[Senate Hearing 107-761]
[From the U.S. Government Publishing Office]
S. Hrg. 107-761
Senate Hearings
Before the Committee on Appropriations
_______________________________________________________________________
Agriculture, Rural
Development, and Related
Agencies Appropriations
Fiscal Year 2003
107th CONGRESS, SECOND SESSION
H.R. 5263/S. 2801
COMMODITY FUTURES TRADING COMMISSION
DEPARTMENT OF AGRICULTURE
DEPARTMENT OF HEALTH AND HUMAN SERVICES:
Food and Drug Administration
NONDEPARTMENTAL WITNESSES
S. Hrg. 107-761
AGRICULTURE, RURAL DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR
FISCAL YEAR 2003
=======================================================================
HEARINGS
before a
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
on
H.R. 5263/S. 2801
AN ACT MAKING APPROPRIATIONS FOR AGRICULTURE, RURAL DEVELOPMENT, FOOD
AND DRUG ADMINISTRATION, AND RELATED AGENCIES PROGRAMS FOR THE FISCAL
YEAR ENDING SEPTEMBER 30, 2003, AND FOR OTHER PURPOSES
__________
Commodity Futures Trading Commission
Department of Agriculture
Department of Health and Human Services: Food and Drug Administration
Nondepartmental witnesses
__________
Printed for the use of the Committee on Appropriations
Available via the World Wide Web: http://www.access.gpo.gov/congress/
senate
______
U.S. GOVERNMENT PRINTING OFFICE
78-459 WASHINGTON : 2002
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512-1800
Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001
COMMITTEE ON APPROPRIATIONS
ROBERT C. BYRD, West Virginia, Chairman
DANIEL K. INOUYE, Hawaii TED STEVENS, Alaska
ERNEST F. HOLLINGS, South Carolina THAD COCHRAN, Mississippi
PATRICK J. LEAHY, Vermont ARLEN SPECTER, Pennsylvania
TOM HARKIN, Iowa PETE V. DOMENICI, New Mexico
BARBARA A. MIKULSKI, Maryland CHRISTOPHER S. BOND, Missouri
HARRY REID, Nevada MITCH McCONNELL, Kentucky
HERB KOHL, Wisconsin CONRAD BURNS, Montana
PATTY MURRAY, Washington RICHARD C. SHELBY, Alabama
BYRON L. DORGAN, North Dakota JUDD GREGG, New Hampshire
DIANNE FEINSTEIN, California ROBERT F. BENNETT, Utah
RICHARD J. DURBIN, Illinois BEN NIGHTHORSE CAMPBELL, Colorado
TIM JOHNSON, South Dakota LARRY CRAIG, Idaho
MARY L. LANDRIEU, Louisiana KAY BAILEY HUTCHISON, Texas
JACK REED, Rhode Island MIKE DeWINE, Ohio
Terrence E. Sauvain, Staff Director
Charles Kieffer, Deputy Staff Director
Steven J. Cortese, Minority Staff Director
Lisa Sutherland, Minority Deputy Staff Director
------
Subcommittee on Agriculture, Rural Development, and Related Agencies
HERB KOHL, Wisconsin, Chairman
TOM HARKIN, Iowa THAD COCHRAN, Mississippi
BYRON L. DORGAN, North Dakota ARLEN SPECTER, Pennsylvania
DIANNE FEINSTEIN, California CHRISTOPHER S. BOND, Missouri
RICHARD J. DURBIN, Illinois MITCH McCONNELL, Kentucky
TIM JOHNSON, South Dakota CONRAD BURNS, Montana
PATTY MURRAY, Washington LARRY CRAIG, Idaho
ROBERT C. BYRD, West Virginia TED STEVENS, Alaska
(ex officio) (ex officio)
Professional Staff
Galen Fountain
Jessica Arden
William Simpson
Rebecca M. Davies (Minority)
Les Spivey (Minority)
Rachelle Schroeder (Minority)
Administrative Support
Angela Lee (Minority)
C O N T E N T S
----------
Wednesday, February 27, 2002
Page
Department of Agriculture: Office of the Secretary............... 1
Thursday, March 14, 2002
Department of Agriculture........................................ 197
Wednesday, March 20, 2002
Commodity Futures Trading Commission............................. 355
Department of Agriculture:
Food Safety.................................................. 389
Marketing and Regulatory Programs............................ 415
Food, Nutrition, and Consumer Services....................... 377
Department of Health and Human Services: Food and Drug
Administration................................................. 511
Nondepartmental witnesses........................................ 605
AGRICULTURE, RURAL DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR
FISCAL YEAR 2003
----------
WEDNESDAY, FEBRUARY 27, 2002
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 10:20 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Herb Kohl (chairman) presiding.
Present: Senators Kohl, Harkin, Durbin, Johnson, Byrd,
Cochran, Specter, and Craig.
DEPARTMENT OF AGRICULTURE
Office of the Secretary
STATEMENT OF HON. ANN VENEMAN, SECRETARY OF AGRICULTURE
ACCOMPANIED BY:
JAMES MOSELEY, DEPUTY SECRETARY
KEITH COLLINS, CHIEF ECONOMIST
STEVE DEWHURST, BUDGET OFFICER
opening statement of senator herb kohl
Senator Kohl. Be called to order at this time, the
Appropriations Subcommittee on Agriculture, Rural Development,
and Related Agencies, for our first hearing on the President's
budget submission for fiscal year 2003. We want to welcome
Secretary Veneman, along with Deputy Secretary Moseley, Mr.
Collins, and Mr. Dewhurst.
The primary purpose of this hearing is to review USDA's
plans and priorities as laid out in the fiscal year 2003 budget
submission, and to discuss the main challenges facing those
agencies under the jurisdiction of this subcommittee. I would
like to note that we had originally planned to also hear from
the Health and Human Services Secretary, Tommy Thompson, in
regard to the Food and Drug Administration, but he was not
available to be with us here today.
Madam Secretary, since you last appeared before this
subcommittee, events have occurred which have changed the lives
of us all, altered general perceptions about the role of
government, and forced a reevaluation of the priorities that we
hold, both in our own personal lives and as a Nation. September
11 was a horrible tragedy, but it was also an awakening to new
challenges and new responsibilities for all Americans.
The Department of Agriculture clearly has an important part
to play in this call to service. USDA is on the front line of
our homeland defense with its work in securing our Nation's
food supplies, food safety, biological research, and
containment of exotic pests and diseases. The specter of this
Nation crippled by a food shortage or terrorized by an
intentionally-introduced food-borne disease is enough to
convince most Americans of the truth behind President Bush's
assertion just last month. Issues of agricultural policy have
become issues of national security.
And beyond the increased emphasis USDA must place on these
security issues, the Department must also continue to run, and
run well, the traditional programs that support farmers, rural
communities, the environment, the hungry, children, and many
others. That task is made more difficult this year by the
impending passage of a new farm bill, a bill which will
institute a host of new or improved programs to assist farmers,
support rural communities, protect the environment, and ease
hunger.
I would like to make one comment in regard to the farm
bill, although I know I must defer to my colleagues, many of
whom serve on this subcommittee, who are conferees. This
Administration and others have made a strong case that free and
open markets are in the best interests of American farmers. In
the area of dairy, as you know, I have fought for that
principle, and against interstate price-fixing dairy compacts.
They benefit dairy farmers in some regions at the expense of
those in other regions, and they place an unjustified tax on
milk-drinking constituents in all regions.
I trust, Madam Secretary, that as you work with the farm
bill conferees, you and the President will strongly oppose any
efforts to reinstate dairy compacts in any form.
I look forward to working with you, Madam Secretary, as we
put together a budget for fiscal year 2003, and I know that
together we can direct our limited resources in a way that
meets the great challenge of keeping our food supply safe while
treating farmers, consumers, and our rural communities fairly
and well.
Before we hear from you, I want to turn to my ranking
member and my good friend, Senator Cochran, for any comments
that he may wish to make. I will then ask other members of the
subcommittee if there are opening statements that they may wish
to make.
Senator Cochran?
statement of senator thad cochran
Senator Cochran. Mr. Chairman, thank you. I am pleased to
join you in welcoming the distinguished Secretary of
Agriculture, Ann Veneman, to present the Department of
Agriculture's budget request for next year. I am glad to see
the request includes increases to protect the safety of our
Nation's food supply and a generous amount, $73.5 billion, in
direct spending to fund the new farm bill. I am looking
forward, as a member of that conference, to helping to draft a
version of that legislation which I hope will meet the needs of
our farmers and ranchers over the next 5 or 10 years.
I know, Madam Secretary, you have spent a lot of time in an
effort to determine how the department should allocate
emergency appropriations to meet homeland security needs. I
also know this has been a hectic 6 months for all the members
of the President's Cabinet. This has been a time that has
tested the leaders of our Nation and put an enormous strain on
our Nation's resources, both human and economic. I want you to
feel assured that this committee is aware of the importance of
our working together in a bipartisan way to deal with these
very important challenges that face our country.
Senator Kohl. Thank you, Senator Cochran. Senator Byrd?
Senator Byrd. I have no opening statement. I have some
questions.
Senator Cochran. I thank you. Senator Craig?
statement of senator larry craig
Senator Craig. Mr. Chairman, thank you very much. Madam
Secretary, welcome before the committee. I, like the chairman
and ranking member, are pleased with the amount that you are
recognizing in the budget that the President released on
February 4th of $74.4 billion.
I must tell you, as we struggle to put together new farm
policy, and it will be a struggle in conference with the
disparities between the House bill and the Senate bill, and I
would hope this committee and the principals on it will work
sooner rather than later to send a clear message to American
agriculture, production agriculture in this country, what we
are going to be doing for the coming year. We are now in the
field, or soon to be in the field. Credit lines are being
negotiated, and I think, Mr. Chairman, the message needs to be
clear as to our plans and this country's support for production
agriculture.
My guess is that that message needs to come long before a
conference report comes to the floor of the Senate on the new
farm bill, because my guess is that will be a ways out.
Thank you.
Senator Kohl. Thank you, Senator Craig. Senator Durbin?
statement of senator richard durbin
Senator Durbin. Thank you very much, Mr. Chairman. And,
Madam Secretary, thank you for joining us. Deputy Secretary
Moseley, thank you for being here. And the long suffering Keith
Collins and Steve Dewhurst, who have come before these
Congressional committees for many, many years, we are happy to
see all of you here.
We will be focusing on production agriculture, as we
should, and I will have a number of questions, but I think we
should not overlook the substantial responsibility of your
department in the area of food safety. Thank you for calling me
yesterday to discuss the GAO report on Mad Cow disease and what
we can do to make certain that it never threatens the United
States.
I hope that under this President, who made the point during
his campaign, that we will finally modernize food safety in
America. To think that we are still dealing with some 12
different Federal agencies responsible for food safety, 35
different laws, and 28 different committees and subcommittees
on Capitol Hill with jurisdiction on that single issue of food
safety. And as we discuss the Department of Agriculture, we
should not overlook the responsibility and opportunity that we
have to modernize the system once and for all.
prepared statement
I think your crowning achievement as Secretary is not only
to put the agriculture sector of our economy back on track,
but, as your term ends, whenever it ends, to say that we
finally took on this issue, which, for half a century, has
really eluded every Secretary of Agriculture. And I want to
work with you to make that happen.
Thank you, Mr. Chairman.
[The statement follows:]
Prepared Statement of Senator Richard J. Durbin
Chairman Kohl, thank you for holding this important hearing today.
I look forward to working with you, Senator Cochran, and my
Subcommittee colleagues on the fiscal year 2003 (Agriculture budget.
Mr. Chairman, I'd like to welcome USDA Secretary Ann Veneman to this
morning's hearing. Madam Secretary, I look forward to working with you
and the rest of the USDA team. I'm certainly familiar with two
gentlemen you've brought with you today, Chief Economist Keith Collins
Budget Officer Steve Dewhurst both testified last April before this
Subcommittee, along with the Secretary. I always enjoy their budget
insights. I'm also happy to welcome Deputy Secretary James Moseley.
I'd like to take a few minutes this morning to talk about some very
important issues that affect the Department, and my home State of
Illinois. When I go back to Illinois, one of the things I hear from
farmers is: How can we get the rural economy back on track? There are a
couple of ways. One is having a new Farm Bill, which the Senate just
passed and is now in conference, and another is through providing
farmers with incentives for things such as biodiesel and ethanol.
Having said that, it's important for all of us to realize the 1996
Freedom to Farm Bill was not written in stone. The legislation simply
has not worked. While the objective of the 1996 bill was to make our
farmers less dependent on government subsidies by phasing out many of
the previously existing subsidy programs to make way for a more market
driven approach, the 1996 bill did anything but that. A new Farm Bill
will change things by restoring the farm safety net, targeting payments
to farmers in need, and ensuring that livestock producers are not left
behind should be the first steps. I believe this legislation will help
family farmers, ranchers, and other rural Americans compete in the
marketplace. The Farm Bill is a good start to putting America's farm
economy back on solid ground.
We must also work to become less dependent on foreign oil by
opening and broadening markets for American agricultural products and
find appropriate alternative uses. We need to create incentives for our
farmers to produce and develop more efficient ways to make biodiesel
and ethanol. More specifically, I hope that my colleagues in Congress,
and in the Bush Administration, will make every effort to expand the
role of biodiesel and ethanol in the reformulated gasoline program.
Knowing what we know about MTBE, this should be a top priority. I
believe expanding biodiesel and ethanol's role is a win for our
farmers, a win for the environment, and a win for the rural economy.
In wake of 9.11.01, I'd now like to turn to another issue of
importance: food safety and security.
I recently announced I will soon introduce the BSE Prevention and
Protection Act to strengthen our national defenses against mad cow
disease. This bill will apply science and good common sense to make our
borders more secure, improve our surveillance activities, and remove
from the food supply for humans and animals some animal-derived
materials that could potentially spread mad cow. We'll also get these
same materials out of non-food items, like cosmetics and medicines.
I plan to reintroduce the Genetically Engineered Foods Act. While I
strongly support biotechnology, I've seen farmers in Illinois and
throughout the country get hurt by some grave mistakes made by others.
We must be able to better assure farmers of an available market for
biotech crops, and assure consumers of the safety and effective
oversight of this new technology. My bill will accomplish both these
goals. I have been working very closely with Senator Harkin on
legislation that will explicitly empower the USDA to close down
facilities that repeatedly fail to meet minimum food quality standards.
I am also planning to hold a hearing to examine the adequacy of
government oversight of the Federal school lunch program, and how
managerial and organizational deficiencies may be affecting the health
of school children.
All food safety threats--whether salmonella or mad cow--are made
more difficult to manage by our highly fractured food safety system.
Currently, Federal oversight for food safety is fragmented with at
least 12 different Federal agencies, 35 different laws governing food
safety, and 28 House and Senate subcommittees with food safety
oversight. With overlapping jurisdictions and scattered
responsibilities, Federal agencies often lack accountability on food
safety-related issues. For that reason, I have introduced the Safe Food
Act. This legislation would unite food safety and inspection activities
in a single agency with a clear mission to protect the public health.
While the details of a new structure need to be developed in an open,
participatory process, one of the best things we can do to protect the
public health and save lives is unite Federal food safety activities in
one agency.
I want to work with you and others in the Administration to design
and implement a more streamlined system to strengthen food safety and
better protect public health. I hope the Department will continue to
explore this idea and work with me on ensuring that our food supply is
the safest in the world.
Madam Secretary, I was glad to see you at the event that honored
former Senators McGovern and Senator Dole, who have championed the
Global Food for Education Initiative to seek the support of many
nations to provide a modest meal everyday for every needy child
throughout the world.
But I am completely at a loss to understand why this Administration
has zeroed out the funding for the Global Food for Education Initiative
pilot project. There are over 300 million children worldwide not
getting enough to eat. Malnourished children find it difficult to
concentrate and make poor students. But these school feeding programs
have many other benefits, including increased attendance rates and more
years of school attendance; improved girls' enrollment rates; improved
academic performance; lower malnutrition rates; greater attention
spans; later ages for marriage and childbirth. I understand that you
want to assess the pilot project, but it would certainly be possible to
keep the 55 projects running in more than 30 participating countries
while you and we in the Congress look at ways to increase the
effectiveness of the program.
In closing, I believe we have a great deal to do and a very short
year in which to accomplish these initiatives for rural America and our
farm families. It's time for Congress to roll up its sleeves and get to
work in concert with USDA to revitalize the rural economy, make sure
our food supply is safe and secure while at the same time looking to
needs abroad.
Members of the subcommittee, Secretary Veneman, and others, I look
forward to working with you as we continue to discuss the fiscal year
2003 USDA budget. Thank you.
Senator Kohl. Thank you, Senator Durbin. Senator Johnson?
STATEMENT OF SENATOR TIM JOHNSON
Senator Johnson. Well, thank you, Mr. Chairman. I would
submit my full statement. I welcome the Secretary, of course,
to our committee, and the rest of the distinguished panel. I
would only observe, just very briefly, that, while I am
appreciative of the USDA support for food safety initiatives,
and we need to work with them on that, I am disappointed with
the significant reductions in funding for all of our rural
development initiatives as well as reductions in research,
education, and extension programs. And it is my hope that we
can work together throughout the course of this budget process
to address some of those shortcomings.
Thank you, Mr. Chairman.
[The statement follows:]
Prepared Statement of Senator Tim Johnson
Thank you Chairman Kohl and Senator Cochran, it's a pleasure to
join you today in welcoming our Secretary of Agriculture to the
subcommittee's hearing concerning the proposed United States Department
of Agriculture (USDA) budget for fiscal year 2003. I extend greetings
to Secretary Veneman and thank her for offering testimony on USDA's
budget. I am also particularly eager to learn USDA's plan to work with
Congress to complete action on a new farm bill this year.
Those of us who care about the future of family farmers and
ranchers recognize the urgency of adopting a new farm bill, with sound
farm policy, very soon, in order to restore economic security to
American agriculture.
However, overall, the President's budget for agriculture fails to
provide the kind of financial bridge necessary to help America's
farmers, ranchers, and rural communities cross the divide between
recession and prosperity. In January, the Administration announced that
without a new farm bill or emergency payments, net farm income could
drop by 20 percent this year, and that a new farm bill must be signed
by the President no later than mid-March in order for it to be
implemented for the 2002 crop year. Given the failings of the current
farm bill, and the fact that Congress adopted 4 multi-billion emergency
bills since the enactment of the 1996 bill, it is imperative that we
enact new farm legislation quickly.
However, the President's budget provides conflicting guidance on
where the Administration stands on farm policy. On one hand, the
President has expressed support in the USDA budget for an additional
$73.5 billion in farm bill funding for farmers, ranchers, and rural
America. However, USDA budget numbers fall short. In the first 5 years,
the President's USDA budget provides $11.5 billion less for farm policy
than in the Senate farm bill ($33.4 B versus $44.9 B).
It appears the President's budget shifts money from the first few
years the new farm bill in order to pay for a promised new safety-net
beyond the life of the 5 year farm bill. Washington, DC is famous for
budget rhetoric and gimmickry, and I understand that the Administration
opposes the Senate farm bill because, according to OMB and USDA, the
Senate farm bill ``front-loads'' the funding in the first 5 years of
the farm bill. However, those of us fighting to fortify the income-
safety net for farmers, who need help now, aren't going to apologize
for the Senate farm bill, it's loan rates, or the fact that it provides
meaningful funding, early-on in the life of the farm bill. The
Administration can call it ``front-loading,'' but I call it making sure
farmers and ranchers have assurance that the new farm bill won't pull
the rug out from under them in 2002, 2003, and 2004. So, I am
disappointed the USDA budget does not adequately address these needs.
I am also concerned the Administration's USDA budget assumes that
commodity loan rates will be reduced from the current levels--which
have been maintained on an annual basis by USDA for several years now--
to the formula levels contained in the 1996 farm bill, which will
dramatically decrease producers' income protection. A large portion of
the $73.5 billion will be needed to restore loan rates to existing
levels, not to mention funds needed to increase to the levels in the
Senate Farm Bill.
The House farm bill drops loan rates to formula levels while the
Senate farm bill increases loan rates and sets them at specified levels
in the bill. It is disappointing to me that USDA might support the
House farm bill provisions with respect to commodity loan rates, where
rates are set at formula levels consistent with the 1996 farm bill, and
you, as Secretary of Agriculture, are empowered to lower loan rates
even further. Some estimate the House loan rate provisions would allow
USDA to lower loan rates to $1.56 per bushel for corn and $4.00 for
soybeans. I don't think most farmers in South Dakota would support this
direction with loan rates, it's just the opposite of what they've
wanted for years with respect to the farm bill.
Additionally, despite the September 2001 report, ``Food and
Agricultural Policy-Taking Stock for the New Century'', published by
USDA, suggests too few farmers reap too many of current farm program
subsidies, USDA won't support, or even take a position on the Dorgan-
Grassley-Johnson payment limitations amendment in the Senate farm bill.
Family farmers, ranchers, and rural Americans know that rhetoric is not
reality, they want USDA to take a stand on these important farm bill
issues and to help keep them in the final farm bill.
Beyond the farm bill, I want to recognize that we're operating
under a totally different budgetary environment today. We started last
year with a $300 billion annual surplus, and we are now looking at
deficits each year into the future. It tells us how difficult funding
at last year's level is going to be when it comes time for Congress and
the Administration to construct this year's budget. USDA's budget
reflects that different environment, and I appreciate it is a tough
position. We should all do our best to hang onto as much of the USDA
budget as we can, but obviously, huge increases in funding for defense
and homeland security, compounded by the fact that we'll have less
money coming in, means that we'll have to pinch pennies.
I wish to applaud President Bush for including $131 million in
USDA's budget for new investment to protect the Nation's food supply
from animal and plant pests and diseases. We must work together to
provide greater homeland security for our food and fiber system. I
believe the new money recommended for food security will help us
increase point-of-entry inspections of food and other imports, expand
diagnostic and response services, and support greater research aimed at
protecting our crops and livestock from attack by animal and plant
diseases. I also support your recommended increases for food safety
initiatives, and funding to cover State and Federal food inspections.
Nonetheless, I do not support the recommended decreases for vital
rural development programs. The total rural development budget has been
cut by $3.5 billion, with significant reductions for water and waste
water projects, housing assistance, and cooperative development in
rural sectors of the country. Rural development is a key ingredient in
re-igniting prosperity in many of our States, and I will work to
restore funding for rural development programs where I can.
Finally, I am deeply concerned with the proposed cuts to USDA's
budget for research, extension, and education. The total Cooperative
State Research, Education and Extension Service (CSREES) budget
experienced a $10 million cut. Land grant institutions such as South
Dakota State University (SDSU) depend upon a sound financial footing
contained within base, formula funds, to maintain existing programs
that keep our farmers and ranchers the most competitive in the world.
SDSU and other land-grant universities are making a real difference
with the funding they receive to maintain research, education, and
extension activities.
Particularly, SDSU is developing creative, new programs to benefit
the younger generation of South Dakotans with sportsmanship and
personal character programs, parents and other adults with respect to
role-modeling, and of course, the farmers and ranchers of my State with
new initiatives that promote value-added agriculture and energy
independence. I believe the Administration should have provided greater
resources for our land-grant institutions, and I will do what I can in
this subcommittee to fix USDA's budget concerning the work of land-
grant universities.
Moreover, the extraordinary cuts to research contained in the
Agricultural Research Service (ARS) budget may harm important research
facilities all across the country. For instance, Brookings, South
Dakota is home to the Northern Grains Insect Research Laboratory. This
facility, affectionately known as the ``bug lab'' to South Dakota
farmers, is one of the premier labs with respect to insect research.
The lab provides farmers in the Northern Plains with crop production
and pest management information that enables producers to improve their
bottom line. Cuts to agricultural research, whether they harm the
efforts of land-grants such as SDSU, or efforts at our Nation's ARS
labs, are counterproductive and I will work in this subcommittee to
restore some of this funding where I can.
Madam Secretary, our work this year will not be easy. But I am
confident that if we work together, this subcommittee can produce a
responsible and effective budget for the important functions of the
USDA. Thank you for appearing before us today and I thank the Chairman
and the committee for their time.
Senator Kohl. Thank you, Senator Johnson. Secretary
Veneman, we would be pleased to hear your statement.
STATEMENT OF ANN M. VENEMAN
Secretary Veneman. Thank you, Mr. Chairman. I very much
appreciate the opportunity to be here today with you and other
members of the committee to discuss the fiscal year 2003 budget
for the Department of Agriculture. I very much appreciate the
working relationship that I have had with this committee and
the ability that we have had to work together. I have been to
many of your States and appreciate the fact that we can call
and talk about issues anytime.
As was indicated, with me today are Deputy Secretary Jim
Moseley, our Budget Officer, Steve Dewhurst, who you all know
very well, and Keith Collins, our Chief Economist, two of our
very stellar career employees in the USDA and people that we
could not operate the Department without.
I have been very busy traveling this year to many of your
States, as I indicated, and have had a lot of opportunities to
talk directly with farmers and ranchers and to hear what they
think about some new initiatives being introduced, one of which
has been kind of fun this year, a Leaders of Tomorrow
initiative. Through this initiative we have been working with
young people around the country, having 4-H'ers and FFA
leadership with us at each of our stops and visits throughout
the country, trying to give young people the opportunity for
mentoring. We have been promoting some of the youth initiatives
in this country that will give us the leaders of tomorrow for
our great Nation.
I want to thank the committee again this year for its
support of USDA programs and for the long history of effective
cooperation between the committee and our Department.
The budget that we are presenting this year is consistent
with our policy book that we issued in September called ``Food
and Agricultural Policy: Taking Stock for the New Century.''
Hopefully the committee has had the opportunity to take a look
at this book.
Our budget also addresses the Nation's new priorities, as
you mentioned, Mr. Chairman, in light of the September 11
events, in a fiscally-responsible manner. Regaining fiscal
stability requires that we recognize our priorities and that we
make difficult funding decisions. I can assure you that USDA
has done just that in preparing our 2003 budget proposals, and
I want to tell you quickly what our budget does.
It funds key priorities for USDA. As Senator Cochran
indicated, it protects farm-program spending, at $73.5 billion
over the baseline for the next 10 years, supporting the budget
resolutions of both the House and the Senate last year. It
strengthens homeland security and infrastructure protections,
such as pest and disease, food safety, research, all of the
issues that we have called the ``infrastructure'' that protects
our agriculture. It provides tools to expand trade and help our
producers export. It provides a record level of a nutrition
safety net for families who are in need of assistance. It
promotes good conservation and environmental stewardship. It
helps rural communities, and it expands initiatives to make
sure that we make government work better.
The fiscal year 2003 budget calls for $74.4 billion in
spending, which is an increase of $11 billion over the fiscal
year 2002 budget submitted by the President last year, and is
only slightly below the 2002 enacted level. The 2002 enacted
level was higher because of emergencies, whether it was
fighting forest fires because of droughts in the West, the
supplemental bill that we got to assist us with homeland
security, and so forth.
I want to go through the basic priorities that are detailed
in our budget. First, this budget provides an additional $73.5
billion over 10 years, as I mentioned, to meet our commitment
to fund a farm bill based on sound policy. The President has
personally reiterated that commitment, and we are going to
continue to work with the Congress and the conferees to produce
a sound farm bill that the President can sign.
We enjoy a good working relationship with Chairman Harkin
and Senator Cochran and other members of the conference
committee, and we are looking forward to working closely with
them as we go through this conference.
We are also committed to implementing a farm bill as
quickly as possible. It is not an easy task, but I have met
with employees recently, both in Georgia and in Missouri, to
talk about implementation issues and how we can prepare ahead
of time for the implementation of this farm bill.
Second, the budget protects agriculture and our food supply
from potential threats, intentional or unintentional, and
requests increases for key infrastructure programs that protect
our food and agriculture--pest and disease prevention, food
safety, and research. These are core programs that are critical
to agriculture, and oftentimes they are forgotten. We just need
to look back over the past year, where we were dealing with the
threat of Foot and Mouth disease, strengthening our systems and
reallocating resources to ensure that we did not get that
economically devastating disease in our livestock herds. It
could have been so devastating. Then we had the events of
September 11, where we are now concerned, not only about
unintentional threats to our food supply, but intentional
threats, as well. So we are requesting an additional $146
million in new spending for food safety, pest and animal
disease prevention, and research.
There is a record level of spending for the Food Safety and
Inspection Service to support over 7,600 meat, poultry, and
egg-product inspectors. In addition, more research is proposed,
aimed at protecting our food and agriculture system from animal
and plant diseases, insects, and other pests. Increases for
research in these areas will emphasize the development of
improved detection, identification, diagnostic and vaccination
methods, and identify and control threats to animal and plant
agriculture.
Internal surveillance and analysis will be strengthened to
ensure that we can respond to problems if they were to occur.
An increase of $48 million is requested for animal health
monitoring to enhance our ability to quickly identify any
outbreaks that might occur. An increase of $19 million is
requested in the Agricultural Quarantine Inspection Program to
continue to provide border inspection and to protect
agriculture and the food supply against pests and diseases.
Staffing for the Agricultural Quarantine Inspection Program
would be increased to nearly 4,000 staff years in fiscal year
2003 with this budget. This would be a 55 percent increase from
staff levels at the beginning of fiscal year 2001.
Our Research, Economics, and Education agencies in fiscal
year 2003 would be funded at approximately $2.3 billion. This
includes doubling the budget for the Department's competitive
National Research Initiative from $120 million in fiscal year
2002 to $240 million. This would include $9 million for new
uses of agriculture products, and $6.5 million for global
climate change research initiatives.
Last month, the President approved an additional $328
million in one-time spending as part of the Defense
Supplemental Appropriations Act. This includes $105 million for
pest and disease exclusion, detection, and monitoring, $80
million for upgrading USDA facilities and operational security,
$87 million for laboratory upgrades, $40 million for research
activities, and $15 million for food safety protection. We are
working now with our appropriate agencies and the President's
Office of Homeland Security to plan and implement that
spending.
I might add that all of these measures and actions that we
have taken directly support our protection systems to guard
against BSE. As Senator Durbin mentioned, we did discuss
yesterday the GAO report that just came out on the BSE issue,
but I also want to point out that in November, we released,
with Harvard University, a 3-year study on BSE, which looked in
depth at how we are dealing with this issue. They found that we
have strong systems, that our risk of getting this disease is
relatively low, and that if we were to have a case of the
disease, that the likelihood of it spreading was very low.
Nonetheless, we continue to move forward and remain vigilant,
be on our guard against threats, and take additional
precautions. We have detailed statements and fact sheets
available to you and your staff outlining the specific actions
that we are taking to strengthen all of our programs.
Third, this budget maintains an aggressive program level of
over $6.4 billion in support of food and agriculture
international trade. It increases funding by $50 million for
trade programs and services that provide valuable tools for
U.S. producers to gain access in the markets. A substantial
budget increase for Public Law 480 Title II donations is
proposed. The Administration believes that the Public Law 480
program should be the primary vehicle for food aid overseas,
rather than relying on the use of Section 416(b).
We continue to hope that the Congress will quickly approve
trade promotion authority for the President. I might add that
we will continue to be very aggressive to tear down the unfair
trade barriers that are hurting our farmers in the
international marketplace.
We just had, last week, a decision by Japan to remove an
unjustified barrier against our poultry exports. Also last week
we announced a limited, but at least a beginning, of the
opening for our table grapes into Australia. We announced
actions just within the last couple of weeks claiming that the
actions of the Canadian Wheat Board are unfair against our
producers and that we are going to continue to pursue trade
remedies. The President has personally intervened, and we
continue to be very aggressive, on the issue of China's
regulations for biotechnology that could hurt our exports.
Fourth, this budget provides a record $41 billion to
provide a strong nutrition safety net for families who need
assistance from the government whether it is through our Women,
Infants, and Children (WIC), Food Stamp, or Child Nutrition
Programs. The WIC Program is an essential part of the nutrition
safety net, and this is a program that the President cares
deeply about. It is designed to protect a very vulnerable
segment of the population--that is, low-income, nutritionally-
at-risk women, infants, and children. This program has shown
measurable results, particularly in terms of reductions in
infant mortality. It is important to remember that 47 percent
of the children born in this country are born to WIC families.
For fiscal year 2003, the Administration has included
sufficient resources in the budget to support an average WIC
participation of 7.8 million people, up from 7.5 million
recipients in 2002.
Specifically for the Food Stamp Program, outlays are
increased in the President's budget by over $1.4 billion to
support an average participation of 20.6 million participants,
up from 19.8 million in fiscal year 2002. The budget also
requests a $2 billion contingency reserve, should enrollment
exceed our estimates. The budget includes a number of
legislative proposals to improve the Food Stamp Program.
Legislation is proposed for the Food Stamp Program to restore
Food Stamp eligibility for legal immigrants who have been in
the United States for at least 5 years, allow ownership of one
vehicle per work-able household member and other provisions to
simplify program rules and improve program accountability. I
might note that just yesterday the President talked about the
importance of these programs and initiatives when he was
outlining his Welfare Reform proposals.
Fifth, this budget promotes good conservation and
environmental stewardship programs to help our environment and
farmers and ranchers. The President often says that farmers and
ranchers are the best stewards of the land, and we want to give
our farmers and ranchers additional tools to manage working
lands. The budget provides $6.1 billion in spending for the
Natural Resources and Environment agencies. It includes a $50
million increase for conservation operations and technical
assistance. The budget for the Natural Resources Conservation
Service, like that for the farm programs, is highly dependent
upon the outcome of the farm bill.
The Administration supports a strong conservation component
in the farm bill to enhance conservation for the working
farmlands, through programs such as the Conservation Reserve
Enhancement Program and the Environmental Quality Incentives
Program. The budget includes resources necessary to continue
the services USDA provides to farmers and landowners, and the
budget continues to emphasize key areas, such as nutrient-
management plans for animal feeding operations and the need to
meet the strong demand for environmental assistance.
Sixth, this budget contains $11.6 billion for Rural
Development programs, roughly the same level as that which we
spent in fiscal year 2001. The budget takes a close look at
programs and targets resources to high-priority areas. We have
worked hard in this budget to provide funding for the most
urgent needs of rural America, including home ownership, waste
and water systems, and support for business development and
jobs in rural areas. We have recommended some reviews and
reforms in some areas of rural development, including the rural
rental housing and the rural telephone bank, to ensure that
they are producing the intended results.
Finally, this budget looks closely at the programs and
services this Department manages. It contains several critical
management initiatives that will better integrate USDA programs
and services to bring them into line and better prepare our
employees for the 21st century workplace. More importantly, our
initiatives will help us serve our customers more expeditiously
and efficiently.
In the USDA's budget, you will find resources and
commitments in various places dedicated to the achievement of
this management agenda. For instance, we want to improve
customer service in our field delivery system by taking another
look at our office structure, our organization of
administrative support functions and how we manage a number of
important areas, such as our credit portfolio.
Overall, there is a great level of attention to this budget
to investments in technology. We cannot expect our employees to
improve customer service or achieve other management objectives
unless they are provided with modern technology. We want to
make e-Government a reality for our customers.
That completes my overview of some of the key points in
this budget. We believe it is a responsible budget, it funds
key priorities and programs at USDA. I very much appreciate the
opportunity to discuss these important priorities with you
today.
PREPARED STATEMENTS
Thank you again, and we look forward to working with you
during the budget process and to advance the priorities that we
have outlined. I would be glad to respond to any of your
questions, Mr. Chairman, and those of the committee. Thank you.
[The statements follow:]
Prepared Statement of Ann M. Veneman
Mr. Chairman, Members of the Committee, it is an honor for me to
appear before you to discuss the fiscal year 2003 budget for the
Department of Agriculture (USDA). I have with me today Deputy Secretary
Jim Moseley, our Chief Economist, Keith Collins, and our Budget
Officer, Steve Dewhurst.
I want to thank the Committee again this year for its support of
USDA programs and for the long history of effective cooperation between
this Committee and the Department in support of American agriculture. I
look forward to working with you, Mr. Chairman, and all the Members of
the Committee during the 2003 budget process.
As you know, the President's Budget was released on February 4th.
Total USDA outlays for 2003 are estimated to be $74.4 billion. This is
an increase of $11.1 billion above the level requested in 2002, and it
is only slightly below the 2002 enacted level.
The Department is addressing the Nation's new priorities in light
of the September 11 events in a fiscally responsible manner. This
requires recognizing our priorities and making difficult funding
decisions. I can assure you that USDA has done just that in preparing
its 2003 budget proposals.
We have also taken actions to assure that the $328 million of
emergency supplemental funds made available to USDA for security needs
in 2002 will be invested in ways to meet high priorities, particularly
to improve USDA's biosecurity operations for the long term. We are
working closely with the Office of Homeland Security and we have
established a USDA Homeland Security Council to coordinate our security
efforts and track progress in using those funds to ensure that priority
needs are met. The Council will play a significant role in establishing
the final plans for use of those funds.
For 2003, this budget supports the Administration's principles for
the 21st Century as stated in our report: Food and Agricultural Policy:
Taking Stock for the New Century, issued last fall. Specifically, the
budget does the following:
--Ensures that the new Farm Bill will be generously funded by
providing an additional $73.5 billion in mandatory funding over
the 2002-2011 period to develop sound policies for farm
commodity and income support, conservation, trade, food
assistance, research, and other programs.
--Supports the Administration's goal of opening new markets overseas
and expanding U.S. agricultural exports by providing over $6
billion in export program support.
--Provides the largest increase ever for the Special Supplemental
Nutrition Program for Women, Infants and Children (WIC) thereby
supporting 7.8 million program participants.
--Provides support for over 20 million food stamp participants
including legislation to allow more legal immigrants to
participate and other changes to simplify complex rules,
support working families and improve program delivery.
--Protects agriculture and our food supply from potential threats--
intentional or unintentional--and requests more than $146
million in new spending for food safety, pest and animal
disease prevention, and research.
--Improves the Department's management of its delivery of programs.
--Improves the stewardship of our soil, water and forests by making
more resources available for conservation uses with less money
spent for overhead expenses.
--Maintains funding to support loans, grants, and technical
assistance to address a diversity of rural development needs
including financing electric and telecommunications systems,
water and waste disposal systems, rural housing, and business
and industry.
With this as an overview, I would now like to discuss the details
of our budget proposals for each of the Department's mission areas.
farm and foreign agricultural services
The farm sector in recent years has experienced lower market
returns for several major commodities and losses from various disease,
pest and other natural disaster-related causes. Supplemental assistance
has been enacted to prevent farm income declines. While the situation
is improving for some commodities, market returns in other areas of the
farm economy are still low. The President's budget for 2003 provides
for an additional $73.5 billion in direct spending over the 2002-2011
period to fund new legislation to replace the expiring 1996 Farm Bill.
This level is consistent with amounts contained in the Congressional
Budget Resolution. We will work with Congress to develop a bill which
contains sound policy consistent with the principles we have laid out
for 21st Century agriculture.
The new Farm Bill should be generous but affordable. It should
provide a reasonable safety net without encouraging overproduction and
depressing prices, establish farm savings accounts to help manage risk,
support our commitment to open trade, offer incentives for good
conservation practices on working lands, and enhance nutrition
programs.
International Trade
In conjunction with the new Farm Bill, it is essential that we also
lower trade barriers and open new markets overseas since trade is
critical to the long-term health and prosperity of the American
agricultural sector. Enhancing the competitiveness of U.S. agriculture
in the world marketplace must also be one of the primary objectives of
our farm policy.
One of the most important strategies for enhancing trade is
continuing the liberalization of global agricultural trade. America's
farmers and ranchers stand to gain a great deal from further trade
reform through increased access to markets overseas and a reduction in
unfair competition in those markets.
The new round of multilateral trade negotiations is at the center
of our trade liberalization efforts. Our agenda for agricultural reform
negotiations includes substantial reductions in tariffs and increased
market access, elimination of export subsidies, reform of State trading
enterprises, and tighter rules on trade-distorting domestic support.
We also are pursuing trade liberalization through both regional and
bilateral negotiations, and we are closely monitoring existing trade
agreements to ensure that our trading partners comply fully with the
terms of those agreements and do not institute technical barriers to
trade that run counter to their spirit.
Another strategy laid out in our review of 21st Century agriculture
is ensuring we have the proper tools needed to expand exports in an
increasingly competitive environment. This starts with the granting of
Trade Promotion Authority (TPA) to the President so that we can
demonstrate to our trading partners that the United States is serious
in our pursuit of free trade objectives and in our negotiating
proposals. We urge the Congress to enact this important legislation
early this year. We also very much want to work with the Congress to
craft provisions of the trade title of the new Farm Bill so that they
are consistent with the principles we have established for 21st Century
agriculture.
Our work in the international area begins with the Foreign
Agricultural Service (FAS), the Department's lead agency in
implementing many of our international activities, and which plays an
absolutely critical role in our trade expansion efforts. For 2003, the
budget provides $140 million for FAS, an increase of $10 million above
the 2002 level. Included in the FAS request is much-needed funding to
support an e-Government initiative that will upgrade the agency's
information technology (IT) resources and capabilities, and modernize
its business practices and operations. Over the last year, FAS has
faced a series of computer-related crises that have threatened to
cripple agency operations and communications. This is a particularly
serious problem for an agency that has offices throughout the world and
must work closely on a daily basis with many different agencies, such
as the State Department and Office of the U.S. Trade Representative.
The FAS proposals also include increased funding for the Cochran
Fellowship Program. This is a highly successful program that has
provided training and helped to establish. positive linkages with many
agriculture officials throughout the world. The additional funding will
expand programming in a number of important areas, including
biotechnology, food safety, and World Trade Organization accession
requirements.
Another key to having the proper trade expansion tools is to ensure
adequate funding for the Department's export promotion and market
development programs, which our budget proposals are designed to do.
For the CCC export credit guarantee programs, the largest of our export
programs, the budget includes a program level of $4.2 billion. This is
an increase of $300 million above the projected 2002 level, reflecting
continued very strong growth in the supplier credit guarantee program.
For the Foreign Market Development (Cooperator) Program, Market Access
Program, and Quality Samples Program, the budget includes a total
program level of $120 million, unchanged from this year's level, and
$63 million for the Dairy Export Incentive Program, a slight increase
over the current estimate for 2002.
As the Committee is aware, the Administration has undertaken a
review of U.S. foreign food assistance activities in order to reform
and rationalize their implementation and to strengthen their
effectiveness. Among the results of that review is the decision to
provide a more secure and predictable foundation for our overseas food
aid activities by reducing their reliance on the year-to-year
availability of surplus commodities. At the same time, these activities
will largely be funded through discretionary sources, subject to
Congressional review and approval, and with reduced reliance on
mandatory CCC funding. Accordingly, the budget provides increased
funding for food aid donations under the Public Law 480 Title II
program, while donations of commodities under section 416(b) authority
that rely on the purchase of surplus commodities by CCC will not be
continued in 2003. The budget includes a total program level of $1.35
billion for Public Law 480 in 2003. Based on current price estimates,
total commodity shipments under Public Law 480 programs in 2003 should
reach 3.7 million metric tons.
Farm Program Delivery
Farm Service Agency (FSA) salaries and expenses are funded at $1.3
billion in 2003. This would support continuation of staffing levels at
the current 2002 levels of about 5,800 Federal staff years and 11,250
county non-Federal staff years, including about 2,000 temporary staff
years. We expect the workload for FSA to remain relatively heavy in
2002 and 2003.
In order to help FSA meet this workload challenge, improve service
to farmers and enhance operating efficiency, the budget provides
increased funding of $56 million for FSA's information technology
efforts related to the Service Center Modernization Initiative. This
includes an acceleration of geographic information systems and other
common computing environment initiatives to help move the delivery
system into the e-Government era. The budget presents these funds as
well as funds for the other Service Center agencies under the Common
Computing Environment appropriation to ensure that these activities are
well coordinated.
Management initiatives to modernize farm credit program servicing
activities and to review the Service Center office processes and
structure of FSA, Natural Resources Conservation Service (NRCS) and
Rural Development (RD) will also be undertaken in an effort to improve
our ability to provide services at less cost.
Credit
We have also included in the budget a program level of about $4
billion in farm credit programs to assure that farmers have access,
when necessary, to Federally-supported operating, ownership, and
emergency credit. No additional funding is being requested for the
emergency loan program. Based on current estimates, the budget assumes
that carry-over funding in the emergency loan program will be
sufficient to meet demand in 2003.
Crop Insurance
The budget for this mission area also includes full funding for the
crop insurance program. The budget includes such sums as necessary to
meet producers demand for the program given that participation in the
program is voluntary on the part of producers. The program is delivered
by private insurance companies, and the Federal Government reimburses
the companies for their delivery, costs. The companies also receive
underwriting gains on policies for which they retain the risk of loss.
In 2000, Congress substantially reformed the crop insurance program, in
part, by providing for substantial increases in the premium subsidy
available to producers, especially at higher levels of coverage. As a
result, participation in the program increased substantially. With the
increase in business, private insurance companies have received a
windfall as underwriting gains have increased about 400 percent from
the levels of the early 1990s. This budget includes proposed
legislation which would cap underwriting gains at 12.5 percent of the
retained premium.
marketing and regulatory programs
Marketing and Regulatory Programs agencies provide basic
infrastructure to protect and improve agricultural market
competitiveness for the benefit of both consumers and U.S. producers.
Pests and Diseases
Helping protect the health of animal and plant resources from
inadvertent, as well as intentional pest and disease threats from
terrorists, is the primary responsibility of the Animal and Plant
Health Inspection Service (APHIS). The importance of this
responsibility was recognized by the inclusion of $119 million
specifically for APHIS in the Homeland Security Supplemental funding
for 2002. These funds will be used to: improve effective border
protection, in part through the purchase of equipment and the hiring of
anti-smuggling personnel; work with the States to expand survey efforts
for plant and animal pest and disease detection; and meet enhanced
building security and other needs. Of the total, $14 million will be
used to relocate certain biohazard laboratory facilities to a facility
on the National Veterinary Services Laboratories campus in Ames, Iowa.
For 2003, we are requesting a net increase of about $120 million
over the regular 2002 appropriation for APHIS salaries and expenses
which consists of over $262 million in increases partially offset by
$142 million in decreases. While we have successfully kept foot-and-
mouth disease and bovine spongiform encephalopathy (BSE) out of the
United States, our inspectors remain highly vigilant, in part, because
of bioterrorist threats. The $1.1 billion 2003 budget request for APHIS
reflects continued and enhanced efforts to protect U.S. agriculture at
the borders, and also to promptly detect and respond to a pest or
disease outbreak, among other activities. An increase in total program
level of about $19 million is devoted to enhance Agricultural
Quarantine Inspection, and an increase of another $48 million is
devoted to enhanced monitoring and surveillance for pest and disease
outbreaks.
Once detected, prompt eradication of an outbreak is essential to
limit damages and reduce overall control costs. The 2003 budget
requests $162 million in appropriations to continue funding several
eradication programs that had been started with funds transferred from
CCC. Such continuing activities can no longer be considered
``emergencies.'' These funds will be used to combat species such as the
Asian Long-horned Beetle, citrus canker, Mediterranean fruit fly,
chronic wasting disease, plum pox, rabies, scrapie, and tuberculosis.
For any new emergency pest and disease outbreak, our legal authority to
use CCC funding would be relied upon. However, the Administration is
concerned about rising Federal costs of emergency pest and disease
control and expects to seek public comment on flexible criteria to
share the financial burden with cooperators who receive benefits from
program activities.
Marketing
Another important proposal in this area involves the Grain
Inspection, Packers and Stockyards Administration (GIPSA). The budget
includes a total program funding level of $43 million to help ensure
efficient market functioning. Included within this total is about $2
million being requested for improved enforcement of anti-competitive
laws and monitoring the use of new technologies to evaluate livestock
carcasses. Another $450,000 is requested to expand the newly
established biotechnology program to keep pace with the rapid
introduction of new products and the need for commodity certifications.
A further $3.4 million is requested to enhance the ability of GIPSA to
electronically provide and receive data and information. The GIPSA
budget also proposes user fees to recover costs of the U.S. grain
standards program, as well as license fees to recover costs of the
Packers and Stockyards program.
For the Agricultural Marketing Service (AMS) the budget includes an
increase of $1 million to expand international market news reporting in
Central America, South America, and Asia and increase the availability
of accurate, timely, and unbiased international market information.
This type of real time market information is required for American
producers to be competitive in a global economy. The budget also
requests an increase of $1.6 million to implement improvements to the
Pesticide Data Program and the Federal Seed Act Program. Improvements
to the program infrastructure for these programs are necessary to
ensure effective delivery of program services to American agriculture.
food safety
A safe food supply is one of the foundations of a successful food
and agricultural system. As we have witnessed, highly publicized
outbreaks of foodborne illness have demonstrated how important
safeguarding public health is to both consumers and producers. And,
with the threat of terrorism, we must be even more vigilant in
safeguarding the Nation's food supply. USDA plays a critical role in
safeguarding the food supply and its policies have contributed to the
recent decline in pathogenic contamination of meat and poultry
products. This Administration believes that continued investment in the
food safety infrastructure is necessary to ensure that the appropriate
personnel, tools, and information are available to address the emerging
food safety hazards that threaten public health and the viability of
our agricultural system. Therefore, the budget includes record funding
for the Food Safety and Inspection Service (FSIS).
For 2003, the budget proposes $804 million, an increase of about
$28 million over the 2002 current estimate. Funds are requested to
cover the costs of Federal inspection and for maintaining Federal
support of State inspection programs. This includes resources necessary
to maintain approximately 7,600 meat and poultry inspectors which will
ensure the uninterrupted provision of inspection services.
In addition, the budget requests an increase of $14.5 million to
improve FSIS' information technology infrastructure. FSIS' existing,
disparate information systems will be replaced by a new system with
enhanced data sharing capabilities. Upgrading these important
information systems will lead to improved science-based decision-making
for risk assessment and risk management functions, as well as improved
resource management.
The budget also requests an increase of $2.7 million to conduct
slaughter epidemiological surveys and risk prevention activities for
small and very small establishments. These surveys will improve the
quantity and quality of data available to FSIS for use in evaluating
the effectiveness of inspection strategies to detect animal disease
outbreaks and the food safety guidelines to limit the impact of those
outbreaks.
The 2003 budget includes a commitment to review the current
overtime fee structure for meat, poultry, and egg products inspection,
including an analysis of the manner in which fees are assessed and the
underlying statutory basis for those fees. There is no budget impact in
2003 as a result of this action, however, the analysis of the current
fee structure will begin immediately. The budget also proposed a new
annual licensing fee that will make funds available, beginning in
fiscal year 2004 and in subsequent years, to invest in food safety
inspection technology and other Federal programs that directly benefit
the industry.
food, nutrition, and consumer services
The budget includes $41.9 billion for USDA's domestic nutrition
assistance programs, the highest request ever, targeted to help
Americans in need. This request reflects our commitment to the
nutritional safety net, and to helping participants find and retain
jobs, and move toward economic self-sufficiency.
A major component of the nutrition safety net is the Special
Supplemental Nutrition Program for Women, Infants and Children (WIC).
The budget requests a record level of $4.8 billion for WIC, almost 10
percent above the 2002 appropriation. The request funds average annual
participation of about 7.8 million participants, and it provides an
additional $150 million contingency reserve should additional demand
for WIC appear. This request reflects the growing demand for WIC and it
also reflects a firm commitment by this Administration to ensure that
resources are directed to programs that make a real difference in
peoples lives. WIC is just such a program. Ensuring funding for WIC is
one of our major priorities and is critical to the Administration's
goal of guaranteeing stable funding for this important program.
The Food Stamp Program is funded at $26.2 billion, an increase of
almost $3.2 billion above the 2002 level. The increase would cover a
projected 2 percent increase in food costs with average participation
of about 20.6 million people. This is an increase of about 2 million
participants over the most current month reported, November 2001. The
request also includes a $2 billion contingency reserve, in case it is
needed to support a higher than expected level of participation.
Also of great importance is reauthorization of the Food Stamp
Program. The budget contains several legislative proposals for food
stamps that are consistent with the principles we have laid out for
21st Century agriculture. These proposals would:
Allow legal immigrants who have resided in the U.S. for 5 years or
more to apply for food stamps. This is consistent with welfare reform
as it would bring the Food Stamp Program into conformity with other
public assistance programs such as Medicaid and the Temporary
Assistance for Needy Families programs that work in concert together at
the local level. This change provides a nutritional safety net for
these legal immigrants while maintaining requirements that they look
first to their earnings, resources and the support of their sponsors to
meet their needs.
Index the standard deduction to a percentage of poverty, so it
adjusts both to reflect household size and changes in living costs.
This, along with standardized medical and dependent care deductions
(and several other program simplifications) will allow States to focus
more on helping households get back on their feet, and less on complex
and error-prone details.
Exempt one vehicle per work-able household member from being
counted as an asset to facilitate participant efforts to seek and
retain employment.
Eliminate the requirement that 80 percent of the Employment and
Training funds going to childless unemployed adults so that States can
more flexibly direct these resources to help those most likely to use
them.
Reform the Quality Control System to focus on recurrent error
problems. Although error rates are at their lowest level ever, States
issued nearly $1.3 billion in overpayments and underpaid eligible
households by nearly $460 million. This is just too high. The proposed
changes would allow States to receive meaningful incentive awards for
good performance and only sanction States with 2 consecutive years of
error rates exceeding the 75th percentile for all States. Enactment of
these changes will help all stakeholders to strive for even better
performance.
The Child Nutrition Programs are budgeted under current law at
$10.6 billion. The request anticipates an increase of about 2 percent
in food costs, growth in the programs due to the increased number of
school aged and younger children, and some expansion in the breakfast
and child care food programs. Program integrity will continue to be a
focus for these programs, not only to ensure the proper allocation of
Child Nutrition funds, but also because far larger sums of Federal and
State education money are targeted to low-income schools based on free
and reduced price lunch data.
natural resources and environment
The importance of conservation programs has grown well beyond their
historical purpose of protecting productive topsoil for the purpose of
food production. We are now realizing the significance of agriculture's
impact on other areas of the environment such as water quality. In
addition, public awareness and concern for the Nation's natural
resources have continued to grow as we gain a better scientific
understanding of soil and related resource problems and how best to
address them. The 2003 budget request in the conservation area
recognizes these developments, as well as the need to protect the
conservation partnership that has evolved over the years between the
Department and conservation districts and farmers.
The budget request for the Natural Resources Conservation Service
(NRCS) for 2003 proposes $1.2 billion in appropriated funding, and
assumes $1.0 billion in mandatory funding for the Environmental Quality
Incentive Program (EQIP) within the Commodity Credit Corporation (CCC)
baseline, including estimated spending in the new Farm Bill. The
appropriated request includes $787 million for conservation technical
assistance (CTA) which represents the foundation of the Department's
conservation partnership, as well as the primary means by which the
Department implements many of the critical natural resource programs
such as the Conservation Reserve Program (CRP) and the conservation
initiatives that will be called for in the new Farm Bill.
Addressing the problems associated with polluted runoff from animal
feeding operations (AFOs) remains one of the most critical challenges
and continues to be a high priority within the Department. To help AFO
operators develop and implement nutrient management plans, NRCS will
increase the level of technical assistance funding in 2003. Financial
assistance that AFO operators might need to implement the plans will
come from the EQIP.
The Department's 2003 budget request maintains funding for the 348
Resource Conservation and Development (RC&D) areas now authorized and
will also be sufficient to support any new areas authorized in 2002.
The ongoing program will continue to improve State and local leadership
capabilities in planning, developing and carrying out resource
conservation programs.
While maintaining and strengthening those conservation programs and
activities that are vital to a healthy natural environment, the 2003
budget ceases funding those programs that have not performed well, that
have a limited scope, or that have goals that can be better addressed
through other programs. The Forestry Incentives Program falls in this
general category and is not to be continued. In addition, all non-
emergency watershed planning and operations funding will be redirected
to other higher priority work within NRCS. Although support for regular
watershed operations and planning is being terminated, the 2003 budget
does propose to fund the Emergency Watershed Protection (EWP) program
at an appropriated level of $111 million, which is an amount equal to
the 10-year average for EWP spending. This would provide an important
level of security to rural areas in the event of sudden and unforeseen
natural disasters, and would enable the Department to respond to these
disasters in a much more timely manner.
Under the Common Computing Environment budget an increase of $13
million is included for NRCS activities for telecommunications costs,
GIS implementation, cyber-security initiatives and enhanced access for
customers.
rural development
The Administration's principles for rural development are to
recognize the diversity of rural America and the importance of the
nonfarm economy to rural communities; to create an environment that
will be attractive to private investors to rural areas, encourage
greater education and technical skills for rural residents, and
capitalize on rural America's natural resource base; to protect lives
and property against certain hazards, such as forest fires; to expand
rural infrastructure, and to serve as a coordinator among the various
levels of Government and private sector stakeholders in rural
development activities.
USDA's rural development mission area has the primary
responsibility for administering programs to meet these principles. The
2003 budget includes over $1.9 billion in budget authority for rural
development programs that would provide almost $11 billion in loans,
grants and technical assistance for a variety of purposes, including
the financing of electric generation and distribution systems,
telecommunications, water and waste disposal and other essential
community facilities, rural housing, and business and industry. The
2003 budget also includes a request for about $685 million for the
administrative expenses for these programs.
The total amount of budget authority for Rural Development is $2.6
billion, which is approximately at the 2002 enacted level. However, the
budgetary resources have been realigned so that the 2003 budget allows
USDA to efficiently and effectively meet the needs of rural America.
Most programs are funded at approximately the 2002 enacted levels.
About 60 percent of the program decreases are due to reductions in
demand. The 2003 budget also reflects the annual changes in subsidy
rates due to different technical and economic assumptions. Funding for
Round II Rural Empowerment Zones and Enterprise Communities Grants and
Multifamily Housing loans for new construction has not been requested.
The telecommunication programs are funded at program levels of $495
million in direct loans for the regular programs, $50 million in direct
loans and about $25 million in grants for the distance learning and
medical link program, and $80 million in direct loans and $2 million in
grants for the broadband and internet services program. These are the
same levels as appropriated for 2002 except for distance learning and
medical link direct loans, and broadband and internet services grants.
For the past few years, USDA has requested and received program level
funding for $300 million in direst loans for the distance learning and
medical link program. Unfortunately, there have been very few
applicants because potential applicants are more interested in the
grant program. The reduced level of funding for 2003 is expected to
fulfill actual demand.
As for broadband and internet services, the program was established
on a pilot basis in 2001. The $2 million in program level funding
available for grants in that year was targeted to a few small
communities that could not qualify for loans due to a lack of repayment
ability. While there is no lack of demand for grants for this purpose,
the Department believes that communities should bear a substantial
portion of the cost of such services, which means the program should
focus on loans rather than grants, as reflected in the budget request
for 2003. Further, the Department is again proposing that no funding be
provided for Rural Telephone Bank (RTB) loans. The RTB is fully capable
of obtaining funds to make loans through commercial channels which
would encourage privatization.
The water and waste disposal program would be funded at a level of
$814 million in direct loans, $75 million in guaranteed loans and $587
million in grants--the same as appropriated for 2002. This program
provides safe drinking water and waste disposal for rural residents and
encourages business and industry to locate in rural areas which means
more jobs and a more diversified rural economy.
The business and industry guaranteed loan program is funded at a
program level of $733 million. This is the same amount that will be
available from the 2002 appropriations.
The single family program levels for 2003 would support $957
million in direct loans and nearly $2.8 billion in guaranteed loans--
enough to provide about 50,000 homeownership opportunities.
The rural rental housing program would be limited to a program
level of $60 million in direct loans for repair and rehabilitation and
related purposes and $100 million in guaranteed loans for either new
construction or repair and rehabilitation. The Department is concerned
about the substantial cost to the Government for rental assistance
payments to support its existing portfolio of about 17,800 existing
projects. These projects have an outstanding balance owed of close to
$12 billion. Many of these projects are over 20 years old and in need
of repair or rehabilitation. The Department has already initiated a
review of alternatives for servicing the portfolio. This review will
also consider options for making loans for new projects at less cost to
the Government.
research, education, and economics
To maintain the unparalleled success of U.S. agriculture, it will
be necessary to make investments in research, education, and economics
as new challenges confront the agricultural sector. Continuing to
provide a secure food supply and maintaining and strengthening U.S.
farmers' competitive advantage in world markets within a restrained
budget will require a close assessment of priorities.
The 2003 budget for this mission area totals $2.3 billion. For
ongoing programs, there is an overall net increase of $15 million.
There are increases for critical intramural and grant programs,
decreases for less critical projects--many of which were specific
congressional earmarks for projects that could be funded through
competitive programs--and a reduction of $102 million in the
Agricultural Research Service (ARS) buildings and facilities account
following the large appropriations in 2002.
The 2003 budget for ongoing research and information activities in
ARS is $1,014 million, a net increase of 3 percent above the 2002
enacted level. The budget includes an increase of $13 million for
emerging, reemerging, and exotic plant and animal diseases; such as BSE
and Food and Mouth Disease (FMD), to protect the U.S. food supply and
increase the product longevity and market quality of agricultural
commodities; an increase of $9 million for biobased products and
bioenergy from agricultural commodities, two initiatives that are
supported by the President's national energy policy; an increase of
$6.5 million for global climate change to improve our understanding of
carbon sequestration and support other aspects of the Administration's
climate change research initiative; an increase of $5.0 million to
develop advanced pathogen detection capabilities needed for homeland
security; and several other critical initiatives.
We are pleased that Congress has responded positively to the urgent
need for a modern animal health facility in Ames, Iowa with combined
appropriations of $113 million in the regular and supplemental
appropriations acts in 2001 and 2002. In this regard, we are in the
process of preparing a report at the request of the Appropriations
Committees on our estimates of costs for the entire project, the
planned construction schedule, and our plans for managing this major,
multiagency undertaking.
The 2003 budget proposal for the Cooperative State Research,
Education, and Extension Service is just over $1 billion. The National
Research Initiative (NRI) is funded at $240 million, representing an
increase of $120 million from 2002. The Federal Government plays a
unique role in its support of the basic research needed to maintain the
technology-based competitive advantages we currently enjoy in so many
segments of the economy. In recent years, there have been especially
large increases in Federal commitments for research in support of
medicine and national defense. Unfortunately, commitments for
agricultural research have not kept pace and opportunities to take
advantage of some of the Nation's best university-based scientific
talent are being lost. The budget proposal for the NRI will enhance
agriculture as a scientific discipline; it will provide opportunities
to partner with other Federal agencies and bring an agricultural
perspective to topics of mutual interest; and it will make a
contribution towards encouraging and training the next generation of
agricultural scientists. Formula-based programs for research and
extension are continued at the 2002 level, and the budget provides an
increase of $2.4 million for higher education programs.
The 2003 budget for the Economic Research Service (ERS) is $82
million which supports the ongoing program of work and provides
increases for two initiatives. An increase of $2.7 million will support
the ERS share of the joint effort with the National Agricultural
Statistics Service (NASS) to improve the Agricultural Resources
Management Survey, known as ARMS, generating more dependable and
statistically defensible results and making results available through
web-based dissemination. This national survey of farms provides data
and analysis to characterize the economic conditions and rapidly
changing structure of the agricultural sector. ARMS is the primary
source of information about the financial condition, production
practices, use of resources, and economic well being of America's
farmers. As the principal source of data, ARMS makes it possible for
ERS to answer key questions from USDA policy officials, Congress,
Executive Branch officials, and other decision makers about the
differential impacts of alternative policies and programs across the
farm sector and among farm families.
An increase of $2 million will support the second initiative on the
effects of invasive pests and diseases on the competitiveness of U.S.
agriculture. The results of this initiative will provide information
that can be used to help guide resource allocation for efforts to
exclude and control invasive species. A major portion of this work will
be to assess cost effective means of the public sector in reducing
economic risks to U.S. agriculture from invasive species while
preserving economic gains from trade and travel.
The budget for NASS is $149 million which includes an increase for
four initiatives. An increase of $15.5 million is requested for the
cyclical change in statistical activities associated with conducting
the 2002 Census of Agriculture, with 2003 being the peak in the 5-year
cycle. NASS's portion of the initiative to improve ARMS is $4.6
million. In addition to improvements discussed previously, this funding
will support research efficiencies to integrate the ARMS program with
other data collection efforts. The NASS request also includes about $5
million in increases for additional computer security, for development
costs to move to electronic collection of data, and for development of
an annual locality based county/small area estimation program to
provide statistical data below the State level.
departmental management
The Departmental staff offices provide leadership, coordination and
support for all administrative and policy functions of the Department.
These offices are vital to USDA's success in providing effective
customer service and efficient program delivery. Salaries and benefits
often comprise 90 percent or more of these offices' budgets, leaving
them little flexibility to reduce other expenditures needed to continue
their operations. The 2003 budget proposes funding needed to ensure
that these offices maintain the staffing levels needed to provide
management, leadership, oversight and coordination.
These offices also have key responsibilities related to the
President's Management Agenda and other departmentwide and agency-
specific management reforms, which are crucial to making the Department
an efficient, effective and discrimination-free organization that
delivers the best return on taxpayers' investments. The 2003 budget
requests funding to achieve the following management priorities:
As a direct result of the events of September 11, the budget
request includes specific changes to increase the level of security and
emergency planning for the Department.
We will continue to streamline the Service Center agencies (FSA,
NRCS and RD) to improve efficiency and customer service. We will also
continue our efforts to provide electronic services to USDA customers.
A key element in these plans is the completion of a common computing
environment for the Service Center agencies and acceleration of our
efforts to acquire and use geographic information systems.
We will continue efforts to process employment and program civil
rights complaints in the Department in a fair and timely manner and
promote a working environment in which discrimination against employees
or customers is not tolerated.
We will continue to develop departmentwide administrative
information systems so that decisionmakers can receive timely and
reliable information on the Department's finances, people and
purchases. These systems will also make the Department's administrative
operations more efficient by eliminating redundant, stove-piped and
aging information systems. They are critical to the Department's
ability to achieve and maintain a clean opinion on its financial
statements and adequate computer security.
We will continue to strengthen our information security program to
better protect USDA's valuable information assets from intrusion and
theft. We will also develop an Enterprise Architecture, which is a key
planning and risk management tool for information technology
investments.
We will put more of the Department's work up for competition and
increase the use of performance-based contracting to generate savings
and efficiencies.
We will continue renovations of the South Building to ensure that
employees and customers have a safe and modern working environment.
We are proposing to fund rental payments to the General Services
Administration (GSA) in the budgets of agencies occupying GSA space
instead of a central account in order to hold USDA managers accountable
for the full cost of their programs.
The budget also provides increased funding for the Office of the
Inspector General to help it address an expanding workload and provide
active assistance to USDA agencies. It also provides for reengineering
audit and investigative activities, streamlining operations, and
increasing office efficiencies.
That concludes my statement. I look forward to working with the
Committee on the 2003 budget so that we can better serve those who rely
on USDA programs and services.
______
Biographical Sketch of Jim Moseley
Jim Moseley was sworn in as the deputy secretary by Agriculture
Secretary Ann M. Veneman on July 17, 2001.
As the deputy secretary, Moseley will oversee the day-to-day
activities of the U.S. Department of Agriculture, one of the largest
and most diverse departments in the Federal Government. USDA's mission
includes the management of traditional farm programs, private lands
conservation, domestic food assistance, agriculture research and
education, agricultural marketing, international trade, meat and
poultry inspection, forestry, and rural development programs.
Prior to this appointment, Moseley, an Indiana farmer with 32 years
of hands-on farm experience, was the owner of Ag Ridge Farms, which
specializes in grains, and managing partner of Infinity Pork, LLC,
which raises hogs. Both are located in Clarks Hill, Ind.
Moseley has played a key role in developing public policy for
agriculture, the environment, and natural resources conservation at the
state and national levels. From 1989-1990, he served as agricultural
advisor to the administrator of the U.S. Environmental Protection
Agency. Moseley previously served at USDA as the assistant secretary of
agriculture for natural resources and environment from 1990-1992. In
this capacity, he provided leadership to the Forest Service. and the
Natural Resources Conservation Service on a variety of issues including
endangered species, old growth forests, livestock grazing on public
lands, wetlands, and policy issues related to the conservation title of
the 1990 Farm Bill.
In 1997, he served as chairman of the industry negotiating team for
the National Pork Dialogue. Following the 1995 Farm Bill, Moseley
served as a consultant to the National Association of State Departments
of Agriculture, where he worked with producers and NRCS to develop
model resource management plans for farmers and ranchers
From 1993 to 1995, Moseley served as the director of agricultural
services and regulations for the State of Indiana at Purdue University.
He also served as a political analyst and member of the editorial board
of the Farm Journal Publications. Moseley has held membership in
numerous professional and academic organizations and has received many
awards and honors. In recognition of his service and commitment to
agriculture, he was voted the National Outstanding Young Farmer of
America for 1982.
Moseley was born in Peru, Ind. He holds a Bachelor of Science
degree in horticulture from Purdue University in West Lafayette, Ind.
Prepared Statement of Ira L. Hobbs, Acting Chief Information Officer,
Office of the Chief Information Officer
introduction
Mr. Chairman and members of the Subcommittee, the Department of
Agriculture--USDA--appreciates this opportunity to share with you our
recent progress and future plans to expand electronic government and
cost-effectively use information technology--IT--to improve customer
service and make employees more productive.
In line with the Clinger-Cohen Act, the Office of the Chief
Information Officer--OCIO--provides USDA agencies with cyber security,
IT investment, enterprise architecture, and telecommunications policy
guidance and oversight. The OCIO is responsible for managing the IT
component of the Service Center Modernization Initiative and leading
the Department's electronic government--e-Government--program. In
addition, we provide USDA agencies with department-wide data center and
telecommunications services, and desktop support for the Office of the
Secretary and the USDA National Appeals Division.
preparing for a changing environment
The Department faces a changing environment--one filled with new
challenges and opportunities such as consumer-driven agriculture,
increasing globalization, and advances in information and
communications technology. These trends, among others, are bringing
fundamental changes to the world in which the USDA operates and
fulfills its mission. Technology is reshaping our economy and in turn
our society. Agricultural production and rural communities are not
immune from these forces. What consumers, nonprofits, and businesses
are becoming accustomed to in terms of electronically enabled
convenience and improved service in the private sector, they are
increasingly demanding as citizens and partners from the public sector.
These trends are here to stay and the pace of innovation will only
continue to accelerate.
In order to remain relevant in this new economy, meet these
challenges, fulfill our social mission, and operate a results-oriented,
market-driven enterprise in line with Secretary Veneman's vision that
is outlined in our Food and Agricultural Policy, the USDA must embrace
this change.
As the stewards of the IT resources Congress provides USDA, my
office is working to help provide the increasingly complex information
technology tools that our customers and staff require, in a manner that
ensures our funds are invested wisely and protects the integrity and
confidentiality of the information we gather and store.
usda's fiscal year 2003 information technology budget summary
The Department's overall budget request for information technology
in fiscal year 2003 totals almost $1.7 billion in budget authority; a
$200 million increase over the $1.5 billion that USDA agencies are
planning to spend in fiscal year 2002. This request will fund IT staff,
hardware/software purchases, contractor services, telecommunications,
and other infrastructure expenditures. These IT resources support every
aspect of USDA's programs, from financial systems to program delivery
systems to the infrastructure for our field organizations. This request
represents about 3 percent of the total $52 billion proposed for IT
investments for the Federal Government.
A snapshot of USDA's overall request for IT shows almost 25 percent
of the proposed total, approximately $410 million, funds entitlements
that are distributed to the States in support of the Food Stamp and the
Women, Infants and Children programs--this includes Advanced Planning
Documents and Electronic Benefits Transfer Grants to States. The IT
budgets for the Service Center agencies, which include the Farm Service
Agency--FSA, the Natural Resources Conservation Service--NRCS, and the
Rural Development Mission Area--RD--agencies, total approximately $390
million. In addition to the separate agency budgets, the proposed
budget includes a request for about $130 million to support the Common
Computing Environment--CCE--infrastructure modernization of these
agencies. This combined total of about $520 million represents about 30
percent of the USDA total IT budget. Finally, the USDA Forest Service's
IT budget of about $347 million comprises another 20 percent of the
Department's total. USDA IT Capital Planning and Investment Control The
Department manages its IT funds through the IT Capital Planning and
Investment Control--CPIC--process. The Executive Information Technology
Investment Review Board--EITIRB--which is chaired by the Deputy
Secretary, is the central CPIC body that reviews, monitors and approves
the Department's IT investments. The EITIRB's review is required by
Congress and ensures that the Department's major IT investments are
aligned with its business processes and strategic direction, and that
the corporate impact of these investments is fully considered.
In support of the EITIRB, the OCIO continues to strengthen
management of the USDA's IT investments portfolio by tracking project
costs, schedules, risks and benefits, from all agencies, by providing
guidance throughout a project's life-cycle, and by developing and
providing CPIC and project management training for USDA IT managers.
As a result of these efforts to enable more informed and
intelligent investment decisions on IT capital acquisitions, the
President's first Management Scorecard rated USDA a ``yellow'' for
Enabling e-Government largely based on our strong IT CPIC performance.
This was one of only two ``yellows'' awarded government-wide to large
agencies.
strengthening information security
Last month, the Acting USDA Inspector General testified that ``one
of the more significant dangers USDA faces is a cyber attack on its IT
infrastructure, whether by terrorists seeking to destroy unique
databases or criminals seeking economic gain. The Department has
numerous information assets, which include market-sensitive data on the
agricultural economy and its commodities, signup and participation data
for programs, personal information on customers and employees,
agricultural research, and Federal inspection information ensuring the
safety of the food supply, as well as accounting data. The information
and related systems face unprecedented levels of risk from intentional
or accidental disruption, disclosure, damage, or manipulation.''
Today, USDA is only minimally prepared for a natural disaster or
cyber attack targeted to disrupt our critical IT infrastructure. In a
review of the Department's cyber security program required by Congress
in the Government Information Security Reform Act--GISRA, the USDA
Office of the Inspector General along with the OCIO found a number of
material IT security weaknesses at USDA. The fundamental cyber security
challenges to USDA include:
--Lack of senior management attention to addressing cyber security
vulnerabilities,
--Inadequate disaster recovery and business resumption capacity,
--Poor integration of information security into the Department's IT
capital planning process,
--Incomplete risk management and information systems security
planning,
--Inadequate information systems security awareness and training for
employees,
--Inadequate intrusion detection monitoring and incident reporting,
and
--Inadequate supervision over information technology contractor
provided services.
Despite these continuing challenges, with the resources provided by
Congress, we have made significant progress over the past year. For
example:
--A Cyber Security Advisory Council, consisting of senior executive
program officials and IT personnel from across the Department,
has been established to provide broad input into all aspects of
cyber security program and policy development.
--A comprehensive Cyber Security Architecture is being designed to
provide a much-improved level of network security for current
and future delivery of services over the Internet.
--Risk Assessments are becoming an integral part of IT management
within the Department. OCIO, together with USDA agency staff,
continue to develop standard tools and procedures for
performing these assessments.
--Departmental IT security-related policies and guidance have been
issued or drafted in areas such as mainframe security, incident
reporting, information systems security plan guidance, user ID
and password requirements, and privacy policy on the use of
customer information.
--More rigorous security requirements have been included in USDA's IT
CPIC process to ensure that plans for all new systems identify
specific security controls, costs, and schedules.
--Structured training courses are being provided for USDA information
security technicians and managers in a wide range of security
disciplines.
--New information security incident reporting procedures that require
an analysis of the incident as well as reports on corrective
measures where appropriate have been established.
--An Enterprise Agreement to provide all agencies with standard
information security tools has enabled the Department to better
collect and analyze information for risk prediction, risk
quantification and risk management.
In addition to these activities, the OCIO has evaluated and rated
the information systems security plans for each USDA agency. We are
currently providing our analysis of these plans to each agency head,
and requesting a remediation plan be developed to correct identified
information security weaknesses. We are also requiring each agency
undertake an independent risk assessment of their information security
program this fiscal year.
Similar to our review of agency security plans, the Office of
Management and Budget has reviewed USDA's information security program,
identified weaknesses, and requested the Department improve its overall
cyber security program. We have already begun revising our project plan
for the Department's cyber security program, and are working with the
agencies and OMB to ensure the plan balances OMB expectations with the
Department's priorities and capacities.
Your support of the Department's central cyber security program is
crucial to ensuring USDA is prepared to recover quickly should a
critical information system be rendered inoperable or unreliable due to
an unexpected catastrophe. For fiscal year 2003, the President's Budget
Request includes increases of:
--$5.5 million to implement an information survivability program to
minimize disruptions caused by attempted intrusions, natural
disasters, and terrorist attacks. While we continue to improve
our intrusion detection system, we recognize that no prevention
measures are perfect. Cyber security disaster recovery and
business resumptions tools, procedures, and policies must be
developed and tested for facilities and operating environments
that house USDA's mission critical information systems.
--$500,000 to establish the USDA Sensitive System Certification
Process to provide a standard and repeatable process for
evaluating the technical and non-technical security features of
an information system. The methodology is measurable and
results in documentation and certification activities that hold
system owners accountable for the security of their information
assets.
USDA is also cooperating with the White House Office of Homeland
Security as it develops and coordinates the implementation of a
comprehensive national strategy to secure the United States against
terrorist threats or attacks, including cyber attacks.
enterprise architecture
Mr. Chairman, to take our information and information technology
management to the next level, we need your support for our enterprise
architecture--EA--initiative. This initiative will enable us to better
organize and analyze our business processes, information needs, and
supporting technologies to create a more citizen-centered, results-
oriented, and market-based USDA.
We are focusing our efforts this year on the EA for a number of
reasons. An EA is a requirement of the Clinger-Cohen Act, and is the
key to better integrating our cyber security, e-Government, and
telecommunications programs. It will also enable us to coordinate
managing our IT resources in a way that serves our electronically
enabled citizens, while ensuring that our organization and processes
are documented and managed to accommodate the business needs of
citizens who are not able to access USDA electronically.
Further, OMB has identified the lack of a comprehensive EA as a
major risk to successful delivery of all IT programs within USDA.
Managers of IT projects currently under development typically have
little understanding of what the future IT environment will be like
when their system is finally deployed. Because an EA develops a shared
view of the future IT environment, agency project managers developing
IT programs and projects will have a clearer idea of the direction in
which they must move to align with the direction of the Department. In
recent reviews, the General Accounting Office has identified similar
concerns with other Federal agencies operating without an EA.
For fiscal year 2003, an increase of $15 million is requested to
establish the USDA-wide Enterprise Architecture. An EA that is
integrated with key IT management activities and processes at the
Department level will enable USDA to ensure that scarce resources are
spent wisely, and are aligned with a common vision for USDA's IT
future.
Building on our previous enterprise architecture efforts, we have
developed a plan that identifies the major goals, activities, tools,
and participants to implement an USDA EA. Our plan includes:
--Developing the architectural components at both the Department and
agency levels (e.g. information about business processes,
information collected, systems used to collect and use
information and the technology that supports the systems);
--Collecting this information in a central repository to model and
analyze the EA;
--Conducting training and awareness sessions to ensure that all EA
components contribute towards an integrated USDA architecture.
These sessions will target multiple audiences across the
Department including: program executives, IT executives,
architecture program managers and their teams, and agency
staff;
--Adding staff years to work with the agencies to ensure cross-
Departmental architectural consistency; and
--Integrating EA processes with other internal management processes
(e.g., IT investment decisions and information collection
reviews). The staff will work on architecture policy and
directives, planning and oversight of agency activities.
The Department's recent efforts to leverage our economies-of-scale
by negotiating enterprise licensing agreements provide a one tangible
example of the benefits to establishing an EA. Rather than having
agencies make individual purchases, during fiscal year 2001, USDA
entered into or renewed seven enterprise or multi-agency agreements for
hardware, software and services. These include agreements for cyber
security tools, Section 508 remediation software, office automation
products, and GIS software and services for the entire Department. We
estimate the cost saved by entering into these agreements at
approximately $240 million for the life-cycle of these products. In
fiscal year 2002, enterprise agreements already completed include
statistical analysis and enterprise resources planning software tools,
and software to support emergency response messaging. Additional
efforts are underway to complete or consolidate agreements for database
software tools, anti-virus software, and network routing and switching
hardware, software and support services. These agreements benefit the
entire Department by reducing staff required to support acquisitions,
streamlining training and support requirements, and reducing costs.
While we have made significant progress in establishing enterprise
agreements without the benefit of an EA, we can do much more once we
establish our architecture and are able to look across the Department
for additional opportunities. We expect these opportunities to come not
only from enterprise agreements for hardware, software and services,
but also from the ability to identify duplicate processes and to work
with agencies to develop shared processes and shared systems. Some of
this is already underway under the auspices of the e-Government
program, and will be enhanced by our EA.
A shared vision of our future business and IT environment, modeled
in the Enterprise Architecture, will ensure that we are selecting the
best mix of information and information technology investments to
deliver USDA's future programs and services.
service center modernization initiative--information technology
Mr. Chairman, the Service Center Modernization Initiative--SCMI--
remains among the USDA's highest IT priorities. This initiative, which
includes the Common Computing Environment--CCE, is a major cornerstone
of our modernization and technology improvement efforts. It is rapidly
breaking down the technology barriers of the old legacy systems in the
Service Center agencies to provide a common technology infrastructure
that enables use of modern processes, maximizes shareability of
information, supports electronic access by customers, provides better
and more efficient services, and supports our goal of one-stop service.
The CCE is the most visible and far reaching IT modernization at USDA.
The technology infrastructure will support about 50,000 USDA employees,
volunteers and partners over three mission areas delivering over $55
billion annually in services.
The CCE incorporates common data definitions, structures and
warehouses; open market office software; use of Geographic Information
Systems--GIS; use of the Internet and the adopting of modern
programming languages and scalable systems to ensure long-term
interoperability and support for current and future program delivery.
The Office of the Chief Information Officer continues to provide
direct management and oversight of information technology resources
provided by Congress under the CCE fund for this initiative. We rely
heavily on the IT leaders and personnel of the three partner agencies
working with OCIO executive and project management staff to plan and
implement the CCE. Employee unions and associations are also fully
involved and add valuable field insight to the process. Although this
process has served us well in the design, acquisition, and deployment
of the CCE technologies, long-term success will depend upon the
establishment of an integrated IT support staff to operate and maintain
the shared technology infrastructure.
Through the end of fiscal year 2001, about 70 percent of the
planned CCE technology investments were made and several reengineered
business processes were either deployed, or in the final stages of
testing. The standardization of the IT infrastructure is well under way
and will be completed within the next 18 months. The new infrastructure
is flexible and built around maximizing the ability to share
appropriate information both within USDA and with other Fderal, State
and local agencies, USDA customers and the private sector. Our progress
to date includes a number of significant accomplishments:
--An integrated technology architecture has been developed, tested
and piloted.
--An interagency IT management structure operating under OCIO has
been put into place to oversee the implementation of the CCE
along with an OCIO project management office.
--A Blueprint Plan for CCE has been developed.
--An Integrated Project Plan has been developed.
--Shared, integrated phone systems and local and wide area networks
have been installed.
--Wiring to support future technologies has been installed in local
offices.
--Internet access for most employees has been provided.
--A shared Interoperability Lab and test facility has been
established.
--About 45,000 modern/interchangeable and security capable
workstations have been acquired.
--Common office automation--word processing, spreadsheet, etc.--
software has been provided that is compatible with customer and
partner software.
--Over 9,000 modern and shareable printers have been acquired.
--A shared help desk support system has been established.
--Three Web Farms built around common technologies have been
implemented to support Web-based applications and e-Government
implementation.
--A common GIS Enterprise Software License has been acquired.
--Common security tools, data management approaches and configuration
management processes have been implemented.
--A migration platform--AS 400--for FSA has been acquired and
installed to support rewriting of COBOL applications to the new
CCE languages.
--Shared Network Servers to support common e-mail, remote systems
management, local data storage and security enhancements have
been acquired.
--Limited numbers of digital cameras and global positioning units
were purchased and contracts put in place for future
acquisitions.
As we have moved forward with the CCE, we have taken advantage of
market trends, enterprise license approaches and volume buying to
significantly reduce the cost of implementation. CCE contracts
typically result in substantial discounts off of prices paid by other
Fderal agencies. Total capital investment costs for the CCE are
currently projected to be almost 40 percent less than the low-end
estimate developed in the original business case. In dollar terms, that
is about $290 million in reduced costs. Additionally, as CCE initiates
contracts, other USDA agencies often participate, which increases
volume, reduces unit costs and moves all of USDA towards common
technology tool sets. A good example of this was the establishment of a
USDA-wide Enterprise License for GIS software which resulted in
extremely deep discounted pricing for the CCE, the Forest Service and
other USDA agencies.
During the current fiscal year a number of key activities are
planned which will take the CCE to 90 percent completion by the end of
the year. These activities include:
--Network Servers and remaining workstations purchased in fiscal year
2001 will be fully deployed thereby providing enhanced
security, a shared and robust e-mail system, ability to manage
and monitor IT systems from a central location and enhanced
local data capabilities.
--A GIS strategy will be updated and integrated with the government-
wide geospatial initiative underway through the
Administration's Quicksilver initiative, and all remaining CCE
architecture issues will be finalized.
--The Service Center telecommunications capabilities will be
significantly enhanced to support growing numbers of Web-based
applications and to meet e-Gov and e-File requirements.
--Shared application servers will be acquired and deployed to support
GIS and other new program applications.
--Investments will be made in data warehouse, data centers, disaster
recovery, security components and the Web farms to support
internal and external data sharing and electronic services.
--Employees will be trained in the new technologies.
Even as the new CCE technologies are being rolled out, the Service
Center agencies are working to retool their program applications and
create new shared applications that will run on the new infrastructure.
The Secretary recently announced the deployment of one of these--The
Service Center Information Management System--SCIMS--which is a shared
database of common customer information. All Service Center agencies
will use this common database, and customers will no longer have to
give name changes, address changes, etc., multiple times to participate
in different programs. Other reengineered applications such as the
customer service toolkit, a common land unit GIS application, natural
resources data gateway, an office information locator, a shared human
resource application and others have already been developed, tested,
and deployed on the CCE system. Many others are in development and
testing and will be deployed over the next several months. The CCE
provides the common infrastructure that enables these new and more
efficient applications.
Your continued support of this initiative is essential for
completion of the CCE and the timely, high-quality services that it
will help bring to USDA customers. For fiscal year 2003, the
President's Budget requests $133 million for the CCE account, which is
an increase of $73.8 million over the $59.4 million appropriated in
fiscal year 2002. This budget proposal includes in the central CCE
account not only the funding needed to complete and maintain the core
CCE technologies, but also a number of increases for the Service Center
agencies' specific needs to ensure that those activities are fully
coordinated. The fiscal year 2003 funding will be used as follows:
The $59.4 million base level funds will be used to complete the
acquisition and deployment of the core CCE infrastructure and begin a
regular ``refresh'' cycle of replacing CCE components as they reach the
end of their lifecycle. This will allow us to purchase all remaining
peripheral devices such as plotters, printers, GPS units, digital
cameras, etc., that are needed by field staff to fully optimize the use
of the CCE technologies. We will also replace the first 16,500 CCE
workstations purchased in late 1998 and, by continuing regular
replacement of aging equipment, avoid high maintenance costs and
obsolescence in the future.
The $73.8 million increase for specific agency needs will be used
for a variety of modernization costs including the acceleration of GIS
implementation, systems migration/modernization, shared applications,
increased telecommunications and other operating costs, security and
eGovernment related work. Specifically:
--$32.8 million will be used to acquire GIS imagery, digitize land
unit and natural resources information, build GIS data
warehouses, support GIS application development and train
employees in the application of GIS technologies to program
delivery. While the CCE provides the infrastructure to
implement GIS, the data applications and training are necessary
to fully utilize this capacity and provide the increased
efficiencies and better products that this technology will
support.
--$10.8 million will be used to continue FSA's modernization of its
Financial Management Information System--FMIS--and the Farm
Loan Program--FLP--system. These new centralized systems will
include electronic access by employees and customers.
--$10.2 million will be used for increased telecommunications costs
resulting from the move to more Web-based applications, central
databases, and e-Government activity. While the central Web-
based applications and databases are more efficient and allow
greater use, re-use and sharing of applications and data, they
do result in additional telecommunications needs and costs.
--$4.8 million will be used to continue implementation of the shared
Service Center Information Management System or SCIMS.
Additional features will be added to the application fielded
early this year and subsidiary systems will be linked to this
shared database. When fully implemented, this system will
provide immediate access to eligibility and payment limitation
information which will eliminate delays and allow for more
timely service.
--$4.0 million will be used for across-the-board SCA projects to
implement e-Government. This would be directed towards shared
applications and tools needed by all three agencies to
implement these activities.
--The remaining $11.2 million would be used for security, Web Farm
support, legacy systems operations and maintenance, and for
shared Service Center Modernization costs previously funded
under FSA with non-recurring funds.
The fiscal year 2003 budget request represents a significant
milestone for our modernization efforts. With it, we complete the
implementation of the long-term objective of having an integrated
technology infrastructure for our Service Center agencies. We will also
begin a regular refreshment of that infrastructure such that, never
again, do we allow the technology support of these agencies to reach
the outdated state of the stove pipe technologies that existed when we
began this effort. Additionally, we will expand the successful model
that we have used to manage the CCE to include similar oversight and
coordination of new agency specific IT activities that need to be
better integrated and leveraged for the benefit of our program delivery
and our customers.
electronic government
Electronic Government--e-Government--is about more than technology;
it is about fundamentally transforming how USDA delivers its
information and services. At USDA, this transformation is being driven
by the President's emphasis on expanding e-Government to improve
customer service, make employees more productive, and save taxpayer
dollars, and the Congress' mandate to action through legislation such
as the Government Paperwork Elimination Act and the Freedom to E-File
Act.
E-Government solutions are necessary for the Department to meet
many of the challenges we now face, which include:
--Transformations in industries that the USDA supports and regulates;
--The need to ``do more with less;''
--A new focus on market-driven policies and programs;
--An emphasis on results-oriented solutions that require unified
approaches to easily collaborate, share information and manage
the organization's knowledge; and
--Increasing expectations from customers, private and public sector
organizations and employees.
USDA's customer groups are currently online in impressive numbers.
According to the National Agricultural Statistics Service, 41 percent
of farmers are online; close to the 44 percent of the total U.S.
population that used the Internet in 2001--based on information from
Jupiter Research. And while Internet use by both low-income Americans
and rural residents lags behind other groups, Internet use by both
groups has grown quickly. Rural Internet use grew by over 70 percent
from 1998-2000, and low-income use has grown by 80 percent over the
past year--the fastest growth rate of any income group. Furthermore, 89
percent of all children have Internet access at home or school. The
statistics are sited from the Current Population Survey/August 2000,
U.S. Department of Labor/U.S. Census Bureau.
Similarly, USDA's major partner organizations have pervasive
Internet access. Ninety-eight percent of research and academic partners
are online and 90 percent or more of banks, insurance companies,
governments, and major agribusinesses are online as well.
To meet growing customer demand, several USDA agencies are already
implementing innovative e-Government initiatives. USDA is considered a
government pioneer in providing some information and services--such as
benefits, food safety information for consumers, and loans--
electronically through customer cards/electronic benefits transfer
(EBT), call centers, and the Web. The USDA Meat and Poultry Hotline,
the Agriculture in the Classroom educational partnership initiative,
the Unified Export Strategy and Laboratory Electronic Application for
Results Notification Web-based applications are just a few examples of
USDA e-Government successes.
Building on this foundation, USDA has launched a Department-wide e-
Government Program that is managed by an interagency e-Government
Executive Council, under the leadership of the Deputy Secretary and the
OCIO. Chaired by USDA's recently named Associate Chief Information
Officer for e-Government, the Executive Council is finalizing an e-
Government strategic framework that incorporates the vision, goals,
marketing, and tactical activities to support our transition away from
solely traditional paper-based processes and single-agency service
delivery approaches. USDA's e-Government Strategic Plan establishes a
comprehensive vision and direction for the Department and its agencies
for the next 5 years (fiscal year 2002-2006). The Strategic Plan was
developed to:
--Incorporate and align e-Government with annual performance and
business operating planning and budgeting processes;
--Build on USDA's current capabilities and efforts;
--Share USDA best practices;
--Break down organizational silos by taking a citizen-centered view
of the delivery of our programs and services;
--Avoid redundant approaches and save money by looking for
opportunities to unify systems and collaborate across USDA
agencies, enterprise-wide and with other Federal departments,
including the ``Quicksilver'' initiatives under the auspices of
Office of Management and Budget;
--Prioritize opportunities, devoting resources to opportunities with
the largest impact; and
--Create a sense of ownership and shared vision for the Department as
a means to fostering cultural change.
Through the cooperative efforts of USDA's e-Government leaders in
all mission areas, we are implementing the USDA e-Government Strategy.
We are identifying key interdepartmental, enterprise-wide, cross-
mission area and cross-agency opportunities for achieving USDA's e-
Government goals and objectives, including USDA ``smart choices''--
projects which will begin our journey to achieving USDA's e-Government
goals and those of broader government-wide efforts.
Integrated into the plan is USDA's compliance with the Government
Paperwork Elimination Act. Further, progress made by the Service Center
agencies in addressing the requirements of the Freedom to E-File Act
during the first quarter of fiscal year 2002 includes deployment of a
large portion of the technology required for agricultural producers to
access and submit information to the Department via the Internet. The
Risk Management Agency approved the E-File implementation plans for 17
of the 18 crop insurance providers.
Realizing the Department's vision and achieving USDA's e-Government
goals will require executive leadership and support, the resources to
make significant infrastructure and technical improvements,
participation from USDA's partners, and most of all, the commitment and
hard work of all USDA employees.
it workforce planning
Implementing e-Government solutions and managing our IT resources
effectively will require recruiting and retaining highly skilled IT
employees. Towards this end, the USDA IT human resources communities
continue to collaborate to improve the professional development of
USDA's IT workforce. Two specific initiatives underway include the
analysis of a survey to assess the core competencies required by USDA
executive and senior IT managers, and the implementation of the new
Office of Personnel Management IT job classification standard to better
recruit employees with the skills USDA requires to deliver programs
today and into the future.
ocio working capital fund activities
The OCIO manages the USDA National Information Technology Center--
NITC--headquartered in Kansas City, Missouri, with a software
development facility in Ft. Collins, Colorado, and a support office in
Washington, D.C. The NITC, with a $56 million budget funded by USDA's
Working Capital Fund, provides innovative, cost-effective and secure
information technology solutions to support the specific missions of
USDA's agencies. NITC also provides computer services to the Federal
Aviation Administration, the General Services Administration, and other
government clients on a reimbursable basis.
The OCIO also operates the Department's long distance
telecommunications network, which like the NITC, is funded by the USDA
Working Capital Fund. Working in collaboration with the agencies, we
are redesigning this network to ensure it provides provide cost-
effective, secure, and reliable services to USDA programs 25 hours a
day, 7 days a week.
conclusion
Mr. Chairman, members of the Committee, the Department of
Agriculture faces critical challenges as it transitions into this new
e-Government era of providing services to our customers online. To meet
these challenges, we are strengthening our Cyber Security program to
better protect our growing information assets, and we are coordinating
a Department-wide e-Government effort to ensure customers and staff can
easily access and use these new Internet-based services.
We are also focusing on the Service Center Modernization
Initiative, which will bring USDA's county offices into the 21st
century while reducing the burden on our customers. The Common
Computing Environment is key to effectively modernizing the services we
deliver to farmers, ranchers, and other customers of our Service Center
agencies. This effort continues to be among the Department's highest
information technology priorities.
Finally, by strengthening the overall management of USDA's IT
resources through the development of an Enterprise Architecture, we
will be well on our way to realizing the benefits envisioned in the
Clinger-Cohen Act. We ask for your support for these initiatives, and
look forward to working with you in the Congress to achieve these
important objectives.
______
Prepared Statement of James Michael Kelly, Acting General Counsel,
Office of the General Counsel
introduction
Mr. Chairman and members of the Subcommittee, I am pleased to have
this opportunity to provide you with an overview of our agency and to
address some of the current activities and issues facing the
Department.
mission
The Office of the General Counsel (OGC) is the law office for the
Department. As an independent, central agency within the Department,
OGC provides legal advice and services to the Secretary of Agriculture
and other officials of the Department of Agriculture with respect to
all USDA programs and activities.
organization
OGC's services are provided through 12 Divisions in Washington and
18 field locations. The headquarters for OGC is located in Washington,
D.C. The Office is directed by a General Counsel, a Deputy General
Counsel, a Director for Administration and Resource Management, and six
Associate General Counsels. The attorneys located in headquarters are
generally grouped in relation to the agency or agencies served. Our
field structure consists of five regional offices, each headed by a
Regional Attorney, and 13 branch offices. The field offices typically
provide legal services to USDA officials in regional, State, or local
offices.
current activities and issues
international affairs and commodity programs
During fiscal year 2001, OGC provided and, in 2002 continues to
provide, a significant amount of assistance with respect to commodity
loan, producer income and production adjustment programs authorized by
various statutes, including the Agricultural Adjustment Act of 1938,
the Commodity Credit Corporation (CCC) Charter Act, the Food Security
Act of 1985, and the Federal Agriculture Improvement and Reform Act of
1996. The assistance provided during the past fiscal year also extended
to a number of ad hoc programs provided in several acts, primarily the
Agriculture, Rural Development, Food and Drug Administration, and
Related Agencies Appropriations Act, 2001, and Public Law 107-25. This
required extensive review of, and assistance in, drafting numerous
regulations and program documents for these new programs which included
assistance for producers of cottonseed, tobacco, dairy, oilseeds,
peanuts, honey, wool and mohair, and livestock.
In addition, recent legislative efforts also produced extensive OGC
involvement in rule-making and other program efforts related to: (1) a
disaster program for producers of commodities affected by adverse
weather conditions; (2) new provisions to implement the revision of the
United States Warehouse Act; (3) the development of new programs to
help encourage the production of wheat gluten and related products; (4)
a Payment-in-Kind (PIK) diversion program to encourage farmers to
divert acreage from sugar production in return for a payment from CCC
from its supplies of excess sugar; (5) assistance to producers for
losses of water in the Klamath Basin region; and (6) a potato diversion
program. In addition, OGC attorneys continued to be involved in the
handling of the Starlink corn crisis by assisting in the establishment
of a program to purchase tainted seed corn in order to reduce the
amount of Starlink corn in production in 2001. OGC also provided
substantial assistance to the Foreign Agricultural Service (FAS) and
the Farm Service Agency (FSA) with respect to legislative proposals to
streamline and simplify commodity acquisitions for use in various
foreign and domestic commodity programs.
With respect to FAS, OGC has been involved in the implementation of
a number of major international trade and foreign assistance
initiatives. During fiscal year 2001, OGC was involved in: (1) the
current round of World Trade Organization (WTO) Agriculture Agreement
negotiations; (2) negotiations to create a Free Trade Area of the
Americas; and (3) providing assistance relating to the Codex
Alimentarius Commission. OGC attorneys participated in various WTO
activities including consultations, panel considerations, appeals, and
arbitrations involving various trade disputes. These involved: (1)
Korea's dual retail system for beef imports; (2) Chile's price band
system and safeguard measures relating to certain agricultural
products; (3) ensuring the European Union's compliance with the WTO
decision striking the ban on imports of meat produced with growth-
promoting hormones; (4) Japanese phytosanitary issues; and (5) Canadian
dairy export subsidies and access for U.S. products. OGC continues to
be actively involved in other FAS program areas such as providing legal
advice for the export credit, supplier credit, and facilities guarantee
programs. OGC was extensively involved in negotiations on export
credits and credit guarantees in agriculture that took place under the
auspices of the Organization for Economic Cooperation and Development.
In addition, OGC has been heavily involved in the interagency process
relating to the liberalization of U.S. sanctions on trade in
agricultural commodities and products. During the past year, OGC has
also been involved in the implementation of a large number of foreign
assistance agreements under which agricultural commodities are donated,
including surplus agricultural commodities acquired by CCC. The
implementation of these agreements involves extensive review of draft
agreements, commodity procurement, ocean transportation issues, and
cargo loss and damage claims. In the area of international food
assistance, OGC reviewed and helped draft numerous agreements with
private voluntary relief organizations, the World Food Program of the
United Nations, and various foreign governments. This assistance
included a combination of donations and concessional credit sales of
grains, oilseeds, and other U.S. agricultural commodities. OGC also
assisted the Department of Justice in pursuing admiralty claims for
cargo loss and damage arising in connection with food aid shipments and
defended the Department in a number of lawsuits brought by shipping
companies that were challenging contracts for the ocean transport of
the food aid. Fiscal year 2001 and 2002 activities also include
implementation of the President's Global Food for Education Initiative
under section 416(b) of the Agricultural Act of 1949 and consulting
with Congressional committees on legislative changes to this activity
and food aid authorities generally.
food and nutrition division
With respect to USDA's domestic food assistance programs, OGC has
been heavily involved in efforts related to the review of proposed
legislation and the implementation and enforcement of new legislation
aimed at welfare reform and other program improvements, as well as the
ongoing program integrity and compliance initiatives. We expect the
demand for legal services in connection with these activities to remain
constant in fiscal year 2002 and 2003.
More specifically, during this past year, OGC attorneys worked
closely with the Food and Nutrition Service (FNS) to provide legal
review of major Food Stamp Program regulatory amendments to implement
provisions of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (PRWORA) (as amended by the Omnibus
Consolidated Rescissions and Appropriations Act of 1997), the Balanced
Budget Act of 1997, the Agricultural Research, Extension, and Education
Reform Act of 1998 and the Agriculture Risk Protection Act of 2000.
Extensive legal assistance was also provided with respect to
implementation of a provision of the William F. Goodling Child
Nutrition Reauthorization Act of 1998 which provides Child and Adult
Care Food Program (CACFP) benefits to a new group of eligible
participants (i.e., at risk youth in after school programs). OGC also
played a significant role in drafting legislation to clarify the
Secretary's authority to make grants and provide statutory waivers for
demonstration projects designed to improve the delivery of nutrition
benefits in the Food Stamp Program.
In fiscal year 2001, OGC provided legal assistance in the
development and review of proposed Farm Bill legislation which would:
provide for transitional food stamp benefits for families moving off
the welfare programs for up to 6 months following the cessation of a
household's cash assistance payments under the Department of Health and
Human Services' Temporary Assistance to Needy Families program;
continue the supply of commodities to the Emergency Food Assistance
Program and expand the use of accompanying administrative funds to
cover storage of commodities prior to distribution by State and local
authorities; establish the Hunger Fellowship Program designed to
develop and encourage talented individuals to initiate and administer
solutions to the hunger problem nationally and internationally; exclude
from the household income calculation in the Food Stamp Program the
housing allowances provided to troops and their families living in
private housing provided by the military on or near military bases;
extend the Senior Farmers' Market Nutrition Program; and provide free
fresh fruits and vegetables for consumption outside regular school meal
service periods by students at elementary schools through a pilot
program in a number of localities. OGC also reviewed proposed
legislation to amend the PRWORA to provide Food Stamp benefits for
qualified alien children. The proposed legislation would also amend
PRWORA to provide that working immigrant families qualify for Food
Stamp benefits after working sixteen qualifying quarters as opposed to
forty qualifying quarters of coverage (as defined under title II of the
Social Security Act), as currently required by PRWORA.
During fiscal year 2001, OGC assisted in the defense of several
legal challenges to the domestic food assistance programs. Among other
issues, Litigation was brought regarding State implementation of
certain welfare reform provisions initiated by PRWORA. The challenge
concerned the Secretary's interpretation of provisions in PRWORA
affecting the Food Stamp Program eligibility of Micronesians living in
the United States. Other challenges were brought concerning: the manner
in which an FNS administrative review was conducted in a matter
involving a determination of serious deficiency of a sponsor in the
CACFP based on an audit done by Office of Inspector General (OIG);
USDA's discretion in permitting flexibility in the implementation by
State food stamp agencies of the provisions of a final rule; settlement
negotiations of a class action lawsuit involving State Agency referral
of Food Stamp Program recipient claims for collection through the
Treasury Offset Program of the U.S. Department of the Treasury; and,
again with respect to the CACFP, OGC has been working with counsel for
several States in pursuing Federal and State administrative claims
arising from audits performed by OIG. Finally, OGC provided significant
legal assistance in seeking judicial recognition of the credibility and
weight of evidence derived solely from data generated through the Food
Stamp Program electronic benefit transfer system in cases involving the
withdrawal of the authorization of retail food stores to accept and
redeem food stamps.
With respect to program regulations, OGC reviewed a substantial
final rule implementing the Non-Citizen Eligibility and Certification
Provisions of PRWORA, which involved numerous significant modifications
in the Administration of the Food Stamp Program. OGC also provided
significant legal advice regarding two rules changing the National
School Lunch and School Breakfast Programs to address foods of minimal
nutritional value and to require participating schools to identify
blended beef, pork, poultry and seafood products. Substantial legal
guidance was also provided in connection with the rule providing for
the treatment of food delivery systems under the WIC program.
OGC frequently assisted in furthering the program integrity
objectives of the nutrition assistance programs. The Office worked
closely with Department officials engaged in evaluating and sanctioning
States for their performance in administering the Food Stamp Program
under that Program's quality control system.
OGC also provided formal and informal advice on a number of issues
affecting the efficient Administration of the food assistance programs.
The Office provided counsel regarding the legal issues affecting the
consideration of demonstration project proposals to privatize
certification functions in the Food Stamp Program. OGC also provided
legal advice on the limitations applicable to the waiver of single
State agency requirements as authorized under the Intergovernmental
Cooperation Act of 1970. Finally, OGC worked diligently in providing
legal advice to assist in the efforts resulting in emergency food
assistance for victims of the September 11 terrorist attacks in New
York.
regulatory and marketing programs
The Department's food safety programs and responsibilities are
exceptionally important to American agriculture and to American
consumers. OGC attorneys are committed to providing the most effective
and comprehensive legal assistance possible to these critical programs.
We will continue to work closely with the Food Safety and Inspection
Service as it addresses an array of important issues over the next few
years.
We will provide the strongest possible support to the agency, in
light of the court ruling in the Supreme Beef litigation, to ensure
that meat, poultry, and egg product safety are not adversely affected
by that decision. OGC participates fully in the agency's continuing
work to enhance the implementation of the Hazard Analysis and Critical
Control Points (HACCP)/Pathogen reduction regulations and on the HACCP-
based inspection models project (HIMP) which is testing new inspection
models that the agency believes will lead to more effective inspection,
improved food safety, and better use of agency resources. We have
worked closely with the Department of Justice over the last year to
defend the HACCP regulations and FSIS' statutory authority to use the
HIMP project's inspection models in a lawsuit brought by the American
Federation of Government Employees, the Community Nutrition Institute,
and several FSIS meat inspectors. The validity of the revised HIMP
project was approved by the Federal district court and the case was
appealed for a second time by the plaintiffs. The matter case was
argued in January 2002, and we are awaiting the court of appeals
decision.
OGC also provides comprehensive legal support to FSIS' rulemaking
activities. Our attorneys work with FSIS staff from the earliest stages
of these agency policy development activities, serving on an array or
agency working groups and regulation development teams, involved with
such projects as the BSE Risk Assessment Working Group, the inspection
of imported exotic species, an egg products inspection task force, and
a performance standards working group. We have also assisted in the
development and preparation of the agency's many rulemakings that have
included, over the last year, proposed requirements for Listeria
control, procedures for notification of new technologies, the revision
of chilling time and temperature requirements for ready-to-cook
poultry, and establishment of mandatory inspection of ratites and
squab.
We also devote considerable resources to the agency's field
operations activities and to FSIS' compliance and enforcement programs.
We have worked with the agency in its continuing efforts to improve its
recall assessment procedures, to enable the sharing of recall
information with State and other Federal agencies, and to improve the
use of epidemiological evidence in recall situations. OGC attorneys
also partner very effectively with agency officials, with the Office of
the Inspector General, and with the Department of Justice to ensure the
prompt and successful prosecution of criminal, civil, and
administrative cases involving violations of the meat, poultry, and egg
products inspection laws and to prevent the distribution of
adulterated, misbranded, or uninspected products.
Safeguarding the animal and plant health of the United States is a
matter of paramount importance to the Department. OGC has partnered
effectively with the Animal and Plant Health Inspection Service (APHIS)
for many years in carrying out these program responsibilities and will
continue to do so in the future. APHIS' responsibilities have become
vastly more complex, requiring not just effective safeguarding measures
to prevent the introduction and dissemination of animal diseases and
plant pests, but programs to ensure the safe and smooth entry of people
and goods into the United States, and the facilitation of agricultural
trade in compliance with our international obligations. Similarly,
OGC's responsibilities and the demands for timely and effective legal
support of APHIS inspection and regulatory activities have increased as
well. A new Plant Protection Act was passed in June 2000. We have
worked closely with APHIS on the implementation of the new law. In
addition, we have been extensively involved in APHIS' response to the
safeguarding review of its Plant Protection and Quarantine activities
conducted by the National Plant Board, and will be required to dedicate
significant resources to APHIS as it considers and implements
improvements based on a similar review of its animal health and disease
prevention programs.
We have an exceptional relationship with APHIS program officials
and with their regulation development staff, and we have worked very
closely with them in connection with an array of voluntary cooperative
programs and rulemaking activities that included rules for the
regulation of sheep and goats for scrapie, rules dealing with bovine
tuberculosis, pseudorabies in swine, and with respect to plant health
issues, regulations for plum pox, oak mortality syndrome, citrus
canker, Karnal bunt, noxious weeds, and the glassy winged sharpshooter.
In connection with the facilitation of international trade, our
attorneys provided effective support for APHIS activities related to
the development of rules that will allow agricultural commodities to
enter U.S. markets while ensuring that America's agricultural resources
are not impaired and that plant and animal health in the U.S. are not
comprised. These regulations have covered requirements for an array of
commodities ranging from fruits and vegetables to animals and animal
products. They include the regulation of animals and animal products
designed to enhance the barriers to bovine spongiform encephalopathy
(BSE) or Mad Cow Disease, and to prevent the introduction of foot-and-
mouth disease.
We also dedicated substantial resources to defending APHIS program
activities and regulations in the Federal courts, including a challenge
to the Department's authority to order disposal of sheep in Vermont
which were diagnosed with a transmissible spongiform encephalopahty
(TSE), and challenges by domestic producer groups to APHIS regulations
allowing the importation of citrus from Argentina and avocados from
Mexico. We also handle a broad caseload of administrative cases on
behalf of APHIS to enforce its regulations. These cases have included
prosecutions for violations of the standards for accredited
veterinarians, the illegal importation of plant and animal products,
violations of the regulations governing the interstate movement of
various plants, animals and plant and animal products, and the
falsification of phytosanitary certificates.
During fiscal year 2002, OGC anticipates expending substantial
resources in connection with the Horse Protection Act program. OGC
attorneys serve as agency counsel in administrative enforcement actions
brought under this statute. In fiscal year 2001, OGC initiated 30
enforcement cases, and we expect to initiate approximately the same
number of cases in 2002. OGC will also continue to provide assistance
and counsel to APHIS in connection with the training of Veterinary
Medical Officers and in connection with issues relating to APHIS'
multi-year Operating Plan for the horse show industry.
OGC provided significant legal services to APHIS in connection with
enforcement of the Animal Welfare Act (AWA). In fiscal year 2001, OGC
initiated 57 administrative enforcement cases and we expect fiscal year
2002 referrals to remain at or exceed that level. We also provided
assistance to APHIS in a number of rulemaking dockets concerning marine
mammals held in captivity, confiscation of suffering animals, licensing
requirements for applicants, and guidelines for handling dangerous
animals. OGC attorneys also provided training to APHIS personnel in
connection with the AWA program.
In the past year, OGC has provided extensive legal services to the
Agricultural Marketing Service (AMS) in various matters and will
continue to work closely with AMS in the year ahead. OGC continues to
provide assistance in rulemaking and related litigation involving Class
III and IV milk pricing. A recommended decision was issued in November
2001 and it is anticipated that a final rule will be issued in early
2002. OGC also assisted AMS in several regional hearings to review
pooling standards in milk orders and these will continue in fiscal year
2002.
OGC has been heavily involved with research and promotion program
issues. As a result of the Supreme Court's decision in United States v.
United Foods, Inc., which held that the imposition of mandatory
assessments upon handlers of fresh mushrooms to fund generic mushroom
advertising violated the First Amendment because it required handlers
to subsidize commercial speech with which they disagreed, a
proliferation of litigation has occurred involving challenges to other
programs. Administrative challenges to milk, watermelon and honey
research and promotion programs are currently pending. In addition, two
cases challenging the beef promotion program, and one challenging the
pork promotion program, are pending in the U.S. District Courts, and
three others, filed by beef importers, are pending in the U.S. Court of
International Trade. There is also an administrative challenge to the
advertising program conducted under the California tree fruit marketing
order. In addition to the litigation involving the constitutionality of
these programs, OGC worked closely with the Agricultural Marketing
Service in connection with development and publication of proposals for
new programs for avocados and lamb.
OGC continues to assist AMS in connection with the implementation
of the Organic Standards program. The final rule became effective
February 20, 2000, and the program will be fully implemented October
21, 2002. During this implementation period, OGC has provided and will
continue to provide legal advice and assistance on numerous issues such
as peer review panel procedures, treatment of non-covered agricultural
products, the provision of reasonable security, and equivalency issues.
In addition, AMS will need to conduct rulemakings in connection with a
number of issues which were not covered in the previous rulemaking, and
OGC will provide assistance in connection with them.
In the Trade Practices area, we provide legal services under the
Packers and Stockyards Act (P&S Act), the Perishable Agricultural
Commodities Act (PACA), and the Capper-Volstead Act and provide the
liaison for the Department under the Memorandum of Understanding
between the Department, the Federal Trade Commission and the Department
of Justice on competition issues. Under the P&SA, the attorneys of the
Trade Practices Division file administrative complaints to enforce the
provisions of the statute, requiring prompt payment for livestock and
poultry and ensuring that livestock auction markets and dealers are
solvent, provide accurate weights and measures, and account accurately
to sellers and producers of livestock. Of special note this year under
the P&S Act, we litigated two enforcement cases against large packers
alleging violations of the Act. Section 202 of the Packers and
Stockyards Act makes it unlawful for any packer to engage in any
unfair, unjustly discriminatory or deceptive practice. Our complaint
against Excel Corporation alleges that the packer engaged in an unfair
or deceptive practice when it changed the formula by which it
calculated lean percent in slaughter hogs, a calculation that directly
affected the price the packer paid to producers, without telling
producers of the change. As a result of the change, the packer paid
lower prices to producers for 80 percent of the hogs it purchased. A
decision in the case was handed down on February 7, 2002 in which the
Administrative Law Judge found that Excel had violated the P&S Act and
the regulations and issued a cease and desist order but did not assess
a civil penalty. The Department plans to appeal this decision to the
Judicial Officer. In the second case against a large packer, the
complaint alleged that Farmland National Beef Packing Company, L.P.
(Farmland) subjected a feedlot to an unreasonable prejudice or
disadvantage by retaliating, changing its buying practices (and failing
to buy at all), after the feedlot manager criticized the packer in a
letter to a farm journal. The Farmland case settled for a payment by
Farmland of $90,000.
As a result of a fiscal year 2000 GAO report recommending changes
in P&SP's investigation procedures in competition cases, OGC has agreed
to work closely with P&SP on the process by which its investigations
are planned and implemented and to assign attorneys to work with agency
investigators in the initial stages of case development and
investigation. Congress provided additional resources to OGC for the
staffing necessary to provide these additional legal services. OGC
hired three additional attorneys and has begun to participate in the
early stages of P&SP's competition case investigations, assisting P&S
with the review of its competition investigation work plans, traveling
to the field offices to meet with investigation teams and providing
whatever legal services are necessary as the investigation proceeds.
OGC has provided significant legal resources to the PACA program
this year, with an especial emphasis on cases arising out of Operation
Forbidden Fruit, the investigation and indictment of a number of
Federal inspectors and produce wholesalers for altering inspection
documents as a result of bribes. The attorneys of the Trade Practices
Division file administrative complaints against dealers, brokers or
commission merchants who must be licensed to buy and sell fruits and
vegetables in interstate or foreign commerce. The administrative
complaints enforce the provisions of the Perishable Agricultural
Commodities Act (PACA) which requires prompt payment, accurate
accounting and compliance with contractual obligations. The PACA
includes not only a disciplinary program involving suspension or
revocation of license or civil penalties for violation of the Act, but
also a reparation program. The basis of the reparation program rests
upon section 5(a) which makes a violator of any part of section 2
liable to the injured party for the full amount of damages caused by
the violation. This liability may be enforced by suit in any court of
competent jurisdiction, or by complaint to the Secretary. A complaint
to the Secretary initiates a reparation proceeding in which both
parties have opportunity to make an evidentiary record, and have their
dispute determined by officials of this Department.
In connection with the Hunts Point ``Operation Forbidden Fruit''
convictions, approximately 800 reparation complaints were filed in
which the complainants allege that they have been defrauded as a result
of bribes paid by Hunts Point firms to Federal inspectors to issue
inspection certificates falsely showing poor quality produce. The Hunts
Point firms typically used these certificates to negotiate downward
price adjustments with their suppliers. Usually, the suppliers would
then innocently negotiate similar adjustments with their suppliers all
the way back to the producers. Approximately100 complaints are still
pending, and many of the complaints are against innocent intermediate
firms. The reparation hearings are presided over by attorneys of the
Trade Practices Division and all decisions, whether based on
documentary proceedings or after hearing, are reviewed and approved by
Trade Practices Division attorneys. Also in connection with ``Operation
Forbidden Fruit'' this year the Division filed disciplinary cases
against the first of several produce firms whose employees made
payments to Federal inspectors. The complaint alleges that the firm
(which is responsible for the acts of its employee) made payments and
false statements about the condition of the produce it received in the
altered inspection certificates and those statements constitute false
or misleading statements for a fraudulent purpose in violation of the
PACA. The complaint seeks to revoke the PACA licenses of the company.
Attorneys in the Trade Practices Division continue to act as
liaison to the DOJ and the Federal Trade Commission on competition
issues, pursuant to the Memorandum of Understanding between the three
agencies. OGC expedites the provision of data or expertise to the DOJ
on agricultural issues as DOJ or the FTC investigates firms or reviews
mergers or acquisitions of agricultural businesses. OGC is also working
closely with the FTC and DOJ in their participation in the training of
investigators and economists of the Packers and Stockyards Programs in
investigative techniques and case preparation as recommended by the
September GAO report on P&SP's investigation of competition cases.
rural development
OGC also provides legal services to USDA agencies which manage some
of America's largest loan portfolios. OGC continues to be heavily
involved in debt collection, housing and farm foreclosures with many
farm debts going back to the emergency loan program of the 1980's, and
civil rights matters affecting the Farm Service Agency's (FSA) farm
loan programs. OGC is assisting the Department of Justice in defending
several putative multi-million dollar class actions for damages brought
by former Mexican agricultural and railroad workers seeking refunds of
their savings fund for work from 1942 through 1964. We continue to
provide assistance to FSA and the Rural Development mission area in
implementing the Debt Collection Improvement Act of 1996, specifically
involving credit reporting, electronic transfer of funds, offset, and
cross-servicing. OGC continues to defend several lawsuits involving
hundreds of Rural Housing Service (RHS) multifamily housing projects
whose owners want to prepay their loans and thereby remove a
significant number of low income housing units from rural America.
OGC continues to work with the Rural Business-Cooperative Service
(RBS) in reviewing their cooperative agreements and in improving their
cooperative agreement process. During the past, year we assisted RBS in
establishing their new Value Added Development Grant program and will
continue to assist them in further implementing this program. We are
working to resolve an increasing number of major defaults on Business
and Industry loans. We also continue to work with the RHS in
implementing the grant program for agriculture and seafood processor
workers authorized under Public Law No. 106-387.
Also in the Rural Development area, OGC successfully
assistedconcluded assistance to RHS, in conjunction with the Department
of Housing and Urban Development and the Department of Veterans
Affairs, to streamline the housing loan application process for Native
American borrowers on Indian reservations. OGC expects to continue to
work closely with RHS to overcome obstacles to single family housing
loans on Indian reservations.
Implementation of the Agriculture Risk Protection Act of 2000 has
increased the responsibilities of the Risk Management Agency (RMA).
Compliance efforts have been enhanced requiring extensive legal service
to develop administrative cases against producers, agents, loss
adjusters, and reinsured companies. Millions of dollars are now
available for contracting and reimbursement for research and
development and risk management education, all of which will require a
significant time for legal review. RMA continues to implement new risk
management programs developed by the private industry to expand the
number of producers covered under that safety net, which will also
require a significant time for legal review as such products go through
the Board of Director approval process.
We continue to work with Department officials to reduce regulatory
burdens, eliminate obsolete and unnecessary regulatory requirements,
and streamline regulations, particularly in the areas of rural, farm
and utility lending. For example, OGC has worked extensively with FSA
over the past year to rewrite all of their farm loan programs loan-
making and servicing regulations to reduce regulatory burdens where
possible and to clearly state agency policy. We are assisting RHS in
streamlining and rewriting loan-making and servicing regulations for
their single and multiple family housing loan programs, their Community
Facilities loan program and their environmental regulations affecting
these programs. Our efforts on these long-range projects will continue
into fiscal year 2003.
The need for legal services in connection with programs of the
Rural Utilities Service (RUS) grew significantly during fiscal year
2001 as a result of an increase in the funding in all major program
areas, the implementation of a number of fundamentally new RUS
financial assistance programs, and the impact of the continuing changes
in the electric and telecommunications industries on program structure
and policies.
The RUS electric program approved and OGC documented loans and
guarantees totaling $2.6 billion to 226 borrowers. The electric loans
included 15 loan guarantees totaling $1.7 billion for generation and
transmission (G&T) facilities, a $700 million increase over the
preceding year and the highest G&T loan level in more than 15 years. At
the end of fiscal year 2001, there remained a backlog of some 20 G&T
applications seeking $4.0 billion in funding. The need for legal
services is expected to grow over the next few years as the demand for
power supply financing continues to increase. Because of the pressing
need for new generation, a number of borrowers have sought to arrange
for bridge financing pending action by RUS. Consequently, OGC
assistance helped develop new security arrangements for bridge lenders.
The power supply projects typically involve very complex corporate,
financial and security structures negotiated on a case-by-case basis.
For example, RUS is now funding special purpose entities under project
financing arrangements. The transactions are very different from the
historical model used in the RUS program and, consequently, legal
documentation must be custom-crafted to fit each project. The projects
are further complicated as RUS and borrowers addressed problems
associated with deregulation, unbundling, customer choice, and the
growing uncertainty and risk in the power supply market. OGC has
provided considerable legal services to RUS in several projects
involving financially troubled borrowers, including the restructuring
of debt and security arrangements for a power supply borrower in a
manner designed to enhance recovery of RUS loans, improve operations of
the borrower in the increasingly competitive industry, and facilitate
the construction of new power supply facilities.
OGC assisted the RUS electric program in the promulgation on a
number of regulations. For example, OGC assisted in drafting
substantial revisions to RUS regulations 7 CFR part 1755 which
prescribes the forms of contracts to be used in RUS-financed
construction. The revisions are designed to update and streamline RUS
contract requirements and procedures. OGC also drafted a notice of
funding availability (NOFA) and loan documents to implement RUS's new
``T Rate'' program and assisted in implementing a new loan and grant
program to high energy rural communities.
The RUS telecommunications program and the Rural Telephone Bank
(Bank) processed loans totaling $675million for telecommunications
infrastructure. In addition, OGC assisted in development of a number of
new RUS telecommunication programs. These included a $100 million
broadband pilot loan program which required the drafting of a NOFA and
the negotiation and drafting of loan documents on a case-by-case basis.
OGC also drafted a NOFA and grant documents required to implement a new
Weather Radio Grant program and provided legal services in connection
with 87 grants and loans provided under the Distance Learning and
Telemedicine Loan and Grant program. OGC assisted RUS and
representatives of the Rural Telephone Bank on several legislative
proposals to privatize the Bank and on issues associated with the
privatization, the capital structure of the Bank and the rights of Bank
stockholders.
natural resources
In the natural resources area, the Natural Resources Division and
OGC Field Offices have been involved in many significant undertakings
concerning national forest management and natural resources
conservation programs. We also assisted three of our client agencies,
the Forest Service, Natural Resources Conservation Service, and
Agricultural Research Service daily in support of their program
missions.
We have provided assistance to the Natural Resources Conservation
Service (NRCS) in administering a number of conservation programs on
private or other non-Federal farm, pasture and non-industrial forest
lands, including the Wetland Conservation (Swampbuster) Program,
Environmental Quality Incentives Program, Wetland Reserve Program,
Farmland Protection Program, and the Emergency Watershed Protection
Program.
OGC also continued to provide legal counsel to NRCS in the
enforcement of the highly erodible land and wetland conservation
compliance provisions of the Food Security Act of 1985. OGC assists
NRCS in determinations for enforcement and for granting statutorily-
authorized variances. OGC defended the agency in administrative appeals
and lawsuits challenging the implementation of the conservation
provision of the Food Security Act. Additionally, OGC continues to
provide legal services in support of the Wetlands Reserve Program
(WRP).
OGC assisted NRCS and the Forest Service in working with the
Environmental Protection Agency (EPA) regulations promulgated under the
Clean Water Act for total maximum daily loads of pollutants. The
increasing concern and focus on water quality matters, particularly
regarding non-point sources of pollution, have lead to a continuing
increase in the level of legal services to the Forest Service and the
NRCS.
In the forest management program area, OGC provided litigation
support to the Department of Justice in collecting millions of dollars
in damages owed the government by defaulting timber sale purchasers.
OGC provided assistance to the Department of Justice in on-going
settlement negotiations of more than twenty consolidated cases
concerning the collection of tens of millions of dollars in damages
plus interest owed the government pursuant to Orders issued in two of
the representative consolidated cases. OGC also assisted in limiting
contractual damages payable by the client agency for environmentally
protective actions. OGC provided legal assistance on the defense of
approximately 35 lawsuits challenging timber sale suspensions,
modifications and cancellations and alleging the right to takings
compensation pursuant to the Fifth Amendment to the U.S. Constitution.
OGC also led a negotiation team to resolve litigation and other issues
involving the Shelton Sustained Yield Unit with a goal of limiting
liability while also resolving long-term issues related to the
existence of the Unit. Additionally, OGC provided legal assistance in
drafting contract provisions to limit liability for contractual
damages, and developed and presented a 3-day course on Advance Contract
Law to train Forest Service personnel on various aspects of contract
law as it relates to their daily program activities.
The timber sale program in Alaska continues to require significant
legal services. Attorneys in both the Washington office and the Juneau
field office are assisting with litigation claims of $1.5 billion
arising from denial of contract claims on the Alaska Pulp Corporation
(APC) 50-year timber sale contract on the Tongass National Forest.
APC's aggressive litigation stance required the commitment of
significant OGC time and resources to defend against its claim and the
related massive discovery effort.
OGC provided legal advice and assistance to the Forest Service
regarding implementation of stewardship contract pilot projects aimed
at harvesting timber while simultaneously advancing forest resource
management objectives and presented information and materials to
attorneys in the public sector during a training course sponsored by
the American Law Institute of the American Bar Association. Under these
stewardship contracts, timber is harvested and contractors provide
services designed to achieve land management goals, including road and
trail maintenance, watershed restoration and restoration of wildlife
habitat. OGC also provided legal advice and assistance on the
interpretation and implementation of a statute authorizing the
collection and retention of fees associated with the harvest of special
forest products.
OGC advised on planning issues related to forest plans currently
undergoing revision and overdue plan revisions. Compliance with and
review of Sierra Nevada framework, including the Herger-Feinstein
Quincy Library Groups Forest Resources Act, also requires continuing
OGC advice. OGC also provided, and will continue to provide,
substantial assistance to the Department and the Forest Service related
to revision and implementation of the land and resource management
planning and roadless area conservation, and administrative appeal
regulations and various transportation and roads initiatives. In
addition, providing preventive law advice regarding the Endangered
Species Act (ESA), the National Environmental Policy Act (NEPA), and
the National Forest Management Act (NFMA), as well as other laws,
requires continued OGC attention. Of particular significance is
assisting the Forest Service in dealing with new information and
coordinating management decisions for wide-ranging fish and wildlife
species, many of which are threatened or endangered. OGC continues to
advise on interagency efforts, such as streamlining ESA and NEPA
processes and the administrative appeal process, wildland fire
management, and the application of the Migratory Bird Treaty Act.
Approximately 120 cases are pending challenging Forest Service
decisions on NEPA, NFMA and ESA grounds. The level of litigation is
expected to continue or increase, especially with respect to fire
prevention and restoration projects. OGC assistance is also provided
for forest plan and project administrative appeals, hundreds of which
are filed each year.
In real property matters, OGC provides extensive legal assistance
to the Forest Service, the Natural Resources Conservation Service and
the Agricultural Research Service. In fiscal year 2001, over $150
million was appropriated to USDA agencies for the acquisition of lands
and interests in lands. These land transactions involve considerable
legal involvement in contracting, title work and closing. Additionally,
legal counsel is provided for the entire spectrum of real estate
matters related to the National Forest System (NFS) and other USDA
administered lands including title claims, trespass, appraisal, survey,
special use authorizations and similar issues.
OGC provides legal services regarding land title claims involving
private parties, Indian tribes and pueblos, and State and local
governments. These claims arise under treaties, Spanish land grants,
and statutory grants by Congress. Several Indian land claims are in
active settlement negotiations.
Additionally, OGC has provided an increasing amount of advice to
the Forest Service in its activities related to hydro power projects,
in part due to the approximately 200 relicensing proceedings before the
Federal Energy Regulatory Commission (FERC) occurring in the next 10
years for projects located on NFS lands.
In the minerals area, OGC provided significant legal advice
concerning constitutionally required procedures which the Forest
Service must adopt to suspend or terminate instruments regulating the
mining of metals on the tens of millions of acres of land administered
by that agency which are subject to the United States mining laws. OGC
also provided extensive assistance to the Department of Justice in
successfully defending the first challenge to controversial Forest
Service regulations classifying mineral materials according to their
use. OGC also significantly assisted the Department of Justice in
defending several lawsuits alleging that statutes or administrative
actions of the Forest Service constituted takings of rights held by
holders of mining claims and mineral leases.
In congressional matters, OGC provided extensive assistance in
addressing numerous legal issues encountered during implementation of
the Secure Rural Schools and Community Self-Determination Act of 2000,
an act stabilizing payments to 40 States (and through them to 712
counties) by decoupling them from forest receipts. OGC also provided
substantial legal assistance in responding to Congressional document
requests, including a request from Chairman Lieberman relating to the
Department's controversial roadless area conservation rule. OGC
assisted the Forest Service Legislative Affairs staff in preparing for,
and following up to, numerous Congressional hearings.
In the recreation area, OGC provided significant legal advice
regarding the Forest Service's off-highway vehicle program, including
the extent that the Forest Service may restrict the use of such
vehicles based on environmental concerns by persons with disabilities
consistent with civil rights law. OGC also continued to provide
extensive assistance to the Department of Justice in successfully
defending the Forest Service's noncommercial group use rule.
Additionally, OGC analyzed the constitutionality of communications site
land use fee waivers for Corporation for Public Broadcasting
affiliates, but not for religious broadcasters; issues pertaining to
Indian religious and cultural use of NFS lands; and methodologies for
determining the fair market value of using NFS lands for outfitting and
guiding. OGC also provided assistance to the Forest Service with
ensuring that States and other non-Federal Governmental entities that
hold lands and recreation special use permits insure and indemnify the
United States under those permits.
In the international forestry area, OGC provided assistance in
reviewing two nonbinding wildfire arrangements, one between the U.S.
Departments of Agriculture and the Interior, and the participating
agencies of Australia, and the other between the U.S. Departments of
Agriculture and the Interior and the National Rural Fire Authority of
New Zealand. The arrangements outline the fire fighting assistance that
each party to the arrangement may provide to another party to the
arrangement.
OGC provided substantial assistance to the Department on issues
relating to compliance with applicable pollution control laws. In
particular, OGC assisted the USDA Hazardous Materials Policy Council
and the USDA Hazardous Materials Management Group in carrying out the
hazardous materials management program. In addition, OGC provided
assistance and advice to the Department and the Forest Service on the
cleanup of hazardous materials sites on NFS lands and at other Agency
facilities. OGC represented the Forest Service, along with the
Department of Justice, in negotiations with non-Federal parties
responsible for the cleanup of contamination on NFS lands. OGC also
played a substantial role in advising the Department on compliance with
applicable pollution control standards, including negotiating
compliance agreements with the EPA and State environmental enforcement
agencies. OGC also provided the Department with advice to protect the
Department's interests regarding hazardous materials issues which arose
in the context of land transfers and acquisitions. Finally, OGC
provided significant legal services in connection with pollution
control legislative proposals, including the Brownfields bill.
general law division
The General Law Division (GLD) provides legal services concerning
those areas of law that apply generally to all agencies of the Federal
Government. These services include, but are not limited to, the
determination of claims filed under the Federal Tort Claims Act,
personnel and labor matters, procurement, grants, fiscal law issues,
and reviewing each year hundreds of Freedom of Information Act and
Privacy Act appeals, each involving up to hundreds of pages of
documents, in order to insure that the various agencies of the
Department do not release or withhold documents inconsistent with
applicable law. In addition, GLD attorneys assist the Department of
Justice with any litigation that arises in these and other areas, and
represent the Department before the USDA Board of Contract Appeals and
the Merit Systems Protection Board.
Since the events of September 11, GLD has provided significant
legal resources in connection with the development of new biosecurity
policies and procedures for USDA biosafety level 3 (BSL 3)
laboratories. In connection with the new biosecurity policies and
procedures, GLD is providing advice regarding implementation of the
policies and procedures by USDA agencies, as well as application of the
policies and procedures to non-USDA staff. As the procedures are
implemented, we anticipate that GLD attorneys will advise agencies
regarding personnel suitability determinations made pursuant to the
biosecurity policy. In addition, GLD anticipates that it will provide
legal services relating to the development of new biosecurity policies
and procedures for non-BSL 3 laboratories. As the Administration's
efforts to assure homeland security accelerate, we anticipate that GLD
will assist the Department in the implementation of the full range of
USDA homeland security activities.
Over the past year, client agencies with continuing frequency have
requested legal advice on the subjects of computer security, the
Freedom to E-File Act, and the Government Paperwork Elimination Act.
Replacing the traditional paper infrastructure and doing business
principally with electronic processes generates legal issues. GLD has
been called upon to assist in each stage of the constantly evolving
technology as clients fashion methods of gathering, proving, and
storing data electronically and in reducing the legal risks in ``going
paperless.'' In the post September 11, environment, more emphasis than
ever is being placed on computer security, and we expect that increased
legal resources will be devoted to that effort.
GLD attorneys anticipate working with the Office of Procurement and
Property Management on implementation of the Integrated Acquisition
System, a Department-wide web-based e-Procurement solution. For non-
procurement programs, GLD continues to advise the Office of the Chief
Financial Officer and the Cooperative State Research, Education, and
Extension Service on e-Government issues as they arise. Such issues
generally involve the binding nature of the use of electronic means in
the solicitation, application, award, and Administration of Department
financial assistance. GLD additionally advises on the authority and
funding issues for Department-wide initiatives.
Related to these security issues, GLD advises contracting personnel
of USDA agencies on construction contracts. For example, GLD is working
with contracting personnel on the contract to design the renovation of
agricultural research facilities at Ames, Iowa. Other recent examples
are GLD's representation of the Agricultural Research Service in a bid
protest before the General Accounting Office, and serving as agency
counsel in a bid protest before the Court of Federal Claims regarding
award of a contract to replace the power plant at the Plum Island
facility in New York. GLD anticipates a substantial increase in the
need for legal advice and representation on construction contract
matters as the Department upgrades its facilities. GLD attorneys also
have noticed increases in the need for legal services relating to the
use of performance-based statements of work for services contracts, and
respecting administrative bid protests of awards of permits by the
Forest Service. Other significant procurement related issues looming on
the horizon that will require GLD legal support include additional
contracting out of activities currently being performed in-house and
the replacement of the agencies' legacy information technology systems.
GLD continues to provide essential legal support for the Research,
Education, and Economics agencies. The pending Farm Bill has and will
require substantial legal support from GLD. GLD attorneys are working
closely with the research agencies and various staff offices on this
matter. GLD expects a surge in requests for legal opinions and
assistance from research agencies and staff offices upon enactment of
the new Farm Bill. GLD anticipates devoting significant resources to
assist these agencies and offices in interpreting both new authorities
and changes to existing authorities, and the many regulatory changes or
new regulations necessary to implement them. GLD will also assist the
research agencies with intellectual property issues attendant to
bringing the benefits of scientific research to the public.
GLD continues to provide legal services to the National Appeals
Division (NAD) regarding procedural issues and general administrative
matters. For example, GLD recently advised NAD on the use of
videoconferencing for its hearings.
legislation division
OGC continues to provide legislative drafting and related
assistance to the Department and Congress on major legislative
activities that involve the Department and its programs. Extensive
assistance was provided to Departmental policy officials and
Congressional staffs in drafting and analyzing various legislative
proposals recently enacted by Congress, including legislation to
provide emergency funding to farmers (Public Law 107-25) and
appropriations provisions contained in the Agriculture, Rural
Development, Food and Drug Administration and Related Agencies
Appropriations Act, 2002 (Public Law 107-76). In addition, we continue
to provide drafting assistance to agencies of the Department and
Congressional staffs regarding the Farm Bill currently before Congress,
including regarding H.R. 2646, the Farm Security Act of 2001, and S.
1731, the Agriculture, Conservation, and Rural Enhancement Act of 2002.
In addition, we are planning to participate in the preparation of
legislation in support of the President's fiscal year 2003 budget
request for the Department.
litigation division
Litigation Division attorneys, in cooperation with attorneys from
the DOJ and other divisions in OGC, presented USDA's position in
appellate courts. These efforts led to a U.S. Supreme Court decision
rejecting the argument that governmental authorities licensing
expressive activity on public property, including the Forest Service,
should have the burden of seeking judicial review and carry the burden
of proof whenever denying a permit to engage in such activity. In
another case, the Supreme Court declined to review a decision by the
Court of Appeals for the District of Columbia Circuit, which upheld the
Secretary's revocation of a license issued under the Perishable
Agricultural Commodities Act after the licensee engaged in commercial
bribery. The Supreme Court also decided that the Plant Variety
Protection Act did not prevent a plant breeder from receiving a utility
patent under the Patent Act for plants which reproduce by seed. The
Fifth Circuit concluded that USDA veterinarians could not rely solely
on palpation to support a finding that a horse is sore under the Horse
Protection Act. The Ninth Circuit prevented the government from
pursuing an enforcement action to collect over $1 million of
assessments under the almond marketing order, on the grounds that an
almond handler distributed its assets to its shareholders following the
sale of the business. The Fifth Circuit affirmed a decision by the
Secretary that the failure to install fencing around a facility holding
tigers violated the Animal Welfare Act. Finally, the Supreme Court has
agreed to hear a case that raises a question whether a breach of
contract or a takings claim arise when a statute is enacted that alters
a contractual right to prepay a government mortgage loan.
civil rights
The Secretary wants to ensure that all of our customers and
employees are treated with dignity and respect, and are afforded equal
employment opportunity (EEO) and equal access to all USDA programs.
Critical to the achievement of these goals was the creation, in 1998,
of the Civil Rights Division (CRD) within OGC. Staffed with attorneys
with specialized expertise in civil rights and EEO law, CRD is charged
with providing legal services to the Secretary and all agencies of the
Department on civil rights and EEO issues.
CRD has maintained a stellar litigation record while also providing
prompt and sound legal advice to our client agencies. However, as
recognition of CRD's successful efforts spreads, the demands on the
office increase. CRD's litigation duties currently include 6 program
class actions and 16 employment class actions, each at different stages
in the litigation process. The requested damages in these class actions
could cost USDA upwards of $20.0 billion.
CRD continues to play a critical role in the settlement of the
Pigford/Brewington litigation. The settlement helped the Department to
reinvigorate its efforts to become a Federal civil rights leader in the
21st century. CRD has taken the leading role in ensuring that USDA
meets its commitments under the Pigford/Brewington consent decree,
particularly with respect to the production of relevant documents and
necessary legal analyses related to each claim filed pursuant to the
consent decree, as well as ensuring the Department's compliance with
adjudicator and arbitrator decisions. CRD is working with FSA and the
Department of Justice (DOJ) to develop timely and appropriate
Government responses to claims filed by eligible farmers.
Key to settlement of the Pigford/Brewington case was the 1998
enactment of the waiver of various statutes of limitations, allowing
farmers with long-standing discrimination complaints to have their
claims finally heard. CRD and OGC field offices represent the
Department in the nearly 100 cases in which a hearing has been
requested. The number of requests for hearing is anticipated to
increase to between 150 and 200. With respect to farmer discrimination
claims not covered by the Pigford/Brewington settlement, CRD works with
the USDA Office of Civil Rights (CR) to ensure that all claims receive
expeditious and fair consideration, within the bounds set by applicable
law.
With respect to the ongoing implementation of the Pigford consent
decree, the claimants may opt to seek relief under one of two available
avenues: The Track A procedure provides for submission of a written
claim to the adjudicator with pre-determined damages of $50,000 per
prevailing claimant, whereas the Track B procedure allows for an
evidentiary hearing before an arbitrator and the opportunity to receive
actual damages. The total number of claims submitted exceed 72,000, and
of those, over 21,000 claims have been found eligible for Track A
consideration. We anticipate that a few hundred additional late-filed
Track A claims will be accepted. CRD attorneys must review the agency
response on each of these eligible Track A claims prior to submission
to the adjudicator. In addition, nearly 180 claims have been found
eligible for Track B arbitrations. CRD attorneys must assist DOJ
attorneys in their representation of the agency, including assistance
with document discovery, identification of similarly situated white
farmers, and responses to interrogatories. Furthermore, CRD plays an
important role in the Monitor review process. All claimants can
petition the Monitor to reevaluate their claims, and CRD reviews
Department responses to these petitions for legal sufficiency and
consistency. We anticipate that most of the roughly 8,400 claimants
whose claims were denied by the adjudicator may seek Monitor review.
Many claimants who were granted relief by the adjudicator seek Monitor
review of the scope of the relief granted. In addition, for cases in
which the Government seeks Monitor review of an adjudicator decision,
CRD will prepare the Government's petition for Monitor review. The
Department has already filed over 600 petitions and will continue to do
so when warranted.
CRD also assists DOJ in representing USDA in the defense of five
more recent class action program complaints currently pending in
Federal district court. Four of these class actions are brought by
farmers and raise allegations similar to those found in Pigford/
Brewington. Only one of these cases has been certified as a class
action to date: in Keepseagle, the Federal district court has certified
a class of Native American farmers and ranchers who allege
discrimination in the Administration of farm programs and failure of
the Department to adequately address complaints of discrimination. In
the Fifth Amended Complaint filed in Keepseagle, 838 named plaintiffs
joined in the suit. The class agents have represented to the Court that
as many as 19,000 Native Americans may be members of the class.
The remaining three class action cases filed by groups of farmers
are: Love, filed on behalf of female farmers; Garcia, filed on behalf
of Hispanic farmers; and Wise, filed on behalf of African-American and
female family farmers. In Love, the court has dismissed all claims
other than those brought under the Equal Credit Opportunity Act.
Motions regarding the propriety of class certification are pending in
both Love and Garcia. The Wise case, which overlaps with both Pigford/
Brewington and Love, has been stayed temporarily by the court. As these
cases move forward, CRD's role in assisting DOJ with discovery and
potential management of class issues will expand.
The sixth program class action is the Chiang case, in which female
residents of the Virgin Islands are alleging denial of access to rural
housing credits and benefits on the basis of race, gender and national
origin. USDA's motion to dismiss the case has been denied, and the
parties have been directed to submit briefs on the issue of class
certification. This case is anticipated to require a significant
commitment of resources by CRD in the development of factual and legal
issues relating to rural housing programs in the Virgin Islands over a
nearly 20 year period.
CRD also represents USDA in the defense of fourteen class action
employment complaints pending before the Equal Employment Opportunity
Commission (EEOC). Three of these complaints have been certified by
EEOC to proceed as class actions. One of the certified classes
encompasses employees throughout the Department. In addition, CRD is
representing USDA in the defense of two class action employment
complaints currently on appeal before EEOC's Office of Federal
Operations. In one of the complaints on appeal, certification of the
class was denied; in the second, the EEOC entered a finding of no
class-wide discrimination following a hearing on the merits. In recent
years, CRD has settled two employment class action complaints under
which individual complainants are currently pursuing their claims.
Another class action is near settlement and thus is anticipated to
require future monitoring and implementation efforts by CRD.
Recent years have seen a drastic increase in the demand for CRD's
litigation services in formal individual complaints filed by USDA
employees with the EEOC. For example, 796 formal complaints were filed
with USDA during fiscal year 2001, with 578 complaints currently
pending for hearing before the EEOC Administrative Judge. Approximately
1900 active EEO cases are pending throughout USDA. CRD continues to
carry a full workload of complex and politically sensitive individual
EEO cases involving either issues of first impression or disputes over
positions at the highest levels within USDA. CRD litigates these cases
on behalf of the Department before the EEOC and occasionally, the Merit
Systems Protection Board (MSPB). These individual cases require
constant attention, travel across the country, and interaction with
senior management officials.
In addition to its primary litigation responsibilities, CRD
continues to assist DOJ in the litigation of numerous individual civil
rights cases in both the employment and program areas pending in
Federal district court. The Assistant U.S. Attorneys (AUSAs) and/or DOJ
attorneys who serve as lead counsel request an ever-increasing amount
of litigation support from CRD, including draft answers, full
litigation reports, dispositive motions, discovery responses, witness
preparation, and deposition and trial participation.
To address other employment issues, CRD will intensify its efforts
to provide training and technical assistance to OGC field attorneys and
to Department officials, civil rights directors, and employee relations
specialists. The goal is to identify and address EEO obstacles before
they elevate into litigation. Where issues are identified, CRD will
bring the concerns to the attention of appropriate Department
officials, with legal analysis and recommendations for resolution.
fiscal year 2003 budget request
For fiscal year 2003, the budget proposes a total of $39,841,000
for OGC salaries and expenses, an increase of $7,214,00 from the amount
enacted in fiscal year 2002, excluding supplementals. Within this
fiscal year 2003 request, there is a total of $1,693,000 to cover the
rental costs previously paid from a central account within USDA in
accordance with the Administration's proposal to budget for the full
costs of the programs and $2,308,000 for Retirement/Health Pension
Benefits. The Explanatory Notes provided to the Committee provide
information on the comparable levels for these items in fiscal year
2001 and 2002.
OGC is also requesting $3,213,000 over the adjusted base for fiscal
year 2002, consisting of $1,002,000 for pay costs, $722,000 to maintain
current staffing levels, $811,000 for additional legal staff, $426,000
for office automation, $246,000 for Employee Pension and Annuitant
Health Benefits, and $6,000 for the Federal Employment Compensation Act
program.
closing
That concludes my statement. We very much appreciate the support
this Subcommittee has given us in the past. Thank You.
______
Prepared Statement of Lou Gallegos, Assistant Secretary for
Administration, Departmental Administration
Mr. Chairman and members of the Subcommittee, I want to thank you
for the opportunity to submit this statement supporting the President's
budget proposal for fiscal year 2003 for USDA Departmental
Administration.
As you are aware, Departmental Administration (DA) takes in a wide
range of activities and responsibilities. Our mission is to provide
leadership in administrative areas and to provide those services that
make the programs of the Department work better. Today, I want to
report to you on some of our activities over the last year and
highlight the budget request for next year.
The budget request reflects the tragic events of last September. We
are requesting additional resources to ensure the safety and security
of USDA facilities and programs. The Budget also shows our strong
commitment to improving the civil rights record of our programs and
employment.
civil rights
The Office of Civil Rights (CR), in accordance with the Secretary
of Agriculture's civil rights policy statement, provides overall
leadership and direction to USDA agencies to ensure enforcement and
compliance with civil rights laws, rules and regulations in employment
and program delivery. In October 2000, CR completed a comprehensive
analysis of CR systems, processes, procedures, staffing needs, level of
knowledge, skills and abilities, automation needs, and administrative
support, called the Long Term Improvement Plan (LTIP). We are currently
working toward the full implementation of the LTIP, which will enable
CR to process complaints within the required statutory timeframe.
CR has made major strides in implementing process and
accountability improvements. All significant proposed regulations are
reviewed for civil rights impact and compliance with applicable
statutes and regulations. Last year, 100,000 USDA employees received
civil rights training, and senior managers and supervisors were
required to attend a 1-day diversity training seminar to enhance their
ability to understand diversity, to better manage diversity, and to
identify the importance of diversity in making USDA a high performance
agency.
The average processing time for program civil rights complaints was
reduced by 14 percent in fiscal year 2001. Although processing time for
employment complaints increased by 7 percent during the same period,
this was due to the fact that many older cases were completed during
the year. Reports of investigations issued in fiscal year 2001 more
than doubled over the fiscal year 2000 level. Improved case tracking
systems are being put in place and management controls have been
tightened throughout the process.
The fiscal year 2003 Budget requests an additional $2 million which
will allow CR to increase its employment by 17 staff years. The
additional staff will enable CR to take significant steps toward its
goal of processing civil rights complaints within the required
statutory timeframe. It will also permit the Department to address some
of the conditions which cause complaints and to address the
deficiencies noted in the audit reports of the USDA Inspector General.
outreach
Last year, 47 proposals competed for The Outreach for Socially
Disadvantaged Farmers grants (``2501'' Program) that provide training
and technical assistance to underserved groups of farmers and ranchers.
There were 28 successful grantees that collectively received almost $6
million in funding, of which $3 million was provided by the Fund for
Rural America. For fiscal year 2003, The President's Budget continues
the fiscal year 2002 appropriated level of $3.2 million for the grant
program.
During fiscal year 2002, the Office of Outreach's priority is to
identify a collective method for USDA Agencies to measure and report
minority participation in USDA programs. This year our office has
developed a database for capturing information electronically that is
submitted with the grantee's quarterly report. In 1 year, we have gone
from paper reporting to collecting information by disk or by e-mail. At
the end of fiscal year 2002, our office will be able to collect and
analyze data for reporting and for program evaluation. Outreach plans
and census data will also be used to identify and remove barriers so
that underserved groups will be equally represented in USDA programs.
small and disadvantaged business utilization
During fiscal year 2001, the Office of Small and Disadvantaged
Business Utilization (OSDBU), in concert with Southwest Texas State
University, completed a comprehensive survey of Hispanic small
businesses on a nationwide basis. The survey resulted in the
identification of numerous barriers that hinder Hispanic small
businesses from successfully participating in USDA's contracting
activities. USDA's OSDBU will use this data to help direct more
effective USDA-sponsored technical assistance to this under-represented
group.
Also during fiscal year 2001, OSDBU developed and implemented a
Web-based registration process for its Vendor Outreach Program. The
Program provides the small business community with the opportunity to
meet with USDA agency small business coordinators and contracting
officials to discuss their capabilities and learn of potential
procurement opportunities. The automation of the registration process
has increased OSDBU's effectiveness in communicating with small
business and USDA participants. It has also reduced the overall cost of
managing the program through more reliable and accurate data and
increased program efficiency. During fiscal year 2002, OSDBU began the
development of a Web-based electronic procurement forecast system which
is designed to reduce the labor necessary to collect and assemble
USDA's annual procurement forecast. Once implemented, the system will
result in a decrease in errors, making data more reliable and useful,
and will provide USDA customers with quick and easy electronic access
to the data.
During fiscal year 2002, OSDBU will conduct two Outreach/Technical
Assistance Conferences. The first such conference will provide policies
and procedures for Federally recognized American Indian tribes to
participate in OSDBU's Bringing Rural America Venture Opportunities
(BRAVO) program. BRAVO is a business development program designed to
assist Tribal entities (Indian Nations) in establishing small start-up
companies. The initiative will result in increased use of American
Indian and Alaskan Native-owned business by USDA and increased
employment on Indian lands.
The second conference targets women-owned small businesses located
in rural America. The conference will provide technical assistance on
how to successfully do business with USDA and other Federal agencies.
crisis planning and management
In December 2000, the Office of Crisis Planning and Management
(OCPM) was created to coordinate USDA planning and response to
disasters and emergencies. OCPM supports USDA's Homeland Security
Council by coordinating emergency activities among USDA agencies and
other Federal entities in response to potential crises and emergencies,
such as a domestic outbreak of a foreign animal disease, natural
disaster, or terrorist attack, through such mechanisms as the Federal
Response Plan.
OCPM successfully faced several recent challenges, including
working to ensure USDA and other Federal agencies were well coordinated
in responding to a threatened outbreak of Foot and Mouth Disease and in
supporting the Department's response to the events of September 11,
2001. DA continues to have lead responsibility for the development and
maintenance of the USDA Continuity of Operations (COOP) Plan. On
September 11, 2001, USDA effectively implemented its Headquarters COOP
plan for the Office of Secretary and was operational at its alternate
site within hours of the attack. In fiscal year 2002, the Headquarters
COOP plan is being further refined, and lessons learned on September
11, 2001 are being addressed.
In fiscal year 2003, increased funding requested for OCPM is needed
to expand COOP planning to other critical USDA facilities such as
critical laboratories and large centers of employment. An effective
COOP plan is also an essential element of USDA's support to homeland
security and DA is committed to ensuring that the USDA COOP plan allows
us to continue delivering critical services to the Department's
customers during times of emergencies.
OCPM also oversees the Department's personnel security program.
Under this program employees are determined suitable for public trust
positions and worthy of national security clearances. Last year there
was a backlog of about 560 cases. We stepped up clearance activities
this year and the backlog was successfully eliminated using a taskforce
approach. The war on terrorism and USDA's participation in Homeland
Security activities, however, has reclassified a large number of
positions that now require background investigations. Additional funds
requested for fiscal year 2003 will be utilized to complete staffing
the personnel security program and to begin modernizing the program and
integrating e-government processes.
physical security
The need for increased physical security for Federal Government
facilities nationwide and for the protection of employees and critical
assets has been a concern since the Oklahoma City bombing, and more
recently with the New York city and Pentagon acts of terrorism. USDA
conducts its programs in approximately 25,000 buildings at more than
7,000 sites around the world. DA, through the Office of Procurement and
Property Management (OPPM), provides overall leadership and direction
to USDA agencies in the management and coordination of security for
these facilities. Major activities include policy development,
education and training, and security assessments of facilities.
Since September 2001, OPPM has conducted physical security
assessments of some 40 key USDA facilities. These security assessments
cover many facets of the security spectrum, including chemical,
biological and radiological; information technology; food safety,
animal, and plant research; and aviation assets. These security
assessments utilize a risk management approach to analyze threats,
vulnerabilities, and the criticality of assets to better support key
decisions linking resources with prioritized efforts for results. The
results will be used to help guide future programs and responses to
combat terrorism and other threats, and to develop appropriate
standards and methodology for conducting facility/cyber/personnel
security assessments, identifying deficiencies, recommending
countermeasures, and following up on actions taken to mitigate physical
security concerns.
OPPM was also focused on the safety and protection of facilities,
assets and employees during the 2002 Winter Olympics. USDA has
approximately 56 facilities located in and around the venues of Salt
Lake City where the Olympics were being held, 17 of which were
identified as mission-critical facilities involving research activities
and storage of weapons and explosives. OPPM was the lead in operating
an emergency command center throughout the duration of the games to
oversee and ensure the safety and protection of these facilities,
assets, and employees.
use of biofuels
The Department's support and promotion of biofuels in fiscal year
2001 resulted in an estimated 112,000 gallons of biodiesel fuel used in
USDA vehicles and equipment. The Agricultural Research Service's Henry
A. Wallace Center in Beltsville, Maryland has taken the lead in
demonstrating the benefits of biodiesel use, including using a
biodiesel heating oil blend to heat over a dozen buildings at the
Center.
On August 8, 2001, Secretary Veneman issued Secretary's Memorandum
5400-8, establishing a statement of preference for use of ethanol and
biodiesel fuels in USDA's motor vehicles and ordering actions to carry
out these policy preferences. USDA was recognized with a White House
``Closing the Circle'' award in June 2001 for significant contributions
to the environment through the use and promotion of biodiesel fuel.
federal excess personal property program
Section 923 of the Federal Agriculture Improvement and Reform Act
(FAIR) of 1996, authorized the Secretary of Agriculture to acquire and
transfer excess Federal personal property to any of the 1994 Tribal
Institutions, Hispanic-Serving Institutions, and the 1890 colleges and
universities, including Tuskegee University. In fiscal year 2001, USDA
transferred $3.1 million worth of personal property under the program,
bringing the total to greater than $10.6 million since the program
began in fiscal year 1999. This program provides much needed property
and equipment to institutions that otherwise would not be able to
acquire property due to limited funds and will improve the
institutions' capability in the areas of research, educational, and
technical and scientific activities.
procurement policy
During fiscal year 2001, USDA completed work to make FedBizOpps
available for use throughout the Department. FedBizOpps is a system for
electronically advertising our contracting opportunities and furnishing
copies of solicitations via the Internet. It is part of the President's
e-Government Management Agenda.
With regard to the increased use of Performance Based Service
Contracting (PBSC), another Presidential Management Agenda item, USDA
surpassed the Administration's fiscal year 2001 goal of 10 percent of
eligible contracts applying performance-based methods. In fiscal year
2002, we are stepping up our monitoring and leadership to assist USDA
agencies in meeting the 20 percent goal. This includes placing actual
PBSC contracts on the Internet as examples to assist USDA agencies in
achieving this challenge. In fiscal year 2003, the planned goal is 30
percent and we will continue our performance monitoring, scrutinize
advance procurement plans, and expand our website information,
including training aids and example PBSC contracts.
human resources management
The Office of Human Resources Management (OHRM) is providing
leadership to the Department on the human capital piece of the
President's Management Agenda. OHRM prepared a 5-year restructuring
plan focused on improving accountability within the Forest Service and
on improving efficiency within the Service Center agencies. OHRM is
also supporting the President's Management Initiative dealing with e-
Government, specifically the interagency projects on HR Enterprise, e-
recruiting and e-training.
OHRM completed a workforce analysis and is working on an analysis
of critical skill gaps. The Office is participating with the Office of
Personnel Management and other Federal Departments in a job fair for
information technology specialists. OHRM is preparing to launch three
new developmental programs: a USDA-wide mentoring program, a new
leadership development program for executives and managers, and a new
Career Intern Program for scientific, administrative and professional
occupations.
OHRM is making significant changes to the USDA's policies and
practices for managing the Senior Executive Service (SES). In fiscal
year 2002, executive performance plans will be better integrated with
the Department's Annual Performance Plan. Performance standards will be
more measurable and reflect a balanced scorecard: mission results,
business results, customer service satisfaction, employee satisfaction
and civil rights. OHRM is developing common performance standards to
hold all executives accountable for the President's Management
Initiatives and civil rights. A standing Executive Resources Board was
formed to provide peer oversight of the SES.
OHRM continues to support the recruitment and retention of a
diverse workforce. Employee advisory councils were established to
provide the Secretary with sound advice about eliminating under-
representation of minorities and women. USDA has significantly
increased its hiring rates for Hispanics and is hiring larger numbers
of persons with disabilities. In 2000, UDA made a commitment to hire
9,000 persons with disabilities by 2005.
OHRM has led a corporate approach to planning and investing in IT
systems in the human resources management area. USDA now has a standard
for software that classifies positions and has piloted three possible
software solutions to speed up the hiring process. USDA also has made a
good start at e-training with over 17,000 licenses with commercial
providers. This year, OHRM will lead the mission areas in developing a
business case for IT solutions for transaction processing and employee
self-service.
conflict prevention and resolution ohrm's
Conflict Prevention and Resolution Center leads and coordinates the
Department's conflict prevention and resolution activities, focusing on
the use of Alternative Dispute Resolution (ADR) to resolve conflicts in
the workplace and between USDA and its customers. In fiscal year 2001,
two Departmental directives on ADR were issued, and ``Dealing with
Workplace Conflicts and Concerns: A Guide for Employees'' was published
for all USDA employees. USDA continued to resolve over 80 percent of
workplace disputes when ADR was used in the earliest stages of
conflict, before the filing of a grievance or EEO complaint. Over 5,000
USDA employees received training in conflict resolution. Finally, the
Certified Agricultural Mediation Program provided service in over 4,000
disputes involving producers and other USDA customers. Efforts in
fiscal year 2002 will be focused on increased use of ADR to resolve EEO
complaints, and on educating agencies on the potential for ADR usage
and other collaborative processes in a wide range of programmatic
disputes.
government ethics program
The Office of Ethics (OE) was formed in 1998 to provide Government
ethics leadership and services within the Department. At the request of
other agencies, OE has opened a Web site which provides access to
training and financial disclosure forms to USDA employees and to
employees from several other Departments and Government organizations.
This open Internet access to training and other materials is a major
step forward toward e-Government.
agriculture buildings and facilities
The fiscal year 2002 Budget requests $71 million for Agriculture
Buildings and Facilities for the operations, maintenance and repair of
current facilities including $34 million for the continuation of the
project to renovate the 70-year old Agricultural South Building. The
building is 10 years older than the Pentagon and is in dire need of
repair and renovation to make it safe, efficient, and functional. We
are now constructing Phase 2 of the 8-phase renovation project approved
by Congress in 1995. Phase 3 of the renovation will begin this fall.
The required renovation work includes fire protection systems,
abatement of hazardous materials, and replacement of over-aged and
inefficient utility systems.
The request also contains $851,000 for major repairs scheduled for
the other buildings of the USDA Headquarters Complex including the
Sidney R. Yates Building, the Jamie L. Whitten Building and the Cotton
Annex.
Formerly, this appropriation included the central rent account
which provided the rental amounts to be transferred to the General
Services Administration for space occupied nationwide by USDA agencies
except the Forest Service. The fiscal year 2003 Budget proposes to fund
those rental payments and related costs in the budget of the agencies
occupying the space. This will allow managers direct control over
rental space allocations and better reflect true program cost.
hazardous materials management
The Hazardous Materials Management Program is needed to meet USDA
compliance responsibilities under the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA), the Resource
Conservation and Recovery Act (RCRA), and related State and local laws
and regulations, and to meet the USDA goal of completing all
environmental cleanup actions by the year 2045. Activities supported by
this program contribute directly to USDA's strategic goal of
maintaining and enhancing the Nation's natural resources and
environment.
We must clean up and restore lands and facilities currently and
formerly under USDA jurisdiction, custody, and control and ensure
responsible management in the use, storage, and disposal of hazardous
materials and waste. Non-compliance may result in the Department being
subject to environmental enforcement actions by Federal and State
regulators, lawsuits by private parties, and citizen suits at any of
these sites. Under applicable Federal and State pollution control laws,
fines and penalties could exceed $25,000 per day and lawsuits could
cost, in some cases, more than the funding needed to perform a timely
cleanup action.
USDA cleaned up 47 sites in fiscal year 2001 and plans to cleanup
17 this year and another 48 sites in fiscal year 2003. Since 1987, over
2,250 sites have been cleaned up. Many of the smaller, simpler, and
less costly priority sites have already been cleaned up. However, the
cleanup of environmentally contaminated sites may now be more
challenging because many of the over 2,000 sites remaining to be
completed are more costly and more complicated. Cleanup costs at some
sites may exceed $100 million, and USDA's current cost estimate to
complete all work exceeds $4 billion.
direct appropriation
For Departmental Administration, the Budget requests $48.5 million.
This amount would provide program increases of $2 million for civil
rights enforcement, $2.2 million for security and homeland defense and
$200 thousand in support of the President's management objectives for
Government procurement.
conclusion
Mr. Chairman and members of the Subcommittee, this concludes my
statement on the Departmental Administration budget for fiscal year
2003. I want to reiterate our appreciation for the strong support which
this Subcommittee has given us.
______
Prepared Statement of Kevin Herglotz, Deputy Chief of Staff and
Director of Communications, Office of Communications
Mr. Chairman and members of the Subcommittee, I am pleased to
discuss the fiscal year fiscal year 2003 budget request for the
Department of Agriculture's Office of Communications.
When Congress wrote the law establishing the U.S. Department of
Agriculture in 1862, it said the department's ``. . . general designs
and duties shall be to acquire and to diffuse among the people of the
United States useful information on subjects connected with agriculture
in the most general and comprehensive sense of the word. The Office of
Communications coordinates the implementation of that original mandate.
The Office of Communications coordinates communications with the
public about USDA's programs, functions, and initiatives, providing
information to the customers and constituency groups who depend on the
Department's services for their well-being. It also coordinates the
communications activities of USDA's seven major mission areas and
provides leadership for communications within the Department to USDA's
employees.
The Office of Communications is adopting new technologies to meet
the increased demands for information. Using the Internet's world wide
web, radio, television and teleconference facilities, we are able to
ensure that the millions of Americans whose lives are affected by
USDA's programs receive the latest and most complete information. The
Office of Communications' 5-year strategic goal is to support the
Department in creating a full awareness among the American public about
USDA's major initiatives and services. This is essential to providing
effective customer services and efficient program delivery and should
result in more citizensBespecially those in underserved communities and
geographic areasBavailing themselves to helpful USDA services and
information.
The Office of Communications will continue to take an active part
in policy and program management discussions by coordinating the public
communication of USDA initiatives. We will continue to provide
centralized operations for the production, review, and distribution of
USDA messages to its customers and the general public. We will also
monitor and evaluate the results of these communications. Staff will be
instructed in using the most effective and efficient communications
technology, methods, and standards in carrying out communications
plans.
Also, we are focusing on improved communications with USDA
employees, especially those away from headquarters. This will enhance
their understanding of USDA's general goals and policy priorities,
programs and services, and cross-cutting initiatives.
Our office will work hard to meet our performance goals and
objectives. We will work to communicate updated USDA regulations and
guidelines, conduct regular training sessions for USDA communications
staff about using communication technologies and processes to enhance
public service, foster accountability for communications management
performance throughout USDA, and continue to work to create a more
efficient, effective and centralized Office of Communications.
Increasing availability of USDA information and products to underserved
communities and geographic areas through USDA's outreach efforts is
integral to our performance efforts. The Office of Communications will
also provide equal opportunity for employment and promote an atmosphere
that values individual differences.
fiscal year 2003 budget request
The Office of Communications is requesting a budget of $10,153,000.
This is a net increase of $727,0000 ($9,426,000 available in 2002). If
you exclude the Federal Employee Pension and Health Benefits, our
request is $9,637,000, a net increase of $743,000. The net increase
includes $61,000 for annualization of the fiscal year 2002 pay raise,
$185,000 for the anticipated fiscal year 2003 pay raise, and $497,000
for Web Page Redesign and Outreach benefits. The Explanatory Notes
provided to the Committee presents information on the comparable levels
for these items in fiscal year 2001 and 2002.
Our central task is to ensure the development of communications
strategies which are vital to the overall formation, awareness and
acceptance of USDA programs and policies. As more than 90 percent of
the Office of Communications' obligations are for salaries and
benefits, this increase is vital to support and maintain staffing
levels for current and projected demands for our products and services.
Since our current budget leaves little flexibility for absorbing
increased costs, the Office of Communications cannot absorb these
additional salary costs without placing severe constraints on daily
operations. This could result in backlogs and delays in communications
items such as printing, graphic design and photography used in support
of education or promotion of American agriculture.
This concludes my statement, Mr. Chairman. I will be pleased to
respond to any questions.
______
Prepared Statement of Edward McPherson, Chief Financial Officer, Office
of the Chief Financial Officer
Mr. Chairman and members of the Subcommittee, I am pleased to
present the fiscal year 2003 budget request for the Office of the Chief
Financial Officer (OCFO) and the Department's Working Capital Fund
(WCF) of the United States Department of Agriculture (USDA).
My remarks today address:
--The results on which we are currently focused;
--Results we have achieved recently;
--Our fiscal year 2003 Budget Request;
--The Department of Agriculture's Working Capital Fund.
The Chief Financial Officer of the United States Department of
Agriculture (USDA) is responsible for the financial leadership of an
enterprise which, were it in the private sector, would be the sixth
largest company in the United States with $76 billion in annual
spending, 131,385 employees and $127 billion in assets.
These responsibilities are fulfilled by a headquarters staff in
Washington, D.C. with accounting operations support provided by USDA's
National Finance Center in New Orleans, Louisiana.
The National Finance Center also operates an item processing and
record-keeping business that executes payroll for about one-third of
all Federal employees and provides administrative data for more than
120 government entities, including the Thrift Savings Plan (TSP) with
2.5 million participants who own $92 billion in investment assets.
results on which we are currently focused
We are currently focused on accomplishing the following five
results in fiscal year 2002 as context for you in considering our
fiscal year 2003 budget request:
--Enhancing USDA's system of internal control with a goal of a clean
audit opinion for the United States Department of Agriculture's
fiscal year 2002 financial statements after 7 years of
disclaimed opinions;
--Completing the successful implementation of a standard accounting
system at USDA and improving related corporate administrative
systems;
--Focusing the effectiveness of the National Finance Center (NFC) in
satisfying USDA and non-USDA customers as well as the employees
and other stakeholders of NFC;
--Effectively conducting competitive sourcing responsibilities for
USDA under the Federal Activities Inventory Reform (FAIR) Act;
--Advancing the integration of performance measurement with the
annual budget process in concert with USDA's Office of Budget
and Program Analysis.
results achieved recently
Since taking these responsibilities on October 5, 2001, am pleased
to report the following important results that have recently been
achieved:
Rural Development (RD) received an unqualified (``clean'') audit
report on their fiscal year 2001 financial statements as a result of
our resolving long-standing deficiencies in present value accounting
(Credit Reform) used to establish program costs on Rural Development's
$70 billion loan portfolio. In addition, the Commodity Credit
Corporation, with $14 billion in loans, received an unqualified opinion
on its Balance Sheet, Statement of Net Position and Statement of Net
Cost for the first time in several years. (Commodity Credit Corporation
received a disclaimer on the Statement of Budgetary Services and the
Statement of Financing due to issues in recording various versions of
its budgets.)
Therefore, four of the five USDA agencies that had stand-alone
audits for fiscal year 2001 will have largely clean opinions--a
significant breakthrough. The last remaining agency, the Forest
Service, is a primary focus for corrective actions already underway. A
sixth agency, Food and Nutrition Services, had a waiver from a stand-
alone audit in fiscal year 2001 because they consistently have had a
clean opinion.
USDA's controllership competency has been enhanced by accessing
additional talent, reengineering accounting processes, integrating
information technology initiatives, and clarifying individual and
collective accountability for performance. For example:
--A new Associate Chief Financial Officer, four experienced
controllers and several new agency chief financial officers are
now in place at USDA;
--Accounting operational processes have been improved in the Forest
Service, other agencies, and the National Finance Center;
--Since October 2001, 15 USDA agencies or mission areas comprising
approximately 98 percent of USDA employees are served by our
standard accounting system;
--Specific financial accountability performance standards are now
included in the annual performance plan of each agency's chief
financial officer.
USDA's decision-making and Administration has been improved in its
Working Capital Fund through specific business cases justifying the
spending of this money and improved cash management.
Our approach to competitive sourcing is now focused on creating
sound choices to advance the performance of USDA as an enterprise, as
well as that of individual mission areas and agencies.
USDA is re-examining our lending function to assure effective
credit approval, loan portfolio management, information technology use,
and debt collection.
Recent achievements at the National Finance Center include:
--Implementing two new Thrift Savings Plan investment funds, the
Small Capitalization Stock Index Investment (S) Fund and the
International Stock Index Investment (I) Fund;
--Establishing the Salary Offset Agency Process to notify payroll
offices of past due debts by individuals they currently
payroll. NFC was the first payroll office within the Federal
Government to provide the Department of Treasury with this
automated interface;
--Opening the Thrift Savings Plan to military service people.
fiscal year 2003 budget request
With this context, let's turn to our 2003 Budget Request. Our
fiscal year 2003 operating budget request is for $8,399,000, an
increase of $2,747,000 or 48 percent over the adjusted fiscal year 2002
level of $5,652,000. Within this budget request there is a total of
$254,000 to cover the cost of items previously paid from central
accounts within USDA or on a government-wide basis, including Federal
Employees Compensation Act and Civil Service retirement and retiree
health benefits. The Explanatory Notes provided to the Committee
contain information on the comparable levels for these items in fiscal
year 2001 and fiscal year 2002. Approximately 90 percent of the Office
of the Chief Financial Officer's current obligations are for the
salaries and benefits of the OCFO staff. The requested pay cost
increase of $147,000 (2.6 percent or $110,000 for the fiscal year 2003
increase plus $37,000 for annualization of the fiscal year 2002
increase) and $46,000 or 1 percent for salary adjustments are
fundamental to maintaining the current staff level for leadership and
oversight of financial management at USDA.
The remaining increase of $2.3 million and 17 staff years is
essential to executing our primary accountability of providing sound
financial management and accounting operational processes at USDA.
Specifically, I am seeking increases for the following purposes:
--An increase of $885,000 and 7 staff years for Financial Statements,
Accountability Report and Consolidated Audit Oversight. OCFO is
not properly staffed to lead the preparation of financial
statements and support to the Inspector General's financial
auditing processes. The requested resources are vital for the
USDA to comply with basic financial reporting and the increased
reporting requirements under the Reports Consolidation Act of
2000, which mandates that agencies must produce a single,
consolidated accountability report. This accountability report
includes the annual financial statements, agencies' assurances
on management controls and the annual performance report
required by the Government Performance and Results Act (GPRA).
Further, Office of Management and Budget Bulletin No. 97-01,
Form and Content of Agency Financial Statements, has mandated
that agencies submit interim unaudited financial statements on
a quarterly basis in fiscal year 2003. In addition, beginning
with the quarter ending March 31, 2004, USDA is required to
submit to OMB its quarterly unaudited financial statements 21
days after the end of each quarter.
--An increase of $410,000 and 3 staff years for GPRA and Performance
Management. Current staffing is insufficient to handle the GPRA
planning and review activities for the 26 USDA agencies and to
meet the increasing demand for performance reporting. To
address increased workload and provide oversight, a staffing
increase of three full-time equivalent staff and contract
support costs of $100,000 are required for the development and
production of the three Department-wide GPRA plans and reports.
--An increase of $542,000 and 3 staff years for Cost Accounting and
competitive sourcing responsibilities associated with the FAIR
Act. Fiscal year 1998 through fiscal year 2000 USDA
Consolidated Financial Statement Audit Reports have included
findings on USDA noncompliance with laws and regulations
regarding cost accounting and user fee'reviews for goods and
services. Without essential staff, it is not possible to
provide the necessary policy and guidance to individual
agencies and to perform the necessary follow-up work to ensure
compliance with policy. Audit findings have criticized previous
USDA CFO's insufficient efforts to provide guidance and
monitoring activities related to user fee reviews and cost
accounting methodologies. This request would provide two full-
time equivalent staff to coordinate and oversee the agency's
cost accounting and user fee activities review. We also request
$250,000 for contract support to develop appropriate cost
accounting methodologies, document processes, review user fees,
and construct performance linkages to strategic planning goals
and objectives.
--This initiative also requests one additional full-time equivalent
staff to support the Department-wide implementation of the
Federal Activities Inventory Reform (FAIR) Act of 1998 and
related A-76 public/private sector cost comparisons and
competition. The Department is required annually to review the
workforce and inventory all commercial and inherently
governmental jobs and provide reports to the Office of
Management and Budget. Increasing public-private competition
will require additional oversight, guidance and policy
development at the Departmental level.
--An increase of $463,000 and 4 staff years for Departmental
Administration and Staff Office Accounting and Budget Execution
Support. This staffing is essential to improve the timeliness
and accuracy of financial reporting for these USDA functions.
The implementation of the Department's new financial management
system has brought significant changes in the financial
management practices for Departmental Administration and Staff
Offices. These resources will provide important customer
services, including the preparation of required external
financial reports, definition and development of internal
financial management reporting tools, preparation of applicable
financial accounting adjustments, and assistance in budget
preparation and execution. The staff also acts as an
intermediary between the administrative end-users of the
financial management system here at headquarters and the
accounting processing functions located at the National Finance
Center.
working capital fund
Let's focus on USDA's Working Capital Fund (WCF). As context, the
Working Capital Fund provides controllership services to USDA agencies
and offices, data processing for USDA and a wide range of item
processing and record keeping for non-USDA customers.
We estimate total operating costs for the WCF in fiscal year 2003
will be $323.0 million, an increase of $11 million or 3.6 percent over
the fiscal year 2002 estimate. The cost of basic services for financial
management, information technology data centers, telecommunications and
administrative services will increase by about $7 million or 2.5
percent from $274 million in fiscal year 2002 to $281 million in fiscal
year 2003.
The remaining $42 million for the operating cost of the USDA
corporate systems is an increase of $4 million or 11 percent. These
systems include the Foundation Financial Information System
(accounting), the Integrated Procurement System and the Universal
Telecom System (Network Infrastructure).
The most important financing message I have for you today in this
regard is my request for $21 million in new appropriations to the
Working Capital Fund to invest in USDA's corporate systems development.
These systems are needed to process over $2.1 billion in procurement,
$3.0 billion in property management, and $15 billion in payroll, travel
and other administrative systems. This funding will address severe IT
infrastructure and system architecture deficiencies in order to meet
the financial management and accounting needs of our agencies.
USDA's Executive Information Technology Investment Review Board
will determine funding priorities among the following systems:
--Integrated Acquisition System (IAS).--This system will be the
corporate procurement system for USDA. After the accounting
system, it is a critical system for our accurately reporting
financial results, improving procurement services, our ability
to do electronic government, and streamline and manage both
procurement and financial management processes. It will also
assure adequate internal controls and avoid the rework we must
now do to reconcile the old procurement feeder system and the
accounting system.
--Travel.--We will use this money to look at alternative ways of
accounting for travel at USDA. Initial funding will be used for
a market survey of potential service providers and for the
implementation of the new USDA travel solution.
--Property/Asset Management.--A large item on our balance sheet
financial statement is property, an area over which we need
more control and assurance. Simply put, we need a new property/
asset management system to provide internal stewardship and
financial management controls of property with a workable
interface among the three key systems for our financial
results: property systems, procurement systems and the
accounting system.
--Data Warehouse Enhancements.--The Data Warehouse is the basis for
an integrated financial management system at USDA. When it is
complete, it will provide USDA with corporate data needed to
manage USDA and monitor performance. The enhancements planned
will be needed to address the data being provided by the new
feeders so users will have adequate reports and to provide the
data and system needed for performance and financial reporting.
--Universal Telecommunications Network.--This effort will provide
USDA a shared telecommunications network that has the capacity
needed to allow customers to transact business with USDA
electronically and safeguard their data from intrusion. Funding
will be provided to continue this effort.
I thank you, Mr. Chairman, for the opportunity to share with you:
--The results on which we are currently focused;
--Results we have achieved recently;
--Our Fiscal year 2003 Budget Request; and
--USDA Working Capital Fund.
I welcome any questions the Committee might have.
______
Prepared Statement of Nancy L. Smith, Acting Director, National Appeals
Division
Mr. Chairman and members of the Subcommittee, I am pleased to
appear before you to discuss the fiscal year 2003 budget request for
the National Appeals Division.
introduction
The National Appeals Division (NAD) was established by the
Secretary of Agriculture pursuant to the Reorganization Act of 1994.
The Act consolidated the appellate functions and staffs of several USDA
agencies under a single administrative appeals organization. NAD
appeals involve program decisions of the Commodity Credit Corporation,
the Farm Service Agency, the Risk Management Agency, the Natural
Resources Conservation Service, and Rural Development agencies.
Moreover, in States under the authority of the United States Court of
Appeals for the Eighth Circuit, NAD Hearing Officers adjudicate and the
Director makes final determinations on applications for fees under the
Equal Access to Justice Act (EAJA). NAD is headquartered in Alexandria,
Virginia, and has regional offices located in Indianapolis, Indiana;
Memphis, Tennessee; and Lakewood, Colorado. NAD's staff of 133 includes
70 hearing officers.
mission
NAD's mission is to conduct evidentiary administrative appeals
hearings and reviews arising out of program decisions of certain USDA
agencies. Our strategic goal is to conduct independent evidentiary
hearings and issue timely and well-reasoned determinations that
correctly apply USDA laws and regulations. NAD's mission is statutorily
specific, but its operation is dynamic and challenging, given the
complexities of changing laws, regulations and policies affecting USDA
program decisions.
For 2003, the budget proposes a total of $15,262,000 for NAD's
salaries and expenses, an increase of $2,393,000 from the amount
enacted in fiscal year 2002, excluding supplementals. Within this
fiscal year 2003 request, $1,503,000 covers the costs of items
previously paid from central accounts within USDA or on a government
wide basis, including GSA rental payments, Federal Employees
Compensation Act and Civil Service retirement and retiree health
benefits. The Explanatory Notes provided to the Committee provide
information on the comparable levels for these items in fiscal year
2001 and fiscal year 2002.
That concludes my statement, and I look forward to working with the
Committee on the 2003 National Appeals Division budget.
______
Prepared Statement of Joyce N. Fleischman, Acting Inspector General,
Office of Inspector General
introduction and overview
Good morning, Mr. Chairman and members of the Committee. I
appreciate the opportunity to testify before you today to discuss the
activities of the Office of Inspector General (OIG) and to provide you
information on our audits and investigations of the major programs and
operations of the U.S. Department of Agriculture (USDA).
While this is my first formal appearance before the Committee as
Acting Inspector General, I have been the Deputy Inspector General at
USDA for more than 6 years and have been involved in the oversight and
direction of OIG throughout this time. I want to thank you for your
support to the agency during the past and hope we have been able to
address some of your concerns. I look forward to working closely with
you both as Acting Inspector General and Deputy Inspector General.
Before I begin, I would like to introduce the members of my staff
who are here with me today: Gregory Seybold, Assistant Inspector
General for Investigations; Richard Long, Assistant Inspector General
for Audit; and Delmas Thornsbury, Director of our Resources Management
Division.
The safety and wholesomeness of agricultural products provided to
the public is our primary concern. Our audits and investigations have
continually addressed issues related to the integrity and security of
American agriculture, the protection of the consumer, and the safety of
USDA-operated and- funded facilities and their personnel. As such, much
of our work has been focused on what are now termed ``Homeland Security
issues'' even before the tragic events of September 11.
Our work in protecting the Nation's food supply, cybersecurity,
disaster programs, production agriculture, and financial integrity are
all part of our broad spectrum of ensuring the safety of the
agricultural economy and the Department's infrastructure. With the
events of September 11, these efforts have been greatly intensified and
reinforced.
In my testimony today, I will address these crucial issues facing
the Department and the work OIG is doing to support and assist in these
areas.
homeland security
Homeland Security--Response to Terrorism
The events of September 11 and the subsequent anthrax attacks have
given new urgency to issues of security over USDA's infrastructure and
the agricultural economy. Those events tested OIG's law enforcement
response and audit support to departmental operations as never before
in our history. Following the terrorist attacks, OIG special agents
immediately provided emergency assistance and participated in the
Federal Bureau of Investigation (FBI) task force operations in New York
City. In addition, over 30 special agents were deployed to more than 50
critical USDA-operated or -funded facilities, including laboratories
and research facilities across the country, to determine vulnerability
to attack or compromise by terrorists. They met with facility and
laboratory directors, safety officers, and research leaders to discuss
and evaluate the security measures for the facilities, personnel,
foreign scientists and researchers, and the handling of hazardous
materials. We assigned 32 special agents to counterterrorism task
forces and to nationwide criminal investigations related to the events
of September 11.
We are working with USDA agencies to protect the food supply and
ensure that the Department continues to serve the needs of the
agriculture sector and the consumer. OIG has helped USDA agencies
establish teams of dedicated personnel to respond to each emerging
crisis. In addition, the agency has been responding to numerous anthrax
contamination threats at Federally inspected meat plants and other
sensitive USDA facilities. I am happy to say that, to date, all of
these threats have been hoaxes.
Security of USDA Laboratories and Critical Facilities
In the spring of 2001, we began a review of the Department's
security and controls over biohazardous materials at its laboratories.
We looked at controls to prevent the inadvertent or intentional release
of the biohazardous materials. We interviewed departmental and agency
officials and visited 6 of the Department's biosafety level (BL) 3
laboratories. The Department was then unaware of the nature, number,
and biosafety risk of biohazardous materials at any of its facilities,
both USDA-operated and USDA-funded. The Department did not require
detailed tracking records of any access to biohazardous materials or
comprehensive security checks on personnel with access to these
materials. Moreover, the Department did not have adequate physical
security at a number of its facilities commensurate with the level of
risk. Our past investigations of vandalism at USDA facilities by animal
rights and environmental activist groups had already identified the
heightened need for physical security at many of these facilities,
especially those of the Forest Service (FS) and the Animal and Plant
Health Inspection Service (APHIS).
The September 11 events suddenly imbued these vulnerabilities with
a new sense of urgency, particularly given the possibility of a
terrorist presence in our country and the devastating impact of an
intentional release of such biohazardous materials on the agricultural
economy. On September 24, we issued an interim report to the Department
advising that it needed to take immediate steps to identify and compile
an inventory of biohazardous materials in its possession. Further, it
needed to strengthen management controls. Moreover, it needed to ensure
that all materials are adequately accounted for and strengthen or
upgrade the physical security at its facilities commensurate to the
biosafety risk of the materials. Shortly thereafter, the Department
responded by establishing a task force to draft departmentwide policies
and procedures on biosecurity requirements for its BL 3 laboratories.
They were to address inventory control, physical security, personnel
security, and incident reporting. OIG participated in the task force
discussions and provided feedback on the draft policies and procedures.
During the period of these reviews, the Department contracted with the
Sandia National Laboratories to conduct a risk assessment and security
analysis at all of its BL 3 laboratories.
Concurrently, because of the heightened awareness of the
consequence of these biological agents if released, we accelerated and
broadened our review. We immediately met with APHIS officials to
discuss our concerns with the import and domestic shipment of such
biohazardous materials. We were encouraged that the agency had already
begun to address these concerns by temporarily suspending new permits
while it reviewed the process. We interviewed Department officials who
administered the visitor exchange, or J-1 visa program, at the
departmental laboratories. Based on these interviews and meetings, we
proposed additional procedures to preclude a potential terrorist,
posing as a visiting scientist, from obtaining such biohazardous
materials. Further, we proposed procedures to strengthen the visa
programs and monitoring of visitors to USDA facilities. We devoted
increased resources to our review of controls over genetically
engineered organisms, or GEOs, whose premature and uncontrolled release
into the environment in an untested state might damage agricultural
production.
Because we were concerned whether any new inventory and security
procedures had been implemented at the field level, we dispatched
approximately 50 auditors to over 100 laboratories nationwide in
October and November 2001. In December, we issued another interim
report to the Department. We reported there had been no concerted
efforts by the agencies to contact the laboratories under their
control, obtain an inventory of biohazardous agents, or ensure that
security measures are adequate. We recommended that the Department
hasten implementation of the policies and procedures prepared by its
biosecurity task force and take immediate action to correct the
deficiencies at one BL 3 laboratory. Since then, a number of the
agencies have compiled inventories and have started to evaluate the
vulnerability or risk associated with such inventories with the goal of
implementing additional biosecurity measures.
In our second phase of this ongoing review, we intend to evaluate
the controls and security at university and private laboratories funded
by the Department. This will include biological agents and chemical and
radioactive materials stored or used at these laboratories and their
shipment by these facilities.
Enhanced Controls Needed on Imported Meat and Agricultural Products
One of OIG's ongoing activities, even before September 11, was
involvement in departmental efforts to ensure that animal and plant
diseases from abroad do not infect agricultural production in this
country. During 2001, the world witnessed outbreaks of Foot and Mouth
Disease (FMD) in Europe and South America. At the outbreak of FMD in
Great Britain and elsewhere, we began establishing emergency response
teams to investigate similar threats to American livestock and
agriculture. A team traveled to the United Kingdom to gain firsthand
knowledge of its law enforcement agencies' experience in dealing with
quarantines, as well as any unlawful activity associated with that
outbreak.
Because of the devastating effect FMD could have on the U.S.
livestock industry if an outbreak occurred in this country, last summer
OIG undertook an expedited review of APHIS' and the Food Safety and
Inspection Service's (FSIS) functions regarding imported meat. We found
that the fundamental problem was poor or failed communications between
the two agencies. For the processes of inspection, reinspection, and
clearance or rejection of imported meat to work efficiently, the two
agencies must communicate in an organized and punctual manner. This did
not always occur. For example, a mixed shipment of over 32,000 pounds
of meat product from an FMD-restricted country arrived at the Port of
Houston and was approved by APHIS for transport to an FSIS inspection
house. However, when APHIS approved the transfer, it inadvertently
released the hold on the shipment, allowing the meat product to be
shipped prematurely. Neither agency was aware the product had been
shipped to a commercial warehouse in San Antonio, Texas, until the
broker discovered the error 9 days after the release of the product. As
a result, the product was returned to Houston, where over one-sixth of
it had to be destroyed because it had been produced after the FMD
restricted date.
We found that APHIS needed to improve its accountability over
imported products from their arrival at U.S. ports-of-entry through
disposition. More importantly, neither APHIS nor FSIS had an adequate
system of controls or records that could produce such information. We
recommended that these agencies implement new procedures to strengthen
their communication and coordination at the field level and that they
issue instructions specifically identifying the responsibilities of
each agency regarding the handling of products from restricted
countries. We further recommended that APHIS discontinue its policy of
allowing mixed shipments of unrestricted and restricted products to
enter the country for sorting. Additionally, we recommended that the
agencies jointly conduct an inventory to identify and account for all
products that had entered the United States from FMD-restricted
countries and ensure the disposition of any that still remained. We
recommended that APHIS improve its systems to track and account for
products that are retained on hold at the ports-of-entry and flag
instances where such products have remained for an unreasonable amount
of time. Both APHIS and FSIS agreed with the findings and
recommendations and are acting on them.
We are just completing a review of the adequacy and effectiveness
of APHIS' operations to prevent or minimize the introduction of
harmful, exotic pests and diseases into the United States. We disclosed
in an interim report that APHIS' process for performing criminal
history record checks on newly hired employees assigned to work in
secure areas of commercial airports did not meet Federal Aviation
Administration (FAA) requirements. For instance, we documented one case
in which an APHIS inspection officer worked for over 280 days without a
check having been initiated even though FAA regulations required one
within 45 days of hiring. During that time, the employee had unescorted
access to secure areas of a major commercial airport. We recommended
that APHIS immediately identify all employees for whom background
checks had not been made; take interim measures to ensure they were not
assigned to secure areas; amend its hiring policies to include
preemployment checks that, at a minimum, meet FAA requirements; and
implement a tracking system to ensure that employees properly complete
and return security forms within specified timeframes. APHIS agreed to
do so.
tracing financial transactions
Since September 11, U.S. Attorneys around the country have
established task forces of Federal and State law enforcement agencies
to identify and seize sources of funding for terrorist groups. We are
participating in many of these task forces because we know that money
from several of our current food stamp trafficking cases is being
transferred overseas. We have routinely focused our investigations
regarding the trafficking of food stamp benefits, either via paper
coupons or the Electronic Benefits Transfer (EBT) system, on the money
trail. One recent investigation of food stamp trafficking identified
approximately $228,000 that was transferred to foreign bank accounts in
a country known to harbor terrorists by the owners of a convenience
store authorized to accept food stamps and Special Supplemental
Nutrition Program for Women, Infants, and Children benefits.
We have moved to halt this type of fraud through aggressive use of
money laundering and forfeiture statutes and through combining our
efforts with other law enforcement agencies. Our goal is to prevent
USDA program funds from supporting any terrorist operatives, either in
the United States or overseas.
security over hazardous material
We have an audit underway to evaluate APHIS' safety practices,
accountability, and internal controls over the handling, security, and
disposal of hazardous materials, used in its Wildlife Services
programs, including explosives and pesticides. We found that APHIS
lacks adequate accountability and control over hazardous pesticides and
drugs maintained by some of its State offices for use in wildlife
damage control. At the 2 State offices we visited, which have over 32
percent nationwide of the pesticides and 24 percent of the drugs used
in the National program, APHIS did not maintain adequate records to
support its inventories of hazardous materials representing 8 different
pesticides or drugs including M-44 cyanide and fumitoxin fumigant. We
recommended that the two State APHIS offices determine whether
unaccounted for hazardous materials were missing or stolen and report
to OIG. In addition, we recommended the State offices immediately
establish and implement controls to ensure that perpetual inventory
records of pesticides and drugs are maintained. Further, we recommended
that the State offices document transfers to applicators and perform
periodic inventory counts. APHIS has acted on our recommendations;
however, in requiring its State offices to perform and reconcile
inventories, discrepancies have come to light which we will be pursuing
with APHIS to resolve.
Outreach Activities
Our experiences over the years working with State and local law
enforcement agencies, especially during Operation Talon, have
reinforced the benefits that joint Federal, State, and local
cooperative efforts can have in protecting USDA programs and resources.
While first responses will always involve State and local agencies, the
catastrophic events of September 11 highlighted the urgent and
increased need for Federal, State, and local coordination of efforts to
protect the Nation's food supply. Recently, we met with top officials
to emphasize these points and to offer OIG's insight and assistance as
the Department and each of the agencies undertake an assessment of
their vulnerabilities and development of solutions. We expanded these
efforts to the vast field structure maintained by the Department. OIG
regional managers are meeting with departmental field staff and State
and local officials, particularly law enforcement and health officials,
to alert them and join in a concerted effort to protect the
agricultural economy and the Department's assets.
For more effective outreach, OIG has expanded its efforts to
include networking with industry and farm organizations, and other
similar groups. Recent efforts have included meetings with regional
shipping and trucking associations and the Southeastern
Intergovernmental Audit Forum, which consists of Federal, State,
and local auditors.
olympics
The 2002 Winter Olympics has been declared a Homeland Security
``Event'' for Federal law enforcement agencies. For the past year and a
half, OIG has joined in a partnership with the FBI and the U.S. Secret
Service (USSS) to ensure the integrity and security of the food supply
for the Olympics, and to ensure the security of USDA's facilities in
and around Olympic venues that are potential targets for attacks. In
addition, OIG serves as the liaison between the FBI and USSS with USDA
agencies while at the event. In
January, we sent additional special agents to provide law
enforcement coverage as the Olympics unfold. Further, OIG will provide
emergency response with other law enforcement agencies to any threat to
disrupt the events.
computer security
Audits of computer security have been a high priority, and our
emphasis in this area will continue to increase. As the Department
continues to expand its use of information technology (IT) for program
and service delivery, this component of the USDA infrastructure has
become a key element for operational integrity and control. One of the
more significant dangers USDA faces is a cyberattack on its IT
infrastructure, whether by terrorists seeking to destroy unique
databases or criminals seeking economic gain. The Department has
numerous information assets, which include market-sensitive data on the
agricultural economy and its commodities, signup and participation data
for programs, personal information on customers and employees,
agricultural research, and Federal inspection information ensuring the
safety of the food supply, as well as accounting data. The information
and related systems face unprecedented levels of risk from intentional
or accidental disruption, disclosure, damage, or manipulation.
Public confidence in the security and confidentiality of the
Department's information and technology is essential. The Department
has taken positive action, through the Office of the Chief Information
Officer, by developing and initiating a plan to strengthen USDA
information security; however, we continue to identify deficiencies at
component agencies. Our independent evaluations, completed to meet the
Government Information Security Reform Act requirements, disclosed
material IT security weaknesses. Our assessments identified over 3,300
high- and medium-risk vulnerabilities and numerous low-risk
vulnerabilities. Inadequately restricted access to sensitive data was
the most widely reported problem. Most agencies we reviewed had not
ensured security plans contained all elements required by the Office of
Management and Budget. In addition, agencies had not planned or tested
for contingencies and disaster recovery, nor had they properly
certified and attested to the adequacy of security controls and
performed assessments to identify, eliminate, or mitigate risks.
food safety and farm programs
Consumer Protection
During the past year, our investigations of meat and poultry food
processing operations resulted in 12 convictions and overall monetary
results totaling over $4.7 million, primarily in fines. We are
investigating a corporation for distributing unwholesome poultry
products contaminated with rodent hair and feces to 47 California
school districts. In two other cases, a major food-processing
corporation and a major food store chain pled guilty to distributing
millions of pounds of meat products contaminated with Listeria
monocytogenes, which can cause severe illness or death to anyone who
consumes the contaminated product. These firms were fined a total of
$1.4 million. In the most serious case, the food store chain knowingly
distributed contaminated food product that resulted in a recall of over
4.5 million pounds of product.
Protecting Farm Interests
We are concerned with protecting this Nation's agricultural
interests from farm to table. Approximately 1 year ago, OIG special
agents were on the front lines ensuring that APHIS' staff was not
hindered from enforcing the seizure and transportation of over 350 East
Friesian sheep from Vermont to the National Veterinary Services
laboratory in Ames, Iowa, where they were destroyed. Four sheep from
those flocks had tested positive earlier for a transmissible spongiform
encephalopathy (TSE)--a class of diseases including bovine spongiform
encephalopathy, or ``mad cow'' disease. In response to the test
results, the Secretary issued a declaration of extraordinary emergency
because of atypical TSE of foreign origin, which enabled USDA to seize
the sheep. The seizure was challenged in Federal court. While this
delayed action for approximately 6 months, ultimately a judge upheld
the Secretary's order, and the sheep were seized, transported, and
euthanized without incident.
OIG agents and other members of the Ohio Organized Crime
Investigations Commission Task Force infiltrated a criminal
organization which was preying on farmers in the tri-State area. The
investigation found that the criminal organization was responsible for
over $5 million in farm-related thefts. In August 2001, 12 members of
the organized group were arrested in the Dayton area for their
participation in a conspiracy to steal farm equipment and other items
from local farmers. Six of the subjects were recently sentenced to jail
terms from 2 to 12 years, and the task force recovered over $1 million
worth of the stolen property. OIG positively identified 30 farms
participating in FSA programs that this criminal organization
victimized in 12 counties in Ohio, 5 counties in Indiana, and 1 county
in Kentucky. Much of the stolen property was collateral for farm-owned
property or operating loans and business and industry loans.
Implementation of Agricultural Risk Protection Act and Disaster
Assistance Programs
We have continued to review RMA and the Farm Service Agency (FSA)
as they implement the provisions of the Agricultural Risk Protection
Act of 2000. Our efforts have focused on monitoring their joint
implementation plan involving program compliance and integrity. We
participated with the agencies in drafting the implementation plan and
attended agency briefings provided to congressional and departmental
staff, as well as industry officials. We also participated in various
working groups directed to draft specific policies and procedures for
the implementation plan. Our goal was to assist both RMA and FSA up
front in improving their quality control system and compliance
procedures to assess program integrity. This up front and proactive
approach is more effective and efficient in ensuring that eligible
farmers are treated fairly and receive proper assistance rather than
identifying improper payments and recommending their recovery after the
fact.
We reviewed FSA's implementation of the disaster assistance
programs mandated by Congress. Last year, we again reported that the
agencies had not implemented interagency procedures to share corrected
program information, such as corrected acreage resulting from a
compliance review, that could impact payment determinations by the
other agency. For example, FSA issued over $19 million in disaster
assistance to watermelon and corn producers based on indemnity payment
information provided by RMA. However, most of those payments resulted
from excessive yields established by RMA or from a nonviable crop for
the area coverage. In both cases, RMA had to rescind these flawed crop
insurance programs.
We surveyed FSA's implementation of the fiscal year 2000 disaster
assistance programs authorized under the Agriculture, Rural
Development, Food and Drug Administration, and Related Agencies
Appropriations Act of 2001. We analyzed the amount of funding allocated
to the various programs. As a result, we initiated a more intensive
review of FSA's implementation of the new Quality Loss Assistance
Programs. Further, we examined the implementation of the Limited
California Cooperative Insolvency Payment Program, particularly FSA's
determination of producers' payments.
food stamp program
We have continued to proactively review EBT systems that provide
Food Stamp Program (FSP) benefits as they are implemented in the
States. Currently, 44 States and the District of Columbia have
implemented EBT systems with 40 of them implemented statewide or
districtwide. Approximately 84 percent of food stamp benefits,
estimated at $17.1 billion for fiscal year 2002, are issued through
these systems. During fiscal year 2001, we completed reviews in the
District of Columbia, Hawaii, and Washington and found all of their EBT
systems have been implemented successfully.
Operation Talon
For the last 5 years, OIG has coordinated a nationwide law
enforcement initiative dubbed ``Operation Talon,'' which, to date, has
resulted in the arrest of nearly 8,000 fugitive felons. This
initiative, which has been carried out in conjunction with other law
enforcement agencies and State social service agencies across the
country, was designed to identify, locate, and apprehend dangerous and
violent fugitive felons who may also be illegally receiving benefits
through FSP. Operation Talon has grown into a nationwide dragnet,
currently encompassing fugitives wanted in 31 States, as well as
Federal fugitives sought by the U.S. Marshals Service. The more serious
offenses for which Operation Talon fugitive arrests have been made
include 35 arrests for homicide; 51 for sex offenses, including rape
and child molestation; 17 for kidnapping/abduction; 435 for assault;
229 for robbery; and 1,728 for drug/narcotic offenses. A number of
States have removed arrested fugitives from their food stamp rolls,
resulting in savings to FSP. We have managed to leverage our success
through the use of targeted asset forfeiture funds to pay for overtime
costs and special equipment needs of the State and local law
enforcement agencies participating with us in Operation Talon.
Furthermore, this equipment remains with the State and local agencies
to support their law enforcement and emergency response efforts.
public corruption
In fiscal year 2001, OIG fought public corruption by investigating
USDA employees who abused their positions for private gain. We worked
jointly with the Drug Enforcement Agency, the FBI, the U.S. Customs
Service, and the Internal Revenue Service to bring to justice an APHIS
inspector who, over a 3-year period, accepted over $90,000 in cash and
drugs as bribes to permit approximately 230 kilograms of cocaine to be
smuggled through the Miami International Airport. The cocaine was
hidden inside vegetable containers he cleared at the airport. After the
subject was indicted by a Federal grand jury, he pled guilty to
conspiracy to possess narcotics with intent to distribute and is
currently awaiting sentencing.
In another significant case, a former Agricultural Marketing
Service produce inspector in St. Louis pled guilty to accepting bribes
to intentionally downgrade produce. He had been taking bribes for
almost 15 years. His actions harmed local farmers, who were underpaid
for their product, and allowed corrupt produce company officials to
pocket illegal profits. Ten other people associated with produce
companies have also been found guilty in this case. Our public
corruption cases led to 21 convictions and 61 personnel actions last
year.
financial integrity
While some of the Department's agencies have achieved success with
their financial systems and received clean financial opinions, other
major agencies have not. For fiscal year 2000, financial statements for
three agencies received unqualified opinions. The Food and Nutrition
Service, the Risk Management Agency (RMA), and the Rural Telephone Bank
(RTB) received unqualified opinions on their fiscal year 2000 financial
statements, which means their statements fairly presented their
financial position. But FS and the Commodity Credit Corporation (CCC)
were unable to timely provide their financial statements for us to
complete our audit of them by the legislatively mandated date of March
1, 2001. Statements provided by FS and CCC subsequent to March 1
contained significant errors. The Rural Development (RD) mission area
received a qualified opinion because it was not able to properly
determine the cost of its loan programs.
The individual conditions of the agencies, when taken together,
resulted in issuance of a disclaimer of opinion on the Department's
consolidated financial statements for the past 7 fiscal years--1994
through 2000. These opinions mean that, overall, the Department did not
know whether it correctly reported all monies collected and the cost of
its operations, or that it properly accounted for all of its over $100
billion of assets. Most importantly, some USDA managers do not have
reliable financial information on which to make decisions.
Our current audits of the fiscal year 2001 financial statements
have shown improvements in the timeliness of CCC financial information
and in RD's efforts in determining the cost of loan programs. Our audit
work on the Department's consolidated statement for fiscal year 2001 is
ongoing.
business process reengineering
Before I close, I would like to take a few minutes and tell you
about an initiative we have begun within OIG for which our budget
request would provide critical support. Last summer, the senior
management team at OIG decided that the agency needed to undertake a
full review of how we do our business. We believe that the agency can
achieve greater efficiency in carrying out our mission to audit and
investigate if we streamline our processes and adopt more modern
business practices. We also believe that we can use state-of-the-art
information technology to free our people to do more of the work that
they are uniquely qualified to do. In other words, we want to utilize
machines to do that which machines can do, thus allowing human minds to
do those things only they can do.
To that end, we launched a formal study of our agency. We are well
into a detailed, systematic plan that will result in a phased strategic
plan to equip and train our people so that OIG can maintain its
historic high level of quality, reliability, production, and service in
its operations.
One example of desperately needed modernization involves automated
audit workpaper files and an electronic case management system for
Investigations. The Government Paperwork Elimination Act requires that,
when practicable, Federal agencies must use electronic forms,
electronic filing, and electronic signatures to conduct official
business with the public by 2003. OIG currently lacks any systematic
method of electronically recording and storing audit workpapers.
Workpapers and other supporting documentation are often prepared using
multiple approaches, formats, and storage mediums. The few electronic
workpapers and support documentation the agency does produce, while
meeting current audit standards for hardcopy documents, fail to meet
the evolving standards for electronic documents, especially standards
for electronic record validity. The agency must accept the challenge to
enhance audit integrity and efficiency using automation. We expect
automating the agency's audit workpapers to reap significant savings in
stafftime and review and coordination of our audit work processes. This
will allow us to work smarter, as well as expand the depth and
analysis, cross-referencing, quality control, and report writing of our
audit work. The same analysis holds true for automated case management
for our law enforcement investigative operations. Our auditors and
special agents are highly skilled people whose time can be spent more
effectively doing audits and investigations rather than filing papers.
We are beginning our modernization effort with this budget with a
request for money for information technology and training for OIG staff
to support these agencywide streamlining and cost-cutting efforts,
allowing us to work smarter and do more with our resources.
conclusion
I am very proud of the accomplishments of OIG and pleased to report
that, in fiscal year 2001, we continued to more than pay our own way.
In the Investigations arena, our special agents completed 490
investigations, obtained 358 indictments and 352 convictions, and made
1,335 arrests. These actions resulted in $66 million in fines,
restitutions, other recoveries, and penalties during the year.
In the audit arena, we issued 111 audit reports and obtained
management's agreement on 99 recommendations. Our audits resulted in
questioned costs of over $45 million. Of this, management agreed to
recover $38.5 million. In addition, management agreed to put another
$122 million to better use. Equally as important, implementation of our
recommendations by USDA managers will result in more efficient and
effective operations of USDA programs.
The events of September 11 have altered all of our lives and the
course of the work we do. As I discussed earlier, our work has always
been focused on the protection and enhancement of American agriculture,
a safe and plentiful food supply for our own citizens, and, indeed, for
people around the world. Since September 11, we have redoubled our
efforts and worked with the Department to support its and the
Government's Homeland Security efforts to ensure the Nation's food
supply and to safeguard America's agricultural infrastructure. Overall,
since the September 11 attacks and subsequent threats, at least one-
third of our resources--more than 100 agents and 75 auditors--have
taken on additional duties to respond to the immediate Homeland
Security issues.
I recognize there is a fierce competition for the Government's
limited resources; however, I believe adequate funding for our office
make good sense. OIG is very cost effective in view of the money it
saves the taxpayers and in providing sufficient assurance and well
being to the American people. As such, I request that our proposed
funding level be approved without reduction.
This concludes my statement, Mr. Chairman. I appreciate the
opportunity to appear before you today and would be pleased to respond
to any questions you may have at this time.
ANNUAL CROP FORECASTS
Senator Kohl. We thank you very much for your statement.
Secretary Veneman, a Bloomburg news item of February 22 stated,
and I quote, ``Agriculture Department officials said they have
given advance copies of the agency's annual crop forecasts to
certain commodity traders, researchers, and investors before
they are disclosed to the public,'' unquote.
On the face of this announcement, and even if we were not
in the current Enron environment, such news items are highly
disturbing. The security that normally surrounds the USDA crop
announcements is well known for its intense secrecy and the
high market sensitivity of such information. To hear that such
information is being provided to certain commodity traders and
others in advance of the public release places in question the
integrity of the USDA and the very markets for which you are
supposed to provide stability and transparency.
Would you now please set the record straight on the
incident raised in this news item and provide for the record
the current practice at USDA for the release of this type of
information?
Secretary Veneman. Yes, Mr. Chairman, I agree that these
kinds of news items are of concern. However, this is an issue
that is not practiced. It has gone on for some period of time
in the Department, since the mid 1990s, as I understand it, and
does not include the kind of information that is in the lock-up
reports. Dr. Collins put out a statement yesterday on this
issue, and I would like him to just reiterate what was in that
statement and how we will proceed from here on out.
Senator Kohl. Mr. Collins?
Dr. Collins. Thank you, Mr. Chairman. Mr. Chairman, I would
say, first, that we work very hard at USDA. We work vigorously
to ensure the integrity of our data, our forecasts, our
estimates, our projections programs, and I think I can stand
here today and say that our integrity is intact. As a Federal
agency, we are probably unsurpassed with the record that we
have had over the years in ensuring the sanctity of the way we
handle our data and forecasts.
Let me say I found that article disturbing, too, and I
think it mischaracterizes what we do. At our Outlook Forum,
which we have in February, we offer early-season projections of
the upcoming year, an outlook for the upcoming year. It is
based on publicly-available information, and it is not
connected with the lock-up, with surveys, or with internal
information in any way.
At that forum, we do peer-review. We have asked external
reviewers to come in and critique the forecasts before we
release the outlook for the upcoming year. Those people who we
have asked to do that are not investors or traders, as the
article said. They are researchers, and they are analysts. We
also ask them to protect the confidentiality of the
information. We have no record that that confidentiality has
ever been breached or that there has ever been any problem with
regard to this.
Finally, I guess I would say that we consider this
information, because it comes so early in the season and
because it is not based on any internal surveys or estimates,
we consider it minimally market-sensitive information.
So, in any event, the final part of your question was: What
are we doing about it today? What is our practice? As a result
of the stories that have surfaced over the last couple of days,
and to avoid any possible confusion or misperception in
anyone's mind, we are simply just going to discontinue that
practice and not have third-party or external reviews of those
early season outlooks that we present.
Senator Kohl. Thank you. As you know, and I am sure agree,
it is extremely important that the markets have complete
confidence in USDA activities and information. We expect you to
ensure that USDA's market information is secure and properly
released to the public. I am sure you agree.
Dr. Collins. We are committed to that.
INSPECTION OF IMPORTED MEAT AND POULTRY PRODUCTS
Senator Kohl. Madam Secretary, as I am sure you are aware,
the front page of the Washington Post on Monday featured an
article in regard to USDA inspections of foreign meat-packing
plants. This article highlighted several cases involving both
Mexican and French plants found to have numerous sanitation and
safety problems, some failing USDA inspections altogether.
After initial inspections, the article reports that many of
these plants regained their license to export meat to America
without ever having been reinspected by the USDA.
The article also mentions a 2000 report by the USDA
Inspector General which found, among other things, that 19 out
of 36 U.S. trading partners had exported meat to the United
States even though their meat and sanitation programs did not
meet U.S. standards in areas such as testing for chemical
residues.
In addition, last Monday HHS Deputy Secretary Claude Allen
told the Center for Strategic and International Studies that
our food supply is vulnerable and that it is best to inspect
food supplies coming into the United States at their source,
rather than when the product is at our border.
Given the heightened state of awareness that all Americans
have practiced since September 11, it would seem that a lack of
proper inspections or maintenance of standards in the area of
meat and poultry imports seems counter to the general
expectations of enhanced oversight. Funds which have been
provided for homeland security, and for which additional funds
are requested, have been directed to hire additional APHIS
inspectors to interdict harmful products entering the country.
However, it appears that additional homeland security funds are
not being requested to enhance oversight of foreign slaughter
and processing facilities in spite of an imperfect record in
recent years. And so, in view of the current threats posed to
Americans by those wishing to do us harm, should additional
steps be taken by USDA in the area of foreign meat and poultry
inspections to ensure American safety and confidence in these
products?
Also, would you comment on what actions USDA has taken in
response to the June 2000 Inspector General report on this
subject?
Secretary Veneman. Mr. Chairman, my understanding is the
article that appeared in the Post earlier this week was based
on an OIG report, and that it did not take into account,
despite several interviews with our Undersecretary for Food
Safety, the steps that have been taken with regard to Mexico
since the OIG report was released. Information was not
contained in that news report, including the fact that we have
done additional inspections of Mexican plants, that we
prohibited the plant in question from exporting products to the
U.S., during the time they were in non-compliance, and that we
continue to do reviews with regard to those Mexican plants.
I agree with you that we absolutely need to maintain the
integrity of these inspection systems. What we do when we go
into another country where we allow imports, is to certify
their inspection system, and then we do regular checks on the
plants within that system to determine whether or not they are
meeting the criteria. If not, steps are taken to ensure that
the criteria are met or the plant is prohibited from exporting
products to the United States. They have been taken with Mexico
since the 2000 OIG report and we continue to review those
systems to make sure that there is no issue with regard to
those meat plants.
We have increased money within the budget with regard to
conducting foreign program reviews in Mexico and other
countries and we are continuing to review those issues. Mexican
imports, as I understand it, are re-inspected at the border by
USDA inspectors at a rate of a 100 percent.
Senator Kohl. Are you suggesting that the basic premise and
impression of the direct statements, in quotes, that were made
in that article on Monday are inaccurate, and that the public
that read that article should, for the most part, disregard its
import and its inference?
Secretary Veneman. Mr. Chairman, I think that rather than
saying it is inaccurate, I would say that the article did not
tell the whole picture of what has happened over the last year
or so with regard to the OIG report. We have gone in and
inspected the plants, we have taken steps since the report to
correct any violations, and we don't believe that the article
accurately reflected the actions that have been taken in the
recent months.
Senator Kohl. Well, how often are foreign meat-packing
plants inspected by USDA?
Secretary Veneman. Mr. Chairman, I will have to get back to
you with the answer to that. I do not have that particular
information.
[The information follows:]
In light of recent animal health diseases in Europe and
bioterrorist threats both in the United States and abroad, FSIS'
certification process for foreign inspection programs has become a
subject of heightened interest. Annually, we review all foreign
inspection systems in countries eligible to export meat and poultry to
the United States. In fiscal year 2001, FSIS reviewed the documentation
of and performed on-site audits in 27 of the 32 countries eligible to
export meat and poultry products to the United States, as well as two
countries requesting eligibility, and was satisfied that all 29
countries had implemented Sanitation Standard Operating Procedures
(SSOPs), HACCP systems, and pathogen testing programs. These audits
included visits to 217 slaughter and processing establishments and 82
laboratories. FSIS did not audit four countries (Austria, Ireland,
Northern Ireland, and England) in 2001 because the September 11 events
disrupted planned travel. The fifth (Uruguay) was delayed because of
foot and mouth disease concerns that might have resulted in its
delistment. Those issues were resolved, and Uruguay was audited from
January 14 through February 1, 2002. There were no major deficiencies.
FSIS has rescheduled the four remaining audits for 2002.
Dr. Collins. I can say with regard to Mexico, we audited
three plants in November, and we have planned an audit again in
April of this year. So that is two sets of audits within
several months. I cannot tell you what the schedule is for all
the countries of the world.
Senator Kohl. Well, the obvious question that comes up is
if a product is being shipped from foreign plants into this
country to be consumed by the American public, shouldn't the
level of inspection be comparable to inspections here in this
country?
Secretary Veneman. We do certify that the countries from
which meat is imported have systems that are equivalent to
those here in the United States, including having inspectors in
the plants from those countries that are trained to enforce
U.S. inspection standards.
Senator Kohl. However, isn't it a fair question to ask, if
that is true, how something like what occurred in that story,
as reported, could have happened?
Secretary Veneman. As Dr. Collins indicated, we have
audited three plants, as I understand it. I can certainly have
our Undersecretary for Food Safety further elaborate on this
for you, Senator, and get more information to you.
[The information follows:]
Our international efforts include ensuring that imported product is
safe for consumption and held to the highest standards of food safety.
I take the recent reports of poor sanitary conditions in meat plants in
Mexico and the questions concerning USDA's auditing and plant
certification in Mexico very seriously. For this reason, I requested
Under Secretary Murano travel to Mexico to get an assessment of the
situation. During this visit, she, along with the FSIS Acting
Administrator and other USDA officials, met with Dr. Javier Trujillo,
Director of Food Safety for Mexico, and other Mexican government
officials to measure their level of commitment to maintaining a meat
inspection system that is equivalent to the United States. They took
the opportunity to visit several plants in question to see the sanitary
conditions first hand. We will continue to ensure that every effort is
being made in Mexico and all other eligible exporting countries to
maintain the highest level of sanitary conditions and will keep you
apprized of the progress.
To ensure that foreign countries exporting meat and poultry
products to the U.S. have equivalent inspection systems, the Agency
performs on-site audits of those systems, monitoring, verifying, and
evaluating the effectiveness of the controls that are in place to meet
Federal requirements. In fiscal year 2001, the Agency completed routine
audits of establishments, laboratories performing residue and
microbiological analyses, and government inspection systems in 29
countries.
The equivalence of the foreign inspection systems audited is
assessed by focusing on five risk areas: sanitation, animal disease,
residue controls, slaughter/processed product controls, and enforcement
controls. In addition, as part of the audit of each country, the Agency
evaluates HACCP programs, SSOPs, and generic E. coli and Salmonella
testing procedures.
During fiscal year 2001, FSIS completed development of a
reprogrammed Automated Import Information System (AIIS) and a planned
revision of the sampling of imported products. Both initiatives were
described in a public meeting on June 8, 2001. The new AIIS is expected
to become operational nationwide in the first half of 2002. At that
time, FSIS will begin a port-of-entry sampling approach that focuses on
the performance of a country's inspection system, rather than on
individual plants within the system. The new approach is similar to
that used to monitor Canadian imports for over 10 years. The new system
will also use the same HACCP product category codes used by the
domestic program, so that new information on risks associated with
products can be incorporated into port-of entry sampling.
In fiscal year 2001, FSIS conducted the annual Meat and Poultry
Inspection Seminar for Foreign Government Officials, which was attended
by 62 government officials from 37 countries, at the FSIS training
Center in College Station, Texas. Two sessions were held in fiscal year
2001 to accommodate the growing popularity of the program. The
objective of the Seminar is to increase the understanding of foreign
government inspection officials of the U.S. inspection and livestock
production systems in order to assist them in developing inspection
systems and in accepting U.S. exports.
Senator Kohl. Well, do you believe that additional
inspectors should be hired? How many inspectors, and how much
money would it take to ensure that foreign meat-packing plants
were inspected often enough to adequately ensure that meat
imported into the United States is safe for American consumers?
It seems to me that you would agree that is our responsibility
to be able to ensure the safety of the American consumer's food
supply.
Secretary Veneman. Oh, absolutely. We need to ensure that
we have----
Senator Kohl. And to rely entirely on foreign assurances
that this is being done, it seems to me, is not adequate, and
this case demonstrated that it is not an adequate kind of a
procedure for us to go forward with. The basic question is,
what are your thoughts and what are your plans with respect to
providing assurances that product brought into this country are
as safe as products that are produced in this country?
Secretary Veneman. Well, as I indicated, Senator, our Food
Safety and Inspection Service does review the systems of other
countries. FSIS does not just review and certify the inspection
systems, but they conduct regular reviews to ensure that a
plant's certification meets our inspection standards. We will
continue to review foreign inspection systems.
We are absolutely committed to making sure that the safety
of the food supply in this country is in terms of the product
that is coming in from other countries--as safe as it can
possibly be. I think that we want to do everything we can to
assure consumers that this is the case.
Senator Kohl. Well, let me just end my questioning on this
matter by asking you whether or not one of your primary hopes
and goals during your tenure is to improve the quality of
inspection that takes place on foreign product imported into
this country? There is a job that needs to be done; there are
problems that need to be addressed; and ours is not, by any
means, a system which has been perfected sufficiently, and it
needs a lot of attention. Do you agree with that?
Secretary Veneman. Mr. Chairman, I am absolutely committed
to doing everything that we can to assuring that we continually
improve food safety in this country. To the extent that we need
to improve the systems of reviewing meat coming in from other
countries we want to continue to make sure we enhance those
systems to the maximum extent possible.
Senator Kohl. Okay. I will leave it with this comment. I
get the impression you are saying, look, it is one of many,
many things we do, and we will continue to work at it. And
again, my impression is that you believe that what we read on
Monday is basically not accurate and does not raise clearly
that there is an urgent problem that needs to be addressed. It
is my impression that you do not look at this that way, and you
can respond to that. I will move on to my next question.
Secretary Veneman. Mr. Chairman, my feeling is, from what I
have been told by our folks, is that what we read on Monday did
not accurately reflect all that the Department is doing to
ensure that the systems are as complete as possible. It did not
include the fact that checks have been done on these systems,
that we have reviewed these plants since that time, and that
the article simply did not reflect the complete story, in terms
of what has been done since the OIG report was issued.
TRADE WITH CHINA
Senator Kohl. Okay. Secretary Veneman, a recurring theme in
foreign policy discussions is the need to promote trade and
open markets. Recently, President Bush was in China and had
hoped to persuade that government to relax its rules in regard
to imports of genetically-modified crops. Reports indicate that
President Bush was less than 100 percent successful, and at
stake are pending shipments of soybeans and other commodities
and our long-term access to substantial markets abroad.
Can you give us an update on the negotiations with the
Chinese and the issue of biotechnology barriers to that market?
Secretary Veneman. Well, as you know, Mr. Chairman, and as
you indicated, the Chinese have pending biotechnology
regulations. It has created some difficulty with soybean
shipments from the United States into that market in recent
months. In the last year, we have had a tremendous market for
exporting soybeans to China, and that's a market we want to
maintain. It is a market that is being hampered by the proposed
regulations, and we are concerned that once the regulations are
implemented, they could cause difficulties for our exports to
resume, so we have been working very, very hard on this issue.
We have had many contacts with the Chinese government. Our
embassy in China has been very active on this. As you
indicated, the President raised this when he was in China this
week.
We intend to aggressively pursue this issue to maintain the
ability of our producers to export into this market. Now that
China is a member of the WTO, if we have to we do have dispute
settlement mechanisms available to us, something that we did
not have before the time that China came into the WTO. We will
continue to pursue every lead we possibly can to ensure that we
can keep markets open as they should be.
BIOTECHNOLOGY
Senator Kohl. Do you think that better segregation of
genetically-modified products might be necessary to avoid
similar trade problems in the future? If so, what can USDA do
to help facilitate and expedite such a process?
Secretary Veneman. I believe 60 to 70 percent of our
soybeans are now products of biotechnology, because they are
producing a superior product, but it is difficult to segregate.
The system can segregate if, in fact, there is a need to do
that, but there is an extra cost, because it basically takes
the product out of the commodities system.
The important issue here, I believe, is that we have
regulatory reviews of our products of biotechnology. There is
no issue with regard to the safety of those products, there is
no distinguishable difference from those products, and we
believe they ought to have access to the global marketplace.
Senator Kohl. I thank you, and I would like now to turn to
my friend and the distinguished ranking member of this
subcommittee, Senator Cochran.
HOMELAND SECURITY SUPPLEMENTAL
Senator Cochran. Mr. Chairman, thank you. Madam Secretary,
the budget request appears to me to be well-balanced among the
many responsibilities and programs administered by the
Department of Agriculture. I notice research programs, for
example, will receive extra funding in the homeland security
area. Food safety and the integrity of our food production
resources are also given higher priority. Specifically, an
additional $15 million is allocated to the Food Safety and
Inspection Service in the Homeland Security Supplemental
Funding for this fiscal year.
I am curious to know if you can tell us how the money is
being spent. How is it being allocated in that FSIS account?
Secretary Veneman. We did obtain about $328 million in the
Defense Supplemental Appropriations, and within the
appropriation, some of the funding was designated to certain
agencies. We are now in the process of working with each of our
agencies to determine how exactly they are going to spend the
money to ensure that it is appropriately utilized for the
purposes for which it was intended. We have an ongoing process
to make sure that we are not just looking at this from a
single-agency-by-agency process, but one that integrates all of
the agencies together to see how we can best integrate our
programs.
I cannot tell you exactly what the $15 million in the FSIS
budget will fund, but we are conducting a comprehensive review
to look at the entire $328 million and determine how that
should be spent within the USDA budget.
Senator Cochran. Well, I know some substantial amount is
being spent to complete research facilities, if I am not
mistaken, that will be used to try to help protect the
integrity of our food production aspects. And APHIS has needs,
I understand, that were also provided additional funding in the
emergency supplemental. That is a lot of money to have at this
point in the year without some more specific idea of how the
funds are to be used, it seems to me.
Secretary Veneman. Well, I do not want to indicate that we
do not have any specific ideas on how to designate the funding,
because we do, I just wanted to let you know that we have not
made the final decisions, because the process is ongoing.
We do have specific needs, as you indicated, in the
laboratory areas. We have been working on our laboratories for
some time, in terms of repair and enhancement needs. Since
September 11 and with some of the issues that we have faced in
recent years, there is a need to make sure that our laboratory
system is strong and ready to respond and react to any issue
that they may be confronted with.
In addition, we are continuing to do research on a number
of issues. In the money that is allocated to FSIS, there is a
total of about $28 million, as I understand it, that is being
requested in the 2003 budget.
What FSIS has proposed in the 2003 budget is to improve
information technology infrastructure, support the
implementation of improvements to management, and an increase
of $2.7 million to include slaughter, epidemiological surveys,
and risk prevention.
I may have Mr. Dewhurst comment briefly on the process that
we are going through with regard to the Defense Supplemental.
Mr. Dewhurst. The Secretary wanted to be sure that we used
that $328 million in the most effective way possible so we
asked all of the Department's agencies that are involved with
that money, specifically FSIS, the Animal and Plant Health
Inspection Service, the Agricultural Research Service, and a
number of our staff organizations, to present detailed plans to
the Department for the use of that money. Those plans have now
come in.
The Homeland Security Council in the Department, that the
Secretary has established, reviewed those plans earlier this
week. FSIS has made some proposals to strengthen some aspects
of its inspection system, to improve security at some of its
laboratory and diagnostic facilities, and to make some
investments in technology. As you might expect when you go
through an activity like this, you find that when you call on
USDA agencies for information, you inevitably find some issues
with respect to coordination, with respect to making sure
everybody is on the same page, in terms of the priorities.
And so the agencies and the Undersecretaries involved have
been given a very short period of time, to go back and take
another look at their proposals in light of those concerns. Our
intention is to provide the Congress with a complete report on
how we are going to use that money in very short order.
Senator Cochran. When do you think we can expect to receive
that report?
Mr. Dewhurst. Well, I am talking about making these
decisions in a week or two, and we should have a report shortly
thereafter.
Senator Cochran. Okay. I think we are entitled to know what
the plans are in some specificity, because we have, in this
budget request, some additional funding that is being requested
for the same activities, and it would be good to have a
complete picture before we are called upon to actually make the
decisions of how we provide for those needs in our bill.
FARM BILL FUNDING
Let me ask you this, too, about the farm bill; I mentioned
that we are beginning to work--the House and Senate staff on
the legislative committee has been meeting to identify areas of
agreement where we can resolve differences early. It looks as
though this may take a little longer than some people are
hoping. There is a lot of pressure on the Congress to act now,
to complete action on this farm bill.
But in that connection, there is a big difference between
the two pieces of legislation. The House bill is a 10 year
bill, as compared to a Senate 5 year bill, in effect, because
most of the funding in the Senate bill occurs up front. That
is, the majority of the funding is spent in the earliest years
of the life of the Senate bill, whereas it seems to be spaced
out more evenly over time in the House bill.
So I wonder if you have any observations to make about what
the considerations of the Administration will be on that
subject. I am glad to see the Administration becoming involved
in the process and giving us the benefit of your thoughts. And
while it may be outside the purview of this hearing, it does
have funding implications, and it does have implications for
our appropriations bill. Do you have any comments about that,
Madam Secretary?
Secretary Veneman. I do, Senator, and I appreciate the
question, because I think it is a very important issue that,
not only I have been talking about on behalf of the
Administration, but the President has commented on this as
well. As was indicated, the $73.5 billion was included in the
budget. We have made it clear that the provision contained in
the farm bill ought to reflect the House bill, and that this
funding should be spent relatively evenly over the 10 year
period. We are concerned about the fact that the Senate bill
would front-load the spending, thereby undermining the baseline
for agriculture in the out years. We believe that the
conference should come out with a bill that is similar to the
House bill, in the respect that it more evenly spends the
amount of money allocated. I believe the bill that you offered,
Senator, did the same thing, in terms of spending relatively
evenly over the time period allotted.
We do not believe it is wise to front-load the spending, as
I said, and we believe that it should be spent evenly or
relatively evenly over the 10 year period.
FARM BILL IMPLEMENTATION
Senator Cochran. One other consequence of the new farm bill
would be its potential impact on the costs of Farm Service
Agency staffing and operations, and information technology
requirements. Will additional funding be needed from this
committee to implement farm bill programs in a timely manner?
Is the department reviewing these needs to help us understand
what the funding implications might be of the new farm bill in
that connection?
Secretary Veneman. Senator, we are reviewing all of these
issues. Our staffing needs are going to be dependent upon what
is ultimately agreed to by the Congress and signed by the
President, in terms of a new farm bill, and whether it involves
a lot of new programs.
As I indicated in my opening remarks, one of the things
that this budget does is it includes a fair amount of money for
new technology. We believe that new technology is extremely
important to the future of our Administration of the farm
programs. The ability of farmers, for example, to access
information online, to apply online, to use e-Government-type
solutions for better delivery of services, is not just a matter
of increased people, but it is how we are able to develop the
systems to administer our programs.
Recently, when I was in Georgia, I was able to visit with a
seminar of people that were coming together from the FSA and
looking at different ways to get all our maps online. Now, pen
and ink maps of all the farms are still maintained in most
county offices. There is an ongoing process to get all of the
maps online so that they can be integrated with NRCS maps, so
that we can have better coordination of our services, create a
more farmer-friendly ability to deliver our programs, give
farmers the ability to access information from their home
computers and the ability to deal with their farm decisions.
So I believe that we are going to have to look at staffing
and technology together for the future, and it is going to
depend on what we end up getting in the overall farm bill.
We do maintain in this budget consistent staffing for the
Farm Service Agency, anticipating that the implementation of a
farm bill is going to take a considerable amount of time and
effort on the part of our employees. We are going to be looking
at, as you suggest, what the needs are going to be in the long
term, given the fact that we will have a new farm policy to
administer.
Senator Cochran. Thank you. Thank you, Mr. Chairman.
Senator Kohl. Thank you, Senator Cochran. Senator Byrd?
HUMANE SLAUGHTER
Senator Byrd. Thank you, Mr. Chairman. Madam Secretary, the
fiscal year 2001 Supplemental Appropriations Bill included $3
million for activities related to the treatment of animals, of
which no less than $1 million was to be used to enhance humane
slaughter practices as established under the jurisdiction of
the Food Safety Inspection Service. Can you explain how those
funds have been allocated and the status of the actions
initiated by the supplemental funding?
Secretary Veneman. Senator, since that involves such a
specific line item, I am going to have Mr. Dewhurst answer that
question for me.
Senator Byrd. Very well. Mr. Dewhurst?
Mr. Dewhurst. Senator, of those funds, $1,250,000 has been
allocated to the Food Safety and Inspection Service. The FSIS
has used those funds to hire an additional 17 veterinary
medical specialists. These are folks who move from plant to
plant and who have humane slaughter as their primary
responsibility. They had been brought into the system to make
sure that every effort is stepped up and that the agency's
responsibilities in that area are carried out.
An additional $1,250,000 has been allocated to the Animal
and Plant Health Inspection Service to strengthen their work in
support of the Animal Welfare Act. They have hired some
additional staff, they are doing some additional inspections,
and they are doing a large amount of additional training for
animal handlers in this country to assure that humane methods
are used.
Consistent with what the Congress asked us to do, the
remainder of the money has been allocated to the Agricultural
Research Service and to the Cooperative State Research,
Education, and Extension Service for research in technologies
that would encourage the humane slaughter and handling of
animals.
So the money has been distributed and is being used
consistent with congressional intent. We owe the Congress a
report on that subject. We will have that report in short order
and will give you a much more detailed review.
Senator Byrd. Well, I was going to ask the question about
the Senate report that was recommended by the Supplemental
Appropriations Bill, the committee report--that bill fiscal
year 2001. And at this point, no report has yet reached this
committee.
When you said ``in short order,'' what do you mean by that?
How soon may this committee expect that report?
Mr. Dewhurst. It is very hard to say exactly when, since we
have not received it from the agencies yet. Can I say within
the next 3 to 4 weeks, and that we will do everything we can to
get it earlier than that.
Senator Byrd. Very well. And would you please write me a
letter to tell me that report is submitted so that I know it is
being submitted and so that I will be able to read it?
Mr. Dewhurst. Yes, sir.
[The information follows:]
Letter From Ann M. Veneman
Office of the Secretary,
Washington, DC, April 4, 2002.
Hon. Robert C. Byrd,
Chairman, Committee on Appropriations, United States Senate, S-128,
U.S. Capitol, Washington, DC.
Dear Mr. Chairman: The Senate Report (S. Rpt. 107-33) accompanying
the fiscal year 2001 Supplemental Appropriations Act (Public Law 107-
20), directed the Secretary of Agriculture to ``provide a report to the
Committee on Appropriations of the House and the Senate as soon as
possible on activities of the Animal and Plant Health Inspection
Service, the Food Safety and Inspection Service, and agencies under the
jurisdiction of the Under Secretary for Research, Education and
Economics regarding reported cases of inhumane animal treatment, the
response of USDA regulatory agencies, and the research, development,
and promotion of technologies to help reduce the incidence of such
treatment.'' This report is enclosed.
We have provided copies of this Report to Senator Stevens and all
Members of the Committee, in addition to Members of the House Committee
on Appropriations. If you have any questions or comments, or would like
us to brief you on this subject, please feel free to call the USDA
Office of Congressional Relations at (202) 720-7095.
Sincerely,
Ann M. Veneman,
Secretary.
Senator Byrd. You will do that? How many slaughter plants
are there in this country?
Mr. Dewhurst. Speaking from memory, I think it is about
8,000.
Senator Byrd. Eight thousand?
Mr. Dewhurst. Approximately.
Senator Byrd. There are those who suggest that the only way
to assure that animals are not being treated cruelly in
slaughter plants is to assign a Federal inspector to each plant
to provide continuous observation of stunning and killing
operations. If you are correct in that there are 8,000 plants,
this probably is not a very viable suggestion.
If full-time inspectors cannot be continuously placed in
plants, what assurances can you give, Madam Secretary, that all
animals will be treated humanely and that cases of animals
being butchered while still alive or facing other unspeakable
torments will not again occur?
Secretary Veneman. We have inspectors in each of our meat
plants. We just looked at some information. It is not 8,000,
but 6,000 plants of which 950 are slaughter plants and the
remaining are processing establishments, and we have 7,600
full-time inspectors. Meat plants do have inspectors present
when they are running, part of our meat inspectors' obligation
is to look at the slaughter methods and review the slaughter
methods to ensure that the animals are being properly handled.
Senator Byrd. So what do you propose to do to tighten up
this operation and make as sure as possible that animals are
being slaughtered humanely?
Secretary Veneman. We are continuing to train inspectors to
ensure that they have the latest information on humane
slaughter, to ensure that they are continually aware of the
issues regarding humane slaughter. I recall a series of
articles last year where industry is also doing additional
training of their own employees to ensure humane slaughter
practices are being maintained in meat plants.
Senator Byrd. Do you have inspection personnel that can
visit slaughter establishments on a regular basis?
Secretary Veneman. As Mr. Dewhurst indicated, we do have an
additional 17 veterinary medical specialists who were assigned
from the additional supplemental funding that do oversee the
in-plant enforcement of humane slaughter. So that is a new
addition.
Senator Byrd. Understand that between January 1998 and
January of 2002, 16 agency actions were taken to withhold or
suspend plant operations for violations of the Humane Methods
of Slaughter Act. What comment do you have on that? That is 4
years. Over a period of 4 years, over 16 agency actions were
taken to withhold or suspend plant operations for violations of
the Humane Methods of Slaughter Act.
Secretary Veneman. Again, sir, I believe that, certainly,
there is always room for improvement, but the fact of the
matter remains that there are these additional inspectors that
we have put in place to oversee the humane slaughter issues. We
are continuing to improve education of our in-plant inspectors
on the issues relating to humane slaughter, and we are going to
continue to pursue humane slaughter issues to assure that we
are doing everything possible to maintain humane slaughter
practices in the plants.
Senator Byrd. What was the total number of violations or
possible violations of the Humane Methods of Slaughter Act that
were reported for corrective action or further action during
that period of 4 years?
Secretary Veneman. Senator, I do not know the answer to
that question. We would have to get that information to you in
writing.
[The information follows:]
The report shows that in the last 4 years, 16 facilities were
suspended from receiving Federal meat and poultry inspection services
due to systemic non-compliance with humane handling or slaughter
requirements. FSIS also issued 117 warnings of non-compliance since
October 2001, which have been corrected to prevent reoccurrence.
Senator Byrd. Very well. Does anyone at the table have more
to say on this question? Can anyone offer me any further
information?
Madam Secretary, I noted you gave the committee a statement
numbering 24 pages. Not one word did I see in that statement
about the humane methods of Slaughter Act. I may be mistaken.
Perhaps there is something in it, but I have glanced, at least
cursorily, through the statement, and there has not been a word
said about this subject matter. Is it not important enough to
include in your statement--that animals were not being
slaughtered humanely?
Secretary Veneman. As I indicated earlier, I had read some
of the articles earlier last year. As I indicated in my
statement, we are committed, through our Food Safety and
Inspection Service, to the highest levels of funding ever in
that agency, which is the agency that oversees the humane
slaughter of animals. We have included additional inspectors,
as I have indicated in my earlier remarks. We take this issue
very seriously, as we do food safety issues and all of the
issues that we deal with in our Department. We will continue to
do everything we can to improve these systems and to enhance
the education and training of our employees in this area.
Senator Byrd. Well, now, the $3 million, I believe, was
included in my request in the supplemental. How much is the
President asking for in this budget, the 2003 budget, for this
purpose?
Secretary Veneman. Go ahead.
Mr. Dewhurst. The President's budget includes enough money
to carry forward the things we are doing with the $3 million.
In other words, there is money in the FSIS budget to continue
to employ the additional veterinary inspectors that we have
hired with the money. I do not want to mislead you; there is
not an increase, but there is money in the President's budget
to carry on the commitments we made with the $3 million.
Senator Byrd. Do you need additional inspectors to enhance
the proper treatment of animals in the slaughtering plants? Do
you need additional inspectors? I think this is a matter of
considerable importance, and I am sure that the people of this
country support my conclusion in that respect.
Madam Secretary, where in your statement is there
information about this matter? The report that the Committee
requested in the 2001 supplemental has not been received by
this Committee. Now, do you need additional inspectors to do
the proper job? These animals cannot speak for themselves. They
suffer pain, just as do human beings. Step on a cat's tail.
Step on the dog's foot. And the answer is: pain. I am waiting
for your answer. Could you use additional inspectors?
Secretary Veneman. Sir, we have included in this budget the
total number of inspectors that the agency has said that they
need to properly do the job that they have been asked to do.
What we have said is that the budget fully funds the inspectors
that the agency indicates that they will need to do food safety
inspections. So my best advice from the agency is that what we
have requested in this budget is the total number of inspectors
that we will need.
Senator Byrd. And that number is what?
Secretary Veneman. Seventy-six hundred.
Senator Byrd. Not 7,600 looking after the humane slaughter
practices?
Secretary Veneman. Seventy-six hundred.
Senator Byrd. I do not think you are saying that, are you?
Secretary Veneman. Seventy-six hundred total inspectors,
and the inspectors have a responsibility for overseeing humane
slaughter, as well as meat inspection within the plants. In
addition, as I indicated, there have been 17 veterinary medical
specialists who have been hired to oversee humane slaughter and
the practices that are going on in the plants, in other words,
an extra layer just to review this particular issue.
Senator Byrd. And will the 17 employed by the $3 million
that I included in the----
Secretary Veneman. Yes, sir, that is my understanding.
Senator Byrd. Well, let us find out if we need more.
Secretary Veneman. We will be happy to do that. We will be
happy to go back to our Food Safety and Inspection Service and
determine whether or not additional employees are needed.
Senator Byrd. For what? What am I asking for?
Secretary Veneman. For the humane slaughter review.
Senator Byrd. Right. And to enforce all of the laws that
are already in the book. Alright, then we will get the report
then within 3 weeks that was requested in the 2001
supplemental----
Secretary Veneman. Yes, we will get that report to you as
quickly as possible, and hopefully within the time period you
have indicated. We will do everything we can to get that report
done as quickly as possible.
Senator Byrd. You indicate--there are some facts and
figures in that report in response to some of the questions
that I have asked.
Secretary Veneman. Yes, sir.
Senator Byrd. For example, will these inspectors need to be
veterinarians to properly serve this function? Well new
inspectors will be required to meet the requirement of having a
Federal inspector in each plant to provide continuous
observation of stunning and killing operations. According to
news stories that you yourselves have read, some of these
animals are being--they are not being killed.
Be prepared to answer some questions on this subject. These
animals have nobody to speak for them, and the agencies need to
take seriously this subcommittee's interest in this matter.
The scriptures say that, ``The righteous man regardeth the
life of his beasts.'' Think about it.
Mr. Chairman, I have further questions, but I have taken
enough time. I am not very satisfied with the responses. I will
have to say that. It does not seem to be a concern down at the
agency that many of us have in this matter and of the fact that
the American people expect the agency to do its work in this
regard. We should not stand by casually and allow animals to be
brutalized in the slaughter plants. They should be slaughtered
humanely and in accordance with the law.
This subcommittee is going to expect you, Madam Secretary,
to see that the agency shapes up in this regard and does these
things. We are concerned. I hope you will be, too.
Secretary Veneman. Sir, I am concerned, and we will do
everything possible to make sure the slaughter plants are in
compliance with the law. That is our obligation.
Senator Byrd. I thank you, and we will expect the report on
time. Thank you.
Senator Kohl. Thank you, Senator Byrd. Senator Craig?
RURAL DEVELOPMENT
Senator Craig. Chairman, thank you. Madam Secretary, one of
the things that has happened in public land and rural States
like mine, as access to public-land resources have declined
dramatically over the last decade, is substantial dislocation
of people and negative economic impact in many of these
communities that are not only ag-related, but they are forest-
related, mining-related, and it is largely our people have been
locked off the land and away from those resources by public
policy, substantial economic dislocation has occurred.
Rural economic development is critical, whether it be in
that blended kind of economy that I have just spoken of, or a
purely ag-economy. As agriculture has consolidated, there are
fewer people living in these communities. There is a struggle
to keep infrastructure whole and, in doing so, to be able to go
out then and attract other kinds of industries to come into
those communities.
In the 2003 budget, we see a fairly flat funding. And while
I understand that to some degree, I would like an explanation
as to why in the relatively flat funding we see a reduction
from $4.1 billion in 2002 to $2.6 billion in 2003 in the direct
loans and guaranteed loans for rural electric systems, and the
explanation is reflective of anticipated demand. So if you
could explain that to me.
Also, then, if we are at flat funding and we have
dislocated or readjusted about $1.5 billion, where did that
money go, and does it stay within rural development?
Secretary Veneman. I am going to have Mr. Dewhurst answer
the specifics on the budget.
Senator Craig. Okay.
Mr. Dewhurst. Well, you are correct, Senator. For electric
loans in this budget, we had $2.6 billion in 2001. We have $4.1
billion in 2002. The 2003 budget is back at essentially the
$2.6 billion level. We had a number of programs in the 2002
bill that were increased significantly in anticipation of
demand for those programs. At the time we were putting this
budget together last fall, demand for electric loans had not
appeared. We did not have the resources to budget for that
demand in 2003 without cutting other programs. So the budget
put those programs back at the 2001 level.
One of the things that is happening to us in rural
development in our credit programs is that the subsidy costs of
these programs are increasing, because as we are doing a more
thorough job of auditing our books, and we are finding out that
the risks in some of these loans are higher than we had
anticipated. So the budget authority that you provide in the
Appropriations Act to support these programs is becoming more
precious. Where we did not have absolute proof of demand,
although we had rising costs, we had to be fairly conservative
in the funding levels for the programs.
RURAL WATER AND WASTE LOAN PROGRAM
Senator Craig. One of the areas of high concern, I think,
to all of us in these rural areas, especially with many of them
just financially strapped--I mean, I have a couple of small
communities in Idaho who are being looked at to meet water
standards, and I am suggesting that EPA--we have one where the
EPA wants to level a fine of $10,000 a day to a very small
community that has less than $10,000 in its treasury. Now, I
think it is pretty damned counterproductive for that to happen.
What they are in need of is a grant to help them put in a water
system, not to sit there and sock them around as a Federal
agency is doing at this moment. In the area of water and waste
water programs, are we at level or below-level funding?
Mr. Dewhurst. I will just say that we are a little below
the 2002 level and about the same as the 2001 level. We need
loans and grants for rural water and waste-disposal systems. Of
course, what we do with the community is help them figure out
what they can afford by way of a loan.
Senator Craig. Exactly.
Mr. Dewhurst. We then make the difference in a grant. The
grants, of course, count against the budget, dollar for dollar.
This may be interesting, in fiscal year 2002, we have $894
million for the water and waste loan program. It costs us loan
level of $62 million in budget authority. That is the
anticipated subsidy. In the 2003 budget, you only have $814
million for the loan level. But it costs us $92 million in
budget authority. In other words, we had to find $30 million in
increased funds within our budget targets even to finance the
$814 million loan level. That is because the subsidy costs of
the program have increased.
So I do not have a fancy answer for you, other than to say
we used every dollar we had within the budget targets to try to
do the best we could for the water and sewer systems budget of
the Department.
Secretary Veneman. Senator, can I just add one more thing
to that? I do understand the issues with regard to some of
these small rural communities looking at enforcement actions.
We have had some success in this regard, and we would be happy
to work with you and with some of your communities where we can
put our EPA and USDA folks together to help people try to
comply with the EPA requirements. We have been working
together, Administrator Whitman and I, on these kinds of
issues.
RURAL DEVELOPMENT COORDINATION
Senator Craig. Well, it is good news to think that we have
agencies that are actually talking to each other. That is a
rarity in this town, especially when sometimes they run
parallel to each other and do not do so. So actually, with EPA
doing what I am not suggesting it not do, other than it deal in
a softer-glove approach in causing and directing folks to get
things done, to have USDA talking with them and seeing where
they can coordinate can and should be a very real plus.
In the new farm bill, when it emerges, I trust that there
will a substantially stronger rural development title in there.
I have been a part of putting some authorizing language in
there, as have others--National Rural Development Partnership
Act, I and others have crafted and we put it in there. One of
the things that is true there, and I think will be helpful to
us, is to create a more seamless relationship between local,
State, and Federal cooperation and agencies. Now, my folks say
that the greater bounce for the buck comes when they receive
block grants that are specific in character and they can direct
those resources. The State Department of Agriculture in Idaho
expresses that. Do you see that as an important or a positive
approach in moving progressively in these areas of rural
development?
Secretary Veneman. Absolutely, Senator. We talked a lot
about the need to look differently at rural communities in the
policy book that we put out, and I could not agree with you
more that we need to continually review our programs and our
policies with regard to rural communities and how we can best
help them. Part of that is developing the infrastructure so
that they are not left behind, but a lot of it is also
utilizing collaborative approach with rural communities by
having local input into decision making. I think we saw that in
the implementation of the Secure Rural Schools Self-
Determination Act of 2000. Last December, you came to the
Department to join me in announcing the release of $384 million
in payments to States for schools, road projects, and forest
stewardship projects, where we have and will continue to
collaborate with local communities. I could not agree more that
that is extremely important.
We did have, in the emergency supplemental bill that was
passed by the Congress and signed by the President in August,
specific block grants to State Departments of Agriculture, and
as you indicated, that has been very popular with the State
Departments of Agriculture. They were in town this week, and
they again expressed this to me. Whether or not that will
ultimately end up as something that emerges from the bill, I am
not sure, but we certainly do have a number of programs that
assist States in specific areas, particularly the State
Departments of Agriculture and the pest and disease prevention
and eradication efforts. I know that there is increasing
interest in these kinds of programs, as well.
But the collaboration, in my view, has become ever more
important since the events of September 11. If we are to have
homeland security work correctly, we need to have local, State,
and Federal officials all working together, not only to prevent
any unfortunate circumstances, but to react in the event that
something might happen. So I absolutely agree that
collaboration has to be stronger than ever.
Senator Craig. Well, thank you very much, Madam Secretary.
Several of my colleagues have covered other questions that I
think are of concern to us as it relates to the overall budget
for the coming year. As I have mentioned earlier, and as I
mentioned in my opening statement, I think timeliness this year
and sending the right messages are going to be critically
important as our agricultural producers struggle to get back on
their feet and need to get their loan packages put together, an
element of certainty is critical, and that may not be that
clear as we struggle to conference a new farm policy. So I
think that we, through the budget, can offer that kind of
stability or anticipation, maybe better than the policy itself
will.
Thank you.
Senator Kohl. Thank you, Senator Craig. Senator Durbin?
FARM BILL PROPOSAL--EXTENDING FOOD STAMP BENEFITS TO LEGAL IMMIGRANTS
Senator Durbin. Thank you, Mr. Chairman. Madam Secretary,
thank you for joining us. In your opening statement, you
reiterated the Administration's position of extending food
stamps to legal immigrants who have been here for 5 years. In
the farm bill, which Senator Harkin brought to the floor, we
cosponsored an amendment with Senator Lugar that established
that--the vote was 96 to 1 in the Senate. We were very proud of
that.
I am asking the Administration, particularly if you would
be willing to write a letter to the conferrees, since it is not
included in the House version, to make it clear that that is
the Administration position and that you would like to see this
in the final farm bill as enacted.
Secretary Veneman. Well, I think our position on that is
very clear. It is in the 2003 budget. If we need to write an
additional letter, we can certainly reiterate what we have
already stated.
[The information follows:]
Letter From Ann M. Veneman
Secretary of Agriculture, Office of the Secretary,
Washington DC, March 13, 2002.
Hon. Larry Combest,
Chairman, Committee on Agriculture, U.S. House of Representatives, 1026
Longworth House Office Building, Washington, DC.
Dear Chairman Combest: At this critical point for the farm bill, I
would like to reiterate the Administration's main requirements for
forward-looking, bipartisan consensus legislation.
Farm bill funding is our top concern, since it affects all policy.
The Administration believes that the new farm bill must honor the
limits of the Congressional Budget Resolution. Consistent with this
Resolution, Congress should not pass a farm bill that exceeds $73.5
billion. We will strongly oppose any effort by the Conferees to ignore
the Congress' own spending limits.
The Senate-passed bill frontloads the 10-year funding into the
first 5 years, placing the future of farm programs in jeopardy for the
second 5 years. The Senate bill also sharply reduces or terminates
funding for roughly fifteen rural, conservation and commodity programs
after 2006 in order to compensate for this ill-advised frontloading. We
will strongly oppose any frontloaded farm bill that allocates more than
$36.8 billion in the first 5 years.
The farm bill must support farmers without encouraging
overproduction and further depressing prices. The Administration
continues to support marketing loan rates--an existing countercyclical
program--that are equivalent to those contained in the House bill.
The Administration supports a strong, reliable safety net. The
House bill's increased funding for fixed decoupled payments ensures
farmers a consistent, predictable income safety net while maintaining
market-oriented planting flexibility.
The Administration supports additional risk management tools to
help non-program crop producers, and has proposed the use of farm
savings accounts to complement traditional farm support programs. The
Administration urges expansion of the Senate's farm savings account
pilot program in order to provide a broader base of assistance without
causing planting and marketing distortions.
The Administration has stressed the absolutely critical importance
of increased trade to America's farmers, and we have strongly urged
that the new farm bill must support trade and be consistent with our
international obligations. The House bill's fixed decoupled payments
are ``green box'' and meet our trade obligations, while Senate
provisions increase the likelihood of U.S. non-compliance. Both the
House and the Senate have worked hard to include ``circuit breaker''
provisions to help ensure compliance with our WTO obligations. The USDA
has suggested some modifications to the Senate's language, which we ask
the Conferees to consider.
The Administration strongly objects to any changes in existing law
regulating the sale of food and medicines to Cuba. We oppose repeal of
prohibition on private financing by U.S. persons of sales of
agricultural commodities to Cuba.
The Administration continues to oppose country of origin labeling.
Provisions in both bills potentially violate international trade
agreements, raise costs for consumers, particularly low-income
Americans, and does nothing for food safety.
The Administration supports a Farm Bill with a strong conservation
title that bolsters working land stewardship, supplements farmers' and
ranchers' income, improves water quality, provides wildlife habitat,
conserves water and protects open space. We have made a particular
commitment to conservation programs for working lands, such as EQIP and
a new Grasslands Reserve Program. We also support growth in established
conservation programs such as CRP, WRP, FPP and WHIP. However, we are
concerned that the Senate's new Conservation Security Program commits
to open-ended spending risking future funding for these established
programs, without assuring cost effective environmental benefits. We
suggest a pilot approach to develop tools for measuring benefits and
establish justifiable payment rates.
We also commend the Senate for including a provision making legal
aliens living in the U.S. for at least 5 years eligible for food
stamps. This is a key component of the President's budget, and we
encourage the Conferees to include it in the final bill. The
Administration has also proposed an improved Quality Control system
that we believe, represents an effective and balanced approach to
ensuring payment accuracy in the Food Stamp Program.
Achieving a solid farm bill to assist farmers and ranchers in
challenging times is of top priority for the Administration. The
Administration looks forward to working with you toward an expeditious
conclusion to the conference and a bipartisan farm bill that will best
help America's producers in the coming years.
Sincerely,
Ann M. Veneman.
Senator Durbin. I hope you can do it. Thank you. Madam
Secretary, when my wife and I were first married, I gave--her
first Christmas gift was a puppy. I bought her a little black
puppy. It was a Newfoundland. And I should have looked ahead,
because in a matter of about 8 months, it turned into 120-pound
dog. And it used to push its way out the back door in
Springfield, Illinois, and get in a world of trouble--stealing
balls off the playground from kids, and dragging laundry off
lines--and we would always get phone calls, and I always knew
when the phone conversation started out, ``Do you own a big,
black dog,'' that we were in trouble.
You own a big dog, Madam Secretary. It is food safety. And
every time that phone rings, you are in trouble, because you
are dealing with an issue that is spread over 12 different
Federal agencies, 35 different laws, 28 different committees,
as I said in my opening statement.
You just stated that if we are going to be serious about
homeland security, we have to coordinate things. Well, I have
heard from the President, the Vice President, Secretary
Thompson, and from you, as well, that food safety and security
is one of those things that needs to be coordinated. And I
sincerely hope that--my plea-is to try to move this
Administration toward consolidating the food safety and
security under one agency, which is consistent with President
Bush's campaign pledge, will really be part of next year's
proposal. It clearly is not part of this year's proposal. And
it leaves a lot of questions unresolved.
FOOD SAFETY IN THE NATIONAL SCHOOL LUNCH PROGRAM
Let me give you one specific example, the school lunch
program. Each day today, 28 million kids will eat school
lunches. And it is shocking to learn that the number of food-
borne illnesses linked to school lunches increased by 56
percent between 1990 and 1997. Now, this was before you came on
the scene and had this responsibility, but it has been clear to
me that the Federal agencies lack the necessary authority to
deal with something as serious as food-borne illnesses in the
school-lunch program, such as recall authority, which seems so
basic, that if someone is supplying a food product to the
school lunch program, it is found to be contaminated and to
make children ill, you do not have the authority to recall that
product that has been distributed to other schools. It does not
make any sense. And there is little or no coordination between
the State and the local governments in enforcing any of these
laws relative to the school lunch program.
As you sit there, can you point to anything that is
currently being done in your department in this area of food
safety in school lunch programs that can lead me to believe
that you are sensitive to this and moving toward dealing with
the problem?
Secretary Veneman. We have been looking very carefully at
the school lunch program and food safety. In fact, I have
directed our Agricultural Marketing Service, which does the
actual procurement of the commodities served in the school
lunch program, to work directly with our Food and Nutrition
Service and the Food Safety and Inspection Service personnel so
that we have a consolidated and coordinated effort in looking
at the school lunch food safety issues. These agencies have
worked in their stove pipes in the past, and we want to make
sure that we have a coordinated food safety effort for school
lunch programs, and for school lunch purchases and for school
lunch contracts. These agencies will work together to ensure
the safety of the food served in this program, and ensure that
any decisions made, are made jointly with input from all of
these agencies.
Now, I had not heard the statistic you talked about, in
terms of food-borne illness, but we know, from CDC studies,
that over 80 percent of food-borne illness is from improper
handling of product. If these statistics are correct, then I
think we need to make sure that people in the school lunch
programs that are serving our children school lunches are
properly trained in how to handle food.
Senator Durbin. That is right.
Secretary Veneman. It is food handling that is the biggest
problem.
Senator Durbin. It is.
Secretary Veneman. People are not trained today in how to
handle food, and we need to make sure that people in our
schools are properly handling the food.
FOOD SAFETY RECALL AUTHORITY
Senator Durbin. When your predecessor came before my
Subcommittee in Government Affairs and spoke of food safety, he
made that point as well, but he also said, ``I really wish I
had the authority--when I found out that there was contaminated
food being distributed to schools across America--that I had
the authority to recall that food. I do not have that
authority, under law.'' Americans, families, mothers and
fathers are shocked to know that. Would that not be an
important tool and weapon for you to have in those cases where
you deal with contaminated food that could endanger school
children?
Secretary Veneman. Well, it is an authority that I think is
certainly worth talking about. On the other hand, I will say
that, without the authority, we have been able to get, through
the voluntary recall process, most product that needs to be
recalled off the shelves. I recall when this was a Health
Department issue, not a USDA issue. I was in California in the
State Department of Food and Agriculture at the time of the
processed strawberry issue which I believe was in 1997. Through
working with the Health Departments and working with trace-back
of the product, USDA was able to get most of the product
voluntarily recalled--I believe all of it.
Senator Durbin. Secretary, I do not think you could sell
that position to any group of parents in America. To tell them
that you do not need the authority to recall contaminated food
that has been distributed to schools, will be hard to explain.
I just--I do not think you are going to be able to sell that,
and I really hope you will take another look at it, because it
is one of the proposals which I am going to bring in the area
of food safety.
I am giving you a tool which you may never need or never
use, but when you need it, you need it right now. And a lot of
parents are counting on you because of your responsibility in
the school lunch.
FOOD AID
Let me, if I can do two other quick questions, and I thank
the committee for their forbearance. The Administration has
made a significant policy decision in this budget when it comes
to food aid programs not to use surplus commodities. Now, they
have moved around some money to provide for food aid overseas
from other sources. The net result of it--and I was at a
hearing yesterday with the USAID administrator, Mr. Natsios--
the net result of this, Senator Harkin, is that we will provide
less food assistance as a Nation to the world next year than we
do this year. I do not think the world is going on a diet. I
think the world is still hungry. And, in fact, more children
are going to be born into it. We will put less food aid in that
world, and I think that is a bad decision.
But let me ask you, just from an economic viewpoint, going
back to some economics courses I took many years ago, if we
have low farm prices and a surplus that is not being utilized
and used, does that surplus not act as a damper on prices and
keep them down? Is it not in the best interest of our
production agriculture for us to use our surplus, exhaust our
surplus, not have carryover, so that prices can rise, as
opposed to be diminished by the Administration's new policy of
not using surplus commodities?
Secretary Veneman. Let me just clarify the Administration's
position. The Administration's position is founded on the fact
that it is better to use Congressionally-allocated funds
through Title II of Public Law 480, rather than using section
416(b) authority through mandatory CCC funding for the bulk of
our food aid donations. This budget allocates additional
amounts into the Public Law 480 Title II account as opposed to
depending upon section 416(b) for substantial amounts of our
donations.
Now, at the same time, USDA retains the section 416(b)
authority within the budget. It talks about using section
416(b) specifically, I believe, for the donation of nonfat
dried milk, which we do have in surplus. While the budget
anticipates the use primarily of Public Law 480 for the food
aid purchases that are needed, our food aid authorities,
contained in section 416(b) are still an available tool. It is
just that we do not anticipate using it to the degree that it
has been used in the past, but rather shifting that to the
Public Law 480 Title II program.
Senator Durbin. Basic question: Would a larger surplus of a
commodity reduce the price on the market or raise the price on
the market?
Secretary Veneman. Well, basic economics would say it
reduces the price on the market.
Senator Durbin. And so reducing the size of the surplus
helps bring up market prices for farmers across America,
correct?
Secretary Veneman. Yes.
Senator Durbin. And if the Administration's policy is not
going to reduce the size of the surplus, then it is going to
keep farm prices down and increase the cost of the farm
program, correct?
Secretary Veneman. Well, Senator, we are not undermining
our commitment to food aid in this country. I do not want, in
any way, to leave that impression. The question is through what
authority should food aid be funded? Is it going to be funded
through Public Law 480 Title II, which is discretionary
funding, or should it primarily be funded through section
416(b), which is mandatory CCC funding. I think that is where
the debate is, not our commitment to helping people around the
world and helping our farmers by getting----
Senator Durbin. I want to pursue this with you, because I
think if Mr. Natsios' comments yesterday, that we will provide
less food to a hungry world next year--this seems like a very
flawed approach.
I have several other questions, but I have taken too much
time. Thank you, Mr. Chairman.
Senator Kohl. Thank you, Senator Durbin. Senator Specter?
STATEMENT OF SENATOR ARLEN SPECTER
Senator Specter. Thank you, Mr. Chairman. I join my
colleagues in welcoming you here, Madam Secretary, you and your
associates. How are you enjoying the job?
Secretary Veneman. It depends on the day.
Senator Specter. Well, aside from today, how are you----
Secretary Veneman. It is going very well.
Senator Specter. This is the annual ritual, Madam
Secretary. You will get used to it. As they said to Mrs.
Lincoln, ``Aside from that, how did you like the play?''
But day in and day out, do you find it rewarding?
Secretary Veneman. It is very rewarding. We have a very
diverse Department covering everything from farm programs to
food and nutrition programs to food safety, as was talked
about, so we really have a very diverse group of issues which
we are dealing with, and it is very rewarding to be able to
serve in this time in our country.
FARM BILL FUNDING
Senator Specter. I see Senator Harkin here--he and I work
very closely on the Subcommittee on Labor, Health, Human
Services, and Education--and I infer he has not questioned yet,
so what do you think of the Harkin Farm Bill?
How much too expensive is it?
Secretary Veneman. Well, as I indicated----
Senator Specter. It is called a loaded question, Madam
Secretary.
Senator Harkin taught me how to ask those.
Secretary Veneman. As I indicated in my earlier comments
with Senator Cochran, we are concerned about spending the money
that has been allocated by the Budget Committee relatively
evenly over the 10 years. I think that the principles that the
Administration has outlined for the farm bill have been clearly
stated, and are keeping within the budget agreement and
allocating that money evenly over the 5 years, making sure that
we have a safety net that does not overly increase production,
thereby depressing prices, making sure that the farm bill is
consistent with our trade obligations, and making sure that we
have good conservation practices. The Administration is hopeful
that all of these principles, as well as the possibility of
creating another tool for farmers and ranchers through the
establishment of farm savings accounts, can become part of the
final farm bill that is being discussed by conference
committee.
Senator Specter. Well, I know the Administration will weigh
in at the conference, and we urge you to do that. It was a
tough vote. I supported the bill. I think we need to go to
conference. I was concerned about the cost. Many of the
programs there were very important for the Nation. There was a
step forward on limiting the payments and trying to avoid
having the giant farmers get so much of the money. Nationally,
it is a critical bill.
I spent my early days in the State of Kansas, worked on a
farm as a teenager, and I know how hard the work is. And the
farmers do need support. So for Pennsylvania, the fruit growers
needed a little help.
DAIRY COMPACT
They got a little, not a whole lot. The dairy farmers
needed help. We have been fighting for a compact, but do not
seem to be able to get one. We have--when I said that I worked
closely with Senator Harkin, I did not mean to exclude working
closely with Senator Cochran and Senator Kohl. Senator Cochran
and I, for the last 22 years, have sat next to each other on
the Appropriations Committee. And Senator Kohl and I, elected
in 1988 and worked very closely on Ruby Ridge where he was the
author of great changes and modifications in the use of deadly
force, but he has been a very tough deadly-forcer on the
compact issue.
But what can we do, short of the compact, which we are not
likely to get, to avoid these enormous shifts, swings in price?
Our dairy farmers in Pennsylvania go from $16 a hundred weight
to less than $10 a hundred weight, and they are being driven
out of business. And there just needs to be some stability
there. What can we do?
Secretary Veneman. Well, I am going to ask our Chief
Economist, Dr. Collins, to assist me in the answer of that
question, because it really is one of economics.
Senator Specter. No, I have asked him the question before,
and I have never found out.
Okay, Dr. Collins.
Dr. Collins. Well, I will do my best to continue my record.
That is a difficult question. I mean, one thing obviously
we can do is to extend the price support program for dairy,
which is scheduled to terminate in May of this year. That would
be one thing we could do. Some of the variability we have seen
in the dairy market over the last couple of years has been
driven by weather, for example. Of course, we export very
little, we import very little and 98 percent of what we consume
is produced here. So what happens with our production often
determines these swings in price. Last year we had some poor
weather, and we had the lowest increase in milk production in
15 years. In fact, that gave us very high prices. We had the
second-highest milk price in history in 2001. Now, this year,
we expect a lower price. So some of this variability simply
comes from the normal market forces that are related to
weather.
I think one thing we could do is develop some type of price
or risk-management program for dairy producers, beyond what we
were talking about with the price-support level that the
government provides.
Senator Specter. Dr. Collins, I know this is a complex
subject. What I would like you to do, without taking any more
of the time, because there are more questions here, is to give
me a memorandum on it as to where you think we might head on
stabilizing prices, an option paper. Because I know that is
something everybody wants to accomplish.
Dr. Collins. I would be happy to do that.
Senator Specter. We do not have any more problems coming
from Australia and New Zealand, do we?
Dr. Collins. I have not looked at the data recently, but I
don't believe so.
Senator Specter. Senator Cochran and I and Senator Symms
made a trip there in 1982, and we thought we solved that
problem. I just wanted to be sure.
Dr. Collins. I will check on that for you.
LOAN DEFICIENCY PAYMENTS
Senator Specter. Okay. Finally, an issue which is
parochial, but very important to the farmers in Erie. In the
fall of 2000, the USDA ruled that farmers were ineligible for
Federal loan-deficiency payments because they had filled out
the forms wrong on the advice of Federal Farm Service Agency
employees. I would not be surprised if you were unaware of
that, Madam Secretary, but people were asked to pay back lots
of money with interest, not getting anymore payments. And what
I would like you to do is take a look at it. I saw your
efficient staff just handed you a memo. That is what you call
good staff work, handing you a memo to answer a question which
you could not possibly know all the details on. But what I
would like you to do is to take a look at it and provide a
written response as to what we might do.
These farmers, hundreds of them, were misled. And it is not
their fault. And if they got payments that they were not
entitled to, then, okay, maybe there will be an offset, but we
should not talk about interest, we should not talk about
penalizing for something that was not their fault, that the
employees did, if, in fact, that is true. And I believe it is
true. So if you would provide me with a written response, I
would appreciate it. Thank you very much.
Secretary Veneman. We will be happy to do that, sir.
[The information follows:]
Erroneous Loan Deficiency Payments
A review of the Erie County FSA Office revealed that the office had
issued incorrect 1998- and 1999-crop loan deficiency payments (LDP's)
to producers by using the previous day's LDP rate to calculate the
payments. As a result, some participants were underpaid and others were
overpaid.
For those who were underpaid, FSA issued additional payments based
on the correct LDP rate. For those who were overpaid, the Erie County
FSA Office issued letters requiring refund of the overpayments (the
difference between the incorrect payment and the recalculated amount
based on the correct LDP rate). Interest was waived from the date of
the erroneous disbursement to the date of notification to the producer
of the overpayment amount. There were approximately 730 incorrect
overpayments totaling $115,198.34.
Participants who had been overpaid had the opportunity to appeal
FSA's decision to require refunds. In most of the cases that were
appealed, the National Appeals Division (NAD) upheld the FSA decision
because the producers had been told that the LDP rate being used in
calculating the payment was that of the previous day. In the few cases
where the producer had not been told, NAD reversed the FSA decision.
At the end of fiscal year 2001, there were 53 producers with
outstanding overpayment amounts totaling $48,464.29. In October 2001,
the Pennsylvania State Office was instructed to proceed with collection
action.
Senator Specter. Thank you very much. Thank you, Mr.
Chairman.
Senator Kohl. Thank you, Senator Specter. Senator Harkin,
you have been patient, and we will call on you.
FARM BILL FUNDING
Senator Harkin. Thank you very much, Mr. Chairman. And,
Madam Secretary, welcome again to the committee. And I just
again want to publicly thank you and all of your staff for the
close work that we have had as we have labored through this
farm bill on the Senate side, and we finally got it through.
And I can say publicly that at no time have I or my staff ever
sought to get information or any kind of data or colloquies,
correspondence with your department, that we have not gotten it
and gotten it in good time, so I just really appreciate that
very good working relationship.
I also want to add at this time, I did not speak with
Senator Specter before we came in here.
We came in together, but we did not huddle out there, so I
did not give him that question. I want that on the record.
However, since he asked, I do want to spend some time--I
had not planned on this, but I do want to spend a little bit of
time talking about the Senate bill and the buzz I am hearing
now. First, I would look at just Page 4 of your written
testimony. And it says here ``the new farm bill should be
generous, but affordable. It should provide a reasonable safety
net without encouraging overproduction and depressing prices.''
I believe we have a safety net in the Senate farm bill,
counter-cyclical. ``It should establish farm savings
accounts.'' That is in our bill, not the House bill. ``It
should support our commitment to open trade.'' We have got
money in there for the Foreign Market Development Program, the
Market Assistance Program, more than the House has got. ``We
should offer incentives for good conservation practices on
working lands.'' We have the CSP program, not the House bill.
``And we should enhance nutrition programs.'' The House has
$3.6 billion for nutrition. We have $8.9 billion for nutrition.
Are you sure you do not support the Senate farm bill?
I mean, I read that, and I say, well, wait a minute, that
looks just like what we did when you compare it to the House
bill.
But the buzz I am hearing now--I talked to my Governor from
Iowa last evening, and he said that they had been at the White
House. And I said, ``Well, did the President talked about
agriculture?'' He said, ``Well, they did ask him about the farm
bill, and his response was that there was too much front
loading. There was too much money spent in the early years.''
And that is really all he said. And that is what the President
said when he was in Colorado. It just seems to be something
that is fixed in his head, that he just keeps saying this.
So what I would like to explore with you for awhile is
that, because I think there is a lot of misinformation out
there about the budget aspects of the Senate farm bill, and I
kind of want to get to the bottom of it. And let us bring some
factual accuracy. My staff gave me this little chart here. It
is from the Congressional Budget Office. As I understand, the
Administration said that the farm bill must abide by the
Congressional Budget Resolution that was adopted last May.
Again, for the record, I want to point out that was a
budget resolution passed by a Republican House, a Republican
Senate, and supported by a Republican president. I want to make
that clear. This is--we are not talking about any new budget
that came out of the Senate or anything like that.
That budget resolution provides for $73.5 billion in new
spending over 2002 to 2011. The budget resolution contains no
restrictions on how that money is divided up among the years
except that no more than $7.35 billion is to be spent in the
year 2002. Do you agree with that description, Madam Secretary?
Secretary Veneman. I believe that is correct, but I have
not seen the language specifically.
Senator Harkin. Just stating the facts. Now, if you look at
the final CBO scoring of the Senate farm bill--the final CBO
scoring of the Senate farm bill--you will see that the CBO
analysis shows new budget authority of $73.5 billion over 2002-
2011 period, with $7.1 billion in fiscal year 2002. From the
standpoint of outlays, okay--outlays, let us make sure we are
talking about the same thing, outlays, in terms of spending--
CBO shows new spending of $72.9 billion--that is from our farm
bill--over the 2002-2011 period--$5.9 billion of that in fiscal
2002.
So, again, I ask you, Madam Secretary, would you agree that
those CBO figures show that the Senate bill complies with the
congressional budget resolution? Does the Senate bill comply
with the congressional budget resolution?
Secretary Veneman. Senator, I just now saw the CBO chart
for the first time.
Secretary Harkin. You have had the CBO numbers, surely,
before now. This is just a chart. You do not have--you can
forget about the chart, just listen to the numbers--just get
your people to----
Secretary Veneman. No, as far as I understand it, the 10
year total for the farm bill is $73.5 billion.
Senator Harkin. That is right.
Secretary Veneman. So any bill must stay within that
number.
Senator Harkin. Do you agree that the Senate----
Secretary Veneman. The concern----
Senator Harkin. Does the Senate bill stay within that
number?
Secretary Veneman. According to the CBO numbers, that is
correct. The concern, as I have expressed it to you before and
today at this hearing, is that the Administration's position is
that the spending should be used relatively evenly over a 10
year period. I think what you were referring to with regard to
what the President said is that there is a concern about
spending too much money in the first 5 years, and not reserving
enough for the second 5 years.
Senator Harkin. I am----
Secretary Veneman. I understand we have a difference of
opinion on that.
Senator Harkin. No, I do not want opinions. I just want
facts. Right now. We will get into the opinions some other
time. I just want facts now, because we are talking about
front-loading, and I want to--I am now going to get to--I just
wanted to establish the fact that the Senate farm bill does
comply with the budget resolution passed last year and
supported by this President. And that fact is yes. And does
anyone dispute that? If they do, please say so.
Now I want to get into the front-loading issue. It is
coming up. Now, what we have done in the Senate farm bill is, I
believe--is to try to help farmers who are struggling right
now. Now, this is just in the opinion part of it, perhaps. We
try to help farmers that are struggling right now. Low
commodity prices. Very low commodity prices. We then continue a
strong income protection into the later years and build that
into the baseline for the next farm bill. There is no reduction
in the safety net for the program crops in later years.
But CBO says the safety net will cost less in later years,
because CBO predicts that commodity prices will increase over
the next 10 years. That is what CBO said. Prices will increase
over the next 10 years. The safety net will cost less.
And so, again, as I understand it, the Administration
position is--is the new farm bill should put less emphasis on
helping farm families now so that there might be more funds on
paper in the budget baseline for 2009 or 2010 or 2011 in the
next farm bill. It seems to me that that is backwards. Now,
that is opinion. I am getting into opinion here.
Now I will go back to facts. The budget resolution--there
is no constraint on how we divide up the $73.5 billion. Now,
the Administration has come in and said, ``We want it evenly
spent.'' Okay. At the time the budget resolution was adopted,
we had this chart issued. It lays out the assumptions in how
that is going to be spent over the years. The budget resolution
that was passed shows that the larger share of the $73.5
billion would be spent in the first 5 years, as compared to the
second 5 years. That is this budget resolution that was passed
last year by the House and the Senate and supported by the
President.
Specifically. Specifically. Factually, assumption by the
CBO was that $40.25 billion of the $73.5 billion would be spent
in 2002 to 2006, the first 5 years.
Again, Madam Secretary, I ask are those assumptions that
were in that budget resolution--is that what the Administration
is opposed to?
I will repeat the question. I know you are talking with
your staff. What I have pointed out was in the budget
resolution passed last year, CBO assumed that $40.25 billion
would be spent in the first 5 years. Are you opposed--is the
Administration opposed to that? Is that the front loading that
the Administration is opposed to?
Secretary Veneman. Well, we have not taken a position on
what CBO did in terms of scoring the budget resolution. What we
have done is said that the amount of money over the 10 year
period that has been allocated should be spent relatively
evenly. The primary reason for that is to make sure that the
producers have certainty in the out years as to what monies
will be available, in terms of the baseline.
Senator Harkin. I will get to that. I will get to that.
Again, I do not know what ``relatively'' means. I am just
saying that the budget resolution passed here last year,
supported by this Administration, supported $40.25 billion in
the first 5 years. Are you now telling me you do not support
that, the Administration does not support that, that they have
changed their mind? If so, I would like to know.
Secretary Veneman. Sir, we supported the amount of money
that was in the budget resolution, and we have said that the
farm bill spending ought to maintain that amount of spending
over the 10 year period, but it should be spent relatively
evenly. We have never taken a position on how CBO scored that
10 year outlay.
Senator Harkin. Okay. I will ask you again. CBO, last year,
the budget--and that budget was supported by the
Administration. That budget was supported by the
Administration--$40.25 billion is outlayed, is spent in the
first 5 years. Again, I will ask again, does the Administration
believe that $40.25 billion in the first 5 years is too much?
Secretary Veneman. Again, Senator, what we support is the
$73.5 billion over 10 years. We have not taken a position----
Senator Harkin. We are there. We have already agreed. We
are there.
Secretary Veneman. Right.
Senator Harkin. Now we----
Secretary Veneman. We have not taken a position on----
Senator Harkin. How do I get this first 5 years?
Secretary Veneman. We have not taken a position on the way
that CBO has scored the farm bill in the budget resolution. We
have said that the money should be spent relatively evenly over
the 10 year period.
Senator Harkin. Help me out here. I do not know what
``relatively'' means. Now, 73.5 divided by ten, is that what
you mean? Every year, it should be spent--exactly that number
every year? Is that what you are saying?
Secretary Veneman. We are saying that the spending does not
have to be exact, but I believe that, and I will ask Dr.
Collins to correct me if I am wrong, the version of the House
farm bill has spending relatively even--not exactly even, but
relatively even in terms of the way the spending is allocated
over the 10 year period. I believe that the bill that was
proposed by Senators Cochran and Roberts had spending allocated
relatively even over a 10 year period of time.
Senator Harkin. Well, let us get to that. Well, evidently
you do not want to comment on the budget resolution. Now,
sometimes we can use it, and sometimes we cannot. It just
depends on how it fits the facts. But the facts are--and this
cannot be disputed--the budget resolution of last year
supported $40.25 billion for 5 years. Now, CBO has scored the
Senate bill that we passed for 5 years. That scored $40.38
billion for the same 5 years--one third of 1 percent more. Now
I am to understand the Administration does not like that.
So that is--these are some of the facts that we have got to
get out there on this so-called front-loading that we are
doing. Now, I am not--as I understand it, you are not arguing
that we should overturn the budget resolution of last year. Are
you arguing that? I mean, because it did not do it relatively
evenly over 10 years. It did $40.25 billion in the first 5
years.
Now, if you are saying you want to overturn that, we ought
to know about it, because I am getting a little upset with this
talk about this front-loading all the time when I pointed out
that our front-loading is $130 million more in 5 years than the
budget resolution, which is one-third of 1 percent.
Secretary Veneman. Senator, may I have Dr. Collins just
comment briefly on this?
Senator Harkin. Sure, glad to.
Dr. Collins. First of all, I guess I would say, going back
to the original budget resolution, which did have year-by-year
numbers in it that the Administration never took a position on
those year-by-year numbers. It is our understanding that what
the budget committee does in putting a year-by-year number in
there is largely irrelevant, that it is up to the authorizing
committee, your committee, to determine that spending pattern.
So the position the Administration has taken all along has been
on the $73.5 billion and not on any year-to-year concept.
Regarding the question of front-loading, I think you can
look at it in two lights. You can look at it in terms of
outlays, which is the numbers you have been quoting. You can
also look at it in terms of budget authority. I am not sure
what the budget resolution applies to, whether it is BA or
outlays. But certainly, in terms of budget authority, the
Senate bill becomes even more front-loaded.
Now, you say we have seen the CBO numbers, but I actually
had not. I saw the CBO numbers on the farm bill for the first
time this morning. I think they were either released last night
or this morning, so we really have not had a chance to study
these numbers, and I have not seen the BA numbers from the CBO.
I have only seen the outlay numbers, which were provided to me
this morning. But the earlier BA as scored by CBO for the
Senate bill was $46 billion during the first 5 years--was $45.8
billion during the first 5 years.
Senator Harkin. Was that authority?
Dr. Collins. That was budget authority, yes, sir.
Senator Harkin. Let us talk about spending. What is the----
Dr. Collins. Spending is the number you have quoted.
Senator Harkin. Right, $40.38 [billion].
Dr. Collins. Right. So I am saying the question of front-
loading applies to both of the concepts of budget authority and
spending so you have to keep both of those in mind.
Senator Harkin. I will be glad to talk authority with you
Keith, or I will talk outlays, but let us not keep--let us not
move back and forth across the turf.
Dr. Collins. Fair enough.
Senator Harkin. I will be glad to talk with you. If you
want to talk authority, we will talk it. If you want to talk
outlays, we will talk to that, too.
Dr. Collins. No, I am just trying to clarify why we have
not taken a position on the year-by-year numbers from the
original budget resolution.
Senator Harkin. So you are saying that every year has got
to be relatively even. I would like to figure out what
``relatively'' means and what the parameter means.
Dr. Collins. That is a good question.
Senator Harkin [continuing]. Guidance and direction from
the Administration on it.
Dr. Collins. I think that is a fair question.
Senator Harkin. And I am just saying that we looked at the
budget resolution, and we kept pretty close track of the budget
resolution. That is the facts. Now, if the Administration said
they do not like that budget resolution, well, that is another
point, and maybe we can get onto it for that. But this idea of
front-loading--again, getting into the opinion sector of it, it
is like this. Let us say you have got a bad body wound, and you
are bleeding profusely. You have cut an artery. Do you need a
Band-aid or do you need a tourniquet? You need a tourniquet.
Now, once you suture it up and you stop the bleeding and it
heals a little bit and you have got a little scar, do you need
a tourniquet or a Band-aid? You need a Band-aid then. But you
do not need the same thing at every point along the line, in my
opinion.
If you want to get into the opinion side of it, Madam
Secretary, we have got extremely low prices right now, and we
are going to have them for the next couple of years. We know
that. Farmers are hurting--badly. They need the tourniquet now.
I do not know what they are going to need in 2008 and 2009 and
2010. We are not going to have a 10 year farm bill. We are
going to have a 5 year farm bill. I think the House agrees with
that, and I think the Senate agrees with that. We are going to
have a 5 year farm bill.
Now, you said something about the baseline. Let me
factually state for the record, the bill--the Senate bill--will
not reduce the baseline for farm income protection. Under the
Senate bill, when we get to 2006, there will be money in the
CBO baseline for the income protection level in our bill. The
baseline will adjust to commodity prices at that time. For
example, we have an income protection price of $5.75 a bushel
for soybeans. The cost of that income protection would be built
into the baseline at the end of this farm bill. Now, the costs
may go up, or it may go down. But the CBO baseline will
automatically adjust so that there is, in the baseline, enough
money to fund that income protection level of $5.75 a bushel
for soybeans. Obviously, if prices go up, the income protection
goes down. If prices go down, the income protection goes up.
And that is the way the way we designed the bill.
The alternative to that? The alternative to that is to
continue what we are doing, that is, Freedom to Farm direct
payments every year, regardless of prices. That is the
alternative. And that is what the House bill has got. If you
want to just continue direct payments year after year,
regardless of what the price is, well, then you just--that is
the debate I guess we are going to have in conference. And I do
not know what the Administration's position is going to be on
that.
But I want to--there are two things we are doing. We are
dealing with facts, in terms of how much we are spending on our
bill in 5 years, compared to the budget resolution. Now, I did
not compare it to what the Administration was, because I did
not know what the Administration was. I hope maybe by the time
we go to conference, I said to my colleagues here--at least
Senator Cochran who is going to be on the conference--I hope
maybe the Administration would define ``relatively'' for us.
What parameter does the Administration want? Does it want
exactly evenly every year? Is it 2 percent deviation? Five
percent? Ten percent? How much does the Administration mean by
that? Then we can start arguing on the basis of opinion and
sort of philosophy on whether or not we need some more money in
the first 5 years. I have stated quite frankly for the record,
I do believe we need more money in the first 5 years. I am not
arguing that we should not--I believe we do. So if you call
that front-loading, you call that front-loading. But to hear
people talk about it, it is like we are taking all the money
and putting it in 5 years, when we are not taking all the money
and putting it in 5 years.
So all I can say is that, you know, the current CBO
baseline--if the current CBO baseline, Freedom to Farm, will
continue, we would have the same front-loading, have exactly
the same front-loading if we continued Freedom to Farm, even
payments, have the same front-loading, more so than what we
have got.
So again, I just want to get those facts out there. And,
you know, I think, Madam Secretary, you have said time and time
again we need to rework the Freedom to Farm Bill. We need to
rework that, and we have done it, and we have put money into
conservation programs and rural development and farm savings
accounts and everything like that--foreign market development
programs, and we have a reasonable safety net. We might argue
about overproduction and depressing prices. That probably gets
into the opinion level, I suppose. But I will continue to point
out the facts of what it is, in terms of the budget we have and
the budget resolution, and I will continue to ask the
Administration for their definition of ``relatively.'' Thank
you, Madam Secretary.
Senator Kohl. Senator Cochran?
RURAL HOUSING SERVICE
Senator Cochran. Mr. Chairman, Senator Bond, who is helping
manage the election reform bill, asked if I could raise an
issue that impacts the Rural Housing Centralized Servicing
Center in St. Louis and citizens applying for low-income rural
housing loans. Madam Secretary, he asked if you could delay
implementation of a new phone-conversation recording system
until a series of his questions that have been provided to the
department are answered.
Secretary Veneman. Certainly, we will be happy to look at
that. I will review his questions and see if we can accommodate
his concerns.
AGRICULTURAL RESEARCH
Senator Cochran. Thank you. Mr. Chairman, one comment, I
suppose, rather than a question as we get to the end of this
hearing. I noticed in the Secretary's testimony, there is a
statement to this effect, ``Commitments for agricultural
research have not kept pace, and opportunities to take
advantage of some of the Nation's best university-based
scientific talent are being lost.'' I agree wholeheartedly with
the Secretary's comment on that subject and that this is a
problem that we need to address.
But despite the proposal to double the funding for the
National Research Initiative, the overall level of funding in
the budget that the secretary submits today for the
Agricultural Research Service and the Cooperative State
Research, Education, and Extension Service (excluding ARS
building and facilities, emergency supplemental appropriations
and proposed funding transfers for rental costs and employee
pension and health annuitant benefits) is $14 million below the
fiscal year 2002 enacted levels. If we are going to meet the
current and future challenges, such as genomics, land and
animal management, pests and diseases, and genetically-modified
organisms, we will have to invest more rather than less in our
research efforts.
Mr. Chairman, thank you for your conduct of the hearing
today. You have been eminently fair and patient. It is a
pleasure to work with you, sir.
ADDITIONAL COMMITTEE QUESTIONS
Senator Kohl. Thank you, Senator Cochran. The subcommittee
will be submitting questions for the record.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Herb Kohl
nrcs conservation reserve program technical assistance
Question. Please provide information on the levels of technical
assistance that were used to carry out the Conservation Reserve Program
in fiscal year 2002.
Answer. In fiscal year 2002, a general signup of CRP acres is not
being held, so technical assistance costs will be a result solely of
acres signed up through the continuous and farmable wetlands programs.
Technical assistance will be funded through provisions in the fiscal
year 2002 Agriculture Appropriations Act permitting use of $13 million
in funds from the Environmental Quality Incentives Program and through
a pilot program of direct contracts between the Commodity Credit
Corporation and private entities.
Question. Please provide information in regard to SNOTEL operations
in fiscal year 2002.
Answer. The increased funding level for SNOTEL in fiscal year 2002
allowed for all water supply forecasting and drought assessments to be
fully supported this season. Also, operations of this automated
snowpack monitoring system have been restored to full response with
this increased funding and progress is being made on maintenance that
had been deferred in recent years. At the current funding level,
scheduled replacement of obsolete components at the two critical base
meteor-burst radio stations is underway and needed replacements at the
660 remote SNOTEL stations will be carried out over the next several
years.
Question. Please provide a status report on project items included
under the heading of ``Conservation Operations'' on pages 68-69 of
House Report 107-275 and any other projects that are included on pages
86-91 under the same heading in Senate Report 107-41.
Answer. NRCS will provide the Committee with a listing of the funds
allocated to States for Conservation Operation project items. NRCS has
requested that each State Conservationist submit a second quarter
status for each project in their State. This status summary will also
be provided.
[The information follows:]
fiscal year 2002 nrcs conservation operations earmark status report as
of 3/31/2002
Alabama
State: Alabama
Funds: CO-01, $300,000
Project: Sand Mountain Water Quality Conservation Project
Progress/Status: NRCS is in the process of developing a grant
agreement with the State of Alabama Soil and Water Conservation
Committee to transfer $300,000 to accelerate water quality initiatives
on Sand Mountain. NRCS is recruiting a soil conservationist to add to
our existing staff in our Rainsville Field Office to support this
project.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The Federal contract for the wetland treatment area will be
completed by September 30, 2003. Long Term Contracts (LTCs) have
conservation practices scheduled for installation through fiscal year
2003.
State: Alabama
Funds: CO-01, $150,000
Project: Central Alabama/Birmingham Water Quality and Conservation
Initiative
Progress/Status: A Project Coordinator has been appointed to
complete studies and a plan of work for the project area. Preliminary
meetings have been held to solicit local need and input from interested
parties and local units of government.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The installation of all conservation practices will be completed
by September 30, 2003.
State: Alabama
Funds: CO-01, $200,000
Project: Alabama Gulf Coast Water Quality and Conservation
Initiative
Progress/Status: A Coordinator for the project has been appointed.
Organizational meetings have been scheduled and input solicited from
interested parties. The Coordinator will work closely with local units
of government and the local community college to establish a GIS base
from which to coordinate the data as it is collected and analyzed.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The installation of all planned conservation practices will be
completed by September 30, 2003.
Alaska
State: Alaska
Funds: FIP, $504,600
Project: Reforestation
Progress/Status: Applications for 392 acres of reforestation, which
should allocate $120,636 of program funds, have been received.
Currently, 70.5 acres have been reviewed and approved by State
Forestry, which will be allocated in early May. The remaining 326.5
acres will be reviewed by State Forestry as time and staffing is
available. Current status of seedlings arriving in Alaska will account
for only 500 acres of planting to be completed in fiscal year 2002. The
seedlings will be shared by the following programs: FSA, FIP, SIP,
Kenai Peninsula Borough and Anchorage Municipality funding.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Cost share agreements for the total amount should be allocated by
September 30, 2002. Disbursements for a majority of the. obligated
funds should occur in fiscal year 2003 and 2004, dependent upon
seedling and reforestation vendor availability as well as weather and
climate.
State: Alaska
Funds: CO-01, $50,000
Project: Harding Lake Association
Progress/Status: A Cooperative Agreement has been drafted to
transfer $30,000 to the SalchaDelta Soil and Water Conservation
District. The SWCD will hire a project planner to coordinate NRCS
effort with the Lake Homeowners Association. NRCS has promised to
survey the entire lake, the properties, and possible inlet and outlet
sites. We are currently negotiating with the Army Corps of Engineers to
provide LIDAR data as a part of their ongoing work in the area (no
agreement needed or requested). This would eliminate the need for a
survey and allow NRCS to focus on hydrology and site analysis.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: None. Cooperative Agreement obligating $30,000 will be signed by
July 1, 2002. Surveying will be completed by September 1, 2002
utilizing the remaining $20,000.
State: Alaska
Funds: CO-01, $450,000
Project: Kenai Streambank Restoration Project
Progress/Status: A draft of Amendment #2 to the Cooperative
Agreement is being developed. The city is prioritizing projects.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Cooperative Agreement obligating entire $450,000 will be signed
by July 1, 2002. Construction will begin fall 2002 and continue through
fall 2003.
State: Alaska
Funds: CO-01, $2,250,000
Project: Offices and Staff
Progress/Status: USDA-NRCS has completed position descriptions for
Juneau and Glennallen. Vacancy announcement for the Glennallen position
has closed and selection of candidate will be made in the near future.
The position in Juneau is advertised and will close on May 13. Funding
has been allocated to technical support for these offices as, well as
Nome and Bethel,--Alaska. Field Office furniture and equipment
(including engineering equipment) is being purchased to assist in
public information program and assistance in rural Alaska. Grant
modification with AASWCD for $500,000 was signed January 24, 2002. New
Grant Agreement between the Alaska Association of Conservation
Districts and Alaska NRCS for $200,000 was finalized on March 8, 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Disbursement for a majority of the obligated funds should occur
in fiscal year 2002.
State: Alaska
Funds: CO-46, $300,000
Project: Cold Region Plants
Progress/Status: The project will develop a plant material plot
network that will transect the State with resulting data that can be
incorporated into ongoing global warming studies. Cooperative Agreement
between the USDA Natural Resources Plant Materials. Center was
finalized on April 14, 2002. The Cooperative Agreement transfers
$300,000 to the State of Alaska Plant Materials Center to prepare a
U.S. Cold Region Plant Materials Evaluation Network Project Plan. The
Cold Regions Evaluation Network will benefit all cold regions
researchers and people attempting to commercialize plants from
geographic areas indigenous to regions North of 52 degrees North
Latitude and equivalent vegetated regions in the Southern Hemisphere
(South of 52 degrees South Latitude).
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Cost Share agreements for the total amount are allocated.
Disbursements for the obligated funds will occur in fiscal year 2002
and 2003.
State: Alaska
Funds: CO-46, $350,000
Project: Native Plant Materials Evaluation and Developing
Progress/Status: Cooperative Agreement between the USDA Natural
Resources Conservation Service and the Alaska Department of Natural
Resources Plant Materials Center was finalized on April 8, 2002. The
Cooperative Agreement supplement is a revision to the existing
Cooperative Agreement signed in April 1999 for evaluating and
increasing native plant materials in Alaska. To assure consistent
program direction, an advisory committee has been formed. As the
program is developing, the committee expects to have commercial seed
producers throughout the State. The Agreement transfers $350,000 to the
State of Alaska Plant Materials Center for Native Plant Materials
Evaluation and Development.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Disbursements for the obligated funds will occur in fiscal years
2002 through 2005.
Arkansas
State: Arkansas
Funds: CO-01, $2,750,000
Project: National Water Management Center
Progress/Status: National Water Center is accomplishing assigned
items in national and local business plan.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: All funds will be obligated by September 30, 2002.
State: Arkansas
Funds: CO-01, No funds allocated to this project.
Project: Phase 2 of the Kuhn Bayou Project
Progress/Status: NRCS staff is 75 percent complete on the designs,
plans, and specifications for Phase II with a scheduled completion date
of August 1, 2002. Phase II contract will complete the main delivery
system and the distribution system that will provide irrigation water
to 14,000 acres of cropland and winter water for a wildlife management
area. NRCS staff also inspected and administered the contract for Phase
IA which was completed on February 7, 2002, at a final cost of
$947,623.90. Phase IA contract was for the installation of a portion of
the main delivery system. Funds were made available for Phase IA
through a CO-01 earmark in fiscal year 2000.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: No funding was allocated for this project in fiscal year 2002.
State: Arkansas
Funds CO-01; $375,000
Project: Little Red River Irrigation Project
Progress/Status: This project will provide water for 34,400 acres
of cropland and a large portion of the cropland will be flooded in the
fall and winter for waterfowl and other migratory birds. In 2001, NRCS
provided technical assistance to the Irrigation District and the U.S.
Army Corps of Engineers in conducting a reconnaissance-type study of
the diversion project. The Corps completed work on the first phase in
2001. Work on the second phase began in 2001 and will be completed
early in calendar year 2002. NRCS will use the Corps' work as it begins
to develop a project plan and an environmental impact statement. NRCS
has dedicated 1089 staff days for the planning process in fiscal year
2002. The plan/EIS will be completed in fiscal year 2003.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: No funds will be disbursed after September 30, 2002.
State: Arkansas
Funds: CO-01, $150,000
Project: Upper Petit Jean Watershed Project
Progress/Status: NRCS will use the fiscal 2002 appropriation to
prepare a generic (program neutral) plan and environmental assessment
for this project. The project plan will add municipal and industrial
water supply to an existing Public Law 566 planned single purpose
structure. This water supply will provide additional water for Waldron
and Booneville, and other rural water districts in Arkansas. NRCS has
provided planning and other technical assistance information to the
sponsor and their consultant in fiscal 2001 and 2002. The consultant
has prepared a feasibility study that estimated the total cost of the
project of approximately $15.2 million. Due to NRCS' and the
consultant's planning efforts this fiscal year; the revised project
cost is $21.3 million.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: No funds will be disbursed after September 30, 2002.
State: Arkansas
Funds: CO-01, $150,000
Project: Walnut Bayou Irrigation Project
Progress/Status: NRCS will use the fiscal year 2002 appropriation
to complete a generic (program neutral) plan and environmental
assessment and the design of Phase I for this project. NRCS prepared a
natural resource plan in fisca year 2001 with funds provided by the
State of Arkansas through the Arkansas Soil and Water Conservation
Commission. That plan documented the feasibility of providing
irrigation water from the Red River delivered through a pump station
and pipeline to Walnut Bayou. The project will provide water to 30,000
potentially irrigated cropland.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: No funds will be disbursed after September 30, 2002.
Arizona
State: Arizona/New Mexico
Funds: CO-01, $300,000
Project: Southwest Strategy
Progress/Status: Conducted Federal and State employee streamlining
ESA process training sessions; Completed Section 7 consultations for
the Programmatic Fire Related activities, formed agency issue
resolution teams for addressing Section 7 consultation issues; Held
Fire Risk Reduction and Recovery Workshops; Conducting monthly
interagency briefings on Fire issues; Developed a national contract to
train tribal and rural citizens to work on fire fighting and
restoration and fuel reduction; Completed ``A Guide to the Laws and
Terminology of Federal Land Management; Co-sponsored Coordinated
Resource Management (CRM) workshops with NM Association of Conservation
Districts; Developed an interagency Rangeland Monitoring Handbook and
Training Program for NM; Providing assistance to the current AZ CRM
Monitoring efforts; Provided intergovernmental coordination on noxious
weed management activities (inventory, mapping and public awareness);
Sponsored a Tribal Lands and People Summit and Tour for Federal and
Tribal leadership; Hosted the Farm Policy Listening Session for tribal
government and members; Sponsored interdepartmental Cultural Resource &
Law Enforcement Training session; Completed Biological Synthesis along
the United States/Mexico border; and currently providing leadership,
guidance and coordination through a partnership effort (Federal, State,
tribal and local governments, local stakeholders and conservation
districts) in addressing emergency Drought response and activities in
the Southwest.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The projects and activities will be completed prior to September
30, 2002.
California
State: California
Funds: CO-01, $600,000
Project: Monterey Bay Sanctuary
Progress/Status: The NRCS Rural Roads Engineer started work on
March 11. The NRCS Rangeland Mgmt. Specialist position will be
advertised in May. The Agriculture Plan Implementation Committee will
finalize the partnership agreement funds ($80,000) during the third
quarter. NRCS staff completed curriculum development (fact sheets,
self-assessment sheets, slide presentations) together with UCCE for
Farm Water Quality Planning Short Courses & a course was held for
farmers in San Benito County. Practice effectiveness field trials are
underway for row arrangement and vineyard cover cropping by NRCS, UCCE,
RCD and other partners.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Partner Agreements: $116,000
State: California
Funds: CO-02, $350,000
Project: Lake Tahoe Basin
Progress/Status: Implementation of the Backyard Conservation
Program with over 100 Site Evaluations on private home sites conducted
between October 1 and November 15, 2001. Staff is currently previewing
2001 progress and developing new program needs and objectives for 2002
field season. Soil Survey--Field work on 20,000 acres (private lands)
completed.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Soils Survey will need to be published.
State: California
Funds: CO-01, $375,000
Project: Agriculture Enhancement
Progress/Status: Alameda County: A Cooperative Agreement with the
Alameda County Resource Conservation District is being developed for
items within the Ag. Enterprise Plan. Funding will also be used to hire
an NRCS Soil Conservationist and Ecologist. Contra Costa County: A
Cooperative Agreement was signed with the Contra Costa Resource
Conservation District for two major tasks: completing and publishing
the Marsh Creek Watershed Plan and implementing high priority projects
in the Alhambra Creek Watershed Plan.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Partner agreement (Contra Costa): $55,000, Partner Agreement
(Alameda): $97,500.
Delaware
State: Delaware
Funds: CO-46, $290,000
Project: Expand cooperative efforts with DE State University for
Plant materials program.
Progress/Status: An agreement with Delaware State University and
the Natural Resources Conservation Service has been obligated in the
amount of $290,000.00 to support the research efforts of the Claude
Phillips Herbarium.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: All obligations will be completed prior to September 30, 2002.
Florida
State: Florida
Funds: CO-01, $5.0 million
Project: Creation and Implementation of pilot projects for
innovative technology systems to treat waste and wastewater generated
by confined animal feeding operations.
Progress/Status: NRCS entered into a Working Agreement with Farm
Pilot Project Coordination, Inc. (FPPC) on January 30, 2002. FPPC has
developed a Plan of Work and budget for the innovative technology
projects. FPPC has submitted a draft Request for Proposal (RFP) for
review by NRCS. Two hundred thousand dollars was provided to FPPC as
start up costs to begin implementation of the project.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The working agreement is for 3 years. It is anticipated $3.5
million will be disbursed after September 30, 2002.
State: Florida
Funds: CO-01, $500,000
Project: Coop agreement with Manatee Ag Water Reuse System Project.
Progress/Status: FL-NRCS is in the process of writing an agreement
with Florida West Coast RC&D to develop a project plan. The plan will
devise a method to rate potential users and determine the steps
necessary to begin the hook-ups from transmission lines to user's
pumps.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The remaining dollars will be used to begin individual user hook
ups. The $500,000 will be spent by December 30, 2002.
Georgia
State: Georgia
Funds: CO-01, $1,100,000
Project: Cooperative agreement with Georgia Soil and Water
Conservation Commission
Progress/Status: NRCS has signed a grant agreement that transfers
$935,000 to the State of Georgia Soil and Water Conservation Commission
(SWCC). The grant agreement work plan states that the SWCC will provide
accelerated assistance on surface water irrigation supplies in the
project area. Surface water structures and irrigation system
enhancements will be installed on these farms. NRCS is providing
technical assistance to plan and design these structures. Planning will
be completed in fiscal year 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The installation of all conservation practices will be completed
by September 30, 2003.
State: Georgia
Fund: CO-01; $500,000
Project: Georgia Agricultural Water Conservation Initiative
Progress/Status: Water Conservation District ($250,000), Middle
South Georgia Soil and Water Conservation District ($150,000), and the
Georgia Association of Conservation Districts ($25,000). The grant
agreement work plans state that the Soil and Water Conservation
Districts will provide accelerated assistance on resource management
systems to enhance irrigation efficiencies in the project area. Surface
water structures, irrigation system enhancements and water conserving
conservation practices will be installed on these farms. Georgia
Association of Conservation Districts will provide educational and
information support to the overall project. NRCS is providing technical
assistance to plan and design the conservation practices. Planning will
be completed in fiscal year 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The installation of all conservation practices will be completed
by September 30, 2004.
Hawaii
State: Hawaii
Fund: CO-46; $250,000
Project: Molokai Agriculture Community Committee
Progress/Status: On April 11, 2002, NRCS sent a letter to the Tri-
Isle RC&D Council, Inc. informing the council that additional funding
in the amount of $250,000 is available for fiscal year 2002. Upon
receipt of the council's acceptance, the total amount for this Molokai
Agricultural Development Program will be $1,005,298.44. There are a
total of 11 projects that are ongoing, which include, but are not
limited to, farming (e.g., organic sweet potatoes), composting, noni
processing, community kitchens, promotion of taro as a crop, working
with the Maui Community College (Molokai) training grantees on
agricultural courses, etc. It is anticipated that ten additional
projects (e.g., hydroponics, promotion of Coffees of Hawaii, fruit farm
expansion, etc.) will be developed by grantees with the fiscal year
2002 funding.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The cooperative agreement will be extended prior to September 30,
2002, to accommodate grantees in completing their projects. Fiscal year
2002 funds will be disbursed to the Tri-Isle RC&D Council, Inc. as
projects progress or are completed during fiscal year 2003.
State: Hawaii
Fund: CO-46; $20,000
Project: Alien Weed Pests
Progress/Status: The Garden Island RC&D Council has submitted the
``Proposal for the Kaua'i Invasive Species Committee'' to NRCS. NRCS is
currently reviewing the proposal and will award a noncompetitive
discretionary grant agreement. The goal of the grant agreement is to
promote and maintain a healthy and diverse forest environment by
identifying and controlling alien and invasive species.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The proposed grant agreement will be extended prior to September
30, 2002 to accommodate the project. Fiscal year 2002 funds will be
disbursed to the Garden Island RC&D Council as the project progresses
with a completion date of June 2003.
State: Hawaii
Funds: CO-46, $300,000
Project: PMC for Native Plants to Clean Up the Island of Kahoolawe
Progress/Status: The Hawaii Plant Materials Program continues to
increase production of native plant seeds for the island of Kaho'olawe.
Native seeds are being delivered to the island of Kaho'olawe in
coordination with the Kaho'olawe Island Reserve Commission (KIRC).
Twenty acres at the PMC are being developed for native seed production
fields, eight acres of which are currently planted to four species of
native grasses and shrubs. The NRCS Plant Material Program will be
acquiring a plant specialist to assist in Kaho'olawe revegetation
efforts.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: None
Idaho
State: Idaho
Funds: CO-01, $200,000
Project: Idaho OnePlan
Progress/Status: Computer programmers are continuing to work on the
nutrient management module. Comprehensive business requirements are
being developed in cooperation with NRCS Information Technology Center
(ITC) in Fort Collins, Colorado. The nutrient management module is
scheduled for completion in 4 weeks. The conservation planning module
is scheduled to be completed by September 1, 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Testing within the FifteenMile Creek Watershed is targeted from
September to December 2002.
State: Idaho
Funds: CO-01, $500,000
Project: Little Wood River Irrigation District Gravity Pressure
Delivery System
Progress/Status: The project will convert the current open canal
gravity delivery system to a closed gravity pressurized system. The
project will eliminate 4.3 mw of power usage, increase water savings by
30 percent on irrigated cropland, and eliminate the need for potable
water use for city landscape watering. A scoping meeting has been held
and a Plan of Work has been developed. NRCS has detailed a full-time
employee to serve as the project coordinator. Development of an
Environmental Impact Statement (EIS) is underway and the public notice
has been placed in the Federal Register.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Feasibility Study will be completed by June 2003.
State: Idaho
Funds: CO-01, $500,000
Project: Irrigation Vicinity of Minidoka
Progress/Status: Funds are used to assist land users to convert
from surface irrigation to sprinkler irrigation due to the closing of
injection wells by the Bureau of Reclamation. The injection wells
dispose of tail water from the surface irrigation, which is a direct
conduit to groundwater. Cooperative agreement has been signed with the
Minidoka Soil & Water Conservation District to provide pass-through
dollars to develop long-term contracts with land users and the
Administration of the contracts. Funds will be obligated by September
2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The installation of all planned conservation practices and
management items will be completed by September 2005.
Illinois
State: Illinois
Project: Trees Forever Program
Funding: CO-01; $100,000
Progress/Status: Developing an Agreement to transfer funds.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Anticipate completion and obligation of funds by May 1, 2002.
State: Illinois
Project: Conservation Measures in the Illinois River Basin (EQIP)
Funding: EQIP; $600,000
Progress/Status: EQIP funds have been obligated to Priority Areas
within the Illinois River Basin. All of the $600,000 will be utilized.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: All funds will be expended by September 30, 2002.
State: Illinois
Project: Illinois River Basin
Funding: CO-01; $50,000
Progress/Status: NRCS field staff will continue to provide planning
assistance throughout several local resource planning activities in the
basin.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: All funds will be expended by September 30, 2002.
State: Illinois
Project: Embarrass River Watershed and Shad Lake
Funding: CO-01; $100,000
Progress/Status: NRCS has and continues to provide planning and
engineering assistance to various groups and landowners throughout the
watersheds.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: All funds will be expended by September 30, 2002.
State: Illinois
Project: Glen Shoals Lake
Funding: CO-01; $50,000
Progress/Status: NRCS has and continues to provide planning and
engineering assistance in the watershed.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Anticipate funds to be expended by September 30, 2002.
Indiana
State: Indiana
Funds: CO-01, $50,000
Project: Source Water Protection Initiative
Progress/Status: Public meetings have been held to obtain public
input. NRCS is working with AIRS to develop a study to compare two
watersheds. One watershed will implement Best Management Practices; the
other watershed will not. A water monitoring site will be set up in
each watershed for comparison. A GS-9 soil conservationist will be
hired to provide technical assistance.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The soil conservationist will be hired for a 1 year period
starting in May 2002 and ending in May 2003.
Iowa
State: Iowa
Funds: CO-01, $800,000
Project: Hungry Canyons & Loess Hills Erosion Control--Western Iowa
Progress/Status: Projects have been identified and screened by the
Hungry Canyons Alliance. A grant agreement is being developed to cover
ten selected projects. Dollars will be obligated by June 7, 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Construction on selected projects will begin during the summer of
2002 and carry over into 2003.
State: Iowa
Funds: CO-01, $100,000
Project: Trees Forever Conservation Buffer Promotion
Progress/Status: A cooperative agreement has been executed with
Trees Forever. The agreement includes a schedule of conservation buffer
promotion activities and products to be accomplished by Trees Forever.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Celebration and recognition events will be completed during the
fall of 2002.
State: Iowa
Funds: CO-01, $300,000
Project: Implement CEMSA with Iowa Soybean Association
Progress/Status: A draft cooperative agreement for $300,000 with
the Iowa Soybean Association and the National Pork Producers Council
has been developed.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Work products will be scheduled and completed, and payments will
be disbursed during both fiscal year 2002 and fiscal year 2003.
State: Iowa
Funds: CO-01, $100,000
Project: Cooperative Agreement with TIAER for a Watershed
Management and Demonstration Project
Progress/Status: A draft cooperative agreement for $100,000 with
TIAER for a Watershed Management and Demonstration Project has been
developed.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Work products will be scheduled and completed, and payments will
be disbursed during both fiscal year 2002 and fiscal year 2003.
Kentucky
State: Kentucky
Fund: CO-01; $1,700,000
Project: Soil Erosion Cost Share Program
Progress/Status: NRCS serviced 3,200 applications for KY's State
cost share program for the installation of conservation practices such
as waste storage structures, heavy use area protection, and various
erosion control practices. These requests totaled $37 million; however,
it appears that approximately $10,350,000 will be appropriated by the
State legislature from general revenue funds and KY's share of the
Phase I Tobacco Settlement funds. This is a tremendous Partnership
effort and provides an important program to the agricultural landowners
in Kentucky to address nonpoint source pollution concerns on farms and
ranches.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: NRCS will be asked to design, inspect and certify conservation
practice implementation on those farms approved for State cost share.
State: Kentucky
Fund: FPP; $720,000
Project: Homeplace Farm Purchase
Progress/Status: The earmark is for NRCS to assist The Homeplace on
Green River Incorporated or a local government entity in the Taylor,
Green, or Adair County(s) to purchase a farm of approximately 230
acres. The farm will be protected from encroaching development and will
be used as an educational site to display active farming techniques.
The Nature Conservancy has agreed to hold the conservation easement for
the property. The property has been surveyed and an appraisal is being
conducted.
Fiscal year 2002 Obligations for disbursement after September 30,
2002: We anticipate that the funds will be obligated by the end of the
fiscal year.
State: Kentucky
Fund: CO-02; $700,000
Project: Soil Survey Program
--$40,000--Digital Map Finishing with NRCS--Tennessee
--$17,186--English Editor, WV State Office NRCS--MO-13
--$203,013--GPO/Photo Mechanics, NRCS--National Cartographic and
Geospacial Center, Ft. Worth, TX
--$28,450--NRCS--VA SSURGO, Certify Soil Surveys
--$15,000--Graves Co. Conservation District Compilation
--$8,752--Map Compilation, Private Contract, Bourbon and Nicholas
Counties
--$4,900--Map Compilation, Private Contract, Clark County, Carlisle
and Hickman Map Compilation not yet contracted
--$20,000--UGA/UT/UK Lab Assistance
Fiscal year 2002 Obligations for disbursement after September 30,
2002: We anticipate that the funds will be obligated by the end of the
fiscal year.
Louisiana
State Louisiana
Fund: CO-01; $125,000
Project: Barataria-Terrebonne National Estuary Program (BTNEP)
Progress/Status: NRCS in Louisiana, as a member of the BTNEP
Management Committee, will continue to work on the implementation of
the Comprehensive Conservation Management Plan (CCMP). NRCS has
accelerated technical assistance for the development and implementation
of twenty-two Resource Management Plans (RMS) on approximately 3,000
acres of cropland for participants in the Environmental Quality
Incentive Program (EQIP). Wetlands Enhancement has been applied on over
9,000 acres within the Basin.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Over 5,800 acres of RMS conservation plans have been developed on
cropland and 1,700 acres on grazing lands for fiscal year 2002.
State: Louisiana
Fund: CO-46; $344,000
Project: Golden Meadow Plant Material Center facility improvements
and support for on-going plant materials work
Progress/Status: NRCS has developed and awarded a contract for
construction of a metal building for cold storage. Within the next 30
days, NRCS will purchase, through a GSA contract, a surface water
irrigation pumping station and contractor installation of the
associated underground pipeline. A GSA contract will be utilized to
acquire and install the walk-in cooler.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: All works of improvement are scheduled to be completed by August
30, 2002. All items in the business plan will be accomplished by
September 30, 2002.
Maryland
State: Maryland
Fund: CO-01; $1,728,000
Project: Chesapeake Bay
Progress/Status: Implementation procedures for AFO/CAFO and CNMP in
Maryland are on target. All DCs have received training courses for
certified conservation and nutrient management planning. We have CREP
signup acres of 3,400 with 2,300 acres of buffers (46 percent of goals
accomplished). Buffers and CREP are a high priority in coordination
with State and Federal partnerships. Nutrient management plans have
been applied on approximately 12,000 acres. Certified nutrient
management plans have been developed on 42 sites with 39 CNMPs applied.
Update of Sections I-IV of the FOTG is 60 percent complete.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: None
Massachusetts
State: MA, WI
Funds: CO-01, $300,000
Project: Conservation Programs Related to Cranberry Production
Progress/Status: NRCS has signed a Cooperative Agreement that
obligates $280,000 to the Plymouth County Conservation District and
$20,000 to the Cape Cod Cranberry Growers Association. The objective of
this project is to provide cranberry growers with planning assistance
and access to technologies, to conserve water and other natural
resources, evaluate their off-site impacts, mitigate environmental
problems, improve efficiencies and diversify their farms. The goal of
the project is complete farm plans on at least 225 farms.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Funds will be obligated in contracts by September 30, 2002.
State: MA, NY, CT
Funds: CO-01, $100,000
Project: Nature Conservancy's ``Weed It Now'' (WIN)
Progress/Status: The Nature Conservancy is currently making final
review of ``Grant Agreement'' materials prepared with NRCS. The Grant
Agreement will transfer $100,000 to The Nature Conservancy to carry out
the first year of the ``Weed It Now'' project. The purpose of the
project is to eliminate six different exotic-invasive weeds from
specific areas (approximately 565 acres total) within the Berkshire
Taconic Landscape, thereby helping to protect the value of the forests
for wildlife habitat, biodiversity and forest resources.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Phase one work will be completed by 4/1/2002.
Mississippi
State: Mississippi
Fund: CO-01; $1,500,000
Project: Franklin County
Project/Status: NRCS continues to work on the Franklin County Lake
Project with an estimated completion date of August 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The Franklin County Lake Project should be completed by February
2003.
State: Mississippi
Fund: EQIP; $1,560,000
Project: EQIP National Priority Area in Delta Region
Project/Status: The agency is in the final ranking stage for EQIP
National Priority Area in the Delta.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The funds for EQIP National Priority Area in the Delta will be
obligated by September 2002.
State: Mississippi
Fund: CO-01; $750,000
Project: Miss Delta Resources Study
Project/Status: The study is complete and NRCS has developed a
fiscal year 2002 agreement with the Yazoo Water Management District to
develop plans and implement practices, identified in the study that
will enhance the quantity of water available to farmers in the
Mississippi Delta.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The plans and practices identified for fiscal year 2002 will be
completed by September 2002.
State: Mississippi
Fund: CO-02; $0
Project: Proper classification and taxonomic characteristics of
sharkey soils
Project/Status: Soil Scientist in NRCS continues with the study
using allocated funds to State.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: This project is on-going.
State: Mississippi
Fund: CO-01; $1,300,000
Project: Delta Conservation Demonstration Center in Washington
County
Project/Status: NRCS has entered into an agreement to provide funds
to Washington County SWCD to implement activities planned for the Delta
Conservation Demonstration Center.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The scheduled activities will be completed by September 2002.
State: Mississippi
Fund: CO-01; $900,000
Project: Mill Creek Watershed
Project/Status: NRCS has entered into an agreement to provide funds
to the City of Magee to implement erosion control and flood control
measures including vegetated buffers along the stream corridor.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The scheduled activities will be completed by July 2003.
State: Mississippi
Fund: CO-01; $250,000
Project: Squirrel Branch Drainage Project
Project/Status: NRCS has entered into an agreement with the City of
Richland to provide funds to complete the Squirrel Branch Drainage
Project. This City of Richland project is a carryover that was started
in fiscal year 2001.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The Squirrel Branch Drainage Project will be completed by
November 2002.
State: Mississippi
Fund: CO-01; $75,000
Project: Survey Chickasaway River
Project Status: NRCS will enter into an agreement with sponsors to
provide them funds to conduct a study of the feasibility of designating
the Chickasaways River in Southeast Mississippi.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The Survey Chickasaway River project should be completed by
September 2002.
State: Mississippi
Fund: CO-01; $475,000
Project: Cattle & nutrient management
Project/Status: NRCS has entered into an agreement with the
Mississippi Soil and Water Conservation Commission to provide funds to
implement nutrient management systems with landusers throughout the
State.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The cattle & nutrient management project will be completed by
September 2002.
State: Mississippi
Fund: CO-01; $400,000
Project: Improve Drainage along Lyons Creek
Project/Status: NRCS has entered into an agreement with the Town of
Taylorsville to provide funds to improve the Lyon Creek Drainage
System.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The Lyons Creek project should be completed by November 2002.
State: Mississippi
Fund: CO-01; $175,000
Project: Cooperative agreement with Alcorn State University
Project/Status: NRCS has entered into an agreement with Alcorn
State University to provide the funds and technical assistance to
analyze soil erosion and water quality needs in the area.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: This project will be completed by November 2002.
State: Mississippi
Fund: CO-46; $275,000
Project: Jamie Whitten PMC
Project/Status: NRCS has been developing plans and designs to
implement improvements at the PMC. The implementations should begin
April 2002 and be completed by August 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: This project will be completed by September 2002.
State: Mississippi
Fund: CO-01; $150,000
Project: Mallard Pointe
Project/Status: NRCS has entered into an agreement to provide funds
to the Madison County Board of Supervisors to implement erosion control
and channel bank protection at Mallard Pointe.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: This project will be completed by November 2002.
State: Mississippi
Fund: CO-01; $75,000
Project: Choctaw County Impoundment Study
Project/Status: NRCS plan to enter into an agreement with the
Choctaw County Board of Supervisors to provide them funds to conduct a
feasibility study pertaining to the proposed surface impoundment
structure.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: This project will be completed by September 2002.
State: Mississippi
Funds: CO-01, $5,609,000
Project: Wildlife Management Institute
Progress/Status: National Water Center is accomplishing assigned
items in national and local business plan. An agreement is being
implemented to transfer $3,000,000 to US Fish & Wildlife Foundation.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: All funds will be obligated by September 30, 2002.
Missouri
State: Missouri
Funds: CO-01, $20,000
Project: Upper White River Basin
Progress/Status: A report titled ``Establishment of a USDA-NRCS
Water Quality Project Serving the Upper White River Basin in Missouri''
has been completed. It reflects input from various natural resources
partners and captures budget projections for staffing and support
costs. Copies of the report have been forwarded to the Chief of NRCS.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: None.
State: Missouri
Fund: CO-01; $50,000.00
Project: Source Water Protection Initiative
Progress/Status: NRCS is in process of signing an agreement with
State agency to complete agreed to work objectives.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: All work will be completed by July 2003.
Nebraska
State: Nebraska
Fund: CO-01; $345,900
Project: National Agroforestry Center
Progress/Status: $231,900 was transferred to the National Business
Management Center (NBMC) who provides all administrative support for
the National Agroforestry Center (NAC). This transfer allows the NBMC
to process all vouchers, grants and agreements, travel and other
expenditures for activities related to the NAC. $114,000 is the
allowance for Gary Wells in Nebraska for his salary and expenses while
working at the NAC. The USDA National Agroforestry Center (NAC) had its
origins in the 1990 Farm Bill. It began as a Forest Service effort in
1992 and expanded into a partnership with the Natural Resources
Conservation Service in 1995. NAC conducts research on how to design
and install forested buffers to protect water quality and develops and
delivers technology on a broad suite of agroforestry practices to
natural resource professionals who directly assist landowners and
communities.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: $57,000 in salary and support costs has been spent for the
employee in Nebraska, Gary Wells, working at the NAC. The rest of the
money is being spent at the NAC administered through the NBMC.
New Jersey
State: New Jersey
Funds: CO-01, $1 million
Project: State Cost Share Program
Progress/Status: Technical assistance has been provided in
planning, estimating costs and ranking of offers on 163 fiscal year
2002 applications. Ninety contracts are currently being developed.
Implementation is ongoing on over 100 prior year contracts. NRCS has
hired additional staff (term employees) to meet this workload need.
Fiscal year 2002 Obligations for Disbursement after September 2002:
Technical assistance will be offered in the implementation of contracts
throughout fiscal year 2002.
New Mexico
State: New Mexico
Funds: CO-01, $150,000.
Project: Southwest Strategy
Progress/Status: The SW Strategy develops an annual plan of
operations with partnership input each year. Seventeen projects have
been identified this year. Several additional projects (5 to 7) not
initially identified are also incorporated into the plan and completed.
Coordination between numerous partnerships continues.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: All funds will be obligated by September 30, 2002.
New York
State: New York
Funds: CO-01, $325,000
Project: Westchester County SWCD/Long Island Sound
Progress/Status: Negotiations have been completed with the
Westchester County SWCD and have led to an agreement to pass through
$250,000.00 to the District for projects to be completed to conserve
and protect Long Island Sound. The remaining $75,000.00 will be used by
NRCS to provide technical assistance to the project.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: $0
State: New York
Funds: CO-01, $500,000
Project: Pastureland Management/Rotational Grazing
Progress/Status: This earmark is more commonly referred to as Graze
New York. Cooperative Agreements are currently being negotiated to pass
through approximately $325,000.00 to eight central New York Soil and
Water Conservation Districts to provide technical assistance for the
planning and implementation of prescribed grazing systems. The
remaining $175,000.00 will be used to provide NRCS technical assistance
to the project.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: $0
State: New York
Funds: CO-01, $250,000
Project: Skaneateles and Owasco Watersheds
Progress/Status: Negotiations are currently underway with the
Cayuga, Onondaga and Tompkins County Soil and Water Conservation
Districts to provide technical assistance to plan and implement Best
Management Practices in both watersheds. Approximately $130,000.00 will
be passed through to the Districts with the remaining $120,000.00 used
to provide NRCS technical assistance to both projects.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: $0
State: New York
Funds: CO-01, $250,000
Project: Onondaga Lake Watershed NPS
Progress/Status: NRCS retains this funding in order to provide
technical assistance to the Onondaga Lake Watershed Project in Onondaga
County. Our assistance to the project supports the planning and
implementation of Whole Farm Plans throughout the watershed.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: $0
State: New York
Funds: CO-01, $300,000
Project: Beaver Swamp Brook
Progress/Status: Negotiations are currently underway with the City
of Rye and Village of Harrison which are developing their plans at this
time. The entire $300,000.00 will be passed through.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: $0
State: New York
Funds: CO-01, $200,000
Project: Computer Tools for NMP
Progress/Status: NRCS is working with David Galton, Professor,
Dairy Management at Cornell University who is developing a proposal for
the refinement, integration and implementation of computer tools to
improve nutrient management planning on dairy farms in New York.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: $0
State: New York
Funds: CO-01, $650,000
Project: Phase II Watershed Ag. Council
Progress/Status: NRCS will use $570,000.00 for technical assistance
to the NYC Watershed Agricultural Program for the development and
implementation of farm plans in the NYC Watershed. The remaining
$80,000.00 will be used for the stewardship of easements in the NYC
Watershed. Negotiations for developing the Cooperative Agreement for
this purpose are currently underway with the Watershed Ag. Council.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: $0
State: New York
Funds: CO-01, $130,000
Project: Pace University
Progress/Status: A Cooperative Agreement has been developed with
Pace University in order for them to promote sustainable growth and
protection of soil and water resources. The entire $130,000.00 will be
passed through to Pace University.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: $0
State: New York/Pennsylvania
Funds: CO-01, $204,000
Project: American Heritage Rivers
Progress/Status: NY received $90,000 and PA received $104,000 for
technical assistance for river navigator positions in the two States.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: $0
North Carolina
State: North Carolina
Funds: CO-01, $50,000.00
Project: Dairy Cattle Manure Evaluation.
Progress/Status: Report in progress.
Fiscal year 2002 Obligation for Disbursement after September 30,
2002: Funds are expected to be obligated by September 30, 2002.
North Dakota
State: North Dakota
Funds: CO-01, $700,000
Project: Red River Basin Flood Prevention Project
Progress/Status: A grant agreement to begin the flood prevention
study was signed with the University Of North Dakota, Energy &
Environmental Research Center for $700,000 on April 3, 2002. The
objective of the study is to establish a program to evaluate the
feasibility of utilizing existing infrastructure in a systematic way
for temporary storage of flood water in the Red River Basin.
Fiscal year 2002 Obligations for Disbursement after 9/30/02:
Anticipate that $300,000 will be disbursed after 9/30/02.
Ohio
State: Ohio
Fund: CO-01; $1,000,000.00
Project: Maumee Watershed Hydrological Study and Flood Mitigation
Plan
Progress/Status: Funding will be used for land treatment and
technical assistance using multiyear contracts. This assistance will
enhance partner funding from the Army Corp of Engineers that has been
made available to five local conservation districts for upland
treatment.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Funds will be obligated according to the plan developed by the
local working group.
State: Ohio
Fund: CO-01; $50,000.00
Project: Urban Encroachment on Rural Acres
Progress/Status: NRCS has an agreement with the Fulton County
Planning Commission to gather landuse data and produce GIS products.
Currently, work is being done on survey development; actual survey is
to be completed in September 2002. The data will be utilized to
identify land cover/use, environmentally significant areas,
agricultural significance, ground water information, and suitability
for development.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Preliminary maps are to be developed by November 2002 with the
final map products and presentation to be completed by October 2003.
State: Ohio
Fund: CO-01; $1,250,000.00
Project: Great Lakes Basin Program
Progress/Status: The basin program supports a competitive annual
grants program that funds several types of erosion and sedimentation
control projects. Grant applications were reviewed and applicants
notified of their application status by the Great Lakes Commission.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: All funding was transferred to the Great Lakes Commission on
March 21, 2002.
State: Ohio
Fund: CO-01; $50,000.00
Project: Source Water Protection Initiative
Progress/Status: This funding will increase planning efforts in the
Upper Big Walnut Creek watershed. A nationally recognized CREP program
has been initiated in this watershed. This 13 million-dollar local,
State, and Federal partnership is working to protect the drinking water
for nearly 600,000 people.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Funds will be obligated according to the developed plan.
Oregon
State: Oregon
Funds: CO-46, $325,000
Project: Oregon Garden Foundation
Progress/Status: The NRCS is developing an amendment to the fiscal
year 2001 cooperative agreement that transfers funding to the Oregon
Garden Foundation. The cooperative agreement work plan submitted by
Oregon Garden on April 4, 2002 states that the funds will be used to
pay salaries and expenses for 10 individuals to support improvement of
the wetlands on site and provide interpretive signage, literature, and
other educational opportunities that enhance visitor understanding of
wetland ecology.
Fiscal year 2002 Obligations for Disbursements after September 30,
2002: The Federal contract will be completed December 31, 2003.
State: Oregon
Funds: CO-46, $125,000
Project: Advanced Wetland Plant Research--Jackson Bottom Wetland
Preserve
Progress/Status: NRCS is finalizing an agreement that transfers
funding to test and evaluate wetland and upland edge enhancement
techniques in 10 studies plots designated around the perimeter of the
education center. The NRCS plant materials specialist is serving as a
project advisor to establish enhancement goals and set success
criteria.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The Federal contract will be completed September 30, 2004.
State: Oregon
Funds: EQIP, $250,000; CO-01, $250,000
Project: Klamath Basin Accelerated Planning and Implementation
Assistance
Progress/Status: NRCS is currently assisting the Oregon Klamath
Soil and Water Conservation District and California's Lava Beds/Butte
Valley Resources Conservation District to develop a natural resources
plan that will address Klamath Basin natural resources issues. These
two districts have established a local Steering Group and will be
soliciting additional stakeholder participation. The planning process
will initially focus on delivery of accelerated EQIP financial
assistance. In the longer term the planning process will need to adapt
to different planning scales such as the Upper and Lower Klamath Basin,
sub-watersheds of these basins, irrigation districts, and individual
farms. NRCS will focus its assistance efforts at the sub-watershed and
individual farm scale. Complexity of this planning effort is compounded
by the interaction of the Klamath Basin Project Area, The Endangered
Species Act, and Tribal concerns with the demands on limited water
resources in the Klamath Basin. The planning and implementation effort
will be a long-term project with anticipated benefits to be derived
when landowners/operators implement conservation systems to improve
water management--quality and quantity; improve wildlife habitat for
aquatic and upland wildlife; restore wetland to improve water quality
and improve/increase wildlife habitat; and improve grazing land
management. Implementation will lead to improved Klamath Basin
watershed health with related improvement in hydrologic condition.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: All EQIP financial assistance funding will be awarded to private
landowners before September 30, 2002. Related EQIP technical assistance
will be utilized well before the end of this fiscal year. All CO-01
funding technical assistance funding will be utilized before the end of
this fiscal year.
Pennsylvania
State: Pennsylvania
Fund: CO-01; $1,338,000
Project: Chesapeake Bay Program
Progress/Status: NRCS has provided planning, me&E, design and
construction quality assurance to farmers in the Chesapeake Bay area in
cooperation with the local Conservation District. This accelerated
technical assistance was provided to manage nutrients, reduce erosion,
eliminate runoff from barnyards, and improve soil quality.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The design and installation of planned conservation practices
will continue through fiscal year 2003. Technical assistance will be
necessary to fulfil the contracts signed with landowners to install
conservation practices in their CBP contract. These contracts may have
planned practices for up to 3 years. Payments will need to be processed
to the landowners.
Puerto Rico
State: Puerto Rico
Funds: CO-01, $150,000
Project: Digitization and Certification of all published soil
surveys
Progress/Status: Three of six published soil surveys in Puerto
Rico, are digitized and SSURGO certified. Two have been compiled and in
process of digitizing. These two soil surveys are in schedule to be
digitized and SSURGO certified before the end of the fiscal year 2001.
Digital Soil Survey CD products will be prepared for each one of these
five published Soil Surveys. Only one, the Humacao Area Soil Survey, is
pending because Digital Orthophotography Quadrangles (DOQ's) are not
available.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The digitizing, certification and digital CD products of all
published soil surveys (except for Humacao Soil Survey) will be
completed by September 30, 2003.
Rhode Island
State: Rhode Island
Fund: CO-01; $250,000
Project: Jamestown Water Supply and Wetland Restoration Project
Progress/Status: NRCS has drafted a cooperative agreement that
transfers $225,000 to the town of Jamestown, RI. The Town will develop
a proposed budget, certify that the real property right and permits
have been obtained, assure compliance with NHPA, ensure the wetlands
are restored and/or protected, provide engineering designs and as built
drawings, construct the system connector and assume operations and
maintenance of the project. NRCS is reviewing the engineering designs,
conducting inspections during project installation, providing technical
assistance in ensuring the protection of the wetlands. Town officials
expect to sign the agreement by April 30, 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The project installation will be completed by December 31, 2002.
South Carolina
State: South Carolina
Fund: CO-01; $600,000
Project: Natural Resources Conservation Decision Support System
Progress/Status: NRCS has amended the existing cooperative
agreement to transfer $450,000 to the University of South Carolina for
fiscal year 2002 activities. The cooperative agreement work plan states
that the Earth Sciences and Resources Institute of the University
(ESRI-USC) will continue the development and improvement of GIS-based
conservation planning and prioritization tools. Current tools developed
under prior funding include: (1) AFOWizard, a compliance-oriented, site
specific, nutrient management tool; (2) CRPWizard, a CRP site
prioritization tool based on the Environmental Benefits Index; and (3)
PriorityWizard, a watershed prioritization tool. The fiscal year 2002
scope of work includes: (1) Expedite and improve the comprehensive
nutrient management planning process with the use of AFOWizard; (2) Use
spatial analysis to solve current field problems and to address new
challenges that may arise from the upcoming Farm Bill; (3) Use web-
based applications to better serve and reach NRCS customers; and (4)
Provide technical support for ESRI-USC-developed applications. Focus of
the effort will be on NRCS SC needs. The ESRI-USC team is available to
consult with other States. NRCS is providing technical specialists from
both field and state office levels.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: None
State: South Carolina
Fund: CO-01; $550,000
Project: Changing Land Use and the Environment (CLUE)
Progress/Status: NRCS has amended the cooperative agreement to
transfer $412,500 to Clemson University for fiscal year 2002
activities. The objective of this research program is to develop a
knowledge base to understand the impact of land use changes on the
environment. Results of this research will provide quantitative answers
to questions posed by stakeholders, policy and decision-makers,
developers, and planners concerning land use alternatives. The project
has six objectives: (1) Characterize water quality and quantity before,
during, and after land use change; (2) Evaluate efficacy of installed
best management practices (BMP's) and compare this efficacy with
reported values and model predictions; (3) Establish a comprehensive
water quality monitoring program in two subwatersheds (one developed
and another undergoing development) to characterize changes in storm
water and receiving water quality as a function of land use; (4)
Analyze the determinants of the current use of land-converting
techniques, some of which may be BMP's; (5) Analyze the cost
effectiveness of currently used and proposed BMP's; and (6) Collaborate
with existing outreach programs to insure that the knowledge learned in
this research is translated to the general public who have questions
regarding changing land use. The fiscal year 2002 funding will be used
to continue work on tasks begun in fiscal year 2001 and to initiate
work on objectives not previously funded. Focus will be on completing
installation of remaining instrumentation, field data collection and
analysis, laboratory analyses of water samples, analysis and
preliminary conclusions, and technology transfer.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Data collection and analyses following storm events are expected
to extend beyond September 30, 2002, since these are weather dependent.
This will extend the project completion date beyond fiscal year 2002.
Tennessee
State: Tennessee
Fund: FIP; $250,000
Project: Damage to Forest Health from Southern Pine Beetle
Progress/Status: NRCS-TN is currently in negotiations with the
Tennessee Department of Forestry to utilize the funding to provide
financial assistance to landowners, as a supplement to the TN Dept. of
Forestry, Southern Pine Beetle Program, to establish new stands of
pines with proper spacing to resist the pine beetle infestation.
Subject to agreement, stands will be established on cut-over hardwood
plots to disperse the pines to areas not previously infested with the
Southern Pine Beetle.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The plantings and financial assistance will be completed by May
30, 2003.
Texas
State: Texas
Fund: CO-01; $500,000
Project: Facilitate water conservation and efficient irrigation
activities in the Bexar, Medina, Uvalde Counties of Edwards Aquifer.
Progress/Status: Texas received a $500,000 earmark located in
Congressional District 23 to facilitate water conservation and
efficient irrigation activities in the Edwards Aquifer Area in Bexar,
Medina and Uvalde Counties. To date, the irrigation water management
plan has been developed and 60 percent of the staffing has been
completed. The remaining 40 percent of the Irrigation Team staffing
have been selected and will be in place by June 2, 2002. Equipment
purchases are currently being made for implementing the water
conservation activities.
The funding will be used to establish an Irrigation Team
responsible for evaluating existing irrigation systems, recommending
installation of more efficient systems and improved irrigation water
management, outreach activities and developing cost-share contracts in
the area through the Environmental Quality Incentives Program (EQIP)
and the Bexar-Medina-Atascosa (BMA) Public Law 566 Program.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: All dollars will be dispersed by September 30, 2002.
State: Texas
Fund: CO-01; $3,000,000
Project: Field Office telecommunication pilot project in West Texas
Progress/Status:
--Interagency planning meeting was completed in December
--Information Technology Center, Fort Collins, was involved in the
December meeting
--A detailed plan for implementation has been drafted.
--Starting to purchase telecommunications equipment
--Installing T-1 lines or upgrading frame relay in 31 service centers
--A telecommunications contractor has been selected and additional
telecommunications equipment will be purchased based on the
contractor's assessment and recommendations
--Based on a field trip, it has become apparent training is a high
priority and steps are underway to implement interagency
computer software training. This may be a model for future
agency training.
--Based on interagency planning meeting and field trip, the
telecommunication project will encompass innovative means of
improving service to our customers. The process is underway to
identify, develop, and test new telecommunications application
services with customers and agency personnel.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: All funds will be obligated by September 30, 2002.
State: Texas
Funds: CO-01, $300,000
Project: TIAER Demonstration Project
Progress/Status: NRCS has a draft cooperative agreement prepared
and is negotiating with Texas Institute of Applied Environmental
Research (TIAER) to finalize project deliverables and responsibilities.
NRCS-Texas will submit complete agreement draft to Animal Husbandry &
Clean Water Programs Division for review. NRCS-Texas will transfer
$300,000 of the earmark to NRCS-Iowa the National Pork Producers
Council and the Iowa Soybean Association for their demonstration
project. The utilization of mircowatershed planning and third-party
certification of CNMP's has potential to demonstrate a new approach for
addressing water quality issues in agricultural communities.
Fiscal year 2002 Obligations for Disbursement after June 2003: The
activities set forth the cooperative agreement and work plan will be
completed by May 31, 2003.
State: Texas
Funds: CO-01, $100,000
Project: TIAER Demonstration Project
Progress/Status: NRCS has utilized staff time to develop a draft
cooperative agreement and conduct meetings with the Texas Institute of
Applied Environmental Research (TIAER). On site meetings between staff
have supported the development of the draft agreement and work plan for
the project. NRCS-Texas has expended 50 percent of the funds to support
agreement development and project deliverables. NRCS-Texas will work
with the Animal Husbandry & Clean Water Programs Division to coordinate
with NRCS staff in Iowa to formalize consistent and comparable
agreements for the demonstration projects.
Fiscal year 2002 Obligations for Disbursement after June 2003: The
funds will be utilized throughout the fiscal year to cover staff time
and expenses to support the demonstration project, work with TIAER, and
provide staff resources as agreed. All funds shall be expended by the
close of the 2002 fiscal year.
State: Texas
Fund: CO-46; $568,000.00
Project: Texas Plant Materials Centers
Progress/Status: fiscal year 2002 funding to the Texas Plant
Materials Centers (PMCs) was specified to be not less than the fiscal
year 2001 level. Texas received $568,000, the same as fiscal year 2001,
which was distributed as usual among the three PMCs in the State.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: All planned activities for 2002 will be completed by September
30, 2002.
Utah
State: Utah
Fund: CO-01; $125,000
Project Name: AFO/CAFO
Progress/Status: Utah State legislature was trying to add $400,000
to the $125,000 as was done in fiscal year 2001. The legislature did
not pass the additional $400,000. Last year, there was a ranking
criteria that determined who what get what dollars. Due to the
legislation not passing, the Utah Department of Agriculture and Food
(UDAF), is now re-doing the criteria. When the criteria are completed .
. . . a contract will be initiated.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: A contract between UDAF and NRCS for the $125,000 is expected to
be signed by May 15.
Vermont
State: Vermont
Fund: CO-01; $300,000
Project: Alternative Manure Management Technology
Progress/Status: NRCS has not signed any agreements at this time,
but the funds will be obligated for several activities and projects. An
existing agreement to hire an Alternative Manure Management Coordinator
will be amended to continue through 2003; an agreement to continue with
Super Soil Inc., (a system that delivers electricity to manure to
change odor and nutrient properties). Potential new projects include
installing a milkhouse wastewater system that flocculates out solids
that can be treated separate from liquids; and converting animal waste
into fuel pellets.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Depending on how the work plan schedules are written, most of the
fiscal year 2002 Earmark could be disbursed in fiscal year 2003.
Virginia
State: Virginia
Funds: CO-01, $1,404,000
Project: Chesapeake Bay Program
Project Status: $1.4 million in Chesapeake Bay funds are earmarked
in the fiscal year 2002 budget for NRCS in Virginia. These funds
support a total of 19 NRCS staff years within the watershed. Included
in that number, 2 civil engineering technician positions have been
filled. These positions provide detailed conservation practice layout,
design, and training assistance to numerous NRCS and Soil and Water
Conservation District (SWCD) employees within the drainage area of the
Bay. In general, our employees provide resource data and technical
advice to help counties and soil and water conservation districts
identify buffer and wetland protection areas as part of the tributary
strategy's process. We provide training and assistance on conservation
planning and resource management/protection to public and private
landowners and managers. NRCS service center staff work with SWCDs in
carrying out education activities, analyzing workload and developing a
means to improve natural resource conditions. The next step is to track
and measure progress. Most NRCS staff time is spent helping landowners
plan, layout, design, and install best management practices to protect
groundwater and surface water by controlling non-point source pollution
from agricultural and urban lands. This includes properly managing
excess animal waste and providing a variety of standards and
specifications for best management practices cost-shared under State
and Federal programs. To date, fiscal year 2002 accomplishments have
consisted of helping landowners apply resource management systems on
6,100 acres of cropland, 1,400 acres of forestland, and 5,000 acres of
pasture and hay land; installed 900 acres of riparian forest buffers;
5,600 acres of nutrient management systems; and 5,200 acres of pest
management systems.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: None
West Virginia
State: West Virginia
Funds: CO-01, $250,000
Project: Mid-Atlantic Highlands-Design & Implement Natural Stream
Restoration Initiatives.
Progress/Status: Currently the watershed Work Group is identifying
a site on Knapps Creek.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Work will be completed by 12/31/2002.
State: West Virginia
Funds: CO-02, $200,000
Project: Geographic Database to conduct digitized soil surveys w/
Cancan Valley Insti.
Progress/Status: To conduct digitized soil surveys in the Mid-
Atlantic Highlands in conjunction with the Canaan Valley Institute
(CVI). Established priority work list to include following counties:
Morgan County; Jeferson County; Kanawha County; Mercer County;
Summers County; Harrison County and Taylor County.
After priority list was established, cartographic base materials
were requested from NRCS's National Cartographic Center. Work is
currently underway on Morgan and Kanawha County.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: $0
State: West Virginia
Funds: CO-01, $160,000
Project: Nitrogen Soil Test
Progress/Status: Eleven counties have been identified for
conducting the testing program. A vacancy announcement has been
prepared for hiring temporary soil conservation aids to start working
this summer to collect and test manure, litter and soil samples. This
information will be provided to the cooperating farmers to reduce,
costs and protect water quality.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: $0
State: West Virginia
Funds: CO-02, $0.00
Project: GIS Center of Excellence at WV University
Progress/Status: Met with VWVU department heads and dean several
times since December 7th to establish a planning team. NRCS met on
Friday, January 18, 2002 to outline framework of plan. Members of
planning team include: NRCS Soil Survey Division Director, WVU Dean of
Arts and Sciences, Department Chair WVU Geology and Geography, NRCS
State Soil Scientist, and NRCS State Conservationist (Chairman). First
formal meeting was held in February to approve outline of plan draft.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: N/A
State: West Virginia
Funds: CO-01, $860,000
Project: Appalachian Small Farmer Outreach Program
Progress/Status: Thirty-three (33) public outreach meetings are
scheduled, and 33 in-service training sessions are scheduled during the
second quarter of fiscal year 2002. NRCS continues to support 13
conservation positions for grassland outreach. NRCS is continuing the
evaluation of pilot project for the development of technology for
riparian grazing and winter grazing. NRCS is working with ARS, WVU
Extension Service and WV Conservation partnership to develop and
conduct Appalachian Grazing School fiscal year 2002 Obligations for
Disbursement after September 30, 2002: $0
State: West Virginia
Funds: CO-01, $300,000
Project: Potomac & Ohio River Basin Soil Nutrient Project
Progress/Status: Sampled 14 soil series in Greenbrier Valley and 7
soil series in the Potomac Basin and submitted to WVU Laboratory.
Currently summarizing data collected to date. NRCS prepared sampling
plan for 2002 field work in Northern Panhandle and Greenbrier Valley.
Mine soils was added to list for characterization for background on
soil phosphorus status and potential retention capacity. Meet monthly
with representatives of Agriculture and Forestry Experiment Station to
monitor progress in lab work.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: $0
State: West Virginia
Funds: CO-01, $546,000
Project: Chesapeake Bay Program:
Progress/Status: Funding supplements salaries and benefits for
conservation staff working in the Chesapeake Bay Drainage Area Counties
of West Virginia.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: None
Wisconsin
State: Wisconsin
Funds: CO-01, $300,000
Project: Wisconsin Cranberry Growers
Progress/Status: NRCS and the Wisconsin State Cranberry Growers
Association (WSCGA) have mutually agreed on a ``whole farm planning''
process that will address the needs of cranberry growers within the
State. A cooperative working agreement has been initiated that
solidifies the partnership between NRCS and WSCGA. NRCS will provide
office space and the like, along with dedicating a soil conservationist
to the process. WSCGA will employ a project coordinator with extensive
experience in Wisconsin cranberry production, train the NRCS soil
conservationist and formulate a WSCGA Advisory Committee for the
process.
Fiscal year 2002 Obligation for Disbursement after September 30,
2002: All funds will be obligated for implementation of the whole farm
planning process by December 31, 2003.
State: Wisconsin
Funds: CO-01, $2,000,000
Project: Global Environmental Management (GEM)
Progress/Status: A cooperative agreement has been completed and
signed with the University of Wisconsin Stevens Point. The objective of
the agreement is to develop community planning processes and
methodologies related to natural and agricultural resources. Approaches
will be tested in the course of assisting two Wisconsin counties to
develop comprehensive community plans by 2010. Products and protocols
will be accomplished in the following areas: social/institutional
capital, natural and farmland resource inventory techniques,
alternative resource management strategies.
Fiscal year 2002 Obligation for Disbursement after September 30,
2002: Completion of the agreement objectives/products will by June 30,
2005.
State: Wisconsin
Funds: CO-01, $1,000,000
Project: Aldo Leopold Foundation
Progress/Status: A cooperative agreement is completed and awaiting
signatures between NRCS and the Leopold Foundation. After several
working meetings between NRCS, Leopold Foundation and FACT (Farming and
Conservation Together), an agreement has been completed to install
conservation practices that promote the conservation of natural
resources of the Fairfield Marsh area. Such practices and programs
could include, wetland restoration, soil conservation, water quality
improvement, forest management, conservation buffers, wildlife habitat
improvement, and farmland protection.
Fiscal year 2002 Obligation for Disbursement after September 30,
2002: The installation of all conservation practices will be completed
by December 2005.
State: Wisconsin
Funds: CO-01, $250,000
Project: GLCI--Wisconsin Department of Agriculture
Progress/Status: NRCS, DATCP and the GLCI council have agreed on
the implementation of the educational assistance program for Wisconsin
grazers. The cooperative agreement has been finalized and the call for
proposals has been released.
Fiscal year 2002 Obligations: All funds will be obligated to
successful grant recipients by September 30, 2002.
Question. Please provide a status report in regard to activities of
individual NRCS plant materials centers.
Answer. I will ask the Natural Resources Conservation Service to
provide that information for the record.
[The information follows:]
Plant Materials Centers (PMC) continue to focus on high priority
issues like invasive species, fire restoration, drought management,
nutrient management and water quality. Products from PMC work include
conservation plant releases, printed materials and oral presentations
that help land owners and managers address key conservation needs and
environmental concerns.
Plant materials work is organized according to national projects
that address key conservation needs. Technology development and
transfer that relate to these national projects is realized by studies
at individual PMCs. Consequently, PMC studies form the basic foundation
upon which the plant materials program functions. Each PMC has multiple
studies, and these studies emphasize high priority issues of the
geographic area served by that PMC. A table summarizing this
information according to plant materials projects, PMCs working on
them, and the number of studies at each PMC and a table reflecting
critical resource issues being addressed by the plant materials (PM)
program are provided for the record.
STATUS OF PLANT MATERIALS PROJECTS
------------------------------------------------------------------------
PMCs addressing the project
(and number of active
Project Title and Brief Description studies at each PMC to
address the project)
------------------------------------------------------------------------
Critical Area 1.1: Controlling erosion on Arkansas (6), Colorado (1),
highly disturbed areas such as highways, Florida (2), Hawaii (2),
dams etc. Louisiana (5), Michigan
(2), Mississippi (1),
Montana (1), New Jersey
(1), New Mexico (1), New
York (2), Washington (4)
Cropland 1.1: Controlling erosion on East Texas (1), Hawaii (1),
cropland with cropping and residue Knox City, TX (2), Maryland
management systems.Florida (2), Georgia (2), Michigan (1),
(2), Hawaii (2), Maryland (1), Mississippi (3), Missouri
Mississippi (2), New York (2), North (2), New Mexico (2), South
Dakota (1)Cropland 2.1: Controlling Texas (1), Washington (1)
erosion on cropland with vegetative
barriers in the US.
Cropland 3.1: Controlling erosion on Georgia (2), Kansas (1),
cropland by crop conversion to perennial Mississippi (11), New York
crops or less erosive annuals. (1), Washington (3), West
Virginia (1)
Cropland 4.1: Protecting surface and California (1), Idaho (2),
ground water with vegetative filters. Kansas (10), Knox City, TX
(2), Montana (6), North
Dakota (16), Washington (1)
Forestland 1.1: Conservation systems for Georgia (1), Hawaii (2),
controlling erosion and improving water Mississippi (2), Montana
quality within forested watersheds. (1), New Mexico (1), Oregon
(2), Washington (1)
Mineland 1.1: Improve erosion control and Arkansas (1), Colorado (7),
the quality of water leaving mined land East Texas (2), Florida
and other drastically disturbed sites. (4), Kansas (3), Montana
(7), New Mexico (10), West
Virginia (6)
Natural Areas 1.1: Maintaining plant California (1), Colorado
diversity and controlling soil erosion on (4), Florida (4), Hawaii
natural areas. (5), Kansas (3), Knox City,
TX (2), Louisiana (1),
Maryland (4), Michigan (8),
Mississippi (4), Montana
(5), New Jersey (3), New
Mexico (6), New York (3),
North Dakota (5), Oregon
(6), Washington (11), West
Virginia (3)
Pasture/Hayland 1.1: Improving forage Colorado (2), East Texas
production and other conservation systems (2), Idaho (1), Kansas (2),
with cool season plants. Knox City, TX (1), Maryland
(1), Michigan (1), Missouri
(1), Montana (2), New
Mexico (4), New York (3),
North Dakota (1), South
Texas (1), Washington (4),
West Virginia (3)
Pasture/Hayland 2.1: Improving forage Arizona (1), Arkansas (6),
production and other conservation systems East Texas (3), Florida
with warm season plants. (7), Georgia (6), Hawaii
(2), Kansas (2), Michigan
(3), Mississippi (31),
Missouri (7), New Jersey
(3), New Mexico (2), New
York (4), North Dakota (1),
West Virginia (1)
Rangeland 1.1: Improving the ecological Arizona (8), California (3),
status, production and soil protection of Colorado (3), Florida (3),
rangeland. Idaho (12), Kansas (2),
Knox City, TX (6), Montana
(6), New Mexico (13), North
Dakota (2), South Texas
(14), Washington (5)
Urban 1.1: Developing plants to use in Florida (1), Maryland (1),
urban areas to control erosion and Missouri (1), New Mexico
protect water quality. (2)
Urban 2.1: Developing plants to use in Colorado (1), Florida (3),
urban areas to reduce water quantity use Montana (1), New Mexico (4)
(xeriscapes fit here).
Water Quality 1.1: Develop the technology East Texas (1), Florida (2),
for creating and restoring wetlands for Idaho (6), Knox City, TX
water quality improvement. (3), Louisiana (2),
Maryland (1), Missouri (3),
New Mexico (1), North
Dakota (1), Oregon (22),
South Texas (3)
Water Quality 2.1: Develop the technology Colorado (6), Georgia (1),
for restoring or creating riparian areas Idaho (3), Kansas (1),
for water quality improvements. Maryland (4), Mississippi
(1), Missouri (1), New
Jersey (3), New Mexico
(12), New York (1), Oregon
(17), South Texas (1),
Washington (5)
Water Quality 3.1: Develop the technology Arkansas (1), Idaho (13),
for stabilizing channels for soil erosion Kansas (4), Maryland (1),
control. Michigan (3), New York (1),
Oregon (4), West Virginia
(1)
Water Quality 4.1: Develop plants for Louisiana (3), New Jersey
shoreline erosion control. (4), New York (1), South
Texas (7)
Wildlife 1.1: Develop plants for improving Colorado (8), East Texas
wildlife habitat. (3), Florida (2), Hawaii
(1), Knox City, TX (5),
Louisiana (2), Michigan
(1), Mississippi (3),
Missouri (7), Montana (1),
New Jersey (3), New Mexico
(1), New York (4), North
Dakota (4), Oregon (1),
South Texas (6), Washington
(1)
Animal Waste Management................... California, Colorado, Idaho,
Maryland, Mississippi,
Montana, North Dakota,
Oregon, Washington
------------------------------------------------------------------------
CRITICAL RESOURCE ISSUES ADDRESSED BY PLANT MATERALS PROGRAM
------------------------------------------------------------------------
PMCs addressing this
Critical Resource Issues addressed by the resource concern in one or
PM Program more studies
------------------------------------------------------------------------
Water Quality (Buffers)................... California, Colorado, East
Texas, Florida, Georgia,
Idaho, Kansas, Knox City
(TX), Maryland, Michigan,
Mississippi, Missouri,
Montana, New Jersey, New
Mexico, New York, North
Dakota, Oregon, South
Texas, Washington
Carbon Sequestration...................... California, Georgia, Idaho,
Kansas, Louisiana,
Michigan, Mississippi,
Montana, New Jersey, New
Mexico, North Dakota,
Washington
Grazing Land Conservation................. Arizona, Arkansas,
California, Colorado, East
Texas, Georgia, Idaho,
Kansas, Knox City (TX),
Louisiana, Maryland,
Michigan, Mississippi,
Missouri, Montana, New
Jersey, New Mexico, New
York, North Dakota, Oregon,
South Texas, Washington,
West Virginia
Invasive Species.......................... Arizona, California, Hawaii,
Idaho, Kansas, Knox City
(TX), Maryland, Michigan,
Mississippi, Montana, New
Mexico, North Dakota,
Oregon, South Texas,
Washington
Native Species............................ Arizona, Arkansas,
California, Colorado, East
Texas, Florida, Georgia,
Hawaii, Idaho, Kansas, Knox
City (TX), Louisiana,
Maryland, Michigan,
Mississippi, Missouri,
Montana, New Jersey, New
Mexico, New York, North
Dakota, Oregon, South
Texas, Washington, West
Virginia
Nutrient Management....................... California, Colorado,
Florida, Idaho, Kansas,
Knox City (TX), Louisiana,
Maryland, Mississippi,
Missouri, Montana, North
Dakota, Oregon, Washington
Restoration of Disturbed Areas (e.g., Colorado, East Texas,
fire, minelands, overgrazing, etc.). Florida, Idaho, Michigan,
Mississippi, Montana, New
York, North Dakota, Oregon,
South Texas, Washington,
West Virginia
Riparian Zones............................ Arkansas, Colorado, East
Texas, Florida, Georgia,
Idaho, Kansas, Knox City
(TX), Maryland, Michigan,
Mississippi, Missouri,
Montana, New Jersey, New
Mexico, New York, North
Dakota, Oregon, South
Texas, Washington
Soil Erosion.............................. Arizona, Arkansas, Colorado,
East Texas, Florida,
Georgia, Hawaii, Idaho,
Kansas, Knox City (TX),
Louisiana, Maryland,
Michigan, Mississippi,
Missouri, Montana, New
Jersey, New Mexico, New
York, North Dakota, Oregon,
South Texas, Washington,
West Virginia
Water Management (e.g., drought).......... Colorado, East Texas, Idaho,
Knox City (TX), Montana,
New Mexico, Washington
Wetland and Wildlife Conservation......... Arizona, Colorado, East
Texas, Florida, Hawaii,
Idaho, Kansas, Knox City
(TX), Louisiana, Maryland,
Michigan, Mississippi,
Missouri, Montana, New
Jersey, New Mexico, New
York, North Dakota, Oregon,
South Texas, Washington,
West Virginia
------------------------------------------------------------------------
Question. Please provide information in regard to activities of the
individual NRCS conservation institutes.
Answer. The NRCS Institutes activities focus on providing relevant,
timely, up-to-date technical tools to field staff. Priority activities
include development of training and technical guide materials, nutrient
management, carbon sequestration, and conservation planning;
development of internet access to technical information and resource
data; and testing new and innovative methods for protecting the
nation's natural resources. Specific activities are provided for each
Institute.
[The information follows:]
Wetland Science Institute (WLSI)
Training--developing and delivering specialized training in wetland
restoration, hydric soil identification, wetland plant identification,
and application of hydrology tools for wetland identification. Six of
15 courses/workshops have been delivered to NRCS field personnel with
wetland restoration and delineation responsibilities thus far in fiscal
year 2002.
Technical Guidance--developing and disseminating technical guidance
documents for wetland restoration, delineation, and assessment. The
Index of Biotic Integrity Case Study and the Wetland Restoration
Handbook are scheduled for completion and distribution to the field in
fiscal year 2002.
Direct Assistance--providing direct assistance to NRCS State staff
and others for resolving wetland problem areas in the field. WLSI staff
has provided assistance to South Dakota (wetland hydrology); Arkansas,
Louisiana and Oklahoma (wetland restoration); Maryland and Delaware
(wetland plant issue); Vermont, New Hampshire, Maryland and Delaware
(hydric soils); and North Dakota (wetland functional assessment).
Social Sciences Institute (SSI)
Technical Procedures and Skill Enhancement Assistance: The SSI has
several procedures on compact disk including (1) Self Scoring
Evaluation of Locally Led Conservation Planning and (2) Adding Up
Social Capital: An Investment in Communities. Both procedures are
designed to help NRCS field staff expand community participation in
conservation planning. The SSI has also developed 30 technical fact
sheets to help NRCS field staffs improve their human relation skills to
better serve our customers.
Gathering and Assessing Customer Feedback--The SSI obtains feedback
from our customers and assesses internal employee or program needs.
These assessments include gallop poll of customer satisfaction and
surveys of: (1) adoption barriers perceived by small and limited
resource farmers; (2) NRCS employees; (3) council members from the
Resource Conservation and Development Program Area; and (4) Earth Team
Volunteers for recruiting and retention purposes.
Training--developed and delivered training courses to NRCS field
and management staff. Some examples follow:
--Developing Your Skills to Involve Communities in Implementing
Locally Led Conservation, SSI has trained trainers from 35
States.
--Sponsorship of 27 Leader in You Training Programs since 1996. These
programs are satellite transmissions featuring the top trainers
in the country, including Steven Covey, Tom Peters, and Warren
Bennis.
--Consultation with American Indian Governments training course. This
course provides NRCS employees better tools and techniques to
work with our historically under-served Indian tribal
customers.
Soil Quality Institute (SQI)
Soil Carbon Assessment and Monitoring.--Developing soil carbon
assessment and monitoring protocols, tools and models. Work is being
conducted in cooperation with the Agricultural Research Service, the
National Resources Ecology Laboratory, Los Alamos National Laboratory,
and Land Grant Colleges to determine the ability of different soils to
sequester carbon undergoing different management systems.
Soil Quality and Conservation Practice Effects.--One of the
functions of the SQI is to determine the effects of management systems
(i.e., agricultural, forestry, grazing, urban) on soil quality. One
example is the Soil Conditioning Index; a field office tool to be
distributed this fall, which will give field office staffs the ability
to assess agricultural systems effects on soil quality.
Dynamic Soil Properties.--SQI is leading the effort in defining
dynamic soil properties and its importance to natural resource
management. Dynamic soil properties are those that change in response
to land use and management. This type of information is currently not
available in our soil databases. It will allow field office staffs,
farmers and ranchers to improve management decisions that enhance soil,
water, and air quality.
Training and Outreach.--Four soil quality courses have been taught
the first two quarters of this fiscal year in New York, Nebraska,
Louisiana, and Tennessee to NRCS and other partners at the field office
level. Four more courses will be taught during the last two quarters of
this fiscal year in Washington, Iowa, Hawaii, and Kansas. Approximately
20 soil quality workshops reaching over 6,000 people have been given to
various farm groups and non-government organizations. Well over 100,000
publications have been distributed on soil quality information.
Natural Resources Inventory and Analysis Institute (NRIAI)
Technical Assistance--sponsored development of new inventory and
trending technologies for natural resources on the nations privately
owned lands. NRIAI is involved in these activities with a variety of
State and Federal agencies, universities, and not-for-profit
organizations.
Technology Development--developed technology to assist NRCS field
and management staffs perform surveys and statistical analysis. Some
examples follow:
--Modern, efficient methods of information management and delivery
using geographic information systems, remote sensing, database
management, online delivery, economic analyses, and computer
modeling to provide practical views of the State of the land
and its trends.
--Relevant new technologies on surveying, statistical analysis, and
design to support the NRCS continuous National Resources
Inventory.
Grazing Lands Technology Institute (GLTI)
Technology Development--developing technology to assist NRCS field
offices in conservation planning processes. Ecological site
descriptions provide information describing the interactions among
soils, vegetation, and land management across the landscape. Grazing
lands application software is utilized to inventory land and animal
resources and develop a balanced plan between grazing resources and
animal demand. A web-based version of this software is scheduled for
release at the end of fiscal year 2002.
Training--supporting technology delivery to the field level through
developing and conducting specialized workshops and training sessions
with NRCS State specialists. Workshops and training sessions have been
conducted and are scheduled in animal nutrition, prescribed burning,
rangeland health, pasture condition scoring, ecological site
descriptions, and forage suitability group descriptions during fiscal
year 2002.
Technical Assistance--providing technical assistance to States
regarding complex grazing management issues. Technical assistance has
been provided to Northern Plains, South Central, Southeast, and West
Regions regarding development of ecological site descriptions and
forage suitability group descriptions. The institute has also provided
technical assistance to several States regarding grazing management-
animal nutrition issues utilizing the Nutritional Balance Analyzer
software program.
Watershed Science Institute (WSI)
Technology Development--developed a model State practice standard
for forest riparian buffers as well as a watershed ecosystem nutrient
dynamics model for phosphorus to dynamically simulate phosphorus
budgets at a watershed scale. The watershed ecosystem nutrient dynamics
model for phosphorus has been applied in Inland Bays Watershed,
Delaware; Little Cobb River Watershed, Minnesota; and the Eucha-
Spavinaw WS, Oklahoma/Arkansas.
Technology Delivery--prepared technical reports for distribution to
field offices on: (1) Waterborne Pathogens in Agricultural Watersheds;
(2) Fate and Transport of Waterborne Pathogens; and (3) The Potential
Use of DNA Fingerprinting in Ag-Related Pathogen/Bacteria Management.
Training--prepared and distributed handbooks and training materials
for: Conservation Corridor Planning at the Landscape Level--Managing
for Wildlife Habitat.
Technical Assistance--provided technical assistance to States and
National Headquarters in preparation of environmental assessments to
accelerate program and project implementation (Tillamook Basin, OR).
The institute has also provided technical assistance in developing the
framework and pre-population of the Electronic Field Office Tech Guide
(EFOTG).
Wildlife Habitat Management Institute (WHMI)
Training--Supports technology to the field by developing and
conducting workshops and training courses. Forty-five video lectures
have been completed through universities and WHMI's staff on courses
such as (1) Wildlife in Agricultural Ecosystems and (2) Understanding
the Landscape.
Technology Development--Supports the field through conducting,
developing, and managing various technical projects that will enhance
farm bill delivery through conservation planning. Forty-five projects
have been completed or are underway at present.
Assessment--Conducts assessments and findings on USDA-NRCS programs
as to the effects on fish and wildlife habitat on private lands. Leads
special efforts to show and substantiate private land conservation
efforts through partnerships such as ``Our Living Land'' project.
A table is provided with the funding levels for fiscal year 2002
for each Institute.
[The table follows:]
Fiscal Year 2002 Budget Allocation for NRCS Institutes
Institute Budget Allocation
Grazing Lands Technology Institute...................... $859,200
Natural Resources Inventory and Analysis Institute...... 576,600
Social Sciences Institute............................... 1,082,000
Soil Quality Institute.................................. 587,100
Watershed Science Institute............................. 902,100
Wetland Science Institute............................... 496,500
Wildlife Habitat Management Institute (allocation
includes $3 million for National Fish & Wildlife
Foundation)......................................... 5,609,000
--------------------------------------------------------
____________________________________________________
Total............................................. 10,112,500
nrcs watershed and flood prevention operations
Question. Please provide a status report on project items included
under the heading of ``Watershed and Flood Prevention Operations'' on
page 69 House Report 107-275 and any other projects that are included
on pages 92 through 94 under the same heading in Senate Report 107-41.
Answer. NRCS will provide the Committee with a listing of the funds
allocated to States for Watershed and Flood Prevention Operations
project items. NRCS has requested that each State Conservationist
submit a second quarter status for each project in their State.
[The information follows:]
fiscal year 2002 nrcs watershed earmark status report
Alaska
State: Alaska
Funds: WF-08, $340,000
Project: Tanana River Erosion Control
Progress/Status: A Cooperative Agreement has been drafted and
delivered to Alaska Department of Natural Resources, Parks and Outdoor
Recreation to transfer funds to DNR for implementation. Implementation
will continue in fiscal year 2003.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The Cooperative Agreement is scheduled to be signed in the third
quarter of 2002. Disbursement will likely occur in fiscal year 2003.
Arkansas
State: Arkansas
Funds: EWP, $400,000 financial assistance funds in fiscal year 2002
and $3,300,000 financial assistance funds carryover from an EWP earmark
in fiscal year 2001.
Project: Phase one of the Kuhn Bayou Project
Progress/Status: NRCS awarded Phase IB contract on January 25,
2002, at a cost of $3,619,346 with a scheduled completion date of
January 30, 2004. Phase IB contract includes a portion of the main
delivery system and the main pumping station that will provide
irrigation water to 14,000 acres of cropland and winter water for a
wildlife management area. NRCS staff will administer and inspect the
installation of this contract through January 2004.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Progress payments for construction installation will be made
after September 30, 2002, and will continue through January 2004.
Funds: WF-08, Encourages
Project: Little Red River Watershed and Big Slough Watersheds
Progress/Status: NRCS has allocated $700,000 in financial
assistance and $200,000 in technical assistance in fiscal year 2002 for
the Little Red River Watershed Land Treatment Project. This water
conservation project provides cost-share on approved on-farm
conservation practices that will reduce the rate of decline of
available groundwater on 25,000 irrigated acres. The financial
assistance will be obligated to approximately seven new longterm
contracts (LTC's) on about 1,000 acres. The technical assistance will
be used to write the new LTC's and service contracts on 40 existing
LTC's on approximately 13,000 acres. NRCS staff continues to formulate
a plan supplement for the Big Slough Watershed. The $200,000 that has
been allocated to this project for fiscal year 2002 will be used to
prepare the plan supplement, including economic and hydrology and
hydraulic analyses. The plan supplement addresses floodwater damages to
approximately 17,000 acres of cropland and urban communities.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: No funds will be disbursed after September 30, 2002 except for
progress payments on the seven new LTC's in the Little Red River
Watershed. Payments will be made on these LTC's through September 2006.
California
State: California
Funds: WF-08, total no funds earmarked
Project: Chino River Dairy Reserve Project
Progress/Status: Watershed planning staff working with local
sponsors to prepare an application for a watershed project. Application
has been received.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: N/A
Funds: WF-08, total $2,500,000
Project: Beardsley Wash Watershed
Progress/Status: Project will be installed by local contract
administered by Ventura County Flood Control District. (VCFCD). Design
underway by VCFCD. NRCS will review and concur in the design with
anticipated delivery by May 20. Ventura County will advertise the
project for bids, and construction is expected to begin by July 30,
2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Estimated installation of the planned work by December 15, 2002
with disbursement to follow.
Florida
State: Florida
Funds: WF-08, $1,914,000
Project: Four pilot projects in north Florida (dairy and poultry
cleanup).
Progress/Status: Six new long-term contracts (LTCs) executed as of
April 23, 2002 for $248,393. Plans are to finish an additional 27 LTCs
for the remaining $961,607 during fiscal year 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: This project will be completed during fiscal year 2004, with 65
LTCs still needing funds during fiscal year 2003 and fiscal year 2004.
Hawaii
State: Hawaii
Funds: WF-08, $3,010,000
Project: Water Storage and Delivery Systems (Lower Hamakua Ditch
Watershed (LHD), Upcountry Maui WS and Lahaina WS)
Progress/Status: LHD WS--Survey and design of Phase 2 Flume Repair
and Historic Flumes Repair underway, Project Agreements for repairs to
be completed by August 31, 2002. Upcountry Maui WS--Survey and design
of Phase 2 Main Pipeline underway, Project Agreement for pipeline
installation to be completed by August 31, 2002. Lahaina WS--Agreement
for Services executed to contact EIS preparation.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: LHD WS--CLO contracts for Phase 2 Flume Repairs and Historic
Flume Repair to be awarded by November 30, 2002; Upcountry Maui WS--CLO
contract for Phase 2 Main Pipeline installation will be awarded before
November 30, 2002.
Illinois
State: Illinois
Funds (WF-08): $1,400,000
Project: DuPage County
Progress/Status: In process of developing an agreement with DuPage
County to transfer funds. Funds will be obligated when Agreement is
signed that addresses stormwater management.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Anticipate funds to be obligated by June 1, 2002.
Funds (WF-08): $8,590,000
Project: Provide Assistance for Embarras River Basin, Lake County
Watershed and DuPage County
Progress/Status: Currently working with staff and local sponsors to
determine funding needs, potential projects/activities, and authorities
to expend the funds.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Anticipate funds to be obligated by September 30, 2002 and
disbursed during fiscal year 2003.
Iowa
State: Iowa
Funds: WF-08, $1,015,000
Project: Soap Creek Watershed
Progress/Status: Designs are being finalized on eight dams. Project
agreements on these sites will be executed by June 30, 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Construction on these sites will begin in late summer and carry
over into fiscal year 2003.
Funds: WF-08, $834,000
Project: East Fork of the Grand River Watershed
Progress/Status: A project agreement obligating financial
assistance funds has been signed covering the construction of 10 dams.
In addition, an architectural and engineering contract solicitation is
being prepared for the design of a large multi-purpose dam.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Construction on the 10 dams will begin this summer. Construction
on sites will likely carry over into fiscal year 2003. Design work on
the multi-purpose dam will begin this summer with disbursements into
fiscal year 2003.
Funds: WF-08, $169,000
Project: Twelve-Mile Creek Watershed
Progress/Status: Design is being completed for two dams. A project
agreement obligating funds for these two sites will be executed by June
30, 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Construction on the two dams will begin this summer, with
disbursement in fiscal year 2003.
Funds: WF-08, $40,000
Project: Twin Ponies Watershed
Progress/Status: Plans are being finalized for the repair of one
dam. A project agreement obligating funds for this repair work will be
executed by June 30, 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Repair work will begin late this summer, with disbursement in
fiscal year 2003.
Funds: WF-08, $532,000
Project: Troublesome Creek Watershed
Progress/Status: Design work is being completed for two dams. A
project agreement obligating funds for these two sites will be executed
by the end of June 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Construction on the two dams will begin this summer, with
disbursement in fiscal year 2003.
Funds: WF-08, $221,000
Project: West Fork of Big Creek Watershed
Progress/Status: Design work is being completed for five dams. A
project agreement obligating funds for the five sites will be executed
by the end of June 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Contracting for construction of the five dams will be completed
by late summer, and construction of the sites will carry over into late
fiscal year 2002. Disbursement will occur in fiscal year 2003.
Funds: WF-08, $210,000
Project: Mill Creek Watershed
Progress/Status: Financial assistance funds for this project have
been obligated. The local contracting organization is currently working
with individual landowners to complete land treatment projects.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Land treatment work is currently underway; however, some of the
work will carry over into fiscal year 2003 with disbursements also in
fiscal year 2003.
Funds: WF-08, $526,000
Project: Little River Watershed
Progress/Status: Design and plan development work for one dam is
being completed. A project agreement for construction of the dam will
be executed by June 30, 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: A contract for the dam construction will be awarded in late
summer. Construction will carry over into fiscal year 2003 with
disbursement in fiscal year 2003.
Funds: WF-03, $1,940,000
Project: Little Sioux Watershed
Progress/Status: Eighty-seven land treatment contracts have been
executed to date, and several others are pending. In addition, designs
for three dams, and the repairs of three other dams, are being
completed at this time. Project agreements for these six sites and the
remaining land treatment work will be executed by June 30, 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Work on the dam construction and dam repair projects will carry
over into fiscal year 2003. Land treatment work that has not commenced
will also carry over into fiscal year 2003. Disbursements will occur in
fiscal year 2003.
Funds: WF-08, $150,000
Project: Mosquito Creek Watershed
Progress/Status: Local site conditions will likely preclude dam
construction work in this watershed. Technical assistance for upland
treatment is ongoing.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The sponsors have been contacted regarding the status of
remaining dam work and those actions that are needed to make additional
work possible. Reprogramming of current dam construction dollars to
other projects is also being discussed with the sponsors. Disbursements
will likely occur in fiscal year 2003.
Kansas
State: Kansas
Funds: WF-08, $1,942,100
Project: Wet Walnut Creek Watershed
Progress/Status: The funds will be obligated by May 1, 2002. The
engineering plans have been completed for the remedial work on 20 dams,
with construction underway on 4 sites. All construction work is to be
completed by 12/31/02.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The construction of the last three sites is scheduled in fiscal
year 2003 with disbursements to follow.
Kentucky
State: Kentucky
Funds: WF-08, $100,000
Project: Caney Creek Watershed Project
Progress/Status: Discussions with sponsors are underway to
ascertain the purpose of the earmark and concerns of the residents.
Planning efforts will be underway once sponsors articulate their
objectives.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Disbursements to occur in fiscal year 2003.
Louisiana
State: Louisiana
Funds: WF-08, $300,000
Project: Bayou Bourbeux Watershed Project
Progress/Status: Five new long-term contracts (LTC) were executed
in April 2002. Fifty-four LTC's are in force with conservation
practices installed. Twenty-one LTC's are scheduled to complete
conservation practice installation this fiscal year. Awaiting funding
for concrete lining of a channel phase.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Ten LTC's have conservation practices scheduled for installation
by December 2002 with disbursements to follow in fiscal year 2003.
Funds: WF-08, $100,000
Project: Dairy Farmers in Lake Pontchartrain & Middle Tangipahoa
Project
Progress/Status: Phase II of the animal waste system clean-out
program has begun. During Phase I, 28 systems were cleaned during
fiscal year 2001, updating an estimated 20 percent of the 275 waste
systems installed in the Lake Pontchartrain Basin during the 1990's.
Average cost of the system clean-out is $1,040.00. Contracts are
awarded by the Lake Pontchartrain Foundation to assist dairy farmers in
protecting water quality by the construction waste management systems.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The Federal contract for waste management systems will be
completed on May 30, 2003. Twenty-three LTC's have conservation
practices scheduled for installation October--December, 2002 with
disbursement in fiscal year 2003.
Minnesota
State: Minnesota
Funds: WF-08, $6,450,000
Project: Snake River Watershed Project
Progress/Status: Phase I (Lower Floodway) 80 percent complete.
Phase II (Floodwater Impoundment) currently in bid award process with
construction start expected in May 2002. Phase III (Upper Floodway)
will be advertised in August or September 2002. Funds will be obligated
in by August 30, 2002, with a project agreement for local contracting.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: It is expected that approximately 50 percent of Phase II ($2.2
million) and all of Phase III ($3 million) will be disbursed after
fiscal year 2003.
Mississippi
State: Mississippi
Fund: WF-08, $313,000
Project: Town Creek/Coonewah Creek
Project/Status: Implementation of channel improvements on the
Coonewah Creek Channel will begin in May 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The Town Creek/Coonewah Creek project will be completed by
September 2002.
Fund: WF-08, $575,000
Project: Design flood water retarding structure in Pellaphalia
Creek Watershed.
Project/Status: The plan has been completed. The design and
implementation will be completed in fiscal year 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The flood water retarding structure in Pellaphalia Creek
Watershed should be completed by November 2002 with disbursement to
follow.
Fund: WF-08, $430,000
Project: Pearl River, Dry Creek Watershed, Marion County
Project Status: Implementation of this bank stabilization measure
will begin in May 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The flood control project should be completed by November 2002
with disbursement to follow.
Fund: WF-03, $625,000
Project: Install grade stabilization structures in the Skuna River.
Project Status: Implementation of these bank stabilization
structures will begin in May 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The grade stabilization structures in the Skuna River should be
completed by November 2002 with disbursement to follow.
Fund: WF-03, $300,000
Project: Strayhorn Creek Watershed
Project/Status: Implementation of these bank stabilization
structures will begin in May 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The Strayhorn Creek Watershed project will be completed by
November 2002 with disbursement to follow.
Missouri
State: Missouri
Funds: WF-08, $3,120,000
Project: Hickory Creek
Progress/Status: Contract awarded for construction of site H-10D to
implement watershed plan. A cooperative agreement for a local contract
is scheduled to be developed in the 4th quarter for construction of
sites H-1A and H-2A. Approximately $200,000 has been placed in a
cooperative agreement with the City of Neosho in order to purchase
additional properties in the buyout. Final plans completed for sites H-
10D, H-1A, and H-2A.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The local contract for sites H-1A and H-2A will be completed in
fiscal year 2003. The buyouts are anticipated to be completed in the
first quarter of fiscal year 2003.
Funds: WF-08, $1,100,000
Project: Marthasville
Progress/Status: To implement watershed plan, contract awarded for
construction of site MV-5. Final plans completed for site MV-5.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The Federal contract for construction of site MV-5 is scheduled
to be completed in November 2002.
Funds: WF-08, $850,000
Project: West Fork of Big Creek
Progress/Status: Contract awarded for construction of five
floodwater retarding dams. Contract for construction of small
floodwater retarding dams scheduled to be bid in 4th quarter. Final
plans completed on 11 floodwater retarding dams.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The Federal contract for construction of six floodwater retarding
dams has an estimated completion date in Summer 2003.
Funds: WF-08, $450,000
Project: East Fork of Grand River
Progress/Status: A Federal contract for construction of four small
floodwater retarding dams is scheduled to be bid in 4th quarter. Final
plans completed on nine floodwater retarding dams.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The Federal contract for construction of four floodwater
retarding dams has an estimated completion date in Summer 2003
Funds: WF-08, $365,000
Project: McKenzie Creek
Progress/Status: In order to purchase an additional 12-15
properties in the buyout, $300,000 has been added to the cooperative
agreement. This is being done through a partnership with the Missouri
Department of Transportation, the City of Piedmont, and NRCS.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The buyout is expected to extend into the first quarter of fiscal
year 2003.
Funds: WF-08, $600,000
Project: Upper Locust Creek
Progress/Status: A bid opening for a Federal contract for
construction of seven floodwater retarding dams is scheduled for May
30, 2002. Final plans completed on 13 floodwater retarding dams.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The Federal contract for construction of seven floodwater
retarding dams has an estimated completion date of August 2003.
Funds: WF-08, $500,000
Project: Troublesome Creek
Progress/Status: A bid opening for a Federal contract for
construction of six floodwater retarding dams is scheduled for May 24,
2002. Final plans completed on 10 floodwater retarding dams.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The Federal contract for construction of six floodwater retarding
dams has an estimated completion date in July 2003.
Funds: WF-08, $370,000
Project: East Yellow Creek
Progress/Status: A bid opening for a Federal contract for
construction of five floodwater retarding dams is scheduled for May 30,
2002; Final plans completed on five floodwater retarding dams.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: The Federal contract for construction of five floodwater
retarding dams has an estimated completion date in April 2003.
New Mexico
State: New Mexico
Funds: WF-08, $7,777,000
Project: Truth or Consequences/Williamsburg Arroyos Watershed, Site
3C, phase III.
Progress/Status: The design of phase III is complete. Preparation
of final drawings and specifications are progressing on schedule and
are expected to be complete by May 30, 2002. A construction contract
for installation will be awarded by August 30, 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Funds will be disbursed in fiscal year 2003.
North Carolina
State: North Carolina
Funds: WF-08, $1,743,000
Project: Swan Quarter Watershed Project
Project/Status: The design for phase I, to construct 15,000 foot
dike is nearly complete. A project agreement will be signed to start
construction on Phase I by September 1, 2002.
Fiscal Obligation for Disbursement after September 30, 2002: Funds
will be disbursed in fiscal year 2003.
North Dakota
State: North Dakota
Funds: WF-08, No earmarked funds were provided in fiscal year 2002.
Project: Devil's Lake Basin Flooding
Progress/Status: NRCS continues to utilize the WRP, EQIP, and WHIP
programs in working with individual producers to increase the potential
water retention capability of wetlands in the basin. NRCS is currently
working with the Devil's Lake Basin Joint Water Resource Board, the
North Dakota State Water Commission, and other Federal, State, and
local agencies to update and revise the 1995 Devils Lake Basin Water
Management Plan. This Plan will be used in determining future
directions to address the flooding, transportation, agricultural, and
other socioeconomic impacts the flooding is continuing to have on the
Region.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: None.
Pennsylvania
State: Pennsylvania
Funds: WF-08, $430,000
Project: Oven Run Watershed Project
Progress/Status: Site A Phase I construction contract is nearing
completion. Site A, Phase II will be bid in May 2002. Design of Site E
will be completed in May and will be out for bids in June. Based on
engineer's estimates, the total construction cost (NRCS share) to
complete this watershed in fiscal year 2002 is $532,000. An additional
$172,000 will be needed in fiscal year 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Sites A (Phase II) and Site E construction will continue in
fiscal year 2003. NRCS quality assurance responsibilities will continue
during construction. Payments will need to be made to the agreement
holders in fiscal year 2003 to meet contractual obligations.
Rhode Island
State: Rhode Island
Funds: WF-08, $100,000
Project: Pocasset Flood Plain Management Study and Watershed Plan
Progress/Status: Flood control watershed measure plan and EIS are
being drafted. Hydrologic models are being finalized. Draft plan and
EIS expected to be published in Federal Register in late fiscal year
2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: None
Texas
State: Texas
Funds: WF-03, total (FA and TA): $2,430,000
Project: Elm Fork of the Trinity Site 19MP (Muenster Dam)
Progress/Status: All permits obtained, design completed for Phase I
construction, Phase I contract award will be early June 2002, design of
Phase II will be completed in August 2002, obligate Financial
Assistance funds for Phase II by Contracting Local Organization
Agreement in September 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Phase I construction will be completed in fiscal year 2003,
contract for Phase II construction will occur in fiscal year 2003 with
disbursement to follow.
Funds: WF-08, total (FA and TA): $4,270,000
Project: Bexar-Medina-Atascosa (BMA) Watershed Project
Progress/Status: Activities are being carried out to meet the
intent of the earmark:
--On-farm land treatment to improve irrigation efficiencies using
long term contracts (LTCs) with irrigation farmers in the BMA
District
--Technical assistance to implement 4 LTCs planned in fiscal year
2001
--Technical assistance to plan an estimated 10 new LTCs in fiscal
year 2002
--Obligate financial assistance funds for 10 LTCs by September 30,
2002
--Structural measures (canal improvement and/or Pearson Reservoir)
--Considerable resources have been dedicated to provide technical
assistance on engineering surveys, geologic investigations,
preliminary designs in order to be ready to implement in
fiscal year 2002.
--President of the BMA Board has notified NRCS that the Board has
postponed implementation of the canal improvement under the
Watershed Plan. Since the local sponsors are not ready to
carry out their responsibilities of the structure measures
under the Plan, construction funds for the canal
improvement can not be obligated on this project in fiscal
year 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: All LTCs will have conservation practices schedule for
installation during fiscal year 2003.
West Virginia
State: West Virginia
Funds: WF-08, $735,000
Project: Deckers Creek Watershed
Progress/Status: Watershed plan revisions underway and will be
completed in May to be ready for project authorization.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Design and construction of land treatment and reclamation
measures will continue in fiscal year 2003.
Funds: WF-03, $550,000
Project: Potomac Headwaters Land Treatment Watershed Project
Progress/Status: Implementation of conservation practices in the
Potomac Headwaters Land Treatment Watershed is underway. Approximately
60 percent of planned practice installations were completed as of
January 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Funds for installation practices will be disbursed through fiscal
year 2003 and fiscal year 2004.
Funds: WF-08, $360,000
Project: Knapps Creek Stream Restoration Watershed Project
Progress/Status: Draft plan for Knapps Creek Watershed was
completed on January 2, 2002. Completion of plan has been suspended
pending completion of demonstration project on reach of Knapps Creek.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Authorization of the Watershed Plan will be sought in fiscal year
2003 after completion of the demonstration project. Cost data from the
demonstration project will be used in completion of the final Watershed
Plan.
Funds: WF-03, $4,800,000
Project: Lost River Watershed Dam #10
Progress/Status: Final design of the dam is completed and under
peer review. Local sponsors are in process of obtaining land rights. A
contract for construction should be awarded in September 2002.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Construction of the dam will continue through December 2004 with
disbursements to follow.
Funds: WF-08, $100,000
Project: Redesign existing flood impoundments to include water
storage
Progress/Status: Several watershed structures have been identified
for the option of adding water supply. Deckers Creek Watershed, Site 1
has 30 percent of the planning phase completed. The costs for including
water supply storage and upgrading the structure to current Federal
standards have been completed.
Fiscal year 2002 Obligations for Disbursement after September 30,
2002: Planning and design will continue in fiscal year 2003.
Wisconsin
State: Wisconsin
Funds: Emergency Watershed Protection Program Earmark received
$1,000,000
Project: Shell Lake ($750,000) Burnett and Washburn Counties
($250,000)
Progress/Status: Agreement with the City of Shell Lake has been
completed and signed. A cooperative agreement was completed as a grant
agreement with limited NRCS involvement in the project. Agreement with
Burnett County to act as the sponsor for tornado debris clean up in
Burnett and Washburn Counties is in draft and will be signed by April
30, 2002. NRCS will assist Burnett and Washburn Counties with inventory
and project design. Four lakes have been identified as priority by the
sponsor. Three other lakes will be considered in the second phase.
Fiscal Obligation for Disbursement after September 30, 2002: A
request for reimbursement of $83,000 was approved for payment on April
19, 2002. Remaining products are scheduled through fiscal year 2003.
nrcs watershed rehabilitation program
Question. Please provide a status report on activities carried out
through the Watershed Rehabilitation Program in fiscal year 2002.
Answer. The fiscal year 2002 Agriculture Appropriations Bill
provided $10 million to begin implementation of the watershed
rehabilitation activities authorized by Public Law 106-472. The
appropriation language directed that priority be placed on those
projects, which posed the highest risk to life and property. I have
asked the Natural Resources Conservation Service to provide additional
information for the record.
[The information follows:]
Applications from 80 local communities were received in the first
quarter of fiscal year 2002. Each application was ranked using a risk-
based system in January 2002, and funds were provided to State
Conservationists for the selected projects in February 2002. All of the
43 selected projects in 17 States involve high hazard dams with the
potential loss of life of at least 11,000 people living below the dams
selected for rehabilitation activity. The funds for fiscal year 2002
were projected to:
--Initiate 43 watershed rehabilitation plans in 17 States;
--Complete 10 project plans in 7 States; and
--Have implementation/construction underway on 8 projects in four
States.
nrcs forestry incentives program
Question. Please provide information in regard to Forestry
Incentives Program activities to reduce the potential of wildfire.
Answer. Since inception of the Forestry Incentives Program in 1975,
almost 1,463,000 acres of non-industrial private forest land has been
thinned and pruned to save marketable trees and rural areas from the
potential destructive forces of wildfire.
In addition, over 3,868,000 acres of trees have been planted on
lands hat are managed in a manner to protect the resource from
wildfire, insect infestation, and other natural calamities.
In 2002, preventive emergency funds were made available to address
specific reforestation needs and to reduce fire risk due to massive
insect infestations in Tennessee and Alaska. These funds were made
available, until expended, for thinning and reforestation in order to
reduce the fire hazard from the dead and dying trees. It is expected
the preventive emergency funds will impact 3,600 acres in Alaska and
4,500 acres in Tennessee.
soil, water and air sciences research
Question. The fiscal year 2003 President's budget for ARS proposes
a decrease of $10.737 million to terminate numerous Congressionally-
designated projects appropriated in fiscal year 2001 and 2002 in Soil,
Water, and Air Sciences research to provide savings to finance higher
priority research.
Please provide a status on each of the projects you propose to
eliminate in fiscal year 2003 and State when you could complete each
project if you receive funding to do so, as well as how much future
funding would be necessary.
Answer. The fact that the Department has requested new funding for
an initiative while at the same time proposing to eliminate projects
under the same general initiative is a significant strength of our
internal review process as reflected in the fiscal year 2003 budget.
ARS has over 1000 individual projects grouped under different areas,
and not all of these projects have equal value. The fiscal year 2003
budget reflects a reallocation of resources to projects that represent
the most effective use of taxpayer dollars to meet overall national
needs. Projects that, while of value, are not as important are proposed
for elimination. Thus, the fiscal year 2003 budget is a valuable
statement of what the Department believes to be the highest priority
allocation of resources within each initiative.
The Agency has about 2,000 scientists (what we refer to as category
1 scientists) working in 100+ locations across the nation. In recent
years, scientific research (not just agricultural research) has moved
away from work being done by a single scientist or a small cohesive
group of scientists working in a single location. Now, discoveries at
ARS are far more likely to come from multi-disciplinary research
conducted at more than one location. In fact, one of the principal
reasons ARS created National Programs during the mid-1990s was to
aggregate the research projects that were doing closely related work
into a structure that would expedite interaction between these
locations and scientists. A second benefit of the new National Program
structure has been the strengthening of communication between ARS
scientists and managers and the various customers and stakeholders in
each area. The 40 National Program Workshops which were held during the
startup phase were very helpful in defining the research agendas for
each program.
When ARS is asked to address a new or re-emerging problem we assess
many factors. First we ascertain scope and nature of the problem
(location, crop(s)/commodity(ies) affected, nature of the problems,
potential options, etc.). Then we assess the Agency's capabilities
(where are the scientific skills needed to address the problem; what
locations have the necessary equipment and facilities to support the
work needed to address the problem; and what other factors such as
climatic zones, soil type, are critical to the work). Sometimes these
analyses produce predictable decisions. But in other cases, some or all
of the work may be done at locations far from where the problem exists
or the commodity grows.
ARS believes that the development of its annual budget, which is
submitted to Congress as part of the President's budget is the agency's
most comprehensive statement of how it can and should proceed with a
comprehensive research plan for addressing the issues confronting
American agriculture. These issues are identified by interactions with
our customers and stakeholders, the Congress, and the Administration.
Question. Three projects recommended for elimination are waste
management research (Starkville, MS); improved animal waste management/
animal waste treatment research (Florence, SC); and, manure management
research (Ames, Iowa). Your budget request, however, also proposes a $5
million increase for research in support of managing wastes to enhance
air and water quality involving all phases of animal feeding; manure
handling; storage and treatment; land application; crop production; and
conservation practices and alternative uses to provide solutions to
problems associated with animal waste management. Please explain the
differences and similarities between the proposed reductions for the
waste management research in Starkville, animal waste/animal waste
treatment research in Florence, and manure management research in Ames,
with the $5 million waste management research project you are
proposing.
Answer. The $5 million initiative proposed in the President's
budget is designed to provide tools to producers and their advisors so
they can effectively deal with animal waste while protecting the
environment, human health, and animal health. The initiative has three
main parts: (1) determine the processes controlling losses of manure
nutrients, emissions and pathogens to soil, water, and air; (2) develop
management practices, treatment technologies, and decision tools to
reduce or eliminate risks from animal production systems to the
environment and human health; and (3) determine the effectiveness of
the practices, technologies, and tools at the farm and watershed scale.
The main focus of the new initiative is to strengthen ARS research
efforts in two key areas: (a) control of atmospheric emissions from
livestock and poultry production systems and (b) control of manure
pathogens that may pose a threat to human health. These efforts will
involve cooperation among ARS scientists, university scientists, and
scientists from State and other Federal agencies.
The projects at Starkville, Mississippi are designed to develop and
evaluate poultry litter management systems for forage and row crop
production. This research focuses on nutrient management for water
quality protection and is being done in cooperation with Western
Kentucky University. These projects would complement the initiative
proposed in the President's budget.
The project at Florence, South Carolina addresses the development,
evaluation and improvement of farm-scale systems of swine waste
treatment technologies. This project complements the work proposed in
the President's budget initiative.
The current manure management research project at Ames, Iowa
focuses on modification of swine diet to reduce emissions of volatile
organic compounds associated with odor by manipulating microorganisms
in the swine gut. The new initiative looks at the whole swine
production system, not just within the animal, to bring about a
reduction in emissions of odor causing compounds. The current work at
Ames would represent one part of the research on an overall system of
odor control proposed in the 2003 budget.
plant sciences research
Question. The fiscal year 2003 President's budget for ARS proposes
a decrease of $53.192 million to terminate numerous Congressionally-
designated projects appropriated in fiscal year 2001 and 2002 in Plant
Sciences research to provide savings to finance higher priority
research.
Please provide a status on each of the projects you propose to
eliminate in fiscal year 2003 and State when you could complete each
project if you receive funding to do so, as well as how much future
funding would be necessary.
Answer. The proposed increases included in the budget are part of a
national program plan to fund high priority agricultural research
initiatives that are less project specific and are generally broader in
scope than are the projects proposed for termination. The Agency has
about 2,000 research scientists working in 100+ locations across the
Nation. In recent years, scientific research (not just agricultural
research) has moved away from work being done by a single scientist or
a small cohesive group of scientists working in a single location. Now,
discoveries at ARS are far more likely to come from multi-disciplinary
research conducted at more than one location. In fact, one of the
principal reasons ARS created National Programs during the mid-1990s
was to aggregate the research projects that were doing closely related
work into a structure that would expedite interaction between these
locations and scientists. A second benefit of the new National Program
structure has been the strengthening of communication between ARS
scientists and managers and the various customers and stakeholders in
each area. The 40 National Program Workshops which were held during the
startup phase were very helpful in defining the research agendas for
each program.
When ARS is asked to address a new or re-emerging problem we assess
many factors. First we ascertain scope and nature of the problem
(location, crop(s)/commodity(ies) affected, nature of the problems,
potential options, etc.). Then we assess the Agency's capabilities
(where are the scientific skills needed to address the problem; what
locations have the necessary equipment and facilities to support the
work needed to address the problem; and what other factors such as
climatic zones, soil type, are critical to the work). Sometimes these
analyses produce predictable decisions. But in other cases, some or all
of the work may be done at locations far from where the problem exists
or the commodity grows.
ARS believes that the development of its annual budget, which is
submitted to Congress as part of the President's budget, is the
agency's most comprehensive statement of how it can and should proceed
with a comprehensive research plan for addressing the issues
confronting American agriculture. These issues are identified by
interactions with our customers and stakeholders, the Congress, and the
Administration.
Question. Please explain the differences and similarities between
the proposed reductions for sorghum research (Manhattan, KS; Bushland,
TX; Stillwater, OK; Lubbock, TX) and citrus/horticultural research (Ft.
Pierce, FL) with the proposed $500,000 increase for research to thwart
plant pathogens that could significantly harm agricultural productivity
and U.S. trade.
Answer. The sorghum research projects that are cut in the fiscal
year 2003 President's budget focus on serious problems for the U.S.
sorghum industry. These include: developing new uses and new markets
for sorghum (Manhattan, KS), developing cropping and tillage systems to
improve effectiveness of irrigated and dryland systems for sorghum
production in the Southern Great Plains, (Bushland, TX), enhancing
sorghum resistance to drought, heat stress and cold damage (Lubbock,
TX), and increasing sorghum resistance to the insects, greenbug and
sorghum midge (Stillwater, OK). However, these sorghum projects do not
contribute to thwarting the plant pathogens and invasive species that
are a higher priority in the President's fiscal year 2003 budget.
Research programs at Ft. Pierce, Florida, are dealing with serious
diseases of citrus such as citrus canker and citrus tristeza virus. The
work being done at this site is of critical importance to the national
citrus industry as there are still serious citrus diseases poised to
enter the United States, such as citrus variegated chlorosis, which is
leading to the destruction of 5 million trees per year in the Sao Paulo
area of Brazil. Given the critical nature of these efforts nationally
in the United States, research on these important diseases is being
incorporated into a national defense strategy against exotic and
invasive plant pathogens. Funds proposed in the 2003 Budget would
support development of detection and identification methods, including
genomic sequencing for molecular identification, to aid regulatory
agencies and policy-makers, an essential element to enhance our defense
against plant pathogens.
Question. Please explain the differences and similarities between
the proposed reduction for sudden oak disease research (Ft. Detrick,
MD) with the proposed $5.357 million increase for emerging, reemerging,
and exotic diseases of plants.
Answer. ARS is conducting multi-disciplinary research on emerging,
reemerging, and exotic diseases of plants to prevent and control their
spread. Sudden Oak Death is responsible for killing large numbers of
Quercus species (oak) from Monterey County, California to southern
Oregon. The cause of the disease has only recently been identified as
Phytophthora ramorum, a previously undescribed species of fungus
capable of killing mature, otherwise healthy trees. Recently, the
disease has been identified on several plants of horticultural
significance including rhododendron and related crops. To date, the
disease has only been found on the west coast. Exotic diseases such as
Sudden Oak Death pose severe problems of regional and sometimes
national significance throughout the United States. ARS's
multidisciplinary research program seeks to determine the basis of host
specificity and the nature and scope of pathogen diversity in the
United States. ARS seeks to address longer-term problems of plant
diseases at a national level. Given the critical nature of exotic
diseases in the United States, ARS research is being incorporated into
a national defense strategy against exotic and invasive plant
pathogens.
Question. Please explain the differences and similarities between
the proposed reductions for soybean genetics research/two geneticists
(Columbia, MO) and microbial genomics research (Pullman, WA) with the
proposed $2.95 million increase for agricultural genomes research.
Answer. Projects proposed in the 2003 Budget are part of a national
program planning process used to develop the agency's budget, and are
generally part of more broadly defined initiatives. The proposed $2.95
million increase for agricultural genomics research is in support of a
multi-commodity program to develop complete maps of the location of
genes on chromosomes by sequencing DNA from maize, legumes, microbes
and insects (honey bee). The genetic maps derived from interpretation
of these DNA sequences are needed to facilitate the development of
sophisticated gene markers that will help geneticists identify and
select germplasm with enhanced product quality, productivity, food
safety and resistance to diseases. Knowledge gained from these
sequences is a committed step toward future efforts to define genetic
mechanisms that regulate these biological systems. The proposed
distribution of funds for these DNA sequencing activities is: maize and
other cereals such as rice ($1.2 million), soybean and Medicago
truncatula ($0.8 million), alfalfa and other legumes ($0.4 million) and
insects ($0.55 million).
The research associated with the proposed reduction for soybean
genetics at Columbia, Missouri involves the development of higher value
soybeans to help improve profitability for farmers. This work focuses
on the identification and the regulation or expression of genes that
govern quality of soybean meal, specifically the genes that control the
level of undesirable carbohydrates and the organic phosphorus in seed.
These traits respectively reduce feeding efficiency and escalate the
potential for undesired environmental impact of livestock wastes). This
work is similar to the proposed agricultural genomes research in that
it deals with a legume, soybean, and it investigates traits that are
important to soybean product value. It differs by the fact that the
work involves the discovery of function for a limited number of genes,
and does not involve sequencing the entire soybean genome or the
development of gene markers for the specified traits. This research
would benefit significantly from knowledge gained by the work proposed
for agricultural genomes research. In fiscal year 2002, $480,000 was
appropriated for this project.
The research associated with the proposed reduction for microbial
genomics research at Pullman, Washington involves acquisition of the
genome sequence of Babesiosis bovis (tick) to develop biological
control strategies or vaccines to block infections that are transmitted
by ticks to cattle and horses. This work is similar to the proposed
agricultural genomes research in that it deals with the DNA sequence of
a microbial organism. DNA sequencing was to be performed under a
specific cooperative agreement with Washington State University, but
this agreement did not involve the development of genetic markers or a
complete genetic map of the B. bovis genome. The investigation focused
on only a limited number of genes relative to the project objectives.
Future research on this topic also would benefit significantly from
knowledge gained by the work proposed for agricultural genomes
research. In fiscal year 2002, $480,000 was appropriated for this
project.
Question. Please explain the differences and similarities between
the proposed reductions for the Center for Biological Controls/FAMU
(Gainesville, FL) and Pierce's Disease research (Parlier, CA; Ft.
Pierce, FL; Davis, CA) with the proposed $2.7 million increase for
research in support of controlling invasive species.
Answer. These research programs are similar in that they address
important agricultural pests--in Florida (associated with Florida A&M
University), both native and invasive pests, and in California, the
newly introduced glassy-winged sharpshooter that vectors Pierce's
disease (a $33 billion annual threat to the grape, raisin, and wine
industry, a potential threat to production of almonds and other
commodities, and to roadside safety buffers of oleander). The proposed
increase of $2.7 million will be directed to developing a national plan
for fighting additional invasive species, including such potentially
devastating insect pests as the Asian longhorned beetle in New York
City and Chicago (a $670 billion annual threat), the Chinese soybean
aphid (a newly introduced vector of bean viruses) and Russian wheat
aphid in the Midwest, pink hibiscus mealybug in California, imported
fire ant and silverleaf whitefly in the South, fruit flies (near ports
of entry in California and Florida), Formosan termite in New Orleans,
cereal leaf beetle in the Northwest, mite and beetle pests of bees, and
many other high priority pests. Invasive weeds such as leafy spurge,
melaleuca, old world climbing fern, giant salvinia, saltcedar,
hydrilla, waterhyacinth, yellow starthistle, downy brome, Brazilian
pepper, jointed goat grass, purple loosestrife, and many other weeds
that infest over 100 million acres throughout the United States
resulting in a 12 percent loss in crop yields valued at $36 billion
annually, will also be targeted.
animal sciences research
Question. The fiscal year 2003 President's budget for ARS proposes
a decrease of $19 million to terminate numerous Congressionally-
designated projects appropriated in fiscal year 2001 and 2002 in Animal
Sciences research to provide savings to finance higher priority
research.
Please provide a status on each of the projects you propose to
eliminate in fiscal year 2003 and State when you could complete each
project if you receive funding to do so, as well as how much future
funding would be necessary.
Answer. The Agency has about 2,000 research scientists working in
100+ locations across the Nation. In recent years, scientific research
has moved away from work being done by a single scientist or a small
cohesive group of scientists to a more multi-disciplinary approach
where research is conducted at several locations. One of the principal
reasons ARS created National Programs during the mid-1990s was to
aggregate the research projects that were doing closely related work
into a structure that would expedite interaction between these
locations and scientists. A second benefit of the new National Program
structure has been the strengthening of communication between ARS
scientists and managers and the various customers and stakeholders in
each area. The 40 National Program Workshops which were held during the
startup phase were very helpful in defining the research agendas for
each program.
When ARS is asked to address a new or re-emerging problem we assess
many factors. First we determine the scope and nature of the problem
(location, crop(s)/commodity (ies) affected), and then we assess the
Agency's capabilities (scientific skills needed, locations with
facilities and equipment to support the work, and factors such as
climatic zones, soil type, etc.).
ARS believes that the development of its annual budget, which is
submitted to Congress as part of the President's budget is the agency's
most comprehensive statement of how it can and should proceed with a
comprehensive research plan for addressing the issues confronting
American Agriculture, which includes animal sciences research. These
issues are identified by interactions with our customers and
stakeholders, the Congress, and the Administration.
Question. Please explain the differences and similarities between
the proposed reduction for the livestock genome mapping initiative
(Clay Center, NE) with the proposed $3 million increase to identify
genes that influence disease resistance, reproduction, nutrition, and
other economically important production traits in livestock and
poultry.
Answer. The proposed reduction at Clay Center, NE, is for the
development of a specific laboratory resource (physical map) needed for
genomics research while the $3 million increase proposed this year is
to support high through-put genomic sequencing of farm animal genomes
in collaboration with NIH.
commodity conversion and delivery research
Question. The fiscal year 2003 President's budget for ARS proposes
a decrease of $5 million to terminate numerous Congressionally-
designated projects appropriated in fiscal year 2001 and 2002 in
Commodity Conversion and Delivery research to provide savings to
finance higher priority research.
Please provide a status on each of the projects you propose to
eliminate in fiscal year 2003 and State when you could complete each
project if you receive funding to do so, as well as how much future
funding would be necessary.
Answer. As stated in previous responses to similar questions, the
Agency has about 2,000 research scientists working in 100+ locations
across the Nation. Discoveries at ARS are far more likely to come from
multi-disciplinary research conducted at more than one location. When
ARS is asked to address a new or re-emerging problem we assess many
factors, including scope and nature of the problem and the Agency's
capabilities. Sometimes these analyses produce predictable decisions.
But in other cases, some or all of the work may be done at locations
far from where the problem exists or the commodity grows.
ARS believes that the development of its annual budget, which is
submitted to Congress as part of the President's budget, is the
agency's most comprehensive statement of how it can and should proceed
with a comprehensive research plan for addressing the issues
confronting American agriculture. These issues are identified by
interactions with our customers and stakeholders, the Congress, and the
Administration.
Question. Please explain the differences and similarities between
the proposed reduction for the biomass crop production research
(Brookings, SD) with the proposed $3.5 million increase to develop
technologies to produce biobased products from agricultural commodities
and byproducts.
Answer. These research programs are similar in that they develop
technologies to expand the use of agricultural commodities and
byproducts through conversion of these materials into value-added
biobased products that benefit the rural economy, the environment, and
national security. The projects differ in the kinds of agricultural
materials used and in the types of biobased products that result. The
biomass crop production research objective at Brookings, South Dakota
is to improve the quality and value of animal feed produced from
distillers' dried grains (a byproduct of ethanol production) and from
wheat straw, corn stover, and switchgrass. The proposed $3.5 million
increase to ARS will focus on developing technologies to develop
composites from cereal grain starches and residues, high-performance
natural rubber polymers, oil-producing plants that serve as
biofactories for chemical feedstocks, procedures for processing flax
fiber, activated carbon adsorbents from agricultural wastes such as
soybean hulls and nutshells to remove contaminants from water,
environmentally-friendly enzymatic methods to modify vegetable oils for
use as lubricants, starch and protein-based copolymers from
agricultural materials; efficient processing technologies for value-
added co-products from corn milling and ethanol production, biobased
substitutes for imported products, and value-added products from
rendered animal byproducts.
human nutrition research
Question. The fiscal year 2003 President's budget for ARS proposes
a decrease of $1 million to terminate numerous Congressionally-
designated projects appropriated in fiscal year 2001 and 2002 in Human
Nutrition research to provide savings to finance higher priority
research.
Please provide a status on each of the projects you propose to
eliminate in fiscal year 2003 and State when you could complete each
project if you receive funding to do so, as well as how much future
funding would be necessary.
Answer. The Agency has about 2,000 research scientists working in
100+ locations across the Nation. In recent years, scientific research
has moved away from work being done by a single scientist or a small
cohesive group of scientists to a more multi-disciplinary approach
where research is conducted at several locations. National Program
Workshops are held to develop a national research agenda for the 40
national programs. When ARS is asked to address a new or re-emerging
problem we assess many factors, including capability of ARS staff,
available space/facilities, and equipment needs. ARS believes that the
development of its annual budget, which is submitted to Congress as
part of the President's budget is the agency's most comprehensive
statement of how it can and should proceed with a comprehensive
research plan for addressing the issues confronting American
Agriculture, which includes Human Nutrition research.
buildings and facilities
Question. In fiscal year 2002, ARS received almost $119 million in
appropriated funding for buildings and facilities with an additional
$73 million from the fiscal year 2002 Homeland Security Supplemental.
With the increased threats to lab security as a result of the
terrorist attacks and anthrax scares last year, is $16.58 million
sufficient for your buildings and facilities account in fiscal year
2003?
Answer. The $16.58 million is sufficient to meet the highest
priority projects identified through the budget development and
Administration priority-setting phase. These proposed funds are not
related to the lab security needs. We are in the process of reviewing
our security needs. Security enhancements are being financed with the
$21.7 million provided in the fiscal year 2002 Emergency Supplemental
under the Salaries and Expenses account. These funds will help us to
address the needs at the five laboratories that handle high-risk
biological agents and needs at selected other high-risk labs as well.
Question. Of the $16.58 million, how much is directly related to
enhancing lab security? Has the Department conducted a complete
analysis of ARS building security needs and if so, what are their
findings?
Answer. None of the $16.58 million requested is directly related to
enhancing lab security, although design and construction projects begun
with this money will incorporate enhanced lab security features.
ARS is in the process of conducting physical security assessments
on our facilities. As of April 2002, 22 assessments have been
completed. The balance of ARS locations will be completed by September
2002. Based on the findings of the first 22 sites, ARS estimates that
it will cost $80 million to address all security needs.
Question. Please provide a status report on project items or
locations included under the heading of ``Agricultural Research
Service'' on page 52 of House Report 107-275 and any other project
items that are included on pages 20 through 39 under the same heading
in Senate Report 107-41.
Answer. The status of each of the building and facility items
funded in fiscal year 2002 appropriation is:
----------------------------------------------------------------------------------------------------------------
Project location Appropriated Status
----------------------------------------------------------------------------------------------------------------
Maricopa, AZ.................................. $8,400,000 Predesign contract completed in first quarter
fiscal year 2002. Design scheduled to be
completed in the third quarter, fiscal year
2003.
Albany, CA.................................... 3,800,000 Design for Phase 3 will be completed in first
quarter of fiscal year 2003. Construction
contract for Phase 1 was awarded in first
quarter, fiscal year 2002. Phase 2 will be
awarded in the third quarter, fiscal year 2002.
Davis, CA..................................... 5,000,000 Design scheduled for com-pletion by the first
quarter, fiscal year 2003. Construction
contract scheduled for award in third quarter,
fiscal year 2003.
Washington, DC (USNA)......................... 4,600,000 Design contract for the Administration Building
Modernization will be awarded in the second
quarter of fiscal year 2002. Planning and
Design of the headhouse/greenhouse will be
awarded in the third quarter of fiscal year
2002. Design of the Bladensburg Road entrance
will be awarded in the fourth quarter, fiscal
year 2002.
Hilo, HI...................................... 3,000,000 Predesign contract is scheduled for completion
in the fourth quarter of fiscal year 2002.
Design is scheduled for award upon signing of
lease agreement with the University of Hawaii.
Aberdeen, ID.................................. 500,000 Design scheduled for award in third quarter of
fiscal year 2002.
Peoria, IL.................................... 6,500,000 Construction contract for Phase 1 of the 4-phase
project will be awarded in the third quarter,
fiscal year 2002.
Ames, IA...................................... 40,000,000 Design contract for the Large Animal BSL-3Ag
50,000,000 facilities was awarded the second quarter,
\1\ 14,081,000 fiscal year 2002. Construction award is
anticipated in fourth quarter, fiscal year
2003. Planning and design for the remaining
facilities will begin in the fourth quarter,
fiscal year 2002, including the facility to be
built by APHIS to relocate labs. Construction
of APHIS facilities will begin in fiscal year
2003 and be completed in mid-fiscal year 2004.
Manhattan, KS................................. 3,000,000 Partial funding for construction of Phases 3 and
4 was provided in fiscal year 2001 and 2002.
Orono, ME..................................... 3,000,000 Design for the new aquaculture facility is fully
funded. A design contract for the new facility
was awarded in the second quarter, fiscal year
2002.
Beltsville, MD (BARC)......................... 3,000,000 Design for replacement greenhouses is on hold
until reprogramming request of fiscal year 2002
funds is approved.
Beltsville, MD (NAL).......................... 1,800,000 Construction award for major upgrade of plumbing
and Phase 2 electrical systems is anticipated
for the fourth quarter, fiscal year 2002.
St. Paul, MN 300,000 Design award anticipated in the third quarter,
fiscal year 2002, with completion expected by
the second quarter, fiscal year 2003.
Poplarville, MS............................... 800,000 Predesign award anticipated by the first quarter
fiscal year 2003.
Stoneville, MS................................ 8,400,000 Design for the replacement facility is complete.
The construction of lab/office is fully funded.
Construction award anticipated by the fourth
quarter, fiscal year 2002.
Las Cruces, NM................................ 475,000 Design and construction of replacement facility
are fully funded. Design is complete.
Construction is scheduled for completion in the
fourth quarter of fiscal year 2002.
Greenport, NY................................. 3,762,000 Contracts for the construction of the debris
\1\ 23,000,000 removal, coastal erosion control, and design of
the potable water system will be awarded in the
fourth quarter, fiscal year 2002. Release of
the fiscal year 2002 Supplemental funding is
contingent upon a report to Congress on
security issues, and an independent review of
the needs and options for these facilities.
Woodward, OK.................................. 1,500,000 Design awarded the second quarter, fiscal year
2002.
Wyndmoor, PA.................................. 5,000,000 Design award of Phases 8 and 9 is scheduled for
the fourth quarter, fiscal year 2002. Phase 7
construction is scheduled for award in the
first quarter, fiscal year 2003.
Charleston, SC................................ 4,500,000 Construction of Phase 1 of the replacement
facility is scheduled for completion in the
third quarter of fiscal year 2002. Award for
construction of headhouse anticipated by the
fourth quarter, fiscal year 2002.
Brookings, SD................................. 850,000 Design award anticipated by the fourth quarter,
fiscal year 2002.
Logan, UT..................................... 5,600,000 Design for new facility is complete.
Construction contract is scheduled for award in
the third quarter, fiscal year 2002.
Leetown, WV................................... 2,200,000 Predesign awarded in the first quarter of fiscal
year 2002 and scheduled for completion by the
third quarter, fiscal year 2002.
Madison, WI................................... 3,000,000 Future site of replacement facility is under
negotiation.
----------------------------------------------------------------------------------------------------------------
\1\2002 Supplemental.
allocation of homeland security funds
Question. Madam Secretary, in your testimony you indicate that you
have established the USDA Homeland Security Council. This Council will
play a significant role in implementing the final plans for the proper
disbursement of the $328 million provided for operational security and
upgrading facilities. In your request for fiscal year 2003, you have
asked for an additional $28 million for security improvements.
What do you currently see as the most serious threats facing the
mission areas of USDA and to what extent do you think you are ready at
this time to respond to those threats?
Answer. The greatest threats facing U.S. Agriculture are those that
relate to the intentional introduction of highly infectious animal
pathogens into the U.S. food and agriculture system. Having learned a
lesson from the U.K. Foot and Mouth Disease outbreak, USDA has
increased its capacity to block the introduction of such pathogens and
quickly respond to an outbreak. If, however, terrorists were to
simultaneously and surreptitiously infect livestock at multiple
locations, it would greatly stress our capacity to respond and
therefore could have far reaching economic consequences for the United
States. Therefore, we are allocating funds to strengthen the detection,
diagnostic and rapid response capabilities in the States. The
introduction of plant pathogens is likely a lesser threat, as the
spread of plant disease is generally a slower process. However, once
introduced, plant pests could become well established and have very
serious long-term consequences to production and the ability to export
commodities. Therefore, selected plant pathogens are also on the
priority list of threats.
Question. Can you tell us what has been completed to date in terms
of upgraded facilities and security needs, specifically in the area of
biosecurity, and how much of this money is supporting new security
officers that will continue to be in the baseline for future requests?
Further, to what extent will the decision on allocation of these funds
be made by the Office of Homeland Security?
Answer. After September 11 we developed a list of about 130
facilities that were in critical need of security enhancements.
Priorities were set within that list and we have been proceeding to
make improvements. The supplemental funds will greatly assist us in
making the highest priority improvements and performing assessments to
assist us in determining additional needs for security enhancements.
About $1 million of these funds will be used to develop integrated
standards and methodology for conducting facilities, cyber, and human
security assessments in accordance with GAO recommendations. About
$1.25 million will support a staff of security officers that will be in
the baseline for future requests.
In the area of biosecurity, USDA entered into an inter-agency
agreement with the Department of Energy to employ Sandia National
Laboratories to conduct a risk-based vulnerability survey of five ARS
and APHIS bio-safety level 3 (BSL-3) laboratories and make
recommendations to improve the physical, personnel and information
security at those facilities--that project is essentially concluded and
cost approximately $0.5 million. Approximately $1.5 million will be
obligated under the supplemental to follow through by having Sandia
assist lab managers in implementing the security recommendations and in
developing biosecurity training and field manuals for these
laboratories.
In the interim we have made improvements to heighten security. For
example,
--we moved the Ames, Iowa less secure laboratory facility from a
shopping center location to the more secure main campus;
--the USDA emergency operations center is staffed 24 hours a day, 7
days a week for any agriculture related disaster;
--the guard presence in headquarters has been significantly increased
and armed;
--we have worked with the Coast Guard to increase the surveillance
around Plum Island;
--the NFC, NITC and Ft. Collins computer centers security procedures
have been reviewed and improvements are underway;
--all facilities are updating their Emergency Occupant Plans;
--new procedures are being put in place for communication of
emergency situations to employees;
--we have served as a government leader for anthrax monitoring and
testing; and
--we continue to monitor headquarters for anthrax and certain other
pathogens; and we assisted with security for the Olympics.
Although the Department will make final decisions on allocation of
these funds, we will certainly work closely with the Office of Homeland
Security and seek their advice when appropriate.
Question. How do you justify a request for an additional $28
million for Homeland Security when you have yet to determine how to
allocate funds already at your disposal?
Answer. We are working to assure that we are allocating the
supplemental funds to the highest priority projects and should have
that completed soon. The $28 million primarily would be used to
continue to fund those facility and operational security needs that
cannot be covered with the supplemental. Also, we need some funding
that gives us some flexibility for unforeseen needs. We would certainly
work with the appropriations committees on the allocation of these
funds.
Question. I understand that the Department has contracted with the
Sandia Corporation for a security review of operations at Plum Island,
New York. Can you provide us an update on this review, when will it be
complete, and what do you hope it will reveal?
Answer. In October 2001, the Department retained the Sandia
Laboratories, through an interagency agreement with the Department of
Energy, to conduct security reviews at the Department's Biological
Safety Level 3 (BSL 3) labs that conduct research programs involving
high consequence pathogens. The draft reports are nearing completion.
Sandia was tasked with providing a conceptual design for improving
areas such as electronic security; onsite and local response forces;
physical protection requirements; personnel suitability determinations;
escort procedures; material access control and accountability; and
computer network security.
Question. Will you please provide a copy of the review to this
Committee upon completion?
Answer. The Sandia report has to be classified in order not to
disclose publicly the nature any vulnerabilities might exist or the
details of our protective systems. We can and will provide an
unclassified executive summary, and would be happy to meet face-to-face
with the Committee or its staff to discuss the findings and the steps
we are taking to enhance lab security.
Question. Will you please notify this Committee of decisions in the
allocation of funds for Homeland Security?
Answer. Yes, we will notify the Committee as soon as the
Administration makes decisions on the allocation of these funds.
Question. Secretary Veneman, what has been obligated to date and in
which mission areas?
Answer. I will provide that information for the record.
[The information follows:]
As of April 29, 2002, all of the funds ($39 million) for the WIC
Program of the Food, Nutrition and Consumer Services had been obligated
as well as about $8.8 million of funds for Departmental Administration,
$2.0 million for the Agricultural Research Service, and $0.18 million
for the Office of the Inspector General.
Question. Who serves on this new USDA Homeland Security Council and
what authorities do they have?
Answer. The Deputy Secretary serves as Chairman of the Council.
Membership is made up of Under and Assistant secretaries, the Chief
Information Officer, the Chief Financial Officer, the Inspector General
and the General Counsel. The Chief Economist and the Department's
Budget Officer also participate. The Council has three Sub-Councils:
--The Under Secretaries for Food Safety and Marketing and Regulatory
Programs co-chair the ``Protection of the Food Supply and
Agricultural Production'' Sub-Council.
--The Under Secretaries for Research, Education and Economics and
Natural Resources and Environment co-chair the ``Protecting
USDA Facilities and Other Infrastructure'' Sub-Council.
--The Assistant Secretary for Administration and the Inspector
General co-chair the ``Protecting USDA Staff/Emergency
Preparedness'' Sub-Council.
This structure was established to provide a corporate view of what
the Department needs to do to fill its part in making the country
safer. This Council will facilitate coordination and reduce duplication
of efforts among mission areas.
Question. How much of the activity in the Department is being
reviewed, directed or approved by Tom Ridge's Office of Homeland
Security?
Answer. We have shared the Homeland Security related information we
are developing with the Office of Homeland Security and have
participated in many of the coordination meetings called by the Office
and have provided expertise concerning protecting the food supply to
them. Governor Ridge and his staff are not directing USDA's homeland
security efforts. I believe that it is important from the overall
perspective that we have coordination across the government just as
that coordination is important within the Department.
streamlining/csrs and rental payments
Question. I see your request includes $5 million for workforce and
organizational streamlining with a target consolidation of 200
additional field offices. This Service Center streamlining has been a
long and hard process. You also indicated in your explanatory notes you
would build on lessons learned.
What lessons have you learned and what new factors will you
consider ensuring USDA has the proper coverage for rural residents and
farmers to access your programs?
Answer. We have learned that everyone is in favor of streamlining,
but no one wants their local field office ``consolidated.'' In order
for any office consolidation effort to be successful it must be based
on sound, objective information and take subjective circumstances into
consideration before final decisions are made. For this reason, we have
established a special work team made up of field and headquarter
representatives of the Natural Resources Conservation Service, Farm
Service Agency, Rural Development and the Departmental Offices of
Budget and Program Analysis and Chief Information Officer. The Field
Office Review and Restructuring Team, operating under the guidance of
the National Food and Agriculture Council, are preparing options for
reviewing office operations and improving our field delivery system.
Field and customer involvement are also being planned in the review and
plan preparation process. Our goal is to improve customer service and
access to the best possible program services. The criteria being
considered in the study reflect the needs for serving rural residents
and farmers as well as impacts of new farm program legislation and
improvements in technology.
Question. The budget request also includes moving rental payments
and pension and health benefits costs from centrally administered
accounts to individual agencies. Is this action not contrary to the
streamlining strategies you are putting in place for other USDA
activities, such as the county field structure?
Answer. As the Federal Government increases its efforts evaluate
the effectiveness of programs and to tie program performance to budget
costs, it is necessary to know the full cost of these programs.
Therefore, it was decided to attribute the costs you mentioned to
individual agencies.
common computing environment
Question. Please provide an update on the progress of the Common
Computing Environment.
Answer. Significant progress continues to be made regarding the
critical infrastructure components that form the basis for the Common
Computing Environment (CCE).
The following major CCE improvements are planned for fiscal year
2002. Successful completion of these tasks will bring the CCE to 90
percent complete. Network servers and workstations will be fully
deployed, thereby providing enhanced security, a shared and robust e-
mail system, ability to manage and monitor IT systems from a central
location and enhanced local data capabilities. A GIS strategy will be
updated and all remaining CCE architectural issues will be finalized.
The telecommunications capabilities of the Service Centers will be
significantly enhanced to support the growing number of web-based
applications and to meet the e-Gov and e-File requirements. Shared
application servers will be acquired and deployed to support GIS and
other new program applications. Investments will be made in data
warehouses, data centers, security components and the Web Farms to
support internal and external data sharing and electronic services.
Training is planned to insure employees have the skills needed to
effectively use and support the new technologies.
Although the CCE infrastructure will be in place shortly, the full
utilization of the infrastructure will depend upon (1) how quickly the
agencies can develop and digitize the base data needed to support GIS
applications, and (2) the rate of conversion of current business
applications to more streamlined integrated applications fully
utilizing the CCE shared systems and data.
agriculture buildings and facilities and rental payments
Question. Construction of the South Building is still underway.
Please provide a status report on the progress, including where you are
placing employees in temporary setting AND what agencies are affected.
Answer. We are making good progress on the renovation and
appreciate the support Congress has provided. Phase 2 of the planned
eight-phase renovation is now under construction in Wing 4. The
construction of Phase 2 was funded in fiscal year 2001, started in
August 2001, and is now scheduled to be completed in November 2002.
Phase 3 construction, comprised of the headhouse along Independence
Avenue between Wings 3 and 5, was funded in fiscal year 2002 and is
scheduled to be awarded in the fall of 2002. Contract documents,
started in fiscal year 2001, are now being completed and a solicitation
for the contract will be advertised in May 2002.
The fiscal year 2003 budget request includes funds for construction
of Phase 4A: comprising Wing 5, a new mail facility, and the renovation
of the basement of Wing 4. The design of the new mail facility was
begun in response to the anthrax-related events of the fall of 2001.
Design of Phase 4A in Wing 5 is being planned to begin in late 2002, to
be completed in May 2003, and for award of a construction contract in
the Fall of 2003. I will provide information for the record on the
agencies affected.
[The information follows:]
In order to proceed with construction in each phase of the
renovation, the construction zone must be vacated. The relocation space
strategy for the renovation has included several components, including:
relocating agencies to the new George Washington Carver Center,
completed in 1998; relocating agencies to other locations in the
downtown Agriculture complex, including areas of the South Building
either previously renovated or not yet renovated; and use of leased
space in South West Washington near to the South Building. Relocation
space planning is underway with each mission area or agency.
------------------------------------------------------------------------
Mission Area or Agency Planned Relocation Space
------------------------------------------------------------------------
Agencies located within Phase 3 boundaries
include:
Natural Resources Conservation Service South Building, Carver
Center
Rural Development..................... South Building
Grain Inspection, Packers and South Building
Stockyards Administration.
Office of the Chief Financial Officer. South Building
Farm and Foreign Agricultural Services South Building, Limited
Leased Space
Office of the General Counsel......... South Building
Agricultural Marketing Service........ South Building
Office of Operations.................. South Building
National Agricultural Library......... South Building
Office of Administrative Law Judges... South Building
Office of the Chief Information South Building, Carver
Officer. Center, Whitten Building
Agencies located within the Phase 4A
boundaries include:
Farm and Foreign Agricultural Services South Building, Limited
Leased Space
Agricultural Marketing Service........ South Building
Office of Operations.................. South Building, Annex
Office of Communications.............. South Building
Office of Small and Disadvantaged South Building
Business Utilization.
Grain Inspection, Packers and South Building
Stockyards Administration.
Agriculture Research Service.......... South Building
Natural Resources Conservation Service South Building
Office of Civil Rights................ South Building
------------------------------------------------------------------------
assistance for socially disadvantaged farmers
Question. I understand the Department is requesting the same
funding level as in fiscal year 2002 but has decreased the direct farm
operating and ownership credit programs that are the principal tool to
assist disadvantaged farmers.
With your limited and oversubscribed funds, how will FSA be able to
adequately serve this population?
Answer. The levels requested in the budget were based on estimated
demand. Changes in the subsidy costs for these programs have made them
more expensive to deliver in fiscal year 2003 than in fiscal year 2002.
For example, in fiscal year 2003, we requested $12 million in budget
authority (BA) to provide $100 million in direct farm ownership loans.
This compares to $4 million in BA, in fiscal year 2002, to provide $147
million in loans. For direct farm operating loans we have requested
$104 million in BA to provide $600 million in loans, in fiscal year
2003, compared to $55 million in BA to provide $621 million in loans in
fiscal year 2002. Overall, we have nearly doubled the amount of budget
authority requested for these programs. The higher subsidy rates are
primarily the result of changes to the subsidy model to more accurately
reflect the actual timing of cash flows for these programs.
Question. What is the breakdown of guaranteed lending in comparison
to the direct in addressing the need of the Socially Disadvantaged
farmers in fiscal year 2000 and fiscal year 2001?
Answer. I will provide that information for the record.
[The information follows:]
FARM SERVICE AGENCY LOAN OBLIGATIONS TO SOCIALLY DISADVANTAGED FARMERS
----------------------------------------------------------------------------------------------------------------
Number of Loans Obligations
---------------------------------------------------------------
Fiscal year Fiscal year Fiscal year Fiscal year
2000 2001 2000 2001
----------------------------------------------------------------------------------------------------------------
Operating:
Direct...................................... 2,256 2,377 $74,236,000 $79,317,000
Guaranteed.................................. 488 419 74,293,000 69,718,000
Farm Ownership:
Direct...................................... 318 312 35,850,000 35,829,000
Guaranteed.................................. 314 333 92,760,000 103,970,000
----------------------------------------------------------------------------------------------------------------
Question. Please provide information on new and completed projects
funded in fiscal year 2002 with section 2501 dollars and where the
funds were obligated.
Answer. No 2501 funds have been awarded for fiscal year 2002. A
Notice of Request for Proposals--RFP--soliciting section 2501 project
proposals for fiscal year 2002 is currently in clearance within USDA
and will be published in the Federal Register in the near future.
Question. Please provide information on the requirements for
receiving this money, as well as examples of successful and
unsuccessful uses of section 2501 funds.
Answer. The statute limits eligibility under this program to 1890
Land-Grant colleges, including Tuskegee University; Indian Tribal
community colleges; Alaska Native cooperative colleges; Hispanic-
serving post-secondary educational institutions; other post-secondary
educational institutions with demonstrated experience in providing
agricultural education or other agriculturally-related services to
socially disadvantaged family farmers or ranchers in their region; and
any community-based organization that (1) has demonstrated experience
in providing agricultural education or other agriculturally-related
services to socially disadvantaged farmers and ranchers; (2) provides
documentary evidence of its past experience in working with socially
disadvantaged farmers and ranchers during the 2 years preceding its
application for assistance; and (3) does not engage in activities
prohibited under Section 501(c)(3) of the Internal Revenue Code of
1986.
Applicants must have the financial, legal, administrative, and
operational capacity to carry out the objectives of the program. I will
provide examples of projects for the record.
[The information follows:]
Alabama A&M University, Normal, Alabama.--This Project employs
farmer groups, associations and/or cooperatives to marshal existing
resources in rural Alabama to address the issues socially disadvantaged
farmers and rural residents in the area face. This concept and the
holistic approach to outreach form the cornerstones of the outreach and
technical assistance efforts in North Alabama. The 2501 Project at
Alabama A&M University believes that it can help rural areas apply the
cooperative model to a wide variety of problems. It is instrumental in
the development of three organizations: (1) the Northwest Alabama Small
Farmers' Agriculture Improvement Association, (2) the Reed Town
Incubator Center, and (3) the Madison County Agricultural Production
and Marketing Cooperative. The first organization, the Northwest
Alabama Small Farmers' Agriculture Improvement Association,
headquartered in Franklin County, has 43 active members from three
counties. Working with both the 2501 Project and the Alabama
Cooperative Extension Service, using a $37,000 grant from the Heifer
Project International, this organization produces meat goats, cattle,
and pastured poultry. The second organization, the Reed Town Incubator
Center, also headquartered in Franklin County has 22 members. Its aim
is to stimulate general economic growth in the Russellville area by
attracting agricultural and non-agricultural business to the area. The
third organization, Madison County Agricultural Production and
Marketing Cooperative, is producing and marketing non-traditional
produce such as canola, fruits, vegetables, and organic agricultural
products. The 2501 Project and the Alabama Cooperative Extension
Service provide these groups with training and technical assistance in
the development process of cooperatives, principles of cooperatives,
functions and roles of cooperative procedures, and grant writing. The
2501 Project serves over 500 participants in 13 counties.
Tuskegee University, Tuskegee, Alabama.--The Farm Management
Specialists are working with 2501 participants to explore value added
prospects and projects and to develop detailed marketing plans targeted
to livestock, fruits and vegetables. Farm and Home plans were developed
with participants and an agreement was reached with the Commonwealth
National Bank of Mobile, Alabama, to provide a revolving loan program
to Tuskegee University's 2501 project participants. This agreement also
involves partnership with the USDA Resource conservation and
Development Area and the Alabama Tom District. The 2501 participants
registered and took part in the Booker T. Washington Economic
Development Conference, Professional Agriculture Workers Conference,
USDA/Food and Agriculture Council Working Group, USDA/Food and
Agriculture Council Meeting and the USDA Outreach Working Group
Meeting.
Kentucky State University, Frankfort, Kentucky.--Kentucky State
University Small Farmer Outreach Training and Technical Assistance
Program conducted a Risk Management Workshop on February 26, 2002, at
the Boneyville Baptist Church in Lincoln County, Kentucky. The workshop
focused on Financial Management and USDA Programs. Farmers were given a
workbook to keep records for the 2002 crop year. The Workshop
emphasized the importance of crop insurance and record keeping for all
enterprises in their farming operation. Approximately 75 farmers
attended this meeting. In addition, several USDA programs were
discussed along with tobacco and livestock management.
North Carolina A&T State University, Greensboro, North Carolina.--
The 2501 Project is bridging the Digital Divide of socially
disadvantaged farm families. Technology via computers is being used to
help meet global changes in agriculture. North Carolina farmers and
their families are practicing good record keeping procedures and
keeping abreast of trends in agriculture to maintain and sustain their
farming operations. The Farmers Adopting Computer Training--FACT--
Project was designed to improve and enhance the farm management
practices through the use of technology. FACT has provided in-home,
one-on-one assistance on an as needed basis for at least 4 days to farm
families by exposing them to computers, and assisting them in building
skills that will help with communicating, problem solving, and
decision-making. This project features a software program that is
totally customizable to each farm and operation. Prior to implementing
the FACT Project, several North Carolina farmers were surveyed and it
was discovered that some farmers kept records in record books or file
cabinets; however, their traditional ways of record keeping were on
notepads, in file boxes, on the dashboards of trucks, under truck seats
and in shoeboxes. Inaccurate record keeping and filing systems have
reduced farmers' abilities to obtain loans, legal settlements, and to
effectively market their crops. Introducing farmers to computers as a
method of record keeping is a new innovative way to keep track of their
total farm operations in one location. Now, farmers will be able to
access records and reports in less time; leaving them more time to
operate their farms.
Cankdeska Cikana Community College--CCCC, Fort Totten, North
Dakota.--At one time the bison was the sole source of life to the
Indians of the Great Plains. In the mid-1800s, their numbers shrank to
near extinction. With the aid of the 2501 Project, bisons are making
their resurgence on the Spirit Lake Nation Indian Reservation. In
November 1999, the management of the bison herd was handed over to the
CCCC. With the assistance of the Intertribal Bison Cooperative, based
out of Rapid City, South Dakota, detailed management and marketing
plans have been established, including harvesting all 2-year-old and
older bulls that are not going to be used as breeding stock. This will
not only produce a significant amount of meat, but also a substantial
supply of bison-by-products, which will be offered to artisans in the
Spirit Lake Nation. Plans are being made so that once the number of
bison increases to levels of self-sufficiency local ranchers may
acquire bison calves to start their own herds.
Fort Berthold Community College--FBCC, New Town, North Dakota.--The
2501 Project has incorporated machinery, equipment, labor, and other
resources to provide six segments of the Fort Berthold Indian
Reservation the means to return to gardening. Gardening has an integral
part in the history and heritage of the Three Affiliated Tribes--
Mandan, Hidasta, and Arikara Nations. Historically, these nations were
known to be great farmers of vegetable crops. The Garrison project,
which is the largest earth filled dam, inundated 155,000 acres of
productive bottomlands in 1951. As a result, the native people were
forced to urban areas to find jobs in factories thousands of miles
away. Today, these people are returning to their home reservation and
their traditional roots. In an effort to restore the gardens, FBCC
initiated a project to help restore a reliable, quality food source,
promote nutritionally sound diets, and increase the availability of
fresh vegetables for the reservation. FBCC has provided the people on
the reservation with services such as preparing old garden sites, and
creating new ones at their residences where they can plant traditional
and non-traditional gardens. This 2501 Project initiative is growing
and continues to be successful as an outreach assistance, training, and
an inspiration for the elders and tribal members of the Fort Berthold
Reservation.
Another 2501 Project for Fort Berthold Community College, New Town,
North Dakota, with the assistance of local producers established a
cooperative on the Fort Berthold Indian Reservation to help enhance
beef cattle production on the reservation. In the past, reservation
producers have incurred some obstacles while trying to compete as
suppliers in the modern beef industry. Some of the obstacles producers
faced included difficulty in obtaining adequate financial assistance to
increase herd sizes and lack of timely technical assistance to
establish beef cattle enterprises. This cooperative will purchase and
distribute livestock to members based on various guidelines. The number
of cattle appropriated to each member will depend on the producer. A
member cannot exceed a base herd size of 75 head if he/she plans to
receive cattle from the cooperative. This restriction will ensure that
the cooperative is concentrating on helping small farmers. The college
has developed a loan repayment schedule for producers to follow. The
repayment plan is based on the price of 500-pound steers on October 30
of each year at the Stockmen's Livestock Exchange in Dickinson, North
Dakota. It also considers fluctuating prices in the beef industry, and
the repayment plan of the loan reflects those changing prices. Members
interested in joining the program are required to take courses in
animal husbandry and farm and ranch accounting. By taking the courses,
the producers will take home practices and techniques to apply on their
operations. The college will support this joint venture by providing
meetings, seminars, and workshops to keep members abreast of the latest
trends, technology, and information available.
Texas A&M University, College Station, Texas.--The 2501 Project's
Women in Agriculture Business Management program is targeted to farm
and ranch wives. The program was created in response to the fact that
more women are becoming involved in the management of farms and also
because farming is a high-risk business in which the wife needs to be
prepared if she is suddenly thrust into the position of being fully in
charge as the result of an accident, divorce, or death.
Prairie View A&M University, Prairie View, Texas.--The 2501 Project
demonstrated some of the latest techniques in sustainable agriculture
to farmers, leaders in the local agricultural community, and reporters
during the Smith County Cooperative Extension Program, Media Field Day.
The 2501 Project facilitates the acquisition and application of
knowledge and skills focused on agricultural systems that are holistic
and profitable in their approach to farm resource management, and
places emphasis on sustainable agriculture. The 2501 Project Farm
Advisors made 885 direct contacts with producers concerning sustainable
agriculture issues, resulting in 139 producers reporting that they
acquired new skills. In addition, 800 program participants received
technical information on farm pond management and soil conservation
practices. The goal of sustainable agriculture is to extend the life
and productivity of area soils and wetlands. Coordinators of the Texas
Sustainable Agriculture Program, who were on hand to witness the
demonstrations, plan to train Extension agents on sustainable
agriculture practices so they can work with growers across the State.
Rural Community Development Resources, Yakima, Washington.--The
Center for Latino Farmers, with primary focus on farm worker to farm
owner initiatives was established in Yakima County, Washington. A
Spanish/English survey was developed by the 2501 Project staff and USDA
Outreach personnel in Washington State to learn about the needs of this
new generation of limited English speaking Latino farmers and their
knowledge of USDA programs. A preliminary summary of the initial survey
results were as follows: 90 percent of the respondents preferred
Spanish as a way to communicate; 50 percent of the farmers were in some
type of fruit production; 37 percent are beginning farmers; and 13
percent are vegetable and livestock producers. The 2501 Project has
identified 150 Latino farmer participants in five rural central east
Washington counties of Yakima, Grant, Chelan, Adams, and Benton. The
Project is providing outreach and assistance to these socially
disadvantaged farmers to increase their access to USDA Programs,
develop their understanding of computers and train them to set up their
own computerized accounting systems at home.
Lac Courte Oreilles (LCO) Ojibwa Community College, Hayward,
Wisconsin.--The 2501 Project, known locally as the Guiding Resource
Opportunities with Tribal Heritage--GROWTH, is making tremendous
strides in its outreach initiatives. Project GROWTH provides students
with practical learning experiences and is improving several community
services utilizing the Geographic Information Systems--GIS, a computer
tool that combines demographic and road information for future land use
planning. As a result of providing the GIS computer laboratory at LCO
Ojibwa Community College, the students can now participate in
interesting and interactive projects with several community entities.
Growing Power, Inc., Milwaukee, Wisconsin.--The Milwaukee Small
Farmer Distribution Center, Growing Power, Inc., developed a market
basket approach for improving the distribution of fresh produce and
healthy foods to the inner``) city areas of Wisconsin. As a result,
Growing Power, Inc., is contributing to the development of the urban
markets for the Wisconsin farmers while providing quality food products
for city residents. Locally, several socially disadvantaged farmers
have started or increased their scale of truck farming to supply the
market for Growing Power, Inc. The increased size of these produce
farmers with their specialty crops will be able to increase their
income.
Question. What are you using to determine these funds are used
properly and can you see a direct correlation between the outreach
efforts and increased program participation in this target population?
Answer. The USDA Office of Outreach provides oversight to determine
that the funds authorized are used for outreach, training, and
technical assistance to socially disadvantaged farmers and ranchers by:
(1) monitoring and evaluating the business management capability
through reviews of quarterly performance reports; (2) monitoring
performance of the project recipients and assessing compliance with
requirements through conducting on-site visits, reviewing progress
reports, submitted publications, and recipient correspondence; and (3)
serving as liaison and coordinating the close collaboration between
project recipients and USDA agencies that administer relevant
agricultural programs.
Although we do not have statistical data to show a direct
correlation between the Program and increased program participation, we
do have positive anecdotal evidence. Today, we have organizations and
agencies working together that would have found it impossible to do so
10 years ago. The Project recipients have implemented programs with
input and participation from county, State and USDA agencies, State
Departments of Agriculture, community-based organizations, foundations,
and churches. The number of participants now actively using the local
agencies has steadily increased. Since the inception of the program,
approximately 80 percent of 2501 project participants now use the
Cooperative Extension Service; and about 75 percent of the participants
are now familiar with services offered by the Natural Resources
Conservation Service as compared to pre-project awareness that ranged
from 5 to 10 percent.
rhs--rural community development initiative grants
Question. The President's budget request eliminates the RCDI
program. This program was created to provide capacity building for non-
profits to provide housing and other essential community needs. It was
modeled after a program at HUD. Many small rural communities have non-
profits and governmental entities that lack sophistication to access,
administer and conduct the proper accounting required by Federal
programs. The non-profit community-based programs are critical for poor
rural States to deliver service.
What was the demand for the first NOFA in dollars and requests?
Answer. The Rural Housing Service received 79 applications for $26
million for the Rural Community Development Initiative under the first
Notice of Funds Availability issued during fiscal year 2000.
Question. Do you see this need addressed in another format?
Answer. A number of organizations, including Rural Development's
Office of Community Development, the Resource Conservation and
Development Districts, the Cooperative Extension System and the Forest
Service support such capacity building. The Department of Agriculture
is working hard to continue the strong collaboration among these
programs that prevents duplication and synergizes more effective
results.
Question. HUD has this assistance to our urban counterparts, why is
rural America left behind again?
Answer. Rural Housing Service has $12 million available during
fiscal year 2002 for the Rural Community Development Initiative. The
Notice of Funds Availability has been published in the Federal Register
and applications are due on July 2, 2002. We will evaluate the demand
for this program based upon the number, types, and variety of
applications received.
office of assistant secretary for congressional relations
Question. The Budget request for fiscal year 2003 shows a decrease
in allocations to the agencies but an increase in the combined account
for Headquarters and Intergovernmental Affairs. What is the reason for
the combining Headquarters with Intergovernmental Affairs? Will there
be significant increased activity in Intergovernmental Affairs and for
what purpose?
Answer. The breakout for the Assistant Secretary for Congressional
Relations is $1,312,000 for Headquarters and $484,000 for
Intergovernmental Affairs. The increase is to ensure the headquarters
staff is strengthened to better coordinate the activities of
congressional relations within the Department of Agriculture. This is
an effort to ensure our responses to the Congress are timely and
accurate. This can be accommodated by adjusting the resources devoted
to congressional relations by our USDA agencies to reflect vacancies in
those staffs as well as workload considerations.
food and nutrition service
Question. Recently, the New York Times published an interview with
the author of a book alleging that the food industry is encouraging
consumers to eat larger portions of food than ever before. ``Biggie-
size'' meals are more prevalent in our society than ever before, and
while the argument can be made that Americans are more health conscious
than in years past, the fact still remains that over one-half of
Americans are overweight. Surgeon General Satcher reported recently
that over 300,000 Americans die each year from fat-related causes, and
last year alone we spent $117 billion on obesity-related economic
costs.
What actions is USDA taking to counteract the ``eat more'' messages
consumers are receiving from some members of the food industry, both
within USDA and in conjunction with the food industry and other
government agencies?
Answer. USDA recognizes the seriousness of the problem of
overweight and obesity in America. Many ongoing nutrition promotion
activities in the Food, Nutrition, and Consumer Services (FNCS) mission
area are directed to helping Americans follow the Dietary Guidelines,
which include guidelines urging Americans to ``aim for a healthy
weight'' and ``be physically active.'' In addition, we are in the
process of planning specific program directions and activities that
focus on an obesity initiative. I will have the Food and Nutrition
Service (FNS) provide additional information for the record.
[The information follows:]
This initiative, ``Breaking the Barriers: Practical Approaches to
Improve Americans' Eating Behaviors,'' focuses on changing American's
eating behaviors and exercise patterns. To help us develop a plan that
will make a difference in the way people eat, FNS recently hosted two
forums to solicit input from experts in the areas of obesity, portion
control, and behavior change. Among those present and providing us with
valuable advice was Dr. Marion Nestle of New York University, the
author of the book referenced in this question.
In order to change eating behaviors, these experts advised us to
plan a focused campaign with specific goals and simple and clear
messages. We hope to develop a campaign that includes (1) raising
awareness about the issue and motivating individuals to make changes,
(2) working to change social norms about how much to eat, and (3)
incorporating efforts to promote changes in eating environments, so
that healthful choices are easier to make. The entire initiative will
center on building partnerships both within the Federal Government and
with private organizations to leverage our efforts.
When individuals recognize that they want to make changes in their
diet, they will need clear, specific, and practical advice. Therefore,
as one part of the overall effort, we plan to develop practical,
actionable materials for consumers centered on the Dietary Guidelines
for Americans and the Food Guide Pyramid. For example, one brochure in
development is titled ``How Much are You Eating?'' It focuses on
becoming aware of portion sizes and provides tips to help manage these
portions. It will be released in the Spring of 2002. The FNS is using
nutrition education, promotion, and environmental approaches to
encourage healthy diets and physical activity among program
participants, and encourage proper portion size. Some examples of
activities underway in this area include:
--The messages used in the Eat Smart. Play Hard. campaign, such as
``Balance your day with food and play,'' are intended to
promote both better diets and physical activity among children.
The campaign also provides guidance for parents and caregivers
that includes simple tips to help parents to foster these
behaviors.
--Team Nutrition, in supporting the school meals standards updated
through the School Meals Initiative for Healthy Children,
provides training and technical assistance to schools and
childcare to ensure that portions served in schools are in line
with recommendations for age.
--FNS is currently developing tools for families and childcare
providers that teach parents and caregivers about appropriate
serving sizes. This material includes guidance on appropriate
serving sizes and uses familiar items to communicate a clear
picture to help parents accurately estimate the volume of the
food they serve.
Question. What actions are being geared specifically towards
children (such as through programs authorized by the Child Nutrition
Act), who are much more easily impressed with toys in fast-food meals,
and the lure of soda and candy at school vending machines?
Answer. The health of America's children is a great concern to the
Department, especially relating to their food intake. We have a number
of activities underway for them so I will ask the Food and Nutrition
Service to provide for information for the record.
[The information follows:]
The Food and Nutrition Service (FNS) has focused its efforts on
educating children about the importance of healthy eating and physical
activity. Working with schools that participate in the School Nutrition
Programs, nutrition messages are delivered through fun, interactive
activities that are designed to change children's behavior. While the
agency cannot, nor does it want to, compete directly with the food
industry with toys or similar incentives, it has worked to make the
educational material it develops, colorful and attractive to children.
Also, the activities are engaging and designed to get children to try
new foods and to enjoy eating.
More specifically, Team Nutrition is the agency's initiative
designed to reach children with simple, consistent nutrition messages
from a variety of sources on a consistent basis. The messages are
delivered through the classroom, cafeteria, school, home, community and
media. The messages are: Eat a variety of foods; Eat more fruits,
grains and vegetables; Eat lower fat foods more often; and Be
physically active. Materials have been developed and distributed which
can be used in the classroom and in school activities while others can
be taken home and used with the family to expand message delivery.
Another area of emphasis is the school environment. FNS has
developed and distributes, upon request, kits that help local groups
evaluate their school's policies and practices to determine if changes
are needed. It then provides suggested actions to take to make
improvements. Areas explored are time to eat, the quality of meals
served, other food options, nutrition education and physical activity
policies, etc. The issue is that we are teaching children it is
important to eat healthy and be physically active in the classroom and
not supporting those messages in the school environment.
The EAT SMART. PLAY HARD. Campaign contains a variety of materials
developed for families that include brochures, activity sheets,
bookmarks, stickers, and book covers, which deliver positive nutrition
and activity messages. These materials are available to State and local
agencies participating in any of the FNS Programs to use in encouraging
children and their families to eat healthy and be physically active.
There are many messages being delivered to children in the
commercial marketplace. We are working to be sure positive nutrition
and physical activity messages are delivered to them in schools and
through the agency's programs. We are also working to build
partnerships with other agencies and organizations that are concerned
about children's health and well being. By collaborating, we can
deliver consistent messages to children and their families and, over
time, change the negative health trends we are seeing now.
Question. It has been reported many times that lower-income
Americans are more likely to be overweight than other Americans. Has
USDA made an effort to streamline information about healthy eating and
exercise to make it easily accessible to lower-income Americans?
Answer. FNS recognizes that the Federal nutrition assistance
programs play a vital role not only in increasing access of low-income
Americans and children to nutritious foods, but also to helping them to
develop healthy eating and lifestyle behaviors that promote long-term
health, reduce risk of disease and support productive lives. I will
have the Food and Nutrition Service (FNS) provide additional
information for the record.
[The information follows:]
FNS provides educational and promotional materials designed
specifically to motivate and encourage healthy choices to State and
local level cooperators who then use a variety of communication
channels to reach low-income program participants. The agency also
distributes nutrition guidance, research, and tools that translate
science to practice to program stakeholders at the State and local
levels to assist them in designing comprehensive interventions aimed at
fostering and sustaining behavior change among low-income populations.
Examples of these include:
--A book of Recipes and Tips for Healthy, Thrifty Meals, distributed
to food stamp recipients nationwide to provide information on
preparing and serving low-cost meals.
--Educational and promotional materials being developed for low
literacy and Spanish language groups in the Food Stamp Program
that will support maintaining a healthy weight and adherence to
the Dietary Guidelines.
--The cross-program EAT SMART.PLAY HARD.TM campaign
designed to improve long-term health by encouraging behaviors
consistent with the Dietary Guidelines and the Food Guide
Pyramid, including new educational resources now under
development in English and Spanish to help make good dietary
practices and physical activity easy for parents and children.
--Healthy Eating for Boys, a collaborative initiative now under
development between FNS, CDC and 100 Black Men of America (100
BMA Inc.) to introduce nutrition and physical activity
component in the 100 BMA Inc. mentoring program. The goal is to
promote healthy eating and help to teach young men to act as
change agents for healthy communities.
These educational resources are developed with input from
cooperators and national experts and generally include testing with
consumers to ensure relevance, clarity and readability for their target
populations, including low-income populations.
Question. Please provide an outline of the activities funded in the
President's budget directly related to reducing obesity and increasing
activity among Americans. What role will the Center for Nutrition
Policy and Promotion and Team Nutrition specifically play in these
activities?
Answer. I will have the Food and Nutrition Service provide that
information for the record.
[The information follows:]
The FNCS Obesity Initiative titled Breaking the Barriers is a new
initiative under the current Administration. The goals of the
initiative are to promote healthy weight and to prevent and reduce the
incidence of overweight and obesity. The strategies for the obesity
initiative include educating American consumers about what constitutes
a healthy diet, fostering change in social norms about eating and
exercise, helping consumers develop skills to put nutrition and
exercise knowledge into practice, and promoting changes in eating
environments, so that healthful choices are easier to make. Additional
strategies include improving Food Assistance program standards and
nutrition education and expanding partnerships and collaborations to
leverage resources.
The Center for Nutrition Policy and Promotion's (CNPP)
responsibilities related to overweight and obesity are to promote
healthy weight among the general public. CNPP is working to help change
consumer's eating behaviors through focused, individualized messages
that offer real-life solutions and practical approaches to help
Americans make sensible food choices. The Center plans to continue
collaboration with potential partners to leverage CNPP resources to
reach the largest possible audience with our messages. CNPP will strive
to initiate a number of private/public partnerships to promote the
Dietary Guidelines, 2000. CNPP is also involved in collaborative
partnership efforts such as 5-A-Day with CDC and NCI, to promote the
consumption of fruits and vegetables. Using current funding, specific
projects recently completed or in the planning stages include:
--Forums Breaking the Barriers: Practical Approaches to Improve
Americans' Eating Behaviors and Breaking the Barriers: Helping
Americans Eat Smaller Portions.--Experts in nutrition,
behavior, the media and potential partners in this effort were
invited to advise USDA at two forums. In addition, these forums
inform these experts about the initiatives that USDA is
promoting to improve health and reduce obesity in America, as
well as to begin to define roles and contributions of potential
partners. The discussion at these forums is being used to plan
USDA initiatives.
--Consumer brochure How Much are You Eating.--A consumer friendly
brochure to help consumers become more aware of how much food
is on their plate and to link the amount they eat to Food Guide
Pyramid recommendations. The brochure will be released in April
2002, and made available on the CNPP website as well as through
print copies.
--Media campaign.--Organize press conferences, appearances, and media
events to raise the public's awareness through the media. Media
opportunities include USA Weekend, Parade Magazine, and other
monthly women's magazines.
--Promotion and education materials.--Consumer-friendly materials are
being developed to increase awareness of food choices, and
offer practical tips on making sensible decisions in real life
situations such as snacking, fast foods, and restaurants.
--Food Label Initiative.--Collaborate with the food industry to
design and implement nutrition education information on the
food label to help consumers relate the amount of food they're
eating to the recommendation in the Food Guide Pyramid.
FNS is working to better address obesity through Federal nutrition
assistance programs by improving program standards and nutrition
education, and expanding partnerships and collaboration. Key activities
include:
--The Food Stamp Program (FSP) is developing education and
promotional materials for low literacy and Spanish language
groups that will support maintaining a health weight and
adherence to the Dietary Guidelines.
--Updated nutrition standards in the school meals programs that have
contributed to dramatic improvement in the number of schools
offering students the opportunity to select a low-fat lunch;
FNS is working to support further improvements through:
--Team Nutrition, an integrated, behavior-based comprehensive
program for promoting the nutritional health of the
Nation's school children, and infants and preschoolers in
child care centers;
--An action kit, Changing the Scene: Improving the School Nutrition
Environment, to help schools provide students with the
skills, opportunities and encouragement they need to adopt
healthy eating patterns;
--Improvements in the nutritional quality of commodity foods,
including lowering fat levels and increasing the quantity
and variety of produce for schools; and
--Team Nutrition Grants and cooperative agreements to support
comprehensive school-based efforts to promote healthy
eating and physical activity.
--Activities in the WIC Program to improve nutrition education
include:
--Revitalizing Quality Nutrition Services (RQNS) in WIC by revising
nutrition services standards and promoting effective
nutrition education strategies
--Consistent program nutrition risk criteria to identify infants
and children at risk of becoming overweight and to
facilitate early intervention; and
--FIT WIC Demonstration Grants to State Agencies to identify ways
that WIC might be changed to help prevent childhood
overweight and obesity.
--Cross-program activities that support healthy eating and physical
activity are also underway, including the EAT SMART. PLAY
HARD.? campaign designed to improve long-term health by
encouraging behaviors that are consistent with the Dietary
Guidelines for Americans and the Food Guide Pyramid, and new
educational resources in English and Spanish to help make good
dietary practices and physical activity easy for parents and
children.
food stamp program
Question. The President's Budget includes, and the Senate has
passed, a legislative proposal to allow legal immigrants who have
resided in the U.S. for 5 years or more to be eligible to apply for
food stamps. You have mentioned this proposal in your remarks.
Please provide the estimated cost over 10 years in order to fund
this proposal.
Answer. This proposal would cost $2.099 billion over 10 years.
Question. Does USDA believe that this proposal will result in a
rapid influx of new applications for food stamps? Are there
administrative resources available to handle such an influx?
Answer. USDA's experience is that when the number of eligible
households increase in response to new legislation, the new applicants
come in gradually, allowing State agencies time to hire and train any
additional personnel that may be needed.
For example, in fiscal year 2003, we are projecting that the
proposal would add approximately 129,000 people to a total food stamp
caseload of about 20 million which would be less than a 1 percent
increase. The expected number of additional people participating would
rise to 247,000 in fiscal year 2004 and 358,000 in fiscal year 2005.
While States with a concentration of immigrants (such as California)
may have to increase resources slightly to handle the workload, these
increases would be offset because States would not have to use their
own resources to provide food stamp benefits and other nutrition
resources to immigrants who are now ineligible. In addition, USDA pays
half of all operating costs for the Food Stamp Program, providing a
dependable source of funding for State agency expansions.
Question. There are several legislative proposals intended to
simplify the eligibility requirements to encourage participation by
low-income families. However, there is also a proposal to require TANF
recipients to qualify based on actual income and resources, as opposed
to being categorically food stamp eligible. This particular proposal
appears to be contradictory to easing eligibility requirements.
Please explain its justification in light of the Administration's
attempt to encourage less restrictive eligibility.
Answer. The President's proposal would restore legislation to the
pre-Welfare Reform policy of allowing recipients of cash assistance to
be categorically eligible for food stamps. It would require recipients
of other, non-cash TANF benefits to qualify for food stamps on the
basis of their household's income and assets like any other household.
This proposal targets benefits to those most in need and simplifies the
current complex policy that requires States to explore eligibility
under a number of programs rather than looking at a single program--
TANF cash assistance. While households that qualify for cash assistance
need food stamps, it is less clear that households receiving TANF-
funded benefits other than cash assistance experience a similar level
of need. For example, the practice of making households categorically
eligible by providing a low-cost, TANF-funded benefit, such as giving
them a brochure on domestic violence, may direct food stamp benefits to
households with significant levels of liquid resources. The proposal
would allow the benefits now going to such households to be redirected
to reduce the cost of the other provisions to improve the Food Stamp
Program.
Question. I understand that the Administration is concerned that
the House and Senate Farm Bills make changes to the Quality Control
system in the Food Stamp Program that you believe will result in a loss
of State accountability for erroneous payments. I also understand that
the Administration has a separate proposal regarding the Quality
Control system.
Please explain your concerns with both Farm Bill proposals, as well
as your proposal.
Answer. The Administration believes that the Food Stamp Quality
Control system--the program's key measure of payment accuracy--needs
reform. The system can do a better job of encouraging accuracy and
effective management in the program, and our proposals do that. I will
have the Food and Nutrition Service provide additional information for
the record.
[The information follows:]
Under the current system, all States with higher than average error
rates are liable for a portion of the cost of these errors. With
sanctions based on the national average, roughly half of all States
face liabilities in any given year. Thus, the current system does not
effectively target those States with the worst problems with strong
incentives for improvement.
For this reason, the Administration proposed major revisions to the
current system. The Administration's proposal would sanction States
with error rates greater than the 75th percentile for two consecutive
years. The amount of the sanction would equal 10 percent of the cost of
erroneous payments. Current provisions for enhanced funding would be
replaced with $70 million in annual performance bonuses for payment
accuracy and high quality customer service.
These revisions parallel the House and Senate proposals in that
they would dramatically reduce the number of States facing liabilities
in most years. But they differ significantly from the House and Senate
bills in that they balance this reduction with tough sanctions that
ensure that States with persistently high error rates continue to face
serious consequences for failing to perform.
In contrast, the quality control revisions in the House and Senate
bills would raise the erroneous payment rate above which penalties
would be imposed and require USDA to use a lower estimate of each
State's error rate. States would then have to exceed this higher target
for three consecutive years before any penalties could be assessed. We
estimate that only two States would have faced any liability in 2000
under these provisions, and they would have been liable for only $3
million.
In fiscal year 2000, improper payments in the Food Stamp Program
totaled an estimated $1.33 billion. About $970 million of this amount
represented benefits received by individuals to which they were not
entitled. More troubling, however, is that $360 million in benefits
were not made available to individuals who were entitled to them. An
increase of just one percentage point in fiscal year 2003 could amount
to $200 million more in erroneous payments.
The Administration is concerned that erroneous payments are sure to
increase if the House and Senate proposals are adopted. Food stamp
caseloads are rising in response to a softer economy, State
administrative resources are stretched thin, and with growing pressures
to eliminate State budget deficits, attention to program management is
likely to suffer. The Quality Control provisions in the House and
Senate bills would reduce, if not eliminate, the incentives for States
to keep erroneous payments low.
Question. The President's budget recommends a number of legislative
changes to the Food Stamp Program. During senate consideration of the
Farm Bill, an amendment was adopted that included changes similar to
those proposed by the President.
Are the Food Stamp provisions in the Senate farm bill consistent
with the President's proposal or are there other changes still
recommended.
Answer. The President's proposal includes changes that would ensure
program access, help modernize the program, enhance work supports and
increase the emphasis on work and eventual self-sufficiency, simplify
program rules, and strengthen out-come based performance measures
including payment accuracy. These are some of the fundamental
principles. I will ask the Food and Nutrition Service to provide
additional information for the record.
[The information follows:]
The President's proposal included changes that would: (1) simplify
the program by standardizing the medical and child care deductions,
excluding interest and dividend income, and allowing the full standard
utility allowance rather than a prorated amount in certain situations;
(2) support work by excluding from countable resources one vehicle per
adult and allowing States more flexibility in using employment and
training funding; (3) maintain the nutrition safety net by restoring
eligibility to legal immigrants who have been in the country for 5
years and indexing the standard deduction to household size; and (4)
improve accountability by replacing the Quality Control system with a
system that balances payment accuracy with other program goals.
While the Senate bill simplifies the program, it does not address
some areas of complexity that would be streamlined or strengthened by
the President's proposal. The Senate-passed Farm Bill includes an
amendment that would restore eligibility to legal immigrants after a
five-year wait but imposes restrictions if the immigrant has been in
the country illegally for a year or more. Quality Control revisions in
the Senate bill raise the erroneous payment rate for which penalties
would be imposed and require USDA to use a lower estimate of each
State's error rate. States would then have to exceed this higher target
for three consecutive years before any penalties could be assessed.
wic program
Question. The President's Budget proposes funding for the WIC
program at a level intended to support a monthly average of 7.8 million
participants, an increase of 0.3 million above the fiscal year 2002
estimated average participation.
Given the changes in the U.S. economy that have occurred since the
submission of the President's fiscal year 2002 budget, do you believe
that adequate resources remain available this fiscal year to meet
current caseload demand, and potential increases in participation?
Answer. The Department is currently working closely with its State
partners to access the adequacy of fiscal year 2002 funds to support
program caseload and to estimate the level of any potential State
agency shortfalls. This information will be used, in consultation with
OMB, to evaluate our program management options for the balance of the
year.
Clerk's Note: On March 21, 2002, the Administration submitted an
emergency supplemental proposal to Congress. This proposal included $75
million for the WIC Program.
Question. What is the expected carryover of funds into fiscal year
2003 based on USDA's most recent data?
Answer. It is estimated that $110.6 million will be recovered from
fiscal year 2002 and made available in fiscal year 2003.
Question. Have any States implemented caseload management
strategies for the current fiscal year due to depleting funds? If so,
please describe a typical caseload management plan, and how various WIC
constituencies may be affected.
Answer. At this point, it appears several States have implemented
caseload management strategies in some locations. There are several
ways that WIC State agencies can efficiently and effectively manage
caseload. WIC regulations, for example, provide that it be achieved
through targeting benefits to those most in need on the basis of
nutritional risk. WIC State agencies may also establish shorter
certification periods on a participant case-by-case basis, or
discontinue new certifications of lower-priority participants, or in
extreme cases, discontinue new certifications of all applicants, while
implementing applicant waiting lists. As a last-resort measure, State
agencies can discontinue or temporarily suspend benefits to all
applicants during a certification period. Please let me ask the Food
and Nutrition Service for additional details on this.
[The information follows:]
The following provides the current status of caseload management
strategies:
Restricting access.--Arizona and Michigan have established waiting
lists for individuals in the lower nutritional risk priorities.
Michigan currently has four local agencies with waiting lists. One of
the local agencies has approximately 700 postpartum women and 4-year
old children on a waiting list. Additionally, some Oregon and
Washington local agencies are restricting access to lower priorities.
Potential restrictions.--Many State agencies, including California,
are predicting the need to restrict access unless additional funding is
available. Other State agencies are considering making changes to the
food packages to help reduce food costs (i.e., lowest prices juice,
store brands, etc.).
Question. Do you anticipate that any people who apply for the WIC
Program will be placed on a waiting list or turned away this year?
Please compare your answer to recent years.
Answer. There are currently a few local agencies in several States
that are placing people on waiting lists or not serving certain
priority levels. Other State may have to take similar action later this
fiscal year. This has not occurred in recent years except in isolated
cases that affected relatively few, if any, local agencies at the end
of a fiscal year.
Question. Please provide detailed information on the proposed $150
million WIC contingency funds. What circumstances would trigger the use
of these funds? If the funds are not used, will they carry over the
next year? How was this number decided on?
Answer. The contingency reserve funds will only be allocated to WIC
State agencies to prevent adverse caseload actions. It is our intent to
allocate these funds on a case-by-case basis to help State agencies
dealing with unanticipated circumstances related to caseload levels and
food costs. We will remain flexible in distributing the funds by
allocating the money outside the WIC funding formula. The unused
portion of the contingency reserve would carry forward into fiscal year
2004.
The budget was formulated to support an average monthly
participation of 7.8 million. The contingency fund will serve an
additional 200,000 participants which should provide an adequate
cushion in case food costs or program demand exceed current
expectations.
Question. Is there anticipation on the part of the Administration
that funding in the fiscal year 2003 President's budget will not be
enough to fully fund the WIC program for the entire year? If not, why
is a contingency fund necessary? If so, why not simply make the funds
available at the beginning of the fiscal year?
Answer. The request for contingency funds reflects the
Administration's commitment to support this vital program. It is
anticipated that the fiscal year 2003 President's budget can support
all participants for the entire year. A contingency fund is desirable,
however, in the event that the appropriated amount is not sufficient to
maintain participation in particular States as a result of unforeseen
events, such as increased food costs. We would not expect States to
plan caseload management decisions based on these contingency funds
though, and for this reason, it would be inappropriate to allocate the
money as part of the normal grant award process.
Question. Many State WIC Directors feel that this contingency fund
would be more beneficial if they had definite knowledge during their
planning process whether or not the funds would be available. Please
comment on their concerns.
Answer. We envision the contingency funds would be targeted to
support caseload in those State agencies where there is an
unanticipated funding shortfall. We believe it is imperative to remain
flexible in distributing the funds by allocating the money outside of
the current funding formula; thereby possibly making funds available to
WIC State agencies that would not otherwise be eligible to receive
funds.
Question. Has the Department taken into consideration the enhancing
activities by WIC providers in regard to nutrition education and
lowering the childhood obesity rate? What, if any, specific actions
have been proposed?
Answer. I will have the Food and Nutrition Service provide this
information for the record.
[The information follows:]
In addition to receiving nutritious supplemental foods, WIC
participants are offered targeted nutrition education individually or
as part of a group. WIC's nutrition education approach is designed to
teach participants and caregivers about the important role nutrition
plays in health promotion and disease prevention as well as overcoming
specific risk conditions. WIC nutrition education messages support the
recommendations of the Dietary Guidelines and the Food Guide Pyramid
that encourage physical activity, portion control and healthy eating.
Impacting the issue of childhood obesity is a very complex problem
requiring a multitude of complex solutions. Specifically, the WIC
Program has developed consistent nutrition risk criteria to identify
infants and children who are at risk of becoming overweight and to
facilitate early intervention. In addition, the ``FIT WIC''
demonstration grants given to five State agencies are examining ways
that WIC might help be more responsive to the problem of childhood
overweight and obesity. One outcome of this project is the development
of an implementation manual that will assist other State and local
agencies in developing similar projects.
wic farmers' market nutrition program
Question. The WIC Farmers' Market Nutrition Program has long been
an active player in bringing together the programs of nutrition
assistance and support for farmers and the rural economy. I have
recently been informed that USDA has decided to not release the
additional $10 million for the WIC Farmers' Market Nutrition Program
provided in fiscal year 2002, and a letter is currently being sent to
the Appropriations Committees informing Members of this decision.
Please provide information on the factors taken into consideration
when making this decision.
Answer. The Agriculture Appropriations Act for fiscal year 2002
made $10 million available for the WIC Farmers' Market Nutrition
Program without conditions and another $15 million available if the
Secretary determined that sufficient funds were available to meet WIC
caseload requirements. Taking into account the costs and participation
reported so far this year by States indicate that the funds may not be
sufficient to continue participation at these record levels for the
balance of fiscal year 2002 and that the conditions delineated in the
fiscal year 2002 Agriculture Appropriations Act for release of the
additional $15 million for the WIC Farmers' Market could not be met.
Question. Please explain why the Administration chose not to
continue this program in fiscal year 2003, especially in light of
significant increase in funding for the WIC Program, including a
contingency fund of $150 million.
Answer. While all can agree that supporting America's farmers and
providing low-income seniors and WIC participants access to fresh
fruits and vegetables is a laudable goal, these are small programs that
do not operate in all States and, in many cases, provide a very limited
benefit level. The Administration believes that we can best serve these
populations as well as America's agricultural producers, by focusing
precious resources on broad-based, more universally established
programs tailored to the nutritional needs of the populations they
target. We are focused on improving the structure of current programs.
This kind of hard choice is central to the Administration's
responsibilities and we accept the need and responsibility for making
tough choices.
Question. In addition to farmers' markets program that are directly
linked to nutrition programs, does USDA have other authorities, such as
through the Agricultural Marketing Service, to provide support for the
development and expansion of farmers' markets?
Answer. Yes. In fact, the Agricultural Marketing Service has put a
lot of effort into expanding farmers' markets all over the nation.
Further, food stamps may be redeemed at approved farmers' markets.
The Food and Nutrition Service and the Agricultural Marketing
Service (AMS) are the two USDA Agencies that deal directly with the
development and expansion of farmers' markets. While FNS programs
provide low-income Americans with access to farmers' markets, AMS
supports direct marketing opportunities for small farmers including
farmers' markets, pick-your-own farms, roadside stands, subscription
farming and community supported agriculture. AMS provides training and
technical assistance to farmers in the design of facilities,
transportation, expansion and promotion activities as well as promoting
research in support of farmers' direct marketing efforts.
seniors' farmers' market nutrition program
Question. In fiscal year 2002, the Congress provided $10 million
from the Commodity Assistance Program to fund the Senior Farmers'
Market Program, which helps make fresh produce available to senior
citizens and supports local farmers markets. We also encouraged the
Secretary to use additional CCC funds to supplement the Seniors'
Farmers' Market Nutrition Program.
Do you intend to use additional resources from the Commodity Credit
Corporation to supplement the appropriated funds for the Seniors'
Farmers' Market Nutrition Program in fiscal year 2002? If a decision
has not yet been made, when can one be anticipated?
Answer. The Department is working closely with OMB to evaluate the
option of making funds available from the Commodity Credit Corporation
to supplement the appropriated resources of the Seniors' Farmers Market
Program. We hope to inform the Committee of the decision on this matter
shortly.
Question. This program has been eliminated in the Administration's
fiscal year 2003 budget. Please explain why the decision was made not
to fund the program.
Answer. As with the WIC Farmers' Market Nutrition Program, we agree
that supporting America's farmers and providing low-income seniors
access to fresh fruits and vegetables is a laudable goal. However, this
is a small program that does not operate in all States and, in many
cases, provides a very limited benefit level. The Administration
believes that we can best serve low-income populations as well as
America's agricultural producers, by focusing precious resources on
broad-based, more universally established programs tailored to the
nutritional needs of the populations they target. We are focused on
improving the structure of current programs. This kind of hard choice
is central to the Administration's responsibilities and we accept the
need and responsibility for making tough choices.
fns elderly feeding program (nutrition services incentive program)
Question. The Administration's budget deletes all funds for this
program, which provides cash and commodities to States for distribution
to organizations that deliver meals to elderly citizens in their homes,
or in group settings. The Administration proposes moving this program
to the Department of Health and Human Services, Administration on Aging
and consolidating it with the HHS elderly meals program.
Has the Administration provided adequate funding to DHHS to absorb
this program request?
Answer. The Nutrition Service Incentive Program is included in the
Department of Health and Human Services (DHHS) fiscal year 2003 budget
request. The level of funding requested by DHHS for the program is the
same as the amount appropriated to USDA to administer the program in
both fiscal year 2001 and fiscal year 2002.
Question. Has the USDA received any assurance from DHHS that this
program will indeed be funded in the Labor/HHS appropriations bill?
Answer. The Nutrition Service Incentive Program is included in the
Department of Health and Human Services (DHHS) fiscal year 2003 budget
request. DHHS is working with its appropriations committees to support
and promote the proposed transfer of funding to their appropriation.
Question. If this Subcommittee accepts the President's
recommendation and does not fund this program, and the Labor/HHS
Subcommittee also fails to provide funding, does the Administration
have a contingency plan in place to support the Nutrition Services
Incentive Program in fiscal year 2003 by other means?
Answer. Even though the Administration is committed to this
important program, we would not be able to provide these services if
the program were to not be funded by either Subcommittee.
food safety and inspection service
Question. Protecting the nation's food supply, both from harm
caused intentionally and unintentionally, are an extraordinary
important function of government. If we relax our standards or our
efforts for even the shortest period of time, the consequences could be
extremely dire. The human and economic tolls would be very high, and
consumer confidence could be affected for a significant period of time.
Therefore, it is imperative that the Food Safety and Inspection Service
have the resources necessary to enable us to continue protecting
America's food.
You state that the President's budget will maintain approximately
7,600 inspectors. Is this number an increase from the number of
inspectors funded previously?
Answer. FSIS reached its goal of 7,610 in-plant permanent full-time
employees in September 30, 2000 and maintained it throughout fiscal
year 2001. We believe this level, along with the flexibility to use
temporary or part-time employees as needed, will be adequate to meet
the industry's demand for inspection services. The Agency plans to
maintain that level throughout 2003.
Question. How many, if any, of these inspectors were hired as a
result of funds provided to the FSIS in response to the terrorist
attacks?
Answer. We are planning to use $1.5 million of the funds provided
by the Homeland Security Supplemental to hire 20 additional import
inspectors for a total of 100 import inspectors.
Question. Please provide an update on the efforts of FSIS,
including work done with other government agencies, within USDA, and
with industry, to prevent an outbreak of any major animal diseases,
such as foot-and-mouth, BSE, or other potential animal diseases.
Answer. I have asked the Food Safety and Inspection Service to
provide that information for the record.
[The information follows:]
Although FSIS conducts post-mortem inspection of animal carcasses
to determine the presence of disease, FSIS does not operate on the farm
and its mandate is limited to zoonotic diseases, those that impact
human health and are transmitted from animals to humans. This mandate
excludes many animal diseases, including foot and mouth disease.
However, FSIS has been aggressive and proactive for over a decade to
prevent Bovine Spongiform Encephalopathy (BSE) from entering the United
States. No cases of BSE have been found in cattle in the United States.
State, local and Federal agencies already coordinate strategy on
BSE and other Transmissible Spongiform Encephalopathies (TSE) through
an interagency strategic planning committee. The Interagency BSE
Steering Committee is responsible for planning ways to minimize the
spread of BSE and identifying potential vulnerabilities in our present
system, clarifying jurisdictional issues, improving communication
between Federal agencies on TSE-related matters, and developing
strategies for communicating with the public if a case of BSE or
variant Creutzfeldt-Jacob Disease (vCJD) or BSE-contaminated animal
feed were found in the United States. The Committee consists of
representatives from USDA, Health and Human Services, U.S. Customs
Service, Office of the U.S. Trade Representative, Department of Defense
(DOD), State Department, Office of Management and Budget, White House
Office of Science and Technology, American Association of Feed
Officials, National Association of State Departments of Agriculture,
and the National Assembly of Chief Livestock Health Officials.
Coordination and planning at the technical level occurs among
scientists addressing BSE issues through participation in the
Interagency BSE Working Group. Technical representatives from the
Animal and Plant Health Inspection Service (APHIS), Agricultural
Research Service, Center for Disease Control and Prevention, Customs
Service, DOD, Foreign Agricultural Service, Food Safety and Inspection
Service (FSIS), and the National Institutes of Health participate in
the Group. The Group discusses prevention activities, new science, and
changing world events and coordinates efforts across agencies. Annual
meetings with Canadian and Mexican technical experts from counterpart
organizations include the following subject areas: animal health,
public health, diagnostics and research. These annual interactions have
contributed to increased understanding and harmonization of TSE control
and prevention policies among the three countries.
Within USDA, the Animal and Plant Health Inspection Service is
primarily responsible for efforts to prevent animal disease outbreaks.
On January 10, 2002, President Bush signed the Defense Appropriations
Bill, which bolstered USDA homeland security efforts. This bill
included $105 million for APHIS for pest and disease exclusion,
detection, and monitoring. A portion of these funds is being expended
to enhance activities designed to protect the U.S. from serious animal
disease threats such as Foot and Mouth Disease (FMD) and BSE.
Question. Have these activities been enhanced since the terrorist
attacks of September 11?
Answer. Yes, we have taken a number of steps to enhance our efforts
to prevent animal disease outbreaks. For example, in October, 2001,
USDA provided $1.8 million in State grants for emergency animal disease
preparedness activities. These grants are to be used to help various
States better prepare and coordinate emergency preparedness activities
related to animal disease protection. On January 10, 2002, President
Bush signed the Defense Appropriations Bill, which bolstered USDA
Homeland Security efforts. This bill included $105 million for APHIS
for pest and disease exclusion, detection, and monitoring. A portion of
these funds is being expended to enhance activities to protect the U.S.
from serious animal disease threats, such as FMD and BSE.
FSIS is using a portion of its Homeland Security supplemental
funding to provide biosecurity training to FSIS inspectors. All FSIS
inspectors are already trained to look for food safety problems in the
plants and in the products we regulate--whether the problems are
intentionally or accidentally caused. The Agency is committed to
further enhancing the skills of its inspection force to deal with
biosecurity events. On September 20, 2001, all FSIS inspectors were
placed on heightened alert and given instruction to report any
suspicious in-plant activity to FSIS and local law enforcement
authorities. In addition, FSIS has integrated biosecurity
responsibilities into the new veterinary medical specialist positions
created in each District. These individuals will coordinate emergency
response activities at the District level in conjunction with State and
local food safety and law enforcement authorities.
Question. What is the funding level in the Administration's budget
for these activities?
Answer. The 2003 budget includes $146 million of increased funding
to strengthen training and technology to enhance homeland security and
protect agriculture and the food supply. Highlights of these increases
include: (A) a $19 million increase in the AQI program for improved
point-of-entry inspection programs; (B) a $5 million increase to
strengthen the capability of APHIS to assess and monitor outbreaks of
diseases in foreign countries that have the potential to spread to this
country; (C) a $48 million increase for plant and animal health
monitoring; (D) a $12 million increase for other APHIS programs to
expand diagnostic, response, management, and other scientific and
technical services; (E) a $28 million increase to support FSIS food
safety activities; and (F) a $34 million to support research aimed at
protecting the Nation's agriculture and food system.
Question. The FSIS was provided an additional $15 million in
emergency supplemental funds after the terrorist attacks of September
11.
Please provide information on how this money has been expended to
date, or how the FSIS plans on spending this money.
Answer. Funds allocated to FSIS from the Homeland Security
Supplemental will be used to used to improve facility security, educate
and train inspectors regarding bioterrorist threats, increase
monitoring and surveillance of the food supply, expand FSIS laboratory
capabilities for detecting contaminants, and provide technical
assistance and biosecurity awareness to State and local government
inspection officials and international cooperators. In addition to the
$15 million provided directly to FSIS, an additional $1.5 million will
be allocated to them from funds appropriated to the Office of the
Secretary to strengthen inspection at ports of entry.
Question. How were decisions made on how the money would best be
used?
Answer. The Department has established a USDA Homeland Security
Council to provide policy oversight and coordinate Department-wide
homeland security issues. It also approves budgets and other major
commitments, appoints representation to inter-agency groups and tracks
USDA progress on high priority homeland security objectives. The
Homeland Security Council examined proposals submitted by the agencies
for spending the $328 million of emergency supplemental funds made
available to the Department.
humane slaughter
Question. Funding was provided supplemental to the fiscal year 2001
appropriations to enhance humane slaughter activities carried out by
FSIS. It is my understanding that these funds were used to hire 17
District Veterinary Medical Specialists (DVMS)
Please provide information regarding the functions to be performed
by the DVMS.
Answer. Using funding provided in the recent supplemental
appropriations bill, FSIS added 17 District Veterinary Medical
Specialists (DVMS) to its workforce. These additional resources will
further bolster FSIS' oversight of humane slaughter and handling
issues. Each DVMS will be responsible for on-site coordination of
nationally prescribed humane slaughter procedures and verification of
humane handling activities, as well as dissemination of directives,
notices, and other information from Headquarters through the district
office to Veterinary Medical Officers in the field.
Question. Will the DVMS be working solely on humane slaughter
activities? If not, approximately what percentage of their time will be
spent on humane slaughter activities?
Answer. The DVMS' primary responsibility will be the monitoring and
promotion of humane slaughter practices in their respective Districts.
It is difficult to assign a strict percentage as to the time spent by
the DVMS on humane slaughter activities, as that will depend on the
functional requirements of their Districts. However, it is expected
that the majority of the DVMS's work hours will be devoted to humane
slaughter activities and other functions will be incidental.
Question. Along with disseminating information regarding humane
slaughter to the field, will these employees also perform ante-mortem
inspections? If not, will other employees be performing these
inspections?
Answer. No, ante-mortem inspection is currently performed on
livestock presented for slaughter in Federally inspected facilities by
the veterinarians and inspectors assigned to slaughter plants.
Question. Is the hiring of the new DVMS expected to increase
overall the number of ante-mortem inspections to ensure humane
slaughtering?
Answer. The DVMS will spend time in the ante-mortem area of
slaughter plants monitoring the slaughter practices of the plant and
providing expertise to both plant and FSIS staff in the conduct of
humane handling practices, as well as in other incidental activities,
such as the recognition of foreign animal diseases. During their visits
to plants in their respective Districts, they will provide techniques
and training in humane slaughter practices and biosecurity to the FSIS
inplant inspection personnel.
Question. What would the estimated cost be of providing an ante-
mortem inspection at all continuously operating slaughter plants at
least once per day?
Answer. Ante-mortem inspection is currently performed on all
livestock presented for slaughter, as well as on poultry in Federally
inspected facilities. These functions are already provided for by funds
currently appropriated to FSIS.
Question. Are funds requested in the Administration's budget to
continue the activities of the 17 new DVMS?
Answer. The Administration's 2003 budget for FSIS will continue to
provide funds for the 17 District Veterinary Medical Specialists (DVMS)
from within the base-level funding appropriated to the Agency.
Question. Are funds requested to hire more DVMS?
Answer. The Administration's 2003 budget does not request
additional funds to hire more DVMS.
inspection of foreign meat-packing plants
Question. Madame Secretary, I believe it is extremely important to
follow up on reports such as the one by the USDA Inspector General in
June of 2000, that put into doubt the safety of all meat consumed by
Americans. Currently, there is no way for the average consumer to
easily find out whether the meat they are buying at the grocery store
is coming from a USDA approved, clean facility, whether it be domestic
or abroad. Therefore, according to newspaper articles, and the IG
report itself, one could conclude that there is no way for the average
consumer to make a truly informed guess at whether or not the meat they
are consuming is safe. This is unacceptable, and it is unthinkable that
plants that have completely failed USDA inspections would be allowed to
import meat into the United States without ever being re-inspected by
someone from the USDA. I have asked many of these questions earlier,
and feel that they are absolutely worth asking again in order to
receive the best information for the public.
In view of the current threats posed to Americans by those wishing
to do us harm, should additional steps be taken by USDA in the area of
foreign meat and poultry inspections to ensure Americans' safety and
confidence in these products?
Answer. We are allocating $1.5 million of Homeland Security
Supplemental funding to hire 20 additional import inspectors, for a
total of 100, to perform intensified surveillance of imported meat,
poultry, and egg products. The inspectors will be located at various
ports-of-entry to augment the existing inspection force.
Question. Please expand on any additional steps you feel are
warranted.
Answer. The efforts of States and other cooperators with whom USDA
works are essential to provide in-depth protection of the Nation's from
security threats to our food supply. Therefore, Federal assistance will
also be used to bolster State capabilities. This will help maximize our
ability to contain any outbreaks.
Question. What actions has USDA taken in response to the IG report
mentioned above?
Answer. I have asked FSIS to provide the information you requested
for the record.
[The information follows:]
The IG report identified weaknesses in documentation of FSIS
decisions on determining the eligibility of countries to export to the
United States. FSIS has taken a number of steps in response to the 35
recommendations in the report. These have included strengthening
documentation on equivalence decisions taken by the Agency on the
eligibility of foreign countries to export to the United States,
strengthening management controls on all aspects of the equivalence and
plant certification processes, documenting procedures for entering
plant certification information in the Automated Import Information
System (AIIS) to assure that ineligible shipments are not allowed to
enter the United States, training managers in management control
principles, and assuring that FSIS auditors have all the information
they need to plan in-country audits.
Question. How often, on average, are foreign meat-packing plants
inspected by USDA officials? Do you feel that this is adequate?
Answer. FSIS reviews all foreign inspection systems in countries
eligible to export meat and poultry to the United States. In fiscal
year 2001, FSIS reviewed the documentation of and performed on-site
audits in 27 of the 32 countries eligible to export meat and poultry
products to the United States, as well as two countries requesting
eligibility, and was satisfied that all 29 countries had implemented
inspection systems equivalent to the U.S. inspection system. These
audits included visits to 217 slaughter and processing establishments
and 82 laboratories.
Question. What is the standard procedure when a foreign meat-
packing plant fails to meet USDA guidelines?
Answer. A foreign plant that fails to meet USDA guidelines is
delisted; that is, it is no longer allowed to export to the U.S. It may
be recertified for export to the U.S., however, if it has corrected all
deficiencies by the time of its next USDA audit.
Question. If a plant fails to meet USDA guidelines during an
inspection, should there be a follow-up inspection by USDA officials to
ensure that the meat is safe before it is sent to the United States, or
is it the Administration's position that it is acceptable to rely on
assurances from other countries that the meat is safe?
Answer. FSIS officials currently conduct follow-up inspections of
those plants that fail to meet USDA guidelines.
Question. It does not appear that there is an increase for foreign
inspectors in the USDA budget.
Do you believe additional inspectors should be hired?
Answer. FSIS plans to hire an additional 20 import inspectors with
funds provided through the Homeland Security supplemental
appropriation.
Question. How many inspectors, and how much money, would it take to
ensure that foreign meat-packing plants were inspected often enough to
adequately ensure the meat imported into the United Sates is safe for
consumers?
Answer. The resources requested in the fiscal year 2003 Budget are
sufficient to support USDA's Food Safety program in the next fiscal
year. This includes reviews of foreign inspection programs and the
inspection of imported product. It is important to remember that all
meat and poultry imported into the United States must be produced under
a foreign inspection program that USDA determines provides equivalent
public health safeguards to our domestic inspection program.
Additionally, when imported product arrives at a port-of-entry, USDA
inspectors then reinspect it prior to allowing it to enter the country.
Question. Can you certify that no meat or poultry products are
being imported into this country, and sold to American consumers, that
do not meet at least minimum USDA standards? If your answer is no, what
are you doing to fix what would appear to be a broken system?
Answer. All meat and poultry imported into the United States must
be produced under a foreign inspection program determined to be
equivalent to the USDA's program. When imported product arrives at a
port-of-entry, USDA inspectors then reinspect imported product prior to
allowing it to enter the country.
Question. This topic also brings into consideration the subject of
country-of-origin labeling.
If certain plants, or certain countries, repeatedly fail USDA
inspections and are then allowed to import meat into the United States,
do you believe it is the right of the consumer to know where their meat
is coming from?
Answer. Currently, all imported meat shipments are reinspected upon
arrival at U.S. ports of entry. Shipments not meeting USDA standards
are refused entry to the U.S. Therefore, country of origin labeling in
no way affects the safety of imported product. The inspection it
receives is the same as domestic product. The determinations as to
whether it is fit or unfit for human consumption are the same. As for
imported retail packages or consumer-ready packages, these are already
required to bear country of origin labels.
Question. What effect on this problem do you believe required
country-of-origin labeling would have?
Answer. Country of origin labeling would not have any affect on the
safety of the product.
rus--broadband
Question. What role do you see the government playing in the rural
broadband transmission arena when the private sector is still debating
their participation considering cost, regulations, mergers, and other
factors?
Answer. Broadband service is vital to the economic development,
education, health and safety of rural Americans. For rural communities
to prosper, as they move from predominantly agricultural-based
economies into today's global marketplace, they must have the same
access to the world markets and educational and health care
opportunities as urban residents. Because of the vast distances often
separating rural communities and the nation's urban economic and
educational centers, rural broadband deployment is critical to
sustaining the agricultural economy and the development of e-commerce.
To further this objective, Rural Utilities Service believes the
government's role in fostering rural broadband deployment today is more
important than ever since the private sector's efforts are not focused
on a universal broadband solution.
government functions--contracting out
Question. In the fiscal year 2002 report, this committee identified
functions that affect eligibility determination, disbursement,
collection or accounting for government subsidies provided under any
direct or guaranteed loan of the Rural Development and Farm Service
Agency mission area as an inherent government function. Additionally,
the Committee asked for a report by March 1, 2002, on all efforts by
the Department to enter into contracts to carry out any of the
previously stated activities.
When will the Department submit the report?
Answer. The Department submitted the report on March 6, 2002. In
the report we noted that we have not entered into any contracts for
these services and do not plan to do so.
Question. In the President's Budget for USDA, the section titled
``competitive sourcing'' states the goal is to compete 15 percent of
the commercial positions by the end of 2003.
What positions fall under the title of commercial positions?
Answer. Some examples of the type of positions we are considering
for competitive sourcing include; data processing, finance and
accounting, public affairs specialists, education and training,
administrative support, fleet management, charting and mapping, grounds
maintenance, mapping and charting, and construction management.
Question. Would these positions include what the Committee
considers as inherent government functions in the Rural Development or
Farm Service Agency mission area?
Answer. We do not believe that these positions will include what
the Committee considers as inherent government functions.
Question. Do you have a plan you can share with the Committee to
reach the President's goal?
Answer. We are working on our plan to meet the President's goal and
will provide a copy to the Committee once it is final.
inspector general
Question. Was the increase in staff years between fiscal year 2001
and fiscal year 2002 sufficient to carry out duties of the Inspector
General?
Answer. The Office of the Inspector General's (OIG) full-time
equivalent (FTE) ceiling was 723 in fiscal year 2001 and 2002. The
agency was not able to fully fund the 723 FTE ceiling in fiscal year
2001 with available resources. Actual FTE usage was 650. Additional
resources for staffing is not available in fiscal year 2002.
At the current funding and staffing levels, OIG is able to carry
out the most critical aspects of its mission. The agency performs
ongoing determinations of its responsibilities and priorities in order
to direct resources to the areas of most urgent and immediate need.
Question. How much money is used for overtime of existing employees
in the field to carry out investigations?
Answer. As law enforcement officers, OIG's special agents receive
availability pay as part of their standard compensation package. OIG
does not utilize overtime pay for its Investigations special agents.
Question. A few years ago, the USDA RHS and OIG created a joint
initiative in the multi-family housing portfolio. What was the result
of this effort, and is it still ongoing?
Answer. OIG and the Rural Housing Service (RHS) formed the joint
initiative to review Rural Rental Housing (RRH) projects because of
concerns about continuing fraud, waste, and abuse in the Rural Rental
Housing (RRH) program. The result of this initiative was evaluation
report ``Rural Rental Housing Program Uncovering Program Fraud and
Threats to Tenant Health and Safety,'' issued in March 1999.
The initiative targeted 32 multi-family owners and management
owners that had been identified by Rural Development State Offices as
potential abusers of the program. We identified 18 owners and
management agents who misused over $4.2 million while neglecting the
physical condition of the properties, some of which threatened the
health and safety of the tenants. The OIG Audit staff referred sixteen
cases to the Investigations staff.
Question. What unauthorized funds were collected by the government
as a result of this effort?
Answer. The initiative identified $4.2 million in misused funds.
All funds have been collected, written off, or resolved through
additional documentation.
Question. Has the Agency adequately responded to any weaknesses
that were identified by OIG?
Answer. The agency has adequately responded. Recommendations from
all 18 audit reports have received management decision or final action.
The agency established a Multi-Family Enforcement Task Force, including
OIG participation. RHS has also implemented improvements to its RRS
computer database to allow the agency to better monitor and identify
potential abusers of the program. RHS inspected the projects where OIG
found significant deficiencies in the physical condition of the
properties and has required the State Offices to continuously report on
the status of corrective actions. RHS plans to inspect all of its
17,000 RRH projects.
aphis commodity credit corporation transfers
Question. The fiscal year 2003 President's budget proposes to amend
the Agricultural Risk Protection Act by preventing the Secretary of
Agriculture from transferring funds from the Commodity Credit
Corporation (CCC) to combat emergencies for plant pest or noxious weed
infestations that the CCC funded the previous year.
What will the Department do if appropriated funding for emergency
programs, such as Asian long-horned beetle (ALB) eradication efforts,
in fiscal year 2003 is insufficient to manage the program that year?
Answer. We feel that activities for infestations whose scope and
magnitude are known should be funded through the appropriations
process. We retain authority to seek the use of funds from the CCC to
combat any emergency pest and disease outbreak that is outside the
scope of the appropriations.
Question. Also, what if the ALB infestation spreads to another
State, such as Wisconsin, in fiscal year 2003--is that considered a new
infestation and can the Secretary transfer CCC funds for it?
Answer. As you describe the situation, I would consider Wisconsin
to be outside the scope of the infestation to be funded by the
appropriations. As a result, we retain the to use funds from the CCC
for such infestations.
biosecurity
Question. U.S. biosecurity is of great concern to all Americans.
Last year's foot-and-mouth disease outbreaks in other countries, and
the events of September 11, have heightened the need for increased
inspection efforts at U.S. ports of entry to prevent biosecurity
invasions.
What is the Department doing to better coordinate efforts with all
inspection agencies at the ports to share data, establish targets for
inspection, and direct travelers appropriately?
Answer. Several recent steps have been taken to improve
communication with Customs, INS and FSIS at the ports. APHIS is
developing its Port Information Network Operations (PINOPS) database to
track meat and animal product shipments and its Automated Targeting
System (ATS) to track product to be held for inspection. The ATS
corresponds to Customs' Automated Manifest System. It will improve
identification and automatic targeting of high-risk imports for
inspection and possible entry refusal. ATS and PINOPS will be linked to
share relevant data and will contain separate modules for tracking and
accounting for products on hold, including entry refusal, and
communicating that status with FSIS and other agencies. We are
currently at the contracting stage of the development, having completed
an initial phase of testing. As Customs updates their system, we will
continue to keep pace with their changes.
With FSIS, APHIS has also taken broad steps to improve port
procedures for ensuring that harmful meat products do not enter the
country. APHIS signed a memorandum of understanding with FSIS to better
define operational procedures and more clearly define the roles and
responsibilities of each agency at the ports of entry. APHIS inspectors
have also begun independently transmitting FSIS inspection forms to
FSIS to enhance port processes.
Question. What actions are you taking to identify ports of entry
that pose high risks for foreign animal disease and plant pest
introductions?
Answer. APHIS AQI staff monitor ports nationwide as well as at pre-
clearance locations to determine the level of risk from different ports
of entry. We collect data in a standard form that identifies what
biological material has come to the port. If it did not meet the
requirements to enter the U.S., we track whether it requires treatment
or would have to be destroyed or returned to its origin. We analyze the
data at both the regional level and at a central level to determine
where the greatest risk lies for introductions of pests and diseases.
Question. How are you enhancing agricultural quarantine inspection
staffing and technology to prevent the unlawful entry of regulated
items?
Answer. APHIS has increased staffing to prevent illegal products
and will continue to hire additional personnel. APHIS will continue to
add new positions to address the current safeguarding need. We are
increasing inspection personnel at the Northern border to look at
passengers and cargo using Canada as a transit to the U.S. from a third
country. As part of that effort, staff are gathering intelligence on
the use of Canada as a transit country. We have increased the number of
detector dog teams and have begun using them to inspect cargo and will
also increase their mandate to include post offices and refrigerator
cars. We have also hired personnel specifically to prevent smuggling.
Those additional personnel are analyzing data for the highest risk
places for illegal entry.
In our efforts to prevent illegal entry of restricted product, we
are also increasing the use of technology. Analysts are developing the
Automated Targeting System and the Automated Cargo System to track
illegal imports. Port staff use a database to post violations across
the country to be aware of potential violators. We have also increased
the use of x-ray technology at ports to detect what is in containers
and bags.
Question. What is USDA doing to increase prosecutions for trade
compliance violations to deter the illegal smuggling of produce?
Answer. Beginning January 1, 2002, APHIS implemented new penalty
guidelines allowed under the Plant Protection Act. The guidelines
increased the maximum penalty from $1,000 per violation to $250,000 per
violation and $500,000 per case. This level of penalties is a better
deterrent to crime because before, violators could absorb fines as a
general business cost. Also, to complement the additional activities to
search for violators, APHIS has increased the number of investigators
who prosecute violations. This has led to an increase in the number of
cases we can prosecute, further deterring crime.
Question. Please provide the amount requested, by line item, in the
fiscal year 2003 President's budget to prevent foreign animal disease
establishment in the U.S.
Answer. I will provide that information for the record.
[The information follows:]
In the fiscal year 2003 request, the following line items have a
foreign animal disease or pest implication:
FISCAL YEAR 2003 FOREIGN ANIMAL DISEASE OR PEST-RELATED
[Dollars in the thousands]
----------------------------------------------------------------------------------------------------------------
Fiscal Year Program Total Program
Program 2002 Base Increase Request \1\
----------------------------------------------------------------------------------------------------------------
AQI Appropriated................................................ $58,090 $11,979 $70,069
FMD/Emerging Foreign Animal Diseases............................ 3,898 4,119 8,017
Import/Export (import work only)................................ 4,710 1,012 5,722
AHM&S (FAD investigations)...................................... 1,000 0 1,000
AHM&S Surveillance (FMD and other FADs)......................... 0 19,333 19,333
Screwworm....................................................... 30,797 0 30,797
Tropical Bont Tick.............................................. 424 0 424
Emergency Management Systems.................................... 4,201 6,945 11,146
Wildlife Services Operations (FMD Surveillance)................. 0 8,225 8,225
Veterinary Diagnostics (foreign animal disease and lab quality 5,865 3,400 9,265
assurance).....................................................
-----------------------------------------------
Total..................................................... 108,985 55,013 163,998
----------------------------------------------------------------------------------------------------------------
\1\ Excluding non-program related changes.
Question. Please provide an update on the Department's cooperative
efforts with the Vermont Department of Agriculture and the University
of Vermont, College of Agriculture, to develop a biosecurity
demonstration and outreach program.
Answer. APHIS is working with the Vermont Department of Agriculture
and the University of Vermont to finalize an agreement.
Question. A recent USDA press release announced the Department's
efforts with Health and Human Services to strengthen bovine spongiform
encephalopathy (BSE) protection systems for cattle, including the
doubling of BSE tests conducted this fiscal year compared to the
previous year. The news release also mentioned a Harvard BSE risk
assessment to evaluate current preventative measures and to identify
additional actions necessary to minimize the risk of BSE.
Are you planning to enhance BSE testing again in fiscal year 2003
and, if so, what funds are in the budget request for these tests?
Answer. We requested $8,443,000 in fiscal year 2003 to enhance our
national BSE surveillance and laboratory activities.
Question. What actions is the Department taking to strengthen
protection programs as a result of the Harvard BSE risk assessment?
Answer. Though the Harvard study indicated that the risk of BSE
occurring in the United States is extremely low, we intend to take
several steps to aggressively protect American consumers and the
livestock sector. We intend to enhance surveillance by increasing the
number of cattle samples tested in fiscal year 2002 to more than 12,500
compared to approximately 5,200 sampled in fiscal year 2001. We have
invited public comment on further possible regulatory options to
further reduce human exposure to products that could contain the BSE
infective agent. Options considered are:
--Prohibiting the use of brain and spinal cord from specified cattle
in human food;
--Prohibiting the use of central nervous system tissues in boneless
beef products, including meat from Advanced Meat Recovery (AMR)
systems, and,
--Prohibiting the use of the vertebral column from certain categories
of cattle, including downed animals, in the production of meat
from AMR systems.
Further, the Food Safety and Inspection Service will propose to
prohibit the use of certain stunning devices used on cattle prior to
slaughter.
APHIS will publish an advance notice of proposed rulemaking to
consider disposal options for dead and downer animals, which are
considered an important potential pathway for BSE spread in the food
chain.
USDA has taken proactive protective measures to prevent the
introduction of BSE into the United States. Most recently, APHIS
imposed import restrictions in September, 2001, on Japanese ruminants
and ruminant products due to a confirmed case of BSE there.
Question. The threat to agricultural production and the food supply
from causes either unintended or otherwise, especially since the events
of September 11, requires our special attention and proper education
and communication within the agriculture sector. At the same time,
poorly timed or ill-conceived announcements may have a negative effect
on the domestic commodity markets and among our trading partners. For
example, a suggestion that foot and mouth disease has possibly been
detected in the U.S. would undoubtedly send shock waves throughout the
livestock markets.
What is the best approach the Department can take to make sure all
prudent information in the area of biosecurity is made publicly
available without unintended market consequences?
Answer. The Department has been very careful about assuring that
only accurate information is made publicly available. The recent market
scare regarding FMD at a Kansas stockyard was precipitated by
speculative discussions. APHIS immediately dispensed accurate
information about the extent of testing which was occurring. No FMD was
found and the markets returned to normal shortly. However, the
situation underscored the impacts that could occur from an outbreak and
the need for a quick response with accurate information.
Question. In view of recent events, do you think it is advisable to
classify certain security-related USDA information for review only by
certain leadership positions within government?
Answer. We are reviewing the need for original classification
authority.
Question. Over the years, the Extension Service has developed a
level of trust within the farming community that far exceeds that of
other agencies which are considered more regulatory in nature. As a
consequence, farmers are often more willing to make inquiries of or
share information with Extension Service personnel than with other
representatives of government.
Do you think the Extension Service could play a role as first
responder in the area of sharing and collecting bio-security
information within the agriculture sector?
Answer. Yes, the resources of the Cooperative Extension System
(CES) of the USDA, the land-grant colleges and universities, and local
county governments can be mobilized as first responders to support a
homeland security initiative. The CES is present in all U.S. counties--
including more than 3,000 local offices. It has a long history of
educational efforts with all communities, offering timely research-
based programs to youth, families, community leaders, and those
involved in agriculture, natural resources, and business and industry.
It brings the resources of land-grant colleges and universities to bear
in addressing locally identified priorities and issues and provides a
feedback mechanism to these educational institutions so that they can
better serve citizens and communities. The local CES presence--the
staff who live and work in these counties and communities--makes the
CES a logical partner in the homeland security effort.
A key part of the approach to homeland security will be the
capacity to reach throughout the U.S. into all communities in a
constructive and non-threatening way--and in a manner that complements
rather than disrupts local customs and traditions. The nature of the
threats will likely change, requiring an ongoing presence and
association with communities. If the threats materialize, affected
communities will need help with recovery--which in itself may be a
protracted task.
As it has repeatedly demonstrated over the years, the CES can
effectively respond to natural disasters and other emergency
situations. The Extension Disaster Education Network (EDEN)--in place
for a number of years--offers a wide range of educational materials
that the public and CES staff can use to mitigate the impacts of
disasters such as floods, storms, droughts, and disease outbreaks. The
substance and format of these materials can be adapted to support a
successful homeland security effort. The Department has allocated
$600,000 to EDEN with funds provided in the fiscal year 2002 Emergency
Supplemental for Homeland Security. Funds would be used to develop
educational materials, recruit and train personnel to deliver
information at times of crises, and secure computer systems. These
efforts build on the existing network of extension agents who are
trained to help people and communities deal with natural disasters.
Funds are needed to expand the Network to meet homeland security needs.
Question. What role do you think the Extension Service can play in
education and awareness to reduce future risks of bio-terrorism, such
as better ways to secure farm chemical storage, protect livestock from
the spread of disease, or other potential threats?
Answer. The CES is poised to become a major player in the homeland
security initiative. It has a vast array of experiences and resources--
as well as a long history of community involvement--to carry out the
educational and communication tasks that are critical to the success of
homeland security in an open society. The CES also has a strong record
of cooperating with other organizations, such as public schools, law
enforcement agencies, fire and emergency services, local governments,
and other higher education institutions. The CES is, of course, a
national organization and as such has communications and other systems
firmly in place that can assure a focused response to threats and a
capacity to engage with communities in responding to terrorist or other
episodic events.
CES can, as it does with other efforts, greatly multiply its
resources by training volunteers to train others and using its existing
presence and communication networks. Specialized materials would be
prepared, tested, and disseminated for each of the four action-related
focuses--awareness, risk assessment, mitigation, and recovery.
biological control
Question. As a method to reduce the use of chemicals, there has
been a significant employment of biological control agents to counter
various threats to agricultural production. Unfortunately, there are
cases in which this practice can have unintended consequences. For
example, it has been reported that in the late 1970's and early 1980's,
USDA introduced into a number of States a species known as Harmonia
axyridis (multicolored Asian lady beetle) as a biocontrol agent. Since
that time it spread rapidly, killing the native lady beetles, and now
posing potentially millions of dollars in damage to the domestic wine
industry and causing other harm.
Does USDA continue to support the release of non-native species to
serve as biocontrol agents, and if so, please provide information on
such activities and explain what actions USDA takes to ensure that
unforeseen consequences, as with the Harmonia axyridis, do not occur?
Answer. The USDA continues to support the release of non-native
species to serve as biocontrol agents of pests that devastate natural
areas and severely reduce crop production. ARS facilities overseas
collect and evaluate the natural enemies of such designated invasive
pests. These natural enemies are reared, and tested in quarantine to
determine their effectiveness against the target pests, and to ensure
that they do not attack native species (predators with a broad host
range such as the multicolored Asian lady beetle, Harmonia, are now
categorically excluded from importation for biocontrol). Biocontrol
agents that have been proven to be effective and safe by this science-
based process are packaged and shipped stateside for use in classical
biocontrol programs, and are monitored post-release for non-target
effects. Available ARS resources will continue to be directed toward
evaluating and improving these procedures. Some of the invasive pests
that are currently targeted for biological control are: the melaleuca
paper bark tree in Florida, codling moth in the Pacific northwest,
glassy-winged sharpshooter and olive fruit flies in California, leafy
spurge in the upper States, Asian longhorned beetle in New York and
Illinois, and saltcedar and yellow starthistle in the West.
Invasive species account for approximately $137 billion per year in
damage costs in the United States alone. Non-native weeds infest at
least 100 million acres in the United States, and increase by 8 to 20
percent annually. ARS works with APHIS to streamline the regulatory
process governing testing and introduction of biological control agents
for management of invasive exotic weeds, resulting in faster approval
for release of biological control agents.
Damage from invasive insects costs U.S. agriculture an estimated
$30 billion annually; typically, the more damaging invasive insects
cost U.S. agriculture at least $1 billion each, with the glassy-winged
sharpshooter and Asian longhorned beetle representing threats of $33
billion and $670 billion, respectively. Invasive mite, beetle, and
disease threats to bees threaten, through loss of pollination, $15
billion in fruit, nut (almond), and legume crop value.
By conservative estimates, biological control is responsible for
saving $20 billion in damage from invasive insects annually in the
United States. ARS is further developing biological control as a major
cost-effective ($100 return for each $1 invested) strategy for
management of invasive insects. Biological control programs help
increase agricultural production while decreasing the industry's
reliance on chemical pesticides.
ARS firmly believes that integrated pest management (IPM) and
areawide pest management systems, employing biologically-based or pest-
specific methods, can substantially decrease the risks from the most
hazardous pesticides and simultaneously increase economic benefits for
agriculture, as well as provide substitutes for at-risk pesticides
impacted by the FQPA.
The key to controlling insect pests and improving the health and
effectiveness of beneficial insects such as bees and biocontrol wasps
could be hidden in their genes. To capitalize on developing genomics
techniques, ARS and CSREES co-sponsored the 1st International Insect
Genomics Workshop in 2001. The workshop prioritized projects that would
benefit from a more coordinated effort, with the honey bee (related to
biocontrol wasps) genome emerging as the initial target for sequencing,
followed by important pest moths, beetles, and fruit flies.
Question. Is USDA undertaking any actions now, or proposed for
fiscal year 2003, to combat the Harmonia axyridis either though
research or pest management activities?
Answer. The multicolored Asian lady beetle, Harmonia axyridis, is a
predator of aphids and other small insects, including pests such as the
pecan aphid, hemlock wooly adelgid, and the recently established
Chinese soybean aphid.
This beetle is native to Asia. In an attempt to establish the
beetle for biological control in the United States, many Federal and
State agencies and universities were involved in releases in 12 States.
This effort continued intermittently from 1916 to 1983. Immediately
following each release, the species disappeared, making it impossible
to determine whether these releases resulted in establishment of the
beetle. Biological control practitioners, using newly emerging
ecological concepts, decided that further importation might be risky to
wildlife, and importations ceased. Biological control agents such as
this beetle, with a broad host range that included native insects, that
could potentially out compete native natural enemies and become pests
themselves, were no longer imported. Nevertheless, a strain of the
beetle, which is believed to have escaped from infested cargo at
seaport in New Orleans, Louisiana, did become established by 1988. Once
established it has been an effective biological control agent of pecan
aphids in Georgia and other locations. In 2001, the beetle was also
shown to provide economic control of spirea aphid on apple and was the
predominant lady beetle species attacking the soybean aphid.
Beginning in the autumn of 1993, this beetle was found creating a
nuisance in homes in Georgia, Oregon, Virginia, Maryland, Alabama,
Delaware, New Jersey, Washington, and Pennsylvania. It has since
expanded its range and is found as a nuisance in much of the eastern
United States and several mid-western states and continues to expand
its range. As do many native lady beetles, this species forms large
swarms in the fall and moves into sheltered areas, including attics and
crawl spaces, for overwintering. The beetles are particularly attracted
to buildings (of all sizes, shapes and colors).
Programs are now underway to isolate, identify, and use aggregation
pheromones (insect-produced odors that cause the beetles to congregate
in the fall) and repellents (odors that can be placed near homes to
discourage beetle entry). The Chemicals Affecting Insect Behavior
Laboratory, Beltsville, Maryland, has found two compounds that act as
repellents; they are being evaluated. A trap has also been developed by
Dr. Louis Tedders, formerly at ARS, and the design has been posted on
the web by the Office of Technology Transfer, thus making it available
to interested homeowners for use in removing the beetles from their
homes. Through cooperation with the Extension Service, efforts are
underway to make the ARS trap design and a pest fact sheet, produced by
the ARS Information Service, generally available to homeowners.
Currently, exclusion by sealing cracks in housing exteriors is the
best way to keep the beetles from entering homes, a method that serves,
additionally, to improve regulation of home climate and to conserve
energy.
foreign agricultural assistance
Question. As part of the U.S. policy in the Afghan theater, it has
been suggested that this country should take actions to help shift
local farmers from the lucrative poppy production to a form of
agriculture that does not have implications for internal drug
trafficking or other illegal purposes.
Is USDA involved in helping Afghan farmers move to alternative
forms of agriculture?
Answer. USDA is not currently working in Afghanistan but is
prepared to assist, if requested, by providing technical assistance and
training to facilitate Afghanistan's recovery. USDA has extensive
expertise that could be relevant to Afghanistan, including experience,
albeit years ago, in working with that country regarding alternatives
to poppy production.
Question. Is USDA involved in other international agricultural
development as part of a larger U.S. foreign policy strategy aside from
pure economic development in those regions?
Answer. USDA is involved in a number of U.S. Government inter-
agency processes focused on broad U.S. foreign policy strategies
designed to promote political, economic, and social stability. An
inter-agency working group meets weekly at the State Department, for
example, to work on joint agency strategies for cooperation with
Afghanistan, Pakistan, and other nations in the region.
USDA is heavily involved in outreach and scientific collaboration
on biotechnology, which along with other international research
activities, are helping increase the capacity of the world to feed its
hungry people, thus reducing one of the conditions that breeds
terrorism. Similarly, work in multilateral organizations, such as the
Food and Agriculture Organization of the United Nations, is helping
establish the political will and strategies needed to significantly
reduce the number of undernourished people. Some of these efforts have
been ongoing, but are being expanded and refocused as a result of the
September 11 events.
USDA is developing strategies and focusing increased attention on
policy and institutional frameworks to foster the growth of
competitive, market-based agricultural sectors. This enhances one of
our other strategic goals for being involved in international
agricultural development: to expand market opportunities for U.S.
producers.
Several other activities are taking place under the rubric of the
Middle East Peace Initiative. USDA is a key player in a Middle East
integrated pest management project, training programs on environment
management, and programs promoting scientific research cooperation
among countries in the region.
illinois river
Question. Section 745 of Public Law 107-76 directs you to
participate in a conservation pilot project in the Illinois River
Basin.
Please provide information in regard to this directive.
Answer. Over $1.1 million of Environmental Quality Incentive
Program Funds have been committed for cost sharing on conservation
practices to be installed in the Illinois River Basin this fiscal year.
In addition, according to the national CREP/CRP data base, the Illinois
CREP has enrolled 30,002 acres (1,257 contracts) at a total estimated
cost share of over $4.6 million for fiscal year 2002.
biotechnology
Question. Consumers are still distrustful of products that contain
genetically modified organisms.
What is USDA doing to assure the credibility of the U.S. regulatory
system in regard to environmental and food safety of genetically
engineered products?
Answer. The National Economic Council has established an
Agriculture Biotechnology Working Group (ABWG). One of the first
priorities of this group is to work on the regulatory safety issues,
both scientific and procedural, associated with the unintended or
adventitious presence of genetic material in seeds introduced through
genetic engineering. This is a complex regulatory issue that will
involve the food safety and environmental regulatory agencies. In
addition, the ABWG has set up a system for interagency coordination and
communication concerning the categories of new products (pharmaceutical
plants, fish, animals, insects) that the regulatory system is or will
be reviewing over the next several years.
To assure that the scientific basis of APHIS' regulatory review
remains current, USDA contracted with the National Academy of Sciences
(NAS) to conduct a review of the scientific basis for determination of
non-regulated status for transgenic crops under the Plant Protection
Act and the National Environmental Policy Act. The NAS evaluated the
appropriateness of methodologies, the type and quality of data, and
adequacy of issues assessed. Their report, entitled ``Environmental
Effects of Transgenic Plants: The Scope and Adequacy of Regulation''
was issued on February 22, 2002. The report notes that new transgenic
plants receive greater regulatory scrutiny than conventional plants,
and views its recommendations ``. . .as a means to help improve an
already functioning system.'' APHIS is now reviewing the report and
studying its recommendations, with a view to improving our system. We
believe NAS is a valuable resource to assure that our regulatory
activities have high credibility in the scientific community.
Coordination efforts are underway to establish the Federal review
infrastructure for transgenic animals. APHIS, the Food Safety and
Inspection Service (FSIS), and the Food and Drug Administration (FDA)
will work to articulate a transparent process for a variety of products
and also address overlapping jurisdictions between the agencies.
Potential concerns over animal welfare issues could impact the Agency's
inspection responsibilities. APHIS plans to clarify its regulatory
approach to transgenic vectors of animal disease (transgenic
arthropods) and coordinate this with our existing oversight approach to
transgenic insects of plant disease.
APHIS continues to work with the Environmental Protection Agency
(EPA) to clarify the two agencies' respective roles in evaluating plant
pest risk and plant pesticides; herbicide tolerant plants and herbicide
use; and EPA's work to develop exemptions to its rule on the regulation
of plants containing plant pesticides. In addition, the Agency is
developing expanded guidance for applicants on information needed to
satisfy requirements for granting a petition.
animal welfare
Question. The Committee is very concerned about the Department's
actions to support animal welfare.
Please provide a summary of fiscal year 2001 Animal Welfare
activities including number of investigations, the nature of
violations, enforcement actions, and their outcomes.
Answer. I will provide that information for the record.
[The information follows:]
In fiscal year 2001, APHIS continued to employ a two-pronged
enforcement strategy. For licensees and registrants who show an
interest in improving the conditions for their animals, we pursue
innovative penalties that allow them to invest part or all of their
monetary sanctions in facility improvements, employee training,
research on animal health and welfare issues, or other initiatives to
improve animal well-being. This approach enables the individuals to
immediately improve the conditions for their animals while we send a
clear message that future violations will not be tolerated. On the
other hand, for licensees and registrants who do not improve the
conditions for their animals, APHIS pursues enforcement action. Such
action typically includes significant monetary penalties and/or license
suspensions or revocations. It may also include confiscation of their
animals and relocation of the animals to another facility if they are
found to be suffering.
An important component of APHIS' enforcement strategy is the high-
priority designation for certain cases. Cases are deemed high priority
based on the following criteria:
--Severity of animal suffering (death or severe injury)
--Past compliance history of facility
--Potential public or animal safety or health concerns
--Abusive or potentially violent nature of licensee or registrant
--Type of facility and species of animal involved
--Severity of the issue resulting in extensive public interest
For high priority cases, APHIS and the USDA Office of the General
Counsel put special emphasis on investigation and enforcement to
expedite their resolution. This measure has been successful in
shortening the time frames of significant cases and providing quicker
relief for animals protected under the AWA.
Through this multifaceted enforcement strategy, APHIS and the
Office of the General Counsel have been able to virtually eliminate the
backlog of Animal Welfare Act violation cases awaiting resolution
through the formal administrative process. The results have been
shorter time frames for resolving cases and the ability to expedite
high-priority cases. In addition, APHIS imposed penalties totaling
almost $510,000 in fiscal year 2001.
The following table provides detailed information on the number of
enforcement actions conducted and resolved during fiscal year 2001:
Numbers of Enforcement Actions Conducted and Resolved, fiscal year
1999-2001.
Cases Investigated and Reviewed:
NUMBERS OF ENFORCEMENT ACTIONS CONDUCTED AND RESOLVED, FISCAL YEAR 1999-2001
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Investigated and reviewed Cases resolved Sanctions imposed
--------------------------------------------------------------------------------------------------------------------------------------------------
Submitted to
Fiscal year investigative Submitted for Stipulations Administrative Fines imposed Revocations,
Cases and formal Official offered/ law judges by Fines imposed suspensions, and
enforcement prosecution warnings settled \1\ decisions \1\ administrative by stipulation disqualifications
services staff
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1999......................................... 313 188 104 143 89/79 28 $585,162 $82,152 16
2000......................................... 329 184 101 125 75/100 70 343,301 110,848 23
2001......................................... 276 201 51 178 130/97 74 365,875 143,440 10
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Some stipulations settled were originally offered in the previous year.
We resolved several high-profile cases or brought charges against
parties in fiscal year 2001. The following are just a few examples:
In November 2000, APHIS and a zoo in Oregon settled charges that a
handler severely beat an elephant. The zoo agreed to a civil penalty of
$10,000. Of that amount, APHIS approved $5,000 to hire outside experts
on elephant care and to implement all reasonable recommendations. The
other $5,000 was paid to the U.S. Treasury. The zoo also agreed to not
rehire the handler who beat the elephant.
In January 2001, a USDA judicial officer upheld a decision that
found a Missouri dealer guilty of charges that she was acting as a dog
dealer without a license. Her $5,000 fine was suspended as long as she
does not violate the AWA in the future. She is also permanently
disqualified from being licensed under the AWA.
In April 2001, a USDA administrative law judge found a Nevada
exhibitor guilty of charges that he harassed APHIS officials and failed
to maintain proper acquisition records, keep animal enclosures in good
repair, protect stored food from spoilage, provide enclosures to
protect animals from inclement weather and the elements, provide
sufficient and potable water, control pests, properly clean enclosures,
provide sufficient perimeter fencing, and provide sufficient space for
animals to make normal postural and social adjustments. He was fined
$27,500, and his license was revoked. This decision was upheld on
appeal.
Question. How is the Department utilizing the fiscal year 2002
funding increases for Animal Welfare and Animal and Plant Health
Regulatory Enforcement?
Answer. We are using the increases to hire, train, and equip
additional animal care inspectors and investigators in areas of the
country where the need is most pressing. By so doing, we intend to
improve our program of inspections and follow-up investigations and
enforcement. Recently, we have hired ten new animal care inspectors, to
be stationed in the following States: New York; District of Columbia;
Georgia; Florida; Michigan; Illinois; Missouri (2 positions); Montana;
and Texas. Before the end of fiscal year 2002 we plan to hire seven
additional inspectors, to be stationed in West Virginia; Puerto Rico;
California (2 positions); Colorado; Pennsylvania; and northern Indiana.
In similar fashion, we are using the increased funding for animal
and plant health regulatory enforcement to hire, train, and equip
additional investigators in areas where animal care violations are most
prevalent. Recently, we hired new investigators to be stationed in
Arkansas, Georgia, Illinois, Nebraska, New Jersey, Pennsylvania, South
Carolina, and Washington. We plan to hire additional investigators this
year to be stationed in northern California, southern California, New
York, Tennessee, North Texas, and South Texas. The result will be
improved response time to reports of Animal Welfare Act violations and
a greater ability to expedite higher priority cases.
Question. The fiscal year 2003 President's budget proposes
decreased funding for animal welfare; how will this decrease affect the
USDA's ability to conduct necessary inspections at licensed and
registered facilities?
Answer. While we may reduce the absolute number of inspections, the
effect will be partially mitigated by the newly hired inspectors having
a full year of experience, enabling them to operate at an improved
level of efficiency. Also offsetting the reduced funding, we incurred a
number of one-time costs in fiscal year 2002 associated with hiring and
equipping the new inspectors such as new vehicles ($340,000) and
computers ($85,000). We will continue to employ a risk-based inspection
system so as to concentrate activities on facilities where animal
welfare concerns are the greatest.
boll weevil eradication program
Question. The Committee is concerned about the President's proposal
to decrease funding for the Boll Weevil Eradication Program.
How is the Department working with the cotton industry in regard to
the President's proposal to decrease the Federal cost share for active
eradication zones of the program? Specifically, how will the proposed
budget affect grower ability to meet program requirements and not lead
to an increased spread of infestations?
Answer. We work closely with the cotton industry on budget issues
regarding the Boll Weevil Eradication Program. As we approach fiscal
year 2003, we expect to see significant acreage move from the more
expensive active phase of the program, into the weevil-free, post-
eradication phase. As a result, we can afford to reduce the amount of
our total contribution, while still providing a 20 percent cost-share
for the zones still involved in active eradication. The balance of
program costs can be met through grower assessments, varying levels of
State funding, and short-term loans from the Farm Service Agency (FSA).
Growers can meet remaining program requirements through some
combination of grower assessments, State funding, and FSA loans. In any
case, our proposed budget will not lead to an increased spread of
infestations.
Question. Please provide an update on the Boll Weevil eradication
program and the status of geographic information systems development.
Answer. The cooperative Boll Weevil Eradication Program (BWEP) has
been highly successful in reducing and ultimately eliminating losses
caused by the boll weevil. Of the nearly 16 million acres of U.S.
cotton, the BWEP has eradicated the boll weevil from 5.9 million acres
since eradication activities began in 1983. As a result, we and our
cooperators are very encouraged with the program's progress. The 5.9
million acres are in the program's post-eradication phase, while nearly
10 million acres are in the active phase, leaving less than 1?million
acres outside the program. These final areas are expected to join the
BWEP within the next few years. We project to eradicate boll weevil
from all cotton growing areas of the U.S. and northern Mexico by 2005,
in cooperation with States, the cotton industry, and Mexico.
chronic wasting disease
Question. Chronic Wasting Disease (CWD) is becoming a serious
problem in U.S. deer and elk populations.
Please provide an update on the Department's surveillance and
indemnity efforts for CWD in deer and elk.
Answer. Since 1997, program officials have found CWD in 21 farmed
elk herds in six States. We have also found CWD in the free-ranging
deer and elk population of five States including Colorado, Wyoming,
Nebraska, South Dakota, and most recently Wisconsin. To date, APHIS has
tested approximately 6,200 farmed cervid with more than 2,100 of these
animals tested this fiscal year. We have also tested more than 7,000
free-ranging deer and elk. We expect to test an additional 1,100 free-
ranging deer and elk this fiscal year including 500 deer from Wisconsin
sampled as a result of our recent finding of CWD in the State's wild
deer. To date, Federal and State officials have depopulated 18 positive
elk herds including 7 in South Dakota, 1 in Montana, 7 in Colorado, 2
in Nebraska, and 1 in Kansas. Three herds remain, 1 in Oklahoma, 1 in
Colorado, and 1 in Nebraska. While the Colorado herd has just recently
been exposed to infected free-ranging deer, the Nebraska herd has
undergone 4 years of surveillance with no further evidence of disease.
The State of Nebraska has released the herd from quarantine. We have
spent $3.6 million for indemnities.
Question. There have been three recent finds of CWD in free-ranging
deer in Wisconsin. How did CWD, which until recently had only been
found primarily in the Rockies, suddenly appear in Wisconsin?
Answer. Presently, APHIS does not know how the free-ranging deer in
Wisconsin were infected with CWD. We are working with the Wisconsin
Department of Natural Resources (DNR) to determine the source of
infection.
Question. What action is the Department taking to identify the
presence of this disease and prevent it from spreading in Wisconsin and
elsewhere?
Answer. In fiscal year 2001, I declared an emergency and
transferred $2.6 million from the Commodity Credit Corporation (CCC) to
APHIS to conduct enhanced CWD surveillance in both the farmed and free-
ranging cervid populations, and to remove existing and newly infected
herds. An additional $12.2 million has been transferred in fiscal year
2002 to continue the emergency effort.
Specific to Wisconsin, APHIS has cooperated with the Wisconsin
Department of Natural Resources (DNR) to collect samples from an
additional 500 deer killed from the area where the 3 positive animals
were collected. This additional testing has resulted in program
officials identifying 10 more deer as infected with CWD. We are also
working with DNR to gather epidemiological data to determine the source
of infection for the free-ranging deer. APHIS is encouraging the State
to require mandatory surveillance and restrict movements from captive
cervid herds in the area where free-ranging animals were found to be
positive for CWD. In addition, APHIS is encouraging States to require
additional barriers between captive and free ranging cervids in areas
where transmission of CWD between these two groups is a risk.
west nile virus
Question. West Nile Virus (WNV) is continuing to spread in the
U.S., killing numerous horses, birds, and now humans.
Please update the Committee on how APHIS plans to address West Nile
Virus activities in Illinois and other States in fiscal year 2002.
Answer. In fiscal year 2002, APHIS will enhance cooperative
education, surveillance and monitoring efforts in the following States:
Alabama, Georgia, Massachusetts, Maine, Connecticut, Missouri, New
Hampshire, Vermont, New Jersey, New York, North Carolina, South
Carolina, Virginia, Wisconsin, Minnesota, Kentucky, Tennessee,
Nebraska, Kansas, Oklahoma, North Dakota, South Dakota, Texas and
Puerto Rico.
In addition, based on a fiscal year 2002 congressional directive,
APHIS, Wildlife Services will work in the State of Illinois to enhance
WNV surveillance efforts in wildlife through collection, sampling and
testing of birds to complement and supplement ongoing WNV research and
management activities associated with State Agencies and the University
of Illinois.
Question. Which Federal agency has the lead responsibility for
ensuring that we are focusing adequate attention to this disease and
what is APHIS's role in this coordinated effort?
Answer. APHIS has the lead Federal role in protecting livestock
from impacts of West Nile virus. The Center for Disease Control and
Prevention is the lead Federal agency for protecting human health from
WNV.
Question. Should APHIS have a greater role in the effort to detect
and prevent the spread of WNV?
Answer. APHIS has technical and field expertise regarding the
management and research of wildlife facilitated diseases including WNV.
We believe that the budget provides an appropriate utilization of that
expertise at this time.
______
Questions Submitted by Senator Byron L. Dorgan
plant science research
Question. I am very concerned about the $53,192 million cut of
``Congressionally-designated projects'' from the plant science ARS
account. Of particular concern to me are the cuts for National Wheat
and Barley Scab Initiative and the National Sclerotinia Initiative,
which is of great importance to sunflowers and other commodities. These
two programs are national initiatives conducted in various locations
all over the country and cannot be deemed mere ``Congressional
earmarks'' targeted toward beefing up the research budget of any
particular site. I think it would be a real shame to eliminate these
national initiatives now--particularly since the National Sclerotinia
Initiative just got off the ground last year. This initiative has great
promise--as demonstrated by the National Wheat and Barley Scab
Initiatives' progress in developing scab resistant varieties like the
spring wheat variety named Alsen. The new variety is named after the
town of Alsen, located on route 66 in Northeastern North Dakota, an
area, which was particularly hard hit by this disease. The discovery
would not have been possible if it were not for the National
Sclerotinia Initiative funding.
Does the Administration recognize the benefits of these national
research initiatives?
Answer. Congress appropriated $3,000,000 in fiscal year 1999 for
the National Wheat and Barley Scab Initiative and appropriated
increases of $1,800,000 in fiscal year 2000 and $798,200 in fiscal year
2001. The fiscal year 2003 President's proposed budget only affects the
fiscal year 2001 increase of $798,200. There still is $4,800,000 in the
fiscal year 2003 President's Budget for research aimed at combating
this devastating wheat and barley disease through the National Wheat
and Barley Scab Initiative. The fiscal year 2003 President's proposed
budget does target the fiscal year 2002 National Sclerotinia Initiative
appropriation due to higher priority needs in the fiscal year 2003
budget.
The Agency has about 2,000 research scientists working in 100+
locations across the nation. In recent years, scientific research (not
just agricultural research) has moved away for work being done by a
single scientist or a small cohesive group of scientists working in a
single location. Now, discoveries at ARS are far more likely to come
from multi-disciplinary research conducted at more than one location.
In fact, one of the principal reasons ARS created National Programs
during the mid-1990s was to aggregate the research projects that were
doing closely related work into a structure that would expedite
interaction between these locations and scientists. A second benefit of
the new National Program structure has been the strengthening of
communication between ARS scientists and managers and the various
customers and stakeholders in each area. The 40 National Program
Workshops, which were held during the startup phase, were very helpful
in defining the research agendas for each program.
When ARS is asked to address a new or re-emerging problem we assess
many factors. First we ascertain scope and nature of the problem
(location, crop(s)/commodity(ies) affected, nature of the problems,
potential options, etc.). Then we assess the Agency's capabilities
(where are the scientific skills needed to address the problem; what
locations have the necessary equipment and facilities to support the
work needed to address the problem; and what other factors such as
climatic zones, soil type, are critical to the work). Sometimes these
analyses produce predictable decisions. But in other cases, some or all
of the work may be done at locations far from where the problem exists
or the commodity grows.
ARS believes that the development of its annual budget, which is
submitted to Congress as part of the President's budget, is the
agency's most comprehensive statement of how it can and should proceed
with a comprehensive research plan for addressing the issues
confronting American agriculture. These issues are identified by
interactions with our customers and stakeholders, the Congress, and the
Administration.
Question. I am also concerned about this $53.192 M cut in ARS plant
science research because it wastes the investments that we put into
this research in fiscal year 2001 and fiscal year 2002 Agriculture
Appropriations bill. Let me give you an example. I have been working
with my colleagues and a number of national commodity groups for barley
and wheat who joined together to increase the base funding for the
Cereal Crops Unit at the Fargo ARS, and the Subcommittee has graciously
met our request for the last 2 years.
But the facility has found it nearly impossible to hire researchers
in this area because the Administration keeps cutting out this funding
in its budget request and no reasonable person would take a position
only to have it eliminated a year later. This is a particularly
frustrating situation for me and the commodity groups that have waited
so long to augment presently underfunded national research in the area
of Cereal Crops. I have heard that this same problem is happening at
ARS facilities across the nation.
How does the Administration justify wasting the investments we put
in these areas of research last year by not being able to attract
researchers to fill these research positions?
Answer. The increases for the base funding of the ARS Cereal Crops
Unit, Fargo, North Dakota, in fiscal year 2001 and fiscal year 2002
have been used effectively to address the serious problems that
threaten the economic viability of small grains and sunflower
producers. Funding has been used to initiate and strengthen research to
increase genetic resistance to scab, stem and leaf rust, septoria and
other diseases of wheat and barley. Research has been expanded to
identify and develop new cereal and sunflower germplasm and varieties
with enhance grain quality and oil traits. Molecular markers and
candidate genes linked to desired traits in small grains and sunflower
are being identified. Much of this research is facilitating use of new
genomic discoveries to develop new, effective breeding tools for wheat,
barley, oat and sunflower improvement programs. New research scientists
have been hired including a sunflower molecular geneticist and a cereal
plant pathologist. The fiscal year 2001 and fiscal year 2002
Congressional appropriations have also been used to replace and upgrade
laboratory equipment. The fiscal year 2001 and fiscal year 2002
increases for the Cereal Crop Unit have been targeted for cuts in
fiscal year 2003 due to higher priority needs in the President's budget
foreign food assistance
Question. This morning's Congressional Daily, is reporting that ag
and humanitarian groups went to the White House yesterday to tell the
President that the USDA's budget for international food aid would
result in a reduction in U.S. food aid and embarrass the U.S. at the UN
World Food Summit scheduled for next June.
As a member of this Subcommittee, I share their concerns about the
budget request. I am very concerned that the budget would end the
annual purchases of $500 million to $700 million in commodities under
CCC and Food for Progress. Although the budget asks for an increase in
the Food for Peace budget of $350 million, this increase comes at the
expense of other things this Subcommittee needs to fund through its
302b allocation, such as ag research, farm loans and other important
domestic, discretionary needs. I am one of the strongest supporters of
international food aid, and I believe the numbers in this plan simply
don't add up. I agree that this plan would bring down the total amount
of food distributed through international aid.
What rationale does the Administration have for ending the annual
purchases of commodities under the CCC and Food for Progress?
Answer. The budget and program proposals for U.S. foreign food
assistance activities in 2003 reflect the results of the
Administration's recent management review of those activities. The
purpose of the review was to rationalize and reform their
Administration and to strengthen their effectiveness. One of the topics
examined by the review was the number of U.S. food aid programs and the
number of agencies involved in administering them, raising the
possibility of an overlap of functions and inefficiencies.
Another consideration was the recognition that future food aid
activities should be placed on a more solid foundation by reducing
reliance on the year-to-year availability of surplus U.S. commodities.
The lack of assurance on the availability of surpluses creates
uncertainties among both recipient countries and distributing agencies.
As a result of the review, the number of programs through which
U.S. food assistance is provided will be reduced and program
Administration will be streamlined. USDA will continue to carry out
government-to-government programs, while AID will assume responsibility
for all programs carried out in cooperation with private voluntary
organizations (PVOs), cooperatives, and the World Food Program.
In addition, there will be a reduced reliance on the year-to-year
availability of surplus U.S. commodities in our food aid activities,
which should provide greater assurance and stability to those
activities. Therefore, Section 416(b) activities that rely on the
purchase of surplus commodities will not be continued. However, the
section 416(b) statutory authority will continue, which will allow for
the donation of commodities that are acquired by CCC in the normal
course of its domestic support operations.
It is important to note that, while section 416(b) donations will
be scaled back, the President's budget requests an increase of $335
million for the Public Law 480 Title II program. Donation programs that
in recent years have been carried out in conjunction with PVOs and the
World Food Program under section 416(b) authority will now be conducted
under Title II.
Food for Progress programming carried out with CCC funding will not
be continued in 2003, as those programs generally have been conducted
in conjunction with PVOs and such programs will now be administered by
AID. However, Title-I funded Food for Progress programs that
traditionally have been carried out through government-to-government
agreements will continue.
Another benefit of these reforms is increased budget clarity.
Reducing reliance on mandatory CCC funding for both section 416(b) and
Food for Progress activities will make U.S. foreign food aid activities
subject to the annual appropriations process. This will provide more
transparency and scrutiny in the budget management process and improve
oversight of these activities.
Question. Do you agree with the assessment of PVOs that this plan
would actually bring down the U.S. provision from 5 million tons to no
more than 3.5 million tons?
Answer. There will be some decrease in the overall tonnage level of
U.S. food assistance in 2003, but the PVO estimate for 2003 programming
is too low. Our estimate for 2003 programming exceeds 3.7 million
metric tons.
However, it is important to note that the Administration's reforms
place an increased emphasis on direct feeding activities in our food
aid programs, with a corresponding reduction in the level of sales--
monetization--of food aid commodities. Much of U.S. food aid in recent
years has been provided to support non-feeding, economic development
activities, carried out with funding raised through the sale of the
commodities in local markets. The Administration proposes to scale back
the level of monetization and to support economic development
objectives through other means. In fact, the President's budget
proposes a substantial increase in funding for U.S. development and
humanitarian assistance.
By placing greater emphasis on direct feeding in our food aid
activities, we believe the United States will continue to provide a
leadership role in meeting global food needs despite some reduction in
the overall level commodity programming. In addition, the
Administration has made clear that it is prepared to release
commodities from the Bill Emerson Humanitarian Trust should a need for
emergency food assistance arise. As a follow-up to the management
review, the Administration will be reviewing the procedures for use of
the Trust to ensure their flexibility and responsiveness. There are
currently 2.5 million metric tons of wheat in the Trust, which is
available for release should it be warranted. Its continued
availability provides an important backstop to our efforts to meet
world food needs.
broadband grants
Question. I see that the $24 million for broadband grants in fiscal
year 2002 has been cut back to $2 million. I think this is a shame
because many rural areas have slow Internet service and need help
achieving high-speed, broadband Internet access. It's highly unlikely
that the private sector is willing to invest funds to bridge this
digital divide.
Don't you agree that high-speed broadband Internet access is
crucial to any region's economic viability?
Answer. With the passage of the Rural Electrification Loan
Restructuring Act of l993, all loans made by the Rural Utilities
Service's Telecommunication Program have been for facilities that will
provide broadband services to rural America. Since that time, small
rural commercial and cooperative telecommunications providers have
borrowed more than $5 billion in Federal loan dollars at an interest
rate equal to the cost of money to the U.S. Treasury for broadband
infrastructure, much of which is installed and providing service today.
In fiscal year 2001, Congress appropriated $100 million in loans
and $2 million in grants for broadband infrastructure and local dial-up
Internet as part of a pilot program. In fiscal year 2002, Congress
appropriated $80 million in loans and $25 million in grants. The
President's budget requests $2 million for grants and $79.5 million
loans. An important feature of the pilot program was an increase in the
population level of the communities that were eligible for funding. In
the traditional Rural Utilities Service Telecommunications Program,
Rural Utilities Service may only loan to communities with 5,000
inhabitants or less. Under the broadband pilot program, Rural Utilities
Service could provide financing to communities of up to 20,000.
Response to the pilot loan program was enormous. By the close of fiscal
year 2002, therefore, Rural Utilities Service will have financed $180
million in broadband infrastructure loans from fiscal year 2001 and
2002 funds through this pilot program.
While the task of wiring rural America for broadband service is far
from complete, the response to both our traditional telecommunications
loan programs and the broadband loan programs have shown that small,
rural telecommunications systems can provide rural America with
broadband and advanced telecommunications services capable of providing
high-speed Internet connections as well as distance learning and
telemedicine services with Federally-financed loans. Only the smallest
of communities have demonstrated the need for grant funds to accomplish
this task. Therefore, with adequate funding of the Rural Utilities
Service loan programs and $2 million in grant assistance, we believe
that Rural Utilities Service can continue to be the catalyst for
broadband deployment in rural America.
ez/ec program
Question. I notice that funding for rural Empowerment Zones has
been eliminated this year. I am disappointed to see this because the
EZ/EC program provides the tools needed by these distressed areas to
create new businesses, meaningful jobs, decent housing, and safe
neighborhoods. The Zones were designated based on the quality of their
strategic plans to address these socio-economic challenges. They are
held accountable for various performance measures that assess progress
of both individual projects and overall effort. They also leverage
notable support from private, public and non-profit partners.
Last year, I wholeheartedly supported the $15 million funding level
provided by this Subcommittee and recommended in the Administration's
budget. Unfortunately, your budget for this year did not continue to
support the program at the level needed to meet the annual Federal
funding commitment made to EZ/EC during the competitive designation
process.
Would you support the Subcommittee in its efforts to provide this
funding in order to fill our Federal funding commitment to this
program?
Answer. Only 2.6 percent of total funding received to implement
strategic plans for the Round II Empowerment Zones/Enterprise
Communities (EZ/EC) has come from the EZ/EC grants. Approximately half
of the $60 million that has been appropriated so far is still available
to EZ/ECs due to judicious management and pending final program
regulations, which will be completed in March 2002. Available funding
is sufficient to meet the projected needs of EZ/ECs.
farm service agency--farm loans
Question. This year, the proposed total FSA loan program level is
$3.8 billion for direct and guaranteed farm loans, which are down from
$4.2 billion in fiscal year 2002.
The level of funding for these programs concerns me. I have heard
complaints from my district offices about these loan levels. Every
year, farmers whose applications for FSA Direct Farm Ownership loans
have been approved are turned away because the money appropriated in
October has run out by the first of the year. The ND FSA office says
money for farm ownership loans has run out already, and headquarters
confirms that there is no more until next year. The fiscal year 2003
proposed level is of particular concern because increased subsidy costs
in 2003 have reduced the amount of program that can be supported with
the same amount of budget authority.
In January, North Dakota FSA already had more than a $1 million
shortfall for direct ownership loans for 2002 and about $5 million less
than they need for direct beginning farmer and guaranteed non-beginning
farmer loans. Farmers who come to FSA are told that they must wait
until at least October to get the money they have already qualified to
receive. Does the Administration recognize the problem? What kind of
funding level would be needed in fiscal year 2003 to ensure that FSA
does not have to start a waiting list for farmers who want a direct
ownership loan so early in the year?
Answer. We are always working to assist eligible family farmers
with FSA direct loan assistance. As you noted, increased subsidy costs
in 2003 have made the direct loan programs more expensive to operate.
The amount of loans that could be supported under the direct farm
ownership and operating loan programs was reduced based on estimated
demand.
Guaranteed loans are a more cost-effective method of assistance. By
maximizing the use of guaranteed loans, the limited amounts of direct
loan funds are available to applicants who truly have nowhere else to
turn. Administrative efforts undertaken in the guaranteed programs to
reduce the paperwork burden on lenders and expedite the approval
process have increased the amount of loan activity in fiscal year 2002
compared to the previous year. This increase is most dramatic in the
guaranteed farm ownership loan program where use has increased by 41
percent compared to a year ago. We have also been successful in
increasing the use of guaranteed loans to reach beginning farmers. So
far in fiscal year 2002, guaranteed farm ownership assistance to
beginning farmers has increased 40 percent over last year.
This increased use of guaranteed loan programs would assist in
fulfilling the demand for FSA loan assistance. It is critical to use
guaranteed loans to the maximum extent possible to preserve direct
funds for applicants who have no alternative to direct financing. The
surge in use of the guaranteed programs by applicants previously
seeking direct loans will also enhance the ability of non-beginning
farmers to obtain direct loan assistance.
Although direct loans are essential for those that need them, many
farmers are able to use loan guarantees to stay, or start, in business.
Diverting most, or all, of the guaranteed loan resources to the direct
loan programs would only reduce the total number of people that FSA can
help. We believe that the approach set forth in the President's budget
makes the best use of the available resources.
rural telephone bank
Question. The Rural Telephone Bank program has been a great tool
for meeting telecommunication needs in rural areas but the
Administration has eliminated the $175 million for Rural Telephone Bank
loans again this year. Last year, the Administration requested similar
action and this Subcommittee restored this funding upon the
recommendation of those in rural America who thought the time was not
right to eliminate this program. I am curious about the lack of support
for this funding from the Administration.
Does your proposal to eliminate the funding for new Rural Telephone
Bank loans have the support of telephone cooperatives?
Answer. Under statutory authority mandated by the Rural
Electrification Act of 1936, the Rural Telephone Bank began
privatization in 1996 by redeeming Class A stock currently owned by the
Federal Government. Language that has appeared in each appropriations
bill since 1996 currently restricts redemption of Class A stock to no
more than 5 percent of the outstanding balance. Under this restriction,
the Bank cannot privatize for more than 20 years. The six elected
members of the Rural Telephone Bank board, 3 representing cooperative
telecommunications providers and 3 representing commercial
telecommunications providers, have all publicly expressed their desire
to privatize the bank in a much shorter time frame. Toward this end,
the Rural Telephone Bank, with funding provided by Rural Development,
has commissioned a study to develop a plan that would provide a
seamless transition to a privatized institution. Since the Rural
Telephone Bank has sufficient cash to retire the remaining Federal
equity contribution--Class A stock--the budget proposes no new Federal
lending authority to provide the impetus for a more timely
privatization of the Rural Telephone Bank. Privatization will provide
the bank greater flexibility than available as a government entity.
This flexibility will increase the banks ability to meet the changing
telecommunication needs of rural America.
local television loans
Question. The Administration has also cut the $20 million in
funding for Local Television Loans that the Subcommittee included in
last year's appropriations bill, but I don't see an explanation for
this change in the budget summary. Can you explain why the
Administration didn't request funding for these loans in its fiscal
year 2003 budget submission?
Answer. Access to local as well as global communications services
is critical for the health, safety, and economic development of rural
communities. We believe that a satellite communications system is one
of the essential components of meeting rural citizens' information and
multi-media services needs and Rural Utilities Service wants to play an
integral role in this endeavor. From a philosophical standpoint, the
need for rural communities' access to local weather and news is not a
debatable issue. Pragmatically, however, the implementation of the Act
has been cause for considerable debate within the industry, a debate
that has only intensified with the recently proposed merger of DirectTV
and Echostar. The most recent merger proposal includes provisions to
charge uniform rates nationwide for monthly charges and installation
charges and to broadcast local television channels in all 210
Designated Market Areas, including full compliance with Federal must-
carry requirements. The primary players, the cable television industry
as well as current and prospective satellite providers, are all
rethinking their future financial feasibility in light of the proposed
merger. We are monitoring developments in the proposed merger to
determine an appropriate strategy before proposing additional funding
for local television loans.
section 515 multi-family housing
Question. The budget does not include funding for direct loans or
any new multi-family housing projects pending completion of a review of
this program. Can you give the Subcommittee a list of planned projects
that this funding cut will affect?
Answer. Because the Section 515 direct loan program uses a national
Notice of Funds Availability to accept, evaluate, score and rank for
selection project proposals, specific projects cannot be identified at
this time for the current fiscal.
farm bill
Question. I am pleased that the Administration made good on its
promise to include the farm bill allocation of $73.5 billion over 10
years. I am concerned, however, that other proposals will not meet the
mandates of the farm bill when enacted. What amendments to your budget
request do you anticipate making after the enactment of the farm bill
later this year?
Answer. It is too early in the process to know whether any
adjustments would be needed to meet any mandates of the farm bill. We
will continue to assess the budget implications as the bill is
finalized.
Question. Over the last several months, your Administration has
repeatedly gone on record against the largest farms in the U.S.
receiving the bulk of the farm program payments. These statements
represent a position that more or less castigates present law, condemns
the House bill, and then the Senate bill..all for the same reason. I
know the Administration has other concerns, but this payment limit
objection is one of the common complaints your Administration has
consistently raised.
Many in the Senate apparently took heed of these objections,
because in a historic bipartisan vote, they defeated a motion to table
the payment limitation amendment by a margin of 31 to 66. Yet, despite
this margin--despite all of your Administration's statements condemning
the large payments of the largest farms--a position on this amendment
has not been forthcoming from the Administration.
This debate has clearly shown that our current payment limits are a
charade, due to ``blossoming triple entities,'' the use of commodity
certificates to skirt LDP limits, and the proliferation of ``ghost
farmers.''
Where does the Administration stand on Payment Limitations?
The Administration does not list payment limitations in its 5
priorities for the farm bill. Does this absence mean that the
Administration would not support a bill that emerges from conference
with meaningful payment limitations--i.e. language that closes all the
loopholes? Would the President feel compelled to veto such a bill?
Answer. As you note, we have not identified the payment limitation
aspects as one of the most fundamental issues we are concerned with
from a national perspective. We believe the payment limit issue should
be resolved by the Congress.
______
Questions Submitted by Senator Richard J. Durbin
renewable fuels
Question. What is the USDA going to do to promote the use and
production of renewable fuels?
Answer. The Department has a number of activities that expand use
of biobased products and bioenergy, including programs aimed at
increasing the use of biobased products and biofuels. For example, I
recently issued a Memorandum to agencies directing them to increase use
of biodiesel and ethanol in USDA fleet vehicles where practicable and
reasonable in cost and to purchase and lease alternative fuel vehicles
in geographic areas that offer alternative fueling. I will include for
the record additional details on the Department's efforts in this area
prepared by the agencies.
[The Information follows:]
The Department supports programs that encourage expanded use of
biobased products, both in-house and throughout Government; conducts
research to improve efficiency and economics of biobased products and
fuels production; provides incentives to increase purchases of domestic
ag commodities used for increased production of alternative fuels; and,
provides information to those seeking to use biobased products. Some
specific examples of how the Department is responding to this effort
are listed below.
Under Executive Order 13101 on Greening the Government Through
Waste Prevention, Recycling, and Federal Acquisition, USDA is charged
with developing and publishing a list of biobased products. Currently,
CSREES, ARS and the Office of Energy Policy and New Uses are preparing
a Federal Register notice to solicit public comment on criteria, such
as minimum biobased content, that products must meet to be considered
for the biobased products list. The list is to be used by agencies in
modifying their procurement programs to give increased consideration of
biobased products. Congress provided funding for this activity to the
Department through appropriations for the Agricultural Research
Service, and these funds are maintained in 2003 at the 2002 level of
$0.5 million.
The Department is actively involved in cooperative efforts with the
Department of Energy, the Environmental Protection Agency, and the
Office of the Federal Environmental Executive to foster increased use
of biobased products and bioenergy. For example, USDA and DOE are
cooperating to demonstrate the use of methane produced from dairy
animal manure for electricity and heat production. USDA, DOE, the
Forest Service, and the Bureau of Land Management are involved in a
feasibility study on biomass feedstock for gasification, the results of
which will be useful in determining USDA Rural Utilities Service loan
guarantee amounts and economic benefits of gasification technologies.
The Commodity Credit Corporation (CCC) is supporting the second
year of a 2-year program of bioenergy incentive payments by providing
up to $150 million in 2002 in bioenergy incentive payments to encourage
increased production of fuel grade ethanol and biodiesel from grain.
In support of the National Energy Policy goals for Building the
Rural Infrastructure for Energy Sources, the Rural Development mission
area supports several programs aimed at renewable energy. Funds may be
made available for renewable and alternative energy projects under the
Business and Industry Loan Program. The 2003 budget for RD proposes an
increase of $2 million for cooperative research agreements to study
emerging cooperative structures.
A general focus of research in this area is to reduce costs for
conversion of feedstocks and other phases of production to reduce
overall production costs for energy/fuels production from agricultural
biomass. Reducing production costs increases the competitiveness of the
products compared to traditional sources. An increase of $8.8 million
above the 2001 level is included in the 2002 Act for Agricultural
Research Service (ARS) research on bioenergy. Building upon the 2002
initiative, a 2003 budget increase of $3 million is proposed to improve
quality and quantity of ag biomass feedstock. Increased funding for the
National Research Initiative Competitive Grants Program will focus on
conversion of biomass and co-product development, with emphasis on more
efficient conversion of cellulosic biomass and starch to ethanol. Added
emphasis will also be placed on new energy crop development and
biodiesel work will be continued. There is an estimated increase of $7
million for the NRI for all research related to bioproducts, about $2
million of which is projected to be supportive of bioenergy research.
An increase of $5 million is proposed for the Forest Service bioenergy
research program to develop economic technologies for converting woody
materials into energy; develop energy efficient processing and
production systems for woody fiber and solid wood products; develop and
demonstrate systems for producing energy from small diameter and low
valued source material; and develop and demonstrate new woody cropping
systems for energy feedstock production.
Executive Order 13123, Greening the Government Through Efficient
Energy Management establishes energy management and emissions reduction
goals for the Government and requires agencies to promote energy
efficiency, water conservation, use of renewable energy products and to
help foster markets for emerging technologies. ARS currently estimates
continued spending of about $0.5 million to support energy efficiency
projects at the agency locations based on energy improvement
implementation plans.
Question. How can Congress work in concert with the USDA to promote
incentives for the use and production of ethanol and biodiesel?
Answer. The Department has worked with Congress as it works to
complete a 2002 Farm Bill. Since Farm Bill legislation provides many of
the Department's authorities for carrying out our mission, I view work
on this piece of legislation as an important part of a cooperative
effort to help ensure the best use of USDA resources to address this
issue. We are prepared to assist Congress by providing research, data,
analysis, or statistics for new legislation. The Administration
supports the renewable fuels standard proposed in the Senate version of
the Energy Bill that would enhance the use of ethanol and biodiesel.
Question. How can a renewable fuels standard benefit all farmers?
Answer. Increasing the use of biofuels will help stabilize farm
income and reduce farm subsidies, decrease U.S. dependence on imported
oil, increase demand and prices for corn and other agricultural
biomass, create jobs, help protect the natural environment, and
generate new rural economic activity. Many studies have been released
that use varying assumptions and sources of data, resulting in a wide
range of estimates for the net energy value of corn-based ethanol. A
recent study by the USDA Office of Energy Policy and New Uses reported
that energy in ethanol is 1.34 times the energy needed for its
production.
Question. Would the Department support extension of the Bioenergy
Program in fiscal year 2003?
Answer. The Administration's proposed budget supports the original
commitment to fund the program for 2 years, fiscal year 2001 and fiscal
year 2002. As part of the 2002 Farm Bill, the program is extended.
Question. Did the Department provide an extension to the program in
its budget submission to OMB? If so, can you explain why the provision
was removed prior to passback?
Answer. The Administration's proposed budget supports the original
commitment to fund the program for 2 years, fiscal year 2001 and fiscal
year 2002. While the program was designed to help increase production
capacity of renewable fuels, the program was also stimulated by rising
stocks of grains and oilseeds and low prices. Corn stocks in particular
are now declining, and corn prices rising. The bioenergy incentive
payments were offered to provide a temporary, added incentive to boost
the expansion of the biofuels industry. Industry will respond to market
demands, including changes in commodity and fuel prices, commodity
surpluses, and demand for alternative, renewable fuels.
bse/mad cow disease
Question. What actions are you taking to ensure the protection of
the human food supply from BSE? What actions need to be implemented?
Answer. The Department is pursuing a variety of activities aimed at
protecting the U.S. food supply from Bovine Spongiform Encephalopathy
(BSE). On November 30, 2001 USDA released a landmark study by Harvard
University that shows the risk of BSE occurring in the United States is
extremely low. The report showed that early protection systems put into
place by the USDA and Department of Health and Human Services (HHS)
have been largely responsible for keeping BSE out of the U.S. and would
prevent it from spreading if it ever did enter the country. Even so,
officials outlined a series of actions to be taken that would continue
strengthening programs to reduce that risk even further.
I will provide for the record a press release that identifies all
the actions we plan to take:
[The information follows:]
[news release]
Harvard Study Shows Very Low Risk of BSE in the United States--
Government Continues to Bolster Prevention Programs In Effort to
Continue Providing Important Safeguards to Protect Consumers and
Agriculture
Washington, Nov. 30, 2001--The U.S. Department of Agriculture today
released a landmark study by Harvard University that shows the risk of
Bovine Spongiform Encephalopathy (BSE) occurring in the United States
is extremely low. The report showed that early protection systems put
into place by the USDA and Department of Health and Human Services
(HHS) have been largely responsible for keeping BSE out of the U.S. and
would prevent it from spreading if it ever did enter the country. Even
so, officials outlined a series of actions to be taken that would
continue strengthening programs to reduce that risk even further.
The risk assessment was commissioned by USDA and conducted by the
Harvard Center for Risk Analysis. It evaluates the ways BSE could
spread if it were to ever enter the United States. The report's purpose
is to give agencies a scientific analysis to evaluate preventative
measures already in place and identify additional actions that should
be taken to minimize the risk of BSE.
``The study released today clearly shows that the years of early
actions taken by the Federal Government to safeguard consumers have
helped keep BSE from entering the United States,'' said Agriculture
Secretary Ann M. Veneman. ``Even if BSE were to ever be introduced, it
would be contained according to the study. However, we cannot let down
our guard or reduce our vigilance. We must continue to strengthen these
critical programs and today we are announcing a series of actions to
bolster our protection systems.''
``Based on 3 years of thorough study, we are firmly confident that
BSE will not become an animal or public health problem in America, ``
said Dr. George Gray, deputy director of the Harvard Center for Risk
Analysis and director of the project.
In response to the report, Veneman announced a series of actions
the USDA would take, in cooperation with HHS, to strengthen its BSE
prevention programs and maintain the government's vigilance against the
disease.
First, USDA will have the risk assessment peer reviewed by a team
of outside experts to ensure its scientific integrity.
Second, the USDA will more than double the number of BSE tests it
will conduct this fiscal year, with over 12,500 cattle samples targeted
in 2002--up from 5,000 during 2001.
Third, USDA will publish a policy options paper outlining
additional regulatory actions that may be taken to reduce the potential
risk of exposure and ensure potential infectious materials remain out
of the U.S food supply. To ensure its decisions are science-based,
options will be tested using the computer model developed through the
risk assessment to determine the potential impact they would have on
animal and public health.
The options to be considered will include: prohibiting the use of
brain and spinal cord from specified categories of animals in human
food; prohibiting the use of central nervous system tissue in boneless
beef products, including meat from advanced meat recovery (AMR)
systems; and prohibiting the use of vertebral column from certain
categories of cattle, including downed animals, in the production of
meat from advanced meat recovery systems. USDA will invite public
comment on the options and then proceed with appropriate regulatory
actions.
Fourth, USDA will issue a proposed rule to prohibit the use of
certain stunning devices used to immobilize cattle during slaughter.
Fifth, USDA will publish an Advance Notice of Proposed Rulemaking
(ANPR) to consider additional regulatory options for the disposal of
dead stock on farms and ranches. Such cattle are considered an
important potential pathway for the spread of BSE in the animal chain.
``We found that even if BSE were ever introduced, it would not
become established,'' said Gray. ``With the government programs already
in place, even accounting for imperfect compliance, the disease in the
cattle herd would quickly die out, and the potential for people to be
exposed to infected cattle parts that could transmit the disease is
very low.''
BSE has never been detected in U.S. cattle, nor has there been a
case of the human form of the disease, variant Creutzfeldt-Jakob
Disease (vCJD), detected in the United States. Since 1989, USDA has
banned the import of live ruminants, such as cattle, sheep and goats,
and most ruminant products from the United Kingdom and other countries
having BSE. The ban was extended to Europe in 1997. To stop the way the
disease is thought to spread, HHS prohibited the use of most mammalian
protein in the manufacture of animal feed intended for cows and other
ruminants. Should a case of BSE ever be detected in this country, an
emergency response plan has been developed to immediately control
suspect animals and prevent them from entering the food supply.
This summer, HHS Secretary Tommy Thompson announced an action plan
outlining new steps to improve scientific understanding of BSE that
incorporates a comprehensive approach to further strengthen
surveillance, increase research resources and expand existing
inspection efforts.
BSE is a chronic, degenerative neurological disorder of cattle that
belongs to a family of diseases known as transmissible spongiform
encephalopathies. Also included in that family of illnesses is vCJD,
which is believed to be caused by eating neural tissue, such as brain
and spinal cord, from BSE-affected cattle.
A complete copy of the Harvard Report can be obtained from USDA's
official website at http://www.usda.gov/. For more information about
BSE and the many efforts being taken to prevent its entry and spread
into the United States, also visit http://www.usda.gov or http://
www.hhs.gov/.
Question. How quickly can you act, now that the multi-year Harvard
Risk Assessment is complete?
Answer. USDA has already begun to act upon the findings of the
Harvard BSE risk assessment. FSIS published a paper for comment in the
January 17, 2002, Federal Register outlining additional regulatory
actions it may take to further reduce the potential risk of BSE and to
ensure that potentially infectious materials do not enter the U.S. food
supply. A proposed rule is currently being drafted to prohibit the use
of certain stunning devices used to immobilize cattle during slaughter.
Additionally, an advance notice of proposed rulemaking is being drafted
that will consider additional regulatory options for the disposal of
dead stock from farms and ranches.
Question. What methods of testing exist to detect BSE in cattle?
How many cattle are currently being tested? Is this number adequate?
Are you testing cattle that die on farms? If so, at what rate?
Answer. I have asked the Animal and Plant Health Inspection Service
to provide that information for the record.
[The information follows:]
The United States has actively monitored for BSE since 1990.
Several Federal Agencies have been involved in this effort including
the Animal and Plant Health Inspection Service (APHIS) and the Food
Safety and Inspection Service (FSIS). The US surveillance effort
focuses on testing high-risk cattle such as animals exhibiting signs of
neurologic disease; animals condemned at slaughter for neurologic
reasons and nonambulatory animals, commonly referred to as ``downer
cattle''. Recently, we began testing cattle which have died on the
farm. BSE can only be detected by testing brain material. Currently we
use both histology and immunohistochemistry as our primary testing
methodologies. Histological examination is the microscopic evaluation
of brain tissue to look for the degenerative changes.
Immunohistochemistry is used to detect the abnormal form of prion
protein, which is a marker for the disease.
As of March 31, 2002, APHIS, National Veterinary Services
Laboratories (NVSL) has tested 25,487 brain samples for BSE. Of the
25,487 samples, NVSL tested 8,583 in fiscal year 2002. We expect to
test at least 4,000 additional samples in fiscal year 2002. Of the
samples already tested this fiscal year, slightly more than 1,000
samples have been from cattle which have died on the farm. We have
steadily increased the level of surveillance over the last 5 years from
3,000 samples in fiscal year 1997 to over 12,500 samples in fiscal year
2002, an increase of over 300 percent. We feel this increased level of
surveillance is needed to demonstrate our BSE free status.
single food safety agency
Question. Following September 11, Secretary Thompson said that food
safety should be one of our Nation's greatest concerns. Do you agree
with his statement?
Answer. Ensuring the safety of the food supply is one of the
Nation's greatest concerns and has been one of USDA's top priorities
for almost 100 years. Our food safety system was functioning
effectively prior to September 11 and is continuing to function
effectively.
Question. What risks do you feel are facing our Nation's food
supply?
Answer. Our food safety programs are designed to reduce all types
of hazards in the food supply, whether they are chemical, physical, or
microbiological. One primary function is to identify and remove
diseased and unwholesome animals. In recent years, we have emphasized
the reduction of and control of pathogens that contribute to an
estimated 76 million cases of foodborne illness reported by the Centers
for Disease Control and Prevention. FSIS also continues to operate a
strong residue control program to address chemical contamination. These
programs have been very successful and are recognized worldwide as the
most appropriate means for controlling food contamination, whether
unintentional or intentional.
Question. Do you think our current food safety system is able to
adequately protect consumers?
Answer. The United States has one of the safest food supplies in
world. Even so, this Administration continues to strengthen USDA's food
safety programs to ensure safe and wholesome meat, poultry and egg
products. For two consecutive years, we have proposed record-level
spending for food safety programs and strengthened our inspection
systems to ensure regulatory compliance and safety. We will continue to
examine prudent and sound measures that will further strengthen USDA's
food safety programs. We are serious about protecting public health and
we must continue to incorporate proven scientific principles throughout
the food safety system to enhance our food safety infrastructure.
Question. What steps do you think are needed to create a food
safety system that will provide the best protection to consumers?
Answer. The Administration believes that continued investment in
the food safety infrastructure is necessary to ensure that the
appropriate personnel, tools, and information are available to address
the emerging food safety hazards that threaten public health and the
viability of our agricultural system. Therefore, the 2003 budget
includes an increase of $146 million to strengthen training and
technology to enhance homeland security and protect agriculture and the
food supply. Highlights of these increases include: (A) a $19 million
increase in the AQI program for improved point-of-entry inspection
programs; (B) a $5 million increase to strengthen the capability of
APHIS to assess and monitor outbreaks of diseases in foreign countries
that have the potential to spread to this country; (C) a $48 million
increase for plant and animal health monitoring; (D) a $12 million
increase for other APHIS programs to expand diagnostic, response,
management, and other scientific and technical services; (E) a $28
million increase to support FSIS food safety activities; and (F) a $34
million to support research aimed at protecting the Nation's
agriculture and food system.
Question. Would you support efforts to modernize food safety
statutes?
Answer. I would be happy to work with Congress on any efforts to
ensure that the U.S. has the safest food supply possible.
Question. What should be done to create a single voice on food
safety in the U.S., as recommended by the National Academy of Sciences?
Answer. The Administration's report, Food and Agricultural Policy:
Taking Stock for the New Century indicates that where possible, Federal
policies and programs must be coordinated and integrated to reduce
duplication of effort, regulatory burdens, and program costs. This is
especially important where several agencies share regulatory
responsibilities or have a role in research, development, and
implementation of food safety policies. USDA and FDA have had a
Memorandum of Understanding in place since 1999 to exchange information
on an on-going basis about establishments that fall under both of our
jurisdictions. As a result, both agencies have worked together on
several cases in which we were jointly able to ensure the safety of
specific food products. USDA is committed to engaging in substantive
discussions with FDA and other agencies with food safety
responsibilities about other areas where cooperation can and should be
utilized.
national school lunch program
Question. Why has there been an increase in foodborne illness
outbreaks associated with the Federal school lunch program?
Answer. Currently, Centers for Disease Control and Prevention (CDC)
relies on States to voluntarily report outbreak information. A change
in outbreak reporting forms and policies in 1998, showed an increase in
the number of foodborne illness outbreaks reported. CDC does not
consider this to be an absolute increase in the number of outbreaks
that have occurred but rather a response to the change in the reporting
system. Therefore, we have no reason to believe that there has been a
recent upturn in foodborne illness events in schools.
Question. What oversight authorities are needed by USDA to
effectively regulate the school lunch program?
Answer. We believe that we do not need any additional oversight
authority in the area of food safety in the National School Lunch
Program at this time. This is based on the longstanding practice that
such oversight is the responsibility of State and local officials.
These entities, working with the Centers for Disease Control, have
systems in place intended to monitor the safety and sanitation
procedures in food service facilities.
In this regard, however, the Department did propose legislation
that would require local schools to obtain health inspections at least
twice during the school year during the last Child Nutrition Program
reauthorization. This proposal was based on an understanding that, in
some areas, health inspections of school food service facilities were
not required. The proposal, as finally enacted in the William F.
Goodling Child Nutrition Reauthorization Act of 1998, now requires
schools to have a health inspection at least once a year where no local
regulations apply.
Question. What efforts are made by USDA to coordinate with State
and local officials in regulating the school lunch program?
Answer. Responsibility for food safety in the operation of the
National School Lunch Program is primarily the responsibility of local
schools and State and local health departments charged with this
responsibility. The Department's involvement in this area is limited to
the purchase and delivery, as well as inspection, of commodities
purchased for the Program. Commodities are only purchased from
manufacturers who operate under the food safety inspections of the
Department's Food Safety and Inspection Service, the Food and Drug
Administration and the Department of Commerce.
In our effort to support State and local efforts above, the
Department has a significant effort underway to provide school food
service personnel with training and technical materials directed
towards providing information on all aspects of food safety. These
materials emphasize the importance of personal hygiene, preparing,
holding and storing foods at proper temperatures and preventing the
spread of bacteria through cross-contamination.
foreign food assistance
Question. Would you please confirm whether the Administration's
2003 budget request would increase or reduce total outlays for
international food assistance? What would you consider an appropriate
trend in spending for such programs?
Answer. The 2003 budget request does include a reduction in funding
for international food assistance activities. In part, this reflects
the Administration's decision to provide greater stability and
assurance to our food aid efforts by reducing their reliance on the
year-to-year availability of surplus U.S. commodities. Hence, section
416(b) activities that rely on the purchase of surplus commodities will
not be continued. However, this will be offset by the requested $335
million increase in funding for Public Law 480 Title II.
Although the overall level of funding is reduced, it is important
to note that the Administration's food aid reforms place an increased
emphasis on direct feeding activities in our programs with a
corresponding reduction in the level of monetization, or sales, of food
aid commodities. Much of U.S. food aid in recent years has been
provided to support non-feeding, economic development activities
carried out with funding raised through the sale of the commodities in
local markets. The Administration proposes to scale back the level of
monetization and to support economic development objectives through
other means. So, while the overall level of food aid programming may
decline, the increased emphasis on direct feeding programs should allow
us to continue our leadership role in responding to world food aid
needs.
Finally, the Administration has stated that it is prepared to
release commodities from the Bill Emerson Humanitarian Trust should
unanticipated, emergency food aid needs arise during 2003. As a follow-
up to the management review of foreign food aid activities, the
Administration will be reviewing the procedures for use of the Trust to
ensure their flexibility and responsiveness. There are 2.5 million
metric tons of wheat in the Trust at present, which could be released
should circumstances warrant. The availability of the Trust also will
help to ensure we can respond to global food needs.
global food for education initiative
Question. Under the consolidation of food aid programs, who would
have responsibility for the Global Food for Education Initiative? What
is the Administration's justification for omitting funding for GFEI in
fiscal year 2003, given that there has not yet been any assessment of
the pilot program's impact?
Answer. No decision has been made on which agency would be
responsible for administering GFEI, should the initiative be continued
beyond the pilot program currently being implemented by USDA. No
funding for GFEI was included in the 2003 budget because the
Administration believes the results of the pilot program should be
assessed before a decision is made on whether the initiative should be
continued on a more permanent basis. However, we will be extending many
of the GFEI country projects currently underway by using resources that
remain from the initial $300 million program level.
fiscal year 2002 agriculture appropriations projects
Question. Madam Secretary, I would like to address a couple of
matters lingering out there from last year. First, the fiscal year 2002
Senate Report (107-41) included language under the Natural Resources
Conservation Service's (NRCS) Watershed and Flood Prevention Operations
that provides funding for a number of Illinois watershed projects. The
second matter is, the Senate report included $300,000 for the
University of Illinois and the State of Illinois for research,
educational initiatives, and West Nile Virus disease surveillance. The
conference report included Report Language under APHIS. To this date,
these issues remain unresolved. Madam Secretary what does USDA intend
to do about these projects? Could you tell me what the Department is
waiting for?
Answer. The fiscal year 2002 Appropriations Act provided $8.6
million for assistance for the Embarras River Basin, Lake County
Watershed, and DuPage County. NRCS is currently working with State and
local officials to determine funding needs, potential projects, and
activities, and appropriate authorities to spend the funds. We
anticipate that the funds will be obligated by the end of the fiscal
year, and disbursed during fiscal year 2003.
With regards to the West Nile Virus (WNV) initiative, based on an
fiscal year 2002 congressional directive, APHIS, Wildlife Services will
work in the State of Illinois to enhance WNV surveillance efforts in
wildlife through collection, sampling and testing of birds to
complement and supplement ongoing WNV research and management
activities associated with State Agencies and the University of
Illinois.
food stamp program
Question. Will the department weigh in with the House conferees on
the farm bill and urge them to adopt the Senate language restoring food
stamp eligibility for low-income legal immigrants who have lived in
this country for at least 5 years?
Answer. Department officials and legislative liaison personnel are
in touch with the conferees of both houses and are working to advocate
the provisions of the President's budget proposal.
wic shortfalls on funding
Question. What information does the Department have concerning
potential shortfalls in State WIC funds for fiscal year 2002?
Answer. WIC State agencies were surveyed in February regarding
potential shortfalls prior to the allocation of the $39 million
supplemental appropriation. At that time, they reported a $78.4 million
shortfall of food funds. The supplemental appropriation provided State
agencies with approximately $28.5 million in food funds that helped
reduce the estimated funding shortfall. The remaining $10.5 million was
allocated for nutrition services and administration funding.
In preparation for the upcoming May reallocation of prior year
unspent funds, we are again surveying WIC State agencies. They have
been asked to provide us with an estimated shortfall of food funds for
fiscal year 2002 and a justification for requesting additional funds.
We are expecting the survey forms back by early May 2002.
Clerk's Note: On March 21, 2002, the Administration submitted an
emergency supplemental proposal to Congress. This proposal included $75
million for the WIC Program.
Question. Are any States taking action to cope with this situation
(for example, by restricting access for certain categories of eligible
participants)?
Answer. Several local agencies in several States have implemented
caseload management actions. I will ask the Food and Nutrition Service
to provide additional information for the record.
[The information follows:]
The following provides the current status of caseload management
strategies:
Restricting access.--Arizona and Michigan have established waiting
lists for individuals in the lower nutritional risk priorities.
Michigan currently has four local agencies with waiting lists. One of
the local agencies has approximately 700 postpartum women and 4-year
old children on a waiting list. Additionally, some Oregon and
Washington local agencies are restricting access to lower priorities.
Potential restrictions.--Many State agencies, including California,
are predicting the need to restrict access unless additional funding is
available. Other State agencies are considering making changes to the
food packages to help reduce food costs (i.e., lowest prices juice,
store brands, etc.).
Question. How does the department plan to monitor on an ongoing
basis whether funds are sufficient to maintain WIC participation across
the States?
Answer. The Food and Nutrition Service will continue to survey
State agencies prior to each reallocation this fiscal year to determine
the need for additional funds. This year the reallocation of funds will
occur every other month, as mandated by law.
Clerk's Note: On March 21, 2002, the Administration submitted an
emergency supplemental proposal to Congress. This proposal included $75
million for the WIC Program.
Question. I would like to ask that the Secretary provide this
information to the Committee on a timely basis, and work with us in the
months ahead to assess the potential need for additional funding in the
upcoming supplemental appropriations bill.
Answer. We commit to work with the Committee in the upcoming months
by providing information and assessing the potential need for
additional funding for the WIC Program.
______
Questions Submitted by Senator Tim Johnson
prime question
Question. Madam Secretary, I am a strong supporter of renewable
fuels such as ethanol. The benefits of ethanol are obvious; the
production of ethanol leads to reduced dependence upon foreign oil,
strengthened energy security, increased farm income, job creation and
economic growth in rural America.
Moreover, while concentration dominates most sectors of
agriculture, ethanol production concentration has decreased from 67
percent in 1999 to 49 percent today. This decline in the concentration
of ethanol production can best be attributed to the increasing number
of farmer-owned ethanol co-ops that have been established across the
country.
Of the nine ethanol plant projects currently underway in South
Dakota, one is an innovative ethanol production and cattle feeding
operation, known as ``PRIME'' or the Dakota Value Capture Cooperative.
Once complete, this project will produce approximately 20 million
gallons of ethanol, and, capture the value of the wet distillers
grains--byproduct of ethanol production--and employ it as an input in
the feeding of cattle in an adjacent feedlot.
To help jump-start this innovative project, I worked to provide $6
million in appropriations last year (one-half from the Energy
Department and the other half from USDA). As you know, I've been trying
to get USDA to expedite their share, ($3 million) of this grant to
PRIME because the Energy Department has already approved funding and is
set to devote their share, ($3 million) to PRIME within 1-2 weeks. Yet
USDA indicates that the Energy Department must provide some confidence
to you that the project is indeed the sole source of funding. I promise
to work with all parties to get USDA this information. Over 700 South
Dakota farmers and ranchers have invested over $14 million in equity
towards this cooperatively held ethanol and cattle feeding project.
These agriculture producers deserve the cooperation of those of us at
the Federal level, in accordance with the enactment of the fiscal year
2002 Agriculture Appropriations Conference Report, to do our jobs and
help provide the grant assistance authorized last year.
I urge you and USDA in the strongest terms possible to work with me
to complete the process of awarding this grant, and I intend for us to
move ahead in the following manner.
First, that USDA make this grant to PRIME-Dakota Value Capture Co-
op on a non-competitive basis. Second, that the project receive the
full $3 million from USDA that has been earmarked in the most
expeditious fashion. And finally, that this matter be sanitized of any
and all political underpinnings that may jeopardize the process and the
project.
Madam Secretary, first do you agree to work with me on this matter?
Second, how will you help us move the process along to ensure the
expeditious delivery of grant funds to the project?
Answer. Yes, we do agree to work with you on this matter. Following
is a status report on the results of our efforts on this matter.
The Department of Agriculture has completed a review of Public Law
107-76, Section 747, and documents prepared by PRIME Technologies. It
has been determined that the grant can be awarded on a non-competitive
basis. We are proceeding in that manner. In March 2002, the Rural
Business-Cooperative Service Administrator expects to delegate
authority to administer the grant funds at the State Office level to
our Rural Development South Dakota State Director. The total project is
projected for $60 million for the purpose of development of an
``Integrated Ethanol Plant, Feedlot, and Animal Waste Digestion Unit.''
leaking agricultural market forecast
Question. Madam Secretary, over the weekend it was reported that
the chairman of USDA's World Agricultural Outlook Board (Mr. Gerald
Bange) admitted that USDA provides advance information to preferred
individuals with respect to USDA's annual crop forecasts each February
in preparation for USDA's Annual Conference.
On Tuesday, USDA Chief Economist Keith Collins issued a statement
that USDA would halt the practice of disclosing details of some crop
reports to selected commodity traders before the information is
disclosed to the public.
However, members of congress are already curious as to why this
practice of sharing sensitive crop report information to preferred
individuals was ever permitted in the first place, as reflected by
Senator Lugar's announcement that he will ask the GAO to investigate
USDA's Handling of the crop reports.
While I have great respect for you, Madam Secretary, your fine
staff and certainly for Mr. Collins, USDA should not believe that Mr.
Collins' statement about ending this practice will also end the inquiry
into this inflammatory matter.
Madam Secretary, this is not entirely the fault of USDA under your
reins, that is clear. But, what is also clear to me is that we must
take strong steps to provide some confidence back into the producer's
minds with respect to this market information and the way it is
reported.
Will you inquire within USDA as to this preferential information
disclosure practice and use all your resources to determine if the
information released this year was indeed ``market moving'' or
influential upon commodity prices?
Second, will you prepare for the members of this subcommittee the
following:
--the identities of the parties receiving this information?
--when the information was distributed?
--any written USDA policy on such information distribution?
--the identity of the parties disclosing the information?
--and the full range of information affected by this policy or
practice?
Finally, I am also very interested in your view of the role of USDA
in providing market information to the public in general. As you know,
the 3-70-20 rule, which relates to the Mandatory Price Reporting
results in blackouts of livestock market information in regions of the
country which have little competition. Now I am a strong supporter of
price reporting and I think the new 3-70-20 rule is much better than
the problematic 3-60 rule. Yet, producers in some regions are at a
disadvantage with regard to bid competition by buyers. A full
discussion on the role of information in the marketplace would be
helpful to the subcommittee in determining whether additional resources
must be devoted to USDA in this regard or not.
Answer. The Department of Agriculture takes the provision of market
information to market participants as one of its highest priorities. We
are committed to ensuring such information is accurate, objective,
reliable, relevant and secure. Our key agencies that provide market
information, such as the Economic Research Service, National
Agricultural Statistics Service, Foreign Agricultural Service and
Agricultural Marketing Service, issue many hundreds of reports annually
devoted to improving the efficiency of markets and the capacity of
market participants to engage in competitive, equitable transactions.
These reports adhere to various protocols for clearance and release to
the public. Some reports are prepared solely by USDA staff and are
released under secure conditions because they are developed from
confidential information or are judged to be more market sensitive than
other reports. Reports based on economic trends and not on confidential
information are minimally market sensitive, or not sensitive at all.
Such reports are not prepared in, or released from, secure conditions
and may involve external review.
A February media article by Bloomberg reported on the peer review
process used by USDA to assess the highly tentative, pre-season outlook
presented by USDA economists at the Department's annual agricultural
outlook Forum in February. Unfortunately, the Bloomberg article failed
to recognize the difference between the outlook material discussed at
the Forum, which is based solely on publicly available data, and the
Department's monthly commodity market forecasts, which incorporate
information from confidential survey-based reports. Each month the
Department prepares and releases highly market-sensitive forecasts of
production, use, stocks, and prices for a number of commodities under
tightly secured ``lockup'' conditions. There has been no premature
release of such information.
Contrary to the press article by Bloomberg, no one from the World
Agricultural Outlook Board--WAOB--or any other USDA agency, ``leaks''
forecasts or ``tips off'' commodity traders, researchers, or investors,
routinely or otherwise, with early details of market moving reports
before they are disclosed to the public. Following the Bloomberg story,
some follow-up media articles highlighted inaccurate and inflammatory
portions of the Bloomberg article. This has misled some in the farm
community, traders, and the general public to incorrectly conclude that
details of a ``crop report'' were disclosed to selected individuals.
There is absolutely no substance to this allegation; there was no such
disclosure.
I will provide additional material for the record regarding the
specific questions you raise.
[The information follows:]
The information presented at USDA's annual outlook Forum is of an
entirely different nature than market sensitive ``lockup'' reports. The
purpose of the Forum is to publicize and encourage public comment in a
collegial environment regarding USDA's very preliminary observations on
prospects for the forthcoming year. The pre-season projections
presented at the Forum are simple updates of projections prepared the
prior fall and published in the Commodity Credit Corporation Commodity
Estimates book, released as part of the President's budget submission
to Congress in early February. At the Forum at the end of February,
these early-February budget-book projections are updated to reflect
additional information available to the public after the budget
projections are first developed. For example, on January 11 of this
year, USDA's National Agricultural Statistics Service--NASS-published
significantly revised planted acres, harvested acres, and yields for
corn and soybeans for 2001. Consequently, these changes required
private sector and USDA economists to revise their early-season
projections for 2002/03 so that supply and demand variables would
balance.
The early-season projections by economists discussed in February
are clearly different than the highly market-sensitive monthly
forecasts released as part of the crop production report process.
Starting in May of each year, USDA begins the monthly supply and demand
forecasts for the new crop year, which are published in the World
Agricultural Supply and Demand Estimates Report. These forecasts
reflect survey-based estimates, including the first winter wheat
production forecast to be released by NASS. It is only within the
confined lockup area in the South Building, where all means of
communication with the outside are cut off, that NASS developed market
information is provided to WAOB and analysts from other agencies to
prepare market forecasts. All monthly lockup reports are handled with
utmost security.
As clearly stated in USDA commodity papers presented at the Forum,
the pre-season projections released at the Forum do not reflect any
surveys conducted by USDA, which have not been publicly released well
in advance of the Forum. Similar to numerous projections by private
sector research firms and university extension specialists, USDA's
Forum projections were developed by USDA economists. No USDA employee
responsible for the collection, analysis, and reporting of survey
based-data was involved in the preparation of these projections.
Because these early-season economic projections are based solely on
economic trends and publicly available information--and not on survey
or confidential information--they generally reflect a consensus of
market analysts and are, at most, minimally market sensitive.
In the mid-1990s, USDA began inviting well-respected industry
researchers and university analysts--not traders and investors, as was
reported--to participate in sessions as peer reviewers of the early-
season outlook presented at the Forum. The purpose was to enrich the
content of the Forum by stimulating feedback and discussion. This
procedure resulted in extensive positive feedback from participants
attending the Outlook Forum in general and, in particular, improved
quality of the commodity outlook sessions. Peer reviewers were provided
our assessments several days prior to the Forum, so they would have
time to conduct their review. Peer reviewers were also entrusted to
keep the information confidential, and we know of no violations of this
arrangement.
This year USDA invited two highly respected analysts to review and
comment on USDA's outlook for grains, oilseeds, and cotton. As listed
in the Forum program, their speech topics, names, and titles were as
follows: ``Industry Perspective on the USDA Grain Outlook,'' Nancy
DeVore, Vice President, Bellingham Commodity Trade Analysis, Inc.--Ms.
DeVore addressed both USDA's grains and oilseeds outlook. ``Response to
the USDA Outlook,'' Mark Lange, Vice President, Program and Policy
Analysis, and Program Coordinator, National Cotton Council.
These speakers were asked to provide their prepared remarks to the
Forum staff 2 days prior to their presentations at the Forum. Copies of
the outlook papers to be presented by USDA at the Forum were provided
to these speakers several days in advance of the Forum, so they would
have time to peer review the USDA papers and prepare their comments.
The USDA papers were provided to the private sector reviewers by the
Chairs of USDA's Interagency Commodity Estimates Committees for grains
and cotton:
Gerald R. Rector, Chair, Interagency Commodity Estimates Committees
for Wheat and Feed Grains, WAOB.
Carol Skelly, Chair, Interagency Commodity Estimates Committee for
Cotton, WAOB.
While Outlook Forum research papers and discussions do not present,
or are based on, new survey-based information, the Forum is designed to
stimulate alternative viewpoints and discussion of issues that may
affect the outlook for the upcoming season. Infrequently, the results
of discussions at the Forum have a very slight impact on commodity
markets. However, our review indicates that there is no evidence that
USDA outlook papers shared in advance with expert reviewers were used
inappropriately, affected markets, or provided an unfair market
advantage to anyone.
Notwithstanding the benefits of the external review process to
conference participants and the general public, the Bloomberg report
has raised confusion and created misperceptions about USDA's procedures
and integrity. Such misunderstandings diminish the public trust, which
the Department has worked so hard to achieve. USDA's record is
unblemished and the Department intends to keep it that way.
Consequently, USDA announced on February 25 that the external review
process has been terminated.
bee research program
Question. Madam Secretary, domestic honey producers and beekeepers
have contacted me with deep concerns about the cuts proposed in the
fiscal year 2003 USDA budget with respect to honey bee research and the
Agricultural Research Service (ARS). Honey producers play an important
role in the agricultural economy in South Dakota.
They are concerned with the reduction of bee research from $5.7
million to less than $2.5 million, given that this program comprises
less than 1 percent of the total budget for ARS.
Why did the bee research program bear such a sizable reduction in
this year's budget when the total program represents simply a small
share of the total ARS budget?
Did USDA seek input from honey producers, beekeepers, or
researchers concerning these cuts? If so, what sort of meetings or
events took place to seek input on the cuts? If not, why not?
Answer. The President's Budget proposal actually reduces ARS'
research on honeybees by $4 million, from $8 million in fiscal year
2002 to some $4 million in fiscal year 2003 and represents a relatively
small share of the total reduction of $104,486,000 proposed for ARS in
fiscal year 2003.
The Department based its decision to consolidate and reduce
honeybee research in order to finance national high priority research
initiatives in fiscal year 2003 strictly from the recommendations of
the Strategic Planning Task Force, which conducted site visits and
laboratory reviews at these locations.
farm bill payment limitations
Question. Why does the September 2001 report, Food and Agricultural
Policy: Taking Stock for the New Century document published by USDA
suggest that too few farmers are receiving too many of the Federal
Government payments, yet, USDA has not supported or even taken a
position on the Dorgan-Johnson-Grassley payment limitations amendment
in the Senate farm bill?
Answer. Our policy document was primarily addressing a broader
concern with the distribution of farm program benefits across all
sectors of agriculture and not the narrower question/issue of the
distribution of payments among traditional program crop producers. We
believe that current programs have not addressed the needs of many
producers as well as they have commercial producers of the few major
program crops. There are many sectors of agriculture which receive
relatively little assistance from government programs and services and
that was one of the concerns we were addressing. The Senate payment
limitation provision addresses a narrower concern regarding the
distribution of payments and benefits for producers of those few
programs crops. This is a somewhat different issue. The payment limit
provision will have disparate effects on producers of a few major
program crops in different regions of the country, but will not address
the issue of providing benefits to producers of other commodities who
also need assistance of various kinds. We believe the Congress is the
appropriate body to address the largely regional distributional
questions brought up by the Dorgan-Johnson-Grassley amendment.
______
Questions Submitted by Senator Thad Cochran
office of the chief financial officer/working capital fund
Question. The President's fiscal year 2003 budget requests a $21
million appropriations to the Working Capital Fund. (No funds were
appropriated for fiscal year 2002.) How has the Working Capital Fund
been financed to date? Why is an appropriation to the Working Capital
Fund required for fiscal year 2003? How will this appropriation be
used? What would be the result of not providing the appropriation
requested? Will additional appropriations to the Working Capital Fund
be required in future fiscal years? Why or why not?
Answer. The Working Capital Fund was established in language making
appropriations to USDA for fiscal year 1944. This language is codified
at 7 U.S.C. 2235 and requires that activities supported by the Fund
recover actual or estimated costs of good and services from their
customers. Recurring operations of the Fund are not subsidized through
appropriations or other sources of funds.
In the late 1980's through the early 1990's, USDA and the Congress
engaged in a cooperative effort to recapitalize the Fund, providing
over $30 million in direct appropriations for capital equipment
purchases and annual authority to collect contributions from agencies
of up to $2,000,000 in growth capital. In this way, the Fund
replenished capital for large-scale equipment purchases. However, this
recapitalization plan did not anticipate the significant investments
that would be necessary in systems development as we moved to upgrade
corporate administrative systems that in some cases were more than 20
years old.
Having to upgrade our systems to address concerns voiced by our
Inspector General, the General Accounting Office, and the Congress, we
were in the position of having to fund investments out of operating
funds, which placed a considerable burden on the budgets of our
customer agencies.
By October of this year, we will have completed the implementation
phase of our core accounting and financial management system the
Foundation Financial Information System (FFIS). However, we are in
great need of upgrading the systems that feed administrative and
financial information to the core system. Investments in procurement
systems, property, travel, and other solutions will be critical to
USDA's success in addressing concerns over our financial management
practices.
The Office of the Chief Financial Officer, along with partners from
the Assistant Secretary for Administration and the Office of the Chief
Information Officer, have established a major initiative and task force
to address our corporate administrative systems needs. Our work will
serve as the basis for a new comprehensive plan to be shared with OMB
later this year. However, work continues in developing integrated
procurement systems and other applications, hence the need for the $21
million in appropriated support.
$21 million is not sufficient for all modernization efforts,
although it is an important first step. As part of the plan shared with
OMB last year, USDA provided an estimate to OMB of the resources needed
over 5 years for corporate and other selected system modernizations. At
the time, we estimated a total investment of about $300 million.
OCFO is focused now on capturing value in the near-term
modernization of subsystems closely related to financial management
accountability. This is an important part of our review and revision of
our corporate systems investment plan. Specifically, we are reviewing
our plan for subsystems to ensure that it addresses internal control
and audit issues.
Not providing the appropriation would delay any progress we might
make in addressing the financial management issues and system needs
identified in audits and voiced as concerns by Congress. Having made
the considerable investment of agencies' funds in bringing the core
FFIS system on line, we need to take the next step to ensure that the
systems supporting the core financial system can support our vision of
providing timely, accurate, and reliable financial and administrative
information to managers so that they can manage their programs more
effectively. Without the appropriation, we will not have sufficient
capital to invest in pilot projects to demonstrate the effectiveness of
our approaches. We will not have the capital to purchase software
applications to serve as the foundation for this new generation of
systems. In short, we will be left for some time to come with a new
financial information system that can serve our needs in that area, but
it will be supported by old, ineffective, unreliable administrative
systems.
With respect to future investments, the need for appropriations is
largely contingent upon other funding strategies that could be made
available. Use of unobligated balances could be a source of funds as an
alternative or to supplement appropriations. We can say, however, that
the need for investment capital is there.
homeland security
Question. The fiscal year 2003 request for the Office of the
Secretary includes an increase of $28.250 million for ``building
security and other terrorism protection costs''.
Please explain how and when this $28.250 million will be allocated.
How was it determined that $28.250 million will be required to meet
these needs?
Answer. The $28.25 million will be allocated in fiscal year 2003 to
continue to fund those facility and operational security needs that
cannot be covered with the Supplemental appropriations funding provided
in 2002 and to give the Secretary the flexibility to meet unforeseen
needs. As we move to increase the security of our infrastructure and
people, we are faced with costs that we cannot always predict.
Therefore, we estimated what would be a reasonable level of funding to
meet those needs, based on the information we had at the time. We will
continue to work with Congress as we allocate and spend funds for
security needs.
workforce and organizational streamlining
Question. The fiscal year 2003 request for the Office of the
Secretary includes an increase of $5 million ``for funding workforce
and organization streamlining and restructuring activities.'' What
coordination and implementation cost for office consolidation analysis
and planning are expected to be incurred by the Office of the
Secretary? Please be specific.
Answer. One of the goals of this Administration is to put in place
significant management improvements that streamline government
operations, use the private sector as the provider of services when
these services are commercial in nature, and increase customer service.
These management improvements will result in efficiencies over the long
run, but do require some upfront capital to put in place. This fund
would be used to support some of the costs of these streamlining
efforts.
In recent years, the Department has co-located field offices of the
Farm Service Agency (FSA), Natural Resources Conservation Service
(NRCS) and Rural Development (RD) into one-stop USDA Service Centers to
provide seamless, quality customer service to farmers and rural
residents. Since 1993, about one-third of the country offices of the
Service Center agencies and a number of State offices have been
consolidated. The Department will build on the analyses and lessons
learned from this effort and develop a plan during 2002 to initiate the
consolidation of at least 200 additional offices in 2003. The
Department's review will include an assessment of the costs and
benefits of further office consolidations. The Department will also
review other business and administrative processes in the Service
Center agencies and develop plans to restructure or reengineer them as
appropriate. The budget provides a $5 million increase for the Office
of the Secretary to coordinate and implement these activities.
Question. The Department of Agriculture clearly has a requirement
to protect its critical information to ensure continuity of operations
after any disaster. Presidential Decision Directives 63 and 67
specifically address this requirement.
The events of September 11 demonstrated the importance of this,
when entire data centers on Wall Street, containing massive amounts of
financial information, vanished in an instant. The financial markets,
however, were up and running almost immediately because this critical
information was ``mirrored'' to a geographically remote site. In other
words, I understand the information was not ``backed up'' to tape and
stored in a warehouse, but instead was ``mirrored'' to a secondary data
center which was able to immediately take over all operations when the
primary data center went down.
Is the Department developing a secondary site and capability
similar to that, which seems to have saved the day for our Nation's
financial markets?
What is required, in terms of funding or other resources, to
establish a secondary site?
There may be many functions that the Department performs that are
absolutely dependent on information technology. Has the Department
identified its mission-critical systems? Which are they?
What direction is the Department heading with respect to an
overarching disaster recovery/business continuance capability
Department-wide?
The Department's National Finance Center (NFC) in New Orleans
processes about 40 percent of the payroll for the Federal Government,
and also houses the Federal Government's Thrift Savings Plan.
Does the NFC ``mirror'' its data to a secondary site that could
quickly take over essential operations should there be an outage of any
kind?
What is NFC's current method for back up data storage for those
data functions that need to be performed if there ever were an outage
at the Center, or worse yet, if data was ever lost as a result? Has
this system ever been tested?
Answer. USDA recognizes that contingency planning is a critical
component of a sound information security strategy. Re-establishing
automated processes in the event of a malfunction or disaster is
essential to the Department's ability to meet its mission objectives.
No departmental-level activities are currently underway to establish a
single secondary site with the capacity to continue operations of
USDA's critical systems without a noticeable delay. In preparation for
the Year 2000 Computer problem, USDA identified its most essential
information technology systems. These 52 systems remain the focus of
our cyber security efforts and are the first systems analyzed for risk,
tested for vulnerabilities and monitored to ensure security measures
are appropriate and efficient. The complete list of these 52 mission-
critical systems will be provided for the record.
With respect to an over-arching disaster recovery/business
continuance capability Department-wide, USDA presently has in place a
rigorous Continuity of Operations (COOP) plan for USDA facilities in
the Washington, D.C area. This plan was partially implemented
successfully on September 11, 2001. USDA is currently developing a
strategy to extend COOP planning to critical USDA facilities located
outside the Washington, D.C area. This extended planning effort will
include such critical facilities as the National Finance Center,
National Information Technology Center, and USDA Bio-safety Level III
laboratories. Many of these facilities currently have well defined
business continuity and emergency operations plans, which will form the
basis for future COOP plans. Upon completion of the draft COOP plan for
these critical facilities, USDA will follow-up with a large scale COOP
exercise in the late fiscal year 2003 timeframe to assess if the plans
can be executed as indicated. A plan review program will be established
to monitor annual changes and biennial updates. This will ensure that
the plans adjust to exercise lessons learned, incorporate the latest
policy changes, and stay current with events/conditions. USDA is also
in the process of revising its emergency management structure to
provide a more responsive and efficient emergency response capability.
The decision to invest in ``mirroring'' at a secondary site and
other more timely backup technology and processes, similar to that
which enabled the financial markets to rapidly recover, will be based
on the criticality of the systems, data, and technology infrastructure
on which program delivery depends. Each agency that has not already
done so will be conducting a risk-assessment of its critical systems
throughout the remainder of this fiscal year. Based on the results of
these risk assessments, appropriate disaster recovery and business
resumption plans will be developed. To further assist in this effort,
the Department will be using emergency supplemental funds to establish
a standard process for preparing appropriate disaster recovery and
business resumption plans for all of its mission-critical systems.
Funds to continue this activity are included in the Department's fiscal
year 2003 budget request.
With respect to the NFC, backup tapes are created daily for all
applications, databases, operating system software, and other business
system files. These backup data are sent daily to an offsite storage
facility. The NFC has contracted with SunGard Systems to provide
recovery capabilities for the NFC at recovery centers in Philadelphia
and Atlanta should a disaster or other outage occur that renders the
NFC inoperable.
The NFC's plan is to recover their critical information technology
infrastructure and their critical application systems within 48 hours
of the declaration of a disaster (outage). Within 6 hours of an event,
an assessment is made and, if necessary, a disaster is declared.
Following the declaration, notification and mobilization of the key
recovery personnel with backup data occurs. The notification and
mobilization occurs within 18 hours with key personnel and backup data
arriving at the Philadelphia and Atlanta recover centers. Within the
next 24 hours after arriving at the Philadelphia recovery center, NFC
infrastructure is restored and operational. At the same time, the NFC
business systems are restored and operational at the Atlanta recovery
center. Within 48 hours, NFC's critical systems are restored and normal
business operations resume.
The NFC performs disaster recovery testing twice a year using the
backup data. The tests conducted twice a year have proven generally
successful in recovering and processing the critical systems within the
target time frame. We believe that the context in which NFC performs
recovery is different from that of financial markets and institutions.
Whereas the financial entities of which you spoke require ``minute-by-
minute'' capability in their systems and recovery methods, ``point-in-
time'' service provides us with effective system and recovery
capability for core services while allowing us to avoid the extremely
expensive solutions that the ``minute-by-minute'' approach to recovery
would require.
However, the issue with the NFC's current disaster recovery process
is that it assumes people can be contacted, and people have an ability
to travel within specified time frames. The events of 9/11 and the
resulting assessment and guidance of major advisory firms in this
business area cast doubts upon the viability of the current approach.
Therefore, we are looking at new approaches. I will provide additional
information for the record on some of NFC's plans for increased
security.
[The information follows:]
--Public Key Infrastructure (PKI).--In fiscal year 2002, NFC intends
to deploy a PKI system for selected applications, allowing
digital signatures for transactions and encrypted data
transmission via the Internet. The infrastructure to verify PKI
certificates is being deployed with secondary site ``fail
over'' capabilities. In the event of a total equipment failure
in New Orleans, the secondary site would provide authentication
for users of certificates issued by the National Finance
Center.
--Payroll and Financial Systems.--In fiscal year 2003, the National
Finance Center intends to perform a pilot test of data
mirroring capabilities within the existing National Finance
Center operated facilities in New Orleans, and to perform an
analysis of alternatives for full mirroring capability to a
secondary site. The planned analysis would examine the specific
existing technical architecture and application design, and
compare specific technical alternatives for mirroring the data
to a secondary site. At that time, specific facility,
equipment, and telecommunications requirements would be
identified with cost estimates for each alternative.
--Payroll and Financial Systems.--In fiscal year 2004, the National
Finance Center has requested a minimum level of funding for the
capital equipment required to establish a secondary site
technically capable of providing minimal recovery for the
critical portions of these systems within 24 hours.
--Thrift Savings Plan System.--The Thrift Savings Plan System is
undergoing a transition from the application designed by the
National Finance Center to one designed by Materials and
Communications, Inc. The new system's current plan for recovery
is the restoration of data from tapes warehoused at an offsite
location. However, portions of the system are technically
capable of mirroring data to a secondary site. The system
owner, the Thrift Investment Board, has stated intentions to
move to an environment, which would afford 24 hour per day, 365
days per year availability. Mirroring capabilities figures
significantly in this concept.
Funding and Resources
The estimates for funding and resources to provide full secondary
site capabilities are not known at this time. The total cost would be
offset by the discontinuance of the current business continuance
contracts for tape warehousing and recovery facilities. The plans
outlined above are estimated to cost $950,000 in fiscal year 2003 and
$2,800,000 in fiscal year 2004. The analysis of alternatives currently
planned for fiscal year 2003 would provide more detailed levels of
additional funding and resources. The key areas that must be addressed
are secondary site facilities, personnel, equipment, and
telecommunications.
USDA's list of Departmental Priority Systems was established as
part of the Department's efforts to mitigate computer problems related
to the Year 2000 computer date rollover. The criteria used to identify
these systems are based on the economic repercussions, financial
impact, and health and safety risks if these systems were to fail.
------------------------------------------------------------------------
Agency System
------------------------------------------------------------------------
Farm Service Agency....................... 102--Direct Deposit System
SCOAP
Farm Service Agency....................... 118--Conservation Reserve
Program(CRP)(SCOAP)
Farm Service Agency....................... 123--PA Payment Systems
Farm Service Agency....................... 534--Gram Inventory
Management System Phase 2
Farm Service Agency....................... 540--Processed Commodity
Inventory Mgmt. System
Farm Service Agency....................... 717--Automated Price Support
System (APSS)--# 2
Farm Service Agency....................... 76--Check Writing System
SCOAP
Farm Service Agency....................... 77--Cash Receipts System
SCOAP
Farm Service Agency....................... 78--Automated Claims System
(SGOAP) (ACS)
Farm Service Agency....................... 80--Common Receivable System
(SCOPPS)(CRS)
Farm Service Agency....................... 86--Data Control System,
SCOAP(DCS)
Farm Service Agency....................... 88--Assignment/Joint Payment
System, SCOAP
Risk Management Agency.................... Actuarial Filing System
Risk Management Agency.................... Data Acceptance System
(DAS)--SUN
Risk Management Agency.................... Reinsurance Accounting
System (RAS)--SUN
Food Safety and Inspection Service........ Automated Import Information
System (AIIS)
Food Safety and Inspection Service........ Performance Based Inspection
System (PBIS)
Food Safety and Inspection Service........ Planned Compliance Program
(PCP)
Food Safety and Inspection Service........ Residue Violations
Information System (RVIS)
Food and Nutrition Service................ Agency Financial Management
System(AFMS)
Food and Nutrition Service................ Anti-Fraud Locator using EBT
Retailer Transactions
(ALERT)
Food and Nutrition Service................ Coupon Requisition &
Inventory Management System
(CRIMS)
Food and Nutrition Service................ Disqualified Recipient
Subsystem (DRS)
Food and Nutrition Service................ Food Stamp Program
Integrated Information
System (FSPIIS)
Food and Nutrition Service................ National Integrated Quality
Control System (NIQCS)
Food and Nutrition Service................ Regional Office
Administrated Program
(ROAP)
Food and Nutrition Service................ Special Nutrition Program
Integrated Information
System (SNPIIS)
Food and Nutrition Service................ Store Tracking,
Authorization and
Management Subsystem
(STAMS)
Agricultural Marketing Service............ Financial Information System
Agricultural Marketing Service............ Market News Information
System
Animal and Plant Health Inspection Service Export Certification Program
Animal and Plant Health Inspection Service Generic Database (GDB)
Animal and Plant Health Inspection Service Headquarters WADS replaces
AQI-Monitoring
Animal and Plant Health Inspection Service Laboratory Information
Management System
Animal and Plant Health Inspection Service Licensing and Registration
Information System
Forest Service............................ Fire & Aviation Management--
F&AM
Natural Resources Conservation Service.... CLIMSYS/CDBS
Natural Resources Conservation Service.... SNOTEL
Natural Resources ConservationService..... WSF
Rural Development......................... Automated Multi-Housing
Accounting System
Rural Development......................... Dedicated Loan Origination
and Servicing System
Rural Development......................... Federal Finance Bank Loan
Accounting System
Rural Development......................... Guaranteed Loan Accounting
System
Rural Development......................... Program Loan Accounting
System
Rural Development......................... Rural Telephone Bank Loan
Accounting System
Rural Development......................... Rural Utilities Loan
Accounting System
OCFO/National Finance Center.............. Accounting Applications
OCFO/National Finance Center.............. Administrative Payments
OCFO/National Finance Center.............. Billings & Collections
OCFO/National Finance Center.............. Payroll/Personnel
OCFO/National Finance Center.............. Thrift Savings Plan
------------------------------------------------------------------------
______
Question Submitted by Senator Arlen Specter
protecting u.s. agriculture
Question. Secretary Veneman: Protecting the U.S. agricultural
system is a shared responsibility between government and industry. How
does USDA propose to ensure that warning, protection and response to
potential threats are the result of coordinated efforts between
government at all levels and the multiple entities in industry? What
specific mechanisms exist or are being put in place to ensure that all
parties are operating from common procedures and communication
mechanisms during a crisis?
Answer. Over the last several years, USDA has worked to modernize
its agricultural safeguarding system to address increased threats of
both accidental and intentional pest and disease introductions. The
events of September 11 have heightened the sense of urgency to these
ongoing efforts. USDA has taken several measures to strengthen
cooperative partnerships with State/local governments and industry, and
to improve communications. Increased information sharing, both within
the government and agricultural community, will be essential in
ensuring a quick and effective response to a biosecurity threat. First,
we have established an emergency management grants program to further
the efforts of the National Animal Health Emergency Management System
(NAHEMS), the State-Federal-industry effort to improve the United
States' ability to deal successfully with animal health emergencies.
The goal of the grant program is to increase the level of animal health
emergency preparedness throughout the country. In fiscal year 2001,
USDA awarded close to $2 million to 31 States, 6 Tribal Nations, and 1
university. For fiscal year 2002, the USDA will use homeland security
supplemental funds to distribute $11 million in emergency management
grants.
Second, we are requesting $4 million in fiscal year 2003 to enhance
the disease response component of our system by placing up to 35
emergency managers throughout the country to assist States with
establishing animal health emergency standards, to participate in local
and State exercises, and to assist with actual animal health
emergencies. The placement of these managers will set up an
infrastructure for a quick and effective response to disease outbreaks
involving one or more States. We have established an Emergency
Operations Center with advanced networking and monitoring capabilities
in Riverdale, Maryland. We have scheduled several training courses
throughout the fiscal year for State animal health emergency managers
to provide tools and information to augment their emergency management
plans.
In addition, USDA is using the findings of the National Association
of State Departments of Agriculture (NASDA) Animal Health Safeguarding
Review report to further cooperation with State, local, and university
stakeholders. While the NASDA review found that we have been effective
in detecting, controlling, and eradicating animal health threats, the
escalating demand for services has strained the resources of USDA
agencies that deal with animal health issues. In response to one of the
review's recommendation for improved and expanded applied research and
animal health diagnostic capabilities, USDA recently signed a
memorandum of understanding (MOU) with the American Association of
Veterinary Laboratory Diagnosticians (AAVLD) that, when implemented,
should enhance the Department's ability to provide timely diagnostic
services. The MOU permits USDA to certify States to perform diagnostic
tests for certain foreign animal diseases and establish a formal
network of accredited, State diagnostic laboratories. USDA is working
with the AALVD to develop appropriate standards and an inspection
system to ensure that State facilities meet our biosecurity
requirements.
USDA is committed to ensuring that its Federal, State, and industry
stakeholders are aware of and support the Department's efforts to
protect U.S. agriculture. We realize that close coordination and
information with our stakeholders is crucial. We will continue to
strengthen our partnerships with the States, as well as the
agricultural community, to protect the health and integrity of our food
production systems.
SUBCOMMITTEE RECESS
Senator Kohl. Our next hearing will be on Thursday, March
14th at 10 o'clock in this room where we will hear testimony
from sub-cabinet members of the Department of Agriculture on
the state of the farm economy and the rural sector.
If there is no other business to come before the
subcommittee, we stand recessed.
[Whereupon, at 12:30 p.m. Wednesday, February 27, the
subcommittee was recessed, the reconvene subject to the call of
the Chair.]
AGRICULTURE, RURAL DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR
FISCAL YEAR 2003
----------
THURSDAY, MARCH 14, 2002
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 10:02 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Herb Kohl (chairman) presiding.
Present: Senators Kohl, Dorgan, Johnson, Murray, Cochran,
Stevens, and Burns.
DEPARTMENT OF AGRICULTURE
STATEMENTS OF:
KEITH COLLINS, CHIEF ECONOMIST
J.B. PENN, UNDER SECRETARY FOR FARM AND FOREIGN AGRICULTURE
SERVICES
MARK E. REY, UNDER SECRETARY FOR NATURAL RESOURCES AND
ENVIRONMENT
MICHAEL E. NERUDA, DEPUTY UNDER SECRETARY FOR RURAL DEVELOPMENT
JOSEPH J. JEN, UNDER SECRETARY FOR RESEARCH, EDUCATION AND
ECONOMICS
OPENING STATEMENT OF SENATOR HERB KOHL
Senator Kohl. This hearing will come to order. Today we
welcome our guests from the Department of Agriculture, who will
be providing an overview of the farm economy and rural sector,
and an explanation of how the President's fiscal year 2003
budget applies to these subjects. We will hear today from USDA
Chief Economist Keith Collins; J.B. Penn, Under Secretary for
Farm and Foreign Agricultural Services; Mark Rey, Under
Secretary for Natural Resources and the Environment; Mike
Neruda, Deputy Under Secretary for Rural Development; and
Joseph Jen, Under Secretary for Research, Education and
Economics. Also joining us today is Mr. Dennis Kaplan from the
Office of Budget and Program Analysis, and we welcome you all
to this hearing.
Information on the subject of today's hearing is crucial to
the work of this subcommittee. When I was first elected to the
Senate in 1988, I created the Wisconsin Agricultural Advisory
Committee, which is made up of more than 20 farm and rural
economic experts from around my State of Wisconsin, to help
identify the emerging issues and challenges facing Wisconsin
farmers in rural communities.
You gentlemen here today have the experience, the staff and
the resources to provide this subcommittee similarly valuable
information on a national as well as an international scale.
Your contribution is not only noted but very much appreciated.
I want to say at the outset that there are a number of
proposals in the budget that I find troubling. Just to mention
a few, I question the wisdom of a proposal that greatly reduces
United States contributions to humanitarian food assistance
around the world when now, more than ever, that world is
looking to this country for leadership.
Also, I do not understand why the President would eliminate
funding for programs designed to install flood prevention
structures and practices, and instead adopt a policy that,
while it will not protect your home from a flood, will
nevertheless help you pick up the pieces after a flood.
And when an identified unmet need for this country is a
shortage of housing for the rural poor, I do not understand why
this budget, for the first time in 40 years, does not provide
funding for construction of rural rental housing units.
Finally, I have to admit that the proposal to terminate the
cereal product laboratory in Madison, Wisconsin, which was
established in the 1930s, has caught my attention.
Still, gentlemen, we appreciate the testimony you have
prepared and it will be made part of the record. Following
statements by Senator Cochran, or any of my other colleagues
when they arrive, we will turn to our witnesses for a summary
of their testimony. I do ask you to make your summaries as
brief as possible so that we will be able to ask questions
during our limited time this morning.
Noting that Senator Cochran or any of my colleagues are not
here at the moment, we will start with your testimony. First,
we ask you, Mr. Collins, to give us your testimony.
STATEMENT OF KEITH COLLINS
Mr. Collins. Thank you very much, Mr. Chairman. I
appreciate the opportunity to be invited to join this
distinguished panel from USDA to kick off today's hearing with
a brief overview of the state of the farm economy, which I
believe to be improving slowly after bottoming out in 1999.
Overall demand for crop products is likely to be
constrained as the global economic slowdown runs through the
remainder of 2002. Recent data on the U.S. economy shows that
the recession has not been as deep as once thought or predicted
and recovery now appears to be underway. Even so, the U.S.
economy is starting slow here at the beginning of 2002, but it
will improve as the year unfolds, as low energy prices, low
interest rates, the tax cut and the recently enacted stimulus
package gradually increase consumer confidence.
Foreign economic growth is expected to be weak again this
year with developed economies particularly fragile,
particularly Japan and Argentina. The prospects are improving
for the Middle East, for East Europe, parts of Asia, and we
think in Mexico as well.
The value of the dollar unfortunately is expected to remain
as high or higher than it was last year. In this environment of
slow economic growth and a high value of the dollar, we still
expect U.S. agricultural exports to increase to $54.5 billion,
and that's up from about $53 billion last year. And we expect
imports to remain unchanged, at about $39 billion.
Farm cash receipts have gone up in each of the last 2
years, and they are forecast to rise again this year to $204
billion; that would be $16 billion higher than they were in
1999. I think this growth in revenue indicates the slow but
steady improvement in the overall market fundamentals that I
have expressed earlier. Livestock receipts are showing the most
strength in the farm economy and our forecast will remain near
last year's record high level.
The continuing decline of the Nation's cattle inventory and
cautious expansion by hog producers resulted in a less than 1
percent increase in meat production last year and a similar
increase is predicted this year. Consequently, livestock prices
have been firm or rising, except for milk, where production is
up sharply following the pretty high returns of last year. The
poultry market has been slowly improving but I believe that
prospects now are linked to resolution of the Russian ban on
U.S. poultry.
United States crop receipts are forecast to remain well
below the record high that was set back in 1997. They are
pressured by large supplies in competing countries and by ample
stocks. Nevertheless, by the end of this marketing season,
global grain stocks are likely to be down nearly 10 percent
from a year ago and that will be the lowest level since the
mid-1990s. Grain prices, consequently, could move up pretty
significantly if we were to have adverse weather that affects
global crop production.
Unfortunately, stock levels for cotton and rice are likely
to be at 15-year highs this year, which I think brings
implications for the revenues for those crops. Despite the
improvement in overall market revenue for agriculture as a
whole, the prospects for cash farm income are going to depend
on the disposition of the new Farm Bill. Assuming the Farm Bill
and other assistance legislation, then net cash income for U.S.
agriculture as a whole in 2002 will look very similar to the
average of recent years.
Although dependent upon substantial government support, the
overall financial condition of farming continues to be stable.
In 2001 we saw a slightly larger decline in the number of farms
in the U.S. than we had seen in recent years. However, the
value of farm real estate rose 3 percent, and another increase
is expected this year, keeping the farm debt to asset ratio at
a pretty manageable level.
Reported loan delinquency and foreclosure rates at
agricultural banks have been low and agricultural banks overall
are in fairly sound financial condition. In addition to large
government payments, off-farm income continues to help make
farms avoid more serious financial problems. For example, just
consider those farms who say that their principal occupation is
farming. Those farms had an average household income of $59,000
in the year 2000, compared with $57,000 for the average income
for all U.S. households.
Another factor demonstrating the importance of off-farm
income is that only 12 percent of all farms had more than 80
percent of their household income come from farm businesses.
To conclude, while national farm conditions appear stable,
a combination of low prices and adverse weather has contributed
to some regional and some sector problems. In addition,
production agriculture consists of a very diverse group of
farms and ranches with varying degrees of financial success and
needs. Today we have farms that struggle to keep their
operation going while simultaneously we have others that are on
the cutting edge of production and marketing technology,
creating new busy opportunities for the farm businesses.
That concludes my statement, Mr. Chairman.
[The statement follows:]
Prepared Statement of Keith Collins
Mr. Chairman and members of the Subcommittee, thank you for the
invitation to discuss the economic situation in U.S. agriculture. The
generally weak markets for major crops continues, fueled by the global
economic slowdown, the high value of the dollar, and large global
production. Despite the reduction in major crop prices over the last
several years, the financial condition of the farm sector has remained
stable due in part to large government payments. Other contributing
factors have been a reluctance of producers to take on new debt, low
interest rates, off-farm employment opportunities, and improved prices
and returns for livestock. In addition, prices for energy-related farm
inputs have dropped over the past year, helping to hold down farmers'
production expenses.
Looking ahead, little improvement in major crop markets is expected
over the next 12 months, unless global crop production moderates from
recent high levels. However, the financial condition of the farm sector
is expected to remain stable in 2002 supported by continued strength in
livestock prices and returns, low interest rates, stable energy prices,
and continued large government payments.
outlook for the u.s. and world economies
The outlook for the global economy is for a continuation of the
current economic slowdown through 2002. The global economic slowdown is
expected to constrain growth in demand for agricultural products, but
will also help to stabilize farm production expenses in 2002. Prior to
last year, the slowdown in the world economy reflected poor economic
performance in Asian and Latin American countries. In contrast, a sharp
downturn in the U.S. economy is a major contributor to the current
global economic slowdown.
U.S. Gross Domestic Product (GDP) registered a strong increase of
5.7 percent during the second quarter of 2000 but then plunged sharply,
declining by 1.3 percent in the third quarter of 2001. For all of 2001,
U.S. GDP increased by 1.1 percent. Despite the sharp drop in growth and
rising unemployment, consumer spending did not contract, helping to
avoid an even deeper recession. The U.S. economy is forecast to
register a second year of slow growth in 2002, with the rate of growth
increasing to 1.6 percent and unemployment holding at about 6 percent.
The rate of growth is expected to improve throughout the year, as low
energy prices, low interest rates, and tax cuts gradually increase
consumer confidence.
Foreign GDP growth in 2001 was a very slow 1.3 percent and is
forecast to moderate further to 1.2 percent this year (Oxford
Economics). Developed economies will be particularly weak, especially
Japan and Argentina, but prospects are improving in the Middle East,
and parts of Asia. In addition, Mexico's economy is forecast to grow by
1.4 percent in 2002 after contracting slightly last year.
outlook for u.s. agricultural exports
The value of U.S. agricultural exports peaked at a record $60
billion in fiscal year 1996. Over the next 3 years, the value of U.S.
agricultural exports fell by nearly $11 billion, reflecting increased
foreign competition and a strong dollar. In fiscal year 2002, the value
of U.S. agricultural exports is forecast to reach $54.5 billion, up
from nearly $53 billion last year. The value of U.S. agricultural
imports is forecast to remain unchanged at $39 billion in fiscal year
2002.
The U.S. real agricultural trade-weighted exchange rate has
appreciated by 30 percent relative to the currencies of countries that
import U.S. agricultural products over the past 6 years, increasing the
price importers must pay in terms of their own currency. And over this
period, the U.S. dollar appreciated 40 percent relative to the
currencies of U.S. agricultural competitors, serving as an incentive
for foreign producers to maintain or even expand production. No major
adjustment in the value of the dollar is anticipated in 2002. Despite
the current U.S. economic slowdown and low interest rates, foreign
capital continues to flow into the United States as investors continue
to view the U. S. economy as providing the most lucrative and least
risky investment opportunities.
Large foreign crop production for several consecutive years in a
row has also contributed to the weakness in U.S. agricultural exports
over the past several years. Since the early 1970s, world wheat and
coarse grain production per hectare has varied considerably from year-
to-year, after adjusting for trend, with yield up 1 year and followed
by a decline the next year. These annual fluctuations in yield
primarily reflect fluctuations in weather patterns around the world.
There are two notable exceptions to this up-and-down pattern. The first
notable exception is the 4-year period of 1984-87 when yields were
quite consistent, stocks built up, and farm economic problems occurred.
The second notable exception is the 6-year period of 1996-2001, when
again yields have been very stable and rising.
outlook for farm income
After bottoming out in 1999 at $188 billion, farm cash receipts
reached $202 billion in 2001. In 2002, farm cash receipts are forecast
to reach $204 billion, $3 billion below the record set in 1997 of $207
billion. Livestock receipts are forecast to hold steady in 2002 at near
the record of $106 billion set last year. Crop receipts are projected
to rise $2 billion in 2002 to $98 billion, but remain well below the
record of $111 billion in 1997. Cash receipts for grains, soybeans, and
cotton declined from a record $57 billion in 1997 to $40 billion during
1999-2001 but are projected to increase slightly to $41.5 billion in
2002.
Despite improving cash receipts, prospects for net cash farm income
in 2002 depend on enactment of additional financial assistance to
producers either in a new Farm Bill or supplemental assistance
legislation. If no legislation is enacted, net cash farm income would
decline to under $51 billion, down from the record of $59.5 billion
last year. However, if legislation is enacted that provides payments
equal to the average of the payments that would likely be made under
the House and Senate passed Farm Bills, net cash farm income would be
in the range of $56-57 billion, similar to the average of recent years.
In 2002, farmers' total production expenses are forecast to increase by
$0.6 billion to a record $200 billion. Repair, marketing, and labor
costs are expected to increase in 2002, with these higher costs about
offset by lower fertilizer and lime, fuel and oil, and interest
expenses.
Net cash income, excluding government payments, measures the net
income received from the marketplace. Income earned from the market has
risen from $34 billion in 1999 to $38 billion in 2001 and projected to
increase to over $40 billion in 2002, reflecting a slow but steady
improvement in market fundamentals.
Government payments have offset much of the decline in major crop
cash receipts since 1998, helping to maintain producers' cash flow.
Direct government payments to farmers dropped from the record of $23
billion in 2000 to $21 billion last year, compared with $8 billion in
1997. In 2001, direct government payments included nearly $4 billion in
Production Flexibility Contract (PFC) payments, $6 billion in loan
deficiency payments and marketing loan gains, $1.7 billion in
conservation program payments, and over $9 billion in emergency (crop
and market loss) assistance.
For major field crops, such as wheat, rice, corn, sorghum, oats,
barley, cotton and soybeans, government payments have been especially
important in maintaining cash flow. Net cash farm income for major
field crops averaged slightly under $26 billion during 1999-2000 and is
projected to fall below $24 billion for crop year 2001, compared with
the average of $26 billion for the 1995-99 crops. Direct government
payments were equal to one-third of net cash income for major field
crops during 1995-99. For the 1999-2000 crops, direct government
payments were equal to three-fourths of net cash income for major crops
and account for about the same proportion of net cash income for the
2001 crop year.
outlook for farm finance
The overall financial condition of the farm sector continues to
remain fairly strong. The value of U.S. farm real estate rose 3 percent
during 2001, bringing the value of farm assets to $1.22 trillion, 12
percent higher than at the end of 1998. Farm debt rose 4.8 percent in
2001, surpassing $190 billion for the first time since 1984. As a
result, the farm debt-to-asset ratio rose slightly in 2001 to 15.8
percent from 15.5 percent in 1999 and 2000, but continues to remain
well below the level reached during periods mid 1980s farm financial
crisis.
In 2002, the farm debt-to-asset ratio is expected to increase
slightly to 16 percent, reflecting another year in which the value of
farm assets rises by less than the increase in farm debt. The value of
farm assets is expected to rise by about 1 percent in 2002, but could
be higher depending on farm legislation, while farm debt is forecast to
increase about 2 percent. The slight deterioration in the debt-to-asset
ratio assumes continuation of current farm programs and may not occur
if Congress enacts a new farm bill or provides ad hoc assistance to
producers in 2002. Although farm debt has increased the past 2 years
and expected to increase again in 2002, most farmers are not as heavily
leveraged as a decade ago, face lower interest rates, and are generally
in better financial health.
All major lenders to agriculture, including USDA, continue to
experience very low levels of delinquencies, foreclosures, chargeoffs
and loan restructurings. No agricultural bank failed in 2001 and only 5
failed during 1994-2000. In the mid 1980s, 60-70 agricultural banks
were failing annually. Surveys find banks healthy, liquid and ready to
make loans. Farmers are repaying loans--with the help of government
payments--and are somewhat hesitant to take out new loans which shows
prudent behavior on their part. However, bankers in a number of regions
express pessimism about their borrowers financial positions.
In addition to record government payments, improved off-farm income
opportunities for farm households have helped avoid more serious farm
financial problems. In recent years, about 90 percent of the total
income of the average farm household is derived from off-farm sources.
Earnings of farm operator households from off-farm sources averaged an
estimated $60,000 in 2001, up from less than $36,000 in 1992. Combining
income from farm and off-farm sources, farm operators averaged over
$62,000 in total household income in 2001, about 9 percent higher than
the average income of all U.S. households.
While national farm financial conditions appear secure, regional
and sector problems persist. The combination of low prices and adverse
weather in the Southeast, southern plains and elsewhere has contributed
to regional pockets of farm financial stress. In addition, production
agriculture consists of a diverse group of farms and ranches with
varying degrees of financial success, which a single aggregate
performance indicator such as net farm income cannot capture.
outlook for major crop and livestock commodities
Major crop prices for the 2001/02 season continue to be pressured
by large global production and ample stocks. Nevertheless, market
fundamentals are slowly improving. At the end of this season, global
grain stocks are projected to be down 8 percent from a year ago and the
lowest since 1995/96. Thus, world grain prices could move up
significantly in the coming year, if weather adversely affects global
crop production.
In 2001, U.S. producers planted the lowest wheat acreage since
1973. Wheat prices this marketing year are forecast to average $2.75-
$2.85 per bushel, up from last season's $2.62. The increase in price
reflects lower total supplies and declining world and U.S. carryover
stocks. Total use is forecast to decrease by 168 million bushels over
last year's nearly 2.4 billion bushels, as food use, feed use, and
exports are all expected to decline. Wheat exports are projected to
fall to 975 million bushels, down 86 million bushels from last season.
A major factor contributing to lower U.S. exports this season is larger
wheat production in importing countries. Wheat production in the major
importing countries rose from 161 million tons last season to a
projected 165 million tons in 2001/02. U.S. ending stocks are forecast
to fall for the third consecutive year to 701 million bushels, which
would be the lowest in 5 years.
Winter wheat seeded area for 2002 of 41 million acres was down
fractionally from 1 year ago and the lowest since 1971. Lower plantings
and reduced carryin stocks are expected to lead to another year of
reduced supplies. Even so, farm prices may be about unchanged during
the upcoming season because of increased competition for export
markets. Wheat exports could fall to 900 million bushels in 2002, the
lowest level in 30 years. Weather reduced wheat production in Canada
and the European Union (EU) in 2001. Winter wheat acreage in the EU was
up sharply last fall and assuming a return to normal weather, the
United States would face increased competition from the EU and Canada
in 2002/2003. However, moisture levels continue to remain well below
normal in Canada.
The 2001/02 corn crop of 9.5 billion bushels was 4 percent below 1
year ago, as plantings dropped by nearly 4 million acres, primarily
reflecting less than ideal planting time weather. The average corn
yield reached 138.2 bushels per acre in 2001, the second highest on
record, as the weather was generally good throughout the growing
season. The smaller crop more than offset larger beginning stocks,
causing supplies of corn to drop from 11.6 billion bushels last season
to 11.4 billion bushels in 2001/02. With total supplies down from 1
year ago, ending stocks are forecast to decrease by 303 million bushels
to 1.6 billion bushels, the lowest level since 1997/98.
Total corn use this season is projected to reach a record 9.82
billion bushels, compared with last season's 9.74 billion bushels,
reflecting expanding domestic use. Both feed use and food, seed and
industrial use are expected to reach record levels. Corn used for
alcohol production is expected to reach 690 million bushels, up 11
percent from a year earlier and up 74 percent from a decade ago.
Increasing corn production in importing counties is expected to reduce
corn exports by 10 million bushels from last season's 1,935 million
bushels, even though excessive rains and flooding reduced Argentina's
corn crop in 2001 and China's corn exports are forecast to decline
because of the elimination of export subsidies following entry into the
WTO. The farm price of corn for the 2001/02 marketing year is forecast
to average $1.85-$2.05 per bushel, compared with last year's $1.85 per
bushel.
Lower natural gas prices will lower corn producers' fertilizer and
irrigation costs in 2002. These lower costs are expected to lead to a
slight increase corn plantings in 2002. However, total corn supplies
could remain about unchanged from 1 year ago, assuming normal weather.
U.S. corn exports are forecast to reach about 2 billion bushels in
2002/03, as expanding world demand offset the effects of a rebound in
Argentina's corn crop and ample supplies of wheat for feeding. Another
year of rising exports, an expected expansion of 30 percent in corn
used for ethanol, and flat supplies could lead to some strengthening of
market prospects for corn in 2002/03.
Soybean production was record-high in 2001, reaching nearly 2.9
billion bushels, up 5 percent from a year earlier. The production
increase more than offset lower carryin stocks, causing total soybean
supplies to increase by about 3 percent in 2001/02. Most of the
increase in supplies is expected to go into higher total use. Domestic
crush is forecast to exceed last year's record by 2 percent and U.S.
soybean exports could eclipse last year's record of 1 billion bushels.
Despite the increase in use, ending stocks are forecast to increase by
7 percent to 265 million bushels. Soybean prices for 2001/02 are
projected to average $4.05-$4.45 per bushel, compared with last
season's $4.54.
The loan rate provisions of the next farm bill could influence
soybean plantings in particular. Under the House-passed version of the
farm bill, the soybean loan rate could be no higher than $4.92 per
bushel, compared with this season's $5.26, whereas the Senate-passed
version of the farm bill would reduce the soybean loan rate to $5.19
and increase loan rates for competing crops. Either version of the farm
bill would tend to dampen soybean plantings, compared with current law.
The decline in soybean acreage this year could be muted by the timing
of the farm bill, since producers may not have much time to evaluate
the provisions of the new farm bill prior to spring planting. Assuming
soybean plantings for 2002 are about unchanged from last year, U.S.
soybean supplies would reach another record in 2002. In addition, large
South American soybean inventories going into 2002/03 and further
acreage and production expansion in 2003 will also keep soybeans prices
under pressure next season.
China is a major market for U.S. oilseeds. Protein consumption in
China has increased at above 10 percent per year since 1997, led by
increases in oilseed crushing capacity, livestock production and shifts
toward feeding more optimal rations. Growth in production of soybeans
and other oilseeds has not kept pace, leading to strong gains in
Chinese imports of U.S. oilseeds. There is considerable concern that
China may use regulations on imports of biotech products to restrict
imports of U.S. soybeans and corn. These regulations have led to some
cancellations of U.S. corn and soybean export sales destined for China
in recent weeks. At this point, it is unclear to what extent China
regulations on biotech imports will result in long-term export losses
and lower prices to U.S. producers.
Cotton production reached a record 20 million bales in 2001, up 17
percent from 1 year ago. The increase in production, combined with
larger carryin stocks, caused total supplies to increase from 21
million bales in 2000/01 to 26 million bales this season. Despite the
increase in total supply, U.S. cotton mill use is projected to decline
from last season's 8.9 million bales to 7.3 million bales, as textile
imports continue to grow with the strong dollar being a major factor.
Excluding Mexico, the textile trade weighted value of the dollar has
risen 30 percent since 1997. In addition, the slowdown in the U.S.
economy has also hurt mill use. Even though domestic mill use is
projected to decline, total use is expected to increase this season, as
larger supplies have made the U.S. more price competitive in world
markets. Despite a projected increase in exports of 3.5 million bales,
stocks of cotton at the end of the 2001/02 season are projected to
reach a burdensome 8.5 million bales, a 16-year high. From August 2001
through January 2002, the farm price of cotton averaged 31.7 cents per
pound, compared with last year's season average price of nearly 50
cents.
This season's lower price should reduce U.S. and foreign planted
area in 2002. U.S. exports should be strong again in 2002/03. Even so,
U.S. stocks are likely to remain large, greatly limiting the prospect
for much of a rebound in U.S. cotton prices in 2002/03.
Rice production, in 2001, reached 213 million cwt., up 12 percent
from the last year and surpassing the previous record of 206 million
cwt. set in 1999. The strong increase in production caused total
supplies at the beginning of the crop year to rise by 26 million cwt.,
up 11 percent from the previous year. Both domestic use and exports are
projected to exceed year ago levels, with total use rising by over 10
million cwt., as increased supplies and lower prices have made U.S.
rice more competitive in world markets. Total carryover stocks are
projected to rise from 28.5 million cwt. last season to nearly 44
million cwt. at the end of the 2001/02 season, which would be the
largest carryover in 15 years. The farm price of rice is forecast to
average $4.00-$4.20 per cwt. this season, the lowest since 1986/87 and
down from last season's $5.61 per cwt.
Sugar production dropped below 8 million tons in 2001, down 8
percent from a year earlier. In order to reduce government inventories
of sugar and prevent additional forfeitures, USDA announced Payment-in-
Kind (PIK) Programs for the 2000 and 2001 crops under which producers
could elect to divert a portion of their contracted acreage from
production in exchange for in-kind payments in the form of CCC-owned
sugar. At the end of the current marketing year, the CCC is projected
to hold about 300,000 tons of sugar in inventory, down from nearly
800,000 tons at the end of last season. The PIK programs have reduced
stocks and strengthened prices near term. Looking ahead over the next
several years, import commitments under existing international trade
agreements (including Mexico), the potential for over quota or second
tier imports from Mexico, and trend growth in U.S. yields are likely to
continue to pressure sugar prices, possibly again resulting in CCC loan
forfeitures and stock accumulation.
In 2001, hog prices averaged $46 per cwt. for the year, up 2
percent from a year earlier and up one-third from 2 years ago. Despite
relatively favorable returns in recent years, production has not
expanded as in the past. In 2001, the number of sows farrowing was
below a year earlier in each quarter, except for a slight increase in
September-November. In addition to a smaller number of sows farrowing
in 2001, the average number of pigs per litter declined slightly for
the first time since 1988 and for only the third time in the past 20
years. As a result, the 2001 pig crop was down 1.3 million head from
2000. However, higher U.S. imports of hogs and an increase in dressed
weights caused pork production to increase by 1 percent in 2001.
Commercial pork production is forecast to be up slightly in 2002
due primarily to heavier slaughter weights. Hog prices are forecast to
average $42-$45 per cwt. in 2002, but rising seasonal production could
push hog prices to the upper $30 range during the fourth quarter. U.S.
pork exports are forecast to drop off somewhat from the brisk pace of 1
year ago. U.S. pork exports were up about 21 percent in 2001,
reflecting increased consumer demand for pork in Japan because of
Bovine Spongiform Encephalopathy (BSE) and other animal disease
concerns.
In 2001, liquidation of the Nation's cattle herd finally led to
reduced beef production. Beef cow slaughter rose sharply in 2001 and
large numbers of heifers were moved into feedlots rather than retained
for herd expansion, as the most severe winter since 1992/93 increased
cow slaughter during the first quarter of 2001 and drought in many
areas caused producers to reduce their herds. Despite large numbers of
heifers moving into feedlots, the number of cattle placed on feed
dropped 6 percent causing beef production to decline by 2.6 percent in
2001. Fed cattle prices averaged $72.43 per cwt. in 2001, compared with
$69.65 the previous year. Fed cattle prices peaked in the first quarter
with prices declining through the year as the effects of last year's
winter weather dissipated and exports slowed. The economic slowdown and
the September terrorist attacks further pressured prices along with
rapidly rising slaughter weights in the fourth quarter.
Beef production in 2002 is expected to decline 2 percent from last
year. Choice steer prices are expected to average $72-$77 per cwt. in
2002. The February 1 Cattle report indicated that the total number of
heifers 500 pounds and over is fractionally below last year. This would
imply that the number of heifers which will be available to be bred in
late spring or early summer for calving next spring will be about the
same as last year. If the liquidation phase of the cattle cycle is to
end, the majority of the herd retention will have to come out of calves
born this year. These animals would be bred in 2003 for calving in
2004. If this occurs, it is likely that beef production will not expand
before 2005. The major constraint to expansion appears to be
availability of forage. Given dry conditions in many cattle areas,
producers appear to be holding back on expansion until the forage base
shows improvement.
Last year, U.S. beef exports dropped by 8 percent, as Japanese
consumers reduced beef consumption because of concerns related to
animal diseases. Prospects for recovery in U.S. beef exports in 2002
appear remote, as economic conditions in Japan, the strong dollar, and
continued concerns about the safety of beef will likely prevent a
rebound in sales to Japan.
Broiler prices are projected to average 57-61 cents per pound in
2002, compared with 59 cents per pound in 2001. In response to
declining prices and returns, producers began reducing the rate of
expansion in broiler production in 2000. Broiler production rose 2.5
percent in 2000 which followed a 7-percent increase in 1999. In 2001,
broiler production increased by 2 percent and is forecast to increase
by 2.8 percent in 2002.
Broiler exports continue to show considerable strength. In 2001,
broiler exports reached 6.2 billion pounds, up 15 percent from a year
earlier. Increased shipments to Russia accounted for most of the
increase in U.S. broiler exports in 2001. In 2002, broiler exports are
expected to total about 6.35 billion pounds, as the slowing world
economy and the continuing strength of the dollar are expected to
moderate the growth in broiler exports. This forecast assumes Russia
does not ban U.S. exports of chicken and turkey meat because of
concerns related to the use of antibiotics in U.S. broiler production
and anti-microbial rinses in U.S. poultry processing plants. Since
Russia accounted for 37 percent of U.S. broiler exports in 2001, such a
ban would have a very negative effect on leg quarter prices and U.S.
exports.
The largest annual drop in milk production since the mid 1980s
caused milk prices to rise sharply in 2001. In 2001, the all-milk price
averaged $14.93 per cwt., up from $12.40 in 2000 and surpassed only by
the record of $15.46 in 1998. The drop in milk production in 2001
reflected declining cow numbers and lower milk production per cow.
After increasing in both 1999 and 2000, cow numbers reverted back to
the much more typical downward trend of the past several decades in
2001. Milk production per cow in 2001 was adversely affected by
stressful winter weather, higher than normal summer temperatures, below
normal forage quality, and tight supplies of replacement heifers.
Increasing milk production at the end of last year caused milk
prices to drop sharply and the Commodity Credit Corporation (CCC) to
resume purchasing nonfat dry milk under the price support program. In
calendar year 2001, 353 million pounds of nonfat dry milk were
purchased under the price support program, compared with 558 million
pounds the previous year. In addition, 141 million pounds of nonfat dry
milk were exported under the Dairy Export Incentive Program (DEIP). At
the end of 2001, the CCC held 776 million pounds of nonfat dry milk,
less than 1 million pounds of butter, and about 4 million pounds of
cheese in inventory.
Milk production is expected to grow by about 2.5 percent in 2002,
assuming a return to more normal summer temperatures and some
improvement in forage quality. In contrast, commercial dairy product
demand is expected to increase by less than 2.5 percent in 2002, as
softening economic conditions lead to less rapid growth in demand for
dairy products than in recent years. With supplies rising faster than
demand, the all-milk price is forecast to average $12.85-$13.45 per
cwt. in 2002, and nonfat dry milk purchases under the price support
program could continue to remain near last year's pace, unless the
purchase price is lowered.
The outlook for horticultural crops is very uneven. As a group,
cash receipts for horticultural crops are projected to be up in 2002
and the value of exports is forecast to reach a record $11.3 billion in
fiscal year 2002. However, farm prices for some horticultural crops,
including apples, grapefruit, and pears are being adversely affected by
large supplies.
conclusion
Despite continued low returns in some commodity markets, a strong
balance sheet, off-farm opportunities, lenders in good shape with ample
loanable funds, and the prospect of new farm legislation with continued
financial support, all suggest the farm sector is secure and in
reasonably good shape as the planting period for the 2002/03 season
approaches. A few key factors to watch in the coming months that will
shape this outlook include:
--The pace of Chinese imports and exports and crop supplies in the
major exporters.
--Resolution of the U.S. farm bill debate, which will affect the
amount of support provided to producers and could potentially
affect relative loan rates and planting incentives.
--Transparency of China's biotech regulations to be implemented
beginning March 20.
--Evolution of WTO implementation in China, particularly with respect
to the relative incentives provided to grains and oilseed
producers, which may affect domestic production of these crops.
--South American crop developments in the months ahead.
--The U.S. and global economies.
Mr. Chairman, that completes my testimony and I would be pleased to
respond to questions.
Senator Kohl. We thank you, Mr. Collins. Before we move on
to Mr. Penn, I would like to ask Senator Cochran whether he has
a statement he would like to make.
Senator Cochran. Mr. Chairman, I appreciate that. I just
want to join you in welcoming our panel of witnesses today. We
appreciate your cooperation with our subcommittee in our
efforts to review and understand the President's fiscal year
2003 budget proposals under your jurisdiction. I look forward
to your comments, and our questions and answers that will
follow.
Senator Kohl. Thank you, Senator Cochran. Senator Murray,
do you have a statement?
Senator Murray. Thank you, Mr. Chairman, it is good to be
here. Thank you for having this hearing. I do not have an
opening statement. I look forward to my first full year on the
subcommittee. Thank you.
Senator Kohl. Thank you, Senator Murray. Senator Johnson.
Senator Johnson. Thank you, Mr. Chairman. I have a
statement that I will submit for the record so we can move
ahead to the panel.
[The statement follows:]
Prepared Statement of Senator Tim Johnson
Thank you Chairman Kohl and Senator Cochran, it is my pleasure to
join you today in welcoming our many panelists to the subcommittee's
hearing concerning the state of the farm economy and rural sector. I
extend greetings to each of you and thank you all for appearing before
this subcommittee.
We are all here because we care about the future of rural America
and family farmers and ranchers. Americans are the envy of the world
because we enjoy the most affordable and safest food, spending only 11
percent of our household income on groceries. Yet I am concerned that
many of the advances we have been making will be lost under the
proposed budget for USDA in fiscal year 2003. I find it disconcerting
that USDA suggests the farm sector is secure and in reasonably good
shape, yet in recent years, 90 percent of the total income of the
average farm household comes from off-the-farm employment.
Today, South Dakota farmers receive on average approximately half
the price for crops they pocketed in 1996. Additionally, many farmers
and ranchers are paying more each year for critical inputs such as fuel
and fertilizer. This situates farmers in a price-cost squeeze making it
nearly impossible to earn a decent farm income that covers total
production expenses. Overall, the President's budget for agriculture
fails to provide the kind of financial bridge necessary to help
America's farmers, ranchers, and rural communities cross the divide
between recession and prosperity.
Notwithstanding that we are under significantly different budget
constraints this year, I do not support the recommended decreases for
vital rural development programs. The total rural development budget is
proposed to be cut by $3.5 billion, with significant reductions for
water and waste water projects, housing assistance, and cooperative
development in rural sectors of the country. This enormous funding blow
to ongoing rural development efforts will affect virtually every county
in the state of South Dakota alone. Rural development is a key
ingredient in reigniting prosperity in many of our States, and I will
work to restore funding for rural development programs where I can.
Furthermore, South Dakota State University (SDSU), a land grant
institution that relies upon funds from the Cooperative State Research,
Education, and Extension Service (CSREES) will also suffer from budget
cuts. I am disappointed that SDSU and other land grant universities
that provide such vital research and education outreach, have to endure
a $10 million cut in funding. SDSU and other land-grant universities
are making a real difference with the funding they receive to maintain
research, education, and extension activities. American farmers and
ranchers rely upon the information made available by land grant
universities, in order to maintain the reputation producing the safest
food in the world.
Taking into account the new budget environment we find ourselves in
today, I still cannot support the recommended cuts to the Agriculture
Research Service (ARS) budget. It is through the research completed at
ARS facilities across the country that ensure producers are armed with
up to date and adequate information in order to improve production.
Ongoing changes in today's global environment do not permit successful
producers to be armed with anything but the most current information
and technological advances. Cuts to agricultural research are
counterproductive and I will work in this subcommittee to restore some
of this funding where I can.
I was pleased to see the President's budget including a small
increase for the Resource Conservation and Development (RC&D) Program,
which I consider vital to the 75 percent of the population that is
served by the 368 RC&D councils nationwide. Yet, this increase does not
allow for the Department to approve the many proposed councils
throughout the country. In South Dakota alone, there are seven
established councils with the hope to have each county involved in the
effort to improve the quality of life and standard of living in rural
communities.
Our work this year will not be easy. But I am confident that if we
work together, this subcommittee can produce a responsible and
effective budget for the important functions of the USDA, which will
have a truly positive impact on the farm economy and rural sector.
Thank you all for appearing before us today and I thank the Chairman
and the committee for their time.
Senator Kohl. Thank you, Senator Johnson. Mr. Penn.
STATEMENT OF J.B. PENN
Dr. Penn. Thank you, Mr. Chairman. I appreciate the
opportunity to appear before the committee this morning to
discuss the budget and programs for fiscal year 2003 for the
Farm and Foreign Agricultural Services mission area in the
Department. I will be very brief.
As you know, the Farm and Foreign Agricultural Services
mission area is at that heart of USDA efforts to assist
American agriculture to respond to the challenges of the 21st
century. Our mission area provides price and income supports,
farm credit and capital assistance, risk management tools,
conservation assistance, trade expansion and export programs,
and together these provide a broad-based economic safety net
for America's farmers and ranchers.
The 2003 budget proposals fully support this range of
activities. The proposed budget reflects the $73.5 billion
agreed to for the new broad-based farm policies for 2002
through 2011. It fully funds the risk management and crop
insurance activities. It supports export expansion, provides
for a program level of over $6 billion for the Department's
international activities, and it provides for the delivery of
the large and complex set of farm programs while improving the
management and the delivery of those programs.
Our mission area is composed of three major agencies in the
Department, and I would like to just say a very brief remark
about each of those and their budgets.
Starting with the Farm Service Agency, which is our
principal vehicle for delivering assistance directly to
farmers, FSA will play a lead role in implementing the programs
of the new Farm Bill and it continues to enhance its ability to
provide first-rate service more efficiently to farmers and
ranchers all across the country. The 2003 proposed level for
FSA salaries and expenses supports about 5,800 Federal staff,
11,250 non-Federal county staff, and that's the same level as
it was in the previous year.
Now there are some very significant workload implications
that will arise out of the Farm Bill that's now being
developed, but because of the provisions of that bill were
unknown at the time we developed this budget and are still
unknown at this time, we could not address the workload
requirements associated with the new Farm Bill. So our budget
projections do not include any allowances for the increased
workload because of that bill.
The workload, as I said, could be fairly considerable
because the new Farm Bill could well include updating crop
acreage basis and program yields, something that has not been
done in many, many years. It could have, perhaps, new payment
limit provisions, new conservation programs, new farm accounts.
There could be a considerable number of program modifications
and new programs that would add substantially to the work load.
Once we know what the provisions of that bill are, then we
will complete our assessment of the resource requirements. We
will work within the Administration, consulting with OMB and
the other agencies, and we will determine how to proceed from
that point.
I would also note that the FSA budget for 2003 supports
nearly $4 billion in farm loans, about a quarter of which would
be direct loans and the rest guarantees. That level is just
slightly below what is available for 2002. By law, a
substantial portion of the direct loans will be reserved for
assistance to beginning, limited resource, and socially
disadvantaged farmers and ranchers.
Next I turn to the Risk Management Agency. The Federal crop
insurance program is now one of the strongest parts of the
safety net available to our Nation's agricultural producers. In
2001, the crop insurance program provided nearly $37 billion in
protection on over 211 million acres, which is approaching two-
thirds of the cropland base in this country. The crop insurance
program has seen a very significant shift in business in the
past 2 years because the producers that use insurance are
electing higher levels of coverage as a result of the premium
subsidies that were provided in the Agricultural Risk
Protection Act of 2000.
The 2003 budget requests an appropriation of such ``sums as
necessary'' as mandatory spending for all costs associated with
the program's Federal salaries and expenses. I would also note
that the budget includes a proposal to cap the amount of
underwriting gains the insurance companies may receive, and
that proposal was based on the fact that since 1994, the
insurance companies have received over $2 billion in
underwriting gains, while the Federal Government has paid about
$1 billion in excess losses.
Now, shifting to the international arena, I think one of
the clearest facts before us is that our farmers and ranchers
have the capacity to produce far, far more food and fiber than
we need to meet the domestic market requirements. So if we are
to have a thriving, profitable farm sector, then we have to
have access to the customers and the markets that are outside
our own boundaries. One of the major activities of the Foreign
Agricultural Service is trying to help with that market
promotion and market expansion.
The program includes a very ambitious trade agenda being
pursued by the entire Administration, which would include
multilateral trade negotiations under the auspices of the Doha
agricultural round, regional negotiations such as the free
trade area of the Americas, and bilateral trade agreements with
several important countries, Chile and Singapore, perhaps to be
completed this year.
In addition, the Foreign Agricultural Service conducts a
very ambitious program of monitoring and enforcement of the
existing trade agreements. We try to make sure that people who
enter into these agreements fully comply with the provisions
that they have agreed to.
The budget for the Foreign Agricultural Service has a
modest increase proposed of $10 million, $6 million of that
being for absolutely mission critical IT and the rest being for
various other programs, including the Cochran Fellowship
Program, which will focus in the coming year on the areas of
biotechnology and food safety.
Now I want to also mention in the international arena that
the Administration conducted a review of U.S. foreign food
assistance, as Chairman Kohl noted in his opening remarks. The
President's budget reflects the results of that review in the
proposal to increase Public Law 480, Titles I and II, to
provide $1.34 billion in assistance, which would amount to 3.7
million metric tons of food assistance. Along with the increase
in Title II, there is a decrease for Section 416(b).
Overall, Mr. Chairman, we think this is a good budget. It
is a very modest budget. It doesn't reflect any major changes,
any major departures in policy from what has existed, and the
increases that are requested are focused on the areas of most
urgent need.
So with that, I will stop and I will be happy to respond to
questions at the appropriate time.
[The statements follow:]
Prepared Statement of J.B. Penn
Mr. Chairman and Members of the Committee, I am pleased to appear
before you today to present the 2003 budget and program proposals for
the Farm and Foreign Agricultural Services (FFAS) mission area of the
Department of Agriculture (USDA). With me this morning are the
Administrators of the three agencies within our mission area: James
Little, Administrator of the Farm Service Agency; Ross Davidson, Jr.,
Administrator of the Risk Management Agency; and Ellen Terpstra,
Administrator of the Foreign Agricultural Service. I am also
accompanied by Mary Chambliss, the Department's Acting General Sales
Manager, and Stephen Dewhurst, the Department's budget officer.
Statements by each of the Administrators providing details on the
agencies' budget and program proposals for 2003 have already been
submitted to the Committee. My statement will summarize those
proposals, after which we will be pleased to respond to your questions.
Mr. Chairman, last year, the Department released a report on food
and agricultural policy for the 21st century--Food and Agricultural
Policy: Taking Stock for the New Century. The report assesses the
current state of the American food and agricultural system and
identifies the challenges and needs it will face in the new century.
Based on those findings, the report sets forth a set of goals and
principles that we believe should guide the development of policy,
programs, and institutions that will affect the growth and vitality of
the food and agricultural sector in the new century.
The programs and services of the FFAS mission area are at the heart
of the Department's efforts to assist American agriculture respond to
the challenges of the new century. Through the wide range of services
provided by our agencies--price and income supports, farm credit
assistance, risk management tools, conservation assistance, and trade
expansion and export promotion programs--we provide the foundation for
a broad-based safety net for our farmers and ranchers.
The 2003 budget proposals we are discussing today fully support
these activities and ensure our continued efforts on behalf of
America's agricultural producers. In particular, the budget supports
the development of sound policies for the domestic commodity and income
support, conservation, trade, and related programs in the new Farm Bill
by providing an additional $73.5 billion in mandatory funding over the
2002-2011 period. It fully funds our risk management and crop insurance
activities. It supports the Administration's export expansion goals by
providing a program level of over $6 billion for the Department's
international activities and programs. Also, it provides for the
continued delivery of a large and complex set of farm and related
assistance programs, while improving management and the delivery of
those programs.
farm service agency
The Farm Service Agency (FSA) is our frontline agency for
delivering farm assistance and is the agency the majority of farmers
and ranchers interact with most frequently. Producers come to FSA to
participate in farm programs, including programs involving flexibility
contract or other direct payments, commodity marketing assistance
loans, loan deficiency payments, farm ownership and operating loans,
disaster assistance, and conservation programs such as the Conservation
Reserve Program (CRP). Because FSA will play a lead role in
implementing provisions of the new Farm Bill, the budget places a
priority on enhancing the ability of FSA to provide better service to
our producers more efficiently.
farm program delivery
Current conditions in the farm economy and the substantial level of
assistance in new programs to be implemented will continue to reinforce
the need to improve customer service efficiency in FSA and the other
county-based conservation and rural development agencies. The
substantial workload that FSA has faced over the past 3 or 4 years is
expected to continue through 2003, as new Farm Bill programs are
implemented.
The proposed 2003 program level for FSA salaries and expenses of
$1.3 billion will support a ceiling of about 5,800 Federal staff years
and 11,250 non-Federal county staff years, unchanged from the 2001
levels and the current estimates for 2002. At the time the budget was
developed, the workload implications of the new Farm Bill were unclear.
We will continue to assess the provisions of the Bill as it is
developed to estimate the workload implications.
The Administration also places high priority on management
initiatives and investments in technology to deliver improved, more
efficient services to rural customers by continuing to streamline and
modernize the field offices and Service Centers. Although we have
established a high number of consolidated Service Centers and have made
major strides in replacing separate-agency, aging information
technology systems with the Common Computing Environment and re-
engineered business processes, additional steps are needed to realize
the full benefits.
A key component in these efforts is the Geographic Information
System (GIS) which will replace normal hard-copy paper maps and data
files with an integrated digital system. The GIS will enable producers
and the Service Center agencies to electronically share and process
vital information on farm records, soils, and aerial photography in
ways that can dramatically improve efficiency. The President's budget
proposes $28 million for this GIS effort as part of the $56 million in
appropriated funds under the Office of the Chief Information Officer
for FSA's component of the Common Computing Environment. The Rural
Development mission area and the Natural Resources Conservation Service
(NRCS) will provide additional funding, as necessary, to support the
modernization plan and Service Center initiative.
FSA also will work on modernizing its farm credit program servicing
activities, and we will review Service Center office processes and
structure to explore additional ways to provide services at lower cost.
The 2003 budget was prepared before the precise nature of a new
Farm Bill was known, but it is anticipated that most of the programs
FSA would be required to deliver in 2003 will be governed by the new
legislation. FSA has been preparing for the challenges that a new bill
could bring and is evaluating the administrative and workload issues of
programmatic changes such as updating crop bases and other challenges
looming for 2002, 2003, and beyond, along with opportunities for
increased administrative efficiencies and streamlining.
commodity credit corporation
Disaster and commodity price and income support programs
administered by FSA are financed through the Commodity Credit
Corporation (CCC). CCC also is the source of funding for a number of
conservation programs administered by USDA, and it funds many of the
export programs administered by the Foreign Agricultural Service. CCC
borrows funds directly from the Treasury to finance those programs.
Changes over the last decade in commodity, disaster, and
conservation programs have dramatically changed the level, mission, and
variability of CCC outlays. CCC net outlays increased from $10 billion
in 1998 to a record of $32 billion in 2000, and were $22.1 billion in
2001.
CCC net outlays for 2003 are currently estimated at $11.6 billion,
down approximately $5.8 billion from the 2002 estimated level of $17.4
billion. These are current law baseline estimates and do not include a
continuation of emergency assistance provided in supplemental
appropriations acts in recent years. They also do not include program
changes and new spending likely to be authorized in the Farm Bill. The
budget does support increased spending for the Farm Bill at levels
consistent with the 2002 Congressional Budget Resolution and, when this
is taken into account, CCC net outlays in 2002 and 2003 will likely
remain closer to the 2001 level.
The 2002 Agriculture Appropriations Act authorizes CCC to replenish
its borrowing authority as needed from the Treasury, up to the amount
of realized losses at the end of the preceding fiscal year. It is
projected that, in 2002, CCC will draw about $22 billion under that
authority for 2001 losses. The appropriation to reimburse CCC for net
realized losses that Congress provided for 2002 was a current,
indefinite appropriation. This provided CCC with the flexibility to
request funds as needed from the Treasury, up to the actual losses
recorded for the most recent year. Without this current, indefinite
appropriation, CCC would have been unable to replenish fully its
borrowing authority at the beginning of 2002, and timely assistance to
producers could have been jeopardized due to insufficient borrowing
authority.
conservation programs
Conservation program outlays will account for an estimated 10
percent of CCC expenditures in 2002. The 1996 Federal Agriculture
Improvement and Reform Act authorized direct CCC funding for the CRP
administered by FSA and several conservation programs administered by
NRCS. It also authorized CRP through 2002 and set enrollment in the
program at 36.4 million acres. The new Farm Bill is expected to
substantially increase conservation program levels, including those
funded by CCC.
At the end of 2003, about 34.9 million acres are projected to be
enrolled in CRP. In 2001, no general signup was held but a 1-year
extension was offered on expiring contracts. Also, 20,000 acres were
enrolled in the Farmable Wetlands Pilot Project. A 1-year extension of
CRP contracts has been announced for 2002 as well. About 600,000 acres
are expected to be enrolled under the continuous, non-competitive CRP
sign-up in 2002. In addition, about 200,000 acres are expected in the
Farmable Wetlands Pilot Project. For 2003, new Farm Bill provisions
will be in effect but, for purposes of the budget presentation,
continuation of existing CRP authorities is assumed, which would allow
for general, as well as continuous, CRP sign-ups to continue.
emergency conservation program
In order to ensure timely emergency assistance to restore farmland
damaged by natural disaster, the 2003 budget requests about $49
million, reflecting the 10-year average, in appropriated funding for
the Emergency Conservation Program. This will avoid the delay commonly
faced in providing assistance when no advance funding is provided.
farm loan programs
FSA plays an important role in the safety net available to our
Nation's agricultural producers by providing a variety of direct loans
and loan guarantees to farm families who would otherwise be unable to
obtain the credit they need to continue their farming operations. By
law, a substantial portion of the direct loan funds are reserved each
year for assistance to beginning, limited resource, and socially
disadvantaged farmers and ranchers. For 2003, 70 percent of direct farm
ownership loans are reserved for beginning farmers and about 35 percent
are made at a reduced interest rate to limited resource borrowers, who
may also be beginning farmers.
The 2003 budget includes funding for about $700 million in direct
loans and $3 billion in guarantees. Although these levels are down
slightly from 2002 totals, they do not reflect any change in policy.
The reductions are due primarily to technical re-estimates of subsidy
rates for the direct loan programs that have made those programs more
expensive to operate. However, we believe the proposed loan levels will
be sufficient to meet demand in 2003.
The 2003 budget also maintains funding of $100 million for the Boll
Weevil Eradication program and $2 million for the Indian Land
Acquisition program, the same levels that were provided in 2002. For
emergency disaster loans, carryover funding from 2002 is expected to
provide sufficient credit in 2003 to producers whose farming operations
have been damaged by natural disasters.
risk management agency
The Federal crop insurance program represents one of the strongest
safety net programs available to our Nation's agricultural producers.
It reflects the principles set forth in the Department's report on food
and agriculture in the 21st century by providing a safety net that is
compatible with international trade commitments, creates products and
services that are market driven, harnesses the strengths of both the
public and private sectors, and reflects the diversity of the
agricultural sector.
In 2001, the crop insurance program provided nearly $37 billion in
protection on over 211 million acres, which is about 5 million acres
more than were insured in 2000. However, the crop insurance program has
seen a significant shift in business over the past 2 years--producers
have chosen to buy-up to higher levels of coverage as a result of
increased premium subsidies provided in the Agricultural Risk
Protection Act of 2000 (ARPA). Although total acres insured have not
increased dramatically, there has been a major shift in coverage. For
example, participation at coverage levels of 75 percent or more has
increased by more than 50 percent. The number of policies and acres and
levels of liability and premiums all increased more than 40 percent for
coverage levels of 70 percent and higher.
The 2003 budget requests an appropriation of ``such sums as
necessary'' as mandatory spending for all costs associated with the
program, except for Federal salaries and expenses. This level of
funding will provide the necessary resources to meet program expenses
at whatever level of coverage producers choose to purchase and can
accommodate the effects on participation that might result from Farm
Bill and other changes.
Our current projection of mandatory funding needs for the program
reflects a modest decrease, from $2.9 billion in 2002 to $2.8 billion
in 2003. This projection is based on USDA's latest estimates of planted
acreage and expected market prices for the major agricultural crops,
and assumes that producer participation remains essentially the same as
it was in 2001.
The 2003 budget includes a proposal to cap the amount of
underwriting gains the insurance companies may receive at 12.5 percent
of their retained premium. This proposal is expected to reduce program
costs by about $115 million annually. Since 1994, insurance companies
have received over $2 billion in underwriting gains while the Federal
Government has paid about $1 billion in excess losses. As a group, the
companies have not experienced a loss since the devastating Midwestern
floods of 1993, when they posted a combined loss of $82 million. In the
last 8 years, they have recovered that loss nearly 25 times over.
For salaries and expenses of the Risk Management Agency, $76
million in discretionary spending is proposed, an increase of $1.3
million above the 2002 level of $74.7 million.
foreign agricultural service
Lowering trade barriers and opening new markets overseas are among
the Administration's highest priorities for American agriculture. The
basis for that commitment is established in our report on food and
agricultural policy for the 21st century. As the report makes clear,
trade is critical to the long-term health and prosperity of the
American agricultural sector.
More than 96 percent of the world's population lives outside the
United States, so it stands to reason that is where most future growth
in global food consumption will occur. With agricultural production in
this country far exceeding our needs and growing at a pace faster than
the domestic market can absorb, it is vitally important that our
farmers and ranchers have access to growing overseas markets.
The report on food and agricultural policy emphasizes that
enhancing the competitiveness of U.S. agriculture in the world
marketplace must be one of the primary objectives of our farm policy.
It also sets forth a trade agenda for the 21st century and lays out a
number of strategies for achieving that objective. One of the most
important of those strategies is continuing the liberalization of
global agricultural trade. America's farmers and ranchers stand to gain
a great deal from further trade reform through increased access to
markets overseas and a reduction in unfair competition in those
markets.
The new round of multilateral trade negotiations is at the center
of our trade liberalization efforts. Those negotiations received an
important boost by the negotiating framework agreed to in Doha, Qatar
last November. With that agreement as a foundation, the United States
can now pursue our ambitious agenda for agricultural reform
negotiations, including substantial reductions in tariffs and increased
market access, elimination of export subsidies, reform of state trading
enterprises, and tighter rules on trade-distorting domestic support.
Doha was also important as both China and Taiwan were approved formally
for accession to the World Trade Organization (WTO), which furthers our
pursuit of open markets and opens a wide range of new marketing
opportunities for our producers and exporters.
We also are pursuing trade liberalization through both regional and
bilateral negotiations. These include negotiations to establish a Free
Trade Area of the Americas that will encompass virtually all of the
Western Hemisphere, as well as bilateral negotiations aimed at
establishing free trade agreements with Chile and Singapore. Another
important element of our trade agenda is monitoring and enforcement of
existing trade agreements. We are working diligently to ensure that our
trading partners comply fully with the terms of those agreements and do
not institute technical barriers to trade that run counter to their
spirit.
Another strategy laid out in the report on 21st century agriculture
is ensuring we have the proper tools needed to pursue our export
expansion objectives in an increasingly competitive environment. At
USDA, having the appropriate tools means having effective export
promotion and market development programs, as well as the necessary
infrastructure to implement them.
Our budget proposals for the Department's international programs
and activities for 2003 are designed to ensure that we have the
necessary resources to achieve our export expansion objectives, using
the statutory authorities presently available to us. We recognize that,
in the case of the export activities funded through mandatory spending,
the pending Farm Bill may change the level of funding that will be
available for both this year and 2003. Indeed, a portion of the
additional funding for the Farm Bill included in the budget estimates
is available for these programs.
fas salaries and expenses
The Foreign Agricultural Service (FAS) is the Department's lead
agency in implementing most of our international activities and plays
an absolutely crucial role in our trade expansion efforts. For 2003,
the budget provides $140 million for FAS, an increase of $9.4 million
above the 2002 level. Included in the FAS request is much-needed
funding to support an electronic-Government initiative that will
upgrade the agency's information technology (IT) resources and
capabilities, and modernize its business practices and operations. Over
the last year, FAS has faced a series of computer-related crises that
have threatened to cripple agency operations and communications. This
is a particularly serious problem for an agency that has offices
situated throughout the world and must work closely on a daily basis
with many different agencies, such as the State Department and Office
of the U.S. Trade Representative. FAS' modernization plans have been
reviewed and approved by both the Department's Chief Information
Officer and the Office of Management and Budget, and have been found to
be consistent with USDA's long-term goals and strategies for business
process and IT reform.
The budget also provides funding to develop a plan to establish a
standardized information system for all U.S. foreign food aid programs
that will be accessible via the Internet to administering agencies,
vendors, and grantees. The system will facilitate the distribution of
information on U.S. food aid activities and operations, as well as
improve program administration and execution.
The FAS proposals also include increased funding of $1 million for
the Cochran Fellowship Program. This is a highly successful program
that has provided training and helped to establish positive linkages
with many agricultural officials throughout the world. The additional
funding will expand programming in a number of important areas,
including biotechnology, food safety, WTO accession requirements, and
the quality and marketing of U.S. high value agricultural products.
export promotion and market development programs
Another key to having the proper trade expansion tools is to ensure
adequate funding for the Department's export promotion and market
development programs, which our budget proposals are designed to do.
For the CCC export credit guarantee programs, the largest of our export
programs, the budget includes a program level of $4.2 billion. This is
an increase of $300 million above the projected 2002 level, reflecting
continued very strong growth in the supplier credit guarantee program.
For the Foreign Market Development (Cooperator) Program, Market
Access Program, and Quality Samples Program, the budget includes total
funding of $120 million, unchanged from this year's level. Both the
House and Senate versions of the Farm Bill provide increased funding
for both the Cooperator Program and MAP for both 2002 and 2003. As
noted earlier, a portion of the additional funding for the Farm Bill
included in the budget could be allocated to these activities.
The budget also includes an estimated program level of $478 million
for the Export Enhancement Program, the maximum level allowed under our
WTO export subsidy reduction commitments, and $63 million for the Dairy
Export Incentive Program, a slight increase over the current estimate
for 2002.
foreign food assistance
As the Committee is aware, the Administration has undertaken a
review of U.S. foreign food assistance activities in order to reform
and rationalize their implementation and to strengthen their
effectiveness. Among the results of that review is the decision to
reduce the number of programs through which assistance is provided and
to redefine roles in order to eliminate overlap. As a result, USDA will
continue to carry out government-to-government programs, while the
Agency for International Development (AID) will assume responsibility
for programs carried out in cooperation with private voluntary
organizations, cooperatives, and the World Food Program. Another
outcome is the decision to provide a more secure and predictable
foundation for our overseas food aid activities by reducing their
reliance on the year-to-year availability of surplus commodities. At
the same time, these activities will largely be funded through
discretionary sources, subject to Congressional review and approval,
and with reduced reliance on mandatory CCC funding.
The results of the Administration's review are reflected in the
2003 budget and program proposals for U.S. foreign food aid activities.
For Public Law 480 food assistance, a total program level of $1.34
billion is provided, which is expected to support total commodity
shipments of 3.7 million metric tons.
This includes a program level of $160 million for Title I credit
sales, which is expected to support approximately 700,000 metric tons
of commodity assistance. For Title II donations, the budget provides a
program level of $1.18 billion, an increase of $335 million above the
2002 enacted level. The proposed program level for Title II is expected
to support 3 million metric tons of commodity assistance.
Consistent with the results of the food aid review, donations of
commodities under section 416(b) authority that rely on the purchase of
surplus commodities by CCC will not be continued in 2003. However,
commodities that are acquired by CCC in the normal course of its
domestic support operations will be available for donation through
government-to-government agreements. Current CCC baseline estimates
project a limited supply of surplus nonfat dry milk that could be made
available for donation under section 416(b) authority in 2003.
Finally, the 2003 budget proposes a change in the funding mechanism
for meeting the costs of U.S. cargo preference requirements under the
foreign food assistance programs. The Administration is proposing no
change in the current requirement that 75 percent of all U.S. food aid
commodities be shipped on U.S. flag vessels when they are available at
fair and reasonable rates. However, the budget does propose to
eliminate the current arrangement under which the Maritime
Administration reimburses the Public Law 480 programs or, in the case
of section 416(b) and Food for Progress donations, CCC for one-third of
the costs of complying with cargo preference requirements. This change
will eliminate a duplicative financing system, reduce record-keeping,
and lower administrative costs. It will also enhance programming
objectives by eliminating uncertainty near the end of the fiscal year
regarding the timing and receipt of reimbursement payments.
The 2003 budget includes $45 million in the Public Law 480 budget
request to offset the elimination of Maritime Administration
reimbursements, and a legislative proposal to implement the proposed
change in financing will be transmitted to Congress in the near future.
This concludes my statement, Mr. Chairman. The agency
administrators and I would now be pleased to answer any questions you
and Members of the Committee might have.
______
Biographical Sketch of J.B. Penn
Dr. J.B. Penn was sworn in as under secretary for farm and foreign
agricultural services by Agriculture Secretary Ann M. Veneman on May
25, 2001.
Before his appointment to USDA, Penn was Senior Vice President and
Manager of Sparks Companies, Inc.'s Washington office. Prior to joining
Sparks, he was President of Economic Perspectives, Inc. from 1981 to
1988.
Penn's government experience includes service as Deputy
Administrator for Economics of the USDA's Economics and Statistics
Service and as Senior Staff Economist for the President's Council of
Economic Advisers.
A widely respected agricultural economist, Penn has also served on
numerous missions and task forces, including two to Poland led by Nobel
Laureate Norman E. Borlaug. He also was a member of Presidential
Agricultural Task Forces sent to Honduras in 1982 and Ecuador in 1984,
as well as a similar Mission to Guatemala in 1987.
Penn received his BS in Agriculture from Arkansas State University
in 1965. In 1967 he earned a MS in Agricultural Economics from
Louisiana State University. He earned a PhD in Agricultural Economics
from Purdue University in 1973.
Penn is a member of several professional organizations including
the American Agricultural Economics Association; Bennett Agricultural
Roundtable; Council on Food, Agriculture, and Resource Economics; and
the Farm Foundation. In 1988 he became a founding member of the
Foundation for the Development of Polish Agriculture.
Penn has authored or co-authored numerous journal articles,
technical reports, research monographs, book chapters and popular
reports. He co-authored Agricultural and Food Policy (fourth edition),
which is widely used in U.S. universities. He has been a frequent
speaker before industry groups and associations. He also has received
numerous awards, the most recent being Distinguished Alumnus from the
College of Agriculture at Purdue University.
______
Prepared Statement of James R. Little, Administrator, Farm Service
Agency
Mr. Chairman and Members of the Subcommittee, I appreciate the
opportunity to present the fiscal year 2003 budget for the Farm Service
Agency (FSA).
The President's Budget for FSA and the Commodity Credit Corporation
(CCC) provides for spending increases of $73.5 billion over the
baseline estimates for the fiscal year 2002-2011 period, consistent
with the tenets of the congressional Budget Resolution for those fiscal
years. About $69 billion of this increase covers CCC-funded activities,
including farm commodity and income support, conservation, and export
and related programs. Although a year-by-year distribution of this
increase cannot be accurately determined until a new farm bill is
enacted, ``placeholder'' estimates are reflected in the Budget for both
fiscal year 2002 and 2003. In contrast, our Salaries and Expenses
budget does not reflect an increase, despite the fact that our
administrative requirements are expected to increase significantly as
we implement and administer the new bill. For planning purposes we are
working diligently to forecast the workload impacts and related costs
of the potential scenarios contained in the House- and Senate-passed
bills. Once program provisions become clarified by a conference
agreement, we will be able to provide definitive estimates of both
start-up and ongoing administrative costs of the new act.
FSA will be impacted significantly by the commodity and
conservation provisions of the new act. We are already engaged in
preparing ourselves so we can hit the ground running and provide for
prompt and efficient program delivery once the President signs the bill
into law. For example, we are already examining a range of
administrative and programmatic issues, including how we will update
crop bases. We are also engaged in a number of other initiatives
designed to improve the overall operation of the agency and better
serve our customers no matter what the final shape of the new farm
bill. I'd like to highlight a few of these areas.
Technology
Over the last several years the Department has made considerable
progress in its ongoing effort to collocate agencies into one-stop
Service Centers throughout the country. To realize the full benefit of
the new office structure, improved information management, data sharing
between the Service Center agencies, and retooling our processes are
essential. Through collaboration and cooperation with our sister
agencies--the Natural Resources Conservation Service, the Rural
Development mission area, and the Risk Management Agency--we have made
significant progress toward achieving this goal. Some examples include:
--FSA, on behalf of the county-based agencies, recently released
software to State and county offices to implement the State and
County Information Management System (SCIMS). This software,
which merges legacy name and address data into the SCIMS
intranet database, is an important first step in information
sharing among Service Center agencies. It will eliminate the
need for each agency to maintain its own customer
identification system and will lead us toward an integrated,
almost seamless, automated environment servicing all Service
Center agencies. This is one of the critical elements toward
putting the ``E'' in e-Government.
--FSA is working closely with the other county-based agencies to
enable agricultural producers to access and file electronically
all forms and selected records by June 20, 2002, in compliance
with the mandates set forth in the Freedom to E-File Act.
Through collaboration with the Office of the Chief Information
Officer, the infrastructure has been put in place and a process
is being developed to ensure that all major program benefits
can be delivered electronically. This capability, coupled with
other streamlining efforts and improvements, will further
improve FSA's service delivery and customer satisfaction.
--Another key component of technology improvement is the Geographic
Information System (GIS), which offers the potential to
transform the way the Service Centers do business by replacing
manual, hard-copy processes with an integrated digital system.
When fully operational, GIS will provide a seamless database
encompassing aerial photography, soil information, customer
information, and farm records, and will enable us to eliminate
the printing and storage of paper maps. Service Center agencies
have been collaboratively investing in and implementing GIS and
have begun the early phases of implementation. The system is
now at a critical juncture in providing digital geospatial data
and the tools to make practical use of the information
collected. FSA's budgetary component includes $27.8 million
under the Department's Common Computing Environment account to
accelerate progress on the GIS to help comply with the mandates
of the Freedom to E-File Act and Government Paperwork
Elimination Act. In addition, the President's Management
Initiatives direct the Department to explore the use of CCC
funding of private sector support for these initiatives. We
will be working with the Department to determine how best to
leverage our resources to achieve this mandate. Also, FSA is
involved with the government-wide Quicksilver initiative called
Geospatial One-Stop. The Department of Interior is the lead
agency on this initiative, which will significantly enhance the
implementation of e-Government by making geospatial data more
accessible and usable. The Geospatial One-Stop builds upon
existing capabilities to accelerate the development of the
National Spatial Data Infrastructure, technology, policies, and
standards that support ``one-stop'' access to the Federal
Government's spatial data assets.
Program Integrity
Under the provisions of the Agricultural Risk Protection Act
(ARPA), FSA is partnering with the Risk Management Agency (RMA) to
enhance program integrity and compliance for RMA insurance products.
While RMA is the lead for this effort, FSA has been working closely
with RMA and during fiscal year 2001 trained approximately 2,500 local
FSA personnel to assist RMA in obtaining evidence of program abuse and
fraud. In addition, through the alliance established between FSA and
RMA and in collaboration with insurance providers, more than $15
million in improper insurance claim payments were recovered in fiscal
year 2001. Efforts are also under way to reconcile data collected by
our two agencies to ensure data consistency and compliance under
provisions of ARPA.
Program Outreach
FSA is committed to reaching out to producer populations that have
been under-served by our programs. Toward this end, the Secretary
recently signed a cooperative agreement with the National Tribal
Development Association to implement the National FSA American Indian
Credit Outreach Initiative. As a 4-year pilot program in Montana, this
program has doubled the number of Montana Indians accessing FSA farm
loans and, through pre-loan education and counseling, has achieved a
delinquency rate that is half the national average. In order to
replicate this success nationwide, the expanded cooperative agreement
outlines a 3-year phased approach to ensure orderly and cost-effective
expansion of the initiative to all Federally recognized Indian tribes
in the contiguous 48 States. We plan to bolster other outreach efforts,
as well, to ensure that all under-served populations are served in all
parts of the Nation.
Recruitment
To improve the diversity of our workforce, particularly in the
field, FSA is taking a number of actions to improve recruitment efforts
of minorities, especially Hispanics. These efforts are designed to
remove barriers that often limit minorities' access to employment in
FSA. We have established Regional Recruitment Teams that coordinate
broad regional and agency-wide recruitment efforts to more effectively
target minority applicants, particularly in the States and counties
where most of our vacancies exist and/or our diversity is not
representative of the local civilian population. These teams
participate in recruitment fairs, conferences, and trade shows to pool
a region's vacancies so that we have multiple occupations and vacancies
to discuss with potential applicants. FSA is also increasing its
mentoring programs with schools and organizations, particularly schools
with large minority populations, where we sponsor career planning
workshops. In addition, we are adopting an on-line application system
that will make it easier to apply for agency vacancies.
budget requests
Turning now to the specifics of the 2003 Budget, I would like to
highlight our proposals for the commodity and conservation programs
funded by the Commodity Credit Corporation (CCC); the farm loan
programs of the Agricultural Credit Insurance Fund; our other
appropriated programs; and administrative support.
commodity credit corporation
Domestic farm commodity price and income support programs are
administered by FSA and financed through CCC, a government corporation
for which FSA provides operating personnel. Commodity support
operations, handled primarily through loans, payment programs, and some
limited purchase programs, currently include corn, barley, oats, grain
sorghum, wheat and wheat products, soybeans, minor oilseed crops,
cotton (upland and extra long staple), rice, tobacco, milk and milk
products, peanuts, and sugar.
CCC is also the source of funding for the Conservation Reserve
Program (CRP) administered by FSA, as well as many of the conservation
programs administered by the Natural Resources Conservation Service. In
addition, CCC funds many of the export programs administered by the
Foreign Agricultural Service. When authorized by the Secretary or
through legislation, CCC also finances various disaster assistance
programs.
Program Outlays
The 2003 budget estimates largely reflect supply and demand
assumptions for the 2002 crop, based on October 2001 data. CCC net
expenditures for fiscal year 2003 are estimated at $11.6 billion, down
$5.8 billion from a level of $17.4 billion in fiscal year 2002, and
continuing the downward trend from CCC's record high of $32.3 billion
in fiscal year 2000.
The net decrease in projected fiscal year 2003 CCC expenditures
primarily reflects the expiration of $10 billion in 2001 emergency and
market loss assistance authorized by the Agricultural Risk Protection
Act, the 2001 Agriculture Appropriations Act, and two fiscal year 2001
supplemental appropriations. In fiscal year 2002, about $260 million in
carryover market loss assistance payments have already been made.
However, no such assistance payments are reflected in the Budget for
fiscal year 2003. Other components include decreases of about $2.3
billion in loan deficiency payments and nearly $313 million in Section
416 ocean transportation, partially offset by increases of $20 million
in production flexibility contract payments and $43 million in non-
insured crop assistance payments.
Reimbursement for Realized Losses
The fiscal year 2002 Appropriations Act authorizes CCC to replenish
its borrowing authority as needed from Treasury, up to the amount of
realized losses recorded in CCC's financial statements at the end of
the preceding fiscal year. Under this authority, we are projecting that
in fiscal year 2002 CCC will draw approximately $22.1 billion for
fiscal year 2001 losses.
Conservation Reserve Program
The Conservation Reserve Program (CRP), administered by FSA, is
USDA's largest conservation/environmental program. It is designed to
cost-effectively assist farm owners and operators in conserving and
improving soil, water, air, and wildlife resources. This assistance is
accomplished through the conversion of highly erodible and other
environmentally sensitive acreage from the production of agricultural
commodities to a long-term resource-conserving cover. CRP participants
enter into contracts for periods of 10 to 15 years in exchange for
annual rental payments, along with cost-share and technical assistance
for installing approved conservation practices. The authorizing
legislation currently allows enrollment of up to 36.4 million acres.
The program is administered through general signups, normally held
annually through a competitive bid process, and an ongoing continuous
signup for selected high-impact practices such as riparian buffers and
filter strips.
In fiscal year 2001, no general CRP signup was held, but a 1-year
extension was offered for contracts expiring during the fiscal year. In
addition, about 20,000 acres were enrolled in the Farmable Wetlands
Pilot Project. For fiscal year 2002, again, no general signup is
expected due to the uncertainty of a new farm bill and its pending
implementation date. However, a 1-year extension opportunity was
announced in January for the 1.7 million acres under contracts expiring
this fiscal year. About 600,000 new acres are expected to be enrolled
under continuous signup, including acres under the Conservation Reserve
Enhancement Program (CREP), and about 200,000 acres are anticipated
under the Farmable Wetlands Pilot Project. The fiscal year 2003 Budget
assumes a general signup of about 1.8 million acres as well as
enrollment of another 800,000 acres under continuous signup and the
CREP.
In fiscal year 2002, CCC will pay approximately $1.68 billion for
rental costs and about $120 million for sharing the cost of
establishing permanent cover on the enrolled acreage. The bulk of the
rental payments, covering acres enrolled in regular signups, was issued
early in the fiscal year. For fiscal year 2003, the budget projects CCC
costs of approximately $1.86 billion, consisting of $1.73 billion for
rental payments on previously enrolled and extended acres, and $126
million for cost-share assistance.
farm loan programs
The loan programs funded through the Agricultural Credit Insurance
Fund provide a variety of loans and loan guarantees to farm families
that would otherwise be unable to obtain the credit they need to
continue their farming operations.
The fiscal year 2003 Budget proposes a total program level of about
$3.8 billion, a decrease of $89 million from fiscal year 2002. Of this
total, $3 billion is requested for guaranteed loans, offered in
cooperation with private lenders, to serve a larger proportion of
borrowers through these programs.
For direct farm ownership loans we are requesting a loan level of
$100 million, a decrease of $47 million from the fiscal year 2002
appropriated level. The proposed program level would enable FSA to
extend credit to about 1,000 small and beginning farmers to purchase or
maintain a family farm. In accordance with legislative authorities, FSA
has established annual county-by-county participation targets for
members of socially disadvantaged groups, based on demographic data.
Also, 70 percent of direct farm ownership loans are reserved for
beginning farmers and about 35 percent are made at a reduced interest
rate to limited resource borrowers, who may also be beginning farmers.
For direct farm operating loans we are requesting a program level of
$600 million, $11 million under the fiscal year 2002 appropriated
level, to provide nearly 14,500 loans to family farmers.
For guaranteed farm ownership loans in fiscal year 2003, we are
requesting a loan level of $1 billion, the same as fiscal year 2002.
This program level will provide approximately 4,500 farmers the
opportunity to acquire their own farm or to preserve an existing one.
One critical use of guaranteed farm ownership loans is to allow real
estate equity to be used to restructure short-term debt into more
favorable long-term rates. For guaranteed farm operating loans we
propose an fiscal year 2003 program level of $2 billion, a decrease of
$6 million from 2002. This level will enable about 16,500 producers to
finance their farming operations. This program enables private lenders
to extend credit to farm customers who otherwise would not qualify for
commercial loans and ultimately be forced to seek direct loans from
FSA.
In addition, our budget proposes to continue the current program
levels of $2 million for Indian tribal land acquisition loans and $100
million for boll weevil eradication loans. For emergency disaster
loans, carryover funding from 2002 is expected to provide sufficient
credit to producers whose farming operations have been damaged by
natural disasters.
other appropriated programs
State Mediation Grants
State Mediation Grants assist States in developing programs to deal
with disputes involving a variety of agricultural issues--distressed
farm loans, wetland determinations, conservation compliance,
pesticides, and others. Operated primarily by State universities or
departments of agriculture, the program provides neutral mediators to
assist producers, primarily small farmers, in resolving disputes before
they culminate in litigation or bankruptcy.
States with certified mediation programs may request grants of up
to 70 percent of the cost of operating their programs. The fiscal year
2003 Budget requests $4 million, an increase of $507 thousand, to
extend the program to 32 States. So far in fiscal year 2002, 28 States
have received mediation grants.
Emergency Conservation Program
To restore farmland damaged by natural disasters and return it to
productive agricultural use, the fiscal year 2003 Budget requests $48.7
million for the Emergency Conservation Program (ECP). As of March 1,
$11.5 million has been allocated in fiscal year 2002 to share the cost
of repairing damage caused by drought, floods, tornadoes, and other
disasters across the country. With more than half of this fiscal year
remaining and the hurricane season still ahead, most, if not all, of
the available funding is likely to be allocated by the end of the year.
An fiscal year 2003 appropriation would ensure timely emergency
assistance to producers.
Dairy Indemnity Program
The Dairy Indemnity Program (DIP) compensates dairy farmers and
manufacturers who, through no fault of their own, suffer income losses
on milk or milk products removed from commercial markets due to
residues of certain chemicals or other toxic substances. Payees are
required to reimburse the Government if they recover their losses
through other sources, such as litigation. The fiscal year 2003
appropriation request of $100 thousand, together with unobligated
carryover funds expected to be available at the end of fiscal year
2002, would cover a higher than normal--but not catastrophic--level of
claims. While the usage of this program has been low in recent years,
DIP is a potentially important element in the financial safety net for
dairy producers in the event of a serious contamination incident.
administrative support
The costs of administering all FSA programs are funded by a
consolidated Salaries and Expenses account. The account is comprised of
direct appropriations, transfers from program loan accounts under
credit reform procedures, user fees, and advances and reimbursements
from various sources.
The fiscal year 2003 Budget requests $1.34 billion from
appropriated sources, including credit reform transfers covering
subsidies. Included in the request is $86 million to cover GSA rental
payments; the accruing cost of retirement for current employees covered
by the Civil Service Retirement System; and the accruing cost of post-
retirement health benefits for current employees. These items were
previously funded outside of FSA's appropriations on either a
departmentwide or a governmentwide basis. The Explanatory Notes
provided to the Committee show comparable levels for these items in
fiscal year 2001 and 2002.
The Salaries and Expenses budget reflects a net increase of $49
million in fiscal year 2003, primarily for pay-related costs, including
the cost of maintaining permanent county office staff-years that were
supported in 2002 with funds carried forward from 2001.
As I mentioned previously, with divergent versions of the farm bill
pending at the time of the budget's development, our estimates do not
provide for any costs specifically associated with implementing or
administering the new legislation. In the absence of farm bill workload
assumptions, the Budget shows straightlined employment levels of 5,806
Federal and 11,251 non-Federal county staff-years, which reflect the
workload of recent years when significant supplemental assistance has
been provided. However, new program requirements under the new farm
bill are likely to call for significant resources to implement and
administer. Once the new program provisions are in place, we will
provide updated estimates of fiscal year 2003 staffing requirements and
related costs.
Mr. Chairman, this concludes my statement. I will be happy to
answer your questions and those of the other Subcommittee Members.
______
Biographical Sketch of James R. Little
James R. Little is the Administrator of USDA's Farm Service Agency
(FSA). As Administrator, Mr. Little is responsible for the
administration of farm commodity and conservation programs, farm loan
programs, and certain disaster and Federal crop insurance programs.
Many FSA programs are financed and carried out through the facilities
of the Commodity Credit Corporation (CCC), a wholly-owned Government
corporation with a $30 billion line of credit with the U.S. Treasury.
Mr. Little also serves as the Executive Vice President of CCC.
Previously, Mr. Little served as Treasurer and Controller of CCC. Prior
to his most recent appointment, Mr. Little was FSA's Acting
Administrator.
Mr. Little has spent his entire professional career with USDA.
Prior to serving in his current position, he was Associate Chief
Financial Officer for Financial Operations. In this capacity, he
provided oversight to USDA's overall financial operations, with an
emphasis on ensuring that USDA's mission agencies complied with United
States Government accounting standards and regulations involving assets
valued at nearly $120 billion. Mr. Little is a Certified Government
Financial Manager.
Mr. Little began his professional career with USDA at the grass
roots level serving as a staff accountant with the former Rural
Electrification Administration, now a part of the Rural Development
mission area. He worked his way up through the ranks, holding
leadership positions in the Federal Crop Insurance Corporation, now the
Risk Management Agency, and the former Agricultural Stabilization and
Conservation Service, now FSA. With more than 31 years of total Federal
service, Mr. Little has extensive financial, management, and program
experience, particularly with USDA's county-based agencies.
Mr. Little, a native of Charlotte, North Carolina, has a Bachelor
of Science degree from the Virginia Polytechnic Institute in
Blacksburg, Virginia. He and his wife Bonnie are the parents of one
daughter.
______
Prepared Statement of Ross J. Davidson, Jr., Administrator, Risk
Management Agency
Mr. Chairman and members of the Subcommittee, I am pleased to
testify in support of the President's fiscal year 2003 budget for the
Risk Management Agency (RMA). RMA is in its second year of delivering
an innovative $8.2 billion risk management reform package under the
Agricultural Risk Protection Act of 2000 (ARPA). Title I of that law
contained a 5-year initiative to strengthen the safety net for
agricultural producers by providing greater access to more affordable
risk management tools, better protection from production and income
loss, and improved efficiency and integrity of the Federal crop
insurance program.
RMA is implementing ARPA in a timely and farmer-friendly way,
contracting for and reviewing new products, promoting risk management
strategies, and reinsuring nearly 1.3 million policies on over 211
million acres. In 2001 alone, RMA provided hard hit farmers
approximately $36.7 billion of protection and paid them over $2.4
billion in losses.
The crop insurance program has seen a significant shift in business
over the past 2 years--producers have chosen to buy-up to higher levels
of coverage as a result of increased premium subsidies provided in
ARPA. While total acres insured did not increase dramatically, total
acres coverage levels jumped more than 50 percent to levels of 75
percent and higher. The number of policies, acres, liability, and
premium all increased more than 40 percent for coverage levels of 70
percent and higher.
Our current projection for 2003 shows a modest decrease in
participation. This projection is based on USDA's latest estimates of
planted acreage and expected market prices for the major agricultural
crops, and assumes that producer participation remains essentially the
same as it was in 2001. It is difficult to project how the program may
grow as it expands to include new crops, more innovative policy
options, and changes in the willingness of producers to participate in
the program. However, there are already many new products and policy
options that are being considered for approval by the Federal Crop
Insurance Corporation (FCIC) Board of Directors. In addition, we have
numerous activities underway to encourage participation, especially in
underserved areas. In all likelihood this means that the program will
continue to grow well into the future.
Today, I would like to focus on and highlight our recent progress
in helping producers manage their agricultural risk. I will also
address areas of concerns and their solutions, and discuss a
legislative proposal that targets reinsured company profits.
recent accomplishments
Livestock Insurance Plans.--On November 15, 2001, the FCIC Board of
Directors approved two livestock pilot programs--Livestock Gross Margin
(LGM) and Livestock Risk Protection (LRP)--as authorized by ARPA. The
pilot programs, which will begin in 2002, will protect Iowa swine
producers from lower hog prices. Until ARPA, federally-backed insurance
plans providing livestock protection were prohibited by law. If
successful, these types of livestock insurance programs will provide
livestock producers with risk management tools for reducing their price
risks. Livestock products represent about one-half of the total farm
cash receipts.
The LRP sales are scheduled to begin in April 2002. The LGM
insurance product is scheduled for sale in July 2002 for the August 1,
2002-January 31, 2003 insurance period. Both products will be available
from private insurance agents. The length of the pilot programs will be
determined by farmer participation and the financial performance of the
programs.
Education and Outreach.--RMA has implemented several initiatives to
increase awareness and service to small and limited resource farmers
and ranchers and other under served groups and areas. In 2001, RMA
hosted the first national outreach conference titled: Survival
Strategies for Small and Limited Resource Farmers and Ranchers. Over
300 professionals representing 45 States, 22 universities, and three
foreign countries convened at this conference to share ideas and
develop strategies to benefit the underserved communities. In addition,
RMA entered into several cooperative agreements with community-based
organizations and universities to address the specific needs of
underserved communities. RMA now has partnership agreements with 12
State departments of agriculture to provide customized risk management
educational opportunities to producers in their States. RMA supplements
these activities with additional risk management training in high
schools, community colleges, and other forums.
Educational activities also targeted Future Farmers of America
(FFA), youth, and included production of publications, CD's, and an
interactive simulation-based educational experience via the Internet.
In total, 838 educational and outreach activities were conducted by RMA
attracting more than 35,000 participants.
Because many producers in underserved States grow crops or raise
commodities that may not currently be insurable, RMA announced a cost-
share initiative in 11 targeted States to encourage use of the Adjusted
Gross Revenue (AGR) insurance product. Under the program, RMA shared in
50 percent of a producer's AGR premium cost. In addition, RMA paid the
entire administrative fee for all eligible policies.
About $2 million annually is earmarked to provide risk management
educational opportunities to specialty crop producers using many of the
same avenues used in addressing underserved States. As a result, in
2001, more than 130 partnerships were formed to reach specialty crop
growers. An additional $5 million was provided to the Cooperative State
Research, Education, and Extension Service (CSREES) for a competitive
grants program to promote risk management educational opportunities.
Program Compliance and Integrity.--ARPA provided $23 million over 5
years to enhance program integrity and compliance. In fiscal year 2001,
RMA spent approximately $2.25 million providing 2,500 FSA county office
personnel 28 hours of classroom training. This basic training enabled
local FSA personnel to assist RMA in obtaining useful evidence of
program abuse and fraud.
By working proactively with insurance providers and FSA, the
alliance prevented more than $15 million in improper claims payments in
2001--more than double RMA's average annual recovery. In addition, the
alliance allowed RMA, through criminal, civil and administrative
actions, to recover about $29 million--approximately four times RMA's
average recovery rate.
At the same time the training initiative was launched, RMA began a
project to apply research and technology to crop insurance data. This
process, known as data mining, identifies potential problems and
targets reviews that will determine whether fraud, waste, or abuse
exist. A combination of the initial data mining efforts and the new
alliance enabled RMA to increase the number of cases reviewed from an
average of about 200 cases per year in 2000 to 700 cases per year in
2001 and the number of policies reviewed from about 2,000 in 2000 to
10,000 in 2001.
Research and Development.--During fiscal year 2001, nearly 30
contracts and partnership agreements, worth almost $19 million, were
awarded to further program goals for expansion of new and improvement
of existing crop programs and risk management strategies. Examples
include contracts/agreements awarded to: review RMA's rating
methodologies; review quality loss adjustment procedures to reflect
local quality; evaluate the impact of the Federal crop insurance
program on planted cotton acreage; and conduct feasibility studies on
items such as multi-year coverage, wild salmon, and pasture and
rangeland pilot programs.
In addition, the FCIC Board of Directors considered 15 private
product submissions, and authorized three new risk management
products--the two livestock programs mentioned earlier, and the
Nutrient Best Management Practices Pilot.
Dairy Options Pilot Program.--The Dairy Options Pilot Program
(DOPP) was expanded to include 300 counties. DOPP is an innovative
cost-sharing program for dairy producers that encourages the use of
milk price risk management tools. Program expansion, higher milk
prices, and extensive outreach resulted in a dramatic increase in
participation. During Round III in 2001, producers purchased a total of
2,788 put options. By comparison, a total of 1,847 put options were
purchased collectively in Round I in 1999 and Round II in 2000. An
interactive distance learning program for DOPP is available for
eligible producers over the Internet.
obstacles/solutions
To address concerns expressed about the ``slow'' implementation of
many sections of ARPA, RMA has done the following:
--Initiated the ARPA Tracking System.--Implementing the first year of
ARPA was very difficult due, in part, to changes in program
development requirements. The Act requires research and
development of new risk management programs through
partnerships and contracts. Initially, the Agency was not fully
prepared to take on such a tremendous task. Also, since RMA
does not have contract authority, it relied heavily on other
government sources. Knowing the exact status of so many
documents and tracing such large amounts of funds required RMA
to develop the ARPA Tracking System. The tracking system
records the various stages of contract development and
approval, resulting in a more organized and productive process.
--Set quarterly funding goals.--In an effort to expend ARPA funds
more efficiently and effectively, RMA has established quarterly
obligation goals. RMA intends to have at least 80 percent of
all fiscal year 2002 ARPA money either obligated or committed
by the end of the June, 2002. This will eliminate the
unnecessary flood of activity at year end that sometimes leads
to poor use of resources.
--Expanded the training effort.--In order to give RMA employees the
knowledge and skills necessary to properly implement ARPA, a
comprehensive training program was established to provide a
series of contracting courses. RMA employees who would be
responsible for administering contracts and developing
cooperative agreements and partnerships received between 100
and 200 hours of classroom training on topics such as project
management, negotiating skills, basic contracting and contract
administration, task order writing, preparing performance based
statements of work, and source selection.
For years, RMA employees have received very little program
training. For fiscal year 2002, a comprehensive needs
assessment was completed, identifying program, contracting, and
leadership skills needed to improve job performance. Based on
this needs assessment, priorities were established, and
approximately $500,000 has been set aside for this training.
The total budget for RMA group and individual training is $1.2
million in fiscal year 2002.
administrative and operating (a&o) expenses
Discretionary account expenses are estimated to increase by $1.3
million from the fiscal year 2002 appropriated level of $74.8 million
to $76.1 million for fiscal year 2003. This net increase includes an
additional $1.4 million for pay costs, which includes $531,000 for
annualization of the fiscal year 2002 payraise and $901,000 for the
anticipated fiscal year 2003 pay raise; an increase of $3.3 million for
a government-wide proposal regarding employee pension and annuitant
health benefits; a $2.1 million increase which represents a transfer
from the Department's central rent account for rental payments to the
General Services Administration (GSA); and a decrease of $5.5 million
for one-time costs and activities relating to ARPA implementation that
would occur in fiscal year 2002 only.
fcic fund
The fiscal year 2003 budget proposes that ``such sums as may be
necessary'' be appropriated to the FCIC Fund. This would ensure that
the program is fully funded to meet producers needs and not tied to a
specific level of participation. Nonetheless, an estimate has been made
of the funding needs for a projected level of participation. As
discussed earlier, this estimate is based on USDA's latest projections
of planted acreage and expected market prices, and shows a modest
decline in overall funding needs, from $2.9 billion in fiscal year 2002
to $2.8 billion in fiscal year 2003.
This estimate includes: (1) the premium subsidy the Government
provides, which is 100 percent for catastrophic coverage and ranges
from 38 to 67 percent for buy-up coverage, (2) the reimbursement of
delivery expenses incurred by private insurance companies, which is
limited to 24.5 percent of premium for buy-up coverage, and (3) the
Government's portion of the difference between indemnities and premium
income, which reflects any underwriting gains or losses received by the
companies, as well as any excess losses paid by the Government.
The fiscal year 2003 budget estimate also reflects a proposal to
cap underwriting gains received by the private insurance companies that
deliver the crop insurance program to 12.5 percent of retained premium.
Over the past decade the crop insurance program has nearly quadrupled
in size, in large part, because of the generous government subsidies.
The private insurance companies have benefitted form the growth in
business, much of which has been due to producers shifting to higher
levels of coverage rather than an increase in the number of producers
who participate in the program. Since 1994, they have received about $2
billion in underwriting gains, at the same time, the government has
paid out nearly $1 billion in excess losses. This proposal, to limit
underwriting gains, is expected to save about $115.1 million annually.
The fiscal year 2003 budget assumes $68 million to fund ARPA
initiatives. The $68 million includes funds for: improving program
compliance and integrity ($3.5 million), research and development ($35
million), pilot programs for livestock and wild salmon ($16 million),
education and risk management assistance ($10 million), and policy
consideration and implementation ($3.5 million).
conclusion
Congress first authorized Federal crop insurance in the 1930s along
with other initiatives to help agriculture recover from the combined
effects of the Great Depression and the Dust Bowl. FCIC was created in
1938 to carry out the program and, initially, was started as an
experiment. Crop insurance activities were mostly limited to major
crops in the main producing areas.
Within the past decade, covered acres have increased from 80
million to over 200 million, from one insurance product to dozens, from
a few crops to approximately 120. The program has nearly quadrupled in
size. In 2000 and 2001, insurers quickly and efficiently paid out in
excess of $5.1 billion to cover losses of farmers.
RMA has also dramatically changed the way in which we bring new
products to market, conduct outreach, and provide oversight. ARPA has
improved the program's ability to be a broad and effective means for
producers to manage their production risk.
RMA has responded deliberately and methodically to this challenge,
and we have implemented the new provisions in a timely and farmer-
friendly way. We are committed to providing producers with effective
crop insurance coverage at an affordable price. Additionally, RMA will
target excessive profits while still providing an incentive for
reinsured companies to participate in the program. Crop Insurance is
one of the tools of a farm safety net that can best help farmers deal
with the changing nature of agriculture in the 21st century.
We appreciate your on-going support as we continue to transform our
Agency and our programs to better serve the risk management needs of
the American farmer.
______
Biographical Sketch of Ross J. Davidson, Jr.
Ross J. Davidson, Jr., was named Administrator of USDA's Risk
Management Agency by Agriculture Secretary Ann M. Veneman on February
6, 2002.
The Administrator of RMA leads the agency that provides risk
management protection to America's farmers through a sound crop
insurance program and other risk management tools. RMA's administrator
also serves as Manager of the Federal Crop Insurance Corporation.
Most recently, Davidson was vice president-industry affairs and
vice president-corporate finance for United Services Automobile
Association (USAA) from 1988-2001. Prior to joining USAA, Davidson
worked for Tesoro Petroleum Corporation as its Assistant Treasurer.
Davidson has more than 25 years of experience in enterprise risk
management, corporate finance, treasury, investment and related public
policy matters in insurance and energy. He has published articles in
professional journals and has been a frequent advisor, commentator and
innovator on natural disaster and risk management public policy.
Davidson received a Bachelor's degree in Economics from Brigham
Young University in 1974, and a Master's degree in Business
Administration there in 1976.
Davidson has been a member of several professional organizations
including the American Risk and Insurance Association, Financial
Executives International, and the Association of Finance Professionals.
He is a past president of the BYU Marriott School of Management Alumni
Board and is on the steering committee of the Marriott School of
Management Insurance and Financial Services Institute. He also served
on the Managing Catastrophe Risks Advisory Board of the Wharton School,
University of Pennsylvania.
______
Prepared Statement of Ellen Terpstra, Administrator, Foreign
Agricultural Service
Mr. Chairman, members of the Subcommittee, I appreciate the
opportunity to review the work of the Foreign Agricultural Service
(FAS) and to present the President's budget request for FAS programs
for fiscal year 2003.
The FAS mission remains constant: we are committed to expanding
export opportunities for U.S. agricultural, fish, and forest products,
and to helping alleviate world hunger and food insecurity. Given
today's management challenges, these goals must be accomplished through
better public/private sector collaboration, strategic planning, greater
use of technology, and resource management.
United States agricultural exports rebounded to $52.8 billion in
fiscal year 2001, an increase of $2 billion over 2000. FAS expects this
trend to continue in fiscal year 2002, with agricultural exports
forecast to reach $54.5 billion. Two-thirds of the increase forecast
for 2002 is expected in Asia, despite slower economic growth there.
Export prospects for 2002 are improved over the previous year for
several commodities including corn, wheat, and horticultural products.
fas program activities
To support our goal of expanding export opportunities for U.S.
agricultural, fish, and forest products, we continue to use our long-
standing export programs vigorously. For example, the export credit
guarantee programs facilitated sales of more than $3.2 billion in U.S.
agricultural products last year. The GSM-102 program helped U.S.
exporters register sales of nearly $770 million in the Caribbean,
Central and South American regions, a doubling in sales from the
previous year. The GSM-103 program helped U.S. exporters sell over $14
million worth of wheat to Jordan and over $21 million worth of wheat to
Tunisia. U.S. exporters continue to discover the benefits of the
Supplier Credit Guarantee Program. We issued nearly $226 million in
credit guarantees under this program in 2001.
With the aid of the Dairy Export Incentive Program (DEIP), U.S.
exporters sold more than 58,000 tons of dairy products in fiscal year
2001. The Commodity Credit Corporation awarded about $8 million in
bonuses to help U.S. dairy exporters meet prevailing world prices and
develop foreign markets, primarily in Asia and Latin America. As in
recent years, market conditions did not warrant large-scale use of the
Export Enhancement Program. However, sales of frozen poultry where
facilitated by bonuses of nearly $7 million which supported more than
11,000 tons of exported product.
FAS continues to stress the importance of market development. In
2001, we allocated $90 million to 65 U.S. trade organizations, State
regional groups, and cooperatives for export promotion activities under
the Market Access Program (MAP), and approved marketing plans totaling
$33.5 million for 24 trade organizations under the Foreign Market
Development (FMD) program.
FAS introduced 854 Cochran Fellows from 82 countries to U.S.
products and policies in 2001--the largest number of participants in
the program's history. These Fellows met with U.S. agribusiness;
attended trade shows, policy and food safety seminars; and received
technical training related to market development. The Cochran
Fellowship Program provides USDA with a unique opportunity to educate
foreign governments and private sectors not only about U.S. products,
but also about U.S. regulations and policies on critical issues such as
food safety and biotechnology.
On the trade policy front, USDA works to open, expand, and maintain
markets for U.S. agriculture. FAS was a key player in the successful
launch of negotiations in November 2001 to further liberalize global
agricultural trade under the World Trade Organization (WTO). The Doha
Development Agenda includes an ambitious agenda and schedule for
agricultural trade reform that will be critical if we are to achieve
our goals of opening markets, eliminating export subsidies, and
reducing trade-distorting domestic support around the world.
We also worked bilaterally to create and maintain market
opportunities for U.S. exporters. FAS worked to defend U.S. corn
growers against charges of dumping and subsidization brought by a
Canadian corn growers association. We worked with Brazilian officials
to lift barriers to U.S. wheat exports. We closely monitored access for
U.S. beef to ensure that South Korea fully complied with the WTO ruling
that allowed full access for beef imports to that market. FAS worked
with the American Crop Protection Association and the U.S. fresh fruit
industry to meet import requirements on Taiwan, maintaining a $200-
million market for U.S. fruit.
To support both our export mission and our food security mission,
we have used food aid to move commodities from the United States to
needy people around the world. We also collaborated with a diverse
group of U.S. institutions in research partnerships with 51 countries.
These research and exchange activities promoted the safe and
appropriate development and application of products from biotechnology,
as well as other areas such as food safety, improved nutritive value of
crops, environmental sustainability, and pest and disease resistance of
crops and livestock.
In fiscal year 2001, FAS programmed more than 4.4 million metric
tons in food aid to help feed millions of hungry people in more than 70
countries around the world. Under the authority of section 416(b) of
the Agricultural Act of 1949, as amended (Section 416), the Commodity
Credit Corporation (CCC) donated approximately $650 million worth of
commodities in fiscal year 2001. We used 480,000 tons of those
commodities as part of our pilot Global Food for Education (GFE)
Initiative, a program to provide school feeding and pre-school
nutrition projects in developing countries. Concessional sales under
Public Law 480, Title I, totaled over 750,000 metric tons valued at an
estimated $105 million to seven countries. Another 450,000 tons of
various U.S. commodities were donated to about 18 countries under the
Food for Progress program, with Title I-funded Food for Progress
donations accounting for over two-thirds of this tonnage.
In addition to our food aid activities, FAS continues to serve as
the coordinator for the U.S. Government's food security committee. Last
November, at the Food and Agriculture Organization's conference, USDA
affirmed the U.S. commitment to assist in ending world hunger.
Secretary Veneman also urged countries to support the development of
products from biotechnology to help feed the world's growing
population.
priorities for 2002 and 2003
Faced with continued growth in our agricultural productivity, a
strong U.S. dollar and continued aggressive spending on market
promotion by our competitors, we must redouble our efforts to improve
the outlook for U.S. agricultural exports. For this year, we plan to
continue to:
--Pinpoint constraints to exports of U.S. agricultural, fish, and
forest products;
--Work to remove trade barriers and trade-distorting practices;
--Represent U.S. agricultural interests by strongly advocating U.S.
policies in the international community;
--Help producers, processors, and exporters to strengthen their
export knowledge and skills;
--Ensure that the U.S. farm, forest and fishery sectors have timely
and complete intelligence about emerging market opportunities;
--Inform foreign buyers about the superior quality and reliable
quantities of agricultural products offered by U.S. producers,
and educate them about how to locate U.S. products;
--Use our export credit guarantee programs to reach new customers for
U.S. agriculture;
--Use USDA export assistance programs such as the Foreign Market
Development Program and the Market Access Program effectively
to pursue export opportunities; and
--Work with emerging markets and developing countries to promote
economic development to help meet the international commitment
to reduce hunger.
I would like to discuss our top priorities for fiscal years 2002
and 2003. Last September, Secretary Veneman released a report that
identifies critical needs for U.S. agricultural policy for the new
century. The report, titled ``Food and Agricultural Policy: Taking
Stock for the New Century,'' States, ``Enhancing the competitiveness of
U.S. food and agriculture in the global marketplace should be one of
the primary objectives of our farm policy.'' To achieve this goal, we
will focus on several strategies.
continuing the liberalization of trade in agriculture
At the top of our list is moving forward in the multilateral trade
negotiations on agriculture under the WTO. With the launch of the Doha
Agenda last November, the United States has taken a leading role in the
WTO negotiations underway in Geneva.
The Doha declaration is an important step forward for U.S.
agriculture, calling for the new negotiations to be concluded by
January 1, 2005. The comprehensive negotiations over the next 3 years
will be centered on expanding market access, reducing export subsidies,
and reducing trade-distorting domestic support. The WTO multilateral
negotiations are the best place to address needed reforms in world
agricultural trade because it is only in the WTO that we have broad
disciplines on market access, subsidies, and technical measures. The
mandate also guards against creating new loopholes in the rules that
could be used to disguise trade-distorting measures.
Trade capacity building is also a high priority. If we are to
achieve success in the negotiating process, we must engage the
developing world in the creation and implementation of appropriate
trading rules and guidelines. This will take time, but it will be worth
the investment. These countries represent our future growth markets. If
we are to realize our goal of liberalizing trade through multinational
bodies such as the WTO, we must address the concerns of developing
countries, which make up the majority of WTO members. Without the
support of developing countries, there will be no new multilateral
round.
We also will continue to work with the countries that would like to
join the WTO. Although increasing the number of members in the WTO is a
high priority, we will continue to insist that these accessions be made
on commercially viable terms that provide trade and investment
opportunities for U.S. agriculture. And when membership in the WTO is
achieved, we must continue to monitor aggressively those countries'
compliance with their commitments. We must ensure that acceding
countries implement trade policies and regulations that are fully
consistent with WTO rules and obligations.
For example, after many years of negotiations, China and Taiwan
joined the WTO in December and January, respectively. As part of the
WTO membership process, both countries reached agreements with the
United States that, when fully implemented, will bring great benefits
to our farmers and ranchers. However, in order to realize these gains,
we must be vigilant to ensure that China and Taiwan live up to their
WTO commitments and maintain open markets. We are expanding our staff
resources to monitor this compliance. A priority of FAS this year will
be the negotiating of a WTO accession agreement with Russia.
Another important area of work for FAS is the negotiation to
establish the Free Trade Area of the Americas (FTAA). The FTAA is
intended to be a comprehensive free trade agreement between the 34
democracies in the Western Hemisphere. Negotiations began in 1998 and
are expected to conclude by 2005. By concluding the FTAA, the U.S. will
gain liberalized access to a region of 675 million people with a
combined consumer buying power of $1.5 trillion (excluding our NAFTA
partners).
We also are actively participating in the Asia Pacific Economic
Cooperation (APEC) forum. We expect APEC to serve a key role in
promoting continued trade liberalization within the region and in the
WTO, and we will be working through the APEC food system to realize
this goal. Just last month, USDA organized a meeting for high-level
government officials of the 21-member economies of APEC to discuss
biotech issues. The meeting was an opportunity for officials to discuss
recent breakthroughs in biotech research, consumer awareness of biotech
issues, capacity building for developing countries in biotechnology,
and issues being addressed by international organizations such as Codex
Alimentarius
Another priority is how we deal with the issues surrounding
products produced through biotechnology. The increasing number of
countries around the world that are issuing regulations relating to
products of biotechnology present a particular challenge, both for our
infrastructure and for our food and agricultural exports. I could go on
at length to describe our efforts at USDA to try to stay on top of the
issue and to ensure that government actions on labeling and product
approval in China, the European Union, and elsewhere, do not lead to
trade restrictive policies that reduce market access for U.S.
commodities.
This issue will continue to be a dominant one for U.S. agriculture
in the immediate years ahead, whether in the WTO or in our bilateral
relationships with customer and competitor nations alike. That is why
we have said that, when it comes to biotechnology, our focus will be on
making sure that biotech approval regimes, wherever they exist, are
transparent, timely, predictable, and science-based.
ensuring we have the proper tools
We also continue to work on improving the way we carry out our
market development programs. When FAS implemented its Unified Export
Strategy (UES), our goal was to streamline the planning and application
process for exporters who apply to participate in our market
development programs. The UES encourages our strategic partners to
formulate market-specific strategies for developing or expanding export
markets. This approach facilitates a more effective use of FAS' full
arsenal of market development programs.
This effort grew out of our strategic planning process that
integrates all the marketing, credit, and trade policy tools that we
have available to maximize the market for agricultural products. This
process lets us review the competition and all FAS-sponsored efforts in
a given market to determine whether we have the optimal mix of programs
and funding, given that market's potential as a buyer of U.S.
agricultural products. It also allows us to step back and review our
efforts regionally as well as globally.
Let me give you a few examples of how exporters can increase their
effectiveness by combining programs. The American Sheep Industry
Association (ASI) used the Quality Samples Program (QSP), the FMD
program, and its own industry funds to develop a market for U.S. wool
in Italy. The Association used the QSP to send U.S. wool samples to
potential buyers in Italy, and followed up with an FMD-funded trade
mission. Prior to these efforts, U.S. wool was relatively unknown in
Italy, and sales to that market were irregular and small. Italy is one
of the world's most important markets for wool, and ASI's strategy and
use of market development programs allowed the organization to make
significant sales to major buyers in that market.
U.S. Wheat Associates used a similar combination of programs to
help introduce U.S. wheat to millers in Burma. Through a combination of
QSP and FMD, U.S. Wheat provided technical assistance to show the
millers how U.S. wheat compares to wheat from Australia. As a result of
the efforts, several mills, which had never before bought U.S. wheat,
purchased 16 containers of dark northern spring wheat and five
containers of soft white wheat, with plans for additional purchases.
We will continue to encourage U.S. exporters to develop and refine
their marketing strategies, look to new market opportunities, and fully
use all the FAS tools at their disposal.
focusing our marketing strategy
To help exporters in this effort, FAS continues to refine its own
global marketing strategy to target those markets that offer the most
growth opportunity. We must protect our hard-won gains in mature
markets, and at the same time, set aggressive but achievable growth
targets in those markets that offer the most potential.
Our global marketing strategy is also instrumental in our ongoing
review of our overseas office locations and staffing. We must fully
utilize our staffing in FAS overseas offices to ensure that we are
positioned to take advantage of the market opportunities created by our
market access initiatives as well as new opportunities offered by
emerging growth markets.
budget request
Mr. Chairman, we appreciate the support provided by the Committee
in the fiscal year 2002 appropriation for FAS. The increased funding
enabled FAS to substantially bolster our overseas market intelligence
capabilities and maintain an increased overseas presence in Ukraine and
Balkans. In addition to funding fiscal year 2002 pay cost increases,
FAS was able to add new staff to enhance our technical trade resolution
capabilities.
Mr. Chairman, our fiscal year 2003 budget proposes a funding level
of $139.8 million for FAS and 985 staff years. This represents an
increase of $9.4 million over fiscal year 2002, with staffing levels
unchanged. Although previous budgets addressed resource requirements
arising from growing workload demand, the fiscal year 2003 budget
primarily focuses on funding for much-needed improvements in the
agency's infrastructure to ensure effective implementation of our
programs. Key to infrastructure improvement is the FAS electronic
government (e-Gov) initiative.
The budget includes an increase of $6 million to support a
comprehensive e-Gov initiative designed to modernize FAS business
practices and operations and, thereby, ensure compliance with statutory
requirements for electronic business transactions and record keeping.
The Administration, Congress, and Department have mandated transition
to an e-Gov model of operation, incorporating high-speed communication
with customers, real-time collaboration across Federal agencies and
with private-sector partners, and heavier reliance on automated
processes for knowledge management. The Government Paperwork
Elimination Act (GPEA) requires all Federal agencies to provide
individuals or entities the option to submit information or transact
business electronically, and to maintain records electronically, when
practicable, by October 2003. These two requirements have created a
requirement for continual improvement in use of electronic technologies
in serving FAS' clientele. To become and remain e-Gov and GPEA
compliant will require ongoing investments in three primary categories:
bandwidth, modification of business practices, and software and
hardware as follows:
Expansion of telecommunications bandwidth
FAS operates in 93 cities overseas, almost all of which are
connected to Washington electronically via government-operated
telecommunications lines operated by the Department of State (DOS)
Diplomatic Telecommunications Service (DTS). The current average
bandwidth of 12.2 kilobit per second (kbps) was specified in a 1995
agreement with DOS and was intended for the low-bandwidth demands of
electronic mail of the pre-Internet era.
Recognizing the profound impact this narrow bandwidth has on work
performance in the new, Internet-oriented work environment, DOS is
upgrading worldwide DTS to a minimum of 64 kbps by the end of 2002.
This upgrade, while essential and unavoidable, is costly. At current
rates, FAS use of the DTS at the new minimum line speed would increase
annual costs by approximately $3.0 million.
As a less costly alternative to the DTS, FAS proposes to lease
bandwidth from commercial providers of telecommunications bandwidth
where it is available, reliable, feasible, and secure. Certain high-
risk posts (e.g., Russia and China) as well as posts with no private
Internet providers (e.g., Burma and Syria) will continue to be served
solely by the DTS. This approach will result in a cost for minimum 64
kbps Internet access and Washington-to-field telecommunications of
approximately $2.049 million per year.
Support for recurring hardware and software upgrades and replacement
The FAS e-Gov initiative includes $2.0 million to establish a
recurring replacement cycle for mission-critical hardware and software.
Chronic under-funding of hardware and software for the past several
years has resulted in postponement of routine replacement of basic
infrastructure. The bill for this neglect has come due. The requested
funding addresses a number of problems, any of which could cripple the
Agency including:
--Elimination of single point of failure in the FAS computer network.
--Replacement of backup of files and databases currently operating on
obsolete technology.
--Replacement of several Internet web servers, large database
servers, and our main communications (e-mail) server that are
operating at full capacity and will be at the end of their
useful life cycles in 2003.
This initiative also upgrades and modernizes FAS' remote sensing
imagery and geographic information systems analysis capability, its
economic analysis capability, its ability to communicate these
findings, and its ability to enable the remote sensing unit to
participate effectively in e-government.
E-Gov related process re-engineering, training, and software
development
Many of the customer-oriented business processes, including
application for dairy import licenses, administration of export credit
guarantees, and reporting of export sales, use business processes last
updated in the 1970s and in some cases dating back to the 1950s. These
functions are now performed using office automation and database
management software and hardware that cannot meet the requirements of
e-Gov or the GPEA.
This initiative provides for moving the Agency to a knowledge
management footing, in which information collected and analyzed by
Agency staff is indexed and clustered, and thereby made retrievable
with minimal effort by program managers and senior policy makers.
Current paper-based systems must be analyzed and re-engineered,
however, as merely converting an old business process from paper to
electronic documents would serve only to automate existing gross
inefficiencies. The funding requested for re-engineering business
processes will fund outside analysis of what the Agency should improve
and provide a roadmap for concrete action. Funding for procuring
commercial, off-the-shelf software and for software development will be
used to implement the re-engineered processes.
The FAS e-Gov initiative includes $2.0 million for process re-
engineering projects with the objective of moving manual processes to
on-line, web-enabled system. Examples include:
--paper-based food aid program development procedures;
--paper-based ocean transportation and commodity shipment systems;
and
--paper-based import license application and registration system.
Moving to an e-Gov environment affords FAS and the public it serves
an opportunity to realize a highly efficient and cost-effective
interaction. The successful transition is dependent not only on
realization of needed funding in fiscal year 2003, but also on
sustained funding levels in future years.
The budget also proposes an increase of $250,000 to develop a plan
to establish a standardized information system for all U.S. foreign
food aid programs that will be accessible via the Internet to
administering agencies, vendors, and grantees. The system will
facilitate the distribution of information on U.S. food aid activities
and operations, as well as improve program administration and
execution. FAS will work to develop this system with the Farm Service
Agency, the U.S. Agency for International Development (USAID), and the
Maritime Administration.
Our fiscal year 2003 request includes an increase of $1.0 million
for the Cochran Fellowship Program and a total appropriated level of
$5.0 million. This increase will support 150 additional participants in
the program and help to achieve the agency's goal of providing training
to 1,000 participants annually. The additional programming will focus
on several important topics, including biotechnology, food safety,
World Trade Organization (WTO) accession requirements, and the quality
and marketing of U.S. high value agricultural products.
The budget includes $2.086 million to fund projected pay cost
increases in fiscal year 2003. Absorption of these costs in fiscal year
2003 would primarily come from reductions in agency personnel levels
and would have a devastating effect on FAS efforts to address declining
levels in the U.S. share of world agricultural exports.
For fiscal year 2003, the budget proposes a total of $4.4 million
to cover the costs of items previously paid from central accounts
within USDA or on a government-wide basis, including GSA rental
payments and civil service retirement and retiree health benefits. The
2003 Explanatory Notes provided to the Committee include information on
the comparable levels for these items in fiscal years 2001 and 2002.
export programs
Mr. Chairman, the export promotion, food assistance, and foreign
market development programs administered by FAS are key to expanding
global market opportunities for U.S. agricultural producers.
Export Credit Guarantee Programs.--The budget includes a projected
overall program level of $4.2 billion for export credit guarantees in
fiscal year 2002. As in previous years, the budget estimates reflect
actual levels of sales expected to be registered under the programs
rather than authorized program levels. Of the total program level, $3.4
billion will be made available under the GSM-102 program and $57
million will be made available under the GSM-103 program. For supplier
credit guarantees, the budget includes an estimated program level of
$750 million, an increase of $299 million from the fiscal year 2002
current estimate. This increase reflects rapid growth in the level of
sales registrations in fiscal year 2001 and the expectation of strong
program growth in fiscal years 2002 and 2003. For facility financing
guarantees, the budget includes an estimated program level of $60
million, unchanged from the current estimate.
Foreign Market Development.--The fiscal year 2003 Commodity Credit
Corporation (CCC) program and budget estimates include $27.5 million
for the Foreign Market Development (Cooperator) Program, unchanged from
last year. The CCC estimates also include $2.5 million in funding from
CCC for the Quality Samples Program. Under this program, samples of
U.S. agricultural products are provided to foreign importers in order
to promote a better understanding and appreciation of their high
quality. The Quality Samples Program is carried out through commodity
organizations and agricultural trade associations.
Market Access Program (MAP).--The CCC estimates provide funding for
MAP in fiscal year 2003 at $90.0 million, unchanged from fiscal year
2002.
Export Enhancement Program (EEP).--World supply and demand
conditions have limited EEP programming in recent years; however, the
fiscal year 2003 budget does include a program level of $478.0 million
for the EEP, the maximum level permitted under the export subsidy
reduction commitments of the Uruguay Round Agreement on Agriculture.
Dairy Export Incentive Program (DEIP).--The budget assumes a DEIP
program level of $63 million for fiscal year 2003, slightly above the
fiscal year 2002 estimate of $61 million.
The Uruguay Round subsidy reduction commitments for dairy products
are now fully phased in. For those products announced under annual DEIP
allocations, the CCC baseline assumes programming at the Uruguay Round
maximum quantity limits. The estimated program level for DEIP is an
estimate of the level of subsidy funding needed to facilitate export
sales at the quantity limits. The program level may increase or
decrease from the projected level depending upon the relationship
between U.S. and world market prices during the course of the
programming year.
foreign food assistance
The Administration recently completed a management review of all
U.S. foreign food assistance activities in order to rationalize and
reform their administration and to strengthen their effectiveness. The
results of the Administration's review are reflected in the 2003 budget
and program proposals.
Public Law 480.--For fiscal year 2003, the budget includes a total
program level for all titles of Public Law 480 food assistance
activities of $1.34 billion, which is expected to provide approximately
3.7 million metric tons of commodity assistance. For Title I, the
budget provides for a program level of $160 million, which will support
approximately 700,000 metric tons of commodity assistance.
For Title II donations, the budget provides a program level of
$1.18 billion, an increase of $335 million above the fiscal year 2002
enacted level and $146 million above the current estimate for 2002,
which has been increased as a result of funding provided through
emergency supplemental appropriations and funding carried over from
prior years. The proposed Title II program level is expected to support
3.0 million metric tons of commodity donations. As in recent budget
submissions, no specific level of funding is requested for Title III
grants; however, current authorities provide that up to 15 percent of
the funds of any title of Public Law 480 may be transferred to carry
out any other title.
In accordance with the results of the Administration's food aid
review, Food for Progress programming in 2003 will be limited to
government-to-government programs funded through Public Law 480 Title
I. CCC-funded Food for Progress programs that traditionally have been
carried out through private voluntary organizations and cooperatives
will not be funded as those types of programs will be the exclusive
responsibility of USAID.
Donations of commodities under section 416(b) authority that rely
on the purchase of surplus commodities by CCC will not be continued in
2003. However, commodities that are acquired by CCC in the normal
course of its domestic support operations will be available for
donation through government-to-government agreements. For 2003, current
CCC baseline estimates project the availability of a limited supply of
surplus nonfat dry milk that could be made available for programming
under section 416(b) authority.
The 2003 budget includes $45 million in the Public Law 480 budget
request to offset the proposed elimination of Maritime Administration
reimbursements This increase is associated with a proposed change in
the financing mechanism for the costs of meeting U.S. cargo preference
requirements under the foreign food assistance programs. The budget
proposes to eliminate Maritime Administration reimbursements and fund
the full costs of cargo preference through the food aid programs
themselves. This will eliminate a duplicative financing system and
reduce record keeping, although the Maritime Administration will
continue to assist FAS and USAID in ensuring compliance with cargo
preference requirements.
This concludes my statement, Mr. Chairman. I will be glad to answer
any questions.
______
Biographical Sketch of A. Ellen Terpstra
A. Ellen Terpstra was sworn in as Administrator for the Foreign
Agricultural Service on March 1, 2002. She oversees various programs
that foster exports of American agricultural, fish, and forest
products. FAS works on international trade agreements and negotiations;
coordinates USDA's role in international food aid programs; reports on
international agricultural production and trade; administers export
assistance programs; and provides linkages to worldwide resources and
technologies that can benefit U.S. agriculture.
Before her appointment to USDA, Terpstra was president and chief
executive officer of the USA Rice Federation from 1998 to 2002. Before
joining the Rice Federation, she was president of the U.S. Apple
Association for 7 years.
Terpstra's government experience has focused on international food
and trade policy. She served as trade negotiator and policy coordinator
for the Office of the U.S. Trade Representative and an agricultural
policy analyst with the Congressional Research Service. She also has
been a consultant to the Food and Agriculture Organization of the
United Nations in Rome, Italy, and has served on several national
agricultural advisory committees.
Terpstra received her bachelor of science degree from Georgetown
University's School of Foreign Service.
Senator Kohl. Thank you, Dr. Penn. We turn now to Mr. Mark
Rey, who is the Under Secretary for Natural Resources and the
Environment.
STATEMENT OF MARK REY
Mr. Rey. Mr. Chairman and members of the subcommittee, I am
pleased to appear before you today to present the fiscal year
2003 budget and program proposals for the Natural Resources
Conservation Service.
The President often reminds us that every day is Earth Day
when you work on the land, and from my perspective it is clear
that the men and women of the Natural Resources Conservation
Service out in the field are making a tremendous difference to
ensure that farmers and ranchers have the resources and
expertise they need to care for natural resources and respond
to emerging environmental challenges. This happens through the
Natural Resources Conservation Service and specifically through
conservation technical assistance.
We know that farmers and ranchers are receiving exemplary
service from NRCS's field staff. In fact, NRCS has one of the
highest ratings for customer satisfaction among all government
and private sector organizations. Last year, NRCS participated
in the American Customer Satisfaction Index, which surveyed
customers of NRCS conservation technical assistance. The ACSI
is administered by the University of Michigan Business School.
It is the only uniform cross-industry/government measure of
customer satisfaction which allows benchmarking between the two
sectors.
The NRCS results were the highest for any USDA agency
participating in the 2001 survey and it has been described as
comparable to private sector companies such as Mercedes Benz
and Ritz Carlton. We are proud of the outstanding service that
we are providing customers through conservation technical
assistance. Our customers have come to expect excellent service
from the agency, and it will be a future challenge to continue
to ensure the funding and resource support for our staff are
sufficient to help them meet the expectations of farmers and
ranchers.
Turning to the Resource Conservation and Development
program, or RC&D, because of the support of this subcommittee,
the Secretary was able to announce the selection of 20 new RC&D
areas earlier this year, bringing the total number of
authorized areas to 368. On a national scale, non-Federal
Government agencies including State, local and tribal
governments, as well as private and not-for-profit
organizations, are playing important roles in conservation
policy. The RC&D program have been extremely successful in
leveraging and matching resources among these organizations. We
continue to receive excellent applications deserving of USDA
recognition and we want to maintain and enhance this very
popular program.
Turning now to our water resources related programs. We
know that emergency needs for watersheds resulting from natural
disasters have been averaging $110 million per year. However,
in the past, rather than planning for this need, we have
historically relied on emergency supplemental appropriations to
react to stricken communities, often months after the disaster.
The Administration's budget proposes $111,389,000 for emergency
watershed protection, which will allow us to respond to
disasters and protect homeland security.
In conclusion, the programs presented to this subcommittee
for funding are essential to the policy objectives proposed in
our overall agriculture conservation policy framework. In a
sense, it really comes down to three principles that we hold
dear.
First, we want to provide support for the cadre of trained
and skilled professionals out on the land working with farmers
and ranchers every day through conservation operations. Second,
we want to provide that workforce and the workforce of State
and local government cooperators with the very best data,
technical tools and training through conservation operations.
And finally, we want to continue to foster collaboration and
partnerships with other organizations through conservation
operations and the resource conservation and development
program. If we act on these three principles, I think we will
be well positioned to meet emerging conservation challenges for
the future and to help farmers and ranchers realize their goals
for the land they work.
I thank the subcommittee for the opportunity to appear and
will be happy to respond to your questions.
[The statements follow:]
Prepared Statement of Mark E. Rey
Mr. Chairman and Members of the Committee, I am pleased to appear
before you today to present the fiscal year 2003 budget and program
proposals for the Natural Resources Conservation Service (NRCS) of the
Department of Agriculture (USDA). I thank Members of the Subcommittee
for the opportunity to appear, and I would like to express gratitude to
the Chairman and members of this body for the support of additional
funding for fiscal year 2002.
Mr. Chairman, the President often reminds us that everyday is Earth
Day when you work the land. From my perspective as Under Secretary for
Natural Resources and Environment, it is clear that the men and women
of NRCS out in the field are making a tremendous difference to ensure
that farmers and ranchers have the resources and expertise they need to
care for natural resources and respond to emerging challenges.
In September, the Secretary released Food and Agriculture Policy:
Taking Stock for the New Century. Conservation clearly has a central
place in that document, and the Administration's agriculture policy as
a whole. Our conservation policy for agriculture is founded upon the
following seven principles:
--Sustain past environmental gains
--Accommodate new and emerging environmental concerns
--Design and adopt a portfolio approach to conservation policies
--Reaffirm market-oriented policies
--Ensure compatibility of conservation and trade policies
--Coordinate conservation and farm policies
--Recognize the importance of collaboration
Mr. Chairman, what we have put forward is a look at total
agriculture policy, and how it interrelates with real issues on farms
and ranches across the country and throughout the Nation's food
delivery system. And I would submit that our success in these areas
really depends upon what happens in this Subcommittee, because
everything we do relates back to Conservation Operations--the
fundamental investment in conservation assistance to farmers and
ranchers.
conservation operations program
The success of USDA's entire conservation effort depends upon the
availability of practical scientific and technological information that
is used by field employees who carry out a host of Federal, State, and
local programs. NRCS develops and transfers applied technologies
through the Field Office Technical Guide (FOTG), including technical
manuals, handbooks, and technical references. Collectively, NRCS
provides science-based solutions for the work carried out on the
Nation's farms and ranches.
We know that farmers and ranchers are receiving exemplary service
from NRCS field staff. In fact, NRCS has one of the highest ratings for
customer satisfaction among all government and private-sector
organizations. Last year, NRCS participated in the American Customer
Satisfaction Index (ACSI), which surveyed customers of NRCS
conservation technical assistance. The ACSI is administered by the
University of Michigan Business School. It is the only uniform, cross-
industry/government measure of customer satisfaction, which allows
benchmarking between the two sectors. The NRCS results were the highest
for any USDA agency participating in the 2001 survey, and has been
described as comparable to private sector companies such as Mercedes-
Benz and Ritz-Carlton.
We are proud of the outstanding service that we are providing
customers. Our customers have come to expect excellent service from the
agency, and it will be a future challenge to continue to ensure that
funding and resource support for our staff are sufficient to help them
meet the expectations of farmers and ranchers. Conservation Operations
means the continued availability of nationwide cooperative soil survey
information, climate and precipitation data and forecasting, and the
National Resources Inventory (NRI). These technical tools ensure that
we first have accurate baseline information regarding the natural
resources, and also trends and changes over time. Our work in this area
is tantamount to our success in multi-agency efforts, including our
work with the Environmental Protection Agency on clean water issues
relating to non-point source pollution livestock waste. Our resource
information and science-based technology are absolutely essential to
sound decision-making. Also, NRCS offers farmers and ranchers the
voluntary assistance they need to meet emerging challenges. Overall,
the Conservation Operations program is the keystone to meeting locally-
led conservation policy objectives, by providing sound scientific data
and common sense solutions for farmers and ranchers.
resource conservation and development
Mr. Chairman, because of the support of this Subcommittee, the
Secretary was able to announce the selection of 20 new RC&D areas
earlier this year, bringing the total number of authorized areas to
368. On a national scale, non-Federal government agencies, including
State, local, and Tribal governments, as well as private and not-for
profit organizations are playing important roles in conservation
policy. The RC&D program has been extremely successful in leveraging
and matching resources between these organizations. These organizations
come together at the local level to identify community needs and
collaborate on a voluntary basis. The RC&D program is a model for the
kind of collaboration and partnership effort that our Food and
Agriculture Policy document describes. It provides an excellent return
for a limited Federal investment and we appreciate the continued
support of this Committee.
watershed and flood prevention operations
The President's budget for fiscal year 2003 proposes to eliminate
Watershed Surveys and Planning, Watershed and Flood Prevention
Operations, and the Watershed Rehabilitation Program. The budget
requests funding for Emergency Watershed Protection (EWP) to provide
assistance to local communities when disasters occur.
The NRCS Emergency Watershed Protection (EWP) Program is a recovery
program targeted to communities--as opposed to individuals--by
relieving imminent hazards to life and property caused by floods,
fires, windstorms, droughts and other natural occurrences. NRCS
provides technical assistance and pays as much as 75 percent of the
cost for emergency repairs, such as removing debris from a stream. We
also purchase easements from willing landowners in flood prone areas to
prevent future crop losses.
As our Farm Policy document points out, water and agriculture are
inextricably linked. From looking at recent fiscal years, we know that
emergency needs for watersheds resulting from natural disasters
averages about $110 million per year. However, rather than prepare for
this need, we have historically relied upon emergency supplemental
appropriations to react to stricken communities, often months after the
disaster occurred. Therefore, for 2003, we are requesting $111 million
in appropriated EWP funding which would better equip the Federal
Government to respond more quickly to disasters and protect homeland
security.
summary
In conclusion, the programs presented to this Subcommittee for
funding are absolutely essential to the policy objectives proposed in
our overall agriculture conservation policy framework. It really comes
down to the following three points:
--Support the cadre of trained and skilled professionals out on the
land, working with farmers and ranchers everyday through
Conservation Operations.
--Provide that workforce and the workforce of State and local
government cooperators with the very best data, technical
tools, and training through Conservation Operations.
--Continue to foster collaboration and partnerships with other
organizations through Conservation Operations and RC&D.
I thank the Subcommittee for the opportunity to appear and would be
happy to respond to any questions Members might have.
______
Biographical Sketch of Mark E. Rey
Mark E. Rey was sworn in as the under secretary for natural
resources and environment by Agriculture Secretary Ann M. Veneman on
October 2, 2001.
In that position, he oversees the U.S. Department of Agriculture's
Forest Service and Natural Resources Conservation Service.
Since January 1995, Rey served as a staff member with the U.S.
Senate Committee on Energy and Natural Resources. He was the lead staff
person for the committee's work on national forest policy and Forest
Service administration. He was directly involved in virtually all of
the forestry and conservation legislation considered during the past
several sessions of Congress, with principal responsibility for a
number of public lands bills during this period. In addition, he worked
on the Herger/Feinstein Quincy Library Act of 1998 and the Secure Rural
Schools and Community Self-Determination Act of 2000. This latter law
is considered to have been the most extensive public forestry
legislation passed by Congress in 20 years.
From 1992-94 Rey served as Vice President, Forest Resources for the
American Forest and Paper Association. He served as Executive Director
for the American Forest Resource Alliance from 1989-92. He served as
Vice President, public forestry programs for the National Forest
Products Association from 1984-89. From 1976-84 he served in several
positions for the American Paper Institute/National Forest Products
Association, a consortium of national trade associations. From 1974-75
he worked as a staff assistant for the U.S. Department of the
Interior's Bureau of Land Management in Billings, Mont., and
Washington, D.C.
Rey is a native of Canton, Ohio. He holds a Bachelor of Science
degree in wildlife management; a Bachelor of Science degree in
forestry, and a Master of Science degree in natural resources policy
and administration, all from the University of Michigan in Ann Arbor.
______
Prepared Statement of Pearlie S. Reed, Chief, Natural Resources
Conservation Service
Thank you for the opportunity to appear before you today to discuss
our fiscal year 2003 budget request. Conservation is important to me.
I've devoted most of my adult life and my career to helping people get
conservation on the land. I want to thank the Committee for their
support for conservation over the years, and especially last year
during the fiscal year 2002 appropriations process. The terrorist
threat and the weakening global economy forced all levels of government
to make hard choices to balance many competing needs. Your concern for
conservation of the Nation's priceless resource base means healthier
land and cleaner water for people now and a more secure future for
future generations of Americans.
The farmers and ranchers who are the managers and caretakers of the
Nation's agricultural lands want to be good stewards of soil and water.
They want to protect the environment in which they and their neighbors
live; they want to hand on to the next generation a land as productive
and healthy as the one they received from the last generation. But they
need help to be the good stewards they want to be.
For the help they need, producers and other land users rely on
NRCS. They know they can expect good service from NRCS; they value the
usefulness, accessibility and clarity of our advice and information;
and they appreciate the courtesy and professionalism of NRCS employees.
Just how highly they rate NRCS's service was revealed by a recent
survey conducted by the University of Michigan using the American
Customer Satisfaction Index. A sample of those who received
conservation technical assistance last year gave NRCS a score of 81 out
of a possible 100 points. This is 10 points higher than the average for
private sector services and 12 points higher than the average index of
Federal Government services. Users of conservation technical assistance
gave NRCS a trust index of 90 out of a possible 100 points.
I hope that we will be able to work with you this year to continue
your funding support for conservation in fiscal year 2003, and
especially to maintain the funding level needed to ensure that the
conservation delivery system that this Nation has built over the past
65 years can continue to help local people care for the land.
discretionary funding
Conservation Operations
The President's fiscal year 2003 budget request for Conservation
Operations proposes an increase of $118.19 million. The increase
includes transfers from the Office of Personnel Management and USDA's
Departmental Administration account that are part of the President's
government-wide management initiative for agencies to pay the full cost
of certain employee benefits. The explanatory notes provided to the
Committee provide information on the comparable levels for these items
in fiscal year 2001 and fiscal year 2002.
The Conservation Operations account funds the basic activities that
make effective conservation of soil and water possible. It funds the
assistance NRCS provides to conservation districts, enabling people at
the local level to assess their needs, consider their options, and
develop area-wide plans to conserve and use their resources.
Conservation operations support the site-specific technical assistance
NRCS provides to individual landowners to help them develop plans that
are tailored to their individual economic goals, management
capabilities, and resource conditions. It also includes developing the
technical standards and technical guides that are used by everyone
managing soil and water--individuals, local and state agencies and
other Federal agencies. And it includes our Soil Survey and Snow Survey
Programs and other natural resources inventories, which provide the
basic information about soil and water resources that is needed to use
these resources wisely. This basic inventory work contributes to
homeland security as well as to the long-term sustainability of the
Nation's natural resource base.
In fiscal year 2001, technical assistance supported by Conservation
Operations funds, enabled landusers to treat 9.6 million acres of
cropland and 11.3 million acres of grazing land to the resource
management system level (sustainable management). On 3.5 million acres
of cropland that had been eroding at severely damaging rates, NRCS
technical assistance enabled farmers to reduce erosion to the tolerable
rate or less, thus preserving the productive capacity of the soil.
Overall, NRCS provided planning assistance on more than 31.4 million
acres of land in all uses and application assistance on more than 28.6
million acres.
In fiscal year 2001, NRCS continued to assist producers to respond
to the public's concerns about water quality, concerns that are
continuing to result in the enactment of increasingly more stringent
regulations addressing water quality at local, State, and Federal
levels. We provided assistance to apply conservation systems to address
water quality concerns on 14 million acres. Practices that were applied
to help protect water quality included: 5.4 million acres of nutrient
management; 1.2 million acres where irrigation water management was
improved, and 524,343 acres of buffer practices. All of these
activities were supported by Conservation Operations. In some cases,
funds from other Federal programs or State or local sources were
utilized in combination with Conservation Operations.
Adequate funding for Conservation Operations in 2003 will enable
NRCS to maintain our level of assistance to the basic needs of
producers all across the country. It will also enable us to increase
our attention to critical resource concerns, such as animal feeding
operations and grazing lands.
Operators of animal feeding operations need increased assistance in
order to respond to the public's growing concern that such operations
pose a threat to the environment. NRCS has invested in technology
development and training to ensure that agency and partner field staff
are prepared to provide the help AFO operators need. Ensuring that
assistance is available to all AFO operators who need it will be a
major challenge--as many as 270,000 AFOs may need assistance. The
President's budget provides Conservation Technical Assistance funds to
increase AFO assistance, to the extent practicable.
Another serious concern continues to be the health of private
rangeland and pastureland. The Nation's 630 million acres of non-
Federal grazing lands are vital to the quality of the Nation's
environment and the strength of its economy. In fiscal year 2001, NRCS
provided technical assistance to land users on more than 18 million
acres of private grazing land. Improved grazing land health on these
lands will benefit society as well as the landowners. Healthy grazing
lands mean reduced erosion, improved air quality, reduced potential for
flooding, improved fisheries and aquatic systems, and healthy riparian
areas. The plant cover on grazing lands can reduce the impacts of
drought and sequesters millions of tons of carbon. The 2003 budget
continues this important work.
Resource Conservation and Development
The President's budget also includes an increase for the Resource
Conservation and Development Program. Through the RC&D program, NRCS
works in partnership with local volunteers organized as Resource
Conservation and Development Councils representing multi-county areas.
Each council consists of public and private sector sponsors and other
local organizations that represent a diverse cross-section of community
interests. These local councils play a vital role in improving the
quality of life and standard of living in rural communities across the
Nation. NRCS provides a coordinator and an office for each council.
Currently a total of 368 RC&D areas serve more than 81 percent of the
Nation's counties and more than 75 percent of the population. We have
received applications from an additional 21 areas, and at least 10
other areas are forming across the Nation. The President's budget
proposes funding of $52.031 million for fiscal year 2003 which would
enable continued support of the 368 authorized areas.
For every dollar appropriated by Congress, the RC&D Councils
provide an average of $14 from other sources to carry out projects they
have identified as critical to helping their communities socially and
economically. RC&D reporting data for fiscal year 2001 indicate that
councils and their partners created 514 new businesses, helped expand
1,830 businesses, and financially assisted 1,099 businesses. An
estimated 7,494 jobs were created through area projects. Efforts to
improve natural resources resulted in improvement of 878,343 acres of
wildlife habitat, improvement of 224,871 acres of lakes, and 5,038
miles of streams. Educational projects helped 283,249 people develop
new skills. RC&D projects helped 778,350 economically or socially
disadvantaged people.
Watershed Planning and Operations and Emergency Watershed Protection
The President's budget for fiscal year 2003 proposes to eliminate
Watershed Surveys and Planning, Watershed and Flood Prevention
Operations, and the Watershed Rehabilitation Program. The budget
requests funding for Emergency Watershed Protection (EWP) to provide
assistance to local communities when disasters occur. EWP helps
communities reduce imminent hazards to life and property caused by
flood, fires, windstorms, and other natural occurrences. Through EWP,
NRCS provides technical and financial assistance for immediate cleanup
and subsequent rebuilding of damaged areas and for restoration of
stream corridors, wetlands, and riparian areas. Emergency work includes
establishing quick-growing vegetation on denuded land, steeply sloping
land, and eroding banks; opening dangerously restricted channels;
repairing diversions and levees; and purchasing flood plain easements.
Under EWP, NRCS also provides assistance in urban planning and site
selection to the Federal Emergency Management Agency when FEMA is
relocating communities out of the flood plain.
NRCS emergency watershed protection efforts have traditionally been
dependent upon Congressional emergency supplemental appropriations
enacted after an event has occurred. Over the past 10 years, these
appropriations have averaged $110 million annually. The President's
budget for fiscal year 2003 proposes to ensure more timely and
effective response by providing an appropriation of $111.389 million so
that assistance can be on the way as soon as a disaster occurs.
commodity credit corporation funded conservation programs
Environmental Quality Incentives Program
EQIP provides producers and landowners with incentives to implement
long-term, comprehensive conservation farm plans. The final 2003 level
for EQIP will be set when the new farm bill is passed. For planning
purposes, the President's budget for 10 year funding for Farm Bill
programs assumes a $1 billion level for EQIP in fiscal year 2003.
Demand for EQIP has historically exceeded the available funding. In
fiscal year 2001, for example, total EQIP funding was $199.9 million,
whereas the funds requested totaled an estimated $359.4 million. Of the
47,461 applications for program assistance received in fiscal year
2001, only about 37 percent (17,684 applications) could be funded. The
total unfunded backlog of EQIP applications is more than $1 billion.
Two examples where EQIP technical and financial assistance is
especially important are protecting the quality of water in the
Colorado River and helping livestock producers protect the environment.
The Nation still needs to reduce salt loading to the Colorado River by
an additional 0.86 million tons per year to meet treaty obligations.
Producers are willing to help achieve that goal, but they need
technical assistance from NRCS to design and implement practical and
effective conservation measures; and they need financial assistance.
The current backlog of EQIP applications for salinity control measures
reflects almost $150 million in financial assistance.
The technical and financial assistance provided to operators of
animal feeding operations through EQIP is an important supplement to
the basic technical assistance provided through Conservation
Operations. Because many comprehensive nutrient management plans
include complex structures that are expensive to install and maintain,
some producers simply can't implement them without financial
assistance. The President's 2003 budget will provide for financial and
technical assistance under EQIP for AFO-related concerns in fiscal year
2003.
Agricultural Management Assistance
This program, which was first implemented in fiscal year 2001,
provides technical and cost-share assistance in 15 States where
participation in the Federal Crop Insurance program has historically
been low. In fiscal year 2001, NRCS administered $8.3 million to
provide assistance in improving water management, including irrigation
water management; planting trees for windbreaks or water quality; and
mitigating risk through diversification or resource conservation. The
President's budget for fiscal year 2003 assumes continued funding at
the authorized level of $10 million in total for the program.
Closing--Partnership for Conservation
Mr. Chairman, as you know, conservation of the resources on the
Nation's private land is a voluntary partnership effort that relies on
many individuals, groups, and governmental entities working together to
achieve common goals. The foundation of this effort is the traditional
partnership between NRCS, local conservation districts, and State
conservation agencies. Conservation districts are units of State or
tribal government that are responsible for setting priorities and
developing conservation programs for their area. They are operated by
boards of locally elected officials who serve without salary. NRCS
provides assistance on private lands through the districts. NRCS and
State and local employees in a field office work as a team, using the
same case files and technical tools. District employees administer
local and State conservation programs and help NRCS specialists in
delivering Federal programs in the district. NRCS specialists provide
assistance to achieve local priorities, deliver Federal programs, and
help deliver State and local programs.
The most important members of this conservation partnership are the
people who own the land and make the decisions about its use.
NRCS's role is to provide the infrastructure--the foundation of
science and technology that is essential to using natural resources
productively while protecting their quality and an effective delivery
system to make that knowledge available to those who need it in forms
that are useful to them.
Conservation doesn't just happen. It takes all of us, including
Congress, working together to make it happen. This concludes my
statement. I will be glad to answer any questions.
Senator Kohl. We thank you, Mr. Rey. And now we turn to Mr.
Mike Neruda, who is Deputy Under Secretary for Rural
Development.
STATEMENT OF MICHAEL E. NERUDA
Mr. Neruda. Thank you, Chairman Kohl; thank you, Senator
Cochran, members of the subcommittee. It is a real pleasure to
be here today to present to you the President's fiscal year
2003 budget request for the Rural Development mission area at
USDA.
I will, with the permission of the Chairman and the
Subcommittee, abbreviate my remarks and have the full remarks
for the record.
The Rural Development mission area consists of three
agencies, the Rural Business Cooperative Service, the Rural
Housing Service, and the Rural Utilities Service. The mission
area also administers the rural portion of the empowerment
zones and enterprise communities initiative, and financially
assists the National Rural Development Partnership, a
nationwide network of rural development leaders and officials.
Rural Development, as you can see, is responsible for a
remarkably wide variety of programs to help improve the quality
of life for rural Americans.
I will go now into the budget. Mr. Chairman, the
President's commitment to improving conditions in rural America
is reflected in this budget request for fiscal year 2003. The
Rural Development budget totals $2.6 billion in budget
authority. Budget authority at that level will support $11.6
billion in direct loans, loan guarantees, grants, and technical
assistance, and pay administrative expenses. This level of
support is consistent with the program levels achieved in
recent years, although it is below the current appropriated
estimate of $14.3 billion that is available for 2002.
Implementation of new and more accurate cash flow models
incorporating recent program experience and new economic
assumptions resulted in changes in program subsidy rates for
fiscal year 2003. The impacts of these new subsidy rates on
individual program levels varies, but the net effect is a lower
total practical level that can be supported with the same level
of budget authority. However, our 2003 budget does not require
an across the board reduction.
I would like to point out that the development and
incorporation of these cash flow models resulted just last week
in Rural Development receiving its first unqualified audit
opinion on its financial statements since 1993. This is a
significant achievement and reflects the commitment and support
of this subcommittee.
I will now focus on specific requests.
The Rural Utilities Service. This Administration believes
that enhanced communications infrastructure is essential for
rural communities to be able to compete effectively for jobs
and income generating opportunity. For that reason, this budget
continues the effort to support broadband transmission and
local dial-up Internet service by providing $80 million in
loans and $2 million in grants.
The fiscal year 2003 budget reflects the administration's
commitment to a fully privatized Rural Telephone Bank that does
not require Federal funds to finance the loans it makes. The
bank was established in 1972 to provide a supplemental source
of credit to help establish rural telephone companies. This has
proved to be remarkably successful, and efforts have been
underway since 1996 to privatize the bank.
I would also like to point out that the request for
electric program loans is maintained at the fiscal year 2001
appropriated program level of over $2.6 billion. This
subcommittee generously provided over $4 billion in loan funds
for fiscal year 2002. This increase for fiscal year 2002 will
go a long way toward reducing the backlog of electric loan
demands, so our 2003 request is returned to the 2001 program
level.
Rural Business-Cooperative Services (RBS). One key to
creating economic opportunity in rural areas is the development
of new business and employment opportunities. However, many
rural areas do not have sufficient access to the capital needed
to sustain local businesses and generate new rural growth.
RBS programs, particularly what we call B&I loan guarantee
program, supplement the efforts of local lending institutions
in providing capital to stimulate job creation and economic
expansion. RBS also provides research and technical assistance
to assist in the identification and creation of new business
structures that can support innovative capital formation and
utilization in rural America.
Included in the rural cooperative development grant request
is $2 million for cooperative research agreements for
cooperative energy alternatives. A comprehensive program for
research is needed to determine how the cooperative foreign
business can be adopted to increasing domestic fuel supplies,
both traditional and alternative, while increasing economic
returns to the farmers. This program will be carried out
through cooperative research at the national office and through
cooperative research agreements with universities and
appropriate nonprofit program organizations.
The Rural Housing Service. The budget request for the
programs administered by the Rural Housing Service totals $5.2
billion in program level. This commitment will improve housing
conditions in rural areas, and in particular, improve home
ownership opportunities.
We are proposing a multi-family housing request of $60
million for direct loans, $100 million for guaranteed loans,
$53 million for farm labor housing loans and grants, and $712
million for rental assistance.
This request represents a refocusing of attention on multi-
family housing, with the $60 million loan program directed
solely to repair and rehabilitation of existing projects. Rural
housing has an existing multi-family housing portfolio of $12
billion that includes over 17,600 projects. Many of these
projects are 20 years old or older and face rehabilitation
needs. Rural Development is taking a critical overall look at
the multi-family housing new construction program to ensure
that it is maintained on a proper course to provide maximum
benefits for rural America. Our budget request also includes $2
million for an independent study to identify alternative ways
to fund new construction in a more cost efficient manner.
The budget includes a total of $712 million in rental
assistance payments, a slight increase over the current level.
These payments are used to reduce the rent in rural rental
housing projects to no more than 30 percent of the income of
very-low income occupants, typically female heads of household
with annual incomes averaging under $8,000.
The request for community facilities funding totals $250
million for direct loans, $210 million for guaranteed loans,
and $17 million for grants. Community facility programs finance
rural health facilities, child care facilities, fire and safety
facilities, jails, education facilities, and almost any other
type of essential community facility needed in rural America.
As you can see, Mr. Chairman, we have a wide range of
projects within our mission area. Again, I thank you for
allowing me to testify and of course will take any questions at
the end.
[The statements follow:]
Prepared Statement of Michael E. Neruda
Mr. Chairman, Members of the Committee, it is a pleasure to present
to you the President's fiscal year 2003 Budget request for the Rural
Development Mission Area of USDA.
The Rural Development mission area consists of three agencies, the
Rural Business-Cooperative Service (RBS), the Rural Housing Service
(RHS), and the Rural Utilities Service (RUS). These agencies are
responsible for delivering programs authorized by the Consolidated Farm
and Rural Development Act, the Farm Security Act of 1985, the Rural
Electrification Administration Act of 1936, the Cooperative Marketing
Act of 1926, the Agricultural Marketing Act of 1946, the Housing Act of
1949, and the Rural Economic Development Act of 1990, as amended. The
mission area also administers the rural portion of the Empowerment
Zones and Enterprise Communities (EZ/EC) Initiative, and assists the
National Rural Development Partnership, a nationwide network of rural
development leaders and officials. This listing of responsibilities is
suggestive of the remarkably wide variety of programs in Rural
Development's purview, to help improve the quality of life for rural
Americans.
Rural Development assists rural individuals, communities, and
businesses obtain the financial and technical assistance needed to
address their diverse and unique situations. This financial and
technical assistance may come solely from Rural Development or be
combined with assistance from one of the numerous public and private
organizations involved in the development of rural communities. Rural
Development agencies deliver over 40 different loan, loan guarantee,
and grant programs in the areas of business development, cooperative
development housing, community facilities, water supply, waste
disposal, electric power, and telecommunications, including distance
learning and telemedicine. Rural Development staff also provides
technical assistance to rural families and community leaders to ensure
success of those projects it has financed. In addition to their loan-
making responsibilities, Rural Development staff are also responsible
for the servicing and collection of a loan portfolio that exceeds $83
billion.
Rural Development's large portfolio displays one dimension of the
successes of the program funding this Committee has provided. However,
numbers do not reveal the human side of these successes. Later, in
testimony from the agencies, you will hear clearly how the program
funding the Committee provides dramatically improves the lives of rural
Americans. These success stories are remarkable.
rural development budget request
Mr. Chairman, the President's commitment to improving conditions in
rural America is reflected in this budget request for fiscal year 2003.
The Rural Development budget request totals $2.6 billion in budget
authority. Budget authority at that level will support $11.6 billion in
direct loans, loan guarantees, grants and technical assistance, and pay
administrative expenses. This level of support is consistent with the
program levels achieved in recent years, although it is below the
appropriated estimate of $14.3 billion that is available for 2002.
Implementation of new, more accurate cash flow models that incorporate
recent program experience and new economic assumptions resulted in
changes in program subsidy rates for fiscal year 2003. The impact of
these new rates on individual program levels varies from program to
program--some increasing and some decreasing--but the net effect is a
lower total program level that can be supported with the same amount of
budget authority. However, our 2003 Budget does not reflect an across
the board reduction. Rather, we are requesting increases in certain
programs and reductions in others, as will be described later. I will
now discuss the requests for specific programs.
rural utilities service
The Rural Utilities Service (RUS) provides financing for electric,
telecommunications, and water and waste disposal services that are
essential for economic development in rural areas. The RUS program
request totals $4.8 billion, which is comprised of $2.6 billion for
electric loan programs, $495 million for rural telecommunication loans,
$50 million for Distance Learning and Telemedicine loans, $25 million
for Distance Learning and Telemedicine grants, $80 million in loans and
$2 million in grants to support broadband transmission and local dial-
up Internet service, $889 million for direct and guaranteed Water and
Waste Disposal loans, $587 million for Water and Waste Disposal Grants,
and $3.5 million for Solid Waste Management Grants.
Electric program funding will benefit about 3.4 million consumers
from systems improvement, through upgrading almost 220 rural electric
systems. Approximately 60,000 jobs will be created as a result of
facilities constructed with electric program funds. Almost 133,000 new
subscribers will receive telecommunications service, over 495,000
existing subscribers will receive improved service, and about 11,385
jobs will be generated as a result of facilities constructed with
Telecommunications funds. Under the Distance Learning and Telemedicine
programs, approximately 140 schools will receive distance-learning
facilities and 55 health care providers will receive telemedicine
facilities. Over 38,000 jobs will be generated as a result of
facilities constructed with Water and Waste disposal program funds, as
540 rural water systems and about 275 rural waste systems are developed
or expanded in compliance with the Safe Drinking Water Act and Federal
and State environmental standards.
The fiscal year 2003 budget reflects the Administration's
commitment to a fully privatized RTB that does not require Federal
funds to finance the loans it makes. The Rural Telephone Bank (RTB) was
established in 1972 to provide a supplemental source of credit to help
establish rural telephone companies. This has proved to be remarkably
successful, and efforts have been underway to privatize the bank. In
1996, the RTB began repurchasing Class ``A'' stock from the Federal
government, thereby beginning the process of transformation from a
Federally funded organization to a fully privatized banking
institution. A privatized bank would be able to expand and tailor its
lending practices beyond current limitations imposed as a government
lender.
rural business-cooperative services
One key to creating economic opportunity in rural areas is the
development of new business and employment opportunities. However, many
rural areas do not have sufficient access to the capital needed to
sustain local businesses and generate new rural growth. Agricultural
producers may not have a mechanism or information to utilize the equity
available in farmland for other business purposes. Such equity could be
leveraged into other activities, providing capital infusions into
capital starved areas. Rural Business-Cooperative Services (RBS)
programs, particularly the Business and Industry (B&I) loan guarantee
program, supplement the efforts of local lending institutions in
providing capital to stimulate job creation and economic expansion. RBS
also provides research and technical assistance to assist in the
identification and creation of new business structures that could
support innovative capital formation and utilization in rural America.
The RBS budget request for fiscal year 2003 totals about $844
million in RBS loan and grant assistance, the bulk of which represents
$733 million in B&I loan guarantees. This level of funding for the B&I
program alone will create or save over 20,400 jobs in rural America.
$44 million is requested for the Rural Business Enterprise Grant
program, $3 million for the Rural Business Opportunity Grant program,
$40 million for the Intermediary Relending Program, almost $15 million
for Rural Economic Development loans, and $9 million for Rural
Cooperative Development Grants. In total, the budget for RBS programs
is expected to create or save over 89,300 rural jobs.
Included in the Rural Cooperative Development Grant request is $2
million for cooperative research agreements for cooperative energy
alternatives. A comprehensive program of research is needed to
determine how the cooperative form of business can be adopted to
increasing domestic fuel supplies, both traditional and alternative,
while increasing economic returns to farmers. The program will be
carried out through cooperative research at the National Office and
through cooperative research agreements with universities and
appropriate nonprofit program organizations.
rural housing service
The budget request for the programs administered by the Rural
Housing Service (RHS) totals $5.2 billion. This commitment will improve
housing conditions in rural areas, and, in particular, improve
homeownership opportunities. The request for single family direct and
guaranteed homeownership loans totals $3.7 billion, which will assist
46,000 households who are unable to obtain credit elsewhere to purchase
a home of their own. This level of construction activity will stimulate
almost 34,000 jobs in rural areas. The RHS request also includes $35
million for housing repair loans and almost $32 million for housing
repair grants, which will be used to improve 12,000 existing single
family houses, mostly occupied by low income elderly residents.
We are proposing a multi-family housing request of $60 million for
direct loans, $100 million for guaranteed loans, $36 million for farm
labor housing loans $17 million for farm labor housing grants, and $712
million in rental assistance. This request represents a refocusing of
attention on multi-family housing, with the $60 million loan program
directed solely to repair and rehabilitation of existing projects. RHS
has an existing multi-family housing portfolio of $12 billion that
includes over 17,600 projects. Many of these projects are 20 years old
or older, and face rehabilitation needs. Rural Development is taking a
critical overall look at the multi-family housing new construction
program to ensure that it is maintained on a proper course, to provide
maximum benefits for rural America. Our budget request includes $2
million to fund an independent study to discover alternatives to fund
new construction in a more cost efficient manner. Given the needs for
repair/rehabilitation of existing projects, and the requested study of
alternatives for new construction, RHS is proposing to defer making
direct loans for new construction under the section 515 Rural Rental
Housing program. However, direct loans would continue to be made for
new construction under the Farm Labor Housing program. Further, funding
for new construction would continue to be available under the Section
538 Guaranteed Loan program.
This budget provides an increase in the farm labor housing program
to $53 million, which will address pressing needs for farm worker
housing across the country. This program provides housing to the
poorest housed workers of any sector in the economy, and supports
agriculture's need for dependable labor to harvest the abundance
produced by rural farms.
The budget includes $706 million for Section 521 Rural Rental
Assistance payments, a slight increase over the current level. These
payments are used to reduce the rent in rural rental housing projects
to no more than 30 percent of the income of very low-income occupants
(typically female heads of households, with annual incomes averaging
under $8,000). Currently, almost a quarter of a million households are
receiving such assistance. The 2003 Budget provides for the renewal of
expiring 5-year contracts for more than 42,000 of the units occupied by
these households.
The request for community facilities funding totals $250 million
for direct loans, $210 million for guaranteed loans, and $17 million
for grants. Community facilities programs finance rural health
facilities, childcare facilities, fire and safety facilities, jails,
education facilities, and almost any other type of essential community
facility needed in rural America. These funds will support 4,000 beds
in new or improved elder care facilities, 180 new or improved health
care facilities, 170 new or improved fire and rescue facilities, 50 new
or improved child care centers, and 70 new or improved schools.
administrative expenses
These requested program levels provide ambitious targets for
accomplishments, for which this Committee will be proud. However,
delivering these programs to the remote, isolated, and low income areas
of rural America requires administrative expenses sufficient to the
task. With an outstanding loan portfolio exceeding $83 billion,
fiduciary responsibilities mandate that Rural Development maintain
adequately trained staff, employ state of the art automated financial
systems, and monitor borrowers' activities and loan security to ensure
protection of the public's financial interests.
For 2003, the budget proposes a total of $685 million for Rural
Development S&E. Within this fiscal year 2003 request, there is a total
of $56 million to cover the costs of items previously paid from central
accounts within USDA or on a government wide basis, including GSA
rental payments, Federal Employees Compensation Act and Civil Service
retirement and retiree health benefits. The Explanatory Notes provided
to the Committee provide information on the comparable levels for these
items in fiscal year 2001 and fiscal year 2002.
Our request includes support for initiatives such as the multi-
family housing study mentioned earlier and maintaining the commitment
to modernizing financial systems, along with assuming new mission area
responsibilities for employee retirement costs and GSA leases. It also
includes funding for new equipment to support state-of-the-art
technologies utilized in our Centralized Servicing Center (to enhance
servicing of single family housing borrowers), support for reviewing
large and complex electric and telecommunications infrastructure loans,
and increased funding for training. Rural Development is very
appreciative of the funding provided in the fiscal year 2002
appropriation for automated financial systems development, which
allowed Rural Development to continue to support the development of
systems for guaranteed loans, multi-family housing loans, Rural
Utilities Service systems modernization, and the Program Funds Control
System. This funding allows Rural Development to address long delayed
automated systems development needs. The funding we are requesting for
2003 will allow us to continue several projects that require multi-year
funding.
Mr. Chairman, Members of the Committee, this concludes my formal
statement. We would be glad to answer any questions you may have. Thank
you for the opportunity to appear before you to discuss the Rural
Development budget request.
______
Biographical Sketch of Michael E. Neruda
Michael E. Neruda was appointed by Secretary Ann M. Veneman to be
the Deputy Under Secretary for Rural Development.
As Deputy Under Secretary, Mr. Neruda oversees the USDA Rural
Development Mission Area, which consists of three agencies; $14 billion
annual funding authority for loans, grants, and technical assistance to
rural residents, communities, and businesses; and an $80 billion
portfolio of existing loans to collect. Rural Development has over
7,000 employees located across the United States and in Puerto Rico,
the Virgin Islands, and the Western Pacific Trust territories. Mr.
Neruda is the direct supervisor for the three Agency heads and the 47
politically appointed State Directors. In addition to his
responsibilities within Rural Development, Mr. Neruda serves as the
chair of the National Food and Agricultural Council (NFAC). The NFAC is
an interagency council that includes members from all USDA agencies
that maintain a presence at the State and local level, and serves as
the primary forum for coordinating USDA programs at the State and local
level.
Prior to his current appointment, Mr. Neruda served as Confidential
Assistant to Secretary Veneman. He represented USDA at the President's
Management Council prior to the confirmation of the Deputy Secretary
and advised the Secretary on the implementation of President Bush's
management agenda and other broad organizational issues impacting the
Department.
Mr. Neruda has extensive experience working on agricultural issues,
in both the Legislative and Executive branches. Prior to his current
appointments at USDA in the Bush Administration, he was Staff Director
of the Subcommittee on General Farm Commodities, Resource Conservation
and Credit, Committee on Agriculture, U. S. House of Representatives.
In this position he was a key adviser to the House Agricultural
Committee on issues related to farm commodities, trade, conservation,
and credit. Mr. Neruda has also served on the staff of several Members
of Congress, including Representative Fred Grandy and Senator Roger
Jepsen, both of Iowa, and Senator Ed Zorinsky of Nebraska.
Mr. Neruda served in the Administration of President George H.W.
Bush at USDA as the Executive Assistant to Agriculture Secretary Edward
Madigan. In that position he codirected a comprehensive USDA/OMB Field
Structure Review, which resulted in a proposal for a nationwide
restructuring of USDA client services. He also served as the Acting
Deputy Assistant Secretary for Administration and later managed the
Risk Management Agency's network of regional service offices.
Mr. Neruda is a Captain in the Navy Reserve and was recalled to
active duty for OPERATION DESERT STORM. He received the Bronze Star for
his service in the Persian Gulf. After the war he was chosen to return
to the USA with General Schwarzkopf to manage all aspects of the
General's participation in public events.
Mr. Neruda was reared on the family farm near Dorchester, Nebraska,
and holds a M.A. in Public Administration from the University of
Oklahoma as well as a B.S. in General Agriculture from the University
of Nebraska-Lincoln. He is the father of two children who currently
attend Stanford University.
______
Prepared Statement of Hilda Gay Legg, Administrator, Rural Utilities
Service
Mr. Chairman, Members of the Subcommittee, thank you for the
opportunity to present the President's fiscal year 2003 budget for the
Rural Utilities Service (RUS). We appreciate the work and support you
and the other members of this subcommittee have provided for a strong,
dependable infrastructure in the rural United States.
Safe, dependable, affordable, modern utility infrastructure is an
investment in economic competitiveness and serves as a fundamental
building block of economic development. Technology, regulatory, and
market structure changes, combined with an aging utility infrastructure
are occurring in the electric, telecommunications, and water sectors.
Without the help of USDA through the RUS programs, to replace and
enhance the utility infrastructure of Rural America the residents of
rural communities will have a more difficult time sharing in the
Nation's basic quality of life. Eighty percent of the Nation's landmass
continues to be rural, encompassing 25 percent of the population. As we
face a challenged economy, this infrastructure investment is vital to
spurring economic growth, creating jobs and improving the quality of
life in Rural America.
The nearly $38 billion RUS loan portfolio includes investments in
approximately 7,900 small community and rural water and waste disposal
systems, and 2,000 electric and telecommunications systems serving
rural America. The partnership RUS has with local communities,
cooperatives, businesses and citizens is the key to the success of
these programs.
a budget that leads
The President's proposed budget will enable RUS to respond to the
demand in rural America to meet the needs brought on by the rapidly
changing markets and technologies. Rural America, if it is to be a part
of today's fast changing economic landscape, must have the ability to
meet changing needs. The ability of borrowers to respond quickly to
changing conditions is a key to the public-private partnership between
RUS and its borrowers. RUS continues to streamline policies, offer
borrowers more flexibility in financing, while ensuring safe, reliable
modern utility service to rural Americans.
electric program
The RUS Electric Program budget proposes $11 million in budget
authority to support a program level of $2.6 billion. These amounts
include: $6.9 million in budget authority for a hardship program level
of $121.1 million, $4.0 million in budget authority for a municipal
rate program level of $100 million, a $700 million funding level for
Treasury rate loans and a $1.6 billion funding level for guaranteed
loans through the Federal Financing Bank, which do not require any
budget authority, and $80,000 in budget authority for a $100 million
loan guarantee program for private sector loan guarantees.
An example of how our rural electric borrowers can improve the
economic potential and quality of life in rural communities is the
Hawkeye Tri-County Electric Cooperative (Hawkeye Tri-County). Hawkeye
Tri-County of Cresco provides electric service to 6,100 consumers using
2,100 miles of distribution line in Howard, Winneshiek, and Chickasaw
counties in northeast Iowa. Recently, RUS awarded Hawkeye Tri-County a
$4,245,000 loan to connect 130 consumers, construct 23 miles of
distribution line and make other necessary system improvements.
Hawkeye Tri-County supports the economic development efforts of
area communities by awarding loans through its economic development
revolving loan fund. The loans made available through this fund come in
part from grants awarded to Hawkeye Tri-County by several different
sources including the USDA Rural Economic Development Loan and Grant
(REDLG) Program. For every dollar Hawkeye Tri-County invests in a
project, $6 are received through these programs. Over the past 2 years
Hawkeye Tri-County has funded over $1 million in local projects through
this revolving fund. This includes funding for:
The Dairy Education and Applied Research Laboratory in Calmar--a
unique, state-of-the art dairy facility was built on the campus of a
local community college with the help of a $240,000 grant from Hawkeye
Tri-County. The cooperative also supplied one mile of three-phase line
to serve the facility and offered rebates on energy efficient lighting.
The Decorah Business Park and the Industrial Park in Lime Springs--
The cooperative provided over $550,000 in low-interest loans to two
local industrial parks in order to build infrastructure to support
additional businesses locating to the area.
water and enviromental programs
This budget seeks $587 million in budget authority for Water and
Waste Disposal (WWD) grants; $3.5 million in budget authority for solid
waste management grants; and $92 million in budget authority to support
$814 million in WWD direct loans and $75 million in guaranteed loans.
This level of support is expected to improve the quality of life and
health of an estimated 1.6 million Americans in needy communities each
year by providing access to clean, safe drinking water. In addition,
new or improved waste disposal facilities would be provided to an
estimated 300,000 people living in rural areas.
The Water and Waste Disposal program has been very successful since
its inception over 60 years ago. A total of over $26 billion in
financial assistance has been provided, about 70 percent of that in the
form of loans; approximately 45 percent of the total has been provided
during the past 10 years. Needs for water and waste disposal systems
are still significant and are likely to grow as a result of expanding
population in rural areas, changes to water quality standards, drought
conditions, and similar factors. The application backlog for assistance
continues to total about $3 billion each year. Over the last 3 years
RUS has assisted 902 borrowers in moving up to commercial credit in
accordance with its graduation requirement. As a result of this effort,
nearly $2.8 billion in loans were paid off.
Our budget request will allow third-party service providers such as
rural water circuit riders and waste water technicians to make over
76,000 water and wastewater system contacts to communities needing
technical assistance and, through a clearinghouse effort, take more
than 10,000 telephone calls and an estimated 20,000 electronic bulletin
board and web site contacts. As a result of strong WWD technical
assistance efforts, both from staff and third-party service providers/
contractors, loan delinquency and loan losses will remain low.
Currently, less than 1 percent of approximately 7,900 borrowers are
delinquent. Since the inception of the water and waste disposal
program, only 0.1 percent of the amount loaned has been written off.
As an example of the work we do, RUS recently assisted residents of
the Zuni, New Mexico to develop their own safe and dependable supply of
drinking water. The area served has a low-income level, and the water
system was badly in need of repairs and improvements. Many of the 1,842
residential, 24 commercial and 83 institutional customers were having
to buy and haul drinking water, and often had to contend with low
pressure due to distribution system and water supply problems. The
system failed to meet 8 out of 10 applicable water quality standards.
When construction is finished, the residents will have access to clean,
safe, and reliable drinking water, coming from a modern, well equipped
and managed system.
investing where resources are most limited
The agency is working to improve outreach, participation, and
delivery where rural resources are most challenged. This goal addresses
the heart of our mission. We combine our technical and financial
resources to reach out and assist those communities, tribes and other
groups with limited resources. The RUS outreach efforts have touched
the vast expanse of our country-from rural Alaskan Villages to Colonias
along the U.S.-Mexico border, communities in the Mississippi Delta, and
the great needs of Native Americans. The end result is a stronger
economy and a stronger America.
Since the earliest days of rural electrification, RUS has focused
special attention on tribal communities. One of our earliest electric
borrowers was the Navajo Nation. Five out of the seven tribally owned
telephone companies are RUS borrowers. RUS investments in utilities in
Alaska provide service to some of the most remote native Alaskan
villages.
RUS investments in drinking water and wastewater projects serving
tribal and rural Alaskan communities have increased by nearly 400
percent since fiscal year 1993, and continue to grow. RUS is dedicated
to helping unserved and under-served communities. Nearly $16 million
was earmarked in fiscal year 2002 to benefit Native Americans. For
fiscal year 2003, the President's proposed budget earmarks $24 million
for Native Americans, of which $16.0 million is to be used for water
and waste disposal grants. Additionally, we are intensifying
coordination of funds with the Indian Health Service and State and
other Federal agencies.
modern telecommunications in rural america
The building and delivery of advanced telecommunications networks
is having a profound effect on our Nation's economy, its strength, and
its growth. High-speed telecommunications services can literally solve
many of the challenges facing rural residents--its students, the
elderly and rural businesses. Children growing up on our farms and in
our small towns can have access to the best education our Nation can
provide. Rural citizens, particularly the elderly, will not suffer from
inadequate health care that diminishes the quality or length of their
lives. And rural economies will prosper and grow with new markets only
a computer screen away. Rural economies today are so much more than
just farm-based economies. In fact, seven out of eight rural counties
are now dominated by varying combinations of manufacturing, service-
oriented and other non-farming activities. Today's advanced
technologies will allow rural communities to become platforms of
opportunity for new businesses to compete locally, nationally, and
globally and the funding we are seeking in the 2003 budget request will
help us continue to meet the ``new communications-needs'' of rural
America.
treasury rate, guaranteed, and hardship loans
Since 1995--when RUS implemented Congress' visionary policy
requiring all RUS-financed facilities be ``broadband capable''--every
telephone line constructed with RUS financing is capable of providing
advanced services using digital and fiber technologies. This loan
program targets the most rural communities, populations that are less
than 5,000 people.
This year's budget includes $75 million in 5 percent interest
hardship loans, $300 million in Treasury rate loans and $120 million in
loan guarantee authority for the telecommunications programs. This
amount of assistance will cost only $1.4 million in budget authority,
most of which is needed to support the targeting of hardship loans to
the poorest, neediest, and highest cost to serve areas.
This budget also reflects the Administration's commitment to
privatizing the Rural Telephone Bank and therefore does not request
budget authority to support lending for 2003. Today, the bank operates
as a supplemental lender to entities eligible to borrow funds from the
RUS program. A privatized bank would be able to expand or tailor its
lending practices beyond its current limitations imposed as a
governmental lender, as well as use its substantial loan portfolio and
cash reserves to extend favorable credit terms to smaller, rural
companies. Privatization, therefore, should be pursued in a prudent,
thoughtful manner, one consistent with the bank's enabling legislation
thereby allowing it to continue as a private lender helping to meet the
growing capital demands of the rural telecommunications industry.
broadband loans and grants
We also propose to continue the special program of loans and grants
to facilitate the deployment of broadband service in rural areas. This
program was established on a pilot basis in 2001 and received funding
for 2002. For 2003, RUS is requesting $80 million in Treasury rate
loans and $2 million in grants.
Broadband service not only provides critically needed economic
stimuli for rural communities through e-commerce initiatives and by
enticing new businesses, it creates a new ``workforce'' of students
educated through distance learning programs with the skills necessary
to compete globally.
An important element of this program is that it enables RUS to fund
broadband investment in the next level of rural America, towns with
populations up to 20,000 inhabitants. These towns are typically caught
in the middle--too small to attract private capital and too large to
qualify for incentive-based programs.
distance learning and telemedicine loans and grants
The Distance learning and Telemedicine program continues its charge
to improve educational and health care delivery in rural America. The
terms ``distance learning'' and ``telemedicine'' are becoming synonyms
for ``opportunity and hope.'' Telemedicine projects are providing new
and improved health care services beginning with patient diagnosis,
through surgical procedures, and post-operative treatment. New
advancements are being made in the telepharmaceutical and
telepsychiatry arenas providing health care options never before
available to many medically under-served areas. Distance learning
projects continue to provide funding for computers and Internet hookups
in schools and libraries. The realm of study options available to rural
students through distance learning technologies literally brings the
world to their doorstep. The value of these services to rural parents,
teachers, doctors and patients is immeasurable. Building on advanced
telecommunications platforms, distance learning and telemedicine
technologies are not only improving the quality of life in rural areas,
but they are also making direct contributions to promoting e-commerce
in rural areas by introducing the skills needed for a high-tech
workforce and promoting sound health care practices, like preventative
care initiatives.
For 2003, RUS is requesting $25 million in grants for this program,
and $50 million in Treasury rate loans. Since its inception, more than
90 percent of this program's benefits has come from grant funding.
Experience indicates that rural health care clinics, and especially
educational providers, simply cannot afford loans to implement their
projects. The $50 million in loans is expected to be sufficient to meet
the demand from larger, consortium-based entities with the necessary
resources to collateralize a loan.
three program areas, working together
These three program areas, telecommunications, electric, water and
environmental, all weave together for the fabric of infrastructure
foundation in rural communities. They each fit, tongue and groove, with
the rural business and rural housing programs that make up the rest of
the Rural Development mission area. Each one being equally important to
the economic and structural health of a community. This budget provides
for sound, responsible, economic growth through investment in our rural
communities.
Every RUS Administrator before me has faced unique challenges in
delivering ``common'' services--telephone, electricity, and water and
waste disposal--to hard working rural Americans. People that got up
before it was light, worked until well after dark, and fed a growing
Nation. Today's information age poses its own unique challenges and I
look forward to working with private and public sectors, and of course
Congress, to meet those challenges.
______
Biographical Sketch of Hilda Gay Legg
Hilda Gay Legg serves as the 15 Administrator of the Rural
Utilities Service. She was appointed by President George W. Bush and
confirmed by a unanimous vote of the U.S. Senate September 27, 2001. As
Administrator of the Rural Utilities Service (RUS), Ms. Legg
administers to the infrastructure needs of rural America through loan
and grant funds totaling over $6 billion for Water and Environment
Programs, Rural Telecommunications Programs and Rural Electrification
Programs.
Ms. Legg comes to this Administration, from The Center for Rural
Development in Somerset, Kentucky, where she served seven years as
Executive Director and CEO. She was responsible for the overall
management of the state of the art facility as well as program
development and outreach. The Center is a national model for economic
development in rural areas in such projects as education, workforce
training, telecommunications, arts and culture, environment, tourism
and other economic development programs geared toward the ``total
community development'' concept. Through the Center's advanced
technology and operating capacity access, new opportunities have been
provided to rural Kentucky business, industry, and research leaders
from domestic as well as international sources.
In 1990, Ms. Legg was appointed by President George Bush as
Alternate Federal Co-Chairman for the Appalachian Regional Commission
in Washington, D.C. Her primary responsibility was to represent and
promote the economic policies for the region's 21 million people, and
assist in the management of a $190 million budget aimed at job
creation, building infrastructure, education and work force training
and numerous research programs relative to rural economic development.
During the late 1980's, Ms. Legg became Director of Admissions and
faculty member at Lindsey Wilson College in Columbia, Kentucky. From
1985 to 1987, she was the Field Representative in the Bowling Green
office of U.S. Senator Mitch McConnell.
Ms. Legg served in the Reagan Administration at the U. S.
Department of Education. She started her professional career as a
teacher in the Adair County Schools and is certified both as a
secondary administrator and counselor. She remains active in education
issues by serving as Vice Chair, Alice Lloyd College Board of Trustees,
and Campbellsville University's Advisory Board.
She is a graduate of Campbellsville University and received her
master's degree at Western Kentucky University. She finished the Senior
Executive Program at Harvard University's John F. Kennedy School of
Government in 1992.
______
Prepared Statement of James C. Alsop, Acting Administrator, Rural
Housing Service
Mr. Chairman and members of the Committee, thank you for this
opportunity to testify on the Rural Housing Service's fiscal year 2003
Budget Proposal.
The Rural Housing Service (RHS) assists rural America in a variety
of ways. Our loan and grant programs promote healthy rural communities
by helping to provide decent and affordable housing as well as
essential community services, such as fire protection, health care
centers, and child care centers. Through partnerships with the private,
public, and nonprofit sectors, RHS provides financial and technical
assistance to low-income families and rural communities. RHS helps
those who do not have effective access to credit because of the
isolated nature or small scale of rural markets. We also provide credit
to low-income families and communities that otherwise could not afford
mortgage or other debt service payments.
With the $5.2 billion program funding in the proposed fiscal year
2003 budget, RHS will provide assistance to about 48,000 households for
single family housing homeownership, repair and rehabilitate nearly
6,000 rural rental housing units, and provide rental assistance to more
than 42,000 very-low-income occupants of RHS funded rural rental units.
Additionally, it will support more than 170 new or improved health care
facilities, more than 150 new or improved fire and rescue facilities,
and about 50 new or improved child care facilities. It also will create
or preserve more than 30,000 jobs in rural America.
In today's economic uncertainties, RHS programs ensure that the
majority of rural America's most vulnerable members, including low-
income elderly, children, farmworkers, and Native Americans, do not
suffer severe financial hardship. Let me show you how we plan to
continue to do that under the Agency's fiscal year 2003 budget
proposal.
rhs homeownership programs reach the underserved
For more than 50 years, RHS' Section 502 direct loan homeownership
program has successfully worked to improve the overall quality and
affordability of the Nation's rural housing stock. Our customers are
happy with their homes. According to a recent Economic Research Service
(ERS) report titled Meeting the Housing Needs of Rura/Residents, 90
percent of recent Section 502 direct loan borrowers think that their
current home is better than their last one. These same satisfied
customers are people whom the private market has difficulty serving.
Ninety percent say that without assistance from us it would have taken
them more than 2 years to purchase a comparable home, and 44 percent
believe they could not have purchased a home without the Section 502
direct loan program. Twenty-nine percent of RHS borrowers are members
of minority groups as compared to 15 percent of all recent low-income
homeowners, and 32 percent of our customers are female single parents,
as compared to 12 percent of all recent low-income homeowners. In
addition, 15 percent of Section 502 households have at least one member
with a disability. Almost three-quarters of the borrowers surveyed were
first-time homeowners.
In the fall of 2001, a Hidalgo County, Texas family of six moved
into their new home thanks to the combined efforts of a number of
organizations. Hidalgo County contains many areas, known as Colonias,
which may lack electricity, water and sewer and garbage service. RHS
provided a Section 502 Direct Loan for $50,000 to finance the first new
home in this area. A community based nonprofit organization built the
house while several other organizations contributed by providing loans,
grants, technical services and in-kind gifts. Due to the success of
this combined effort a number of other new homes were built in the
area.
The 2003 budget includes $957 million in Section 502 Direct Loans
as well as $35 million in direct loans and $32 million in grants for
the Section 504 Very-Low Income Repair Program. These funds will enable
about 23,000 low-income rural Americans to become homeowners or to
improve their substandard homes. An additional $2.75 billion in Section
502 Guaranteed Loans will help nearly 34,000 low-and moderate-income
rural households become homeowners. For rural Americans with very-low,
low, and moderate incomes, the Section 502 direct and guaranteed loan
programs continue to be the most effective housing programs available.
Based on the estimates used by the National Association of Home
Builders, the 2003 budget request for these programs will help create
nearly 30,000 jobs through the construction of new homes.
The 2003 budget also includes $34 million for the Self-Help Housing
Technical Assistance Grants program. By allowing families to earn
``sweat equity'' by helping to build their own homes, the Self-Help
program makes housing affordable for many hard-working, very-low-income
families, who otherwise would never be able to own their own homes.
About half of the program's participants are members of minority groups
and a significant portion is farmworkers. The program requirements are
tough: participants must contribute 65 percent of the labor towards
construction of their homes. Because owning a home is so important to
them, these families are willing to work at their regular jobs and then
put in as much as 35 hours a week, building their houses. We anticipate
that the 2003 budget request will allow RHS to award technical
assistance grants enabling more than 1,500 families to build their own
homes.
In Riverton, Wyoming, a single mother with three daughters built a
home for her family. She joined three other families learning to work
together to supply 65 percent of the labor needed to build their homes.
Under Housing Partners, Inc., the four families learned to pour
concrete, frame houses, and finish the interiors. Each home was
financed with a $54,000 Section 502 loan from RHS. The loan amount was
kept low because the homeowners contributed their ``sweat equity'' to
the cost of their homes. Typically, sweat equity adds about 20 percent
to the value of a home.
rhs partners with private and nonprofit organizations to increase
homeownership opportunities
Homeownership can have a tremendous impact on families' lives and
on the strength of rural communities. However, RHS cannot address this
issue alone. We must work with partners. Leveraging has become an
integral part of how we do business. RHS is collaborating with a number
of private and public partners to meet the housing needs of low-income
families and individuals. For example, the Rural Home Loan Partnership
(RHLP) has grown into an important delivery method for providing
homeownership opportunities throughout rural America.
RHS originally established the RHLP as a pilot project initiated
with the Federal Home Loan Bank System (FHLB) and the Rural Local
Initiatives Support Corporation. Now, RHS has expanded the RHLP to
include other partners. In the RHLP, a local nonprofit or community
development corporation partners with a local lender and RHS to provide
homeownership education and single-family mortgages to very-low- and
low-income rural residents. In fiscal year 2001, the RHLP produced
1,666 new homeowners using $105 million in RHS funds and $32.8 million
from other lenders and grantors. For every dollar RHS invests in
affordable housing, an RHLP partner contributes another 31 cents. The
first year's success began with 10 local partnerships; the pilot has
expanded each year to its current level of 267 partners.
Last year, an RHLP partnership between Hibernia National Bank and
RHS funded 142 loans in rural Louisiana, with the bank's 20 percent of
the financing totaling $2 million. With the Federal Home Loan Board
(FHLB) in Dallas, Hibernia provides down payment and closing cost
assistance, thus enabling more families to qualify for loans and to
afford better homes. In rural St. Martinville, LA, RHS and Hibernia
teamed up to finance homes in the first new subdivision in the town in
25 years. Providing this much-needed low-income housing not only helps
individuals, but also spurs the local economy.
rhs rental programs serve the most vulnerable rural americans
Although RHS housing programs have been successful, many rural
residents still live in substandard housing. According to the Housing
Assistance Council's recent report titled The State of the Nation's
Rural Housing, more than one million rural renter households are
``worst case needs'' households, as defined by the Department of
Housing and Urban Development. These are households that have incomes
below 50 percent of the area median household income, are extremely
cost-burdened or inadequately housed, and receive no Federal housing
assistance. Of those rural renters with worst case needs, 62 percent
pay 70 percent or more of their income for housing.
Together, the RHS Section 515 Rural Rental Housing program and the
Section 521 Rental Assistance (RA) program provide decent, safe, and
affordable housing to those families who need it the most. The Section
515 program provides loans at an interest rate of 1 percent for
building affordable housing, while the Rental Assistance program
reduces rents for tenants to pay no more than 30 percent of their
income.
The average annual income of our Section 515 tenants is just under
$8,000. Fifty-two percent of our 469,000 tenant householders are
elderly, 16 percent have a handicap or disability, 28 percent are
members of minority groups, and 73 percent are women. In fiscal year
2001, RHS provided $50 million to build more than 1,500 apartments and
another $54 million to rehabilitate 5,500 apartments for our Section
515 tenants. The fiscal year 2003 budget request of $60 million for the
Section 515 housing will provide much-needed repairs or rehabilitation
to 5,900 units. No funding is included for Section 515 Direct Loans for
new construction. However, the budget includes $100 million in Section
538 Guaranteed Loans that may be used for new construction. In
addition, it includes $36 million in loans and $17 million in grants
for Farm Labor Housing projects most of which will be new construction.
The $706 million in fiscal year 2003 funding requested for the
Section 521 Rental Assistance (RA) program is essential in ensuring the
integrity and financial stability of our Section 515 and Section 514/
516 Farm Labor Housing loan and grant programs. The percentage of our
RA budget devoted to ensuring that tenants currently receiving RA
continue to receive those benefits increases each year as the
cumulative effect of the program grows. In 2003, well over 93 percent
of our RA budget will be used to ensure that more than 42,000 RA
contracts are renewed and that the people living in these units can
remain in affordable housing. The remainder of the RA funding will be
used to keep rent affordable when repair and rehabilitation are needed
for existing units.
RHS maintains a multi-family housing portfolio of existing projects
that provide housing for over 450,000 very-low and low-income families
nationwide. Over half of these families receive rental assistance
payments. It is becoming more difficult for RHS to meet the needs of
the existing aging portfolio and to fund new rental units for very low-
income families currently living in substandard housing. Accordingly,
$2 million is included in the fiscal year 2003 budget to provide for an
evaluation of the program by an independent entity. This evaluation
would examine budgetary funding practices, financing mechanisms, and
program administration procedures to determine if there is a more cost-
efficient manner to deliver MFH programs and provide quality affordable
housing to rural residents most in need.
rhs provides essential facilities to distressed rural communities
Along with decent and affordable housing, many communities also
lack essential community facilities such as educational buildings,
fire, rescue, and public safety facilities, child care centers, and
health care facilities. This shortage not only impacts the quality of
life for community residents but also makes it more difficult for
communities to attract and retain businesses. Our Community Facilities
(CF) direct and guaranteed loan and grant programs provide funding for
these essential facilities.
The fiscal year 2003 budget includes $477 million for the Community
Facilities program, $250 million for Direct Loans, $210 million for
Loan Guarantees and $17 million for grants. This level of funding allow
us to continue our commitment to educational facilities, which are
especially important in preparing rural children and adults to compete
in the global economy. In fiscal year 2001, we assisted 145 communities
by investing $81.9 million in buildings to house public schools,
charter schools, libraries, museums, colleges, vocational schools, and
educational facilities for the disabled. We also helped finance the
purchase of computers and other technological equipment. Public safety
is an often neglected need in rural communities. In fiscal year 2001,
we invested $81.6 million in 473 facilities, including communications
centers, police, fire and rescue stations, civil defense buildings, and
related vehicles and equipment.
Childcare is especially important in rural areas. A staggering 24
percent of rural America's children live in poverty. Without adequate
child care facilities, many rural parents face a tough choice: go to
work to increase their family's income, but worry about whether their
children are safe and well cared for, or live in poverty in order to
stay home to take good care of their children. The high-quality
childcare centers financed by the Community Facilities program allow
parents to go to work with peace of mind.
Ringgold County Child Care Center in Mount Ayr, Iowa, is a good
example of how our Community Facilities (CF) program helps communities
provide essential services. Funding was provided by a number of sources
in addition to RHS. These included a Community Development Block Grant,
the local school district, and various charitable and local sources.
The center serves over 150 children, with separate areas for children
in different age groups, ranging from infants to pre-schoolers.
I have discussed the funding for the major RHS programs. Now, let
me take a moment to show you how the budget will help some of our most
vulnerable rural citizens: the elderly, farmworkers, and Native
Americans.
rhs provides rural america's elderly with safe, affordable housing and
essential community facilities
For elderly rural people who want to remain in the homes they own,
we provide the Section 504 very-low income loan and grant programs.
These programs make substandard homes safe and decent by financing such
things as indoor plumbing, electric heating and cooling systems, safe
wiring, roof and floor repair, and the installation of features to
accommodate disabilities. In fiscal year 2001, $61 million in loan and
grant money was used to repair about 11,500 homes under the Section 504
program. The President's 2003 Budget includes $31.5 million for the
Section 504 grant program, which serves very low-income seniors, and
$35 million for the Section 504 loan program in which about half of the
beneficiaries are elderly. With this money, RHS can help make nearly
12,000 substandard homes safe and decent.
The RHS Community Facilities program finances a range of service
centers for elderly people, including nursing homes, boarding care
facilities, assisted care, adult day care, and intergenerational care
centers that serve both elderly people and children at the same time.
Since its inception in 1974, the Community Facilities program has
invested $767 million in facilities that directly benefit seniors and
millions more in health care services that serve both seniors and the
general population.
rhs programs serve america's farmworkers
Although the housing needs of the elderly are severe, the most
poorly housed groups in America are farm workers and Native Americans.
Farmworkers enable America to maintain its agriculture production
levels and compete in world markets, yet they are the lowest-paid group
of workers in the Nation. While their labor ensures food security
through the successful production and distribution of our Nation's
agricultural crops, farmworkers live in substandard housing, sometimes
without basic sanitary facilities, safe heating and cooking equipment,
and a supply of clean water.
RHS provides housing to farmworkers primarily through two programs:
the Mutual Self-Help program, which I have already described, and the
Section 514/516 Farm Labor Housing program, which is the only national
source of farm labor housing construction funds. Participants in either
of these programs must be permanent residents or U.S. citizens. Tenants
in our farm labor housing must earn a substantial portion of their
income through farm work. Eighty-nine percent of tenants in RHS-
financed farm labor housing are minorities, primarily Latino and
African-American.
The fiscal year 2003 budget request of nearly $53 million for the
Farm Labor Housing program will enable us to finance construction of
more than 1,000 new units as well as address our anticipated need to
rehabilitate and repair about 1,200 existing units. This funding will
be highly leveraged because RHS partners with other public and private
funding organizations in the vast majority of its complexes.
In addition to providing farmworkers with housing, RHS provides
them with essential community facilities, such as child care and health
care centers. The CF program has been successful also in meeting the
needs of migrant farmworkers--a transient population difficult to
serve. In conjunction with the Department of Health and Human Services,
we have funded a number of migrant health care clinics and migrant Head
Start centers.
native americans benefit from rhs assistance
Native Americans suffer greatly from inadequate housing, and lack
of access to basic community and health services. RHS continues its
extensive outreach to Native Americans by working to overcome barriers
to lending on trust land and by providing grant funds whenever
possible.
RHS has worked hard to increase its investments, which benefit
Native Americans. The Section 504 housing repair loan and grant
programs are often the first RHS programs to be used on a reservation.
Section 504 loans are especially easy to use because if the loan is
less than $2,500, no real estate security is needed. Thus, the problem
of lending on trust land is avoided. We also have financed numerous
Section 515 multi-family housing complexes serving Native Americans
across the Nation. We typically provide about 10 percent of our Housing
Preservation Grant funds to organizations that serve Native Americans.
Through small Section 525 Technical Assistance Grants to nonprofit
organizations, we fund credit counseling and homebuyer education to
Native Americans to help them qualify for RHS single family housing
loans and become successful homeowners.
Native American communities, especially those on reservations, have
many needs beyond housing--needs for medical centers, libraries,
community centers, childcare centers, Head Start facilities, and fire
stations and trucks. The Community Facilities program provides loans
and grants to help meet all these needs. In addition, the fiscal year
2003 budget proposal earmarks $4 million in Community Facilities
assistance for tribal colleges. Many of these colleges need major
repairs and renovations to existing buildings, facilities to house new
programs, and computers and other equipment. This earmark enables us to
assist the tribal colleges in their efforts to provide students with
the education needed for success in their lives.
In South Dakota, Si Tanka College, an associate degree school run
by the Cheyenne River Sioux Tribe, received a Community Facility (CF)
direct loan and a guaranteed CF loan totaling more than $6 million
enabling them to purchase a fully accredited university. The purchased
college, Huron University, was a small private institution struggling
to survive with declining enrollment and funding. The purchase enhances
both colleges financially as well as in expanded curriculum. Huron will
add a Native American curriculum and Si Tanka will be able to offer 4-
year degree programs. The courses will be taught via Internet
technology to students on the reservation who are unable to travel the
200 miles to the Huron campus. Huron University is a significant part
of the local economy, so the community also benefits from the merger.
rhs supports rural america and local community needs
The USDA Centralized Service Center (CSC) in St. Louis, Missouri,
provides all written and oral communication to customers in either
English or Spanish to better serve the needs of these customers. At the
CSC, RHS has used aggressive recruitment and retention initiatives in
order to create a workforce, which is 11 percent bilingual and can
supply these services. The CSC also works closely with the National
Industries for the Blind and provides monthly mortgage statements in
Braille for self-sufficient blind customers. National TDD phone service
is available from CSC as well as e-mail customer responses for
customers with hearing disabilities. Employees with disabilities, over
10 percent of the CSC employee population, are provided special
equipment to enhance their productivity and ability to serve customers.
RHS's commitment to helping people become self-sufficient is also
evident in their ongoing Welfare-to-Work initiative. CSC has worked
with the St. Louis Transitional Hope House and the American Red Cross
to employ former welfare recipients. Twenty-six employees referred
through this effort started out as worker trainees. Eighteen have since
been promoted into permanent loan processor positions. New worker
trainees are provided with mentors and may later become mentors
themselves as they become proficient in the work environment. One
employee who started in the Welfare-to-Work program is now enrolled in
college, pursuing an accounting degree. Another has obtained RHS
financing and is now a proud single-parent homeowner.
The CSC has received several individual and Government agency
awards for its initiatives. These include awards from the Council for
Employment of Individuals with Disabilities, the Hispanic Employment
Council, and the Black Employment Council.
I hope I have illustrated for you the many ways that RHS programs
improve life in rural areas. We have great opportunities to assist
rural people and their communities in becoming self-sufficient. I have
mentioned only a few examples of how RHS makes a difference in the
lives of so many rural Americans.
Mr. Chairman and members of the Committee, with your continued
support, RHS looks forward to improving the quality of life in rural
America by helping to build competitive, active rural communities
through our community facilities and housing programs.
______
Biographical Sketch of James C. Alsop
James C. Alsop began his career with the U.S. Department of
Agriculture on June 10, 1968, as an Extension Agent with the
Cooperative Extension Service in Suffolk, Virginia. In 1972, Mr. Alsop
joined the Farmers Home Administration in Tappahannock, Virginia. Mr.
Alsop held the following positions in Virginia: Assistant County
Supervisor, County Supervisor, Community Programs Specialist, and
District Director. In 1979, Mr. Alsop became a Community Programs
Specialist in the National Office in Washington, D.C. At the National
Office, he has held the positions of Direct Loan Processing Branch
Chief, Acting Deputy Assistant Administrator for Community and Business
Programs, Executive Assistant to the Administrator, Rural Business-
Cooperative Service, and Deputy Administrator for Community Programs,
Rural Housing Service. He is currently serving as the Acting
Administrator for the Rural Housing Service.
Mr. Alsop graduated from Virginia State College with a Bachelor of
Science Degree in Animal Science. Mr. Alsop has completed the USDA
Senior Executive Service Candidate Development Program and received the
certificate of executive qualification. He has been selected as a
member of the Senior Executive Service. He has attended numerous
executive training seminars, including the Leadership for a Democratic
Society at the Federal Executive Institute in Charlottesville,
Virginia. He has received numerous outstanding merit awards for
outstanding job performance. In June of 1997, Mr. Alsop was the team
leader of the Community Facilities Basic Training Group that received
one of the highest awards presented by the Secretary of Agriculture for
superior service. This honor award for excellence was presented to the
group for contributing to Rural Development program delivery by
initiating improvements in customer service. He served on the National
Reorganization Negotiating Team in 1994, developing procedures for the
placement of Rural Development employees nationwide during the USDA
reorganization. He served as a management representative for Rural
Housing Service on the Rural Development Partnership Council.
As the Deputy Administrator for Community Programs, he was
responsible for administering the Community Facilities direct,
guaranteed, and grant programs nationwide. There are 47 Rural
Development State Offices that include at least one person per office
responsible for implementing the Community Facilities program. Mr.
Alsop managed a national program that received supportable loan and
grant allocations totaling $499 million during fiscal year 2002. The
outstanding Community Facilities portfolio consists of 4,771 loans or
grants totaling $2,011,536,240. Community Programs has a current
portfolio of 98.4 percent.
Mr. Alsop has been serving as the Acting Administrator for the
Rural Housing Service since January 22, 2001. He is responsible for
providing guidance to Single Family Housing, Multi-Family Housing,
Community Programs, Program Support Staff, and the Centralized
Servicing Center in St. Louis, Missouri. There are 747 full-time
equivalents designated under the National Office Rural Housing Service
Administrator's Office. Rural Housing Service has an appropriation of
$5.8 billion for fiscal year 2002. The outstanding portfolio, including
direct and guaranteed loans and grants, is in excess of $50 billion.
Mr. Alsop is married and has two sons and two granddaughters. The
Alsops reside in Sterling, Virginia.
______
Prepared Statement of John Rosso, Administrator, Rural Business
Cooperative Service
Mr. Chairman and members of the Subcommittee, I am pleased to
appear before you today to present the Administration's fiscal year
2003 Budget for the Rural Business-Cooperative Service (RBS).
Mr. Chairman, the programs and services of RBS, in partnership with
other public and private sectors, continue to improve the economic
climate of rural areas through the creation or preservation of
sustainable business opportunities and jobs in rural America. RBS
continues to target its resources to farmers, ranchers, and to the
under-served rural areas and populations. RBS programs fall into two
broad categories, loan and grant programs to assist rural businesses,
and programs of assistance to farmers, ranchers, and other rural
residents organized on a cooperative basis.
The programs of RBS help close the gap in opportunity for these
under-served rural areas and populations, bringing them closer to
sharing fully in the nation's economic growth. The $844 million
requested in this budget for RBS programs will assist in creating or
saving about 89,300 jobs and providing financial assistance to more
than 3,900 businesses.
Continued emphasis will be given to financial assistance for
projects located in the Rural Empowerment Zone/Enterprise Communities/
Rural Economic Area Partnerships ((EZ/EC/REAP), the Mississippi Delta,
and Native American communities. In addition, priority will be given to
projects that support the Administration/Departmental objectives on
value-added agricultural and alternative energy, including bioenergy
development in rural areas.
business and industry guaranteed loan program
For the Business and Industry (B&I) Program, the fiscal year 2003
budget includes $29.0 million in budget authority to support $733
million in Guaranteed Loans. This is a slight increase in budget
authority compared to last year. The guaranteed fee is limited to a
maximum of 2 percent of the guaranteed portion of the loan based on
current regulation. A regulation change is pending to allow the Agency
to either charge a higher guaranteed fee, consider an annual fee, or a
combination of the two. This regulation, if implemented by the
beginning of the fiscal year, would give the Agency flexibility to
offset some of the increasing subsidy and would allow for a larger
supportable loan level for the same budget authority. Based on recent
history and current economic conditions, the demand for this program
will continue to be strong.
We estimate that the funding requested for 2003 would create or
save about 20,400 jobs.of an agricultural commodity raised by the
individual farmer stockholders. This program allows lenders to better
meet the needs of rural businesses. Through the lender's reduced
exposure on guaranteed loans, they are able to meet the needs of more
businesses at rates and terms the businesses can afford. B & I
Guaranteed loans may be used by this individual farmers to purchase
cooperative stock in a start-up cooperative established for value-added
processing. Further, within the total funding for the program, $18
million in B & I loans is earmarked for projects in EZ/EC and REAP
areas.
To illustrate how this program has improved the economic climate in
an under-served area of rural America, I would like to share a success
story in support of the President's Energy Policy. In July 2001, RBS
issued a Business and Industry loan guarantee, totaling $$12,500,000,
to Sterns Bank N.A. of St. Cloud, Minnesota, to assist Quad Country
Corn Processors Cooperative of Galva. Iowa. This loan guarantee will be
used to replace the interim financing of costs for developing,
constructing and equipping an 18-million gallon per year ethanol
facility. The startup cooperative is owned by 415 farmers who
contributed $8.5 million in equity capital this is being used towards
the development of the $22 million plant. This plant that will use
nearly seven million bushels of corn to produce 18 million gallons of
ethanol per year, along with 120,000 tons of by-product for livestock
feed. The Quad Country Corn Processors Cooperative is expected to
create 16 jobs at the ethanol plant, and will open new markets for our
farmers, and help to meet the growing demand for alternative energy
sources. In addition, 20 jobs are projected to be created at separate
facilities owned and operated by separate companies that will take the
carbon dioxide by-product from the ethanol plant and refine, liquefy,
and make it into dry ice.
intermediary relending program
The fiscal year 2003 Budget also includes $19.3 million in budget
authority to support $40 million in loans under the Intermediary
Relending Program (IRP). The initial investment of this proposed level
of funding will create or save an estimated 9,000 jobs, but because
these funds, over the 30-year loan term, are re-loaned three or four
times by the intermediary, we estimate that over 30,600 jobs will
eventually be created or saved. Within the total program level, $5.7
million will be earmarked for EZ/EC/REAP areas, $3.6 million for Native
Americans and $7.1 million for Mississippi Delta projects.
Participation by other private credit funding sources is encouraged
in the IRP program, since this program requires the intermediary to
provide, at a minimum, 25 percent in matching funds. The demand for
this program continues to be strong. To illustrate the benefits IRP
provides to rural America, I would like to share with you a success
story from Owego, N.Y.
For example, $18,326 was initially awarded to the Tioga County
Local Development Corporation was initially awarded an $18,326 grant in
June 2000, and a second grant totaling $82,000 was made in April 2001
from. Tioga County has been designated as a REAP zone because of the
loss of several major businesses and the job and economic activity that
they provide. An IRP loan was made in April 2000, a $300,000 IRP loan
was made in the amount of $300,000 to the Tioga County Small Business
Revolving Loan Fund, which they relent to local entrepreneurs, and
relent, through the Tioga County Small Business Revolving Loan Fund, to
local entrepreneurs. It is projected that approximately 11 businesses
will be provided the opportunity to replace some of the jobs and
economic activity that has been lost. As a result of this relending
activity, it is projected that 18 jobs will be created or saved.
rural business enterprise grant program
For the Rural Business Enterprise Grant (RBEG) Program, the fiscal
year 2003 Budget includes almost $44 million. We anticipate that this
level of funding will create or save over 35,100 jobs. The demand for
this program continues to be strong. The purpose of this program is to
assist small and emerging businesses. It is estimated that each dollar
of investment through the RBEG Program generates another $2.40 in
private capital. Among the many eligible grant purposes under this
program is the establishment of a revolving loan fund by the grantee to
support small and emerging business development in rural areas. Within
the total program level, $7.0 million will be earmarked for EZ/EC/REAP
areas, $3.0 million for Native Americans, and $1.0 million for the
Mississippi Delta Region.
For example, in 1999, a $194,000 RBEG was awarded to the Village of
Winchester in Winchester, Ohio of Adams County, Ohio to assist the
Adams Agri-Business Enterprise Center support local small agriculture
related businesses. Adams County is located in the Appalachia Region
and is suffering from persistent poverty and out-migration, as
unemployment rates have always been high. The grant was used to provide
approximately half the $400,000 construction cost of a value-added
agri-business incubator. Construction of the project was completed in
October 2001. One of the first tenants in the building was the Farm
Fresh Growers which is projected to jointly market their value-added
fruit and vegetable products. This project is expected to assist at
least 4 businesses, create 5 jobs, and save 10 jobs.
Another example is a project located in Quincy, FL. In June of
2001, a $99,999 RBEG was awarded to the North Florida Educational
Development Corporation (NFEDC) for the Quincy Packinghouse Wellsprings
Initiative. The grant funds will be used to renovate and equip an
abandoned feed mill. It will be leased to the Big Bend Growers
Cooperative, Inc. comprised of small and disadvantaged minority
farmers. The cooperative's members will gain access to markets they do
not have individually as growers. Approximately 15 farmers will be
assisted and 12-15 new jobs will be created.
rural economic development loan program
The fiscal year 2003 Budget includes almost $15 million in Rural
Economic Development Loans. This program represents a unique
partnership, since it directly involves the rural electric and
telecommunications borrowers in community and economic development
projects. It provides zero interest loans to intermediaries who invest
the funds locally. In fiscal year 2001, each dollar invested through
these programs attracted an estimated $6.31 in other capital.
rural business opportunity grant program
The fiscal year 2003 budget includes $3 million for Rural Business
Opportunity Grants (RBOG) to provide much-needed technical assistance
and capacity building in rural areas. This level of funding includes
$1.0 million for Native Americans and $1.0 million for Mississippi
Delta Region Projects. The demand for this program continues to grow.
Many rural areas need to develop economic and community development
strategies that will attract private investment capital and Federal and
State assistance. Also, the vast majority of rural communities are
served by part-time officials who do not have the time or necessary
training to compete with large communities for funding that may be
available to them. The funds requested under this program will aid in
providing that invaluable assistance to allow communities as they take
their first step toward overcoming these impediments.
To illustrate, $67,000 in grant assistance was provided under the
RBOG program to the Adopt a Farm Family project, located in Sikeston,
MO. The funds were used to conduct a feasibility study to determine if
a sunoil and/or soyoil processing facility would be feasible in the
area. If determined to be feasible, it is possible that a processing
facility could be established. Such a facility would create new jobs
and generate additional income for rural households in an area that has
very high unemployment and persistent poverty.
rural cooperative development grant program
Another source of assistance to developing cooperatives is the
funding of new and existing cooperative centers through the Rural
Cooperative Development Grant Program. This partnership with
institutions of higher learning and nonprofit associations permitted us
to fund 20 centers for a total of $4.5 million in fiscal year 2001.
cooperative programs
The functions of our cooperative programs are authorized under both
the Cooperative Marketing Act of 1926 and the Agricultural Marketing
Act of 1946. Our programs of research, technical assistance, education/
information, statistics and assistance in starting new cooperatives are
designed to establish viable business entities that help individual
farm operators and other rural residents retain access to markets and
sources of supplies and services in a sector that is becoming rapidly
vertically coordinated and industrialized. Cooperatives are a means for
rural people who are typically structurally weak compared to level the
playing field with to their buyers and suppliers, to be allowing for
them to be treated more fairly in the marketplace.
Since 1926, USDA has worked as a partner to farmer cooperatives,
helping interested groups of agricultural producers form new
cooperatives and working with existing cooperatives to improve their
efficiency and expand the scope of services to members. These functions
are now carried out primarily within the Rural Development mission area
by the CS program. Our National Office and State office staff who
specializes in research, technical assistance, statistics and
educational/informational activities. carries out the work. It is also
augmented by State Rural Development Offices that are identifying
cooperative development specialists on their staffs to assist in
starting and servicing the needs of new cooperatives. Our efforts are
aided by partnerships with universities, State departments of
agriculture, and non-profit associations through various program
activities aimed at strengthening rural people's ability to use mutual
self help efforts to earn a decent living, and to enhance their quality
of life.
Cooperative Services conducts studies, alone or in conjunction with
other Federal or State institutions, to provide farmers with
information on economic, financial, organizational, legal and social
aspects of cooperative activity. Technical advice assists farmer
cooperatives in the development and operation of viable organizations
to better serve the Nation's family farmers. Educational assistance
provides farmers and other rural residents with a proper understanding,
use and application of the cooperative tool. A major initiative by RBS
has been to encourage the staffing of Cooperative Development
Specialists in each State Office. These individuals provide a more
local source of expertise in guiding the development of new cooperative
businesses and helping to determine their feasibility. To date,
approximately 25 staff members in our State offices have this
responsibility either solely or on a collateral basis. We are confident
they will become a more important source of assistance to emerging
business as they gain more expertise.
An example of our technical assistance work is provided by the
Great Plains Buffalo Cooperative (GPBP) project. RBS staff worked with
the steering committee of this group since March 2001 and helped them
conduct two feasibility analysis. Based on these studies, GPBC is
moving forward to form a cooperative that will purchase an existing
processing facility and an adjacent feedlot. The cooperatives will then
process and market member owned buffalo products. Approximately 100
producers from an 8-State area in the Western U.S. will be involved in
this cooperative effort.
appropriate technology transfer for rural areas
The Appropriate Technology Transfer for Rural Areas (ATTRA) program
offers producers and agribusiness advisors information on use of the
best sustainable production practices. Encouragement of such practices
lessens dependence on agricultural chemicals and is more
environmentally friendly. The ATTRA program handled over 20,000
requests this past year and continues to be a source of information
throughout the country through its 800 number and the use of the
Internet.
conclusion
Mr. Chairman, this concludes my formal statement on the fiscal year
2003 Budget. I would be happy to respond to any questions the
Subcommittee may have regarding the Rural Business Cooperative Service
programs of the Rural Development mission area.
______
Biographical Sketch of John Rosso
As Administrator of the U.S. Department of Agriculture (USDA) Rural
Business-Cooperative Service (RBS), John Rosso oversees a variety of
programs and services that promote a dynamic business environment in
rural America, and encompasses many varied cooperative developments and
value-added endeavors for farmer producers.
In fiscal year 2001, RBS, Business Programs, provided a total of
$1.2 billion of financial assistance resulting in over 100,000 jobs
being created/saved, and 4,889 businesses were assisted in rural
America. In fiscal year 2001 RBS, Cooperative Services, through the
Rural Cooperative Development Grant Program, provided 20 recipients in
20 States with a total of $4.8 million, which assisted nearly 100
existing or new cooperative businesses. The Cooperative Services
Program also administered the prototype Value Added Development Grant
(VADG) Program, reviewing over 600 applications and awarding $20
million to 62 applicants.
John Rosso has acted in several capacities in prior years at the
Department of Energy and the Department of Housing and Urban
Development, and is now serving under his third President. Prior to
coming to Washington D.C. to serve in a national capacity, he was
elected as the Presiding Officer/Majority Leader of the Suffolk County
Legislature, New York, where he served as an elected official for
several terms.
Before retiring from the private sector and entering government
service, John Rosso was President and Chief Executive Officer for over
20 years of varied private companies owned and operated by him. John
Rosso was heavily involved in commercial and residential development,
petroleum distribution, General Insurance, retail sales and
franchising.
John Rosso is a native of Brooklyn, New York, growing up on the
eastern end of Long Island where he was also active in civic affairs as
President of the School Board, the local Hospital, Chamber of Commerce,
and Secretary of the Northeastern Regional Fuel Dealers Association. He
is married and the father of two adult children, and has been portrayed
by his former constituents as a dedicated ``family man.''
Senator Kohl. We thank you very much, Mr. Neruda, and now
turn to Dr. Joseph Jen, who is Under Secretary for Research,
Education and Economics. Dr. Jen.
STATEMENT OF JOSEPH J. JEN
Dr. Jen. Thank you, Mr. Chairman, members of the
subcommittee. It is my pleasure to appear before you for the
first time to discuss the fiscal year 2003 budget for the
Research, Education and Economics mission area. The
administrators of the four agencies are in the audience and
each of them has submitted written testimony for the record.
Given today's tight budget constraints driven significantly
by the need to shore up our homeland security and current
economic conditions, the REE budget that we are discussing
reflects a recognition of the crucial role of REE research,
education, economics and statistical programs in solving the
problems facing our Nation's agriculture and food system.
We appreciate the support received from Congress in our
appropriations for fiscal year 2002. The President's fiscal
year 2003 budget proposes $2.3 billion for the four REE
agencies. For more than 100 years, science has been the
foundation of American agriculture. During the past century,
research investment and scientific advances have fueled the
tremendous rate of productive growth in the American
agriculture sector. American public investment in agricultural
research is a major reason the percentage of household income
we spend on food has dropped from 20.5 percent in 1950 to 10.2
percent in the year 2000.
However, without continued gains in agricultural science,
the United States cannot continue to provide affordable, safe
and nutritious food to American consumers and the world
population. Without continued scientific progress, we also
cannot continue to compete effectively in global marketplace,
nor can we develop practices that mitigate the effects of
agriculture on the environment.
The remarkable success enjoyed by our agricultural food
systems and the resultant benefit that have inured to the
Nation depend heavily on our having a reservoir of basic
fundamental scientific knowledge. Applied mission-oriented
research and technology development then draw on this knowledge
reservoir to address pressing problems faced by the agriculture
sector and society. If we are to continue the successes of the
past, we must continue to support basic research, to replenish
the basic fundamental knowledge reservoir, as well as applied
mission-oriented research. USDA is committed to achieve a
balanced research portfolio to do just that.
The fiscal year 2003 budget proposes increases to $240
million for the National Research Initiative, a program
authorized in 1991 legislation at $500 million annually.
Competitive programs such as the NRI open to all research
communities provide the most effective mechanism for attracting
the best minds in the Nation to conduct research in agriculture
and food systems. The NRI program not only provides funds for
basic fundamental research such as plant, animal, microbial and
food genomics, but also it is proposing to increase funding in
research on exotic and emerging plant and animal diseases, such
as wheat scab and karnel bunt in the west, and Pierce's disease
in California.
The President's budget also reflects an increase in the ARS
budget for biobased products and bioenergy research, the
research focused on solving multiple national problems through
finding new uses and new markets for valued added agricultural
products such as modern fuels, which will improve our Nation's
energy security.
On the education side, the President's budget provides an
increase of $2.7 million for three higher education programs in
the CSREES. One of them is an international program for land
grant institutions.
Statistical and economic analysis also will see increases
in the President's budget proposal to conduct the agricultural
resource management survey known as ARMS. The survey is jointly
sponsored by NASS and the ERS. Data from ARMS forms the
foundation of research analysis, making it possible to answer
key questions from Congress, Administration officers, USDA, and
other decision makers about the differential impact of
alternative policies and programs across the farm sector.
Lastly, REE is working cooperatively with many other
Federal agencies to stretch the research dollar. For example,
we are working with NSF on plant genome research, and with DOD
and DOE on biobased products and energy. We were asked by OSTP
recently to lead a cooperative effort in domestic and animal
genome research, involving NIH, NSF, DOD, OSTP, and various
agencies within USDA.
With continued investment in agricultural research, we will
be ready to meet both future problems and take advantage of new
opportunity presented by cutting edge science and technology.
Thank you.
[The statements follow:]
Prepared Statement of Dr. Joseph J. Jen
Mr. Chairman, Members of the Committee, it is my pleasure to appear
before you for the first time to discuss the fiscal year 2003 budgets
for the Research, Education, and Economics (REE) mission area agencies.
I am accompanied by the Administrators of the four mission area
agencies: Dr. Edward Knipling, Acting Administrator of the Agricultural
Research Service (ARS); Dr. Colien Hefferan, Administrator of the
Cooperative State Research, Education, and Extension Service (CSREES);
Dr. Susan Offutt, Administrator of the Economic Research Service (ERS);
and Mr. Ronald Bosecker, Administrator of the National Agricultural
Statistics Service (NASS). Also present is Steve Dewhurst, Director of
the Office of Budget and Program Analysis of the Department of
Agriculture (USDA). Each Administrator has submitted written testimony
for the record.
Given today's tight budget constraints driven significantly by the
need to shore up our homeland security and current economic conditions,
the REE budget that we are discussing reflects a recognition of the
critical role of REE's research, education, economics and statistics
programs in solving the problems facing our Nation's agricultural and
food system. We appreciate the support received from Congress in our
appropriations for fiscal year 2002. The President's fiscal year 2003
budget proposes $2.3 billion for the four REE agencies. The overall
funding for the four agencies represents a balanced budget portfolio
supporting the mission area's programs.
REE's four agencies have a proud history over many decades of
finding solutions to the challenges confronting farmers, ranchers and
consumers involved in agriculture, resulting in a high return on the
Federal investment to our Nation; a Nation that enjoys a plentiful,
affordable, and safe food supply. For more than 100 years, science has
been the foundation of American agriculture. During the past century,
research investments and scientific advances, largely in the public
sector, have fueled the tremendous rate of productivity growth in the
American agricultural sector. In 1862, when Congress established the
Department of Agriculture, one farmer fed five people. In 1940, one
farmer fed 19 people. Today one American farmer feeds 129 people.
America's public investment in agricultural research is the reason why
the percentage of household income we spend on food has dropped from
20.5 percent in 1950 to 10.2 percent in 2000.
The historical success of agricultural research reflects the
importance of science, technology, economics, and statistical
information for the U.S. agricultural sector and the larger society.
Without continued gains in agricultural science, the United States
cannot continue to provide affordable, safe, and nutritious food to
American consumers and the world population. Without continued
scientific progress we also cannot continue to compete effectively in
the global marketplace nor can we develop practices that mitigate the
effects of agriculture on the environment. Agricultural research and
analysis are essential to ensuring America's food and agricultural
system remains productive and that our Nation's food supply remains the
safest, most wholesome, and most plentiful in the world.
The remarkable success enjoyed by the agricultural sector and the
food system and the benefits that have accrued to the Nation depend
heavily on having a reservoir of basic fundamental scientific
knowledge. That reservoir is filled through basic fundamental research.
Applied mission-oriented research and technology development then draw
on that knowledge reservoir to address pressing problems faced by the
agricultural sector and society. If we are to continue the success of
the past, we must continue to replenish the basic fundamental knowledge
reservoir.
As indicated in USDA's latest policy book, Food and Agricultural
Policy: Taking Stock for the New Century, the Department is committed
to achieving a balanced agricultural research portfolio including an
appropriate blend of basic fundamental research and applied mission-
oriented research. The proposed REE budget provides such a balance with
increases in research focusing on basic fundamental science to
replenish the knowledge reservoir and increases in applied mission-
oriented research that draws on the knowledge in the reservoir to
develop solutions to pressing problems in agriculture. For example, the
National Research Initiative (NRI) is USDA's premiere competitive
research program administered by CSREES. The budget proposes to double
the funding available to $240 million for the NRI, a program authorized
in 1991 legislation at $500 million annually. Competitive programs,
such as the NRI, open to all the research community, provide the most
effective mechanism for attracting the best minds in the Nation to
basic fundamental research in agriculture and food system. The research
supported by the NRI principally contributes to the basic fundamental
knowledge reservoir, which provides the basic knowledge for future
applied research, education, and extension programs.
Agricultural genome research is a more specific example of basic
fundamental research receiving an increase in the President's budget.
We are only at the dawn of the age of biotechnology, although its
promises are well established. The science is solid and the potential
to help producers reduce inputs and increase yields is clear. Just
around the corner, functional foods or food products with beneficial
health properties will emerge. However, harvesting the promise of this
powerful technology depends on having a fundamental understanding of
the genetic make-up of plants, animals, and microbes. The sequencing of
genomes and identifying and mapping genes that influence resistance,
reproduction, nutrition, and other economically important traits are
all part of this new science, collaterally called genomics or
biotechnology. In collaboration with other Federal agencies, USDA is
currently participating in, and supporting, the National Plant Genome
Initiative and the Microbe Project. We have also been asked to lead in
the coordination of research activities related to domestic animal
genomes. Increases in ARS's agricultural genome budget and in CSREES's
National Research Initiative (NRI) will strengthen both agencies'
programs and, therefore, expand our basic knowledge of genomics, moving
us closer to harnessing the potential of biotechnology.
The President's budget also proposes increases in applied mission-
oriented research to tackle today's problems and cultivate tomorrow's
opportunities in agriculture. Exotic and emerging plant and animal
diseases and pests pose severe problems throughout the United States
and need immediate attention. For example, citrus canker threatens
Florida's citrus industry and Pierce's disease threatens California
vineyards. In addition, the recent outbreak of foot-and-mouth disease
in the United Kingdom and destruction of huge numbers of animals
resulted in immense economic losses due to domestic and international
trade embargoes. The President's budget includes an increase of $13
million in the ARS program to meet short-term needs, such as the
development of new methods to rapidly and accurately detect and
identify pathogens, as well as research to pursue long-term solutions
for integrated control strategies.
In closely related research, the President's budget also provides
for an increase in the ARS budget of $5 million to fund animal and
plant research in support of biosecurity. Because of its size,
complexity, and integration U.S. agriculture is uniquely vulnerable to
highly infectious diseases and pests, particularly foreign diseases not
endemic to the United States. Disease outbreaks from malicious
introduction of pathogens could have profound impacts on the national
infrastructure, the domestic economy, and export markets. The proposed
increase would support cutting-edge research to develop simple and
rapid diagnostic tests for use by field staffs to identify the causes
of disease outbreaks and to prevent their spread.
The President's budget also reflects an increase in applied,
mission-oriented research to develop and promote biobased products and
bioenergy. This research focuses on solving multiple national problems
through finding new uses and markets for agricultural products. Recent
events have contributed to a renewed emphasis on expanding the use of
biobased industrial products, including biofuels, to improve our
Nation's energy security, our balance of payments, our environment, and
our rural economy. The call for action is an Administration initiative
and part of the President's National Energy Policy. The requested funds
would support research to improve the quality and quantity of
agricultural biomass feedstock for the production of energy and
biobased products, using both conventional and molecular technologies.
Increases in the budget supporting the research component of REE
are complemented with increases in education, a second critical
function of REE. U.S. agriculture has entered an era characterized by
global competitiveness, food distribution inequities, environmental
concerns, and promising technologies. Grappling with these issues
requires a reliable supply of highly qualified scientists and other
skilled professionals working to advance the frontiers of knowledge and
technology in agriculture and food systems. Scientific and professional
human capital is one of the most crucial variables affecting the future
of our food and agriculture system. The shortage of qualified
scientists, engineers, managers, and technical specialists threatens
our entire food and agricultural sector. The President's budget
provides an increase of $1.7 million for two higher education programs,
Institution Challenge Grants to enhance institutional capacity and
Graduate Fellowship Grants for the development of expertise. The budget
also proposes funds for a program to incorporate an international
component into teaching, research, and extension programs at land-grant
institutions.
Statistics and economic analysis also receive increases in the
President's budget proposal for REE. Comprehensive agricultural
statistics and an understanding of agricultural markets and the
evolving farm sector are critical ingredients for crafting informed
farm policy and maintaining our competitive position in the global
economy. A core source of information for gaining this understanding is
derived from the Agricultural Resource Management Survey, known as
ARMS, jointly sponsored by the National Agricultural Statistics Service
(NASS) and the Economic Research Service (ERS). Conducted annually,
ARMS is the primary source of information about the financial
condition, production practices, use of resources, and household
economic well-being of America's farmers. Data from ARMS form the
foundation of research and analyses, making it possible to answer key
questions from Congress, Administration officials, USDA and other
decision-makers about the differential impact of alternative policies
and programs across the farm sector. This REE initiative proposes a
major reengineering of ARMS so that we can continue to provide high
quality information that accurately portrays the economic conditions
and the rapidly changing structure of the farm sector.
As Secretary Veneman stated in the book Food and Agricultural
Policy: Taking Stock for the New Century, ``Every aspect of our food
and agricultural system is fed with new knowledge, through research and
development, data collection and information dissemination.'' This
science base depends upon how effectively the various Federal research
partners collaborate with each other. The challenges in our food and
fiber system today are complex and can not only benefit from, but often
require, collaboration with other USDA agencies and Federal departments
to be effectively addressed. We must partner with institutions with
complementary strengths and perspectives, if we are to effectively meet
issues of common concern and responsibility.
REE is making that collaboration happen. In January of this year,
ARS and the Animal and Plant Health Inspection Service (APHIS) signed a
Memorandum of Understanding to strengthen their working relationship in
which ARS carries out research to support APHIS's programs. CSREES
consults with APHIS, FSIS, and other agencies to develop requests for
proposals (RFPs) in their competitive programs that are responsive to
emerging issues and high priorities of the Department. ERS has
initiated a process for systematically consulting with each of the USDA
mission areas to facilitate ERS's responsiveness to the needs of the
regulatory and action agencies in the Department. NASS is providing the
Risk Management Agency statistics needed to administer their insurance
programs. Beyond USDA, our agencies are working with the National
Aeronautics and Space Administration on precision agriculture, with the
National Science Foundation on plant genome research, with Department
of Energy (DOE) on microbial genome research and with the Department of
Defense and DOE on biobased products and bioenergy. We are also
collaborating with the Food and Drug Administration and the Centers for
Disease Control and Prevention on food safety, with the Office of the
U.S. Trade Representative on trade negotiations, and with the
Environmental Protection Agency (EPA) on implementation of the Food
Quality Protection Act of 1996.
In our association with these Federal departments and with the
White House's Office of Science and Technology Policy, REE is enhancing
understanding across the government and research community that the
research conducted and supported by USDA is of high quality and is an
important component of the government-wide research and technology
agenda. REE research agencies have much to contribute to and gain from
participation in the broader research and development agenda of the
Federal Government. Our genomics research is world-class. ERS's
analysis and NASS's statistics make critical contributions to sound
policy, trade, and regulatory decisions. The more the USDA research and
development, analysis and statistics programs are integrated in the
Federal research and development effort, the stronger both the USDA and
broader Federal program will be. Such participation will also benefit
U.S. agriculture by attracting the broader scientific community to the
issues of concern to the agricultural and food systems.
The discussion above highlights many of the high priority REE
initiatives in the budget. Fuller discussion can be found in the
agencies' Explanatory Notes. I would now like to turn briefly to the
budgets of the four REE agencies.
Agricultural Research Service.--The Agricultural Research Service
fiscal year 2003 budget requests over $1 billion in ongoing research,
information programs and related activities in a wide range of high
priority areas. Within the total, the budget proposes increases
dedicated toward high priority programs, several which I previously
described. Offsetting most of these increases, the budget proposes
redirection of about $104 million in current programs to fund those
higher priority program initiatives of national and regional
importance. As the principal intramural biological and physical science
research agency in the Department, ARS continues to play a critical
role for the Department and the larger agricultural community in
conducting both basic fundamental and applied mission-oriented
research. Results from ARS's basic fundamental research provide the
foundation for applied and developmental research carried out by ARS
and many academic institutions and private industry. ARS's applied
research and technology development also meet the research needs of
other USDA agencies.
The ARS budget also reflects the impact of increased world trade on
our farm sector. Global trade and travel generate economic benefits but
increase the risk of introducing invasive species that can adversely
affect food and fiber production and lessen agricultural productivity.
The ARS budget provides an increase of $2.7 million to support research
focused on the exclusion of potential new invasive species with quicker
detection and more effective eradication methods. It will also
facilitate the development of more efficient long-term management of
established known invasive species.
Agriculture is also vulnerable to changes in climate. Rising
temperatures, changing amounts of precipitation, increased variability
in weather, and increases in the frequency and intensity of extreme
weather events like drought and floods are predicted to accompany the
intensification of the greenhouse effect. While vulnerable to these
environmental changes, agriculture offers significant opportunities to
mitigate the increase in greenhouse gases in the atmosphere. An
increase of $6.5 million in the President's budget for climate change
will support research providing information on balancing carbon storage
and agricultural productivity in different agricultural systems across
the Nation.
The National Agricultural Library (NAL), one of four national
libraries, serves as a national resource for information on agriculture
and related sciences. The proposed increase will enhance NAL's
information technologies, increase the volume and quality of
information services, reduce the cost of information and services, and
develop specialized collections. This will include the first steps
towards developing a National Digital Library for Agriculture in
partnership with the land-grant universities, to improve NAL's world-
wide customers' access to key digital agricultural information. NAL
will also continue to work in concert with land-grant universities,
Federal agencies, nonprofit organizations, and others partners through
the Agriculture Network Information Center (AgNIC).
To fulfill its mission, ARS must modernize its antiquated research
facilities. The fiscal year 2003 ARS budget proposes $17 million for
facility modernization or restoration efforts at four locations.
Included is over $7 million for the National Agricultural Library to
address major facility deficiencies and $3 million for the U.S.
National Arboretum to complete the remaining phases of the greenhouse
complex renovation and the Hickey Run stream restoration. Needed
repairs due to tornado damage and continued restoration of facilities
at the Henry A. Wallace Beltsville Agricultural Research Center would
be funded with an increase of $4.2 million. A $2 million increase is
provided for continued modernization of facilities at the Plum Island
Animal Disease Center in Greenport, New York. The emergency
supplemental appropriations for fiscal year 2002 have provided a total
of $73 million for the Plum Island facility and for the Ames, Iowa
animal disease research complex.
Cooperative State Research, Education, and Extension Service.--The
President's 2003 budget provides over $1 billion for the Cooperative
State Research, Education, and Extension Service. In providing critical
funding to the research, education, and extension programs of the Land
Grant system and other universities and organizations across the
country, CSREES continues to play a central role in the generation of
new knowledge and technology and the transfer of that knowledge and
technology to its stakeholders. Within the discretionary budget, the
funding levels for the six formula programs remain the same as the
fiscal year 2002 appropriations.
In addition to the increases in the NRI and higher education
programs described above, the CSREES budget includes increases to
enhance the agency's capacity to serve its grantees through developing
a new electronic grants application and reporting system and continuing
the design and development of the Research, Education, and Economics
Information System.
The Government Paperwork Elimination Act (GPEA) mandates that
electronic submission, maintenance or dissemination of information be
available as a substitute for paper by October 21, 2003. As a grant-
making agency with responsibility for administering many programs, GPEA
has significant implications for the management of CSREES programs. The
CSREES budget provides $2.25 million for e-Government to develop new
systems, as well as to modify existing systems, to meet the requirement
of GPEA. The funds will facilitate CSREES adopting electronic
capabilities in virtually all aspects of its granting program.
Economic Research Service.--The Economic Research Service is
provided $82 million in the President's fiscal year 2003 budget. As the
Department's principal intramural economics and social science research
agency, ERS conducts research and analysis on the efficiency, efficacy,
and equity aspects of issues related to agriculture, food safety and
human nutrition, the environment, and rural development.
Complementary to an ARS increase in invasive species research, an
ERS increase of invasive species of crop pests and livestock diseases
within the context of increasingly global agricultural markets. A major
focus will be to assess the role of the public sector in reducing
economic risks to U.S. agriculture from invasive species while
preserving economic gains from international trade and travel.
The ERS budget also provides $2.7 million for its component of the
joint ERS/NASS initiative to improve the Agricultural Resource
Management Survey, as described above.
National Agricultural Statistics Service.--The National
Agricultural Statistics Service budget request for fiscal year 2003 is
$149 million. This includes an increase of $4.6 million for the NASS
component of the joint ERS/NASS ARMS initiative. NASS's comprehensive,
reliable, and timely data are critical for policy decisions and to keep
agricultural markets stable and ensure a level playing field for all
users of agricultural statistics. In addition to the ARMS initiative
described above, the President's budget provides increases in several
other critical areas of the NASS program.
The Census of Agriculture provides comprehensive data on the
agricultural economy, with national, State and county level detail. The
program increase of $15.5 million reflects the cyclical nature of this
statistical activity associated with conducting the Census of
Agriculture. The increase in fiscal year 2003, the peak year in the 5-
year cycle, will be used to support an array of activities associated
with collecting, processing, and analyzing records for roughly 3
million farmers surveyed in the 2002 Census of Agriculture. The funds
will also be used for new equipment and software to effectively
process, retrieve and view scanned questionnaires.
The Government Paperwork Elimination Act mandate of electronic
dissemination and reporting of data has major implications for a
statistical agency such as NASS. GPEA requires the acquisition and use
of information technology, including alternative information
technologies that provide for electronic submission, maintenance, or
disclosure of information as a substitute for paper. An increase of $3
million in the NASS fiscal year 2003 budget will allow NASS to build a
data base infrastructure to support more than 100 different surveys
each year. By 2006, most NASS self-administered surveys will be
available electronically and information for the 2007 Census of
Agriculture will be electronically collected. It represents a major
change in how NASS does business, one that we can meet with adequate
funding.
The events of September 11, 2001 heightened already high concerns
about cyber-security in the Federal government. Billions of dollars in
global commodity trade depend on NASS statistics, making computer
security essential to protect the accuracy of its statistics and
premature access. The budget proposes an increase of $700,000 to
enhance NASS cyber-security and architecture systems to ensure that
confidential respondent information is safeguarded and the integrity of
the survey data is maintained.
summary
In summary, I want to reiterate that, given an overall tight
budget, the REE agencies' budgets present a balanced profile,
reflecting a commitment to replenishing our reservoir of basic
fundamental science and at the same time supporting applied mission-
oriented research addressing immediate problems. The budget also
provides new funding in education to ensure the Nation has a strong
cadre of professionals and in statistics and economic analysis to
promote informed decision making for all parties involved in the food
and agriculture system. It also reflects an understanding that
research, education, and economics programs are essential for solving
not only the problems American agriculture and our producers face
today, but also to address the emerging problems of tomorrow and expand
opportunities for consumers. With continued investment, we will be
ready to meet those future problems and take advantage of new
opportunities presented by cutting-edge science and technology. Thank
you. I. welcome your questions.
______
Biographical Sketch of Dr. Joseph J. Jen
Joseph Jen was sworn in as the under secretary for research,
education, and economics by Agriculture Secretary Ann. M. Veneman on
July 17, 2001.
He will oversee four agencies of the U.S. Department of
Agriculture: the Agricultural Research Service, the Cooperative State
Research, Education, and Extension Service, the Economic Research
Service, and the National Agricultural Statistics Service.
Jen is a widely recognized agricultural scientist and educator,
with experience in both the public and private sectors. Since 1992, Jen
has served as the dean of the College of Agriculture at California
Polytechnic State University in San Luis Obispo. In this capacity, Jen
oversaw eleven departments with 3,500 students, 250 faculty and staff,
and a budget in excess of $30 million.
From 1986 to 1992, Jen was division chairman of the University of
Georgia's Division of Food Science and Technology in Athens, Georgia.
He served as director of research at the Campbell Institute of Research
and Technology for the Campbell Soup Company from 1980 to 1986. He was
an associate professor at the Department of Food Science and Human
Nutrition at Michigan State University from 1979 to 1980.
Jen was a food science and biochemistry professor at Clemson
University from 1969-1979. From 1975 to 1976, he served as a research
food technologist at the Horticultural Research Institute for the U.S.
Department of Agriculture's Agricultural Research Service in
Beltsville, Maryland.
As a Dean, Jen has earned the reputation as a successful
administrator who has established several innovative cooperative
agreements and proposals with private industry.
Jen received his B.S. degree in agricultural chemistry from
National Taiwan University in 1960. He earned a M.S. degree in food
science from Washington State University in 1964 and a Ph.D degree in
comparative biochemistry from the University of California at Berkeley
in 1969. He also received an MBA degree from Southern Illinois
University in 1986.
Jen was elected as a Fellow of the Institute of Food Technologists
in 1992 and received the Distinguished Educator Award from the National
Association of Colleges and Teachers of Agriculture in 1999. In 2000,
he was appointed by the White House Office of Science and Technology
Policy to be a U.S. delegate in the U.S.-Japan Millennium Study.
______
Prepared Statement of Dr. Edward B. Knipling, Acting Administrator,
Agricultural Research Service
Mr. Chairman, and members of the Subcommittee, I appreciate this
opportunity to present the Agricultural Research Service's (ARS) budget
recommendations for fiscal year 2003. The President's fiscal year 2003
budget request for ARS is $1,014,086,000. This represents an overall
increase of $34,622,000 over the fiscal year 2002 appropriation level
of $979,464,000. This net increase is attributable to both additions
and reductions, including: GSA rent and pension/annuitant health
benefit transfers, $45,448,000; pay and operating cost increases,
$35,603,000; program increases, $58,057,000; and program decreases,
$104,486,000. The net change in research program dollars, excluding the
GSA rent and benefits transfers, is a reduction of $10,826,000. The
fiscal year 2003 budget also proposes $16,580,000 for the ARS Buildings
and Facilities account.
proposed program increases
The fiscal year 2003 President's budget includes $58,057,000 in
program increases for the following initiatives:
Emerging, Reemerging, and Exotic Diseases of Plants and Animals
($13,357,000).--Emerging diseases are caused by previously unidentified
pathogens or new manifestations of ``old'' diseases. Reemerging
diseases occur after long quiescent periods or upon the introduction of
a new pathogen into a native plant/animal population in a new
geographical area. The globalization of trade, increased international
travel of people and movement of goods, changing weather patterns,
genetic shifts in pathogen populations, and changes in crop management
practices all provide opportunities for the emergence or reemergence
and spread of plant and animal diseases.
Recent outbreaks of the highly virulent Newcastle disease of
poultry in Australia and Mexico, and foot-and-mouth disease in Great
Britain have required the destruction of hundreds of thousands of
animals which has resulted in immense economic losses. The newly
emerging disease in swine known as porcine respiratory disease complex
is the most economically important disease currently facing the U.S.
swine industry. Emerging plant diseases include citrus canker which
threatens Florida's $8.5 billion citrus industry.
ARS will use the proposed increase to develop sensitive diagnostic
tests and vaccines to control foot-and-mouth disease and Newcastle
disease. Prevention and control strategies will be developed for
porcine respiratory disease complex, bovine spongiform encephalopathy,
and Marek's disease (in chickens). Research will also be conducted on
emerging and exotic plant diseases to minimize or prevent their
establishment in the U.S.
Agricultural Genomes ($6,900,000).--The Nation's agricultural
system today faces formidable challenges including new pests and
pathogens from water and soil pollution, environmental regulations, and
the extinction or inaccessibility of genetic resources. Genomics and
biotechnology are critically important for maintaining and enhancing
the production, quality, and safety of plant- and animal-based food
products.
With the proposed increase, ARS will identify the genes that
influence disease resistance, reproduction, nutrition, and other
economically important production traits in livestock and poultry.
Research will identify the genes in Texas cattle fever tick that
contribute to acaracide resistance and host function for babesiosis. In
addition, research will support genomic sequencing work on maize,
legumes, microbes, and insects.
Biotechnology Risk Assessment ($3,600,000).--The National Academy
of Sciences has identified several areas that need further study, such
as, the characteristics of genetically engineered crops and the long
term ecological impacts of these crops; the effects of genetically
modified organisms on non-target organisms; and the gene spread from
crops to surrounding vegetation. ARS will use the proposed increase to:
determine the rates of gene flow, including transgenes, from crops to
nearby vegetation; develop and test novel strategies to prevent pest
populations from becoming resistant to plant incorporated protectants;
and identify and develop gene technology that will limit transgene
activity to specific tissues.
Invasive Species ($2,700,000).--Invasive insects, weeds, and other
pests cost the Nation well over $100 billion each year. Weeds,
including leafy spurge, melaleuca, salt cedar, water hyacinth, purple
loosestrife, and jointed goat grass, currently infest at least 100
million acres in the United States. They reduce crop yields by
approximately 12 percent and forage yields by 20 percent. Arthropods
(insects and mites), such as the glassy-winged sharpshooter, silverleaf
whitefly, Asian longhorned beetle, pink hibiscus mealybug, Russian
wheat aphid, and Chinese soybean aphid, destroy 13 percent of crop
production each year.
With the proposed increased, ARS will perform research to develop
attractants and biological control technologies for managing invasive
insects/weeds. Research will also be conducted on the relationship of
major invasive insects and their natural enemies.
Agricultural Genetic Resources ($4,000,000).--Present support of
the germplasm program is inadequate to prevent the risk of extinction
and loss of genetic diversity. With the availability of new genomic
tools, genetic diversity is extremely valuable for improving
production. ARS will use the proposed increase to collect, identify,
characterize, and maintain germplasm in centralized gene banks. ARS
will also encourage germplasm exchange and distribute research
quantities of healthy, pure, and adequately characterized germplasm.
Biosecurity Research ($5,000,000).--The General Accounting Office
(GAO) has reported that certain countries are developing biological
warfare agents directed at animal and plant agriculture. The GAO
indicates that U.S. agriculture is a potential target. Disease
outbreaks from a malicious introduction of pathogens could have
profound impacts on the national infrastructure, the domestic economy,
and export markets. Disease pathogens that could be used to debilitate
U.S. agriculture include highly infectious viruses, bacteria,
nematodes, fungi, and insects that attack major commodities, such as
cattle, swine, poultry, cereals, vegetables, and fruits.
With the proposed increase, ARS will develop more rapid and
sensitive onsite pathogen detection and identification tests for animal
pathogens. Also, ARS will develop a genomic analytic sequencing
capability which will assist in determining threatening diseases'/
pathogens' geographic origin and potential for spread.
Managing Wastes to Enhance Air and Water Quality ($5,000,000).--The
management of waste has become increasingly important because of its
far-reaching impacts. Properly managed it can be used to improve soil
properties, as a nutrient source for crops, and for alternative uses,
such as energy production. Improperly used, the waste from 280,000
animal feeding operations around the country pose a threat to soil,
water, and air quality, and human and animal health.
With the proposed increase, ARS will continue to develop cost
effective technologies and management practices which enable producers
to capture the value of manure and other byproducts without degrading
environmental quality or posing a threat to human and animal health.
Biobased Products/Bioenergy from Agricultural Commodities
($9,000,000).--Widely fluctuating energy prices and depressed
agricultural commodity prices have contributed to a renewed emphasis on
expanding the use of biobased industrial products (including fuels) to
improve the Nation's energy security, balance of payments, environment,
and rural economy. By expanding the development of biobased products
and bioenergy, increased demand will be created for agricultural
commodities to strengthen farm product prices and raise farm income;
new opportunities will be provided for business development and
employment growth in rural America; dependence on imported oil will be
reduced and U.S. security enhanced; and environmental quality will be
improved by reducing air pollution and greenhouse gas emissions.
With the proposed increase, ARS will improve the quality and
quantity of agricultural biomass feedstock for production of energy and
biobased products. The conversion of agricultural materials and wastes
to biofuels will be improved. In addition, technologies will be
developed to produce biobased products from agricultural commodities
and byproducts.
Global Climate Change ($6,500,000).--Climate change encompasses
global and regional changes in the Earth's atmospheric, hydrological,
and biological systems. Agriculture is vulnerable to these
environmental changes.
The objective of ARS' global change research is to develop the
information and tools necessary for agriculture to mitigate or adapt to
climate change. ARS has research programs on carbon cycle/storage,
trace gases (methane and nitrous oxide), agricultural ecosystem
impacts, and weather/water cycle changes.
ARS will use the proposed increase to develop climate change
mitigation technologies and practices for the agricultural sector.
Research will include land use and land management impacts on carbon
sequestration; measurement, verification, and modeling of carbon
storage; and assessing and managing risks to agricultural production
and water supplies from weather variability.
Agricultural Information Services ($2,000,000).--ARS will use the
proposed increase to begin implementation of the digital library
initiatives recommended by the 2001 Interagency Panel for Assessment of
the National Agricultural Library. These initiatives will provide
improved access to electronic resources, delivery of digital
information to USDA customers, and archiving of USDA digital
publications. The development of information technology to manage and
deliver information will also be continued.
proposed program decreases
The President's budget for fiscal year 2003 addresses a number of
national needs and Administration priorities. Two issues of major
concern to the President and the American people are national defense
and domestic security. In this regard, the Department of Agriculture
and ARS, along with most other Federal departments and agencies, have
been asked to reduce or freeze spending, and assume a flat or slow rate
of growth to accommodate the war effort and homeland defense--central
responsibilities of this Government. Furthermore, as a result of
additional emergency spending in fiscal year 2002 and the economic
downturn, the Office of Management and Budget (OMB) and the
Congressional Budget Office (CBO) both project deficit spending this
year and in fiscal year 2003, requiring government wide fiscal belt-
tightening and the imposition of budget constraints to curtail
spending.
Within this context, the President's budget proposes decreases in
selected programs in ARS. The program decreases recommended in the
budget amount to $104,486,000. Eighty-six percent of this reduction
($89,486,000) is derived from Congressionally-designated funding
appropriated in fiscal years 2001 and 2002. While these projects are
considered to be important, they are less critical at a time when
resources are needed for higher priority programs and therefore, reduce
the amount of funding available for these priorities within overall
budget ceilings. Other reductions in ongoing base programs totaling
$15,000,000 result primarily from location and laboratory closures and
consolidations as recommended by the ``Strategic Planning Task Force.''
As you may recall, the Task Force was established under the 1996 Farm
Bill to review all currently operating research facilities constructed,
or planned to be constructed, with Federal funds. Consistent with
specific recommendations made in this report, the ARS budget requests a
number of location and laboratory closures and consolidations as
follows: the closure of two research locations/worksites, the Irrigated
Desert Research Laboratory, Brawley, California and the New England
Plant, Soil and Water Laboratory, Orono, Maine since similar work is
done elsewhere; and the closure of the honey bee research laboratories
located at Baton Rouge, Louisiana; Beltsville, Maryland; and Tucson,
Arizona. A portion of these honey bee programs will be consolidated
with the honey bee laboratory at Weslaco, Texas. The Soft Wheat Quality
Research Laboratory, Wooster, Ohio is proposed to be closed. The Cereal
Quality evaluation functions carried out at the Cereal Crops Research
Laboratories at Fargo, North Dakota and Madison, Wisconsin are to be
closed and a portion of this effort is to be redirected to Manhattan,
Kansas where work on wheat quality will be housed. The Avian Disease
and Oncology Laboratory, East Lansing, Michigan is to be closed with a
significant portion of these programs transferred to Athens, Georgia
and Beltsville, Maryland. This move will consolidate poultry disease
research in Athens. The Processed Foods Laboratory, Albany, California
is also proposed for closure since major food companies are capable of
conducting this type of research. In addition, the Crop Improvement
Utilization program at the Western Regional Research Center is being
reduced in scope.
proposed pay costs
In addition to these program initiatives, the budget provides
funding to cover costs associated with pay raises effective in fiscal
years 2002 and 2003. These increases, $35,369,000, are critically
needed to avoid Agency wide erosion of base resources. The absorption
of these costs reduces the number of critical support staff and
scientists needed to conduct viable programs, and reduces funds
available for laboratory equipment and supplies essential to the
programs. The Agency's budget also includes an increase of $234,000 to
reimburse the Department of Labor for administering the Federal
Employees Compensation Act (FECA) Program.
proposed transfers
In addition to the proposed increases ($93.7 million) mentioned
above, the ARS budget includes two transfers to directly pay for Agency
obligations currently handled by other Federal agencies. One is the
transfer of $42,641,000 to ARS to fund employee pension and annuitant
health benefits now administered by the Office of Personnel Management.
The second transfer is to finance the direct funding of payments to the
General Services Administration for ARS occupied rental space, totaling
$2,807,000. These costs are currently paid through the Department's
Central Account.
proposed increases for buildings and facilities
The fiscal year 2003 budget is proposing an increase of $16,580,000
for ARS' buildings and facilities. Many of the Agency's laboratories
were constructed half a century ago and are in immediate need of major
repair, renovation, or modernization. In order to attract and retain
top scientists, solve the Nation's most critical agricultural problems,
and address the research needs of the 21st century, ARS must have
modern, up-to-date laboratories and facilities. Funding is proposed for
the following projects:
Henry A. Wallace Beltsville Agricultural Research Center,
Beltsville, Maryland ($4,180,000).--The Beltsville Agricultural
Research Center is the largest agricultural research center in the
world in terms of program scope and concentration of scientists. It is
world renowned for the quality of its research, its contributions to
agriculture, and its prominent scientists. On September 24, 2001, the
Beltsville Center sustained significant damage to its facilities and
equipment from a tornado. ARS will use the proposed fiscal year 2003
increase to continue restoration of the Center's facilities.
Plum Island Animal Disease Center, Greenport, New York
($2,000,000).--Plum Island is the only site in the United States where
research can be carried out on highly contagious animal diseases, such
as foot-and-mouth disease. The Center is also used by the Animal and
Plant Health Inspection Service (APHIS), which performs diagnostic
work on foreign animal diseases that are an ongoing threat to U.S.
livestock. In 1989, ARS and APHIS began to develop a long range plan
for the modernization of their facilities at Plum Island. As part of
the ongoing modernization program, ARS is requesting $2 million for
miscellaneous small projects/contingencies to support the
modernization.
Abraham Lincoln National Agricultural Library, Beltsville, Maryland
($7,400,000).--The National Agricultural Library is one of four
national libraries and the largest agricultural library in the world.
The library houses a collection of more than 3.2 million items in 50
different languages. It serves as a national resource for information
on agriculture and related services. Constructed in 1968, NAL's
building requires major renovation. In fiscal year 1998, ARS received
funds for renovation of the Library's first floor. Renovation of other
floors and systems have taken place since then. In fiscal year 2003,
ARS is requesting $7.4 million to continue addressing the major
facility deficiencies.
U.S. National Arboretum, Washington, D.C. ($3,000,000).--The
National Arboretum was created by an Act of Congress in 1927 as a
center for research and education in the plant sciences. Since 1959,
the Arboretum has also been open to the public as a display and show
area for ornamental plant materials, as well as continuing to function
as a center for research and education. Many of the Arboretum's major
building systems (i.e., heating, ventilating, air conditioning, and
electrical) and infrastructure (i.e., paving, fences, and steam and
water lines) have either reached or surpassed their useful life
expectancy. As part of the ongoing modernization of the Arboretum, ARS
is requesting in fiscal year 2003, $3 million for renovation of the
greenhouse complex and for planning, design, and construction of the
Hickey Run stream restoration which drains onto the Arboretum's
grounds.
Mr. Chairman, this concludes my statement. I will be glad to answer
any questions the Committee may have.
______
Biographical Sketch of Edward B. Knipling
Dr. Knipling is a native of Texas, but grew up primarily in the
Washington, D.C. area. He earned his B.S. in 1961 in forestry from
Virginia Tech University. He received his M.A. in 1963 and Ph.D. in
1966 in plant physiology from Duke University.
Dr. Knipling served in the U.S. Army 1966-68, conducting research
on remote sensing of the environment. He began his career with the U.S.
Department of Agriculture, Agricultural Research Service (ARS) in 1968
as a research plant physiologist in Gainesville, Florida. He has also
served as Area Director for ARS in Stoneville, Mississippi (1975-78),
and in Fresno, California (1978-82), and Associate Deputy
Administrator, National Program Staff, Beltsville, Maryland (1982-88).
Dr. Knipling served as Director of the Beltsville Agricultural Research
Center, Beltsville, Maryland (1988-89) and served as Deputy
Administrator of the National Program Staff, Beltsville, Maryland,
until October 1996. Dr. Knipling served as Acting Administrator for ARS
from October 1996 to November 1997. Dr. Knipling was appointed
Associate Administrator of ARS in December 1997. Dr. Knipling has been
serving as Acting Administrator since December 2001.
______
Prepared Statement of Dr. Colien Hefferan, Administrator, Cooperative
State Research, Education, and Extension Service
Mr. Chairman and Members of the Committee, I appreciate the
opportunity to submit the proposed fiscal year 2003 budget for the
Cooperative State Research, Education, and Extension Service (CSREES),
one of four agencies in the Research, Education, and Economics (REE)
mission area of the United States Department of Agriculture (USDA).
The CSREES fiscal year 2003 budget proposal is just over $1
billion. CSREES works in partnership with the land-grant university
system, other colleges and universities, and public and private
research and education organizations, in concert with the Secretary of
Agriculture and the intent of Congress, to initiate and develop
agricultural research, extension, and higher education programs. This
partnership has a breadth of expertise that is ready to deliver
solutions to problems facing U.S. agriculture today.
The broad portfolio of CSREES programs has supported scientific
discovery from idea to application. Formula funds have leveraged
dollars from other sources, provided the start-up funds needed for an
investigator to establish a research program and build the capacity to
compete successfully in a competitive program, and allowed for a rapid
response to emerging problems. Competitively funded research from the
National Research Initiative (NRI) has supported individual
investigators undertaking basic research aimed at generating new
knowledge. Research results are applied to real life problems through
the Cooperative Extension System's outreach efforts. All of these
efforts are undertaken in an environment that prepares students to meet
the ongoing needs of agriculture, the environment, individuals and
communities.
CSREES continues to provide new opportunities for discoveries and
advances in knowledge through our competitive programs such as the NRI
and Integrated Programs. Funding for agricultural research,
particularly that pursued at university campuses, has dramatically
lagged behind funding for other disciplines. The fiscal year 2003
proposed increase of $120 million in the NRI will begin to reverse
agriculture's loss of intellectual capital in the U.S., and is a
significant step in reaching the authorized level of $500 million. In
particular, to support current high priority programs we will provide
larger, more effective awards, and new targeted emphasis will be placed
on critical areas. Increased partnerships with other Federal agencies
on research topics of mutual interest will be possible. For example, we
will be able to increase working relationships with the Environmental
Protection Agency, National Aeronautics and Space Administration, and
Department of Energy on air quality/global change issues. More funds
will be available to strengthen agricultural research at small and mid-
sized institutions and in States that are less successful in the
competitive grants arena. Innovative multidisciplinary research
training will be provided for agriculture's future scientists in
emerging areas such as agricultural biotechnology, agricultural
bioinformatics and functional foods. The quality of agricultural
science will increase as more of the best and brightest scientists from
all areas of the U.S., and all institutions, submit proposals to the
NRI.
The increased funding for the NRI is expected to have significant
impact that:
--Responds to emerging and re-emerging diseases of plants and animals
with detection and early identification of disease agents
accidentally or intentionally introduced and has an emphasis on
the transfer of detection technology to the field. In
addressing these issues, focus will be on management strategies
for surveillance, intervention, prevention and control of
agricultural disease and pest threats;
--Maintains leadership in agricultural genomics to assure the
availability of new and improved agricultural products that are
economically viable and produced with less environmental
impact. Studies will be conducted to expand genetic maps and
tools for under-funded plant, animal and microbe species to
develop new products, as well as, plants and animals resistant
to pests, diseases and environmental stresses. Studies also
will be conducted to discover new vaccines, alternatives to
antibiotics, and new industrial catalysts and enzymes;
--Develops more effective human nutrition programs for the discovery,
development and appropriate use of functional foods that
provide health benefits beyond basic nutrition. Also creates
programs for research on food choice and effective nutritional
interventions that improve the quality of diets in the U.S. and
decrease the risk of chronic diseases;
--Provides solutions to managerial challenges faced by small and mid-
sized farms through systems research that identifies innovative
practices and managerial capabilities most appropriate for the
size, scale, and type of operation. This includes understanding
the best methods for translating new technologies into
applications; and
--Improves air quality through understanding key agricultural
processes and management practices that adversely impact air
quality, and through development of appropriate mitigation
strategies.
A provision of the fiscal year 2002 Agriculture Appropriations Act
prohibits USDA from administering a 2002 competition for the Initiative
for Future Agriculture and Food Systems (IFAFS) program and the
Administration's fiscal year 2003 budget continues the prohibition in
2003. When Congress permitted implementation of this competitive
program in fiscal years 2000 and 2001, it fulfilled a valuable role in
supporting integrated research, education, and extension activities
that met the needs of the agricultural community.
Sustained support through our formula programs is assisting the
land-grant university system in providing leadership, research,
information, and education to meet the challenges facing communities.
The mix of challenges varies from one region to another and from one
community to another with close links between the concerns of rural and
urban communities. Some rural and urban communities struggle together
with rapid growth, congestion, and environmental degradation, while
others contend with increasing unemployment, out migration and loss of
vital businesses and services. There is a growing need for the
preservation of farmland and open spaces in rural areas. Many
communities lack the capacity to deal with these challenges or to grasp
alternative opportunities. The land-grant universities are receiving a
growing number of requests to help people and communities understand
the causes of their problems and to develop and evaluate alternative
solutions. Formula funding helps the land-grant universities in their
efforts to discover new knowledge that builds community capacity,
entrepreneurial capacity, and personal capacity to create a more
sustainable future.
CSREES continues to expand diversity and opportunity with
activities under 1890 formula and educational programs, and 1994 and
Hispanic-Serving Institutions educational programs. Funding for our
1890 formula programs provides a stable level of support for
implementation of research and extension programming. This proven path
of research and extension program development rapidly delivers new
technologies, of all kinds, into the hands of our citizens, helping
them solve problems important to their lives.
The higher education programs respond to the development of human
capacity and the need for a highly trained cadre of quality scientists,
engineers, managers, and technical specialists in the food and fiber
system. The fiscal year 2003 budget provides a $1.7 million increase in
CSREES higher education programs for the Food and Agricultural Sciences
National Needs Graduate Fellowship and Challenge Grants Programs. The
International Science and Education Grants Program will incorporate
substantive international activities into teaching, research, and
extension programs related to food systems, agriculture and natural
resources at U.S. land-grant and other campuses. This program also will
provide important and unique support to Tribal Colleges, the
Historically Black Land-Grant Colleges and Universities and the 1862
Land-Grant Universities as they pilot important new approaches to
globalizing their programs.
CSREES is committed to improving the management of resources
through the development of a new electronic grants application and
reporting system and continuing the design and development of the
Research, Education, and Economics Information System (REEIS). The
fiscal year 2003 budget proposes increases of $2.3 million and $0.7
million, respectively for these efforts. Currently, CSREES receives
approximately 6,000 proposals annually resulting in about 2,000 grants
and cooperative agreements annually. These numbers are expected to grow
with anticipated increased funding. We are committed to streamlining
the process through participation in the development of a common
Federal electronic application and reporting system. We are developing
rapidly the capability to electronically receive, process, and award
proposals, including electronic distribution to reviewers nationwide,
and support for electronic financial and technical reporting on awards.
We also are developing the REEIS as a platform to link some 40
different databases and serve as a single source of information on
issues related to accountability, strategic planning, and performance
assessment. CSREES also is examining how it can leverage its
partnership with the land-grant university system to result in better
access of research, education, and extension information products
useful to the Nation as a whole. This concept, which has been termed e-
Extension, could significantly extend the ability of these universities
and the Department to provide synthesized and meaningful information to
the public.
Within this fiscal year 2003 request, there is a total of $5.6
million to cover the costs of items previously paid from central
accounts within USDA or on a government wide basis, including GSA
rental payments, and Civil Service retirement and retiree health
benefits. The Explanatory Notes provided to the Committee details
information on the comparable levels for these items in fiscal year
2001 and fiscal year 2002.
CSREES, in collaboration with university and other partners,
nationwide, continually meets the many challenges facing the food and
fiber system. The programs administered by the agency reflect the
commitment of the Administration to further strengthen the problem-
solving capacity of Federally-supported agricultural research,
extension, and higher education programs. In addition, we continue to
enhance our responsiveness and flexibility in addressing critical
agricultural issues.
______
Biographical Sketch of Colien Hefferan
Dr. Hefferan became Administrator of Cooperative State Research,
Education, and Extension Service (CSREES) on October 7, 2000.
She joined the U.S. Department of Agriculture (USDA) in 1979 as an
economist with the Family Economics Research Group, Agricultural
Research Service. She transferred to the Cooperative State Research
Service in 1988, where she served as Deputy Administrator for Natural
Resources, Food and Social Sciences. With the establishment of CSREES,
Dr. Hefferan was named the Deputy Administrator for Competitive
Research Grants and Awards Management. In August 1995, she moved to the
Office of the Administrator serving as either the Acting Administrator
or the Associate Administrator of the Agency until 2000.
Prior to joining USDA, she served on the faculty at the
Pennsylvania State University, as an adjunct faculty member at the
University of Maryland, and as a research fellow at the Australian
National University in Canberra. She has authored more than 60 research
articles and chapters, edited several books on economic issues and
trends influencing families and consumers, and spoken widely on issues
related to advance agricultural research and education. In 2000, she
was honored with a Presidential Rank Award as a Distinguished Federal
Executive.
Hefferan has a Ph.D. and M.S. Degree from the University of
Illinois, and a B.S. Degree from the University of Arizona.
______
Prepared Statement of Susan E. Offutt, Administrator, Economic Research
Service
Mr. Chairman and members of the Committee, I am pleased to have the
opportunity to present the proposed fiscal year 2003 budget for the
Economic Research Service (ERS).
mission
The Economic Research Service informs and enhances public and
private decision making on economic and policy issues related to
agriculture, food, the environment, and rural development.
budget
The Agency's request for 2003 is $82 million, a net increase of
$14.8 million from the 2002 appropriation. The net increase consists of
five parts: a $2.7 million increase to fund the Economic Research
Service's share of reengineering the Agricultural Resource Management
Survey; a $2 million increase for an initiative on the effects of
invasive pests and diseases on the global competitiveness of U.S.
agriculture; a $1.4 million increase for pay costs; a $2.8 million
increase for employee pension and annuitant health benefits; and a $5.9
million increase which represents a transfer from the Department's
central rent account for rental payments to GSA.
ers contributions to mission area goals
ERS shares five general goals with its fellow agencies in the
Research, Education, and Economics (REE) mission area: (1) a highly
competitive agricultural production system, (2) a safe and secure food
supply, (3) a healthy and well nourished population, (4) harmony
between agriculture and the environment, and (5) enhanced economic
opportunity and quality of life for all Americans. These goals are
fully consistent with the U.S. Department of Agriculture mission.
Goal 1: The U.S. agricultural production system is highly competitive
in the global economy.
ERS helps the U.S. food and agriculture sector effectively adapt to
changing market structure in rapidly globalizing, consumer-driven
markets by analyzing the linkages between domestic and global food and
commodity markets and the implications of alternative domestic and
international policies on competitiveness. ERS economists analyze
factors that drive change in the structure and performance of domestic
and global food and agriculture markets; provide economic assessments
of structural change and competition in the agricultural sector,
including markets for food consumed at and away from home; analyze how
global environmental change, international trade agreements, and
foreign trade restrictions affect U.S. agricultural production,
exports, imports, and income; and provide economic analyses that
determine how fundamental commodity market relationships are adjusting
to changing trade, domestic policy, and structural conditions. Policy
makers and the food and agriculture industry benefit from research
contained in reports such as Agriculture in Brazil and Argentina:
Developments and Prospects for Major Field Crops (November 2001) that
analyze driving forces in global markets, in this case the factors
underlying Brazil and Argentina's growing export market share.
ERS will continue to work closely with the World Agricultural
Outlook Board and USDA agencies to provide short- and long-term
projections of U.S. and world agricultural production, consumption, and
trade. Through our Agricultural Outlook magazine, we have highlighted
policy issues and the resulting impacts on commodity, land, and other
markets, as well as timely analyses of commodity-related topics such as
traceability, water supply issues, and the intersection of farm policy
with WTO commitments. In addition, ERS has worked closely with the
World Agricultural Outlook Board and other USDA agencies in developing
a ``commodity centers of excellence'' initiative that would provide
``one-stop shopping'' for key USDA data. In 2002, we are making our
commodity outlook reports more relevant by improving their timeliness
and quality and increasing the frequency for selected commodities. We
will be focusing this year on the development of better data measures,
through collaboration with industry and others, to provide our users
with the most relevant data and analysis possible.
ERS will expand research on how dynamics of consumer demand,
notably growing consumption and trade in high value products, are
shaping global markets. ERS researchers undertook a comprehensive
assessment of the demand-side dynamics of global food and agricultural
markets resulting in the report published in May 2001, The Changing
Structure of Global Food Consumption and Trade, which highlighted how
higher incomes, urbanization, other demographic shifts, improved
transportation, and consumer perceptions regarding quality and safety
are changing global food consumption patterns. An enhanced analytic
understanding of these fundamental market relationships has improved
the analytical base for USDA's foreign market analysis and projections
activity.
In addition, ERS will continue to work closely with the Foreign
Agricultural Service and the Office of the U.S. Trade Representative to
ensure that negotiations launched in Doha under the auspices of the
World Trade Organization and regional trade agreements are successful
and advantageous for U.S. agriculture. Research will target options and
prospects for further liberalization in global markets, building on
recent ERS findings such as empirical evidence that tariffs on food and
agricultural products constitute the most significant barrier to
increased market access for U.S. products. The ERS report released in
May 2001, Agricultural Policy Reform in the WTO--The Road Ahead,
provided a comprehensive assessment of alternatives to further
liberalization in global agricultural markets negotiating proposals.
ERS will also continue to conduct and build upon research designed
to significantly improve understanding among decision makers of the
changing structure in the agricultural sector (for example, the
implications for producers of the increasing replacement of open
markets by contractual arrangements and vertical integration). The ERS
report, U.S. Fresh Fruit and Vegetable Marketing: Emerging Trade
Practices, Trends, and Issues, published in January 2001, demonstrates
the expertise that ERS has built in explaining and analyzing critical
changes in vertical relationships in the food system, and the
implications for producers and others throughout the supply chain. The
report, Concentration and Technology in Agricultural Input Industries,
published on the web-site in March 2001, examines consolidation in the
agricultural biotechnology industry. This report examines the causes
and consequences of consolidation and sheds light on the question of
how consolidation affects competition and market efficiency in the
industry. The 2001 Family Farm Report--Structural and Financial
Characteristics of U.S. Farms, along with associated shorter brochures,
briefings, and articles, documents the ongoing changes in farms'
structure, financial performance, and business relationships in
response to consumer demands, competitive pressures, and changing
opportunities for farm families.
ERS analyses can help guide and evaluate resource allocation and
management of public sector agricultural research--a key to maintaining
increases in productivity that underlie a strong competitive position
for U.S. farmers. ERS economists track and seek to understand the
determinants of public and private spending on agricultural research
and development; evaluate the returns from those expenditures; and
consider the most effective roles for public and private sector
research entities. To address the relationship between public and
private sector research, ERS produced in 2001 the report, Public Sector
Plant Breeding in a Privatizing World. This report indicates how public
sector plant breeding yields societal benefits that private sector
efforts may not. Benefits include greater information sharing and
development of plant varieties that are under-researched by the private
sector. The USDA Advisory Committee on Agricultural Biotechnology drew
extensively on the major insights from the ERS report in writing their
August 2001 report, The Future of Public Plant Breeding Programs:
Principles and Roles for the 21st Century.
agricultural resource management survey
The request for an increase of $2,700,000 in fiscal year 2003 is
necessary to fund the Economic Research Service's share of
reengineering the Agricultural Resource Management Survey (ARMS). ARMS
is undertaken annually by ERS in cooperation with the National
Agricultural Statistics Service, which conducts the survey. ARMS is the
primary source of information about the financial condition, production
practices, use of resources, and economic well-being of America's
farmers. Data obtained from the ARMS survey are the foundation for the
body of research that has led to the recognition on the part of
decision-makers of the diversity of the farm sector and the
differential impact of alternative policies and programs across the
farm sector and among farm families. The reengineering activities
supported by this initiative will expand the capability of the ARMS
survey to achieve its desired outcome, improve the quality and content
of the survey's data and research outputs, and lay the groundwork for a
more efficient data collection process. In addition, larger sample
sizes will broaden the survey's ability to inform decision-making by
giving decision-makers a better understanding of the potential impacts
of national farm policy alternatives for individual States and for
different types of farms within those States.
Based substantially on ARMS data, ERS provides regular analysis of
the financial status of the farm sector and of farm households. In
addition to informing Federal and State and local policy-makers about
the viability of the farm sector and farm households, ERS income
estimates provide official input into U.S. economic estimates
disseminated by the Department of Commerce (DOC) and the Council of
Economic Advisors. Further, ERS has used the ARMS data to elevate the
debate over the viability of the farm sector from reliance on an
aggregate measure of net farm income to micro-level analysis of
business performance. Data from the Agricultural Resource Management
Survey were used to compare returns earned by farm businesses with the
returns earned by nonfarm businesses. Results show that the median rate
of return for nonfarm businesses exceeds farm businesses by
approximately three percentage points, but that large farms are four
percentage points higher than nonfarm proprietorships. This work also
showed that the net worth of households with nonfarm businesses largely
coincides with the net worth of all households with farm businesses. In
the case of large farm businesses, household wealth is greater than the
wealth of households with nonfarm businesses.
Goal 2: The food production system is safe and secure.
ERS focuses on improving the efficiency and effectiveness of public
food safety policies and programs by analyzing the benefits of safer
food and the costs of food safety policies; studying industry economic
incentives to adopt food safety innovations and provide safer foods;
and assessing consumer demand for safer foods and the roles of consumer
information, attitudes, and behaviors regarding food safety. This
research helps government officials design more efficient and cost-
effective approaches to promoting food safety. For example, ERS works
closely with various USDA agencies and the Centers for Disease Control
and Prevention (CDC) on risk assessment and pathogen reduction efforts,
including analyzing the benefits and costs of implementing the Hazard
Analysis and Critical Control Points (HACCP) rule. In early fiscal year
2002, ERS began to assess results of the first post-HAACP survey of
meat and poultry slaughter and processing plants, designed to
understand how HAACP has affected firms' costs and investments in food
safety control technologies. The survey was funded in part with support
from USDA's Food Safety and Inspection Service (FSIS).
The ERS research program provides widely cited quantitative
estimates of the benefits of safer food, such as reducing direct
medical costs and indirect costs associated with productivity losses
from foodborne illnesses caused by several major microbial pathogens.
ERS received increased funding for work under Goal 2 in fiscal year
1999 and fiscal year 2000. Using this funding ERS administered a
competitive process through which grants were awarded to major research
universities. The projects, for which results are expected in 2002, are
applying state-of-the-art valuation and survey methodologies to measure
consumers' willingness to pay for reductions in food safety risks from
microbial pathogens in foods. This information will be used to improve
understanding and quantitative estimates of societal benefits of food
safety programs and policies.
Understanding how food prices are determined is increasingly
important in responding to domestic and international market events and
opportunities that promote the security of the U.S. food supply. As the
farm share of the food dollar declines, accurate retail price forecasts
depend more heavily on understanding the marketing system beyond the
farmgate. ERS systematically examines the factors that help set retail
prices, including an assessment of the roles of the transportation,
processing, manufacturing, wholesaling and retailing sectors; the
impact of imports and exports; and linkages to the total economy.
Goal 3: The Nation's population is healthy and well-nourished.
ERS helps identify efficient and effective public policies that
promote consumers' access to a wide variety of high-quality foods at
affordable prices. ERS economists analyze factors affecting dietary
changes as well as trends in America's eating habits; assess impacts of
nutrition assessments and the implications for the individual, society,
and agriculture; and provide economic evaluations of food and nutrition
assistance programs. A Congressionally mandated study conducted by ERS
examined the effects of tiered meal reimbursement rates for family
child care homes participating in the Child and Adult Care Food Program
(CACFP). The study found that the family child care homes component of
the CACFP became substantially more targeted towards low-income
children, and that the number and nutritional quality of meals and
snacks in the homes with the lower reimbursement rates was maintained
after tiering was introduced. Congress also directed ERS to assess the
impacts of cost-containment practices that State WIC agencies often
implement to reduce the costs of providing WIC foods. In 2001, ERS
released Assessment of WIC Cost-Containment Practices: An Interim
Report to Congress, which presents results from the first year of the
study, including details on cost-containment practices, on the
selection of six States for case studies, and on planned data
collection efforts and subsequent analysis.
Analyses of nutrition education efforts consider what kinds of
information motivate changes in consumer behavior, the food costs of
healthy diets, the influence of food assistance programs on nutrition,
the effects of demographic shifts on dietary choices, and the
implications of food consumption patterns and dietary choices for the
structure of the food system. In 2001, ERS released the study,
Overweight Children: Is Parental Nutrition Knowledge a Factor?, which
found that greater parental nutrition knowledge is associated with
lower prevalence of overweight children. The finding is important
because health authorities consider obesity in children and adolescents
to be a vexing and difficult condition to treat, and understanding the
role of parental knowledge may be critical to success of weight control
efforts.
Through the Food Assistance and Nutrition Research Program (FANRP),
ERS will continue to conduct studies and evaluations of the Nation's
food assistance programs. FANRP research is designed to meet the
critical needs of USDA, Congress, program managers, policy officials,
USDA program clients, the research community, and the public at large
in relation to the design and effectiveness of food assistance
programs, diet quality, and nutrition education. FANRP research is
conducted through internal research at ERS and through a portfolio of
external research. Through partnerships with other agencies and
organizations, FANRP is enhancing national surveys by adding a food
assistance dimension. FANRP's long-term research themes are dietary and
nutritional outcomes, food program targeting and delivery, and program
dynamics and administration.
Goal 4: Agriculture and the Environment are in Harmony.
In this area, ERS research and analytical efforts in cooperation
with the Natural Resource Conservation Service (NRCS) support
development of Federal farm, conservation, environmental, and rural
policies and programs. Such efforts promote long-term sustainability
goals, improved agricultural competitiveness, and economic growth. This
effort requires analyses of the profitability and environmental impacts
of alternative production management systems in addition to the cost-
effectiveness and equity impacts of public sector conservation policies
and programs. ERS analysts focus on evaluating the benefits and costs
of alternative agricultural and environmental policies and programs in
order to assess the relationship between improvements in environmental
quality and increases in agricultural competitiveness.
In fiscal year 2001, ERS released a comprehensive study on
conservation and environmental policy in agriculture, Agri-
environmental Policy at the Crossroads, outlining the environmental
gains due to past policy and the issues and trade-offs that would arise
in designing a program for environmental payments in agriculture. This
report has served as an important reference for parties evaluating
conservation policies for the next Farm Bill. ERS is continuing to work
with NRCS to provide a combination of economic, farm structural, and
geographic information to inform ongoing decision-making about the
design of USDA conservation programs and Federal water quality
regulations pertaining to animal waste and non-point pollution.
In 2001, ERS published the report Confined Animal Production and
Manure Nutrients, comparing estimates of manure nutrient production by
large confined animal feeding operations against the capacity of nearby
cropland and pastureland to assimilate nutrients. The results indicate
that in areas where many animals are concentrated, traditional methods
of proper manure management may be particularly difficult and costly
because of inadequate amounts of nearby land for spreading manure at
agronomic rates. ERS is currently estimating the costs of meeting
proposed animal waste regulations through land management at the farm,
regional, and national levels. ERS research is also contributing to an
assessment of EPA regulatory proposals to implement the Total Maximum
Daily Load (TMDL) provisions of the Clean Water Act, which will cover
nonpoint source pollution from agriculture.
In its publication, US Organic Farming Emerges in the 1990s:
Adoption of Certified Systems, ERS has developed a new set of
statistical indicators to monitor organic farming, one of the fastest
growing segments of U.S. agriculture, as it responds to new regulatory
and other conditions.
ERS also is a research leader in developing integrated assessments
of the agriculture sector linking bio-physical and economic modeling to
simulate the economic effects of climate change and the economic
opportunities for climate change mitigation strategies in U.S.
agriculture. The agency research was an input in the Cabinet review of
climate change issues in Spring 2001.
invasive pests and diseases
The request for an increase of $2,000,000 is to initiate an ongoing
program of work to examine the economic issues of invasive pests and
diseases of crops and livestock within the context of increasingly
global agricultural markets. The results of this initiative will
provide information that can be used to help guide resource allocation
for efforts to exclude and control invasive species. A major portion of
this work will be to assess cost effective means of the public sector
in reducing economic risks to U.S. agriculture from invasive species
while preserving economic gains from trade and travel. Two research
components to address these issues include: the economic effects of
invasive species on crop and livestock production, commodity markets,
trade, and regional economies, and the benefits and costs of
alternative policies and programs to protect against the introduction
of and/or to eradicate those species.
Goal 5: Enhanced economic opportunity and quality of life for rural
Americans.
The ERS contribution to this goal is based on analysis that
identifies how investment, technology, employment opportunities and job
training, Federal policies, and demographic trends affect rural
America's capacity to prosper in the global marketplace. ERS economists
analyze rural financial markets and how the availability of credit
(particularly Federal credit) and public spending, taxes, and
regulations influence rural economic development. ERS analysts explore
changing population and migration patterns for small towns and local
areas and their implications for the growth and prosperity of local
communities, labor markets, industries, and families. With the release
of early results from the 2000 U.S. Census, for example, ERS is
studying the rapid growth of Hispanics in rural areas and their role in
affecting social and economic change in their local communities.
ERS studies the determinants and evolution of trends in rural
employment, earnings, education and skill levels, and the quality of
rural jobs. Efforts focus on ways to increase the adaptability of rural
workers to local and national economic change and assessments of rural
development strategies to facilitate this adaptability. An ERS report
published in October 2001, Displaced Workers, studies rural and urban
workers displaced by economic restructuring or technological advances,
and assesses whether Federal programs to assist and protect these
workers evenly serve residents of both rural and urban areas. In
addition, ERS is studying the effectiveness of education as a rural
development strategy, analyzing the relationships between education and
economic outcomes for the individual worker and the rural community.
ERS continues its long tradition of economic research on the
welfare of disadvantaged population groups in rural areas, including
low-income families, children, the elderly, and racial/ethnic groups,
and the Federal assistance programs that serve them. ERS leads a
national research effort to study the rural implications of welfare
reform. A series of papers published in the fall 2001 issue of the ERS
periodical, Rural America, helps inform the policy debate over
reauthorization of the Personal Responsibility and Work Opportunity Act
of 1996. Other studies are investigating the effects of the Earned
Income Tax Credit on the poverty, employment, and welfare status of
rural people.
ERS researchers are also examining Federal credit and tax policies
to assess their impact on farm families and the intergenerational
transfer of farm assets. Researchers are assessing the impacts of
structural and policy changes on the costs and availability of
electric, telecommunications, and financial services in rural America.
ERS research has highlighted the role that Federal tax policy plays in
farm profitability. Effects of Federal Tax Policy on Agriculture,
released in April 2001, analyzed the then-current Federal tax code,
determining how farming was affected by the full range of marginal
income tax rates, deductions, and credits. The report also considered
the effect that the social security tax, the estate and gift tax, and
various proposals to change farmer tax burdens might have on farming,
farmland values, and the structure of the agricultural sector.
ERS has developed and widely disseminated a new farm typology that
goes beyond the traditional classification of farms by sales class
alone to a grouping that is much more reflective of operators'
expectations from farming, stage in their life cycle, and dependence on
agriculture for household income. Continued applications of the
typology are bringing new understanding about the diversity of the U.S.
farm community, factors that can enhance success among small and
minority-owned farms, and the implications for the different types of
farms of alternative approaches to provide safety nets for farm
households and protect rural communities.
customers, partners, and stakeholders
The ultimate beneficiaries of ERS's program are the American people
whose well-being is improved by informed public and private
decisionmaking leading to more effective resource allocation. ERS
shapes its program and products principally to serve key decision
makers who routinely make or influence public policy and program
decisions. This clientele includes White House and USDA policy
officials and program administrators/managers; the U.S. Congress; other
Federal agencies and State and local government officials; and domestic
and international environmental, consumer, and other public
organizations, including farm and industry groups interested in public
policy issues.
ERS depends heavily on working relationships with other
organizations and individuals to accomplish its mission. Key partners
include: the National Agricultural Statistics Service for primary data
collection; universities for research collaboration; the media as
disseminators of ERS analyses; and other government agencies and
departments for data information and services.
closing remarks
I appreciate the support that this Committee has given ERS in the
past and look forward to continue working with you and your staff to
ensure that ERS makes the most effective and appropriate use of the
public resources.
______
Biographical Sketch of Susan E. Offutt
Susan E. Offutt became Administrator of the U.S. Department of
Agriculture's Economic Research Service on January 21, 1996. The
Economic Research Service is an agency that provides economic and other
social science information and analysis for public and private
decisions on agriculture, food, natural resources, and rural America.
Prior to becoming Administrator of ERS, Susan was the Executive
Director of the National Academy of Sciences Board on Agriculture,
which conducts studies on a range of topics in agricultural science.
Before taking over at the Board in January 1992, Susan was chief of the
agriculture, ranch at the Office of Management and Budget in the
Executive Office of the U.S. President. Susan served as assistant
professor from 1982 to 1987 at the University of Illinois, where she
taught econometrics and public policy in the agricultural economics
department. She is currently President-elect of the American
Agricultural Economics Association and an editor of the Review of
Agricultural Economics. Susan received a B.S. degree from Allegheny
College (1976) and a M.S. (1980) and Ph.D. (1982) from Cornell
University.
______
Prepared Statement of R. Ronald Bosecker, Administrator, National
Agricultural Statistics Service
Mr. Chairman and members of the Committee, I appreciate the
opportunity to submit a statement for this Committee's consideration in
support of the fiscal year 2003 budget request for the National
Agricultural Statistics Service (NASS). This Agency now conducts the
census of agriculture which was begun in 1840, and the agricultural
statistics program created in 1842. Both programs support the basic
mission of NASS to provide timely, accurate, and useful statistics in
service to U.S. agriculture.
As American farms and ranches have progressed to making greater use
of agricultural science and technology, the need for more detailed
information has increased. The periodic surveys and censuses conducted
by NASS contribute significantly to the overall information base for
policy makers, agricultural producers, handlers, processors,
wholesalers, retailers, and ultimately, consumers. Voids in relevant,
timely, accurate data contribute to wasteful inefficiencies throughout
the entire production and marketing system.
Official data collected by NASS are used for a variety of purposes.
Absence or shortage of these data may result in a segment of
agriculture having to operate with insufficient information; therefore,
NASS strives to continuously produce relevant and timely reports, while
at the same time reviewing priorities in order to consider emerging
data needs. Potential outbreaks of animal and plant diseases, like the
international outbreak of Foot-and-Mouth Disease (FMD), underscore the
importance of America's food safety and supply. NASS's small area
estimation program and the census of agriculture provide the foundation
of data necessary to minimize the damage that would result from the
spreading of potentially devastating diseases throughout the Nation.
These data quickly and easily identify areas for heightened monitoring
and in the worst case, aid in establishing logical boundaries for
containment of the disease. Additionally, other food safety and
environmental concerns have meant that vital data series are needed to
accurately measure the chemicals used by the food and fiber industry.
The globalization of agricultural commodity markets also increases the
demand for relevant, accurate, timely, and impartial statistical
information to assist those who sell U.S. agricultural commodities
worldwide.
The crop, livestock, and other related statistics are provided by
NASS throughout the year, in cooperation with each State Department of
Agriculture. This program, which began in 1917, has served the
agricultural industry well and is often cited by others as an excellent
model of successful State-Federal cooperation. The addition of the
census of agriculture has strengthened NASS's partnership with its
State cooperators. This joint State-Federal program helps meet State
and national data needs while minimizing overall costs by consolidating
both staff and resources, eliminating duplication of effort, and
reducing the reporting burden on the Nation's farm and ranch operators.
The success of this partnership was demonstrated when NASS, through its
State-Federal cooperation, completed the 1997 Census of Agriculture in
less time than previous censuses, increased the total response, and,
through the use of a toll-free number, responded better to questions
from farmers and ranchers completing the census questionnaires. NASS's
46 field offices, which cover all 50 States (New England States are
combined) and Puerto Rico, provide statistical information that serves
national, State, and local data needs.
NASS statistics contribute to providing fair markets where buyers
and sellers alike have access to the same official statistics. This
prevents markets from being unduly influenced by ``inside'' information
which might unfairly affect market prices for the gain of an individual
market participant. Empirical evidence indicates that an increase in
information improves the efficiency of commodity markets. Information
on the competitiveness of our Nation's agricultural industry will
become increasingly important as producers rely more on the world
market for their income.
Through new technology, the products produced in the United States
are changing rapidly as producers continue to become more efficient.
This also means that the agricultural statistics program must be
dynamic and able to respond to the demand for coverage of newly
emerging products and changing industries. For example, during 2001,
NASS issued the U.S. Hog Breeding Structure report. This new report
documented changes in the makeup of the breeding herd by size of
operation and the increasing efficiency of the breeding herds. NASS
also issued a new report titled U.S. Cattle Supplies and Disposition.
This report provided information on current cattle supply and
disposition numbers, and trends which have implications for future
cattle supplies.
Not only are NASS statistical reports important to assess the
current supply of and demand for agricultural commodities, but they are
also extremely valuable to producers, agribusinesses, farm
organizations, commodity groups, economists, public officials, and
others who use the data for decision making. Statistical data are used
in decisions affecting agricultural policy, foreign trade,
infrastructure, environmental programs, research, rural development,
and many other activities.
All reports issued by NASS's Agricultural Statistics Board are made
available to the public at previously announced release times to ensure
that everyone is given equal access to the information. NASS has been a
leader among Federal agencies in providing electronic access to
information. All of NASS's national statistical reports and data
products, including graphics, are available on the Internet, as well as
in printed form. Customers are able to electronically subscribe to NASS
reports by clicking on the appropriate release. A summary of NASS and
other USDA statistical data are produced annually in USDA's
Agricultural Statistics, available on the Internet through the NASS
Home Page, on CD-ROM disc, or in hard copy. All of NASS's 46 field
offices have Home Pages on the Internet, which provide access to
special statistical reports and information on current local commodity
conditions and production.
Beginning in fiscal year 1997, NASS received funding to conduct the
Census of Agriculture on a 5-year cycle. The transfer of the
responsibility for the census of agriculture to USDA streamlines
Federal agricultural data collection activities and has improved the
efficiency, timeliness, and quality of the census data. Data collection
for the 2002 Census of Agriculture will occur during fiscal year 2003.
Statistical research is conducted to improve methods and techniques
used in collecting and processing agricultural data. This research is
directed toward providing higher quality census and survey data with
less burden to respondents, producing more accurate and timely
statistics for data users, and increasing the efficiency of the entire
process. For example, NASS has been a leader in the research and
development of satellite imagery to improve agricultural statistics.
NASS recently provided the public a valuable new and detailed Cropland
Data Layer for six major crop producing States. The NASS statistical
research program strives to improve methods and techniques for
obtaining agricultural statistics with an acceptable level of accuracy.
The growing diversity and specialization of the Nation's farm
operations have greatly complicated procedures for producing accurate
agricultural statistics. Development of new sampling and survey
methodology; data collection using mail, face-to-face interviewing,
computer assisted telephoning, and recently Internet contacts; as well
as computer intensive processing technology enable NASS to keep pace
with an increasingly complex agricultural industry. Considerable new
research has been directed at improving the 2002 Census of Agriculture,
including the use of optical scanning and Intelligent Character
Recognition systems. NASS is also making advancements in Electronic
Data Reporting, with the goal of giving the Nation's farmers and
ranchers the opportunity to electronically respond to the 2007 Census
of Agriculture.
Major Activities of the National Agricultural Statistics Service
(NASS) The primary activity of NASS is to provide reliable data for
decision making based on unbiased surveys each year, and the census of
agriculture every 5 years, to meet the current data needs of the
agricultural industry. Farmers, ranchers, and agribusinesses
voluntarily respond to a series of nationwide surveys about crops,
livestock, prices, chemical use and other agricultural activities each
year. Periodic surveys are conducted during the growing season to
measure the impact weather, pests, and other factors have on crop
production. Many crop surveys are supplemented by actual field
observations in which various plant counts and measurements are made.
Administrative data from other State and USDA agencies, as well as data
on imports and exports, are thoroughly analyzed and utilized as
appropriate. NASS prepares estimates for over 120 crops and 45
livestock items which are published annually in over 400 separate
reports.
The census of agriculture provides national, State, and county data
for the United States on the agricultural economy every 5 years,
including: number of farms, land use, production expenses, farm product
values, value of land and buildings, farm size and characteristics of
farm operators, market value of agricultural production sold, acreage
of major crops, inventory of livestock and poultry, and farm irrigation
practices. The census of agriculture is the only source for this
information on a local level which is extremely important to the
agricultural community. Detailed information at the county level helps
agricultural organizations, suppliers, handlers, processors, and
wholesalers and retailers better plan their operations. Important
demographic information supplied by the census of agriculture also
provides a very valuable data base for developing public policy for
rural areas.
Approximately 60 percent of NASS's staff are located in the 46
field offices; 24 of these offices are collocated with State
Departments of Agriculture or land-grant universities. NASS's State
Statistical Offices issue approximately 9,000 different reports each
year and maintain Internet Home Pages to electronically provide their
State information to the public.
NASS has developed a broad environmental statistics program under
the Department's water quality and food safety programs. Until 1991,
there was a complete void in the availability of reliable pesticide
usage data. Therefore, in 1991 NASS cooperated with other USDA
agencies, the Environmental Protection Agency (EPA), and the Food and
Drug Administration, to implement comprehensive chemical usage surveys
that collect data on certain crops in selected States. EPA uses the
State and national level actual survey chemical data, rather than worst
case scenarios, in the quantitative usage analysis for a chemical
product's risk assessment. Beginning in fiscal year 1997, NASS also
began survey programs to acquire more information on Integrated Pest
Management (IPM), additional farm pesticide uses, and post-harvest
application of pesticides and other chemicals applied to commodities
after leaving the farm. These programs have resulted in significant new
chemical use data, which are important additions to the data base.
Surveys conducted in cooperation with the Economic Research Service
also collect detailed economic and farming practice information to
analyze the productivity and the profitability of different levels of
chemical use. American farms and ranches manage half the land mass in
the United States, underscoring the value of complete and accurate
statistics on chemical use and farming practices to effectively address
public concerns about the environmental effects of agricultural
production.
NASS conducts a number of special surveys as well as provides
consulting services for many USDA agencies and other Federal, State,
and private agencies or organizations on a cost-reimbursable basis.
Consulting services include assistance with survey methodology,
questionnaire and sample design, information resource management, and
statistical analysis. NASS has been very active in assisting USDA
agencies in programs that monitor nutrition, food safety, environmental
quality, and customer satisfaction. In cooperation with State
Departments of Agriculture, land-grant universities, and industry
groups, NASS conducted 157 special surveys in fiscal year 2001 covering
a wide range of issues such as farm injury, nursery and horticulture,
farm finance, fruits and nuts, vegetables, and cropping practices.
NASS provides technical assistance and training to improve
agricultural survey programs in other countries in cooperation with
other Government agencies on a cost-reimbursable basis. NASS's
international programs focus on developing and emerging market
countries in Asia, Africa, Central and South America, and Eastern
Europe. Accurate information is essential for the orderly marketing of
farm products. NASS works directly with countries by assisting in the
application of modern statistical methodology, including sample survey
techniques. This past year, NASS provided assistance to China, Ecuador,
Ethiopia, Honduras, Kazakhstan, Mexico, Nicaragua, Oman, Philippines,
Russia, South Africa, and Ukraine. In addition, NASS conducted training
programs in the U.S. for 180 visitors representing 19 countries. These
assistance and training activities promote better quality data and
improved access to data from other countries.
NASS annually seeks input on improvements and priorities from the
public through: displays at major commodity meetings, data user
meetings with representatives from agribusinesses and commodity groups,
special briefings for agricultural leaders during the release of major
reports, and through numerous individual contacts, especially those
made at the grass roots level through NASS's 46 field offices. As a
result of these activities, the Agency has made adjustments to its
agricultural statistics program, published reports, and electronic
access capabilities to better meet the statistical needs of customers
and stakeholders.
fiscal year 2003 plans
The fiscal year 2003 budget request is for $149,069,000. This is a
net increase of $35,283,000 from the fiscal year 2002 appropriation.
The fiscal year 2003 request includes increases for cyclical
activities associated with the Census of Agriculture program
($15,501,000); continued improvements to computer security to assure
the integrity of market sensitive data prior to official release
($700,000); a joint project with the Economic Research Service to
reengineer the Agricultural Resources Management Survey and
significantly strengthen the reliability of the data ($4,625,000);
improvement in the statistical integrity and standardization of the
data collection and processing activities of the Locality Based
Agricultural County Estimates/Small Area estimation program
($1,000,000); development of an infrastructure that integrates paper
and e-Government data dissemination and electronic data reporting
($3,000,000); and funding for increased pay costs, employee pension and
annuitant health benefits, GSA rental payment, and Federal Employees'
Compensation Act (FECA) program ($10,457,000).
A net increase of $16,941,000 and 117 staff-years for the census of
agriculture.
The Census of Agriculture budget request is for $42,291,000. This
includes a program and pay cost increase of $16,941,000 and 117 staff-
years for activities associated with the 2002 Census of Agriculture.
The funding increase is necessary for a number of significant data
collection activities occurring in fiscal year 2003. This is the fourth
and peak year in a five-year funding cycle for the 2002 Census.
Preparations include completion of the labeling and ZIP-code sorting
operations for roughly three million mail packages; mailing and follow-
up data collection activities; and processing and analysis of all
Census of Agriculture records. The Computer Assisted Telephone
Interview network and data validation systems to assist census
respondents who utilize the toll-free information telephone lines will
be brought online from a test environment. Training programs and
instructional guidelines will be communicated to the NASS State
offices, Puerto Rico and the outlying areas of Northern Marianas, U.S.
Virgin Islands, American Samoa, and Guam. NASS will also purchase and
install new equipment and implement the software needed to effectively
process, retrieve, and view scanned questionnaire images. NASS will
contract with the Commerce Department's National Processing Center for
functions not supported by NASS's infrastructure. This will serve to
minimize costs and provide faster, more efficient processing of the
large census work loads. Later in fiscal year 2003, the Agency will
devote resources to tabulating and disseminating data products in both
electronic and paper media.
An increase of $4,625,000 and 35 staff years are requested to fund
reengineering efforts for the Agricultural Resources Management Survey
(ARMS) program.
An increase of $4.625 million will support the NASS share of the
joint effort with the Economic Research Service to improve the ARMS
program, generating more dependable and statistically defensible
results and making results available through web-based dissemination.
This national survey of farms provides data and analysis to
characterize the economic conditions and rapidly changing structure of
the agriculture sector. As the principal source of data, ARMS makes it
possible to answer key questions about differential impacts of
alternative policies and programs across the farm sector.
An increase of $700,000 and one staff year are requested for
continued enhancements to the NASS computer security architecture and
systems.
Protection from cybersecurity threats is a top priority throughout
the information technology community. Computer security is of even more
critical importance to NASS because its mission of providing timely,
accurate, and useful statistical information on the agricultural
economy is based on confidential information collected from farmers,
ranchers, and agribusinesses. Billions of dollars in global commodity
trade depend on statistics that NASS must ensure are protected so that
the data are not obtained prematurely or modified in any way. In
addition, accelerated e-Government strategies promote the critical need
for advancements in the protection of reported information. In the
absence of new security measures, NASS's development of Internet-based
data collection procedures to reduce reporting burden on farmers and
ranchers, improve respondent ease-of-use, and boost survey
participation will substantially increase the Agency's exposure to
outside computer intrusions.
An increase of $1,000,000 and 7 staff years to develop an annual
integrated Locality Based Agricultural County Estimates/Small Area
estimation program.
Local area statistics are one of the most requested NASS data sets,
and are widely used by private industry, Federal, State and local
governments and universities. Data requests vary from a simple inquiry
for county acreage, yield, and production statistics, to the
comprehensive integrated data request for acreage, economic,
demographic, and environmental data relating to a single or multiple
county area, watershed, congressional district, or other special small
areas. With the merger of the Census of Agriculture and the current
statistics programs of NASS, there are new possibilities for combining
census demographic and economic data with traditional county estimates
data and environmental data sets. Thus, this initiative allows us to
explore alternate ways of combining the Census of Agriculture with
comprehensive annual county estimates data sets of the current
statistics program. This linking of data sets can be combined with
other environmental program data sets to produce comprehensive data
sets for a new Small Area Estimation Program. Funding of this
initiative also enables the addition of three major crop producing
States to the popular NASS Cropland Data Layer program.
An increase of $3,000,000 and 10 staff years for e-Government data
dissemination and electronic reporting.
This initiative will allow NASS to initiate actions and activities
to address the Government Paperwork Elimination Act (GPEA) mandate that
requires Federal agencies, by October 21, 2003, to allow individuals
the option to submit information or transact with NASS electronically.
NASS will begin building an infrastructure that integrates paper and
web instruments. This integration will promote standardization, data
handling efficiencies, and data security and provide 24 hour a day
access, improving convenience to respondents.
This concludes my statement, Mr. Chairman. Thank you for the
opportunity to submit this for the record.
______
Biographical Sketch of R. Ronald Bosecker
Raymond R. (Ron) Bosecker grew up on a small farm in southern
Illinois where he gained firsthand experience with hogs, cattle, corn,
soybeans, wheat, hay, and farm upkeep. He graduated from Southern
Illinois University (SIU) with a Bachelor of Science degree in
Agricultural Economics in 1966 and received Master of Science degrees
from Ohio State University in Agricultural Economics (1968) and
Statistics (1972).
Mr. Bosecker began his career with the National Agricultural
Statistics Service as a student trainee in the Illinois State
Statistical Office: Upon graduation from SIU, he moved to the Ohio
State Statistical Office, where he served as a commodity statistician.
In June 1972, Mr. Bosecker transferred to Washington, D.C. where he
served as a mathematical statistician in several units, including
Remote Sensing, Nonsampling Errors, Sampling Studies, Area Frame, and
Statistical Methodology. In 1981, Mr. Bosecker became the Deputy State
Statistician of the California State Statistical Office. In 1985, he
returned to headquarters as Chief of Methods Staff, Statistics
Division, and later became Chief of the Survey Sampling Branch,
Research Division.
In June 1992, he was appointed Director of the Research Division.
As Director of NASS research, he was responsible for the NASS remote
sensing program and the national area sampling frame, as well. as
developing new methodology for data collection, data analysis, and
presentation of data. In this role, he coordinated statistical research
with universities, other statistical agencies, and a wide variety of
data users inside and outside of USDA. He was reassigned in April 1999
as Acting Deputy Administrator for Field Operations. This position has
responsibility for 45 State Statistical Offices utilizing 60 percent of
NASS resources. He was selected as Administrator in December 1999.
He has participated internationally in the Business Survey Frames
Roundtable and provided agricultural statistics program assistance in
Tunisia, Haiti, Bolivia, and Argentina. He sits on the Statistics
Canada Advisory. Committee on Agricultural Statistics and is a member
of the U.S. Interagency Council on Statistical Methodology.
Senator Kohl. Thank you very much, Dr. Jen. And before we
commence our round of questions, I would ask Senator Burns if
he has any comments.
Senator Burns. No, Mr. Chairman, thank you.
U.S. CONTRIBUTION TO WORLD FOOD ASSISTANCE
Senator Kohl. Thank you very much. Secretary Penn, the
President's budget request for fiscal year 2003 includes a
welcome increase in the Public Law 480 Title II program, Food
for Peace. However, it does not continue surplus purchases of
commodities for donations per Section 416(b) in fiscal year
2003. As a result, despite the increase in appropriations for
food assistance, total donations are going to decrease.
Therefore, your budget is misleading if it is meant to imply
that the U.S. plans to maintain its role as a leader in world
food assistance. In fact, that role of leadership will be
diminishing.
While the Bush Administration gets high marks for the
successful deployment of food aid in the Afghan theater, which
may well have prevented a human crisis in that region during
this winter, there remains much to be done around the globe.
Africa remains among those Nations most in need of food
assistance, and even countries in our own hemisphere are not
immune to chronic hunger. Combating world hunger is a challenge
that needs a global response, and should not be tied primarily
to foreign policy objectives in a given region.
So, Dr. Penn, can you tell us the average value of U.S.
donations under 416(b) and Public Law 480 for humanitarian food
donations over the past 3 or 4 years, and how that average
compares to the total program level for food assistance in this
President's budget?
Dr. Penn. Well, thank you, Mr. Chairman. Let me just say
something initially about the international food system. These
programs have a long history. As you know, Public Law 480 was
enacted in 1954, and these programs have served a wide variety
of objectives over time. They have met humanitarian objectives,
foreign policy objectives, market development, support for our
farmers.
A whole host of objectives has been attempted with these
programs, and the number of programs has increased over time,
and the funding mechanisms have increased. So this
Administration upon taking office saw a food assistance effort
that I think could be characterized as being somewhat in
disarray, and it immediately formed a task force led by the
Office of Management and Budget and the National Security
Council, involving the Agency for International Development,
USDA, State Department, Treasury and others, all of the
agencies that have some role with these programs, to try to
sort out the food assistance efforts and to see if we could
reduce some of the duplication, if we could reduce the number
of programs, if we could streamline the assistance, with the
overall goal of trying to provide as much assistance as we
possibly can to those people around the world who are
malnourished.
With that objective in mind, all of the programs were
assessed and the decision was taken to shift most of the focus
to the Public Law 480 program and to reduce the focus on the
416(b) program. There is an increase in funding for Public Law
480 that is something on the order of $335 million for fiscal
year 2003, and there is a reduction in 416(b) from what it has
been in the past down to only $50 million for 2003.
The budget numbers, as you know, get a little complex
because of the supplemental. After September 11, there was $95
million made available for Afghanistan, which shows up in the
numbers, so comparing on that basis you are correct in assuming
there is an overall reduction. But nonetheless, we think that
with the program changes that have been implemented, we will be
able to feed almost the same number of people, if not the same
number of people, in the coming fiscal year as we did in the
past.
Senator Kohl. Dr. Penn, what has the removal of these
commodities from U.S. supplies over the past several years had
on our farm income? Would not a change in the Administration's
decision to stop purchasing surplus commodities have a positive
effect on farm prices?
Dr. Penn. I don't think there will be any change in farm
income. We are just shifting the funding source from purchasing
and donating commodities under Section 416(b); now the
commodities will be purchased and donated under Public Law 480,
Title II. So the benefits to the American farmer should be the
same, because we are purchasing the commodities from the
domestic marketplace and we should get the same price impact
regardless of the funding source within the budget.
Senator Kohl. All right. It is true that CCC stocks of
commodities reduced in recent years. However, some remain, such
as more than 800 million pounds of non-fat dry milk, which
could be used for donations. And beyond the totals of CCC-owned
commodities, there are still surplus stocks that continue to
have a depressing effect on farm prices and the rural economy.
Can you provide us with estimates of surplus commodities, CCC-
owned or otherwise, that could be used for donations for
humanitarian food assistance?
Dr. Penn. Yes, Mr. Chairman, I think I can shed some light
there. These international food assistance programs have been
very closely connected to the farm support programs over the
years. In fact as I said earlier, one of the main objectives of
these programs at times in the past has been surplus disposal,
which enabled us to provide for good use some of the excess
supplies we had of farm commodities.
At one time the domestic farm programs were structured such
that the Department of Agriculture actually took ownership of
various commodities. We were operating a price support program
such that if the market price didn't reach a certain level then
the farmers forfeited their commodities to USDA under the loan
program. So we had huge stockpiles of grain, oil seeds, milk
powder, sugar, other commodities. Well, beginning in the mid-
1980s, those programs started to be restructured and reformed,
and by the time we got to 1996, most of those kind of loans and
price support programs were gone. We now offer what's called a
marketing loan program.
And the result of that is that we give farmers payments of
the difference between the loan rate and the market price,
rather than actually take ownership of their commodities. So
the end result is that today, USDA rarely takes ownership of or
has in its own storehouses any surplus commodities.
You correctly mentioned nonfat milk powder, and I can
update your numbers a little bit. I was just told this morning
that we now have 950 million pounds of nonfat dry milk that is
owned by the Commodity Credit Corporation and is available for
utilization in some way.
The only other commodity that we have is sugar, and we have
a relatively small amount, something over 200,000 tons. We're
moving to put that back into the marketplace as soon as we
possibly can.
So today, when we are talking about programming
commodities, the way the program works is that rather than
going and physically taking stocks from USDA warehouses, the
Secretary of Agriculture determines that certain commodities
are in a surplus condition, and then we're able to go into the
marketplace and buy those commodities and make them available.
So in terms of commodities we own, we have a lot of nonfat dry
milk powder, and we would certainly like to program more of
that. We are looking for every possible opportunity to move
that product into the international feeding programs and to
move what little we can into the domestic feeding programs.
Senator Kohl. The question I asked was not just CCC-owned
surplus, but an estimate with respect to all surplus
commodities. I might ask, Mr. Collins, if you would wish to
make a comment.
Mr. Collins. I would only echo what Dr. Penn said, that it
is possible to come up with estimates of overall surpluses
irrespective of whether they are owned by the government or
not. In fact, we do that through an interagency process to
determine programs for Public Law 480 when we make commodities
available. When we make commodities available under Public Law
480, we can't make them available if they will shorten the
domestic market. So we do an analysis periodically to look at
the overall availability of commodities that we use under
Public Law 480.
Of course there are other commodities where we don't do
such analysis that you might argue would be surplus, like
cotton right now. But it would be possible to come up with some
rough estimate, but it is not easy, because there is no simple
definition of when something is in surplus and when it is not,
there is no off-on switch for that. It is judgmental about what
the effect would be on the domestic market.
Senator Kohl. I thank you. Dr. Penn, has the Administration
evaluated how other countries may respond to our cutback in
food donations? Is it not possible that without continuing
strong U.S. leadership, donations worldwide will also go down
and that the gains made in recent years to control world hunger
may be reversed? I am assuming that you do not dispute the
assumption that I am making, that the United States' level of
food donations worldwide under the President's budget is to go
down.
Dr. Penn. Mr. Chairman, there are levels and there are
numbers of people to be fed. Let me say about U.S. leadership,
I full well agree with you that the United States has been the
leader in providing food. In fact, we provide about half of all
the food aid provided in the world. And one of the key
questions in the interagency task force evaluation of the
foreign food assistance program was, what is the appropriate
share of total world food donations that the United States
should be making. Is it a third or is it half? And the question
is, how do we get other countries to step up to the plate and
to provide more of the food assistance that's needed? Even
though we are providing a large amount, even though it's half
of the total, it's still in some cases far short of what's
needed to improve the nutrition of all the people in need.
Our assessment is, Chairman Kohl, that we're not losing
leadership in being the greatest provider of food assistance,
that we still have the moral authority to say to other
countries that they should be doing more. And we think that, as
I said earlier, even though the amount in the budget may be a
little less because of the program changes and reductions, we
think we will be able to feed close to the same number of
people that we were feeding last year, even though the
resources are somewhat less.
CCC COMMODITY INVENTORIES
Senator Kohl. All right. Dr. Penn, in regard to the current
CCC surplus of nonfat dry milk, will you work hard to include
that supply in humanitarian food shipments this year?
Dr. Penn. We certainly will. And as I said, this is a
little bit of a sore point with us in that sugar and milk are
the only two surplus commodities that we hold. We have been
working the sugar surplus, the sugar stocks down from something
approaching 900 million tons to something on the order of a
couple hundred million tons, and we would like to do the same
with nonfat dry milk.
As I said, we have about 950 million pounds of nonfat dry
milk in storage. Let me just put that in perspective for you.
In the United States, in our entire market, we only use 750
million pounds in a year, so we have an ample amount of nonfat
dry milk. The problem is finding opportunities to put it in the
international feeding programs. When you provide the milk
powder, typically you need something to go with it. First of
all you need clean water and then usually you need some other
nutrient product to mix it with. There is a limited opportunity
for being able to do that, but I can assure you that at every
possible opportunity, we will be using nonfat dry milk.
Senator Kohl. I thank you very much. Senator Cochran.
TIMING OF NEW FARM BILL
Senator Cochran. Mr. Chairman, thank you. Dr. Penn, as you
know, we are in conference with the House of Representatives on
a new Farm Bill, and a question has arisen about how important
is it for us to complete action in a timely fashion in terms of
giving the Administration an opportunity to then implement the
provisions of the new Farm Bill, particularly as they may
relate to current crop year activities. So I ask you, what is
the date, if you can tell us, by which the new Farm Bill would
have to be completed or passed for the Department to implement
it for this crop year?
Dr. Penn. Well, Senator Cochran, I'm reluctant to give a
specific date, as you can well imagine, but you have raised a
very important consideration for us. This is a very complex
situation, in that today we're administering the last year of
the FAIR Act. So at the very moment that the House and Senate
are in conference on a new Farm Bill which might be applicable
to this year's crops, we're actually administering a farm bill
for this year.
Since the House completed action on its bill last October,
we started going through title by title, provision by
provision, to ascertain our workload requirements and what the
difficulty is going to be to implement that. We also looked at
the Senate bill, and now we're just eagerly awaiting the
results of the conference committee to see what the final
provisions will be.
But I can tell you that it can't be much longer, just as a
practical matter. As you well know, there are provisions in the
bills, for example, that might require an updating of the
acreage bases or an updating of program yields. We haven't done
that for many years. That's going to require the development of
new software, and it's going to require gathering a lot of new
information--a lot of information from farmers themselves--and
we're going to have to develop all of that.
And if the farmers are given an option of whether to update
or not, then we're going to have to provide them with what
their current situation is, we're going to have to show them
what the updating would be, and then we're going to have to
spend time with them in the county offices helping them decide
what would be in their best interest. The staff, especially the
people in the field offices, tell us it's going to take a long
time for the farmers to come in and sit down and work through
all this. We think that something on the order of 4 months
would be required to do that alone.
So, we can't wait very much longer as a practical matter
and do the first-class job we want to do in implementing the
Farm Bill for the 2002 crops.
Senator Cochran. I appreciate your understanding of the
pressure that has been building on the Congress to act quickly
so it would be possible for some farmers to have the benefits
of the new Farm Bill, but I think you have given us kind of a
dose of reality here that we need to take to heart.
The work that you are doing in analyzing the options in
advance is to be applauded. I appreciate knowing that. I think
we are encouraged that the Department is moving ahead to
prepare for whatever the likely eventualities are in connection
with the new Farm Bill, and I congratulate you for that.
FARM LOAN PROGRAMS
We are hearing from farmers in our State that some are
unable to obtain commitments from lending agencies and bankers
who are making loans for putting the crops in the ground this
year because of the outlook in terms of prices. Prices are so
low that many lenders are just not willing to make a loan
because farmers cannot show that they will earn a profit and be
able to repay the loan or break even.
In that connection, we have these loan programs that direct
loan and guaranteed loan programs, that are administered by the
Department of Agriculture. Have there been any new estimates
made as to what the demand is going to be for these loans, and
do we have enough in the budget request to cover the demand
that may be made on the Department from eligible farmers who
can prove that they cannot get financing and who might be
eligible for these government subsidized or guaranteed loans?
Do you think the budget can accommodate the new demand that
might be anticipated?
Dr. Penn. We've looked at that pretty carefully, Senator
Cochran, and as you correctly state, the demand for the direct
operating loans that are offered by the Department is stronger
this year than it has been in the past couple of years. That is
probably because of the continuation of relatively low prices.
We have assessed the resources that we have available, and we
believe that we have sufficient resources to meet the demand.
As you know, there is some flexibility in the complex of farm
loan programs such that as you move through the year, some of
the monies can be moved from one program to another program
depending on need. We think that by utilizing that flexibility,
we will have adequate resources for the year.
Senator Cochran. You mentioned in your statement that
opening new markets overseas and lowering trade barriers is
most important. And I agree with you that trade is critically
important for agriculture producers to prosper, and I
congratulate the Department for its aggressive effort in that
regard. In that connection, I am seriously concerned with the
actions of Russia with respect to poultry imports from the
United States. What is the Department doing to help solve this
problem?
Dr. Penn. Senator Cochran, I am as exasperated with this
situation as you are and I can tell you that we have mounted an
all-out effort to see if we can't get this Russian ban lifted
immediately. This is a very major market for U.S. poultry, as
you suggest. It's a market that is approaching $700 million
annually. About half of all of the U.S. poultry exports go to
the Russian market, and so we are very concerned about the
actions.
We think the actions of the Russians are arbitrary, we
think that there is no basis whatsoever in terms of science or
in terms of real concern about food safety, about the safety of
our production. And we're somewhat perplexed as to the
motivation, especially given that the Russians have indicated
they want to join the World Trade Organization, given that we
have a new improved relationship nationally with Russia. So we
are very perplexed as to why they are doing that, but I can
assure you that we are taking every action that we possibly
can.
The U.S. ambassador in Moscow has been regularly presenting
our case. We have a team of specialists from the USDA there now
trying to respond to any technical questions that the Russians
might have. Ambassador Zellick has been in contact with his
counterpart expressing our strong displeasure in this action.
Secretary Veneman yesterday spoke to the Russian ambassador
here and expressed our dismay in the strongest possible terms,
and has scheduled a telephone conversation with the Russian
minister of agriculture, who is also a deputy prime minister,
to do the same thing. We are trying to keep this at a very high
level and not let it get bogged down in technical talks which
can drag out over a long period of time, because we don't think
there is any merit in the claims that the Russians have made.
So, I think we are doing everything that we possibly can at
this point to apply all of the pressure that would be needed to
get this resolved quickly.
Senator Cochran. I appreciate your explanation and I think
you are on the right track. I hope we can succeed in our
efforts to reverse their decision, because it is putting a
large segment of our economy in jeopardy and it is very
serious.
I saw in the newspaper this morning a report that symptoms
in some farm animals in Kansas have been noted that are similar
to foot-and-mouth disease symptoms. Is this something the
Department is aware of, and are we doing anything to
investigate this and use money that may be available to the
Department for the animal health research programs and efforts
to combat animal-borne diseases or threats to our country?
Dr. Penn. Senator, let me make a general comment about the
incident you mentioned, and then I would defer to my colleague,
Dr. Jen, about the research aspect.
Yes, we're very much aware of that. This country has been
most fortunate in that we have not had an outbreak of foot-and-
mouth disease in many years, since the late 1920s, I think, and
we have had no outbreak of BSE or any of the other major
livestock diseases that have occurred in other parts of the
world.
We have systems in place of course, to try to avoid ever
getting outbreaks. We have strengthened all of those. The
experience of last year with foot-and-mouth disease in Europe,
with the BSE outbreak in Europe, has made us all the more aware
that we need to do more. And Secretary Veneman has been very
diligent in making sure that all of our agencies have
reexamined the situation and are doing our dead level best at
monitoring and surveillance.
We did check out the incident that was reported in Kansas
City; it caused quite a bit of turmoil in the livestock market
yesterday. It was a false alarm and we're very pleased about
that, but we are constantly monitoring these situations.
Anytime there is any discussion about the possibility of an
infected animal, it is immediately tested, and we're doing
everything that is humanly possible to try to protect the
integrity of the food system. This is extremely important to
the economy.
TERRORISM RESPONSE FUNDING
Senator Cochran. Before Dr. Jen proceeds to comment on the
research aspect, when the Secretary was here, we asked the
question about whether there had been a final decision made
about how to use the money that has been appropriated in the
emergency supplemental in response to the terrorism attacks and
other homeland security needs. And the response was that they
would get back to us, that they had not really completed a
review of all the agencies input that they had gotten
Department-wide on this subject. Has this now been completed,
or do you know how much is going to be allocated for research
and other activities?
Dr. Penn. I do know that after the Secretary's appearance
here, that she and Deputy Secretary Moseley began discussing
this. I don't know what the disposition of that is, but I'm
almost certain that the allocations have been made. I just
can't tell you what they are.
Senator Cochran. Thank you. Dr. Jen?
Dr. Jen. Thank you, Senator. I will also confirm what Under
Secretary Penn said, regarding the Kansas City incident
yesterday, we have--the preliminary results. A sample went to
Plum Island Research and Diagnostic Lab for testing. The
preliminary test was negative. We have to do confirmatory
testing, which is underway.
Chances are it's going to be negative as well. This is a
routine type of testing that we have been doing for years,
since 1929, and we have had a number of false alarms throughout
the years, so we are not doing anything extraordinary at this
time.
In terms of the research side of it, we are doing two kinds
of research to try to eliminate these kinds of animal diseases,
invasive diseases and things like that. One is rapid detection,
developing a much quicker way of detecting the results rather
than having to wait for incubation of 3 to 4 days. We are doing
that using a DNA type of technology.
The second part is to try to find ways of prevention. This
is also oriented towards genomics, investigating whether or not
there are ways either through vaccine inoculations of animals
or by changing the genomic makeup of the animals, so they can
never catch foot-and-mouth disease.
Senator Cochran. One suggestion that I heard just this last
week from a veterinary medicine school dean from Mississippi
State University was an idea that we need to be more aggressive
not just in the United States but around the world, and have
programs that would involve scientists who actually go to other
countries and help deal with problems that are developing there
that could end up in the United States and threaten the health
of our animal population or be in the nature of food-borne
illnesses that we could more effectively stop at the point of
origin. What is your reaction to that?
Dr. Jen. You are absolutely correct. In fact, when the
United Kingdom had the breakout of disease, USDA had quite a
number of scientists in the UK, on the one hand trying to help
them deal with the disease breakout, but on the other hand,
actually learning a lot on how to deal with such breakouts. So
things like that are going on at all times.
Senator Cochran. Thank you very much, Mr. Chairman.
Senator Kohl. Thank you, Senator Cochran. Senator Murray.
Senator Murray. Thank you very much, Mr. Chairman, and
thank you to all the witnesses. Dr. Penn, let me start with
you. You and Secretary Veneman have made trade an important
part of this Administration's farm policy. I appreciate that,
and I have been a big proponent of increasing funding for the
Market Access Program because I think it is really a critical
tool that helps our farmers, our businesses, and our
cooperatives. I wanted to comment that I hope that the
Administration in the negotiations with the Farm Bill really
helps us with some active support in raising the amount to $200
million as quickly as possible, hopefully in 2003.
Dr. Penn. We are very supportive of that.
NAP PAYMENTS
Senator Murray. Mr. Secretary, my State's farmers are
hurting. I know that is common to many agricultural States, but
this has been a very difficult time for us. I was pleased to
hear Mr. Collins talk about the improving employment numbers,
but I have to tell you, in my State we have, over 8 percent
unemployment. We have the second highest level in the Nation
behind Oregon, and our agricultural industry has been hurting
for some time. We have especially been hit by drought and
several storms, and a lot of my farmers are calling me to find
out when they can expect assistance under the non-insured
assistance program. Mr. Secretary, can you tell me when those
NAP funds are going to get to our farmers?
Dr. Penn. It's my understanding, Senator, that all of the
rules and regulations have been promulgated now and that the
checks should start being issued very shortly, if they haven't
been already.
Senator Murray. The checks are in the mail.
Dr. Penn. I didn't say that, you notice, but I thought it.
That is my understanding, and Mr. Jim Little, who is the
Administrator of the Farm Service Agency, is in the audience.
Senator Murray. He is listening to you say they are in the
mail.
Dr. Penn. Yes, he is, and I hope he's nodding. I can't see
him back there.
Senator Murray. We do want to encourage you to get those
moving, and we do need those checks.
Dr. Penn. We are working very hard on that.
FARM SERVICE AGENCY STAFFING LEVELS
Senator Murray. I want to ask you about the Farm Service
Agency's staffing levels. In your testimony you said the
President's budget supports a ceiling of about 5,800 Federal
staff years and 11,250 non-Federal staff years within the Farm
Service Agency. Washington State's allocation in that budget is
134 full-time employees and 22 to 24 temporary employees. That
frankly doesn't feel like a very fair allocation to us in
Washington State. Our counties are very large geographically.
No offense to the midwest or east coast, but we tend to draw
our counties bigger in Washington State and in the west. That
means that our county offices have to cover a very large area.
On top of that, we jumped right into consolidation of a lot
of our county offices, so many of our offices are now covering
an extremely large geographic area.
And in addition to that, Washington State, by a lot of
standards, is the third most diverse agricultural State in the
entire country. So that means that these employees who cover a
very large area have to cover very different crops as well, and
we are very short handed.
Could you help me look into this and see if there are some
changes that we can make so we can better reflect the actual
workload of those folks that are in some of these difficult and
challenging areas?
Dr. Penn. I will certainly do that. And let me just comment
generally that we are in a little bit of a crunch here, as you
can appreciate. The overall thrust has been to reduce the staff
in the Farm Service Agency going back for 10 years or more.
That agency has reduced the number of permanent people from
something over 22,000 down to the present 17,057 in about 10
years. The idea was that we can provide the same service or
even better service to our farmer customers by doing it
smarter, by consolidating where that makes sense, by adopting
new technologies, certainly computerizing wherever we can.
We've done that, and I think that most people who look at the
overall performance of the Farm Service Agency over the years
think that it's a real success story, that it has done more
with less.
And then I would point out that in the last 4 years, the
workload of that agency has increased tremendously with the
supplemental assistance that has been provided by the Congress.
In 1998, 1999, 2000, and again last year, there were
supplemental assistance packages on the order of $5.5 to $7.5
billion. A lot of those had new programs, like for apples and
other nontraditional crops, which required the development of
software and gathering of information, which brought about a
substantial increase in workload.
Now I'm not here crying, but I am just pointing out that we
are trying to do a lot more with a declining resource base. We
have a lot of new initiatives underway, especially in adopting
new technology and developing service centers, working with our
colleagues in Rural Development and the Natural Resources
Conservation Service. We are trying to use common data bases
where we can, and a common computing environment where we can.
Senator Murray. Well, some of our people don't even have
those computers.
Dr. Penn. I understand. We're----
Senator Murray. I just think the system is unfair at this
point and we are asking many of our folks to serve much more
diverse areas, to help out more folks, and that is not working
out for any of us.
Dr. Penn. We will look into that. The allocation among
States is a very key question. We were on the House side
yesterday, and Mr. Little had the same request from another
State, so we are really trying to juggle, but we will look into
it.
Senator Murray. I would like to work with you.
Dr. Penn. We will try to make as fair an allocation as we
possibly can to get the job done, because as I said in my
opening statement, FSA is the front line with respect to our
interaction with farmers, and we want to make that as positive
as we possibly can.
CONSERVATION RESERVE ENHANCEMENT PROGRAM
Senator Murray. Very good.
Well, I saved my best question for last, and I want to
address this to you, Secretary Penn, as well as to Mr. Rey. I
want to raise an issue that is really of absolute critical
importance in the State of Washington, to the future of our
farmers, and also salmon restoration efforts.
In 1998, the U.S. Department of Agriculture and the
Washington State Conservation Commission signed an agreement to
administer the Conservation Reserve Enhancement Program in
Washington State, which is really my State's primary tool for
getting certainty under the Endangered Species Act to our
farmers and ranchers.
Unfortunately, the USDA is taking the position now that
CREP funds cannot be used on lands that are subject to State
land use laws and local ordinances. That decision has had
serious and dramatic impacts in my home State, and is
particularly troublesome and problematic because it came as a
complete surprise, to our Federal, State and local officials,
as well as our farm community.
Mr. Secretary, I'm not going to go into the details of
salmon recovery in Washington State. You know, I think, and so
does Mr. Rey, the tremendous difficulties we have negotiating
on natural resource issues. They are very difficult and
contentious.
If USDA's position stands, it is going to kill years of
work and progress, and I simply want to ask both of you today
for your commitment to work with me and other Members of
Congress, the State of Washington and all of our constituents,
to resolve this problem. Can I just get both of your commitment
to work with me on this issue?
Dr. Penn. Well, you certainly have my commitment. I'm not
familiar with all of the details, I do know a bit about the
CREP, but you have my commitment, we will work with you.
Senator Murray. The problem is that CREP is now saying
funds cannot be used on lands subject to State land use laws
and local ordinances, and that is going to kill this program.
Dr. Penn. I understand that. We will work with you.
Senator Murray. Mr. Rey.
Mr. Rey. This is the first time I have heard of it, but
working together, we can resolve this difference.
Senator Murray. I would like both of you to work with me
and others to solve this problem. Thank you.
Senator Kohl. Senator Burns.
AGRICULTURAL MARKETING
Senator Burns. You didn't even notice me over here, did
you, I was so quiet.
With all the talk about rural development, if you just give
us $5.00 grain, 75-cent cotton, you guys could go away, we
would not need much out there.
I want to just go down a couple lines of what I am
thinking, and it probably has nothing to do here, but I can
tell you where we have some real problems. Number one, we need
more staff. Senator Murray hit it right on the head. You think
they are computerized, so give us more computers. They don't
give them out in Montana, and so we have a real shortage this
way.
But I have to ask, does the Department of Agriculture ever
look into these marketing things on how we market our
commodities off of these farms? Right now we have a situation
in the cattle business where you have tighter areas of
concentration and if you look at the sheep business, it's
worse. When you have one company, one firm that controls over
65 percent of the kill and 65 percent of the imports that come
into this country, do we ever take a look at those folks and
see how we could do it better? Because it seems to me the
problem, there ain't nothing wrong on the farm except the
price.
And I don't see anybody in this Department of Agriculture
yet taking a look at marketing structures, both in grain--and
we spent a lot of time in the new Farm Bill trying to reach a
deal with packer concentration, but we have not looked at the
grain marketing structure in this country for a long long time.
And I'm just to wit's end on how we can increase income,
because that is our problem. All other problems go away.
And I know I have some questions for you about these kinds
of problems but I am not going to go into those today, because
those are sort of parochial and we want to get to the end where
the Chairman wants to go, and to take a look at appropriations
as well. But I am telling you, we have to focus on different
things down there other than just building a bureaucracy that
sometimes, and I know their dedication, but by gosh, I will
tell you one thing, delivering is something else. But I think
we have to start looking at how we market these commodities and
the income coming back to the farm.
And it is just one of those things, but I cannot see, I do
not see the Department of Agriculture going up to Justice
saying, we have a situation out here that is pretty antitrust.
I called this guy, I called a guy down there in Colorado and
said I have a thousand lambs, what is the market on fat lambs
today, and he said they would weigh 120 pounds. He told me what
the price was. I said, I will ship them on Monday morning. He
said well, I ain't buying them. He is the only buyer there.
That is our problem, and we are not looking into those kind
of situations in the Department of Agriculture. And it does not
make any difference what administration it is, it does not make
any difference. But that is where we are getting hammered,
folks, and I will pass the plate after this sermon, but I have
a few questions and I will direct them to you directly. Thank
you, Mr. Chairman.
Senator Kohl. Thank you very much, Senator Burns. Senator
Dorgan.
Senator Dorgan. Mr. Chairman, I agree with Senator Burns,
but let me ask some questions about some specific issues. The
points he raised are very important points. In every direction
the family farmer looks, there is a monopoly. If they want to
move their grain to markets, you face one or two railroads.
They tell you what the price is and if you do not like it,
tough luck. When you sell it, you sell it to a grain trader,
who is selling it into a highly concentrated market. In every
direction they are facing near monopoly, and Senator Burns is
right about that, and we have to do something about that.
First of all, let me say there are some encouraging things
in this budget, the priorities like WIC, the Food Stamps, food
safety, food inspection, I think there are some encouraging
things that have been recommended and I appreciate that.
Let me ask about the areas where I think we also needed to
do better. One, the Rural Telephone Bank program, I think has
been a very important tool for rural America, and the
Administration has eliminated that for the second year, I
believe, in the budget. Can you tell us what the basis is for
recommending the elimination of that program?
Mr. Neruda. Senator, I think I can take that question.
There is a strong belief that the bank should be privatized and
starting back in 1996, an effort was started to do that, and
this is just a continuation of that process, supported by our
board of directors on the bank board, and we think this is the
way to go with this program.
Senator Dorgan. You think the investment is necessary for
rural America, you just think it ought not be a public
investment, it ought to be a private investment?
Mr. Neruda. Right, on this particular program, yes, sir.
Senator Dorgan. Well, we have disagreement about that, as
you know. I don't believe Congress agrees with you, and I
certainly do not.
Let me ask a couple questions about the $53 million cut of
Congressionally-dedicated projects from the ARS account. Of
particular concern to me are the cuts for the National Wheat
and Barley Scab Initiative and the National Sclerotinia
Initiative, which is of great importance to sunflowers and
other commodities. We have had very substantial success with
these investments. In North Dakota, for example, our farmers
have lost financially about $2.6 billion to scab disease, and
the investment that we have made in this research has been very
productive, I might say. Can you tell me your vision for this
sort of thing? I understand you might have just zeroed it off
because the Congress said it wanted it, but you do not think it
is unworthy to have this kind of investment in scab research,
do you?
Dr. Jen. Senator, I will try to answer that question. I
think there are so many research programs USDA is carrying out.
The Administration, I think for years, has favored a
competitive grant program over specific projects. But from the
program point of view and my Agency's point of view, I think
all the programs, all the research, is worthwhile. We just
don't have enough money to do it.
Specific to your point, those programs that you are talking
about are absolutely worthwhile doing. It's just in the budget
process, the Administration had to choose some. I want to also
say that some of them are covered in the request for increase
in National Research Initiative so these programs can be done
on a competitive basis and probably done even better.
Senator Dorgan. Well, is there a basis for suggesting that
something can be done better with respect to scab research? In
other words, are you suggesting that what has been done has not
been done in the most effective way?
Dr. Jen. No, sir. I think what has been done has been done
very very well. It's just that it is the Administration's
belief that if a research program is open to all the research
community to compete, we can have the best minds of the country
to work on those programs.
Senator Dorgan. As you know with respect to scab research,
we had a consortium throughout the country that was doing work
on that, and they had great great success, and it pains me to
see a recommendation of reduced funding for that. Is this just
a lower priority and cannot be fully funded with the amount of
money that is available?
Dr. Jen. No, sir, I didn't say that. I didn't say it was a
low priority. I believe that many of these researchers will
submit proposals through our competitive program and carry it
out. The group of people that you talked about, came to see me
some time ago, and we realized the importance of the research
project. I think there will be some way that those will be
carried out.
Lastly, I would want to say on my Agency's behalf that I
think the other four agencies doing the research within the
mission area have always very diligently carried out whatever
the final budget provisions that the Congress has appropriated
are, and we will do so again.
Senator Dorgan. But, let me just pursue that a bit more,
because the Congress, we say here is the way we would like to
do this, and by all accounts it has been highly effective, and
I am now talking about the consortium dealing with scab
research, but by all accounts it has been effective. And what
you are saying is let us reduce funding, even though you are
not suggesting that what has been done is ineffective?
I thought I heard you suggest the reason that you threw out
the ear marks $53 million for plant science research at ARS is
that we did not have enough money.
Dr. Jen. That is not what I said either. I said we didn't
have enough money to do all the research and we are being put
in a situation to really make choices supporting the many
different programs that we have.
Senator Dorgan. Well, if we do not continue the scab
research at a robust level, and others that we have had
underway with a consortium of many universities, that have
yielded enormous successes, including the seed variety called
Alsen, how will it be done another way, or will we just
discontinue that research? I think I heard you say it will
somehow be done in some other way. How will that happen?
Dr. Jen. Well, one of the ways that it can possibly happen
is the researchers that are doing it will submit proposals in
the competitive grant programs, and they will receive fundings
through that process to continue the research.
Senator Dorgan. Although I appreciate the answer, I would
observe that I think that when you have something that works
quite well, something that the Congress, Republicans and
Democrats from a number of States have said let us invest in
this, and the result of that investment has been quite
extraordinary, I do not think it is wise to not fully support
the program. That is something that the Congress will decide
upon, but let me ask one additional question.
INTERNATIONAL FOOD ASSISTANCE
The budget request with respect to the annual purchases of
$500 to $700 million in commodities under the CCC and Food for
Progress programs, the budget asks for an increase in Food for
Peace programs of $350 million. This increase of course comes
at the expense of some other things, one of which I just
discussed. I think international food aid is very important,
and I think the $350 million is significant and important. But
the commodities that were made available previously under the
CCC and the Food for Progress program are also important, and I
wonder if you can tell me the rationale for ending the annual
purchase of the commodities under those two programs. The PBO
stated, this claim will actually bring down the U.S. provision
from 5 million tons to no more than 3.5 million tons, and I
wonder if you could just give me your evaluation of that.
Dr. Penn. Senator, I explained a little earlier the
rationale that went into the evaluation of the whole foreign
food systems sector. As you note, the decisions were taken to
modify the overall effort somewhat, to try to reduce the number
of programs that are utilized to distribute funding among the
various sources and to shift responsibilities between USDA and
USAID.
I don't think there's any change in the commodity mix that
has been programmed under the food assistance programs, I think
that is going to continue to be the same. It in large part
depends on the dietary habits of the receiving countries and
the kind of foods that they want and can utilize. So I don't
think there is any change in the commodity distribution at this
stage at all.
Senator Dorgan. I understand Senator Kohl asked you a
similar question. I was at another committee and missed that,
so let me submit a question for you.
Dr. Penn. We will be happy to respond.
Senator Dorgan. Mr. Chairman, that is all I have.
Senator Kohl. Thank you, Senator Dorgan. Senator Stevens.
Senator Stevens. Thank you, Mr. Chairman.
Secretary Neruda, in most areas of America that you all are
familiar with, the cost per kilowatt hour is about 8 to 9
cents. In Alaska, our rural communities pay as much as 45 cents
per kilowatt hour, 500 percent above what the rest of the
country pays. To improve energy efficiency for rural power
generation, the Senate at my request added $30 million to the
Rural Development Administration's budget. And I was little
alarmed to hear that the General Counsel's office indicated
there may be a problem because of a legal technicality, even
though the funds were used in the previous years under the same
authorization.
When I became Solicitor General Counsel at Interior, the
General Counsel of Defense then, Mr. Decreet, told me the story
of President Roosevelt. During World War II, he got a
resolution from Congress forbidding the United States from
giving or selling military supplies to our allies to get around
it he developed the lend-lease concept. The Secretary of the
Navy told him that his general counsel indicated the lend lease
program technically violated the resolution, and he was not
sure he had the authority to proceed. Mr. Deckert told me that
the President told the Secretary of the Navy to go back to the
Department, go through his legal department, and as soon as he
found a lawyer that understood the problem and said that the
technicality did not exist, he was the new General Counsel.
I hope that does not have to happen to your general
counsel. Can you tell me what that status is of this
appropriation? Will you release the funds? The construction
needs to be started, and if that money is not released almost
immediately, it will not be available for this summer in
construction season in Alaska.
Mr. Neruda. Senator, I certainly appreciate the concern
regarding Alaskan kilowatt hour cost, and I also understand
that technicality issues when we work with our general counsel,
having worked on a number of issues recently on technicalities.
But I am pleased to report that our Office of General Counsel
has worked out the problems on that issue and I have directed
our budget office to transfer those.
Senator Stevens. That is good news. He may have his job for
a little while.
Mr. Neruda. As will I.
Senator Stevens. In the broadband grant program, again, I
requested the Senate to increase funds for a public facilities
program for areas of extremely high unemployment. This was the
first time authorization to use a portion of those funds to
deploy high-speed Internet. Most people do not know, many
places in my State do not even have roads. You work with people
who sit on dirt roads, and we work with people without any
roads. And we work with people who do not even have dial up
access, let alone high speed access.
I know your people are working diligently on the
regulations for that program, but again, the regulations and
the process are holding up the distribution of that money. Can
you tell us when those rules might be finalized so that money
could be released to carry out that program?
Mr. Neruda. Yes, sir, Senator. Because of some language
changes from last year when we divided up many issues trying to
get that money out, we have been able to effectuate that change
so that it can now go to a State agency, and that will allow
this to proceed. And if I could work with your staff to
continue with this process, I think we can come to a good
conclusion on that.
Senator Stevens. Dr. Penn, we authorized a program of
salmon crop insurance and as you know, the salmon industry is
in a period of real deep crisis. As a matter of fact, I do not
think most people realize, but very soon if we are not careful,
Americans will be buying only Chilean salmon, Chinese
whitefish, and all our fishermen and boats will be stranded on
the shore because we just cannot meet the costs of their
production.
Those imports also are coming in from Norway. The salmon
insurance program is critical to allow our people to come
through periods of shortage of the natural supply as farmers
face. The farm insurance program has worked very well for
farmers. I do not know any reason why it will not work for
salmon fishermen. When they have a crisis periodically of loss
of supply caused by natural causes, predators in the sea, or
whatever it might be, then they really have to start over
again, and they cannot compete with foreign producers if they
have to absorb the cost of such natural losses which would be
borne in the farm community by the insurance program. I hope
that you are going to be able to get that program running.
Could you give us a report on it?
Dr. Penn. Yes, sir, I can. The Risk Management Agency staff
and the staff at the University of Alaska-Fairbanks have
explored this problem to some considerable degree, I
understand--the problem of trying to develop an actuarially
sound insurance program for wild salmon. And the staff, I know,
have been in contact with your staff, keeping them apprised of
the problems. Unfortunately, the inherent nature of wild salmon
just doesn't lend itself very well to an insurance program, and
I don't think we are going to be able to develop an insurance
program that we can offer in an actuarially sound manner the
way that we have actuarially sound programs for crops and other
livestock.
However, in the course of doing this evaluation, we did
discover some of the problems that your industry faces, and I
think we have identified some possible marketing opportunities
that we could develop with you. We do have some money remaining
in that project, I am told, so we would be more than happy to
try to work out some way to utilize those funds to explore some
of the problems that have been identified and see if we can
help with boosting prices and help the overall problem with the
industry.
Senator Stevens. I am sad to hear that. I am reminded of
the time I went to the Commodity Exchange in Chicago to talk
about the problem of not having futures in fish, and they
reported back it was not possible. They now have futures in
foreign imports of fish, but they do not have any futures on
fresh fish. I really think that the ingenuity of your
Department and of our economic system ought to be able to face
up to that. Should we face the problem that because of the
futures and the financing and the disasters, that the fresh
food market will go away, and we will be entirely dependent
upon frozen farm-raised fish?
I think your people have a duty in that to help us find
some solutions for this industry. And it is not just Alaska, it
is New England, California, the Gulf. Half of the people in my
State that have any income derive a substantial portion of that
income from fishing and we face the grave possibility of seeing
by the end of this decade, the fishing industry disappear from
North America.
Now if it does, very frankly, your Department is going to
bear the responsibility, in my opinion, because you have always
just ignored fish as being a food. It is fresh fish that we
should market--I am going to try to get the Secretary to help
us call a national conference on fish. We ought to absorb the
fresh food market of the world using the best fish in the
world, and that is naturally harvested fish.
Believe me, New England is dead, the Gulf is ready to die,
Alaska is hanging around just by a thread, except for one
fishery, the natural pollock. The pollock is healthy and will
continue to be brought into our markets. But again, that is a
tough one.
But as I say that, let me also add that we now have a
surplus of canned pink salmon because of the enormous influx of
fish from Chile. And I apologize for taking too long, Mr.
Chairman, but this is very serious to me. Just as an aside, I
hope you notice that the imports from Chile, 43 percent of the
yearly imports came in during the time when the fresh salmon
hit the market last summer. Now if that is not dumping, I do
not know what is. And not one of your people noticed that at
all, not one.
And we now have an overhang on the market for this year of
the canned, pink salmon that is already there. You are
purchasing some of it for the school lunch program, but what
about this international feeding program? Could we buy some of
that salmon to ship out in the international feeding program?
If it stays, the price of pinks will be so low that that market
will collapse this year also.
So I would urge you, I am not asking for your commitment, I
would urge you to consider adding the surplus canned pink
salmon to the international feeding program if at all possible.
By the way, it is primarily in the State of Washington and
Alaska that are suffering jointly on that one.
Secretary Rey, I have a problem also in your area. What is
the status of the efforts to get the OMB to release the money
for the fire program? Mr. Chairman, Senator Cochran, understand
this. South central Alaska, running about 245 miles from Homer
to Wasilla, have suffered bark beetle kill. We tried under the
last Administration to get authority to cut down those trees or
at least treat them and were not able to do that. About 60
percent of that forest in the area is owned by the Federal
Government.
We are told this will be one of the worst drought years in
history. If a fire starts in that area with the northerly wind
that comes up that spit, up the inlet, we will see the possible
destruction of the entire south central Alaska, and that is
really a very serious thing. I have tried to get us prepared
for it, but somehow no one seems to understand the urgency. Can
you tell me, Mr. Rey, if there is any chance at all of getting
that money released?
Mr. Rey. We are in the middle of discussions now with OMB
and with your staff, and with the House Appropriations
Committee staff, and I believe within the next couple days we
will reach a conclusion on the release of at least a
significant portion of that money.
Senator Stevens. We have lost 35,000 acres already from a
fire last year that we were lucky that it was stopped. It was
stopped because it was on State land and the State moved in
immediately with the help of the Forest Service, I might add,
and we appreciate that, and they stopped that fire after it had
destroyed 35,000 acres. We are talking about what, 2.5 million
acres, 60 percent of it on Federal land.
Mr. Rey. Right. It's on both the Chugach National Forest
and the Kenai Wildlife Refuge. And one of the challenges that
we face is that the magnitude of the infestation and die-back,
as well as the limited markets available for the quality of the
product that would result, makes it very difficult to do
anything economic. We have focused a lot of attention in trying
to reduce fuel hazard risks in the areas of wildland along the
East Side Road going up from Homer.
Senator Stevens. I know they are concentrating on wildlife,
but I would point out to you, 50 percent of the population of
Alaska stands in the path of that fire.
Mr. Rey. That's right.
Senator Stevens. And what helped stop that fire last year
was a sudden rain. The good Lord helped us. If that starts and
it funnels up that inlet, it will be a barren wasteland. I have
never seen an area like this, and I do not understand that
people will not let us go in and selectively cut at least fire
breaks in there. Do you know there is not a fire break in the
way of that fire? Not one.
Mr. Rey. I have been to the area and I have seen that. My
fire review sheets indicate that situation truly exists.
Senator Stevens. Take a look. Again, I belabored this
somewhat, Mr. Chairman, and I thank you for the time. Thank
you, gentlemen. I would urge you to help us. We have the
highest rate of unemployment--no, I guess we are not the
highest now, very interestingly, because so many people left
last year. They are not on our rolls anymore, they are down in
California or somewhere where you can live on unemployment
compensation, because you cannot live in Alaska on unemployment
compensation. Thank you very much, Mr. Chairman.
Senator Kohl. Thank you very much, Senator Stevens.
DAIRY OPTIONS PILOT PROGRAM
Dr. Penn, Dr. Collins, the Dairy Options Pilot Program is
about to expire. This affects dairy farmers in my State as well
as other States, who need a reliable risk management tool to
avoid the financial problems associated with widespread
distress pertaining to production and price.
Gentlemen, could you describe your thoughts on how well the
program has functioned, if it should be extended, expanded, or
if it should be modified?
Dr. Penn. Mr. Chairman, let me respond initially and then
Dr. Collins can respond as well. In the point of view of the
Risk Management Agency, the dairy options pilot program has
generated a considerable amount of interest, it has brought
attention to the fact that the dairy industry can really use
risk management tools, and we think in that regard, in helping
producers manage their risks, that it has been a fair success.
The use of that program has grown enormously from the first
round in 1999, when it was available in 38 counties in 7
States, and there were a relatively small number of options
that were involved. In the last round, I'm told it is now in
275 counties in 39 States, a large number of producers have
been trained in the use of these options and a large number are
now using these options.
We plan to do a formal evaluation of the program after this
year, but based on the anecdotal evidence and the limited
observations that we have, the program is working as intended,
the program seems to be working well, and I would surmise that
it will probably be extended to be made into a permanent
program available to a much larger area, because I think it is
one of the few that has shown real promise.
Senator Kohl. Thank you very much. Mr. Collins.
Mr. Collins. I agree with Dr. Penn that it would be helpful
if dairy producers had more risk management tools available to
them. Traditionally, about 85 percent or 90 percent of all the
milk in the United States is marketed through cooperatives and
the producers have not really been interested in price risk
very often. In general, there haven't been many tools
available, but one of the things that the dairy options program
has done is helped increase the volume of contracts in dairy
products, and so I think that has helped producers. It gives
them an opportunity to use options markets even apart from the
DOP program itself.
I think the other thing is, the DOP program over its life,
which is I guess now 3 or 4 years old, has trained something on
the order of 5,000 or 6,000 dairy producers on the use of
options markets. We have about 200,000 dairy producers in the
Nation, so that's not a huge percentage, but it's beginning to
penetrate that industry. And of course, when one producer gets
trained, they talk to other producers, they are leaders in
their community, and by word of mouth, that's affecting other
producers beyond the 5,000 or 6,000 that have been trained. So
I think I would look at the Dairy Options Pilot program as an
educational benefit, and I'm awaiting this analysis that Dr.
Penn's folks are doing, to see if they come up with more than
that, but it strikes me as primarily an educational program and
I view that as probably worth continuing at some scale.
I would point out that there have been other developments
in the sector for mitigating price and revenue risks. For
example, the Federal Crop Insurance Corporation has approved
two pilot programs for revenue and price risk coverage for
hogs. These are pilots, the first time there has been any
insurance using price for hog producers, and it's not
unthinkable that somewhere down the road, someone will be
suggesting that the Federal Crop Insurance Corporation include
some products for milk or dairy products, so I think that we're
taking steps in that direction even apart from the Dairy
Options Pilot Program.
Senator Kohl. Thank you very much, Mr. Collins. Senator
Cochran, do you have anything further?
ADDITIONAL COMMITTEE QUESTIONS
Senator Cochran. Mr. Chairman, I do have some more
questions, but I will submit them for the record. I thank the
panel. They were very helpful to us this morning in addressing
and discussing some of the concerns that we have, I appreciate
their response to the questions that we have and hopefully they
can provide answers in an expeditious way.
Senator Kohl. Thank you, Senator Cochran.
I do have one or two more questions I will submit for the
record.
I have also been asked by Senator Byrd to submit three
questions for the record on his behalf. One is on current
drought conditions, one is on the elimination of flood
prevention operations funding, and the third is in regard to
rural community water supply in Berkley County, West Virginia.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Herb Kohl
international humanitarian food assistance
Question. Secretary Penn, as I stated in the March 14, 2002 hearing
with you the United States is a leader in the area of international
humanitarian food assistance. In recent years, your authorities under
416(b) have been used to supplement food donations provided through the
Public Law 480 programs. While I commended you on the increase in the
Public Law 480 Title II program, this budget does not continue surplus
purchases of commodities for donations through section 416(b) in fiscal
year 2003.
I am sure you have seen some concerns issued in various media
reports regarding the proposed decrease in food aid as a result of this
budget and the possible impact to farmers and this country's long
efforts to reduce hunger in the world. In the hearing, you made a
reference that the assistance will almost be the same amount.
Additionally, you stated that the United States contributes
approximately 50 percent of all world aid and the Administration was
looking to other Nations to increase their participation.
What is the Administration's belief regarding this country's proper
share and I assume from your comments it will be under the 50 percent
mark you had mentioned previously and can you tell us the historical
value (last 10 years) of U.S. donations under 416(b) and Public Law 480
in comparison with the combined total in the President's request for
this budget.
Answer. In recent years, the United States share of global food
donations has increased to over 60 percent, which is up from about 40
percent in 1995 (based on estimates from the Food Aid Convention).
Although we do not have a specific target for the appropriate share of
U.S. food aid, it is clear that other countries should be encouraged to
increase their commitment toward meeting global food needs.
[Regarding the historical value of United States donations, the
information follows:]
FOOD AID PROGRAMMING--COMMODITY COSTS--FISCAL YEAR 1992-2003
[In dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Public Law 480 Public Law 480 Public Law 480 Food for
Fiscal year title I \1\ title II title III Section 416(b) Progress \2\ Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
1992.................................................... 374,240.6 482,254.2 239,995.1 308,107.4 126,805.8 1,531,403.1
1993.................................................... 332,800.0 509,149.5 231,736.0 364,944.2 923,432.1 2,362,061.8
1994.................................................... 217,800.0 578,411.0 174,994.9 90,483.2 113,228.8 1,174,917.9
1995.................................................... 171,703.1 457,687.5 82,552.0 7,487.0 172,970.1 892,399.7
1996.................................................... 218,985.9 503,606.9 39,273.9 .............. 107,682.9 869,549.6
1997.................................................... 152,708.6 413,090.5 28,101.2 .............. 79,064.2 672,964.5
1998.................................................... 164,399.3 474,556.2 21,335.2 .............. 126,713.3 787,004.0
1999.................................................... 420,367.2 496,336.1 13,698.8 869,030.1 306,859.6 2,106,291.8
2000.................................................... 156,751.9 470,526.9 .............. 501,503.1 150,990.1 1,279,771.9
2001.................................................... 105,200.0 438,675.0 .............. 629,989.6 107,110.8 1,280,975.4
2002 \3\................................................ 108,400.0 500,574.8 .............. 303,346.0 109,257.9 1,021,578.7
2003 \4\................................................ 106,676.0 555,000.0 .............. 49,600.0 25,000.0 736,276.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Public Law 480 Title I column includes concessional sales portion of Title I, and not Title I-funded Food for Progress.
\2\ Food for Progress column includes Title I-funded and CCC-funded Food for Progress.
\3\ Fiscal Year 2002 values represent estimates as of 4/10/02. Fiscal year 2002 Title II includes the commodity cost portion of carry-over ($94.1
million) and supplemental funding ($95 million) enacted in response to the September attacks.
\4\ Fiscal year 2003 values are estimates submitted with fiscal year 2003 President's Budget Section 416(b) estimate is for non-fat dry milk (from CCC
inventory).
Question. Does the Administration support the Global Food for
Education program and do you intend to carry it out in fiscal year 2002
and 2003?
Answer. In fiscal year 2002, USDA is continuing to implement the
Global Food for Education Initiative (GFEI) pilot program. We did not
include funds in the Administration's fiscal year 2003 budget request
pending the results of an evaluation of the GFEI pilot. A decision on
whether to continue GFEI will depend to a considerable extent on the
findings of the evaluation.
Question. Will you please provide this Committee a copy of the
Administration's multi-agency review of food aid programs including who
participated, the specific policy decisions that resulted from that
review, and the rationale for those decisions?
Answer. The review was conducted jointly by the U.S. Department of
Agriculture, U.S. Agency for International Development, Department of
State, Department of Treasury, National Security Council, Office of
Management and Budget, and Office of the U.S. Trade Representative.
[A summary of the conclusions of the food aid review follows:]
bush administration food aid review summary of conclusions
Background
Many conditions affecting overseas food aid have changed since the
last Executive Branch, review of U.S. food aid programs in the 1970s.
The Bush Administration first described the need for a review of food
aid programs in the President's Blueprint for New Beginnings in
February 2001. It expanded on this need and the plan for a review in
the President's Management Agenda in August 2001.
From August to December 2001, the Administration held a series of
meetings to review U.S. foreign food aid programs. All relevant U.S.
Government agencies and offices participated in the review, including
the U.S. Department of Agriculture (USDA), U.S. Agency for
International Development (USAID), Department of State, Department of
Treasury, Office of Management and Budget, and Office of the U.S. Trade
Representative. Staff of the National Security Council chaired the
review. Although not directly part of the review, non-governmental
organizations informed the work of U.S. government agencies and offices
by initiating informal meetings during the period of the review.
The purpose of the review was to examine existing food aid programs
with the objective of improving reliability, efficiency, and
management. This paper summarizes the results of the food aid review.
Objectives of Food Aid
The food aid review concluded that the broad objective of U.S. food
aid is to use the agricultural abundance of the United States to meet
the U.S. government's humanitarian and foreign policy objectives
related to the achievement of global food security. The United States
will use food aid in a manner that enhances global agricultural trade
and provides an appropriate U.S. contribution toward global food needs.
Since the review determined that the primary function of food aid is to
improve food security, U.S. food assistance programs should
increasingly target the most food insecure populations. Food
distribution is important in both emergencies and development programs
for addressing the hunger of the people most in need of food. The
Administration supports increased direct distribution and continues to
support development programs.
Background to Program Adjustments
In 1998, faced with a sharp decline in commodity prices, USDA
sought to support American farmers and feed hungry people in dire need
by using its authority through Section 416(b) to dispose of surplus
food procured by the Commodity Credit Corporation (CCC) under the
Charter Act. This food was provided to the World Food Program (WFP),
private voluntary organizations (PVOs), and foreign governments to
distribute to needy people and to monetize. The increased use of the
CCC Charter Act resulted in a significant increase in the amount of
U.S. Government food aid and development programs beginning in 1999.
While this produced benefits, it also led to unintended distortions,
including those described in the President's Management Agenda.
Specific Program Adjustments Resulting from the Review
The Administration's food aid reform will shift most U.S. food
donations from 416(b) to Public Law 480 Title II, and pursue a range of
complementary initiatives. More specifically, the Administration plans
to undertake the following measures:
End most use of 416(b).--The Administration will not use the CCC
and 416(b) mandatory authority for humanitarian or development
programs. The authority to use 416(b), however, will remain unchanged
(i.e., the Administration will not request that the authority be
eliminated). The small, traditional 416(b) programs administered by
USDA, based on actual CCC inventories, will continue.
Increase requests for Title II.--The Administration has requested a
$335 million increase in appropriated Title II food (which is used for
humanitarian and development purposes) in light of ending the use of
416(b) for such objectives.
Undertake a careful transition.--The Administration views fiscal
year 2002 as a transition year for the shift from 416(b) to Title II.
It is expected that up to $400 million of food aid will be provided in
fiscal year 2002 using 416(b) authority.
Increase reliance on the Emerson Trust.--For future cases in which
there is an increased need for emergency food aid, the Administration
will use the Bill Emerson Trust. The Administration percent will review
the procedures for use of the Trust to ensure its flexibility and
responsiveness, and request that Congress make any required legislative
changes.
Focus official food aid.--The Administration will fund Food for
Progress government-to-government food aid through its Title I
authority, and allow Title III to remain inactive. USDA will continue
to refine the operation of Food for Progress.
No legislative changes are required to implement any of these
measures.
Impact of Adjustments
These program adjustments are expected to have many beneficial
effects.
--Greater focus on direct feeding of needy people.--During the 1990s,
a large percentage of 416(b) funding was monetized by recipient
governments and PVOs. The food was sold to traders to sell to
people, almost always below the cost to the U.S. government of
procuring and shipping the commodities. This resulted in total
development assistance being less than the cash expended by the
U.S. government on the food. The new shift away from 416(b) to
Title II will increase the amount of food under Title II that
is available for emergencies and can be used for direct feeding
of hungry people. The Administration also plans to increase
development assistance to make up for part of the decrease in
development programs from monetized food aid. Based on these
shifts, U.S. food aid will focus more on direct distribution to
needy people, and U.S. development funding on development
programs (avoiding the loss through monetization). To help
ensure that the direct distribution reaches the most needy
recipients, U.S. agencies will consult with other major
bilateral donors and the relevant multilateral organizations.
--Increased food aid reliability.--Funding levels for 416(b) depended
on the changing estimates of crop surpluses, while levels for
Title II are pre-determined by Congress. Shifting from 416(b)
to Title II allows the government and aid agencies to know how
much food aid will be available, making it easier to plan
programs.
--Improved flexibility.--The use of the Bill Emerson Trust
(especially with improved procedures, if required) and the
continued existence of 416(b) authority provide the means to
respond to either greater emergency food needs or large U.S.
surpluses.
--Better agency specialization.--USAID will administer most PVO and
WFP programs as a result of the shift from 416(b) (which USDA
administers) to Title II (which USAID administers). USDA will
administer all government-to-government programs as a result of
the Administration funding Food for Progress programs through
Title I (administered by USDA) instead of Title III
(administered by USAID). This consolidation will allow each
agency to specialize and reduce the need to have duplicative
capabilities. The Administration will continue to refine this
specialization and collaboration in order to utilize the
expertise of both agencies.
--Increased budget clarity.--Funding for 416(b) is not subject to the
Federal budget appropriations process (i.e., it is a
``mandatory'' program), but levels for Title 17 are
appropriated annually by Congress (i.e., it is a
``discretionary'' program). Shifting from 416(b) to Title II
increases transparency in the budget management process,
allowing Administration officials and lawmakers to better
maintain priorities and performance. Using the Emerson Trust
for unforeseen emergencies also increases accountability
because the Trust must be replenished by appropriations each
year it is used.
--Ensured appropriate use of 416(b).--The sudden, sharp threat to
farm income in 1998 that precipitated the use of the CCC and
416(b), before Congress began to provide direct supplementary
income assistance for farmers, is no longer present. The
current mandatory funding and purchase of wheat, the main
donation crop, is harder to justify as the conditions that led
to the original purchases have changed. CCC will not be used as
a regular program to purchase commodities for 416(b) to
``dispose'' overseas, and 416(b) authority will be used to
donate the smaller amounts of commodities in CCC inventory.
Next Steps
Over the next several months, the Administration will work with
Congress on appropriations and any legislative implications of the
current reform proposals. To complement the current reforms outlined
above, the Administration is examining several other initiatives.
Streamline cargo preference funding.--The Administration will
propose legislation to eliminate reimbursements by the Maritime
Administration to other agencies for part of cargo preference costs.
This will end time-consuming intra-governmental transfers.
Expand Section 202(e) authority.--The Administration will propose
legislation to allow USAID to make administrative payments for WFP
previously made through the State Department's International
Organizations and Programs account. This will eliminate duplication,
and encourage more accountability in WFP finances.
Over the next year the Administration will continue to refine its
reforms, and to review existing programs, legislation and procedures in
order to improve the effectiveness and efficiency of U.S. food aid.
Question. In the hearing you mentioned an increased number of non-
fat dry milk that was more than the 800 million pounds reported
earlier. Additionally, I was delighted for your positive remarks of
your efforts to reduce this surplus. What are your short and long-term
plans to bring this large surplus down?
Answer. In terms of our international food aid programs for fiscal
year 2002, Section 416(b) planned programming approved as of April 10,
2002, includes funding for approximately 6,800 metric tons of non-fat
dry milk exports. In addition, a USDA proposal is pending and approval
is expected in the near future, which would provide funding for another
43,600 metric tons of non-fat dry milk exports under Section 416(b). In
fiscal year 2003, it is projected that non-fat dry milk from Commodity
Credit Corporation (CCC) inventory will continue to be available for
programming under Section 416(b) authority. The exact volume to be
programmed in fiscal year 2003 will depend on commodity availability
and viable proposals for donations.
In addition to Section 416(b), approximately 6,500 metric tons of
non-fat dry milk will be donated under the fiscal year 2002 Food for
Progress program.
Question. What is the reaction of this cut from foreign
governments, particularly from ones of the greatest need?
Answer. In fiscal year 2001, the World Food Program (WFP) was the
largest recipient of Section 416(b), receiving about half of the total.
During the recent annual bilateral meeting between the WFP and the
United States, the WFP stated that in their view the overall change in
U.S. food aid policy, especially the end of Section 416(b), will reduce
the number of the hungry WFP will be able to feed from 83 million in
2001 to 53 million in 2003.
barriers to u.s. agricultural exports
Question. Secretary Penn, when Secretary Veneman appeared before
this subcommittee last month, we discussed the problems with trade
barriers China intends to enforce regarding agricultural commodities
produced through biotechnology. Since then, a reprieve has been granted
which is allowing, for the moment, U.S. shipments to continue. However,
that remedy is only temporary. Now, we hear from the Russians that U.S.
poultry shipments are being banned for reasons including food safety.
Can you give us an update on these two specific problems regarding
United States access to major foreign markets?
Answer. As part of the interim implementation process for China's
new biotechnology regulations process, all of the technology companies
with commercial biotech products in the United States have intentions
to apply for a safety certificate for these products. Monsanto has made
their application for Roundup Ready Soybeans, the only biotech soybean
variety commercially produced in the United States. This application
has now been accepted by China's Ministry of Agriculture (MOA). Also,
part of the interim process involves the ability of companies to apply
for an interim safety certificate from MOA in China. In order to apply
for the interim safety certificate, a company needs to: (1) show that
an application has been made for a ``permanent'' safety certificate and
(2) the application for the interim safety certificate has to be
accompanied by an official document from the exporting country--or a
third country--that the product has completed the regulation review
process in that country. USDA/GIPSA has issued such a document for
biotech soybeans, corn, canola, and cotton commercially produced in the
United States. Although the implementation of the interim process is
currently very fluid, it appears that MOA is now beginning to accept
applications for the interim safety certificates. The interim measure
will expire on December 20, 2002. The situation will need to be
continually monitored.
With respect to the Russian ban on U.S. poultry, we believe the ban
was an inappropriate response to the concerns that Russia has
expressed, and the issue continues to draw the attention of President
Bush, Secretary Veneman, and other senior U.S. officials. The reasons
given for the ban, including unquantified findings of salmonella
bacteria and irregularities in selected export certificates, had not
been previously raised with the United States. Throughout our extensive
discussions with Russia, we have been provided no evidence of any
health threat to United States or Russian consumers. Nevertheless,
because the Russian market is important to U.S. poultry producers and
because USDA takes health and safety issues very seriously, we will
continue negotiations on a formal protocol to reassure the Russian
government and Russian consumers of the safety of our poultry.
Question. How can we continue to tell our farmers that trade
liberalization is the answer to problems of farm income when it seems
that for every trade barrier we knock down, two take its place?
Answer. Trade is crucial to the health and prosperity of U.S.
farmers and ranchers as about 25 percent of farm production is exported
each year. Over the past decade, we have made great strides to lower
trade barriers and reduce subsidized competition for U.S. agricultural
exports. During the current World Trade Organization (WTO) agriculture
negotiations, we will continue the reform process by improving market
access opportunities for U.S. products and reducing high subsidies that
distort international markets. In addition, we will continue to pursue
bilateral and regional free trade agreements that are in the interest
of the United States. We will also work bilaterally with countries to
resolve any trade problems.
Finally, it appears true that as more markets are opened, more
trade problems arise. As we open markets, we must expect problems to
arise and be prepared to address them. We should not, however, shy away
from working to open markets because it might trigger some problems on
a small portion of the trade opportunities that are generated.
Question. In regard to trade barriers, some commodities are
significantly affected and others are not. Today, the pressure seems to
be on poultry products, soybeans and corn. Tomorrow it may be fresh
fruits and vegetables.
Would you comment on whether or not you feel that trade barriers,
as they exist now and in the foreseeable future, do pick winners and
losers among U.S. producers and if they do, what steps can USDA or the
Congress do to equal the playing field here at home?
Answer. Countries that erect trade barriers are usually protecting
a domestic interest. Because the United States has a highly productive
and efficient agricultural sector and is the world's largest trading
partner, it appears that countries are purposefully targeting U.S.
products. USDA will continue to work to address these trade barriers
against U.S. products for the overall benefit of U.S. agriculture.
rural housing and farm credit shift from direct to guaranteed lending
Question. The Department's fiscal year 2003 budget reflects a shift
from direct to guaranteed lending in the housing and farm loans. These
programs also experience some of the largest backlogs in your mission
areas, including in my home State of Wisconsin. I understand some of
this is attributed to questionable increases in loan subsidies. In the
real world outside the beltway, the program levels have gone down. When
you devised the budget and allocated the resources, you were aware of
the impact to these vital programs that serve less affluent borrowers,
including proportionally larger numbers of minorities including women.
In your testimony, the Bush Administration indicates that you have
provided increased budget authority for these programs to support the
notion that is not a cut.
Is the Department concerned about the diminishing resources to
assist these constituents, who have limited resources, and represent a
higher percentage of minorities than the population served by the
guaranteed programs and if so, how do you propose to address these
unmet needs?
Answer. We are concerned about our ability to assist minority and
beginning farmers with farm credit. However, it is the increasing
program costs and resulting increase in budget resources, not the
reduction of resources, that is at issue. The 2003 budget will actually
use approximately $56 million more in budget outlays for the direct
operating and ownership loan programs. Unfortunately, because of
increasing costs, the available program levels actually decline
slightly even though the budget authority would increase. We do not
believe that the increases in loan subsidy rates are questionable. The
cost estimates are based upon valid accounting data and the same
economic assumptions that support the rest of the President's Budget.
The primary basis for the rates increasing is that the Agency is making
aggressive use of loan servicing provisions. These provisions alter the
cash flow stream and result in higher program costs.
Guaranteed loans are a more cost-effective method of assistance. By
maximizing the use of guaranteed loans, the limited amounts of direct
loan funds are available to applicants who truly have nowhere else to
turn. We have been successful in increasing the use of guaranteed loans
to reach minority and beginning farmers. So far in fiscal year 2002,
guaranteed operating and ownership assistance to beginning farmers has
increased 21 and 35 percent, respectively over last year. Guaranteed
assistance to minority farmers has increased by 30 percent over last
year. We believe that the approach set forth in the President's budget
makes the best use of the available resources.
The Administration remains dedicated to providing affordable
housing assistance to rural Americans. By leveraging our direct Section
502 funding with outside sources such as affordable housing grants, and
our sweat equity (Self-Help) program, we expect to continue helping the
neediest applicants, which include minorities and women.
Although the Section 502 housing direct loan program level for 2003
is less than 2002, the Administration requested additional budget
authority to keep the direct loan program level at nearly 90 percent of
last year's level. The Administration remains committed to serving the
neediest constituents at a time when difficult budget choices must be
made.
Question. These programs, the guaranteed and direct, were designed
by Congress to compliment one another, not replace. Is it your belief
that these guaranteed programs will serve these constituents that have
been historically served by the direct programs?
Answer. The farm loan guaranteed program cannot replace the direct
program, and as previously stated, the budget devotes an additional $56
million in budgetary resources to keep the direct program levels fairly
close to the 2002 levels. It is critical to use guaranteed loans to the
maximum extent possible to preserve direct funds for applicants who
have no alternative to direct financing.
We do not believe that the guarantee Rural Rental Housing program
will serve the same population that has historically been served by the
direct program. However, we do believe that the guaranteed and direct
Single Family Housing programs complement one another. The guaranteed
program serves primarily moderate income rural families, while the
direct program focuses on serving low and very-low income applicants.
Guaranteed loans are made by lenders at market interest rates and
involve no interest subsidy, while direct loans are made by the Agency,
and the interest rate for a given loan can be subsidized at a level
that is based on a borrower's income. While approximately 30 percent of
all guaranteed loans made do go to low-income borrowers, the program
was generally designed to serve a moderate income clientele. The
guaranteed and direct programs each serve a unique niche for rural
homebuyers.
Question. What steps will the Department take to effectively
address under served individuals and communities with reduced and
oversubscribed resources, and wouldn't your outreach efforts breed
additional frustrations from within these target populations?
Answer. The proposed budget levels for farm loans will meet most or
all of the loan demand, both direct and guaranteed, from targeted
groups. In the past, the Agency has faced challenges in fully utilizing
targeted funds, and the increased utilization this year is the result
of successful outreach efforts. It can be frustrating for those who
apply for and must wait for funds, but it is certainly more frustrating
for someone who wants to start farming or buy a farm and does not know
there is a program that can help, even if they do have to wait for
funds.
Each year our Rural Development State offices determine which areas
and populations are underserved and most needy and focus outreach
efforts on those areas. We do not believe that these efforts create
frustrations in our borrowers. Several of our programs have eligibility
requirements and other statutory and regulatory provisions to ensure
that they serve those most in need of assistance. Our outreach efforts
complement that purpose. There are set-asides for some communities,
such as Empowerment Zones and Enterprise Communities, and tribal
colleges, which further ensure that those funds go to the poorest rural
communities.
Question. What populations and geographic areas are you targeting
for assistance?
Answer. Funds are targeted to Empowerment Zones, Enterprise
Communities, Rural Economic Area Partnerships; tribal colleges; and
communities with extreme unemployment and severe economic depression.
Funds will also be available through the Rural Community Development
Initiative to develop the capacity and ability of private, nonprofit,
community-based housing and community development organizations serving
low-income rural communities to undertake projects to improve housing,
community facilities, and community and economic development projects
in rural areas.
Single Family Housing direct loan programs are targeted in rural
areas to serve very-low, low, and moderate income families. We
specifically target underserved counties and Colonias, Empowerment
Zones and Enterprise Communities, Rural Economic Area Partnership
communities and Indian Country. Five percent of our funds are set-aside
for the ``100 Underserved Areas and Colonias''. These are counties with
high rates of poverty and substandard housing that have not received a
proportionate share of funding over the previous 5 years.
Question. Dr. Penn, your testimony is filled with information
targeting socially disadvantaged, limited resource and beginning
farmers. Then I read you will reduce the direct farm ownership by $47
million to $100 million. So what you are saying is the need is great
and outreach efforts are important but we will not provide the proper
resources to do the job?
Answer. It is unfortunate that there will be a reduction in the
direct farm ownership program level in spite of an additional $7.7
million in budget authority in this program. However, every budget
decision is a difficult choice, and we remain convinced that the
proposed budget makes the most effective use of limited resources. The
increase in direct farm ownership budget authority is greater than the
total budget authority for guaranteed ownership. Although direct loans
are essential for those that need them, many farmers need loan
guarantees to stay in or start in business, and diverting most or all
of those resources to the direct loan programs would only reduce the
total number of people that FSA can help.
Question. What is the backlog of requests for this program and how
do you justify this reduction?
Answer. There is currently a backlog of unfunded approved direct
farm ownership loans of $32 million. A significant portion of these
applications will be funded in May as a result of a pooling and
redistribution of unused loan funds. In addition, the transfer of
unused guaranteed operating loan funds to the direct farm ownership
loan program, which is statutorily required to be accomplished in
August and September of fiscal year 2002, will also satisfy a portion
of approved loans awaiting obligation.
Question. Mr. Neruda, The USDA Single Family homeownership program
with a backlog of over $5 billion has dropped by over $120 million. The
Multi-Family housing program was decreased by approximately 50 percent
and has stopped all new construction for the first time in over 40
years. The Rural Housing Service testimony cites studies that outline a
large and continuous unmet need in rural America.
I see increases in the President's request for homeownership
programs at HUD. Then I compare what this Committee provided in fiscal
year 1994, $665 million in budget authority for these two critical USDA
housing programs and I now look at this request of under $200 million.
These facts indicate that limited resource farmers and low-income
residents and families are not on the President's agenda. Please
explain why the Administration has chosen this policy.
Answer. This Administration is committed to improving the lives of
rural residents, and most particularly, low-income rural residents and
families. The President is requesting a program level of almost $11
billion in Rural Development programs, the bulk of which directly
benefits low and very low-income individuals and families. The Single
Family Housing direct program would be funded at nearly $1 billion,
which will enable 23,000 low-income families to become homeowners. The
budget authority supporting the Single Family housing request is over
30 percent higher than the fiscal year 2002 appropriated level. Higher
subsidy rates, however, resulted in a lower program level. The Very
Low-income Housing Repair loan and grant request is up over fiscal year
2002 levels, along with Rental Assistance and Farm Labor Housing loan
and grant requests. In total, the budget authority requested to support
Rural Development programs for fiscal year 2003 is only slightly lower
than the fiscal year 2002 appropriated level.
The budget fulfills commitments to focus on housing,
infrastructure, and other economic assistance to rural communities. The
Department of Agriculture provides subsidized, means-tested loans and
loan guarantees to individuals for homes, and makes subsidized
financing available to developers who offer housing to elderly,
disabled, migrant farm workers, or low-income rural residents of multi-
unit housing buildings. All the programs are limited to areas with
populations of 25,000 or less.
In fiscal year 2003, the direct and guaranteed Single Family
Housing program will fund $3.7 billion in loans and loan guarantees.
This means that 51,000 low to moderate income rural families will have
new opportunities for homeownership.
costs of carrying out the new farm bill
Question. Secretaries Penn, Rey and Neruda, your statements
acknowledge that the new farm bill will involve increased workload
requirements, that are continuing to assess what those needs may be,
and that you will provide us updated estimates.
Secretary Penn, in the event those estimates reveal a substantial
shortfall in fiscal year 2003 funding, does the administration plan to
submit a supplemental request to this subcommittee, and if not, how do
you intend to proceed? What type of programs would you choose not to
administer?
Answer. We are attempting to estimate the workload requirements for
the new farm bill, but would not know the magnitude until the final
provisions of the bill are clarified. There may be some areas where the
provisions of the bill may permit use of some of the funding authorized
by the bill to address certain workload requirements such as technical
assistance for conservation programs. In addition, the bill authorizes
the use of approved third parties to carry out the technical assistance
activities need by producers. Many of the new programs are mandatory
and we will not have the luxury of not implementing those programs. Any
activities which are not mandatory or urgent and items which could be
postponed would be examined as we determine how to allocate available
resources. Frankly, it is difficult to speculate what the final
requirements may be and what the Administration's approach will be.
However, it appears that there will likely be shortfalls in available
resources. I am sure we will make every effort to maximize the use of
all available resources before any supplemental request would be
considered. We will keep the subcommittee informed when the situation
becomes clear.
Question. Secretary Rey and Secretary Neruda, there are new
programs in pending versions of the farm bill that affect your mission
areas as well. Would you please respond to this matter and Secretary
Rey, would you specifically address the issue of the Section 11 cap
which has restricted conservation technical assistance for the past
several years?
Answer. The Natural Resources Conservation Service has developed an
analytical model that will project the technical assistance cost of
programs. The model uses the NRCS workload analyses, timekeeping
information, and other program information to projects staff year needs
based on the amount of time needed to complete task associated with
different programs. The model is designed to easily accommodate changes
in policy, procedures funding, and participation levels and will
provide NRCS leadership with projected staff year and technical
assistance costs needed to implement programs. We have used the model
to project costs using information available from the House and Senate
bills, however, the figures will continue to change due to the changes
in Farm Bill language and as NRCS policies and procedures for the
programs are finalized.
Enactment of the Federal Agriculture Improvement and Reform Act of
1996 (the 1996 Act), limited the total dollar amount of Commodity
Credit Corporation (CCC) funds made available for fund transfers and
allotments to all Federal agencies. The 1996 Act amended section 11 of
the Commodity Credit Corporation Charter Act (15 U.S.C. 714), by adding
the following language: ``After September 30, 1996, the total amount of
all allotments and fund transfers from the Corporation under this
section (including allotments and transfers for automated data
processing or information resource management activities) for a fiscal
year may not exceed the total amount of the allotments and transfers
made under this section in fiscal year 1995''. Under the 1996 Act,
Subtitle E--Administration, section 161, reimbursable agreements,
funding made available for technical assistance was limited, and held
at the 1995 CCC spending level of approximately $35 million annually.
Subsequently in fiscal year 2001 the section 11 cap was increased to
approximately $56 million. In its deliberations on the 2002 farm bill,
the Congress is considering ways of remedying the problem caused by the
Section 11 cap on NRCS' ability to provide the needed technical
assistance to adequately carry out the CRP and WRP.
crop insurance underwriting gain
Question. Secretary Penn, the President's budget request includes a
new general provision that would impose a cap of 12.5 percent on
underwriting gains realized by crop insurance companies as a condition
of a Standard Reinsurance Agreement. The rationale for this change is
to avoid windfall profits that may occur due to the increased demand
for crop insurance, for which premiums are subsidized by the
government.
When would savings resulting from this provision first be realized?
Answer. That depends on the assumptions that are made about when
the reinsured companies actually receive underwriting gains. It is our
understanding that the Congressional Budget Office has scored the
proposal as having essentially no first year outlay savings because it
assumes that the outlay savings will be delayed until the following
fiscal year. It is our position that the proposal has real potential
for long term savings of about $115 million annually. The President(s
Budget assumes that these savings will begin in fiscal year 2003 and
savings in obligations are expected in fiscal year 2003.
Question. Please explain what effect this provision will have on
the availability of crop insurance to producers?
Answer. Producers will not be affected by this proposal. There
would be no change in the premium paid by producers or the coverage
they receive.
Question. What is the likelihood that this provision will force
certain crop insurance firms out of business or impair the availability
of new crop insurance products?
Answer. It is questionable that this provision will force certain
crop insurance firms out of business, as it is anticipated that the
crop insurance companies will reduce their retained risk to correspond
with the reduced underwriting gain potential, maintaining a balance
between risk and return. The Agricultural Risk Protection Act of 2000
provides for the reimbursement of development and maintenance costs on
products approved by the FCIC Board of Directors for reinsurance, and
if applicable, offered for sale to producers.
tax-exempt financing, rural housing service/rural utilities service
Question. The Guaranteed Community Facilities program and the
Guaranteed Water and Waste Program are currently prohibited by an OMB
circular from using tax-exempt financing.
Wouldn't the use of a guarantee coupled with tax-exempt financing
help rural municipalities with much lower interest rates and debt
servicing?
Answer. The Guaranteed Community Facility and Guaranteed Water and
Waste programs are prohibited from using tax-exempt financing by
Section 149(b) of the U.S. Tax Code. The OMB Circular only replicates
the law. That being said, the use of a guarantee coupled with tax-
exempt financing would result in a lower interest rate and thus provide
savings in debt repayment for rural municipalities and public entities
that can issue tax-exempt debt.
Question. Has the Department conducted an analysis for the policy
impacts of such a change?
Answer. We have conducted some preliminary analysis that indicates
that the authority to guarantee tax-exempt debt would result in greater
utilization of guaranteed loans and would reduce demand for the limited
direct loan dollars.
Question. The RHS Section 538 program and several other Federal
programs currently have this authority. Why is this not extended to the
CF and WW programs?
Answer. Section 149(b) of the U.S. Tax Code specifies that any
Federal guarantee is nullified if it is financed with tax-exempt bonds.
The section goes on to list the exemptions to this rule. In general,
all Federal housing programs are exempt along with a few other specific
programs. The Community Facility (CF) and Water and Waste (W&W) loan
guarantees do not fall under any of the exemptions. That is why Section
538 and several other Federal guarantee loan programs are using tax-
exempt financing and CF and W&W are not.
Question. Wouldn't this change allow limited direct funds to be
used in communities of greater need?
Answer. We have conducted some preliminary analysis that indicates
that the authority to guarantee tax-exempt debt would result in greater
utilization of guaranteed loans and would reduce demand for the limited
direct loan dollars.
congressional spending priorities
Question. Secretary Jen, the President's request eliminates items
that were funded in the fiscal year 2001 and 2002 appropriations bills
at the initiative of the Congress. These items, largely in the areas of
research, have provided major contributions to the advancement of our
understanding of the agricultural sciences and other important fields.
Instead, USDA has continuingly preferred competitive research programs
through which, I note, the University of Wisconsin performs very well.
The position of this subcommittee has been that we need a balance of
the two.
Do you not agree that research funded at the direction of the
Congress has provided important contributions to agriculture, the
environment, food safety, and many other areas?
Answer. Yes, research funded at the direction of Congress has made
significant contributions, and we are committed to a balanced
agricultural research funding portfolio. However, the Administration
believes that peer-reviewed competitive programs that meet national
needs are a much more effective use of taxpayer dollars than earmarks
that are provided to a specific recipient. Competitive programs, such
as the National Research Initiative (NRI) open to all the research
community, provide the most effective mechanism for attracting the best
minds in the Nation to conduct research in agriculture and food
systems. Some broad aspects of many research topics currently addressed
with earmarked projects may be included in the scope of the NRI program
in 2003. Other topics may be addressed under other broader based,
competitively-awarded Federal programs or programs supported with
Federal and non-Federal funds administered by State-level scientific
program managers.
Question. What performance standards does USDA use in awarding
funds through competitive research programs?
Answer. Awards made under CSREES' competitive research programs are
peer reviewed by panel members and/or ad hoc reviewers. Peer review
panel members and ad hoc reviewers are selected based upon their
training and experience in relevant scientific or technical fields
taking into account certain factors--i.e., the level of formal
scientific or technical education and other relevant experience of the
individual, as well as the extent to which an individual is engaged in
relevant research and other relevant activities. The panel and
reviewers are provided with evaluation factors in order to rank and
select projects to be recommended for funding. The evaluation factors
may differ for each program depending on the program requirements. The
evaluation factors are published annually in the program's request for
applications or guidelines.
Question. What safeguards are built into USDA competitive research
grant programs that will ensure attention to specific problems that may
not receive the attention of the major participants in agricultural
research, who traditionally are more successful in securing competitive
funds?
Answer. Success in securing competitive funds is dependent upon,
among other things, the ability to address the specific problem being
studied under the program and the ability to provide a research
proposal that fully covers the criteria outlined in the request for
applications. Each program has evaluation factors against which
projects submitted are judged. These evaluations factors are published
annually in the program's request for applications or program
guidelines. Therefore, all applicants are aware of the criteria that
will be used to select projects for funding. In addition, CSREES
participates in stakeholder meetings, workshops, and conferences, in
which our State partners have an opportunity to discuss the grant
awards process. For example the NRI program conducts a major regional
grant-writing workshop annually that is open to all United States
institutions. At the workshop, NRI Program Directors are present and
available for small group and one-on-one interactive discussions with
potential applicants regarding the program.
initiative for future agriculture and food systems
Question. Since the Administration favors competitive research
programs as the most efficient means of securing the best research, why
does the President's proposal recommend eliminating the Initiative for
Future Agriculture and Food Systems program?
Answer. A provision of the fiscal year 2002 Agriculture
Appropriations Act prohibits USDA from administering a 2002 competition
for the Initiative for Future Agriculture and Food Systems program and
the fiscal year 2003 budget request continues this policy. Since this
program was not funded by Congress in fiscal year 2002, the savings
were used to fund discretionary programs.
When Congress permitted implementation of this competitive program
in fiscal years 2000 and 2001, it fulfilled a valuable role in
supporting integrated research, education, and extension activities
that met the needs of the agricultural community. The Administration
continues to favor competitively awarded grant programs. We stand ready
to administer any program that Congress directs us to implement.
section 515 multi-family housing
Question. The President's fiscal year 2003 request proposes to
eliminate all new construction for the Section 515 Multi Family Housing
program. All funding will go towards rehabilitation and equity loan
needs. I also understand the proposal would use approximately $2
million in salaries and expenses to conduct a thorough review of
alternatives for both making new loans and servicing the existing
portfolio of about 17,800 projects. The President's Millennium Housing
Commission and the Commission on Affordable Housing and Health Facility
Related Needs for Seniors is also given a similar task. The backlog is
tremendous and the need and deficiencies in rural areas are reflected
in national studies including the USDA Economic Research Service.
Additionally, the average resident income of this program is
approximately $8,000.00. In my home State of Wisconsin, 79 percent or
approximately 8,000 units (7,896) are for elderly residents.
Nationally, this figure is 57.8 percent or 243,979 units. America,
including our rural sections, is growing older.
The appropriations levels for this program have dropped
significantly over the last 10 years. Congress took steps to address
weaknesses in the program and reduce the cost by changing the loan term
from 50 to 30 years. Why are we still talking about cutting cost for
Rural Rental Housing?
Answer. Although progress has been made, this administration is
dedicated to further improvement of the program. We suggest there is an
opportunity to find other areas of the program that can be made more
cost efficient. A task force has been established to complete a
comprehensive review of program alternatives, focusing on more
efficient ways of funding new construction and servicing the existing
portfolio of about 17,800 projects. The task force will make
recommendations to the Under Secretary regarding program direction and
funding.
Question. What positive steps, both legislative and administrative,
has the Department performed since 1992 to address weaknesses outlined
by Congress?
Answer. The Department has taken a number of positive steps in both
loan processing and loan servicing activities. A loan scoring system
was developed to ensure nationwide consistency in selecting requests,
and national funding competition now ensures that funds are directed to
the areas of greatest need in the country. The Department's build and
fill policy, implemented in 1994, has been extremely effective in
ensuring that communities are not over-developed. This policy ensures
that a property is fully occupied before another one is built in the
same community. Also, to ensure that the amount of assistance provided
to an applicant is no more than necessary, Rural Development has
implemented a subsidy layering review. Rural Development State Offices
have executed Memorandums of Understanding with State tax credit
agencies to share cost data at several stages of processing. Rural
Housing Service also uses a computer-based analysis to evaluate each
loan proposal throughout loan processing.
Question. What is the current default rate and delinquency compared
to the previous 10 years?
Answer. The Multi-Family Housing program loan delinquency rate at
the end of fiscal year 2001 was 1.5 percent for all loans. This is an
all time low and the fifth straight year of decreasing delinquency
rates. Ten years ago the rate was 3 percent. This rate is less than or
equal to rates achieved by other governmental and non-governmental
Multi-Family Housing lenders. The Department continues to work
aggressively to resolve loan delinquencies to solidify the overall
integrity of the portfolio.
Question. Has the financial return to the developer been severely
reduced as a result of the subsidy layering provisions?
Answer. The Department implemented a ``subsidy layering'' financial
feasibility model for the evaluation of all loans starting in 1997.
This model, coupled with Memorandums of Understanding between State tax
credit administering agencies and Rural Housing Service, has reduced
the incidence of excess assistance to a project developer.
Question. Why do you propose to stop new construction and what will
be done as you conduct this study to address the need?
Answer. Funding under Section 515 for new construction is not being
requested in fiscal year 2003, as we believe it is appropriate during
this period to perform a comprehensive review of the program that will
focus on finding more efficient ways to fund new construction. Support
for existing occupants in rural rental housing projects will continue
to be provided through the rental assistance payments program.
Additionally, direct loans will continue to be used for repair,
rehabilitation and related purposes, and guaranteed loans will remain
available for both new construction and repair and rehabilitation.
Question. What is the clear purpose of the Multi-Family Housing
Study in your request and what do expect to do with the findings?
Answer. The Multi-Family Housing study will perform a comprehensive
review of program alternatives, focusing on more efficient ways of
funding new construction and servicing the existing portfolio. The task
force will report their findings to the Department so that needed
changes, if any, can be made.
Question. What evidence do you have to support the notion that this
assistance can be provided to the same low-income population at a
reduced cost to justify halting new construction?
Answer. We will examine alternatives or possible modifications to
the Section 515 program developed both by our task force and proposed
by the Millennial Housing Commission to make the program more
efficient. Also we will examine the existing housing with the intent to
develop comprehensive estimates of future rehabilitation needs of the
portfolio.
Question. What other Federal programs assist the same income
populations in rural America and are these less costly?
Answer. There are a few other Federal programs that can reach the
same populations, albeit in a limited way. Federal Low Income Housing
Tax Credits provide tax credits for private investments in the
production of new and rehabilitated affordable housing units consistent
with State-determined housing priorities. Housing and Urban Development
Section 8 vouchers address the issue of affordability but do not
provide funds for adding to the housing stock. Federal costs are about
50 percent greater for tax credits units than for vouchers. Coupled
together, tax credits and Section 8 vouchers can reach the same
populations. However, to date, developers of low-income housing have
been reluctant to invest time and funds in developing small properties
in rural areas without Rural Housing Service participation. The Housing
and Urban Development Home Program is a Community Development Block
Grants program offered under the Department of Housing and Urban
Development. The Housing and Urban Development Home Program funds can
also be used to expand the supply of decent, safe, sanitary, and
affordable housing, particularly rental housing, for very low-income
and low-income families.
Question. How will you serve additional needs in fiscal year 2003,
including the elderly?
Answer. Direct loans will continue to be used for repair,
rehabilitation and related purposes. Ways in which the elderly have
been assisted in this manner include building or increasing the size of
community rooms and ensuring that the property is handicapped
accessible. The Department will continue in its effort to help the
elderly maintain their privacy and live independently.
Question. On the topic of preservation, I understand that
approximately two-thirds of the 17,000 portfolio is more than 15 years
old. What plans do you have for rehabilitating and updating these
properties as the needs arise?
Answer. To maximize the affect of limited rehabilitation funding,
the Department has made extensive efforts to leverage funds from other
funding sources. In recent years, borrowers who have received Section
515 loans have leveraged on average another 45 percent of the
development funds from sources such as tax credit proceeds or The
Housing and Urban Development Home Program funds. In addition, the
Department has subordinated its loans to other funding sources to
facilitate new construction and preservation.
Question. Is there enough money flowing in these properties to
conduct general repairs?
Answer. In most cases, there are sufficient funds flowing from
project cash flow to conduct general repairs. However, many projects
are unable to generate sufficient income to set aside funds to meet
long-term capital replacement needs. Projects most vulnerable are those
located in weak housing markets with few or no deep tenant subsidy
units available to allow rents to be affordable by very-low and low-
income tenants.
Question. How is the Agency using other resources such as Section
8, LIHTC, Home and Federal Home Loan Bank funds in these projects?
Answer. We have worked with State tax credit agencies to obtain set
asides of tax credits for Rural Development properties in several
States. We currently have funding partnerships with Fannie Mae, the
Federal Home Loan Banks and State agencies administering The Housing
and Urban Development Home Program funds. Section 8 vouchers are used
in some instances to supplement rent payments in low income housing
when Rural Housing Service rental assistance is not available.
Question. If the Committee restored additional funding to this
program, what would be the priorities regarding preservation,
maintaining the portfolio for low-income residents and providing
property owners with incentives that have been promised? Please include
associated rental assistance needs?
Answer. A survey of our State Rural Development offices reported a
need for $139.5 million for immediate critical repairs. This levels of
funding would require $65.1 million in Budget Authority. In addition,
we estimate that $45 million rental assistance would be needed to
facilitate that level of funding.
Prepayment statutes require the Department to offer incentives to
borrowers who request to prepay in an attempt to retain the properties'
use as affordable housing. We currently have waiting lists for the two
most important incentives, equity loans (over $9 million) and Rental
Assistance (under $1 million). We estimate that there could be a
significant demand of about $40 million in equity loans and $30 million
in Rental Assistance for inventories to added prepayments.
Question. How many projects are currently eligible for prepayment?
What is the average time for an owner once they make the request and
are in the system? What percentage of owners that request prepayment
and are eligible are actually allowed to prepay?
Answer. Approximately 11,000 Multi-Family Housing projects were
funded prior to 1989 and are eligible for prepayment. This represents
approximately two-thirds of the Multi-Family Housing portfolio. We have
not determined the average amount of time between the acceptance of a
completed application by the Department and a final action, which
typically is either prepayment or the receipt of an incentive to
continue participating in the program. Final action most often depends
on the availability of resources such as equity loans and preservation
rental assistance. However, we do know that approximately half of the
applications currently recorded in our prepayment tracking system have
been filed during the last year. During fiscal year 2001, of the 119
prepayment requests accepted by the Department, 24 were retained with
incentives (20 percent) and 95 projects (80 percent) were authorized to
prepay. Of the 95 prepayments accepted, 64 were prepaid with
restrictive use agreements (67 percent) and 31 were prepaid without
restrictive use agreements (33 percent).
Question. I understand the Agency has been attempting to overhaul
the operation regulations (3560) for several years. Why haven't these
regulations been proposed to the public for comments and when do you
plan to have them completed?
Answer. The new 3560 regulations are a complete overhaul of the
multi-family housing programs within Rural Housing Service. The process
of reviewing this extensive regulation has taken longer than expected,
due to the complexity of the subject matter. With recent actions taken
to address concerns of reviewers, we anticipate that the regulation
will be published for final review in the near future.
Question. The budget request implies that the farm labor community
has priority over the standard Section 515 Multi-Family Housing
applicants. The Farm Labor Housing program is very specific, serving a
limited population within certain geographic locations. Additionally,
if you are stopping new construction in the Section 515 Multi-Family
Housing program, this program is identical with the exception that
additional grant funds or subsidy is driven into the project, which
makes it more costly.
If you are looking at ways to reduce the cost for low-income rental
housing, why are you continuing with this more costly housing than the
standard 515 program?
Answer. The Nation's farmworkers are among the poorest of the poor
and an overwhelming unmet need for farmworker housing persists
throughout America. Farmworkers are a difficult and costly population
to serve and the Section 514/516 programs are the only Federal programs
serving farmworkers exclusively. Unlike projects serving the general
population, many farmworker projects cannot qualify for the Housing and
Urban Development Home Program funds or Low Income Housing Tax Credits.
In addition, many States do not have special housing programs for
farmworkers.
Question. Rising insurance rates are having a negative impact on
affordable housing stock throughout this Nation. Rural housing is
certainly not exempt from these costs.
Has the agency allowed the deductibles to be increased as a result
of these increased costs to projects?
Answer. Currently, Rural Housing Service regulations provide
guidance regarding the amount of deductibles allowed for Multi-Family
Housing properties. If owners are unable to obtain the required
deductible, other options are provided in the regulations. The owner
may make a cash deposit to the reserve account which will be set aside
to cover the gap between the required deductible and the obtainable
deductible, or the owner may set aside a portion of the existing
reserve account to cover the gap.
Question. Is this change in the proposed 3560 servicing regulations
and if so what kind of relief can you offer prior to issuing the final
regulation?
Answer. The proposed 3560 servicing regulations do provide
flexibility in determining the maximum deductible allowed. However, the
current regulations already provide the owners with some relief. The
Department continues to work with our field staff, owner and management
groups and the insurance community to better address this issue.
Question. According to a 1997 GAO Report, titled ``Opportunities to
Improve Oversight of the Low Income Housing Program'' questions were
raised as to whether there are sufficient reserves to address major
repairs.
Does the majority of the portfolio that has reached the 20 year
mark have sufficient reserves to handle major repairs and if not what
do you propose to do to address this problem?
Answer. While the great majority of the properties have been well
maintained, they are experiencing normal wear and tear. The reserve
accounts were established based on the development cost at the time of
construction and did not factor in an inflation rate. This has caused
many reserve accounts to be at an insufficient level to cover current
and future repairs needs. The Department works with owners to conduct
capital needs assessments to determine the expected need and timing for
rehabilitation, specific to their properties. With the information from
a comprehensive needs analysis, the Department and owner are able to
reassess the reserve account funding levels.
Question. Are you allowing projects to increase their rents to
assist in building up the reserve accounts and who determines if rent
increase requests are honored, the Rural Development Managers, State
Director or National Office and is there a national policy for this
issue?
Answer. The Department encourages borrowers to increase rents when
necessary to build up reserve accounts. However, the rent levels for
the units must remain marketable and affordable in communities,
particularly when rental assistance is not available at the property.
When a significant number of units in a project are receiving Rental
Assistance, the availability of funding of such Rental Assistance needs
to be considered in terms of absorbing the impact of a rent increase.
The Rural Development Multi-Family Housing Servicing Officials have
been provided the authority to approve changes to rents and reserve
account levels. The authorities are provided in Rural Housing Service
regulations.
Question. Several years ago the occupancy surcharge was eliminated.
What can accumulated funds from this surcharge be used for?
Answer. The Department of Agriculture currently has approximately
$15.5 million plus interest accrual of $6 million in occupancy
surcharge collections. These funds were collected by Rural Housing
Service and deposited in the Rural Housing Insurance Fund in such a
manner as to accrue interest on the total amount of funds collected.
Under statute, the monies are to be made available only to guarantee
the payments of principal and interest on equity loans for developments
financed after 1989. Payment from the occupancy surcharge account are
to be in only amounts necessary to ensure that additional project
expense from the incurred guaranteed equity loan does not raise rent
payments above prescribed maximum rent levels necessary to operate the
project. Public Law 194-193, enacted August 22, 1996, eliminated the
collection of occupancy surcharge payments. Rural Housing Service would
like to work closely with the Committee in the future to examine
alternative uses for these funds for these funds that may more
immediately benefit the portfolio.
Question. How much rental assistance that is allocated in the
States is currently unused and how do you increase efficiency with the
use these funds in the States and the national office?
Answer. Currently, the Rental Assistance usage rate is
approximately at 92 percent of available units. With current occupancy
levels at a 93 percent rate, the Rental Assistance usage rate lines up
directly with the occupancy rate. There are areas of the country where
out-migration has taken place resulting in the unused Rental Assistance
usage rate being higher than average. We are working with the States
affected to effectively use unused Rental Assistance. Rural Housing
Service field staff evaluates efforts made by owners and managers to
market vacant units to Rental Assistance eligible applicants. Rural
Development State Directors may authorize the transfer of unused Rental
Assistance to another eligible borrower after a borrower has not used a
portion of the Rental Assistance units for a 12-month period. During
the past few years, the Agency has been successful in significantly
increasing the number of transferred unused Rental Assistance units.
The Rural Housing Service National Office will continue to monitor and
work with field offices to maximize the usage of this valuable
resource.
Question. Considering the concern for preserving the portfolio for
low-income residents, would you support a pilot initiative that would
allow multi-family projects to be acquired and rehabilitated by public,
non-profit entities with a sole mission of preservation, provided that
such an entity maintains the rent and use restrictions and there is no
additional RA or RHS subsequent loans used in the projects? Would this
allow entities with experience throughout the country to use creative
financing and other methods to come up with best practices to address
this problem now and in the future?
Answer. Such a pilot proposal could be acceptable provided that
there are reasonable assurances that long-term capital needs will be
adequately addressed without creating additional debt. We also expect
that any non-profit or public body participant would be able to meet
the existing eligibility criteria currently contained in Section 50(c)
of the Housing Act of 1949.
rhs 502 housing
Question. Direct program-I noticed the President's budget for HUD
has substantial increases for homeownership, which includes the down
payment assistance program and the self-help ownership program. The
USDA 502 program has been extremely successful and since inception. I
also understand a new model has been created that increased the subsidy
costs of this program. Since the creation of the Centralized Service
Center, the delinquency and default rate have decreased.
What are the factors that caused the increase in the subsidy rate
for this program?
Answer. Rural Development implemented new cash flow models for the
2003 Budget for the following programs:
Increased Subsidy Rate from 2002 to 2003: Direct Section 502
Single-Family Housing Loans; Direct Section 515 Multi-Family Housing
Loans; Section 524 Housing Site Development Loans; and Multi-Family
Credit Sales of Acquired Property Loans.
Decreased Subsidy Rate from 2002 to 2003: Section 523 Self-Help
Land Development Loans; and Single-Family Credit Sales of Acquired
Property Loans.
Methodologies used by these new models for calculating defaults,
recoveries, payment assistance, and scheduled collections differ from
the old models. Program performance assumptions used by these new
models are based on historic program performance and proxy data from
comparable programs run by the Federal Housing Administration and Small
Business Administration. Previously, program performance assumptions
were based on program staff expertise. These changes were a
collaborative effort between the Department of Agriculture, Office of
Management and Budget, and the General Accounting Office. The changes
to these models were made to more accurately reflect the true cost of
these programs to the taxpayers, which will allow lawmakers to better
determine Federal-funding allocations. This better reflection of the
true cost in these models will also help the Department of Agriculture
obtain a clean audit opinion on its credit programs. The current
interest rate assumptions as well as the most recent program
performance data are also included in the new model.
Question. The previous administration placed a great deal of
emphasis on leveraging Federal resources with other funding to stretch
limited dollars. The 502 Direct Leverage Program initiatives allowed
private lenders to finance as little as 20 percent of the loan and take
a first lien position. Depending on the lender's rate, the 80 percent
financed by RHS could have driven up the subsidy cost to make it
affordable to a low-income borrower.
Has this impacted the subsidy of the 502 Direct Program?
Answer. The subsidy the borrower receives on the direct loan is
based on the amount of the loan and the borrower's income. This subsidy
is one of several factors that impact on the subsidy cost of the
program, which according to the new model is higher than prior years'
estimates. However, there is no evidence to suggest that leverage has
increased the subsidy rate on direct loans.
Question. What risk does the private lender incur?
Answer. There is little security risk incurred by a private lender
when leveraging with a Section 502 direct loan.
Question. What is the average blend of government versus private
funds in these leveraged deals?
Answer. The average blend of leveraged loans for fiscal year 2001
was as follows: government funds, 77.82 percent; private lender funds,
18.38 percent; and other types of funds (such as forgivable loans and
grants) 3.71 percent.
Question. Have you conducted a cost comparison to see if the
government could have saved money if RHS financed the entire loan and
not just a portion?
Answer. To date, no formal study of the cost differentials between
leveraging and non-leveraging has been conducted. Five years of data
has been collected which may be enough to establish some trends.
Question. Should the Department continue this initiative, isn't
this program based on borrower affordability and not cost to the
government?
Answer. Leveraged lending continues to be an important component of
the direct loan program. This initiative is intended to maximize the
number of low and very low-income families afforded the opportunity of
homeownership.
In fiscal year 2001, Rural Housing Service leveraged 7,772 Section
502 Single Family Housing direct loans. Leveraging provided
approximately $124 million in loans and grants from other sources to
supplement the Section 502 Single Family Housing direct program.
Families assisted are only asked to leverage an amount consistent
with their repayment ability. By leveraging Agency funds with other
lending institutions and grant programs, we are able to stretch our
loan dollars to assist more families in obtaining the American dream of
homeownership.
Question. Why wouldn't you limit this program to below market rate
loans to encourage lenders and non-profits to use low interest loans
and/or grants to enhance affordability and allow lender to receive CRA
credit?
Answer. The leveraging program is designed to include the widest
possible spectrum of funding sources. We strive to encourage a broad
range of participation and strengthen ties with our local partners. In
addition, the customer benefits through homeownership education and
establishes ties to the local community through partners and local
lenders. To limit our program to below market rate loans would reduce
the number of smaller lenders and non-profit groups who could
participate in our program.
The Community Reinvestment Act has been a great tool in promoting
our leverage loan program to the small community lenders. Many of them
retain all the mortgages they make and our leverage loan allows them to
put more dollars back into their local communities and meet their
Community Reinvestment Act requirements.
We believe that the leveraging program has provided a valuable tool
to engage lenders into low-income mortgage finance in which they would
not otherwise participate.
Question. What is the limit a private lender can charge under this
initiative for their interest rate?
Answer. Leveraged lenders are expected to charge reasonable and
customary interest rates and fees. Besides monitoring the lending
practices of leveraged lenders, Agency staff counsel applicants on how
to shop for the best mortgage to supplement our funding.
While the Agency has not set specific limits regarding the interest
rate that private lenders may charge, the Agency monitors the lending
practices of leveraged lenders to protect borrowers from abusive
tactics like excessively high fees, high interest rates and packing,
the practice of adding credit insurance or other extras to increase the
lender's profit on a loan.
Since the leveraging of Single Family Housing loans is fairly new
to the Agency, we are continuously learning and making improvements. We
are currently developing guidance to our field offices to ensure
consistency and protection for our customers.
Question. The 502 Direct Program serves individuals and families in
small rural communities with an average income of $17,000.00 and/or
approximately 55 percent of their respective county median income.
Additionally, Department of Housing and Urban Development has never
effectively penetrated remote rural areas.
Do the HUD homeownership programs serve the same low-income rural
population?
Answer. According to the General Accounting Office study published
in September 2000, Department of Housing and Urban Development does not
offer to rural populations a program comparable to the direct Section
502 Single Family Housing direct loan program.
Question. If the President's request provided additional resources
for homeownership at HUD, why not the rural programs?
Answer. The fiscal year 2003 budget request reflects a continued
commitment for rural programs. The Section 502 Single Family Housing
direct budget authority was increased in the President's budget by $43
million from the fiscal year 2002 level. The decrease in deliverable
program funds is due to the increase in the cost of the program.
Question. The Payment Assistance program for the Direct 502 program
is tied to the median county income and the relationship to the
borrower's income. Borrowers must contribute 22 percent, 24 percent or
26 percent of their adjusted income towards their mortgage payments. In
some cases a borrower could cross a county line and drop from 26
percent to 22 percent and lower their payment significantly.
Is this a complicated system to administer and does it cause
confusion or resentment with the potential customers?
Answer. Administering payment subsidies is not complicated. Rural
Housing Service staff uses an automated system to calculate the
appropriate payment subsidy based upon the borrower's adjusted annual
income, the applicable area median income, and the monthly taxes and
insurance for the property. Our partners will soon be able to access
this system electronically as a result of our e-government initiatives.
A few of our partners have voiced concerns that an applicant in one
area can qualify for a higher loan amount than an applicant located in
another area when all other factors are equal. This occurrence is
attributed to differences in the area median income, which can vary
widely within a state and is not within the Agency's control.
Question. Have you looked at any alternatives to this current
system and can you make changes administratively?
Answer. Payment Assistance, which replaced the previous interest
credit method of calculating borrower subsidy assistance, has been in
existence since 1996. This system was adopted in an effort to reduce
the cost of the program. Prior to Payment Assistance, interest credit
afforded borrowers a more generous subsidy by basing their mortgage
payments on 20 percent of their income. Now that payment assistance has
been in existence for several years, we believe there is sufficient
data to conduct a study of payment assistance. If a study identifies
the need for changes to the payment assistance calculations, the Agency
can determine whether changes can be made administratively or if
regulatory or statutory changes would be necessary.
Question. Are individuals and families in the mid-range (24
percent) encountering more difficulty in the approval process that the
other two categories?
Answer. We have not received feedback that mid-range income
individuals and families are encountering more difficulties in the loan
approval process than other income category applicants. If the
committee has documented cases, we would be pleased to look into the
matter.
Question. Have you considered a more family friendly option in the
calculation of the subsidy for the mortgage rate that would encourage
families to stay intact and waive the income of elderly parents and/or
grandparents including children that attend college?
Answer. We consider the income of all members of the household in
determining subsidy except for full-time college students, which is
consistent with the Department of Housing and Urban Development and the
governing statutes. Many families with part-time college students or
elderly family members who come to live in the household are impacted
by an increase in payments, although these family members may not have
the capacity to contribute financially towards the mortgage payments.
guaranteed housing
Question. Last year, the Department requested and Congress approved
an increased guarantee fee from 1 percent to 2 percent to drive down
the program cost. After that increase, HUD dropped their rate from
approximately 2.5 percent to 1.5 percent. Additionally, FHA and VA
guaranteed programs allow mortgage insurance premiums and/or a
guarantee fee on top of their established LTVR restrictions. Rural
Housing Service is currently prohibited from going over 100 percent of
appraisal value for purchase loans. This barrier will only allow fees
to be incorporated in the loan only if the appraisal is determined to
be 98 percent or lower of the LTVR.
What has been the policy impact on borrowers and lenders from this
fee increase, both for the borrowers and private lenders?
Answer. The fee is charged by the Agency to the lender, however the
lender typically passes this charge off to the borrower as a closing
cost expense. Consequently, the higher fee has increased borrower
closing costs associated with the guaranteed program. The fee can be
paid out of the borrower's own pocket, financed into the loan if the
appraised value of the property being purchased supports including the
fee, or it can be paid by the seller as a seller sales concession. In
comparison to the Federal Housing Administration insured or Veteran's
Administration guaranteed homeownership programs, the fee being charged
for the Rural Housing Service guarantee is considered high but not
excessive.
Question. The Department has the authority to charge up to 2
percent guarantee fee. Have you considered lowering the rate to react
to market changes and other Federal housing programs?
Answer. For guaranteed loan purchase transactions, lowering the
rate has not been considered an option due to the impact that a lower
rate would have on the budget. For instance, lowering the fee rate by
0.5 percent would increase the budget authority required to fund this
fiscal year's program level ($3.15 billion) by over $15 million. The
Federal Housing Administration currently charges an up-front fee of 1.5
percent of the loan amount, but on top of this fee, Federal Housing
Administration charges customers an annual fee of 0.5 percent of the
outstanding principal balances of their loans.
Question. FHA and VA have had a long-standing policy to allow
mortgage insurance and guarantee fees to be included in the loan. Do
you believe this change would negatively impact the portfolio and cause
an increase on the subsidy cost?
Answer. Rural Housing Service already allows fees to be included in
the loan amount provided the loan to value ratio does not exceed 100
percent. Allowing fees to be included for up to 102 percent would
likely increase the risk of loss and therefore, increase the subsidy
rate. A precise estimate is not available.
Question. Your mission for the 502 Guaranteed Program indicates
this program is to serve moderate-income families and individuals in
rural areas who can't obtain conventional mortgage financing?
Does this requirement fit the current overall mission today and
does it hinder the administration of this program?
Answer. The guaranteed program is designed to serve customers who
do not qualify for conventional credit. Additionally, guaranteed loans
are limited to families with household income that are categorized as
``moderate'' (115 percent of area median income, or less). Generally,
these requirements serve our mission because they allow the Agency to
concentrate its financial resources on those applicants who are truly
in need. However, there are pockets of rural areas where home prices
have escalated to a point where a family with a moderate level of
income simply cannot afford to buy a modest home.
Question. Does HUD or VA have this requirement on any of their
programs?
Answer. No, Housing and Urban Development and Veteran's
Administration do not restrict use of their programs based on a
family's household income or ability to obtain ``conventional'' credit.
Question. One of the missions of the USDA housing programs is to
graduate borrowers who receive subsidized housing to commercial credit.
In fiscal year 2001, Congress allowed refinancing using the 502
Guaranteed Loan Program. Additionally, it also allowed refinancing
direct loans with guaranteed loans. However, the Department is
currently prohibited from refinancing a direct subsidized loan to a
private lender's guaranteed loan if the new rate is higher than the
current note rate.
If a direct borrower is currently paying 7 percent and wants to
move to a 30 year private mortgage loan with a rate of 8 percent,
shouldn't that borrower be allowed to do so and isn't this in the best
interest of the government and the borrower?
Answer. If they are eligible to refinance, direct program borrowers
must graduate their loans, even if it means accepting a higher interest
rate. However, graduating a direct loan to a guaranteed loan is
currently limited statutorily to those cases where a borrower will
receive the same or a lower interest rate on the new loan. This
restricts some direct borrowers from utilizing the guaranteed program
as a graduation tool. Removing the interest rate increase restriction
on direct to guaranteed refinances would allow more borrowers to
qualify for graduation.
Question. Additionally, if a current guaranteed borrower wants to
refinance his/her loan with another guaranteed loan, the Department is
requiring that the borrower pay the 2 percent for refinancing.
What other Federal housing programs have this requirement?
Answer. No other programs have this requirement. Rural Housing
Service currently charges a 2 percent fee for all guaranteed purchase
transactions, including another full 2 percent fee to be paid if an
existing borrower wants to refinance his/her loan through the program.
The funding fee for Veteran's Administration purchase loans is
generally 2 percent, yet the fee for a Veteran's Administration
refinance transaction is always a flat 0.5 percent. For Federal Housing
Administration refinance transactions, a new up-front 1.5 percent
mortgage insurance premium is charged, but a prorated portion of the
up-front fee that was charged for the initial Federal Housing
Administration loan is rebated to the customer.
Question. How many borrowers have taken advantage of this authority
to refinance loans?
Answer. So far during fiscal year 2002, we have obligated 278
refinance transactions representing approximately $24.5 million.
Question. If you go to a lower interest rate in the guaranteed
refinancing, wouldn't this loan be more secure and in the best interest
of the government?
Answer. Guaranteed refinanced loans are limited to performing
borrowers already in the portfolio, or to graduation-eligible direct
Section 502 borrowers. Only unpaid principal and interest, and
reasonable loan closing costs can be refinanced. Guaranteed refinance
loans may not include ``cash out'' to the borrower or the refinancing
of subordinate liens. Allowing existing guaranteed borrowers who have
paid satisfactorily to lower their interest rates through a guaranteed
refinance should reduce risk and help to ensure successful
homeownership.
Question. Could you give the borrower credit for the first fee paid
or possibly a prorated credit for loan exposure instead of the full 2
percent?
Answer. Yes, we have the statutory authority to reduce the fee. In
order to do this, data needs to be gathered, or factual estimates made,
on how guaranteed refinance transactions will perform over time.
Without performance data or valid estimates for guaranteed refinance
transactions, the subsidy rate assigned to these loans is the same as
that assigned to new loans. Given the lack of guaranteed refinance
performance data, we are currently unable to reduce the rate. Better
performance data is needed in order to estimate a new subsidy rate, and
the Agency plans to make that a priority during fiscal year 2003.
Question. What is the lending community and/or public interest
groups' reaction to this requirement to pay the full 2 percent
refinancing fee?
Answer. Lenders and public interest groups feel that the 2 percent
fee is too high to warrant their active promotion of the guaranteed
loan refinance program. The cost to refinance with a new guaranteed
loan doesn't make economic sense in many cases.
Question. I understand that if a current 502 Guarantee borrower
wishes to refinance their loan to a lower rate, but their income has
risen above the moderate income level for this program, they are
prohibited from refinancing with another USDA Guaranteed Loan.
Wouldn't the customer and the government be best served by allowing
them to move to a lower interest rate?
Answer. Borrowers would benefit from lower interest rates on their
loans. The government's risk position could benefit, as well, whenever
housing costs become more affordable for existing guaranteed borrowers.
However, allowing borrowers the option to refinance their loans at more
liberal terms would encourage them to stay in the program, rather than
moving on to a conventional credit.
Question. What is the percentage of low-income residents served by
the guaranteed program?
Answer. Over the course of each of the past three fiscal years,
nearly 30 percent of all guaranteed loans have gone to low-income (80
percent of median or less) families.
Question. Have you looked at an area population limitation increase
to be consistent with other Federal housing guarantee products and what
would be the policy implications for market share, attracting lenders
and serving borrowers?
Answer. The Agency feels that its existing eligible areas for
lending activities are reasonable. Expanding the eligible areas to
include higher population would certainly increase activity and demand
for the guaranteed program. But the question is whether higher
population areas meet Rural Housing Service's mission of serving rural
economic needs. Generally, the existing parameters that define rural
areas for the guaranteed program appear to be adequate.
Question. Each year this program has a slow period at the beginning
of the fiscal year as funds are allocated through the appropriation
allotment process. Each year, loan approvals slow down and have to be
prioritized because of limited funding authority. I am told FHA and VA
do not experience this slow period.
With the valuable gains you have made in attracting lenders and
increasing participation in this program, doesn't it make sense to
allow the funding to carryover and not disrupt this integrity of this
program?
Answer. Because of the lead-time required to process a loan, any
interruption in a lender's ability to reserve guaranteed funds may
cause them to question whether they should continue participating in
the program. Maintaining a flow of funds throughout the year is
something RHS strives to ensure. However, making the funds no year does
not alleviate breaks in program delivery for the 502 guarantee single
family housing program. If demand for funds exceeds the amount of funds
available for the year in the 502 guarantee single family housing
program, there would be no funds to carryover and lenders would be
disaffected with the break in program delivery until a subsequent
appropriation. Plus, the Budget request anticipates the expected demand
and no carryover funds are anticipated. Additionally, if the
appropriation is signed before the fiscal year begins, there is no
break in service. What would help to alleviate breaks in program
delivery would be inclusion of specific language for the program in the
first continuing resolution of a fiscal year that would make available
25 percent of the previous year's loan level on October 1 (the budget
authority calculated at the current year subsidy rate). This would
provide assurance of continued funding without regard to carryover
balances.
Question. Can you estimate how many lenders and/or borrowers you
have lost during this down time in October and November?
Answer. Estimates of lenders and borrowers who may have lost
interest in the program are not available. However, we would note that
the demand for guaranteed loans remains strong.
farm labor housing
Question. Is the request for rental assistance enough to
accommodate adequate subsidy for new construction in the Farm Labor
Housing Program?
Answer. In fiscal year 2002, the Rural Housing Service expects to
fund the construction of approximately 800 units of farm labor housing
through the section 514/516 programs. Six hundred units of Rental
Assistance from the national allocation have been earmarked for section
514/516 new construction units, allowing full coverage of the RA
demand. Recently, the section 514/516 programs have received modest
increases. If a funding level increase is made to the section 514/516
programs, a corresponding increase to the Rental Assistance program is
necessary.
Question. Does the Farm Labor Housing Program have a set-aside for
rental assistance?
Answer. There is no formal set-aside for Section 514/516 new
construction Rental Assistance. At the beginning of each fiscal year,
staff estimate the number of Rental Assistance units needed to
accommodate the estimated new construction units that will be built. It
is expected that the Rental Assistance funds will be used for renewals
first and then for Farm Labor Housing. Anything left is used for
Section 515 new construction and debt reduction.
Question. Is there anyway to determine the true need and demand
while using a NOFA system?
Answer. It is difficult to measure need and demand while using a
Notice of Funds Availability system. However, the purpose of a Notice
of Funds Availability system is not to measure need and demand, but to
provide a clean, structured process to make appropriate funding
decisions with limited funding. Under a Notice of Funds Availability
system, Rural Housing Service can allocate funds based on merit and
overall project need which is difficult to achieve under a ``first-
come, first-served'' process
guarantee 538 multi family housing
Question. What is the average household income and rent for this
program in comparison to the 515 program?
Answer. The average rent at a Section 515 property is approximately
$300 per month. This low rent is attainable primarily because of the 1
percent interest rate and rental assistance available under the
program, which in turn allows the Section 515 property to predominately
serve very-low to low income households. Under the Section 515 program,
over 90 percent of the households are in the very-low income range,
with average adjusted household incomes of $8,105.
Under the Section 538 program, the average rent range is between
$450 and $550. It is also important to note that approximately 85
percent of the Section 538 projects utilize tax credits to finance the
development, which means these properties serve tenants with household
incomes that range between 50 and 60 percent of median income. The
average median income served is approximately $35,000.
Question. Why have only a few projects been constructed and why was
only one loan approved last year?
Answer. The Department is aware of certain changes that need to be
made to the program to attract participation from the secondary market.
Upon conducting stakeholder meetings with members of the secondary
market and rating agencies, the Department is moving forward with the
necessary regulation changes. Moreover, we have been assured by the
rating agencies that these policy changes, once implemented, will make
the Section 538 program a very important component of affordable rural
housing.
Additionally, the fiscal year 2001 Notice Of Funds Availability did
not allow enough time to complete reviews required by the National
Environmental Protection Act. These reviews must be completed before a
commitment of Federal dollars can be made. The Notice Of Funds
Availability utilized for fiscal year 2002 shortened the period for
receipt of request for guarantees, which should allow the Department
adequate time to complete the National Environmental Protection Act
process before the end of the fiscal year. Any request received during
fiscal year 2001 that was approved for submission of the full
application and not funded during the fiscal year was carried over for
guarantee commitment during fiscal year 2002. Additionally, the
Department is seeking a reclassification of appropriations to allow
funds appropriated during a fiscal year to be available for commitment
during the subsequent fiscal year.
Question. Have you looked at an area population limitation increase
to be consistent with other Federal housing guarantee products and what
would be the policy implications for market share, attracting lenders
and serving borrowers?
Answer. The population limitation of Rural Development's Rural
Business Cooperative Service is 50,000. Business development is often
limited because the employer is not able to attract employees due to a
lack of affordable housing in the area. Because of the lack of
affordable housing, the rural community loses out two-fold; first, by
losing the tax base of the prospective employer, who decides to choose
another location that would be more attractive to recruiting employees.
Secondly, the community loses the tax base of the prospective employee
who cannot locate in the community due to lack of affordable housing.
The same principle holds true for the rural community's inability to
attract teachers, nurses, police officers, firefighters and other
essential occupations necessary to make a community viable.
Raising the population limit would make the Section 538 program
inconsistent with the other principal Rural Housing Service rental
housing program, the Section 515 program. Raising the population
limitation to 50,000 would enable the Section 538 to work hand in hand
with the Business and Industry and other guaranteed loan programs. It
would likely open the program to more moderate income families.
Question. Would you consider a sliding scale on the guarantee fee,
for example a higher guarantee fee the entity has over 25 percent of
leveraged funds and would the private sector and housing community
react positively towards this change?
Answer. The Department has discussed this issue with members of the
private sector and the housing community. There is an agreement that
the 1 percent initial guarantee fee is acceptable, but that the one-
half percent annual renewal fee has a negative impact on debt service
coverage ratios. As a result, the Department is currently working on
several changes to the regulations, which includes the reduction of the
annual renewal fee from one-half percent to one-fourth percent. We
believe that the lower annual renewal fee will help create greater
affordability. However, lowering of the annual fee could result in a
higher subsidy rate.
Question. How many loans have closed since program inception and
how many closures went forward when there was an obligation but when
the loan closed a decision was made not to continue with the guarantee?
Answer. To date, the Agency has closed 13 guarantees, totaling
$19,438 million to provide 672 units. There are now over 29 guarantee
commitments in the pipeline, which are in different stages of
completion. The pipeline currently totals approximately $35 million and
will produce 1,300 affordable rural housing units.
There are several instances in which the lender decided to continue
with the loan and development of the housing, without continuing to
pursue the guarantee. In such cases, we believe the Section 538 Notice
Of Funds Availability served as a catalyst for the development of
housing in rural areas. Without Section 538, the lender might not have
even considered the development of housing projects in rural areas.
Question. What alterations can you make to increase activity with
this program to serve rural America?
Answer. The Agency is moving forward with several regulation
changes designed to make the program more industry friendly. They
include:
Implementing the same investor repurchase provisions that are found
in the Rural Business Service Business and Industry Program. This
change would ensure the industry prompt payment of the guarantee and
provide better ratings by the rating agencies.
Lowering the annual renewal fee from 0.5 percent to 0.25 percent.
Reworking the liquidation time periods to be more consistent with
the secondary market.
rural utilities service
Question. What has been the effect of electric power deregulation
on rural electric cooperatives?
Answer. Maintaining access to reliable and affordable electric
service in rural areas is one of the greatest challenges in the
deregulation (or restructuring) of the electric industry. The Rural
Utilities Service believes that rural areas can share the benefits of
more competitive electric markets, if market rules include effective
oversight, consumer protections, and reliability of service is ensured.
Increased competition among electric providers is being pursued at the
wholesale and retail level.
To date 24 States and the District of Columbia have adopted
measures to open retail markets to competition. However, experiences
with volatile wholesale electric markets in California and elsewhere,
have led eight of these States to reverse or delay retail competition
(Arkansas, California, Montana, Nevada, New Mexico, Oklahoma, Oregon,
and West Virginia). Many of the remaining States, including largely
rural States in the Midwest, South, and West, have also deferred or
rejected proposals to open their retail markets.
Experience with retail competition in cooperative service areas is
limited. Nine States (Arizona, Arkansas, Delaware, Maine, Maryland,
Michigan, New Hampshire, Pennsylvania, and Virginia) required consumer-
owned electric cooperatives to allow competitive providers to sell
electricity to their retail customers. Other States have generally
exempted cooperatives or allowed them to opt into competitive retail
markets. Retail competition has been slow in coming to rural areas. For
example, in Pennsylvania where cooperatives opened their retail markets
on January 1, 1999, ahead of the State's investor-owned utilities, not
a single competitive provider has yet sought State approval to serve
the largely residential customers of the cooperatives. In Maine and New
Hampshire, retail customers of cooperatives have seen rate reductions
under retail choice. However, the savings were largely attributable to
a pass through of savings from replacement of existing wholesale power
contracts with lower cost power from the competitive market.
Implementation of retail competition in co-op territory in other States
has been slow, as few competitive providers have expressed interest in
serving rural consumers.
The lack of competitive interest in rural areas is not surprising.
It is important to recognize that utilities serving rural areas are
particularly challenged in providing reliable, affordable service by
the combined influences of distance, topography, weather, and lower
customer density. These factors contribute to the generally higher
costs of serving rural customers compared to urban and suburban
customers. Electric service in rural areas typically requires more
capital investment, has higher operation and maintenance costs, and
yields lower revenue per mile of line than in urban and suburban areas.
At the wholesale level, the Federal Energy Regulatory Commission
has been aggressively pursuing measures to open up electric
transmission systems to support broader, more competitive wholesale
electric markets. Electric cooperatives have been largely supportive of
the Federal Energy Regulatory Commission's efforts on wholesale markets
and open access transmission because almost all electric cooperatives
derive a portion of their electricity from competitive markets and are
dependent on the transmission lines of other utilities to deliver power
to their distribution systems. Competitive markets and open
transmission access give cooperatives more opportunities to secure
lower cost and reliable power to serve their customers. Open access
also offers cooperatives broader markets in which to sell any surplus
cooperative generated power and helps lower their costs.
The efforts at deregulating wholesale markets have increased
uncertainties and risks for Rural Utilities Service borrowers.
Substantial benefits to cooperatives of competitive markets and open
access have been slow to materialize.
The Rural Utilities Service borrowers have been stung by
unprecedented price spikes in Western and Midwestern electric markets.
Some have had to raise retail rates to cover higher prices. In
response, several cooperative-based entities have been formed to help
cooperatives cope with market volatility. Power marketers and other
entities now offer risk management services to help cooperatives better
manage their loads in emerging competitive markets. Volatile wholesale
market prices are a major concern in financing new generation. The
Rural Utilities Service encourages all borrowers to develop effective
market risk mitigation strategies and includes an examination of
borrowers' risk management in loan reviews. Implementation by the
Federal Energy Regulatory Commission of effective market oversight and
enforcement tools is also important.
Implementation of new transmission arrangements has resulted in
increased costs for transmission services in several regions. Federal
Energy Regulatory Commission's proposed new regional transmission
organizations offer potential benefits to Rural Utilities Service
borrowers, but one-size-fits-all approaches may not meet the needs of
rural systems. An additional concern for transmission dependent
cooperatives is that the new regional transmission arrangements may
bring increased costs, loss of existing transmission rights, and
inadequate payments for use of cooperative transmission facilities.
Complaints raising these issues are pending before the Federal Energy
Regulatory Commission.
The Rural Utilities Service shares these borrower concerns. In
recent years, the Rural Utilities Service has invested several hundred
million dollars in loans to expand and upgrade transmission in rural
areas. Transition to regional transmission organizations should not
undermine security for and repayment of the Federal investment in these
facilities. Rural Utilities Service is committed to working with our
borrowers, other rural utilities, the Federal Energy Regulatory
Commission, and State regulators to develop regional transmission
arrangements that support truly competitive wholesale markets, preserve
reliable electric service, protect retail consumers, and include
adequate protections for Federal debt.
Question. To what extent has the trend changed from generation to
distribution in lending activity?
Answer. The trends for the Rural Utilities Service Electric Loan
program for the past 5 years are clearly demonstrated by the following
table.
APPROVED FUNDING FOR GENERATION AND TRANSMISSION BORROWERS
[Dollars in thousands]
----------------------------------------------------------------------------------------------------------------
Fiscal year
-----------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
----------------------------------------------------------------------------------------------------------------
Borrower type-distribution:
Number of Loans............... 123 129 168 251 138 209
Amount of Loans............... $653,000 $611,000 $846,000 $1,485 $1,122 $1,564
Percent of Loans.............. 94 95 98 98 91 92
Percent of Amount............. 79 74 91 81 53 60
Borrower type-power supply:
Number of Loans............... 8 7 3 6 13 17
Amount of Loans............... $169,000 $213,000 $79,000 $340,000 $995,000 $1,052,000
Percent of Loans.............. 6 7 2 2 9 8
Percent of Amount............. 21 26 9 19 47 40
----------------------------------------------------------------------------------------------------------------
The table above shows an increase in the number of loans and the
amount of funding approved for generation and transmission borrowers
during the past 5 years. We expect this trend to continue for the
foreseeable future.
The uncertainty of the wholesale power market has caused power
supply (generation and transmission) borrowers serving rural America to
explore new generation and transmission projects in an effort to manage
their electricity supply portfolio to ensure reliable electric service
at a competitive price. Many borrowers are building new power
generation and transmission facilities in response to the deregulation
of electricity and the movement to establish large regional
transmission organizations.
Question. What percentage of Rural America has access to Internet
and broadband communications capabilities on a scale comparable to most
urban areas in this country?
Answer. With regard to rural Internet access on a comparable scale
of quality to urban access, the Rural Utilities Service estimates that
48 percent of rural Americans have dial-up Internet availability that
is significantly below urban quality. Urban quality dial-up access is
defined as connecting at speeds of 35 Kb/s or greater. With regard to
broadband access, it is important to note that true broadband service
must be ``two-way'' high-speed service, not just ``one-way'' high-speed
Internet access. Using the Federal Communications Commission's
definition of broadband (at least 200 Kb/s each way), the Rural
Utilities Service estimates that, between Digital Subscriber Line and
cable modem availability in urban areas, about 60 percent of urban
customers can receive broadband. In rural areas, Rural Utilities
Service believes that between 20 and 25 percent of all households can
receive broadband, and two-thirds of those are in Rural Utilities
Service's borrower-served areas.
Question. In an exchange with Senator Craig, Secretary Veneman
indicated that she is working closely with EPA on water systems where
EPA has found serious inadequacies with the water quality and is
imposing large fines on these water associations. Additionally, last
year the EPA Administrator Christine Todd Whitman approved new
regulations addressing arsenic standards for drinking water and was
concerned that some public systems would shut down as a result.
How many systems under the RUS portfolio has ceased to operate as
a result of the new regulation?
Answer. No Rural Utilities Service financed projects at present
have ceased to operate as a result of the new Environmental Protection
Agency's arsenic regulation. The new standard does not begin to take
effect until December 2006.
Question. How many systems are you working with in partnership with
EPA to address arsenic and other problems where EPA has imposed
sanctions and/or fines and are these projects given priority in funding
on the state and national level?
Answer. Rural Utilities Service is working with the Environmental
Protection Agency on many types of projects to assist rural communities
in meeting their water and wastewater needs. Rural Utilities Service
gives priority for funding to many types of situations small
communities face, of which arsenic would qualify. Since the new arsenic
standard was only recently promulgated and will not go into effect
until 2006, we are only just beginning to see a few applications that
involve arsenic removal. Applicants are not required to disclose
whether the Environmental Protection Agency has imposed sanctions or
fines on the applicant's system and our management information system
does not track whether sanctions or fines have been imposed on systems
in our portfolio.
Question. Please provide information on the backlog of applications
for the water and wastewater loan and grants program.
Answer. There are currently 497 incomplete applications
(applications that have been filed but are not considered complete
applications as they are missing documents such as the engineering and
environmental reports) and 504 applications (applications that are
ready to be further processed once funding becomes available) on hand
for Water and Waste Grants for a total of 1,001. The total amount
requested by these applications is $507,727,679 for incomplete
applications and $498,880,923 for applications for a total of
$1,006,608,602. There are currently 831 incomplete applications and 722
applications on hand for Water and Waste loans for a total of 1,553.
The total amount requested by these applications is $1,362,365,191 for
incomplete applications and $1,014,868,140 for applications for a total
of $2,377,233,331.
Question. The Emergency Community Water Assistance Grant Programs
was a success in the years it was appropriated. Considering the rural
water needs and the expected drought conditions in many parts of
America, can you foresee a need for this program in the near future?
Answer. During fiscal year 2001 we utilized $20 million in
Emergency Community Water Assistance Grant funding. Our projections
indicate that we can fund most of the increased demand because of
emergencies with our regular funds. Major disasters are handled by the
Federal Emergency Management Agency.
Question. If the Committee appropriated funds for this program, do
you believe it should be expanded to include emergency waste needs
also?
Answer. No, we do not have a demand for emergency waste grants at
this time.
rbs-guaranteed business and industry loans
Question. The program level for the B&I program will drop
significantly from recent program levels.
Do you see a decrease in loan activity or demand?
Answer. As of the end of March, we had obligated approximately $220
million less than we had at the same time last year ($510 million
versus $290 million). However, a large demand for the program
continues, with $610,441,393 in preapplications and $258,346,212 in
applications, totaling $868,787,605, pending as of the end of March
2002. The purpose of a preapplication is to allow a lender and borrower
to submit a limited amount of information, most of which should be
easily obtained, so that the Agency can determine and advise the lender
whether the request is likely to meet the requirements of the Business
and Industry program. An application involves the submission of all
information required by regulation. The Agency evaluates the
application and determines whether the borrower is eligible, the
proposed loan is for an eligible purpose, there is reasonable assurance
of repayment ability, there is sufficient collateral and equity, and
the proposed loan complies with all applicable statues and regulations.
Question. Do you anticipate an increased demand for energy
generation or distribution in for new facilities and refinancing
existing operations in this low interest environment?
Answer. We currently observed an increase in loans to refinance
existing operations. We have also recently reviewed two proposed
ethanol projects from the Midwest at the National Office level and have
five preapplications (no applications) totaling $69.1 million pending.
Question. What is the backlog and how will you address future
needs?
Answer. At the end of March 2002, there were 190 preapplications
and 177 applications on hand totaling $868,787,605. Regulations outline
selection priorities when more demand exists for the program than there
is available funding. This priority selection process will be
implemented if the demand exceeds available funding. Any projects not
funded this fiscal year will be carried forward to next fiscal year.
Question. Has there been any discussion to move to a preferred
lender program similar to SBA?
Answer. Authority to establish this category of lender, as an
enhancement to delivery of the program, was included in the 1996 Farm
Bill. A legal concern was raised concerning the Agency's authority to
delegate environmental assessment responsibilities to a preferred
certified lender. This concern has not been resolved and would require
a statutory change.
Question. Do you have adequate resources to provide the proper
training, specifically in field offices, to adequately underwrite and
service B&I loans and, if not, what additional resources would you
need?
Answer. Yes, we do have adequate resources to provide much needed
training to field personnel. Field staff training is an on-going
requirement. The lending arena is far more complex, with the onslaught
of creative methods of financing, new business start-ups, mergers,
sales, etc. The staff requires more in-depth training to fully
understand and counter the difficult issues arising from this complex
lending arena. Our resources are being redirected to provide the in-
depth training needed to address this issue.
Question. Considering recent Government Accounting Office reports
and a rise in defaults and delinquencies, how much of this can be
directly attributed to training and staff recruitment to properly
administer this program?
Answer. Some of the responsibility for defaults and delinquencies
in this program lies in the ability of our staff to properly review and
underwrite the potential loan applications and to conduct the necessary
lender monitoring. With that in mind, we have taken significant steps
toward ensuring that our field office staff is adequately trained and
motivated to improve their loan underwriting and lender monitoring
skills. The agency has initiated internal measures to address these
concerns including assessment review of State Office operations,
rescission of State Office approval authority until training of staff
occurs, and implementation of financial analysis software (currently in
the final stages of acquisition) to assist State Office assessment of
applications.
Question. What impact do you perceive from the elimination of the
B&I Direct Loan Program?
Answer. By discontinuing funding for the B&I direct loan program,
USDA will no longer provide the promise of job creation in rural areas
and will prevent situations where borrowers are very likely to default.
The funding level for the B&I program was never fully utilized. The
program had authority to provide $50 million in loans since fiscal year
1997 (the first year of the program), but never used near that amount.
Further, the subsidy rate went from negative in fiscal year 1997
through fiscal year 2000, to 6 percent in fiscal year 2001, to 28
percent for fiscal year 2002, indicating a much higher default rate
than anyone anticipated. The rate rose dramatically, even though lower
discount rates between fiscal year 2001 and fiscal year 2002 made
direct loans less expensive. Direct B&I borrowers must have been
rejected from a private bank in order to qualify. Program performance
over the last 5 years indicates a high risk situation not appropriate
for a program whose goal is economic development and job creation for
rural America. The high default rate indicates that businesses are
folding and that the program is not providing long-term, stable jobs to
rural America. The lack of demand and the poor program results made it
appropriate to discontinue funding.
rural community advancement program
Question. What additional flexibility would you request in this
account and do you have sufficient data to reflect the shifting needs
in each of the states?
Answer. We currently have ample flexibility in the Rural Community
Advancement Program (RCAP). Full implementation of provisions of the
1996 Farm Bill would not only allow transferring funds within funding
streams but also among streams. However, there has not been a demand
from the RCAP beneficiaries for this added flexibility.
empowerment zones and enterprise communities earmark
Question. All earmarked funding for EZ/EZ areas are eliminated and
carryover funds are cited.
How will you continue to address these areas of greatest need?
Answer. While the 2003 budget does not include grants for the
Empowerment Zones and Enterprise Communities grants initiative, it
maintains the targeting of Rural Development program funds to these
areas. We will also continue to provide a significant and critical
amount of technical assistance from both the National Office and State
and Area Offices to Empowerment Zones and Enterprise Communities. This
includes training in such things as grantsmanship, project management,
financial management, conflict resolution, and building effective
inter-organizational partnerships. In addition, we will continue
provide a significant amount of support through Internet-based
information systems.
Question. Your justification indicates sufficient resources will be
available. Do you believe these designated areas will receive the same
amount of resources in fiscal year 2003 as in fiscal year 2002?
Answer. In general, the ability of rural Empowerment Zones and
Enterprise Communities to obtain resources from other Federal, State,
local, private, and non-profit sources tends to rise as these
communities gain knowledge of the range of programs and experience in
working with funding programs and organizational partners who help
implement the community strategies. From our experience working with
these Round II Empowerment Zones and Enterprise Communities, we believe
that most are at a point where they can manage to continue their
programs for the next year without additional Empowerment Zones and
Enterprise Communities grants.
Question. Have the designated Rural EZ/EC areas come into the
mainstream economically due to past funding?
Answer. The Empowerment Zones and Enterprise Communities have
created over 32,000 jobs, made nearly 1,000 business loans, and started
or attracted over 850 businesses. Some have gone beyond job creation to
build economic specializations such as the luxury yacht industry in the
Kentucky Highlands Empowerment Zone. While more of this has occurred in
the Round I Empowerment Zones and Enterprise Communities than in the
Round II Empowerment Zones and Enterprise Communities, this is
principally a matter of time, and as the Round II communities are able
to build on the groundwork laid by their early projects, the
enhancements in the strength and vitality of their economies will
follow as it has for the Round I Empowerment Zones and Enterprise
Communities.
national rural development partnership
Question. How many States are active with their respective State
Rural Development Councils? Please describe activities.
Answer. The National Rural Development Partnership currently
includes 40 State Rural Development Councils, 39 of which receive
Federal funding. The Arizona Rural Development Councils has not yet
received any Federal funds. The State Rural Development Councils work
on a wide variety of issue areas, ranging from health care to
transportation, environmental issues, agriculture, education, and
economic development. Descriptions of these contributions provide a
sample of the breadth and depth of State Rural Development Councils
activities and are provided below:
Minnesota Rural Partners
The State Rural Development Councils for Minnesota has created a
unique alliance with four foundations, twelve corporations, and three
levels of government entities to support development of the Minnesota
Farmers' Market Hall, an initiative that fits with Minnesota Rural
Partners' plan to help diversify agriculture.
New Hampshire Rural Development Council
In 2001, the Council worked diligently with several local, State
and Federal partners to develop plans for the Community Kitchen
Program, a model for small-scale, shared-use community kitchen
facilities which maximizes use of existing community assets and local
leadership. Three of these kitchens are in development in New Hampshire
with over ten micro-food enterprises participating.
Pennsylvania Rural Development Council
The Pennsylvania Rural Development Council collaborated with the
State departments of Public Welfare, Health and Insurance in 2001 on a
mini-grant initiative to support development of outreach efforts to
increase access to health care coverage for Pennsylvania's low-income
children and families, promote preventive care and good health
planning, and lower the incidence of uncompensated care. This effort
resulted in 9 grants to 12 rural communities for a total of $358,824.
Wyoming Council on Rural Development
Inspired by the difficulties many Federal, State and local
government agencies, as well as private businesses, were having working
with tribal entities in Wyoming, the Council sponsored a workshop that
provided these officials and business leaders the knowledge necessary
to develop and conduct effective working relationships with Indian
Tribes and organizations.
Question. After the Department requested and Congress approved of
the reorganization of the Department of Agriculture, wasn't the Rural
Development Agency designed to change the mission and conduct a
coordinated effort with State and local entities?
Answer. From its inception in 1990, the National Rural Development
Partnership has been a vehicle that the Department of Agriculture uses
to conduct a coordinated effort with State and local entities. The
central role of State Rural Development Councils in building Federal,
State, and local collaborations has not changed over the past decade.
Question. Since many of the Rural Development programs have been
reduced in the fiscal year 2003 request, did the Administration
consider using funds targeted for the NRDP to support critical
shortfalls like low-income housing?
Answer. Since it's founding in 1990, the National Rural Development
Partnership (NRDP) has been funded by the Federal government only from
the voluntary contribution of discretionary agency funds. Each State
Rural Development Council is required to fund at least 25 percent of
its annual budget from non-Federal funds. The National Rural
Development Partnership is housed in the Department of Agriculture, but
it is funded by several Federal agencies. During the 9-year period,
fiscal years 1993 through 2001, five Federal agencies provided funding
for the National Rural Development Partnership (Department of
Agriculture-Rural Development, Labor, Transportation, Veterans, and
Health and Human Services). It is the Department of Agriculture's
intention to broaden the set of financial supporters of the National
Rural Development Partnership for fiscal years 2002 and 2003. Total
funding for the NRDP has been about $2 to $3 million annually, which is
a relatively small portion of the cost of our Rural Development
programs.
Question. Are the efforts within the Office of Outreach duplicative
to the efforts of the NRDP and the 2501 program? Please explain.
Answer. No, the efforts of the National Rural Development
Partnership and the Office of Outreach are not duplicative. In fact,
the National Rural Development Partnership and the Office of Outreach/
2501 Program have very different missions. Whereas the 2501 Program
fills a very important but narrow niche, serving the needs of socially
disadvantaged farmers and ranchers by heightening awareness of the
Department of Agriculture programs, the National Rural Development
Partnership seeks to improve the quality of life for all rural
Americans by fostering inter-agency collaborations.
Question. Is there any way to measure success of the NRDP efforts?
Do they actively help entities that lack capacity to develop strategic
plans, grant writing or reporting activities after they receive Federal
and/or State funds?
Answer. The National Rural Development Partnership can and does
measure the many and varied successes of the 40 State Rural Development
Councils. In fact, over 200 success stories are submitted to the
National Rural Development Partnership by State Rural Development
Councils in any given year. The National Rural Development Partnership
network allows us to disseminate these stories widely so that
successful work in one State can be adapted and implemented by the
State Rural Development Councils in other States.
The National Partnership Office of the National Rural Development
Partnership is currently developing a new State Rural Development
Councils Accountability System designed to further capture the
successes and strengths of our Councils. This Accountability System
will further enhance our ability to share best practices and make a
difference for rural Americans. An early version of this system is to
be in place on October 1, 2002 and the full system is slated to be
complete by October 1, 2005.
centralized service center
Question. The creation of the CSC was a large effort by the
Department that I believe has been a great success. One of the CSC
justifications was it facilitates the best of both worlds, state-of-
the-art software and technology from the private sector combined with
Federal supervised credit.
Does the CSC have the adequate resources to continue efficient
service in the current environment and what are your plans to keep
their resources up to date?
Answer. The Centralized Servicing Center currently has adequate
resources to provide efficient services for homeowners. Major factors
for continuing effective, efficient servicing in the future are
technology and human resources. The technology used at Centralized
Servicing Center is currently state of the art. However, constant
reviews, education, and enhancements are required to integrate new
technology and services as they emerge. For example, a new service
offered this year is payment by phone. Homeowners can now call the
Centralized Servicing Center and provide basic information from the
front of a personal check and the payment can then be electronically
made. There is no cost to the homeowner for this service and this
process is less costly to the government than the standard payment
remittance process. Also, all homeowner mortgage documents and
communications are imaged and retained within the servicing system. By
the end of this fiscal year our local Field Office staff will have
access to these images. This will further enhance seamless servicing
for our homeowners. This enhancement and others are a result of annual
strategic planning sessions to identify and plan for future needs and
ensure that technology and staff are allocated to changing needs. In
addition, through periodic visits to other major Private Industry
Mortgage Servicers, participation in the Commercial Service Bureau
Users Group and participation in the Mortgage Bankers Association
Technology work groups, our staff is educated on changing technology
and services. In the near future, we plan to provide our customers
Internet access to Centralized Servicing Center.
Question. There were discussions in the past that the CSC would
become a Federal collection center for other Federal loans. Can you
provide an update?
Answer. In March 2001, Treasury declined our proposal to collect
Single Family Housing debt that remained following property disposition
and our request to be considered to become a Federal Debt Collection
Center. It is our understanding that Treasury plans to service these
debts itself.
fsa farm credit
Question. The fiscal year 2003 Budget Summary includes a
justification for the shift from Direct Operating and Ownership Farm
Loans to Guaranteed, continuing a trend of the last decade.
Additionally, the program levels in the President's budget reflect the
ability for FSA to provide operating loans to 31,000 farmers in the
guaranteed program and 14,500 with the direct. For ownership loan
programs, levels would provide assistance to 4,500 farmers with the
guaranteed farm program and 1,000 with the direct farm program. This
shift will affect at risk farmers that have nowhere to turn.
The Direct Operating and Ownership Loan Programs were designed to
assist farmers that could not obtain credit elsewhere. The guaranteed
programs do not take the place of the direct programs in serving the
same population. What will be the impact of the reduction in direct
farm operating and ownership programs?
Answer. Administrative efforts undertaken in the guaranteed
programs to reduce the paperwork burden on lenders and expedite the
approval process have increased the amount of loan activity in fiscal
year 2002 compared to the previous year. This increase is most dramatic
in the guaranteed farm ownership loan program where use has increased
by 46 percent compared to a year ago. This increased use of guaranteed
loan programs will assist in fulfilling the demand for FSA loan
assistance. This surge in use of the guaranteed programs by applicants
previously seeking direct loans will enhance the ability of at-risk
beginning and minority farmers to obtain direct loan assistance.
Question. What are the current backlog and the rate of obligations
of funds in comparison to the previous year?
Answer. Use of direct operating loan funds is consistent with a
year ago at this time. Use of the guaranteed loan programs has
increased compared with a year ago--in the operating program, the usage
has increased by 8 percent and the farm ownership program is
experiencing a 46 percent increase compared to a year ago. The demand
for low-interest emergency disaster loans is 57 percent less than the
previous year.
Question. How will this change affect minority and beginning
farmers?
Answer. Due to increased use of the guaranteed loan program by
applicants previously seeking and obtaining direct loan funds, low-
income minority and beginning farmers will have increased access to
direct loan resources to fulfill their credit needs.
economic research service/national agricultural statistics service
agricultural resources management survey
Question. The President's budget includes a $2.7 million increase
for ERS and a $4.6 million increase for NASS in order to improve the
Agricultural Resource Management Survey (ARMS). This survey gathers
information from family farmers all over the country in order to
provide USDA and other organizations with the most recent data
available. The budget also proposes in increase of $15.5 million for
NASS in order to fund the activities associated with conducting the
2002 Census of Agriculture.
Please explain the differences between ARMS, which gathers
information every year, and the Census of Agriculture, which gathers
information every five years. Is the information gathered duplicative?
Answer. The Agricultural Resource Management Survey (ARMS) is an
annual survey of about 1 percent of U.S. farms and obtains detailed
information that can be used to measure the economic performance of
farms. In addition, the ARMS is specifically designed to provide a
research data base that can be used to analyze many different
agricultural and resource policy issues. The ARMS is USDA's primary
source of information about the current status of and changes in the
financial condition, production practices, use of resources, and
household economic well being of America's farmers. The ARMS supports
the official USDA annual farm income estimates and the sector net
income reported to the Bureau of Economic Analysis for developing
annual GDP and personal income for the U.S. economy. The ARMS survey
supports the Congressionally mandated commodity cost of production
estimates (corn, oats, barley, sorghum, wheat, cotton and dairy) and 7
additional commodities (rice, tobacco, peanuts, sugarbeets, hogs, and
cow-calf production) for which ERS receives many requests for policy
analysis.
The Census of Agriculture provides county, State, and national
estimates of general farm and farm operator characteristics at 5-year
intervals. The estimates are based on completed questionnaires mailed
to all farms. The Census reports are widely used to make spatial and
temporal comparison of farm numbers, land in farms, crop and livestock
production and inventories, and other farm and farm operator
characteristics. The information content from the Census can be used to
conduct economic analysis on farm policies at the farm level but lacks
the detail needed to conduct economic analysis on farm policies for
individual commodities.
Prior to the 1997 Census of Agriculture, there was duplication
between the Census, ARMS, and other NASS surveys in collecting crop and
livestock inventories, agricultural production, and sales. For the 1997
and 2002 Census of Agriculture, NASS and ERS made major efforts to
establish consistent definitions and to minimize the duplicative data
collection and overlap with ARMS. For the 2007 Census of Agriculture,
steps are being taken to integrate and coordinate ARMS and other
economic surveys to further remove duplicate reporting. The integrated
effort will prevent duplicate reporting by farmers and reduce
respondent burden.
Question. Please explain what the effect would be of merging the
two surveys, and whether this has been considered previously.
Answer. The reengineering of ARMS and its integration with the
Census of Agriculture will not change the overall objectives and uses
of either survey. However, respondent burden will be reduced by
preventing duplicate reports by farmers. The reengineered ARMS and e-
Government initiative will build a questionnaire repository for
``customizing'' instruments to a respondent's profile. The process will
be dependent on the use of a complex sampling design and a data
warehouse containing individual reported survey and Census data. With
the transfer of responsibility for the Census of Agriculture to USDA,
some efforts were made to coordinate the 2002 Census of Agriculture
with the ARMS data collection. Changes were made in the information
content so the reported estimates would be consistent and
complementary. With the proposed reengineering of ARMS, both data
collection efforts would be fully coordinated and integrated in the
2007 Census of Agriculture.
Question. Is the ARMS survey carried out on years that the Census
of Agriculture questionnaires are carried out, or is there an effort to
streamline efforts during those times?
Answer. The ARMS survey is conducted in the same year as the Census
of Agriculture. The ARMS is necessary to be able to produce the annual
farm sector income and balance sheet estimates. The coordination of the
data collection between the Census and ARMS, however, will ensure that
a respondent selected for both surveys is only contacted once.
Question. Is the Administration expecting to continue increasing
funding for ARMS annually, or do the increases in the President's
budget raise base funding for this activity to an acceptable level?
Answer. Continued increases should not be necessary if this
increase is provided. The survey sample size would be reinstated to its
original level while at the same time providing resources to modernize
survey methods and better coordinate the collection and reporting of
economic data. The requested $7.3 million for NASS and ERS raises the
base annual funding level for ARMS to an adequate level. The level of
funding would increase the size of the ARMS survey sample to an
adequate level to generate statistically defensible results for the
U.S, farm production regions, and the 15 leading States in terms of
farm value of production. The funding would also provide coverage of
commodities in the cost of production phase of the survey to meet
legislative mandates. Without the additional funding to cover
escalating survey cost, only national level estimates for the sector
could be developed and with the increasing interval between the
commodity cost of production survey estimates, would no longer be
defensible in terms of production technologies.
economic research service
food assistance and nutrition research program
Question. Does ERS solicit input from FNS on study and evaluation
needs for the domestic food assistance programs? If so, does FNS
receive feedback on how their input has been utilized? Do you believe
there are gaps in the current research?
Answer. In developing priorities for the Food Assistance and
Nutrition Research Program, the Economic Research Service (ERS) works
closely with the Food and Nutrition Service (FNS), the agency
responsible for administering the Department's food assistance
programs. As one part of this effort, ERS requests and FNS provides a
written list of priorities each year. ERS then meets with FNS to
discuss their priorities and how ERS can help meet their needs. During
the past 5 years, ERS has consistently incorporated some, but not all
of FNS priorities into its research plan. Limited and declining
research funds for food assistance research dictate that some projects
will not be funded. Beginning in fiscal year 2002, the President's
budget has provided some research funds to FNS that allow FNS to
initiate some priorities directly.
rhs demonstration program
Question. In fiscal year 2001, Rural Housing Service was authorized
to create a housing demonstration program for agriculture, aquaculture
and seafood processor worker housing. What is the status of the
demonstration program and what lessons were learned?
Answer. Public Law 106-387 Department of Agriculture, Rural
Development, Food and Drug Administration, and Related Agencies Act,
2001--authorized Rural Housing Service to establish a demonstration
program to provide financial assistance grants--for agriculture,
aquaculture and seafood processor workers in Mississippi and Alaska. A
Request for Proposals was issued on February 12, 2001. Nine proposals
were received in response to the Request for Proposals. Seven proposals
were received from sponsors in Mississippi and two proposals were
received from sponsors in Alaska. Four proposals in Mississippi and two
Alaska were selected for funding.
As of March 31, 2002, one project has been completed in Alaska and
will be ready for occupancy by processing workers during the 2002
season. The sponsors of the other five proposals are continuing to work
toward construction and we anticipate these projects getting, underway
within the next 12 months.
It is too early to tell how successful this demonstration will be.
It is clear, though, that there is an overwhelming unmet need for
processor worker housing in many parts of the country. Our staff
recently attended a roundtable discussion on processor worker housing
issues. This roundtable brought to light the unique problems we are
facing when trying to deal with the problem. Due to agricultural
producer integration, many new processing facilities have sprung up in
small communities ill-equipped to handle an influx of hundreds or
thousands of low--income families. As a result, many of these workers
find themselves renting over-priced, substandard housing units or even
sleeping in shifts in order to make the housing affordable. There are
few resources available to assist these small communities in providing
adequate housing for these low--income residents. Rural Housing
Services's Section 514/516 Farm Labor Housing program definition does
not include processor workers and is not adequately funded to deal with
the problem. The Rural Housing Service Section 515 Rural Rental Housing
program could be used to house processor workers if there were adequate
funding, but in recent years funding levels have been low.
If a new program serving processor workers was authorized, we
suggest that it would be beneficial to conduct a national pilot
program. The structure of the program would be similar to the
demonstration and many of the lessons learned in the demonstration
could be applied to the pilot program.
______
Questions Submitted by Senator Robert C. Byrd
risk management agency
usda response to drought conditions-ag production
Question. Weather conditions again this year do not appear
promising for our Nation's farmers and ranchers. Drought conditions in
the eastern United States already are resulting in water shortages,
calls for restrictions on access to aquifers, and a general concern
that this year's drought will be worse than those of the past 2 years.
On the west coast, earlier reports of high snow packs have turned to
disappointment due to a two month dry spell. In spite of these reports,
the President's request does not include any funding for emergency
loans and, instead, relies on carryover funds to meet anticipated needs
which, according to your statement Secretary Penn, will be sufficient
this year.
In 1999, drought took hold of West Virginia, along with other
States, and caused long-term harm to farmers and ranchers. Cattlemen
had to liquidate their herds due to lack of forage and water. I don't
see how we can sit idly by when we know what is on the near horizon.
According to the U.S. Drought Monitor released on March 5th, parts of
the country has been in drought conditions for a period of years and
the East Coast States have been suffering abnormally dry conditions
since last fall. The entire State of West Virginia falls in the ranges
of moderate to extreme drought.
Do you believe that crop insurance and other risk management tools
are satisfactory to meet the challenges farmers and ranchers are sure
to face this year due to adverse weather conditions?
Answer. Yes, the Risk Management Agency (RMA) has launched
initiatives to satisfactorily insure that farmers and ranchers are
provided with crop insurance and other risk management tools. The
Agriculture Risk Protection Act of 2000 (ARPA) constituted major
legislative changes that RMA implemented in stages. Premium subsidies
were increased as provided by the Act. This provided producers more
than $36.7 billion in protection on over 211 million insured acres
through nearly 1.3 million policies for causes of loss due to adverse
weather conditions, such as drought, inability to plant due to drought,
and failure of irrigation water supply.
The Dairy Options Pilot Program (DOPP) was expanded to include 300
counties. DOPP is an innovative cost-share program for dairy producers
that helps dairy farmers put a ``floor'' under the price they receive
for milk using futures and options markets.
RMA has cooperative agreements with 12 State Departments of
Agriculture to provide customized risk management educational
opportunities to producers in the States of Pennsylvania, Maryland,
Vermont, Rhode Island, New York, Delaware, West Virginia, Maine, New
Jersey, Connecticut, New Hampshire, and Utah. RMA supplements these
activities with additional risk management training in high schools,
community colleges, and other forums.
RMA is continuing to develop, expand and improve its risk
management tools so producers can plan, grow, and market their crops
with confidence because they are backed by affordable, tailored
policies that provide substantial risk protection.
Question. If Congress were to develop a disaster program this year
due to weather conditions, how would you suggest it be crafted so as to
not discourage people from buying crop insurance in the future?
Answer. Consider structuring any disaster benefits based on whether
the producer had purchased insurance and slightly enhance the amounts
for those who had insurance.
Question. As you work with the farm bill conferees on a package
that may include assistance for the 2002 crop year, will you support
efforts to provide assistance to farmers and ranchers who may suffer
from weather-related losses this year?
Answer. The Administration continues to rely on Federal crop
insurance as the primary safety net for agricultural producers. We are
fully confident that crop insurance, along with other risk management
tools, can provide adequate protection to meet the challenges of
producers. There has been a high rate of participation in the program
over the past few years and we expect to provide farmers with immediate
payoffs when, and if, losses are realized. Where there isn't adequate
coverage for producers, USDA also offers the Noninsured Assistance
Program and emergency loans.
Question. Does the Department have a contingency plan to assist
farmers and ranchers this year in the event weather conditions continue
to worsen?
Answer. USDA's primary safety net for agricultural producers
continues to be the Federal crop insurance program. Because it is far
too early in the year to determine the degree of loss due to adverse
weather conditions, we plan to continue monitoring the situation. If
and when losses are realized, we are committed to provide farmers with
immediate indemnity payments.
elimination of watershed and flood prevention activities
Question. The President's budget request eliminates funding for
ongoing watershed operations activities, including a program to
rehabilitate flood control structures that are posing dangers to public
health and safety. Instead, the President proposes to shift funding
into a contingency fund for the Emergency Watershed Protection Program.
This way, I understand, funds would be available for flood recovery
operations when disaster strikes.
While I agree that a contingency fund for the Emergency Watershed
Protection Program makes sense as a way to expedite emergency
assistance to stricken areas, I find it troubling that we would have to
eliminate funding for preventing measures at the same time. This
strategy brings to mind the old adage of an ounce of prevention being
worth a pound of cure.
There are many examples of how watershed operations have made a
difference to rural communities. During May and July of 2001,
catastrophic rains flooded 22 counties in Southern West Virginia.
Although Raleigh County West Virginia was hit hard by these heavy
rains, one small town called Sophia was spared massive damages. Why?
Because the Soak Creek watershed project protected 205 homes, 46
businesses, six churches, and one school from massive flooding damage.
Even in non-disaster years, this $10.5 million watershed project
provides an annual flood benefit of $625,400. Without the Soak Creek
Channel watershed project, the rains of 2001 would have been more
devastating for this community.
Secretary Rey, don't you agree that a sound investment in flood
control would help avoid the need for emergency response to a disaster
and reduce overall costs in both dollar and human terms?
Answer. I agree that prevention and avoidance can help avoid
emergency response to disasters. The Administration's proposal is to
terminate funding to the Watershed Protection and Flood Control program
and to rely more on programs administered by the Corps of Engineers and
FEMA.
Question. Since the Corps of Engineers has jurisdiction for flood
control only in large watersheds, if USDA does not have a role in flood
control in small watersheds, which comprise most of rural America, who
will?
Answer. The Corps of Engineers jurisdiction is not limited to only
large watersheds and they are presently assisting several communities
in small watersheds in rural America. FEMA's programs are also working
with communities in rural America in helping to resolve natural
resource concerns. Presently, many States have existing programs that
assist communities in small watersheds in solving the natural resource
concerns. These existing programs are more efficient than the USDA's
watershed program.
Question. Would you not agree that existing flood control
structures and measures funded through USDA have prevented substantial
damages over the years, and if so, why would you now want to eliminate
a program that prevents floods and replace it with a program that will
be forever chasing flood waters after they have already done their
damage?
Answer. The small watershed has been in existence since 1944 with
enactment of Public Law 534 and then expanded in 1954 with Public Law
566 and have prevented substantial damages in the past 58 years
throughout America. The past watershed projects installed will continue
to provide benefits in the future, but as times have changed, we need
to reexamine the programs and fund those that are more cost effective
like the programs administered by the Corps and FEMA. We also need to
recognize that existing programs at the State and local level are also
addressing many of these issues.
usda response to drought conditions--rural communities
Question. Secretary Neruda, drought conditions do not affect only
farmers and ranchers. Rural communities also suffer. Today, Berkeley
County, West Virginia, is experiencing its worse water crisis of
record. The county had made plans to develop a more efficient water
delivery system to serve its people, but the current drought conditions
have made their problems immediate and extremely serious. The springs
that had been used for water supply are producing far below their norm.
Quarries, which used to supplement these springs, are being pumped dry.
They have appealed to me to help and I am bringing this to your
attention.
Over the years, I have fought to increase the levels of funding for
rural water and wastewater programs at USDA. I strongly believe that it
is our obligation, as representatives of the people, to ensure that our
citizens have access, at least, to the most basic of services. Without
water there is no life. The drought conditions we now face have only
made worse an unacceptable condition.
Berkeley County will soon be submitting an application to USDA for
rural water assistance. I would like assurance from you that this
application will receive your personal attention.
Answer. Rural Development officials have met with the Board of
Directors of the Berkeley County Public Service District to discuss
their circumstances. The Public Service District has identified needs
that must be addressed, and is currently planning how to best meet
those needs. An application for Rural Utilities Service funding was
discussed; however, the Public Service District indicated that it was
pursuing other possible sources of funds at this time. I will ensure
that my office monitors the progress of an application if one is
submitted.
Question. Will you please advise me when you have received this
application and keep me apprised of the actions of USDA in regard to
its disposition?
Answer. The Water and Waste Disposal program is conducted primarily
at the State level. Because of that, I believe the most efficient
approach would be to have my West Virginia Rural Development staff keep
your staff at the State level informed of actions relating to filing
and development of an application.
______
Questions Submitted by Senator Tim Johnson
prime
Question. One of 9 ethanol projects currently underway in South
Dakota, is an innovative ethanol production and cattle feeding
operation, known as (PRIME( or the Dakota Value Capture Co-op. Once
complete, this project will produce approximately 20 million gallons of
ethanol, and, capture the value of the wet distillers grains (byproduct
from ethanol production) and employ it as an input in the feeding of
cattle in an adjacent feedlot.
To help jump-start this innovative project, I worked to provide $6
million in appropriations last year. As you know, I've been trying to
get USDA to expedite their share, $3 million, of this grant to PRIME
because the Energy Dept. has already approved funding and is set to
devote their share, $3 million, to PRIME within 1-2 weeks. In a letter
sent to William Hagy, Deputy Administrator of Business Programs at
USDA, John Ferrell, from the Office of Fuels Development at DOE,
indicates that the department intends to fund PRIME, LLC of South
Dakota for an integrated ethanol complex, including an ethanol unit,
waste treatment system and enclosed cattle feed lot. The application
received by DOE is being processed at this time. Their disbursement of
$2.82 million is expected by the end of March 2002. The Department
states that it does not have any other open or planned solicitations or
funding for a similar type project. That letter was sent to USDA on
February 28, 2002.
More than 700 South Dakota farmers and ranchers have invested over
$14 million in equity toward this cooperatively held ethanol and cattle
feeding project. These Ag producers deserve the cooperation of those of
us at the Federal level, in accordance with the enactment of the fiscal
year 2002. Agriculture Appropriations Conference Report, to do our jobs
and help provide the grant assistance authorized last year.
Can you give me an update on the status of this matter and when
the USDA grant will be made?
Answer. On March 29, 2002, Rural Business-Cooperative Service
Administrator, John Rosso delegated authority to administer the grant
funds at the State Office level to our Rural Development South Dakota
State Director. The State Office is currently working with officials of
Dakota Value Capture Cooperative to process and administer the
Department of Agriculture grant funds. This will allow Dakota Value
Capture Cooperative to work closely with the State Office to expedite
this process.
Question. How will you help move the process along to ensure the
expeditious delivery of grant funds to the project?
Answer. Mr. Rosso contacted representatives of Dakota Value Capture
Cooperative on April 3, 2002, to express the need for and explain
exactly what the Agency will require in order to timely process the
grant. Rural Business-Cooperative Service has established a working
relationship with the Department of Energy Project Officer, Dakota
Value Capture Cooperative, and others to ensure that the grant funds
are delivered as expeditiously as possible.
ewe lamb expansion program and lmaap
Question. Last October USDA announced extending the Lamb Meat
Adjustment Assistance Program (LMAAP) to July 31, 2003. New rules to
extend LMAAP have yet to be published in the Federal Register.
Additionally, USDA announced plans to implement a ewe lamb expansion
program (through LMAAP) that would provide incentives for producers to
purchase or retain breeding ewes, expand their herds, and increase the
available supply of domestic lamb meat. These are the only details
producers have received about this new program that was announced in
October.
What is the status of the new rules extending LMAAP?
Answer. New rules to extend the LMAAP will be published in the
Federal Register on March 26, 2002.
Question. When will the ewe lamb expansion program be released and
implemented?
Answer. Information regarding the ewe-lamb expansion program will
be provided on April 8, 2002, via an update to USDA document 10-LD,
Lamb Meat Adjustment Assistance Program.
loan rates
Question. It's my hope and goal that Congress enacts a new farm
bill soon in order to provide a level of predictability to farmers with
respect to what loan rates and other safety-net mechanisms will be for
the 2002 crop year and beyond. Should the farm bill conferees fail to
produce a final conference report on the farm bill prior to March 22nd
(the so-called Easter Recess deadline), what will USDA do with respect
to loan rates for the 2002 crop year?
Answer. USDA is still optimistic that Congress will complete the
Farm Bill in time to set loan rates for the 2002 crop.
updated yields
Question. Farmers capitalized upon advances in production-
agriculture technology to become more efficient and competitive. In
South Dakota, producers have matched this technology with their know-
how to achieve measurable crop yield improvements in recent years. The
Senate farm bill recognizes this fact and allows farmers to update
their yield and acreage data used to calculate farm payments. However,
the House bill relies upon old yield from the 1981-1985 period to
figure support.
Understanding that implementation of the new farm bill will
complicated no matter the final product, what is USDA's position with
respect to whether or not producers should have the choice of updating
their yields used to calculate program payments?
Answer. The process of updating yields would be time consuming, so
USDA hopes the new Farm Bill can be finalized in a way to permit this
to be done in an orderly manner. We recognize that many producers have
program yields which do not currently reflect their production history
of recent years for some crops.
farm bill payment limitations
Question. Why does the September 2001 report, ``Food and
Agriculture Policy-Taking Stock for the New Century'' document
published by USDA suggest that too few farmers are receiving too many
of the Federal Government payments, yet, USDA has not supported or even
taken a position on the Dorgan-Johnson-Grassley payment limitations
amendments in the Senate farm bill?
Answer. Our policy document was primarily addressing a broader
concern with the distribution of farm program benefits across all
sectors of agriculture and not the narrower question/issue of the
distribution of payments among traditional program crop producers. We
believe that current programs have not addressed the needs of many
producers as well as they have commercial producers of the few major
program crops. There are many sectors of agriculture which receive
relatively little assistance from Government programs and services and
that was one of the concerns we were addressing. The Senate payment
limitation provision addresses a narrower concern regarding the
distribution of payments and benefits for producers of those few
program crops. This is a somewhat different issue. The payment limit
provision will have disparate effects on producers of a few major
program crops in different regions of the country, but will not address
the issue of providing benefits to producers of other commodities who
also need assistance of various kinds. We believe the Congress is the
appropriate body to address the largely regional distributional
questions brought up by the Dorgan-Johnson-Grassley amendment.
honey bee research
Question. Mister Secretary, domestic honey producers and beekeepers
have contacted me with deep concerns about the cuts proposed in the
fiscal year 2003 USDA budget with respect to honey bee research and the
Agricultural Research Service (ARS). Honey producers play an important
role in the agricultural economy in South Dakota.
They are concerned with the reduction of bee research from $5.7
million to less than $2.5 million, given that this program comprises
less than 1 percent of the total budget for ARS.
Why did the bee research program bear such a sizable reduction in
this year's budget when the total program represents simply a small
share of the total ARS budget?
Did USDA seek input from honey producers, beekeepers, or
researchers concerning these cuts? If so, what sort of meetings or
events took place to seek input on the cuts? If not, why not?
Answer. The President's Budget proposal actually reduces ARS'
research on honeybees by $4 million, from $8 million in fiscal year
2002 to some $4 million in fiscal year 2003 and represents a relatively
small share of the total reduction of $104,486,000 proposed for ARS in
fiscal year 2003.
The Department based its decision to consolidate and reduce
honeybee research in order to finance national high priority research
initiatives in fiscal year 2002 strictly from the recommendations of
the Strategic Planning Task Force, which conducted site visits and
laboratory reviews at these locations. Difficult decisions had to be
made within the context of overall budget limitations and the need to
provide increases for high priority national initiatives such as
invasive species and counter-terrorism research.
______
Questions Submitted by Senator Thad Cochran
proposal to cap underwriting gains
Question. The President's fiscal year 2003 assumes $155.2 million
in savings from a proposed appropriations bill general provision to cap
crop insurance underwriting gains at 12.5 percent.
To what extent have the legislative enhancements to the crop
insurance program in 2000 yielded (windfall) profits for the private
insurance companies?
Answer. In 1999 and 2000, Congress provided emergency funding which
USDA used to discount the premium producers were required to pay for
crop insurance. As a result of this discount, the total acreage
enrolled in the crop insurance program increased and some producers
began purchasing higher levels of coverage. The Agricultural Risk
Protection Act of 2000 (ARPA) further encouraged producers to shift to
higher levels of coverage. ARPA increased the premium subsidy to about
60 percent for the typical policy; however, there was a larger
percentage increase in subsidy at the higher levels of coverage. In
1998, the crop insurance program provided coverage on about 182 million
acres with total premiums of about $1.9 billion, and in 2003 we
estimate net acres insured will be about 208 million acres with total
premiums of about $2.8 billion. In other words, due to the higher
Government subsidy, the insurance companies are selling higher value
policies to essentially the same customers. As a result, the companies
have benefited from both higher administrative expense reimbursements
and higher underwriting gains.
Question. If the proposed cap is imposed, would sufficient
incentives exist for companies to participate in the program?
Answer. The last year that companies experienced a loss was 1993
(-$83 million). Since then companies have made approximately $1.6
billion in underwriting gains, half of which was generated under the
1998 (2000 reinsurance years. These underwriting gains represent a
substantial reserve in the event of another loss year.
Question. Why is legislative authority being requested to do this?
Doesn't the Department have the administrative authority to impose this
cap?
Answer. Yes, we could cap underwriting gains administratively by
renegotiating the Standard Reinsurance Agreement (SRA). While the
Department has been prohibited from renegotiating the SRA for several
years, Congress provided authority in the Agricultural Risk Protection
Act of 2000, to renegotiate the SRA once before 2005. However, our
legislative proposal would amend Section 508(k) of the Federal Crop
Insurance Act to provide permanent authority capping underwriting gains
at 12.5 percent. This would also allow Congress to consider the
appropriate level of underwriting gains in the same way that it has
considered the appropriate level of delivery expense reimbursement;
which is currently capped at 24.5 percent. In addition, implementing
the cap through a general provision in the appropriations bill would
allow the savings to begin to accrue immediately.
Question. As you may be aware, CBO has re-estimated the savings
from this proposal. Rather than the $155 million in budget authority
and outlay savings included in the President's budget, CBO estimates
that the proposal would save $62 million in budget authority and no
outlays in fiscal year 2003. What is the basis for the fiscal year 2003
budget authority and outlay savings estimates in the President's
budget? How were they calculated?
Answer. The projected savings of $115 million annually is based on
actual program experience. The Department's estimate assumes the cap
will be placed on each individual reinsured company. While it is a
realistic estimate for a typical year with normal production
conditions, the results are likely to vary from year to year. Further,
The amount of savings in budget outlays that can be achieved in the
first year depends upon the assumptions that are made about when the
companies actually receive underwriting gains. The President's Budget
assumes that these savings will be reflected in fiscal year 2003.
It is our understanding that the Congressional Budget Office's
(CBO) estimate of $62 million caps all insurance companies combined,
resulting in less savings. CBO has also scored the proposal as having
essentially no first year outlay savings because it assumes that the
outlay savings will be delayed until the following fiscal year. While
we acknowledge these differences, it is our position that the proposal
has real potential for long term savings of about $115 million
annually.
Question. I understand that producers purchased higher levels of
coverage in 2000-2001 as a result of changes made to the program in
2000. Has there also been a significant change in program
participation?
Answer. No, there has been no other real change in program
participation. Total acres covered have not increased substantially,
rather, producers have chosen to shift to higher coverage levels. In
1999 and 2000, USDA used emergency funding to increase the premium
subsidy as an incentive for producers to buy higher levels of coverage.
ARPA further encouraged the shift to higher levels of coverage by
increasing the premium subsidy to about 60 percent of the typical
policy premium.
Question. What has been the impact of the fiscal year 2002
appropriations Act limitation on funding for risk management education
programs authorized by the Federal Crop Insurance?
Answer. As a result of this funding limitation, the Risk Management
Agency (RMA) and the Cooperative State Research, Education, and
Extension Service (CSREES) have had to significantly reduce the level
of educational partnering with State departments of agriculture, 1890
and 1862 Land Grant universities, and other public and private
organizations. Consequently, agricultural producers will have far fewer
educational opportunities to learn about existing and emerging risk
management tools.
Question. What would be the consequence of continuing fiscal year
2003 funding for these programs at the fiscal year 2002 level?
Answer. State and local farm organizations have consistently
indicated to RMA and CSREES that farmers and ranchers need strong,
well-funded risk management education and information programs to help
them deal with the increased pace of change in today's farming sector.
Education programs for small and limited resource farmers are
especially critical. The Agricultural Risk Protection Act of 2000
(ARPA) recognized the need for education and provided funding that is
appropriate for that need. Programs funded at a reduced level for
fiscal year 2003 would not be able to fully meet expectations for
farmers and ranchers who need to be well informed on risk management,
as envisioned in ARPA.
conservation programs/natural resources conservation service (nrcs)
Question. The budget proposes termination of USDA's ongoing
watershed operations on the basis that the program provides a marginal
cost-benefit ratio in terms of economic returns and environmental
benefits for each dollar invested, as compared to the FEMA and Corps of
Engineers' programs. Should these USDA projects, which are smaller in
scale and protect rural communities, be expected to get the same return
as those projects undertaken by the Corps of Engineers?
Answer. Typically, the smaller watershed projects protect lower
value property, which results in lower benefits. Additionally, the
majority of the active USDA watershed projects have non-monetary
benefits such as improved water quality or wildlife habitat, which are
not included in the benefit/cost ratio.
Question. Given that the Corps of Engineers currently has the
authority to carry out Public Law 566 watershed and flood prevention
operations but typically does not choose to carry out these smaller
projects, do you believe that rural America will receive the support it
needs and not be passed over for the larger projects that affect urban
populations that the Corps typically funds? Will the Corps be required
to support the smaller projects if the Administration's proposal is
adopted?
Answer. Although the Corps of Engineers may work on any size
watershed under other authorities, it is not authorized to work on
Public Law 566 projects. It is our understanding that every Corps
project must be Congressionally authorized. The Administration will
direct the Corps to evaluate authorized Public Law 566 projects and
seek Congressional authorization on those it considers a priority
within overall spending limits.
Question. With the tremendous benefits that the Forestry Incentives
Program carries out such as water quality improvement and the creation
of wildlife habitats with minimal budgetary commitment, why has the
President's budget proposed to terminate this program?
Answer. According to the President's budget request, the Forestry
Incentives Program falls within the category of having not performed
well, having a limited scope, or having goals that can be better
addressed through other programs.
Question. Both the Senate and House versions of the Farm Bill
include an increase in acreage for the Conservation Reserve Program
over the current capped level of 36.4 million acres. What impact would
an increase in enrollment of Conservation Reserve Program acres have on
commodity prices?
Answer. Both the House and Senate farm bills would increase the CRP
enrollment cap to around 40 million acres. The extent of commodity
supply and price impacts of expanding CRP largely depend on actual net
changes in planted acreage that occur as a result of the change in CRP
enrollment levels. Typically plantings decline, but by a lesser amount
than CRP acreage increases. This plus international production response
mitigates commodity supply and price effects.
A recent analysis of price impacts of expanding CRP enrollment from
36.4 million acres to 40 million acres provides an indication of the
magnitude of expected price changes with a higher CRP enrollment cap.
This analysis evaluates the impacts of enrolling the additional 3.6
million acres in signups held in 2003 and 2004 and estimates that
average prices over 2004 through 2011 would increase $0.05 to $0.09 per
bushel for wheat, $0.02 to $0.06 for corn and other feed grains, $0.07
to $0.11 for soybeans, and around $0.01 to $0.03 per pound for cotton.
Ranges are provided because of uncertainties inherent in long-term
price projections and potential changes in future farm programs.
agricultural research service (ars)
research program implementation
Question. What impact is the President's budget proposal to
terminate funding for Congressional add-ons having on the agency's
ability to implement research activities funded for fiscal year 2002?
(For example, how successful are your efforts to recruit scientists and
research staff funded for fiscal year 2002 if the President's budget
proposes to terminate funding for these positions in fiscal year 2003)?
Answer. The President's Budget proposal to terminate fiscal year
2002 Congressionally-designated research projects in fiscal year 2003
affects the agency's ability to compete with both private and public
science and technology organizations in the recruitment for the best
and highly qualified scientists. As to be expected, highly qualified
scientists are not likely to apply and the agency is forced to select
from applicants not as highly qualified, in order to implement the
research program. This hiring handicap can impact the quality of the
research project and the long-term success of the program.
base funding reduction
Question. How did you decide where to take the $15 million
reduction in base funding proposed in the budget, i.e., which programs
and locations to close or consolidate to achieve this savings?
Answer. In order to achieve the savings of $15 million to finance
proposed increases in the fiscal year 2003 ARS Budget, the Department
adopted the recommendations of the Strategic Planning Task Force which
conducted site visits and laboratory reviews. The Task Force was
established as required by the 1996 Farm Bill, which required a 10-year
strategic plan for Federal ag research facilities. The programs and
locations identified for consolidation and closure in the fiscal year
2003 budget were specifically recommended in the Task Force Report.
Question. The budget proposes to close the Orono, Maine, and
Brawley, California, ARS locations. This is a proposal we have seen in
past Administration budgets. Is your current recommendation based on a
recent review of these locations? What were your specific findings?
Answer. The decisions to close Orono, Maine and Brawley, California
were strictly based on the Task Force recommendations and not from any
recent review of these locations. However, the factors that lead to the
findings and recommendations of the Task Force in 1999 are still
relevant today.
honey bee research
Question. The budget proposes to close the honey bee research
programs at Baton Rouge, LA; Beltsville, MD; and Tucson, AZ, and
consolidate portions of these programs into the program at Weslaco, TX.
The result is that the fiscal year 2003 budget proposes to reduce bee
and honey research funding by 50 percent (falls from $8 to $4 million).
Is it realistic to assume that this program consolidation will produce
this level of savings and that all the honey bee research for the
benefit of the United States can be conducted in one laboratory in
subtropical, south Texas? For example, can genetics study really be
carried out in the presence of the Africanized honey bee population in
Texas?
Answer. Changes in bee research activity reflect budget priorities
within the President's fiscal year 2003 budget. The budget reduces ARS'
bee research effort from 19 to 9 scientists, with a reduction in
funding of $3.7 million out of $6.4 million total. Since bee
pollination provides $15 billion in added value to crops, particularly
those with a high vitamin and nutritional content, ARS will make every
effort to continue critical research efforts.
The budget allows for the following bee research programs to be
continued: Africanized honey bee research; some almond pollination
research; bee germplasm preservation research (although the germplasm
repository will be closed); miticide development for Varroa mite
control (at a reduced level of effort); research in a subtropical
climate applicable only to the dwindling (because of presence of the
Africanized honey bee) fraction of beekeepers that overwinter their
hives in the Lower Rio Grande Valley]; antibiotics for American
foulbrood (at a very reduced level of effort); and honey bee vigor
research (at a very reduced level of effort).
The following programs will be terminated: all bee breeding
programs (since bees cannot be bred in the Africanized honey bee
infested Weslaco area); the Baton Rouge Breeder Colony Service (a
service that allows beekeepers to analyze hives for mite resistance);
bee nutrition and artificial diet research previously conducted at
Tucson; the Bee Disease Diagnosis Service at Beltsville; the
Africanized Honey Bee Identification Service at Beltsville; integrated
pest management (IPM) for Varroa mites; IPM for the small hive beetle;
and most research on honey bee vigor.
lower mississippi delta research
Question. I understand that The Lower Mississippi Delta Nutrition
Intervention Research Initiative is ready to proceed to the design and
implementation phase and that additional funds above the base fiscal
year 2002 level will be required. What is the current (fiscal year
2002) level of funding for this project? How much is included in the
fiscal year 2003 request for this project? Is the fiscal year 2003
proposed level adequate to move to the planned phase of this project?
If not, what additional amount will be required? Please provide a
status report on this project, including the work planned for fiscal
year 2003 and each subsequent fiscal year to completion of the project,
including the funding required in each fiscal year to carry out the
work scheduled.
Answer. The current level of funding for this project is
$3,153,000. No additional funds were requested for fiscal year 2003.
Five major surveys have been completed. They are: (1) Key Informant
Survey; which determined nutrition/health problems, and strength and
weaknesses of counties; (2) FOODS 2000; which determined foods eaten,
food insecurity, health perceptions, participation in USDA nutrition
programs, and shopping information; (3) Community Assessment; which
determined assets of counties relative to nutrition interventions,
location of resources, and demographic information; (4) Grocery Survey;
which determined the availability and accessibility of foods in the 36
counties; (5) Focus Group Survey; which determined attitudes and
knowledge about shopping for foods, food insecurity, healthy food
choices, and behavioral changes.
Pretest instruments for determining food choice behaviors in low-
income African-American youth were completed. Two pilot nutrition
intervention projects were completed: church-based nutrition and
wellness intervention for African-American women with hypertension in
Louisiana, and community clinic-based nutrition and health promotion
intervention for adults in rural Mississippi.
Studies proposed for each for the next 5 fiscal years if funds are
available are as follows:
An additional $6,353,000 would support the following studies: (1)
pilot test measures for increasing fruit and vegetable consumption of
African-American youth on the campuses of Alcorn State University,
University of Arkansas at Pine Bluff, and Southern University and A&M
College in Louisiana ($1,103,000); (2) establish Community Partners in
three counties/parishes: Phillips County, AR; Washington County, MS and
Franklin Parish, LA. ($2,250,000); (3) collaborate with additional
Partners (for example: College of Public Health, AR; Delta State
University, MS; Delta Health Alliance, MS; MS Valley State; LA, to be
determined). They will be necessary for recruiting and training
community nutrition workers needed for the intervention research
($700,000); and (4) maintenance of the Capacity of the Consortium
($2,300,000).
An additional $6,470,000 will provide support for the following
studies: (1) designing nutrition intervention research with communities
in Arkansas, Louisiana, and Mississippi and developing data collection
and monitoring instruments, and procedures, and begin to build
community capacity. ($2,250,000); (2) new Delta partners begin
recruiting and testing training materials for community workers in the
intervention research ($1,000,000); (3) implement measures for
increasing fruit and vegetable consumption of low income African-
American youths on campuses of Alcorn State University, University of
Arkansas at Pine Bluff and Southern University and A&M College
($1,170,000); and (4) maintain capacity of Delta NIRI Consortium
(including the completion of the validation of the Delta NIRI Food
Frequency Questionnaire with the Jackson Heart Study) ($2,050,000).
An additional $9,522,000 would support the following studies: (1)
pretest instruments for nutrition interventions and build necessary
capacity in the communities in Arkansas, Louisiana, and Mississippi.
($3,000,000); (2) recruit and train interviewers, data collectors,
community nutrition workers for the interventions in Arkansas,
Louisiana, and Mississippi. ($3,500,000); (3) finalize data collection
and analysis from the low-income African-American fruit and vegetable
intervention, and publish ($972,000); and (4) maintain capacity of
Delta NIRI Consortium ($2,050,000).
An additional $10,400,000 would support for the following studies:
(1) data collection, nutrition education, training of communities,
implementing the nutrition interventions in Arkansas, Louisiana, and
Mississippi. Maintain the capacity in communities ($3,000,000); (2)
continue the recruitment and training of community workers and assist
in the beginning of analysis. ($2,500,000); (3) pilot test the Fruit
and Vegetable intervention in three other settings, including one for
white low-income youth ($2,000,000); (4) maintain the capacity of Delta
NIRI Consortium ($1,900,000); and (5) plan and develop additional pilot
nutrition interventions for additional counties in Arkansas, Louisiana,
and Mississippi ($1,000,000).
An additional $10,400,000 supports the following studies: (1)
analyze intermediate variables in the interventions, while continuing
the monitoring and implementation of the interventions in Arkansas,
Louisiana, and Mississippi. ($2,000,000); (2) recruitment and training
of additional community workers for the new pilot interventions and to
keep the pool of workers available for the original interventions
($2,500,000); (3) implement the Fruit and Vegetable interventions in
the additional settings ($2,000,000); (4) maintain the capacity of
Delta NIRI Consortium ($1,900,000); and (5) implement one additional
nutrition intervention in other communities in Arkansas, Louisiana, and
Mississippi ($2,000,000).
homeland security
Question. For fiscal year 2002, additional supplemental emergency
appropriations were provided for the ARS to address homeland security
needs. An additional $40 million was provided for ARS salaries and
expenses, of which at least $21.7 million was to be made available for
facility and operational security needs, and an additional $73 million
was provided for the National Animal Disease facilities at Ames, Iowa
(+$50 million), and Plum Island, New York ($23 million).
Could you please update us on the agency's additional homeland
security requirements and how the emergency appropriations made
available for fiscal year 2002 are being spent to address these needs?
Answer. The fiscal year 2002 Supplemental appropriation provided
$40 million under the Salaries and Expenses account for operational
security needs of ARS facilities and for increased biosecurity
research. The Secretary approved an initial allocation of $37 million
for these purposes and held $3 million in reserve to be allocated at a
later date.
ARS will obligate $21.7 million for physical security upgrades at
the Agency's highest priority research facilities located at Plum
Island, NY; Ames, IA; Laramie, WY; Athens, GA; Frederick, MD; Newark,
DE; Beltsville, MD; Ft. Collins, CO; Albany, CA; New Orleans, LA;
Peoria, IL; Wyndmoor, PA; and East Lansing, MI.
The remainder of the $37 million, or $15.3 million, will be used to
finance critically needed research to support the biosecurity
protection of agricultural animal and plant resources. ARS has
allocated $13.8 million for the development of rapid detection capacity
for all priority threat agents. ARS will develop a comprehensive suite
of tests for action agencies that detect pathogens at the site of the
problem. The pathogens will be detected using DNA fingerprinting
technology. ARS will cooperate with a consortium of university and
private sector partners, but work on high consequence pathogens will be
restricted to ARS Biosafety Level 3 facilities at Ames, IA; Plum
Island, NY; Laramie, WY; Athens, GA; and Ft. Detrick, MD.
An additional $1.5 million was allocated for research on
Information Systems. Funding for this research will be committed to
develop a database for foot and mouth disease. Genomic databases such
as this will be useful in diagnostics and vaccine development. They
will also be valuable to law enforcement agencies to pinpoint the
origin of an outbreak.
Question. What is the appropriate research role of ARS relative to
homeland security?
Answer. The most serious threats to American agriculture are those
that are regulated in international trade or could destroy the
confidence of Americans in their food supply. Animal pathogens, such as
foot and mouth disease virus that recently ravaged England, are seen as
the most potent threat. The Office of International Epizootics (OIE)
provides a list of pathogens that are regulated in international
commerce. USDA experts were asked to assess the animal pathogens from
that list (List A) for threat potential reflecting their likely
economic impact on the American economy, the availability of rapid and
reliable detection or diagnostics for the disease, the availability of
control measures including vaccines, and the ease of spread of these
diseases and then to provide an overall assessment based on these
factors. Additionally, analysis furnished by the USDA Office of the
Chief Economist also supported the expert's assessment by concluding
that all pathogens selected would indeed have a major economic impact
in the event of an outbreak.
A number of zoonotic agents, which affect both animals and man, are
currently the subject of research or control measures by other
agencies, but may need to have expanded programs for research and
control based specifically on their impact on animals. Among these are
the causative agents of West Nile Virus, Rift Valley Fever, Nipah
encephalitis, Hendra encephalitis, Western Equine Encephalitis and
other encephalites. The transmissible spongiform encephalopathy, Bovine
Spongiform Encephalopathy, is included as an agent of concern, as its
presence in a country can have a significant negative financial impact
and depressing effect on the food supply. These effects are recently
observed in Japan and earlier in England and Europe.
Plants as well as animals may be subject to terrorist attack. The
list of pathogens that could be used to deliberately attack crops is
large and less well defined than for animals. As USDA prepares for the
next phase of Homeland Security research and control measures, the
Department will revise the lists as necessary to include expanding them
based on updated information and additionally identified needs for
research information and control measures. These lists of pathogens and
vectors, where appropriate, will be a driver for the USDA approach to
providing security for the agricultural system and confidence in the
food supply of this country.
As the USDA enhances its laboratory and surveillance systems to
protect American agriculture from the deliberate introduction of threat
agents, one of the foremost needs will be tests which can rapidly and
with great accuracy and sensitivity detect the presence of pathogens in
animal and plant tissues. In the case of an outbreak, portability of
the detection systems would aid regulatory diagnosticians in limiting
the spread of disease while preventing excessive culling of suspect
populations. These rapid field tests are needed immediately because
adequate vaccines are not available for the most threatening pathogens.
The Agricultural Research Service (ARS) will utilize genomic
sequencing of multiple strains of threat agents of plants and animals
to provide information for development of rapid nucleic acid based
tests for pathogen detection and also for information for antigens for
vaccine development in subsequent phases of Homeland Security. For
animal pathogen rapid detections systems, ARS will work closely with
the Animal and Plant Health Inspection Service to validate tests and
assist in transfer of reagents and protocols to regulatory
laboratories. Plant research will begin to seek resistant germplasm.
ARS will also develop bioinformatics tools, including pathogen
databases, to support detection system and vaccine development.
Question. ARS partners with land grant universities and other
research institutions to conduct research. Which of these institutions
have an existing capability in homeland security/bioterrorism research?
Please provide a specific list, including the institution and its
existing expertise.
Answer. ARS scientists will identify university collaborators whose
research capacity will complement their own in fulfilling the ARS
Homeland Security research mission. The scientists will identify
collaborators with strengths in genomics of pathogens, development of
detection systems, and in the validation of detection systems. Each
university collaborator will be chosen to allow ARS to rapidly conduct
its research to deliver validated rapid detection systems for threat
agents.
Question. The conferees directed that funds for planning and design
at Plum Island not be obligated until the Secretary submits the House
and Senate Appropriations Committees the results of the Department's
review of security issues at Plum Island and other locations. What is
the status of this review and when can we expect to receive that
report?
Answer. ARS entered into a contract on May 5, 2002 with Science
Applications International Corporation for two feasibility studies
dealing with (a) the national need for a Biosafety Level 4 Laboratory
and (b) the overall operational and financial merits of rebuilding the
Plum Island Animal Disease Center in place on Plum Island or siting it
elsewhere. These studies are scheduled for completion on August 5,
2002.
economic research service
agricultural resource management survey
Question. The President's fiscal year 2003 budget Proposal includes
an increase of $2.7 million for the Economic Research Service (ERS) to
assist the National Agricultural Statistics Service (NASS) in
reengineering the Agricultural Resource Management Survey (ARMS).
Please explain the need for reengineering the ARMS survey in fiscal
year 2003.
Answer. ARMS funding has not kept pace with survey costs. The cost
for conducting ARMS at the level of its inception in 1996 has increased
about 35 percent. With static funds for ERS sponsored surveys, the
sample size and scope of ARMS had to be reduced to offset these cost
increases. Without additional funds for reengineering the ARMS, the
2003 sample size will be approximately one-half of what it was in 1996
and will seriously jeopardize ERS's ability to meet USDA data needs and
provide high quality information. Instead of surveying commodities in a
3-year cycle for commodity cost of production, commodities are now
surveyed on a 7-year cycle at one commodity per year. The national
sample of all farms in 2003 will only support national level estimates
of farm income and sector economic performance.
Question. What would be the specific role of ERS in reengineering
the ARMS survey?
Answer. ERS has responsibility for determining which commodity cost
of production estimates are made each year, assuring that the
information content reflects the changing technology and structure of
agriculture, and addressing current policy issues. ERS staff will work
closely with NASS staff in all phases of the survey administration,
including the determination of appropriate sample designs,
questionnaire development, enumerator training, development of
computerized data edit procedures, and data analysis.
Question. How would the additional $2.7 million be allocated within
ERS?
Answer. Of the $2,700,000, $2,315,000 will be transferred to NASS
to restore the sample size of ARMS to the level of its inception in
1996 and to provide the added samples that will allow state-level farm
income estimates in the 15 major production States. In
addition,$135,000 is targeted to improve the survey response rate with
promotional materials and a training workshop for survey enumerators.
ERS will use $250,000 to develop on-line WEB based data tabulation and
distribution system for ERS customers. With this system, customers
would be able to acquire customized summary tables from the ARMS
database.
invasive species initiative
Question. The budget for fiscal year 2003 also includes an increase
of $2 million to initiate a program of work to examine the economic
effects of invasive pests and diseases on the global competitiveness of
U.S. agriculture.
What specific information does ERS expect to obtain through this
initiative that could not be extracted from other ongoing research?
Answer. The budget initiative will fund efforts to work jointly
with USDA's Animal and Plant Health Inspection Service in adding an
economic dimension to invasive species risk assessment. Knowing the
value associated with various pest and disease risks, and comparing
this with the costs of alternative approaches to the problem
(exclusion, monitoring and detection, eradication, management,
indemnity, etc.) provides a sounder basis for making decisions about
effort and fund allocation among multiple pest and disease threats, and
different Federal plant and animal protection programs. There is no
other ongoing research that addresses this need.
Question. What would be the practical application of this research?
Answer. In addition to providing information to make sounder
decisions for fund allocation, the capability to quickly develop
intelligence on the economic consequences of various pest-related
scenarios is also potentially useful in addressing emergency outbreaks.
The initiative would provide for an ongoing program in the economics of
invasive species' threats to agriculture.
Question. How long do you project it will take to complete this new
program, and what are the anticipated out-year costs?
Answer. Since specific pest threats, and the economic and trade
conditions under which they emerge, vary from year to year, it is
envisioned that specific projects would continuously be initiated and
completed under the ongoing program of work, thus providing an economic
basis for addressing unanticipated requests for compensation for pest
damage. Annual out-year costs are expected to be constant at the $2
million level, but may change when the fiscal year 2004 budget is
submitted.
national agricultural statistics service
agricultural resource management survey
Question. The President's fiscal year 2003 budget includes an
increase of $4.625 million for the National Agricultural Statistics
Service (NASS) to assist the Economic Research Service (ERS) in re-
engineering the Agricultural Resource Management Survey (ARMS).
Please explain the need for re-engineering the ARMS survey in
fiscal year 2003.
Answer. ARMS is an integrated survey effort to annually monitor the
overall financial status and well-being of American agriculture. This
re-engineering effort will allow for consolidation of data collections
and permit efficiencies in processing, leading to an overall reduction
in respondent burden. To continue the collection of essential
information to accurately portray the economic conditions and the
production practices of the rapidly changing agricultural sector, a
thorough re-engineering effort is required. Several related data series
will be researched for opportunities to collaborate with the ARMS
design.
The ARMS costs have increased approximately 35 percent in the past
5 years without any funding increases, resulting in significant program
cuts and eroding statistical quality. In addition, the collection of
Congressionally mandated cost of production data for the ERS has been
delayed from a 3-year cycle to a 7-year cycle. Without funding to
restore the program and funding to integrate and rebuild an efficient
system, farm income and expenditure estimates as well as data for
research and policy analysis will continue to erode.
Question. What would be the specific role of NASS in re-engineering
the ARMS survey?
Answer. NASS is responsible for conducting the ARMS survey to
ensure a quality and timely statistical data product for the use of
both ERS and NASS. ERS works jointly with NASS to determine annual
survey content and associated survey design issues. The vast majority
of the survey re-engineering and infrastructure responsibilities fall
to NASS. NASS designs the survey, maintains the sampling frames,
selects the sample, develops the survey data collection instruments,
conducts the data collection, builds the survey processing systems, and
edits and summarizes the data. The integration of ARMS with other
economic survey data collections will result in the re-engineering of
these survey components. NASS has primary responsibility for the
integrity of the ARMS data.
Question. How would the additional $4.625 million be allocated
within NASS?
Answer. A large portion of the funds allocated to NASS for the re-
engineering effort will be devoted to staff resources. Resources have
been pulled from other program areas over time to maintain the ARMS
program, but for the last few years maintaining the program at an
optimal level has not been possible; consequently the scope of the
survey, sample sizes and commodity coverage have been trimmed. To bring
the ARMS program back to optimal levels for providing high quality
information and to re-engineer it for efficiencies, staff must be
dedicated to planning, integrating associated data collections, re-
designing, re-programming, and processing the Agricultural Resource
Management Survey. Significant funds will also be allocated to data
collection costs and other direct costs such as computer charges for
data processing, printing, training, and survey promotion.
Question. What are the key differences between the ARMS survey and
the Census of Agriculture that NASS conducts every 5 years?
Answer. ARMS is USDA's primary source of information about the
current status of and changes in the financial condition, production
practices, environmental impacts, use of resources, and household
economic well being of America's farmers. This detailed farm and
enterprise level economic information is the foundation of USDA's
research and analyses that answer key questions from the Department,
Congress, Executive Branch officials, and other decision-makers about
the differential impacts of alternative policies and programs across
the farm sector. In addition, ARMS provides data for the annual
estimates of average farm income, annual estimates of farm
expenditures, and provides the data for the Congressionally mandated
cost of production estimates for 14 agricultural commodities.
The Census of Agriculture, conducted every 5 years, is essential
for a periodic evaluation of the changing structure and demographics of
American agriculture. It is the only source of consistent, comparable
data at the county level. Census collected production agriculture and
inventory data are comprehensive and include information for minor
commodities and all States, while ARMS focuses on specific commodities,
environmental practices, and financial and management issues in
selected major producing States and regions.
census of agriculture
Question. For the Census of Agriculture, the President's Budget
requests an increase of $15.935 million, due to the fact that fiscal
year 2003 will be the peak year in the 5 year cycle of the Census.
Which specific activities take place during this peak year
requiring so much additional funding?
Answer. The increased funding requested in fiscal year 2003 is
needed due to many significant data collection activities occurring in
2003: completion of the labeling and ZIP-code sorting operations for
roughly 3 million mail packages; mailing and follow-up data collection
activities; and the processing and analysis of all Census of
Agriculture records. The Computer Assisted Telephone Interview network
and data validation systems to assist census respondents who utilize
the toll-free information telephone lines will be brought online from a
test environment. Training programs and instructional guidelines will
be communicated to the NASS State offices, Puerto Rico and the outlying
areas of Northern Marianas, Virgin Islands, and Guam. NASS will also
purchase and install new equipment and implement the software needed to
effectively and efficiently process, retrieve and view scanned
questionnaire images. NASS will contract with the Commerce Department's
National Processing Center for functions not supported by NASS's
infrastructure. This will serve to minimize costs and provide faster,
more efficient processing of the large census work loads. Later in
fiscal year 2003, the Agency will devote resources to the analysis and
summarization of census data.
Question. What would be the affect of making the Census no-year
funding, in the event that we hit a budget year when it might not be
possible to increase funding for the Census to meet its cyclical needs?
Answer. The census appropriations are no-year funds. NASS has been
working to make program adjustments which would flatten the annual
levels of funding; however, it is difficult to compress the collection
and processing time and not have a funding spike. Providing data
products as soon after the reference year as possible necessitates a
funding increase proportional to the work requirements.
locality based agricultural estimates
Question. The Budget request for fiscal year 2003 includes an
increase of $1 million to develop an annual integrated Locality Based
Agricultural County Estimates/Small Area estimation program. Please
explain the need to develop this new program. Is it not possible to
extract the local area statistics that are being requested from the
Census data?
Answer. The Locality Based Agricultural County Estimates/Small Area
Estimation Program provides small area estimates on an annual basis as
opposed to once every 5 years from the Census of Agriculture.
The initiative will enhance the current county estimates program by
increasing the accuracy of the statistics and will allow exploration of
alternate ways of integrating the Census of Agriculture with the
comprehensive annual county estimates data sets. The county estimates
program provides annually over 125,250 estimates to the Risk Management
Agency (RMA). These estimates are currently used directly in the
indemnity calculations for RMA's Group Risk Plans and the Group Risk
Revenue Plans. RMA also uses NASS county estimates yield as a proxy
when an individual farmer's yield history is not available. The county
estimates are used as part of the risk rating process and thus have an
impact on premium levels paid by producers. NASS county estimates have
become even more critical to agricultural producers and RMA since the
passage of The Agricultural Risk Protection Act of 2000 which provides
an additional Federal investment of $8.2 billion in the program over 5
years and mandates group-risk alternatives in the Catastrophic Risk
Protection coverage.
In addition, funding of this initiative will allow satellite
technology to be expanded into 3 additional major crop producing States
to provide a valuable geographic information system (GIS) data layer on
crops for areas other than counties. Data layers can be drawn numerous
ways; for example, watersheds, townships, Indian Reservations, grain
transportation zones, potential crop disease outbreak zones, and animal
habitats. This allows aggregate commodity totals to be calculated for
various geographic areas and uses.
e-government
Question. The fiscal year 2003 budget request includes an increase
of $3 million for e-Government data dissemination and electronic data
reporting to address the Government Paperwork Elimination Act (GPEA)
allowing individuals to transact with NASS electronically.
What specific activities are necessary to comply with the
Government Paperwork Elimination Act?
Answer. The GPEA mandates that agencies must offer electronic
methods of transacting business with our customers, when practicable,
by October 2003. NASS, USDA's statistical agency, collects primary
agricultural information from voluntary responses by farmers and agri-
businesses on hundreds of surveys and disseminates information to the
public. Farmer reported data are protected by law. NASS published data,
already electronically available, should be made more user friendly.
The NASS focus to meet GPEA requirements is to develop electronic data
reporting (EDR) capabilities so data providers can supply needed
information in ways and times more convenient to them. To offer EDR,
NASS must ensure that the EDR process does not degrade data quality,
that response rates do not decline due to respondent frustration, and
that the security of the reported data is not compromised. NASS has a
business plan to develop the EDR architecture with a pilot scheduled
for 2002. The EDR system will be deployed in 2003. NASS has identified
30 ``simple and repetitive'' surveys to offer Web reporting as an
option for respondents in 2003. Complex surveys will not be
``practicable'' for EDR until they have been studied and useability
tests conducted to insure data quality. In 2004, thirty additional
``complex'' surveys will offer web reporting. By 2006 all surveys that
should offer EDR will be available, and in 2007, the Census of
Agriculture will be offered electronically for data reporting.
Development of the EDR system which addresses the GPEA mandate is just
the first phase of transforming NASS for e-Government.
Question. How would the $3 million be allocated within NASS in
order to comply with the Government Paperwork Elimination Act?
Answer. The $3 million will be allocated to the following areas to
support the development of the NASS EDR system: EDR security including
hardware, licenses, certificates, and support staff; software puchases
or development, training, and supporting staff; conversion of
questionnaire metadata to a new metadata repository; setup costs,
travel, training and staff for useability testing; technical and
general support to internal and external customers; the development of
tools to link processes; training; marketing of EDR; and a project
manager to oversee the implementation of the plan.
cooperative state research, education, and extension service (csrees)
integrated activities
Question. The fiscal year 2003 budget for the Cooperative State
Research, Education, and Extension Service (CSREES) proposes to move
the Critical Issues and Regional Rural Development Centers programs
from the Research, Education, and Extension Activities account to the
competitive Integrated Activities account. Previously, in the fiscal
year 2000 budget, USDA requested and the Congress moved funding for
programs such as Water Quality, Food Safety, and Pesticide Impact
Assessment to the newly-authorized Integrated Activities account.
What has been the advantage of funding programs under Integrated
Activities as opposed to research and education and extension accounts?
Answer. Programs funded under the Integrated Activities account use
several authorities that CSREES has to fund projects that address the
agency's research, education, and extension mission. These authorities
encourage technology transfer.
Funding research, education, and extension under Section 406 of
AREERA holds several advantages. The integrated program is open to a
broad array of colleges and universities. All colleges and
universities, including the 1890 institutions, Hispanic-serving
institutions and non-land-grant colleges are eligible to compete for
funds under these programs, thereby broadening the range of topics
proposed and building research, extension, and education capacity in
the agricultural programs of non-1862 land grant institutions. Grants
under the Section 406 integrated authority are awarded competitively,
as required by law; therefore all proposals are judged on technical
merit with only the best projects funded. Most importantly, the
integrated program more closely links the research activities with
extension and education activities, and are designed to transfer
results of the research to producers and the general public more
quickly than pure research programs.
The Agricultural Research, Extension, and Education Reform Act of
1998, (AREERA) expanded the Special Grant authority to include
extension and education activities. The Critical Issues and Regional
Rural Development Centers programs will be conducted under the Special
Grant authority, Section 2(c)(1)(B) of Public Law 89-106, as amended.
This will allow these programs to focus on research, education, and
extension activities in keeping with the expanded Special Grant
authority.
Question. Why are Critical Issues and Regional Rural Development
Centers appropriate candidates to be moved to the Integrated Activities
account?
Answer. The proposed realignment of the Critical Issues Special
Grant to the Integrated Activities account will achieve greater
integration of research and extension activities. The Critical Issues
Special Grant will address new or re-emerging plant and animal pests
and diseases issues and will be awarded on a peer-reviewed competitive
basis. The proposed combining of the Rural Development research and
extension activities into a single program in the Integrated Activities
account will achieve greater integration of research and extension
activities. Funding in fiscal year 2003 will continue to support
research and extension activities at the four Rural Development Centers
located at Pennsylvania State University, Iowa State University,
Mississippi State University, and Utah State University. Each Center
addresses stakeholder-driven priorities within its region to enhance
rural communities and foster economic development.
Question. Are there other research and extension programs that you
suggest might be better served by being moved to the competitive
Integrated Activities account?
Answer. Section 406 of the Agricultural Research, Extension, and
Education Reform Act of 1998, authorizes an integrated, multifunctional
research, education, and extension competitive grants program. Using
this authority, funding has supported not only the linkage of research,
education, and extension activities but also projects and programs
which span and combine all three activities into one cohesive effort.
As with the Food Safety and Water Quality program, an issue whose
resolution spans research, education, and extension would lend itself
to an integrated, multifunctional program.
rural development
Question. The President's budget for fiscal year 2003 does not
provide for new construction of rural multi-family housing and limits
funding to loans for repair, rehabilitation, and preservation. As part
of this proposal, USDA has initiated a study of the entire multi-family
housing portfolio to determine ways to carry out the program more
efficiently. Do you believe that an interruption in construction of new
rural multi-family housing would be detrimental to very low-income
tenants that utilize this rural housing program?
Answer. Rural Housing Service has an excellent track record of
providing Multi-Family Housing to rural America and will continue to do
so. We currently provide affordable rental homes to approximately
468,000 rural households at 17,500 properties nationwide. We provide
subsidized rental units in 1,870 counties of the United States. The
majority of these rental homes are occupied by some of the most
vulnerable households in America, single, elderly women, and families
headed by women. The average adjusted household income of residents in
Rural Housing Service multifamily housing is $8,100, a figure below 30
percent of the median rural income.
Although we have not proposed funding new construction under the
Section 515 program in fiscal year 2003, we believe it is appropriate
during this period to analyze the ongoing needs in rural America for
multi-family housing and the costs associated with providing funding
under the program. From the analysis, we will better be able to
determine if the Section 515 program is the most effective method, in
terms of cost to the Federal government and in delivery, in which to
meet these needs.
Question. A significant decrease ($250 million) in distance
learning and telemedicine direct loans is proposed for fiscal year
2003. Do you not believe that such a large decrease in loans could
result in a backlog for this important program that provides a crucial
link between rural communities and urban medical facilities?
Answer. Since the Distance Learning and Telemedicine Program's
inception, more than 90 percent of this program's benefits have come
from grant funding. Experience indicates that rural health care
clinics, and especially educational providers, simply cannot afford
loans to implement their projects. In addition, schools and school
districts are prohibited by law from entering into long-term debt
agreements in many States. Since the program began to make loans in
1997, only $13 million in loans have been approved over 5 years. The
$50 million in lending authority requested is sufficient to meet the
demand from larger, consortium-based entities with the necessary
resources to collateralize a loan.
Question. An important part of the rural development portfolio is
the Rural Community Advancement Program (RCAP) which includes water and
waste disposal grants and loans. Last year, increasing funding for the
water and waste programs was a priority of this Committee. Can you give
us the total backlog for the water and waste disposal program to date?
Answer. There are currently 497 incomplete applications and 504
applications on hand for water and waste grants for a total of 1,001.
The amount requested by these applications is $507,727,679 incomplete
applications and $498,880,923 applications for a total of
$1,006,608,602. There are currently 831 incomplete applications and 722
applications on hand for water and waste loans for a total of 1,553.
The amount requested by these applications is $1,362,365,191 incomplete
applications and $1,014,868,140 applications for a total of
$2,377,233,331.
Question. In the Senate Farm Bill that is now in conference with
the House a provision has been included that would alleviate the
backlog for not only the water and waste programs but also other
programs within the rural development area. The Congressional Budget
Office (CBO) scored this provision at $454 million. This seems to be a
rather conservative estimate of the backlog. Do you agree with this
estimate? If the backlog for water and waste programs is cleared, where
will this bring us in our effort to deliver safe drinking water and
proper waste water systems to all households in America?
Answer. The $454 million is a reasonable figure for the backlog of
complete applications. It accounts for the funds already available for
obligation in fiscal year 2002. The amount of applications changes
daily as applications are approved and additional applicants apply for
assistance. Also, the amount of budget authority needed changes as
applications progress as some applicants will need less grant and more
loan than originally applied for. The $454 million will certainly go a
long way in getting us closer in our efforts to deliver safe drinking
water and proper wastewater systems to all households in America.
Question. The technical assistance that circuit riders provide to
communities in order to conform with the increase in drinking water
regulations that affect small systems is invaluable and has been a
priority of this Committee. An additional fifteen States are expected
to receive a much needed third circuit rider this year due to the $1.5
million increase provided. Do you believe that additional States would
benefit from a third circuit rider if increased funds were available
for fiscal year 2003?
Answer. We believe that additional States would benefit from an
additional circuit rider if increased funds were available for fiscal
year 2003. However, we had to make tough choices when developing our
budget. The budget does not provide funding for additional circuit
riders.
farm service agency (fsa), rural development (rd), natural resources
conservation service (nrcs) field offices
Question. Would you please outline your plan and time line for the
review of the field office structure mentioned in the budget?
Answer. We have established a working group under the direction of
the National Food and Agriculture Council to review the field office
structure of the Farm Service Agency, Natural Resources Conservation
Service and Rural Development agencies and to develop a plan for
consolidating field office operations in order to improve efficiency.
The target for completion of the review and implementation plan is no
later than September 30, 2002.
Question. How was the goal of co-locating at least 200 addition
offices in 2003 established and how will it be accomplished?
Answer. This number was arrived at during budget negotiations. The
criteria used to determine the 200 offices reflects Farm Service Agency
and Natural Resources Conservation Service offices that: (1) were
slated for closure as part of the 1994 reorganization plans, (2) are
within 25 miles drive of another office, (3) are stand-alone offices
with only one agency represented, or (4) have 3 or fewer employees. The
working group mentioned in the previous question is reviewing these
criteria and offices, but has not completed their analysis or
recommendations to date.
Question. With respect to restructuring or consolidating the
administrative support of field offices, what are your plans and time
frames? What are the ``administrative support'' services and functions
for these offices that will be part of this effort?
Answer. We have established a working group for restructuring
administrative functions under the National Food and Agriculture
Council. The team established task groups in mid-March with plans for
completing assessments and initial reports by mid-May. The
administrative areas that are being reviewed include Civil Rights,
procurement and contracting, administrative directives, and human
resources. The project goal is to provide realistic and achievable
options for significantly increasing efficiency of the administrative
operations in Service Center agencies.
Question. What is your plan for centralizing loan servicing
functions now performed by these offices?
Answer. During the development of the President's fiscal year 2003
budget, the Office of Management and Budget requested an analysis of
the Farm Service Agency's (FSA) Farm Loan Program to ascertain if
functions of that program could be centralized. The FSA has performed
an internal analysis of its loan servicing methodology to determine
which phases of the process might lend themselves to centralization.
The next step in this analysis will be to perform a detailed cost-
benefit assessment to determine if any cost savings or other
efficiencies could be realized by centralizing some loan servicing
activities. This cost-benefit analysis will take into consideration not
only any potential cost saving, but also the impact centralization may
have on loan repayments, loan subsidy rates, and overall program
integrity. We expect to have the results of this assessment available
in time to prepare the President's fiscal year 2004 budget.
cochran fellowship program
Question. I am pleased that the budget proposes a $1 million
increase in appropriations for the Cochran Fellowship Program. I note
that this increase would not only support an additional 150 program
participants but the initiation of new programs in Jordan and Lebanon.
Are there any other countries seeking entry into the program?
Answer. In addition to Jordan and Lebanon, we expect that the most
likely new country for fiscal year 2003 will be Egypt. The majority of
the additional funding will be used to increase the size of the program
in current countries, most likely in Asia and Latin America.
Question. In past years, additional support for the Cochran
Fellowship Program has been provided through the emerging markets
program and by AID. Is this additional support expected to continue
this year and in fiscal year 2003?
Answer. In fiscal year 2002, the Cochran Fellowship Program
received additional support from both AID and the emerging markets
program: $1.4 million from AID to support Cochran Program activities in
the former Soviet Union, and $675,000 from the emerging markets program
to support Cochran Program activities in Russia, Latin America, and the
Caribbean. We expect similar support in fiscal year 2003.
food aid
Question. While the budget requests a substantial increase in
appropriations for Public Law 480 Title II to consolidate and
``improve'' the delivery of food aid, food aid provided through the
Commodity Credit Corporation Food for Progress and 416(b) programs is
to be severely curtailed. Won't this proposal sharply reduce food aid
tonnage, as compared to levels estimated to be provided this fiscal
year and in fiscal year 2001? Just what is that comparison, i.e., the
level of food aid tonnage proposed in the fiscal year 2003 budget as
compared to the total levels estimated to be provided for fiscal year
2002 and provided in fiscal year 2001? Please provide both in terms of
value of commodities and in terms of million metric tons of grain.
Answer. The fiscal year 2002 program level for Section 416(b)
consists of $400 million in new funding, plus carry in from fiscal year
2001. While Section 416(b) donations that rely on CCC purchases are to
be phased out in fiscal year 2003, much of that reduction is offset by
the $335 million increase in Title II funding. In addition, Section
416(b) authority will be retained and USDA plans to use it to move
existing surpluses of non-fat dry milk. The availability of the Bill
Emerson Humanitarian Trust will allow for greater flexibility in
meeting emergency food needs.
[Regarding the food aid levels for fiscal years 2001--2003, the
information follows:]
FOOD AID PROGRAMMING--FISCAL YEAR 2001-2003
[In thousands]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Public Law 480 Public Law 480 Public Law 480 Food in
Fiscal year title I \1\ title II title III Section 416(b) progress \2\ Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Commodity Costs:
2001................................................ $105,200.0 $438,675.0 .............. $629,989.6 $107,110.8 $1,280,975.4
2002 \3\............................................ $108,400.0 $500,574.8 .............. $303,346.0 $109,257.9 $41,021,578.7
2003 \4\............................................ $106,676.0 $555,000.0 .............. $49,600.0 $25,000.0 $736,276.0
Metric Tons:
2001................................................ 753.2 2,134.0 .............. 3,039.1 436.3 6,362.6
2002 \3\............................................ 628.3 2,545.0 .............. 1,415.8 394.2 4,983.2
2003 \4\............................................ 530.0 2,765.0 .............. 25.0 125.0 3,445.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Public Law 480 Title I column includes concessional sales portion of Title I, and not Title I-funded Food for Progress.
\2\ Food for Progress column includes Title I-funded and CCC-funded Food for Progress.
\3\ Fiscal year 2002 values represent estimates as of 4/10/02. Fiscal year 2002 Title II includes the commodity cost portion of carry-over ($94.1
million) and supplemental funding ($95 million) enacted in response to the September attacks.
\4\ Fiscal year 2003 values are estimates submitted with fiscal year 2003 President's Budget. Section 416(b) estimate is for non-fat dry milk (from CCC
inventory).
Note: Tonnages are provided in actual metric tons Metric ton grain equivalents are not available for all programs.
Question. Which agencies participated in the review of the food aid
programs that produced the reform proposals included in the President's
fiscal year 2003 budget? What was the focus and extent of this review?
Is there a report?
Answer. The U.S. Department of Agriculture, U.S. Agency for
International Development, Department of State, Department of Treasury,
National Security Council, Office of Management and Budget, and Office
of the U.S. Trade Representative participated in the review. The
National Security Council chaired the review.
The objective of the review was to improve the reliability,
efficiency, and management of food aid programs. As a result of the
review there will be increased emphasis on Public Law 480 Title II,
which is the primary U.S. overseas food aid donation program. The
Administration has requested a $335 million increase in Title II
funding (which is used for humanitarian and development purposes) in
light of the decision to phase out Section 416(b) donations that rely
on the purchase of surplus commodities by CCC.
Question. The U.S. Maritime Administration now reimburses USDA for
one-third of the ``cargo preference'' law that requires 75 percent of
all food aid be shipped on U.S. flag vessels when feasible. The budget
proposes that these costs be fully borne by USDA. Why?
Answer. The budget proposes to eliminate reimbursements by the
Maritime Administration to other agencies for part of cargo preference
costs. The full costs of cargo preference will be funded directly
through the food aid programs. The 2003 budget includes $45 million in
the Public Law 480 budget request to offset the elimination of Maritime
Administration reimbursements. The Maritime Administration will
continue to assist FAS and USAID in ensuring compliance with cargo
preference requirements.
There are a number of different considerations behind this
proposal. First, it will end problems that have arisen associated with
trying to coordinate funding for shipments of food aid commodities
among different agencies. Difficulties in identifying what actually
constitutes increased freight costs and the time necessary to gather,
transmit, and review documentation evidencing the increase have greatly
added to the administrative burden and costs of operating our foreign
food aid programs.
Second, in the interest of increased governmental efficiency, this
proposal will eliminate a duplication in financing mechanisms for
payment of cargo preference costs and an inefficient inter-governmental
transfer of funds.
Third, the proposed change will eliminate delays associated with
receipt of reimbursement payments, which can hamper shipments at the
end of the fiscal year and affect our ability to meet program goals.
For these reasons, USDA strongly supports this proposal.
SUBCOMMITTEE RECESS
Senator Kohl. Our next hearing will be on Wednesday, March
20 at 2 p.m., in this room, when we will hear from
representatives of the CFTC, the FDA, and the Department of
Agriculture on issues of public health, nutrition and
regulatory programs.
If there is no other business to come before the committee,
we are recessed.
[Whereupon, at 11:53 a.m., Thursday, March 14, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
AGRICULTURE, RURAL DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR
FISCAL YEAR 2003
----------
WEDNESDAY, MARCH 20, 2002
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 2 p.m., in room SD-138, Dirksen
Senate Office Building, Hon. Herb Kohl (chairman) presiding.
Present: Senators Kohl, Durbin, Cochran, and Stevens.
COMMODITY FUTURES TRADING COMMISSION
STATEMENT OF JAMES E. NEWSOME, CHAIRMAN
OPENING STATEMENT OF SENATOR HERB KOHL
Senator Kohl. The subcommittee will come to order. We
welcome all of our guests here today. The number of witnesses
we have and the complexity and the importance of the issues
that will be covered is daunting. I cannot think of more
important work than that with which you are charged here today.
Americans rely on you for nothing less than the safety and
the quality of the food we eat and the drugs that we need to
stay healthy. I want to make special mention of our first
witness, Dr. James Newsome, chairman of the Commodity Futures
Trading Commission. All the members of this subcommittee were
extremely relieved that all of your employees were able to
escape the Twin Towers on September 11. We commend you and all
the CFTC employees for the exemplary manner in which you were
able to continue your work and to look after one another
immediately following the tragedy.
Our second panel here today will consist of Dr. Elsa
Murano, USDA Under Secretary for Food Safety; Mr. William
Hawks, Under Secretary for Marketing and Regulatory Programs;
and Mr. Eric Bost, Under Secretary for Food, Nutrition and
Consumer Services. The primary responsibility of these
departments is keeping food safe and available at every point
in the supply chain for food coming to our tables. This
involves ensuring that devastating plant and animal diseases
such as BSE and Foot and Mouth disease never cross our borders.
It includes responsibility for expanding domestic and
international marketing of U.S. agricultural products, and for
working to resolve agricultural trade problems such as those
now involving China and Russia.
Most importantly, it means running the programs that combat
hunger in America. Hunger dulls the student. It distracts the
worker, weakens the elderly and cripples the very young.
Without adequate nutrition, none of our other attempts to
improve the lives of Americans through government policy will
mean very much.
Finally, on our third panel, we will hear from Dr. Lester
Crawford, newly appointed as Deputy Administrator of the Food
and Drug Administration. Yesterday it was reported that FDA
plans to lift the requirement that drug makers test their
products to make sure they are safe for children. I have been
monitoring this situation and expect Dr. Crawford to address
this at today's hearing.
We have many issues to cover today. Personally, I am
interested to see how each agency is spending the supplemental
funding we provided last year, and I am hopeful this
information will be available at this, our last hearing on the
President's budget. Following opening statements made by
Senator Cochran and my other colleagues, we will hear opening
statements from and ask questions of each panel individually.
We have a very full hearing today, so we ask all of our
witnesses to keep their summaries brief in order to maximize
the amount of time we have for questions. I will now turn to my
friend and distinguished ranking member of this Committee for
his opening statement.
STATEMENT OF SENATOR THAD COCHRAN
Senator Cochran. Mr. Chairman, thank you very much. I am
pleased to welcome the witnesses who are here to testify before
our subcommittee today. We appreciate your cooperation with our
subcommittee as we review the budget request submitted to the
Congress by the President. The areas coming under the
jurisdiction of the agencies that are represented here today
are very important and I am not going to take the time of the
witnesses to make an elaborate opening statement, except to say
that we are very interested in your comments about the budget
request. Your assistance in helping us understand the request,
the highlights and the importance of these activities, is
greatly appreciated. So, we thank you for your presence.
Senator Kohl. Thank you, Senator Cochran. Before we turn to
our first witness, I would ask Senator Stevens to make a few
comments if he wishes.
STATEMENT OF SENATOR TED STEVENS
Senator Stevens. I will have a question when the time
comes, Mr. Chairman.
Senator Kohl. Thank you, Senator Stevens. Mr. Newsome, we
welcome you here today, as well as Mr. Bevill. It has been a
while since we have asked you to come testify before us, so we
appreciate your being here today. And now you may begin your
testimony.
STATEMENT OF JAMES E. NEWSOME
Mr. Newsome. Thank you very much, Mr. Chairman, Senator
Cochran, Senator Stevens. I appreciate the opportunity to be
here to testify on behalf of the Commodity Futures Trading
Commission. I have included detailed background information in
the Commission's written testimony, so therefore I will be
brief with you this morning.
Congress has charged the Commission with maintaining market
integrity, and protecting market participants against
fraudulent and abusive practices. These markets continue to
increase in complexity and volume, with trading volumes
doubling in just the last 10 years. Yet, the Commission
fulfills its mission with just over five hundred employees.
Last year, in addition to our normal responsibilities, we were
tasked with implementing the Commodity Futures Modernization
Act. However, unforseen events would increase our workload even
more.
First, two of the four largest futures exchanges were based
in lower Manhattan: the New York Board of Trade and New York
Mercantile Exchange. The Commission worked to assist the
industry in restoring the operation of these important markets.
Additionally, Mr. Chairman, as you so noted, the CFTC's New
York regional office was located on the 37th floor of the first
World Trade Center. Again, we are thankful that all of our
employees escaped without any major physical injury.
We are particularly appreciative and grateful for the
assistance of this subcommittee in securing the supplemental
funding which was needed to recover and to prepare adequately
for the future. We have recently completed a detailed report on
both our own and our industry's efforts to recover from the
attacks and to prepare, as we must, for future disasters we
hope never to face. A copy of that is attached to the written
statement.
Second, Enron's rapid financial deterioration last fall
caused concern over whether its futures positions could be
closed out without causing undue volatility or reducing
liquidity. Because Enron was a large trader of energy-based
contracts on the New York Merc, its trading activity has been
monitored by our market surveillance staff for quite some time.
The Commission staff worked closely with the clearing house and
affected futures commission merchants and helped ensure an
orderly closeout of Enron's positions.
The markets themselves reacted well with little or no
adverse impact on volatility or liquidity. We have opened a
formal investigation and have made inquiries both to Enron and
other Federal agencies that are investigating Enron to
determine whether their conduct violated the Commodity Exchange
Act. Separately, at the request of the President, we are
working with the SEC, the Fed and the Treasury to review
potential improvements in accounting, auditing and disclosure
practices by publicly held companies.
The President's fiscal year 2003 budget request for the
Commission is $82.8 million with a staffing level of 537 full-
time equivalents. This request represents an increase of $9.1
million, or 12 percent, above the 2002 appropriation. The
request also calls for an increase of 27 staff years above the
current base of 510, which is the lowest staffing level since
1988. Approximately $5.9 million of the increase is required
for the Commission to maintain its current level of services.
The remaining $3.2 million would support the additional 27
staff positions.
This request would increase and enhance the Commission's
information technology capacity, as well as increasing staffing
for our enforcement, market surveillance and CFMA
implementation efforts. The largest portion of the requested
increase, an additional 10 staff years, will be applied to
ensuring that our technological capacities will provide
effective oversight of an industry with platforms and products
that are constantly evolving based upon technological
innovations. This increase will assist all of our divisions.
The requested increase will also cover two additional
positions for the enforcement program. These positions will be
augmented by the dollar resources available from the anti-
terrorism supplement funds which will go toward our E-law
project. We believe the increase the President has requested
for fiscal year 2003 is essential for the Commission to fulfill
its Congressional mandate.
Our staff level has been at 592 in recent years, but I
believe that we can effectively fulfill our current
responsibilities with fewer than 540 FTEs if they are
sufficiently well skilled and experienced. This budget request
does not include funds to provide pay parity with other Federal
financial regulators. However, as the only financial regulator
still limited by the pay restrictions in Title V, we have
recently had to pay retention allowances to our attorneys and
economists in an attempt to reduce our very high turnover
rates. Despite this effort, our turnover rate for 2001 of 10
percent was almost twice the government-wide average.
Among attorneys, a large professional component of our
staff, the rate was 16 percent versus a government-wide average
of 7 percent and an SEC rate of 10 percent. The year before it
was 20 percent, and our 5 year average is now 18 percent among
attorneys. Three-quarters of those who leave report doing so
for financial reasons. But, fully half of these go not to the
private sector, but rather to other Federal financial
regulators.
PREPARED STATEMENT
Mr. Chairman, I respectfully request this committee's
support in removing the agency from Title V restrictions
regarding pay so we may successfully compete with other
financial regulators in hiring and retaining the dedicated
staff we need to accomplish our mission. Thank you very much,
Mr. Chairman.
[The statement follows:]
Prepared Statement of James E. Newsome
Thank you, Chairman Kohl, and members of the Subcommittee. I am
pleased to be here to testify before you on behalf of the Commodity
Futures Trading Commission and I appreciate the opportunity to discuss
issues related to the Commission's budget. I would like also to briefly
review the important role of the futures markets in our economy and the
role of the CFTC in overseeing those markets--and how that role has
changed under the Commodity Futures Modernization Act of 2000.
Background
Futures based on agricultural products, non-agricultural physicals,
and financial items have come to serve the risk management needs of
businesses in virtually every sector of the U.S. economy. While farmers
and ranchers continue to use futures contracts to safely lock in the
prices for their crops and herds months before they come to market,
manufacturers now also use futures contracts to plan their raw material
costs. Exporters reduce uncertainty over the prices they receive for
finished products sold overseas. Mutual fund managers and individual
investors use stock index futures to protect against market volatility.
And electricity generators use futures contracts to secure stable
pricing for their coal and natural gas needs.
Although the primary purpose of futures markets is risk management,
it should be noted that many futures markets play another important
role in the economy, that of price discovery. Many investors and
businesses that are not direct participants in the futures markets
nonetheless refer to the quoted prices of futures market transactions
as reference points or benchmarks for other types of transactions and
decisions. This is particularly important in many agricultural markets
where no other means of price discovery exists outside of the quoted
futures prices, but it is also true in other sectors, including many
energy markets.
Congress created the Commission in 1974 as an independent agency
and charged it with deterring and preventing price manipulation and
other disruptions to market integrity, ensuring the financial integrity
of transactions to avoid systemic risk, promoting responsible
innovation and fair competition in these markets, and protecting all
market participants against fraudulent or other abusive sales practices
and from misuse of customer assets. The CFTC has traditionally had
three operational divisions: Economic Analysis (DEA), Trading and
Markets (T&M), and Enforcement (DOE). DEA has helped the Commission--
through market surveillance, market analysis, and market research--to
fulfill its responsibility to promote competitive markets free of
manipulation or congestion. T&M has developed, implemented, and
interpreted regulations that protect customers, prevent trading and
sales practice abuses, and assure the financial integrity of firms that
hold customer funds. DOE has investigated and prosecuted alleged
violations of the Commodity Exchange Act and the Commission's rules.
Recently, to ensure its ability to properly oversee trading in
single stock futures and the many other innovative products and
platforms that I believe will flourish under the CFMA, we restructured
our staff to make the agency more responsive, more effective, and more
efficient. The main thrust of the new structure will be that functions
previously performed by T&M and DEA will now be performed by two new
divisions and one new office: the Division of Market Oversight, the
Division of Clearing and Intermediary Oversight, and the Office of
Chief Economist. Additionally, the Offices of Public Affairs and of
Legislative and Intergovernmental Affairs were combined to form the new
Office of External Affairs.
How the CFTC Performs Its Mission
In seeking to fulfill its mission, the Commission focuses on issues
of integrity. We seek to protect the economic integrity of the futures
markets so that they may operate free from manipulation or congestion.
We seek to protect the financial integrity of the futures markets so
that the insolvency of a single market participant does not become a
systemic problem affecting other market participants or financial
institutions. We seek to protect the operational integrity of the
futures markets so that transactions are executed fairly, so that
proper disclosures are made to customers, and so that fraudulent sales
practices are not tolerated.
The Commission pursues these goals through a multi-pronged approach
to market oversight. We seek to protect the economic integrity of the
markets against manipulation and congestion through direct market
surveillance and through oversight of the surveillance efforts of the
exchanges themselves. The heart of the Commission's direct market
surveillance is a large-trader reporting system, under which clearing
members of exchanges, futures commission merchants (FCMs), and foreign
brokers electronically file daily reports with the Commission. These
reports show all trader positions above specific reporting levels set
by CFTC regulations. Because a trader may carry futures positions
through more than one FCM and because a customer may control more than
one account, the Commission routinely collects information that enables
its surveillance staff to aggregate information across FCMs and for
related accounts.
Using these reports, the Commission's surveillance staff closely
monitors the futures and option market activity of all traders whose
positions are large enough to potentially impact the orderly operation
of a market. For contracts which at expiration are settled through
physical delivery, such as contracts in the energy complex, staff
carefully analyzes the adequacy of potential deliverable supply. In
addition, staff monitors futures and cash markets for unusual movements
in price relationships, such as cash/futures basis relationships and
inter-temporal futures spread relationships, which often provide early
indications of a potential problem.
The Commissioners and senior staff are kept apprised of market
events and potential problems at weekly surveillance meetings and more
frequently when needed. At these meetings, surveillance staff briefs
the Commission on broad economic and financial developments and on
specific market developments in futures and option markets of
particular concern.
If indications of attempted manipulation are found, the DOE
investigates and prosecutes alleged violations of the Act or
regulations. Subject to such actions are all individuals who are or
should be registered with the Commission, those who engage in trading
on any domestic exchange, and those who improperly market commodity
futures or option contracts. The Commission has available to it a
variety of administrative sanctions against wrongdoers, including
revocation or suspension of registration, prohibitions on futures
trading, cease and desist orders, civil monetary penalties, and
restitution orders. The Commission may seek Federal court injunctions,
restraining orders, asset freezes, receiver appointments, and
disgorgement orders. If evidence of criminal activity is found, matters
may be referred to State authorities or the Justice Department for
prosecution of violations not only of the Commodity Exchange Act but
also of State or Federal criminal statutes, such as mail fraud, wire
fraud, and conspiracy. Over the years, the Commission has brought
numerous enforcement actions and imposed sanctions against firms and
individual traders for attempting to manipulate prices, including the
well-publicized cases against Sumitomo for alleged manipulation of
copper prices and against the Hunt brothers for manipulation of the
silver markets.
In protecting the financial integrity of the futures markets, the
Commission's two main priorities are to avoid disruptions to the system
for clearing and settling contract obligations and to protect the funds
that customers entrust to FCMs. Clearinghouses and FCMs are the
backbone of the exchange system: together, they protect against the
financial difficulties of one trader becoming a systemic problem for
other traders. Several aspects of the oversight framework help the
Commission achieve these goals with respect to traders: (1) requiring
that market participants post margin to secure their ability to fulfill
obligations; (2) requiring participants on the losing side of trades to
meet their obligations, in cash, through daily (sometimes intraday)
margin calls; and (3) requiring FCMs to segregate customer funds from
their own funds.
The Commission also works with the exchanges and the National
Futures Association (NFA) to closely monitor the financial condition of
the FCMs themselves, who must provide the Commission, exchanges, and
NFA with various monthly, quarterly, and annual financial reports. The
exchanges and NFA also conduct annual audits and daily financial
surveillance of their respective member FCMs. Part of this financial
surveillance involves looking at each FCM's exposure to losses from
large customer positions that it carries. As an oversight regulator,
the Commission reviews the audit and financial surveillance work of the
exchanges and NFA but also monitors the health of FCMs directly, as
appropriate. We also periodically review clearinghouse procedures for
monitoring risks and protecting customer funds.
As with attempts at manipulation, DOE investigates and prosecutes
FCMs alleged to have violated financial and capitalization requirements
or to have committed other supervisory or compliance failures in
connection with the handling of customer business. Such cases can
result in substantial remedial changes in the supervisory structures
and systems of FCMs and can influence the way particular firms conduct
business. This is an important part of fulfilling the Commission's
responsibility for ensuring that sound practices are followed by FCMs.
Protecting the operational integrity of the futures markets is also
accomplished through the efforts of several divisions. T&M has
promulgated requirements that mandate appropriate disclosure and
customer account reporting, as well as fair sales and trading practices
by registrants. T&M has sought to maintain appropriate sales practices
by screening the fitness of industry professionals and by requiring
proficiency testing, continuing education, and supervision of these
persons. Extensive recordkeeping of all futures transactions is also
required. T&M has also monitored compliance with those requirements and
supervised the work of the exchanges and NFA in enforcing the
requirements.
As with the Commission's efforts to protect the economic and
financial integrity of the futures markets, DOE also plays an important
role in deterring behavior that could compromise the operational
integrity of the markets by investigating a variety of trade and sales
practice abuses that affect customers. For example, the Commission
brings actions alleging unlawful trade allocations, trading ahead of
customer orders, misappropriating customer trades, and non-competitive
trading. We also take action against unscrupulous commodity
professionals who engage in a wide variety of fraudulent sales
practices against the public.
September 11 and Enron
The Commission began last year with a full plate of tasks relating
to implementation of the Commodity Futures Modernization Act, but two
unforeseen events would increase its workload even more: the World
Trade Center attacks and the Enron bankruptcy. The New York Regional
Office of the Commission was located on the 37th floor of 1 World Trade
Center. Thankfully, all of our employees escaped without major physical
injury. Using backup systems and with help from staff of the Chicago
Regional Office and D.C. headquarters, we provided ongoing surveillance
of futures markets in the hours and days immediately following the
tragedy.
Two of the four largest commodity futures exchanges regulated by
the CFTC were based in Lower Manhattan: the New York Board of Trade and
the New York Mercantile Exchange. Both were drastically impacted on
September 11 and trading did not resume on either exchange for several
days. Other futures exchanges, in Chicago and elsewhere, were also
impacted by events in New York, particularly by the closing of the
stock markets, and experienced temporary interruptions in trading.
However, in its preparedness and by its responses to this unprecedented
disaster, the futures industry demonstrated foresight, resilience, and
determination. Steady leadership, thoughtful contingency plans, prudent
investments in redundant facilities and backup systems, the ingenuity
of technical staffs, and the courage and tenacity of everyone in the
industry, made possible a remarkably fast and effective resumption of
trading, restoring for the U.S. economy rapid access to risk-management
and price-discovery tools uniquely provided by the futures industry.
The Commission, in coordination with local authorities, other Federal
financial regulators in the President's Working Group on Financial
Markets, the Congress, and the White House, strove to assist the
industry in restoring operation of these important markets.
The Commission has been working steadily for the last 6 months to
fully reestablish its permanent presence in New York City. At the end
of April, the Commission will move into permanent space in Lower
Manhattan from our temporary quarters in Jersey City, New Jersey. The
Commission and its staff are particularly appreciative and grateful for
the assistance of this Subcommittee in securing the supplemental
funding we needed to recover and to prepare adequately for the future.
The Commission has completed a detailed report on both its own and the
industry's efforts to recover from the attacks and to prepare, as we
all must, for future disasters we hope never to face. A copy of that
report is attached hereto.
The Commission also found itself with new challenges following
initial disclosures of Enron's financial difficulties last autumn.
Because Enron was a large trader of energy-based contracts traded on
NYMEX, its on-exchange activity had been monitored by our market
surveillance staff for some time. However, the rapid financial
deterioration of Enron last year presented an additional concern for
the Commission: Could Enron's on-exchange futures positions be closed
out without causing sudden price volatility or unduly reducing
liquidity? In fact, Enron was but one of many significant participants
in these large and liquid markets and the markets proved to be quite
resilient. When its financial difficulties became known and Enron
voluntarily closed out its positions, the futures markets reacted well,
with little or no adverse impact on price volatility or liquidity.
As would the financial difficulties of any large futures customer,
Enron's difficulties also raised concerns about the ability of the FCM,
that carried Enron's on-exchange futures positions to successfully
close out those positions if Enron were to fail to meet margin calls.
When Enron's financial troubles became known last fall, T&M staff
worked closely with the NYMEX clearinghouse and the affected FCMs to
monitor and manage the closing out of these positions. By appropriately
adjusting margin requirements, the clearinghouse was able to ensure
that adequate Enron funds remained on deposit at the FCMs. By the time
of Enron's bankruptcy filing, the risks to which FCMs were exposed, as
measured by standard margin requirements, had dropped by 80 percent
from only a week earlier. By mid-December, all of Enron's positions on
the regulated exchanges had been liquidated. I believe this episode was
a success for the system of financial controls in on-exchange futures
markets. There were no disruptions to clearance and settlement system.
Enron met all its obligations. No customer lost funds entrusted to any
FCM. Obviously, as an oversight regulator, we will continue to look at
how and why markets respond the way they do, whether well or poorly, to
a situation such as this one.
As the facts surrounding Enron's collapse have unfolded over the
last several months, the Commission has made a variety of inquiries
both to Enron and other Federal agencies investigating Enron to
determine whether Enron's conduct may have violated the Commodity
Exchange Act. We are obtaining information from Enron and other sources
to determine how it conducted its trading business and whether it
functioned within the bounds of applicable exclusions and exemptions
under the Act. The Commission is also working with the SEC, FERC, and
the Justice Department to ensure that we keep each other apprised of
relevant information developed in our respective investigations.
Separately, as a member of the President's Working Group on
Financial Markets, I have worked with Secretary O'Neill, Chairman
Greenspan, and Chairman Pitt to review for the President potential
improvements in accounting, auditing, and disclosure practices by
publicly-held companies.
Implementation of the Commodity Futures Modernization Act
Certainly events last year caused many of us to pull attention away
from previous plans and intended courses of action. But implementation
of the CFMA remains the most important task before this Commission. And
notwithstanding the unexpected challenges, solid progress was made last
year on security futures products. We are continuing to move toward
permitting trading of these new products at the earliest possible date.
As many of you know, we have issued final rules on notice
registration, listing standards, self-certification of rules and rule
amendments, data reporting, speculative position limits, and dual
trading of single-stock futures. Together with the SEC, we have also
issued final rules on determining if an index is a narrow-based index
subject to joint regulation or a broad-based index subject only to our
rules. With the SEC, we have published proposed rules on margin,
customer funds protection issues, cash settlements, and trading halts.
The NFA has developed numerous rules required by its new capacity as a
limited-purpose national securities association.
Chairman Pitt and I agreed generally last year on how to best
address the issues that remain before us and we issued a joint
statement on December 21st, 2001, the first anniversary of the CFMA's
enactment, expressing our commitment to promulgation of final rules on
margin and customer funds protection at the earliest possible date,
with a goal of permitting actual trading by early in the second quarter
of this year. I remain committed to meeting that objective but I
believe that in the long term issuing the right rules is as important
as issuing rules quickly.
We are also looking forward to completing the intermediary study
called for by the CFMA and are considering proposals for rule
modernization. We have finalized our timeline for the phases of this
important project, including individual interviews which we hope to
conduct in late March and early April, public hearings planned for late
April, circulation of a final report prior to June 21st, and
promulgation of rule amendments as appropriate.
Budget Request for Fiscal Year 2003
The President's fiscal year 2003 budget request for the CFTC is
$82.8 million. That sum represents an increase of $9.1 million (or 12
percent) over the fiscal year 2002 regular appropriation. Of that $9.1
million, approximately $5.9 million is required to maintain the current
level of services and operations. The remaining $3.2 million is being
requested for an additional 27 staff years over the current base of 510
FTEs, which is the lowest staffing level since fiscal year 1988.
overview of funding levels and operational effects
The Commission's top budget priorities are to dedicate resources to
fully implement the CFMA and to invest in the technology improvements
needed to increase the Commission's ability to continue fulfilling its
mission in the face of the rapid technological change that is sweeping
the futures industry.
Our request for 27 additional positions should improve our ability
to keep pace with the rapid growth in volume, innovative products and
transactions, new trading systems, evolving market practices,
technological advances, and market globalization. The largest staff
increase--an increase of ten--will go to information technology because
the effective use of information technology is critical to our ability
to fulfill our mission. It is critical that our information technology
capacity stay on par with industry practices so that we can provide the
timely and accurate information in a relevant format to our
investigators, analysts, and attorneys.
The budget also calls for an increase in two staff years for the
Enforcement program. This staff growth will be augmented by
supplemental anti-terrorism intended to allow us to significantly
upgrade our litigation, case, and document imaging and management
systems through implementation of the ``E-law'' project. this system
will enable staff to image all documents received or created during
investigations and litigation. Those imaged documents--as well as all
on-line annotations, notes, work products, and case information
relevant to each matter (such as names and phone numbers for witnesses,
counsel, and staff at other agencies involved in the matter, etc.)--
will be available to Commission staff despite destruction of the paper
documents, as happened in New York. We expect this system to increase
productivity in DOE as well as to assist the Office of General Counsel
and the Office of Proceedings.
In fiscal year 2003, the Market Surveillance, Analysis, and
Research program will gain five positions. This 7 percent increase
should allow us to keep pace with the growth in new types of exchanges
and products, such as single-stock futures, as well as provide the
proper level of surveillance, exchange oversight, contract design
review, and market and product studies. However, it is difficult to be
sure that resource levels are adequate because so much is not known at
this time about the direction of the markets. If, for example, growth
in the industry outpaces the resources available to oversee the
industry, several risks are introduced, including the increased
possibility of undetected price manipulations and abusive trading
practices. A key goal of the Commission is to ensure that its
regulatory policies reflect industry developments and do not to impede
beneficial market innovation. But because these markets and the
products traded on them are increasingly complex, it will be difficult
to meet this goal without the proper level of staff resources.
The T&M programs which will become part of our new Market Oversight
and Clearing and Intermediary Oversight will together gain four
positions, or 4 percent of staff, in fiscal year 2003. These functions
play important roles in developing regulatory reform initiatives are
key to full implementation of the CFMA. In fiscal year 2003, in
addition to providing guidance to the public and industry professionals
concerning compliance with the CEA, the programs will continue to
review Commission rules to determine if they should be streamlined
further in light of technological and market developments, to provide
guidance to foster innovative transactions and electronic trading
systems, and to monitor the risks to regulated industry participants by
unregulated derivatives activities as well as the risks posed to
registrants by their unregistered affiliates. In addition, these
programs help maintain U.S. leadership in setting internationally
acceptable standards for the regulation of markets and trading. Again,
however, we cannot say with certainly that this increase will be
sufficient because the pace of industry transition is uncertain. It is
the Commission's objective to be equipped to respond as quickly as
desired to these critical challenges and their associated interested
parties.
Finally, the Office of the General Counsel is slated for an
increase of one FTE to ensure it is able to provide for the timely
review of contract market designation applications, rule changes, and
proposed enforcement actions; to provide for thorough and timely review
and analysis of legislation and proposed legislation affecting the
Commission and in defending the Commission in appellate and other
litigation; and to assist the Commission in the performance of its
adjudicatory functions.
employee attrition and pay parity
The Commission continues to face a serious challenge in attracting
and retaining the type of highly skilled and experienced staff that is
needed to operate effectively with our new responsibilities under the
CFMA. The Commission must move from the role of a front-line regulator
to a more flexible oversight role. Some might believe that, in this new
capacity, the agency will need fewer resources than in the past. In the
near term, anyway, just the opposite is true. The CFMA liberated
markets and allowed innovation to flourish, creating new financial
products and new trading platforms and permitting clearinghouses to
respond in kind. I believe we have seen only the beginning of this
exciting process.
This growth and innovation in the marketplace will provide real
benefits to participants, customers, and the economy as a whole.
However, because our fundamental duties have not changed, this growth
and innovation will place increasingly greater demands on our
resources. With new exchanges and alternate trading platforms, there is
no longer a ``template'' to follow; rather, oversight must now be
tailored to fit a variety of markets along a spectrum of regulatory
classifications from basic fraud and manipulation protections to full
oversight. To continue to fulfill our mission to promote markets free
from congestion and manipulation and to protect market participants
from fraud and abusive practices, we must have staff with the proper
training and with solid experience in the markets we oversee.
All too often, however, we lose good people just as they are coming
into their own as economists, commodity lawyers, and trading
specialists. Our overall turnover rate is twice the Federal average.
Among attorneys it is almost 20 percent annually and we have seen the
average tenure of a new attorney decrease from 5 years to 3 years. In
most, if not all, cases our ability to compensate skilled people lags
not only far behind that of the private sector, but also well behind
that of the other Federal financial regulators, where turnover rates
are significantly lower. We are now the only Federal financial
regulator still subject to the pay restrictions of Title V. The SEC
recently was exempted from Title V but their recruitment and retention
problems, according to the statistics, are less serious than our own.
It is difficult enough to accept the loss of a productive employee to a
higher-paying job in the private-sector but it is downright frustrating
to lose such an employee to another Federal agency because of disparate
pay scales. Therefore, Mr. Chairman, I respectfully request this
Committee's support for removing the Commission from Title V pay
restrictions so we may successfully hire and retain the dedicated staff
we need to accomplish the important mission that we have in front of
us.
Thank you for the opportunity to present our mission,
responsibilities, and resource needs. I would be happy to provide
answers to any questions you may have.
______
Commodity Futures Trading Commission on the Futures Industry Response
to September 11
the role of the futures markets
The Commodity Futures Trading Commission (the Commission or CFTC)
is charged under the Commodity Exchange Act with deterring and
preventing price manipulation and other disruptions to market
integrity, ensuring the financial integrity of transactions in the
commodity futures and option markets so as to avoid systemic risk,
promoting responsible innovation and fair competition in these markets,
and protecting all market participants against fraudulent or other
abusive sales practices and from misuse of customer assets. Through
oversight regulation, the CFTC enables the futures markets to serve
better their two key functions in the economy: a mechanism for managing
risk and a means of price discovery.
Futures markets exist primarily to provide a mechanism for managing
risk, principally price risk. Producers, distributors, and users of
physical commodities--as well as those exposed to fluctuation in
financials such as currencies, interest rates, and stock index values--
use futures contracts to manage (or ``hedge'') their exposure to risk.
Thus, disruption of a futures market can cause significant economic
hardship for the users of these hedging tools.
Futures markets also perform a second function: they enable other
markets to discover appropriate prices for commodities (and the
products or services derived from commodities) by referencing quoted
futures markets transactions. Businesses, investors, and even
government entities throughout the economy depend upon these important
price discovery mechanisms. Thus, disruption of a futures market can
cause widespread economic hardship for those who look to it for price
discovery information. For example, observers have noted that had the
New York Mercantile Exchange, Inc. not succeeded in restoring operation
of its market for futures contracts based on crude oil so quickly and
smoothly after the attacks, then the domestic and global stock markets
might have suffered drastically.
There are 16 domestic futures exchanges designated by the
Commission as contract markets. Approximately 65,000 persons are
registered as floor brokers, floor traders, introducing brokers,
associated persons, futures commission merchants, and commodity trading
advisors. Although contracts for agricultural commodities have been
traded in the U.S. for almost 150 years, the industry has in recent
years expanded rapidly into many new markets. Futures and option
contracts are now offered in a vast array of financial instruments,
including foreign currencies, domestic and foreign government
securities, and domestic and foreign stock indices.
There are more than 240 contracts actively traded on U.S. futures
exchanges, twice as many as a decade ago, and the volume of trading has
also doubled in the last 10 years. The four largest exchanges are the
Chicago Board of Trade (CBT), Chicago Mercantile Exchange (CME), New
York Mercantile Exchange, Inc. (NYMEX), and New York Board of Trade
(NYBOT) but there are other futures exchanges, regional and electronic,
that also play important roles.
the role of the cftc
Congress created the Commission in 1974 as an independent agency
with the mandate to regulate commodity futures and option markets in
the United States. The Commission consists of five Commissioners who
are appointed by the President and confirmed by the Senate, one of whom
is designated by the President to serve as Chairman. The CFTC
headquarter offices are located in Washington, D.C. The Commission also
maintains large regional offices in Chicago and New York, and smaller
regional offices in Kansas City, Los Angeles, and Minneapolis.
The CFTC has three operational divisions: the Division of Economic
Analysis (DEA), Division of Trading and Markets (T&M), and Division of
Enforcement (DOE). DEA helps the Commission--through market
surveillance, market analysis, and market research--to fulfill its
responsibility to promote markets free of manipulation or congestion so
that they best serve the risk-shifting and price-discovery needs of the
U.S. and world economies. T&M develops, implements, and interprets
regulations that protect customers, prevent trading and sales practice
abuses, and assure the financial integrity of firms that hold customer
funds. DOE investigates and prosecutes alleged violations of the
Commodity Exchange Act and the Commission's rules.\1\
---------------------------------------------------------------------------
\1\ The Commission recently announced a reorganization plan to
combine key elements of DEA and T&M into a single market oversight
function, and will use other elements of T&M to oversee intermediaries.
A separate office of chief economist will also be established.
---------------------------------------------------------------------------
The Commission also has an Office of the General Counsel (OGC),
which serves as its legal advisor, and an Office of the Executive
Director (OED), which provides management services to support the
Commission's programs. The Office of the Chairman includes the Office
of International Affairs (OIA), which assists the Commission in
responding to global market and regulatory changes by coordinating the
Commission's international activities; the Office of Legislative and
Intergovernmental Affairs (OLIA), which facilitates communications with
Congress, other Federal agencies, and State Governments; and the Office
of Public Affairs (OPA), which serves as the Commission's liaison with
the news media, user groups, and the general public.\2\
---------------------------------------------------------------------------
\2\ The reorganization will also combine OLIA and OPA into a single
Office of External Affairs (OEA).
---------------------------------------------------------------------------
Impact of the Terrorist Attacks
The futures industry demonstrated preparedness, resilience, and
flexibility in the aftermath of the attacks. NYMEX and NYBOT, despite
being directly and severely impacted by the September 11 attacks,
successfully responded by following established contingency plans and/
or by skillfully adapting to unforeseen challenges and new operational
realities. NYMEX initially resumed trading on Friday, September 14th,
using internet access to its electronic trading platform. It resumed
open outcry trading on Monday, September 17th, after remarkable efforts
to restore the functionality of its floor trading facility located only
one block from the World Trade Center. NYBOT, whose facilities in 4
World Trade Center were destroyed, moved quickly into a well-conceived,
well-resourced backup facility in Queens, complete with trading rings,
and resumed its open-outcry trading operations on Monday, September
17th.
The Chicago exchanges were not physically impacted and, after
closing their markets to observe an industrywide day of recognition on
September 12th, resumed trading in all but their equity-based contracts
on September 13th. Trading by all exchanges in contracts based on U.S.
equities was suspended until the reopening of the underlying stock
markets.
All clearing organizations for the futures exchanges and the banks
that they utilize were prepared to function as soon as the exchanges
reopened. Clearing operations were fully successful upon this
resumption of trading. Virtually all reporting firms (futures
commission merchants, clearing members, and foreign brokers) that are
required to submit large trader data to the CFTC were able to do so as
soon as trading activities resumed. This was accomplished through
either their main computing facilities or backup locations. The CFTC's
market surveillance large trader automated computer system was not
disabled in any way.
Preparedness Efforts
The firms, clearinghouses, exchanges, and industry associations
that make up this important industry had in place prior to the
terrorist attacks a variety of preparedness measures and contingency
plans for disaster recovery and business continuity. This event
produced an unprecedented opportunity for plans and preparations to be
tested and, as it turned out, some organizations were better able to
withstand and recover from the disruption. Plans and measures that
proved most effective in preparing certain market participants to
better handle this disaster can and should be held up as benchmarks,
guidance, and inspiration to all market participants as the industry
seeks to prepare itself, as it must, for disasters that it hopes never
to face.
The CFTC, like other financial regulators, learned much about the
adequacy of its own contingency plans. The CFTC had in place a Market
Disruption Contingency Plan that set forth appropriate procedures to
implement and relevant information to collect in the event of extreme
market volatility, financial emergency, or disruption to physical or
electronic facilities. During a period of such market disruption,
designated CFTC staff are responsible under the Plan for: (i)
collecting and analyzing information from various markets, market
participants, and different self-regulatory organizations; (ii)
communicating information to the Commission concerning market events
and conditions and possible regulatory responses; and (iii)
disseminating information and regulatory responses to markets, market
participants, regulatory and self-regulatory organizations, other
Federal financial regulators, Congress, and the public.
The appropriate regulatory responses under the Plan vary from one
market event to another but fall broadly into the categories of:
identification and oversight of market moves, ``first day'' responses,
subsequent follow-up and intensified oversight, and responses to
particular market-related emergencies (such as the distress of a
financial institution, physical emergencies, and major system
malfunctions). In addition, the Commission prepared itself for
potential problems connected with the year 2000 date rollover by
developing contingency plans focused on failures in building
infrastructure services and mission-critical information systems.
It is fair to say, however, that neither the Market Disruption
Contingency Plan nor the Commission's Y2K contingency plan contemplated
the scope of disaster experienced on September 11, which included the
destruction or dislocation of two major exchanges and numerous trading
firms combined with the destruction of a regional office of the
Commission itself. Accordingly, the Commission, like many market
participants, must now undertake a strategic review of every facet of
its preparedness and contingency plans, both in terms of disaster
recovery and business continuity. From instituting better backups of
data and more complete archiving of institutional knowledge, to
enhancing organizational flexibility and responsiveness in times of
crisis, the Commission faces the challenge of ensuring the effective
survival of its abilities to fulfill its core mission and accomplish
its public policy goals.
It is the Commission's hope that--by sharing through this initial
report what it has learned thus far about its own preparedness as a
Federal financial regulator, and about the preparedness efforts of the
exchanges, clearinghouses, and firms that it oversees--it may benefit
both other financial regulators and financial services firms in other
industry sectors that are also reexamining their policies, procedures,
and practices in the aftermath of September 11.
This report is organized into three parts. The first part describes
the efforts of the futures industry to resume operations as quickly as
possible. The second part summarizes the Commission's efforts to
restore its own operational capabilities and respond to administrative
challenges in the aftermath of the attacks, challenges of the type also
faced by many market participants displaced from the World Trade Center
and surrounding area. Finally, the third part reviews what has been
learned thus far about the disaster recovery and business continuity
plans of both market participants and the Commission and discusses
areas where further discussion, analysis, and cooperation within the
industry and with the Commission may prove fruitful.
reopening the futures markets
Two of the four largest commodity futures exchanges regulated by
the CFTC were based in Lower Manhattan: NYBOT and NYMEX. Both were
drastically impacted on September 11 and trading did not resume on
either exchange for several days. Other futures exchanges, in Chicago
and elsewhere, were also impacted by events in New York, particularly
by the closing of the stock markets, and experienced temporary
interruptions in trading.
In its preparedness and by its responses to this unprecedented
disaster, the futures industry demonstrated foresight, resilience, and
determination. Steady leadership, the creativity of technical staffs,
and the courage and tenacity of everyone in the industry, made possible
a remarkably fast and effective resumption of trading, restoring for
the U.S. economy rapid access to risk-management and price-discovery
tools uniquely provided by the futures industry. The Commission, in
cooperation with other Federal financial regulators, Congress, and the
White House, strove to assist the industry in restoring operation of
these important markets.
Tuesday, September 11
The New York Board of Trade
NYBOT and its subsidiary exchanges were located in the World Trade
Center complex. The Coffee, Sugar & Cocoa Exchange (CSCE) and the New
York Cotton Exchange (NYCE) shared a trading floor in 4 World Trade
Center.\3\
---------------------------------------------------------------------------
\3\ CSCE comprises Division A of NYBOT. NYCE, which includes two
subsidiary exchanges, the New York Futures Exchange and the Citrus
Associates of the New York Cotton Exchange, Inc., constitutes Division
B of NYBOT. NYCE's Financial Instrument Exchange (Finex) Division also
trades various currency futures products on a trading floor located in
Dublin, Ireland, during non-trading hours in New York.
---------------------------------------------------------------------------
The Cantor Financial Futures Exchange (CX) had its central matching
computer and terminal operations in 1 World Trade Center.\4\ At 8:45
a.m. on September 11, NYBOT suspended trading and successfully
evacuated all of its staff and members from its facilities at 4 World
Trade Center. By that time, the following NYBOT markets had opened for
trading: NYCE's Finex Division, at 8:05 a.m., and CSCE's Cocoa market,
at 8:30 a.m.\5\
---------------------------------------------------------------------------
\4\ Although not a subsidiary of NYBOT, CX is owned by NYCE and
NYBOT members and NYBOT provides regulatory services for CX. CX trades
various U.S. Treasury futures products.
\5\ The Finex Division had been open for trading on the Dublin
trading floor from 3:00 a.m. to 8:00 a.m., New York time, on September
11. Finex trades executed prior to the attack on September 11 cleared
on the 11 using settlements from the 10th. With respect to other NYBOT
markets, all open orders from September 11 were declared cancelled and
any trades executed in the Cocoa market during the 15 minutes it was
open were declared null and void and none were accepted for matching or
clearing.
---------------------------------------------------------------------------
The other NYBOT markets had not yet opened when the evacuation was
ordered. The Cantor facilities were located on the highest floors of 1
World Trade Center and were destroyed with a horrendous loss of life
before any evacuation could be effected. At the time of the attack,
trading at CX was open on its 23-hour trading platform.\6\
---------------------------------------------------------------------------
\6\ No trades were executed during the CX trading session on
September 11. All open positions on CX were subsequently closed
pursuant to block transactions and trading in futures contracts was
suspended effective September 17th. Trading on CX remains suspended at
this time.
---------------------------------------------------------------------------
NYBOT had in place a remarkably well thought out, well resourced
contingency plan and immediately began preparing to resume trading from
its back-up facility in Queens, which had been established after the
1993 bombing of the World Trade Center. It includes both a data center
and a trading floor equipped with two open-outcry pits. All NYBOT
trading and clearing data were fully backed up and kept current at this
alternate site.
The New York Mercantile Exchange
NYMEX moved several years ago from the World Trade Center complex
to One North End Avenue, several blocks away. Shortly after 9:00 a.m.
on September 11, NYMEX suspended trading and successfully evacuated its
facilities. At that time, the following markets had opened: on the
COMEX Division, the metals markets (copper, aluminum, gold and silver)
had opened at various times between 7:50 a.m. and 8:25 a.m. and the
FTSE Eurotop contracts had opened at 5:00 a.m. and on the NYMEX
Division, the metals markets (platinum and palladium) and the propane
markets had opened at various times between 8:10 a.m. and 8:30 a.m.\7\
Other NYMEX markets, including crude oil, unleaded gas, natural gas,
and heating oil, had not opened by the time of the evacuation.\8\
---------------------------------------------------------------------------
\7\ The NYMEX ACCESS trading session, which had opened for most
contracts at 4:00 p.m. on September 10th, ended at 9:00 a.m. on
September 11. Except for the FTSE Eurotop contracts, all NYMEX futures
contracts could be traded on NYMEX ACCESSR.
\8\ All NYMEX and COMEX Division trades executed on September 11
were subsequently matched and cleared. However, due to system and
processing differences between the two divisions, the procedures varied
slightly. NYMEX trades executed on the trade date of September 11 were
ultimately cleared using settlements from September 10th, the prior
trade date. COMEX Division trades executed on the trade date of
September 11 were ultimately cleared with trades done in the NYMEX
ACCESSR system for the trade date of September 14th. Banking functions
associated with this trading activity for both divisions were conducted
on Monday, September 17th.
---------------------------------------------------------------------------
Although it did not maintain a backup facility for open-outcry
trading, NYMEX did have backup computer and data storage systems in
place to support its trading and clearing activities. However, these
systems were housed on Cortland Street, only one block east of the
World Trade Center complex, and were inaccessible to NYMEX staff. \9\
---------------------------------------------------------------------------
\9\ NYMEX did subsequently move computers and other equipment to
establish back-up systems at a location in New Jersey.
---------------------------------------------------------------------------
NYMEX began holding emergency meetings of its board of directors on
the morning of the 11. These meetings, conducted initially by
conference call and later in the homes of exchange managers and hotel
ballrooms, would continue around the clock. NYMEX was successful early
on in contacting the White House, emphasizing the important price
discovery role played by energy-based futures markets such as that for
West Texas Intermediate Crude, and securing a commitment from the
Federal Emergency Management Agency (FEMA) to provide its ``full
support'' to NYMEX's recovery effort.
Other Commodity Futures Exchanges
At the time of the attack, the agricultural futures and option
markets had not yet opened in Chicago, Kansas City, or Minneapolis and
each of the exchanges in those cities decided not to open for trading
that day. The financial contracts (interest rates and foreign exchange)
had opened and were promptly closed. The New York Stock Exchange and
the Nasdaq Stock Market, which do not open until 9:30 a.m., never
opened on September 11. By early in the afternoon, all of the exchanges
had begun discussing the issue of whether or not to attempt to resume
trading on Wednesday, September 12th.
The Regulators--Communication and Coordination
After making the decision on Tuesday morning to send all non-
essential personnel in the D.C. and other regional offices home for the
remainder of the day and establishing a procedure for contacting
Commission employees who had been evacuated from the New York regional
office in 1 World Trade Center, the Commission's Acting Chairman
convened a meeting of senior staff to address several issues of
immediate concern: (1) ensuring that unauthorized access to futures
exchanges would be blocked in the event economic terrorism was being
contemplated from any quarter; (2) discovering as quickly as possible
the situation facing each of the New York futures exchanges and
providing whatever support or information possible to those exchanges;
and (3) coordinating with other Federal financial regulators to keep
the White House and Congress informed on the condition of the U.S.
financial markets.
Concerns in the first category were quickly allayed as the
Commission confirmed that all boards of trade under its supervision
were closed. Commission staff next began contacting exchanges and
industry associations to gather contact telephone numbers for managers
of the New York exchanges. By mid-afternoon, the Commission was able to
reach executives of both NYMEX and NYBOT at their homes and to learn
basic information about the status of the exchanges: that the NYMEX
facility appeared to be intact but might be inaccessible for some time,
that the primary NYBOT facility was likely destroyed but that a backup
facility existed in Queens, and, most importantly, that both exchanges
appeared to have been successful in getting most of their people safely
out of the World Trade Center complex.
Coordination with other Federal financial regulators had already
begun by this time, enabling the Commission to inform the New York
exchanges that other futures exchanges in Chicago and elsewhere, as
well as the securities exchanges, had decided on their own not to open
for any trading on Wednesday, September 12th, in recognition of the
tragedy that had befallen their colleagues in New York's financial
district.
Before noon, the CFTC had participated in a password-protected
``all markets'' call hosted by Nasdaq with market participants and
regulators representing the stock, options, and commodity futures
markets. At 1:00 p.m., the CFTC participated in the first call among
the President's Working Group on Financial Markets (PWG), which is
normally chaired by the Secretary of the Treasury and also includes the
Chairmen of the Federal Reserve Board (Fed), the Securities and
Exchange Commission (SEC), and the CFTC. Although meetings of the PWG
are normally hosted at the Treasury Department, security concerns near
the White House had led to closure of key Treasury offices and the PWG
conference calls during this period were therefore hosted by the Vice
Chairman of the Fed.
The Acting Chairman of the CFTC emphasized to the other PWG members
that the futures exchanges had expressed strong concerns, with which he
agreed, that it was imperative for banks, financial markets, and
regulators to closely coordinate their responses to market
interruptions. During this initial call, the PWG discussed the need for
coordinated reopenings of the financial markets following what by then
appeared would be an almost certain day of voluntary closures by all
U.S. exchanges on Wednesday, September 12th. The members agreed to a
convene for a series of conference calls to ensure coordination of
their efforts.
In a subsequent conference call on Tuesday, the PWG members
confirmed that each supported the voluntary decisions of exchanges to
remain closed on Wednesday, September 12th, as prudent in light of
security, access, and safety concerns at some exchanges and as
respectful of the tragedy that had befallen colleagues and associates.
Also discussed was the assessment that the nation's financial
infrastructure remained intact and strong and that trading in all
financial products would resume as soon as practicable.
On Tuesday evening, the CFTC participated in another all-markets
call hosted by Nasdaq, during which the major stock exchanges agreed to
announce their decision to remain closed on Wednesday. Participants
also discussed various operational issues. Later in the evening, the
CFTC spoke again with NYBOT managers to discuss various issues,
including NYBOT's offer to share scarce space and trading time at its
backup facility with NYMEX. This spirit of cooperation echoed a
separate invitation by NYMEX for NYBOT to share space in the NYMEX
facility when access thereto could be restored.
The Commission also kept Congress apprised of events on Tuesday,
September 11. Before 11:00 a.m., the Commission's Office of Legislative
and Intergovernmental Affairs (OLIA) had notified the staffs of key
committees of the loss of the New York regional office, the decision to
send home non-essential staff, and the apparent voluntary closure of
all futures exchanges. The Commission also monitored international
developments.
On September 11, staff of the Commission's Office of International
Affairs (OIA) were at the Washington, D.C. offices of the Federal
Reserve, meeting with the 28 members of the joint task force on
securities clearing and settlement systems, which includes members of
the Committee on Payment and Settlement Systems of the Bank for
International Settlements, composed of central bankers from the G10
countries and the International Organization of Securities Commissions
(IOSCO), which represents securities regulators from more than 100
jurisdictions. That evening, OIA contacted the Futures Industry
Association (FIA) to offer assistance and to receive any information
that would be of interest to non-U.S. regulatory authorities.
Wednesday, September 12th through Friday, September 14th
NYBOT
NYBOT was able to make effective use of its website, updating it
four or five times each day with information for traders, employees,
and others, as the exchange continued to ready its backup facility and
its members for the resumption of open-outcry trading there.
NYMEX
NYMEX reported that its first priority, after ascertaining the
safety of evacuated staff, was to assess its facilities. Well before
dawn on Wednesday, a team of managers volunteered to investigate the
condition of the exchange's primary facility. New York City Police
officers escorted them for part of the trip but they had to walk in the
last eight blocks. The team found that emergency generators were
running and that the building appeared to be in very good shape.
Notwithstanding the absence of significant damage to the facility,
it would still take several days and would require overcoming many
challenges, including the lack of electricity and water utilities and
the need to transport large numbers staff into Manhattan via water
ferry, before NYMEX could resume even its electronic trading.\10\ NYMEX
was successful in doing just that, getting key people into the facility
and overcoming connectivity issues, security considerations, and
software compatibility challenges in order to reopen the trading of
NYMEX products on a never-before-utilized web-based version of its
electronic trading platform, NYMEX ACCESSR.\11\ Beta testing was
conducted on the morning of the 14th, and trading on the system
commenced at 2:30 p.m. that day.\12\
---------------------------------------------------------------------------
\10\ Problems with AT&T frame relay circuits in Lower Manhattan
made it impossible to accomplish electronic trading without an
immediate migration from NYMEX's proprietary communications network to
the internet.
\11\ Prior to the attack, NYMEX ACCESSR utilized a closed
proprietary network exclusively. The launch of the new web-based
version of NYMEX ACCESSR had been scheduled for early September but had
been delayed for various reasons.
\12\ A pre-opening session was held from 2:00-2:30 p.m. NYMEX
ACCESSR went down from 2:38-4:00 p.m. to correct a problem with user
profiles and trading rights. Once resolved, NYMEX ACCESSR remained open
until 6:00 p.m.
---------------------------------------------------------------------------
Other Exchanges
On Thursday, September 13th, all futures exchanges outside of New
York reopened for trading. With respect to CBT and CME, the key issue
was whether member firms with offices and banks located in or near the
World Trade Center were able to conduct business, in particular whether
they were able to meet their financial and data transmission
obligations to the clearing organizations. Stock index futures and
option markets remained closed because the U.S. equities exchanges,
particularly the New York Stock Exchange, had not yet reopened.
The Regulators
The Commission continued to participate actively in multiple daily
calls among industry participants, both directly and through the all-
markets calls hosted by Nasdaq, and among the members of the PWG. To
optimize the Commission's information-gathering efforts, Acting
Chairman Newsome delegated to Commissioner Holum responsibility for
overseeing coordination and communication with international markets
and regulators, to Commissioner Spears responsibility for monitoring
the agricultural and physical commodity markets, and to Commissioner
Erickson responsibility for fielding issues with respect to technology
and operational matters. These delegations proved to be very useful.
For example, through the efforts of Commissioner Spears, the Commission
was able to assist NYMEX in its efforts to regain access to its
facility for key technical staff by communicating clearly and quickly
to the National Economic Council, which served as liaison to FEMA, the
importance and urgency of NYMEX's need.
Commissioner Erickson and his staff participated in conference
calls coordinated by the FIA that focused on the immediate needs of
futures commission merchants (FCMs) and exchange clearing members, many
of whom were directly impacted by the attacks. These firms needed to
re-establish electronic contact with the clearinghouses and clearing
banks so that the necessary transfers of records and funds could be
made among firms, clearinghouses, and exchanges. The Managed Funds
Association (MFA) was also actively reaching out to its memberships,
including commodity pool operators and commodity trading advisors
registered with the Commission, to facilitate communication of
information to, from, and about affected members in New York.
On the market surveillance front, the Commission's DEA staff
examined the positions of large traders and clearing members in equity
index futures to assess financial exposures prior to the resumption of
trading in equities on September 17th. CFTC staff also provided large
trader position data to the surveillance staffs of NYMEX and NYBOT
until they could gain access to their own surveillance systems.
OLIA continued to keep Congressional staff informed of developments
and, by that afternoon, was able to update its reports to Congressional
staff to inform them of the confirmed destruction of NYBOT's primary
facility, the apparent survival but inaccessibility of NYMEX's
facility, the availability of a NYBOT backup facility, generous offers
of support within the futures community (such as CME's offer to provide
NYMEX with electronic trading capability and the Minneapolis Grain
Exchange's offer of space on its trading floor), the cooperative
efforts of the Chicago exchanges to coordinate their reopenings in non-
equity contracts, the apparent success of all clearing activities, and
the cooperative efforts of the Federal financial regulators.
By Thursday morning, OLIA was able to report to Congressional staff
that the safety of every employee in the Commission's New York office
had been confirmed. Congressional and White House staff were invited to
attend a special meeting of the Commission on Thursday to discuss the
reopening of trading in non-equity based futures contracts and other
market surveillance issues. Key White House and Congressional staff, as
well as representatives from the Department of Agriculture, attended
this meeting. As the markets closed on the first day of trading in non-
equity futures contracts, OLIA reported to Congressional staff that
trading was active but orderly with adequate liquidity and price
variations within normal ranges on the Chicago and other Midwest
exchanges.
Also during this period, OLIA kept the CFTC's Acting Chief of
Staff, Executive Director, and finance staff apprised of Congressional
developments pertaining to emergency funding. By Friday afternoon, OLIA
was able to respond to requests from Congressional staff for
information on additional funding that the Commission would need to
cover both the costs of returning to normal operations in New York and
the costs of additional security and emergency preparedness measures
for the Commission's facilities.
On September 12th, OIA, in coordination with the Office of
Commissioner Holum and at the request of Acting Chairman Newsome, took
several steps to ensure that non-U.S. regulators and market authorities
had open lines of communication with the Commission about both the
post-attack responses of U.S. firms and markets and the consequences of
the attack that might be relevant to the oversight of their own firms
and markets.
OIA provided a continuously manned contact number for foreign
regulators and market authorities that needed more information about
specific U.S. firms or markets. In addition to assuring that CFTC
contact information on the password-protected members page of the IOSCO
website was kept up-to-date and communicating separately with the U.K.
and German authorities (where the bulk of U.S.-related trading is
conducted), OIA posted specific contact information for non-U.S.
inquiries on the IOSCO web site. Discussions with other authorities
allowed OIA to learn early on that European authorities had suspended
trading in U.S.-based derivatives. OIA responded to requests from firms
doing business in multiple jurisdictions for information on personnel
and possible regulatory relief available in the U.S. OIA was in contact
with Treasury's International Division and served as a conduit for
certain inquiries from that section to other parts of the CFTC. OIA
also worked with IOSCO to communicate information on trading
resumptions in U.S. equity markets. IOSCO members shared with OIA
information about their markets, including information on the pricing
of collective investments and derivatives with exposures to the U.S.
markets and rumors of suspicious transactions.
The Weekend, September 15th and 16th
NYBOT
Having resolved to open for trading on Monday, September 17th,
NYBOT conducted a successful mock trading session for traders on
Saturday, September 15th at its backup facility which confirmed that
all of its systems for trading, price dissemination, and clearing were
fully operational. At that time, members also were assigned booths and
phone lines, and various security measures were instituted to ensure
access only by authorized members and clerks. These efforts ensured
that both the exchange and the traders were prepared for a successful
launch of open-outcry trading on Monday.
NYMEX
Although it had succeeded in rolling out its new internet trading
platform, NYMEX still faced numerous operational challenges to overcome
before it could resume open-outcry trading. In addition to securing
electricity, water, and other utilities for its primary trading
facility, the exchange had to arrange for water transportation into
Lower Manhattan of more than 2,000 employees, traders, and support
staff. The exchange also faced unexpected challenges, such as the
failure of a backup generator. Nonetheless, by Monday morning, the
NYMEX trading facility was the only building open in the World
Financial Center-Battery Park City complex.
The Regulators
Over the weekend, CFTC staff continued to participate in several
all-markets calls, which were also joined by other Federal financial
regulators, in anticipation of a closely coordinated, and tightly
monitored reopening of all stock, option, and equity-based futures
markets on Monday morning. The regulators and exchanges agreed upon
protocols for continuously open lines of communication throughout the
trading day and clarified their plans for moments of observed silence
at or before the opening bells.
Monday, September 17th
NYBOT
Because its backup facility in Queens is smaller than was NYBOT's
World Trade Center facility (two trading rings, one for futures and one
for related options, versus thirteen in the World Trade Center), NYBOT
decided to operate reduced trading hours for each commodity, with
different contracts being traded consecutively rather than
concurrently. When NYBOT reopened for trading on Monday, its official
trading hours for the two trading rings were as follows:\13\
---------------------------------------------------------------------------
\13\ In addition to the CSCE and NYCE contracts that traded in the
rings in the backup facility, NYFE contracts traded at a post in a
separate room: the NYSE Composite Index and Large Composite Index and
the Russell 1000 Index and 1000 Large Index contracts were traded from
9:30 a.m. to 4:15 p.m., and the CRB Index and the SPCI were traded from
10:45 a.m. to 2:00 p.m. (later extended to 10:00 a.m. to 4:00 p.m.).
Finex products were traded in New York at a post in the trading room
from 8:05 a.m. to 3:00 p.m. (later changed to 9:35 a.m. to 3:00 p.m.);
Finex products were traded in Dublin from 3:00 a.m. to 8:00 a.m. (EST)
(later extended to 9:30 a.m.).
---------------------------------------------------------------------------
Cocoa--7:30 to 9:00 a.m.; Coffee--9:30 to 11:00 a.m.; Sugar--11:30
a.m. to 1:00 p.m.; Cotton--1:30 to 3:00 p.m.; and FCOJ 3:30 to 5:00
p.m.
The backup facility also had only 100 booths (compared to
approximately 500 in the World Trade Center) and originally had only
two phone lines per booth. Because of the limitation on phone lines,
the same phone number was used by customers to place orders for
different futures contracts, depending on the time of day (i.e.
customers were asked to call the number in the booth during the time
the market they were interested in was trading in the ring). To offset
this limitation, NYBOT obtained approximately 200 cell phones for use
by members.
NYMEX
NYMEX resumed open outcry trading at One North End Avenue on
Monday, September 17th, following a memorial observation, at
approximately 11:45 a.m. Trading hours for the remainder of that week
were as follows:
--COMEX metals and NYMEX metals and propane futures and option
contracts traded in various staggered 3-hour trading sessions
between 9:30 a.m. and 12:40 p.m.
--FTSE Eurotop futures contracts opened at 10:00 a.m. and closed at
11:00 a.m.
--NYMEX energy futures and option contracts traded in various
staggered trading sessions between 10:30 a.m. and 1:45 p.m.
--Coal futures contracts opened at 11:30 a.m. and closed at 1:15 p.m.
--NYMEX ACCESSR was open from 5:00 p.m. to 8:00 p.m. and reopened at
5:00 a.m. with metals and propane contracts closing at 9:00
a.m. and other energy contracts closing at 10:00 a.m.\14\
---------------------------------------------------------------------------
\14\ On September 20th, NYMEX extended NYMEX ACCESSR trading hours
for the natural gas futures. NYMEX ACCESSR was open from 2:00 p.m.
until 8:00 p.m. and from 5:00 a.m. until 10:00 a.m.
---------------------------------------------------------------------------
Other Exchanges
In Chicago, trading in stock index futures and option contracts
recommenced on Monday morning in perfect coordination with the
reopening of the securities markets.
The Regulators
The Commission monitored the functioning of the futures markets
closely on Monday as markets came back on line in coordination with the
opening of the securities markets. DEA monitored market activity as the
equity-based contract prices fell slightly but remained within very
normal ranges, as energy prices also fell slightly within normal
ranges. T&M monitored the financial integrity of the clearing and
payment systems, confirming that intraday settlement cycles went
smoothly, that customer margin obligations were being met, and that no
significant operational difficulties were encountered. At mid-morning,
Acting Chairman Newsome reported to the PWG that trading was proceeding
in an orderly manner and that pricing generally appeared to be
responding to fundamentals rather than to fear or alarm.
Moving Forward, September 18th to the Present
NYBOT
The use of exchange-issued cell phones was only a temporary
solution at the backup facility. Accordingly, NYBOT had a new telephone
switch installed on the weekend of September 22nd and additional lines
the following week. In November, NYBOT added two trading rings to the
backup facility and two more rings were opened on February 11, bringing
the total to six. The new rings occupy some of the additional 16,000
square feet that NYBOT secured at this location, with some portion
being utilized for support activities. The abbreviated trading hours
were extended somewhat in early November with the opening of the third
and fourth rings. NYBOT again extended the trading hours for each of
its agricultural products when additional support space and trading
rings came on line in February.
NYBOT suffered an interruption of trading at its backup (now
primary) facility on November 12th when American Airlines Flight 587
crashed on Long Island, disrupting telephone service in the area. The
exchange expressed concern over continuing trading when some customers
might not be able to reach their floor brokers. Trading resumed the
next day.
NYMEX
Since September 17th, NYMEX has slowly expanded the trading hours
for both floor trading and NYMEX ACCESSR trading. At this time, trading
hours are not as extensive as before September 11.
Other Exchanges
All of the commodity futures exchanges, including those in New
York, have undertaken efforts to review and update their contingency
plans, both for disaster recovery plans and business continuity, in the
aftermath of September 11.
The Regulators
The Commission participated in daily conference calls of the PWG,
which continued through the week of September 17th. As part of its
efforts to assist FCMs, introducing brokers (IBs), commodity pool
operators, and commodity trading advisors as they resumed operations
with the full reopening of the futures and securities markets, the
Commission announced on September 19th a broad package of regulatory
relief measures designed to assist these market intermediaries in
carrying on with business in the face of challenges presented by the
attacks on the World Trade Center.
These formal measures complemented the CFTC's initial responses to
issues of immediate concern to firms and exchanges as they prepared for
the resumption of trading, which began the previous week in many non-
equity-based futures contracts. The Commission also encouraged firms
whose particular circumstances warranted relief beyond that provided in
the general measures to contact the CFTC, the National Futures
Association, or their designated self-regulatory organizations.
The relief announced included notice that the CFTC would not
consider September 11 through 14 as business days for the purposes of
specified reporting and minimum capital requirements, notice of bulk
transfer obligations, and records inspection requirements imposed by
CFTC regulations. This effectively extended certain reporting deadlines
and recognized that firms may have had difficulty during that week in
moving funds, issuing notices, providing customers with access to
records, or precisely measuring portfolio values.
Firms whose physical operations were disrupted as a result of the
attacks and which were consequently unable to comply with regulations
requiring that records be readily accessible and that the means to
translate records stored on electronic or micrographic media be
available at all times would not be required to do so for the 31-day
period from September 11 through October 11. Such disrupted firms that
were unable on September 11, 12, 13, or 14 to comply with requirements
of specified regulations concerning the calculation of segregated funds
and secured amounts were also excused from those requirements for those
4 days. For such firms that were unable to comply with the confirmation
statement, transaction application, and position closeout requirements
of other specified regulations on September 11 through 14, those days
would not be counted by the CFTC as either business or calendar days in
determining such compliance.
Some firms whose operations were disrupted by the attacks quickly
resumed operations but in alternate facilities or with limited
resources and, consequently, may have had difficulty complying with
noon deadlines for certain segregated funds calculations. Such firms
were permitted, until October 11, to extend those deadlines to the
close of business on the applicable business days. Similarly, firms
that were unable to access time-stamping equipment were permitted to
substitute the use of reasonable alternative methods during the 10-day
period from September 11 through 21st.
On October 5th, T&M issued an advisory to clarify for market
participants that certain exemptive relief granted by the SEC to
registered securities broker-dealers in connection with the events of
September 11 would also apply to FCMs and IBs. This clarification was
useful because the Commission's rule regarding minimum financial
requirements for FCMs and IBs, Rule 1.17, incorporates by reference
certain provisions of specified SEC rules, including SEC Rule 15c3-1,
and, in connection with the events of September 11, the SEC had
previously granted relief from this and certain other rules.
For example, the SEC determined that broker-dealers, when computing
the amount of net capital on hand under SEC Rule 150-1, need not
consider the days through October 5th as business or calendar days for
purposes of taking required deductions from net capital because of
failures to complete government securities transactions. Accordingly,
and pursuant to authority delegated by the Commission to the Director
of T&M under CFTC Rule 140.91, T&M determined to incorporate by
reference any relief granted by the SEC as a consequence of the events
of September 11 that pertained to any SEC rules that are incorporated
by reference into the CFTC's rules. The benefit for market participants
was, to the extent that capital calculations by FCMs and IBs might
incorporate certain of the requirements of SEC Rule 150-1, to extend
the relief granted by the SEC to securities broker-dealers with respect
to those provisions to FCMs and IBs in an equal manner.
The Commission has continued to address the particularized needs of
market participants. For example, T&M has issued an Advisory setting
forth a mechanism by which registrants that had records lost or
destroyed in the attacks may obtain regulatory relief. These
registrants are permitted to submit an inventory of the lost or
destroyed records that identifies them by category and date. The
registrants will then only be required to reconstruct certain
information specified in T&M's advisory and will be permitted to
replace lost records with duplicates, if available. T&M will continue
to work with individual market participants or groups that face
challenges not addressed by the forms of regulatory relief announced
thus far.
In addition to providing regulatory relief, the Commission
monitored international developments and cooperated with foreign
regulators. In September, OIA staff attended a meeting in Madrid of the
IOSCO Technical Committee's Standing Committee 3 (SC3) on Regulation of
Market Intermediaries and participated in SC3's discussions relating to
regulatory responses to the attacks, including issues related to:
--Contingency planning regarding emergency communications with firms;
--Contingency planning regarding firms' secondary ``hot pad''
computer facilities;
--Contingency planning regarding lost data recovery;
--Firms' experiences regarding liquidity needs;
--Regulators' granting of temporary relief from capital requirements;
and
--Issues relating to suspension of trading on some markets or of
certain products.
The committee chairman suggested that SC3 conduct additional work
on contingency planning and disaster recovery to take account of
experiences on and after September 11.
Staff attended the Council of the Securities Regulators of the
Americas (COSRA) meeting in Montreal in October, at which COSRA adopted
a resolution on readiness for market disruptions that urged each
jurisdiction to review the transparency and accessibility of
marketplace rules (including those related to disruptions and defaults)
and the sufficiency of disaster recovery arrangements. Also during
October, OIA participated in a meeting of the IOSCO Technical Committee
in Rome, at which the committee appointed a special project team to
review contingency planning, client identification, and expanded
cooperation and information sharing among securities regulators. At
that time, OIA staff also attended a meeting of the IOSCO Technical
Committee's Standing Committee 2 on Secondary Markets (SC2), during
which OIA contributed to discussions on supervisory issues and
regulatory responses. SC2 expanded its ongoing study on trading halts
to examine whether existing available supervisory powers were adequate
to address market emergencies posed by September 11.
Cooperation with Law Enforcement Authorities
DOE requested information from foreign authorities that regulate
markets for derivatives products whose prices might have been sensitive
to the terrorist attacks. Specifically, the Division focused on energy
products, precious metals, interest rates, currencies, and securities
indexes because these products could conceivably have been utilized by
terrorists or their associates to profit from the attacks. Based on a
review of derivatives markets worldwide, requests were sent to
regulators in the major market centers for activity in commodities of a
sensitive nature.
After receiving prior approval from the Federal Bureau of
Investigation (FBI), DOE requested the following information from
foreign regulators:
--Whether any person on a confidential FBI watch list was regulated
by the authority or had participated in derivatives trading,
either on-exchange or over-the-counter; and
--For the period from August 17th to the date of request, any
suspicious transactions in any cash or derivatives market
(including, but not limited to, energy products; precious
metals, interest rates, currencies, and securities indexes)
where a customer could have benefited from the events on
September
In addition to this general request, DOE sent more specific
requests for assistance to two foreign regulators. To date, no
regulators have reported to DOE any suspicious transactions or persons
participating in their derivatives markets. The foreign regulators
continue to monitor the markets for suspicious activity that may relate
to the September 11 attacks.
restoring commission operations
Beginning on the morning of September 11, the Commission and its
staff faced the challenge of responding simultaneously to unprecedented
situations on two fronts. First, as the oversight regulator for an
important segment of the financial services industry, the Commission
needed to assess the condition of the futures markets, to monitor and
assist in whatever manner possible with their recovery, and to keep the
executive and legislative branches of the Federal Government informed
of the situation. These efforts were described in Part I of this
report.
Fulfilling its responsibilities to the markets and the public
required the Commission and its staff to simultaneously overcome an
internal challenge: restoring the full functionality of an agency that
had lost one of its two largest regional offices and had been forced by
security concerns to evacuate most of staff from its Washington, D.C.
headquarters and its remaining regional offices. This involved
extraordinary efforts in personnel management, facilities acquisition,
telecommunications, budget modification, and even mail handling. Those
efforts are described in this part of the report. Challenges in the
area of information technology that faced the Commission are described
in Part III.
The First Two Weeks
Events unfolded rapidly during the morning of September 11 and the
Commission had to respond to administrative challenges on multiple
fronts. First, all employees except essential senior staff were
evacuated from headquarters and regional offices. Essential staff
remained to coordinate efforts with other Federal financial regulators
and the exchanges, to locate New York staff, and to respond to
questions from the public.
OED quickly established a ``control room'' in the Commission's
executive conference room in Washington, D.C. and equipped it with a
bank of phone lines. Key staff manned these phone lines on September 11
and 12, locating New York staff, sharing information on the Employee
Assistance Program (EAP), and fielding incoming calls.
Immediately after the first attack, OED began compiling a list of
New York employees and home phone numbers. An ongoing attempt to
contact each employee began. The task was difficult due to the lack of
a central database of emergency contact information, the absence of
current phone numbers and addresses in the personnel files of some
employees, and the difficulty of getting calls through to New York. The
Enforcement staff in New York had established a phone tree prior to
this event, and as a result, the New York Division of Enforcement was
able to contact its staff quickly. Diligence and internet search tools
proved useful in contacting other New York staff. The last New York
employee was tracked down on Thursday morning.
The Commission used its outgoing voicemail system to communicate
information about the status of the Washington, D.C. office and about
the National Futures Association (NFA) Hotline, which offered to assist
in fielding calls from the public and the industry. NFA subsequently
issued a press release about its availability to assist in answering
questions.
The Commission's EAP provider was instructed to provide immediate
counseling for employees and their families, particularly in New York,
which included 24-hour one-on-one telephone counseling, face-to-face
individual and family counseling for New York employees, and the
formation of EAP-facilitated support groups. On September 20th, New
York employees were provided the opportunity to share their experiences
with each other at a hotel in Newark. Commissioners, division
directors, and other senior managers attended the session.
Other employee issues presented administrative challenges. (For
example, payroll data was to have been entered on the 10 and 11. In
spite of the disruptions, all payroll data was successfully entered and
D.C. timekeepers continued to enter payroll data for the New York staff
through November.) The Commission's website, www.cftc.gov, proved to be
a valuable tool during this period. Because it was operated by another
entity and hosted at a remote location, the website was updated and
operated without interruption even when CFTC staff were evacuated and
CFTC servers were taken off-line for security reasons. As a result,
CFTC employees, including displaced New York employees accessing the
internet from home computers, had access to up-to-date Commission
information. OED continued to add information to the Commission's
public website and its intranet, including information on the NFA
hotline, EAP information, and links to other relevant websites. OED
established a special section of the website for password access by New
York staff.
To enable those New York employees who felt ready to do so to
participate in the efforts to restore market operations, OED acquired
phone cards and temporary cell phones and configured laptop computers.
New York phone numbers were forwarded to all CFTC offices and new e-
mail addresses and a new network for New York were set up on the
servers in Washington, D.C.
With its offices in the World Trade Center destroyed, an immediate
priority for the Commission was finding temporary and long-term
replacement space. The General Accounting Office confirmed that the
Commission could accept an offer of free temporary space from Burson-
Marsteller, a public relations firm, which supplied fifty New York
employees with phones, cubicles, office supplies, and fax and copying
capabilities. Commission staff covered many administrative details,
such as notifying all Commission registrants that filings which had
previously been sent to New York should now be sent to Washington, D.C.
or Chicago. Meanwhile, Commission staff coordinated with the agency's
real estate agent to begin the search for permanent space in a markedly
different Manhattan office market.
To deal with the unforeseen costs arising from the events in New
York, the Commission submitted a supplemental appropriations request to
OMB on September 13th to cover expenses in three categories: immediate
responses, recovery efforts, and going-forward preparedness. The
request was later amended on October 4th to reflect higher than
expected costs to acquire and build-out replacement office space and a
variety of human resource needs not fully reflected in the original
submission. OMB immediately approved certain emergency funds for
apportionment by the end of the 2001 fiscal year.
The Next Four Weeks
The Commission's administrative staff were largely occupied during
the remainder of September and most of October with negotiating leases
for both short-term office space in Jersey City, New Jersey, and
permanent space in Lower Manhattan. OED also arranged additional EAP
counseling sessions. Weekly meetings with a permanent space project
team--consisting of the Commission's real estate representative,
project manager, a data and security consultant, an architectural firm,
an engineering firm, and a construction company--proved effective,
particularly with the inclusion of a manager from the New York regional
office who could relay the concerns of New York staff.
On the human front, the Commission arranged a ceremony to recognize
the special sacrifices and dedication to service of the New York
employees. The program included a presentation of the Commission flag
to the New York staff and follow-up consultations with EAP counselors.
The White House submitted on October 17th a recommended
supplemental budget request for the CFTC to cover the costs of
restoring the New York office to its previous capabilities and
additional funds to cover the cost of developing an information
technology disaster recovery plan.
Moving beyond the Immediate Aftermath
Once a final agreement for temporary space in Jersey City was
reached, the Commission next arranged for equipment rental, moving
services, and the configuration of computer and telecommunications
networks to enable an early December move-in date. Meanwhile, the lease
for permanent space at 140 Broadway was finalized and buildout plans
developed.
On the budget front, the Commission received a confirmed
supplemental appropriation of $16.9 million to fund restoration of the
New York regional office and various preparedness needs, including
network redundancy, security program enhancements, fault tolerant
system designs, and operational continuity.
Administrative challenges continued to complicate the Commission's
full return to normal operations. For example, the anthrax threat
forced OED to consult the Center for Disease Control, the General
Services Administration, and the Office of Personnel Management in
preparing a response to mail contamination. Ultimately, the Commission
asked the U.S. Postal Service to hold all Washington, D.C. mail pending
test results and any required treatment of CFTC facilities. Mail for
the New York office, which was being routed through Washington, D.C.
was held as a precautionary measure. OED found alternative means of
managing Commission business by, for example, working with vendors to
develop alternative methods of invoicing. All tests results were
negative and mail service resumed in early December.
What Worked Well
Various aspects of the Commission's response to the attacks and the
loss of its New York regional office were very successful. The EAP,
which was not in place in 1993 when many of the current New York
staffers were also with the Commission, was effective in providing
immediate support. Cooperation and teamwork among the Commissioners
also proved to be a success story. For example, Commissioner Erickson's
help was key in locating the interim temporary space for New York
staff. More generally, communication technologies, such as cellular
phones and laptop computers, but most particularly a website accessible
from virtually anywhere a displaced New York employee might be, proved
invaluable in keeping the organization working together as a cohesive
team.
Issues to Address
Although the CFTC had some emergency procedures in place, these
should be improved. The Commission must develop an effective emergency
procedures manual to specify roles and responsibilities and should
distribute both home and office copies of this manual to all employees.
In addition, employees should be given updated procedures on how to
contact each other and a central point of contact. Emergency
procedures, including communication protocols, should be periodically
updated and employees should receive regular training therein.
If the CFTC's Washington, D.C. telephone contractor had not
happened to have been in the building at the time of the attacks, OED
may not have been able to set up the bank of phones in the control
room. Thus, emergency access to the vendor or the development of such
skills with the staff is advisable. It may also be advisable to
establish a toll-free number for employees and employees in all offices
should have an emergency procedures card with clear instructions on how
to call-in. A global emergency message should be prepared for
distribution to the main phone line as well as individual phones at any
affected location. The ability to reach every employee at home should
be improved by maintaining an up-to-date database of employee contact
information. Toward that end, OED is working on such a database and is
evaluating the manner in which to collect and maintain employee home
phone, address, and emergency contact information, in light of concerns
with privacy, security, and rapid accessibility in case of need. OED is
also evaluating e-mail and other alternatives to cell phone contacts,
for use when call volume spikes and calls will not go through. Other
administrative responsibilities also merit attention. For example, the
Commission must ensure that property records are updated on a regular
basis. An incomplete inventory of furniture, equipment, and supplies in
the New York office complicated recovery efforts.
Perhaps, most importantly, and as discussed in Part III of this
report, the Commission must analyze and improve upon its data backup,
redundancy, storage, and retrieval capabilities to better ensure that
critical information, whether first created at headquarters or at one
of the regional offices, is not lost in a disaster.
initial review of preparedness efforts
In this segment of the report, the Commission reviews what has been
learned thus far about the preparedness--particularly contingency plans
for disaster recovery and business continuity (DRBC plans)--of both
itself as a Federal financial regulator and of the various market
participants that play such important roles in the smooth, reliable,
and efficient operation of the commodity futures markets. In addition
to conducting internal analyses of the various responses to the
attacks, the Commission has solicited the input of market participants
in several ways thus far. In October, Acting Chairman Newsome wrote to
the exchanges, clearinghouses, and NFA to request their assistance in
completing an initial survey, which is described below. In November,
Commissioner Erickson chaired a meeting in Chicago of the Commission's
Technology Advisory Committee, which was attended by Acting Chairman
Newsome and numerous industry leaders, to discuss the responses of
market participants to the attacks and their aftermath. These initial
outreach efforts, together with informal discussions with market
participants, have already provided invaluable insights--many of which
are reflected below--and the Commission looks forward to a continued
productive dialogue with market participants.
Preparedness of Market Participants
To learn more about the preparedness of market participants, both
prior to September 11 and moving forward, a survey approach was taken.
Two dozen of the largest FCMs were asked to describe both their
immediate reactions to the disaster and their contingency plans. The
U.S. futures exchanges, their affiliated clearinghouses, and the NFA
were each asked to summarize immediate responses to the disaster, to
assess which responses were most effective, to describe potential
improvements identified thus far, and to suggest industry-wide
initiatives or regulatory actions that may be desirable. These
institutions also submitted to the Commission copies of their existing
contingency plans.
The Futures Commission Merchants
FCMs play a crucial risk intermediation role in the commodity
futures markets by serving as the front-line defense against the
financial difficulties of individual traders rippling through and
becoming systemic problems. Accordingly, because of their importance to
the integrity and smooth functioning of the markets and because many
FCMs were directly affected by the attacks upon the World Trade Center,
the Commission and the NFA cooperatively undertook a survey of two
dozen of the largest FCMs to learn about the State of their DRBC
efforts. All firms responded. This survey covered topics including the
level of detail in formal DRBC plans, how such plans actually worked
during the disaster, and any anticipated changes or improvements
identified thus far.
The survey results revealed that nearly all firms had documented
disaster recovery plans in place and that these were periodically
tested and kept up-to-date on an ongoing basis. The plans generally
contemplated interruptions in the availability of public utilities and
provided for the use of alternative trading platforms or substitute
marketplaces. The firms differed in their approaches to communicating
these plans to employees, however, with some firms communicating plans
throughout their organizations periodically but others not heretofore
having contemplated doing so until after an event occurs. The plans
generally included provisions for alternative office space and
transportation to such space.
All firms duplicated essential computer and telecommunications
systems at backup facilities and routinely backed up essential data.
Most backup facilities and data storage facilities are located some
distance from the main facilities, but a few are close, some within a
mile or less. In the latter cases, these firms are revisiting their
plans in light of September 11. Nearly all firms have duplicated
critical staff competencies to some extent. They use various methods to
accomplish this duplication, including cross-training, having employees
perform similar functions at geographically dispersed sites, and
designating back-up duties.
Of the 18 firms surveyed that were directly impacted by the events
of September 11, all were generally satisfied with the performance of
their disaster recovery and business continuity plans. Concerns were
expressed, however, that such plans did not fully anticipate the
severity of these events in terms of the geographic scope and duration
of the disruptions, and the impact on communications systems. Many
firms had difficulties caused by the widespread nature of the disaster
and the disruptions to telecommunications services. Many firms noted
the importance of locating backup facilities a safe distance from
primary sites, given the unfavorable experiences they or their
competitors had with backup facilities that were in the same disaster
zone as the primary facilities. A few firms noted the difficulties
presented by a long-term dislocation.
Many firms are modifying their plans in light of September 11.
These modifications include improving systems and increasing capacity
at disaster recovery facilities, improving network connectivity and
communications with exchanges, and improving capacity to conduct
business functions from geographically dispersed offices. A few firms
mentioned the issue of ``interdependent'' failures; that is, failures
at other institutions with which an FCM may have one or more mission-
critical relationships. Planning for such failures presents unique
challenges.
The Exchanges, Clearinghouses, and NFA
In addition to surveying FCMs on reactions and preparedness, the
Commission surveyed the major U.S. futures exchanges and their
affiliated clearing organization, which together with NFA constitute
the industry's self-regulatory organizations (SROs), as to both their
own preparedness as trading facilities and their responses as SROs.\15\
---------------------------------------------------------------------------
\15\ These included NYBOT, CBT, CME, NYMEX, the Kansas City Board
of Trade (KCBOT), Minneapolis Grain Exchange (MGE), CX, New York
Clearing Corporation (NYCC), Board of Trade Clearing Corporation
(BOTCC), Chicago Mercantile Exchange Clearing House (CMECC), Kansas
City Board of Trade Clearing Corporation (KCBOTCC), and NFA.
---------------------------------------------------------------------------
Each entity was asked to describe the steps it took in response to
the events of September 11, to assess the effectiveness of the
industry's disaster recovery efforts following September 11, to discuss
any modifications of its individual DRBC plans thus far being
considered, and to make suggestions for improving the industry's
preparedness. All entities responded to the request and those responses
are summarized below.
Immediate Reactions to the Disaster
All of the U.S. futures exchanges and clearing organizations
undertook prompt and ongoing efforts to communicate with employees,
members, other exchanges, and the Commission in the wake of the
September 11 attacks. They also cooperated in a coordinated shutdown
and reopening of futures and option trading that took into
consideration the closure of the securities markets. The various
organizations exhibited great resilience and flexibility in taking
advantage of the different resources and alternatives available to
them. Examples of such reactions included:
--Utilizing backup trading facilities for open outcry trading or
electronic trading;
--Implementing electronic trading for contracts normally traded by
open outcry;
--Quickly securing new data center, backup data center, or office
facilities;
--Establishing executive command centers at remote locations;
--Coordinating with foreign exchanges on clearing member issues;
--Maintaining 24-hour operations to assist members with trade
entries; and
--Identifying regulatory requirements from which relief might be
needed.
In general, the exchanges reported encountering little, if any,
difficulty as a direct result of the suspension and subsequent
resumption of trading. The New York exchanges reported far greater
difficulties, on the other hand, in such areas as communicating with
member firms. NYMEX, in particular, also reported problems in gaining
access to facilities, and finding sources of electricity and water.
The exchanges readily identified a number of actions that were
deemed very effective. For example, daily industry-wide conference
calls coordinated by FIA were noted as particularly useful. Other steps
noted as effective included:
--Contact with other exchanges, including foreign exchanges, to
coordinate disaster responses;
--Commission efforts to coordinate information and market reopenings
and to relax regulatory requirements;
--Disaster assistance and offers of assistance from others in the
industry; and
--Using websites to communicate information to employees, traders,
and other affected parties.
The exchanges also identified a number of challenges they faced in
connection with both individualized and industry-wide disaster recovery
efforts, which included:
--Lack of geographically-remote emergency backup facilities for some
clearing members and for some settlement and custody banks;
--Inability of telecommunications vendors and other utilities to
provide uninterrupted service or seamless switching to backup
sites;
--Trouble getting adequate information from settlement and custody
banks; and
--Relocation of large numbers of clearing members and associated
communication difficulties.
Contingency Plans
Some of the institutions among the exchanges, clearinghouses and
one industry association that were surveyed, responded by submitting
copies of written contingency plans, which varied in both scope and
detail. Two such plans could be described as comprehensive, while
others were limited, for example, to recovery of information processing
capabilities but not recovery of other key capabilities. Several
institutions provided summary descriptions of their strategies for
disaster recovery and/or business continuity.
The submitted plans and summaries indicated that these institutions
had heretofore been somewhat better prepared to respond to problems
related to partial system failures than to total disasters. Four
respondents provided copies of contingency plans for problems less
severe than a catastrophe. Two others provided summary descriptions,
strategies, and business practices for partial system failures.
Many of the responding organizations reported that they have
already identified areas of significant potential modification in their
pre-September 11 contingency plans. The modifications being considered
within the industry include the following:
--Acquisition or expansion of geographically-remote backup trading
facilities;
--Securing emergency access to alternate trading facilities at
another exchange;
--Establishing geographically-remote disaster recovery sites for
data;
--Giving greater attention to the disaster recovery capabilities of
vendors and partners, including testing of their respective
disaster sites and circuits; and
--Formalizing previously informal plans or plan components.\16\
---------------------------------------------------------------------------
\16\ Aspects of a comprehensive contingency plan frequently listed
by information management professionals include:
---------------------------------------------------------------------------
Suggestions for Industry-wide Initiatives
Many institutions also made useful suggestions for improving
industry-wide preparedness, which reflected both the common experiences
of many organizations and the differing impact of events on industry
participants. These suggestions focused on steps which the suggesting
organizations believed to be important, but which would require
coordination and cooperation on an industry-wide basis. They included:
--Identifying best practices for emergency voice and data
communications, via the Internet and otherwise, among all
industry participants, including exchanges, clearing
organizations, and members;
--Establishing emergency procedures, tested annually, on an industry-
wide basis, including participation by the Federal Reserve and
banks involved in the futures industry;
--Designating a central clearinghouse, such as the website of the
Institute for Financial Markets, for information from and for
all market participants;
--Maintaining an industry-wide emergency contact directory, covering
all exchanges, clearing organizations, and FCMs, including home
and cellular telephone numbers as well as e-mail addresses;
--Prearranging post-disaster priority treatment for industry members
by key telecommunications and utility providers;
--Planning for coordinated, expedited post-disaster resumption of
futures trading;
--Bilateral meetings between the Commission and each exchange to
review individual DRBC plans; and
--Providing disaster recovery training for all industry employees.
Previous Reviews of Contingency Plans
Since IOSCO's adoption in 1990 of Principles for Screen-Based
Trading Systems--which included guidance for exchanges and
clearinghouses that ``[b]efore implementation, and on a periodic basis
thereafter, [any electronic trading] system and system interfaces
should be subject to an objective risk assessment to identify
vulnerabilities (e.g., the risk of unauthorized access, internal
failures, human errors, attacks, and natural catastrophes) which may
exist in the system design, development, or implementation''--the
Commission has reviewed contingency plans of new applicants, if
submitted voluntarily, for consistency with the IOSCO guidance.
In anticipation of the year 2000 date rollover, the Commission
obtained and reviewed the contingency plans of exchanges and
clearinghouses. Developing these plans afforded these institutions the
opportunity to assess the vulnerabilities of their information
management and communications technologies and to explore alternative
backup resources. Some of these were put into place as a result of this
review, including backup facilities with mirrored data and the capacity
to operate on the electronic platform of overseas partners.
Nonetheless, it is fair to say that neither the reviews of
contingency plans voluntarily submitted by new applicants nor the
review of Y2K plans focused on preparedness for a large-scale disaster
such as September 11. Accordingly, the CFTC, like many market
participants, is now undertaking a strategic review of every facet of
its preparedness and its contingency plans, both in terms of disaster
recovery and business continuity. From instituting better backups of
data, offsite storage, and more complete archiving, to enhancing
organizational flexibility and responsiveness in times of crisis, the
Commission faces the challenge of ensuring the effective survival of
its abilities to fulfill its core mission and accomplish its public
policy goals.
Preparedness of the CFTC
Immediate Reactions to the Disaster
The Commission had to respond to the disaster on several fronts
simultaneously. The Commission's reaction to the destruction of its New
York regional office, the efforts to verify the safe evacuation of New
York staff, the precautionary evacuation of non-essential staff in
other offices, and the restoration of Commission operations are
detailed in Part III of this report.
Because a state of emergency was declared in Washington, D.C. early
on September 11, the CFTC network was shut down to ensure the safety of
the Commission's data. The network for the executive offices was
restored relatively quickly to retain access to international market
and news information through the Internet. Because information on the
Integrated Surveillance System (ISS), which is used to conduct daily
surveillance of the futures and option markets, and the Exchange
Database System (EDBS), which contains trade data from the exchanges,
is stored on servers in Washington, D.C. and Chicago, respectively, no
surveillance or trade data was lost. (This data is also secured by
routine off-site back ups.) The Commission's information system
firewall was modified to enable the Division of Trading and Markets to
directly monitor trading activity, which was essential to the
Commission's ability to approve startup of NYMEX's internet platform,
as discussed in Part I.
The Benefits of Y2K Preparations
During 1999, the Commission's Office of Information Resources
Management (OIRM) worked with all parts of the Commission to develop a
contingency plan in preparation for the year 2000 date rollover. That
plan was published on September 15, 1999, and addressed two areas of
concern: (1) building infrastructure failures; and (2) mission-critical
information system failures. The Commission's strategy for responding
to a building infrastructure failure was to install communications
equipment in each of its three main offices (Washington D.C., Chicago,
and New York City) and to equip essential staff with laptop computers
for remote access to essential network services. The Commission's
strategy for responding to the failure of either of its two mission-
critical systems was to arrange with the SROs for access to information
contained within comparable SRO systems.
The Commission developed a schedule for deployment of resources
required to implement the plan under either contingency, a list of
essential staff positions, a cost estimate and funding strategy, and an
implementation plan. The Commission tested, implemented, and verified
the effectiveness of these plans during the fall of 1999. The
Commission did not experience any building infrastructure or
information system failures during the date rollover.
Because the Commission's New York office was located in 1 World
Trade Center, both the remote access facilities and the arrangements
with the SROs for access to their information proved helpful to the
Commission in responding to the logistical challenges presented by the
attacks. Many of the New York office staff were able to work from home,
dialing into the Commission's remote access facilities using laptops
provided by the Commission. Other staff members were provided temporary
work space and access to necessary information at the offices of the
New York SROs.
Protecting Market Surveillance Capabilities
The Market Surveillance Section of DEA, in conjunction with the
agency's Chief Information Officer (CIO), is currently working to meet
the requirements of the Government Information Security Reform Act
(GISRA). A documented assessment of market surveillance program
security has been completed using the CIO Council's Federal Information
Technology Security Assessment Framework. Based upon this assessment, a
draft security plan has been produced in compliance with NIST Special
Publication 800-18, Guide for Developing Security Plans for Information
Technology Systems. Other upcoming milestones include a program Risk
Assessment and Rules of Behavior.
General Information Security Issues before September 11
In the spring of 2000, OED arranged for an Information Technology
Assessment to be performed externally, which resulted in a report that
recommended several new initiatives. As a result, the Commission has
taken a number of steps to enhance information security, including
assigning a senior staff person to develop an information security
program and having the CIO work with the information security
specialist and program offices to conduct security self-assessments of
the Commission's computer systems.
Increased Emphasis on Security Issues after September 11
Immediately after the attacks, OIRM began assessing its ability to
restore computing services. That assessment identified a number of
deficiencies in existing contingency plans. During the first 2 weeks
after September 11, OIRM developed an action plan to remedy those
critical deficiencies for which sufficient resources were available and
developed a supplemental budget request to remedy those deficiencies
that would require additional resources. (This request was funded in a
supplemental appropriation.) That action plan includes such things as
improving the program for creation and offsite storage of backup tapes
and offsite retention of system documentation. OIRM has initiated
discussions with those program offices that rely upon the Commission's
mission-critical systems to begin the process of identifying the
disaster recovery requirements for those systems.
Moving Forward--What's the Next Step?
The Commission believes that it is appropriate to continue to
solicit the views of market participants, both individually and through
their associations, to determine whether and how to best encourage the
development of guidance, standards, or best practices in the areas of
disaster preparedness, disaster recovery, and business continuity.
Invaluable insights have been gained in the Commission's initial
outreach efforts through the DRBC surveys and the November 2001
Technology Advisory Committee meeting. In addition to those discussed
above, these insights have included the following observations, many of
which were received from market participants directly involved in the
New York recovery efforts:
--Every single aspect of operational needs (including, without
limitation, electricity, water, natural gas, fuel oil,
telecommunications, personnel transport, food and drinking
water provision) must be considered in emergency planning
efforts or critical dependencies will be missed (e.g. having
electricity for computers but not being able to run air
conditioning systems to maintain safe computer operating
temperatures);
--Feasibility of backup operations should be confirmed in advance to
avoid legal or regulatory impediments (e.g. special air quality
permits that might be required for the sustained operation of
diesel generators);
--Communication protocols among staff, with regulators and other
government authorities, with other organizations on whom an
organization depends for mission critical functions, and even
the media must be planned and tested exhaustively;
--It is not enough for key staff to understand the organization's own
contingency plans, they must also understand the contingency
plans of other organizations with whom important business
relationships exist;
--People are an organization's most valuable asset and contingency
plans must include providing staff (and relevant market
participants such as traders) with the means to reach the
organization, giving them the tools they need, and making sure
they are safe, secure, and comfortable (for example, staff and
market participants expected to use a backup trading facility
should have phone numbers, driving directions, mass transit
options, parking alternatives, restaurant recommendations, and
so forth);
--Regular testing is essential to successful implementation of
contingency plans when needed (for example, NYBOT conducted
quarterly tests up to July 2001);
--Regular backups should mirror every aspect of an organization's
systems; and
--Telecommunications dependencies must be scrutinized for single
points of vulnerability.
As one possible avenue for continued cooperation, the Institute for
Financial Markets (IFM) has offered to evaluate issues surrounding the
promulgation of guidance on coordinating disaster recovery plans among
different institutions, an area of preparedness whose importance was
emphasized by the ripple effect of the attacks across institutions that
routinely rely on one another in the performance of mission-critical
functions. Such an effort--led by the IFM, for example, in cooperation
with other market participants--could take whatever form those
participants believe will be most effective in identifying challenges,
approaches, and solutions.
Some of the areas in which such efforts may yield substantial
benefits include:
--communications, both telephonic and internet-based;
--backup facilities, both for computers and key operations such as
trading;
--protocols and up-to-date information to support communications
within and across institutions, firms, and regulators during a
crisis;
--non-financial support services, such as access to power and water
necessary to sustain operations; and
--effective access to government authorities (at local, State, and
Federal levels).
The relative priority of each of these areas, the appropriate
participants in such efforts, and the suggestion of other areas of
fruitful cooperation will be the subject of both intra-industry and
industry-regulatory dialogues.
It is also important to emphasize that the scope of analysis
undertaken in consideration of these preparedness issues should not be
limited only to terrorist threats. Other types of catastrophe could
threaten the stability of the futures and options markets. Thus, the
scope of analysis should include, at a minimum, consideration of:
--natural disasters, such as floods and earthquakes that affect
multiple entities;
--failures in the telecommunications infrastructure;
--other types of infrastructure failure, such as massive or prolonged
power outages;
--the bankruptcy or other collapse of a key institution, particularly
one that creates a ripple or ``domino'' effect on other market
participants; and
--fraud or other malfeasance on a sufficiently large scale to
undermine the credibility of one or more key markets or market
participants.
In all such analyses, two overriding factors should be kept in
mind: the continuing globalization of the markets and, again, the
critically important but not always obvious interconnections among
entities that present the threat of network failures in mission-
critical functions.
The Commission hopes that this report will be helpful, both as an
analysis of the events on and after September 11 and in planning for
the future. The Commission looks forward to working, both internally
and with market participants, to build upon the successes witnessed
last year as contingency plans were put into action. We must all
realize that these measures can and should be continuously improved and
the lessons learned thus far will improve our ability to do so. Though
we hope never to again face such a tragedy, it is nonetheless incumbent
upon each of us to do our very best to prepare this sector of the
financial system to recover promptly from adversity and to continue to
perform its critically important role in the economy.
Senator Kohl. Thank you very much, Mr. Newsome. This
subcommittee was able to provide CFTC with $16.9 million in
supplemental funding last year to try and help your agency and
employees in New York rebuild, as you know. Could you please
give the Committee a breakdown of how you spent the
supplemental funding which was provided?
Mr. Newsome. Yes, sir, I would be more than happy to, Mr.
Chairman. Again, the commission fully appreciates that
supplemental funding. Today, approximately 20 percent, or $3.5
million of the $17.1 million appropriated, has been committed.
The largest portion has been committed to the immediate
recovery needs arising from the total destruction of our New
York regional office. We plan to move back into the lower
Manhattan financial district next month, and at that point we
will turn our full attention to the development of the
contingency planning disaster preparedness and damage
mitigation efforts that the balance of the supplemental funds
were intended to cover.
In detail, the supplemental appropriation of the $17.1
million was allocated and will be spent as follows: $750,000
for human resource needs, including counseling, reimbursement
of losses and workers compensation claims; $6.2 million for the
physical recovery itself; $1.5 million for the development of
information technology recovery plans, procedures and, then,
implementation; $8.6 (million) for IT preparedness and
mitigation efforts, a continuity of operations site and the E-
law project that I mentioned earlier, which will assist with
collection, storage and retrieval of information gathered or
developed during investigations and litigation.
Senator Kohl. We thank you, and we congratulate you on
being the first witness to testify before the subcommittee who
actually is able to give us specific information on how your
supplemental funding has been spent. Hopefully, the rest of our
witnesses will be able to do the same.
Mr. Newsome, recent revelations about Enron Corporation
sent shock waves throughout the financial markets. We
understand the CFTC's regulatory issues are limited to the
futures industry and as such have limited relevance to the
Enron investigation. Is there any reason for concern that any
segment of the futures industry, over which you do have
jurisdiction, may be prone to the sort of trading
irregularities we saw in the Enron case? And more specifically,
could activities that the CFTC conducts help prevent those
sorts of problems?
Mr. Newsome. Mr. Chairman, I think the Enron situation is a
good example because they operated on the fully regulated
exchanges in which we have full regulatory oversight, and they
also operated in OTC markets in which we have anti-fraud and
anti-manipulation authority. I will explain the difference in
both, quickly.
When the Enron situation came about, the first thing we did
was turn to the regulated futures markets, primarily the New
York Mercantile Exchange, to look at the positions in which
Enron was a substantial player in that marketplace. As I
commented, we worked very closely with the Exchange, with the
clearinghouse, and with the futures commissions, merchants, to
orderly unwind the contracts that Enron had at NYMEX. I think
the market participants, and the CFTC as the regulator, were
very coordinated in those efforts.
We were able to unwind the Enron positions to make sure
that it did not create volatility and dry up the liquidity in
those markets, and I think both from the market's standpoint
and from the regulatory standpoint we were very successful
there. We are currently working with NYMEX to look at the
positions that Enron held in the market through our market
surveillance program, in which we look at those positions on a
daily basis to determine whether or not an industry participant
is maybe trying to manipulate those markets. We continue to
cooperate with NYMEX in looking at those, and are continuing
our investigation into those efforts.
In the OTC market, our approach is different because simply
we have the anti-fraud, anti-manipulation authority. Typically
as we address that side of the market, as we would in other
basically unregulated markets, the bucket shops, the fore-x
shops that we bring charges against, because we have no upfront
surveillance method, we rely on market participants to provide
us information in terms of what is going on there, if there are
any problems. And I would have to say that prior to the Enron
situation, we had received absolutely no calls from any of the
participants who felt they were being unfairly treated or that
markets were being manipulated because of Enron.
However, again, we are investigating that portion of Enron
and that investigation is ongoing. And as we are able to draw
facts we will certainly make that information, as well as our
recommendations, available to the Congress for further debate.
Senator Kohl. Thank you very much. Senator Cochran.
Senator Cochran. Thank you Mr. Chairman. Chairman Newsome,
I noticed that there is a part of the budget request that
includes a user fee. This is relying on, as I understand it,
the enactment of a user fee on transactions, to provide the
Commission with the necessary funding to carry out its
responsibilities during the next fiscal year. Let me ask you
this, if a user fee is not enacted, what would be the effect on
the commission, and would any additional funding need to be
appropriated to make up for the lack of funding from a user
fee?
Mr. Newsome. Senator, as the OMB budget has been passed
out, without removing us from Title V, if things remained as
is, that funding level is adequate to fund the commission for
the next year without any fees. If we were moved out from under
Title V and then the committee chose to fund that, then there
could be an amount, we are currently looking into that. I could
not give you an amount right now of what that would be.
Senator Cochran. I remember hearing your discussion on this
problem before and I remember being impressed with the
seriousness of the situation at that time, and your testimony
today reconfirms that in my mind as something that ought to be
done in terms of the legislative process. So, this committee, I
do not think, has jurisdiction to do that. We are not a
legislative committee. We just appropriate the money for the
agencies and the department to carry out their
responsibilities. At what stage is the effort to secure
legislation that would give you this authority?
Mr. Newsome. At one point, as Senator Feinstein was
drafting her amendment to the Energy Committee, that language
was included. It is my understanding that language has since
been pulled out of that amendment, and so I am not aware of any
substantial effort ongoing to include that language in any bill
that might have jurisdiction over us.
Senator Cochran. I presume if someone like, well, Senator
Kohl decided he wanted to introduce a bill to grant that
particular outcome on Title V, that would probably be referred
to the Agriculture Committee in the Senate, would it not?
Mr. Newsome. That is my understanding, Senator, because we
are under the total jurisdiction of the Agriculture Committee.
Senator Cochran. One other question, last week we had
before this committee some witnesses who asked a question about
the report of a foot-and-mouth disease case in Kansas, and we
were assured at that time by the witnesses that it was a false
alarm, that there was no factual basis to support a fear that
there had been a foot-and-mouth case in Kansas. There was a lot
of other conversation on that issue, but I understand now that
there was a sell off of livestock futures as a result of that
report. Has the CFTC looked into that situation, and were there
any irregularities that we need to know about? Is there
anything we need to do in connection with this appropriations
bill that would enable you to fully investigate that situation?
Mr. Newsome. We are very aware of the situation and are
currently looking into that right now, Senator Cochran.
Certainly there was some volatility in the live cattle market,
on the Chicago Mercantile Exchange last week. We currently have
a team from our enforcement division and our market
surveillance division who are discussing the issue with USDA,
and officials at the Chicago Mercantile Exchange.
And as we develop the scenario, the time frames on when
information was released and how the markets responded to that,
we will certainly make that information available.
Additionally, if we find that there were any violations of the
Commodity Exchange Act, the commission will take the
appropriate action. In terms of how that relates to our
appropriations funding, I think we certainly have the adequate
resources to address a situation such as that in the market.
Senator Cochran. I appreciate your responses to the
questions. I think, given the experience you had on September
11 and the challenges that resulted from that, you have really
had your hands full, that this agency, the Commodities Futures
Trading Commission, has continued to function and carry on its
responsibilities, as I understand it, and we commend you for
that great effort.
ADDITIONAL COMMITTEE QUESTIONS
Mr. Newsome. Thank you very much.
Senator Kohl. Thank you, Senator Cochran, and thank you,
Mr. Newsome, for being with us today.
Mr. Newsome. Thank you, Mr. Chairman.
[The following questions were not asked at the hearing, but
were submitted to the Commission for response subsequent to the
hearing:]
Questions Submitted by Senator Herb Kohl
president's budget
Question. The President's budget this year will provide for an
increase of 27 staff years. Your testimony provided information on how
these employees will be used.
Taking into consideration the extremely high turnover rate among
employees you discussed, and the fact that the future direction of the
markets is unknown, do you believe these additional 27 employees will
truly be enough to ensure that CFTC has the ability to fulfill its
mission?
Answer. The Commission places a high priority on responsiveness in
order to protect the interests of market users and to ensure that our
efforts do not stifle market innovation and evolution. The Commission's
budget request to OMB for an additional 64 FTEs was made in the context
of the current level of compensation, which is below the levels of
other Federal financial regulators. The high turnover rate experienced
by the CFTC is a direct result of that lack of pay comparability. The
flexibility needed in the personnel area to meet the challenges posed
by the implementation of the Commodity Futures Modernization Act of
2000 and to keep pace with the rapidly evolving changes, especially
technological changes, taking place in the markets that we oversee can
be best provided by paying Commission staff at levels comparable to the
other Federal financial regulators.
Question. We provided funding last year to provide retention
bonuses to employees whose occupations have historically experienced
the highest turnover rate at CFTC. Do you know what effect the
retention bonuses have had on turnover so far?
Answer. The group retention bonuses for attorneys and economists
were in effect for only the last half of fiscal year 2001; therefore,
it may be too early to draw any firm conclusions at this point.
However, the rate of attrition among attorneys was 16 percent in fiscal
year 2001, down from 20 percent in fiscal year 2000. Among economists,
the rate was 5 percent, down from 15 percent in fiscal year 2000.
Overall, attrition among full-time permanent employees was 10 percent
in fiscal year 2001, down from 11 percent in fiscal year 2000. Fiscal
year 2001 was the fifth straight fiscal year that the Commission has
experienced double-digit turnover rates among full-time permanent
staff--a rate that is almost double the government-wide average.
proposed transaction fee
Question. Finally, the President's budget proposes a transaction
fee beginning April 1, 2003 that is supposed to generate $33 million in
fiscal year 2003 alone.
Could you please elaborate on what this fee is for, how the $33
million estimate was derived, and if it is agreed to by the Congress,
whether these funds will supplement your current budget request of
$82.8 million or substitute Congressional appropriations?
Answer. According to OMB, the fee would be imposed only on
transactions with public customers. The proposal would be phased in
over the first year and would assess a fee of 31 cents per contract on
transactions overseen by the Commission for 6 months of fiscal year
2003, which is estimated to yield $33 million. It is my understanding
that fee-generated funds would be in lieu of $33 million in
appropriations, rather than an additional $33 million.
Question. In your statement, you ask for the Committee's support of
the removal of Title V pay restrictions for CFTC employees, as you are
the sole Federal financial regulator still under these restrictions,
and it is the driving force behind your high employee turnover rate. I
am aware that you have submitted legislation to the House and Senate
Agriculture Committees that would remove the Title V restrictions. If
this legislation were adopted, and we funded full pay parity with other
Federal financial regulators, according to the CFTC's numbers, it would
cost approximately $16 million in fiscal year 2003.
If the Title V restrictions were lifted, could the receipts from
this proposed transaction fee be used to ensure pay parity for your
employees?
Answer. It is my understanding that OMB proposed these fees to be
offsetting collections, which would make them available for any salary
or expense need of the Commission for which the Commission is
authorized to use its appropriated funds.
______
Questions Submitted by Senator Thad Cochran
hiring and retaining high-level professionals
Question. I am aware that an ongoing problem for CFTC has been the
ability to hire and retain qualified professionals to effectively
execute the oversight and regulatory responsibilities of the agency. It
is my understanding that CFTC continues to lose top-level personnel to
the private sector and to other Federal regulatory agencies, such as
the Securities and Exchange Commission (SEC). In the absence of pay
parity legislation, what measures have been taken to attract needed
professionals to CFTC?
Answer. The Commission uses a wide variety of human resources
flexibilities available to it within Title V. They include:
--Recruitment, Retention & Relocation Allowances.--The Commission's
attorneys and economists--which comprise almost 40 percent of
staff--are paid a 10 percent retention allowance. Although this
pay does not count toward retirement, it does serve as both an
incentive to keep some valuable employees from leaving service
at the CFTC and a selling point to attract prospective
employees. The Commission in the past has paid recruitment
allowances when deemed necessary to lure highly desirable
applicants to the Commission, although use of this authority is
subject to fund availability. The Commission does pay, when
appropriate, relocation costs for eligible employees.
--Superior Qualification Authority.--The Commission has used this
authority to appoint new hires from the private sector at rates
of pay above step one of the grade for which they qualify.
--Non-pay Benefits.--The Commission has looked beyond pay to other
benefits that may be meaningful to the quality of life of our
employees and have sought to use them including: Flexi-time,
non-taxable transit subsidy allowances, and a small in-house
fitness center.
Question. I know that retention bonuses have been used to entice
top-level professionals to stay. Has this been successful? What other
efforts has CFTC made to retain personnel?
Answer. As stated earlier, the group retention bonuses for
attorneys and economists were in effect for only the last half of
fiscal year 2001; therefore, it may be too early to draw any firm
conclusions at this point. However, the rate of attrition among
attorneys was 16 percent in fiscal year 2001, down from 20 percent in
fiscal year 2000. Among economists the rate was 5 percent, down from 15
percent for the same period. Overall, attrition among full-time
permanent employees was 10 percent in fiscal year 2001, down from 11
percent in fiscal year 2000.
Also as stated earlier, the Commission has used a wide variety of
human resources flexibilities available to it within Title V, including
recruitment, retention, and relocation allowances, superior
qualification authority, Flexi-time, and non-taxable transit subsidy
allowances. We believe that without the use of these flexibilities our
turnover problem would be even more severe.
regulatory authority over derivatives
Question. Senator Feinstein has proposed an amendment to the Energy
Bill giving CFTC the authority to regulate energy derivatives trading
in order to increase consumer awareness of the energy market. What is
CFTC's view on having regulatory authority over energy derivatives?
Answer. The Commission believes that it would be premature to make
any changes to the current law prior to the completion of Congress's
hearings the Enron matter and the inquiries being made by the
Commission and other agencies. Should the evidence show that
legislative changes are necessary appropriate, the Commission is ready
to assist Congress in advancing our mission of protecting the public
from fraud, manipulation, and abusive practices.
Question. How would this affect the agency's budget request for
fiscal year 2003?
Answer. With these caveats in mind, the Commission notes that any
amendment to the Commodity Exchange Act that will increase the
Commission's oversight authority will necessarily require a substantial
increase in the Commission's budget request. Further, the greater the
change to the Commission's oversight authority, the greater the
requested increase would be.
DEPARTMENT OF AGRICULTURE
Food Safety
STATEMENT OF ELSA MURANO, UNDER SECRETARY FOR FOOD
SAFETY
ACCOMPANIED BY:
MERLE D. PIERSON, DEPUTY UNDER SECRETARY FOR FOOD SAFETY
MARGARET O'K. GLAVIN, ACTING ADMINISTRATOR
DENNIS KAPLAN, DEPUTY DIRECTOR, OFFICE OF BUDGET AND PROGRAM
ANALYSIS
OPENING REMARKS
Senator Kohl. At this point we would ask our second panel
of witnesses to make their way to the table. Here on our second
panel we welcome Dr. Murano, from USDA, Under Secretary for
Food Safety; Mr. Hawks, Under Secretary for Marketing and
Regulatory Programs; Mr. Bost, Under Secretary for Food,
Nutrition and Consumer Services; as well as staff members that
each of you have brought along. And we also have at the table
Mr. Dennis Kaplan, from the Office of Budget and Program
Analysis. We have reviewed your full testimony and so it is not
necessary to go through that in its entirety. If you could
summarize the elements of the full statement we would
appreciate that at this time. And we will call on Dr. Murano
first.
STATEMENT OF ELSA MURANO
Dr. Murano. Thank you, Mr. Chairman, Mr. Chairman and Mr.
Cochran. I am pleased to appear before you today to discuss the
fiscal year 2003 budget for food safety within the Department
of Agriculture. I am Dr. Elsa Murano, Under Secretary for Food
Safety, and with me today are Dr. Merle Pierson, Deputy Under
Secretary for Food Safety; Ms. Margaret Glavin, Acting
Administrator of the Food Safety and Inspection Service, and
our deputy administrators.
Since this is my first time here, I would like to introduce
myself to you. I am a native of Havana, Cuba. I am a scientist
by profession, having earned an M.S. degree in anaerobic
microbiology and a Ph.D. in food science and food microbiology
from Virginia Tech. The last 12 years I have dedicated my life
to the study of food safety as a professor and researcher at
both Iowa State and Texas A&M Universities.
At USDA our number one goal is to protect the meat and
poultry supply for consumers here and abroad. Every day, 7,600
inspection personnel ensure that plants are meeting food safety
rules. The pathogen reduction final rule has been implemented
nationwide in plants of all sizes. The success of the rule has
been proven in a number of ways. First, through salmonella
testing data which shows that the prevalence of this pathogen
has significantly decreased in all product categories. And
secondly, data from the Centers for Disease Control show
significant reductions in foodborne illness, which CDC has
stated are likely due to implementation of the rule.
GOALS OF FSIS
Today I would like to briefly mention the five goals that I
believe will help us take food safety to a new level. I
strongly believe they need to be pursued simultaneously in
order to achieve our mission of protecting the public's health.
Our first goal is to improve the management and effectiveness
of FSIS programs. Performance expectations, lines of authority
and accountability for ensuring compliance with regulatory
requirements is essential to meet our public health objectives.
This especially includes our field operations where we need to
have the best trained and best supervised work force possible.
In addition, we need to have systems in place that will
ensure that we are vigilant regarding meat and poultry
inspection, including adherence to humane slaughter practices.
Our second goal is to enhance the coordination of food
safety activities within and outside USDA. We have several
efforts underway. Outside USDA we are working with the Food and
Drug Administration exchanging information on an ongoing basis
about dual jurisdiction establishments. I believe there are
other opportunities for us to enhance coordination with the FDA
in these types of establishments to further leverage our
resources for the maximum public health benefit. One includes
the possibility of deputizing FSIS inspectors in emergency
situations to help FDA address threats to the food supply.
The third goal is to enhance the scientific basis of
existing food safety policy systems. Achievement of this goal
is essential if we are to make sound decisions on protecting
the public's health. One way to accomplish this is to use risk
assessment as a way to identify hazards and provide a basis for
making risk management decisions. Another way is through the
application of performance standards as an important
verification tool for HACCP. As you know, we have turned to the
scientific community to get input on this issue. Both the
National Advisory Committee on Microbiological Criteria for
Foods and the National Academy of Sciences will provide us
recommendations by the end of this year.
As another effort to ensure our policy decisions are
science-based, and the process is transparent and inclusive of
all interested parties, we have planned a series of meetings to
discuss how FSIS can integrate scientific principles into its
activities and decisionmaking. In January, we hosted a two-day
public meeting to discuss the role of epidemiology in
investigating foodborne illness outbreaks and initiating
product recalls. We are planning a scientific meeting for May 6
and 7 in Washington to discuss the state of pathogen reduction
measures, including HACCP, and to discuss the role of
performance standards.
Our fourth goal is to enhance outreach and public education
efforts. We will host a food safety education conference in
September of this year, cosponsored by HHS and the Partnership
for Food Safety Education. It will provide an opportunity for
food safety education and communication leaders from across the
country to present and share projects, assess current trends
and plan for the future.
And lastly, our final goal is to ensure that our meat and
poultry are safe from intentional contamination. We have taken
specific steps to accomplish this within the USDA Homeland
Security Council. We created the Food Biosecurity Action Team
to coordinate and facilitate all activities pertaining to food
security and emergency preparedness. In addition, and in
partnership with HHS, we created the Food Threat Preparedness
Network, or PrepNet, which includes all food safety agencies of
the Federal Government. Both of these entities are fully
engaged in the development of plans to quickly respond to
biosecurity threats, as well as preparedness strategies
designed to prevent or contain events to the greatest extent
possible.
We have made headway in food safety and we are on the right
track. To help us continue our efforts the fiscal year 2003
budget includes a funding request for the Food Safety
Inspection Service of $804 million, a $28 million increase
above 2002. Let me very briefly discuss the four specific
components of the request.
BUDGET REQUESTS
First, $10.8 million is for pay and benefit increases for
our workforce. Second, we are requesting $14.5 million to
implement the FSIS Automated Corporate Technology Suite
(FACTS). This is an initiative to replace our existing,
disjointed information systems with a system that has data
sharing capabilities, making program data available at all
levels of the organization. Third, our budget includes a $1.5
million request to expand risk prevention and management
efforts in small and very small meat, poultry and egg
establishments. And fourth, our budget contains a request of
$1.2 million to conduct targeted epidemiological surveys at
slaughter establishments as part of this effort. Samples will
be taken at meat and poultry operations and analyzed for the
presence of lesions and drug or chemical residues.
PREPARED STATEMENTS
I am committed to realizing these five goals and, in doing
so, strengthening the safety of our meat, poultry and egg
product supply. This concludes my statement. Thank you for
listening and I certainly look forward to any questions you may
have.
Senator Kohl. We thank you.
[The statements follow:]
Prepared Statement of Dr. Elsa Murano
Mr. Chairman and Members of the Subcommittee, I am pleased to
appear before you today to discuss the fiscal year 2003 budget for food
safety within the Department of Agriculture (USDA). I am Dr. Elsa
Murano, Under Secretary for Food Safety. With me today are Dr. Merle D.
Pierson, Deputy Under Secretary for Food Safety; Margaret Glavin,
Acting Administrator of the Food Safety and Inspection Service (FSIS);
and USDA's Budget Director, Stephen Dewhurst. Other FSIS
representatives here today are Ron Hicks, Acting Associate
Administrator, Jeanne Axtell, Acting Deputy Administrator for the
Office of Management, and members of the Budget Division staff.
Since this is my first time here, I would like to introduce myself
to you. I am a native of Havana, Cuba. My family and I emigrated to the
United States 40 years ago. So many of my compatriots have lost their
lives in shark-infested waters, seeking the very freedom and
opportunities that led to my being here today. So as a Cuban-American,
I thank the United States, my adopted country, for being the beacon of
liberty for the world.
I am a scientist by profession. I graduated with a B.S. in Biology
from Florida International University. I developed a deep interest in
the medical field and in public health, which led me to earn an M.S.
degree in Anaerobic Microbiology, and a Ph.D. in Food Science from
Virginia Tech. I also developed an appreciation for the field of food
microbiology, and decided to dedicate my life to the study of bacteria,
which although microscopic, are capable of causing so many cases of
foodborne illness each year in our country, and throughout the world.
I have been a researcher and teacher in the field of food safety,
both at Iowa State and Texas A&M Universities. My research efforts have
led me to investigate organisms like Escherichia coli O157:H7, Listeria
monocytogenes, and Salmonella, all the bad actors that have become
household words. My approach in this work has been to determine where
these pathogens are found, and to investigate safe methods that can be
used to control or eliminate them from farm to table.
Throughout my career as a researcher, I have become keenly aware of
the importance of sound scientific studies, and how these can help
provide us with the critical information we need to make decisions that
will truly reduce the risk of foodborne illness. I have also observed
the need for a proactive approach, one that does not react to food
safety crises, but rather anticipates risks and prepares to mitigate
the potential for harm. The events of September 11 are a reminder to
all of us that we need to be diligent in order to prevent threats to
our food supply as much as humanly possible.
Since September 11, the question has been asked, ``What is USDA now
doing to ensure the safety of the nation's meat, poultry, and egg
products supply?'' Recent events have caused us to examine every aspect
of our food safety system at USDA. After close scrutiny, I am confident
that we are in a strong position due to our food safety infrastructure.
We have a daily presence of inspectors in every meat, poultry, and egg
products facility, strong sampling and laboratory resources, a science-
based regulatory inspection system, and an import reinspection, audit,
and verification program that permits free trade while ensuring that
product entering the U.S. is as safe as domestic product. I would like
to thank you for your support, because the full funding that FSIS
received in fiscal year 2002 enables us to fulfill our responsibility
to the American people by ensuring that the U.S. food supply remains
among the safest in the world.
my vision
It is truly an honor to have been asked by President Bush and
Secretary Veneman to serve as Under Secretary for Food Safety. To have
the chance to really make a difference in the food safety arena is a
golden opportunity that I do not take lightly. I would like to share
with you my vision for the future of food safety and inspection for
meat, poultry, and egg products and how the fiscal year 2003 budget
request supports that vision.
When I began the job last fall, I indicated that I would spend some
time assessing where we are and what has been accomplished before
deciding where we needed to go. I have determined that we have a strong
food safety infrastructure. Within FSIS alone, more than 7,600
inspection personnel verify the safety of meat, poultry, and egg
products nationwide. Combined with the resources of other government
agencies at the Federal, State and local levels, we have an extensive
system of protection. A vital part of our infrastructure is the
Pathogen Reduction (PR)/Hazard Analysis and Critical Control Point
(HACCP) regulation, which came into effect for all meat and poultry
plants in 2000.
Our food safety infrastructure is designed to address both
intentional and unintentional threats to the safety of our food supply.
Thus, we must continue to strengthen it, and to increase its
flexibility in responding to food safety threats, if we are to maintain
consumer confidence in our food supply and our regulatory programs.
I have five goals I want to pursue in the coming year to ensure
that we are proactive in protecting the public's health. These goals
are not listed in any particular order because they must all be pursued
with equal vigor in order to ensure the safety of the nation's food
supply. My five goals are to:
--Protect meat, poultry, and egg products against intentional harm;
--Improve upon the overall management and effectiveness of FSIS
programs;
--Enhance coordination of food safety activities within and outside
of USDA;
--Use science to guide our future policy decisions; and
--Significantly enhance outreach and public education efforts.
Protect Against Intentional Harm
Since September 11, we have placed increased attention on the need
for coordinated efforts to ensure biosecurity. As I mentioned earlier,
due to our extensive food safety systems, we have not needed to make
dramatic changes to our operations to respond to possible terrorist
threats. However, I want to assure you that we have taken specific
steps to continue to protect the safety of our meat, poultry, and egg
products, with a special emphasis on intentional contamination. Allow
me to describe some of these steps, which have as their hallmark an
improved coordination in the prevention, as well as response to
biosecurity threats.
Within the Department, the USDA Homeland Security Council is the
lead group in our effort to ensure the safety of our food supply. The
Council is responsible for overall USDA Homeland Security policy,
coordination of Department-wide homeland security issues, tracking USDA
progress on homeland security objectives, and appointing
representatives to inter-agency or external groups. The Council also
ensures that information, research, and resources are shared, and
activities are coordinated with other Federal agencies.
The USDA Homeland Security Council has three subcouncils that
provide coordination between mission areas and agencies, as well as
information to the Secretary and other key decision-makers. One of
these, the Protection of the Food Supply and Agriculture Production
(PFSAP) subcouncil, is charged with protection of the food supply and
agricultural production. The Under Secretary for Marketing and
Regulatory Programs and I are co-chairs of this subcouncil, which is
responsible for:
--Coordination of activities within USDA mission areas in response to
a terrorist threat to agricultural production;
--Coordination of activities within USDA mission areas in response to
a terrorist threat to meat, poultry, and egg products;
--Border surveillance and protection to prevent introduction of plant
and animal pests and diseases;
With specific regards to protection of meat, poultry, and egg
products, there are three entities through which activities are carried
out, both within and outside USDA. First, is the Food Biosecurity
Action Team, or F-BAT. F-BAT is an internal FSIS group, which we
created in response to the September 11 attacks; second is the Food
Emergency Rapid Response and Evaluation Team (FERRET), which involves
all of USDA and which existed prior to September 11; and third is the
Food Threat Preparedness Network (PrepNet), which includes all food
safety agencies of the Federal Government, and which was created after
September 11. I would like to explain to you in more detail what each
of these three entities brings in fighting bioterrorism.
Let's begin at the level of FSIS' preparedness. First, the Food
Biosecurity Action Team (F-BAT) was formed to coordinate and facilitate
all activities pertaining to biosecurity, countering terrorism, and
emergency preparedness within the Agency. F-BAT also serves as FSIS'
voice with other government agencies, and internal and external
constituents on biosecurity issues.
F-BAT is charged with 5 goals:
--Ensuring the continuation of FSIS essential functions during
emergencies;
--Ensuring employee safety pertaining to terrorism, bioterrorism and
catastrophic emergencies;
--Ensuring that FSIS is prepared to prevent and respond to
agricultural terrorism or attacks on the food supply;
--Ensuring proper communication with FSIS employees, USDA, industry,
trade associations, consumers, media, and Congress; and
--Ensuring the security of our laboratories.
F-BAT has been instrumental in several initiatives to improve food
safety and security. These include:
--Assessing potential vulnerabilities along the farm-to-table
continuum;
--Providing guidelines to industry on food security and increased
plant security, particularly in small and very small plants;
--Strengthening FSIS coordination and cooperation with law
enforcement agencies; and
--Enhancing security features at all FSIS laboratories, and
increasing the capacity of its laboratories to test for
additional food safety hazards and biological agents.
In conjunction with F-BAT, FSIS is integrating bio-security
responsibilities into new veterinary medical specialist positions being
established in each district office. These individuals will serve as
points of contact in each district on biosecurity issues.
Next, I'll describe our Department-wide mechanism to ensure
expeditious and effective response in the event of a food security
threat--that mechanism is called FERRET--the Food Emergency Rapid
Response and Evaluation Team.
As I mentioned before, FERRET existed before September 11, having
been established in 1998 to provide a quick and appropriate USDA
response across agencies to food safety emergencies. FERRET is chaired
by me, as the Under Secretary for Food Safety, and emergency response
activities are coordinated by FSIS. As I said earlier, the USDA formed
its Homeland Security Council in response to September 11, with one
subcouncil in charge of protecting the food supply and agricultural
production. So, if a food-related biosecurity event occurs, FERRET and
this subcouncil become one; however, if there is a food emergency that
is not biosecurity-related, only FERRET will function.
The third pillar of our biosecurity efforts is the Food Threat
Preparedness Network, also known as PrepNet. This group functions
across departments to ensure food security throughout the government.
PrepNet is co-chaired by the Administrator of FSIS and the Director of
the Center for Food Safety and Applied Nutrition at the Food and Drug
Administration (FDA). It is a strong example of our commitment to
working with our sister public health agencies to take proactive
measures against bioterrorist threats. Other members of PrepNet include
APHIS, the Centers for Disease Control and Prevention (CDC), the
Department of Defense (DOD), and the Environmental Protection Agency
(EPA). The focus of this group is on preventive activities to
proactively protect the food supply, as well as rapid response in case
of an emergency. PrepNet, which works in conjunction with Governor
Ridge's Office of Homeland Security, is reviewing each agency's
statutory authorities and is conducting an assessment of needs with
plans to fill the statutory gaps. PrepNet members also share scientific
and laboratory assets.
Improve Overall Management and Effectiveness
Now permit me to continue with goal number two of my plans, which
deals with improving the management and effectiveness of FSIS programs.
Many of the efforts related to this goal started before I came on
board. Two examples are the restructuring of our district offices, and
improving the technical background of our workforce.
Last February, FSIS formed an internal working group to review the
role and functions of the district offices. Based on the findings and
recommendations from this group, FSIS will realign its field offices
and personnel. The result of the realignment will be a reduction of
district offices from 17 to 15, with two current offices serving as
sub-district offices. Further adjustments in the district office
structure may be needed as changes occur in the regulated industry.
Regarding our workforce, FSIS recognized sometime ago that it needs
to ensure that field employees have the training and expertise needed
to operate in a more science-based environment. As part of our efforts
to ensure a strong science-based workforce, and therefore a solid
infrastructure, FSIS has introduced the new Consumer Safety Officers
(CSO) position. CSOs conduct on-site food safety and other consumer
protection assessments in meat and poultry establishments, and make
determinations about the scientific efficacy of a plant's HACCP
operating plan. This new occupation advances the Agency's
transformation to a public health regulatory agency by changing the
focus of inspection personnel from being merely process observers to
professionals who verify the effectiveness of risk mitigation and
reduction activities employed in food production processes. FSIS has
already selected and trained thirty-five CSOs. They began new
assignments in December 2001. We plan to select and train, from among
our existing personnel, additional CSOs during fiscal year 2002. The
next class of CSOs is expected to enter training early this summer.
This is part of our effort to gradually increase the proportion of
scientific and technical professionals in FSIS and make available at
the frontline more personnel with scientific and technical expertise in
meat and poultry facilities.
Along with the CSO, our veterinarians play a key role in ensuring
that our mission is carried out. To that end, we are conducting a pilot
test to explore improving the role of veterinarians in FSIS as well as
implementing new strategies to recruit and retain these valuable
professionals. We have established a new veterinary presence in the
field with the introduction of the District Veterinary Medical
Specialists (DVMS) position. The DVMS will serve as the primary contact
for humane handling and slaughter issues, including verification and
enforcement activities, information dissemination, training,
documentation, and generation of recommendations for reports to senior
management on future policies. We appreciate the Committee's funding
support for these positions in the fiscal year 2001 Supplemental
Appropriations bill. These DVMS' will make an important difference in
the Agency's continued efforts to ensure full compliance with humane
handling and slaughter regulations, as well as facilitate coordination
of other activities in the field. In the wake of September 11, we will
now also rely on these professionals to serve as the Agency's first
point of coordination and response to intentional threats to the food
supply. Their presence in the field makes them uniquely qualified to
also serve as the FSIS point of contact on matters of biosecurity for
industry, the Agency's field workforce, and food safety authorities at
the Federal, State, and local level. They also work closely with FSIS'
field epidemiologists as liaisons to State and foreign public health
systems.
These are important steps, but not enough. We have no intention of
leaving behind over 6,000 FSIS inspectors who are so important to our
mission. They, too, must be able to operate in the new, more science-
based FSIS. Our inspectors need to further their understanding of HACCP
and how it enhances their authority. We intend to review training
procedures for inspectors and enhance HACCP training to ensure that
inspectors clearly understand and carry out their responsibilities. We
are also pilot testing different inspection roles under the HACCP-based
Inspection Models Project, or HIMP, which are discussed later in my
statement.
In order for these efforts to work, the Agency needs a strong
supervisory and management infrastructure. Supervisors need to be held
accountable for their decisions and they need the authority to hold
their subordinates responsible for their actions. Clear performance
expectations, lines of authority, and accountability for assuring
compliance with regulatory requirements can forge a strong link among
managers, supervisors, and employees to meet food safety objectives. I
am convinced that through strong management, FSIS will be able to carry
out its mission of ensuring the safest food supply in the world.
Enhance Coordination of Food Safety Activities
My third goal is that of enhancing coordination of food safety
activities within and outside USDA. I have come to believe very
strongly that by working together, we can best leverage our resources
to ensure a safe food supply. One example of how this could be done is
through the cataloguing of Federal, State and local partners'
capabilities regarding identification techniques and laboratory
resources, so that we can quickly determine which agency is best able
to respond to a particular situation, and how to coordinate the
response to that incident among all agencies.
Such strategic leveraging has already begun within USDA, through
our recent partnering with the Animal and Plant Health Inspection
Service, or APHIS, on the subject of veterinary training. We have
established joint training opportunities in foreign animal diseases,
coordinated emergency preparedness, and reviewed food biosecurity from
a collaborative veterinary corps perspective. Our partnership with
APHIS also extends beyond training activities. We are requesting
funding for fiscal year 2003 to establish an integrated surveillance
system with APHIS that would conduct more comprehensive sampling at
slaughter and correlate the data with on-farm data collected in the
APHIS National Animal Health Monitoring System (NAHMS). The system
would provide more seamless data coverage from farm to table, and
present opportunities to better understand the types of risk reduction
strategies that producers and processors can employ. FSIS is also
exploring the possibility of co-locating its laboratories with APHIS
and the Agriculture Research Services' (ARS) laboratories.
Strategic partnering must also occur between FSIS and agencies
outside of USDA. I am proud of our recent coordination efforts with FDA
to combat pathogens. As you may know, FSIS and FDA have had a
Memorandum of Understanding since 1999 to exchange information on an
on-going basis about establishments that fall under both of our
jurisdictions. As a result, we have worked together on several cases in
which we were jointly able to ensure the safety of specific food
products.
I believe there are other opportunities for us to work with FDA to
further leverage our resources for the maximum public health benefit.
In fact, we are currently working on initiatives with FDA that will be
truly groundbreaking in this area. We are exploring ways to increase
coordination and sharing of resources to prevent overlap and
duplication in the food safety arena. We hope to have an announcement
in the near future of additional joint FSIS-FDA initiatives.
I would also like to make note of my commitment to working with our
international partners in ensuring a safe food supply worldwide. FSIS
is actively engaged in the CODEX Alimentarius Commission, a standard
setting body for food safety. Last year, we received an additional
$100,000 in appropriated funds to further our food safety agenda at
this international level. By working with our international partners to
establish internationally recognized food safety standards, we are
ensuring that the U.S. government has a voice in the dialogue.
Our international efforts also include ensuring that imported
product is safe for consumption and held to the highest standards of
food safety. As you may know, recent reports of poor sanitary
conditions in meat plants in Mexico have raised questions concerning
USDA's auditing and plant certification in Mexico. I take these
allegations very seriously. For this reason and at the request of
Secretary Veneman, I recently traveled to Mexico to get an assessment
of the situation. During this visit, I, along with the FSIS Acting
Administrator and other USDA officials, met with Dr. Javier Trujillo,
Director of Food Safety for Mexico, and other Mexican government
officials to measure their level of commitment to maintaining a meat
inspection system that is equivalent to the United States. We also took
the opportunity to visit several plants in question to see the sanitary
conditions first hand. I will continue to ensure that every effort is
being made in Mexico and all other eligible exporting countries to
maintain the highest level of sanitary conditions and will keep you
apprised of the progress.
Use Science to Guide Policy
My background as a researcher in food safety has shown me the
importance of science and how it should influence regulatory policy.
Thus, my fourth goal is one of injecting science into the process of
rulemaking. I'm open to new solutions and new ways of doing business
only if they stand on the firm foundation of science. Enhancing the
scientific foundation of existing food safety policies and systems is
paramount, and it is one of my highest priorities. One way to
accomplish this is to seek an open dialogue with the scientific
community. Towards this end, I am pleased to announce plans to hold a
science symposium this spring on pathogen reduction and microbial
testing. This will be an opportunity for academia, consumers, and
industry, to share their expertise and comment on the future direction
of these important issues.
In addition to hosting scientific symposia, scientific advisory
committees and other science-based organizations can help FSIS improve
its scientific decision-making. One notable example is the question of
performance standards. At the direction of Congress, we have turned to
both the National Advisory Committee on Microbiological Criteria for
Foods, and to the National Academy of Sciences (NAS), which are
comprised of the nation's top scientists and foremost experts in the
food safety discipline, in order to determine the best course of action
on this issue. Performance standards are an important verification tool
for HACCP. The work of the Advisory Committee and the NAS is more than
just an academic exercise. Their expert opinion will go a long way
towards helping us determine how to select the right standards, and
whether the standards have an effect on public health.
Performance standards serve as a measure of the success of food
safety programs. However, it is not enough to set just any performance
standard--for the wrong standard can mislead us into believing that
systems designed to control hazards are working when maybe they are
not. Thus, we must set performance standards that are reliable, and
that are accurate in terms of reflecting when HACCP is not working and
control of hazards has been lost.
The issue of performance standards was most recently showcased in
the Supreme Beef case. This case has confused many into thinking that
FSIS can no longer shut down meat and poultry plants. The fact of the
matter is that USDA has the authority to shut down plants for
sanitation or other food safety reasons, just as it always has.
However, since the Supreme Beef decision, FSIS can no longer rely
solely on Salmonella data to shut down plants. I must emphasize that
Salmonella testing in grinding operations has not stopped. The
difference is that now we are using the performance standard data in
conjunction with other measures, to verify that the establishment's
HACCP plan and Sanitary Standard Operating Procedures (SSOPs) are
working. As you know, our inspectors are charged with such verification
activities. Thus, record reviews, monitoring of plant personnel, as
well as microbial sampling are the tools they use to determine whether
HACCP and SSOPs are working.
In addition to continuing our use of HACCP to control foodborne
hazards, we are piloting novel ideas such as HIMP, to address the on-
line slaughter process. I like to think of HIMP as a total food safety
and process control system. As you know, under HIMP, volunteer plants
take a more active role in the carcass sorting process, while our
inspectors concentrate on more intense inspection and verification
activities. The true value of this pilot project is that it is
demonstrating how real-time data gathering can help plants maintain
control over product, and how increasing the time that inspectors can
spend in verification activities improves their ability to detect
deviations. HIMP is still in its infancy, and FSIS is continuing to
evaluate it and improve it. FSIS has received numerous comments through
public meetings and Federal Register notices about the project, and the
General Accounting Office (GAO) has released its own review of HIMP. We
welcome all of these comments and are always willing to consider
changes that will result in improvements and enhancements in food
safety.
In fact, we plan to have all of the data collected thus far on the
HIMP project reviewed by a scientific institution, in order to ensure
that any conclusions we draw are sound and supported by science. Later
this year, it is our plan to publish a Federal Register notice on the
HIMP program for young chickens, to propose several improvements. We
encourage all interested parties to submit their ideas to FSIS for
consideration. It is important to remember that HIMP is a pilot
project, and we are constantly improving it. It is not yet ready to be
implemented nation-wide. When it is, we will communicate this in a
transparent and open manner, and it will only take place when the data
shows that HIMP represents an improvement over the traditional
inspection system.
Our laboratories also play a significant role in our efforts to use
science to improve FSIS' effectiveness. They are key to ensuring that
we have the science to base our policy on, and to take enforcement
action when necessary. For the last 3 years, FSIS has been working to
gain accreditation for its laboratories under International
Organization for Standardization (ISO) standard 17025. This standard is
internationally recognized as a comprehensive and rigorous standard for
food testing laboratories. Earlier this year, our Microbial Outbreaks
and Special Projects Branch laboratory in Athens, Georgia was
accredited by the American Association for Laboratory Accreditation,
the accrediting body in the United States recognized by ISO. The
American Association for Laboratory Accreditation has audited our three
regulatory laboratories. FSIS is pleased to announce that its Athens,
Georgia laboratory was accredited in February and its St. Louis,
Missouri, and Alameda, California, laboratories were accredited earlier
this month.
Another important way to utilize science as the foundation for
decision-making is to use the tool of risk assessment. Simply stated,
risk assessment is the process by which risks to the food supply, such
as bacteria, are identified, and their probability of causing harm
characterized. Mathematical models are developed with these data, and
used in order to determine whether changing certain practices will
reduce or increase the risk to consumers. Risk assessment is an
important part of policy making, because it helps us make the best
decisions based on science.
An example is the Bovine Spongiform Encephalopathy (BSE) Risk
Assessment that was recently completed by Harvard University's Center
for Risk Analysis. The purpose was to evaluate the ability of U.S.
measures to prevent the spread of BSE to animals and humans, if it were
to arise in this country. The risk assessment provided valuable data
showing that we are in a strong position to prevent the entry of BSE
into the U.S. As the Harvard University risk assessors put it ``the
U.S. is highly resistant to BSE.''
Filling data gaps needed for risk assessments is a priority,
because a risk assessment model is only as robust as the data used to
develop it. In instances where we don't have the needed data, we must
work with researchers to fill the gaps. As you may know, FSIS meets
with ARS each year to discuss our research agenda. The work that both
FSIS and ARS do to prioritize research needs and carry out that
research is very important to our policy making efforts. In the future,
I plan to explore additional partnerships--such as with academia--to
fill data gaps.
Enhance Outreach and Public Education Efforts
My fifth goal for the coming year is to enhance our outreach and
public education efforts. I'm pursuing an aggressive education and
communication program to ensure that consumers have confidence in our
food safety system. This program extends beyond the traditional
outreach effort FSIS has engaged in--educating consumers about safe
handling practices and educating industry on the Agency's regulatory
requirements. My public education and outreach agenda expands the
definition of the public to the broadest sense by including consumers,
industry, FSIS employees, our public health sister agencies, State and
local health departments, and foreign food safety officials.
While I recognize that FSIS excels at developing materials to
educate the public on food safety, the distribution of the materials is
very costly. It is my goal to work with our partners to find a cost-
effective and shared means of ensuring that these important food safety
messages reach their targeted audiences.
One example of our joint efforts to educate the public is our
upcoming food safety education conference. The conference will be
sponsored by USDA and the Department of Health and Human Services
(HHS), in cooperation with the Partnership for Food Safety Education.
We're planning the conference for September to provide an opportunity
for food safety education and communication leaders from across the
country to present and share projects, assess current trends, and plan
for the future.
Another way we're working towards this goal is through a number of
cooperative agreements to foster improved education and understanding
of the risks associated with the handling of meat, poultry and egg
products by retail stores and food service facilities. Last year, FSIS
entered into 18 cooperative agreements with State retail food safety
task forces, municipalities, and colleges and universities that work
with the underserved or economically disadvantaged communities. And
this year, we are working to fulfill those agreements as well as expand
the number of agreements we have to reach even more individuals.
In addition, FSIS has entered into a cooperative agreement with the
Association of Food and Drug Officials (AFDO) to provide train-the-
trainer educational programs nationwide to State and local sanitarians
who inspect these establishments, as well as small retail store and
food service facility owners and managers.
A seamless communication network involving all who play a role in
ensuring the safety of the food supply--from the regulators down to the
consumers--is essential to our mission. Coordinated efforts and a
strong public education campaign will provide the framework for this
communication network.
Consumers look to the government for guidance regarding food
safety. I am seeking an aggressive education and risk communications
program coordinated with HHS to ensure that our efforts are recognized,
and that consumers have confidence in our system.
Having reviewed the overall mission and organization of the Agency,
I would like to discuss some of the operational changes underway in
FSIS to support the President's Management Agenda.
president's management agenda
As you are aware, President Bush has made improving government
performance a priority for this Administration. The need for reform is
not news. Overlapping missions and competing agendas grow up alongside
one another, wasting money and baffling the public. This Administration
believes that government not only needs to reform its operations--how
it goes about its business, and how it treats the people it serves; it
also must rethink its purpose--how it defines what its business is and
what services it should provide.
President Bush has called for a government that is active but
limited--which focuses on priorities and does them well. And the
President's Management Agenda focuses on improving Federal management
and delivering results that matter to the American people. As I pursue
the five goals I have identified in my vision for USDA's Food Safety
mission area, I will be assuring that the intent of the President's
Management Agenda is fully realized.
FSIS has already taken significant steps in improving the
management and effectiveness of its programs and operations. For
example, FSIS has been engaged in on-going efforts to flatten its
organizational structure and increase the number of employees involved
with program delivery since the mid-1990's. This earlier effort was
intended to provide the organizational structure to support the
implementation of the Pathogen Reduction and HACCP regulation and
assure re-direction of resources to the front-line activities of the
Agency. Today, FSIS has turned its attention towards transitioning its
workforce. The goal is to have a front-line inspection workforce that
is equipped with the scientific knowledge and technical skills to
operate in a public health regulatory environment. Creating this
transformation requires the introduction of changes in the workforce
composition, changes in the education and training of inspection
personnel, and changes in the performance expectations for managers and
employees at all levels.
A significant percentage of FSIS resources (92 percent) are
involved directly and indirectly in the food safety inspection of meat,
poultry, and egg products establishments. These functions can be
enhanced through a variety of partnership activities with Federal,
State, and local governments, the regulated industry, and consumers to
meet our mission goals. Using new budget authority made available
through the Homeland Security Supplemental appropriation, FSIS is
exploring opportunities with other Federal agencies to leverage
resources to enhance the security of the food supply. FSIS is
developing closer ties, through cooperative agreements, with CDC, FDA,
and U.S. Customs Service, and State and Federal law enforcement
agencies, on threat recognition and interdiction activities associated
with acts of bioterrorism involving the food supply. There are also
significant roles for academia and the private sector to accomplish the
vital work of homeland security. Private sector resources in academic
and the commercial sector can play vital roles in training and
education, in laboratory studies, and in information technology.
FSIS also plans to continue its work with those States conducting
State inspection programs. Presently, roughly 40 percent of meat,
poultry, and egg products inspection is carried out under State-
operated inspection programs. USDA provides grants to the States, which
then administer inspection programs that must be certified as ``equal
to'' the Federal program. Currently, 27 States participate with FSIS as
``equal to'' partners. Maine is seeking to establish its own State
program and is expected to be certified as early as this summer.
Accurate and timely financial information is key to achieving the
highest measure of accountability and the best operating performance
among Federal programs. The Food Safety mission area is committed to
ensuring that Federal financial systems produce accurate and timely
information to support the operating, budget, and policy decisions for
public health and food safety regulation.
For its part, FSIS has been one of the lead agencies within USDA in
converting to a new accounting system designed to meet the goals of
improved financial performance. In fiscal year 2002, FSIS is continuing
to improve its financial performance by implementing new business
processes within the district offices and by establishing new resource
management performance expectations for field managers.
The President's Management Agenda champions citizen-centered e-
government as a primary means of improving the Federal government's
value to the citizen. Under the leadership of USDA's Office of the
Chief Information Officer, FSIS has been working with other USDA
agencies to identify specific strategic and enabling e-government
initiatives. These ``Smart Choices,'' as they are known, will form the
core of the USDA e-government Strategic Plan. Working towards an
electronic government is essential to my vision for an expanded
outreach and education effort. Improved access to food safety
information and timely data sharing is key to my vision as well.
As part of the USDA e-government Strategic Plan, FSIS has the lead
in implementing the proposed Food Safety and Security Tools initiative.
This initiative promotes interdepartmental collaboration, real-time
data collection, and tracking and retrieval of port- and plant-specific
data regarding food and livestock. Specifically, its focus is to:
--Share information among agencies more rapidly and effectively;
--Equip field inspectors with upgraded wireless and telephone service
to enable them to enter and receive data and to communicate
with each other and with management in a wider range of work
settings; and
--Enhance communication in times of crisis to ensure that essential
food safety-related coordination and communication occurs.
As you can see, my vision for the future of food safety and the
inspection of meat, poultry, and egg products is expansive. FSIS'
efforts to realize this vision and at the same time, to meet the goals
of the President's Management Agenda will not be easy, but we recognize
the reward if we are able to do so--the safest food supply possible. At
this time, I would like to focus on the food safety budget request for
fiscal year 2003 and show you how our funding request relates to
achieving this goal.
fiscal year 2003 budget request
The FSIS budget request for fiscal year 2003 supports the Agency's
basic mission of providing continuous food safety inspection in each
meat, poultry, and egg products establishment in the country. The
increase over the fiscal year 2002 appropriation ensures a level of
funding necessary to cover increased salary and benefit costs, thus
assuming continued support for an in-plant inspection workforce of
7,600 employees. The budget request provides funding for a much-needed
overhaul of the Agency's data sharing and information management
capabilities. The budget request anticipates no change in the Agency's
current overtime and user fee structure in fiscal year 2003. FSIS will,
however, review and propose changes to overtime fees and propose an
annual licensing fee. Both of these would take effect in fiscal year
2004.
In fiscal year 2003, FSIS is requesting $803.6 million, a net
increase in appropriated funds of $28 million. Of this proposed
increase, $10.8 million is for pay and benefit increases. FSIS employee
salaries, benefits, and inspector travel between plants take up nearly
90 percent of the FSIS budget. This increase also includes $1.2 million
for the Grants-to-States program, primarily for increased pay costs at
the State level. It is imperative that States are fully funded for
their share of the cooperative programs to permit continued
coordination between Federal and State authorities on inspection
activities and emerging food safety threats. If not fully funded,
Federal and State pay raises, benefits, and increases in health
insurance and retirement benefits place a significant burden on our
ability to adequately staff inspection activities in meat, poultry, and
egg products establishments.
Earlier, I mentioned the need to overhaul FSIS' data sharing and
information management capabilities. FSIS' fiscal year 2003 budget
includes a request of $14.5 million to implement the FSIS Automated
Corporate Technology Suite (FACTS). FACTS is an initiative to replace
FSIS' existing disjointed information systems, with a system that has
data-sharing capabilities, making program data available at all levels
of the organization. All projects managed within FACTS will be
interrelated through the single database, which will provide a central
point of access, decreasing data redundancy and inaccuracy. A primary
emphasis of this initiative will be to provide timely, up-to-the-minute
data on in-plant inspection and performance. This will dramatically
improve the ability of our inspectors and other professionals to make
decisions quickly, and will allow FSIS to focus its resources on areas
of greatest risk. The data sharing attributes of FACTS will also
improve the coordination of risk management efforts both within USDA
and between Federal, State, and local food safety authorities. Thus,
acquisition and implementation of FACTS is key, and I strongly believe
that the Agency cannot afford not to have this system if it is to do a
top-notch job of protecting the public's health. Certainly, efficiency
will be increased, since by increasing the on-line access to
information, FACTS will help reduce paperwork and administrative costs
and expedite the handling of information requests. FACTS should be
viewed in conjunction with our Field Automation and Information
Management initiative (FAIM). While FAIM provides the tools for
inspector communications, training, and data collection and analysis in
the field, FACTS provides the software, servers, and telecommunications
in the office. From that foundation, FACTS will develop systems that
will support program experts in headquarters, while integrating data
collection from (and data dissemination to) the inspection workforce.
FSIS' fiscal year 2003 budget also includes a $1.5 million request
to expand risk prevention and management efforts in small and very
small meat, poultry, and egg establishments. Concerns with food safety
have caused major changes in food production, processing, and marketing
in recent years. The advent of HACCP controls in inspected meat and
poultry establishments and increasingly stringent standards by leading
retail customers and foreign importers are all helping to drive these
changes. Large firms are adapting, and often leading the way. Small and
very small firms cannot adapt as readily because they frequently lack
the resources to implement cost-effective practices that will better
protect public health. To address this, FSIS will develop and provide
information and outreach to small and very small processors to help
them improve their HACCP systems. Working cooperatively with other food
safety agencies at the State and international level, as well as
academia, industry, consumer groups, and other relevant stakeholders,
FSIS proposes to establish a data sharing system to distribute food
safety information to small meat, poultry, and egg producers and
processors.
Another new initiative included in the fiscal year 2003 budget
request is $1.2 million to conduct targeted epidemiological surveys at
slaughter establishments. These surveys represent the data collection
part of an effort to improve the overall quality and availability of
data now found in disparate animal health databases, such as the
National Animal Health Monitoring System (NAHMS) and the National Anti-
Microbial Resistance Monitoring System (NARMS). The goal is also to
develop a unified animal-based public health surveillance system.
As part of this effort, raw product samples will be taken at meat
and poultry slaughter operations and analyzed for the presence of
lesions, and drug or chemical residues. Data from the samples will be
analyzed for possible links to emerging diseases, priority pathogens,
or other significant threats to public health. This information will
allow the Agency to better assist producers and processors in the
prevention of pathogens and other food safety hazards. It will also
enable FSIS to refine its risk-based inspection strategies in
collaboration with other Federal and State officials who have
regulatory authority for farm-to-table food safety. FSIS will work with
APHIS, FDA, CDC, and the States to prioritize the data collection needs
associated with the survey program.
closing
At this point, I would like to reiterate my five goals:
--Protect meat, poultry, and egg products against intentional harm;
--Improve upon the overall management and effectiveness of FSIS
programs;
--Enhance coordination of food safety activities within and outside
of USDA;
--Use science to guide our future policy decisions; and
--Significantly enhance outreach and public education efforts.
I am committed to realizing these goals and in doing so,
strengthening the safety of our meat, poultry, and egg products supply.
This concludes my statement. Thank you for the opportunity to testify
before you on behalf of USDA's Office of Food Safety. I welcome your
questions.
______
Biographical Sketch of Elsa A. Murano
Dr. Elsa A. Murano was sworn in as under secretary for food safety
by Agriculture Secretary Ann M. Veneman on October 2, 2001. In this
position, she oversees the policies and programs of the Food Safety and
Inspection Service.
Murano has extensive public and private experience in the field of
food safety as both a manager and educator. During the past 6 years,
from 1995 until her recent swearing-in, Murano held several positions
with Texas A&M University at College Station, Texas. Most recently,
since 1997 she served as the director of the university's Center for
Food Safety within the Institute of Food Science and Engineering.
During this time she also served on the university's Department of
Animal Science Research Advisory Committee and the Food Safety Response
Team of the Texas Agriculture Extension Service, and served from 1999-
2001 as the Chair of the Food Safety State Initiative Committee of the
Texas Agriculture Experiment Station. She held the position of the
Center for Food Safety's associate director from 1995 to 1997. In 2000
she was appointed professor in the Department of Animal Science, after
having been an associate professor in that same department from 1995-
2000. In addition, in 2000 Murano was awarded the Sadie Hatfield
Endowed Professorship in Agriculture.
Murano served as a professor-in-charge of research programs at the
Linear Accelerator Facility at Iowa State University Service
Laboratories in Ames, Iowa from 1992 to 1995. She was an assistant
professor in the Department of Microbiology, Immunology, and Preventive
Medicine at that university since 1990.
Before joining USDA, from 2001 until her recent appointment, Murano
served as a member of the USDA National Advisory Committee for Meat and
Poultry Inspection. Since 1998 she also served on the National Alliance
for Food Safety Operations Committee, which she chaired during 2000.
She was a member of several professional organizations, which included
the American Society for Microbiology, the Association of Meat Science,
the Institute of Food Technologists, the Poultry Science Association,
and the International Association of Food Protection.
A native of Havana, Cuba, Murano holds a B.S. degree in biological
sciences from Florida International University in Miami. She also holds
a M.S. degree in anaerobic microbiology and a Ph.D. in food science and
technology, both from Virginia Polytechnic Institute and State
University in Blacksburg, Va.
______
Biographical Sketch of Dr. Merle D. Pierson
Agriculture Secretary Ann M. Veneman today announced the selection
of Dr. Merle D. Pierson as deputy under secretary for food safety.
``I'm extremely pleased that Merle Pierson is joining the USDA
team,'' said Veneman. ``His scientific expertise in food safety will
serve USDA well as we continue to develop sound food safety policies
based on science.''
Pierson is internationally recognized for his work with Hazard
Analysis and Critical Control Point (HACCP) systems and research on the
reduction and control of foodborne pathogens, having authored or co-
authored more than 100 journal articles and five books on food safety
and quality.
Prior to his appointment, Pierson served as professor of food
microbiology and safety at Virginia Polytechnic Institute and State
University (VPI). During his tenure at VPI, he served as head of the
Department of Food Science and Technology from 1985 to 1994, and acting
superintendent of the Center for Seafood Extension and Research from
1992 to 1994. He served as a member of the National Advisory Committee
on Microbiological Criteria for Foods from 1990-1997. Additionally, he
has been actively involved in various capacities with the work of the
Codex Alimentarius Commission--an international body that seeks to
protect the health of consumers and ensure fair practices in food trade
through adoption and implementation by governments of food standards,
codes of practice, and other guidelines. He has served as a consultant
to government and industry on a number of food safety issues, including
HACCP.
A native of South Dakota, Pierson received his B.S in biochemistry
from Iowa State University and his M.S. and Ph.D. in food science from
the University of Illinois.
______
Prepared Statement of Margaret O'K. Glavin
Mr. Chairman and Members of the Subcommittee, I am pleased to have
the opportunity to submit a statement for the record on the current
status of Food Safety and Inspection Service (FSIS) programs and on the
fiscal year 2003 budget request for food safety within the U.S.
Department of Agriculture.
FSIS has a long, proud history of protecting public health.
Although the Agency under the current name was established by the
Secretary of Agriculture on June 17, 1981, its history dates back to
1906. It is the mission of FSIS to ensure that meat, poultry, and egg
products prepared for distribution in interstate and foreign commerce
for use as human food are safe, wholesome, and accurately labeled. FSIS
is charged with administering and enforcing the Federal Meat Inspection
Act (FMIA), the Poultry Products Inspection Act (PPIA), the Egg
Products Inspection Act (EPIA), and the regulations that implement
these laws.
Over the course of the past year, FSIS began a comprehensive review
of the Agency's statute mandated mission of ensuring the safest food
system possible. The Agency is focusing on improvements we can make to
enable us to more effectively carry out our mission. We are identifying
and introducing steps to enhance our performance and to better serve
the public health interests of the American public.
infrastructure
With the Hazard Analysis and Critical Control Point (HACCP) System
fully implemented, the Agency is turning its attention to ways to
improve our infrastructure as a means of better supporting our science-
based inspection system.
FSIS is a large agency, with approximately 9,500 employees. This
includes more than 7,600 inspection personnel stationed in
approximately 6,000 meat, poultry, and egg products plants who inspect
more than 139 million head of livestock, 8.2 billion birds, and 3.1
billion pounds of liquid egg products annually. In fiscal year 2001,
FSIS facilitated the export of over 11 billion pounds of meat and
poultry to approximately 100 countries throughout the world and began
work on a new system to automate the certification of meat and poultry
exports. Agency personnel also reinspected 3.8 billion pounds of
imported meat and poultry from 30 countries, of which 8 million pounds
were refused entry into the United States. 7.8 million pounds of egg
products were imported from Canada, of which 30 pounds were refused
entry. Canada and The Netherlands, remain the only countries certified
to export egg products to the United States, although The Netherlands
exported no egg products to this country last year. Mexico submitted a
request to determine equivalency and eligibility to export egg products
and processed poultry. The Agency is working with Mexico and awaiting
additional information before making a determination of equivalence.
As you may know, recent reports of poor sanitary conditions in meat
plants in Mexico have raised questions concerning USDA's auditing and
plant certification in Mexico. I take these allegations very seriously.
For this reason and at the request of Secretary Veneman, I recently
traveled to Mexico to get an assessment of the situation. During this
visit, I, along with the Under Secretary for Food Safety and other USDA
officials, met with Dr. Javier Trujillo, Director of Food Safety for
Mexico, and other Mexican government officials to measure their level
of commitment to maintaining a meat inspection system that is
equivalent to the United States. We also took the opportunity to visit
several plants in question to see the sanitary conditions first hand. I
will continue to ensure that every effort is being made in Mexico and
all other eligible exporting countries to maintain the highest level of
sanitary conditions and will keep you apprised of the progress.
To ensure the safety of imported products, FSIS maintains a
comprehensive system of import inspection, linking all U.S. ports of
entry through a central computer system. This allows FSIS to establish
compliance histories for countries and plants exporting to the U.S. and
to communicate instantly among ports when problems are found at any
individual port of entry. This system is one part of FSIS' efforts to
verify the effectiveness of foreign inspection systems and also to
support our sister agency, the Animal and Plant Health Inspection
Service (APHIS) in preventing the entry of meat or poultry products
that present an animal disease threat to U.S. livestock. While FSIS has
had a Memorandum of Understanding (MOU) with APHIS since 1985, the two
agencies recently updated the MOU to further strengthen communication
and cooperation for imported products at ports of entry and for audited
products. The MOU is an example of how the two agencies are working
together to assure product from restricted countries is not imported
and does not pose a threat to public health.
In light of recent animal health diseases in Europe and
bioterrorist threats both in the United States and abroad, FSIS'
certification process for foreign inspection programs has become a
subject of heightened interest. Annually, we review all foreign
inspection systems in countries eligible to export meat and poultry to
the United States. In fiscal year 2001, FSIS reviewed the documentation
of and performed on-site audits in 27 of the 32 countries eligible to
export meat and poultry products to the United States, as well as two
countries requesting eligibility, and was satisfied that all 29
countries had implemented Sanitation Standard Operating Procedures
(SSOPs), HACCP systems, and pathogen testing programs. These audits
included visits to 217 slaughter and processing establishments and 82
laboratories. FSIS did not audit four countries (Austria, Ireland,
Northern Ireland, and England) in 2001 because the September 11 events
disrupted planned travel. The fifth (Uruguay) was delayed because of
foot and mouth disease concerns that might have resulted in its
delistment. Those issues were resolved, and Uruguay was audited from
January 14 through February 1, 2002. There were no major deficiencies.
FSIS has rescheduled the four remaining audits for 2002.
FSIS is also responsible for assessing State inspection programs
that regulate meat and poultry products that may be sold only within
the State in which they were produced. The 1967 Wholesome Meat Act and
the 1968 Wholesome Poultry Products Act require State inspection
programs to be ``at least equal to'' the Federal inspection program. If
a State chooses to end its inspection program or cannot maintain the
``at least equal to'' standard, FSIS must assume responsibility for
inspection. There are currently 27 States that have a State meat or
poultry inspection program and operate under cooperative agreements
with FSIS. In these States, Federal funding is provided for up to one-
half of the States' cooperative inspection program, as long as the
State maintains a program ``at least equal to'' the Federal program.
Maine is in the process of establishing its own State program and could
be certified as the 28th State with a State inspection program as early
as this summer.
FSIS also conducts compliance and enforcement activities to address
situations where unsafe, unwholesome, or inaccurately labeled products
have been produced or shipped. The objective of these activities is
two-fold--one, to make a critical appraisal of compliance with meat and
poultry regulations, and two, as a result of certain critical
appraisals, to take enforcement action where necessary. In fiscal year
2001, more than 32,000 compliance reviews were conducted. As a result
of these reviews and other activities, approximately 17 million pounds
of meat, poultry, and egg products were detained for noncompliance with
the respective laws, and nine criminal convictions were obtained
against firms and individuals for violations of the meat and poultry
inspection laws. In addition, FSIS assisted in 66 voluntary recalls of
meat, poultry, and egg products during fiscal year 2001.
Biosecurity Efforts
Since September 11, we have placed increased attention on the need
to coordinate our biosecurity efforts within the Agency and Department,
as well as with other Federal, State, and local agencies, consumer and
industry groups. The Agency has a strong emergency preparedness plan in
place and I am secure in its ability to respond to an intentional
attack on the meat, poultry, or egg products supply. FSIS recently
formed the Food Biosecurity Action Team (F-BAT) to coordinate and
facilitate all activities pertaining to biosecurity, countering
terrorism, and emergency preparedness within the Agency. F-BAT also
serves as FSIS' voice with other government agencies, and internal and
external constituents on biosecurity issues.
F-BAT is charged with 5 goals:
--Ensuring the continuation of FSIS essential functions during
emergencies;
--Ensuring employee safety pertaining to terrorism, bioterrorism and
catastrophic emergencies;
--Ensuring that FSIS is prepared to prevent and respond to
agricultural terrorism or attacks on the food supply;
--Ensuring proper communication with FSIS employees, USDA, industry,
trade associations, consumers, media, and Congress; and
--Ensuring the security of our laboratories.
F-BAT has been instrumental in several initiatives to improve food
safety and security. These include:
--Assessing potential vulnerabilities along the farm-to-table
continuum;
--Providing guidelines to industry on food security and increased
plant security, particularly in small and very small plants;
--Strengthening FSIS coordination and cooperation with law
enforcement agencies; and
--Enhancing security features at all FSIS laboratories, and
increasing the capacity of its laboratories to test for
additional food safety hazards and biological agents.
F-BAT coordinates with FERRET--the Food Emergency Rapid Response
and Evaluation Team--the Department-wide mechanism to ensure
expeditious and effective response in the event of a food security
threat. The Agency also is a participant in the Food Threat
Preparedness Network, (PrepNet), which functions across departments to
ensure food security throughout the government. PrepNet is co-chaired
by the FSIS Administrator and the Director of the Center for Food
Safety and Applied Nutrition (CFSAN) at the Food and Drug
Administration (FDA). This group is a strong example of our commitment
to working with our sister public health agencies to take proactive
measures against bioterrorist threats. Other members of PrepNet include
APHIS, the Centers for Disease Control and Prevention (CDC), the
Department of Defense (DOD), and the Environmental Protection Agency
(EPA). The focus of this group is on preventive activities to
proactively protect the food supply, as well as rapid response.
With these collaborative groups in place, FSIS is well situated to
respond to food safety threats to our nation's food supply, regardless
of whether they occur as a result of intentional or accidental action.
FSIS will continue to coordinate its prevention and response activities
on all levels, both internally and externally among all stakeholders.
enhancing effectiveness
We are moving to enhance our effectiveness by focusing on employee
performance and accountability. We will give our employees the tools
they need to perform in a HACCP-based, scientifically designed program
environment. We have invested heavily in the training and education of
our workforce to ensure that they are able to apply sound science to
the decisions they make on a daily basis. We will enter into training
partnerships with the private sector to ensure that our workforce
continue to have access to state-of-the art training and education. We
are redesigning our performance measurement and appraisal system to
ensure that our employees receive appropriate oversight and
supervision. We are testing new tools such as correlation reviews, web-
based chat rooms for training and information sharing, pilot programs
to make more effective use of the skill and training of our veterinary
corps, and revised supervisory structures for our field offices. We are
moving to implement the recommendations of several work groups that
have studied the structure and workings of our field force so as to
improve coordination, management oversight, and correlation across the
work force. This will improve the consistency and quality of our
decisions. Our program design has become increasingly science-based;
our program delivery must be modernized to keep pace.
We are also making strides in our financial accountability. We
continue to invest in our financial and budget systems and to inject
discipline and professionalism into our resource management. Resource
allocation modernization is an important initiative to ensure that we
are maximizing the use of the resources we have.
In making these improvements we must seek the advice and input of
our stakeholders. We have formed a Standing Subcommittee on Field
Accountability of the National Advisory Committee on Meat and Poultry
Inspection. This Subcommittee, which will meet for the first time in
April, will provide guidance and oversight to our efforts to enhance
our efficiency and effectiveness.
Modernization of FSIS Information Technology
The Agency is also taking aggressive steps to enhance efficiency by
replacing outdated hardware, software, and other computer-related
systems. These upgrades will help our employees in the field function
more efficiently and will enhance communication, increase the
availability of real-time information, and enable us to track actions
taken by inspectors. Our efforts are twofold. The first includes the
Field Automation and Information Management (FAIM) initiative, which is
the major vehicle by which FSIS is providing its dispersed field
workforce with the technology tools to support HACCP-based regulatory
determinations and actions in the field. The second is our FSIS
Automated Corporate Technology Suite (FACTS), a new initiative to
replace FSIS' existing information systems with an enterprise
architecture of data-sharing capabilities that will make the data
available to all levels of the organization.
FACTS began as an effort to improve the accessibility of
information to all users throughout the Agency. From 1997 through 1998,
FSIS conducted a Business Process and Data Analysis project. The
purpose was to analyze the Agency's core business processes and data
needs from a strategic, enterprise-wide view. FACTS is an integrated
initiative to address FSIS' current and future information technology
(IT) needs. FACTS will focus on the FSIS corporate applications and
data management projects, including our nationwide telecommunications
and security infrastructure. In conjunction with the field
infrastructure established by the ongoing FAIM effort, FACTS will
promote a science- and risk-based meat, poultry and processed egg
inspection program through the use of modern information technology.
In fulfilling FSIS business requirements, FACTS will fully support
the USDA infrastructure, architecture and security specifications
through a web-enabled, centralized data source across the mission area,
maximize use of commercial off-the-shelf products, and cyber-security
oriented preparedness. FACTS will also facilitate data and information
exchange among Federal, State, local and, as appropriate, private
sector entities. This will enable FSIS to comply with, by October 2003,
the Government Paperwork Elimination Act (GPEA), which requires Federal
agencies to provide individuals or entities the option to submit
information or transact with the agency electronically, and to maintain
records electronically when practicable.
Laboratory Improvements
An essential component of FSIS' mission to protect public health is
the work of our Agency's four multidisciplinary laboratories. The three
field service regulatory laboratories conduct laboratory testing for
microbiological contamination, chemical and antibiotic residues,
pathological conditions, processed product composition, and economic
adulteration. In fiscal year 2001, FSIS' three regulatory labs
performed conducted 737,139 analyses on 159,401 meat, poultry, and egg
product samples. The fourth laboratory is the Microbial Outbreaks and
Special Projects Branch (MOSPB) laboratory in Athens, Georgia, which
conducts special projects for FSIS and assists in the event of an
outbreak of foodborne illness.
I am proud to announce that FSIS was recently awarded accreditation
under International Organization for Standardization (ISO) Standard
17025 for procedures that the Agency conducts at its MOSPB laboratory.
The Agency's three field service regulatory laboratories in St. Louis,
Missouri, Alameda, California, and Athens, Georgia have also been
awarded accreditation.
Accreditation encourages uniform laboratory practices and increases
credibility. The ISO Standard 17025 is internationally recognized as a
comprehensive and rigorous standard for food testing laboratories. In
order to maintain accreditation, the FSIS quality manual and work
instructions must be continually updated. Each laboratory will also be
audited by A2LA once a year, with an in-depth audit occurring every
other year. In addition, the FSIS Laboratory Quality Assurance Division
conducts annual and special audits of the four FSIS laboratories.
risk-based, science-based programs
Pathogen Reduction (PR)/HACCP
The risk-based, science-based modernization of the meat, poultry,
and egg products inspection programs, begun in 1996 through the PR/
HACCP final rule, has resulted in significant food safety improvements.
Reductions in the prevalence of many microbiological contaminants, such
as Salmonella, have occurred across all categories of meat and poultry
products, and these have been accompanied by reductions in foodborne
illness. Since its implementation in January of 1997, this science-
based regulatory system has changed the food safety landscape for the
better. CDC has attributed the decline in foodborne illness to the
implementation of HACCP. These improvements would not have been
possible without the consistent support of you, Mr. Chairman, and the
Members of this Committee. This support has enabled FSIS to complete
implementation of the PR/HACCP system and to consolidate the resulting
gains into a sound plan for the future.
Under PR/HACCP, plants identify critical control points during
their processes where hazards such as microbial contamination can
occur, establish controls to prevent or reduce those hazards, and
maintain records documenting that the controls are working as intended.
FSIS believes that HACCP-based process control is the most effective
means available for ensuring the safety of food.
The PR/HACCP rule continues to be FSIS' most important tool for
ensuring the safety of meat and poultry. However, the Supreme Beef case
has confused many into thinking that FSIS can no longer shut down a
plant. In fact, USDA has the authority to shut down plants for
sanitation or other food safety reasons. The only change resulting from
the Supreme Beef case is that FSIS can no longer rely solely on
Salmonella data to shut down plants. I must emphasize that Salmonella
testing has not stopped. We are using the performance standard, in
conjunction with other measures, to verify that the establishment's
HACCP plan and Sanitary Standard Operating Procedures (SSOPs) are
working. As you know, our inspectors are charged with such verification
activities. Thus, record reviews, monitoring of plant procedures and
personnel, and sampling are the tools they will use to determine
whether HACCP and SSOPs are working.
In response to the court's ruling, FSIS has developed new actions
to take if an establishment fails to meet the Salmonella standard. FSIS
is using the failure as an indicator that further investigation is
needed to determine the cause of the failure. Therefore, after the
first set of microbiological samples indicates Salmonella is present at
levels above the standard, FSIS will assess the plant's HACCP system
and sanitation procedures, then develop a plan to verify corrective
actions implemented by the plant. If the plant fails a second set of
Salmonella tests, FSIS will document the failure with plant management.
This record requires the plant to take action to correct the reasons
for the failure. FSIS also will conduct an in-depth review of the
plant's corrective and preventive actions and will initiate a third
sample set once those actions have been completed. If FSIS finds that
the corrections are inadequate to address the cause of the failure,
then we will initiate enforcement action. Failure of a third Salmonella
test set will require FSIS to determine whether the HACCP system has
failed to prevent, eliminate, or reduce to an acceptable level, the
occurrence of the identified food safety hazard. If this determination
is made, FSIS will initiate additional enforcement action.
The conference report accompanying the fiscal year 2001 agriculture
spending bill directed the Secretary to request reports from the
National Research Council's National Academy of Science (NAS) and the
National Advisory Committee on Microbiological Criteria for Foods
(NACMCF), which are comprised of the nation's top scientists and
foremost experts in the food safety discipline. The NAS study is in its
early stages and is expected to be completed in approximately 14
months. The NACMCF study is also in its early stages and it is unknown
when it will be complete.
HACCP-based Inspection Models Project (HIMP)
In addition to moving forward with HACCP, we are continuing to
pursue innovative ideas such as the HACCP-based Inspection Models
Project, or HIMP, to further address the on-line slaughter process and
enhance the safety of food products. HIMP is best described as a total
food safety and process control system. Under HIMP, volunteer plants
take a more active role in the carcass sorting process, while our
inspectors concentrate on more intense inspection and verification
activities. The true value of this pilot project is that it is
demonstrating how real-time data gathering can help plants maintain
control over product, and how increasing the time that inspectors can
spend in verification activities improves their ability to detect
deviations. HIMP is still in its infancy, and FSIS is continuing to
evaluate it and striving to improve it. FSIS has received numerous
comments through public meetings and Federal Register notices, and the
General Accounting Office (GAO) has released its own review of HIMP. We
welcome all of these comments and will make changes that result in
improvements and further enhancements in food safety.
We will continue to seek advice and input on HIMP from all of our
stakeholders. This year, we plan to develop a proposed rule for public
comment on the HIMP program for young chickens. The proposal will
include the several improvements to the pilot program.
Science Based Risk Assessments
To further guide the Agency's policy making, several risk
assessments have been conducted or are underway to evaluate the risk
associated with certain microbiological pathogens. FSIS and APHIS,
through Harvard University's School of Public Health, have recently
completed a risk assessment on bovine spongiform encephalopathy (BSE).
A risk assessment for Listeria monocytogenes in ready-to-eat products
has been completed, and a draft risk assessment for E.coli O157H:7 in
ground beef has been submitted to the NAS for peer review. The Agency
is in the early stages of initiating a risk assessment on E.coli
O157H:7 in trim. These risk assessments represent the first step in a
policy making process. Risk assessments look at possible ways that FSIS
could protect public health through the implementation of regulations
created to diminish the risks posed by foodborne hazards in products
regulated by FSIS.
Bovine Spongiform Encephalopathy (BSE)
To date, no confirmed cases of BSE have ever been found in the
United States despite more than 11 years of active surveillance, nor
have there been any reported cases of vCJD, the human variant of BSE.
Because of controls put in place by the U.S. government, it is unlikely
that meat purchased in the United States would be contaminated with the
BSE agent.
In April of 1998, the USDA commissioned Harvard University's Center
for Risk Analysis at the School of Public Health, in conjunction with
the Tuskegee University Center for Computational Epidemiology and Risk
Analysis, to conduct a risk assessment to analyze and evaluate USDA's
measures to prevent BSE. The risk assessment reviewed current
scientific information, assessed the ways that BSE could potentially
enter the United States, and evaluated existing USDA regulations and
policies to prevent the spread of BSE within the United States if it
were to occur.
The results of the risk assessment were released on November 30,
2001, and indicate that the risk of BSE occurring in the United States
is extremely low. Additionally, the report showed that early protection
systems put into place by the USDA and HHS have been largely
responsible for keeping BSE out of the United States and would prevent
it from spreading if it ever did enter the country.
Based on a preliminary review of the risk assessment, USDA
announced a series of actions to be taken that would continue
strengthening programs to reduce the risk of BSE even further. These
actions include the following:
--USDA has arranged for the risk assessment to be peer-reviewed by a
team of independent experts to validate its scientific
integrity. These experts are looking at whether the data have
been correctly interpreted and whether the computer model can
be used easily by USDA scientists to evaluate ``what if''
scenarios.
--APHIS continues to increase testing for BSE, with more than 12,500
cattle samples targeted in fiscal year 2002-up from 5,000
during fiscal year 2001. Surveillance is a critical part of
USDA's multifaceted strategy. APHIS is on target to meet this
goal, having already tested 3,312 cattle as of December 31,
2001.
On January 17, 2002, FSIS published an options paper in the Federal
Register that outlines additional possible regulatory actions to limit
the risk of BSE exposure. To ensure these options are science-based,
they will be tested using the computer model developed by Harvard to
see what impact they would have on further reducing risk.
The options include: prohibiting the use of brain and spinal cord
from specified cattle in human food; prohibiting the use of central
nervous system tissue in boneless beef products, including meat from
advanced meat recovery systems; and prohibiting the use of the
vertebral column from certain categories of cattle, including downed
animals, in the production of meat from advanced meat recovery systems.
USDA has invited public comment on the options and will then proceed to
develop appropriate regulatory proposals.
USDA is also drafting a proposal to prohibit the use of certain
stunning devices used to immobilize cattle during slaughter, and an
advance notice of proposed rulemaking to consider disposal options for
dead and downer animals, because such cattle are considered an
important potential pathway for the spread of BSE in the animal chain.
Listeria monocytogenes (Listeria)
On February 27, 2001, FSIS proposed a rule, which was published in
the Federal Register to help prevent contamination by Listeria and
other harmful pathogens in ready-to-eat meat and poultry products. The
proposed regulation would require meat and poultry establishments to
conduct food contact surface testing for generic Listeria or address
post-lethality contamination in their Hazard Analysis and Critical
Control Point (HACCP) plans.
The comment period was extended several times and finally closed
195 days later on September 10, 2001. FSIS received approximately 3,000
comments with 50 of them being substantive in nature and the remaining
comments being non-substantive form letters.
In order to facilitate public input and gather additional
information during the comment period for this proposed rulemaking,
FSIS held a scientific conference and a public meeting in May 2001, to
discuss the proposed provisions, especially those that would require
certain establishments to conduct environmental testing for non-
pathogenic Listeria.
The proposed rule identified additional needs for scientific
information and analytical data that if addressed, could strengthen the
scientific foundation of the rule. It is extremely important that the
regulations be based on sound science and common sense measures
involving significant public comment.
Before moving forward with a final rule, FSIS expects to evaluate
outstanding data needs identified during the comment period. These data
needs include:
--Analysis of Listeria contamination of ready-to-eat hotdogs by the
Agricultural Research Service;
--Reevaluation of the Listeria risk assessment to take into account
contamination during processing and in-plant mitigation
strategies; and,
--Assessment of the effectiveness of HACCP verification sampling by
FSIS.
E-coli O157:H7 in Ground Beef
In 1998, FSIS initiated the process of conducting a risk assessment
for illnesses associated with E. coli O157:H7 in ground beef. The draft
risk assessment shows that the risk of illness to consumers is low;
very few cooked ground beef servings are likely to have surviving
pathogens present. The best estimates predicted from the assessment is
that the risk of E. coli O157:H7 illness for the general population is
less than one for each million servings of ground beef consumed. The
occurrence and extent of E. coli O157:H7 contamination in ground beef
is most influenced by factors such as the prevalence of the pathogen
among cattle and the level of contamination on the carcass. The
prevalence of E. coli O157:H7 in ground beef increases in the summer
months and decreases during the winter; therefore, the assessment
predicts the risk of illnesses is higher in summer months.
This draft risk assessment was completed in November 2001 and has
been presented to the National Academy of Science (NAS) for peer
review. The assessment produces scientific support for:
--estimating the likelihood of human morbidity and mortality
associated with specific numbers of E. coli O157:H7 in ground
beef servings;
--development of regulatory impact assessments to provide the basis
for FSIS rulemaking;
--identification of critical control points and critical limits in
Hazard Analysis and Critical Control Point (HACCP) systems for
ground beef;
--development of risk-based sampling plans for FSIS inspectors to
verify that industry HACCP systems are meeting regulatory
standards for E. coli O157:H7 in ground beef; and
--identification of future food safety research areas on E. coli
O157:H7 in ground beef.
Ultimately, the risk assessment will serve as an important policy
making tool as the Agency considers what steps to take to enhance food
safety.
workforce of the future
Another way in which FSIS seeks to maximize its effectiveness as a
regulatory and public health agency is by increasing the scientific
expertise of its workforce. The Agency's frontline workforce needs a
broader scientific and analytical background in order to verify PR/
HACCP requirements and deal more effectively with high priority and
emerging food safety hazards. FSIS is also working to increase the
depth of its scientifically trained workforce through recruitment of
commissioned officers of the Public Health Service with medical and
public health backgrounds, and the implementation of the Food Safety
Fellows. In addition, the Agency has undertaken efforts to enhance the
education, training, and professional skills of its employees in order
to build a world class food safety protection workforce.
FSIS has already begun transitioning its workforce. In fiscal year
2001, FSIS hired and trained 35 Consumer Safety Officers (CSO) and
conducted 4 weeks of intensive training before assigning them to the
district offices. CSOs are professional positions requiring a general
scientific background and individuals are responsible for conducting
onsite food safety and other consumer protection verification and
evaluation activities in establishments operating under a grant of
Federal inspection. CSOs assess the scientific adequacy of HACCP plans,
SSOPs, and plant microbiological verification sampling strategies. They
also monitor the interaction of systems within the establishment in
order to ensure food safety and other consumer protections.
Additionally, CSOs focus particular attention on assisting small and
very small plants in the design and implementation of HACCP plans,
SSOPs, E.coli monitoring plans, and microbiological control strategies.
In doing so, CSOs help FSIS comply with the Small Business Regulatory
Enforcement Flexibility Act (SBREFA), which requires that Federal
agencies act to mitigate the adverse impact of new regulations on small
business by providing them assistance and guidance.
FSIS believes that introducing into the district offices, CSOs with
scientific and analytical skills will improve our ability to fully
modernize our inspection system and will ensure the consistent
application of new inspection procedures designed to verify that
official establishments meet regulatory requirements. We were grateful
for the Committee's support for our introduction of CSOs in fiscal year
2001 and have high expectations for the important role these positions
will play in the effort to further enhance our workforce and the level
of food safety in the United States.
FSIS also recognizes that its veterinarians play a key role in
moving towards the professionally trained workforce of the future. The
Agency's workgroups continue to make progress on the recommendations
from the taskforce report, ``The Future of FSIS Veterinarians: Public
Health Professionals for the 21st Century.'' The Agency's Chief
Veterinary Medical Officer, is serving as Executive Sponsor and will
ensure the recommendations from the report are fully implemented. In
December 2001 the Agency also hired 17 more Veterinary Medical Officers
(VMOs) to serve as District Veterinary Medical Specialist (DVMS). The
DVMS' completed 2 weeks of intensive training in January 2002 and have
now been assigned to the district offices in a liaison capacity. The
DVMS' will serve as the primary contact for humane handling and
slaughter issues, including verification and enforcement activities,
information dissemination, training, documentation, and generation of
recommendations for reports to senior management on future policies. We
appreciate the Committee's funding support for these positions in the
fiscal year 2001 Supplemental Appropriations bill. These DVMS' will
make an important difference in the Agency's continued efforts to
ensure full compliance with humane handling and slaughter regulations,
as well as facilitate coordination of other activities in the field.
As we move towards a more science-based workforce, training and
education is a high priority for the Agency. In July 1999, FSIS began
the process of assessing the knowledge and training requirements of our
future workforce by establishing the Workforce of the Future Steering
Committee (WOFSC). The Committee was asked to integrate, coordinate,
and oversee the Agency's workforce planning activities and to guide
this transition of the workforce. The Committee ensures that the
transition of the workforce of the future is carried out efficiently,
cost effectively, and with consistency across the Agency. The Steering
Committee, which is comprised of all major FSIS program areas, as well
as representatives of the National Joint Council of Food Inspection
Locals, the National Association of Federal Veterinarians, and the
Association of Technical and Supervisory Professionals, has developed
guiding principles for managing this change. The guiding principles
were adopted by the Agency and are aimed at ensuring consistency in
Agency decision-making, procedures, and communication, in order to
maintain employee support for the transition to the workforce of the
future.
The Agency also established the FSIS Training and Education
Committee for 2001 and Beyond (TEC 2001) to examine our current
education and training activities, conduct an assessment of Agency
needs, develop an education vision for the Agency, and develop a
strategy for educating and training our employees for the 21st century.
The TEC 2001 Committee reviewed the current status of training within
the Agency and made several recommendations about steps FSIS should
take to develop a more effective program for the future. The final
report encourages the Agency to take the following actions:
--Develop an individualized curriculum for each occupation in FSIS;
--Conduct an assessment of individual FSIS employees to determine a
baseline of skills already possessed and identify the gaps that
need to be filled;
--Develop distance learning applications to deliver training on a
variety of topics to employees;
--Establish a formal evaluation effort of training and education
activities;
--Reorganize the Agency's training resources to consolidate them and
place them directly under the Office of the Administrator as a
separate entity;
--Create a Board of Directors to provide guidance and oversight to
the Agency program;
--Develop a centralized, interactive database to allow both employees
and programs to track training and related activities (classes,
costs, travel, credits, etc.);
--Establish a Training Administrator position in each district
office;
--Centralize funding for training program activities; and
--Evaluate the number and type of personnel resources that should be
dedicated to managing an effective training program.
These activities will form the foundation for a corporate approach
to training and education of FSIS employees and ensure that an
effective mission-based training program exists within the Agency.
food safety education and outreach efforts
FSIS' mission encompasses more than just ``regulatory'' activities.
The Agency's mission also includes a ``public health'' element that
requires extensive communication with stakeholder groups. Our
communication programs seek to increase understanding by these groups
of our mission, authority, regulations, and procedures. Successfully
carrying out these functions is an important and preventive measure the
Agency engages in to reduce the threats of foodborne disease outbreaks
and further protect the public health.
While the Agency's infrastructure plays an important role in
protecting public health and safety from the threats posed by
microbiological hazards, strong partnerships with stakeholders are
needed to ensure the public is fully educated and aware about their
role in preventing foodborne illness outbreaks. Preventing foodborne
illnesses involves more than government inspection, regulations, and
enforcement, it requires proper handling at the retail, transport, and
consumer levels. FSIS believes that in order to ``do its part'' the
public must have good information about what steps they can take to
assist in reducing the number of foodborne illnesses.
Consumer and Food Safety Education
FSIS education programs are designed to prevent foodborne illness.
We develop outreach materials and activities based on current
scientific and consumer research, social marketing, and educational
research to develop products that will effectively educate the public
about the dangers of foodborne illnesses and how these outbreaks can be
prevented. Many programs target consumers who are at greatest risk from
foodborne illness--the very young, the elderly, pregnant women, people
who have chronic diseases, and people with compromised immune systems.
Among these activities, the USDA Meat and Poultry Hotline has for
17 years provided a toll-free national service to consumers,
information multipliers and professionals with questions about safe
preparation of meat, poultry, and other foods, and foodborne illness
prevention. In fiscal year 2001, the Hotline handled almost 86,000
calls. The Agency also received nearly 5,400 inquiries via e-mail. Both
of these tools have proven to be an effective means of facilitating
two-way communication with consumers and others interested in issues
related to FSIS.
In fiscal year 2001, FSIS initiated an outreach pilot project for
the Spanish speaking population. The USDA Meat and Poultry Hotline set
up a 3 month long Spanish language outreach pilot aimed at providing
Hispanic consumers with bilingual service. The pilot outreach efforts
were focused and advertised in Miami, Florida; San Diego, California;
and Newark, New Jersey. The pilot offered callers a choice of speaking
to hotline operators and/or hearing recorded information in Spanish or
English.
We also reach out to consumers and others with food safety
education campaigns. In May 2000, the ThermyTM campaign was
launched to promote the use of food thermometers in the home and is
continuing. In 2001, ThermyTM, along with other USDA
characters, appeared in the Macy's Thanksgiving Day Parade.
ThermyTM has also teamed up with Wal-Mart's 800
Supercenters nationwide, along with local cooperative extension agents
to educate and demonstrate the use of a variety of food thermometers.
ThermyTM brochures and other materials promoting the
importance of cooking foods to safe temperatures have been distributed
at these and other events. Partnerships and other efforts are being
undertaken to further promote the ThermyTM message and
tailor the material for the food service industry.
Another highly successful campaign, Fight BACTM, has
taught safe handling practices to millions and shows no signs of
slowing in popularity. The Partnership for Food Safety Education, made
up of Federal agencies, industry organizations, and consumer groups,
combined resources for this campaign.
Federal, State, and Industry Partnerships
Another example of joint efforts to educate the public is our
upcoming food safety education conference. The conference will be
sponsored by the U.S. Department of Agriculture and U.S. Department of
Health and Human Services, in cooperation with the Partnership for Food
Safety Education. FSIS will convene the conference in September to
provide an opportunity for food safety education and communication
leaders from across the country to present and share projects, assess
current trends, and plan for the future.
We are also working to enhance our public education efforts through
a number of cooperative agreements to foster improved education and
understanding of the risks associated with the handling of meat,
poultry, and egg products by retail stores and food service facilities.
Last year, FSIS entered into 18 cooperative agreements with State
retail food safety task forces, municipalities, and colleges and
universities that work with the underserved or economically
disadvantaged communities. And this year we are working to fulfill
those agreements, as well as expand the number of agreements we have,
in order to reach even more individuals.
In addition, FSIS has entered into a cooperative agreement with the
Association of Food and Drug Officials (AFDO) to provide train-the-
trainer educational programs nationwide to the State and local
sanitarians who inspect these state-regulated establishments, as well
as small retail store and food service facility owners and managers.
Because meat and poultry produced at retail is exempt from Federal
inspection, State and local agencies must ensure food safety in retail
environments.
FSIS' partnerships are not limited to educational efforts. FSIS
works closely with State and local public health and food safety
authorities, as well as with its sister public health agencies, such as
FDA and the CDC, to coordinate food safety strategies and emergency
response activities.
Nationwide surveillance of foodborne illness is a long-standing
example of intrastate cooperation that is coordinated by FSIS and CDC.
The system by which this information is coordinated is known as the
Foodborne Diseases Active Surveillance Network (FoodNet). Under an
agreement between the two agencies, CDC conducts active population-
based surveillance of foodborne diseases. This involves the on-going
and systematic collection of foodborne illness data to detect outbreaks
and monitor disease trends and patterns. Data collected are used to
determine the need for public health emergency response and to assess
the effectiveness of efforts to prevent foodborne disease and outbreaks
over time.
A companion system, the PulseNet computerized database, matches the
DNA fingerprint of foodborne pathogens and accelerates the traceback
process to the source of the contamination. PulseNet has been
especially successful in identifying dispersed illnesses with
potentially common sources of implicated product and alerting the
regulatory agencies so that they can take appropriate action.
Each year, FSIS also participates in the Conference for Food
Protection (CFP), which is a bi-annual forum for Federal, State, and
local government representatives to meet with industry, academia, and
consumers on recommended changes to the Food Code. FSIS collaborates
with FDA on publication of the Code in order to provide Federal
guidance to the States and others with regulatory responsibility for
retail food safety. Adoption of the Code increases uniformity of food
safety regulation among jurisdictions, which benefits both commerce and
consumers.
international activities
Codex Alimentarius Commission (Codex)
FSIS also plays a leading role in the United States' participation
in global dialogue on the setting of international food safety
standards. The GATT Uruguay Round Agreements Act designated USDA as the
lead agency for U.S. participation in the sanitary and phyto-sanitary
standard setting activities of the Codex Alimentarius Commission. The
U.S. Codex Office, located within FSIS, coordinates all U.S. government
and non-government participation in these activities. Through notices
published in the Federal Register, FSIS advises the public of the
standard-setting activities of the Commission, as well as of the dates
and agendas of its meetings.
Codex plays an important role in FSIS' ability to fulfill its
mission. First, its sanitary and phytosanitary standard-setting
activities protect consumers by improving food safety. Second, these
activities help ensure that sound science is the basis for establishing
international food safety standards. In this way, Codex helps
facilitate fair trade in agricultural products.
Codex has grown in importance since it was designated as one of the
three international standard-setting organizations whose health and
safety standards serve as key reference points in settling trade
disputes under the Agreement on Sanitary and Phytosanitary Measures.
Currently, more than 160 nations are members of Codex.
As an active member of Codex, the United States has the opportunity
to make the international food safety standard setting process work
better. We have taken the position that Codex is the organization that
the world's governments should use to discuss food safety issues and to
set standards. We have also proposed changes in many areas where we
believe that progress is needed.
fiscal year 2003 budget request
With that, I have concluded my discussion of FSIS' programs and
would like to provide and overview of the fiscal year 2003 budget
request for FSIS. The budget request for fiscal year 2003 compliments
the programs previously described as part of our regulatory mission and
public health protection responsibility.
The FSIS budget request for fiscal year 2003 supports the Agency's
basic mission of providing continuous food safety inspection in each
meat, poultry, and egg products establishment in the country. The
increase over the fiscal year 2002 appropriation ensures a level of
funding necessary to cover increased salary and benefit costs, thus
assuring continued support for an in-plant inspection workforce of
7,600 employees. The budget request provides funding for a much-needed
overhaul of the Agency's data sharing and information management
capabilities. The budget request anticipates future changes in the
Agency's current overtime and user fee structure beginning in fiscal
year 2004. FSIS will review how it assesses overtime fees and, based on
needs identified through this assessment and propose an annual
licensing fee that would take effect in fiscal year 2004.
In fiscal year 2003, FSIS is requesting $803.6 million, a net
increase in appropriated funds of $28 million. Of this proposed
increase, $10.8 million is for pay and benefit increases. FSIS employee
salary, benefits, and inspector travel between plants take up nearly 90
percent of the FSIS budget. This increase also includes $1.2 million
for the Grants-to-States program, primarily for increased pay costs at
the State level. It is imperative that States are fully funded for
their share of the cooperative programs to permit continued
coordination between Federal and State authorities on inspection
activities and emerging food safety threats. Less than full funding for
Federal and State pay raises, benefits, and increases in health
insurance and retirement benefits place a significant burden on our
ability to adequately staff inspection activities in meat, poultry, and
egg products establishments.
Earlier, I mentioned the need to overhaul FSIS' data sharing and
information management capabilities. FSIS' fiscal year 2003 budget
includes a request of $14.5 million to implement the FACTS initiative.
FACTS will support the FSIS mission by substantially improving the
ability to provide information that is accurate, complete, and timely
for use by Agency decision-makers. FACTS will provide a single location
for storing data that is accessible to Agency decision-makers in a
timely manner, unlike the current data collection systems which are
stored in various locations. Using a single storage location will also
reduce data redundancy. The data will also be more secure because it
will be stored in one location, and information sharing, analysis, and
availability will improve because data will be centralized.
A primary emphasis of this initiative is to provide timely, up-to-
the-minute data on in-plant inspection and performance, thereby
improving regulatory decisions made by Agency personnel and allowing
FSIS to focus its resources on areas of greatest risk. The data sharing
attributes of FACTS will also improve the coordination of risk
management efforts both within USDA and between Federal, State, and
local food safety authorities. By increasing the on-line access to
information, FACTS will help reduce paperwork and administrative costs
and expedite the handling of information requests. This will enable
FSIS to comply with, by October 2003, the Government Paperwork
Elimination Act (GPEA), which requires Federal agencies to provide
individuals or entities the option to submit information or transact
with the agency electronically, and to maintain records electronically
when practicable. FSIS' fiscal year 2003 budget also includes a $1.5
million request to expand risk prevention and management efforts in
small and very small meat, poultry, and egg establishments. Concerns
with food safety have caused major changes in food production,
processing, and marketing in recent years. The advent of PR/HACCP
controls in inspected meat and poultry establishments, the anticipated
rulemaking to mandate PR/HACCP in egg products establishments, and
increasingly stringent standards by leading retail customers and
foreign importers, are all helping to drive these changes. Large firms
are adapting, and often leading the way. Small and very small firms
cannot adapt as readily because they frequently have neither the
information nor the capabilities to implement cost-effective practices
that will produce safer meat and poultry. To address this, FSIS will
develop and provide information and outreach to small and very small
processors to help them improve their PR/HACCP systems. Working
cooperatively with other food safety agencies at the State and
international level, as well as academia, industry, consumer groups,
and other relevant stakeholders, FSIS proposes to establish a data
sharing system to distribute food safety information to small meat,
poultry, and egg producers and processors.
Another new initiative included in the fiscal year 2003 budget
request is $1.2 million to conduct targeted epidemiological surveys at
slaughter establishments. These surveys represent the data collection
part of an effort to improve the overall quality and availability of
data now resident in disparate animal health databases, such as the
National Animal Health Monitoring System (NAHMS) and the National Anti-
Microbial Resistance Monitoring System (NARMS). The goal is also to
develop a unified animal-based public health surveillance system.
As part of this effort, raw product samples will be taken at meat
and poultry slaughter operations and analyzed for the presence of
lesions, and drug or chemical residues. Data from the samples will be
analyzed for possible links to emerging diseases, priority pathogens,
or other significant threats to public health. This information will
allow the Agency to better assist producers and processors in the
prevention of pathogens and other food safety hazards. It will also
enable FSIS to refine its risk-based inspection strategies in
collaboration with other Federal and State officials who have
regulatory authority for farm-to-table food safety. FSIS will work with
the FDA, USDA's APHIS, the CDC, and the States to prioritize the data
collection needs associated with the survey program.
conclusion
Mr. Chairman, this concludes my prepared statement. Thank you for
your continued support. Thank you also for the opportunity to submit
testimony to the Subcommittee on how FSIS is working with Congress and
other partners to become a regulatory public health agency that uses
science-based decision making to implement policies to assure the
safety of meat, poultry, and egg products for American consumers.
______
Biographical Sketch of Margaret O'K. Glavin
Margaret O'K. Glavin is the Acting Administrator for USDA's Food
Safety and Inspection Service (FSIS).
From January 1999 until October 2001, Ms. Glavin served as FSIS
Associate Administrator. As Associate Administrator, she assisted the
Administrator in the general management of the Agency.
From November 1996 until January 1999, Ms. Glavin was Deputy
Administrator of the Office of Policy, Program Development and
Evaluation for FSIS. As Deputy Administrator, she was responsible for
formulating policy, establishing and modifying regulations, and for the
design and evaluation of significant new programs and systems.
From 1994 to 1996, Ms. Glavin served as one of three associate
administrators, where she had responsibility for the day to day
management of the Agency. She led the development of the reorganization
of the Agency's field and headquarters structure and oversaw the
planning for implementation of that structure. Prior to 1994, Glavin
was Deputy Administrator for Administrative Management, where she had
responsibility for the Agency's personnel, budget, Information Resource
Management activities, training programs, management of Agency
property, and procurement and contracting.
Ms. Glavin has been with FSIS since 1983. She served in several
other Agency positions, including Deputy Administrator for Regulatory
Programs, Director of the Review and Evaluation Staff, and Director of
the Standards and Labeling Division.
Before coming to FSIS, she spent 14 years working in the special
nutrition programs for the Food and Nutrition Service of USDA. Her
particular emphasis was on the school lunch program and other feeding
programs for children.
Ms. Glavin holds a B.A. degree in English from Trinity College,
Washington, DC, and a M.A. degree in government from Georgetown
University, in Washington, DC.
Marketing and Regulatory Programs
STATEMENT OF WILLIAM T. HAWKS, UNDER SECRETARY FOR
MARKETING AND REGULATORY PROGRAMS
ACCOMPANIED BY:
BOBBY R. ACORD, ADMINISTRATOR, ANIMAL AND PLANT HEALTH
INSPECTION SERVICE
A.J. YATES, ADMINISTRATOR, AGRICULTURAL MARKETING SERVICE
DAVID R. SHIPMAN, ACTING ADMINSTRATOR, GRAIN INSPECTION,
PACKERS AND STOCKYARDS ADMINISTRATION AND
DENNIS KAPLAN, DEPUTY DIRECTOR, OFFICE OF BUDGET AND PROGRAM
ANALYSIS
STATEMENT OF WILLIAM HAWKS
Senator Kohl. Mr. Hawks.
Mr. Hawks. Thank you, Mr. Chairman, Senator Cochran. It is
certainly a pleasure to be here today to discuss the marketing
and regulatory programs of the U.S. Department of Agriculture
and the budget for 2003. I have with me today Dave Shipman,
Acting Administrator of GIPSA. I have Bob Acord, Administrator
of APHIS, and A.J. Yates, Administrator of AMS.
I have a philosophy that I always abide by, and that is
working together works. And I have worked with my agencies to
draft goals for which we can be held accountable, and I intend
to see that the marketing and regulatory programs of USDA work.
And I want to share those goals with you.
The first goal is building broader bridges. We will
increase cooperation and strategic partnership with farmers,
ranchers, States, foreign governments, Congressional offices
and other interested parties to ensure that our policies
benefit producers and consumers alike.
Our second goal is to move more product. We will facilitate
expanded domestic and international marketing opportunities for
U.S. agricultural products, including value-enhanced products
and products of biotechnology.
Our third goal is investing in infrastructure. Agriculture
that is healthy both biologically and economically is
marketable agriculture.
Our fourth goal is growing our people. We will make a
concerted effort to recruit, recognize, and reward
accomplishments and inspire current and future leaders within
MRP.
Our fifth goal is one that is near and dear to my heart,
and that is selling agriculture as a profession. We will
creatively market the vital role agriculture plays in every
American's life to assist our effort to recruit and retain the
highest-caliber workforce for marketing and regulatory programs
in the USDA.
The funding requests that we are making today are both
requests for taxpayer funds and the benefit that is funded by
beneficiaries of the program services. They carry out the
programs we have, that consist of nearly $1.5 billion, and over
$500 million is funded by user fees that are paid by the
beneficiaries of this service. On the appropriations side the
APHIS request is for $795.4 million, of which $13.2 million is
for buildings and facilities. AMS is requesting $105.2 million.
And the GIPSA request is for $42.9 million.
Agriculture Marketing Services (AMS) activities are an
integral component of the USDA-wide effort to assist the U.S.
agricultural industry in marketing their products and finding
ways to improve their profitability. Many of the programs
administered by AMS are aimed at building cooperative and
strategic partnerships with the agricultural community and the
State institutions that support it.
The Animal and Plant Health Inspection Service's primary
mission is to manage issues involving animal and plant health,
conflicts with wildlife, environmental stewardship and the
well-being of animals. Together with the States and industry,
APHIS protects and promotes U.S. agricultural health,
preserving and expanding domestic and international markets for
U.S. agricultural products.
The Grain Inspection, Packers and Stockyards Administration
mission is to facilitate the marketing of livestock, meat,
poultry, cereal, grain, oilseeds and related agricultural
products, to promote fair and competitive trade for the benefit
of consumers and American agriculture. It helps move more U.S.
product domestically and abroad by investing in domestic
infrastructure that supports marketing with the grain, poultry,
livestock and meat industries.
PREPARED STATEMENTS
This concludes my statement, and I hope working together
works as we proceed in the appropriation of the 2003 budget. We
believe that the proposed funding amounts are vital to
providing the infrastructure to protect American agriculture
from pests and disease, and for moving more product. It will
provide the level of services expected by our customers, the
farmers and ranchers, the agricultural marketing industry and
the consumers. I thank you for the opportunity to be heard and
look forward to answering your questions.
Senator Kohl. Thank you.
We thank you, Mr. Hawks.
[The statements follow:]
Prepared Statement of William T. Hawks
Mr. Chairman and members of the Committee, I am pleased to appear
before you to discuss the activities of the Marketing and Regulatory
Programs of the U.S. Department of Agriculture and to present our
fiscal year 2003 budget proposals for the Agricultural Marketing
Service (AMS), the Animal and Plant Health Inspection Service (APHIS),
and the Grain Inspection, Packers and Stockyards Administration
(GIPSA).
With me today are Dr. James Butler, Deputy Under Secretary for MRP;
Mr. A. J. Yates, Administrator of the AMS; Mr. Bobby Acord,
Administrator of APHIS; and Mr. David Shipman, Acting Administrator of
the GIPSA. They have statements for the record and will answer
questions regarding specific budget proposals.
making our mark
Under my leadership, the Marketing and Regulatory Programs have
identified several broad goals and objectives which will leave a legacy
for this Administration. I intend to hold us accountable for:
Building Broader Bridges.--We will increase cooperation and
strategic partnerships with farmers and ranchers, States, foreign
governments, congressional offices, agricultural commodity and industry
associations, agricultural scientific groups, and other interested
parties to ensure that our policies and programs provide the most
benefits they can to the affected people.
Moving More Product.--We will facilitate expanded domestic and
international market opportunities for U.S. agriculture products
including value enhanced products and products of biotechnology. We
will work closely with the Foreign Agricultural Service and the U.S.
Trade Representative to aggressively and creatively resolve sanitary,
phytosanitary, biotechnology, grain inspection, commodity grading and
other trading issues that limit our potential for growth in
international trade.
Investing in Infrastructure.--Agriculture that is healthy, both
biologically and economically, is marketable agriculture. We will
invest in stronger border security, pest and disease surveillance and
monitoring, bricks and mortar such as National Veterinary in Ames,
increased market news on export markets, improvements in e-Government,
enhanced investigations of anti-competitive market practices and
greater support for biotechnology.
Growing Our People.--We will make a concerted effort to recruit,
recognize and reward accomplishment and inspire current and future
leaders within MRP. We will make MRP a place where the best and
brightest want to be--including promising men and women in diverse
fields that include not only agriculture but also journalism,
accounting, and economics. And,
Selling Agriculture as a Profession.--We will creatively market the
vital role that agriculture plays in every American's life to assist
our efforts to recruit and retain the highest calibre workforce for MRP
and USDA.
funding sources
The Marketing and Regulatory Programs activities are funded by both
the taxpayers and beneficiaries of program services. They carry out
programs costing nearly $1.5 billion; over $500 million is funded by
user fees paid by the beneficiaries of the services.
On the appropriation side, the Animal and Plant Health Inspection
Service is requesting $795.4 million of which $13.2 million is for
buildings and facilities; the Agricultural Marketing Service is
requesting $105.2 million; and the Grain Inspection, Packers and
Stockyards Administration is requesting $42.9 million.
Legislation will be submitted, which if enacted would recover $34
million more in user fees. This legislation would authorize new license
fees to recover the cost of administering the Packers and Stockyards
(P&S) Act, additional license fees for facilities regulated under the
Animal Welfare Act, and additional grain inspection fees for developing
grain standards. I will use the remainder of my time to highlight the
major activities and budget requests for the Marketing and Regulatory
Programs.
agricultural marketing service
AMS activities are an integral component of USDA-wide efforts to
assist the U.S. agricultural industry in marketing their products and
in finding ways to improve their profitability. AMS' mission is to
facilitate the marketing of agricultural products in the domestic and
international marketplace, ensure fair trading practices, and promote a
competitive and efficient marketplace to the benefit of producers,
traders, and consumers of U.S. food and fiber products.
Building Cooperative and Strategic Partnerships
Many of the programs administered by AMS are aimed at building
cooperative and strategic partnerships with the agricultural community
and the State institutions that support it. AMS' oversight of marketing
agreements and orders provides producers the marketing tools they need
to create dependable markets to ensure adequate supplies at a
reasonable price throughout the year. In addition, AMS provides
oversight to research and promotion programs that allow producers,
handlers, processors, or importers to collaborate to solve marketing
problems and to increase sales domestically and abroad. USDA continues
to believe that national commodity research and promotion programs
offer opportunities to maintain, develop and expand markets for
agricultural products both at home and abroad. The market news, shell
egg surveillance, commodity grading, pesticide data, pesticide
recordkeeping, and Federal seed programs depend on support from their
State partners to collect and disseminate information, provide
inspections, and otherwise improve the efficiency of both State and
Federal programs by sharing human and capitol resources.
An example of recent success is the implementation of the National
Organic Standards Program. AMS has worked closely with producers of
organic products to develop and implement the National Organic
Certification Program. This program will facilitate trading of organic
products by verifying for buyers and consumers, across the U.S. and
internationally, that organic food labeling is accurate and consistent.
The program has established national standards for organic production
and handling, and is now accrediting certification agents who will
conduct annual on-site inspections to verify that organic products meet
these standards. The program's 18-month implementation period began
April 21, 2001, and ends October 21, 2002, when the official USDA
organic seal will be permitted for use on certified organic fresh and
processed products. The program estimates that within a few years of
operation, the program will oversee the certification of approximately
14,000 organic producers and handlers.
Moving More Product More Efficiently
U.S. agriculture is facing continual and rapid changes in the
industry, Federal and State regulations and support, domestic and
international consumer preferences, and an ever-expanding dependence on
export markets.
AMS support of international market opportunities for U.S.
agricultural products will yield enormous dividends for the farm
economy, national and world economies. With funding received in 2002,
AMS has increased its participation in international forums that
establish international agricultural trading standards. By working more
closely with international organizations, AMS is better able to ensure
that U.S. agricultural interests are represented in development of
international standards that govern the movement of commodities in
international commerce. This will allow U.S. agriculture to remain
competitive in foreign markets.
Major changes in transportation services and marketing practices
have increased the need for impact and policy analysis and economic
research to ensure the efficient flow of agricultural commodities
through the distribution system. To address these complex problems, AMS
brings together a unique combination marketing and transportation
specialists that conduct analyses to support the maintenance of an
efficient transportation system for rural America and enhance the
overall effectiveness of the food marketing system.
Investing in the Agriculture Infrastructure
As highlighted in the Administration's report, Food and
Agricultural Policy: Taking Stock for the New Century, the success of
U.S. agriculture depends on investment in basic services that not only
protect producers from external threats such as pests and disease, but
also provide the market information and data necessary for competitive
and efficient markets. AMS has been able to capitalize on its broad
expertise and experience in these matters to develop effective programs
and partnerships that provide objective, consistent market data
necessary for decisionmaking.
The Livestock Mandatory Price Reporting System has been a
successful effort to provide livestock market information on a near
real-time basis over the Internet. To manage the data, AMS developed an
automated system capable of accepting thousands of pieces of market
information from the livestock industry and that would generate market
news reports in as little as 1 hour after receipt of the data.
Beginning with the first day of the program, packers have been
successful in submitting data to AMS via the secure Internet
connection. Over 130 different packing plants report transaction data
by lot, several times a day. The system is handling over 90 percent of
the volume reported as slaughtered daily, which equates to 110,000
cattle, 330,000 swine, and 15,000 lambs. On August 20, 2001, revised
confidentiality guidelines were implemented in order to increase the
number of reports available, while still protecting the identity of
market participants. Implementation of the revised confidentiality
guidelines last August has allowed AMS to provide more complete
information and also increase the number of reports available while
protecting the identity of market participants. The Pesticide Data
Program (PDP) has been instrumental in providing data that addresses
domestic and international public concerns about the effects of
agricultural pesticides on human health and environmental quality. The
program provides unbiased, statistically valid data on pesticide
residues in food and water. The information PDP provides to the
Environmental Protection Agency--EPA--is vital for conducting realistic
assessments of dietary risk from pesticides on food commodities
available in the marketplace. These realistic risk assessments will
assure that U.S. agriculture has the necessary inputs for being
competitive. In addition, PDP data supports the international marketing
of U.S. commodities by assuring foreign governments and buyers that
U.S. agricultural commodities are safe for consumption. Newly released
data collected in 2000 indicates that only 0.2 percent of the samples
exceeded the established tolerance level, of which over one third
resulted from post harvest applications.
ams' 2003 budget request
For 2003, AMS requests $105 million from appropriated and Section
32; a total increase of $4.3 million. The 2003 budget includes the
following programmatic changes for AMS:
For Global Market News, AMS requests an increase of $1 million. The
agricultural infrastructure will be improved by expanding global
marketing activities for American producers by increasing international
market news reporting for grains and feeds, oilseeds, livestock,
poultry, dairy, and horticultural markets in Central America, South
America, and Asia. Increasing the availability of accurate, timely, and
unbiased international market information is critical if American
producers are to be competitive in a global economy.
For the Pesticide Data Program, AMS requests an increase of $0.5
million. Funding will be provided to States participating in the
program to offset increased operational costs and to complete
international accreditation for their laboratories. Increased testing
will be conducted on foods generally consumed by children and other
commodities with significant dietary consumption.
For the Organic Certification Program, AMS proposes a decrease of
$0.6 million. This reduction recognizes that initial accreditation of
organic certification agents was provided during fiscal year 2002 and
that future Federal accreditation of organic certification agents will
be user-funded.
For the Federal Seed Act Program, AMS requests an increase of $1.1
million. The funds will be used to upgrade computer systems used to
identify and track seed samples as they progress through the testing
process, improve seed testing equipment, and increase the number of
scientific staff. This increased funding will also allow laboratory
upgrades that are necessary to meet international seed accreditation
requirements. Improved productivity will permit AMS to provide
increased protection to seed buyers in States that have reduced or
eliminated seed testing programs.
For the Commodity Purchase Program, the budget includes an increase
of $0.3 million to improve AMS' ability to verify that the purchased
commodities are all domestically produced.
For Marketing Agreements and Orders, the budget includes an
increase of $0.6 million to permit AMS to hire additional marketing
specialists that are necessary to ensure prompt response to industry
requests for new marketing order amendments and provide effective
oversight.
animal and plant health inspection service
The fundamental mission of APHIS is to anticipate and respond to
issues involving animal and plant health, conflicts with wildlife,
environmental stewardship, and animal well-being. Together with their
customers and stakeholders, APHIS promotes the health of animal and
plant resources to facilitate their movement in the global marketplace
and to ensure abundant agricultural products and services for U.S.
customers. The APHIS mission satisfies 5 strategic goals. They include:
--safeguarding plant and animal resources from foreign pests and
diseases;
--minimizing production losses and export market disruptions by
quickly detecting and responding to outbreaks of agricultural
pests and diseases;
--minimizing risks to agricultural production, natural resources, and
human health and safety by effectively managing pests and
diseases and wildlife damages;
--ensuring the humane care and treatment of animals; and
--developing safe and effective scientific pest and disease control
methods.
APHIS builds broader bridges by working in concert with its
stakeholders--States, industry, and the public--to maintain and expand
export market opportunities and to prevent the introduction and/or to
respond to new threats of plant and animal pests and diseases. APHIS
invests in the agricultural marketing infrastructure that helps protect
the agricultural sector from pests and diseases while at the same time
helping move more U.S. product.
Safeguarding Animals and Plants
Recent events have highlighted the need to protect the security of
our agricultural production sector and food supply. However, well
before the events of September 11, and long before foot-and-mouth
disease (FMD) crippled the British agricultural sector, APHIS has been
engaged in activities that include monitoring and surveillance for
foreign animal disease (FAD) threats beyond our borders, enhanced
inspection for animal and plant health threats at our borders, and
surveillance within our borders to quickly detect and respond to an
animal or plant pest or disease outbreak. Our actions, together with
those of stakeholders and the American public, have successfully
protected the health of the U.S. livestock and poultry industries
against devastating diseases such as FMD and bovine spongiform
encephalopathy (BSE, or ``Mad Cow'' disease) in fiscal year 2001.
The Agricultural Quarantine Inspection (AQI) program has inspectors
assigned to ports of entry and land borders to scrutinize passengers
and cargo to prevent pest and disease introduction into the United
States. In 2001 AQI inspectors processed 92.5 million international
air, maritime, and land border passengers/pedestrians at over 300 ports
of entry. This is an increase of 4.5 percent over fiscal year 2000.
While about 95 percent of international travelers and 96 percent of
border vehicles were in compliance with AQI regulations, APHIS seized
more than 310,000 prohibited animal products and byproducts. We
enhanced the APHIS Smuggling Interdiction and Trade Compliance program
by hiring additional officers and investigators. Most of this activity
is funded through user fees, though appropriations from the General
Fund are needed to pay for inspections along the Canadian and Mexican
borders and in Hawaii and Puerto Rico.
The sterile Mediterranean fruit fly (Medfly) preventive release
program in California and Florida shields our fruit growers. APHIS
works with State and Federal agriculture officials to prevent and
respond to Medfly outbreaks. In California, APHIS is cooperating in
strong statewide detection efforts that identified several harmful
fruit flies entering the United States at California ports. In Florida,
our goal is to detect new introductions quickly enough to begin
mitigation measures before the flies can get established. Overseas
activities are intended to create a sustainable barrier south of our
border. Our program also keeps our multi-billion dollar citrus export
markets open. If the Medfly would become established on American soil,
U.S. producers could lose an estimated $5 billion annually. The APHIS
screwworm program is another example of the safeguarding system in
place to exclude plant and animal pests and diseases. The program
provides a land barrier between North America and South America. In
fiscal year 2001, APHIS continued keeping screwworms out of the United
States and further reduced the likelihood that they will ever return.
The eradication program is close to achieving its goal of establishing
a permanent sterile screwworm barrier in the eastern third of Panama.
Moving More Product
The APHIS import/export inspection program protects U.S. livestock,
poultry, and wildlife populations from restricted diseases, including
those transmissible to humans. APHIS regulates animal and animal
product imports and promotes the American export of these products by
ensuring U.S. animals and animal products meet health and welfare
requirements of recipient countries. This program also participates in
negotiations on trade of animals and animal products that face
potential sanitary restrictions. In fiscal year 2001 APHIS issued point
of origin export certificates for the export of approximately 752,000
head of livestock, 60 million doses of semen, and more than 15,000
bovine embryos. It also supervised the importation of approximately 8
million animals, 11 million poultry, 2.5 million doses of semen, and
1,220 embryos.
The Trade Issues Resolution and Management efforts are key to
ensuring fair trade of all agricultural products. APHIS staff help
resolve trade issues abroad which enhance American commerce. In fiscal
year 2001, APHIS helped:
--Reopen the Brazilian market to U.S. wheat, what had been a $176
million U.S. market before Brazil halted imports in 1996.
--Open the Argentine market to Florida citrus and expanded access for
California citrus and stone fruit; market potential could be as
high as $3 million for U.S. citrus and $5 million for U.S.
stone fruit.
--Open the Chilean market to more than $1 million in apple and pear
exports from Oregon and Idaho, and an even greater value of
citrus sales from Arizona. And,
--Gain access to the Japanese market for U.S. Chilean cherries, which
could yield about $10 million in export sales.
Further, the International Plant Protection Convention adopted a
standard advocated by APHIS which will ensure that U.S. exports are not
unfairly discriminated against for pests that are of not of quarantine
significance to the importing country. APHIS staff negotiate sanitary
and phytosanitary (SPS) standards, resolve SPS issues, and provide
clarity on regulating imports and certifying exports which improves the
infrastructure for a smoothly functioning market in international
trade.
Monitoring Agricultural Pests and Diseases
A key part of the APHIS strategy to protect U.S. agriculture is its
ability to quickly detect outbreaks of foreign agricultural pests and
diseases. APHIS accomplishes its monitoring functions in a cooperative
effort with Federal and State governments and industry. Specifically,
the monitoring program has four components: surveillance, regulatory
enforcement, emergency management, and pest detection. Surveillance
investigations are accomplished through the APHIS National Animal
Health Monitoring System (NAHMS). In fiscal year 2001, APHIS conducted
about 800 investigations compared to fiscal year 2000's total of 385
because of increasing concern over the FMD outbreaks in Europe. APHIS
also is on the lookout for an outbreak of BSE. To date, no cases of BSE
have ever been detected in the United States. However, in March 2001,
APHIS disposed of the two remaining herds of Belgian sheep in Vermont
suspected of having a transmissible spongiform encephalopathy (TSE).
In November 2001, USDA released results of a Harvard University
risk assessment that showed that the risk of BSE occurring in the
United States is extremely low. The report showed that early protection
systems put into place by USDA and the Department of Health and Human
Services have been largely responsible for keeping BSE out of the
United States and would prevent it from spreading if it ever did enter
the country. However, we continue to be aggressive in protecting the
American consumer and the livestock industry from this disease. We are
already planning to more than double the number of cattle samples
tested in fiscal year 2002 compared to fiscal year 2001.
Concerns over the threat of bioterrorism have further demonstrated
the need for a comprehensive national detection system for safeguarding
the country's food production capacity and natural ecosystems. The
Homeland Security Supplemental appropriation will enable APHIS to jump
start proposed activities in the fiscal year 2003 budget. APHIS will
coordinate and oversee early detection surveys in cooperation with the
States. APHIS and the States conduct detection surveys for incipient
infestations of exotic pests that could cause economic damage if they
spread and become established, such as weeds, plant diseases, insects,
nematodes, and other invertebrate organisms. Such activities not only
act to protect U.S. agriculture, but support U.S. exports as well. For
example, surveillance for the Khapra beetle verifies that the United
States is free of this pest, one of the world's worst pests of grain/
commodities, and thus able to maintain billions of export dollars.
The APHIS emergency management system is a joint Federal-State-
industry effort to improve our ability to deal successfully with animal
health emergencies, whether natural or unintentional introductions or
deliberate acts of bioterrorism. During fiscal year 2001, APHIS began
an emergency management grant program to assist States and Tribal
Nations to improve their animal health emergency management systems.
About $2 million was provided to 31 States, 6 Tribal Nations, and 1
university.
Controlling Losses from Pests and Diseases
Pest and disease control techniques are employed by APHIS to
minimize plant and animal losses, and wildlife damage. APHIS
collaborates with States to help manage or eradicate pests and diseases
harmful to American agriculture. The Agency regulates various shipments
of plants, livestock, and related products to prevent the spread of
diseases. For example, APHIS has such efforts as the cooperative boll
weevil program, the cooperative brucellosis program, the Asian long-
horned beetle eradication program, the Accelerated Psuedorabies
Program, the Bovine Tuberculosis program, and the scrapie eradication
program. In fiscal year 2001, the Department released $336 million of
funding from the Commodity Credit Corporation to address pest and
disease emergencies for Asian long-horned beetle, chronic wasting
disease, citrus canker, Karnal bunt, Medflies, plum pox, pseudorabies,
rabies, and tuberculosis. Also included are funds made available for
purchase and disposal of imported sheep potentially infected with a
TSE.
Another component of APHIS pest management is found in Wildlife
Services operations. American wildlife is an active trans-boundary
resource, which in some situations poses a risk to human health and
safety, as well as natural resources. APHIS, in partnership with the
U.S. Fish and Wildlife Service and industry representatives, manages
the increase in wolf activity due to reintroduction initiatives
throughout the United States. APHIS also protects the sunflower
industry from blackbird predation in the Dakotas, by reducing cattail
densities as habitat for migrating blackbirds. The Agency also assists
in rabies mitigation in racoons, which continues to spread north
throughout the eastern seaboard. In fiscal year 2001, APHIS conducted
livestock protection activities for approximately 10,000 resource
owners in cooperation with private individuals and State, Federal, and
local governments. APHIS personnel also provide wildlife hazard
management assistance to almost 400 airports to help minimize wildlife
strikes, which can be a threat to human safety.
Animal Care
APHIS ensures the humane care and treatment of animals by enforcing
uniform compliance with Federal laws and regulations. It performs this
function through sound enforcement and strong educational outreach
efforts to all regulated entities. The Agency uses risk assessments to
target inspection resources at the facilities where animal welfare
concerns are the greatest. In fiscal year 2001, APHIS, hired an
additional 9 animal care inspectors and boosted inspection by almost 10
percent from fiscal year 2000.
Scientific and Technical Services
APHIS must also develop safe and effective scientific pest and
disease control methods and methods for reducing wildlife/agricultural
conflicts.
APHIS regulates the movement and releases of biotechnology products
to ensure that they do not pose a threat to agriculture and the
environment. In fiscal year 2001, APHIS provided 2,600 movement and
release notifications and permits; up from 2,200 provided in fiscal
year 2000. Since the program's inception in 1987, APHIS has deregulated
54 genetically engineered crop varieties, with one new crop deregulated
in fiscal year 2001.
The APHIS veterinary biologics program prevents the importation,
production, and distribution of impure, ineffective, unsafe, or
impotent veterinary biological products in the United States. This
activity includes licensing, inspection, testing statistically-based
samples, and issuing permits for product importation. In fiscal year
2001, APHIS issued 113 new product licenses, so that veterinarians can
now diagnose, treat, and prevent animal diseases with 26 new market
products. Animal drug producers requested approval to market over
17,000 veterinary biological products in fiscal year 2001. APHIS did
not act on 27 requests because producers failed to meet these
requirements. The APHIS National Veterinary Services Laboratories
(NVSL) in Ames, Iowa, tested tens of thousands of submissions in fiscal
year 2001 on import/export samples, dip samples for pesticide
concentration in the cattle tick program, pseudorabies, scrapie,
brucellosis, tuberculosis, and BSE samples. In the recent anthrax
attacks, APHIS processed environmental samples from USDA offices across
the United States.
The Wildlife Services Methods Development program addresses the
research needs to reduce bird damage to the agriculture, aquaculture,
and aviation industries; mammal damage to the timber industry and to
rangeland; coyote damage to the livestock industry; and predation of
threatened and endangered species. The National Wildlife Research
Center develops traditional, nonlethal methods such as improved traps
and snares, maintenance of registered uses for particular chemical
pesticides, repellants and attractants, as well as novel approaches
such as reproduction inhibitors/immunocontraceptives.
aphis' 2003 budget request
The budget request proposes $782 million for salaries and expenses,
a $120 million increase above the current fiscal year 2002 adjusted
base. Notable requests include:
An increase of $14 million for Agricultural Quarantine Inspection
(AQI).--The AQI program is the Nation's front-line defense against the
introduction of dangerous agricultural pests and diseases from other
countries. For example, AQI activities play a key role in protecting
the U.S. livestock sector from bovine spongiform encephalopathy (BSE or
mad cow disease) and foot-and-mouth disease (FMD). User fees are
charged for inspection of international passengers, aircraft, ships,
railcars, and trucks. The 2003 budget proposes $347 million for AQI
activities for improved point-of-entry inspection programs by providing
additional inspectors, canine teams and state-of-the art high-
definition x-ray machines at high risk ports-of-entry on the Canadian
and Mexican borders, in Hawaii, and elsewhere. Expansion of the global
economy and free trade have caused an increase in the volume of
passengers and cargo arriving in the U.S. at additional ports of entry,
with additional facilities at existing ports of entry. APHIS has an 85
percent success rate in clearing international passengers within 30
minutes or less. Likewise, 85 percent of passengers crossing at U.S.
land border points, in non-peak traffic periods, are now cleared
through the inspection system in 30 minutes or less.
An increase of $5 million for Foreign Pest and Disease Exclusion.--
This increase will strengthen the capability of APHIS to assess and
monitor outbreaks of diseases in foreign countries that have the
potential to spread to the United States.
An increase of $49 million for Plant and Animal Health
Monitoring.--Experience in Europe from FMD and BSE highlights the need
for rapid detection and response to agricultural health threats. While
longstanding efforts have kept FMD and BSE out of the United States,
vigilant surveillance and monitoring are still needed and would be
supported by an increase of about $21 million. Funding for plant pest
detection would increase by $20 million. Funding to improve the
emergency management system, in place to coordinate and implement a
quick response to an animal or plant pest or disease outbreak, would be
boosted by about $7 million.
Shifts $162 million of emergency Commodity Credit Corporation (CCC)
funding to annual appropriations for pest and disease management
programs.--These funds will continue control and eradication efforts
begun in 2002 and prior years. Funds will be used to combat species
such as the Asian long-horned beetle, citrus canker, chronic wasting
disease, Medfly, plum pox, rabies, scrapie, and tuberculosis. Successes
in boll weevil eradication and brucellosis efforts allow $45 million of
program reductions as programs rely on loans and shift toward less
expensive monitoring efforts.
For Emergency Funding, the Secretary retains authority to use funds
from CCC to combat any new emergency pest and disease outbreaks. Since
these emergencies cannot be predicted, no estimates are available at
this time. However, the Administration is concerned about rising
Federal costs of emergency pest and disease control activities and
expects to seek public comment before the end of the year on ways to
share the costs with States and the private sector.
An increase of $12 million for Scientific and Technical Services.--
Resources for expanded diagnostic, response, management and other
technical services are increased. This will enhance our ability to
quickly diagnose an outbreak of a foreign animal disease.
grain inspection, packers and stockyards administration
GIPSA's mission is to facilitate the marketing of livestock, meat,
poultry, cereals, oilseeds, and related agricultural products and to
promote fair and competitive trade for the benefit of consumers and
American agriculture. It helps move more U.S. product both domestically
and abroad by investing in domestic infrastructure that supports
marketing within the grain and livestock industry. GIPSA fulfills this
through both service and regulatory functions in two programs: the
Packers and Stockyards Programs (P&SP) and the Federal grain inspection
service (FGIS).
Packers and Stockyards Programs
The strategic goal for the Packers and Stockyards Programs (P&SP)
is to promote a fair, open and competitive marketing environment for
the livestock, meat, and poultry industries. Currently, with only 166
employees, P&SP monitors the livestock, meatpacking, and poultry
industries, estimated by the Department of Commerce in fiscal year 2001
to have an annual wholesale value of $125 billion. Legal specialists
and economic, financial, marketing, and weighing experts work together
to monitor emerging technology, evolving industry and market structural
changes, and other issues affecting the livestock, meatpacking, and
poultry industries that the Agency regulates.
Last year, P&SP conducted over 1,600 investigations. Our Rapid
Response Teams remain a powerful tool to address urgent industry issues
and to immediately notify the public about a stockyard's or market
agency's fiduciary problems. Last year, 94 P&SP investigators were
deployed soon after being notified of a crisis to investigate 51
potentially serious situations across the Nation. During fiscal year
2001, these rapid response investigations found violations of the P&S
Act, and contributed to returning $6.1 million to livestock producers
and poultry growers.
P&SP also is strengthening investigations and assessments of
competitive implications of structural change in the livestock,
meatpacking, and poultry industries. Throughout fiscal year 2001, P&SP
incorporated economic, statistical, and legal expertise into
investigations to increase the efficiency and effectiveness of our
investigations of anticompetitive and unfair practices, and our
enforcement of the P&S Act. Increased cross-utilization of our
economists, legal specialists, auditors, marketing specialists, and
industrial specialists from headquarters and field locations has
brought targeted investigative and analytical skills to specific
investigations. P&SP also pursued cooperative agreements with qualified
researchers and research institutions that contribute valuable
information to P&SP's economic understanding of the livestock,
meatpacking, and poultry industries.
The Swine Contract Library was mandated in the Agricultural Rural
Development, Food and Drug Administration, and Related Agencies
Appropriations Act of 2000 (Public Law 106-78). It amended the P&S Act
to require P&SP to establish and maintain a library of contract
provisions offered by packers to swine producers for the purchase of
swine and to make these provisions available to the public. P&SP
received 11 comments on the proposed rule published on September 5,
2000. A final rule to implement the swine contract library is underway,
but we are finding that our ability to address confidentiality concerns
and unique data requirements may depend on the IT improvements
requested in the fiscal year 2003 budget. Once complete, the Web-based
library will offer summarized information on contract terms and monthly
reports on the number of swine under contract.
The Grain Standards and Warehouse Improvement Act of 2000 (Public
Law 106-472) required GIPSA to implement the GAO's recommendations to
improve investigations of competitive practices and report on actions
taken to improve investigations of competitive practices by November 9,
2001. We recently submitted that report and I apologize for the delay
in the response. In accordance with GAO's recommendations, and based on
required input from the Department of Justice (DOJ) and the Federal
Trade Commission (FTC), in fiscal year 2001, the Agency implemented
investigation planning, development, implementation, and review
processes to ensure appropriate investigation planning and oversight
within P&SP and with the USDA Office of the General Counsel (OGC). Also
during the fiscal year, OGC added more attorneys to address P&SP
matters; Agency economists and legal specialists received additional
specialized training; and P&SP issued its first annual assessment of
the cattle and hog industries to report on changes in those industries.
P&SP is currently finalizing its second annual assessment report.
Federal Grain Inspection Service
GIPSA's Federal Grain Inspection Service (FGIS) facilitates the
marketing of U.S. grain and related commodities under the authority of
the U.S. Grain Standards Act (USGSA) and the Agricultural Marketing Act
of 1946 (AMA). As an impartial, third-party in the market, we advance
the orderly and efficient marketing and effective distribution of U.S.
grain and other assigned commodities from the Nation's farms to
domestic and international buyers. We are part of the infrastructure
that undergirds the agricultural sector.
Since the emergence of value-enhanced grains and oilseeds, niche
markets have been developing for non-biotech commodities, and
establishment of new regulatory requirements by U.S. trading partners
has created a need for greater product differentiation in the
marketplace. To meet this need, market participants are relying, in
part, on testing for accurate information about products in the
marketing chain and to comply with the new market demands. The
efficiency of the marketing system will, therefore, depend on the
availability of accurate and reliable testing which FGIS is prepared to
supply.
In the international arena, FGIS has been working to maintain
strong markets for U.S. grains and oilseeds. Working with the Foreign
Agricultural Service and the Japanese government, FGIS developed a
Protocol for Food Corn Exported to Japan. This protocol, which was
adopted by the grain industry, enabled the United States to continue
exporting corn to Japan by providing assurance that exported corn did
not contain significant levels of StarLinkTM corn. This
protocol has been considered a model for other countries to which the
U.S. exports corn.
FGIS also is keeping pace with the grain industry's move from paper
to e-commerce to streamline, automate, and improve business
transactions. FGIS is keeping pace with our customers' migration toward
an electronic marketing process. We are taking part in pilot tests and
demonstrations with electronic commerce vendors; developing a system to
send inspection information generated at multiple locations directly to
a customer; preparing to submit electronic inspection information into
a vendor's document handling system at the request of applicants; and
pilot testing a computer generated inspection certificate for export
cargoes. By harnessing the latest hardware, software, and available
technology, we will be prepared to enter and participate in the
electronic commerce arena.
All of our efforts to improve and streamline our programs and
services are paying off for our customers, both in terms of their
bottom lines and in greater customer satisfaction. FGIS' service
delivery costs (adjusted for inflation), decreased from $0.27 per
metric ton in fiscal year 1994 to $0.26 per metric ton in fiscal year
2001. With the USDA export certificates that grain exporters received
at this cost, exporters marketed over $20 billion worth of cereals and
oilseeds. Likewise, here at home, buyers and handlers requested over
1.9 million domestic inspections that facilitated the trading of more
than 128 million metric tons of cereals and oilseeds.
One indicator of the success of our outreach and educational
initiatives is the number of foreign complaints lodged with FGIS
regarding the quality or quantity of U.S. grain exports. In fiscal year
2001, FGIS received only 15 quality complaints and no quantity
complaints from importers on grains inspected under the U.S. Grain
Standards Act. These involved 494,267 metric tons, or about 0.5 percent
by weight, of the total amount of grain exported during the year.
GIPSA's 2003 Budget Request
For 2003, the budget proposes a program level for salaries and
expenses of $43 million. Of this amount, $20 million is devoted to
grain inspection activities for standardization, compliance, and
methods development and $23 million is for Packers and Stockyards
Programs. The 2003 budget includes:
An increase of $3.4 million to provide enhanced information
technology applications. With the requested funding, GIPSA would be
able to establish and implement e-Government electronic interfaces to
allow secure receipt and delivery of electronic data between the agency
and its customers. Further, it will enable GIPSA to integrate existing
disparate database information systems into a unified system.
An increase of $2 million to help ensure efficient market
functioning. Carcass weight and quality are major determinants of
price. Carcass quality characteristics, often measured electronically,
are an increasingly important determinant of carcass value. A portion
of the requested increase will allow GIPSA to monitor the livestock and
meatpacking industries' use of electronic carcass evaluation
technologies. Another portion of the budget increase will enable GIPSA
to significantly improve enforcement of the anti-competitive and other
provisions of the Packers and Stockyards Act. And,
An increase of $0.5 million is requested to enable GIPSA to expand
its newly established biotechnology program to keep pace with the rapid
introduction of new products and the need for commodity certification.
The GIPSA budget also includes two user fee proposals. New user
fees would be charged to recover the costs of developing, reviewing,
and maintaining official U.S. grain standards used by the grain
industry. Those who receive, ship, store, or process grain would be
charged fees estimated to total $5.6 million to cover these costs.
Also, the Packers and Stockyards program would be funded by new license
fees of $23.3 million that would be required of packers, live poultry
dealers, stockyard owners, market agencies and dealers, as defined
under the Packers and Stockyards Act.
conclusion
This concludes my statement. I am looking forward to working with
the Committee on the 2003 budget for the Marketing and Regulatory
Programs. We believe the proposed funding amounts and sources of
funding are vital to providing the infrastructure to protect American
agriculture from pests and diseases and for moving more product,
especially for increasing exports to foreign markets. It will provide
the level of service expected by our customers--the farmers and
ranchers, the agricultural marketing industry, and consumers. We are
happy to answer any questions.
______
Prepared Statement of Bobby R. Acord
Mr. Chairman and members of the Subcommittee, it is indeed a
pleasure for me to represent the Animal and Plant Health Inspection
Service (APHIS) before you today. I have spent a good portion of my
career serving this agency and there is none better. Simply put, APHIS
is the guardian of U.S. agriculture. A substantial portion of the U.S.
economy and the health of our food supply depend on APHIS' ability to
prevent foreign pests and diseases from entering the country as well as
quickly detecting and controlling them if they do. Safeguarding
American agricultural health is vital to providing an affordable food
supply for all U.S. consumers. Further, it helps U.S. farmers by
preserving and expanding both domestic and international markets for
U.S.-produced food and fiber, which must be pest- and disease-free to
be sold.
Overseas activities, exclusion efforts at the border, and
monitoring and managing agricultural pests and diseases existing in the
United States are intrinsic and inseparable components of the larger
function of ensuring the health and marketability of U.S. agriculture
worldwide. Our efforts also protect animals from inhumane treatment and
resolve human and agriculture conflicts with wildlife. For all of these
activities, APHIS constantly employs new technologies, scientific
improvements, and innovations to complete our work more effectively and
efficiently. Our statement will cover what we are doing in fiscal year
2002, our fiscal year 2001 highlights, and our fiscal year 2003 budget
request.
Recent events have led Americans--perhaps for the first time--to
worry about the security of our food supply. The need for protecting
U.S. agriculture, however, is not new to APHIS. Our safeguarding system
consists of four tiers: (1) international activities to prevent
problems from getting to U.S. shores; (2) border exclusion once
passengers and products are attempting to enter the U.S.; (3) domestic
monitoring, surveillance, and emergency response to quickly detect and
respond to problems; and (4) ongoing eradication and control activities
for pests and diseases; and wildlife management activities. This
strategy of successive lines of defense has been effective. For
example, we have kept foot-and-mouth (FMD) disease out of this country
since 1929 and have kept any Mediterranean Fruit Fly (Medfly)
incursions in check. Nevertheless, the current realities of
international trade and travel, as well as the threat of those who
would use pests and diseases to terrorize our people and harm our
economy, make safeguarding American agriculture increasingly difficult.
We must remain vigilant in all of these efforts.
Our international activities reduce the threat of agricultural pest
and diseases approaching U.S. borders.
APHIS performs three complementary international functions. First,
APHIS monitors and controls or eradicates pests or diseases in
locations where they threaten U.S. agriculture. In many ways, for us
the first ``border'' is the one that separates areas with pests and
diseases from those free of plagues. We want to deal with problems
where they exist before they arrive at our shores. Second, APHIS
programs regulate trade to ensure its safety to U.S. agriculture. We
must ensure that the same trade that brings people and products to our
nation does not bring us unintended visitors like pests and diseases.
Third, APHIS promotes U.S. exports, using expertise in pests and
diseases to prevent unnecessary trade barriers. American farmers have
the best and healthiest products in the world. If the playing field is
level, they will prevail. Related line items include Foreign Animal
Disease (FAD)/Foot and Mouth Disease (FMD), Fruit Fly Exclusion and
Detection, Screwworm, Tropical Bont Tick, Trade Issues Resolution and
Management, and Import/Export.
Foreign Animal Disease(FAD)/FMD.--APHIS' first line of defense
against FADs is understanding where the threats from overseas lie and
using that information to prevent those diseases from coming to the
United States. APHIS' efforts successfully protected the biological and
commercial health of the $76 billion livestock and poultry industries
in the United States against devastating diseases in fiscal year 2001.
Excluding FMD and other FADs is critical to protecting U.S. farmers and
consumers against losses in productivity, higher food prices, and lost
export markets. Our FAD activities overseas include cooperative
agreements with several countries, including Mexico and the countries
of Central America. These collaborative efforts support FMD and other
FAD surveillance and ensure that the United States is prepared to
address the threat of disease entry. APHIS' FMD line item currently
focuses on Colombia, because it is the nearest threat of overland
transmittal to the United States. Considering the increasing numbers of
passengers and commodities from other regions arriving by air and
water, APHIS has been expanding its efforts to other regions. For
example, experts believe that the recent United Kingdom FMD outbreak
originated in China. This expanded effort is reflected in the fiscal
year 2003 President's budget.
Fruit Fly Exclusion and Detection.--APHIS is eradicating Medfly in
Guatemala and Mexico through Moscamed, a cooperative cost-sharing
program with Mexico, Guatemala, and Belize. APHIS has eliminated Medfly
outbreaks from northern Guatemala, Belize, and all but the State of
Chiapas, Mexico, since 1998 incursions into previously free areas lead
experts to predict that the pest would soon establish itself in the
United States, with a $5 billion per-year cost to U.S. producers.
Emergency authority has been used to transfer funds from the Commodity
Credit Corporation (CCC) since fiscal year 1999 to get on top of the
immediate threat. The eradication program, which includes aerial and
ground bait spray treatments as well as release of sterile flies, is
preventing the fly from moving north through Mexico into the United
States. The goal of the current emergency effort is to create a
sustainable barrier by eradicating Medflies from Guatemala to the
border of Honduras and El Salvador. This program also keeps our multi-
billion dollar citrus export markets open. In fiscal year 2001, APHIS
conducted cooperative fruit fly detection programs in States that are
susceptible to the pests. In Florida, our goal is to detect a new
introduction quickly enough to begin mitigation measures before the
flies can get established. APHIS and California also continued strong
statewide detection efforts that identified several harmful fruit flies
entering the U.S. at California entry ports. In response to these
detections, the program is increasing trapping and establishing
quarantines, where necessary, to prevent the artificial spread of fruit
flies beyond affected areas.
Screwworm.--In fiscal year 2001, APHIS continued keeping screwworms
out of the United States and further reduced the likelihood that they
will ever return. The eradication program is close to achieving its
goal of establishing a permanent sterile screwworm barrier in the
eastern third of Panama. Establishing the barrier at Panama's narrowest
point will result in significant savings over any other location in
Mexico or Central America. Pushing the barrier zone more than 2,000
miles and 7 countries away from the United States by land has provided
ever increasing protection for the U.S. livestock industry, thereby
preventing economic loss to U.S. producers. Our efforts include sterile
fly production in Tuxtla Gutierrez, Mexico, where we produced and
distributed an average of 116 million sterile flies per week in fiscal
year 2001. APHIS is currently examining options secure of an adequate
number of quality sterile flies to maintain the barrier in Panama,
eradicate isolated outbreaks, and provide flies to other countries and
international organizations wishing to begin eradication programs.
Tropical Bont Tick (TBT).--The Caribbean Amblyomma Program (CAP),
initiated in 1995, focuses on a regional approach to eradicating the
TBT and preventing the introduction of the tick and its associated
diseases, heartwater and dermatophilosis, into U.S. livestock and
wildlife populations. APHIS provides technical expertise, program
guidance, and funding through cooperative agreements with the CAP
program and recently assigned a veterinarian to oversee the program.
APHIS cooperates with the Food and Agriculture Organization of the
United Nations and the Caribbean Community to exclude the pest from the
U.S. This is an example of fighting a problem at the ``border'' other
than our own. An eradication program in the U.S. territories or the
mainland would be extremely difficult and expensive, but a modest
investment in the Caribbean offers the U.S. protection against that
dire prospect.
Trade Issues Resolution and Management.--APHIS attaches overseas
monitor and respond quickly to emerging foreign pest and disease
threats at their origin before they to reach U.S. ports. These attaches
also resolve problems associated with shipments of U.S. commodities,
enabling them to clear the border and enter into the country's market.
Overseas personnel collaborate with headquarters staff to present the
correct mix of protecting U.S. agriculture and ensuring that U.S.
agricultural export products receive fair, science-based treatment in
trade negotiations. In fiscal year 2000, APHIS was directly involved in
resolving 67 sanitary and phytosanitary (SPS) related trade issues
involving U.S. agricultural exports, removing restrictions to trade
worth over $2.5 billion. APHIS attaches abroad are positioned to
resolve any difficulties that may impede the importation of U.S.
agricultural shipments. Overseas technical assistance efforts also
benefit U.S. exports by emphasizing the application of SPS concepts,
such as appropriate risk assessment methodologies and harmonization
with international standards. One area of growing concern is
biotechnology. APHIS personnel worked to ensure that decisions on
products derived from biotechnology received the same fair, science-
based treatment as all agricultural products.
Import/Export.--APHIS protects U.S. livestock, poultry, and
wildlife populations from incursions of exotic diseases and parasites
including those transmissible from animals to humans. APHIS regulates
the importation of animals and animal products, determining if products
can safely enter the U.S. without detrimental effects to U.S.
agriculture. APHIS also promotes U.S. exports to markets abroad by
ensuring that U.S. origin animals and animal products meet health and
welfare requirements of recipient countries. This program also
participates in negotiations on trade of animals and animal products
that face potential sanitary restrictions. Fulfilling this mission in
fiscal year 2001, APHIS observed the importation of 7.8 million
animals; 10.6 million poultry; 2.5 million doses of semen; and 1,221
embryos. The program issued point of origin certificates for the export
of approximately 752,000 head of livestock, 60.4 million doses of
semen, and 15,246 bovine embryos. Without APHIS' efforts, U.S. farmers
would lose these lucrative exports.
Border exclusion is our first domestic line of defense to keep
harmful agricultural pests and diseases out of the United States.
United States border activities encompass the largest component of
APHIS' tiered safeguarding system. Border inspections complement the
protection aspect of APHIS international activities, as well as promote
the free flow of trade in agricultural and other products. These
activities give APHIS the opportunity to stop any threats that have
arrived at U.S. shores and borders. The border activities include the
Agricultural Quarantine and Inspection (AQI) line items, as well as the
Cattle Fever Tick program. It is important to note that we are
concerned not only with political borders, but ``pest and disease''
borders as well. For that reason, we inspect people and things leaving
Hawaii and Puerto Rico destined for the mainland United States. We must
do so because pests and disease present in those areas could spread to
mainland States currently free of the problems.
Agricultural Quarantine Inspection (AQI).--This program reduces the
risk of introduction of invasive species into the United States to
protect American agricultural resources, maintain the marketability of
agricultural products, and facilitate the movement of people and
commodities across the borders. With appropriated funding, APHIS
minimizes the threat of pests and diseases entering the U.S. by
conducting point-of-entry inspections of travelers and cargo along the
Mexican and Canadian borders and pre departure inspections of
passengers and cargo traveling from Hawaii and Puerto Rico to the
mainland.
With AQI user fees collections, APHIS inspects arriving passengers'
baggage, commercial aircraft, and commercial vessels from foreign
countries; commercial trucks crossing the U.S.-Mexico border; and
railroad cars crossing the U.S.-Mexico border. As a result of the
heightened focus on security, the need to enhance inspections to
protect U.S. agriculture from possible biosecurity invasions is a major
priority. Using fee collections along with funding from the Homeland
Security Supplemental appropriation, we will enhance our efforts and
successfully protect U.S. agriculture.
In response to the FMD outbreak in the United Kingdom and other
parts of Europe during fiscal year 2001, the Secretary of Agriculture
made $13.5 million available from the AQI user fee reserve to increase
inspection efforts at our ports. APHIS enhanced the surveillance of
animal products from the European Union (EU) and implemented 100
percent inspection of all passengers on flights originating from
affected EU member States. In fiscal year 2001, APHIS inspected
approximately 92.5 million maritime and airport passengers; pre-
departure passengers in Puerto Rico and Hawaii, pre-clearance
passengers in Bermuda and the Bahamas, and pedestrians and bus/vehicle
passengers arriving in the U.S. at over 300 ports of entry. This is an
increase of 4.5 million over fiscal year 2000. Our ports of entry are
pathways for plant and animal contraband materials. While 95.4 percent
of the international travelers and 96 percent of border vehicles were
in compliance with our AQI regulations, we seized 314,641 prohibited
animal products and byproducts. We also maintained 100 trained beagle
teams at 35 major U.S. airports, land borders, maritime ports, and post
offices. These beagles undergo a 12-week training course with their
proposed handlers at the Agency's National Detector Dog Training Center
in Orlando, Florida. APHIS continues to maintain X-ray scanning
equipment as a screening tool in passenger baggage clearance at all
foreign-arrival and pre-departure sites, as well as at several land
border ports on the Mexican border.
In fiscal year 2001, we enhanced our Smuggling Interdiction and
Trade Compliance (SITC) program by hiring additional officers and
investigators. SITC officers analyze pathways, prosecute smugglers, and
provide outreach to industry on regulatory requirements. In addition,
we work closely with several Federal agencies, State Departments of
Agriculture, the Office of the General Counsel, and State and local
police. The fiscal year 2003 Budget and additional funds from the
Homeland Security Supplemental appropriation reflect a commitment to
provide heightened security by upgrading security clearances for all
SITC officers to retrieve high levels of intelligence information and
receive formalized training in this area. SITC must work with other
intelligence groups like the Federal Bureau of Investigation (FBI),
U.S. Customs, and the Office of Homeland Security to collect
information necessary for determining appropriate targets and
interdiction activities to prevent prohibited biological agents from
entering the United States. We conducted two major blitzes on the
Canadian border focusing on vehicle traffic. The SITC program
confiscated over 3,000 pounds of exotic fruits, herbs, and meats at
three western New York crossings during a 3 day blitz.
Cattle Fever Tick.--This program is designed, through the
inspection of cattle and horses, to rapidly identify tick incursions,
eradicate them, and prevent their spread. In addition, the program
prevents the introduction of cattle fever ticks into the United States
from Mexico by using horseback patrols to apprehend stray cattle and
horses and enforce systematic quarantines along the Rio Grande River.
This program, begun in 1906, was the first cooperative Federal-State
eradication effort in the United States. In 1943, we eradicated two
species of the cattle fever tick from the Southwestern United States,
with the exception of a permanent quarantine zone between Texas and
Mexico. Today, the permanent quarantine zone extends over 900 miles
from Del Rio to the Gulf of Mexico and is up to six miles wide. In
fiscal year 2001, during horseback patrols for cattle and horses in the
permanent quarantine zone, APHIS apprehended a total of 144 stray and
smuggled animals from Mexico, 114 of which were infested with cattle
fever ticks.
Stakeholders have proposed enhancements to the APHIS safeguarding
mission, particularly at the borders. To ensure that the Agency is
prepared to meet new challenges and stay ahead of potential problems,
APHIS commissioned thorough evaluations of its plant and animal health
safeguarding programs. After an in-depth review, the National Plant
Board, which recognized APHIS programs as strong, vital and necessary
to the survival and U.S. producers, presented APHIS with its
recommendations for strengthening plant health safeguarding programs in
July 1999. Since then, APHIS has incorporated a number of the Plant
Board's most important recommendations into its operations. These
include establishing the SITC program, securing Congressional approval
of the updated Plant Protection Act, and strengthening risk
assessments. These achievements have significantly strengthened APHIS'
ability to prevent harmful agricultural pests and diseases from
entering the country. In response to other Plant Board recommendations,
APHIS is examining ways of retooling and strengthening its risk
management strategies. These activities, including increased offshore
risk mitigation strategies, improvements in the collection and use of
international pest information, and further strengthening our
scientific and analytical base, would augment inspections at U.S. ports
of entry.
The National Association of State Departments of Agriculture
(NASDA) Research Foundation conducted a similar review of APHIS' animal
health safeguarding programs in 2001. We believe this review will
strengthen animal health programs in much the same way the Plant
Board's review has benefited plant health safeguarding efforts. The
Animal Health Protection Act--similar in scope to the Plant Protection
Act--was recently introduced in Congress. The Act would consolidate and
streamline the more than 20 animal quarantine and related laws that are
now on the books, some of which have not changed since the 1880s. The
Act would enable APHIS to establish a more efficient, effective system
for regulating the import, export, and interstate movement of animals
and animal products. It also would help strengthen APHIS' efforts to
deter people from deliberately bringing in prohibited animals, animal
products, and even animal disease agents. We need these prohibitions
and investigative tools now more than ever before.
Domestic monitoring, surveillance, and emergency response reduces
agricultural production losses and export market disruptions.
The next tier in APHIS' safeguarding system includes monitoring and
rapidly responding to any threats to animal or plant health. The animal
health monitoring and surveillance (AHMS) and the pest detection line
items constitute the Agency's key surveillance efforts. The emergency
management system (EMS) line item helps to quickly respond to animal
disease threats. The Homeland Security Supplemental appropriation will
enable us to jump start proposed activities in the fiscal year 2003
Budget.
AHMS.--The AHMS program covers foreign animal disease
investigations, surveillance for animal disease programs, certification
programs, animal identification, and risk assessments. Collaborative
information sharing and producer confidentiality are cornerstones of
the AHMS program. Through effective partnerships with animal commodity
producer groups--and with State governments, university researchers,
and other Federal agencies--the program met producers' and the U.S.
public's information demands in a cost-effective, collaborative manner.
With increased focus on animal health security in fiscal year 2001,
APHIS increased foreign animal disease (FAD) investigations. In fiscal
year 2001, APHIS conducted 801 investigations, a substantial increase
over fiscal year 2000's total of 385 because of increasing concern over
the FMD outbreaks in Europe. To prevent FAD incursions and the
potential for additional intentional acts that may impact national
security, APHIS thoroughly investigates all suspicious situations. This
includes another FAD, bovine spongiform encephalopathy (BSE). To date,
no case of BSE has ever been detected in the United States. APHIS has
tested more than 13,900 brain samples. The annual number more than
doubled, from 2,303 in fiscal year 2000 to 5,056 in fiscal year 2001.
This is the largest single-year total since surveillance began in 1990.
This enhanced testing helps support and validate the United States'
BSE-free status.
BSE is a transmissible spongiform encephalopathy (TSE). The TSE
family of diseases affects a number of animals, and some also affect
humans. One of those, variant Creutzfeldt-Jakob disease (vCJD) has been
linked to BSE. The Centers for Disease Control and Prevention's ongoing
surveillance program has not detected vCJD to date in the United
States, with the exception of an ill U.K. resident who sought medical
care in the United States. Taking no chances, in March 2001, APHIS
removed and disposed of the two remaining herds of Belgian sheep in
Vermont suspected of having the TSE marker, a sign of potential
disease. APHIS disposed of the first herd in July 2000.
The U.S. Department of Agriculture has conducted several risk
assessments examining the possibility of BSE emerging in the United
States. All the assessments have concluded that the potential risk of
BSE emerging in the United States is low. In November 2001, the Harvard
School of Public Health, Center for Risk Analysis, completed a three-
year study of the risk of introducing BSE into the United States. They
concluded that the U.S. Government's actions have successfully
minimized the risk of BSE in the United States, to the point that even
if a few infected animals were detected, the disease would not become
established. Nevertheless, the adverse economic impact of even a single
case of BSE in the United States would likely be similar to that
experienced in the United Kingdom because of consumer concern and the
trade implications. Because of insufficient technical information about
TSEs, importing countries block many animal products from countries
with BSE. To prevent a similar scenario from occurring in the United
States, the fiscal year 2003 budget includes $7 million in grants to
States for BSE, FMD, and other FAD surveillance. Disease outbreaks in
the UK and other European countries demand that we accelerate our
safeguarding efforts. To continue to keep FADs from entering the U.S.,
we must enhance surveillance and monitoring activities as proposed in
the fiscal year 2003 budget.
Our AHMS program also conducts monitoring and surveillance for
several poultry, equine, and livestock diseases, which complement our
eradication efforts. For example, the National Poultry Improvement Plan
(NPIP), an industry-State-Federal program, continued to protect and
serve the $25 billion poultry industry in fiscal year 2001. The
provisions of the NPIP, developed jointly by industry members, and
State and Federal officials, established standards for evaluating
poultry breeding stock and hatchery products for freedom from hatchery-
disseminated and egg-transmitted diseases. In fiscal year 2001, we
tested 2,756 samples from live-bird markets in the Northeastern United
States for the presence of the avian influenza virus (AIV) and isolated
it in 419 of the samples. We also tested the 2 million horses in fiscal
year 2001 for equine infectious anemia (EIA). Of the horses tested, .03
percent tested positive. EIA is a viral disease that causes fever,
anemia, progressive weakness, and weight loss.
APHIS is actively partnering with the National Johne's Working
Group whose membership includes representation from Federal and State
agencies, Universities, biologics, and livestock industry
organizations. Johne's is a chronic bacterial disease that can have
major economic influence on individual cattle producers and
international cattle markets. At the end of fiscal year 2001, the
Johne's disease program included 1,950 herds that had control plans or
risk assessments filed with States, including 514 enrolled during the
year. Approximately 140 advanced within their program to higher levels
of assurance for test negative status. In fiscal year 2002, Congress
established the Johne's disease program as a separate line item.
As progress continues toward the eventual eradication of
brucellosis from the U.S. domestic livestock, the Agency is placing
more emphasis on surveillance activities to ensure that we find the
last affected herd. In fiscal year 2001, we tested 11.1 million cattle,
300,000 more than in fiscal year 2000. We must maintain adequate
surveillance after eradication to prove to our trading partners that we
are disease free. Similarly, APHIS continued to monitor the incidence
of tuberculosis throughout the United States. Emphasizing national
surveillance, the Agency more than doubled its testing of tuberculosis
suspect tissues submitted by meat inspection personnel from slaughtered
cattle from 1,028 in fiscal year 2000 to 2, 991 in fiscal year 2001.
APHIS identified 71 samples as positive.
Pest detection.--Concerns over the threat of bioterrorism have
further demonstrated the need for a comprehensive national detection
system for safeguarding the country's food production capacity and
natural ecosystems. The Homeland Security Supplemental appropriation
will enable us to jump start proposed activities in the fiscal year
2003 Budget. APHIS will train personnel in key locations throughout the
country and coordinate and oversee early detection surveys in
cooperation with States. APHIS and the States participate in the
Cooperative Agricultural Pest Survey (CAPS) program, which provides the
network for APHIS and the States to target invasive plant pest species
and response activities. This program must increase and enhance the
domestic infrastructure for early detection of weeds, plant diseases,
insects, nematodes, and other invertebrate organisms which can gain
entry into the country or into an area previously free of the pests.
APHIS and the States conduct detection surveys for incipient
infestations of exotic pests that could cause economic damage if they
spread and become established in the United States. CAPS provides an
electronic information exchange through the National Agricultural Pest
Information System (NAPIS) database, web sites and e-mail systems, and
provides strong interagency and interpersonal networks. NAPIS provides
a summary database of pest survey results that are useful in tracking
the spread of pests within the United States, demonstrating their
absence, and planning their control to support U.S. exports. APHIS
makes hundreds of thousands of observations, such as taking grain
samples for Karnal bunt, setting traps for fruit flies, or checking
trees for citrus canker and plum pox. Both positive and negative
results yield valuable and useful information as can be seen with
Khapra beetle. Khapra beetle is one of the world's worst pests of
grain/commodities. Our surveillance verifies that the United States is
free of this pest and thus able to maintain billions of dollars of
exports.
Emergency Management System (EMS).--This program is a joint
Federal-State-industry effort to improve our ability to deal
successfully with animal health emergencies ranging from natural
disasters to introductions of FADs. In addition to unintentional
introductions of FADs, the EMS addresses intentional introductions and
emerging diseases which could pose a threat to trade. With full
readiness to deal with animal health outbreaks, we can mitigate the
damage of outbreaks on the Nation's food supply and economic well-
being. APHIS provided assistance to the UK during its fiscal year 2001
outbreak of FMD by coordinating teams of Federal and State
veterinarians, including 158 veterinarians from APHIS, to travel to the
UK to assist with eradication efforts. In addition to helping an
important ally and trading partner, our veterinarians gained valuable
knowledge and experience.
During fiscal year 2001, the Agency began an emergency management
grant program to assist States and Tribal Nations to meet or exceed the
National Animal Health Emergency Management System State Standards. Of
the 38 grants we awarded, 31 went to States, 6 to Tribal Nations, and 1
to a University. We established State Standards to identify critical
issues in emergency animal health preparedness. APHIS also conducted a
tripartite exercise with Canada and Mexico to develop, practice, and
evaluate a North American emergency response plan for an FMD outbreak.
The exercise focused primarily on communications and the use of
vaccines.
Ongoing eradication and control activities minimize risks to
agriculture production, natural resources, and human health and safety.
The final tier of the APHIS safeguarding system is eradicating and
controlling pests and diseases already established in the U.S. to
minimize the losses they cause, prevent their spread, and reduce trade
restrictions on U.S. exports. Selected programs include the Boll
Weevil, Biological Control, Emerging Plant Pests, Golden Nematode,
Gypsy Moth, Pink Bollworm, Pseudorabies, Scrapie, and Wildlife Services
Operations line items.
Boll Weevil.--The cooperative boll weevil eradication program
(BWEP) has been highly successful in reducing losses. Nationwide, the
fiscal year 2001 program spent approximately $274 million, with 26
percent of that amount provided in Federal cost-share funds. The BWEP
has eradicated boll weevil from 5.9 million acres out of nearly 16
million acres of cotton production since 1983. As a result, APHIS and
program cooperators are very encouraged with the program's progress and
10 million acres are in active eradication. In fiscal year 2001, the
Farm Services Agency issued $94.6 million in low-interest loans to
grower foundations to fund startup costs for new eradication programs
and operating capital for existing programs. After fiscal year 2002,
the need for these loans should begin to decline rapidly.
Biological control.--APHIS provides resources for survey, release,
and establishment activities to control pests of economic significance
using natural enemies. APHIS' National Biological Control Institute
supports cooperative pest management partnerships through its
competitive grant programs. We approved 35 grants to Federal agencies,
State Departments of Agriculture, industry, and universities in fiscal
year 2001 to develop and supply educational materials and services and
to implement the safe and effective use of biological controls in pest
management programs. Just a few of the initiatives included biological
control of salt cedar, spotted and diffuse knapweed, imported fire ant,
and Asian longhorn beetle (ALB). We also continued our offshore
biological control program against the pink hibiscus mealybug and
papaya mealybug.
Emerging Plant Pests.--APHIS addresses a wide range of plant pest
infestations and diseases not covered through ongoing programs. Program
activities include delimiting surveys, control or eradication
treatments, epidemiological studies, laboratory diagnostics, and
parasite releases to combat emerging pests. In fiscal year 2001, we
focused on ALB, Japanese beetle, and pine shoot beetle. Our first
priority is to prevent the spread of these pests to non-infested areas
of the United States. This is an example of where the pest and disease
``borders'' exist within the U.S., borders that do not match State
borders. To further ALB survey, regulatory, and control efforts in New
York and Illinois, APHIS spent $29.9 million in emergency funds. Since
this emergency program began in 1997, APHIS has drastically reduced ALB
populations, thus reducing the risk of spread to uninfested areas.
Golden Nematode (GN).--By conducting a statewide GN survey, this
cooperative program enabled the export and interstate shipment of
potatoes valued at over $90 million without GN-related phytosanitary
restrictions. In fiscal year 2001, APHIS collected 11,323 soil samples
from 6,361 acres in 20 New York State counties and found no new GN
detections.
Gypsy Moth (GM).--APHIS works to prevent the artificial, long
distance movement of the European gypsy moth to uninfested areas of the
United States. We conduct survey activities in cooperation with the
States to detect and delimit isolated populations outside the generally
infested area. During fiscal year 2001, APHIS and cooperators placed
approximately 300,000 pest detection and delimitation traps throughout
the United States. Our efforts limited major outbreaks of over 640
acres to 4 outside the regulated area which met our performance goal.
Pink bollworm (PBW).--We continued the cooperative PBW sterile
release program to protect cotton in the San Joaquin Valley of
California. The program trapped 70 native (non-sterile) moths,
demonstrating a reduced risk to cotton, compared to the 154 trapped in
fiscal year 2000. APHIS produced 800 million sterile moths at the
Phoenix, Arizona, rearing facility for incremental releases in the San
Joaquin Valley. APHIS also coordinated an extensive PBW survey
involving all cotton acreage in New Mexico, Oklahoma, and Texas. Survey
results confirmed the absence of PBW in Oklahoma and most of Texas,
allowing APHIS to further delimit the regulated area.
Pseudorabies.--At the beginning of fiscal year 2001, the United
States had 434 pseudorabies quarantined premises. The program released
all but twelve quarantines at the end of fiscal year 2001. Slaughter
surveillance continues to play an important role in identifying newly
infected herds. Thirty-six States are now participating in Major Packer
Surveillance. In fiscal year 2001, the Secretary authorized the
transfer of an additional $56.1 million in emergency funds to continue
the very successful accelerated program of indemnity, surveillance,
vaccination, compliance, and enforcement. As of January 15, 2002, there
were no herds under quarantine compared to 1,305 at the beginning of
fiscal year 1999 before the accelerated program started. This program
is a good example of how monitoring and cooperation from producers for
depopulation can eliminate animal disease.
Scrapie.--The Voluntary Scrapie Flock Certification Program (VSFCP)
monitors participating flocks and certifies those flocks as free of
scrapie once they have been in continuous compliance with the program
standards for 5 years. As of October 1, 2001, there were 861 flocks
enrolled in the program. This represents a 38 percent increase in
participation during fiscal year 2001. On August 12, 2001, APHIS
published the final rule ``Scrapie in Sheep and Goats; Interstate
Movement Restrictions and Indemnity Program.'' The rule requires
identification of animals for interstate movement, provides indemnity
for destroyed animals, establishes standards for handling infected and
exposed flocks and for approving tests and laboratories, and sets
standards for the State scrapie control program. This rule will
substantially improve APHIS' ability to trace infected and exposed
animals which will make it easier to find and clean up flocks.
Wildlife Services Operations.--APHIS provides Federal leadership in
managing wildlife conflict. The American people consider wildlife as a
valuable public resource even though it can cause damage to
agricultural and industrial resources, pose risks to human health and
safety, and affect other natural resources. Our responsibility is
resolving problems that occur when human activity and wildlife conflict
with one another.
The Agency conducted livestock protection activities for
approximately 10,000 resource owners in fiscal year 2001 in cooperation
with private individuals and State, Federal, and local governments.
Aerial operations are an important part of an integrated approach to
our activities. This activity is critical, not only for livestock and
wildlife protection activities, but also for such operations as wolf
capture and relocation, assisting in search and rescue operations,
wildlife surveys and census gathering, and in the aerial distribution
of oral rabies vaccine units. APHIS continues to implement the safety
recommendations from the 1998 report, Safety Review, Evaluation, and
Recommendations Concerning the USDA, APHIS Wildlife Services Aviation
Program.
In addition to threatening livestock and other agricultural
resources, wildlife can pose dangers to human health. Airports report
approximately 3,600 wildlife strikes to civil aircraft each year and
the U.S. Air Force alone reports more than 2,500 strikes. The requests
for assistance in managing wildlife hazards at airports and military
air bases continue to increase. In fiscal year 2001, our personnel
provided wildlife hazard management assistance to 393 airports. Our
wildlife biologists conducted 118 direct assistance and technical
assistance projects on these airports for the protection of property,
and human safety. Another human health threat is the spread of gray fox
and raccoon rabies. In fiscal year 2001, the Secretary transferred $4.2
million in emergency funds to continue the oral rabies vaccination
program (ORVP) in the eastern United States and Texas.
APHIS continues to cooperate with various State and Federal
agencies to protect reintroduced black-footed ferrets from predators
and to monitor for diseases. We continue to assist State and Federal
wildlife officials in California and Nevada with protecting Sierra
Nevada and Desert bighorn sheep from mountain lion predations. In
fiscal year 2001, APHIS began collaborative efforts with State agencies
in Georgia, Alabama, and Florida for the Wildlife Management and Game
Bird Restoration Program. The major focus of this tri-State, Federal,
and private industry program is to identify how professional predation
management enhances population numbers and productivity for a variety
of ground nesting birds.
Developing and applying scientific methods that benefit
agricultural producers and consumers protects the health of animal and
plant resources and sustains agricultural ecosystems.
APHIS conducts programs to develop new or improved methods for
reducing wildlife/agricultural conflicts, controlling or eradicating
harmful plant and animal pests and diseases, and applying new
technology to assure that the latest genetically engineered viral
vaccines are pure, safe, potent, and effective. We also conduct
laboratory tests to support disease and pest control and/or eradication
programs. These activities are included under the Biotechnology/
Environmental Protection, Veterinary Biologics, Veterinary Diagnostics,
and Wildlife Services Methods Development line items.
Biotechnology/Environmental Protection.--This program regulates the
movement and release of biotechnology products to ensure that they do
not pose a threat to agriculture and the environment. APHIS processes
permits, notifications, and petitions related to transgenic plants
tested in the field and entering the marketplace. In fiscal year 2001,
APHIS increased the number of movement and release notifications and
permits processed to 2,638 from fiscal year 2000 levels of 2,161. We
also processed 8 comprehensive permits which allow numerous requests on
one permit. Since the program's inception in 1987, APHIS has
deregulated 54 genetically engineered crop varieties, with one new crop
deregulated in fiscal year 2001. In December 2001, APHIS had six
pending deregulation applications.
APHIS continues to foster international regulatory harmonization
for genetically-engineered plants and microorganisms. APHIS held an
AgBiotech bilateral meeting with Canada which resulted in a draft
Bilateral Agreement on environmental assessment criteria for transgenic
plants and future areas of cooperation. APHIS continued a joint project
under the Transatlantic Economic Partnership (TEP) aimed at having
regulatory authorities in the European Union and the United States
accepting common data requirements that affect each other's decisions
regarding approval of biotechnology products. Success in the TEP will
facilitate a harmonized approval process for genetically modified
plants between North America and Europe.
Veterinary Biologics.--APHIS strives to prevent the importation,
production, and distribution of impure, ineffective, or impotent
veterinary biological products in the United States. In fiscal year
2001, APHIS issued 113 product licenses. Veterinarians and animal
owners now have 26 new products for the diagnosis, prevention, or
treatment of animal diseases. APHIS provided oversight for 2,481 active
licensed or permitted products for the control of 197 animal diseases.
APHIS approved 17,185 serials of veterinary biologics, while rejecting
27 serials for failing to meet Agency requirements. Our Veterinary
Biologics Program also continued efforts to reduce trade barriers that
limit the sale of veterinary biological products overseas. Program
officials continued technical discussions with representatives of the
European and U.S. biologics industries and with regulatory officials
from the European Union.
Veterinary Diagnostics.--APHIS develops and maintains national and
international laboratory diagnostic support for our animal disease
prevention, detection, control, and eradication programs. We provide
assistance to State and other Federal agencies and laboratories,
educational institutions, and foreign governments in animal disease
diagnosis. We also maintain national and international laboratory
reference assistance and conduct developmental projects for rapidly
advancing technologies.
In fiscal year 2001, our National Veterinary Services Laboratories
(NVSL) in Ames, Iowa, conducted tens of thousands of tests on import/
export samples, dip samples for pesticide concentration in the cattle
tick program, pseudorabies, scrapie, brucellosis, tuberculosis, and BSE
samples. We also processed over 1,300 proficiency exams to certify
laboratories to conduct testing on equine infectious anemia,
bluetongue, Johne's disease, and other diseases and provided training
to State, Federal, private, and foreign participants on domestic and
foreign animal diseases. In the recent anthrax scare, NVSL processed
environmental samples from USDA offices across the U.S., testing for
the bacterium. While all samples tested negative, APHIS devoted
immediate resources to secure the NVSL facility and to conduct anthrax
testing.
Wildlife Services Methods Development.--This program provides
research for APHIS' Wildlife Services program. Our National Wildlife
Research Center (NWRC) provides scientific information for the
development and implementation of effective, practical, and socially-
acceptable methods for wildlife damage management. With this research,
we can protect crops, livestock, natural resources, property, and
public health and safety.
Our NWRC national headquarters is on the Foothills Campus of
Colorado State University in Fort Collins, Colorado with a 25,000
square foot indoor Animal Research Building and a leased 82,000 square
foot Wildlife Science Building on the 43 acre site. During fiscal year
2001, General Services Administration awarded a lease construction
contract for an outdoor animal research complex with projected
completion in 2002. We also completed a design and issued bid documents
for a new support wing addition to the existing indoor Animal Research
Building. Construction of this wing should begin in fiscal year 2002
with occupancy in fiscal year 2003.
NWRC researchers continue to make progress toward developing
integrated strategies for non-lethal control in integrated pest
management programs. These include contraceptives like vaccines for
white-tailed deer and nicarbazin for controlling Canada goose
populations. We continue to develop humane wildlife capture devices and
to coordinate a national trap testing program to improve animal
welfare, meeting our commitment to the European Union.
Inspecting and monitoring animals covered under the Animal Welfare
Act and various laws protecting horses ensures humane care and
treatment.
APHIS has the responsibility, in addition to protecting
agriculture, to ensure that animals receive humane treatment under the
law. This responsibility is carried out by our Animal Welfare and Horse
Protection Programs.
Animal Welfare.--APHIS continues to focus on conducting quality
inspections under the Animal Welfare Act (AWA) at USDA licensed and
registered facilities. The program's risk-based inspection system
concentrates activities on facilities where animal welfare concerns are
the greatest. In fiscal year 2001, APHIS hired nine new animal care
inspectors--bringing the total to 82 after reaching a low of 64 in
fiscal year 1998--boosting inspections by 9.5 percent after a 1.5
percent decrease in fiscal year 2000. We are adding more inspectors in
fiscal year 2002 to continue this trend. The program continues to make
improvements in its computer technology with all field personnel
producing an easy-to-understand inspection report. We have expanded the
use of digital cameras, with field personnel documenting incidents of
noncompliance and, when necessary, immediately transmitting their
photographs to investigators or headquarters staff or both. As part of
the program's e-business improvements, research facilities can now file
their annual report online through the Internet. In fiscal year 2001,
APHIS inspectors continued a series of specialized training courses on
care and handling of elephants, use of animals in research, and basic
training for newly hired inspectors.
Horse Protection.--APHIS also administers the Horse Protection Act
(HPA) of 1970 which prohibits the showing, sale, auction, exhibition,
or transport of sored horses. Inspectors monitor shows and sales for
compliance and oversee an industry self-regulation system, the
Designated Qualified Person (DQP) program which is the primary means of
detecting sored horses. Horse Industry Organizations (HIOs) maintaining
certified DQP programs participate with APHIS in yearly DQP training
seminars and refresher courses. In November 2000, APHIS1 presented to
nine HIOs a draft multi-year operating plan to improve the program. Six
of the nine HIOs elected to follow the multi-year plan. Consequently,
for the other three, we must prosecute violations of the HPA as Federal
cases. At those shows where the HIO agreed to the plan, the respective
HIO may assess penalties for violations. Although there remain a few
minor problems with enforcement using the multi-year plan, APHIS plans
to continue offering it, possibly with minor modifications.
our fiscal year 2003 budget request
The value of American agriculture is enormous. Our bounty is
multiplied when you consider the economic benefits of trading our
agricultural products overseas for other goods and services. Our
agricultural wealth, however, cannot be taken for granted. When people
and commodities move freely across our political and pest and disease
borders, the security of our agricultural products is threatened. Our
only defense, when encouraging free travel and trade, is to safeguard
through inspection and surveillance activities. When an agricultural
pest or disease gets past our free border, we must take aggressive
action to eradicate it. To carry out these activities, we request
$782.2 million, an increase of $120.4 million over the adjusted fiscal
year 2002 base in our salaries and expenses account. In our building
and facilities account, we request $13.2 million, an increase of $6
million over fiscal year 2002.
The challenges facing American farmers and ranchers are increasing
due to economic and trade pressures. To help ease these pressures,
APHIS programs must safeguard producers from foreign pests and diseases
and facilitate and resolve trade barriers and issues. Our first
priority is to address expanding trade and travel which could leave us
vulnerable--both to disease and pest threats, and to unfair trading
practices. We request a $62 million increase to prevent foreign animal
diseases such as FMD or BSE from entering the U.S. Our efforts include:
--Enhanced border crossing and cargo inspections;
--Increased surveillance assistance overseas to define international
disease borders;
--Additional domestic surveillance throughout the U.S. animal
populations for early detection;
--Increased surveillance of cloven hoofed wildlife that may harbor
any diseases;
--Technical assistance to foreign countries;
--Placing emergency managers in States;
--Foreign animal disease testing and ensuring laboratory quality
standards;
--Increased reptile and amphibian inspection for exotic ticks; and
--Risk assessments to respond to international and domestic
responsibilities for regionalization.
To expand agricultural trade, we must be able to prove that we do
not have associated pests or diseases. We request a $25.8 million
increase to prove our pest and disease free status with additional
surveillance, testing, and information technology support. We must also
assure employee safety when using our aircraft. These needs include:
--Enhanced pest detection system to rapidly detect any incursion made
past our borders;
--Harmonization activities and licensing requirements for veterinary
biologics products;
--Implement safety recommendations for our aerial operations program;
and
--Maintain information technology equipment and provide for new
program applications and e-Government initiatives.
Equally important is our need to address the eradication and
suppression of diseases and pests once they have become established in
the U.S. Many of our traditional eradication programs are cooperative
in nature and have a long history of support from industries and other
stakeholders. We must continue ongoing emergency programs which are
currently being funded by transfers from the CCC, and establish a
program to control grasshoppers and Mormon crickets. Our increase
includes $166.5 million to:
--Enhance our chronic wasting disease program to include on-farm
inspections, sample collections, testing, education, and
depopulation;
--Establish a grasshopper/Mormon cricket program to effectively
predict and suppress these pests from western Federal, tribal,
State, and private range lands;
--Create an ongoing plum pox surveillance and control program to
protect stone fruit industries;
--Continue the Medfly program in Mexico and Guatemala to prevent
Medflies from moving northward through Mexico to the U.S.;
--Continue eradication efforts for citrus canker in Florida and ALB
in Illinois and New York;
--Enhance scrapie surveillance, testing, indemnity, and flock clean
up;
--Enhance tuberculosis testing, training, and Mexico eradication
efforts; and
--Continue oral rabies vaccination efforts in Texas and several
eastern and northeastern States.
Our request contains a decrease of $43.4 million in the boll weevil
program where there are fewer acres in active eradication and producers
have access to Federal loans to ensure adequate cash flow. We request a
net increase of $13.6 million in wildlife services operations to expand
work on FMD in wild animals, ensure continued safety of aerial
operations and continue rabies vaccination efforts, while assuming that
cooperators will cover a larger share of the cost of wildlife
management programs.
We request an increase of $6 million in our buildings and
facilities account to maintain our laboratory and inspection stations
and to complete construction of the new animal and plant facility on
the site currently occupied by the Miami Animal Import Center, Miami,
Florida..
Pest and disease eradication programs.--I would like to discuss two
issues related to the USDA/APHIS activities to control infestations.
The first is funding ongoing emergencies and the second is cost sharing
responsibility.
Funding ongoing emergencies.--In recent years the cost of
controlling and eradicating infestations of plant and animal pests and
diseases through transfers from the Commodity Credit Corporation has
increased significantly, from $24 million in fiscal year 1998 to $335
million in fiscal year 2001. In addition, the number of infestations
for which funding was provided and the average cost to combat each
infestation have also grown, to the extent that it is not uncommon to
have to allocate over $50 million to a single disease in one year.
The $335 million of CCC funding provided in fiscal year 2001, which
is equal to 60 percent of the total discretionary appropriation for
salaries and expenses in that year represented a major expenditure of
Federal resources. The Administration continues to be concerned that
the use of CCC ongoing programs, that can last five years or more is
not consistent with the emergency nature of these funds. Therefore, the
Administration has proposed to delete the transfer authority from the
APHIS appropriation and substitute amended authority under the
Agricultural Risk Protection Act of 2001, that would limit the use of
emergency transfers to infestations that were not funded in the
previous fiscal year (unexpected needs). At the same time, the fiscal
year 2003 discretionary budget includes significant increases to fully
fund ongoing eradication programs. These actions will have the
following benefits:
--Requesting Congress to appropriate funding for eradication requests
for ongoing programs.
--Continue to allow the use of CCC for real emergencies.
--Allow for planned, predictable financing of ongoing, long-term
eradication programs.
Cost sharing responsibilities.--As the Federal commitment to
eradicate infestations has increased, we wish to establish flexible
criteria to define the responsibility of the affected partners--the
Federal government, State and local governments, industry, and growers.
Currently, the Federal government often pays over 90 percent of costs,
including indemnities to affected producers. Therefore, the Department
and the Office of Management and Budget will be establishing how
funding responsibility will be allocated, to be published as a
rulemaking for public comment by the end of 2002. When these criteria
are published, they will:
--Allow State and local governments to plan future budget needs;
--Provide for the rational, transparent and predictable allocation of
resources;
--Allow all infestations to be treated in a relatively consistent
way;
--Speed the internal review process.
conclusion
Our safeguarding system consists of four levels of defense: (1)
international activities; (2) border exclusion: (3) domestic
monitoring: and (4) control and eradication. This strategy of
successive lines of defense has been effective in keeping the most
harmful pests and diseases out of the country. This system, however
successful in the past, needs strengthening. With last year's terrorist
actions, the threat of intentional foreign pest or disease introduction
now seems more real than ever. Accordingly, APHIS has an enormous job
to ensure our integrated agricultural safeguarding system can meet the
challenges we face. Our focus centers around a more modern, efficient,
and integrated system that protects American producers from pest and
disease threats at a different kind of border: the area separating pest
and disease affected areas from free ones. These borders may be in
foreign locations, along our U.S. borders, or within the U.S. We are
confident that proving our disease free status will allow our
agricultural products to compete effectively in the global market
place. We commit to effective use of the resources you entrust to us.
We appreciate all of your past support and look forward to even
closer working ties in the future. We are happy to answer any question
you may have.
______
Prepared Statement of A.J. Yates
Mr. Chairman and Members of the Committee, I am pleased to have
this opportunity to represent the Agricultural Marketing Service in
presenting our fiscal year 2003 budget proposal.
mission
AMS activities are an integral component of USDA-wide efforts to
assist the U.S. agricultural industry in marketing their products and
in finding ways to improve their profitability. AMS' mission is to
facilitate the marketing of agricultural products in the domestic and
international marketplace, ensure fair trading practices, and promote a
competitive and efficient marketplace to the benefit of producers,
traders, and consumers of U.S. food and fiber products. We accomplish
this mission through a variety of activities funded from appropriations
and from fees charged for services.
We are responsive to our customers' changing needs. The nature of
our services such as market reporting and grading enables us to
maintain close contact with our customers. To improve our service, AMS
is actively pursuing new ways to provide public electronic access. We
encourage the public to electronically comment on rulemaking. We offer
online market news reports, application for services, filing for
protection under the Perishable Agricultural Commodities Act, and
bidding on Federal commodity purchases.
Furthermore, since most of our user-funded services are voluntary,
we must always remain conscious of cost while being responsive to
customer needs. To carry out our mission, AMS maintains strong
cooperative partnerships with State programs and other Federal
agencies. Our Market News, Shell Egg Surveillance, Pesticide Data,
Microbiological Data, Pesticide Recordkeeping, and Federal Seed
programs depend on support from their State partners to collect and
disseminate information, provide inspections, and otherwise improve the
efficiency of both State and Federal programs by sharing human and
capital resources.
Before I discuss our proposed increases for fiscal year 2003 in
more detail, I would like to briefly describe some of the marketing
issues facing U.S. farmers and a few of AMS' significant
accomplishments during fiscal year 2001, and plans for 2002.
global agricultural marketing
U.S. agriculture is facing continual and rapid changes in the
industry, Federal and State regulations, financial assistance, domestic
and international consumer preferences, and an ever-expanding
dependence on export markets. AMS support of international market
opportunities for U.S. agricultural products will yield enormous
dividends for the farm economy, national and world economies. High
production levels for many U.S. agricultural commodities make it
necessary for U.S. producers to increase their global market share and
develop sustainable export sales. America's consumers also benefit from
a consistent year-round source of agricultural products from our
trading partners.
AMS has been modifying Agency activities to include international
as well as domestic markets so that our programs more fully serve the
needs of U.S. agriculture. For example, our Transportation Services and
Pesticide Data Programs provide information that facilitates
agricultural commodity exports, AMS grading programs offer
certification to export specifications, and AMS laboratory testing
programs allow foreign buyers and government requirements to be met.
In 2002, the Agency received funding for a new Global Market
Expansion activity that delivers additional support to agricultural
producers, growers, and exporters in the international marketing of
U.S. food and fiber products. This activity allows the Agency to
provide its technical expertise in a variety of international forums
where international trading standards are being developed. By working
with international organizations, AMS is able to affect the design of
food quality standards and model inspection protocols so that they are
fair to U.S. shippers and they do not become non-tariff barriers to
U.S. agricultural trade. In addition to serving as a language of
commerce, trade standards help resolve commodity trade disputes with
foreign governments and buyers. U.S. Cotton standards, for example, are
universally used and accepted by the cotton industry and are used in
settling international trading disputes. In addition, all international
seed shipments exported to Europe must be certified using Organization
of Economic Cooperation and Development specifications, or OECD Seed
Schemes. As the U.S. Accreditation Authority to the International Seed
Testing Association, AMS works to develop rules for sampling and
testing of seed in international trade and for accrediting seed testing
laboratories. Recently, AMS developed U.S. Trade Description Standards
for Poultry and is working with the United Nations Economic Commission
for Europe to have these U.S. standards adopted as the international
standard. The U.S. standards were designed to facilitate and enhance
wholesale trading of poultry products in both domestic and
international markets. Agency experts are now working with the turkey
industry to develop similar U.S. Trade Descriptions.
pesticide data program
Our Pesticide Data Program, or PDP, provides information of a
different sort, but still ultimately benefits growers and facilitates
marketing. PDP has been instrumental in providing data that addresses
domestic and international public concerns about the effects of
agricultural pesticides on human health and environmental quality. The
program provides unbiased, statistically valid data on pesticide
residues in food and water. The information PDP provides to the
Environmental Protection Agency--EPA--is vital for conducting realistic
assessments of dietary risk from pesticides on food commodities
available in the marketplace. In addition, PDP data supports the
international marketing of U.S. commodities by assuring foreign
governments and buyers that U.S. agricultural commodities are safe for
consumption.
The program is built on a Federal-State partnership with 10
States--California, Colorado, Florida, Maryland, Michigan, New York,
Ohio, Texas, Washington and Wisconsin. These States collect and test
commodities for pesticide residues. PDP laboratory procedures are
designed to detect, verify, and report low-level pesticide
concentrations using uniform laboratory procedures and an effective
quality assurance program based on EPA Good Laboratory Practices.
Over the past 10 years, the program has tested 51 commodities. The
results from PDP testing provide comparative pesticide residue data
between fresh versus processed commodities, and an in-depth comparison
for selected domestic versus imported commodities.
Newly released data collected in 2000 is based on a total of 10,907
samples of fruit and vegetables, rice, peanut butter, and poultry.
Approximately 80 percent of the tested samples were domestically
produced, 19 percent were imported, and 1 percent were of unknown
origin. Pesticide residues only exceeded the established tolerance
level in two-tenths of 1 percent of the samples. While residues were
detected on 67 percent of the fruit and vegetable, 33 percent of the
rice, 26 percent of the peanut butter, and 3 percent of the poultry
samples tested during 2000, they were significantly below tolerance
levels. Post-harvest applications accounted for over one-third of the
detected residues in fresh and processed fruit and vegetables. EPA has
used PDP data in the re-registration of 43 pesticides--data based on
actual residue levels. Without PDP data, EPA previously used worst case
assumptions that farmers applied pesticides at the maximum approved
levels. In addition, the data are used in determinations regarding
Section 18 Quarantine Exemptions and pre- and post-harvest use
registrations. The information has also been used to examine pesticide
residue issues relating to good agricultural and integrated pest
management practices.
In March 2001 we began testing finished drinking water samples at
11 sites in the States of California and New York. We selected these
sampling sites as a good representation of a variety of population
segments including major urban areas, hydro-geographic regions and land
uses. In January 2002, the program expanded water sampling and testing
to include five sites in Colorado, Kansas and Texas, to provide
monitoring data for areas not covered by EPA drinking water models.
national organic program
AMS' National Organic Certification program will facilitate trading
of organic products by verifying for buyers and consumers, across the
U.S. and internationally, that organic food labeling is accurate and
consistent. The program has established national standards for organic
production and handling, and is now accrediting certification agents
who will conduct annual on-site inspections to verify that organic
products meet these standards. The program's 18-month implementation
period began April 21, 2001, and ends October 21, 2002, when the
official USDA organic seal will be permitted for use on certified
organic fresh and processed products. With a few years of operation,
the program is expected to oversee the certification of approximately
14,000 organic producers and handlers.
The Agricultural Risk Protection Act of 2000 provided funding
intended to defray some of the certification costs for organic
producers. AMS will distribute certification cost-share funding through
agreements with the 15 States targeted for the program. The States will
distribute the funds to organic producers who request reimbursement and
whose production operations are inspected and certified between
December 2000 and October 2002 by an approved certification agent. All
of the payments will be completed by November 2002.
mandatory price reporting system
AMS' Livestock Mandatory Price Reporting addresses concerns about
market concentration in the livestock industry and resulting price
discovery problems in the marketplace. On April 2, 2001, AMS
implemented the Livestock Mandatory Price Reporting, or LMPR, System to
meet the requirements of the Livestock Mandatory Reporting Act. The Act
required USDA to develop a program to provide information on the
marketing of cattle, swine, lamb, boxed beef, lamb carcasses, and boxed
lamb. This is the first regulation that requires the industry to
electronically report proprietary information on daily market
transactions.
LMPR is an ambitious effort to provide livestock market information
on a near real-time basis over the Internet. To manage the data, AMS
developed an automated system capable of processing thousands of pieces
of market information from the livestock industry and generating market
news reports in as little as 1 hour after receipt of the data.
Beginning with the first day of the program, packers have been
successful in submitting data to AMS via the secure Internet
connection. Over 130 different packing plants report transaction data
by lot, several times a day. The system is handling over 90 percent of
the volume reported as slaughtered daily, which equates to 110,000
cattle, 330,000 swine, and 15,000 lambs. In addition, transaction data
includes specifics for various aspects of the lot such as weight and
carcass characteristics. Of the 94 reports developed for mandatory
reporting, 83 are now being released. The system is designed to protect
the confidentiality of packers. No data have been released that
compromise the identity of source packers.
electronic goverment initiatives
To make our services more accessible to our customers, AMS is
moving aggressively to implement several electronic government, or e-
government, initiatives. With the assistance of outside experts, AMS
developed a master technology business plan to guide the Agency in an
intelligent integration of e-government technology. Guided by this
plan, we will establish a business process management system that
accepts electronic information from the public over the Internet and
routes each electronic submission to the appropriate office for
response. Working in conjunction with other USDA agencies, AMS will
pilot the use of an Internet web portal to deliver customized access to
market news reports for public use. We will also add a corporate portal
for AMS decision-makers to allow them to efficiently search and
retrieve information across the Agency. Additionally, our new web
content management system will enable employees to easily move content
to the web and ensure that the web content is current, consistently
presented, and auditable.
We plan to harden security around our information technology
assets. We redesigned the security architecture of the AMS Internet web
site to deny potentially damaging scans and intrusions from
unauthorized public sources. This redesign will expand protections
provided by the existing AMS security program, and furnish our
employees with the necessary web-based security awareness training.
AMS is also providing electronic marketing assistance to the
agricultural industry. We are partnering with the meat and poultry
industry to establish an industry-based, non-profit electronic business
standards forum. The standards produced by this forum will be used to
facilitate the rapid industry-wide adoption of Internet-based systems
for electronically trading meat and poultry products. AMS' support will
ensure broad industry participation and the development and use of fair
standards.
In 2001 AMS revised existing Agency web pages to comply with the
Rehabilitation Act of 1973. Also, we can now post rulemaking actions on
the AMS web site using a consistent format, accept e-mail comments from
the public, or provide the public with on-line web forms to capture
their comments. When appropriate, we can post the comments we receive
on our web site to facilitate public review and to encourage public
participation.
protection of agriculture and the food supply
While we are not requesting additional funding in 2003 for
protection of agriculture and the food supply, AMS is doing its part in
the Department's efforts to guard against potential threats. In
addition to improved cyber-security, AMS has developed strategies to
upgrade the security of agency operations and facilities to ensure the
continuation of our services to the agricultural industry. We are
strengthening physical security at laboratory facilities to improve
protection for Agency employees and the public. Security measures
include entry control, surveillance and emergency power systems. To
ensure continuity of service, AMS established emergency alternate
headquarters locations.
budget proposal
In 2003 we propose to capitalize on the Agency's marketing
expertise and further assist U.S. agricultural producers and traders by
expanding our Global Market Expansion program to make more
international market information available. We are also requesting
funds to improve the infrastructure of our Federal Seed and Pesticide
Data programs. These improvements will ensure that the programs can
deliver the services and information they were established to provide.
For fiscal year 2003 we are requesting program increases of $2.6
million in Marketing Services for the Global Market Expansion, Federal
Seed, and the Pesticide Data programs. These increases are partially
offset by a decrease in one-time Organic Certification funds. We are
also requesting an increase of $1.3 million from permanent
appropriations for Section 32 administrative funding.
global market expansion
We are requesting an additional $1 million for Global Market
Expansion. To remain competitive in export markets, producers must have
access to a centralized, consistent, public source of timely
information on international prices and trade volume. This is
especially critical to the growth and economic stability of smaller and
medium-sized enterprises. The U.S. dairy industry, for example, is
looking for timely market information on Asia and certain Latin
American countries, most notably on high value products such as
specialty cheeses, ice cream and frozen desserts. The U.S. poultry
industry is seeking to expand its market opportunities beyond Asia and
Mexico. AMS' Market News system will provide the information they need
by significantly increasing the international trading volume and price
information we gather, analyze and report.
The pending Free Trade Area of the Americas agreement will open
significant markets in Central and South America to U.S. trade, and AMS
will be ideally situated to provide timely market information from
across the Americas to the benefit of U.S. interests. A major part of
the AMS proposal to expand international market reporting is focused on
the development of stronger relationships with market information
agencies in key competitor countries. AMS has established a strategic
alignment with the Market Information Organization of the Americas
network, whose primary goal is facilitating the consistent exchange of
current market information between the countries of the Americas.
Market reporters based in Washington, D.C., will develop new
reports, expand the information provided in current reports to meet
industry requests, and offer increased technical assistance programs.
federal seed
We are requesting an increase of $1.1 million for the Federal Seed
program so that we can implement basic infrastructure improvements that
will allow AMS to continue to support and protect market
competitiveness in the seed industry and for all U.S. producers. The
program is also vital to international sales of U.S. seed.
The International Seed Testing Association cited specific critical
deficiencies in its recent program accreditation audit of the AMS seed
laboratory. If we fail to address these deficiencies, we risk losing
our international accreditation and consequently our ability to
facilitate international seed sales. The Association's specific
recommendations include the replacement of outdated seed testing
equipment with newer, more reliable and more efficient models. The
laboratory equipment currently used for testing seed samples to verify
germination is over 20 years old and constantly in need of repair.
To effectively protect seed buyers from mislabeled seed, AMS--
Federal Seed program must also upgrade its computer equipment and
database, and increase staffing to expand seed inspection. The
program's database, developed in the 1980's, is desperately in need of
an upgrade. AMS uses its seed database to identify and track seed
samples through the testing process, generate test reports, track
Federal Seed Act investigations, and generate investigative reports.
To adequately protect buyers of seed shipped from States without
inspection programs, AMS must increase its staff of seed specialists
and botanists to collect and test seed from States without inspection
programs. Budget reductions in many States have virtually eliminated
their State seed inspection programs. Currently, an estimated 15
percent of the seed sold in States without active seed control programs
is mislabeled. The higher level of mislabeled seed will surely continue
to increase without an effective monitoring program.
pesticide data program
We are also requesting an increase for infrastructure improvements
to the Pesticide Data Program. Increased funding of $500,000 will allow
the program to monitor changes in residue profiles required by the Food
Quality Protection Act of 1996, and to add data on new commodities and
residues. For example, the program must develop data analysis methods
for organophosphate replacements. Many of these pesticides are used
extensively in the European Union and Canada and are likely to be found
in crops exported to the United States. Approximately 70 percent of the
increase requested will be used to offset rising operational costs at
the State level. Funds will also be used to complete International
Standards Organization accreditation for PDP laboratories. Overall,
these improvements will enable PDP to deliver approximately 15 percent
more pesticide residue data, covering additional children's foods and
other commodities with significant dietary consumption.
commodity purchase services
We are requesting increased funding from Section 32 permanent
appropriations to improve administration of commodity purchase
activities. An increase of $306,000 will enable AMS to better verify
that the commodities purchased are all domestically produced. We will
also work with the industry to make the procurement system more
efficient.
AMS purchases approximately 683 million pounds of fruits and
vegetables per year for domestic food assistance programs at a cost of
about $340 million. The purchasing contracts for those commodities
require that all of the food products meet the published specifications
and that they originate from produce 100 percent grown, processed and
packaged in the United States. To ensure seller compliance with the
domestic origin requirement, we will increase our domestic review
activities. These domestic reviews involve the collection of additional
data to identify, track, and report on commodities purchased under
Federal procurement contracts. We will also conduct weekly product
reviews, provide the findings to the purchaser and bidder, and maintain
a database of these findings for future reference.
marketing agreements and orders
We request an additional $600,000 for Marketing Agreements and
Orders administration to improve oversight and program review
activities. AMS marketing agreement and order programs play a critical
role in helping to stabilize market conditions for more than 60,000
producers, with crops valued at more than $5 billion annually. AMS
program resources, faced with increases in regulatory and policy
requirements, are stretched to their limit in processing informal and
formal rulemaking recommendations in a timely manner, monitoring
marketing order and Section 8e imported commodity compliance, and
ensuring effective program oversight. Consequently, the program has
been unable to respond quickly to recent requests from industry for new
marketing orders and amendments. Additional funding will allow the
program to improve its efficiency and better serve the industry in
establishing new programs and processing amendments to existing
programs.
budget request summary
That concludes our budget presentation for fiscal year 2003. By
fund, our total budget request includes $77.7 million for Marketing
Services, a net increase of $3.1 million. In addition to the program
increases I have outlined, our request includes a decrease in one-time
funding for Organic Certification of $639,000, an increase for pay
costs of $1.1 million, and adjustments for employee pensions and
annuitant health benefits and the Federal Employees' Compensation Act.
We are requesting the current funding level of $1.3 million for
Federal-State Marketing Improvement Program grants under Payments to
States. Our request for $26.2 million in Section 32 Administrative
funds includes a program increase of $900 thousand and an increase for
pay costs of $400 thousand, for a total increase of $1.3 million. This
budget request allows AMS to build on its strengths to assist the
agricultural industry by facilitating domestic and international
marketing and provides for infrastructure improvements necessary to
ensure effective delivery of services to our customers.
Thank you for this opportunity to present our budget proposal.
______
Prepared Statement of David R. Shipman
Mr. Chairman and members of the Committee, I am pleased to
highlight the accomplishments of the Grain Inspection, Packers and
Stockyards Administration (GIPSA), and to submit our fiscal year 2003
budget proposal.
GIPSA is part of USDA's Marketing and Regulatory Programs, which
works to ensure a productive and competitive global marketplace for
U.S. agricultural products. Our mission is to facilitate the marketing
of livestock, poultry, meat, cereals, oilseeds, and related
agricultural products, and to promote fair and competitive trading
practices for the overall benefit of consumers and American
agriculture.
GIPSA has both regulatory and service roles. Our Packers and
Stockyards Programs (P&SP) promotes a fair, open, and competitive
marketing environment for the livestock, meat, and poultry industries.
The Agency's Federal Grain Inspection Service (FGIS) provides the U.S.
grain market with Federal quality standards, a uniform system for
applying them, and impartial, accurate grain quality measurements that
promote an equitable and efficient U.S. grain marketing system.
Overall, GIPSA helps promote and ensure fair and competitive marketing
systems for all involved in the merchandising of livestock, meat,
poultry, and grain and related products.
organization
GIPSA is headquartered in Washington, DC. Our P&SP, which
administers the Packers and Stockyards Act of 1921, as amended (P&S
Act), currently has 166 employees at headquarters and in three regional
offices. The Atlanta Regional Office is primarily responsible for
enforcement issues relating to the poultry industry; the Denver office
for enforcement issues related to the cattle and sheep industries; and
the Des Moines office for enforcement issues related to the hog
industry. Legal specialists, economic, financial, marketing, and
weighing experts from the various locations work together to address
issues, and to monitor emerging technology, evolving industry and
market structural changes, and other issues affecting the livestock,
meatpacking, and poultry industries the Agency regulates.
FGIS personnel work in a unique public-private partnership with
over 2,000 State and private inspectors to provide high-quality
inspection and weighing services on a user-fee basis across the Nation.
Federal inspectors service 38 export elevators in Georgia, Illinois,
Indiana, Louisiana, Maryland, New York, Ohio, Oregon, and Texas. Eight
delegated State departments of agriculture provide service at an
additional 19 export elevators in Alabama, California, Minnesota,
Mississippi, South Carolina, Virginia, Washington, and Wisconsin. In
Canada, the Canadian Grain Commission provides official service on U.S.
grain transported through Canadian ports under a cooperative agreement
at seven locations, with GIPSA oversight. Fifty-nine (59) designated
private agencies serve the domestic market under GIPSA supervision. In
fiscal year 2001, this unique mix of Federal, State, and private
inspection agencies provided over 2 million inspections on nearly 235
million metric tons of grains and oilseeds; weighed over 100 million
metric tons of grain; and issued more than 89,000 official weight
certificates.
Our Technical Center in Kansas City, Missouri, is GIPSA's central
laboratory for technical leadership and support for the official grain
inspection system and U.S. grain industry, and home of the Agency's
Biotechnology Reference Laboratory.
gipsa's packers and stockyards programs
GIPSA's Packers and Stockyards Programs (P&SP) administers the P&S
Act to promote fair and open competition, fair trade practices, and
financial protection in the livestock, meat packing, meat marketing,
and poultry industries. The objective of the P&S Act is to protect
producers, growers, competitors, and consumers against unfair, unjustly
discriminatory, or deceptive practices that might be carried out by
those subject to the P&S Act. To meet this objective, GIPSA seeks to
deter individuals and firms subject to the P&S Act from engaging in
anti-competitive behavior, engaging in unfair, deceptive, or unjustly
discriminatory trade practices, and failing to pay livestock producers
and poultry growers; and to initiate appropriate corrective action when
there is evidence of anti-competitive, trade, payment or financial
practices that violate the P&S Act.
The livestock, meat, and poultry industries are important to
American agriculture and the Nation's economy. With only 166 employees,
GIPSA regulates these industries, estimated by the Department of
Commerce in fiscal year 2001 to have an annual wholesale value of $125
billion. At the close of fiscal year 2001 there were 6,241 market
agencies and dealers, and 2,050 packer buyers registered with GIPSA. In
addition, 1,525 facilities providing stockyard services, an estimated
6,000 slaughtering and processing packers, meat distributors, brokers
and dealers, and 205 poultry firms are subject to the P&S Act.
Last year, GIPSA conducted over 1,600 investigations. Most
violations of the P&S Act were corrected voluntarily, with many
resulting in livestock and poultry producers receiving additional funds
for the sale of their products. During fiscal year 2001, 15
administrative or justice complaints were issued to bring subject firms
into compliance with the P&S Act.
GIPSA continues to provide payment protection to livestock
producers. Financial investigations last year resulted in $6.3 million
being restored to custodial accounts established and maintained for the
benefit of livestock sellers. This is nearly triple the $2.7 million
restored in fiscal year 1999, and $400,000 more than the $5.9 million
restored in fiscal year 2000. Livestock sellers recovered over $844,000
under the P&S Act's packer trust provisions. During fiscal year 2001,
47 insolvent dealers and market agencies corrected or reduced their
insolvencies by $2.9 million; insolvent packers corrected or reduced
their insolvencies by $1.9 million.
To ensure that producers and growers are aware of the protections
the P&S Act provides, GIPSA has increased its outreach activities to
better educate the industry about the P&S Act and GIPSA's regulatory
role in the market. In fiscal year 2001, GIPSA continued a series of
poultry ``town hall'' meetings that it hosted for poultry growers,
integrators, and affiliated industries. The ``town hall'' meetings
prompted multiple requests for additional presentations from growers,
integrators, and industry organizations about GIPSA's authority in the
poultry industry, which were honored as GIPSA personnel had the time
and resources to do so. GIPSA also conducted 23 orientation sessions
for new auction market owners and managers to educate them about their
fiduciary and other responsibilities under the P&S Act. These visits in
the early stages of a market's operations also protect livestock
producers who rely on the market to be a competitive, fair, and
financially sound marketplace. Further, GIPSA personnel regularly met
with industry associations at the local, State, and national levels.
GIPSA participated in these meetings to remain abreast of problems and
concerns in the livestock, meat, and poultry industries, and to better
understand the marketing options and constraints these industries face.
On the front lines, GIPSA's resident agents, situated at 28 locations
across the Nation, maintain open communications with State officials to
discuss areas of overlapping jurisdiction. GIPSA recognizes that it is
essential to stay in touch with growers, producers, and Federal and
State representatives to understand, stay abreast of, and anticipate
issues confronting the industries it regulates. GIPSA's outreach
efforts have fostered a broader base of understanding with growers and
producers. We will continue and expand this effort.
Our regulatory responsibilities are the heart of our mission to
enforce the P&S Act. To this end, GIPSA closely monitors practices that
may impede the free trade of livestock, meat, and poultry.
Investigating complaints alleging anti-competitive, unjustly
discriminatory, or unfair practices in the livestock, meat, and poultry
industries remains a top priority. GIPSA continues to initiate
appropriate corrective action if we discover evidence of these
practices.
GIPSA's Rapid Response Teams remain a powerful tool to address
urgent industry issues and to immediately notify the public about a
firm's fiduciary or financial problems. Last year, 94 GIPSA
investigators were deployed soon after being notified of a crisis to
investigate 51 potentially serious situations across the Nation. During
fiscal year 2001, these rapid response investigations contributed to
returning $6.1 million to livestock producers and poultry growers.
The Agency also provides a hotline (1-800-998-3447) by which
constituents may anonymously voice their concerns. Last year GIPSA
responded to and investigated issues raised by 124 callers. These calls
were in addition to calls received in our regional offices.
GIPSA is also strengthening investigations and assessments of
competitive implications of structural change in the livestock,
meatpacking, and poultry industries. Throughout fiscal year 2001, GIPSA
incorporated economic, statistical, and legal expertise into
investigations to increase the efficiency and effectiveness of our
investigations of anti-competitive and unfair practices, and our
enforcement of the P&S Act. Increased cross-utilization of our
economists, legal specialists, auditors, marketing specialists, and
industrial specialists from headquarters and field locations has
brought targeted investigative and analytical skills to specific
investigations. GIPSA also pursued cooperative agreements with
qualified researchers and research institutions that contribute
valuable information to GIPSA's economic understanding of the
livestock, meatpacking, and poultry industries.
In addition to our normal regulatory duties, GIPSA has fulfilled
several Congressional mandates in fiscal year 2001 and continues work
on others: Captive Supply Study, annual Assessment the Cattle and Hog
Industries, implementing the recommendations in the GAO Report and the
Swine Contract Library.
House Report No. 106-948 directed GIPSA to complete a comprehensive
study of the captive supply issue. USDA released ``Captive Supply of
Cattle and GIPSA's Reporting of Captive Supply'' on January 18, 2002.
The report clarifies GIPSA's definition of the term ``captive supply,''
and compares GIPSA's captive supply statistics to those published by
other organizations. GIPSA found that differences in captive supply
statistics reported by various organizations result from conflicting
definitions of captive supply and variations in the geographical bases
of the data collection. The report also compares 1999 procurement
transactions data of the top four beef packers to summary captive
supply data the packers submitted to GIPSA. GIPSA found that captive
supplies accounted for 32.3 percent of the firms' total slaughter
rather than 25.2 percent, as reported in the packers' annual reports to
GIPSA. The data discrepancies are attributed to misunderstandings about
captive supply definitions and computational errors. GIPSA will take
several actions in response to the study findings. GIPSA will (1)
publish our definition of captive supply in the Federal Register
(livestock that is owned or fed by a packer more than 14 days prior to
slaughter; livestock that is procured by a packer through a contract or
marketing agreement that has been in place for more than 14 days prior
to slaughter; and livestock that is otherwise committed to a packer
more than 14 days prior to slaughter); (2) clarify the reporting
definitions on the Packer Annual Report form; (3) audit future Packer
Annual Reports; and (4) report captive supply information in more
detail.
Amendments to the Packers and Stockyards Act in the Grain Standards
and Warehouse Improvement Act of 2000 (Public Law 106-472) require
GIPSA to submit an assessment of the cattle and hog industries to
Congress each year. GIPSA's ``Assessment of the Cattle and Hog
Industries, Calendar Year 2000'' (issued in June 2001) describes the
general economic state of the cattle and hog industries during 2000,
changing business practices in those industries, and activities that
raise concerns under the P&S Act. The assessment found that technology,
consumer demands, and competitive forces are driving substantial
changes in the structure and behavior of firms in the livestock and
meatpacking industries. Many of the changes may benefit the industries
involved, consumers, and the Nation as a whole. Some may foster
unlawful anti-competitive behavior or unfair trade practices. GIPSA
will address the concerns discussed in the report by monitoring changes
in industry structure and behavior, and examining practices that may be
unlawful under the P&S Act. GIPSA also may formally investigate,
undertake regulatory initiatives, or further research and analyze the
economic, competitive, and trade practice implications of the
structural and behavioral changes. GIPSA is currently finalizing its
second annual assessment report.
Another mandate began with the General Accounting Office's (GAO)
Report to Congress, issued in September 2000, ``Actions Needed to
Improve Investigations of Competitive Practices.'' The Grain Standards
and Warehouse Improvement Act of 2000 (Public Law 106-472) required
GIPSA to implement the GAO's recommendations and report on actions
taken to improve investigations of competitive practices by November 9,
2001. In accordance with GAO's recommendations, and based on required
input from the Department of Justice (DOJ) and the Federal Trade
Commission (FTC), in fiscal year 2001, the Agency implemented
investigation planning, development, implementation, and review
processes to ensure appropriate investigation planning and oversight
within GIPSA and with the USDA Office of the General Counsel (OGC).
Also during the fiscal year, OGC added more attorneys to address GIPSA
matters; Agency economists and legal specialists received additional
specialized training; and GIPSA issued its first annual assessment of
the cattle and hog industries to report on changes in those industries.
The report to Congress has been delayed, in large part, by GIPSA's
increased workload resulting from implementation of GAO
recommendations, and the Agency's report on captive supplies in the
cattle industry, which was completed and submitted to Congress on
January 18, 2002.
The Swine Contract Library was mandated in the Agricultural Rural
Development, Food and Drug Administration, and Related Agencies
Appropriations Act of 2000 (Public Law 106-78). It amended the P&S Act
to require GIPSA to establish and maintain a library of contract
provisions offered by packers to swine producers for the purchase of
swine and to make these provisions available to the public. Publication
of the final rule is contingent on development and deployment of a Web-
based system capable of receiving contracts, extracting unique contract
provisions, and posting summary information in a manner that complies
with the confidentiality requirements of the P&S Act and is useful to
market participants. This is a sizeable and complex undertaking. GIPSA
has been appropriated approximately $200,000 annually to develop and
operate the Swine Contract Library. Additional funding may be necessary
in the future. GIPSA is exploring ways to expedite the development and
implementation of the electronic process and final rule. Once complete,
the Web-based library will offer summarized information on contract
terms and monthly reports on the number of swine under contract.
GIPSA will continue to provide payment protection to livestock and
poultry producers; increase the number of competition and trade
practice investigations of potential violations of the P&S Act; pursue
voluntary corrections of violations of the P&S Act which will likely
result in livestock and poultry producers receiving additional funds;
continue outreach efforts to educate our constituencies about the
benefits and protections offered to livestock and poultry producers
under the P&S Act; monitor and respond rapidly to complaints of anti-
competitive, unjustly discriminatory, or unfair behavior in the
livestock, meat and poultry industries that violates the P&S Act;
pursue cooperative agreements that contribute valuable information to
GIPSA's economic understanding of the regulated industries; address
violations of the P&S Act through formal corrective actions; respond
thoroughly and responsibly to all governmental inquiries and
Congressional mandates; and pursue rulemaking that enhances GIPSA's
ability to investigate and litigate violations of the P&S Act.
gipsa's federal grain inspection service
GIPSA's grain inspection program facilitates the marketing of U.S.
grain and related commodities under the authority of the U.S. Grain
Standards Act (USGSA) and the Agricultural Marketing Act of 1946 (AMA).
GIPSA provides the market with descriptions (grades) and testing
methodologies to measure the quality and quantity of grain, rice,
edible beans, and related commodities; provides an array of inspection
and weighing services, on a fee basis, through a unique partnership of
Federal, State, and private laboratories; and ensures that the
standards are applied and the weights recorded fairly and accurately.
As an impartial, third-party in the market, we advance the orderly and
efficient marketing and effective distribution of U.S. grain and other
assigned commodities from the Nation's farms to domestic and
international buyers.
For an average cost of 26 cents per metric ton of grain in fiscal
year 2001, exporters received USDA export certificates from GIPSA that
they used to market over $20 billion worth of cereals and oilseeds.
Likewise, here at home, buyers and handlers requested over 1.9 million
domestic inspections that facilitated the trading of more than 128
million metric tons of cereals and oilseeds.
Traditionally, the official grain inspection system has operated in
a supply driven food chain. Grain was produced, delivered to the
elevator, and marketed as a commodity with buyers relying on the grades
and standards to describe the general quality of a product.
The emergence of value-enhanced grains and oilseeds, development of
niche markets for non-biotech commodities, and establishment of new
regulatory requirements by U.S. trading partners has created a need for
greater product differentiation in the marketplace. To meet this need,
market participants are relying, in part, on various quality assurance
mechanisms, such as process verification, and testing for accurate
information about products in the marketing chain and to comply with
the new market demands. The efficiency of the marketing system will,
therefore, depend on the availability of accurate and reliable quality
assurance and testing processes.
To ascertain USDA's place in today's evolving marketplace, during
fiscal year 2001, GIPSA published an advance notice of proposed
rulemaking seeking public comment on the Department's role in
facilitating the marketing of grains, oilseeds, fruits, vegetables, and
nuts. GIPSA coordinated the Department's effort to explore how it can
continue to foster the marketing of agricultural products in an
evolving marketplace characterized by biotech and non-biotech crops, as
well as by an increasing number of crops with specific end-use quality
attributes. Two themes emerged in comments pertaining to USDA's role in
market facilitation: (1) USDA should continue and expand existing
programs to standardize testing methodology, and (2) USDA may have a
role to play in developing process verification programs for grains,
oilseeds, and related agricultural products.
To address the public's comments, and to meet the greater need of
providing all players in the market with the information they need to
effectively market all U.S. grain, whether derived conventionally or
through biotechnology, in fiscal year 2001, GIPSA opened a
biotechnology reference laboratory.
In fiscal year 2002, building on its previous efforts, GIPSA began
expanding its Rapid Test Performance Evaluation Program to assess the
performance of rapid tests developed to detect commercially produced
biotechnology events in grains and oilseeds, and confirm that the tests
operate in accordance with manufacturers' claims. Initially, this
program was used to evaluate rapid tests developed to detect the
presence of the Cry9C protein produced in StarLinkTM corn.
Based on findings of a fiscal year 2001 study which found that U.S.
and European private and government laboratories' capabilities to
analyze for biotechnology events varied significantly, on February 7,
2002, GIPSA began offering a Proficiency Program for organizations that
test for biotechnology-derived grains and oilseeds. The program will
enable organizations to enhance testing reliability and help the grain
industry determine the proficiency of commercial labs that provide
testing services.
GIPSA also is exploring the feasibility of providing a voluntary
Process Verification Program to facilitate the marketing of grains,
oilseeds, and related agricultural commodities. The market is adopting
a variety of new marketing mechanisms, such as process verification, to
augment traditional marketing approaches, in response to changing
consumer demands. GIPSA plans to assess how the Agency can add value
through process verification for these commodities by augmenting
existing market mechanisms.
GIPSA also is continuing to collaborate with the National Institute
of Standards and Technology (NIST), and standards organizations in the
United States and other countries to establish internationally
recognized standard reference materials and standard methodologies for
agricultural biotechnology events.
Our efforts to respond to the market's needs for services to
facilitate the marketing of biotech and non-biotech grains have been
substantial. But a great deal of activity has been underway in other
areas as well.
GIPSA continuously evaluates and implements new technology in the
official inspection system to respond to market needs. Further, the
performance of existing official inspection methods is routinely
evaluated and improvements are developed as needed. Official inspection
methods (including calibration equations) are made available to
commercial inspection users to enhance consistency between official and
commercial grain inspection results. We are in the process of
implementing several types of new technology for grain inspection:
--Digital imaging was piloted in fiscal year 2000 to certify the
percentage of broken kernels in long-grain milled, long-grain
parboiled, and short-grain milled rice. GIPSA is refining a
quality control system for this new technology and plans to
expand its use for official rice inspection. We also are using
digital imaging to measure the vitreousness of Hard Red Spring
and Durum wheats. GIPSA, in a joint program with the Canadian
Grain Commission (CGC), also plans to investigate the use of
flatbed scanner technology for imaging and differentiating
white and red wheat kernels. This new technology could greatly
improve the accuracy, consistency, and objectivity of
inspection and grading.
--GIPSA's work on mycotoxin analysis continues to expand. We have
established a zearalenone reference method and began evaluating
zearalenone test kits for use in the official inspection
system.
--Working with the North American Export Grain Association (NAEGA),
GIPSA developed a prototype automated grain inspection system
that will speed inspections, reduce costs to the industry, and
enhance GIPSA's efficiency. We are operating the prototype
system throughout fiscal year 2002 to gather performance data
and identify required enhancements.
--GIPSA is working with researchers from academia and the USDA
Agricultural Research Service to define wheat protein quality
and to develop practical, rapid methods for assessing wheat
protein quality in marketing channels.
--We continue to cooperate with Canadian, Australian, and several
European entities to develop and test a ``global'' near-
infrared transmission (NIRT) calibration to measure the
quantity of protein in wheat and barley. The calibration, based
on tests of nearly 40,000 samples of wheat and barley, uses
artificial neural network technology to achieve excellent
accuracy for very diverse grain types.
--GIPSA has received ISO 9002:1994 registration of its moisture
reference, protein reference, oil extraction reference,
mycotoxin reference, mycotoxin test kit evaluation, and
pesticide data program laboratories. In addition, the pesticide
analysis service has recently received its recommendation for
registration. We are currently updating our program to the ISO
9001:2000 standard. Two additional programs, the Pesticide Data
Program and the Biotechnology Branch, are currently working
toward ISO 17025:1999 accreditation.
GIPSA also is keeping pace with the grain industry's move from
paper to e-commerce to streamline, automate, and improve business
transactions. Recent advances in information technology have provided
the U.S. grain marketing system with tools to provide instantaneous
exchange of electronic documents and data among all parties in the
trade chain. GIPSA is keeping pace with our customers' migration toward
this marketing process. We are taking part in pilot tests and
demonstrations with electronic commerce vendors; developing a system to
send inspection information generated at multiple locations directly to
a customer; preparing to submit electronic inspection information into
a vendor's document handling system at the request of applicants; and
pilot testing a computer generated inspection certificate for export
cargoes. By harnessing the latest hardware, software, and available
technology, we will be prepared to enter and participate in the
electronic commerce arena.
All of our efforts to improve and streamline our programs and
services are paying off for our customers, both in terms of their
bottom lines and in greater customer satisfaction. GIPSA's service
delivery costs (adjusted for inflation), decreased from $0.27 per
metric ton in fiscal year 1994 to $0.26 per metric ton in fiscal year
2001.
We are an integral part of America's grain handling
infrastructure--a superior infrastructure of storage facilities, rail
lines, and waterways that makes American agriculture preeminently
successful in the global marketplace. We recognize our role and will
continue to provide all members of the U.S. grain handling system with
the innovative, high-quality official inspection services they need to
efficiently and effectively meet the challenges of a changing marketing
environment.
Our outreach and educational efforts to our international customers
are maintaining strong open markets for America's grains and oilseeds.
In fiscal year 2001, GIPSA began producing multimedia tools to educate
the domestic and international grain industries. GIPSA now offers CDs
on wheat, corn, and soybean grading; a grain grading overview; rough
rice milling yield, and testing corn for StarLinkTM to the
public. In fiscal year 2001, GIPSA distributed over 2,000 new CDs and
5,000 revised brochures to official inspection offices, grain handling
and processing firms, producers, foreign grain buyers, government
agencies, and educational institutions, and posted the brochures in
electronic format on the Internet. We are now producing CDs on grain
sampling methods and sample variability, container stowage exams, and
rail sampling safety.
One indicator of the success of our outreach and educational
initiatives is the number of foreign complaints lodged with GIPSA
regarding the quality or quantity of U.S. grain exports. In fiscal year
2001, GIPSA received 15 quality and quantity complaints from importers
on grains inspected under the U.S. Grain Standards Act, involving
494,267 metric tons, or about 0.5 percent by weight, of the total
amount of grain exported during the year.
Exporters, importers, and end users of U.S. grains and oilseeds, as
well as other USDA agencies, USDA cooperator organizations, and other
governments, frequently ask for GIPSA expertise overseas. In fiscal
year 2001, we responded to 10 requests for technical assistance
overseas. We helped Zambia, Kenya, Tanzania, and Uganda develop grain
standards and inspection methods; conducted a weight review on a U.S.
wheat shipment to the Philippines; met several times with Japanese
officials to address their concerns over StarLink
corn; participated in several international biotech conferences; and
assisted USDA cooperators with rice grading seminars in Nicaragua,
Costa Rica, and Guatemala, and grain quality seminars in several other
countries.
At home, GIPSA regularly holds seminars and meetings to educate
foreign visitors and customers about the quality and value of U.S.
grain exports. In fiscal year 2001, GIPSA representatives met in the
United States with 75 teams from 32 countries, to provide information,
technical guidance, and educational seminars. These international
outreach efforts help promote greater harmony between U.S. and
international standards, and foster a better understanding of the U.S.
grain marketing system, the official U.S. grain standards, the national
inspection system. This, in turn, reduces the risk of new barriers in
today's open and freer global marketplace, enhances purchasers'
confidence in U.S. grain, and facilitates the export of U.S.
agricultural products.
The grain program will continue to work to ensure our relevance and
value to American agriculture. We are reaffirming our commitment to
facilitating the marketing of U.S. grain by responding to our
customers' needs and providing the highest quality grain inspection and
weighing services to all whom we serve.
fiscal year 2003 budget request
To fund these important initiatives and to enable GIPSA to remain a
valuable part of American agriculture, GIPSA's budget request for
fiscal year 2003 is $42.9 million under current law for salaries and
expenses and $42.5 million for our Inspection and Weighing Services.
There is also an additional increase of $733,000 for pay costs
contained in the budget. GIPSA also is submitting legislation to
collect $28.8 million in new user fees in fiscal year 2003, $5.6 for
the grain program and $23.3 million for PSP.
The President's fiscal year 2003 budget proposes a current law
request for grain inspection of $19.6 million. There are proposed
increases of $850,000 to build unified data warehouse; and $450,000 for
detection of new added value crops and biotechnology traits.
The $850,000 increase for a data warehouse would allow GIPSA to
harness advances in information technology to integrate existing
disparate database information systems to enhance the efficiency of our
oversight and management of the official grain inspection system.
The $450,000 increase will help ensure that the accelerated
introduction of new added value crops, whether derived through modern
biotechnology or conventional breeding, does not outpace GIPSA's
ability to evaluate testing methods and accredit laboratories. The
ability to distinguish specific crops will be driven by added market
value, customer demands, and the regulatory requirements of our trading
partners. The proliferation of regulatory requirements around the world
concerning biotechnology-derived crops, including the eventual
implementation of the international Biosafety Protocol (estimated for
late 2002), will place further demands on the grain industry to
distinguish certain crops. The market demand to segregate higher valued
crops will also place a greater need on being able to identify specific
varieties or qualities of grain. The increased funds will enable GIPSA
to expand its newly established biotechnology program to keep pace with
the rapid introduction of new products. This will involve expanding the
ability to validate rapid protein-based tests, keep pace with the rapid
development of DNA-based methods, and develop reference methods for
traditional end-use traits such as fatty acid profiles, amino acid
profiles, phytate content, and other nutritional qualities.
The President's fiscal year 2003 budget proposes a current law
request for Packers and Stockyards Program of $23.3 million. There are
proposed increases of $1,000,000 to improve enforcement of the anti-
competitive and other provision of the Packers and Stockyards Act;
$1,200,000 for the development of Web applications for PSP; $1,000,000
to monitor the livestock and meatpacking industries' use of electronic
carcass evaluation technologies.
The $1,000,000 increase for anti-competitive enforcement stems from
a General Accounting Office recommendation that attorneys be more
actively involved in the investigative process for anti-competitive
practice investigations. Congress later mandated that GIPSA fully
implement the GAO's recommendations. This staffing increase will allow
GIPSA to fully integrate attorneys to the extent recommended by the GAO
into the more complex anti-competitive, financial, and trade practice
investigations.
The increase of $1,200,000 will allow GIPSA to implement
eGovernment initiatives within the Packers and Stockyards Program.
Currently, GIPSA has no web programmers or web designers that would
allow it to rapidly and accurately deploy Web-based applications to
meet eGov applications. These funds would be used to contract-out the
design, development, implementation, and maintenance of important
eGovernment Web initiatives.
The final increase of $1,000,000 for the PSP would enable GIPSA to
increase its monitoring and regulatory presence as the livestock and
meatpacking industries increase their use of electronic carcass
evaluation technologies. Increasingly, to meet consumer demand and
provide greater ``value,'' packers began purchasing livestock through
contract and marketing agreement or formula-priced transactions, and
began using new means of automating the evaluation of cattle and hog
carcasses based on new technologies, including among other methods,
ultrasound and photographic imaging. Although carcass merit purchasing
has been used for decades in the livestock and meatpacking industries,
the technologies and their applications for evaluating carcass merit
are changing at an accelerating pace. Previously, carcass merit
purchases were generally based on a carcass weight and often one or two
grades assigned by USDA graders. Today, packers increasingly rely on
internally assigned measures of carcass quality using modern and
complex technologies. The technologies now being implemented by packers
have a direct effect in determining the prices paid to producers for
livestock. These changes introduce new risks for producers, since these
new technologies are not standardized and their accuracy is
inconsistent. This lack of standardization and inconsistent accuracy
leaves producers vulnerable to unfair and unjustly discriminatory
practices by unscrupulous members of the meat packing industry.
There are additional increases in the budget that will benefit both
the grain inspection and Packers and Stockyards programs: $83,000 for
employee pension and annuitant health benefits; $790,000 for a web
server farm; $565,000 to meet information technology security
requirements; and $41,000 for the Federal Employees' Compensation Act
(FECA) program.
The increase of $83,000 for employee pension and annuitant health
will allow GIPSA to pay the full share of accruing employee pensions
and annuitant health benefits beginning in fiscal year 2003.
The $790,000 for a web server farm will support GIPSA's internet
and intranet. The Agency must establish standard Web hardware,
software, and facilities to implement the developing eGovernment
electronic interface. This will provide a common information technology
environment required for GIPSA to deliver data to and collect
information from our customers. The Web server farm, comprised of
multiple, high performance servers, will be able to implement a wide
range of Web based interactive applications, and accommodate large data
transfers from customers and field locations to existing Agency
computer systems.
The $565,000 increase will ensure that GIPSA's information
technology security measures are effective and meet USDA standards.
This will require the addition of software, hardware, and additional
servers to provide for data security, backups, and recovery
capabilities. This funding will ensure that GIPSA is a full participant
in USDA's IT security programs.
Finally, GIPSA has requested a $41,000 increase to cover the cost
of the Department of Labor's administrative surcharge for the Agency's
FECA benefits.
The Department request reflects legislation that would fund the
grain standardization and packers programs through fees. Fees are
appropriate when a Federally financed activity clearly provides a
direct benefit for a specific group of people. In such instances, the
costs of those programs should be borne by the benefiting group rather
than by all taxpayers. Both of these programs do provide a direct
benefit to a specific group--by setting up standards to improve the
marketing of grain and by improving the financial integrity and fair
and open marketing of the livestock industry. In addition, there is
precedent for charging fees for these types of activities in the
Agricultural Marketing Services' standardization program, and the
Perishable Agricultural Commodities Act program, which also charges a
licensing fee for participation.
Authorizing legislation has already been submitted for the
standardization fee, and we anticipate submitting legislation for the
packers licensing fee in the near future.
Conclusion
Mr. Chairman, this concludes my statement. I appreciate the
opportunity to testify on behalf of the Grain Inspection, Packers and
Stockyards Administration (GIPSA). I will be happy to answer any
questions the Committee may have.
Food, Nutrition, and Consumer Services
STATEMENT OF ERIC M. BOST, UNDER SECRETARY FOR FOOD,
NUTRITION AND CONSUMER SERVICES
ACCOMPANIED BY:
SUZANNE M. BIERMANN, DEPUTY UNDER SECRETARY FOR FOOD,
NUTRITION, AND CONSUMER SERVICES
GEORGE A. BRALEY, ACTING ADMINISTRATOR, FOOD AND NUTRITION
SERVICE
DENNIS KAPLAN, DEPUTY DIRECTOR, OFFICE OF BUDGET AND PROGRAM
ANALYSIS
STATEMENT OF ERIC M. BOST
Senator Kohl. Mr. Bost, we will turn to you.
Mr. Bost. Mr. Chairman, Senator Cochran, good afternoon and
thank you for having me here today. I would also like to thank
you for providing me the opportunity to present FNCS's budget
request for fiscal year 2003. I would like to introduce three
new members of my team: Suzanne Biermann, Deputy Under
Secretary; Dr. Peter Murano, Deputy Administrator for Special
Nutrition Programs; and Steve Christensen, Acting Deputy
Director for the Center for Nutrition Policy and Promotion.
Since this is the first time I have appeared before the
committee, I would like to take a minute to introduce myself. I
was confirmed last June. Prior to becoming Under Secretary, I
was commissioner of the Texas Department of Human Services
under then-Governor Bush, an agency which included the
responsibility for administering many of the programs that I am
responsible for now, in addition to the Temporary Assistance to
Needy Families Program, and also long term care.
These programs mean a great deal to me personally and I
also believe that this is a unique time for all of us, given
that both the food stamp and child nutrition programs are going
through reauthorization: food stamps in 2002; child nutrition
in 2003. The Administration, and my team and I, look forward to
working with you and the commission staff as we move forward to
effectively and efficiently manage these nutrition programs.
We have some very clear goals, we believe. One, to simplify
the programs. Two, to improve access to the programs while
maintaining integrity. We want to create simple policies that
make the programs understandable to those who administer them
and also those persons who receive the benefits. We want to
ensure full access to the programs by those who are eligible
for the services, and also--this is important--sound public
stewardship of the funds appropriated for these critical
programs.
I say they are critical because I believe that they are.
Food Stamps, WIC, National School Lunch and Breakfast, Summer
Feeding Programs, all of the nutrition programs are important
to low income individuals and families who need and also want
to be healthy and productive members of our society. I view my
responsibility as Under Secretary in two very broad and
important objectives, to ensure that those who are eligible to
participate in Federal nutrition assistance programs have the
opportunity to do so, and also to ensure and maintain the
integrity of our programs.
WIC
The President's budget requested a total of $41.9 billion
in budget authority for fiscal year 2003, which supports the
operations of these programs, and I would like to talk about a
couple of them. First and foremost is WIC. The President's
budget of $4.8 billion for WIC reflects a growing demand for
this program, and also the Administration's firm commitment to
ensure resources are directed carefully to programs that make a
real difference in the lives of people that we serve. The
requested increase of $364 million will support a monthly
average of almost 8 million needy women, infants and children
in 2003. This also includes a $150 million contingency fund if
participation exceeds current estimates.
FARMERS MARKET
One program Nutrition that has received particular
attention is the Farmers Marketing Program. Focusing resources
on the important priorities also means making very tough
choices. The President's budget does not provide for the
Farmers Market Nutrition Program for fiscal year 2003. We agree
this is a very good program, that it supports American farmers
and provides low income families access to fruits and
vegetables. However, it is a program that does not operate in
all States. It is not operated statewide in the States that do
participate, and it provides limited benefits to only some of
the participants. The Administration is making a very difficult
choice in discontinuing the funding in this effort. We are
attempting to focus on broad-based, more universally
established programs.
FOOD STAMPS
Let us talk about food stamps. The President's budget
request, $26.2 billion for the Food Stamp Program, would serve
an average of 20.6 million persons each month, over 3 million
more than it did a year ago. Also, some of our legislative
proposals would simplify the rules, support work, improve
access and also improve accountability. There is also a $2
billion reserve in this program. We expect to use the 2002
reserve, but do not expect a supplemental appropriation
request.
CHILD NUTRITION
The Administration's budget includes $10.6 billion for the
child nutrition programs, which would continue programs that
provide millions of nutritious meals to children in schools and
child care settings.
PROGRAM INTEGRITY
I would like to talk about program integrity. I mention it
because I feel it is so important, especially when you look at
the administration of our Food Stamp Program. For fiscal year
2000, 91.1 percent of all food stamp benefits were issued
correctly, which is the best that it has ever been in the
history of the Food Stamp Program.
However, it still means that 6.5 percent of food stamp
benefits were over-issued and approximately 2.4 percent of the
benefits were under-issued. One point I want to make about
this, which I think is so important having had the experience
of managing the program in Texas, one percentage point
represents a $200 million improper payment. I think this is
really important in terms of our budget proposals--we need a
comprehensive and balanced approach to reforming the system.
We are hoping to balance accountability with other measures
such as program outcomes that discuss the services, customer
service, and to address those States that have the most serious
problems in administering this program. And on the other hand,
the system rewards and provides a bonus of $70 million for
those folks from those States who do an outstanding job of
administration of this program.
CERTIFICATION
One of the issues that is also really important is the
accuracy and the certification of the students in our school
programs. There is evidence that many of the students who are
certified for free or reduced priced meals, who appear to be
eligible, are, in fact, not eligible. In the short period of
time that I have been here, it appears that trend is getting a
little bit worse. Most recent data shows that significantly
more children were certified than were eligible. But I would
also like to mention too that this is a very complicated issue
we are attempting to address. We are taking some very
definitive steps to address it, because as I said, we are
interested in ensuring that we maintain a high level of
integrity in all of our programs.
PREPARED STATEMENTS
With that in mind, I would like to conclude and say thank
you for your time and patience. This concludes my testimony and
I am happy to address any questions you may have of me.
[The statements follows:]
Prepared Statement of Eric M. Bost
Thank you, Mr. Chairman, and members of the Subcommittee for
allowing me this opportunity to present our budget request for fiscal
year 2003. As this is my first appearance before the Committee, I would
like to introduce myself briefly.
I was confirmed as Under Secretary for Food, Nutrition, and
Consumer Services (FNCS) in June 2001. Prior to that time, I served for
almost four years as Commissioner of the Texas Department of Human
Services, one of the Nation's largest human services agencies, under
then-Governor George W. Bush. As Commissioner, I was responsible for
administering State and Federal programs that served more than 2
million needy, aged or disabled Texans each month. I took that position
after more than twenty years of experience managing human services
agencies across the country including Arizona, Pennsylvania, Florida,
North Carolina and the District of Columbia.
With your permission I would also like to introduce three new
members of the FNCS team. Suzanne Biermann, the Deputy Under Secretary
for Food, Nutrition, and Consumer Services, Dr. Peter Murano, the
Deputy Administrator for Special Nutrition Programs at the Food and
Nutrition Service, and Steven Christensen, the Acting Deputy Director
of the Center for Nutrition Policy and Promotion.
When President Bush and Secretary Veneman asked me to join the team
at the Department of Agriculture, I was extremely pleased to have the
opportunity to put my experience to work to effectively manage and
improve the Federal nutrition assistance programs--programs that use
the abundance of American agriculture to promote the nutrition and
health of our Nation. I feel especially fortunate to have the
opportunity to personally participate in the reauthorization of the
Food Stamp and Child Nutrition Programs. All of us at FNCS look forward
to working with you and committee staff to do the best job possible
managing the nutrition assistance programs. Everyone here knows how
important these programs are, but I would like to cite just a few facts
that underscore their importance:
--We know that a poor diet is a significant factor in 4 of the 10
leading causes of death in the United States--coronary heart
disease, cancer, hypertension and stroke, and diabetes;
--We know that poor nutrition and lack of physical activity account
for 300,000 deaths per year;
--We know that the economic cost of poor nutrition accounts for at
least $200 billion per year in medical costs and lost
productivity; and
--We know that participation in the school feeding programs leads to
improved education outcomes.
Federal nutrition assistance programs have a critical role to play
in promoting health and preventing diet-related health problems by
ensuring access to nutritious food to those who need it, and by
promoting better diets and physical activity through nutrition
education and promotion to program participants. The need to improve
diets to fight overweight and obesity extends to the general public.
Our request also supports USDA's Center for Nutrition Policy and
Promotion, which works with the Department of Health and Human Services
and other agencies to promote good nutrition to all Americans.
I view the focus of my responsibility as Under Secretary in terms
of two broad objectives: first, to ensure that all those eligible to
participate in Federal nutrition assistance programs have the
opportunity to do so, if they wish; second, and equally important to
ensure the integrity of the programs through solid public stewardship.
The President's Budget requests a total of $41.9 billion in budget
authority for Food, Nutrition, and Consumer Services for fiscal year
2003. This supports the operation of Federal nutrition assistance
programs, as well as a number of important initiatives that should
advance our program access and integrity. In the remainder of my
remarks, I would like to highlight a few key components of our request.
highest-ever funding for wic
The President's budget includes $4.8 billion for the Special
Supplemental Nutrition Program for Women, Infants and Children, the WIC
program. The requested level, an increase of $364 million over fiscal
year 2002, would allow local communities to provide food, nutrition
education, and a link to health care to a monthly average of 7.8
million needy women, infants and children during fiscal year 2003. The
request includes a $150 million contingency fund, which can be used as
needed if food costs or participation exceed current estimates.
This request reflects the growing demand for WIC during fiscal year
2001 and continuing into this fiscal year; participation reached 7.53
million in October 2002, a record high. It also reflects a firm
commitment by this Administration to ensure that resources are directed
carefully to programs that make a real difference in people's lives.
WIC is just such a program, with an impressive body of research showing
that it is a sound investment of the taxpayer's dollar. As the
President said in his January radio address that highlighted his
budget, we must set priorities for the government to meet the most
important needs for the Nation. Our request for WIC does just that.
farmer's market nutrition program
At the same time that we are focusing resources on the most
important priorities, we must also be willing to make the tough choices
not to fund programs that, however worthy, do not most effectively
support those priorities. This, too, is reflected in our request.
The President's budget does not provide funding for the Farmer's
Market Nutrition Program in fiscal year 2003. While all can agree that
supporting America's farmers and providing low-income families access
to fresh fruits and vegetables is a laudable goal, the FMNP is a small
program that does not operate in all States, is not operated State-wide
by any participating State, and provides limited benefits to only some
WIC participants. While the FMNP is a worthy program, the
Administration is making the difficult choice of discontinuing the
funding in an effort to focus on broad-based, more universally
established programs. This kind of hard choice is central to the
Administration's responsibilities and we accept the need and
responsibility for making tough choices.
Maintaining the Food Stamp Program Benefit Reserve
Our fiscal year 2003 request also sustains the full $2 billion Food
Stamp benefit reserve Congress appropriated in fiscal year 2002. As you
know, one of the greatest strengths of the Federal nutrition safety net
is its ability to respond to economic change. The current economic
difficulties are no exception. In December 2001, the Food Stamp Program
served 18.7 million people, 1.6 million more than a year ago. Nearly
all States are serving more people than they did a year ago, and
participation has increased in 15 of the 17 months between July 2000
and December 2001. We expect to use most of the $2 billion reserve this
year, but we do not believe we will need a supplemental appropriation.
For the coming fiscal year, we recommend continuation of the benefit
reserve at the $2 billion level.
Program Integrity Initiatives
As I mentioned before, I view effective stewardship of Federal
funds as a central responsibility for our mission area, and for me
personally. I'm pleased to report on some successes in this area, but
also to note substantial continued challenges. Our request includes
funding to support increased program integrity activity to address a
number of critically important issues:
Food Stamp Payment Accuracy
The Food Stamp Program is the cornerstone of our Nation's defense
against hunger and a powerful tool to improve nutrition among low-
income families and individuals. But for the program to be effective in
serving this neediest population, it must accurately target benefits.
Those who are eligible for program benefits should have easy access to
them and the amount they receive should be the amount allowed under
law--no more, no less.
As you may know, the accuracy of food stamp payments is at its
highest level ever. In fiscal year 2000, 91.1 percent of all food stamp
benefits were issued correctly. Unfortunately, this still means that
States overissued about 6.5 percent more in benefits than they should
have and underissued about 2.4 percent (people that should have
received more benefit actually received less). The result of which is
that $1.33 billion in erroneous payments were made--$970 million in
overpayments and $360 million in underpayments. This occurred under the
existing Quality Control system, which we propose to refine and improve
via proposals I helped craft in the President's budget. On a personal
note, I have a good sense of how QC works at the State level, and, I am
proud to point out, that as Commissioner in the State of Texas I was
able to substantially improve the payment accuracy in our Food Stamp
Program and for three years in a row achieved enhanced funding for
maintaining an error rate well below that of the national average.
However, despite Texas' achievement, and the recent progress nationally
on error rates, the costs of errors are still too high Every percentage
point increase in the error rate represents about $200 million in
improper payments.
Rising overpayments, which go to a fraction of the caseload,
reflect a real loss to American taxpayers and could erode support for
the program and its participants Equally important, rising
underpayments reflect a real loss to low-income families and
individuals who need assistance.
The President's budget proposes a comprehensive and balanced
approach to reforming the current QC system that not only ensures a
high degree of program integrity but also simplifies the program for
States who administer the program and makes it easier for citizens to
understand and comply with program requirements. The Administration's
proposal would focus sanctions on States with the most serious and
consistently high error rates, and replace current enhanced funding
with $70 million in annual performance bonuses that would balance
payment accuracy with customer service and other measures of program
outcomes.
I seek your support in reforming the QC system in a way that
provides some relief to States while balancing the need to maintain and
improve integrity in our program.
Food stamp caseloads are rising in response to the current
recession, State administrative resources are stretched then, and with
growing pressures to eliminate State budget deficits, attention to
program management and payment accuracy may suffer if there is not a QC
system that holds States accountable.
Food Stamp Trafficking
Trafficking of food stamp benefits for cash by authorized retailers
remains a serious concern. While the most recent data, for 1996 through
1998, showed a substantial decrease in trafficking from previous
estimates, the volume of misused benefits--estimated at $660 million
annually--is still far too high. Our request supports additional
efforts to identify and take action against traffickers through the
analysis of electronic benefit transfer data, and through increases in
FNS retailer compliance staff.
School Meals Certification Accuracy
The evidence is strong that more students are certified for free or
reduced-price school meals than appear to be eligible. The trend has
worsened significantly in recent years. The most recent data shows
that, in 1999, significantly more children were certified for free
meals than survey data showed to be eligible. Although we are not
certain of the exact scope of the problem including those who are
eligible but not served, we are seeking a solution to address it.
While the cost of such errors is unclear, FNS is strongly committed
to improving program integrity without overburdening schools or
compromising access to the programs for eligible children. We are
pilot-testing potential policy changes to improve the certification
process. This issue is complicated because certification data is used
to distribute billions of dollars in education aid, telecommunications
funds and other funding. We must work with the education and other
affected communities in developing a solution. Our request supports
these efforts, as well as additional oversight of State and local
program operations in this area.
Child Care Integrity
The integrity of the Child Care and Adult Care Food Program has
been a focus of concern and action for a number of years. FNS has
intensified management evaluations at the State and local levels,
developed and trained program staff on improved management procedures,
and developed legislative proposals to strengthen program management.
Despite these efforts, additional resources are needed to effect
lasting improvements in child care integrity, and our request supports
modest increases in this area. Program integrity is fundamental to the
Department's stewardship responsibilities; just as importantly, it is
fundamental to the success of the programs themselves, for funds lost
or misused due to poor integrity represent a lost opportunity for the
program to better serve those truly in need. I know you share my
commitment to program integrity, and I look forward to working with you
in this important area.
I will now touch briefly on the more general programmatic
components of our request:
Food Stamp Program
The President's budget requests $26.2 billion for the Food Stamp
Program, enough to serve an average of 20.6 million people each month.
As noted before, we have proposed to maintain the $2 billion benefit
reserve appropriated last year. Our request also reflects a number of
proposals for legislative changes, designed to further the goals of the
program by simplifying rules, better supporting work, strengthening the
nutrition safety net, and improving accountability. These proposals
have a net cost of $29 million in fiscal year 2003 and $4.2 billion
over ten years.
special supplemental nutrition program for women, infants and children
(wic)
As I noted previously, the President's budget includes $4.8 billion
for WIC in fiscal year 2003, including a $150 million contingency fund.
It does not include funding for the WIC Farmer's Market Nutrition
Program.
child nutrition programs
The budget requests $10.6 billion for the Child Nutrition Programs,
which continue to provide millions of nutritious meals to all children
in schools and in child care settings every day. The budgeted increases
in these programs are due to economic conditions that increase the need
for assistance, rising school enrollment, and increases in payment
rates to cover inflation.
The Emergency Food Assistance Program (TEFAP)
The budget requests $50 million for States' storage and
distribution costs and $100 million for food purchases for this
important program. We project that the current high volume of surplus
commodities will continue to be available to TEFAP in fiscal year 2003.
Such donations triple the amount of commodities that we purchase with
appropriated funds. In addition to the $100 million available under the
food stamp account, we are requesting funds for $50 million for States'
storage and distribution costs in fiscal year 2003, the maximum amount
authorized.
Commodity Supplemental Food Program (CSFP)
The budget requests $95.0 million for CSFP, which also benefits
from surplus donations to serve elderly people and women with infants
and young children. The funds requested plus surplus donations and
commodities currently in inventory will be sufficient to continue
expansion in States that joined the program prior to this year. It will
also allow the six States that recently initiated programs to expand
their participation up to their assigned caseload, including North and
South Dakota, Wisconsin, Pennsylvania, Missouri and Washington.
Food Program Administration (FPA)
We are requesting $155.9 million in this account, this includes an
increase of $7 million and 58 staff years in our administrative budget,
which supports the program integrity initiatives I have described, as
well as pay cost adjustments. We are also requesting that $19 million
previously appropriated to other accounts be appropriated in the FPA
account. This repositioning request reflects the President's initiative
to show the full cost of support services, retirement and other non-
direct costs with the program activities these costs support.
In sum, our request sets the right priorities to ensure access to
the Federal nutrition assistance programs for the children and low-
income people who need them, while maintaining and improving their
integrity. Thank you for your attention; I would be happy to answer any
questions you may have.
______
Biographical Sketch of Peter S. Murano, Ph.D., Deputy Administrator for
Special Nutrition Programs, Food and Nutrition Service
Peter S. Murano Ph.D. currently serves as Deputy Administrator for
Special Nutrition Programs of the Food and Nutrition Service, U.S.
Department of Agriculture. Dr. Murano is responsible for the
administration of 13 nutrition assistance programs including the Child
Nutrition Programs, the Special Supplemental Nutrition Program for
Women, Infants and Children (WIC), and the Commodity Nutrition
Programs. Prior to his December 2001 appointment as Deputy
Administrator, Dr. Murano was an Associate Professor in Food Science
and Technology at Texas A&M University's Department of Animal Science
where he taught general nutrition, food science, and food chemistry,
served as undergraduate student advisor, and performed research in the
area of functional food product development and testing. He also led
the development of the undergraduate program in food science and
technology. Under his supervision, the program enrollment more than
doubled, classroom and lab space expanded, and many new student awards,
scholarships, internships, and employment opportunities were secured.
Dr. Murano received the Masters and Doctorate degrees in Human
Nutrition and Foods from Virginia Polytechnic Institute and State
University, and then went on to perform research on irradiated meats
and to teach microbiology at Iowa State University. He has published
widely in professional literature such as the Journal of Food Science,
National Association of Colleges and Teachers of Agriculture, and
others, and has presented at international and national conferences in
the areas of food irradiation, nutrition, and food toxicology. He has
just completed the manuscript for a 500-page undergraduate textbook for
Wadsworth Publishing, ``Understanding Food Science and Technology'' due
for publication in the summer of 2002.
He considers it a tremendous privilege to work at USDA in serving
others. He is particularly sensitive to the needs of children, for ``if
we neglect our children, we neglect our future.''
______
Prepared Statement of George A. Braley
Thank you, Mr. Chairman, and members of the Subcommittee for
allowing me this opportunity to present our budget request for fiscal
year 2003.
The mission of the Food and Nutrition Service is to increase food
security and reduce hunger together with cooperating organizations by
providing children and low-income people access to food and nutrition
education in a manner that inspires public confidence and supports
American Agriculture. We are requesting a total of $41.9 billion to
fulfill our commitment to provide a strong nutrition safety net and
nutrition education. Our programs can be effective in helping to reduce
hunger and to combat obesity and diet-related diseases such as
hypertension, osteoporosis, heart disease, some cancers and stroke
through nutritious food and nutrition education.
The Food Stamp Program Responds To Changing Demands
This budget demonstrates how the Nutrition Assistance Programs
react when needed to provide a strong nutrition safety net for
Americans. We estimate that the Food Stamp Program will serve a monthly
average of 19.8 million people in fiscal year 2002 and use most of the
$2 billion benefit reserve that the Congress appropriated. Our budget
request for fiscal year 2003 will support an increase of over 800,000
in monthly average participation and will fund the program at $26.2
billion. Following your lead, we have included a $2 billion reserve in
our request.
Highest-Ever Funding And Participation In The WIC Program
As President Bush said in his radio address on January 12, 2002,
WIC is one of those vital programs that have proven their value. This
committee also has a history of strong support for the WIC program. We
are proposing a budget of $4.8 billion. As Under Secretary Bost pointed
out in his testimony, this would enable us to provide benefits to a
monthly average of 7.8 million needy women, infants and children and
potentially to reach 8 million people by the end of fiscal year 2003,
far more than ever before. We believe this funding will provide
benefits and services to all who are eligible and wish to participate.
Just in case more people than we currently estimate need and apply for
benefits and services, our request includes a $150 million reserve.
This reserve will ensure that we can properly serve them. In October of
2001, WIC participation reached a record high of over 7,533,000
participants. As expected, participation has fallen since then.
Historically, it is lower in the winter months than during the rest of
the year. We expect program demand to grow throughout the spring and
summer.
Program Integrity
Our mission challenges us, not just to improve food security and
reduce hunger, but also to do so in a manner that inspires public
confidence. In fiscal year 2001, working together with the States, we
have achieved a record low food stamp payment error rate of 8.91
percent. Our plans for the coming fiscal years call for increased
effort to drive the rate even lower. We are requesting an increase of
58 staff years and $4.5 million that will enable us to work toward even
lower error rates than last year's record low. The funding and staff
requested will also allow us to strengthen our integrity efforts in the
Child Nutrition programs. We are concerned that more students may be
certified for free or reduced-price school meals than appear to be
eligible. FNS is strongly committed to improving program integrity
without overburdening schools or compromising access for eligible
children. Therefore, we are pilot-testing potential policy changes to
improve the certification process. Certification data is used not just
for our programs but also to target billions of dollars in education
aid, telecommunication funds, and other funding. We are working with
the education community in developing solutions to this serious
problem. We believe that the additional program integrity efforts we
are proposing are modest investments necessary to fulfill our
responsibility as good stewards of public resources.
Food Program Administration
Our Food Program Administration (FPA) request for fiscal year 2003
is $155.9 million, an increase of almost $7 million over the amount
provided by this committee in fiscal year 2002 after accounting for an
$18.9 million shift of charges from other appropriations to our Agency
salary and expenses appropriation. The shift reflects the
Administration's cost integration legislation that intends to budget
and present the full costs of Federal employees and related support
costs in the accounts and programs where the Federal staff is employed.
The full government share of Federal employee pension contributions and
post-retirement health benefits for current civilian employees of $7.9
million and $11 million for rental payments are included in our $155.9
million request. We are requesting approximately $3.5 million for pay
costs and, as I previously mentioned, $4.5 million to fund 58
additional staff years to improve the oversight of both the Food Stamp
and Child Nutrition programs. In the Food Stamp Program, the additional
staff will support: (1) an augmented investigative and sanctioning
capability through analysis of retailer transactions; (2) increased
retailer compliance investigative capability; (3) maintenance and
enhancement of the quality control system and (4) increased initiatives
to reduce error rates. EBT is now almost nationwide and produces a
wealth of information. We would use the additional staff to check
retailer transactions. With these additional resources, we could use
this information to successfully identify abuse and fraud. We would put
the additional resources into efforts to maintain the accuracy of the
Quality Control System and to increase targeted store visits where the
EBT data suggested there were problems.
In the Child Nutrition Programs, FNS will devote additional staff
to combating clear instances of fraud in the Child and Adult Care Food
Program and safeguard the expenditure of significant Federal dollars.
FNS has refocused its management evaluations to assess State-level
administration of the CACFP in greater depth and will publish
regulations designed to improve State-level management of the Program.
In fiscal year 2003, FNS will conduct training for FNS and State staff
on implementation of program changes required by new regulations and
revise Management Improvement Guidance to reflect those regulations. We
will conduct an in depth evaluation of the school lunch pilot projects
I mentioned previously. These pilots are testing alternatives to the
current school lunch eligibility determination process. The results of
these pilots will be used, as appropriate, to initiate regulatory and
legislative initiatives to improve the certification process. In
addition, we will continue collaboration with State agencies on
implementation of procedures to reduce over-certification and will
utilize a contractor to identify integrity problems in the operations
of the National School Lunch and Breakfast Programs at the State and
school levels.
Child Nutrition Programs
For these programs, we are requesting a total of $10.6 billion, an
increase of $489 million over the level provided for fiscal year 2002.
Our projections of increases in meals to be served in the School Lunch
and Breakfast programs are primarily due to increases in school
enrollment. Our estimates for increases in the Child and Adult Care
Food Program are based on trends that we have seen for many years. In
addition to increased meal service, costs in the Child Nutrition
Programs are due to increasing payment rates that rise to cover
inflation.
The Emergency Food Assistance Program
We are requesting $150 million for this program in fiscal year
2003, the maximum amount authorized. Of this, $100 million is used for
commodity purchases, and $50 million is used for administrative costs.
We project that the current high volume of surplus commodities will
continue to be available to the Emergency Food Assistance Program.
These donations triple the amount of commodities that we purchase with
appropriated funds. Commodities from private donations are also
provided to soup kitchens, emergency shelters and needy families
together with those from the Federal Government. States and Emergency
Feeding Organizations use the funds appropriated for storage and
distribution to handle all of these commodities from the varied
sources.
Commodity Supplemental Food Program
The combination of surplus donations, that partially offset the
cost of purchasing commodities for distribution, and reducing inventory
instead of making new purchases enable this program to serve expanding
participation with a minimal budget increase. We are requesting $95
million for fiscal year 2003 that would allow States with well-
established programs to continue increasing participation and provide
funding for the six States that recently initiated programs to expand
their participation up to their assigned caseload. These States include
North and South Dakota, Wisconsin, Pennsylvania, Missouri and
Washington.
Mr. Chairman, this concludes my statement. I would be happy to
answer any questions you or the other members may have.
Senator Kohl. Thank you very much, Mr. Bost. We will start
our questions with you, Mr. Hawks. As you can understand, Mr.
Hawks, I am seriously disturbed about the recent chronic
wasting disease discoveries from my State in Dane County.
Wisconsin, which is recognized as one of the top deer hunting
States in the country, could suffer significant economic
hardship if the chronic wasting disease spreads throughout our
wildlife populations.
CHRONIC WASTING DISEASE
I understand the Wisconsin Department of Natural Resources
is currently coordinating increased sampling for chronic
wasting disease in deer, from both Dane County and neighboring
Iowa County. Mr. Hawks, could you please inform this Committee
of your efforts to test and identify the presence of this
disease and explain how it suddenly appeared in Buchanan,
Wisconsin, and how to prevent it from spreading throughout
Wisconsin and our country?
Mr. Hawks. Yes sir, I would be happy to. As you know, Mr.
Chairman, there were three positives out of a routine sampling
or routine testing of harvested deer. What we have agreed to do
is increase the sampling by 500. APHIS will do that. We are
working with the epidemiologist up there to try to determine
where the source of this is. We are working with the State
Department of Agriculture to try to get them to restrict the
movement of the captive herds there.
And so we are trying to get to the bottom of it, but the
one thing that I can tell you for certain is that we are doing
increased sampling. We have gone to work with the State
Department of Agriculture there to make sure that we find out
what transpired there. This is just as disturbing to me as it
is to you.
Senator Kohl. Well, Mr. Hawks, Monday of this week our
Governor wrote to Secretary Veneman requesting emergency
assistance to combat chronic wasting disease in Wisconsin. Can
you assure us the Department will promptly act on this request?
Mr. Hawks. Yes, sir, we will promptly act on that request.
IMPORTED MEAT
Senator Kohl. I thank you. Turning to Dr. Murano, I
appreciate your stopping by to see me last week, Dr. Murano, to
discuss some of the concerns I raised at Secretary Veneman's
hearing on February 27th, regarding the safety of imported
meat. As you recall, I raised this issue partially because of a
Washington Post article of February 25th, which reported that
several Mexican and French plants were found to have numerous
sanitation and safety problems, but were still exporting meat
to the United States without ever being reinspected by USDA.
This article raised several red flags for me, for you, and for
consumers all across the country.
So, I would like to give you this opportunity to respond to
the February 25th Washington Post article publicly now, for the
record. In your response, please include information on some of
the suggestions you gave to me during our earlier meeting about
a possible program of sending inspectors to Mexico for extended
periods of time, and how you would suggest setting up such a
program.
Dr. Murano. Thank you, Mr. Chairman, I would be happy to
and I thank you for the opportunity to do this. As you know and
as you just stated, that article in the Washington Post was
very disturbing. And as you also know, this article was written
after I was interviewed by the reporter.
When I was interviewed for the article I was asked to
briefly comment on our system of import inspection. I explained
to the reporter our three-pronged approach in which we require
an exporting country to have an equivalent system of inspection
to that of the United States. We require them to provide
evidence of System equivalence, not only by producing
certifying documents, but also through on-site audits conducted
in these countries by our foreign program reviews to verify
that equivalent public health safeguards are contained in their
systems. We visit foreign plants and make our determination
that way.
The second prong of this three-pronged approach is that
when imported product is received at 124 import inspection
houses located in the United States, we have inspectors perform
a reinspection of the product. We reinspect product lots
according to the volume of product being imported from a given
country. Reinspection assignments are based on computer-
generated statistical models that let us know how many lots to
reinspect.
The third prong of the approach is that periodically, at
least once a year, we go back to these countries and do audits
of their plants. Having explained all of that, it was very
surprising to me when I saw that article and the first thing I
did was try to determine if some of the things that were
written in the article were true. An example of an inaccurate
statement found in that article mentioned a company in Mexico,
CarnesValmo, as being a plant that had exported product to the
United States even though it had actually been delisted in
1999.
We have gone through all the records, not only here in our
country, but also in Mexico. There is absolutely not one pound
of product that has been exported to the United States from
that plant. What I found out in my investigation is that plant
actually, was delisted in May of 1999, when the agency did an
audit, as it regularly does. And that plant has not exported
any product to us since. In fact, in 2001, Mexico did not even
include Carnes Valmo on its list of companies certified to
export to the United States.
That was something that I was certainly glad to find out. I
will tell you this, and I told this to the reporter, that after
having been a professor at Iowa State University and Texas A&M
and doing many projects throughout Latin America and other
countries, I know that there are certainly differences in the
systems countries have in place. I take very seriously my
responsibility to make sure that the countries that we approve
as being able to export to the United States have an equivalent
system to ours.
We have been to Mexico three times this year, in November,
and two or three times last year. In November 2001, our audit
of Mexican plants resulted in the delistment of three plants.
At that time, I was brand new in my position at USDA. I had
only been here for a month. As soon as the agency team told me
that during their audit they found that three plants needed to
be delisted because they were not operating with government
inspectors, Mexican government inspectors, present, which they
are supposed to have, not only did we delist them but
immediately I contacted my counterpart, Dr. Javier Trujillo in
Mexico, to make sure that he realized what was going on and
that we were going to delist those three plants.
I am happy to tell you that he immediately responded and
certified to us that those three plants were now going to
operate with Mexican Federal inspectors. The absence of
inspectors is the reason why we delisted them. As a result of
this incident, we decided to do a 100 percent reinspection of
all product coming from Mexico. The philosophy of trust but
verify is one that I really adhere to. Even though I know
Javier Trujillo very well, I thought this is something that is
too important, to make sure that we have the safest meat supply
possible, whether it is domestic or imported from other
countries.
To this day, we are reinspecting every meat and poultry
shipment that comes from Mexico. Next month we are scheduled to
make another audit visit to Mexico and we will be able to
assess at that point the condition of other plants. As you also
know, Mr. Chairman, 2 weeks ago today myself and two members of
the FSIS team went to Mexico and we visited Dr. Trujillo and
spoke about all of these issues.
We visited a couple of plants, one of which had been
delisted in November because of not operating with government
inspectors, and had a frank discussion with him about
establishing some of the long term solutions to this problem.
In that discussion we talked about some of the things that we
should be doing. One of the ideas that we discussed was for a
certain period of time having some of our inspection teams or
audit teams based in Mexico. We are considering whether to have
a team of auditors that stay there for a 3 month period or for
an entire year. We will have the aduitors stay as long as
necessary to ensure to our satisfaction that all the plants
certified to export to the United States have equivalent
systems of inspection to what we have.
Senator Kohl. I thank you. Is it nevertheless accurate to
say that the plant in question, the Mexican plant in question
mentioned in the Post article, was in May of 1999 when USDA
inspectors visited it, certified to export meat to the United
States?
Dr. Murano. Yes, sir, it was. In May when we visited it we
decertified it or delisted it.
Senator Kohl. Are you able to say with absolute certainty,
Dr. Murano, that meat from that plant could never have slipped
through our random border checks and ended up at American
supermarkets as well as on family dinner tables?
Dr. Murano. I can tell you that for this reason. Even if
the plant changed its name, tried to sneak through if you will
and we go by the establishment number, and this is something
that does not change if the company is sold and it changes
names. Our system of import inspection at these 124 import
houses logs all product coming to the United States by
establishment number. Those are the records that I am telling
you let us know that we have not received any product from
them.
Senator Kohl. How could you say with certainty that even
though meat had not been shipped from that plant, had it been
shipped from that plant, I do not believe there is any way for
you to be able to say with certainty that that meat could not
have wound up in American consumers' hands.
Dr. Murano. If that plant had shipped product to the United
States it would have to go through those border inspection
stations. I am not sure that is what you mean or if you mean if
they had already shipped product.
Senator Kohl. When they do the border inspection stations,
they are inspecting 100 percent of all the meat that is coming
through?
Dr. Murano. No sir, no. They have to log it in anyway,
whether they look at the shipments or not. It has got to be
logged in. But, let us say, and I think this is where you are
going with your question, and forgive me if I am misstating
this on your behalf, if that company had already shipped
product could we have caught it at the border? Maybe that is
the question you are asking? Certainly because we were not
doing 100 percent of the inspection we would not have
possibly----
Senator Kohl. Which you are doing now?
Dr. Murano. Correct.
IMPORTED PRODUCTS
Senator Kohl. With respect to imported products, as opposed
to those that are domestically produced, can you tell us how
much of the total meat and poultry products imported into the
United States are physically inspected by FSIS personnel to the
same degree as domestic products?
Dr. Murano. To the same degree is not going to be very
much, and the reason why is because in this country we are the
inspectors of domestic products. Obviously, we inspect our
products. Product that is produced in other countries is
inspected by their inspectors according to equivalent standards
to ours. We just simply do a reinspection. If we are asking the
question in general are those products inspected just as much
as our products, the answer would be yes, but not by our
inspectors.
Senator Kohl. Can you certify that all the meat, poultry
and egg products currently sold to the American consumers meet
the minimum basic USDA standards?
Dr. Murano. Yes, they have to because they have to have
equivalent systems. If we find in audits that is not the case,
or upon inspection we find out that is not the case, we take
immediate action.
Senator Kohl. Can you tell us how many voluntary recalls
were issued to meat and poultry products last year?
Dr. Murano. I am being told 86. That is how many recalls we
have conducted.
Senator Kohl. How many did you say?
Dr. Murano. Eighty-six.
Senator Kohl. Dr. Murano, under current law USDA has no
mandatory authority to remove tainted food from the
marketplace, as you know. In other words, if a product on the
market is found to be contaminated, USDA has no authority to
force the company responsible to retrieve that product, no
matter how deadly that product may be. As you know, we have to
rely upon the companies for recalls.
I understand that Federal agencies can themselves go into
stores and remove products found to be unsafe. But,
practically, it would seem to be impossible for FSIS to get a
court order deputizing agents to send them into stores to
intercept products before they reach consumers. Is it your
opinion that FSIS should have the authority to issue recalls
when unsafe products might slip through the cracks and reach
American supermarkets, if such authority would in no way
diminish the liability of individual companies?
Dr. Murano. Thank you for that question. When I think about
recalls, whether they are voluntary or mandatory, there are two
important goals: one is to enact that recall as soon as
possible to minimize the impact to consumers; the other is to
be able to retrieve as much product as possible in that recall.
Those are, I think, principles we can all agree with.
Our current system, as you said, is voluntary in the sense
that we, FSIS, cannot mandate a recall. Companies have to
recall their own product. But, I will tell you that in all the
years that the system has been in place, there has only been
one instance where a company, when FSIS recommended that a
recall be issued, refused to do so. What we then did is we
detained the product.
What you described, Senator, was a seizure activity, which
we also have authority for. We have authority for detention and
we do not need a court order for that. In this single instance
I will tell you that immediately upon detaining the product
they issued the recall.
MANDATORY RECALL AUTHORITY
Our experience has been that we have not needed to have
mandatory recall authority: If there was a need to have it in
spite of our detention authority. If companies all of the
sudden decided they were not going to listen to us, they were
not going to recall product, that is another story. But so far,
history has been that our voluntary recall system works.
And philosophically, Senator, I have to tell you that I
tell this to the industry when I make speeches to them--I tell
them you are responsible for the food that you produce, for the
safety of it. You are the ones who produce it. They have to
take that responsibility, and have been doing so.
I was looking at some of the data recently in preparation
for the hearing, and I know that last year, for example, about
30 percent of these voluntary recalls performed by industry
were done as the result of industry itself finding that their
products had a contaminant. They themselves called us and said,
FSIS, the product that we just produced had such-and-such a
contaminant and we are issuing a voluntary recall. It was not
because of our testing. It was their testing.
Senator Kohl. Well, there is no doubt that the overwhelming
majority, almost universally, of the number of companies in the
United States are sensitive to the whole issue to the extent
that you wish them to be sensitive. But, we only need one to
produce a catastrophe. So I guess the question I ask, again,
because it has come up legislatively and we have never been
able to get the legislative approval to give USDA the
authority: There isn't a down side to having the authority even
if you used it just once in 50 years to avert catastrophe;
there is no down side to having the authority.
Dr. Murano. Certainly there would not be any down side if
FSIS would not be held liable, which is what you mentioned, and
you are correct.
Senator Kohl. Thank you. Mr. Bost, I was concerned to read
stories in the last week that one of every five children
receiving free or discounted school lunches may actually be
ineligible. To correct this problem it is important to make
sure that ineligible children do not receive free and reduced
price lunches, but not in any way to hinder participation by
those children who are eligible, many of whom receive their
only nutritious meal of the day through the school lunch
program. How do you intend to work with the Department of
Education to try and balance these two goals?
Mr. Bost. Thank you, Mr. Chairman, you are absolutely
right. Let me provide you with just a little bit of background
and then I will get to exactly what steps we are taking to
address this issue. First and foremost, realize this is not
something that just happened. This is an ongoing issue that I
found when I got here.
The second point is that in terms of how this program
operates, eligibility is determined through self declaration.
Basically, kids take a form home. Parents fill the form out,
and send it back to the school. Based on the form, they are
eligible to receive free meals. And I think that self
declaration is causing some of the issues that we are
addressing now.
The third issue that is of concern is I do not know at this
point to what degree over-certification is a problem. I think
that the reporter took some privilege in coming up with those
numbers, that we are still in the midst of trying to make a
determination of exactly how serious this problem is. The
parameters I have established in terms of the problem are
essentially the two you spoke to.
We want to ensure every single child who is eligible does
receive a free or reduced price meal. We do not want to deter
folks that may be interested in the program. I am interested in
ensuring that we do not put in place any significant
administrative barriers for the school persons in terms of
determining eligibility. They are not in the business of
determining eligibility. They are in the business of feeding
and educating our children. With that in mind, there are some
things that we are doing.
One, we are conducting some pilot projects across the
country to test some alternatives to current certification
procedures. We are looking at the current certification process
that we have in place in terms of requiring self declaration
plus some additional financial information. We have
communicated with the State child nutrition directors about my
concerns and the severity of this problem.
In addition to that, you make reference to us working with
the Department of Education. We are working with the Department
of Education, but we are also working with the American School
Food Services Association that is responsible for the food
service directors and those folks for all of the schools in
terms of ensuring that we work with them, and work to get those
two parameters that are established. And last but not least, as
I mentioned in my testimony, the reauthorization of the Child
Nutrition Programs comes up next year and so we are working and
looking at any possible legislation that we might need to put
forward to address this issue as a part of reauthorization.
So, we are taking some very specific and definitive steps
to address the over-certification problem. I would close by
emphasizing this point. We do not want to deter at all, by any
means, any child that is eligible to receive a free or reduced
lunch.
Senator Kohl. There are some school districts that have
been working on this problem for the past several years, some
22 school districts. Would you care to comment on some of their
efforts and some of the successes and failures?
Mr. Bost. Well, some of the same things I said we were
looking at in terms of some of the pilots. I think we are in
the process now of evaluating some of the steps that they have
taken relative to whether they are going to work or not, and
whether they are going to be successful. I think that the real
issue for me, as I said previously, was to ensure that we do
not put in place overwhelming administrative paperwork burdens
that they are responsible for doing. But, on the other hand, I
am interested in maintaining the integrity of the programs. So,
we are interested in looking at what they are doing. We will
evaluate their results and tie those into all of the steps that
I know, in terms of one, attempting to correct the problem, but
two, preparing for reauthorizing of the child nutrition
programs.
Senator Kohl. Thank you. Senator Cochran.
SUPPLEMENTAL APPROPRIATIONS FOR FSIS
Senator Cochran. Dr. Murano, the Department of Defense and
Emergency Supplemental Appropriations Act for Recovery from the
Response to Terrorist Attacks in the United States provides $15
million to the Food Safety Inspection Service. I am curious to
know whether you have put in place plans to use those funds?
Have they been spent or how do you expect to spend them?
Dr. Murano. I will be glad to, Senator. As you know, the
appropriation was for $15 million for protection of meat and
poultry and egg products, which is what is under our
jurisdiction. We can look at dividing it basically into two
pots, one consisting of $5 million which is concerned mainly
with improving the physical security and cybersecurity of our
various facilities, such as our Technical Services Center in
Nebraska, our financial processing center in Iowa, and our
laboratories.
As concerns in regard to the other $10 million, we have
very specific plans on utilizing those monies to educate our
workforce and our laboratory personnel about new threats to the
food supply, especially the very precise types of hazards that
could be intentionally introduced to our meat and poultry and
egg products. These funds will also be used to provide
technical assistance for States and education for some of the
small and very small plants that need a lot of assistance. They
typically are not able to hire educational consultants and
therefore do not receive the training that they need.
Part of the money will be used to expand the testing
capabilities of our laboratories so that we can engage in
looking for certain agents of disease we currently do not look
for as they are not typically found in meat, poultry and egg
products. These might be the agents that terrorists choose to
utilize.
Senator Cochran. You mentioned in your statement to the
committee this afternoon that you were targeting some small and
very small plants for special assistance. I think you said you
were going to spend an additional $1.5 million to expand risk
prevention and management efforts at these plants. How are you
figuring out which plants are going to be eligible for these
funds and how will the money actually be used?
Dr. Murano. The amounts I talked about in my testimony had
to do with education in terms of food safety programs that we
have, and sanitation and so forth. Small and very small plants
need a lot more hand holding than larger plants do, and they
need help improving their understanding and ability to
implement sanitation procedures. We are planning to use
supplemental funds also for technical assistance, except it
would be in terms of biosecurity.
It is a good way for us to leverage the $1.5 million budget
request in our normal budget for assistance of small and very
small plants. We will leverage that with the supplemental
request we have for biosecurity. In that way we will be able to
really do a more thorough job of training these folks and
giving them as much assistance as possible.
Senator Cochran. Mr. Hawks, I would ask you a similar
question. The funds that were made available in the emergency
supplemental, some of those were appropriated to the Animal and
Plant and Health Inspection Service. Could you tell us how
those funds are being used and how much money you have to work
with?
SUPPLEMENTAL APPROPRIATIONS FOR APHIS
Mr. Hawks. Yes sir. The supplemental appropriation
allocated $105 million in funding to APHIS and allocated $14.1
million for buildings and facilities. The $14.1 million will go
to the Ames facility in Iowa. We are working now within USDA
through a process of identifying the specific areas that these
funds are most needed. But, some of, the majority of the funds,
will be used to increase our inspection, to start--to jump
start, if you will--our 2003 funding request. It will give us
an opportunity to move a little quicker, to start more
surveillance and early detection. And rapid response in our
business, within APHIS, is very important. So, that is where we
are headed with those funds.
We are also looking at greater cooperation with the States,
allocating some of those funds to go to the States to help them
with their emergency preparedness and planning. So we are in
that process. I do not know whether Dennis would like to add
anything to that or not, on the budgeting process within USDA
or not.
Mr. Kaplan. You did a good job.
Senator Cochran. There has been a good bit of discussion
and speculation about a proposal to centralize all border
operations, combining the, INS, the Customs Service, the Coast
Guard, and perhaps some parts of other agencies. What effect
would that have on your responsibilities? You have collateral
responsibilities, or you work with these agencies. How would
USDA be affected by that?
Mr. Hawks. It is our belief, within USDA, that we can
obviously perform much better as a stand alone agency. I have
been working very closely with Customs, with INS, with the
Coast Guard, as well as others within USDA to look at all
possibilities for improving our borders. And I think that is
what we will be looking at, is how we improve the security of
our borders. There are a lot of ways we can do that. One is
obviously better reporting and cooperation. I am taking this
very seriously.
Since September the 11 I have been from the northeast Maine
border crossing in Canada to San Francisco in one day to look
at that, at the port out there. I have been to Miami. The
Deputy Secretary went to Miami with me. We toured the airport.
We toured the cargo facility. I have been to Chicago's O'Hare
to look at our process there. I have been to Kennedy. I have
been to Orlando. I have been to the Port of New Orleans.
And we are doing a pretty good job, I have to say, with
these in coordination with Customs. We obviously need a fully
integrated and fully interactive database with them in order
that we can have more information. In our budget request for
this year we have asked for an additional $4 million to station
veterinarians in foreign countries to improve monitoring and
surveillance for foreign animal diseases. We need to look at
what is going on in other countries in order to have a better
idea of what to look for. Senator Cochran, I would say that we
need to work smarter as well as harder.
Senator Cochran. Well, we appreciate your dedicated
efforts. In that regard, let me ask you about a parochial issue
that has been brought to my attention. I am told that at the
Stennis Space Center in Hancock County, Mississippi, there is a
new technology that is under development that holds promise for
the detection of toxins in our food supply. There are some
toxins that are lethal, of course, such as aflatoxin, that
could easily be mass produced, I am told. And this technology
may give us a new tool in our arsenal, a new weapon against
this kind of terrorist activity. Do you consider this
technology--or are you familiar with it enough to say whether
it has practical application in the Department of Agriculture?
What are your thoughts about it?
Mr. Hawks. I had a briefing on it this morning. It is
hyperspectral imaging and it was developed by NASA, and they
have gone from the huge equipment down to, as they described it
to me, an instrument the size of a loaf of bread. It certainly
was a very exciting briefing that I had this morning. It
certainly has promise. We are always looking for anything that
we can use to rapidly detect toxins or other harmful agents.
But it had a lot of promise this morning, and this morning is
the first time that I had seen this. I have not had a lot of
research into it, but it is still promising.
Senator Cochran. Mr. Chairman, I have a couple of questions
for Mr. Bost, then I would be happy to yield. If I can proceed
to ask them? For the WIC program, Mr. Bost, the funding
requested has increased from the current year. Will the funding
request be sufficient to meet all of the program costs and
participation demands in your opinion?
Mr. Bost. As a part of, in terms of the President's budget
request?
Senator Cochran. Yes, for the WIC program.
Mr. Bost. As a part of the President's budget request, this
is an unprecedented budget request for WIC. I think that
demonstrates a real commitment on the part of this
Administration to address the needs of everyone who needs this
service. I would say at this juncture, based upon our best
estimation, yes the budget will meet program costs and
participation demands.
Senator Cochran. There is a contingency fund. I noticed
$150 million included in the budget proposal for that. This is
a new contingency fund. My question is, what is the benefit of
establishing this fund at the beginning of the fiscal year
rather than appropriating these funds at the outset of the year
or having a supplemental when you see that it is needed?
Mr. Bost. I think it is fairly easily available to us to
use because we look at tracking utilization by State almost on
a monthly basis. If we see a significant increase in the number
of persons who require WIC benefits, then the money is there
and available for us to utilize to meet their needs. Research
on the WIC program has indicated that it is one of the most
successful programs in terms of early intervention and in terms
of meeting the needs of women and children in this country, so
it is a very important program. If the money is there and there
is an identified need, then we are able to quickly respond to
that need.
Senator Cochran. There is a supplemental that is in the
works now. Has OMB, to your knowledge, included any provision
for WIC funding in the supplemental that is being submitted by
OMB tomorrow?
Mr. Bost. We currently have ongoing discussions on that. I
do not think the final decision has been made.
Senator Cochran. You have in the budget request $2 billion
as a contingency reserve for the Food Stamp Program. This is
the same amount that was in the fiscal year 2002 budget. How
much of this $2 billion contingency reserve do you think you
will use in fiscal year 2002, and have you projected the need
for $2 billion more in 2003 already?
Mr. Bost. If we look at the current utilization in the Food
Stamp Program, I think we are going to use all of that money.
Let me give you an example of what has occurred. Over the
course of the last several years we saw a significant decrease
in the number of people in this country applying and receiving
food stamps--unprecedented. In Texas alone, there was almost a
50 or 55 percent decrease.
However, during the course of the last year, from last year
to now, we have seen an increase in about 1.5, 1.6 million
person increase, or about 17.4 up to about 18.6 million. With a
number of things going on, you have an economy, you have a
number of States doing significant access and outreach,
changing their applications. I think that we will continue to
see a significant utilization of the Food Stamp Program in this
country.
Senator Cochran. Senator Stevens was here earlier and
indicated he had some questions that he wanted asked to you,
Mr. Bost, and we will submit those to you rather than my
reading them to you.
And you can just respond for the record, if you would, and
furnish a copy to Senator Stevens at his office in S-146 of the
Capitol? Can you do that and make a note of that?
Mr. Bost. Yes sir. We will be more than happy to do so.
Senator Cochran. We want to keep him happy, right?
Mr. Bost. Absolutely, and you too.
Senator Kohl. Senator Durbin.
VOLUNTARY RECALL
Senator Durbin. Dr. Murano, in your testimony you talk
about the efforts being made on coal mine security, and make
reference to a number of new agencies that are being created:
food biosecurity action teams, food emergency rapid response
evaluation teams, food threat preparedness network. All of
these, apparently, are in response to September 11 and our fear
of bioterrorism. Secretary Thompson from HHS, Secretary Veneman
and others have noted the vulnerability of our food supply to
sabotage or to potential harm. I wanted to ask you a question
about this effort in light of the Chairman's earlier questions.
Clearly, through all of this new effort and all of these
new agencies, if you established that someone had an intention
to contaminate the food supply with a dangerous chemical that
was life threatening, would you in that situation contact the
company that had issued the product and ask them to voluntarily
recall it? Or, would you in that situation seize the product as
quickly as possible?
Dr. Murano. Senator, if we had such a theoretical event
there would be a number of people that would be made aware of
what is taking place. The company definitely would have to be
one of them, for one important reason, they are the ones who
would know, where the product ended in terms of who they were
selling to and what lot numbers may be implicated. We have to
involve them and as a result they would be involved, very
quickly, simply because we need the information they would have
to provide to us.
Senator Durbin. I am not asking about consulting the
company. You are in a situation where someone has just called
you and said we have an emergency on our hands. A terrorist has
contaminated the food supply. We know what it is. We know what
the product is. We have the company on the line. We think we
know where it is. At this point you call the head of the
company and say, ``Would you consider voluntarily taking that
product off the shelf?'' Is that the response you would take?
Dr. Murano. Basically what I would say to the head of that
company is ``Sir, we have evidence that the product produced in
your plant is contaminated with Agent X. We need you to recall
it as soon as possible.'' And that is exactly what I would
expect to happen.
Senator Durbin. So you would not have the authority to make
that happen? You would say we expect that to happen. That is as
far as you would want to go?
Dr. Murano. It is as far as I am able to go right now.
Senator Durbin. Let us talk about where you ought to be
able to go. I think that was the line of the Chairman's
questioning. I think in that circumstance I would expect you to
move heaven and earth to pull that product off the shelf, not
to wait for a corporate decision, a judicial order or
depositions to be taken. Would not you as a person in America
want your government to respond quickly with the authority to
remove that product?
Dr. Murano. Moving heaven and earth is exactly what I would
do. This is the kind of a situation, obviously, where law
enforcement has to be called in. Simultaneously, you have got
the FBI involved and so forth. So, detaining that product and
seizing it would not be something that would take a lot of
time, I have been assured by law enforcement.
Senator Durbin. Let me try to get to the bottom of this. If
we are prepared to move heaven and earth, the question I am
asking is, is the Administration prepared to move Congress to
give them new legal authority so that it is very clear that in
that emergency, whether we are talking about intentional
contamination or accidental contamination, in either instance
Americans are at risk and Americans are in danger.
I hope I am not speaking for the Chairman here, but this is
a line of questioning that has been raised time and again. Why
is the Administration reluctant to ask for the authority to
take a dangerous product off the shelf as quickly as possible?
Dr. Murano. Well, I am going to speak about our system at
FSIS, and as I explained, it is a voluntary recall system. If
it is a system that does not work because the product is not
recalled as quickly as possible, I would be the first person to
say we need that authority. But, the voluntary recall system
has been working. This is something we deal with on practically
day-to-day basis, in the sense that we have to respond to
outbreaks or instances where a product has contaminants that
would be injurious to consumers. It is something we have
experience with, as I said before, Senator, and excuse me for
repeating it. We have not had, except for that one instance,
and we quickly detained product in that case and the company
quickly issued the recall.
Senator Durbin. In 1999 what percent of recalled meat and
poultry products were recovered by your agency?
Dr. Murano. If you will give me a second.
Senator Durbin. While you are looking for it, I will tell
you it was 24 percent in the year 2000. What percent of the
recalled meat and poultry products were recovered by your
agency?
Dr. Murano. I would imagine it was probably about that.
Senator Durbin. Twenty-five percent. So under the current
system you are recovering about a fourth of the recalled meat
and poultry products that you consider to be dangerous. I think
when we are talking about homeland security, intentional
contamination, chemical agents that could be devastating to
individuals, as opposed to a bad night's sleep, for a healthy
person and worse for children and the elderly, that we want a
better response.
Dr. Murano. You had better believe it, and Senator, I will
tell you this, though. If we had the authority to recall we
would not get any more retrieved product. There are many
reasons why we do not get as much actual product back as the
amount that is actually issued on a recall. It is a complex
answer to give you, but just to give you an example of part of
the explanation.
There was a case several years ago where there was a large
outbreak of salmonella involving ice cream. This was produced
by a company that sells door to door. Because they sell door to
door they knew exactly who they sold to, which is typically not
the case. When you have a situation where you are selling food
at a supermarket you do not know who buys it.
But in this case they knew exactly who they sold it to, so
when they had to recall the product, which of course they did,
they could go door to door. The company knew exactly who their
clients were. The CDC conducted a survey after the fact to see
how good the recall response was and what were some of the
factors that affected the product being recalled. And you will
be surprised, because I certainly was, to read the following.
Thirty-one percent of the households that had implicated
product, this was ice cream, knew that there was supposed to be
a recall and the ice cream had a contaminant. This 31 percent
of households went ahead and ate it anyway, because they did
not believe the recall. It is amazing. I mean, it, truly is
amazing. You read that and you say, my goodness. What do you
have to do, go in like Gestapo and raid their refrigerators?
So it is very frustrating to me, I will tell you, Senator,
and I feel exactly as you do. I would love to retrieve every
ounce of product that is contaminated.
Senator Durbin. I just want to give you the tools to do it,
then. Frankly, I want the Administration to ask for those tools
because I do not think they could use them effectively without
that. And I will concede no system is foolproof. No system is
100 percent.
But now that we have graduated from our last hearing, when
we discussed this agency's appropriation, we have graduated
into a new level of thinking here. I hope we have. And you have
given us ample evidence of a lot of people sitting in your
agency thinking about some terrible possibilities, as you say,
to respond to attacks on the food supply.
I am not talking about naturally occurring contamination,
and I just think that we have to be much more aggressive. And
to be much more aggressive, you need better tools. I do not
hear you saying you are not going to ask for them, but I do not
hear you saying affirmatively you are going to move this up.
You have an extraordinary vitae and background in food
safety. I read it again today. And what I found, after sitting
for 16 years before people at this table representing the same
agency, is they bring this great academic background into this
institution and they start thinking institutionally. And then
when they leave, they are liberated again and come back to us
and say, we have got good ideas again. And I am just hoping
that while you are there, that you will use some of this
creative, innovative thinking to come up with some new tools.
I also hope that you will give me an explanation about your
statement on the Supreme Beef case. I am not sure I understand
this. Here is what you said. ``Since the Supreme Beef decision,
FSIS no longer relies solely on salmonella data to shut down a
plant.'' Then you go on to say, ``I must emphasize that
salmonella testing has not stopped. The difference is that now
we are using the performance standard data in conjunction with
other measures to verify that the establishment's plant is in a
sanitary standard operating procedure.'' Do I take it from that
that even though the Administration has not come forward and
asked for legislation to overcome the scrutiny, are you telling
us you found a way around it, that you can enforce salmonella
standards even though the court case said you could not?
HACCP SYSTEM
Dr. Murano. I will be happy to explain, Senator. As a
microbiologist and as someone who has done a lot of HACCP
training in my day--of industry both domestically and in other
countries--I know that HACCP was developed so that microbial
testing would be a part of it, a very important part of it, one
that would verify if control of a hazard is being maintained by
the HACCP system. And so to directly answer your question, what
takes place is simply this. By testing for salmonella, as we
always have and--which we are continuing to do even after the
Supreme Court decision--that testing, it is our marker to say
look carefully or scrutinize with more detail the HAACP plan
and the sanitation plans of that operation, because something
may be wrong. What we do now, and this is in contrast to what
was done before Supreme Beef, we would rely on the salmonella
performance standards as verification the HACCP plan is working
or not working. After Supreme Beef, if there was a third set
failure as we call it, testing for the third time, that is when
the enforcement action was taken.
Now what we do is we are using the salmonella test as a
verification, as a marker. As if you are checking your
cholesterol level. If it indicates if you have a high blood
cholesterol, you maybe need to do something about your diet or
your exercise and so forth.
Senator Durbin. I have heard this many times. Go ahead.
Dr. Murano. So the same way, we use that analogy. It may
not be the perfect analogy. The salmonella microbial test is
our indicator, to look more closely. What we do now is when a
plant--we do this test and we find that the salmonella levels
exceed a certain standard that was established when the HAACP
plan was first implemented, we go into the HAACP plan because
HAACP and sanitation are the process controls that are going to
ensure that the food will be as safe as possible.
Senator Durbin. I follow your answer. I would like to ask
as a favor if you would take a look at the legislation Senator
Harkin and I introduced, S. 2013, the Meat and Poultry Pathogen
Enforcement Act, which we hope will give even more tools to do
this job effectively.
I have one last question. Mr. Bost, your answer to Senator
Cochran's question about the adequacy of the WIC program, have
you taken into consideration the increased cost to the program
within the last year when you say you will be able to meet the
national needs?
Mr. Bost. Yes, we believe we will, when you look at the
amount that is in the contingency fund. We believe, as I said,
the request can serve up to 8 million persons per month. This
is unprecedented. And I would be really surprised if we hit
that amount.
Senator Durbin. The amount of $4.387 billion for WIC,
appropriated in fiscal year 2002, was supposed to support an
anticipation of 7.6 million people. It now looks like it will
support participation of 7.4 million because of an increase in
food costs. And this falls below the January 2002 participation
level, which was 7.5 million. And so I hope that as you are
making these calculations, and rightfully with pride noting
historic levels of funding for WIC, that you will also note
that you are dealing with rising food costs and rising
participation at the same time.
Mr. Bost. Absolutely. Again, Senator, I want to make sure
that we are clear. I am talking about the President's proposal
in terms of 2003, and that is what you are talking about?
Senator Durbin. Yes.
Mr. Bost. Yes, I believe that I would be very surprised if
we were not able to meet it.
ADDITIONAL COMMITTEE QUESTIONS
Senator Durbin. I hope we can keep in close contact.
Mr. Bost. Absolutely. We track this and look at those
numbers, like I said, on an almost monthly basis to see where
we are. And if anything changes I will be the very first to
come and talk with you.
Senator Durbin. Thank you very much. Thank you, Mr.
Chairman.
[The following questions were not asked at the hearing, but
were submitted to the Agency for response subsequent to the
hearing:]
Questions Submitted by Senator Herb Kohl
targeted slaughter epidemiological surveys
Question. The President's budget proposes an increase of $1.2
million to conduct targeted slaughter epidemiological surveys, in
coordination with other Federal agencies.
What portion of the total funding for this pilot project is being
provided by FSIS?
Answer. The $1.2 million FSIS is requesting for the project will
fund all the sampling, laboratory, and survey costs related to the
project. Other agencies will incur only the incidental costs associated
with the staff time by employees participating in the project.
Question. Please provide detailed information on the objectives,
length of time, and amount needed for future years?
Answer. This project is expected to require $1.2 million in funding
each of the next 3 years. Assuming the $1.2 million requested in fiscal
year 2003 remains in FSIS's base appropriation, no additional funds
will be required after fiscal year 2003.
The over-all objective of the project is to establish an integrated
surveillance system with APHIS and our public health partners providing
ante-and-post mortem data on animal diseases and emerging pathogens. An
initial working group with APHIS will be formed this year to prioritize
and determine how best to link this project with data collection
systems already in place at APHIS and FSIS. First, the work group will
analyze existing databases in FSIS, APHIS and CDC to determine how a
coordinated information system could be developed utilizing existing
surveillance and inspection systems and databases. An expert system
will be designed that will provide aggregate data that can be studied
in real time. Confidentiality of data will be addressed and processes
to ensure that will be put in place.
During the first year the objective is to have data already
collected to be able to be used in real time by epidemiologists for
local, regional, national and seasonal trends in animal and human
health. The first year will include a joint study with APHIS NAHMS, FDA
NARHMS and CDC to plan in-plant surveys to potentially link with the
next NAHMS study (which usually includes on-farm pathogen surveys).
Data collected in sentinel plants for each slaughter class that NAHMS
studies would enhance understanding and control of pathogens and other
hazards. If successful, studies in sentinel plants for each slaughter
class could be rotated on a 3-to-5 year basis in parallel with NAHMS
studies to provide meaningful baseline and trend information from the
farm through the to where product leaves the plant.
Project funding would be used primarily for increased sampling of
animals/raw products for analyses, laboratory costs, microbial and
chemical epidemiological studies of pathogens, travel, and meetings
with partners and stakeholders to develop the demonstration project.
The development of software to integrate Federal animal health and food
safety data systems is part of the project as is epidemiological and
surveillance training of field veterinarians.
The third year of the project would include an extensive evaluation
process and a second NAHMS-linked study.
Question. Does this conflict or overlap with NARMS, NAHMS?
Answer. No conflict is intended. A Blue Ribbon Task Group that
included experts from APHIS, FDA, FSIS, AVMA, and other public and
private groups plus a public meeting process developed this project
proposal. The project will make use of their existing databases and
FSIS' data to develop an expert system. In addition, FSIS would augment
their work by collecting needed diagnostic pathology, microbiology,
anti-microbial resistance, residue analyses, serology and gross
pathology data that epidemiologists need to provide early warning
surveillance system to detect emerging animal and human pathogens,
disease trends and additional animal heath and food safety baseline
data. Slaughter facilities are a concentrating point for monitoring
food animal diseases and residue and for detecting emerging pathogens.
The integrated data system would provide real-time scientific data for
science-based risk analysis.
school breakfast start-up grants
Question. I worked to continue funding last year for my State of
Wisconsin to encourage schools to participate in USDA school breakfast
programs. Test results have shown on more than one occasion that a
nutritional breakfast each morning greatly increases students' ability
to learn. Please provide an update on the effectiveness of these start-
up grants. How many school districts have participated?
Answer. In accordance with the provisions contained in the fiscal
year 2001 Agriculture Appropriations Act, the Food and Nutrition
Service entered into a Grant Agreement with the Wisconsin Department of
Public Instruction (WDPI) to implement a breakfast program outreach
project. During fiscal years 2001 and 2002, $500,000 was provided to
WDPI for grants to schools wishing to start programs. In fiscal year
2001, this funding enabled 105 new schools in 56 school districts to
join the School Breakfast Program. Approximately 17 percent of the
enrolled children at those schools received a breakfast on an average
day.
Question. Does the USDA believe that the expansion of school
breakfast start-up grants to other States would result in increased
participation in USDA school breakfast programs nationwide?
Answer. While expansion of breakfast start-up grants to other
States would probably result in some small increased participation in
the School Breakfast Program (SBP), we do not believe that this is an
effective way of reaching more children with the Program. As you know,
we administered a series of breakfast outreach grants from fiscal years
1990 through 1996. During this period, a significant number of schools
joined the SBP, to the end that currently approximately 77 percent of
the schools that offer the National School Lunch Program (NSLP) now
offer the SBP. However, since only 28 percent of the number of children
participating in the NSLP participate in the SBP, we believe that
efforts to bring more children into the SBP should be primarily focused
on children in current SBP schools. In this regard, the Administration
has identified SBP expansion as a current priority. Among our
activities under this priority are partnerships with national advocacy
organizations that are geared toward bringing more children into the
SBP and development and distribution of informational materials for
local school officials and parents.
Question. Please provide an update on these start-up grants. How
many school districts have participated? How does the number of
applications for fiscal year 2002 compare to fiscal year 2001?
Answer. In fiscal year 2001, the Food and Nutrition Service
provided $500,000 to the Wisconsin Department of Public Instruction
(WDPI) to implement a breakfast program outreach project. This funding
was, in turn, provided by WDPI to schools wishing to start programs.
This funding enabled 105 new schools in 56 school districts to join the
School Breakfast Program. Approximately 17 percent of the enrolled
children at those schools received a breakfast on an average day.
WDPI has received requests for fiscal year 2002 funding from an
additional 34 schools in 25 different school districts. WDPI is
currently reviewing these requests and will be awarding funds to
approved schools within the next several months.
wic electronic benefits transfer
Question. Please provide an update on the implementation of the
Electronic Benefits Transfer system, funds in the President's budget
available specifically for this purpose, and information on the current
number of States participating or preparing for participation.
Answer. FNS has requested $14 million in the fiscal year 2003
budget for multi-purpose grants to support the development of WIC State
management information systems, nutrition education, breastfeeding
promotion, and to continue supporting WIC State agencies pursuing
Electronic Benefits Transfer (EBT). Of this amount, up to $6 million
will be dedicated to support EBT development. FNS awards annual EBT
grants to WIC State agencies through a competitive solicitation and
proposal process. WIC EBT grants are intended for up-front design,
development, and implementation, with the understanding that on-going
operations must be sustainable within the State agency's nutrition
services and administration (NSA) grant. Currently there is one
statewide operational WIC EBT system (Wyoming), two operational pilots
(Nevada and Ohio), three State agencies with plans to launch systems in
2002 (Texas, New Mexico, and Michigan), and six State agencies in the
planning phase (Connecticut, Maine, Massachusetts, New Hampshire, New
Jersey, Rhode Island).
wic childhood immunization
Question. I worked to continue funding last year for my State of
Wisconsin to encourage schools to participate in USDA school breakfast
programs. Test results have shown on more than one occasion that a
nutritional breakfast each morning greatly increases students' ability
to learn.
Please provide information on the report requested in the fiscal
year 2002 appropriations bill regarding agency responsibilities for
childhood immunization. What steps have been taken to ensure that while
WIC providers are playing a role in improving immunization rates among
children, these activities are not interfering with the core WIC
objectives?
Answer. In response to the Committee's directive in its report
accompanying the fiscal year 2002 Agriculture, Rural Development, Food
and Drug Administration and Related Agencies Appropriations Act, the
Department submitted, on February 15, 2002, a copy of a WIC-
Immunization Action Plan. That plan, developed jointly with the Centers
for Disease Control and Prevention (CDC) and five other partner
organizations, delineates agency responsibilities for carrying out
activities necessary to improve immunization rates of children
participating in WIC. Working collaboratively, the partner
organizations are making significant progress in addressing the
objectives contained in the plan.
USDA and DHHS are working together to implement this plan using
existing resources. For example, as directed by the Executive
Memorandum of December 11, 2000: Improving Immunization Rates for
Children at Risk, a standardized procedure for immunization screening
and referral using a documented immunization record will be implemented
in WIC by October 1, 2002. The cost of local level assessments and
referrals remain WIC-allowable costs. CDC will fund training and
educational materials necessary for WIC to implement this new
procedure. The training takes places this summer. CDC also funded a
study that evaluated the effectiveness of WIC's new standardized
procedure.
The Department has worked hard to ensure that WIC's role in
immunization screening and referral activities allows WIC to
effectively fulfill one of its core objectives to serve as an adjunct
to health care without sacrificing other core objectives such as
nutrition education. For example, WIC's new standardized procedure for
screening and referral was specifically developed to be efficient in
terms of time savings, simplicity, and accuracy for WIC staff. In
addition, a videoconference is being developed for State WIC Directors
and Immunization program managers that will identify the roles and
responsibilities of WIC and Immunization programs and define key
features of successful coordination. The goal of the workshop is to
promote strategies that enhance the public health goals of both WIC and
immunization programs, reduce barriers to service in both programs, and
empower mutual program beneficiaries to achieve optimal nutritional
well-being and up-to-date immunization status.
wic food package
Question. Please provide an update on the Department's activities
to develop a food prescription rule that takes into consideration
ethnic and cultural sensitivities.
Answer. FNS is working on a proposed rule that would take into
consideration, among other issues, ethnic and cultural sensitivities.
We expect to publish this proposed rule sometime this fiscal year.
wic farmers market nutrition program
Question. Please provide an update on how this program is currently
being administered, including how many States are participating or have
submitted applications, compared to previous years.
Answer. The WIC Farmers' Market Nutrition Program (FMNP) is usually
administered at the State level by either the State agriculture
department or the health department (WIC Program). In addition, any
Federally-recognized Indian Tribal Organization is eligible to
administer the FMNP. The Food and Nutrition service provides cash
grants to State agencies who must administer their programs in
accordance with regulations established at 7 CFR Part 248.
The FMNP is currently authorized in certain areas of 40 States:
Alabama, Alaska, Arkansas, the Chickasaw Nation, California,
Connecticut, District of Columbia, Florida, Georgia, Guam, Illinois,
Indiana, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan,
Minnesota, Mississippi, Mississippi Choctaw, Missouri, New Hampshire,
New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Osage
Tribal Council, Pennsylvania, Pueblo of San Felipe, Rhode Island, South
Carolina, Tennessee, Texas, Vermont, Washington, West Virginia and
Wisconsin. In fiscal year 2001, 41 State agencies participated in the
FMNP, the additional State being Louisiana. Louisiana declined to
continue operations in fiscal year 2002.
Currently, five State agencies (Arizona, Five Sandoval Indian
Pueblos, Hawaii, Montana, and Puerto Rico) submitted fiscal year 2002
State Plans to begin FMNP operations.
senior farmers' market nutrition program
Question. Please provide an update on the expenditure of the $10
million provided through CAP in fiscal year 2002. Include in your
answer the number of participating States, the number of applications
received, and the funding amounts requested and received.
Answer. The Food and Nutrition Service received 43 grant
applications, of which 27 received grant awards to participate in the
Seniors Farmers' Market Nutrition Program in 2002.
The information is provided for the record.
[The information follows:]
FISCAL YEAR 2002--SFMNP GRANT APPLICANTS
[In dollars]
------------------------------------------------------------------------
Requested Offered
------------------------------------------------------------------------
Successful SFMNP Grant Applicants:
Alabama............................. 2,161,400 633,169
Alaska.............................. 100,000 45,316
Arkansas............................ 100,000 72,288
California.......................... 2,000,000 906,325
Chickasaw Nation of Oklahoma........ 143,280 94,767
District of Columbia................ 280,000 129,641
Hawaii.............................. 378,000 342,591
Illinois............................ 1,225,000 859,410
Indiana \1\......................... 59,850 45,316
Iowa................................ 560,000 282,958
Louisiana........................... 672,000 311,964
Maine............................... 971,000 671,405
Maryland............................ 900,000 153,581
Massachusetts....................... 275,000 47,781
Minnesota........................... 100,000 66,760
Missouri \1\........................ 504,000 366,558
Montana............................. 99,000 40,785
Nebraska............................ 495,000 147,910
New Hampshire....................... 78,000 64,315
New York............................ 2,000,000 1,139,018
Ohio................................ 1,318,000 1,194,536
Oregon.............................. 1,280,000 838,351
Pennsylvania \1\.................... 2,000,000 906,325
Tennessee........................... 600,000 260,783
Vermont............................. 43,000 29,270
Virginia............................ 415,000 251,537
Washington.......................... 389,510 97,339
-------------------------------
TOTALS............................ 19,147,040 10,000,000
===============================
Unsuccessful SFMNP Grant Applicants:
Connecticut \2\..................... 111,300 0
Florida \2\......................... 260,000 0
Grand Traverse (ITO) \2\............ 13,500 0
New Jersey \2\...................... 1,000,000 0
North Carolina \2\.................. 133,091 0
Osage Tribal Council \2\............ 55,000 0
South Carolina \2\.................. 850,000 0
West Virginia \2\................... 1,200,000 0
Five Sandoval \3\................... 80,000 0
Kentucky............................ 224,500 0
Nevada.............................. 128,250 0
New Mexico.......................... 120,000 0
Rhode Island........................ 400,000 0
San Felipe \3\...................... 32,320 0
Wichita Affiliated Tribes \3\....... 35,000 0
Wisconsin........................... 612,500
-------------------------------
TOTAL............................. 5,255,461 0
------------------------------------------------------------------------
\1\ New State agency for 2002.
\2\ Participated in SFMNP during 2001 pilot year.
\3\ Federally Recognized Indian Tribal Government or Organization.
Question. How does the number of applications and funding for
fiscal year 2002 compare to fiscal year 2001? If the number of
applications and funding requests has increased in fiscal year 2002,
please explain the Secretary's decision to not use CCC funds to
supplement the program.
Answer. In 2001, the Food and Nutrition Service (FNS) received 45
grant applications requesting a total of $18.2 million, of which 36
grants were awarded totaling $15 million. In 2002, FNS received 43
grant applications requesting a total of $24 million, of which 27
grants were awarded totaling $10 million. Currently, the option of
using CCC funds to supplement the $10 million in appropriated funds is
still being considered.
Clerk's Note: Section 4402(a) of the Farm Bill (Public Law 107-171)
provided an additional $5 million in CCC funds for the Senior Farmers'
Market Program.
Question. What are some of the expressed benefits of the SFMNP, as
well as some of the expressed problems?
Answer. Over 400,000 low-income seniors and 3,700 farmers benefited
directly from the pilot Seniors Farmers' Market Nutrition Program
(SFMNP) in 2001. The SFMNP provides seniors with fresh, nutritious,
unprepared locally grown fruits and vegetables. Additionally, the
program provides limited financial support to small farmers at
participating farmers' markets, roadside stands, and community
supported agriculture programs across the country.
A major problem expressed by the SFMNP grantees is the lack of
administrative funding. In addition, the program is only available on a
limited basis.
studies and evaluations
Question. In recent years, FNS has received funding to conduct
program evaluation and operational research. In fiscal year 2002, FNS
received $3 million for this purpose. Is that amount sufficient to meet
FNS' specific needs? If not, what types of projects are not being
pursued, either within FNS or through other agencies, and what would
the cost of pursuing those projects be?
Answer. The overall studies and evaluation budget, considering both
FNS and ERS funding has been cut by about 50 percent in the past
decade, taking into account appropriations and the effects of
inflation. The $3 million appropriated to FNS for performance
measurement and program assessment in fiscal year 2002 is not
sufficient to meet the needs of the nation's domestic food assistance
programs by itself. In addition to the funds appropriated to FNS,
Congress appropriated just over $9 million to the Economic Research
Service for studies and evaluations of food assistance programs. These
funding levels are equal to the levels requested in the President's
fiscal year 2002 budget. Earlier this year, as we have done in previous
years, FNS identified several areas where ERS could be helpful in
meeting high priority policy information and research needs, and
recommended that ERS use funds from the $9 million appropriation for
this purpose. To the best of our knowledge, ERS has not yet made final
funding decisions for this year, but early indications suggest that
they will accept some, but not all, of FNS' recommendations.
The major priorities identified by FNS and requested of ERS include
a Congressionally-requested study of the cost of preparing school meals
and the adequacy of the school meal reimbursement rates, an examination
of the reasons for interstate variation in the cost of the WIC food
package, and an assessment of the burden and accuracy of various food
stamp reporting options and redetermination strategies. To do an
effective job on these studies, to provide information on which program
managers can rely for decisions for each of these important topics,
more funding would be needed. While these projects would address the
programs' most pressing needs, there is a range of other projects that
would be worth pursuing to ensure that the Nation's multi-billion
dollar annual investment in nutrition assistance is used as effectively
as possible.
Question. I have been informed that FNS does not feel their
requests to ERS to conduct program evaluation of FNS-sponsored
demonstration projects, or other special projects funding with FNS
grants to States, receives high enough priority by ERS. FNS feels that
such projects would be more useful if they received more rigorous
evaluation to test for outcomes and potential for dissemination to
other locales. Do you have any suggestions for how this situation could
be rectified?
Answer. FNS and ERS approach the research needs of the food
assistance programs from significantly different perspectives. FNS is
keenly interested in sharply focused studies that address specific
operational and policy needs of Federal, State, and local program
administrators and the clients we serve. ERS' interests are not without
merit, but they frequently differ from those of the line agency
responsible for policymaking and program administration.
Question. What sort of input does FNS provide into the ERS study
and evaluation agenda for the domestic food assistance program? What
sort of feedback does FNS receive from ERS on how this information has
been utilized?
Answer. Since fiscal year 1998, we have provided ERS
recommendations endorsed by the Under Secretary and the Agency
Administrator identifying what we believe to be the most critical
policy information and research needs for the domestic food assistance
programs for which we are responsible. These recommendations are based
on the cumulative experience of Agency staff, managers, and executives,
as well as that of our State and local partners and other stakeholders.
The recommendations typically identify a set of research questions,
explain their relevance to current or potential policy discussions, and
outline a suggested approach.
ERS staff has met with FNS staff to clarify our recommendations.
FNS staff has also participated in periodic ERS-sponsored conferences
on research priorities, along with staff from other Federal and State
agencies, academic institutions, community organizations, and private
research groups. FNS has not participated in ERS' decision-making
process for projects to be undertaken, nor have we received more than
informal feedback on the factors that affected those decisions.
Question. Please provide information on any gaps that FNS feels may
exist in FNS related research currently underway by ERS.
Answer. FNS is primarily interested in study, evaluation and
research results that help the nation's food assistance program
managers address operational and policy issues. We have not been
successful in persuading ERS to invest significant resources to assess
how to improve program integrity in the Child and Adult Care Food
Program and the accuracy of the school meal application and eligibility
determination process. We are concerned that our inability to obtain
prompt research support for these emerging issues has, at best, delayed
the Agency's ability to assess current levels of performance, test
alternative solutions, and implement effective controls.
the child and adult care food program
Question. In previous years, the Agriculture Appropriations bill
has included a general provision eliminating the requirement that
eligible children receive Title 20 funds in order to receive the CACFP
meal subsidy. This allows proprietary centers to participate in CACFP
if at least 25 percent of the children they serve are eligible for a
free or reduced price meal. This language has been taken out in the
President's fiscal year 2003 budget.
How many children received the CACFP meal subsidy during last year
prior to the aforementioned language being inserted into an
appropriations bill? How many children have been served each year the
Title 20 restriction has been lifted?
Answer. In fiscal year 2000, the year before the aforementioned
language was inserted in the Agriculture Appropriations bill,
approximately 372,000 children were served in child care centers that
participated in CACFP because at least 25 percent of the children they
served qualified for Title XX funds. Beginning in December of fiscal
year 2001, for-profit centers were allowed to participate if 25 percent
of the children they served were eligible for free or reduced price
meals. Since that time, the number of children attending for-profit
centers that participate in CACFP rose to 433,000 in fiscal year 2001
and 457,000 in fiscal year 2002.
Question. Please explain why the Administration chose to re-impose
these restrictions in the fiscal year 2003 budget.
Answer. While the Department is not opposed to extending Child and
Adult Care Food Program (CACFP) eligibility to for-profit child care
centers, we do not believe that extending it on a year-to-year basis is
in the best interest of over all program management and operations.
Inherent in that approach is an uncertainty as to ongoing program
availability for such centers. This results in a reluctance on the part
of State administering agencies to make the significant commitment of
resources necessary to outreach to these centers, properly train them
and provide oversight of their operations to help ensure their
successful operations, if these efforts may have only short term
benefit.
food program administration
Question. I have been informed that resources available for program
administration have been reduced in real terms over the past several
years while the Federal nutrition assistance programs have increased in
both size and complexity.
What functions would be strengthened or initiated if additional
resources for program administration were to be made available?
Answer. With additional resources, FNS proposes to undertake the
following initiatives:
Proposal 1. Enhanced Program Integrity in FNS Programs
To meet the goal of improved stewardship of Federal funds, FNS
would allocate $4,500,000 to improve the oversight of both the Food
Stamp and Child Nutrition programs. In the Food Stamp Program,
$3,500,000 will provide up to 45 additional staff years to support
improvements in payment accuracy. In the Child Nutrition Programs, FNS
will devote $1 million for 13 additional staff years to combating clear
instances of sponsor fraud and mismanagement and safeguard the proper
expenditure of significant Federal dollars.
Proposal 2. Financial Statement Audits
To meet the goal of improved stewardship of Federal funds, FNS
would assign $1,100,000 to fund and administer contracts with Certified
Public Accounting firms for the mandated financial statement audits of
FNS programs. FNS has established a track record as one of the few
agencies to achieve an ``unqualified'' (``clean'') opinion on its
financial statement audit while completing the statements and the audit
on time. FNS is now ready to contract out this annual requirement
formerly performed by the Office of the Inspector General.
Proposal 3. Increase Financial Systems Integrity and Accountability
To meet the goal of improved stewardship of Federal funds, FNS
would devote substantial resources to FNS mission-critical systems that
are dedicated to improving benefit accuracy and reducing fraud. For
example, FNS would incorporate upgrades to the Agency's information
systems into an integrated data warehouse/analysis system capable of
providing access to both program and financial data for enhanced
analysis and tracking capabilities.
ams--cranberries
Question. Wisconsin is the nation's leading producer of
cranberries. Over the past 2 years, prices have fluctuated greatly and
have threatened the profitability of growers in my State and throughout
the country. Can you please share with this Subcommittee what impact
last year's cranberry marketing order had on prices to growers?
Answer. In the 2000/01 crop year, the cranberry industry, through
the Cranberry Marketing Committee, used a producer allotment program
authorized under its Federal marketing order and set a total allotment
at 5.468 million barrels. Government purchases of cranberry products
over the 2000/01 and 2001/02 crop years are estimated at more than
500,000 barrels. For the 2000/01 crop year, sales increased by 847,157
barrels, including government purchases. In addition, per capita
consumption of processed cranberries increased from 1.60 pounds in
1999/2000 to 1.87 pounds in 2000/01.
A key sign that a turnaround in the industry may be occurring is
the rapid reduction of inventory. This reduction in inventory is due to
the producer allotment program, government purchases, and increased
sales. The producer allotment program has resulted in a reduction in
acres harvested from a high of 37,500 acres in 1999/2000 to 34,300
acres in 2001/02.
While prices have fallen from a high of $65.90 per barrel in 1996
to $17.20 per barrel in 1999, prices have improved slightly during the
past two crop years when the producer allotment program was used and
inventories were reduced to more manageable levels. The reported price
of $22.90 per barrel for the 2001/02 crop year is still below the
estimated cost of production of about $30-35 per barrel.
Question. Can you also provide this Subcommittee with information
on how membership for the Cranberry Marketing Committee is selected?
Included in your answer will you please provide information on the
names of all handlers and the percentage that each has in the national
market?
Answer. Committee membership and the selection process are
established under the Federal marketing order for cranberries grown in
ten States, codified in 7 CFR Part 929.
There are eight members on the Committee. Each member has an
alternate. Four members and their alternates represent the cooperative
marketing organization that handles over two-thirds of the production
during the year nominations are made. Three members and their
alternates represent ``independent'' growers who are not members of the
major cooperative. The nominated members and alternates must be growers
or employees, agents, or duly authorized representatives of growers. A
public member and alternate are nominated by the seven Committee
members after they have been selected by the Secretary.
The 10-State production area is divided into four districts. Each
district is represented by at least one member and one alternate member
from that district. District 1 includes the States of Massachusetts,
Rhode Island and Connecticut; District 2, the State of New Jersey and
Long Island, New York; District 3, the States of Wisconsin, Michigan,
and Minnesota; and District 4, the States of Oregon and Washington.
Since promulgation of the Order in 1962, Ocean Spray Cranberries,
Inc., has had four members and alternates on the Committee. At least
one of the four members must be from either Oregon or Washington. Ocean
Spray's members are nominated by Ocean Spray's board of directors, who
normally nominate one grower from each of the four districts.
The independent growers in Districts 1, 2, and 3 gather in
locations central to their respective districts to elect one member and
alternate representative for each district. The independent growers in
District 4 may attend and participate in the District 3 meeting.
District 4 growers who do not attend the meeting have an opportunity to
cast mail votes for the nominee of their choice.
The nomination meetings and Ocean Spray's board meeting are held in
May of every even-numbered year. The nominations, along with brief
biographical information on each nominee and a statement of each
nominee's willingness to serve, must be submitted to the Department of
Agriculture (USDA) by July 1. The Secretary approves the nominees by
August 1, the beginning of the term of office.
Ocean Spray has always handled more than two-thirds of the
industry's production and, thus, has always had four members and
alternates on the Committee. Last year, Ocean Spray's production fell
just below the two-thirds minimum requirement to seat four members.
However, the marketing order does not provide guidance on how to
proceed if this should happen. The Committee has initiated a formal
rulemaking process to amend the marketing order. Amendments are
proposed to increase membership and to provide for a ``swing member''
who represents the segment of the industry with 50 percent or more of
the production. USDA will expedite consideration of those amendments.
Until the Order is amended, USDA has determined that the current Ocean
Spray members and alternates should continue to serve on the Committee.
The process to nominate independent members and alternates will
continue, as scheduled, in May.
Cranberry handlers are: Ocean Spray Cranberries, Inc., Northland
Cranberries, Inc., Decas Brothers Sales Company, Cliffstar Corporation,
Clement Pappas Co., and Hiller Cranberry Sales. Information on each
handler's percentage of national production is proprietary. The six
handlers listed above account for approximately 97 percent of annual
U.S. cranberry production. Small growers handle the remaining 3
percent. These small growers also handle their own production.
codex alimentarius
Question. In fiscal year 2002, we provided FSIS with additional
funds to be used on Codex Alimentarius activities.
Please provide an update on how those funds are being spent, and
how the activities being funded are expanded from previous years.
Answer. In fiscal year 2002 the U.S. Codex office continued to plan
and develop educational and technical outreach activities to other
nations in support of U.S. trade and food safety positions in Codex.
The additional funds were folded into the existing budget for outreach
activities and allowed for expanded programs.
The U.S. Codex Office developed and presented a Technical Seminar
in Hong Kong for countries from the Far East on January 17-19, 2002.
The workshop featured presentations on the World Trade Organization,
Risk Analysis, Equivalence, Traceability, the Labeling of Biotech Foods
and the General Standard for Food Additives. There were 47 participants
in the session including representatives of 14 countries as well as
foreign nationals employed by the Foreign Agricultural Service and
Agriculture Attaches.
On February 11-13, the U.S. Codex Office hosted a strategic
planning meeting in Washington, D.C., for the Codex Coordinating
Committee for Latin America and the Caribbean (CCLAC). This meeting
stemmed from previous U.S. outreach efforts in the region. The meeting,
attended by 10 Latin countries and Canada, included extensive
discussion on a strategic plan for the region and on developing closer
cooperation between North and South America on Codex issues. The U.S.
Codex Office is planning and anticipating conducting a Technical
Seminar for South Asia in India in September. This seminar will include
presentations on how to form a National Codex Committee structure.
Question. Please explain why funding for Codex Alimentarius
decreased in this budget, including any effects this decrease will have
on activities funded previously.
Answer. The decrease in funding available for Codex Alimentarius in
the fiscal year 2003 President's Budget is attributed to the
Administration's proposal to charge the full cost of Federal employee
and health pension benefits to Agencies. FSIS will experience a net
decrease in these costs in fiscal year 2003; for Codex this decrease
amounts to $30,000.
Salmonella A recent article in the Washington Post outlined the
number of turkeys processed at various plants throughout the country
that tested positive for Salmonella. The article stated that the
average contamination rate in 38 plants tested by USDA last year was 13
percent. While there is an argument that turkey products aren't eaten
raw, and proper cooking eliminates the risk of salmonella, USDA has set
limits for chicken processors.
Question. What is the salmonella limit for chicken processors? Is
it the USDA's belief that there is a higher percentage of raw or rare
chickens eaten than turkeys of turkey products? Why isn't the
salmonella limit for turkeys the same as the one for chickens? Answer.
Chicken processors are required to have 12 or less salmonella positive
samples within a set of 51 samples. Due to the timing of data made
available through microbiological baseline studies for Salmonella in
chicken, and the time involved in associated rulemaking, the Agency has
so far only developed a standard for chicken. The article goes on to
say that USDA is waiting for the National Academy of Sciences to finish
a study of bacteria standards before deciding whether to set limits for
turkeys.
Question. When do you anticipate the completion of this study? Once
the study is completed, what is the time frame for USDA to make
decision on salmonella limits for turkey processors? Answer. We
anticipate that the study will be completed in April of 2003.
Subsequent to the completion of the study, the time frame for a
decision on establishing performance standards for salmonella in
turkeys is dependent both upon the information contained in the study
and the public comment requirements of the rule making process.
Question. Please explain the potential impact, if any, this will
have on ensuring a safe meat supply to the public. Include other
options available for USDA to ensure unsafe meat doesn't reach public
supermarkets. Answer. The decision of the U.S. Court of Appeals
represents a change in the way USDA uses one of its enforcement tools.
While the ruling affects USDA's ability to withhold, suspend, or
withdraw inspection from plants that fail to meet Salmonella
performance standards, it does not restrict USDA's ability to take
these actions in plants that are not producing safe products. The
Salmonella performance standard continues to be part of USDA's Pathogen
Reduction/HACCP inspection system. Salmonella testing in grinding
plants will be used in conjunction with other information to verify
that Pathogen Reduction/HACCP systems and sanitation systems are under
control. If a plant fails two sample sets, USDA will immediately
conduct an in-depth review of the plant's food safety systems and
identify corrective actions to be taken. Failure by the plant to
address any deficiencies will result in suspension or withdrawal of
inspection, which would shut down plant operations.
Question. Is the USDA appealing the ruling? If so, please provide
an update on the current situation. Answer. USDA has no plans at this
time to appeal the ruling. The ruling should not be misinterpreted as
undercutting USDA's authority to take action against plants that
produce unsafe meat and poultry products. Salmonella testing in
grinding operations has not stopped. FSIS continues to use Salmonella
testing as one way to verify whether either the Hazard Analysis and
Critical Control Point (HACCP) system or sanitation operating
procedures (SSOPs) implemented by industry are successfully controlling
hazards reasonably likely to occur. FSIS inspectors are charged with
such verification activities. Agency inspectors use record reviews,
visual monitoring of plant personnel, and testing for Salmonella as
tools to determine whether HACCP and sanitation systems are working.
The Agency will continue to take action against those plants that fail
to produce safe product.
fsis automated corporate technology suite
Question. As stated in your testimony, the President's budget
requests an increase of $14.5 million to implement an integrated
computer system.
Please provide the estimated cost of this system over the next 5
years.
Answer. The budget year and out-year costs of the FSIS Automated
Corporate Technology Suite are as follows:
Fiscal year 2003--$14.5 million; fiscal year 2004--$10.5 million;
fiscal year 2005--$10.3 million; fiscal year 2006--$11.8 million;
fiscal year 2007--$10.5 million.
Question. Will this system be integrated with other systems in the
Department?
Answer. FACTS will provide FSIS with the capability to link to
other systems both inside and outside the Department.
cattle ticks
Question. How is APHIS utilizing the funding increase in fiscal
year 2002 for the cattle tick eradication program?
Answer. APHIS used the funding increase in fiscal year 2002 to hire
two inspector positions (1 in Brownsville; 1 in Laredo), and purchase 9
vehicles and radio equipment necessary to update the system.
Question. What actions are you taking in response to your workforce
utilization study of Cattle Fever Tick program?
Answer. We are still reviewing the workforce utilization study and
considering implementing several of the recommendations.
fruit fly exclusion and detection
Question. Please provide an update on how APHIS is utilizing the
additional funding provided in fiscal year 2002 to address the
inequitable distribution of funds for fruit fly trapping in California
and Florida and what efforts exist to address the olive fruit fly
problem.
Answer. We will transfer the additional funds to the California
Department of Food and Agriculture (CDFA). With these funds, the CDFA
will increase trapping densities in counties such as Los Angeles and
Orange County that are high-risk because past fly finds. They also will
increase trapping densities in counties that are high-risk because of
their urban-rural interface (in other words, where rural areas are
being developed for urban use). To conduct these additional trapping
activities, the CDFA will purchase additional traps and lures. In
addition, they will direct $150,000 of the increase toward the
purchase, deployment, and monitoring of Olive Fruit Fly traps in olive
production counties in California. These counties include Shasta and
Tehama Counties to the north, and Tulare and Kern Counties to the
south. The CDFA has met several times with industry groups to determine
ideal sites for these traps and will provide oversight and technical
expertise to local entities, who will actually set the traps.
screwworm
Question. How is APHIS utilizing the fiscal year 2002 funding
increase to ensure that screwworm reintroduction into the U.S. does not
occur?
Answer. The Screwworm increase in fiscal year 2002 was limited to
covering pay costs, which allows us to continue progress in creating a
barrier against screwworm far from U.S. shores. APHIS has eradicated
the pest throughout Central America into Panama. The barrier will be in
place before the end of fiscal year 2002, then the program will convert
to maintaining the barrier in Panama to ensure that screwworm does not
reintroduce itself in the U.S. The cooperative programs have left
behind an infrastructure to prevent future reintroduction of the pest
and to monitor for other animal diseases emerging in the region. APHIS
is also supporting other countries efforts to eradicate screwworm. For
example, APHIS' cooperative screwworm production facility in Mexico is
selling sterile flies to Jamaica for an eradication effort there in
fiscal year 2002.
trade issue resolution and management
Question. Please provide an update on how APHIS is utilizing the
fiscal year 2002 funding increase to safeguard the U.S. from foreign
pests and disease threats and support marketing opportunities for our
agricultural products worldwide.
Answer. APHIS is utilizing the fiscal year 2002 increase in the
TIRM line item on both trade facilitation and safeguarding initiatives.
APHIS attaches overseas facilitate trade by working with host countries
to remove trade barriers or work out protocols for importing U.S.
products. They also are able to intervene when shipments are detained
at ports of entry, resolving the issues and preventing the loss of
products. In fiscal year 2002, APHIS is placing additional personnel in
Asia. A veterinarian will go to China to respond to the increasing
number of trade issues affecting U.S. products there and build
relationships to improve our knowledge of their pest and disease
situation. We are also opening an office in Southeast Asia to better
respond to emerging plant and animal health issues in this region. A
single APHIS attache in South Korea has had to respond to the myriad
trade issues in 14 different countries. Adding another office will
relieve some responsibility, allowing us to provide more efficient
service for animal and plant health issues.
APHIS will also hire two animal commodity specialists to work with
private and public sector stakeholders. These specialists will enhance
export activities and will serve as resources for gathering information
needed for risk assessments. We will also hire five risk analysts to
conduct risk assessments at the Agency's Center for Epidemiology and
Animal Health in Fort Collins, Colorado. These risk analysts will
evaluate the risks associated with regionalization requests from other
countries. In addition, APHIS will enhance the use of E-GOV with
customers for the collection and maintenance of data and records used
in the evaluation and regionalization process for import of animals and
animal products from foreign countries. APHIS also will enhance
harmonization efforts with international organizations and trading
partners for veterinary biologics. This increased level of funding will
allow APHIS to resolve export animal health trade barriers as quickly
as possible and safeguard U.S agricultural commodities.
aquaculture
Question. The Congress provided additional funding in fiscal year
2002 to allow APHIS to continue telemetry and population dynamics
studies on depredating species of wildlife in the Southeast. Please
provide an update on these activities.
Answer. During fiscal year 2002, APHIS completed the second year of
a satellite radio-telemetry study to determine the regional and
continental movements of double-crested cormorants that impact
aquaculture farms in the southeastern United States. Additionally, we
initiated the first season of a multi-year satellite radio-telemetry
study to determine the regional and continental movements of American
white pelicans that impact aquaculture in the southeastern United
States. The data from these studies will allow APHIS biologists to (1)
evaluate current measures and develop new strategies for managing
depredations by these two species on southeastern aquaculture farms;
(2) determine the role that pelicans play in transmitting fish diseases
among aquaculture ponds and farms; and (3) determine regional and
continental movements of cormorants and pelicans and develop regional
and flyway-based management plans for each of these species.
biological control
Question. How is APHIS utilizing the fiscal year 2002 funding
increase for biological control activities?
Answer. We requested the increase for pay costs in anticipation of
the January 2001 Federal pay raise and for annualization of the January
2001 pay increase. We are using the funds to maintain the current
activities which have incurred higher costs due to the Federal pay
raise.
pest threats
Question. Please provide an update on the status of growing pest
threats in Washington State related to abandoned apple orchards;
southern pine beetle infestations in Tennessee which may pose sudden
and serious fire hazards; and the discovery of the Columbia Rootrot
Nematode which may threaten potato exports to Mexico.
Answer. When apple orchards reach the end of their useful life,
growers normally remove and replant them. Currently, there is an
oversupply of many types of apples, and growers may not find it
economically practical to replant these orchards. The costs of removing
orchards is between one and two thousand dollars per acre. Therefore,
growers may choose to abandon these orchards until market conditions
improve. Abandoned orchards can serve as sources of insects and
diseases, since normal pest management is not carried out at these
properties. In many cases, pests and diseases may move from abandoned
orchards to actively managed orchards and increase pest and disease
problems there. At this time, we are not aware of any exotic pest
problems associated with abandoned orchards. Also, we believe that this
problem is best addressed by State officials.
Regarding the southern pine beetle (SPB) infestations, the Forest
Service (FS) is the main USDA agency addressing that issue. In fiscal
year 2001, nine States had outbreak-level populations, and losses in
the southern United States were approximately $300 million. That year,
the FS funded suppression projects on State and private lands in
Alabama, Florida, North Carolina, South Carolina, Tennessee, and
Virginia. The FS also funded projects on Federal lands in Alabama,
Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North
Carolina, South Carolina, Tennessee, and Texas. The most severely
affected area was the southern Appalachian Mountains from southern
Virginia into Kentucky, North Carolina, and South Carolina. They expect
SPB populations to remain high in 2002 and 2003, and the FS plans to
spend $1.8 million in each of these years to continue infestation
treatments and other management applications. Their goal in these
activities is to reduce beetle populations to a low level as rapidly as
possible and to prevent further tree mortality.
In the spring of 2001, several potato shipments originating in the
United States were intercepted at the Mexican border because of the
presence of Columbia Rootrot Nematode. Based on this and other
interceptions, we began an investigation in late 2001 to determine if
there was a problem in the way we ship our potatoes to Mexico. That
investigation is still in progress. Currently, Mexico is not accepting
potatoes from several States because of the perceived phytosanitary
risks. However, we and our counterparts in Mexico are committed to
reaching a resolution that will enable resumed export of our potatoes
to Mexico. In fact, Agriculture Secretaries from both countries signed
a statement in a Memorandum of Understanding affirming their desire to
retain the historical market access of U.S potatoes in Mexico. Both
sides hope to resolve this issue soon.
Question. What is the Department doing to establish new procedural
and/or treatment methods to allow shipments of Hawaii fruit during
winter months without jeopardizing pest introductions to mainland
agriculture?
Answer. Currently, APHIS uses both vapor heat and irradiation to
treat different types of commodities leaving Hawaii for the mainland
U.S. to prevent pests from harming mainland agriculture. Using these
methods, Hawaii producers can ship papayas, mangoes, and other tropical
fruits during the winter months. When a shipper or treatment facility
would like to add commodities they can send, we work with them to
determine the best pest risk mitigation method. Any new requests must
go through a thorough risk assessment, including public comment period,
before APHIS will begin a program.
APHIS also is encouraging other methods to increase the quantity of
fruit Hawaii can market in the U.S. For example, the Medfly is one of
the pests hindering shipments of fruits from Hawaii. APHIS supports
establishing a Medfly control program and establishing Medfly-free
zones to allow producers in those areas to ship to the mainland without
treatment.
Question. Please provide an update on the Departments efforts to
combat Plum Pox, Pierces Disease, Asian longhorned beetles, and Mormon
crickets and grasshoppers.
Answer. Since fiscal year 2000, we have been working with the
Pennsylvania Department of Agriculture to eradicate Plum Pox Virus in
that State. Our efforts are showing excellent results. We removed all
known infected orchards promptly and took steps to reduce the disease's
spread. In doing so, we can assure stone fruit growers that PPV does
not currently exist in the U.S. nursery system. However, emergency
program activities--consisting of surveys, tree removal, site
preparation, and replanting--will need to continue to verify
eradication. We expect to be able to declare eradication by fiscal year
2006.
APHIS is leading a cooperative program to develop strategies that
growers can utilize in managing the Glassy-winged Sharpshooter (GWSS),
a vector of Pierce's Disease (PD). We initiated a pilot study in Kern
County, California, in fiscal year 2001 to develop effective plant pest
management strategies at the farm level. Because citrus is the primary
host plant during the winter months, our strategy involves the
treatment of citrus with a foliar insecticide whenever GWSS are in the
groves during late winter. This combined with follow-up treatments with
a systemic insecticide has maintained GWSS populations at non-
detectable levels throughout the year. This GWSS population reduction
is essential in the management of PD in the multicrop agricultural
area. By reducing GWSS populations in citrus, there are fewer disease
vectors that can return to the vineyards in the spring when the vines
again become a satisfactory food source. In areas where PD has been
identified in the vineyards, this reduction in GWSS helps break the
disease-vector-host triangle and reduces the potential for large
numbers of insects to vector the disease. Results from the initial year
of work indicate that area-wide management strategies that bring
growers in an area together to work in a systematic fashion can
significantly reduce the incidence of this insect.
In fiscal year 2002, we will continue to monitor the impact of
control strategies of GWSS in the study area and include investigations
into the potential of using biological control strategies that are less
intrusive in the environment. We will continue to search for softer,
environmentally friendly compounds to reduce populations of GWSS. We
will also focus on disease mitigation in identified vineyards to
provide methods to reduce or prevent the spread of PD by the vector.
Also in fiscal year 2002, we will begin transferring the strategies
developed in the pilot study in fiscal year 2001 to the County
Departments of Agriculture to begin the implementation of an area-wide
management program. This technology transfer is being accomplished with
the same cooperative spirit that characterized and contributed to the
effectiveness of the earlier pilot study. We have entered into a
cooperative agreement with the California Department of Food and
Agriculture to conduct statewide surveys for GWSS. This effort is
essential to understanding the current infestation and any new areas
that may become infested. Regulatory programs are now in place that aid
in preventing the spread of the insect from infested counties in the
southern part of the State to those counties in the north. Also,
treatment programs are in place that have successfully eradicated the
insect whenever found in the urban areas in these northern counties.
These new insect finds are typically associated with ornamental plants
used in these urban areas. APHIS has provided funds to State and
Federal scientists who are studying novel approaches to managing PD.
These approaches are more long-term in nature, and are aimed at
developing and providing disease resistant varieties of grapes, the
possibility of treating diseased vines with a curative material, and
investigating the potential for biological control of the disease with
similar but competitive organisms.
We are continuing an Asian Longhorned Beetle (ALB) eradication
program in New York State (NYS) and Illinois. Since this program began
in fiscal year 1997, we have drastically reduced ALB populations in
areas that had been heavily infested and the tree removal effort has
made outstanding progress. Our goal is to eliminate the ALB from the
U.S. and prevent future introductions without jeopardizing the $116
billion trade market between the U.S. and China. However, the beetle
continues to spread in metropolitan areas and infested trees continue
to be found in the regulated areas. By fiscal year 2006, we expect the
program to consist almost exclusively of surveys to ensure that we have
eradicated this pest. We plan to achieve eradication in Illinois in
2008 and in NYS in 2009.
In fiscal year 2002, APHIS will continue to focus services on
technical assistance and evaluation surveys on rangelands in all or
part of the 17 Western States. This will include providing technical
expertise and maps based on survey results. We will conduct Grasshopper
and Mormon cricket treatments in Utah, as necessary, under the cost-
share provisions contained in the Plant Protection Act. In all other
States, the focus of treatments will be on Federally managed lands, to
be funded either by APHIS or the Federal land management agency. We
will give priority to rangeland areas that border cropland. APHIS plans
to publish a final Environmental Impact Statement in May 2002 that
examines the environmental effects of suppression alternatives
available to the agency, including the use of insecticides and a no-
action alternative. We will use it for planning and decision making and
to inform the public about the environmental effects of APHIS'
rangeland grasshopper and Mormon cricket suppression activities. Now
that that process has been completed, site-specific environmental
assessments will be required for all programs. In addition, APHIS must
prepare a biological assessment (BA) in accordance with the provisions
of the Endangered Species Act, to determine whether a proposed action
is likely to adversely affect listed species, proposed species, or
designated critical habitat. APHIS is also fulfilling its obligations
under the Endangered Species Act by consulting with the responsible
Federal Agencies on almost 300 species. This consultation is expected
to last through the fiscal year.
golden nematode
Question. How is APHIS utilizing the fiscal year 2002 funding
increase for golden nematode control efforts in New York?
Answer. We are using the fiscal year 2002 funding increase for
golden nematode control efforts in several ways. First, we have
increased the cooperative agreement with Cornell University to
accelerate development of potato varieties resistant to the Ro2 race,
to develop a DNA probe to rapidly identify golden nematode Ro2 suspect
cysts, develop a Polymerase chain reaction (PCR) test to determine
resistance in new potato varieties. Second, we have increased survey
efforts for the Ro2 race of golden nematode. Lastly, we are replacing
equipment and making badly needed repairs to the Westhampton, New York,
facility where we provide space to our State cooperators. Equipment
includes a tractor for soil sampling, a dual-wheel pickup truck, and an
equipment trailer. Repairs include replacement of a heating and air
conditioning unit; doors, windows, and repairs to two buildings,
perimeter fencing, and electrical system repairs.
imported fire ant
Question. How is APHIS utilizing the fiscal year 2002 funding
increase for imported fire ant control management and eradication?
Answer. In fiscal year 2002 APHIS is providing funds to 18 States
to conduct surveys that locate imported fire ant (IFA) infestations.
The States are as follows: Arizona, California, Delaware, Hawaii,
Kentucky, Maryland, North Carolina, New Mexico, Nevada, Oklahoma,
Oregon, South Carolina, Tennessee, Texas, Utah, Virginia, and West
Virginia. In addition, we are providing funds in fiscal year 2002 to 13
States situated entirely or partially within the IFA quarantine area
(Alabama, Arkansas, California, Florida, Georgia, Louisiana,
Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina,
Tennessee, and Texas) for quarantine enforcement.
We are also working with the States to prevent further IFA spread
by enforcing the Federal Quarantine and cooperating with IFA-infested
States to regulate articles such as nursery stock and soil-moving
equipment. In fiscal year 2002, we will work with State cooperators to
jointly conduct road enforcement blitzes in Tennessee, North Carolina,
and other States to inspect nursery material moving out of the
quarantine area. If shipments are found to be in violation of the
quarantine, we will return them to their point of origin, or treat or
destroy them. Violators will be subject to a fine. We will work with
State cooperators to conduct nursery compliance agreement oversight in
fiscal year 2002. In addition, we are revising the regulations in 7 CFR
301.81 to add fipronil as an approved treatment for nursery stock and
grass sod. APHIS is also working with States to mass-rear and release
phorid flies, a promising biological control agent. We expect to have
sufficient phorid flies available to carry out releases in three States
in May 2002, and in eight additional States by September 2002.
noxious weeds
Question. Please update the Committee on how the fiscal year 2002
funding increase for noxious weeds is increasing the availability and
distribution of biological control organisms used in the integrated
weed management system.
Answer. APHIS is devoting the entire increase to establish a
cooperative agreement to work with the Nez Perce Bio-Control Center
(NPBC) to increase the availability and distribution of biological
organisms used to control such invasive weeds as yellow starthistle
(Centaurea solstitialis), spotted and diffuse knapweeds (C. maculosa &
C. diffusa), Dalmatian toadflax (Linaria dalmatica), and additional
invasive rangeland plants. NPBC is operated by the Nez Perce Native
American Tribe, located in Lapwai, Idaho.
Through the agreement, NPBC will carry out the following major
field activities: (1) continue ongoing efforts to establish rearing
nurseries to increase the availability of biological control organisms
to be used alone or in integrated weed control programs, (2) provide
regional technology transfer seminars to Cooperative Weed Management
Area (CWMA) partners in Idaho and to other cooperators throughout the
region, (3) work to distribute biological control organisms throughout
targeted weed infestations on privately managed lands, and (4) monitor
target and nontarget effects at selected release sites to document the
impact of biological controls. NPBC also will function as a centralized
clearinghouse for information and other resources, and will develop and
manage a standardized biological control agent release and tracking
system database. Work under the agreement began in the second quarter
of fiscal year 2002 and will continue through the second quarter of
fiscal year 2003.
pink bollworm
Question. Please provide an update on how APHIS is utilizing
additional funding provided in fiscal year 2002 for pink bollworm
eradication activities in support of sterile moth release in the San
Joaquin Valley of California and in Texas and New Mexico.
Answer. With an increase of approximately $300,000, we have
increased our cost-share for the Texas Pink Bollworm (PBW) Eradication
Program from 10 percent in fiscal year 2001 to 23 percent in fiscal
year 2002. The total funding level for the Texas program will the same
as in fiscal year 2001. This program consists of heavy-density
trapping, pheromone trapping, planting Bacillus thuringiensis (Bt)
cotton, and applications of PBW pheromones for mating disruption. Also
in fiscal year 2002, we have redirected approximately $330,000 from
eastern States to begin funding trapping and control activities in New
Mexico. This was based on a survey conducted over the last couple of
years that indicated an absence of PBW populations in Eastern States
while infestations continue to be extremely high in Western States. In
addition, our sterile release program continues to successfully protect
cotton in the San Joaquin Valley (SJV) of California. Our trapping of
fewer native moths in SJV in fiscal year 2001 as opposed to fiscal year
2000 demonstrates a reduced risk to cotton in that area. Also, we will
continue to monitored the over 10,000 traps in the SJV to detect any
new PBW introductions.
Question. How will the fiscal year 2003 requested funding decrease
for pink bollworm affect eradication programs in Arizona, California,
New Mexico, and Texas?
Answer. The requested funding decrease will not significantly
affect eradication programs in Arizona, California, New Mexico, and
Texas. We can afford to absorb this slight reduction because we have
improved our rearing efficiency and maintained production using less
diet material, thereby reducing cost. Despite this decrease, we will
still be able to sufficiently protect cotton and control the pink
bollworm population in the San Joaquin Valley through the cooperative
sterile release program, as well as cultural practices (crop rotation,
stalk destruction, alternate planting dates, and irrigation
restrictions).
wildlife services operations
Question. What is the status of the national rabies management
plan?
Answer. During fiscal year 2001, several States, including Vermont,
New York, Pennsylvania, Ohio, and West Virginia, participated in a
coordinated oral rabies vaccination program--ORVP. The objective of the
ORVP was to prevent raccoon rabies from spreading into uninfected areas
in the Midwest and further into Ontario and Quebec. Our current
strategy consists of the distribution of fish-scented baits, mostly by
air, that contain vaccine effective in orally immunizing raccoons in
defined barriers. To prevent raccoon rabies from spreading beyond the
barrier, immune barriers were created at strategic locations along the
leading edge of the current distribution of raccoon rabies.
In fiscal year 2001, we assisted cooperators by distributing
approximately 3 million oral rabies vaccine baits over an 8,500 square
mile area in Ohio, West Virginia, Pennsylvania, New York, and Vermont.
To date, these oral vaccination efforts show good promise for
containing raccoon rabies. Additionally, in fiscal year 2001 we
participated in several smaller raccoon ORVP and rabies surveillance
projects in Florida, Alabama, Virginia, Maryland, and Massachusetts.
APHIS continues to cooperate with the State of Texas to prevent the
canine strain of rabies from re-emerging in coyotes in the U.S. The
Agency is also an important funding and operational partner with the
Texas Department of Health in ORVP efforts to contain gray fox variant
of rabies in west central Texas.
In fiscal year 2001, we completed several key steps toward
formulating a viable National Rabies Control Plan. We completed a
programmatic environmental assessment with no negative public comment
on the preferred alternative which relies on strategic use of oral
vaccination to control terrestrial wildlife rabies. We also completed a
comprehensive business plan for the next three years. To complete phase
one of the rabies control plan, we will establish a barrier in Alabama,
Florida, and in Maine. This would result in a vaccination barrier
integrated with land features to contain the spread of raccoon rabies.
Once contained, we will begin work toward eliminating the raccoon
strain along portions of the existing ORV barrier in Ohio, West
Virginia, Pennsylvania, and New York. The program will continue to push
the gray fox variant back to the Rio Grande and provide spot treatment
if reinfection occurs from Mexico.
Question. How much do you plan to spend for rabies control efforts
in fiscal year 2002?
Answer. In fiscal year 2002, APHIS will use $11.75 million in
appropriated funds for rabies control efforts and an additional $6.6
million in emergency funds. This will allow us to control gray fox
rabies in Texas; skunk rabies in Wyoming and California; and raccoon
rabies in Florida, New York, Ohio, Pennsylvania, Tennessee, Virginia,
West Virginia, and Vermont. In fiscal year 2002, we must continue to
extend the barrier in West Virginia south through western Virginia,
terminating at the higher elevations of the Appalachian Mountains in
eastern Tennessee. In addition, we must extend the northern portion of
the barrier from Vermont into New Hampshire, and including parts of
eastern Maine, to protect the eastern terminus of the existing barrier;
failing to do so will compromise the current ORV barriers leading to
the westward spread of raccoon rabies through mountain gaps or through
river valleys that serve as high risk movement corridors for the
disease.
Question. Please provide an update on additional funding you
received in fiscal year 2002 to complete an environmental impact
statement for blackbird control in North Dakota and operations in South
Dakota and Louisiana.
Answer. With the increase, we developed and distributed a scoping
document to approximately 500 agencies, organizations, and individuals
in December 2001. We will use scoping information to write a draft
Environmental Impact Statement (EIS). We expect to complete a final EIS
in the fall and publish a record of decision by the end of December
2002.
Question. How is APHIS utilizing additional funding provided in
fiscal year 2002 for predator control activities in Montana, Wyoming,
and Idaho?
Answer. We are using this increase to maintain the additional
permanent and temporary employees hired for predator control work; to
buy additional vehicles, equipment and trapping supplies; and increase
aerial operations to enhance our ability to respond to predator attacks
on livestock in Montana, Idaho, and Wyoming.
Question. What is the status of APHIS' efforts to increase the
safety of its aerial operations?
Answer. In fiscal year 2002, APHIS continued to comply with the
recommendations set forth in the 1998 Aviation Program Safety Review.
We are using the $1 million increase to convert piston-driven
helicopters to turbine engine helicopters; modify agency-owned aircraft
to bring them into air worthiness compliance; and acquire additional
leased aircraft. We continue to standardize pilot salaries and grades;
provide aviation management training for managers; increase flight crew
training; and conduct recurrent check rides and safety inspections. In
addition, we are implementing the revised Aviation Operations Manual,
paralleling Federal Aviation Administration's (FAA) Part 135
regulations, and are developing an aviation safety program.
The review committee estimated that the total cost of replacing
equipment and training personnel will be more than $4 million,
excluding recurring annual costs such as maintenance and monitoring.
The fiscal year 2002 Appropriations Act included an additional $1
million for aerial safety (for a total of $3.2 million) and the fiscal
year 2003 President's Budget includes an increase of $1.6 million (for
a total of $4.8 million) that will allow APHIS to fully implement the
recommendations of the Aviation Operations' activities. We will
complete the committee's recommendations by December 2002.
All Agency and contract aerial operations will then parallel FAA
regulations and standards, which include mandatory safety, training,
and maintenance personnel; written and approved operations and training
manuals; hazardous training materials; specific aircraft maintenance,
and modification standards; and specific requirements for aerial crew
training and check rides. Aerial operations are critical to oral rabies
vaccination, predation management efforts including those involving
wolf capture activities, migratory bird surveys, and activities to
protect threatened and endangered species. APHIS' first priority is to
ensure employee safety while conducting these activities.
Question. How have you utilized the additional funding provided in
fiscal year 2002 for wildlife management activities in Texas?
Answer. We will use the additional funding to reduce the inequity
of Federal funding versus cooperative funding. To increase the Federal
cost share, we will reimburse cooperative employees monthly travel
expenses.
We also will establish two Assistant District Supervisor positions.
We plan to fill these positions on or about June 1, 2002, in our
College Station and Fort Worth districts. We also plan to fund a
minority student in the wildlife management curriculum at Texas A&M at
Kingsville, TX. This program would begin in the summer of 2002, and is
dependent upon student qualifications and availability. We will use the
remaining funds for the purchase of new computers, replacement
vehicles, and miscellaneous other new and replacement equipment. The
additional funds reduced the inequity of the Federal funding versus
cooperative funding ratio.
Question. What actions have you taken to meet the growing demands
of controlling predatory, nuisance, and diseased animals in South
Dakota?
Answer. In South Dakota (SD), APHIS provides a grant to reimburse
SD Game, Fish, and Parks (SDGFP) for expenditures involved with
delivering wildlife damage management services. Our funding in this
program was increased in fiscal year 2002 from $300,000 to $600,000.
All wildlife damage management activities in SD are carried out under
the direction of SDGFP with its own employees and equipment and
additional funding provided by the State of SD. It is anticipated that
the Federal funding increase in fiscal year 2002 will enhance the
State's ability to control predatory, nuisance, and diseased animals in
SD.
Question. What actions has APHIS taken to establish a beaver
control cost share program with interested parish governments in
Louisiana?
Answer. The Louisiana Wildlife Services program has amended all
existing cooperative agreements for beaver control with Parish
governments to cost share 25 percent of the project costs, including
purchases of new beaver control equipment, supplies to replace outdated
equipment, and salary increases to bring employees up to national
standards. Wildlife Services is also in the process of notifying other
Parish governments who have expressed interest concerning beaver
control efforts. The directed Federal funds will cover approximately
seven full-time Parish beaver control projects. Additional funds would
be needed to expand the cost sharing program for beaver control to
other Parishes or to cost share the maximum authorized amount of 50
percent with Parish governments.
Question. Please provide an update on how APHIS is using additional
funding provided in fiscal year 2002 to improve the wildlife services
facilities near Stuttgart, Arkansas.
Answer. APHIS will use the funds for improvements to existing
office/storage facility near Stuttgart District Office. Our office is
located on property owned by USDA Agricultural Research Service (ARS).
Presently, we are negotiating a long-term interagency agreement between
ARS and APHIS before initiating the improvement project.
Question. Will these improvements be complete in fiscal year 2002?
Answer. If the interagency agreement is completed, and there are no
complications with the subsequent bidding process, we anticipate that
the appropriated funds will be obligated and construction implemented
prior to the end of fiscal year 2002. The project could be completed
within 4 to 6 weeks after construction begins.
Question. What actions has APHIS taken to address increased bird
strikes to aircraft in Florida?
Answer. Florida has over 76 airports for which we provide limited
technical assistance. Florida airports have the second highest rate of
reported wildlife strikes in the nation and these strikes have
increased annually, more than quadrupling over the last 10 years. At
present, APHIS lacks the resources to specifically assign employees to
work exclusively with airports; therefore, we are limited in responding
to requests for assistance in a timely manner.
Question. The fiscal year 2003 budget proposes a decrease of almost
$10 million for Wildlife Services Operations to allow cooperators to
assume a larger share of the cost of wildlife management programs. How,
specifically, will this decrease affect ongoing activities?
Answer. The budget request calls for cooperators to assume a larger
share of the cost of wildlife management programs such as predator
damage to livestock throughout the United States, migratory bird and
other wildlife damage to crops and aquaculture, invasive species
damage, property damage, and protection of threatened and endangered
species. If the cooperators assume the larger share, the ongoing
activities would continue, but through cooperator rather than Federal
funding. If cooperators do not assume a greater share, we would reduce
218 staff years to implement the $10 million reduction and reduce
program activities accordingly.
Question. What will be the impact for providing resolutions to
wolf/livestock conflicts, as well as to resolutions to other human/
wildlife conflicts that Wildlife Services provides on private lands in
Wisconsin?
Answer. Unless cooperators assume a larger share of the cost of
wildlife management programs such as predator control damage to
livestock throughout the United States, ongoing program activities that
Wildlife Services provide would be reduced.
Question. What is the comparison of Federal funding to cooperative
funding for the Wildlife Services Operations program, by state? Please
provide total dollars spent for each State in fiscal year 2001, along
with the Federal and cooperative percentages of total program costs for
each State.
Answer. The following table contains the amount of net Federal
appropriated funds provided to States and State cooperator funds
contributed in fiscal year 2001. The Federal dollars fund Congressional
directives, human health and safety work, protection of endangered
species, migratory bird work, and basic program infrastructure costs.
The Federal amounts listed do not include agency support costs, program
investment activities--such as management information systems and
certain agreements, regional office support, and field program delivery
charges--such as National Finance Center costs, directly paid at the
headquarters level.
[In dollars]
----------------------------------------------------------------------------------------------------------------
Fiscal year 2001 Percent of
State -------------------------------- state/program
Federal Cooperative cost
----------------------------------------------------------------------------------------------------------------
Alabama......................................................... $334,502 $200,402 37.5
Alaska.......................................................... 187,651 666,179 78.0
Arizona......................................................... 485,347 590,440 54.9
Arkansas........................................................ 256,673 267336 51.0
California...................................................... 1,466,235 4,318,816 74.7
Colorado........................................................ 745,013 470,306 38.7
Connecticut..................................................... 8,844 1,500 14.5
Delaware........................................................ 1,822 0 0
District of Columbia............................................ 75 0 0
Florida/Puerto Rico............................................. 327,552 510,579 60.9
Georgia......................................................... 648,850 151,161 18.9
Guam............................................................ 173,555 2,021,067 92.1
Hawaii.......................................................... 439,382 1,256,747 74.1
Idaho........................................................... 1,251,668 628,123 33.4
Illinois........................................................ 111,033 498,068 81.8
Indiana......................................................... 95,781 69,870 42.2
Iowa............................................................ 18,220 34,504 65.4
Kansas.......................................................... 73,543 101,317 57.9
Kentucky........................................................ 161,648 348,310 68.3
Louisiana....................................................... 394,418 389,946 49.7
Maine........................................................... 137,362 284,161 67.4
Maryland........................................................ 214,334 97,446 31.3
Massachusetts................................................... 178,604 113,948 38.9
Michigan........................................................ 830,043 271,998 24.7
Minnesota....................................................... 239,700 62,022 20.6
Mississippi..................................................... 854,591 784,943 47.9
Missouri........................................................ 383,091 221,994 36.7
Montana......................................................... 1,430,363 1,785,566 55.5
Nebraska........................................................ 331,883 441,688 57.1
Nevada.......................................................... 773,891 931,310 54.6
New Hampshire................................................... 520,240 200,217 27.8
New Jersey...................................................... 127,432 172,672 57.5
New Mexico...................................................... 1,232,293 1,019,658 45.3
New York........................................................ 858,311 414,230 32.6
North Carolina.................................................. 197,103 1,248,883 86.4
North Dakota.................................................... 777,549 528,793 40.5
Ohio............................................................ 1,034,159 121,419 10.5
Oklahoma........................................................ 746,175 1,863,786 71.4
Oregon.......................................................... 939,705 1,204,729 56.2
Pennsylvania.................................................... 158,038 239,875 60.3
Rhode Island.................................................... 3,287 4,700 58.8
South Carolina.................................................. 179,865 612,018 77.3
South Dakota.................................................... 321,896 1,120,104 77.7
Tennessee....................................................... 161,649 721,683 81.7
Texas........................................................... 4,478,608 6,701,024 59.9
Utah............................................................ 935,580 1,026,649 52.3
Vermont......................................................... 626,041 54,175 8.0
Virginia........................................................ 348,703 962,706 73.4
Washington...................................................... 547,722 1,531,117 73.7
West Virginia................................................... 2,178,464 298,332 12.0
Wisconsin....................................................... 525,505 1,293,903 71.1
Wyoming......................................................... 1,238,322 596,567 32.5
-----------------------------------------------
TOTALS.................................................... 30,692,321 39,456,987 56.2
----------------------------------------------------------------------------------------------------------------
Question. How does APHIS propose to enforce cooperating agencies
and individuals to assume a larger share of the costs for projects that
are currently underway?
Answer. If cooperators do not assume a greater share, APHIS would
reduce its program contribution to more closely match that of the
States. At the full $10 million level, assuming no increase in
cooperative funding, we would reduce 218 staff years.
wolf control
Question. Depredating wolves pose a significant threat to the U.S.
livestock industry.
What is the status of growing wolf populations in the U.S., and
APHIS' actions to address them?
Answer. Wolf populations continue to expand across the northern
United States from the Great Lakes region to the Pacific Coast. In
addition to naturally occurring populations moving south into the
United States from Canada and east from Minnesota into Wisconsin and
Michigan, the Federal government has reintroduced wolves into portions
of the northern Rocky Mountains and into New Mexico and Arizona. APHIS
has increased efforts to address increasing wolf populations on
livestock. We have active programs in Minnesota and the Northern Rocky
Mountains to reduce wolf depredation; however, more wolves in Wisconsin
and Michigan and reintroduction into Northern Rocky Mountain region,
New Mexico, and Arizona have outdistanced our capacity to adequately
address wolf impacts.
Question. Please provide the Committee with information on various
regional problems with wolves, such as gray wolves in the Northern
Rockies, timber wolves in the upper Midwest, and Mexican wolves in the
Southwest.
Answer. Wolves in the upper Midwest are expanding at a rate that
has led the U.S. Fish and Wildlife Service (FWS) to consider removing
them from the Federal endangered and threatened species list. FWS has
taken regulatory actions to reduce the protection status of wolves in
Wisconsin and Michigan from ``endangered'' to ``threatened.'' Until the
protection status changes, the wolf population will continue to grow in
Minnesota with significant numbers of wolves moving east primarily into
Wisconsin with a secondary movement into Michigan.
APHIS cooperates with the FWS by providing wildlife damage support
to Mexican wolf recovery efforts in New Mexico and Arizona. The entire
Mexican wolf population, approximately 30 animals in New Mexico and
Arizona, is comprised of reintroduced animals and resulting pups. We
are not providing direct assistance to livestock producers in New
Mexico and Arizona; however, with the continued implementation of the
Mexican wolf recovery program and its potential impact to livestock
producers, we anticipate increased demand for our wildlife service
programs in these States. During fiscal year 2001, we responded to
approximately 30 requests for assistance involving Mexican wolf-human
encounters and livestock predation.
Question. How does the number of livestock killed by wolves and the
number of wolf complaints that you have received in the Great Lakes
States compare to the Western States over the last 10 years?
Answer. The gray wolf in the Great Lakes region is naturally
occurring and expanding. The number of livestock killed or injured by
wolves in the Western Great Lakes States over the last 10 years was
8,211 animals, compared to 1,932 in the three western States of Idaho,
Montana and Wyoming. The number of complaints in the three Great Lakes
States over the last 10 years that required WS technical assistance was
1,072, compared to 188 in the three western States.
Question. If the numbers lean heavily toward the Great Lakes
States, why is there so much funding disparity between these two
geographic regions for Wildlife Services to respond to wolf depredation
on livestock?
Answer. Unless funds are in the form of a Congressional Directive
with specific language, WS does not have a line-item for wolf control
in our budget. The budget increase for WY, MT, and ID ($1 million in
fiscal year 2001 and $300,000 in fiscal year 2002) were directives from
Congress earmarked for predator control in general, and not
specifically for wolf depredation on livestock. Although some of these
funds are being used to address wolf damage to livestock, overall they
are being used to deal with other major predators of livestock in these
three States (i.e., coyotes, mountain lions, bears).
Question. The Committee understands that the Wildlife Services
program in Wisconsin has a Federal budget of $5,000 to address wolf
depredation to livestock. What is your long-term strategy for
addressing the problem of wolves killing livestock in Wisconsin?
Answer. With a Federal budget of $5,000 to conduct wolf depredation
management activities in Wisconsin, the Wildlife Services program is
providing statewide technical assistance to citizens experiencing wolf
damage. The Wisconsin WS' office long term goal is to work
cooperatively with the State and local producers to determine the most
cost-effective strategy to alleviate livestock damage while ensuring
public acceptance of wolves, resulting in support of wolf recovery.
Question. What efforts has APHIS made to evaluate the distribution
of funds for wolf depredation activities in all States?
Answer. Because APHIS cannot fund new projects out of existing
funding without negatively impacting other parts of the program, new
programs are encouraged to seek additional funding from other sources.
In Idaho, Wyoming, and Montana, Congress has recognized that additional
funds are needed to off-set the impacts wolves have on livestock and
other routine programs and has provided additional funds for ``predator
control'', including wolves. These additional funds were directed for
those States so as not to negatively impact the other State programs.
In some States the Department of Interior has chosen to provide limited
funding for this purpose (New Mexico/Arizona--$100,000, and Idaho/
Wyoming/Montana--$100,000). These funds help cover APHIS' efforts in
controlling wolves.
invasive species
Question. The Committee is concerned about the number of invasive
species that continue to threaten American agriculture. Please identify
the most significant invasive species threats facing Wisconsin and what
the Department is doing to eradicate or manage these species?
Answer. The most significant invasive species threats facing
Wisconsin are zebra mussel, multiflora rose, purple loosestrife, garlic
mustard, small hive beetle, gypsy moth, and Asian longhorned beetle.
APHIS conducts work there for the following species:
Purple Loosestrife.--Purple loosestrife was brought to the U.S.
from wetland areas in Europe in the early 1800's, most likely because
of its ornamental value. It crowds out the native plants that support
bird and animals populations in marshy areas. It got its start in New
England and spread rapidly north into Canada, south into Virginia, and
west through the States bordering the Great Lakes. Currently, it can be
found throughout the U.S. and is menacing the wetlands in the Northeast
and upper Midwest.
APHIS is releasing leaf-feeding beetles with the intent of
establishing an insectary. During 1999-2001, APHIS shipped 37,000
Galerucella leaf-feeding beetles to Wisconsin as well as several
biocontrol organisms in fiscal year 2002.
In fiscal year 2001, APHIS conducted natural enemy releases and
evaluated release sites. We visited researchers at New York's Cornell
University to observe and document rearing techniques. APHIS may
partner with Cornell University to increase the number and availability
of natural enemies for project participants in 15 States.
Small Hive Beetle.--The small hive beetle is a native of South
Africa and is a widespread pest of honey bees. It was first detected in
Florida in 1998. The beetle has spread to seven States, including
Georgia, North Carolina, Minnesota, Ohio, Pennsylvania, New Jersey, and
South Carolina. In 2001, we found the small hive beetle in four
additional States: Alabama, Maryland, Massachusetts, and Vermont.
APHIS provides funding from the Cooperative Agricultural Pest
Survey (CAPS) to the Wisconsin Department of Agriculture for survey of
wood boring beetles, like Asian longhorned beetle and small hive
beetle. There is no control or regulatory program in Wisconsin since we
have detected no noticeable damage. The cold climate probably limits
the beetle's ability to function.
Gypsy Moth.--Gypsy Moth was introduced in Massachusetts in 1869. It
is the most important hardwood defoliator in the United States. Twenty-
two States, including Wisconsin, are either partially or totally
regulated. Historically, APHIS has conducted control programs
cooperatively with States and other Federal agencies using contingency
funds.
APHIS works collaboratively with the State of Wisconsin to control
and minimize the artificial movement of gypsy moth from regulated
counties to other parts of the State, and the nation that are not
regulated. APHIS also cooperates with Wisconsin and the U.S. Forest
Service to slow the natural spread of gypsy moth and thereby delay the
impact this insect has when it establishes itself beyond the current
infested areas. The U.S. Forest Service conducts yearly suppression
work in front of the natural gypsy moth line in approximately 10
States. APHIS provided the Wisconsin Department of Agriculture with a
grant of $35,000 in 2001 and $40,000 in 2002 from its contingency fund
to conduct regulatory control activities.
Asian Longhorned Beetle (ALB).--The ALB was first discovered in
1996 in the Greenpoint neighborhood of Brooklyn, NY. We believe that
ALB entered the United States inside solid wood packing material from
China. In 1998, despite USDA's National Asian longhorned beetle pest
alert campaign, a separate infestation was discovered in the Ravenswood
area of Chicago. This discovery prompted APHIS to amend its existing
quarantine of wood movement in infested areas and place additional
restrictions on the importation of solid wood packing material into the
United States from China and Hong Kong.
APHIS is working to prevent the spread of the ALB to new areas.
Since we began eradication activities in fiscal year 1997, we have
drastically reduced ALB populations in areas that had been heavily
infested and our tree removal effort has made outstanding progress. In
addition, our regulatory program is effectively minimizing the risk of
ALB introductions into uninfested areas such as Wisconsin. Currently,
we are eradicating the beetle where we know it to exist and conducting
surveys up to 25 miles around infestations to reduce chance of spread.
These activities and ALB moving naturally less than 1.5 miles per year
should prevent any introductions in new areas such as Wisconsin.
Question. Please describe USDA efforts to work with foreign nations
to help avoid the introduction of these species.
Answer. APHIS has personnel worldwide to provide their counterparts
with assistance in monitoring outbreaks of invasive pests and to
control them. This helps ensure that they do not inadvertently enter
the U.S. from these countries. APHIS has programs working with foreign
countries and international organizations on specific pests that are
particularly harmful to U.S. agriculture.
APHIS has cooperative agreements with Mexico and Guatemala to
prevent outbreaks of Medflies in the U.S. To control Medfly
populations, the trilateral Moscamed program uses bait applications and
the sterile insect technique. In Mexico, most serious Medfly outbreaks
occur in the South. APHIS participates in trapping, bait applications,
and sterile fly production there. To further move Medflies from U.S.
shores and make the border more secure, APHIS has heightened the
program in Guatemala. The goal of the program, using bait applications
and sterile Medflies, is to establish a Medfly barrier at the border of
Guatemala with Honduras and El Salvador.
The screwworm program is another example of a successful program to
prevent an invasive species from entering the U.S. APHIS has worked
with the governments of Mexico, Central America, and Panama to
eradicate the pest from all of Central America into Panama. The program
educates local farmers to control individual outbreaks and releases
sterile flies to completely remove the pest from the area. Now the
program is establishing a barrier in Panama and then will focus on
maintaining that barrier. The program has also left an infrastructure
in Central America to prevent reintroduction of the pest.
The tropical bont tick (TBT) program is another example of a
successful invasive species program overseas, this one involving the
Food and Agriculture Organization (FAO). The Caribbean program has been
eradicating TBT from islands whose proximity to the U.S. cause an
unacceptable risk of transferring the pest to U.S. islands, Puerto
Rico, and possibly the mainland. The TBT carries heartwater, an
important disease in cattle which could have devastating effects on
U.S. industry. Through education and a series of bait applications
followed by monitoring and surveillance, the FAO program has been able
to declare four of the nine islands provisionally free of TBT.
nonlethal predator control methods development
Question. In fiscal year 2001, the Committees advised APHIS to
begin a pilot program within its wildlife services division to
demonstrate the effectiveness of nonlethal methods to control predating
species. Please provide a status of this project.
Answer. In fiscal year 2001, in cooperation with the Humane Society
of the United States (HSUS) and Defenders of Wildlife, APHIS completed
a protocol for pilot studies to evaluate the relative effectiveness of
currently available nonlethal predator management methods only versus
the integrated wildlife damage management approach APHIS uses.
APHIS pursued cooperators in California, Idaho, and West Virginia
to participate in the pilot studies. We cooperated with the HSUS to
create a small compensation fund to defray the cost of predator losses
for cooperators who solely used nonlethal assistance during the first
year of the study. Because the study would last several years and
require additional compensation funds, we explored the possibility of
using commercial insurance policies as a method for covering losses.
APHIS planned to have National Wildlife Research Center scientists
direct the project with three to five specialists involved in each of
the three States. However, we decided to postpone the studies due to
lack of adequate funding to conduct them in a scientifically sound
manner. We are considering pursuing these activities as part of our
fiscal year 2004 budget request.
Question. Please update the Committee on how you are utilizing
increased funds in fiscal year 2002 to address infrastructure
deficiencies at the National Wildlife Research Center and nonlethal
predator control methods development.
Answer.
Infrastructure deficiencies.--We are using the fiscal year 2002
appropriation increase to correct the most urgent operating and
maintenance deficiencies. These included replacement or repair of
roofs, windows, and ventilation; purchase of building security devices;
implementation of energy conservation measures; and coverage of rising
facility utility costs.
Non-lethal Predator Control Methods Development.--NWRC is
developing and testing several promising new non-lethal predator
control methods, such as surgical sterilization to reduce depredation
associated with animals provisioning their young; animal activated
frightening devices that inhibit movement of predators into areas with
vulnerable livestock; and several capture devices that could reduce
reliance on padded foothold traps. We are investigating attractant
systems, including visual, sound, and odor applications, necessary to
support field use of these methods. We make all research results
accessible to the public via the APHIS and Wildlife Services web sites.
Question. What is the current status of the infrastructure
deficiencies at the NWRC?
Answer. We are using the fiscal year 2002 appropriation increase to
correct the most urgent operating and maintenance deficiencies. These
included replacement or repair of roofs, windows, and ventilation;
purchase of building security devices; implementation of energy
conservation measures; and coverage of rising facility utility costs.
The new wildlife research pen complex in Fort Collins, Colorado
will be completed in July 2002, and will more than double the potential
output of methods for managing wildlife damage and risks. Current
research priorities and ongoing research projects require all currently
available financial and scientific staff resources.
emergency management system program
Question. How has APHIS used increased funding for the Emergency
Management System Program provided in fiscal year 2002 to respond to
crisis that threaten the economic health of the animal industry?
Answer. For fiscal year 2002, APHIS expects to place emergency
managers in 5 of the 10 Federal Emergency Management Agency (FEMA)
regional offices throughout the United States. These managers will
serve as FEMA liaisons and will deal with emergency management issues
at each region. Currently, we are reviewing and classifying these
positions. APHIS will continue the emergency management grants program
begun in fiscal year 2001. In fiscal year 2001, APHIS awarded 38
grants. Of these 38 grants, APHIS awarded 31 to States, 6 to Tribal
Nations, and 1 to a University. The objective of the grant program is
to assist States with meeting and exceeding the National Animal Health
Emergency Management System (NAHEM) State Standards. These standards
were established to identify critical issues in emergency animal health
preparedness. APHIS has recently begun the process for distributing the
awards for fiscal year 2002.
universal animal identification and database retrieval system
Question. Please provide an update on the Department's pilot
project with the Wisconsin Animal Health Consortium to create a
universal identification and database retrieval system for tracking the
movement of animal and animal-based food products.
Answer. APHIS is working with the Wisconsin Animal ID Consortium to
draft a cooperative agreement. The group has met, established a board,
elected officers, and selected a Chief Operating Officer.
brucellosis
Question. What actions is the Department taking to coordinate
Federal, State, and private activities to eliminate brucellosis from
bison, elk, and other wildlife in the Greater Yellowstone area?
Answer. In fiscal year 2001, the Departments of Agriculture and
Interior signed a Record of Decision (ROD) for a bison management plan
for the State of Montana and the Yellowstone National Park (YNP). The
State of Montana also published a ROD, incorporating the same bison
management plan. While the plan does not actually focus on eradicating
brucellosis from the Greater Yellowstone Area (GYA), it does focus on
managing bison to minimize the risk of brucellosis transmission. APHIS'
next step is to work with involved agencies to develop a brucellosis
elimination plan for the GYA. For fiscal year 2002, APHIS will assist
the States and the National Park Service (NPS) with liaison activities,
planning, bison capture, sampling and testing, and laboratory support.
In addition, APHIS is collaborating with the State of Montana and the
NPS on several research projects including ones on brucella viability
and fetal disappearance. The findings from these projects are expected
to be useful in developing an elimination plan.
johne's disease
Question. Please provide an update on the Department's coordinated
efforts with the National Johne's Working Group and the States to
develop national programs to ensure greater uniformity and equity among
Johne's disease State programs.
Answer. APHIS is continuing to participate on the National Johne's
Working Group (NJWG). The working group consists of members from the
Federal and State governments, universities, and biologic and livestock
industry organizations. The NJWG has developed national programs to
ensure greater uniformity and equity among Johne's disease State
programs. APHIS has developed State standards for these programs.
Program officials are using these standards to identify negative herds,
establish positive herds interested in eliminating the disease, and
develop criteria for herd testing.
By fiscal year 2002, producers had enrolled 1,950 herds in State
control program and 514 herds in State certification programs. Of the
herds enrolled in State certification programs, 140 advanced within
their programs to higher levels of assurance for test negative status.
Of the 50 States, 39 have established advisory committees for Johne's
disease with Federal representation. Eleven States are actively using
APHIS resources including Florida, Illinois, Indiana, Kansas, Maine,
Minnesota, New Jersey, New York, Ohio, Pennsylvania, and Wisconsin. By
fiscal year 2003, we expect to more than double the number of herds
advancing in Johne's certification programs.
tuberculosis
Question. The spread of bovine tuberculosis could be devastating
for U.S. cattle farmers. Please provide an update on the Department's
survey and eradication efforts for bovine tuberculosis in Michigan and
Texas for fiscal year 2002.
Answer. To address bovine tuberculosis in Michigan, program
officials have tested all 300 thousand dairy cattle in the State. In
addition, officials are in the process of testing the State's beef
cattle population consisting of 1 million animals. This past winter
season, we assisted the Department of Natural Resources (DNR) with
collecting and testing samples from the 2001/2002 hunter-killed deer
survey in Michigan. In addition, we are working with Michigan to
develop split State requirements. Split-state status allows a portion
of the State to declare itself free from disease while the other
portion remains under quarantine or modified accredited status. In
February 2002, the State of Michigan submitted its application to APHIS
for split-state status. We are reviewing the application.
In addition, the Agency will provide technical and operational
assistance to Michigan producers to prevent or reduce the transmission
of tuberculosis between cattle and wildlife. Examples include exploring
fencing designs that may separate livestock from wildlife and removing
wildlife that present a threat to livestock. The Agency's National
Wildlife Research Center is researching a model to evaluate management
practices and potential barriers to minimize the interaction between
wildlife and livestock.
Presently, no herds are under quarantine for tuberculosis in the El
Paso, Texas milkshed area. However, based on past experience, we
anticipate at least one of the large dairy herds in this area to be
reinfected within 3 to 5 years. For this reason, APHIS will remove the
high-risk dairy herds in this area to create a buffer zone between the
United States and Mexico. APHIS is in the process of finalizing
regulations to purchase high-risk herds. Our current authority allows
us to purchase only infected and/or exposed animals. The State of Texas
is actively pursuing legislation that will disallow others from
starting up dairy operations in the area and will allow the affected
dairy producers to have a tax extension on capital gains. Presently, we
are in the regulatory process of reclassifying the status of the
remaining portion of Texas (excluding Hudspeth and El Paso Counties).
This portion of Texas will be losing its accredited free status because
we identified two epidemiologically independent infected cattle herds
in less than a 24-month period. State officials have since depopulated
the two infected herds and have conducted complete investigations.
Potentially, the State could regain the status for this area within 2
years. APHIS will work with the State to ensure it regains its status
as quickly as possible.
Question. The fiscal year 2001 Status of Program indicates that the
most serious barrier to the success of the bovine tuberculosis
eradication project is infection in wildlife and in susceptible species
that could transmit disease to domestic livestock; what actions is the
Department taking to address this problem?
Answer. To address this problem and others in the tuberculosis
program, the Secretary of Agriculture transferred $60 million from the
Commodity Credit Corporation (CCC) to APHIS in fiscal year 2001. APHIS
is using a portion of these funds to specifically address the disease
in the wild white-tailed deer population in Michigan. We must control
the outbreak in Michigan because domestic livestock can become infected
by exposure to infected wild animals such as deer. APHIS has identified
artificial feeding as the main source of disease transmission from deer
to deer. As a result, program officials have banned artificial feeding.
Since the emergency declaration, program officials have tested
approximately 300 thousand dairy cows in Michigan and are beginning to
test the State's beef cow population, estimated at 1 million animals.
We have also assisted Michigan officials with testing more than 20
thousand samples from the 2001/2002 hunter-killed deer survey.
We are also continuing to provide technical and operational
assistance to Michigan producers including developing and implementing
activities to benefit local producers such as exploring fencing designs
and depopulating white-tailed deer which present a threat to livestock.
In addition, we are continuing to conduct research at the Agency's
National Wildlife Research Center to evaluate management practices and
test potential barriers to minimize the interaction between cattle and
wildlife. If funding continues at the requested level, APHIS expects to
control the situation in Michigan's wildlife population within the next
several years.
veterinary biologics
Question. American farmers, ranchers, and veterinarians need the
necessary tools to prevent and control animal disease. The Committee
has expressed concerns in the past that the USDA Center for Veterinary
Biologics loses valuable personnel necessary to adequately review and
approve veterinary biologics to serve this purpose and provided
increased funding in fiscal year 2002 to support enhancement of the
center. What steps is the Department taking to ensure that this center
is adequately equipped to support timely and consistent review of
submissions from the biologics industry?
Answer. To ensure that the Center for Veterinary Biologics is
adequately equipped to support timely and consistent review of
submissions, the Department will use the fiscal year 2002 funding
increase to fill several vacant positions for biologics specialists,
veterinary medical officers, and a statistician. In addition, APHIS has
hired four reviewers, one specifically to review transgenic plant
submissions. In addition, APHIS has replaced some obsolete laboratory
equipment this year. APHIS expects that the filling these positions and
purchasing equipment will enhance the services provided to the
biologics industry.
inspection services
Question. What is USDA doing to promote flexible hiring staff
deployment arrangements in Hawaii to provide cost-effective inspection
services to agricultural shippers?
Answer. APHIS uses a mix of full-time, permanent inspection
officers as well as temporary employees to inspect cargo in Hawaii. We
constantly review the program's needs to determine the most cost-
effective mix. We plan to convert a portion of the temporary positions
to permanent because that will likely reduce overtime costs and save
money. To make services more cost-effective, APHIS recognizes a shipper
or a treatment facility with a history of compliance. In that case, we
would only do spot checks on that facility. APHIS currently has this
arrangement with many treatment facilities and cut flower shippers'
costs and the time they need to get full clearance for their products.
______
Questions Submitted by Senator Tom Harkin
supreme beef and pathogen standards
Question. In light of the Fifth Circuit's Supreme Beef decision,
does the USDA still believe that it needs statutory authority to
enforce pathogen reduction performance standards? If not, why? If so,
will the Department support efforts to restore USDA's authority to set
and enforce pathogen reduction standards?
Answer. The court's ruling in the Supreme Beef case did not impact
the Department's ability to use the pathogen reduction performance
standards as a way to measure the effectiveness of food safety programs
within plants, nor did it impair USDA's ability to close plants that do
not meet the statutory and regulatory requirements of the law for
processing meat and poultry. FSIS continues to use Salmonella
performance testing as one way to verify whether either the Hazard
Analysis and Critical Control Point (HACCP) System or sanitation
standard operating procedures (SSOPs) implemented by industry are
successfully controlling hazards reasonably likely to occur. FSIS
inspectors are charged with such verification activities. Agency
inspectors use record reviews, visual monitoring of plant personnel,
and testing for Salmonella as tools to determine whether HACCP and
sanitation systems are working. The Agency will continue to take action
against those plants that fail to produce safe product.
listeria monocytogenes in ready-to-eat products
Question. What are your agencies doing today to protect consumers
from Lm-contaminated foods? What are the current monitoring programs
for Listeria monocytogenes in the products your agencies regulate? Dr.
Murano, what are you doing to speed the rulemaking process? What, if
any, regulatory action is FDA considering to reduce the risk to
consumers from food that may contain Listeria?
Answer. FSIS conducts microbiological testing as a part of its
pathogen reduction program for meat, poultry, and egg products.
Thousands of samples are collected by inspectors each week and analyzed
at FSIS' three laboratories. FSIS uses screening tests to reduce the
resources needed to analyze samples. A screening test indicates if a
sample is potentially positive for a pathogen. If a sample tests
negative for a pathogen screening test, no further analysis is done. If
the screening test indicates a potential positive, further testing is
done to confirm the screen results.
FSIS is planning to evaluate a new HBAX method to screen ready-to-
eat products for Listeria monocytogenes. The evaluation will determine
if the new test is comparable to FSIS's current screening methods. The
evaluation is part of the Agency's ongoing process of evaluating
procedures to shorten the time it takes to obtain test results, while
maintaining analytical quality.
FSIS also conducts a variety of public education programs to
clarify technical and regulatory issues involving food safety. This
outreach involves the use of backgrounders, technical papers, issue
papers, and other educational materials that explain the complex,
technical aspects of Salmonella performance standards, ``zero''
tolerance for E. coli O157:H7 in ground beef and Listeria monocytogenes
in ready-to-eat products, product recalls, and Agency enforcement
issues.
The Food Safety and Inspection Service (FSIS), has been working to
educate pregnant women on the risks associated with Listeria
monocytogenes. Working in partnership with the Food and Drug
Administration, the Centers for Disease Control and Prevention, the
International Food Information Council Foundation, and the Association
of Women's Health, Obstetric, and Neonatal Nurses, FSIS developed a
patient education sheet, Listeriosis and Pregnancy: What is Your Risk?
The sheet provides much needed information on how to reduce the risk of
Listeriosis for pregnant women and their unborn babies. Listeriosis and
Pregnancy: What is Your Risk is being distributed by obstetricians and
other healthcare providers that work with pregnant women.
With respect to Agency's pending rule on Listeria in ready-to-eat
products, FSIS already has adopted a zero tolerance policy regarding
this pathogen in ready-to-eat products and is in the process of
evaluating outstanding data needs identified during the proposed rule's
comment period before proceeding with the publication of a final rule.
These data needs include analysis of Listeria contamination of ready-
to-eat hotdogs by the Agricultural Research Service; reevaluation of
the Listeria risk assessment to take into account contamination during
processing and in-plant mitigation strategies; and assessment of the
effectiveness of HACCP verification sampling by FSIS. The Agency is
working diligently to respond to all the comments received on the
proposed rule and to develop a sound scientific basis for the final
rule.
______
Questions Submitted by Senator Tim Johnson
country of origin labeling
Question. On Friday March 15th, you were quoted in the Washington
Post as saying ``country of origin labeling doesn't matter''. This came
after a statement that you have declined offers from lawmakers to
expand your legal authority to close plants, recall tainted meat
products or require labeling on foreign meat.
Virtually every single farm, ranch and consumer group in the
country supports country of origin labeling on meat products. Arthur
Jaeger, Associate Director of the Consumer Federation of America,
stated in a letter to the Washington Post editor, that while country of
origin labeling is not a food safety program, it provides consumers
important information about the source of their food. I don't think the
issue of labeling has ever been considered a food safety issue. But
when the largest consumer groups indicate that consumers would rather
purchase domestic products over imported goods, I think it is clear
where the public is on this issue.
In addition to supporting the basic label, they further their
position to support a ``born, raised and slaughtered'' standard for
products receiving the ``USA'' label. Your comments on labeling are
specifically regarding meat. I am curious as to why you and the
Department have singled out meat as not worthy of labeling.
So I offer the following questions:
Were you representing the views of the Department in saying
``country of origin doesn't matter?'' Or is this a personal view you
hold?
Answer. The full context of my remarks was not captured in that
article. What I have maintained is that because all imported meat
shipments are reinspected upon arrival at U.S. ports of entry prior to
being allowed to continue on to a U.S. plant for further processing,
country of origin labeling in no way affects the safety of imported
product. The inspection it receives is the same as domestic product.
The determinations as to whether it is fit or unfit for human
consumption are the same. So country-of-origin is not a food safety
issue; it is a marketing issue.
Question. Why do you think consumers do not have the right to know
the origin of the food they feed their families when virtually all
other consumer item bears a country of origin label?
Answer. That is not my view. As a matter of fact, voluntary
labeling of domestic product does exist under FSIS meat and poultry
regulations, however, there has not been a single company that has
taken advantage of that program.
Question. What is your explanation to the American public, who has
asked for country of origin labeling, yet are being ignored by the
Department?
Answer. The public is not being ignored by the Department. FSIS
already requires country-of-origin labeling on all meat carcasses,
parts of carcasses, and retail packages entering the United States.
Imported individual retail packages or consumer size packages must be
labeled, in English, with the country of origin, establishment number,
and name or descriptive designation of the meat products so consumers
know the origin of the product. Furthermore, on August 7, 2001, FSIS
published an Advance Notice of proposed Rulemaking (ANPR) entitled,
``Product Labeling: Defining United States Cattle and United States
Fresh Beef Products.'' FSIS requested comments on whether these beef
products should bear labeling claims that are different from those
permitted under current Agency policy. Those comments are now being
reviewed.
school meal reimbursements
Question. As I stated earlier, I have some concern about the
adequacy of school meal reimbursements. It's my understanding that the
Department has not conducted a comprehensive cost assessment for the
school meal programs in a decade. It goes without saying that
conditions in this industry have changed significantly since then. Last
year we asked about a cost study, and were told that the Agency did not
have the resources to do it. With Congress reauthorizing child
nutrition programs next year, this would be very valuable information.
My question is three fold. Initially, does the Agency have any data to
indicate whether we are providing enough resources to schools to meet
the nutrition standards and meal pattern requirements of the program?
How much would it cost to conduct such a study? And finally, how
quickly could you report back to us with the results?
Answer. The last comprehensive study that examined the cost of
producing reimbursable meals in the National School Lunch Program and
School Breakfast Program collected data in School Year 1992-93. At that
time, the combined Federal subsidy for free lunches and breakfasts
covered the cost of producing these meals. While it is true that
conditions may have changed since then, the annual reimbursement rates
attempt to accommodate these changes by making adjustments based on
changes in the Food Away From Home series of the Consumer Price Index
for All Urban Consumers.
The Agency does have data to suggest that most schools are able to
offer meals that are consistent with the Dietary Guidelines for
Americans with their existing resources. Data collected in School Year
1998-99 for the School Nutrition Dietary Assessment Study--II, indicate
that 82 percent of elementary schools and 91 percent of the secondary
schools offered students the opportunity to select lunches that
provided no more than 30 percent of calories from fat over the course
of a week. However, only 21 percent of the elementary schools and 14
percent of the secondary schools met the program standards for total
fat for the average lunch served. The study does not examine the
relationship between meeting the program standards and financial
resources available to those schools.
To develop national estimates of the cost of producing reimbursable
meals in the National School Lunch Program and School Breakfast Program
(SBP) would require significant time and money. The cost of the
previous meal cost study was about $1.8 million and it did not examine
the relationship of meal cost to nutrient content of meals. The time
needed to select an evaluation contractor, select a nationally-
representative sample of schools, obtain OMB clearance on the design
and data collection instruments, collect and analyze the data, and
write a final report would take about 3 years. A replication of the
previous meal cost study would cost at least $2.5 million today and
would not provide answers to the question about the relationship of
meal costs to meeting nutrition standards.
Examining the relationship of meal costs to nutrient content of
meals would require a much larger study. Integrating the data
collection needed for an analysis of meal costs with the nutrient
content of school meals offered to students is a more efficient use of
scarce research funds. Such a study today would cost approximately $4-5
million and could be expanded to include an examination of after school
snacks for which there is currently no meal cost data available.
It is expected that a large study examining the nutrient content of
school meals offered to students will be conducted in 2005. The USDA
Strategic Plan 2000 to 2005 seeks improvement in the nutritional
quality of meals, commodities and other program benefits. Performance
measures will be needed to determine if the targets established for
schools meals (i.e., meeting the School Meals Initiative nutrition
standards) are met by 2005. The new nutrition standards maintain long-
standing goals of providing one-third (lunches) and one-fourth
(breakfasts) of students' daily needs for calories and key nutrients as
well as goals for fat and saturated fat content that are consistent
with the USDA/HHS Dietary Guidelines for Americans recommendations.
increases in obesity rates
Question. Studies by the Department of Agriculture and other
outside associations have shown a steady increase in obesity in this
country, especially in children. I understand that the Department has
taken notice of this rise, held symposiums, and released studies, but
given that this trend does not show signs of changing, what steps does
the Department plan to take in the next year, and upcoming years, to
address this disturbing trend, and what resources does it need from
this Subcommittee in order to do so in an effective way?
Answer. There is no question that obesity and overweight are
critical public health issues, with significant consequences for our
Nation's future. We are committed to taking action using all available
opportunities and resources to promote healthy weight and prevent
overweight and obesity.
FNCS responsibilities related to overweight and obesity are in two
areas: the effort to promote healthy weight among the general public,
led by the Center on Nutrition Policy and Promotion (CNPP), and efforts
to encourage healthy eating and physical activity among those served by
Federal nutrition assistance programs, managed through the Food and
Nutrition Service (FNS).
CNPP is developing an initiative to help change consumer's eating
behaviors through focused, individualized messages and a multifaceted
and long-term educational campaign that not only emphasizes what
constitutes a healthy diet but also actually puts that knowledge into
practice. The focus of this initiative is to identify real-life
solutions and practical approaches that will help Americans make
sensible food choices. Specific projects recently completed or in the
planning stages include:
--Forums. Breaking the Barriers: Practical Approaches to Improve
Americans' Eating Behaviors and Breaking the Barriers.--Helping
Americans Eat Smaller Portions. Experts in nutrition, behavior,
the media and potential partners in this effort were invited to
advise USDA at two forums. In addition, these forums inform
these experts about the initiatives that USDA is promoting to
improve health and reduce obesity in America, as well as to
begin to define roles and contributions of potential partners.
The discussion at these forums is being used to plan new USDA
initiatives.
--Consumer brochure. How Much are You Eating.--A consumer friendly
brochure to help consumers become more aware of how much food
is on their plate and to link the amount they eat to Food Guide
Pyramid recommendations. The brochure will be released in April
2002, and made available on the CNPP website as well as through
print copies.
--Media campaign.--Organize press conferences, appearances, and media
events to raise the public's awareness through the media. Media
opportunities include USA Weekend, Parade Magazine, and other
monthly women's magazines.
--Promotion and education materials.--Consumer-friendly materials are
being developed to increase awareness of food choices, and
offer practical tips on making sensible decisions in real life
situations such as snacking, fast foods, and restaurants.
--Conference on portion awareness.--To present the scientific
evidence on portion sizes, awareness by individuals of how much
they are eating, the impact of these on obesity, and to
increase media interest in the subject. Noted speakers will
discuss different aspects of portion awareness.
--Food Label Initiative.--Collaborate with the food industry to
design and implement nutrition education information on the
food label to help consumers relate the amount of food they're
eating to the recommendation in the Food Guide Pyramid.
--Interactive Food Guide Pyramid.--Develop a computer based
interactive food guide pyramid to help consumers personalize
their food choices and build their own pyramid. This would link
with the Interactive Healthy Eating Index (IHEI) and provide
consumers with more information about their food choices.
The Center plans to continue collaboration with potential partners
to leverage CNPP resources to reach the largest possible audience with
our messages. CNPP will strive to initiate a number of private/public
partnerships to promote the Dietary Guidelines, 2000. FNCS is also
involved in developing collaborative partnership efforts such as 5-A-
Day with the Centers for Disease Control (CDC) and the National Cancer
Institute (NCI), to promote consumption of fruits and vegetables.
FNS is working to better address obesity through Federal nutrition
assistance programs by improving program standards and nutrition
education, and expanding partnerships and collaborations. Key
activities include:
--The Food Stamp Program (FSP).--Is developing educational and
promotional materials for low literacy and Spanish language
groups that will support maintaining a healthy weight and
adherence to the Dietary Guidelines.
--Updated nutrition standards in the school meals programs that have
contributed to dramatic improvements in the number of schools
offering students the opportunity to select a low-fat lunch;
FNS is working to support further improvements through:
--An action kit, Changing the Scene: Improving the School Nutrition
Environment, to help schools provide students with skills,
opportunities and encouragement to adopt healthy eating
patterns;
--Improvements in the nutritional quality of commodity foods,
including lowering fat levels and increasing the quantity
and variety of produce for schools; and
--Team Nutrition Grants and cooperative agreements to support
comprehensive school-based efforts to promote healthy
eating and physical activity.
--Activities in the WIC Program to address overweight and obesity
include:
--Revitalizing Quality Nutrition Services (RQNS) in WIC by revising
nutrition services standards and promoting effective
nutrition education strategies;
--Consistent program nutrition risk criteria to identify infants
and children at risk of becoming overweight and to
facilitate early intervention; and
--FIT WIC Demonstration Grants to State Agencies to identify ways
that WIC might be changed to help prevent childhood overweight
and obesity.
Cross-program activities.--That support healthy eating and physical
activity are also underway, including the EAT SMART. PLAY HARD.
TM campaign designed to improve long-term health by
encouraging behaviors consistent with the Dietary Guidelines and the
Food Guide Pyramid, and new educational resources in English and
Spanish to help make good dietary practices and physical activity easy
for parents and children.
Recognizing the need to set priorities, USDA is working within
existing resources to address overweight and obesity. However, policy
changes could improve our ability to use resources effectively. In late
1999, FNS submitted a report to Congress, ``Promoting Healthy Eating:
An Investment in The Future,'' which outlined a framework for nutrition
education to enable the Agency and its State partners to reach all
potential eligible persons across program lines. The framework's
components include:
--Authorized funding for cross-program coordination.--To allow FNS
and States the flexibility to direct nutrition education to
potential participants across program lines.
--A funding mechanism to support sustained nutrition education for
all programs.--Ensuring that such efforts are a regular part of
annual budgets and work plans.
--Cross-program coordination of messages and materials.--To ensure
that all programs use consistent, science-based nutrition
education materials and messages that are accessible and
appropriate for the FNS population.
--Expanding the reach of nutrition education by offering grants and
State incentives.--To better reach FNS target and special
populations.
--Leveraging Federal resources with public-private partnerships.--
That could result in greater opportunities to encourage healthy
dietary behavior and promote American agricultural products
using multi-dimensional public and private sector strategies.
--Investing in evaluation.--Of nutrition education delivery and
infrastructure, as well as participant nutrition behaviors, to
ensure the effectiveness of current efforts, address gaps and
improve services.
--Partnership activities.--That advance sound dietary practices, such
as 5-a-Day Partnership with CDC and NCI to promote increased
consumption of fruits and vegetables.
usda veterinarian overtime pay
Question. In early January, I wrote a letter to the Department
regarding USDA veterinarian overtime pay and the Poultry Products
Inspection Act. Many of my constituents who are veterinarians for USDA
are required to work overtime at the request of the specific industry
receiving inspection. At this time of heightened security and greater
security around our borders. I am concerned that we are expecting the
protectors of our borders to increase their output, while not
adequately compensating them.
The Secretary has the authority to set the reimbursed per hour rate
through rule making, which is allowed under the Meat Inspection Act and
the Import Export Inspection Act. However, the Poultry Products
Inspection Act does not contain this provision. My office has yet to
receive a response to my correspondence, so I will take this
opportunity to seek prompt attention to this matter with the following
questions.
What is the Secretary doing to ensure those responsible for
inspections are being adequately compensated for their contributions?
Answer. Federal employees who are not covered by the Fair Labor
Standards Act receive compensation under Title 5 of the U.S. Code. For
this group of Federal employees, which includes FSIS veterinarians, the
overtime rate is capped at one and one-half times the GS-10, Step 1,
hourly rate. The Title 5 cap means that veterinarians at the higher
steps of the GS-12 grade are paid at an hourly overtime rate that is
less than their hourly rate of basic pay. The Secretary of Agriculture
is authorized by Title 7, section 394, of the U.S. Code to pay
employees performing inspection under the FMIA for overtime work at
such rates as the Secretary may determine. However, no comparable
provision exists for employees performing inspection under the PPIA.
Therefore, in fairness to all our employees, the authority to establish
overtime pay rates in excess of the Title 5 limitation has not been
used for veterinarians providing inspection services under the FMIA.
Question. Will the Secretary advocate for the Poultry Products
Inspection Act to contain the provision allowing her office to set the
reimbursed per hour rate?
Answer. Legislation has been introduced to address the issue of
overtime pay for veterinarians. H.R. 3390 seeks to ``provide consistent
treatment of overtime, night, and holiday inspection and quarantine
services performed by employees of the Department of Agriculture.''
Currently, FSIS is reviewing this and other options on the issue of
overtime pay for FSIS veterinarians. The Agency acknowledges the need
to address pay reform and equity issues across the diverse array of
Federal job occupations, and supports pay reform and equity among
personnel performing like regulatory inspection work.
Question. Can I receive a commitment from you today to work with me
in looking into this discrepancy?
Answer. We look forward to working with Congress on this issue.
______
Questions Submitted by Senator Thad Cochran
food safety and inspection service (fsis)
Question. In a Washington Post article on Friday, March 15, 2002,
entitled ``U.S. Vows Tougher Inspections of Imported Meat'', Homeland
Security Director Tom Ridge is quoted as saying ``one of the questions
we need to answer is--whether or not we need multiple agencies dealing
with food safety responsibilities.''
How would you answer that question?
Answer. As you know, the Administration's report, Food and
Agricultural Policy: Taking Stock for the New Century indicates that
where possible, Federal policies and programs must be coordinated and
integrated to reduce duplication of effort, regulatory burdens, and
program costs. This is especially important where several agencies
share regulatory responsibilities or have a role in research,
development, and implementation of food safety policies.
Question. Is the work FSIS conducts duplicative of any work done by
FDA or any other Federal agency? If so, is this appropriate?
Answer. FSIS is responsible for ensuring that meat, poultry, and
processed egg products are safe, wholesome, and accurately labeled.
FSIS enforces the Federal Meat Inspection Act, the Poultry Products
Inspection Act, and the Egg Products Inspection Act, which require
Federal inspection and regulation of meat, poultry, and processed egg
products prepared for distribution in commerce for use as human food.
The Food and Drug Administration (FDA) of the Department of Health and
Human Services (HHS) has jurisdiction over all other food products.
This structure is a reflection of these different missions, as well as
the different statutes formulated at different times for different
reasons. However, FSIS and FDA have had a Memorandum of Understanding
in place since 1999 to exchange information on an on-going basis about
establishments that fall under both of our jurisdictions. As a result,
both agencies have worked together on several cases in which we were
jointly able to ensure the safety of specific food products.
Question. Should Federal food safety inspection activities be
streamlined so that we don't have multiple government agencies working
on different aspects of food safety, but rather a cohesive unit working
to ensure the safety of America's food supply?
Answer. FSIS is committed to engaging in substantive discussion
with FDA and other agencies with food safety responsibilities about
other areas where cooperation can and should be utilized. USDA has
actively engaged in efforts to increase inter-departmental and agency
cooperation between itself and the Department of Health and Human
Services (HHS). The Department is committed to ensuring efficient use
of resources between food safety regulatory agencies in an effort to
maximize the safety of the U.S. food supply and protect the public
health.
USDA is pursuing the concept of inter-departmental cooperation and
has set as one of the Department's highest priorities the need to work
together across department and agency jurisdictions. USDA has
aggressively engaged in steps to enhance cooperation, communication,
and efficiency in the food safety arena through the establishment of
the Food Threat Preparatory Network (Prep-Net). This group, which
includes USDA and HHS officials, was established to coordinate both
preventive and crisis response efforts throughout the Federal
government to food safety issues.
The President's fiscal year 2003 budget includes a new licensing
fee proposal to make funds available in fiscal year 2004 and subsequent
years for FSIS to invest in food safety technology. A new licensing fee
would require legislative action by the authorizing committee, the
Committee on Agriculture, not this appropriations subcommittee.
Question. What plans has FSIS made to pursue this new licensing
fee?
Answer. We are currently reviewing the overtime fee structure to
identify whether there are inequities in the assessment of overtime
fees. We are also reviewing options for the imposition of an annual
licensing fee that all plants would pay, the revenue from which would
be used by the Agency to invest in and upgrade food safety inspection
technology.
Question. To whom would the licensing fee apply?
Answer. It is likely that all establishments would be assessed the
licensing fee.
Question. How does the food safety technology FSIS plans to invest
in differ from the food safety technology the agency currently uses?
Answer. Revenue generated by the fee would be used to expand and
accelerate the Agency's existing program for pilot testing new food
safety technologies, as well as to support their development through
cooperative agreements with universities and other research
institutions.
Question. How will food safety technology needs be met prior to
introduction of the licensing fee, or in the event that the licensing
fee is not authorized by the Agriculture Committee?
Answer. These needs are now met on a limited basis through the
funding of pilot projects to test new food safety inspection
technologies in meat and poultry establishments. Revenue from the
licensing fee would support an expansion of these activities.
Also included in the budget is a plan to replace the existing
overtime fee structure for meat, poultry and egg products inspection
with revised structure to reduce overtime rates and include a charge
for inspections for during second and third shifts.
Question. Can you explain the revised overtime fee structure
proposed?
Answer. The Federal Meat Inspection Act (FMIA), Poultry Products
Inspection Act (PPIA), and the Egg Products Inspection Act (EPIA),
provide for mandatory Federal inspection of livestock and poultry
slaughter at official establishments, and meat and poultry processing
at official establishments, and of egg products processing at official
plants. FSIS bears the cost of mandatory inspection provided during all
regularly scheduled and approved shifts of operation. Establishments
and plants pay for inspection services performed on holidays or on an
overtime basis. They also pay FSIS to perform a range of voluntary
inspection, certification, and identification services to assist in the
orderly marketing of various animal products and byproducts. FSIS also
recovers the cost of certain laboratory services provided at the
request of industry.
The 2003 budget for FSIS includes a proposal to review how overtime
fees are currently applied to determine which types of establishments
receive inspection services beyond one eight hour daily shift without
reimbursing the Government, and those that have to pay fees. If this
review identifies inequities in the assessment of overtime fees, then a
revised structure would be considered that would charge establishments
equitably for inspection services provided outside one eight hour daily
shift.
Question. I understand there will be no budget impact in fiscal
year 2003. What is the estimated impact in future years?
Answer. The future budgetary impact is dependent upon the
implementation of the proposed fee structure, which is not anticipated
to be complete in 2003.
The Administration proposed an increase of $14.5 million to improve
FSIS' information technology infrastructure.
Question. Will there be additional out-year costs associated with
this system upgrade? Answer. The budget year and out-year costs of the
FSIS Automated Corporate Technology Suite are as follows:
Fiscal year 2003--$14.5 million; fiscal year 2004--$10.5 million;
fiscal year 2005--$10.3 million; fiscal year 2006--$11.8 million;
fiscal year 2007--$10.5 million.
The President's fiscal year 2003 budget requests an increase of
$1.2 million to conduct targeted slaughter epidemiological surveys. It
is my understanding that this funding will be used to conduct an
analysis of current animal-based databases and to develop a pilot
project focusing on the specific needs of a public health surveillance
system.
Question. What plans have been made for this pilot project? How
extensive will it be? How long will it last?
Answer. The over-all objective of the project is to establish an
integrated surveillance system with the Animal and Plant Health
Inspection Service (APHIS) and our public health partners providing
ante-and-post mortem data on animal diseases and emerging pathogens.
Current plans are based on a project time frame of 3 years. An initial
working group with APHIS will be formed this year to prioritize and
determine how best to link this project with data collection systems
already in place at APHIS and FSIS. First, the work group will analyze
existing databases in FSIS, APHIS and CDC to determine how a
coordinated information system could be developed utilizing existing
surveillance and inspection systems and databases. An expert system
will be designed that will provide aggregate data that can be studied
in real time. Confidentiality of data will be addressed and processes
to ensure that will be put in place.
During the first year the objective is to have data already
collected to be able to be used in real time by epidemiologists for
local, regional, national and seasonal trends in animal and human
health. The first year will include a joint study with APHIS NAHMS, FDA
NARHMS and CDC to plan in-plant surveys to potentially link with the
next NAHMS study (which usually includes on-farm pathogen surveys).
Data collected in sentinel plants for each slaughter class that NAHMS
studies would enhance understanding and control of pathogens and other
hazards. If successful, studies in sentinel plants for each slaughter
class could be rotated on a three-to-five year basis in parallel with
NAHMS studies to provide meaningful baseline and trend information from
the farm through the to where product leaves the plant.
Project funding would be used primarily for increased sampling of
animals/raw products for analyses, laboratory costs, microbial and
chemical epidemiological studies of pathogens, travel, and meetings
with partners and stakeholders to develop the demonstration project.
The development of software to integrate Federal animal health and food
safety data systems is part of the project as is epidemiological and
surveillance training of field veterinarians.
The third year of the project would include an extensive evaluation
process and a second NAHMS-linked study.
Question. Will there be additional costs in future years associated
with this pilot project?
Answer. This project is expected to require $1.2 million in funding
each of the next three years. Assuming the $1.2 million requested in
fiscal year 2003 remains in FSIS's base appropriation, no additional
funds will be required after fiscal year 2003.
agricultural marketing service (ams)
Question. In its prepared testimony, the Agriculture Marketing
Service points out that it has taken preventive steps to upgrade the
security for operations and facilities to make sure that services to
the agricultural sector are not interrupted. A few of the precautions
that are noted include surveillance, physical security, and emergency
power systems as well as emergency alternate headquarters locations all
without the request for any additional funding to provide for these new
safety measures. How are these costs being met? Are the emergency
supplemental appropriations provided to the Department by Public Law
107-117 being allocated to cover these costs?
Answer. The Agricultural Marketing Service has already begun to
improve the security of its operations and facilities by upgrading
cyber-security and physical security, and by restricting access to
laboratory facilities. Some upgrades were relatively inexpensive such
as securing alternate access points to facilities by locking side and
rear doors, using single access points that are continuously monitored
by existing personnel, and replacing old locks with high security
locks. Existing facilities outside Washington, D.C., were identified as
emergency headquarters locations. Those facilities are already equipped
with most of the equipment needed to assume command and control of
field operations. AMS will use additional funding received under Public
Law 107-117 for the installation of more expensive upgrades such as
emergency power systems, video surveillance systems, and contract
security guards.
wic program participation
Question. Is WIC program participation linked to unemployment or
any other economic factor? Has any analysis on this been done by the
Department? If so, what has it indicated?
Answer. We do not have a model for projecting future demand for WIC
based on economic projections. Since program participation has been
constrained by funding for most of WIC's history, little historical
data is available upon which to build a model.
USDA is working to improve its estimates of the WIC eligible
population and WIC participants. In fiscal year 2002, USDA provided
funding to the National Academy of Sciences (NAS) to develop
alternative estimation procedures. This effort will build on an earlier
report issued by NAS that identified parts of the estimation
methodology for which improvements could be made.
Question. The fiscal year 2003 budget request for WIC would support
an average monthly participation of 7.8 million women, infants, and
children, an increase of approximately 300,000 higher than the
projected fiscal year 2002 participation level? What is the basis for
that estimate?
Answer. It is very difficult to forecast demand for the WIC program
with a high degree of precision. The President's Budget, recognizing
WIC's strong track record of success, seeks to remedy this situation.
The program has been shown to reduce infant mortality, premature births
and low birth weight and has helped reduce anemia rates and increase
childhood immunization rates. Given WIC's proven effectiveness, the
President is committed to ensuring that adequate funds are provided to
WIC to meet program demand. The request includes a $150 million
contingency fund, which could be used to support additional
participation if demand in fiscal year 2003 is greater than current
projections. Adequate and stable funding for WIC is a vital part of the
President's commitment to set priorities to meet the nation's most
important needs.
wic vendor management study
Question. The fiscal year 2003 proposal for WIC includes a $2
million increase to conduct a WIC vendor management study. The final
report on 1998 WIC vendor management study was just submitted to this
Committee in August 2001. What is the need for this additional study?
Answer. The WIC program spends about $5 billion per year in over
45,000 retail grocers (vendors) throughout the country. Although we
have recently completed a study of WIC vendor management, given the
size and scope of the program, there is a need to continually update
this information.
More importantly, this study is needed to allow us to examine the
effects of the Food Delivery Systems final rule that was published on
December 29, 2000. This rule strengthens vendor management in retail
food delivery systems by establishing mandatory selection criteria,
training requirements, criteria to be used to identify high-risk
vendors, and monitoring requirements, including compliance
investigations. In addition, the rule strengthens food instrument
accountability and sanctions for participants who violate program
requirements. It also streamlines the vendor appeals process.
Finally, the new vendor management study will allow us to examine
areas that have not been examined in previous WIC vendor management
studies, such as trafficking in the WIC program.
Question. Why is this study proposed to be funded through the WIC
program account rather than as part of the nutrition studies and
evaluation program funded through the Food and Nutrition Service
``Program Administration'' appropriation.
Answer. In the past, studies and evaluations conducted by FNS have
been funded out of the program to which the benefits of the work
accrue. As you know, the WIC statute in Section 17(g)(5) authorizes up
to one-half of 1 percent of the appropriation, up to $5,000,000 a year,
to be used for evaluating WIC performance, health benefits, participant
characteristics and providing technical assistance. While Congress has
in recent years generally prohibited the use of funding in the food
assistance program accounts for study and evaluation work, it has
authorized the use of these funds for specific projects. We view
projects of this kind as a necessary and appropriate cost of operating
these programs effectively. The FNS Program Administration request does
not include funds to support this study.
wic-immunization action plan
Question. In its report accompanying the fiscal year 2002
Agriculture, Rural Development, Food and Drug Administration and
Related Agencies Appropriations Act, the Committee directed the
Secretary of Agriculture to consult with the Secretary of Health and
Human Services to delineate departmental financial and operational
responsibilities necessary to promote the objectives of the Executive
Memorandum of December 11, 2000, for improving immunization rates for
children. In response to that directive, the Department submitted to
the Committee a copy of its recently developed ``WIC-Immunization
Action Plan''. The letter indicates that the WIC-Immunization Action
Plan is a working document that will be revised and updated as
necessary. Can the Committee expect to receive copies of revisions and
updates to the plan as they are made?
Answer. We will be pleased to provide the Committee revised and
updated versions of the WIC-Immunization Action Plan demonstrating
progress being made on the goals and objectives outlined in the plan.
Updated copies will be sent to the Committee on a bi-annual basis.
Question. When can the Committee expect to receive the report it
requested as to how the Departments of Agriculture and Health and Human
Services have delineated financial and operational responsibilities for
carrying out this plan?
Answer. The WIC-Immunization Action Plan previously submitted to
the Committee is intended to serve as the document that delineates
financial and operational responsibilities for carrying out the plan.
It outlines goals, objectives, responsibilities, and a timeline for
completion of collaborative activities designed to improve immunization
rates for children participating in WIC.
Question. In the interim, what is the Department of Agriculture's
current agreement with the Department of Health and Human Services
regarding the financial and operational responsibilities of the two
departments in carrying out the goals of the Executive Memorandum?
Answer. USDA and DHHS are working together to implement this plan
using existing resources. For example, as directed by the Executive
Memorandum, WIC now has a standardized procedure for screening the
immunization status of children using a documented procedure. The cost
of local level assessments and referrals remain WIC-allowable costs.
The Centers for Disease Control and Prevention (CDC) will fund training
and educational materials necessary for WIC to implement this new
procedure. The training takes places this summer. CDC also funded a
study that evaluated the effectiveness of WIC's new standardized
procedure.
wic infrastructure grants
Question. The fiscal year 2003 WIC request also includes a $4
million increase from the fiscal year 2002 level for infrastructure
grants. What is the need for this additional funding and which
additional projects would be funded if this increase is provided?
Answer. The two primary areas that would receive additional funding
should FNS receive the $4 million increase to the WIC multi-purpose
funding are: 1) general infrastructure funding, which provides grant
monies to WIC State agencies primarily for management information
systems; and 2) electronic benefit transfer (EBT) development.
Currently, funding requests from States in both of these critical
program areas exceed funds available for these purposes.
reimbursement rates in child nutrition programs
Question. The Child Nutrition Programs are up for reauthorization
next year, and one item that has been brought to my attention by
constituents in Mississippi is the inadequate reimbursement rates for
school meals. It is my understanding that the intent of the
reimbursement rates is to cover the full costs of the food, actual
production or preparation of the meal, and the labor involved.
Currently the rate of reimbursement for a free lunch in the continental
United States is $2.09 (this figure is slightly higher in Alaska and
Hawaii, while the average cost of a school lunch in Mississippi is
$2.20. How is the reimbursement rate determined?
Answer. Reimbursement rates for lunches served under the National
School Lunch Program are established in sections 4 and 11 of the
Richard B. Russell National School Lunch Act. Section 4 authorizes a
flat per-meal reimbursement that is provided for all meals served under
the Program; section 11, an additional amount for meals served free and
at a reduced price. In all cases, the statute establishes a base rate
for each meal type and requires the Department to annually adjust these
rates to reflect changes in the ``series for food away from home of the
Consumer Price Index for all Urban Consumers'' published by the Bureau
of Labor Statistics. Section 12 of the Act authorizes the Department to
make adjustments to the established rates to reflect higher costs
associated with providing meals in Alaska, Hawaii, Guam, American
Samoa, Puerto Rico, the Virgin Islands and the Commonwealth of the
Northern Marianas. In addition, meals receive a per meal commodity
reimbursement, which in the upcoming fiscal year will be 15.6 cents per
meal.
Question. Although reimbursements are made for Alaska and Hawaii,
how can each of the 48 contiguous States be expected to survive on the
same reimbursement rate with such varying economics?
Answer. Historically, program statutes have provided for single,
program-wide reimbursement rates for free, reduced price and paid
school lunches. The only exceptions to these rates (also established in
the statute) exist for needy schools that are entitled to an additional
two cents per lunch and additional funding for breakfasts, as well as
for the non-contiguous States and territories where the Department may
provide higher rates to reflect the greater cost of producing a lunch.
The current system of using a single national reimbursement rate
for the contiguous States has been successful in achieving high levels
of participation by schools in the National School Lunch Program and
providing nutritious meals to school-aged children. However, this
method of reimbursement clearly does not take into account the numerous
variables that cause these rates to be adequate or inadequate to cover
the cost of preparing meals in different States, cities or school
districts. We believe that it would be useful to once again study the
costs of providing school lunches to get an overall sense of how things
may have changed since the last study. However, given all the variables
involved, we feel that it would be extremely difficult to establish
differing reimbursement rates that sufficiently accommodate these
variables.
Question. In preparation for reauthorization of the Child Nutrition
programs, would you agree that a study should be conducted regarding
the reimbursement rates for school meals and the adequacy of those
rates on a state-by-state basis?
Answer. The Agency agrees that it is time to reexamine the adequacy
of reimbursement rates for school meals and perhaps even examine the
adequacy of cash reimbursements for after-school snacks. However, the
results would not be available in time for reauthorization. The last
comprehensive study that examined the cost of producing reimbursable
meals in the National School Lunch Program and School Breakfast Program
collected data in School Year 1992-93. That study developed national
estimates, excluding Alaska and Hawaii based on data from 540 schools
in 98 school districts. It did not develop state-level estimates. It
took about three years to complete and cost about $1.8 million.
Clearly, if a similar study were to be conducted, the results would not
be available for upcoming discussions on reauthorization of the Child
Nutrition Programs.
Determining the adequacy of reimbursement rates for school meals on
a state-by-state basis will entail significant time and costs. Samples
would have to be sufficiently large in each State to ensure that the
state-level cost estimates of producing reimbursable meals were of
adequate precision to be meaningful. This would make the study very
expensive. In addition, it is unclear how useful these state-level
estimates of the cost of producing reimbursable meals would be in
determining the adequacy of the reimbursement rates. While there may be
considerable variability in the school meal costs across individual
States, there is probably just as much variability within States.
Calculating a meal cost estimate for the State of New York may not
provide much insight into whether the reimbursement rates are adequate
in Ithaca, NY or Long Island, NY. Similarly meal costs in and around
Jackson, Mississippi may not help estimate costs in Corinth or Tupelo,
Mississippi. It may not be cost effective to spend valuable research
resources to develop state-level estimates on a recurring basis. The
current system of utilizing a single national reimbursement rate for
the continental U.S. has been successful in achieving high levels of
school participation in the National School Lunch Program and providing
nutritious meals to school-aged children.
legal immigrants in the food stamp program
Question. The Senate-passed version of the Farm Bill includes a
provision to allow legal immigrants who have been in this country for
five years or more to apply for food stamps. Is this identical to the
President's fiscal year 2003 budget proposal, and is full funding for
this provision included in the fiscal year 2003 and each subsequent
fiscal year? What are those out-year costs?
Answer. The Senate-passed provision to extend food stamp
eligibility to legal immigrants after five years of residence and the
President's budget proposal are substantively the same. The President's
budget request fully funds the immigrant proposal. In the first year
this costs $66 million; over ten years, this proposal costs $2.099
billion.
Out-year costs for President's immigrant proposal
[In millions]
2003.............................................................. $66
2004.............................................................. 130
2005.............................................................. 195
2006.............................................................. 205
2007.............................................................. 219
2008.............................................................. 232
2009.............................................................. 245
2010.............................................................. 259
2011.............................................................. 271
2012.............................................................. 277
______
Ten year total................................................ 2,099
commodity supplemental food program administrative funding
Question. The President's budget decreases funding for the
Commodity Supplemental Food Program (CSFP) administrative expenses by
$4 million. The Senate-passed version of the Farm Bill reauthorizes the
CSFP and includes a provision for a grant per caseload slot for
administrative expenses incurred by State and local agencies operating
the CSFP. If this provision is retained in the final version of the
Farm Bill, will the President's budget support the grant for the 2003
caseload? If not, what percentage of the 2003 caseload could be served
given the President's proposal?
Answer. If the Farm Bill provision basing CSFP administrative
expense grants on a per caseload slot formula becomes law, the
resources requested in the fiscal year 2003 budget may not be
sufficient to support the proposed caseload and participation levels.
Assuming that the provision's administrative funding per caseload
slot would be adjusted upward with inflation, as proposed, from $50.00,
as cited in the Bill, to $51.50 for fiscal year 2003, the incremental
cost to the program might be as great as $6.5 million at a caseload of
495,683. CSFP resource management is very dynamic and is effected by a
variety of factors that are difficult to anticipate.
To the extent that caseload utilization rates and food cost
inflation are lower than assumed in the budget request or there are
more commodity donations than currently projected, the need for
additional funds to support the costs of the Senate Farm Bill
provisions may be offset.
Given the assumptions for fiscal year 2003 in the budget, if the
program is to absorb this additional cost and stay within the requested
amount, participation could be supported at 93 percent of the level
cited in the budget.
Question. How much additional funding would be needed to fully
support the 2003 caseload if this provision becomes law?
Answer. Up to an additional $6.5 million may be required to fund
the Senate Farm Bill provision and maintain planned program
participation. This estimate is based on the fiscal year 2003 budget
request and the assumption that the provision's administrative funding
per caseload slot would be adjusted upward with inflation, as required
by the provision, from $50.00, as cited in the Bill, to $51.50.
To the extent that caseload utilization rates and food cost
inflation are lower than assumed in the budget request or there are
more commodity donations than currently projected, the need for
additional funds to support the costs of the Senate Farm Bill
provisions would be less than this estimate.
Question. Would the Department be willing to recommend that OMB
submit a budget amendment if necessary to cover the additional funding
needs? If not, what would be the consequences to the CSFP?
Answer. The Department does not anticipate the need to submit a
budget amendment for CSFP at this time. Estimates of the incremental
cost imposed on the program by the Farm Bill's administrative cost
provisions are conservative--abiding strictly by the program
performance assumptions of the fiscal year 2003 budget. However, CSFP
resource management is very dynamic and is effected by a variety of
factors that are difficult to anticipate. To the extent that caseload
utilization rates and food cost inflation are lower than assumed in the
budget request or there are more commodity donations than currently
projected, the need for additional funds to support the costs of the
Senate Farm Bill provisions may be offset. The Department intends to
maintain continuity of CSFP operations, within the fiscal year 2003
request, whether or not the Farm Bill provisions are enacted.
food program administration
Question. Within the Food Program Administration account, the
budget requests an increase of $4.5 million for program integrity for
Food Stamp and Child Nutrition Programs. How will this funding be
distributed between the two programs?
Answer. The Food and Nutrition Service will distribute $3.5 million
to the Food Stamp Program and $1.0 million to the Child Nutrition
Program.
Question. Within each program, how will this funding be allocated?
What are the guidelines or activities for testing program integrity?
Answer. For fiscal year 2003, FNS has requested $3,500,000 in
additional funding and up to 45 additional staff years for enhanced
Food Stamp program integrity efforts. Approximately half of the
resources would go to payment accuracy and quality control efforts
aimed at reducing erroneous payments to recipients. The other half
would be devoted to retailer integrity.
The error reduction resources would support a new headquarters unit
focused exclusively on payment accuracy and expanded program integrity
efforts within FNS regional offices. The newly formed payment accuracy
unit would: (1) encourage States to focus on error causes that are in
their control; and (2) address program management issues. The outcome
of this effort will be an improved stewardship of Federal dollars. The
new resources would spearhead in-depth analyses of error causes,
promote problem-solving techniques, and act as a catalyst to achieve
changes in the way States do business. This renewed focus will
highlight two major problems: (1) State agencies' failure to act on
known information; and (2) their failure to utilize resources that
offer assistance in determining recipients' initial and ongoing
eligibility.
Retailer integrity resources will be devoted to better analysis of
electronic benefit transfer (EBT) data and increased investigator
capacity to identify and remove fraudulent retailers from the program.
They would also be used to augment retailer investigative and
sanctioning capability through analysis of data provided by the Anti-
fraud Locator using EBT Retailer Transactions (ALERT) system, and
increase retailer compliance investigative capability. Using average
production figures for the last five years, each additional compliance
investigator would result in 103 more stores investigated each year, of
which approximately 44 would be found violating and 12 trafficking.
The guidelines/activities for testing program integrity regarding
erroneous payments are regulations, handbooks and policies that support
the Food Stamp Program Quality Control System. Under that system, State
personnel perform second party reviews of a sample of cases and a sub-
sample is reviewed by Federal personnel. The results of those reviews
are used to develop statistically valid State error rates. With regard
to retailers we have two measures that will be used. The first is a
measure of trafficking. FNS has done two studies and is now doing a
third to estimate the rate of trafficking. These studies, done over
time, give us an indication of the extent of trafficking and the
effectiveness of what we are doing to address this problem. In
addition, the agency is looking at other measures of retail integrity
that, if proven, could give us an indication of the size of the issue
and whether progress is being made at confronting it.
The request for the Child Nutrition Programs is $1 million and 13
staff years. The additional resources would be used to conduct
intensive, focused program evaluation and oversight reviews of State
and local program operators which target the most pressing management
improvement problems. The structure of the reviews will be based on
existing review procedures for individual CN programs, such as the
Coordinated Review Effort for the National School Lunch Program and the
Management Improvement Guidance for the Child and Adult Care Food
Program, with modifications as necessary to conform procedures to new
regulatory requirements and to provide greater scrutiny of identified
program integrity problems. Information developed from these reviews
will be compiled and analyzed to evaluate the effectiveness of
regulatory and policy changes aimed at improving program integrity and
to identify areas in which further policy, regulatory, or statutory
changes may be required.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
STATEMENT OF LESTER CRAWFORD, DEPUTY COMMISSIONER
ACCOMPANIED BY:
DR. MURRAY LUMPKIN, PRINCIPAL SENIOR ASSOCIATE COMMISSIONER
JEFF WEBER, SENIOR ASSOCIATE COMMISSIONER FOR MANAGEMENT AND
SYSTEMS
KERRY WEEMS, ACTING DEPUTY ASSISTANT SECRETARY FOR BUDGET
Senator Kohl. Thank you very much. Our last panelist today
is Dr. Lester Crawford, who is the newly appointed Deputy
Administrator for the Food and Drug Administration. Before you
begin your statements, I just want to inform you that one of
our major interests is the high cost of pharmaceutical drugs,
and the degree to which the FDA is or is not in a position to
make a positive impact on this problem in our society.
But it is such a complicated issue all by itself, and so
many different angles to it, we are considering a separate
hearing on it, on pharmaceutical prices and the FDA's role in
that. And we hope very much that if we call this hearing you
will make yourself available to respond to our questions and
some of our thoughts, as well as to give us your thoughts.
Having said that, we would love to hear a summary of your
testimony here today.
STATEMENT OF LESTER CRAWFORD
Dr. Crawford. Thank you, Mr. Chairman, and members of the
subcommittee. Good afternoon. Allow me to introduce myself. I
am Lester Crawford, Deputy Commissioner for Food and Drugs, an
agency of the Department of Health and Human Services. This is
my fourth stint at FDA. I also served as Administrator of the
Food Safety Inspection Service from 1987 to 1991.
I am joined at the table by Dr. Murray Lumpkin, who is
Principal Senior Associate Commissioner; Mr. Jeff Weber, who is
Senior Associate Commissioner for Management and Systems; and
by Mr. Kerry Weems, who is Acting Deputy Assistant Secretary
for Budget. Mr. Chairman and members of the subcommittee, I am
honored to be here to discuss the President's budget for the
Food and Drug Administration for fiscal year 2003. Speaking for
myself, I have always firmly believed in this process and
believe that it is a commitment to the taxpayers as to what we
will do in the coming year.
I am pleased to say the document before us fully meets this
test. The origins of the Food and Drug Administration go back
to the Food and Drug Act of 1906, which expressed the will of
the Congress to protect Americans against misbranded and
adulterated food, drinks and drugs in interstate commerce. That
was but the first step.
Over the years, Congress saw fit to enlarge the FDA's
public health mandates to cover not only 80 percent of the
national food supply, but also all human drugs, vaccines, blood
for transfusion and blood products, tissues for
transplantation, medical devices and devices that emit
radiation, cosmetics and all food and drugs for animals. Today
our agency is responsible for the safety and effectiveness of
$1 trillion worth of products on which Americans depend daily
for their lives, nutrition and good health.
The FDA's overall success in performing this mission is
reflected in the traditionally well protected public health and
the high quality of life that are among America's most widely
admired hallmarks. In this sense, the international reputation
and leadership of FDA are without parallel. The more specific
recent achievements of the agency are discussed in my written
testimony, which describes some of the agency's actions to meet
its considerable responsibilities in the last year. It is a
record we are proud of, especially those accomplishments
relating to FDA's rapid and effective responses to terrorist
attacks last September.
It is a record that I believe measures up to the confidence
that Congress has placed in our agency. Among other subjects,
my written testimony briefly outlines FDA's contribution to the
continually improving safety and security of the Nation's food,
FDA's important role in the system of safeguards against bovine
spongiform encephalopathy, or mad cow disease, and the agency's
actions to prevent the development of antimicrobial resistance
and protect human participants in clinical trials.
The document also lists some of the hundreds of highly
complex and innovative health care products that the FDA last
year approved for marketing: drugs, biological medications and
medical devices that have tremendous potential to relieve human
suffering as well as stimulate our economy.
It is on this record of accomplishment that the President
has based this budget request of $1.7 billion, $295 million of
which is in user fees, for the FDA in the next fiscal year. Our
budget seeks resources to maintain our counterterrorism
efforts, fully fund the proposed pay increase for our
employees, expand our efforts at patient safety and generic
drugs, and continue funding for a new financial management
system.
Mr. Chairman, members of this subcommittee, as taxpayers as
well as civil servants, we at FDA fully appreciate the
importance of maintaining strict budgetary discipline. We are
also conscious of the imperative of protecting the health of
the American people in an environment that is constantly
evolving. As we look ahead, we must complete a number of
significant projects, projects that are vital to this Nation of
ours.
We must continue to improve our counter terrorism
preparedness. That means insuring the safety of the products
the FDA regulates, and safeguarding the availability of
vaccines and other medications that can mitigate the potential
impact of terrorism in America. We must satisfy the high
expectations of American consumers. They demand and deserve
effective public health protection, and ready access to health
related information even as their demographic and consumption
patterns are becoming more diverse.
We must prepare for the coming arrival of a new generation
of efficacious medical products. These new drugs and devices
can transform the practice of medicine and bring unprecedented
health benefits to millions. But first, their safety and
effectiveness must be assessed by our agency. We must continue
in a comprehensive and open manner our evaluation of
genetically modified food products. The technology is
increasingly used to make American food yet more available and
plentiful. But, international acceptance of this technology is
not yet complete.
We must make sure that our public health activities are in
harmony with the new world of international trade. These are
meaningful goals and I can assure you that the FDA will address
them thoughtfully and effectively. Our most effective
instrument, as always, will be science, which is a firm,
factual and objective ground on which the FDA places its
product evaluations, its regulations and its public health
policies. And our most critical need, as always, will be a
steady resource commitment and continued support from the
United States Congress.
We are grateful for the support this committee has provided
in recent years. The FDA looks to you, Mr. Chairman, your
subcommittee and Congress to sustain our efforts to provide the
American people with public health protection that is the envy
of the world. In closing, let me also mention that FDA fully
ascribes to the one HHS policy of Secretary Thompson. This
assures that our resources and expertise will be enhanced by a
seamless system of cooperation and coordination with the CDC,
the NIH and the Office of the Surgeon General, as well as the
other public health resources of the Department of Health and
Human Services.
PREPARED STATEMENT
My colleagues and I will be pleased to respond to your
questions. Thank you.
[The statement follows:]
Prepared Statement of Lester Crawford
Good afternoon Mr. Chairman and Members of the Subcommittee. My
name is Lester M. Crawford, D.V.M, Ph.D. I am the new Deputy
Commissioner for the Food and Drug Administration. Some of my previous
positions include Director of the Center for Food and Nutrition Policy
at Virginia Tech, Administrator of the U.S. Department of Agriculture
Food Safety and Inspection Service, and Director of the Center for
Veterinary Medicine at the Food and Drug Administration. I am honored
to be with you here today to discuss public health and the President's
fiscal year 2003 budget for the Food and Drug Administration.
As we lay the groundwork to address the challenges of this new
century, we need to understand where we have been, what has been
accomplished, how much has changed and how much still remains to be
done. For FDA, the events of September 11, 2001, and subsequent
incidents involving anthrax contamination underscored the importance of
our role in protecting the public health, and reinforce the fundamental
principles required for public health protection. The events of the
past year have highlighted to all of us that the products FDA
regulates--human and animal foods, drugs, biologicals and medical
devices--could be used intentionally to cause widespread harm. This
situation has raised our awareness of the challenges being faced in the
public health sector, including:
--Increasing consumer anxiety about the safety and security of FDA-
regulated products;
--Increasing expectations of consumers with changing demographics and
consumption habits to easily obtain medical, research and risk-
related information;
--Continuing rapid transformation and complexity of the science and
technology that generates the products FDA must regulate; and
--Expanding and evolving composition of global trade and production.
Let me assure you, FDA is deeply committed to our 100 year public
health mandate--to provide the U.S. citizen with the world's best
public health promotion and protection. Today, more than ever, in order
for FDA to continue to fulfill the public's expectations of safe and
effective medical products and a safe food supply, FDA needs a strong
science foundation.
Science will always play a defining role in our Agency's work. The
U.S. continues to lead the world in an era of extraordinary scientific
achievements in research, product development, and collaboration--all
of which can yield unprecedented advancements for health and
nourishment. We continue to marvel at scientific achievements in fields
as diverse as cell and gene therapy; genomics-based drugs; state-of-
the-art surgical robotics; medical devices that reduce trauma to
patients; and bioengineered plants and animals. These achievements
represent an enormous potential for saving lives, improving the quality
of life and stimulating economic growth. I caution that along with the
potential benefits, there exists the possibility for harm if these new
technologies and products are not appropriately monitored by well
trained investigators who understand the risks involved as well as the
potential rewards.
It is important to mention that for many of these innovative
products, the most significant hurdle to their acceptance is not the
technology itself, but consumers' distrust of unfamiliar features, and
the newness itself. The public expects that food, from farm-to-fork,
will be safe and wholesome; that new medical products will be
accessible and available in a timely manner; will have scientifically
demonstrated real benefits that outweigh their known risks; and that
product information and labeling will be accurate, and understandable.
As an Agency, FDA has always been proud of its commitment to
maintain high standards which helps us maintain consumer trust and
confidence. Maintaining that trust requires constant vigilance.
Responding to the new dangers we face is a job that requires time,
resources, and careful planning. We will not rest on the
accomplishments of the past and we realize the enormity of the job that
lies ahead of us.
With that in mind let me discuss some of our recent accomplishments
and summarize our budget request which speaks to the immediate and
long-term challenges that we face.
accomplishments--counter terrorism
Public health agencies have long assumed that a terrorist attack
targeting the U.S. food supply was possible. Given the September 11,
2001, events, and the supplemental funding of $151 million in fiscal
year 2002, it is gratifying to know that we have the resources to
better equip ourselves to prepare for, and respond to, a terrorism
attack. I want to thank you for the additional resources provided to
FDA in the fiscal year 2002 Emergency Supplemental Appropriation.
Responding to emergencies is not new to the FDA. Our Office of
Emergency Operations responds to all types of emergencies and is
routinely working behind the scenes on a day-to-day and hour-by-hour
basis on public health crises. FDA staff has well-established
experience on a wide range of emergencies, from outbreaks of foodborne
illness to product tamperings and now, to deliberate exposure to
anthrax.
Counter Terrorism resources recently provided by Congress will
allow our Agency to hire 218 staff to pursue the work required to fully
support the regulation of the development and licensure of new drugs,
vaccines, medical devices, and radiological products for protection and
treatment against terrorism-related diseases. Toward that end, we are
working to develop new bioterrorism tools by accelerating the
availability of medical products necessary to ensure public health
preparedness. One such element is the expeditious development and
licensing of products to diagnose, treat or prevent outbreaks from
exposure to the pathogens that have been identified as bioterrorist
agents. This process is extremely complex and early involvement by
staff is crucial to the success of the expedited review process. These
products must be reviewed and approved prior to the large-scale
productions necessary to create and maintain a stockpile. Staff must
guide the products throughout the regulatory process, including the
manufacturing process, pre-clinical testing, clinical trials, and the
licensing and approval process. Experts in these areas are needed to
expedite the availability of these products.
The supplemental funding also will support our efforts to enter
into various research contracts and Interagency Agreements (IAGs) with
other Federal agencies, such as the Department of Defense (DOD), the
National Institutes of Health (NIH), and the Centers for Disease
Control and Prevention (CDC), to develop protocols, conduct animal
studies, and define reference databases on treatment and alternative
therapies for infectious diseases caused by the intentional use of
biological agents. In addition we plan to use a portion of the
resources to improve internal scientific knowledge and capabilities,
conduct research to assess in vitro diagnostic technology used to
detect biothreat agents, conduct a market assessment to identify
potential device shortages, and educate health professionals and
consumers on the use of medical biowarfare products. We have high
expectations that our efforts to target Agency resources simultaneously
toward research and risk assessment; an expanded science base; and
education, outreach, and consultations to customers will help maximize
and leverage our work efforts effectively.
Thus far FDA has developed strategies to strengthen the protection
of all regulated products against willful contamination, and to improve
the availability of medical products for the prevention or treatment of
injuries caused by biological, chemical or nuclear agents. For example,
FDA took the initiative to issue a notice which clarified that the
antibiotics doxycycline and penicillin G-procaine are effective and
approved for use in treating all forms of anthrax infections. This
notice included explicit dosing based on FDA's review of scientific
literature and data that had been used to support the August 2000
approval of ciprofloxacin for anthrax. The assurance that the three
drugs are effective against all forms of anthrax infection eased the
public's concerns about a potential shortage of medication for victims
of the mailed anthrax powder. Further we stepped up work on measures to
encourage the development of new drugs to counter the toxic effects of
chemical, biological, radiological and nuclear weapons.
FDA is working closely with industry and other government agencies
in an effort to assure an adequate supply of products for immunization
against anthrax, smallpox and other substances that might be used by
terrorists, and to evaluate adverse experiences reported after
administration of anthrax vaccine in order to optimize its safe use.
FDA contributed to the development of methodology for the detection
of biological agents for potential use by terrorists, and cooperated
with the National Institutes of Health in developing a guidance on the
use of potassium iodide to reduce the risk of thyroid cancer in
radiation emergencies.
FDA is increasing its emergency response capability by reassessing
and strengthening its emergency response plans. For example, we
targeted certain FDA activities to better support the protection of
regulated products (food and animal feed, radiologic devices, the blood
supply, drugs, and vaccines) from contamination and tampering and
shifted resources to ensure the availability of medical products
necessary for public health preparedness and for use against anthrax
and other biological, chemical, or nuclear agents. We revisited how
best to communicate with manufacturers to ensure the availability of
products needed to treat biological agents. We have expedited our
efforts to develop strategies to seize illicit or contaminated products
and to provide regulatory and scientific guidance to government
agencies responsible for the use of medical products in a public health
emergency. We have met with key staff from the medical device and
electrical manufacturers associations to identify potential device
shortages and to ensure an adequate and safe supply of medical products
nationwide. We have had numerous discussions with industry
representatives, manufacturers, and innovative technology developers to
discuss product design for devices that can detect biological and
chemical weapons and agents.
The supplemental funding also will enable FDA to enhance its
surveillance of imported and domestic foods thus allowing us to
strengthen our deterrence and prevention capability. These resources
will allow the Agency to hire 673 investigators, laboratory analysts,
compliance officers and support staff. The additional import
investigators will increase our ability to monitor food as it enters
the U.S. We plan to increase physical examination of imported foods
four fold from 12,000 to 48,000 line-entries per year. In addition, we
will increase the number of investigators to survey critical product
safety points in the domestic food production and distribution system,
and the added laboratory support will increase the number of food
samples tested for possible contamination. A portion of the
supplemental funding will enhance the capability of the Operational and
Administrative System for Import Support, (OASIS), system to better
identify those imports warranting closer scrutiny with both--initial
and follow-up inspections and other surveillance activities and provide
better access to data in other Agency systems. We need to continue to
improve the OASIS system, which has an impressive track record for
detecting the admission of contaminated food.
In conjunction with our Counter terrorism Initiative, we intend to
take a comprehensive approach that addresses all food safety hazards--
including dietary supplements microbiological, chemical, and physical--
for products under FDA's jurisdiction. We also expect to continue to
provide guidance on food security and preparedness to industry and
other Federal agencies.
food safety
The American food supply continues to be among the safest in the
world. Great strides have been made in recent years that have
strengthened the Federal food safety system. The Federal food safety
program includes new surveillance systems, stronger prevention programs
and faster outbreak response. These programs are supported by a new
risk-based inspection strategy, better coordinated and focused research
and risk assessment activities, and enhanced education. Food safety
agencies are working together more closely than ever before. Thanks to
the budgetary support provided by Congress, this multi-agency effort
has successfully built a strong foundation for a state-of-the-art,
science-based food safety system and has promoted partnering among the
key Federal agencies, States, academia, industry, and consumers. We now
have in place newer surveillance systems such as Foodnet, Pulsenet,
NARMS and pilots for eLexnet. Stronger preventive controls implemented
by the Federal agencies, such as good agricultural practices for
produce and HACCP systems for seafood, meat and poultry and juice, have
already shown results. The numerous interagency and Federal/State
partnerships have demonstrably improved the efficiency of our outbreak
response systems.
Recent accomplishments in research and risk assessment include the
establishment of a microbiology laboratory especially designed for
rapid throughput of imported food samples collected for microbiological
analysis at FDA's Northeast Regional Laboratory in New York. Using
specialized methods and equipment, this laboratory was able to cut
analysis time from over 20 hours to less than 8 hours per sample. We
intend to expand this concept to other field microbiology laboratories.
We also installed new mass spectrometry equipment in our field
pesticide laboratories, and trained analysts in the use of a method
developed by one of our scientists which can detect over 100
pesticides, previously undetectable by older methods.
The diversity and types of scientific expertise and knowledge are
ever-expanding. Consequently, we recognize that we must leverage both
academia and industry expertise through cooperative agreements or
consortia. The National Center for Food Safety and Technology (NCFST)
at the Illinois Institute of Technology is devoted to research and
evaluation of better food processing and packaging technology. The
Joint Institute for Food Safety and Nutrition at the University of
Maryland is devoted to risk assessment, agricultural practices and
education, such as international Good Agricultural Practices training
programs, and establishment of the Center for Risk Analysis and
clearinghouse for risk assessment.
The University of Mississippi and FDA are collaborating in the area
of the safety of dietary supplements. The University's Center for
National Products Research will help strengthen our science base in
this emerging field. At the same time, the New Mexico State
University's Physical Science Laboratory and FDA continue their second
year of collaboration to conduct method evaluation of rapid testing
methods of fresh fruits and vegetables for microbial contamination. In
addition, we continue to work with the Interstate Shellfish Sanitary
Commission (ISSC) to promote educational and research activities
related to shellfish safety in general, and Vibrio vulnificus in
particular. We are committed to assuring the safety and quality of
shellfish and development of shellfish regulation. FDA will work to
strengthen these existing collaborations and will develop additional
partnerships with other universities that have strong food safety and
security research programs.
In the extramural area, we have strengthened our scientific
foundation by providing over $24 million through extramural research
grants. These grants have gone to over 30 States to support research in
the areas of Bovine Spongiform Encephalopathy, produce safety, egg
safety, HACCP system validation, food service or retail practices,
antimicrobial research and consumer practices. Our association and
reliance on these grants have continued to provide our Agency a
tremendous resource to improve our scientific expertise.
Food safety education programs have also been greatly enhanced. In
fact, the National Academy of Television Arts and Sciences Mid-Atlantic
Region awarded an Emmy to FDA and the National Science Teachers
Association's for their video ``Dr. X and the Quest for Food Safety.''
The video, part of the curriculum in ``Science and Our Food Supply'',
competed in the Outstanding Children's Program category.
bovine spongiform encephalopathy (bse)
We must continue to carry out effective steps to keep the agent of
BSE out of the American food supply. The cost of not doing so is far
greater than we realize. Let us not forget the European and Japanese
experiences and the costs they have incurred. In 2001 ``Mad Cow
Disease'', more properly known as Bovine Spongiform Encephalophy (BSE),
cases continued to occur in a number of Western European countries,
e.g. Finland recently discovered its first case followed by a similar
announcement by Austria. Outside Western Europe, in September 2001,
Japan announced its first confirmed case of BSE. First identified in
the U.K. in 1986, the brain-wasting disease is fatal to animals and is
believed to be transmissible to people who consume infected beef
products. World-wide, there are just over 100 people known to suffer
this disease, with no cases documented in the U.S. There is a great
deal that is not known or understood well about BSE and other
Transmissible Spongiform Encephalopathies, TSEs, hence the important
emphasis on the science/research aspect of this disease. With this in
mind, inspection of feed and import monitoring for BSE continues to be
a top priority for our Agency.
The Department of Health and Human Services, (HHS), the U.S.
Department of Agriculture, USDA, and other partners have spearheaded
comprehensive efforts to safeguard the nation's food supply and
strengthen protections already in place. We continue to try to ensure
that the feed comply with the bans on the use of sheep and cattle
proteins in feeds, and that contaminated material is not imported. We
have begun to accelerate oversight of bovine derived products used in
drugs, vaccines, medical devices, food products, dietary supplements,
and cosmetics. Resources provided in this year's budget have helped
intensify these efforts.
The Department BSE/TSE action plan outlines steps to improve
scientific understanding of BSE and other TSEs. The DHHS action plan
outlines four areas of responsibility-surveillance, protection,
research and oversight. This effort will be coordinated with other
government agencies, the private sector, and the international
community to contain this epidemic and assist those affected by it. The
plan incorporates a comprehensive approach to further strengthen
surveillance, increase research resources within the FDA budget level,
and expand existing inspection efforts to prevent BSE from entering or
taking hold in the U.S. This plan lays out a course of action to expand
our understanding of the underlying science of TSE and their potential
for transmission to humans.
Protecting our borders against banned import products is a full
time enforcement and compliance activity. To meet this challenge, we
reinforced the existing import ban, in collaboration with USDA/APHIS,
with more specific product information on FDA-regulated products,
including food products, dietary supplements and cosmetics that contain
bovine materials from BSE-identified countries, so that we an better
identify and detain prohibited potentially harmful products. As the
result of funding received in fiscal year 2002 from Congress we are
also hiring additional investigators to reinforce our responsibilities
in this area.
With regard to the U.S. animal feeding industry, we designed a new
database and data entry procedures for BSE inspections as well as a new
BSE inspection checklist to better target firms for re-inspections and
for collection of better data from both FDA & FDA State-Contract
inspectors. By the end of fiscal year 2001 we had inspected over 12,000
firms since 1997 for compliance with our BSE related feed regulations.
In terms of our outreach and education efforts, we conducted two
training sessions for Federal and State investigators on BSE to enhance
the conduct and quality of domestic inspections, ensure timely and
accurate reporting of inspectional findings, and provide updates on the
science of BSE and animal protein detection methods. And, we held a
public meeting in Kansas city to get public input regarding ways to
further improve the feed ban regulation and compliance with the rule.
Regarding some strides made in the research area, we are in the
final stages of developing a test which will provide a quick yes/no
answer on whether there is a potential animal derived material of
concern in a sample of ruminant feed.
antibiotic resistance
The prevention of antimicrobial resistance is another longstanding
effort by FDA to promote stronger and better public health within our
food chain from farm-to-fork. The link between antibiotic resistance in
human foodborne bacterial pathogens and the use of antimicrobials in
food-producing animals continues to be documented by an increasing
amount of scientific evidence. The focus between the use of
antimicrobial products in food-producing animals and human food safety
is necessary because foods of animal origin are frequently identified
as the source of foodborne disease in humans.
Due to concerns that people are acquiring resistant infections from
foods because of the use of these drugs in livestock and poultry, we
continue to monitor this work very carefully and scrutinize the most
up-to-date scientific findings available. For example, FDA recently
published a notice of opportunity for a hearing (NOOH) to withdraw
approvals of new animal drug applications (NADAs) for use of the
fluoroquinolone antimicrobial enrofloxacin in poultry due to new
evidence that the product has not been shown to be safe. This is an
excellent example of how FDA has addressed the dangers of antibiotic
resistance in response to refined and updated scientific research and
findings.
We are committed fully to leveraging with other agencies in our
battle to tackle public health concerns regarding antimicrobial
resistance. For example, the recently completed work on our annual
interagency agreements with the U.S. Department of Agriculture's Animal
Research Service (USDA/ARS) and Centers for Disease Control and
Prevention's National Center for Infectious Diseases (CDC/NCID)
continues to provide funding for conduct of animal and human isolate
testing. The two arms of the National Antimicrobial Resistance
Monitoring System (NARMS), human and animal, are an integral component
of this monitoring system. FDA used the data to track the changes in
susceptibility among isolates from both sources. We have also expanded
NARMS to include monitoring resistance emergence in retail food and
animal feed.
We continue to rely on FoodNet, a data gathering tool to expedite
our access to large amounts of information that assist our work on
antimicrobial resistance. We added a third testing site for NARMS at
FDA to test samples from retail meats to determine the prevalence and
antimicrobial resistance patterns of foodborne bacteria in commonly
consumed meats.
biotechnology--medical products
Biotechnology is fundamentally transforming the practice of
medicine. For example in February of this year, scientists from FDA and
the National Cancer Institute, (NCI) reported research findings that
may lead to a new way to determine the presence of ovarian cancer
through a simple finger stick blood screening.
The research behind this advance depends on two disciplines--
proteomics and computer intelligence. The diagnostic test relies on
software that can detect patterns of key proteins in the blood. Using a
sophisticated artificial intelligence computer program, scientists were
able to ``train'' the computer to tell the difference between patterns
of small proteins found in the blood of cancer patients versus control
samples. Also, we are actively engaged in exploring the use of the new
technologies of genomics, proteomics, and information technology to
provide better biomarkers to help us track and avert adverse health
effects, to rapidly identify micro-organisms that may reach FDA
products via intentional or adventitious routes, and to provide better
and more rapid diagnostic tests.
In July of last year, FDA approved two new medical tests which use
biotechnology techniques to diagnose infection of the hepatitis C
virus. The hepatitis C virus chronically infects several million
Americans and causes hepatitis C and other liver diseases in many
people. The devices, the Amplicor and COBAS Hepatitis C Virus tests,
are the first tests approved to use nucleic acid amplification to
diagnose hepatitis C infection and monitor therapy. These highly
accurate tests use genetic material from the patient's blood along with
enzymes to produce the information needed for a reliable laboratory
diagnosis.
generic drugs
Generic drugs provide Americans with safe and effective lower-cost
alternatives to brand name prescription drugs. The American public can
be confident that when a generic drug product is approved by the
Agency, it has met the rigorous standards established by FDA with
respect to identity, strength, quality, purity, and potency.
Over the years, FDA has approved several thousand generic drugs
that have been used successfully by millions of patients. The
Congressional Budget Office reported in a study completed in 1998 that
the purchase of generic drugs reduced the cost to the public of
prescriptions drugs (at retail prices) by roughly $8 to $10 billion.
The most recently approved generic drugs are for anxiety, heartburn,
depression, and pain management. Given that the cost of prescription
drugs has continued to rise over the last decade, many retired
Americans, living on fixed incomes, have continued to face
affordability issues for medications on which they depend.
Congress has continued its support and increased funding for the
generic drug program. We have continued to make improvements in the
process itself and to educate the public in the safe and effective use
of generic drugs. We have started to recruit and hire additional
medical officers and scientists to help reduce the approval time for
abbreviated new drug applications (ANDAs) and increase the efficiency
of bioequivalence assessments.
patient safety/medical errors
This past year the media paid a great deal of attention to human
clinical trials--both favorable and not so favorable. Thus, an
important focus of the Department's activities in 2001, was the
strengthening of patient protections through programs and measures
designed to enhance the ethical standards of clinical trials and the
safety and effectiveness of approved health care products. We
acknowledge that the Agency has a very important oversight role to
protect patients involved in clinical trials. We must ensure the
accuracy, safety and effectiveness of the data gathered from these
trials and submitted in product applications. We have made important
strides to address some of these limitations. FDA's Office for Good
Clinical Practice (OGCP) is responsible for improving the conduct and
oversight of clinical research and ensuring the protection of
participants in FDA-regulated clinical research. We are committed to
ensuring that the data and reported results are credible and accurate
and that the rights, safety and well being of trial subjects are
protected. We require that the biomedical research that we regulate
conform to Good Clinical Practice, (GCP) standards as articulated the
FDA regulations. GCP standards address all aspects of clinical research
submitted to the Agency in support of product applications and serve to
enhance the integrity of such applications. We also published draft
guidance for clinical trial sponsors on the operation of data safety
monitoring committees. In addition to promoting the protection of human
research participants, and supporting the quality and integrity of
clinical trials and applications submitted to FDA, OGCP works with our
international colleagues in support of global harmonization.
FDA issued an interim rule to provide additional safeguards for
children participating in clinical studies. The new rule provides
specific criteria, such as an assurance of informed consent by the
children and their parents, which have to be maintained by the
Institutional Review Boards that oversee the trials. In addition, FDA
proposed a regulation covering the methods, facilities and controls
used to manufacture human cellular and tissue-based products. Another
new measure, which is of particular significance for people with AIDS,
is an agreement between FDA and the Department of Veterans Affairs (VA)
to improve clinical knowledge of adverse effects of drugs used to treat
HIV infections. Recipients of blood products will be better protected
thanks to FDA's licensing of the first nucleic acid test systems
intended for screening of plasma donors by permitting earlier detection
of HIV and HCV infections in donors.
The safety of hospital patients has been improved by two new
measures. One of them is FDA's requirement of evidence that all but the
lowest-risk reprocessed single-use medical devices--such instruments as
laparoscopy scissors and balloon angioplasty catheters--are as safe and
effective as the original products. The other new measure is an FDA
guidance for the safe use of bed rails, which have been involved in
nearly 400 reported accidents in hospitals, nursing homes and home use.
In addition, FDA awarded several contracts that will enable FDA to
access commercial data bases on the actual use of marketed prescription
drugs in adults and children. The information, which does not reveal
the identity of patients, helps FDA determine the public health
significance of reports it receives through its Adverse Event Reporting
System (AERS).
Last year, FDA announced the creation of a new Drug Safety and Risk
Management Subcommittee to the Advisory Committee for Pharmaceutical
Science. The new subcommittee, which consists of nationally-recognized
experts in areas related to risk perception and management,
pharmacology and other related disciplines, will advise FDA on general
and product-specific safety issues.
In 2001, FDA and the Department's Office of Women's Health awarded
two contracts to study labetalol and atenolol, medications that are
used by pregnant women to treat high blood pressure despite scant
clinical data on the use of these products in this patient population.
The studies are to determine appropriate dosages of greatest benefit
and least risk for pregnant women and their babies. Correct and
appropriate guidance on drug usage is critical to our efforts to
decrease the number of medical errors. To support these efforts, we
have proposed a new prescription drug labeling rule. The proposed new
labeling will reduce practitioners' time spent looking for information,
decrease the number of preventable medical errors, and improve
treatment effectiveness.
An example of FDA's strong commitment to department-wide
coordination and information sharing is FDA's active participation in
the Patient Safety Task Force established within DHHS. FDA helps
integrate medical error data collection efforts; coordinates research
and analysis efforts, and develop strategies to implement patient
safety programs. We also worked to develop plans to utilize existing
vaccine and blood event reporting systems to reduce medical errors and
improvement of patient safety.
safe blood
Safe and accessible blood is essential to our American health care
system. Recent terrorist attacks have shed light on the need to
increase our efforts to protect, maintain, and ensure access to a safe
blood supply. The Blood Safety Action Plan begun in 1997, is currently
being implemented among other agencies of the Department, CDC, NIH, and
the Centers for Medicare and Medicaid Services, (CMS). Our goal is to
strike a careful balance between increasing the safety of the blood
supply while ensuring that life-saving blood and blood products remain
available.
FDA's Blood Safety Action Plan specifically addresses issues of how
to increase speed, efficiency, and coordination of an FDA response to
an emergency affecting the blood safety. To that end, we have continued
to work with the Department to enlist national philanthropic and other
private sector organizations to take a lead role in promoting blood
donations during times of shortage. These and other similar efforts are
designed to improve the ability to predict and respond to blood
shortages and increase the availability and elasticity of the blood
supply. We have also made strides to reduce the number of exemptions to
outdated regulations as well as the number of guidance documents
lacking enforceability through regulations. Further, we have targeted
our efforts to increase industry's compliance with published standards,
improved execution of GMPs and quality assurance. A current database of
potential threats to the blood supply has been developed and includes
appropriate teams to address each threat which has allowed us to make
improvements to streamline coordination among the Department's agencies
and to address emerging infectious diseases and the prevention of
transfusion of transmitted diseases.
gene therapy
FDA, with primary lead role being performed by its Center for
Biologics, Evaluation and Research, (CBER) is developing a Gene Therapy
Patient Tracking System, (GTPTS), to supplement and/or replace current
systems for assessing and promoting the safety of gene therapy human
subjects/patients. The system is designed to provide oversight with
regard to what information should be collected, how best to collect
that information, how to store the data, how to analyze the data, and
how to report and use the data. The system will consist of many
components including databases, procedures, policies, and guidance.
Additionally, FDA and the National Institutes of Health (NIH), Office
of Biotechnology Activities (OBA), are jointly developing a database
application, the Genetic Modification Clinical Research Information
System (GeMCRIS), to facilitate the evaluation and analysis of human
gene therapy clinical information. This joint database application is a
component of the GTPTS.
new products approved
As part of its public health mission, FDA last year evaluated and
approved many new pharmaceutical products and medical devices that
advanced the frontiers of modern medicine. FDA's Center for Drug,
Evaluation and Research, (CDER) approved 66 new drugs, 24 of which were
new molecular entities (NMEs) which are drugs containing active
ingredients never before marketed in the U.S. Ten of the 66 new drugs
(7 of the NMEs) received priority review status and were reviewed and
approved in the median time of 6 months. CBER reviewed a total of 16
complex biological license applications (BLAs) in the median time of
13.8 months and approved them in the median time of 20.3 months. Two of
the BLAs, which were classified as priority products, were reviewed in
the median time of 11.5 months and approved in the median approval of
13.2 months. Most of the products approved by CBER were designed to
detect or treat infectious diseases. The Center for Devices and
Radiological Health, (CDRH) was no different, they approved 54
premarket approvals (PMAs), of which 24 were for devices with novel
technologies or new uses. The median total approval time for the 54
products was 11.3 months.
These major product approvals are expected to benefit a large
number of different groups of clients and include breakthrough
medicines for patients with cancer, heart disease, diabetes and certain
infectious diseases.
cancer patients
Again this year, several newly approved products contribute to the
prevention, early diagnosis or treatment of cancer--the second
deadliest disease in the United States. One of FDA's most important
approvals last year was Gleevec (Imatinib Mesylate), a new oral
treatment for patients with chronic myeloid leukemia, a rare life-
threatening form of cancer. Gleevec was developed for use in a U.S.
patient population below 200,000, and was therefore designated by FDA
as an ``orphan drug.'' Sponsors of such products receive inducements
that include seven-year marketing exclusivity, tax credit for the
product-associated clinical research, research design assistance by
FDA, and grants of up to $200,000 per year. FDA reviewed the drug in
2\1/2\ and approved it under a special procedure that permits the
marketing of important therapies on the basis of their effect on
surrogate markers. In addition FDA approved a new biological product,
Campath (alemtuzumab), for the treatment of patients with B-cell
chronic lymphocytic leukemia.
For women, FDA approved two breast cancer products. One is a
combination of two drugs, Xeloda (capecitabine) and Taxotere
(docetaxel). The other approval was a new indication for Femara
(letrozole) as a first-line treatment for advanced or metastatic breast
cancer in postmenopausal women with hormone receptor positive or
unknown disease.
FDA also cleared a new device that can facilitate early detection
of cancer of the small intestine. The Given Diagnostic Imaging System
is a swallowable capsule containing a tiny camera that snaps pictures
twice a second as it is moved by natural muscular waves of the
digestive track trough the small intestine. The device enables the
physician to see areas that are not reachable by endoscope.
heart patients
FDA approved five highly advanced medical devices for heart
patients. One important device was for children. The Heartstream FR2
AED is the first automatic external defibrillator system for use on
infants and young children who experience cardiac arrest. The device is
designed to restore normal heart rhythm by using conductive adhesive
pads to administer an electric shock through the chest wall.
Two of the devices are new, one-of-a-kind pacemakers. The Biotronik
Home Monitoring System, the first implanted pacemaker that includes a
tiny transmitter capable of automatic, remote data transmission. The
device can be programmed to collect data on the patient's heart
condition and at certain intervals automatically send them to the
patient's physician. The second pacemaker, is the InSync Biventricular
Cardiac Pacing System, is a new type of pacemaker that sends specially
timed electrical impulses to the heart's lower chambers to treat the
symptoms of moderate to severe congestive heart failure. The impulses
are generated by an implanted pulse generator and delivered to the
heart by three wires.
Another first-of-a-kind product is the WCD System, a vest like
device that is worn under clothing to monitor and treat abnormal heart
rhythms in people at risk of dying from sudden cardiac arrest.
FDA also approved PercuSurge, a device consisting of balloon and
aspiration catheters. The device is used to collect and remove blood
clots and other debris created by angioplasty and stenting of a blocked
bypass vein graft.
One important new drug approved last year for cardiac patients is
Natrecor (nesiritide) injection for the treatment of acute congestive
heart failure. The medication, which was developed with the use of
recombinant DNA technology, is a synthetic version of a human hormone
that dilates veins and arteries.
infectious diseases
Five new products to fight infectious diseases were approved by FDA
last year. The first, biologic treatment Xigris, was approved for the
most serious forms of life-threatening sepsis, which claims 225,000
lives in the U.S. each year. The new treatment is a genetically
engineered version of a naturally occurring human protein, Activated
Protein C, which interferes with some of the body's harmful responses
to severe infection. PEG-Intron (peginteferon alfa 2b) injection was
approved for the treatment of patients with chronic hepatitis C, an
infectious disease responsible for as many as 10,000 deaths per year in
the U.S. A new combination vaccine was approved that protects adults
against diseases caused by the hepatitis A virus (HAV) and the
hepatitis B virus (HBV). The vaccine, called Twinrix, combines two
already approved vaccines, Havrix (Hepatitis A Vaccine, Inactivated)
and Engerix-B [Hepatitis B Vaccine (Recombinant)] so that people at
high risk for exposure to both viruses can be immunized against both at
the same time. Twinrix is recommended for travelers who are at high
risk for HBV, and who are visiting countries where there is a
substantial incidence of both HAV and HBV disease. A new anti-fungal
medication Cancidas (caspofungin acetate) intravenous infusion was
approved for patients not responsive to or unable to tolerate standard
therapies for the invasive form of aspergillosis. This is the first
approval in a new class of drugs called echinocandins, which are
believed to work by disrupting the formation of fungal cell walls.
Another novel product approved last year is Viread (tenofovir
disoproxil fumarate), a new anti-viral drug for the treatment of HIV-1
infection in combination with other antiretroviral medicines. Viread is
the first nucleotide analog approved for HIV-1 treatment.
diabetes
The number of people diagnosed annually with diabetes has increased
more than sixfold from 1.6 million in 1958 to 10 million in 1997,
according to the CDC. Today, some 16 million people have the disease--
making it a leading cause of death in the United States. About 2,200
people are diagnosed with diabetes every day, and that close to 800,000
will be diagnosed with the disease this year, according to the American
Diabetes Association (ADA). Many people don't know they have diabetes
until they develop a serious complication such as blindness, kidney
disease, nerve disease requiring amputation, heart disease, or stroke.
The FDA's Office of Women's Health, the ADA, the National
Association of Chain Drug Stores, and 80 other organizations nationwide
are planning a campaign that will focus on the early identification and
control of diabetes. The campaign will highlight the fact that about
8.1 million women in the United States have diabetes. Diabetes is a
unique condition for women. When compared with men, women have a 50
percent greater risk of diabetic coma, a condition brought on by poorly
controlled diabetes and lack of insulin. Women with diabetes have heart
disease rates similar to men, but more women with diabetes die from a
first heart attack than do men with diabetes.
Diabetes-related brochures, wallet-sized calendars, and recipe
cards for nutritious meals will be distributed at grocery stores and
pharmacies in several cities: Atlanta, Baltimore, Chicago, Dallas,
Detroit, Indianapolis, Los Angeles, Miami, New Orleans, Philadelphia
and Phoenix.
FDA also is funding ongoing diabetes outreach through the Indian
Health Service (IHS). ``Portion control is an important message to get
out to women in order to impact the escalating diabetes and obesity
rates among American Indians and Alaska Natives,'' says Sandra Dodge,
an IHS women's health coordinator. IHS is developing culturally-
appropriate handouts to help American Indian women with diabetes manage
portion sizes for meals. The project will target certain urban areas,
as well as American Indian reservations. The overall prevalence of Type
2 diabetes is just over 12 percent in Native Americans versus 5 percent
of the general population. In some tribes, half of the population has
diabetes.
In addition, new technology for monitoring glucose levels in people
with diabetes is moving ahead rapidly, and FDA has been working with a
number of companies to help bring it to market. A novel device approved
last year is the GlucoWatch, a wristwatch-like device that provides
adult diabetics with more information for managing their disease. This
device is one of the first steps in developing new products that may
one day completely eliminate the need for daily finger-prick tests. The
Gluco-Watch extracts the wearer's fluid every 20 minutes by sending out
tiny electric currents, and sounds an alarm if the glucose level
reaches dangerous levels. FDA also approved a new device to aid
diabetics with foot ulcers. The Dermagraft is a skin substitute made
from human cells, which helps replace and rebuild damaged tissue in
diabetic foot ulcers that have been present for more than 6 weeks and
extend deep into the skin. The Dermagraft can remain on a shelf for up
to 6 months, a major advantage over similar types.
global trade and global production--international standards and
harmonization
Working closely with international organizations to harmonize
technical requirements and standards for products regulated by our
Agency remains an important priority. This work recognizes the
international nature of our regulated industries. Equally important is
the recognition of our collective need to share expertise concerning
new products throughout an entire life cycle. We cannot allow
international borders to stem the flow of information as foodborne
pathogens, adverse events, and terrorist activities have no boundaries.
For example, our Agency, along with USDA, and Mexico's Secretary of
Agriculture signed a cooperative agreement in September 2001 to enhance
existing food safety measures through expanding programs, sharing
information and coordinating specific activities. The agreement will
allow us to share information on the sources of fresh produce and to
investigate the causes of any contamination of these imported food
products. These efforts are expected to ensure that borders remain open
and that safe products continue to flow freely between the countries.
The arrangement, in conjunction with other cooperative measures, will
help reduce the incidence of foodborne illnesses on both sides of the
border. The agencies will also collaborate on other specific projects
to achieve common understanding on issues of mutual concern.
We have also continued a project with Mexico on a monitoring system
for antimicrobial resistance in Salmonella camphylobacter and E. coli.
The increase in international trade in food has increased the risk from
cross-border transmission of foodborne pathogens and underscores the
need to use international surveillance systems to monitor the
prevalence of resistance to antimicrobials of importance to human
medical therapy. A cooperative agreement was signed in the Fall of 2001
with human hospitals and veterinary medical schools in four
agricultural States in Mexico to develop a monitoring system compatible
with NARMS.
FDA has established itself as a preeminent leader in international
food safety harmonization efforts as exemplified via our association
and work with Codex Alimentarious. Codex is sponsored jointly by the
United Nations World Health Organization (WHO), and the United Nations
Food and Agricultural Organization (FAO). We helped plan and
participated in the Global Forum of Food Safety Regulators, a
conference designed to enhance communication among food safety
regulators worldwide that was held in Morocco in January. The intent is
to increase the level of food safety as well as food security, which
will result in safer products being exported to the U.S.
Other Federal agencies look to FDA for guidance and input that
promote public health policies consistent with our mission. In
particular, we provided advice and analysis to the Office of the U.S.
Trade Representative, the Department of Commerce, and the USDA Foreign
Agriculture Service on a broad range of trade negotiations and issues,
pursuant to the Food and Drug Administration Modernization Act (FDAMA)
to further U.S. trade objectives in ways that would not compromise
FDA's health and consumer protection mandate. We continued efforts to
eliminate potential barriers in the global marketing of products that
are approved for use in the U.S. These efforts facilitate the Agency's
efforts to promote mutual recognition and international harmonization
aimed at approval systems as well as product surveillance. Our
leadership on the Global Harmonization Task Force provides oversight
and technical expertise in the development of international guidance of
the premarket review and post market patient safety of medical
products. We have also worked with the European Union to train
qualified auditors to conduct FDA quality inspections for products
purchased by the U.S. consumer.
challenges
Each year we find ourselves confronted with more challenges to the
way we do our business. As we have seen, some of these challenges
present a higher degree of risk and harm to the general public if not
addressed. Issues are increasingly complex and the breadth of FDA's
responsibility ever expanding. Whereas, many of our constituents
primarily focus on the product marketing application review process, it
has become clear FDA attention must oversee and regulate the full life
cycle of all the products that we regulate. We continue to see the
changes and challenges that are outgrowths of the successful mapping of
the human genome. We continue to explore a new and unchartered
scientific frontier that promises to deliver the hope that we will be
in a position to transform the diagnosis, treatment, and even
prevention of diseases that afflict groups within our society. The
pipeline of new genetic information remains immense. Genome research is
only in its infancy and of the hundreds of genetic tests in development
and available in the U.S., still only a few have been submitted to and
approved by our Agency. We continue to refine how we coordinate drug
and genetic diagnostic development together. Products will need to
evolve from the research laboratory to the well-characterized
therapeutics with established safety and effectiveness. To make these
critical decisions, we need to ensure that our scientists remain on the
leading edge in their specific scientific disciplines.
The fiscal year 2003 Budget lays out proposed funding levels for
the President's initiatives, identifies resources that can be
redirected to higher priority activities, and highlights some potential
opportunities for management and financial reform and streamlining. The
President is proposing a total budget for the FDA of $1.7 billion that
includes $1.4 billion in budget authority and $286.7 million in user
fees. Counter terrorism funding includes $159.048 million of the total
funding and annualizes the generous supplemental funds received from
Congress in fiscal year 2002. The request also includes increases of
$28.552 million for pay related inflationary costs; $5.0 million for
patient safety/medical errors; $4.582 million for generic drug review;
and $5.2 million for continued development of the Department's Unified
Financial Management System.
our most valuable resource
Our Agency work is a blending of science and law directed at
protecting consumers by focusing on patient, food and consumer safety.
The public trusts us to ensure that food on the family table will be
safe and wholesome; new medical products, drugs, biological products,
and medical devices are available in a timely manner with demonstrated
benefits that outweigh risks; and, product information is useful and
understandable. FDA's ability to maintain the public's trust is
dependent on having a high performing science-based professionals carry
out its mission. FDA is always challenged to make sure we have the
personnel in the scientific disciplines needed. The aftermath of the
September 11 tragedy is a perfect example of changing needs and
increased human resource levels needed in specific scientific
disciplines. Approximately 45 percent of FDA's workforce are dedicated
to ``front line'' efforts, such as import monitoring and inspections,
coordination with States' efforts, and cooperative education programs
with industry, States and consumers.
The $28.5 million requested will fund the mandatory pay increase.
This increase for base resources focuses on pay adjustments because
personnel are so essential to accomplishing the Agency's mission. These
resources will enable FDA to maintain current levels of performance,
and to continue to improve the drug review process. Payroll increases
are needed to cover about half of the staff involved in the drug
application review process not supported by PDUFA user fees; to improve
the ability to assure the safety of regulated products; to inspect and
investigate domestic and foreign manufacturers; and, to participate in
harmonization efforts with countries to establish global standards for
foods, pharmaceuticals and devices. We need now, more than ever, your
continued support to assure FDA is ready to respond to the challenges
of counter terrorism as well as a new medical age.
counter terrorism
The Counter Terrorism request of $159 million reflects the
President's commitment to promote and protect the public health by
ensuring that safe and effective products reach the market in a timely
way, and to monitor products for continued safety after they are in
use. Funding will continue the activities begun in fiscal year 2002 for
the safety of imported foods through expanded inspection and
surveillance of imports; and activities related to medical products,
including measures to help patients exposed to terrorist agents such as
anthrax, smallpox and plague. In some cases, we expect to reframe
existing Agency strategies to anticipate possible terrorist threats
that may translate into risk situations that FDA has not yet addressed.
The tragedy of the attacks of September 11 and subsequent national
events resulted in an accelerated and intensified need for attention to
activities related to Counter Terrorism. A combination of public health
and law enforcement responsibilities requires FDA involvement in
preparedness for and response to a terrorist act. FDA's
responsibilities encompass both the civilian and military sectors of
the population. FDA activities include surveillance, investigation and
laboratory support for detection and management of product
contamination; provision of regulatory guidance to manufacturers and
other government agencies to assure the availability of medical
products, including blood; and establishment of a communications
network that optimizes emergency preparedness within FDA and across the
Federal Government.
Our Counter Terrorism initiative prescribes a strategic blueprint
for protecting the U.S. citizens in the event of future terrorist
attacks. The Initiative will be supported by a Counter Terrorist Action
Plan that will more specifically outline the blueprint. We have
structured the Agency's Counter Terrorism Initiative with the following
four goals:
--Protection of regulated products;
--Medical counter measures;
--Preparedness and response; and
--Radiation safety.
Today our world is faced with new and more complicated challenges.
In our endeavors to address Counter Terrorism issues, our time and
resources will be thoroughly engaged on threat and vulnerability
assessment to guide and target our risk-based strategies; integrated
intelligence and how to identify, gather, assess, and react to the
data; effective collaboration and the ability of multiple organizations
to share information in a timely and accessible manner; and appropriate
intervention to reduce threats as well as a validation and performance
assessment tool to determine output measures and success rates.
Counter Terrorism--Food Safety
In the aftermath of September 11, we realize how our role to ensure
a safe U.S. food supply has become exponentially more important and
complex. It is important to state that we have no credible information
identifying food as a target of terrorist activity. But we know that it
is possible, and that food could be a vector making people sick shaking
public confidence.
Thus our efforts to address emerging public health threats must now
include not only unintentional agents but intentional as well. We have
heightened our awareness to the repercussions and impact of the latter
and our workforce and resources are being reframed accordingly. We will
be challenged to make sure that our role is appropriate for the
anticipated and unforeseen possibilities.
FDA's Counter Terrorism strategy for foods is three-fold. First we
must try to anticipate threats by collecting better information.
Second, we must be prepared to respond should an outbreak occur. Most
importantly, we must expand our inspectional presence particularly at
the border so we can deter terrorist activity. Prevention will be our
best long-term solution.
FDA's food security responsibilities extend throughout the food
chain, and employ research and risk assessment and prevention
strategies through a nation-wide inspection and surveillance
partnership program with the States. To protect the nation's food
supply, we address aspects of food production, manufacture, and
transport in the country of origin, at the U.S. port of entry, and in
domestic commerce. We must continue to enhance the frequency and
quality of imported food inspections, and modernize our import data
system to enable better detection and detention of contaminated food.
We know that further food safety successes require us to work hand-
in-hand with our partners to ensure the quality and safety of our
nation's food supply. The main results of this cooperation--more
effective prevention programs, new surveillance systems, and faster
foodborne illness outbreak response capabilities--have already enabled
FDA to protect the safety of our food supply against natural and
accidental threats. Every significant element of our Counter Terrorism
Initiative will require successful collaborative efforts between our
staff and other organizations, including other health, scientific, and
law enforcement agencies operating at international, Federal, and State
levels.
Although investigators will continue their role in protecting the
public health, the Agency's relatively small number of personnel will
limit the effectiveness of efforts that rely only on people. Key to the
Agency's Counter Terrorism Initiative will be FDA's ability to gather
and assimilate pertinent information about products, hazards,
establishments, suspect individuals, distribution and consumption
patterns and then bring the right combination of information and
resources to crucial decision points.
Counter Terrorism--Medical Product Safety
Those of us in the field of science know too well that this
discipline does not fit neatly into a square box with four well-defined
walls. If one factors into the science equation suspect actors with
terrorism on the agenda, then the ability to predict outcomes becomes
more difficult. Preparedness for and response to an attack involving
biological agents are complicated by the large number of potential
agents (some of which are rarely encountered naturally), their
sometimes long incubation periods and consequent delayed onset of
disease, and their potential for secondary transmission. In addition to
naturally occurring pathogens, agents used by bioterrorists may be
genetically engineered to resist current therapies and evade vaccine-
induced immunity. Pathogens that have been identified as potential
biological warfare agents include those that cause smallpox, anthrax,
plague, botulism, tularemia, and hemorrhagic fevers.
We must ensure sufficient availability of safe and effective
medical products and a safe blood supply to support the development,
maintenance; and deployment of stockpiles of medical countermeasures,
as well as support post-event follow-up and data collection initiatives
for these products, some of which may be investigational. The challenge
will be to identify all of the respective threats and vulnerabilities
assessments and then use intelligence and collaboration to fully
understand the most dangerous intersections of the two and how best to
respond. All of this entails a great deal of planning, dedication, and
execution on our part to reframe our fundamental principles used to
protect the public health mandate. As I have mentioned before, we are
committed to our public health mandate and will continue to play a
pivotal role in counter terrorism preparedness and response via a
combination of regulatory and law enforcement responsibilities.
Counter Terrorism--Physical Security
Congress also provided us critical resources to enhance and tighten
our Agency's physical security by expanding existing service contracts
for facility guards and augmenting equipment to safeguard building
access, laboratory equipment, and protect proprietary research and
information. FDA personnel and facility locations are dispersed
throughout the U.S. We must ensure that our employees have access to
secure and safe locations and that they are able to pursue their work
responsibilities under an ideal work environment without fear for their
well being.
patient safety/medical errors
Our fiscal year 2003 increase request of $5 million builds on the
growing momentum from last year's work to further enhance the
identification of risks associated with the use of medical products and
to reduce the occurrence of adverse events. This initiative, which also
provides for the enhancement of the adverse events data system and
linkages with other health care systems, is a growing initiative that
requires ongoing support to tap into the volume of information within a
large and extremely diverse public health community.
As an Agency, we have to achieve better ways to communicate with
the growing universe of people impacted by FDA regulated products--
education, outreach, information technology, or what is most likely a
heightened combination of all elements. Many patient deaths and
injuries are associated with the use of FDA-regulated products. We
believe that as many as half of these could be avoided by fully
implementing its strategies to prevent Medical Errors.
In light of the rapid scientific advancements and the increasing
volumes of sheer medical information, our ability to effectively
oversee these products must be maintained. The rapid transformation of
the science and technology that generate the products we must regulate
has a direct correlation on the growing workload in our Agency--both on
the premarket as well as postmarket oversight. Systems have to be
arranged to capture, track, monitor, and process the growing pockets of
information. All of these issues must be weighed against the increasing
expectations of consumers with changing demographics and consumption
habits, and then these issues must be factored into the expanding and
evolving composition of global trade and production which will further
necessitate greater coordination and sharing of information.
FDA sees firsthand the technological advances in healthcare as new
medical devices are reviewed and cleared for marketing. FDA must have
quality information about post market problems with devices, especially
how they are used in the clinical setting. FDA has planned designed,
and is implementing a pilot program that will lead to a national
surveillance network, called the Medical Product Surveillance Network
(MedSun), composed of well-trained clinical facilities, to provide high
quality data on medical devices in clinical use. There are currently 50
hospitals enrolled in the program. Recruitment will continue over the
next 2 years, with a target final complement of 225 facilities enrolled
in the pilot program.
generic drugs
The costs and availability of affordable pharmaceuticals will
always be a concern for the consumer. The safety and effectiveness of
the drugs, as well as costs issues, will always be a concern for our
Agency. We recognize that bridging of these concerns for all
stakeholders is a complicated and delicate process and consumer
expectations are difficult to easily measure.
Advancements in the Generic Drug Program are a product of
Congressional support, additional resources, and high quality FDA
staff. The requested increase of $4.6 million will provide for
improvements to the generic drug review program and allow FDA to review
and act upon 75 percent of fileable original generic drug applications
within 6 months.
president's management agendas
The President's Management Agenda provides an outline for our
Agency to pursue the five presidential initiatives. The challenges for
us will be to tailor these initiatives to FDA's unique public health
mandate with the goal to further enhance our citizen focus and bring us
closer to the consumer on a day-by-day basis. Given that our Agency is
overwhelmingly labor intensive, the ability to successfully connect 100
percent of the time with our external customers will be daunting.
FDA's first step to helping the Department improve program
performance and service delivery is to manage more strategically human
capital and to ensure that resources are directed toward national
priorities. To this end, FDA is realigning functions to achieve
efficiencies. For example, during fiscal year 2003, 25 administrative/
management positions will be eliminated resulting in $2.6 million in
efficiencies. Additionally, the fiscal year 2003 budget shows the
consolidation of staff associated with public affairs and legislative
affairs functions at the Department level, for $7.3 million in
efficiencies. FDA has also begun a study of the current organizational
structure to identify opportunities to consolidate and streamline other
administrative functions.
As a part of the FDA Revitalization Act, we have embarked on a
multi-year plan to relocate the major portion of its headquarters
personnel to White Oak, Maryland. This project, coupled with on-going
efforts to reduce supervisory ratios, consolidate administrative
functions and delayer headquarters staff, will afford FDA maximum
flexibility to move resources closer to the day-to-day ``front line''
programmatic work of the Agency. In the meantime, we recognize that
there will be temporary work interruptions during transition periods.
The Agency is integrating information systems and databases, where
possible, with related DHHS systems, and external stakeholders, such as
health providers, academia, other government agencies, regulated
industry, and consumers. This is an ambitious but necessary schedule
that requires a great deal of coordination and planning.
Maintaining a high standard of excellence and then trying to
improve upon that during a time of change requires patience. We are
aiming high in terms of expediting FDA's product review processes by
ensuring sponsors know what is required, eliminating unnecessary
requirements, and soliciting proposals and nominations for consensus
standards from manufacturers to use to satisfy some review
requirements.
pdufa iii
FDA has collected significantly less in PDUFA fees than estimated
due to a reduced number of new drug applications and an increased
proportion of submissions whose fees were waived. The Agency has been
able to meet nearly all of the PDUFA performance goals so far. The
Agency's efforts to meet the PDUFA II goals may have had an unintended
impact on approval times of standard new drug and biologics
applications. Preliminary data indicates that approval times have begun
to increase because more applications require multiple review cycles to
reach approval. The Agency is watching this situation closely. However,
for PDUFA to continue its strong record of success it must be on a
sound financial footing.
FDA is also concerned about the safety of new drugs and biologics
following approval and marketing. In recent years fully 50 percent of
all new drugs world-wide have been launched in the U.S., and American
patients have had access to 78 percent of the world's new drugs within
the first year of their introduction. More rigorous safety monitoring
of newly approved drugs in the first few years after a product is on
the market could help to detect unanticipated problems earlier.
To protect American patients, FDA needs to strengthen its ability
to carry out post-market drug surveillance and other non-user fee
functions it carries out in conjunction with PDUFA. The Agency will
continue to work with industry, the Congress, and all other
stakeholders on a reauthorization of the PDUFA program that will
continue to bring benefits to American consumers by bringing important
new therapies to market quickly without compromising scientific review
standards.
closing
I thank you for the opportunity to share with you the breadth of
FDA's responsibilities. FDA touches the life of every citizen through
the medicines we take or feed for our animals, the blood products we
may need one day, through the food we eat, the cosmetics we use, and,
the medical devices in use today. Americans expect FDA to remain
vigilant, to promote their health and well being, and to protect them
from unacceptable hazards to our population at large, and to assure
that they are adequately informed about the myriad hazards about which
they will have to decide as individuals whether or not they are willing
to accept. Significant investments must be made to keep this Agency
strong and at the forefront of the science upon which its regulatory
mandate is based. The returns on that investment will be an Agency that
is equal to the challenges it faces and able to keep the confidence and
trust of the American public. A strong FDA is clearly good for the
consumer and industry alike, which in turn is good for the economy and
health of our great nation. Thank you once again for the opportunity to
express our views and for your interest in the Food and Drug
Administration and its mission of protecting the public health. I
appreciate your interest and continued support of the Agency and its
public health mission. I expect this year to be another exciting one
for the Agency and I look forward to working with you as we face the
challenges ahead. I welcome any questions you may have.
PEDIATRIC RULE
Senator Kohl. We thank you, Dr. Crawford. Dr. Crawford, I
will read the first sentence of an article that appeared in
yesterday's Washington Post: ``The Bush Administration plans to
suspend the Federal requirement that drug makers test their
products to determine whether they are safe and effective for
children.'' In this article, a number of people long associated
with public health, including a former FDA Commissioner, stated
that this action is unfortunate and will put children at risk
for pharmaceuticals that may actually in fact place their lives
in danger.
Anyone who reads this article will think that the
Government is taking action that is harmful to children; I
think it is important that you respond. So, let us get to the
heart of this issue. If this rule is lifted, will FDA lose any
of its current authorities to make sure that drugs our children
take are safe? And what actions do you intend to take to make
sure that child safety is never compromised?
Dr. Crawford. Thank you, sir. We have been, as you know, in
constant contact with your staff and with others in dealing
with this, what we believe to be a misperception. HHS is taking
action based on the issue that you mentioned to remove any
doubt about its determination to make sure that children's
medications are safe and used properly. The health of America's
children is a top priority of the Administration, and having
drugs that are properly studied for use in children is an
integral part of assuring that our children receive the safe
and effective medical care they deserve.
The Department has reiterated its commitment to
implementing all provisions of the Best Pharmaceuticals for
Children Act, or BPCA, which was passed by the Congress and
signed by the President in January of this year. We are going
to do that as quickly as possible, including the new provisions
regarding the funding of studies involving important drugs that
do not benefit from other types of pediatric development
incentives. The Department believes Congress, with this
legislation, has provided the Government with a very important
new tool to address the specific pediatric needs.
With this new law and its tools now available, questions
have been raised regarding the continued need for and the
legality of the so-called Pediatric Rule, which was promulgated
by FDA in 1998. The Department is aware of certain parts of the
rule that have been instrumental in assuring that the needs of
children are evaluated during the drug development process so
that decisions about further development can be made. To date,
however, FDA has not found it necessary to enforce all the
parts of that rule.
To clarify the situation now that Congress has provided the
new tools in the BPCA, or the Best Pharmaceuticals for Children
Act, the FDA will be reviewing the present rule over the next
few weeks and will be announcing thereafter its findings for
which parts of the pediatric rule should be retained to cover
potential gaps not addressed in the present legislation, and
which parts of the rule should be abandoned as unnecessary now.
So, we had in effect a law that came in supplanting part of
this regulation that we have had for some years. Then we also
had a lawsuit challenging the validity of the regulation.
So, we have to harmonize all of that. But, I can assure you
that the protections that children have enjoyed under the
regulation, and that we believe they will enjoy under the law,
will continue to be sustained by FDA. We are sorry for any
misperceptions that may have occurred in the media reports
based upon a court filing that was placed on Monday of this
week.
DECISIONS ON PEDIATRIC RULE
Senator Kohl. I appreciate your comments, Dr. Crawford.
But, naturally at this time you can understand how many of us
are concerned that in place of a requirement in the law on the
pharmaceutical companies, we now are hearing something much
less, that you say will accomplish the result and that we
should, in effect, trust that you will do the right thing. And,
of course, we do trust. But as one President said, we trust and
we verify, and that is our job, and I am sure you understand
that. And I think I heard you say that you are in the process
of thinking this problem through?
Dr. Crawford. Yes, sir.
Senator Kohl. And you are going to be making some concrete
decisions very soon?
Dr. Crawford. Yes, sir.
Senator Kohl. And I would like to request that you get back
to this committee with those concrete decisions 2 weeks from
now. Is that reasonable?
Dr. Crawford. We certainly will be able to make a progress
report and I can assure you we will have thought it through and
can tell you what we intend doing in a couple of weeks. Yes,
sir.
NARMS ACTIVITIES
Senator Kohl. Okay. As you mentioned in your statement, Dr.
Crawford, the link between antibiotic resistance in humans and
the use of antibiotics in animal feed continues to be
documented with scientific evidence. Every American, especially
parents, are watching this story closely and warily. They want
and need to know what the FDA is doing to keep necessary
antibiotics effective. The National Antimicrobial Resistance
Monitoring System, funded through the FDA, monitors the link
between antibiotics in animal feed and antibiotic resistance in
human beings. So, would you describe the current activities of
NARMS and submit for the record information on funding proposed
for NARMS activities in the President's budget?
Dr. Crawford. Yes sir. We will submit that information. The
National Antibiotic Resistance Monitoring System (NARMS) has
been in place for some few years. The notion of it, the
philosophy of it, is that we need a benchmark to know whether
antibiotic resistance is actually increasing, or whether it
decreases some years and increases others. And this is, I
think, a very effective means of assessing that. Antibiotic
resistance is one of the big medical problems that is facing
this country, Europe and virtually the whole world.
We probably have researched virtually all of the naturally
occurring antibiotics that exist. We are down now to creating
some synthetic antibiotics or antibiotic-like substances in
order to deal with this terrible problem of antibiotic
resistance. It comes from multiple sources and we are dealing
with those in an effective manner. Physician misusage is a
problem as well as the perception, at least, of misusage on
farms and in horticulture and a variety of other ways. There is
a right way and a wrong way to use these antibiotics and it is
up to the FDA to pave the way for what is called approved
usage, and we are committed to that.
Senator Kohl. I thank you, Dr. Crawford. Senator Cochran.
PROGRESS ON COUNTERTERRORISM SUPPLEMENTAL
Senator Cochran. Dr. Crawford, congratulations on your new
responsibilities. We appreciate your presence here today
presenting the fiscal year 2003 budget request to our
subcommittee. In the written testimony you have submitted, you
indicate how FDA is using the $151 million in supplemental
emergency appropriations funding which was provided to the
agency for homeland security. Most of the money, I understand,
is being used for increased staffing. My question is, how far
along are you in that process?
Dr. Crawford. We have done the interviewing, hired some
people and made offers to approximately half of the people we
will be hiring. Our goal and commitment is to get all of them
on board by the end of this fiscal year. It will be done much
quicker than that because we are already half way there.
It is important, as you would know better than I, to get
the right people because this is a large infusion of agency
resources. Our numbers will increase about 10 percent as a
result of this. And this is, in very real ways, the future of
FDA.
A lot of the people we are hiring are younger than in the
past. They also are what we call consumer safety officers,
which means they have a college degree, and they will move
throughout FDA into positions of responsibility over the next
quarter of a century or so. And we have to be very careful
about it, but our personnel office has risen to meet the
challenge and we are about halfway there. And we will keep this
committee posted with each benchmark we make.
SURVEILLANCE AND COUNTERTERRORISM
Senator Cochran. There was some concern too about using
funds in the supplemental for strengthening the surveillance of
drugs and medical devices, following the events of September
11. Are there any new procedures that have been put in place in
this connection?
Dr. Crawford. There are, but I would like to ask my
colleague Dr. Lumpkin to respond to that if I may.
Dr. Lumpkin. I think in answer to your question, Senator,
we obviously in the world of patient safety--from the products
we oversee as far as drugs, human drugs, human biologics, human
devices--are involved in several initiatives to try to improve
several aspects of that. One is improving our knowledge of what
is going on in the outside, expanding our ability to get
information, not only from the traditional passive system, the
passive reporting system of adverse events that we have had in
the past, but also looking at other epidemiological ways of
getting information in a much more active sense, looking at
cohorts over time to see if indeed we can look at what is
happening as far as the use patterns of products and how that
reflects on the safety information that comes from that.
I think we also, in respect to the question you asked about
the events of September the 11, obviously we have a very keen
interest in what happens with products that we use in
bioterrorism, and products that we have had to bring to the
forefront as bioterrorism products, and what kinds of safety
profiles those will have. And those, obviously, are a very
different kind of situation. Those are products that we all
hope and pray we never have to use. And yet, we need to develop
them and we need to have them. And so they are presenting us
with interesting challenges on how you develop the safety
information both before the products become available and then
if, like we have had to with the anthrax situation, how you
follow up after that, to see if indeed you not only did a good
thing by treating people who had been exposed, but what kind of
safety concerns might have arisen from that.
So, those are the kinds of things we have been focusing on
since that point in time.
INTERNET SALE OF DRUGS
Senator Cochran. There had been some interest and concern
with Internet drug sales a couple of years ago. Have the events
of September 11 had any effect on that concern? Is there
anything new that FDA is doing in that connection relative to
enforcement of rules or regulations?
Dr. Crawford. We have a difficult time--we have always had
some problem with drugs being brought into the country. With
the Internet, though, this has taken on an entirely different
perspective because it is possible now to buy drugs from all
over the world by way of the Internet and have them shipped
here. And FDA needs a new and more inventive strategy to deal
with that, because some of these drugs are approved in the
United States, but the formulation that might be exported to
this country may not be approved. The dosage directions may not
be understandable. They do pose a risk to our people. It is not
something that we can get more people at the border to stop.
So, what we are going to have to do is take some rather
severe actions. One of our problems is that each time we take
action against these kinds of products, we have to give the
perpetrators the opportunity for a hearing. And you would
understand very quickly that we just do not have the resources
to give all of these kinds of hearings. We probably need to
consult with this committee and others about some kind of
legislation or tweaking of existing law in order to enable us
to deal with this problem of having to grant these hearings.
And if I might offer, I would like to work with your staffs on
that possibility, because we do have a developing problem that
could break out and embarrass all of us. It is getting more and
more severe all the time.
STOCKPILES OF PRODUCTS
Senator Cochran. We appreciate your concerns and also your
efforts to look at the law and help us understand how we can be
more helpful to you in this regard.
What about current stockpiles of blood and medical
products? Are they adequate? What if anything else needs to be
done in that connection and what is your role in that?
Dr. Crawford. Well, our role is considerable. May I ask Dr.
Kathryn Zoon to come to the table? She is the director of our
Center for Biologics and is directly involved in that process.
Dr. Zoon. Thank you. One of the areas--I will address blood
first because obviously that is one that we are focusing on. On
September 11 a number of events required a number of actions we
are continuing to work on right now. We needed to prepare
emergency guidance for giving relief, for training and
transport of blood, not to affect the safety and quality of
blood, but to allow the facilitation of blood collection and
the very quick training of people to collect blood in an
emergency situation. This worked very well to move the blood
into New York very quickly. What we found is that there were
additional areas we need to focus on, particularly in the blood
arena, which involve transport and interactions with the
Federal Aviation Committee and other agencies, etcetera to deal
with transport.
Also, the issue of supply has actually been an ongoing
issue over the years. And having an adequate supply, especially
in the absence of an emergency, has been with a very small
margin of overage. In fact, we have been working with the
Department, HHS, to develop a surveillance system that works
with 26 surveillance sites and trying to get critical
parameters on the adequacy of the blood supply, and also
working with the Department and encouraging blood donations,
both increasing the number of blood donors as well as
increasing the number of donations per donor.
In the medical supply area, I can speak to biologics, and
particularly our responsibility in smallpox vaccine and anthrax
vaccine and related products, immunoglobulin products. We have
been working with a number of the manufacturers and the
Department to look at the stockpiles of this, which are key to
the public health and safety. This has been a primary action
that we have focused on over this past year. We have spent an
enormous amount of resources in trying to facilitate the
development of these products, both conventional vaccines as
well as the development of new vaccines, and are committed to
do so until we get the problem solved.
PHYSICAL SECURITY ENHANCEMENTS
Senator Cochran. Thank you very much. Some of the
supplemental funds are being used to enhance physical security
at FDA. What enhancements have been made so far and do you have
plans to establish new procedures relative to people who work
at FDA, doing background checks and that kind of thing?
Dr. Crawford. May I ask Mr. Jeffrey Weber to respond to
that, please?
Mr. Weber. Thank you. Yes, we are revising our background
procedure. We are hiring additional guards to monitor our
facilities. The department has instituted new procedures for
monitoring select agents and protecting select agents in our
laboratories. We have done an inventory of all of our
facilities to determine what type of additional security
procedures are needed at them, and we are in the process of
contracting for things like bollards in the parking lots,
additional locks on refrigerators where we store select agents,
additional cameras, etcetera. So we are improving the security
of all of our facilities that handle those select agents.
BACKLOG OF PRODUCT REVIEW
Senator Cochran. In terms of the application and review
performance there has been some concern in the past about the
gaps between the statutory requirements and the reality of
approving applications in a timely way. There has been a
backlog of food and color additive petitions, of animal drug
applications. I have heard about that from constituents. What
is the status of the effort to deal with these backlog
problems?
Dr. Crawford. Starting first with the Center for Veterinary
Medicine, this past year they had an initiative to try to cut
the backlog considerably. They were able to reduce it by about
50 percent. And they have a new commitment this year, with some
new personnel in place, to continue to whittle it down. It is
going to be difficult for them to sustain that with present
resources, but I am committed to doing what I can as Deputy
Commissioner to help them in that process, and I applaud what
they have done.
Senator Cochran. What progress has FDA made in reducing the
review times for medical devices?
Dr. Crawford. We do have an initiative on that also, and I
would like to ask Dr. David Feigal to come forward if I could.
Dr. Feigal. Thank you for the question. There are actually
at this present time no backlogs in medical devices. The
average review time, total time, is as good as it has been in a
decade. But there are definitely areas where we are committed
to improving. One of the areas that has been identified by
industry is the treatment of products which are designated for
expedited review. These have not moved particularly quicker
than our other products. The average is about a year to a year
and a half from the application to market. And we have begun
working with industry to find ways to work together to improve
the application process so that those particular products which
are breakthrough products will come to market more quickly.
MEDICAL DEVICE AND ANIMAL DRUG USER FEES
Senator Cochran. Have there been any discussion with the
medical device and animal health industry with respect to user
fees to help deal with this?
Dr. Crawford. Yes, we have met with the Animal Health
Institute, which represents the animal health industry, and
they informed us just this past week that they are interested
in the user fee concept based somewhat on the Prescription Drug
User Fee Act that has been successful for both FDA and, we
believe, for consumers.
The medical device industry, I believe it is correct to say
there are some elements of it that favor user fees, and some
that have not yet committed. And I think it is fair to say with
them, if Dr. Feigal agrees, that the debate and discussions
have just begun and we do not know where that is going to go.
But, with animal drugs it appears that the notion of user fees
is popular and that it will be pressed.
BSE INSPECTIONS
Senator Cochran. One of the issues that is topical because
of the recent foot-and-mouth disease scare in Kansas and the
terrorist attacks on the United States is the BSE feed and
import monitoring for these animal diseases. It has been an FDA
priority, as I understand it. In your testimony, you indicate
that FDA has inspected over 12,000 firms since 1997 for
compliance with its BSE-related feed regulations. How many
firms have not been inspected and what is FDA doing to monitor
the compliance of those firms already inspected?
Dr. Crawford. Thank you for the question. I would like to
ask Dr. Steve Sundlof to come forward and respond to that. He
has monitored this effort and directed it ever since it began.
He was on board when the first cases of the human form of BSE
occurred, then was instrumental in putting this process in
place. He is the Director of our Center for Veterinary
Medicine.
Dr. Sundlof. Thank you and thank you, Senator Cochran. In
terms of how many have not been inspected, we have inspected--
to our knowledge--we have inspected all of the firms with the
exception of the individual farms, which represents millions of
farmers. But, we made a commitment that we would inspect 100
percent of firms that, in any way, handle the prohibited
material, and we have done this.
We are in the process now, with the appropriations we
received in 2002, to dramatically increase the inspection force
for BSE, and we will be inspecting again all 100 percent of the
firms that handled the prohibited material that, if
incorporated in feed, could produce mad cow disease.
We are going back in a priority manner such that people who
were not found to be in compliance on the last inspection are
the first people that are going to be inspected this time.
Furthermore, we are looking at ``for cause'' inspections on the
farm where we believe that, through our intelligence, that
there may be use of prohibited animal feed in cattle. So, we
have really ramped up the inspection for BSE. We have also
increased our inspection at the borders so that any material
that might be imported into the country that could spread the
BSE agent is being looked at much more closely. In our program
right now we are really starting to get to the point where it
is going to be very much self sustaining.
BSE FUNDING
Senator Cochran. We added $15 million to the funding level
in 2002 for these BSE activities. What is the total proposed
funding level for these activities for 2003?
Dr. Sundlof. In terms of increasing the amount for BSE, I
do not believe, I think we are staying at that same level or
very close to that level for 2003. But, this will get us to our
goal of 100 percent inspections every single year, so every
firm will be inspected at least once every single year. And
again, we have really increased the surveillance at the border.
That $10 million bought 100 inspectors that are out there now
that we did not have before.
Senator Cochran. But you are going to keep them? You are
proposing to keep them?
Dr. Sundlof. Yes, we are going to continue that. In
addition, we have increased our contracts with the States so
that the States are now funded to do more of the inspections
for us. And that is very important because a lot of these feed
mills are in places where it is hard for FDA district
inspectors to get to because they may be in remote parts of the
State. So, having the States out there working with us has
really helped us. In fact, they are doing about 80 percent of
the inspections.
DIETARY SUPPLEMENTS
Senator Cochran. My last question has to do with botanical
dietary supplements. Has there been a study done to assess the
overall quality of dietary supplements that are being sold in
the U.S.?
Dr. Crawford. We regulate those under the Dietary
Supplements and Health Education Act, and Mr. Joe Levitt is
Director of our Center for Food Safety and Applied Nutrition,
and I would like to ask him to talk about any such studies as
he may be aware of, those and those that might be planned.
Mr. Levitt. Thank you. There is no single, comprehensive
study. There are a number of areas that are being looked at at
the universities. We are also working very closely now with the
University of Mississippi to get better data on what is out
there in dietary supplement products, with the Center for
National Products Research at the University of Mississippi.
Senator Cochran. Do you think the Food and Drug
Administration will be able to take advantage of partnerships
such as this where there is expertise in these research areas?
Mr. Levitt. Yes, we are very excited about collaborations
such as these. We can take the expertise, we at the FDA can
really combine that in a positive, synergistic way with
expertise in academia. So we see this as vital to the future of
us having a strong scientific foundation to regulate this group
of products.
Senator Cochran. Do you foresee the possibility of having
FDA scientists located in these research facilities as well?
Mr. Levitt. There is nothing in this year's budget that
addresses that. We do have a collaboration in Chicago on food
processing, food safety that does have FDA employees on site as
part of that facility. And that is a model we are looking at in
terms of how can we take and apply that model elsewhere.
Senator Cochran. Thank you very much. Thank you, Mr.
Chairman.
ANTIBIOTIC RESISTANCE
Senator Kohl. Thank you, Senator Cochran. Just one last
question. Going back to the link between antibiotic resistance
in humans, and the use of antibiotics in animal feed, I have
received many letters from people in my State of Wisconsin
regarding the use of one particular antibiotic, the drug
Baytril in food additives. It is my understanding this drug is
similar to Cipro, the drug used to combat several food-borne
illnesses, and as we know now, anthrax.
Due to a significant increase in resistance among humans a
drug similar to Baytril was approved in 1995 to treat chickens.
The FDA proposed in October of 2000 to ban this class of
antibiotics from use in poultry. And now I have been informed
that this ban is being challenged. Could you comment on that
please?
Dr. Crawford. Yes sir. The state of that situation is that
the FDA did in fact move to question the antibiotic Baytril,
which is a fluoroquinolone, which is of the same family, as you
pointed out, as ciprofloxacin comes from. And two companies
marketed these particular products for chickens. And what FDA
did was publish a notice of an opportunity for a hearing to
have the company come in and explain why their product should
stay on the market or, in effect, defend its license.
ADDITIONAL COMMITTEE QUESTIONS
One of the companies did not wish to avail themselves of
that possibility and voluntarily withdrew that poultry drug
from the marketplace. The second company has chosen to contest
FDA's findings and have asked for a hearing. And a notice of a
hearing has been sent to that company. And as you know, this
means that in time it will be heard by an administrative law
judge. Then the administrative law judge will submit his
findings to me and we will evaluate that and take the
appropriate action.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Herb Kohl
antimicrobial resistance/narms
Question. There have been several news stories recently about the
decrease in antibiotic use by the poultry industry. This has been
fueled, at least in part, by the refusal of some corporate consumers,
such as McDonald's and Wendy's fast food restaurants, to buy chicken
treated with certain antibiotics, due to evidence regarding the links
between antibiotic overuse and drug-resistant bacteria, and public
awareness of this issue.
To what extent has FDA played a role in promoting the reduction of
antibiotics fed to healthy chickens?
Answer. FDA supports judicious use of antimicrobials. Further, in
fiscal year 1977 FDA published a prohibition against extralabel use of
fluoroquinolone to ensure the drug is used therapeutically.
Since there has been concern about the use of antibiotics in
agriculture, other approaches are being evaluated to minimize
contamination of animal products with foodborne human pathogens.
Reducing colonization of animals by pathogenic bacteria by using
competitive exclusion treatments, phage therapy, vaccines and farm
hygiene is being considered as an alternative to antimicrobial feed
additives.
Competitive exclusion products must adhere to FDA regulations that
the bacterial mixtures be well defined. For commercial use, competitive
exclusion preparations for poultry must be free from all known human
and avian pathogens and from any microorganisms with unusually high
resistance to antimicrobials. The FDA has approved a competitive
exclusion product designed to prevent the colonization of chicken
intestines by pathogenic bacteria, such as Salmonella spp.,
Campylobacter spp., and E. coli, and also to reduce the use of
antibiotics and the spread of antibiotic-resistant genes. Researchers
in the Division of Microbiology have standardized a quick and accurate
in vitro assay for determining the efficacy of potential competitive
exclusion products. In addition, researchers have characterized
vancomycin-resistant isolates from a competitive exclusion product. Our
studies indicate that FDA will need to standardize the identification
techniques used to characterize the components of competitive exclusion
products.
Question. What do you believe is an acceptable level of antibiotic
use in food animals, taking into consideration the most recent
information gathered by NARMS? Do you believe that the reduction of
antibiotics by major poultry producers will lower the level of
antibiotic resistance in humans to this acceptable level?
Answer. The science behind the issue of antimicrobial resistance
resulting from the consumption of food animals is complex and requires
a multi-faceted approach by all stakeholders, including the Federal
government, industry, veterinarians and food animal producers, in order
to be successful.
FDA currently does not have accurate estimates as to the amounts of
antimicrobials consumed by food-producing animals. FDA requires the
submission of certain drug sales information as part of the annual drug
experience report for approved drug products. However, the information
submitted is limited and difficult to interpret; for example, many
products are used in both food animals and companion animals yet only
total amounts of drugs produced are reported. The Framework Document
identifies the need for the pharmaceutical industry to submit more
detailed antimicrobial drug sales information as part of its annual
report. The goal of this additional monitoring is to obtain objective
quantitative information to evaluate usage patterns by antimicrobial
agent or class, animal species, route of administration and type of
use, that is therapeutic or growth promotion, in order to better
evaluate antimicrobial exposure. More comprehensive data are essential
for risk analysis and planning, can be helpful in interpreting
resistance surveillance data obtained through NARMS, and can assist in
the response to problems of antimicrobial resistance in a more precise
and targeted way than is currently possible. FDA is developing new
requirements for antimicrobial drug use information through a notice
and comment rule-making process.
Question. What efforts have been made to decrease antibiotic use in
animals other than poultry? Have these efforts been successful, and if
not, what steps are being taken by FDA, alone and in conjunction with
other non-governmental and government agencies, to enhance these
efforts?
Answer. FDA has taken an active role in educating veterinarians and
food animal producers by funding AVMA efforts to develop prudent drug
use principles and disseminating the resulting guidelines. Guidelines
for prudent or judicious use principles have been developed for beef,
dairy, swine and poultry practitioners and for poultry and swine
producers. FDA recently printed these principles in booklet form and
produced two videotapes for educational purposes and distributed the
educational items to appropriate veterinary practitioners. Additional
booklets designed to provide beef and dairy food animal producers the
background to the judicious use principles are under development. In
addition, two projects on prudent drug use activities on dairy farms
were supported in California and Michigan and similar projects in swine
at Tufts University and The Ohio State University were funded in late
2001.
FDA believes that development and dissemination of prudent drug use
principles, is an essential first step, to ensure that the principles
are followed in practice. FDA intends to continue monitoring
development of antimicrobial resistance through the National
Antimicrobial Resistance Monitoring System, NARMS, as one means to
determine if the prudent use principles are effective in slowing or
stopping the development of resistance in foodborne pathogens. Another
method to assess the success of prudent drug use initiatives is to
monitor the use of antimicrobial drugs in food-producing animals, as
described above. The data gathered from the enhanced reporting by drug
sponsors on antimicrobial drug use can be used to evaluate the
effectiveness of mitigation strategies implemented in response to
trends of increasing resistance and to assess the success of prudent
drug use initiatives.
It is important to recognize that there have been notable changes
during the past several years within the Federal government's public
health infrastructure in the approach to addressing the antimicrobial
resistance problem. The Federal Public Health Action Plan, promising a
coordinated focus on, among other areas, education, surveillance,
research, and product development, was published in January 2001. FDA
has served as co-chair of the Interagency Task Force, which developed
the plan. The Task Force is now overseeing the implementation of the
plan and expects to have a report completed by June 2002 on progress
made to date. Copies of this plan are available at the Centers for
Disease Control and Prevention website, http://www.cdc.gov/
drugresistance/actionplan/.
Question. Please provide information on the current activities of
NARMS, including all funding proposed for NARMS activities in the
President's budget and its' proposed uses. What was the total funding
FDA spent or anticipates spending on NARMS activities in fiscal year
2001 and fiscal year 2002? What is the status of the report requested
by the Subcommittee on NARMS that is due May 1?
Answer. FDA expended $8.3 million on NARMS in fiscal year 2001 and
expects to expend the same amount in fiscal year 2002 and fiscal year
2003. There is no new funding included in the fiscal year 2003
President's Budget. The National Antimicrobial Resistance Monitoring
System is a surveillance tool that monitors change in susceptibilities
to antimicrobial drugs of pathogens from human and animal specimens.
Surveillance includes non-typhoidal Salmonella, Escherichia coli O157,
Campylobacter and Enterococcus isolated from human stool samples,
animals at slaughter, and retail meat, as well as human isolates of
Shigella, Vibrio, Listeria and Salmonella Typhi. NARMS is integral to
our strategy of reducing antimicrobial resistance, and is a
collaboration between the FDA, the Centers for Disease Control and
Prevention, and the United States Department of Agriculture. Early
identification of emerging resistance will facilitate management of the
problem, initiate appropriate educational efforts and promote judicious
use, prolonging the effectiveness of approved drugs for humans and
animals.
The NARMS program includes partners from 27 State and local public
health laboratories that represent 63 percent of the U.S. population.
NARMS consists of three testing sites, or arms, all using identical
isolation, identification, and susceptibility testing procedures, and
each testing site has the expertise of a molecular biologist to
facilitate associated analytical microbiological research on the
isolates, including molecular characterization such as pulsed-field gel
electrophoresis, polymerase chain reaction, ribotyping, or other
appropriate method. The three arms include human, animal, and retail
meats.
In fiscal year 2001 NARMS was greatly expanded to include
additional bacterial pathogens and to improve the usefulness of the
program by giving more capability to monitor changes in antimicrobial
susceptibilities and increase the statistical robustness of the
program. This included adding retail meat testing. Retail meat
represents the point of exposure that is closest to the consumer and,
when combined with data from slaughter plant samples, provides a more
representative picture of the prevalence of resistant pathogens in
products derived from food-producing animals.
In fiscal year 2002 FDA expanded NARMS to the retail meat program
by adding five testing and collection sites in Connecticut, Georgia,
Maryland, Minnesota and Tennessee for retail meats. The collection
sites have adopted a standard method to isolate Campylobacter, E. coli,
Salmonella and enterococci from a sample of meat and poultry from
selected grocery stores in the participating States, and cultures each
sample for the presence of Salmonella and Campylobacter. In addition
Georgia, Maryland and Tennessee culture for E. coli and enterococci.
These cultures are then sent to the FDA Center for Veterinary
Medicine's Office of Research for antimicrobial susceptibility testing,
using the same procedures as those used at the CDC and USDA NARMS
testing sites.
In addition, a 3 year cooperative agreement was signed on September
29, 2001 with investigators from four agricultural States in Mexico to
establish an antimicrobial resistance monitoring program comparable to
NARMS. This program will use surveillance to detect resistance among
Salmonella, Campylobacter, and Escherichia coli collected from humans,
animal derived food products and live farm animals. Finally, each NARMS
testing site now has the expertise of a molecular biologist to
facilitate associated analytical microbiological research on the
isolates, including molecular characterization such as pulsed-field gel
electrophoresis, polymerase chain reaction, ribotyping, or other
appropriate method.
Since its inception, NARMS data have been used to identify public
health threats and initiate responses. Federal agencies undertake joint
field investigations of outbreaks of illness marked by pathogens that
display unusual antimicrobial resistance patterns. FDA has used NARMS
data to assess the human health impact of fluoroquinolone use in
poultry. All the participating agencies have used the data to improve
knowledge of risk factors associated with the development of resistance
and to stimulate research in the molecular characteristics of
resistance emergence and transfer. The program has also triggered
broader research projects relating to prudent antimicrobial use in
animals and the role of the environment in the emergence and spread of
antimicrobial resistance.
The NARMS report to Congress is expected to be delivered to
Congress by May 1, 2002. The draft report is currently under review.
Question. What portion of NARMS funding is transferred to USDA?
Answer. In fiscal year 2002 FDA plans to spend $8.3 million on the
NARMS program. The NARMS program is a joint effort between FDA, the
Department of Agriculture, or USDA, and the Centers for Disease Control
and Prevention or CDC. In fiscal year 2001 $1,340,000 went to USDA and
$1,550,000 went to CDC through interagency agreements and supplies/
services contracts. In addition, USDA and CDC contribute resources to
NARMS. In fiscal year 2001 CDC contributed approximately $1,100,000 and
USDA's Agriculture Research Service contributed $950,000.
Question. There have been concerns raised about the scientific
validity of NARMS data, since the specimens studied are taken from a
limited sampling base. There have also been concerns raised regarding
using NARMS data as the basis for regulatory action. How would you
respond to these concerns?
Answer. The NARMS program is integral to FDA's strategy of enhanced
pre-approval assessment, post-approval surveillance, and regulatory
controls in order to better characterize and control the development of
antimicrobial resistance. Early identification of emerging resistance
will facilitate management of the problem. For more information on the
operations of NARMS, we are preparing a comprehensive NARMS report
which is expected to be delivered to Congress by May 1, 2002.
The NARMS was substantially expanded under the National Food Safety
Initiative, which resulted in a very robust, statistically valid
sampling plan for the human arm of NARMS. Ten additional State public
health laboratories are submitting human isolates in 2002, for a total
of 27 sites that represents approximately 63 percent of the U.S.
population. The animal arm of NARMS is a robust and scientifically
valid source for Salmonella isolates. These isolates originate from raw
products collected from federally inspected slaughter and processing
establishments. Salmonella was selected as the target for pathogen
reduction efforts by the USDA Food Safety and Inspection Service in
implementing the--Pathogen Reduction: Hazard Analysis and Critical
Control Point, or HACCP, Systems--Final Rule that published on July 25,
1996. Salmonella testing includes carcass samples from cattle, swine
and chicken, as well as raw ground samples from beef, turkey and
chicken. As long as USDA continues to do Salmonella testing in
federally inspected slaughter and processing plants, NARMS will have a
valid and robust source of Salmonella isolates for susceptibility
testing. For pathogens other than Salmonella, however, the animal arm
of NARMS is not sufficiently robust.
In order to correct this problem, retail meat testing was added to
NARMS in 2001 as a pilot program in Iowa. Retail meat represents the
point of exposure that is closest to the consumer and, when sufficient
samples are collected from a variety of product categories, provides a
representative picture of the prevalence of resistant pathogens in
meat. In fiscal year 2002, FDA has expanded the retail meat program by
adding five testing and collection sites in Connecticut, Georgia,
Maryland, Minnesota and Tennessee. The collection sites have adopted a
standard method to isolate Campylobacter, E. coli, Salmonella and
enterococci from a sample of meat and poultry from selected grocery
stores in the participating States, and cultures each sample for the
presence of Salmonella and Campylobacter. In addition, Georgia,
Maryland and Tennessee culture for E. coli and enterococci. These
samples are sent to the microbiology laboratory at FDA's Center for
Veterinary Medicine's Office of Research where all pathogens present in
the sample can be isolated. The FDA laboratory follows the same
protocols and testing procedures as the human and animal arms of NARMS.
We anticipate that the retail food arm of NARMS will become a very
important source of antimicrobial resistance information on pathogens
other than Salmonella, such as Campylobacter, E. coli, and Enterococcus
species.
In addition, each NARMS testing site now has the expertise of a
molecular biologist to facilitate associated analytical microbiological
research on the NARMS isolates, including molecular characterization.
This work better enables FDA to determine the source of the resistant
pathogen. FDA has also added an animal feed component to NARMS in order
to provide additional information as to possible sources of resistant
pathogens at the farm level and may serve as an area to focus
mitigation efforts. In 2002, FDA field representatives are sampling
animal feed at U.S. rendering plants and the Office of Research in the
Center for Veterinary Medicine is isolating and susceptibility testing
the organisms.
Question. If there are problems with the scientific validity of
NARMS data, what would be needed to make NARMS statistically valid,
including samples collected and analysis costs?
Answer. Maintaining the funding of each of the three testing sites,
human, animal and retail meat, is necessary for maintaining a robust
program. FDA is expanding the retail meat arm of the program. This arm
of NARMS has the potential to be the most resource intensive because of
the need for a valid sampling scheme and the large numbers of pathogens
that may be isolated for susceptibility testing. We anticipate there
could be additional needs for this expansion but the Agency currently
is in the early stages of developing this arm of the program.
Question. Please provide information on the NARMS pilot projects in
Mexico monitoring antimicrobial resistance in Salmonella. Are other
international NARMS projects currently under consideration? If so,
please provide information on them, including the objectives of all
international pilot projects.
Answer. A 3-year cooperative agreement was signed on September 29,
2001 with investigators from four agricultural states in Mexico. The
primary objective is to establish an antimicrobial resistance
monitoring system for foodborne pathogens in Mexico comparable to
NARMS. The long-term objective is to improve the understanding of the
epidemiology of Salmonella, Campylobacter, and E. coli isolates in the
four Mexican states and to better define the susceptibility patterns of
the pathogens and the risk factors associated with drug resistance.
This project will aid in the development of an international database
that will have similar and eventually standardized testing
methodologies with NARMS and other international monitoring programs.
Such a database will allow comparison of trends observed among
countries and enhance food safety activities globally. A multinational
surveillance program will allow improved detection of epidemics and
earlier responses to identified emerging pathogens on an international
scale and provide greater public health protection against multi-drug
resistant pathogens. A potential long-term benefit of this grant is the
ability to design and implement data-driven prudent drug use practices
in the United States and Mexico based on information gained in the
study. There are no plans for additional international NARMS projects
at this time.
Question. Has the Agency sought or received public input in the
past year concerning the NARMS program, and specifically, the
international expansion of NARMS?
Answer. The Food and Drug Administration held a two day public
meeting on March 15 and 16, 2001 to discuss the results from the
National Antimicrobial Resistance Monitoring System and related
antimicrobial resistance research. One of the topics presented and
discussed was the Resistvet Project, which is the US-Mexico
Antimicrobial Resistance Monitoring Program for Foodborne Pathogens.
The next NARMS meeting, hosted by the United States Department of
Agriculture--ARS, is tentatively scheduled for November, 2002. This
will be an opportunity to get additional input concerning the NARMS
program.
animal cloning
Question. There has been much attention in the media recently about
the latest cloned animal, CC the cat. Obviously, this adds fuel to the
already raging cloning debate. There have been articles in the
Milwaukee Journal-Sentinel, and other newspapers, regarding the patent
disputes surrounding cloned animals. One such article was published in
a recent Boston Globe, and stated that the FDA is likely to allow
clone-derived meat and dairy products to be sold as soon as this
spring. The article also reported that over twenty cloned dairy cows,
with the ability to produce milk at a much more efficient rate, have
been sold in anticipation of this ruling.
When was an application first received by the FDA in regard to the
safety of clone-derived meat and dairy products? When is a ruling on
this, and all other similar applications, expected?
Answer. FDA has been considering the suitability of clones of
animals of high genetic merit for food and feed production since it
became apparent in late 2000 that some commercial firms intended to
market such animals for use in breeding and food production programs.
FDA met with firms conducting research and producing clones of cattle,
hogs, sheep, goats, and chickens during 2001 to learn of their business
models, the types and numbers of clones that they planned to produce,
and to encourage the firms to publish as much data as possible relating
to the safety of these animals and their progeny for use in food
production. FDA also identified this issue as the highest priority for
a National Academy of Sciences/National Research Council, NAS/NRC,
expert committee to consider. The NAS/NRC report is expected in June
2002. A determination by FDA on what, if any, safety concerns exist
with regard to clone-derived meat and dairy products incorporating the
NAS/NRC recommendations and any additional scientific data available is
projected by the end of calendar year 2002.
Until an FDA finding has been issued, clone companies have agreed
to withhold all cloned animals, food derived from them and their
progeny from the food and feed supply.
Question. Please provide a timeframe and summary of steps that FDA
has taken to conclude whether these products are safe for human
consumption. Taking into consideration that animal cloning is still in
relatively early stages, have possible long-term health risks been
considered?
Answer. FDA is in the information gathering stage for science-based
decision making on the safety of food derived from clones of animals
that are not genetically engineered. FDA began this process in late
2000, contracting with National Academy of Sciences/National Research
Council, or NAS/NRC for an assessment of risks associated with cloning,
in addition to other animal biotechnology products. In 2002, FDA will
receive the NAS/NRC recommendations, determine whether any additional
data are available that would be useful in an assessment of safety
concerns, and release its findings. FDA also is in the planning stages
to co-sponsor a public meeting this fall on animal cloning that might
gain additional information.
As part of any food safety assessment at FDA, possible long-term
health risks are considered as a matter of course.
Question. Has the agency taken into consideration the possible need
to label products derived from cloned animals?
Answer. The need to label food products derived from cloned animals
will be considered as part of any FDA finding as to the safety of these
products and the appropriate level of regulation warranted, based on
the science. Food labeling is generally based on whether there is a
difference in food qualities or safety that warrants a label.
Question. Has the agency received applications for approval of
clone-derived pharmaceuticals? If so, please provide the status of
these applications. If not, please provide information on what FDA is
doing to prepare for the receipt of such applications, and whether the
same procedures will be used to study the safety and efficacy of clone-
derived pharmaceuticals as opposed to other pharmaceuticals.
Answer. A clone derived phamaceutical includes a variety of
products. One such product might involve xenotransplantation. FDA has
not received any applications for xenotransplantation products that are
derived from cloned animals. A cloned animal is not derived by mating,
that is, by sperm plus egg, but rather by injecting all of the genetic
material of the founder animal into an enucleated--host egg, that is an
egg with of its genetic material removed. This procedure results in
offspring that are nearly genetically identical to the founder animal.
Some U.S. companies are attempting to produce cloned animals for
xenotransplantation products in order to reduce the host's immune
response, product rejection and the need for immunosuppressive agents.
Currently, FDA is not doing anything different to prepare for the
receipt of such applications, and the same procedures will be used for
the study of safety, purity and potency of xenotransplantation products
from clone-derived animals as those derived from wild type or
transgenic animals. For many years, FDA has had a guidance document on
biologics produced in transgenic animals and our expectations for the
industry.
dietary supplements
Question. In fiscal year 2002, the Committee provided increases for
FDA's Dietary Supplement Adverse Event Reporting System and the
National Center for Natural Products Research.
Please provide an update on the effectiveness of the Dietary
Supplement AERS, and the activities of the National Center for Natural
Products Research. What has been accomplished due to the funding
increase provided in fiscal year 2002?
Answer. I would be happy to answer that for the record.
[The information follows:]
fda's dietary supplement adverse event reporting system
Fiscal year 2002 funds are being used for the design, development,
implementation, and maintenance of the CFSAN Adverse Event Reporting
System (CAERS). The FDA intends to use fiscal year 2002 funds for:
--Scanning and redaction of adverse event reports;
--Data entry of adverse event reports;
--Alert letters to manufacturers;
--Design and development of the CAERS database;
--Migration of legacy adverse event data into CAERS;
--An electronic link to the FDA Office of Regulatory Affairs Field
Accomplishment Compliance Tracking System (FACTS); and,
--CFSAN thesaurus development.
CAERS is currently undergoing user acceptance testing, training,
and some technological improvements.
In September 2001, FDA implemented a cooperative agreement with the
National Center for Natural Products Research (NCNPR). This agreement
between FDA and NCNPR created a partnership that allows for more
efficient use of resources to identify and analyze specific components
in botanical dietary ingredients, thereby enhancing overall public
health by ensuring that botanical dietary supplements are safe and
their labeling is not misleading.
The NCNPR cooperative agreement for fiscal year 2001 was awarded on
September 28, 2001. Since the total Project Period is 5 years, the
additional 4 years of funding up to $1 million per year will depend
upon acceptable performance and the availability of future fiscal year
funding. In accordance with the procedures for supplementing
cooperative agreements, FDA must announce its intent, through a Request
for Application (RFA), to increase funding up to an additional $1
million to the NCNPR cooperative agreement in the Federal Register.
Once announced, NCNPR must submit a grant application to demonstrate
how it will meet the objectives of the RFA. The application will go
through a dual review process and FDA anticipates completing this
process and awarding the money to NCNPR in September 2002.
To date, the awarded monies (from fiscal year 2001) have been used
to collect a number of authenticated botanical species for chemical
profiling and characterization. The species include ephedrine alkaloid-
containing species (e.g., ephedra, ma huang), aristolochic acid-
containing botanicals, comfrey, germander, and blue and black cohosh.
The NCNPR scientists are collaborating with FDA scientists to ensure
usefulness for evaluating potential safety issues and to coordinate
related FDA and NCNPR research activities. In this regard, FDA and
NCNPR scientists have jointly presented results of their scientific
collaborations at a professional meeting and are currently preparing
co-authored scientific manuscripts for publication in peer-reviewed
journals. The NCNPR is also completing plans for a scientific workshop
on authenticating botanical ingredients for use in dietary supplements.
The workshop will be held in August 2002 and will provide a basis for
scientists from academia, government and industry to discuss the
scientific issues involved in the authentication of botanical
ingredients. The issues discussed in this workshop will have broad
relevance for research, manufacturing and regulatory applications.
Question. What activities does FDA take to inform the public of all
possible health effects of dietary supplements, such as the anti-
anxiety herb kava, which has recently been reported as the cause of
serious liver problems? What further effective steps could FDA take
with increased funding?
Answer. With available resources, FDA's ability to inform the
public of possible adverse health effects associated with the use of
dietary supplements is limited to the most serious risks presented to
the public. Consumer advisories, MedWatch Safety Alerts, letters to
health care professionals, and information papers are several tools FDA
uses to inform the public of important health information. For example,
FDA issued an advisory on March 25, 2002, informing consumers of the
potential risk of severe liver injury associated with the use of kava-
containing dietary supplements.
With respect to further steps that FDA could take, in January 2000,
FDA published a Dietary Supplement Strategic Plan. Built on law and
science, the Plan sets out clear program goals for a science-based
regulatory program, that will fully implement DSHEA, thereby providing
consumers with a high level of confidence in the safety, composition,
and labeling of dietary supplements. The Plan identifies activities in
six areas: safety, labeling, boundaries, enforcement, science-base and
outreach. The outreach section addresses, among other things, the
Agency goals with respect to communicating information about potential
adverse effects associated with dietary supplements to the general
public. In response to a request from Congress, the Agency is
developing a report detailing the cost of implementing our Dietary
Supplement Strategic Plan.
fda commissioner
Question. Taking into consideration the fact that last year over 20
percent of all the money spent by American consumers was on products
regulated by the FDA, I believe it is safe to say that this agency has
an incredibly important mission. Also, taking into consideration the
events of September 11, the agency has been thrust into the spotlight
like never before because of the important role FDA plays in protecting
America's homeland, and ensuring the products we use and the food we
eat is safe. Finally, when we consider the wide variety of issues
facing the FDA in today's society, ranging from the importation of
pharmaceuticals, to bioterrorism, to the approval of cloned-animal
products, to the influx of potential medical breakthroughs as a result
of doubled NIH funding, it seems that this is definitely an agency that
would benefit greatly from having a Commissioner. We are over a year
into this Administration, and it doesn't seem that a nominee is even on
the horizon.
What effect has the lack of a Commissioner had on the activities of
the FDA, and what functions will be improved once a Commissioner has
been named?
Answer. We at the Food and Drug Administration have been very
fortunate to have within our ranks, incredibly competent and gifted
managers who are outstanding leaders in their respective areas of
expertise. It is because of the foresight of previous FDA
Commissioners, that even during an extended period where the position
of Commissioner is vacant that one among our ranks can be called upon
to successfully lead and guide our Agency. As Deputy Commissioner of
the Agency, I meet with the Secretary regularly.
The Agency has not suffered at all from the lack of a Commissioner.
All responsibilities and activities of the Agency have continued,
focused on the Agency's mission to protect the public health from
impure, misbranded, adulterated, or ineffective products. Once a new
Commissioner is selected, he or she, will come to an Agency that has
continued to operate in an efficient, effective manner; responding to
the needs of our stakeholders, and continuing to enforce the highest
standards for regulated industry.
Question. What information can be provided on the search for a new
Commissioner, and when one might be nominated?
Answer. The search for a Commissioner for FDA is a priority for the
Administration. However, there is no timetable for submitting a
nomination at this time.
generic drugs
Question. Why was the decision made to request such a significant
increase for Generic Drugs? How are these funds proposed to be spent?
Answer. The Generic Drugs Program has the primary responsibility
for approving new generic drug applications. According to the
Congressional Budget Office, generic drugs save consumers an estimated
$8 to $10 billion a year at retail pharmacies. Even more is saved when
hospitals use generic drugs. With the requested increase of $4,582,000,
FDA plans to hire additional reviewers and other staff to accelerate
the review and approval of Abbreviated New Drug Applications; improve
the review of ANDAs without sacrificing product quality to allow the
Agency to reach its goal of reviewing 75 percent of ANDAs within 6
months after submission; hire additional inspectors to increase
inspections of domestic and foreign firms associated with generic drug
production, an activity critical to reducing total approval times; and,
increase coverage of imported generic drugs to better monitor the
quality of finished drug products and bulk drug substances from
overseas. Additionally, the increase will also be used to conduct
research that will allow us to address specific scientific questions
regarding bioequivalence and chemistry of generic products. This
research will be directed at evaluating ways to enable approval of
generic drugs in areas that currently lack generic alternatives, such
as inhalational or topical drug products.
Question. Congress provided specific funds to be used for Generic
Drug Education in fiscal year 2002. How have these funds been spent?
What is the total amount of funding spent by the FDA on Generic Drug
education? In what forms, and to what States, is information provided?
Could more funds be used to improve this effort?
Answer. In fiscal year 2002, FDA has been charged with funding
$400,000 for generic education. FDA believes this funding is sufficient
to support the program. The work for fiscal year 2002 is building upon
plans established in fiscal year 2001 to develop a standard message for
the public. Plans are underway for using physician focus groups to
determine attitudes and knowledge gaps about generic drug products in
that community. Based upon that information, continuing medical
education programs will be developed. Pharmacy continuing education in
coordination with the Association of the State Boards of Pharmacy, is
also planned.
Standard messages for the public will be communicated through media
such as print ads, radio public service announcements and convention
exhibit booths. The material will also be distributed nation wide. Some
of the professional education will involve staff travel to professional
organization meetings to present information on the generic drug
approval process that assures the quality of the drug products. Experts
in the field will also be contracted to provide educational information
on these topics.
blood safety
Question. There is a $5 million increase for Blood Safety
activities in the President's Budget. Please explain how these funds,
if approved by Congress, will be used, and how they will supplement
current activities.
Answer. FDA will continue to provide oversight of the U.S. blood
system to include updating the blood regulations and addressing
emerging infectious diseases in addition to responding to emerging
potential threats to the blood supply in a timely and coordinated
approach. We will be happy to provide specific information for the
record.
[The information follows:]
FDA has requested funding of $5 million for blood safety issues as
part of the overall fiscal year 2003 Biologics Program funding request
for counter terrorism. The following needs have been identified:
Fiscal Year 2003 Request for Blood Safety
Develop possible responses to disruptions in the blood supply;
Assure rapid testing and release of licensed products;
Evaluate current plasma therapies for use in terrorist attacks;
Evaluate current supplies of botulinum immune globulin;
Interact with blood organizations and establishments to develop
contingency standard operating procedures;
Work with establishments to develop means to handle single large
influxes of donors; and,
Interact with other government agencies to allow shipment of
samples for testing during times of limited distribution methods.
pediatric exclusivity
Question. On December 12 of last year, the Senate passed
legislation by unanimous consent to extend until October of 2007 the
current law granting pharmaceutical companies an additional 6 months of
exclusivity on a drug, in addition to any patent rights, if the company
conducts at least one clinical investigation studying the effects of
the drug on children. While many people feel this is an effective
incentive for pharmaceutical companies to ensure the safety and
efficacy of their products on children as well as adults, the true
beneficiaries of this law have also been questioned. According to a
recent CATO article, the FDA recently estimated that drug manufacturers
will earn an additional $30 billion over the next twenty years as
nearly 100 new drugs receive additional market exclusivity for
conducting clinical trials involving children. My calculations show
that this averages to approximately an additional $300 million per drug
due to market exclusivity.
What is the average cost of a clinical trial studying the effects
of a new pharmaceutical on children?
Answer. We do not have precise data on study costs as this is not
information typically obtained by FDA. However, we do know that the
costs vary depending on the type of study, number of children
participating in the study, and the type of drug under study. The
General Accounting Office, or GAO testimony on May 8, 2001, before the
Senate Committee on Health, Education, Labor and Pensions estimated
some of these costs. The GAO estimated that a safety and efficacy study
may cost between $1 million and $7.5 million, while the cost of a
pharmacokinetic, or PK study can range from $250,000 to $750,000 per
age group. In addition, the GAO indicated that limited data provided by
the Pharmaceutical Research Manufacturers of America, or PhRMA
suggested higher study costs, ranging from under $5 million to more
than $35 million. In addition, the GAO found that another study, The
Pediatric Studies Incentive: Equal Medicines for All, Christopher-Paul
Milne, Tufts Center for the Study of Drug Development, published in
April 2001, indicated that, based on a survey of drug companies, the
cost of pediatric studies can average $3.87 million per written
request. We will be happy to provide a table for the record that shows
the number of different types of pediatrics studies we have requested
as of March 1, 2002.
[The information follows:]
TYPES OF PEDIATRID STUDIES REQUESTED 1 2 3
[As of March 1, 2002]
------------------------------------------------------------------------
Type of study No. Percent
------------------------------------------------------------------------
Efficacy & Safety....................... 197 34
PK & Safety............................. 169 30
PK/PD................................... 56 10
Safety.................................. 96 17
Other................................... 50 9
-------------------------------
Total............................. 568
------------------------------------------------------------------------
\1\ 568 studies (241 Written Requests issed).
\2\ No. of studies which specified # of patients to be studied: 325.
\3\ Projected total # patients in requested studies: 33,055+.
Question. How many products that have received this market
exclusivity are developed solely for use in children? Please provide
information on these products.
Answer. As of March 31, 2002, we have issued 241 Written Requests
for pediatric studies under the pediatric exclusivity program and
sponsors have submitted completed studies in response to 63 of the
studies. Of the 63 drugs for which studies were submitted, 56 were
granted pediatric exclusivity, and 7 were denied exclusivity. For the
record, we will provide a table that identifies the 56 drugs that have
received pediatric exclusivity.
[The information follows:]
PRODUCTS GRANTED PEDIATRIC EXCLUSIVITY
------------------------------------------------------------------------
Drug (active moiety) Sponsor
------------------------------------------------------------------------
Abacavir.......................... Glaxo Wellcome, Inc.
Amlodipine........................ Pfizer
Ammonium lactate.................. Westwood-Squibb
Atorvastatin...................... Pfizer
Azelastine........................ Asta Medica
Bisoprolol........................ Wyeth Ayerst
Brimonidine....................... Allergan
Buspirone......................... Bristol-Myers Squibb
Busulfan.......................... Orphan Medical
Calcitriol........................ Abbott Laboratories
Cetirizine........................ Pfizer
Cromolyn.......................... Pharmacia and Upjohn
Didanosine........................ Bristol-Myers Squibb
Enalapril......................... Merck
Etodolac.......................... Wyeth Ayerst
Famotidine........................ Merck
Felodipine........................ Astra Zeneca
Fluoxetine........................ Lilly
Fluvoxamine....................... Solvay Pharmaceuticals
Gabapentin........................ Parke-Davis
Ibuprofen......................... McNeil Consumer Products Co.
Ibuprofen......................... Whitehall-Robbins Healthcare
Insulin glargine.................. Aventis
Isotretinoin...................... Hoffman-La Roche, Inc.
Ketorolac......................... Allergan
Lisinopril........................ Astra Zeneca
Lisinopril........................ Merck
Lamivudine \1\.................... Glaxo Wellcome, Inc
Loratadine........................ Schering Corporation
Losartan.......................... Merck
Lovastatin........................ Merck
Metformin......................... Bristol Myers Squibb
Midazolam......................... Hoffmann-La Roche, Inc.
Milrinone......................... Sanofi-Synthelabo
Mometasone........................ Schering Corporation
Montelukast....................... Merck
Nabumetone........................ SmithKline
Nevirapine........................ Boehringer Ingelheim
Omeprazole........................ Astra Zeneca
Oxaprozin......................... Searle
Oxybutynin........................ Alza
Pemirolast........................ Santen
Pimecrolimus...................... Novartis
Propofol.......................... Zeneca Pharmaceuticals
Ranitidine........................ Glaxo Wellcome, Inc.
Remifentanil...................... Abbott Laboratories
Ribavirin/Intron A................ Schering Corporation
Sertraline........................ Pfizer
Sevoflurane....................... Abbott Laboratories
Simvastatin....................... Merck
Sotalol........................... Berlex Laboratories
Stavudine......................... Bristol-Myers Squibb
Tramadol.......................... R.W. Johnson
------------------------------------------------------------------------
\1\ Active Moieties Granted Second Period of Pediatric Exclusivity Also,
note that 2 drugs granted exclusivity have not yet been approved,
therefore, we cannot disclose their names.
None of the 56 drugs granted exclusivity were developed solely for
use in children. However, Elidel (pimercrolimus), for atopic
dermatitis, was developed primarily for use in children. Also, one of
the yet unapproved drugs that was granted exclusivity was also
primarily studied for an indication that occurs in children. Both of
these drugs were new molecular entities (NMEs).
Question. How many products that have received this market
exclusivity have been prescribed to children on a broad scale prior to
conducting the clinical trial resulting in the market exclusivity?
Answer. Although we do not have specific information on each of the
56 drugs that have been granted exclusivity, I can tell you that in
preparing our January 2001 Report to Congress, and in responding to the
U.S. General Accounting Office in May 2001, we developed the following
information on 28 of the 56 drugs granted exclusivity based on data
from IMS HEALTH data. We will provide the information for the record.
[The information follows:]
Question. Does the market exclusivity apply solely to the pediatric
formulation of the drug, for which the clinical trial was performed?
Answer. Section 505A of the Federal Food, Drug, and Cosmetic Act,
the Act, does not limit the pediatric exclusivity to a pediatric
formulation. Under section 505A of the Act, pediatric exclusivity
assumes the character of the type of exclusivity to which it attaches.
The 6-months of pediatric exclusivity is added to any of the sponsor's
listed patents or previous non-expired grants of exclusivity on drug
products containing the active moiety that was studied. We believe that
this interpretation is the most consistent with the language and
purpose of the pediatric exclusivity provision. The statutory provision
did not limit the exclusivity. The exclusivities that existed prior to
pediatric exclusivity had not resulted in the pediatric studies the
Agency desired, so FDA determined that the pediatric exclusivity had to
provide an adequate incentive. Since pediatric exclusivity attached to
all existing exclusivities and the 5 year exclusivity under Waxman-
Hatch applies to the active moiety, this result was most consistent
with the statute. As a necessary corollary of this interpretation, we
have construed the provision to permit the Agency to include within a
single Written Request pediatric studies on any drug products
containing the active moiety, if such drug products have significant
uses in the pediatric population.
fda orange book
Question. In the Conference Report of last year's appropriations
bill, the Committee expressed concern regarding the possible abuse of
patent extensions by pharmaceutical companies with regard to the FDA
``Orange Book.'' While the FDA has little expertise in patent law and
patent determinations, orange book listings do have a direct effect on
the length of time a pharmaceutical company can potentially prohibit a
generic drug from entering the market. With this in mind, we requested
that the Secretary instruct FDA to work with the Federal Trade
Commission to prepare a report relating to pharmaceutical industry
practices relating to patent law and extensions.
Has the FDA begun any preliminary work with the FTC on such a
report? Please provide an update on any action that has been taken to
date, as well as any planned actions.
Answer. During the past year, the FDA's Office of Generic Drugs
within the Center for Drug Evaluation and Research, provided the
Federal Trade Commission, FTC, with data on numerous occasions to help
them prepare this report. The FTC also participated in a forum the FDA
Office of Chief Counsel coordinated to obtain information from the
innovator and generic pharmaceutical industry on their interpretation
of the applicable statutes, including Orange Book issues.
Question. It is my understanding that FDA guidelines require any
generic firm, when introducing a new product, must certify to FDA that
their drug would not infringe on a patent listed in the Orange Book.
For a more specific study of the Orange Book listings themselves, the
Committee requested a report by March 1, 2002 on the best methods to
collect and disseminate information on the nature of patent extensions
that have been granted on products appearing in the Orange Book, the
effect those extensions have had on the cost of pharmaceuticals, and a
societal cost/benefit analysis in regard to those extensions. We
anticipate that the contents of this report will be helpful in studying
potential ways to lower the cost of pharmaceuticals.Could you please
provide the status of the report at this time?
Answer. The report is under administrative review and will be
provided to the committee within the next several weeks.
Question. Will the contents of this report enable FDA to perform a
comprehensive study to determine whether patents listed in the ``Orange
Book'' are related solely to the chemical makeup of the drug, as
opposed to patent extension for changes such as the size, shape, or
method of delivery of the drug?
Answer. Under the Food, Drug and Cosmetic Act, we are required to
publish patent information for approved drug products upon receipt of
that information from the sponsor of the new drug application. The
statute does not assign FDA any independent action with respect to
patent submissions or otherwise direct it to look beyond the face of
the submitted patent information. Instead, generic and innovator firms
must resolve any disputes concerning the patent or patent coverage in
private litigation. With regard to exclusivity, there is also no
statutory requirement that FDA consider the costs to consumers or the
societal benefits accrued in granting the extensions. FDA's public
health mission is to evaluate the safety and effectiveness of drug
products presented for marketing approval. At the time the different
exclusivities, for example Waxman-Hatch, Orphan, Pediatric, were
enacted into law, there was debate and consideration of the costs to
consumers and societal cost/benefit issues. The resulting exclusivities
and extensions were considered to be justified in order to achieve the
goals of the particular programs such as greater development of drugs
to treat orphan diseases, better labeling for pediatric treatment and
knowledge of pediatric use, and to promote a balance between new drug
innovation and generic drug competition. The Administration is
concerned about the cost of pharmaceuticals and FDA will certainly
participate in efforts that involve matters within the Agency's
jurisdiction and authority.
personal importation and internet drug sales
Question. What actions is FDA currently taking to prevent and
monitor the sale of pharmaceutical and pharmaceutical products over the
Internet? Is the FDA working with any other private or government
entities in this effort? What oversight authorities do you have, or
need, in order to most effectively deal with this problem?
Answer. The growth of the Internet in recent years has enabled many
consumers to purchase medicines online. More than half of all U.S.
homes now have an Internet subscription. There are online pharmacies
that provide legitimate prescription services. Unfortunately, there are
also questionable sites that make purchasing medicines online risky.
In order to assess Internet drug sales and monitor the sale of
these products, FDA established an Agency-wide triage team that meets
monthly to prioritize Internet-related enforcement activities on
unapproved new drugs, health fraud, and prescription drugs sold online
without a valid prescription. This year, FDA has evaluated over 500 web
sites for possible regulatory or criminal action, resulting in 11
Warning Letters, 1 seizure, 22 untitled letters, and 57 cyber letters.
In October and November 2001, the Agency issued 11 cyber letters to
foreign web sites marketing unapproved ciprofloxacin, the generic name
for Cipro, to American consumers. Of the 11 web sites issued cyber
letters, 8 have stopped selling Ciprofloxacin. FDA is working with
foreign regulatory authorities to address the other sites.
FDA also has established another working group which meets
regularly to address public education on Internet sales, and FDA and
the Federal Trade Commission are working together to protect the public
from those who try to take advantage of Internet consumers through a
program known as Operation Cure All. This partnership includes Health
Canada, the Canadian Federal health department, and various state
attorneys general and state health departments, and combines a law
enforcement effort with a consumer education campaign. The effort
focuses on web sites that offer products with false or deceptive claims
about treating or curing cancer, HIV/AIDS, arthritis, hepatitis,
Alzheimer's disease, diabetes, and many other diseases. The objectives
of Operation Cure All are to educate businesses making serious disease
claims on the Internet that such claims must be truthful, nondeceptive,
and substantiated, and that the drugs they sell to treat these diseases
must be FDA approved. The program seeks to deter future violations by
such businesses, educate consumers to be wary of curative claims
concerning serious diseases and medical conditions, and identify
targets for possible enforcement actions. To ensure that consumers are
offered FDA-approved medicines by properly licensed retailers, the
Agency must be enabled to increase surveillance and enforcement
activities; leverage resources with other Federal and State agencies;
and continue to engage in public outreach and education.
Question. Please explain FDA's importation policy and how, if at
all, it has changed over the past 2 years. Has FDA seen an increase in
people buying pharmaceuticals outside of the US? What effect has the
internet had on this situation?
Answer. FDA's current personal importation policy was created in
1954 to address importation through the mail. At that time, the size
and number of personal imports was significantly smaller than it is
today. The policy was expanded in 1977 for personal baggage and again
in 1988 to respond to the unavailability of treatments for AIDS
patients.
In recent years, consumers increasingly have been purchasing and
importing lower-priced medications from foreign countries. Under the
Federal, Food, Drug, and Cosmetic Act, FDA may refuse importation of
any unapproved drug when offered for importation into this country.
However, FDA staff may use enforcement discretion to allow the
importation under certain conditions of particular unapproved drugs
into the U.S. There are several factors that FDA personnel consider
when determining whether to exercise enforcement discretion. First,
when the intended use of the unapproved drug is to treat a serious
condition for which effective treatment may not be available
domestically. Secondly, there is no known commercialization or
promotion to persons residing in the U.S. by those importing the drug.
Thirdly, the unapproved product is considered not to represent and
unreasonable risk. Finally, the person seeking to import the unapproved
drug affirms in writing that it is for the person's own use, generally
not more than a 3-month supply, and provides the name and address of
the doctor licensed in the U.S. responsible for his or her treatment
with the product, or provides evidence that the product is for the
continuation of a treatment begun in a foreign country. Consumers are
also increasingly using the Internet to order prescription medications
from foreign pharmacies, which are sometimes available without a
prescription or by doing nothing more than filling out an online
questionnaire. This concern only increased after September 11 when
consumers began ordering Cipro for prophylactic use. FDA and the US
Customs Service continue to work together to address issues of concern
regarding imported drugs. It is important that we work to develop
better ways to address this important public health issue. FDA will
also explore additional consumer education efforts in this area.
homeland security
Question. I was pleased to see in your testimony a relatively
detailed explanation of some of the activities you have undertaken with
the use of the $151 million in supplemental funding provided to you
last year.
How many total new employees will eventually be hired as a result
of the supplemental funding, what will their functions be including
their location, and have their positions been annualized in the
President's fiscal year 2003 request?
Answer. FDA expects to hire all 832 personnel--655 personnel for
FDA's field component, the Office of Regulatory Affairs, ORA, and 177
personnel for those non-field components--associated with the fiscal
year 2002 Counter Terrorism supplemental budget. FDA annualized all 832
positions in the fiscal year 2003 Congressional Justification. As of
March 18, 2002, ORA has hired 365 of the 655 authorized by the
supplemental budget. I would be happy to provide a breakout of these
personnel.
[The information follows:]
hiring activities
A total of 655 personnel will be hired in ORA to support FDA's
counter terrorism efforts in the field. The breakout of the 635
personnel for Food Safety efforts in the field is primarily split
between import and domestic operations. 433 employees will be assigned
to help assure the safety of imported products. These employees consist
of import consumer safety officers, import laboratory analysts, and
criminal investigators. 212 domestic compliance officers and domestic
investigators will be available to go to district offices to follow-up
on import enforcement needs and support domestic inspections. The
remaining field personnel will be responsible for supervisory and/or
coordination efforts associated with the increased responsibilities
related to counter terrorism.
The initial training provided to the Import Consumer Safety
Officers will concentrate on specific import/border duties. These
duties include working with Customs personnel; learning how to collect,
package and ship samples; fill out collection reports; and conduct
field examinations of shipments, including such activities as visual
inspections for the appearance or smell of a product, swollen can
seams, etc. These employees should be able to contribute to basic
assignments within 2 months.
The domestic compliance officers and investigators will work with
industry to assist them in identifying potentially vulnerable access
points in their manufacturing processes for possible terrorism acts,
and work with them to develop procedures and guidelines for minimizing
vulnerability.
Laboratory analysts assigned to both domestic and import operations
will be available to support increased sample analysis functions,
including analysis for chemical and microbiological contamination.
Employees hired for these positions include chemists, microbiologists,
and physical science technicians.
Thirty employees, within the total of 665 personnel assigned to
Food Safety efforts, will be utilized by the Center for Food Safety and
Nutrition and the Center for Veterinary Medicine to conduct risk
assessments, develop compliance policy for imported animal drugs and
feeds, and foods, collaborate on the development of new methods, and
conduct risk assessments of the results of laboratory analyses of
imported products.
144 new personnel will be hired in science based positions to
address the need for safe and effective medical products, specifically
to expedite FDA's work relating to vaccines, drug therapies, diagnostic
tests, development of computational techniques to strengthen detection
and response capabilities, and consultation with other governmental
agencies and private industry.
Three new personnel to monitor security standards at all
facilities, develop plans for improved security measures and
procedures, and assure effective coordination with all FDA components
and building managers.
Question. Please outline the other activities that are being
carried out with last year's supplemental funding, including the impact
of this funding on food safety.
Answer. The September 11 terrorist attacks and subsequent incidents
involving anthrax contamination raised the frightening prospect that,
in this new world, products regulated by the FDA--human and animal food
and drugs, biological products, and devices--could be used
intentionally to cause widespread harm to U.S. citizens. The American
public will have to depend on the Agency now, more than ever, to
safeguard their public health interests. FDA is in the process of
developing a Counter Terrorism Strategic Plan and Action Plan that
outlines ways FDA will reduce the potential for threats to the Nation's
supply of food and medical products, and ensure that appropriate
emergency and medical countermeasures are in place to minimize the
effects of terrorist attacks.
FDA is currently engaged in numerous Counter Terrorism activities
with the support of the Supplemental Funds. Of 655 new hires in FDA's
field operations, 635 are authorized for food safety activities in the
field with 600 for the foods program, and 35 for the animal drugs and
feeds program. FDA will also enhance the Operational and Administrative
System for Import Support, OASIS, to include real-time screening with
multi-agency import databases to help target inspection resources. The
Agency will increase import filer evaluations to ensure integrity of
importers and import entry data, increase collections of samples for
laboratory analysis; and increase use of field physical examinations of
imported products to ensure safety. The Agency will expand the
Electronic Laboratory Exchange Network or eLEXNET, to provide better
nationwide access to information on food pathogens and select agents.
FDA will also enhance the capacity for, and develop, rapid methods that
can be used for rapid analysis of suspect foods for select agents or
toxins.
FDA's efforts to ensure the safety and effectiveness of medical
products cover human drugs, biologics including vaccines and blood, and
medical devices and radiological health. FDA must review and give
approval, at least on a temporary basis, to every new drug,
therapeutic, vaccine, anti-toxin that is to be administered to humans
and every diagnostic tool that is to be used clinically must be
reviewed and approved by FDA. Since this regulatory process is lengthy,
complex and fraught at times with the unforeseen, it is essential, and
in the interest of national security and public health, that FDA
engages in the process as early as possible with sponsors and
organizations that are developing the therapeutics, vaccines and rapid
diagnostics. This means that FDA must maintain a pro-active role and
work with other organizations from the very outset, starting with
outlining the individual steps that must be taken to obtain FDA
approval, through pre-clinical toxicity testing, the development of
protocols for conducting the clinical trials, to the review and
analysis of the trial results, review of the proposed manufacturing
procedures, inspection of the manufacturing process to assure
compliance with Good Manufacturing Practices and post-marketing
surveillance of adverse events. FDA must also participate in exercises
related to responding to a bioterrorist attack.
In the Biologics program, funds will be used to expedite work on
bioterrorism vaccines, and in support of blood safety activities. For
vaccines FDA will provide consulting services to other Federal agencies
and industry, accelerating emergency vaccine lot releases, and
preparing to evaluate new vaccines whose efficacy cannot be tested buy
exposing people to the pathogen. In the blood safety area, FDA will
expedite licensure issues related to storing of blood and expedite
release of test kits and reagents use for blood screening and reviewing
and processing expedited lot releases. These activities are
accomplished through the regulation of the development and licensure of
new vaccines, therapeutics, and blood products for protection and
treatment against bioterrorism-related threat diseases. The personnel
hired will be targeted toward the range of disciplines necessary to
accomplish the activities described above and include biologists,
chemists, consumer safety officers, medical officers, microbiologists,
compliance officers/technicians, public affairs specialists/
technicians, computer systems analysts, management analysts, personnel
specialists/technicians and program support personnel.
In the Human Drugs program, funds will be used to assure product
availability through an expansion of the drug shortage program as well
as plans to develop protocols for the study of alternative therapies
for biological agents. The latter will be conducted through contractual
work to define animal model programs for relevant diseases such as
smallpox, pneumonic, plague, that provide early and proactive
regulatory guidance to develop data for potential drug therapies. In
additional, the Agency will need to develop a framework for addressing
future regulatory applications that use a combination of vaccine and
drug.
The drug program's new hires will closely match the current mix of
employees in the review process--Medical Officers, Epidemiologists,
Microbiologists, Pharmacokineticists, Mathematical Statisticians,
Biologists, Consumer Safety Officers--CSOs, and other related
disciplines. However, the recruitment process will need to focus on
finding employees with specialized training in infectious diseases,
neuropharmacology, and radiologic products. Veterinarians with
experience with primates and animal modeling will also be hired. The
program plans to enter into various research and development contracts
and Interagency Agreements, IAGs, with other Federal agencies, such as
Department of Defense, DOD, National Institutes of Health, NIH, and
Centers for Disease Control and Prevention, CDC, and private sector
entities to develop protocols, conduct animal studies, and define
reference databases on treatment and alternative therapies for
infectious diseases caused by the intentional use of bioterrorist
threat agents.
The Device and Radiological Health program will accelerate review
of new diagnostics testing for biological and radiological agents. This
program will hire personnel to respond to terrorist threats and
attacks. This involves recruiting and training staff to review new
devices, participating in standard development and recognition,
developing guidances, predicting device shortages associated with an
emergency response, and developing an outreach program focused on
educating health professionals, consumers, and industry on using
medical devices to counter terrorism. Funds will be used to improve
internal scientific knowledge and capabilities, conduct research to
assess in vitro diagnostic technology used to detect biothreat agents,
conduct a market assessment to identify potential device shortages, and
educate health professionals and consumers on the use of medical device
biowarfare products.
Lastly, FDA's National Center for Toxicological Research, NCTR,
expects to improve detection of the virulence, toxicity, and antibiotic
resistance of pathogens, and diagnostic tools for food contaminants.
The Center plans on recruiting and equipping personnel with additional
expertise as computer scientists, protein chemists and microbiologists.
Due to the Center's research responsibilities, it expects to upgrade
designated laboratory facilities at NCTR to a BioSafety Level 3, BSL-3,
to support microbial bioterrorism research. BSL-3 facilities have
containment capability that allows work with indigenous or exotic
agents that may cause serious or potentially lethal disease such as
potential bioterrorist agents. By utilizing the expertise of a
contractor, the upgrade of designated laboratory space can be expedited
thus allowing microbial bioterrorism research to proceed within fiscal
year 2002. Additionally, the Center will outfit upgraded laboratory
facilities with infrastructure to include containment hoods, and
appropriate filtering and monitoring devices. This will allow
identification and rapid detection and assignment of terrorist agents
such as bacterial strains of pathogens and chemicals. To conduct these
studies, FDA will acquire biological agents, chemicals and laboratory
supplies that will allow researchers to characterize multiple strains,
construct a library or database of constituent proteins and test the
library or database to find toxin related markers.
The impact of the fiscal year 2002 supplemental funding for food
safety will result in numerous productive actions in addressing the
safety and security of the nation's food supply. FDA will strengthen
current import and domestic surveillance systems so that a greater
percentage of high-risk food products and adverse events associated
with their consumption can be assessed using state-of-the art
technology. Rapid field test methods will be developed to identify
hazards that may have been released by terrorists. The PulseNet System
will be enhanced to quickly apply DNA fingerprinting over a wider range
of biological threats. In the event of an identified threat, FDA will
deploy disaster response teams who can work with other Federal, State,
and local agencies to eliminate or contain the hazard and reduce public
health risks. In addition, FDA will work with HHS and other government
counterparts to ensure that consumers get up-to-date information about
risks if an incident occurs.
Question. Where do you think is the biggest threat to the Nation's
food supply?
Answer. FDA does not believe there is an inherently greater risk in
either imported or domestically produced goods--human and animal food
and drugs, biological products, or devices. Rather, FDA is committed to
ensuring that regulated products, regardless of where they originate,
are safe, secure, authentic, of the highest quality, properly labeled
and are approved and/or licensed, where required. FDA will be vigilant
in all operations, including domestic operations.
Question. How many food import inspections will FDA do in 2002? How
much has this number increased due to the supplemental funding provided
by Congress last year?
Answer. FDA classifies import coverage as a combination of import
field examinations and import laboratory analyses, which are both
physical evaluations of the product offered for entry. Import coverage
is the sum of these two activities as a percent of the number of line
entries. Import field exams are physical examinations performed at the
entry point. In fiscal year 2001, FDA performed about 12,000 food
import field exams and analyzed nearly 15,000 import samples. So for
fiscal year 2001, the Agency conducted physical examinations on 0.6
percent of the foods offered for import into this country of the total
line entries of 4.6 million. In fiscal year 2002, we will begin to see
real gains in our import coverage because of the increased funding. The
counter-terrorism funding will permit the field to double the number of
import field examinations and increase the number of samples analyzed
by nearly 50 percent in fiscal year 2002. In fiscal year 2003, when the
new investigators are more fully trained and the number of food imports
is expected to increase to 5.4 million line entries, the number of
import field exams will increase to 48,000. Import coverage will then
increase to approximately 1.3 percent of the total food entries.
Question. Last year, you told us that it would cost $270 million to
get to 10 percent coverage of food imports--how much coverage is
provided in this year's budget request? How much could you reasonably
be expected to do with more funds?
Answer. In fiscal year 2001 food import coverage was 0.6 percent.
With the addition of counter-terrorism resources it is expected to
increase to 0.9 percent in fiscal year 2002 and 1.3 percent in fiscal
year 2003 if food line entry growth remains at 10 percent per year.
In fiscal year 2003 and beyond, FDA's import straegy needs to be a
flexible blend of the use of people, technology, information and
partnerships to protect Americans from unsafe imported products. Thus,
the current FDA import strategy is to inspect food products at ports of
entry; increase physical examination and scientific analysis of
products sampled at the border; increase cooperation with other
Federal, State and local agencies, and foreign governments involving
information exchanges; continue foreign inspections and assessments;
and, enhance the automated entry review process or OASIS, through
efficient interfaces with other Agency systems, and improve the
integrity of imported product data submitted to Customs and FDA through
increased evaluations of filers for imported shipments.
The long term solution to a higher level of confidence in the
security and safety of imported food products lies in information
technology that will merge information on products, producers and
intelligence on anticipated risks to target the products for physical
and laboratory examination. The greater use of information technology
relies on data integrity activities that reduce the opportunity for
products to be incorrectly identified at ports. It also relies upon
cooperation from producers so that FDA can identify sources that are
unlikely to need physical testing. Even with such specific targeting of
risks, improvements are limited by the available methodologies for
assessing threat agents and our ability to predict which tests ought to
be used.
Question. How is FDA improving border activities? Does this include
improving communications with other Federal and State agencies?
Answer. Initially, FDA's goal is to provide a greater import
presence than we have been able to provide in the past. An increased
presence can enhance our capacity and capability to perform our normal
import operations such as sample collection and analysis, field
examinations, inspections and also will provide a deterrent effect.
Our first priority is to perform more of these basic operations,
particularly import field examinations and sample analyses, which are
critical in detecting problems in the products we regulate. In
addition, we have emphasized those types of examinations that will
increase the likelihood of detecting intentional acts of potential
terrorism, such as looking for inconsistencies between shipping
documents and the physical product, evidence of tampering,
substitution, or counterfeiting, or suspicious or damaged merchandise.
Not including the new counter-terrorism efforts, much of the additional
basic operations work will be similar to our already designed workplan
assignments. It will include data integrity checks through filer
evaluations and entry review where aspects of the data being reviewed
are checked against existing information within the Agency.
Additional samples will be collected with the additional resources
that have been allocated towards counter-terrorism measures. Analyses
will be performed to detect toxins, poisons and microorganisms. As
additional screening methods are developed in our labs and other labs,
a greater array of analyses can be applied to samples collected. For
example, FDA's Forensic Chemistry Center plans to adapt an FDA toxin
screening method for application as a surveillance tool.
Physical checks of samples will be increased with a greater
presence at the borders. Exams will focus on evidence of manipulation
of shipments, verification against declaration, substitution, and out
of the ordinary physical conditions. During import filer audits, we
will be working with the regulated industry to ensure its attention to
potential terrorist activities, especially as they relate to raw
material receipt, inventory quarantine procedures, sourcing of foreign
products or ingredients, and vulnerable operations.
In the future, we will increase the level of sophistication that we
employ in our import operations, to include better information, better
examination techniques, and more powerful analytical tools.
FDA is increasing its cooperation and coordination with Federal and
State agencies on several different fronts. The Federal Government's
response to Counter Terrorism resulted in increased reciprocal training
between FDA and U.S. Customs. This training is expected to improve
product integrity of goods offered for import and increase enforcement
actions by Customs to deter willful violations of U.S. laws and
regulations. FDA and USDA jointly chair the newly formed PrepNet, the
Food Threats Preparedness Network. With monthly meetings, PrepNet works
to improve coordination among agencies in non-crisis times to prepare
for terrorist threats and activities related to human foods. Other
participating parties include the Environmental Protection Agency, the
Center's for Disease Control and Prevention, Department of Defense, and
New York State, the State Advisor. FDA also works heavily with its
State partners. FDA interacts regularly with State feed control
officials, both individually on an as-needed basis and collectively
through the Association of American Feed Control Officials. FDA's
Office of Criminal Investigation, OCI, will work closely with the FBI
and other agencies in the conduct of criminal investigations, including
the intentional contamination of FDA-regulated products. In addition,
OCI will use its established lines of communication with the
intelligence community and international law enforcement--in
cooperation with the FBI--to gather information and follow leads in
other countries.
Question. What kind of vaccine work is planned to counter-terrorism
in fiscal year 2003?
Answer. The Biologics program will use the funds to help ensure the
safety of approved vaccines, support the continued development,
maintenance and deployment of stockpiles, and expedite the product
evaluation process, including lot release activities, inspection of
manufacturing facilities, assessment of product availability, and
surveillance and compliance activities. FDA will continue efforts to
facilitate the development of biological products, including anthrax
vaccine, smallpox vaccine, and other vaccines such as botulism anti-
toxin, plaque vaccine, tularemia vaccine, and vaccines for filoviruses
and arenaviruses. Emphasis will be placed on programs to develop and
improve novel testing methods for evaluation of vaccines in order to
help ensure their safety, purity, and effectiveness. FDA will also
place emphasis on determining the types of non-clinical data that may
be acceptable for product licensure if pre-licensure clinical studies
are not feasible or ethical to treat human diseases caused by exposure
to a biological weapon.
Question. Finally, the President's FDA budget request for fiscal
year 2003 provides significant increases for counter-terrorism
activities, partially to annualize some of the activities funded in the
supplemental. While this is a completely understandable use of funds
during this time, we must ensure that these increases do not come at
the expense of other FDA programs and activities. How would you respond
to a consumer with these concerns?
Answer. As you have noted, FDA's fiscal year 2003 Congressional
budget request annualized nearly all of the costs associated with
Counter Terrorism activities begun in fiscal year 2002. Consumers
should understand that we requested these funds for two reasons--one,
that Counter Terrorism is one of our highest priorities in protecting
the consumer from potential contamination of foods and medical
products, and two, that a continuation of the funds would prevent the
Agency from having to sacrifice the current measures in place to
protect consumers from injury or harm. The Agency acknowledges that it
did have to temporarily devote time and effort in review of counter
terrorism measures following the events of September 11, 2001 and
subsequent terrorist activities, but the fiscal year 2002 Supplemental
Appropriation provided the financial support to negate the need to
reprioritize existing activities and corresponding resources.
bse
Question. Dr. Crawford, I'm sure you are aware that along with the
introduction of Foot and Mouth Disease, there might be nothing more
harmful to the U.S. cattle industry than evidence of BSE (Mad Cow
Disease) in this country. So far, we have been fortunate. But our
global economy and substantial borders do not provide an easy, sure-
fire, safeguard that contaminated feed or livestock products will never
cross our borders. FDA import inspections, feed regulations, and other
practices are the best assurances we have that U.S. consumers can feel
confident that BSE will remain a foreign disease. A recent letter to
the editor of a newspaper far removed from Washington, D.C. asked the
question, ``If mad cow disease struck the U.S., would we ever know?'' I
suppose the answer to that question is yes, but the better question
might be ``When would we know?'' Please give us an update on the import
inspection practices at FDA to guard against the importation of any
materials that might include BSE contamination. How have you reinforced
the existing import ban, as your statement indicates, and how many
additional investigators will ultimately be hired for this effort?
Answer. FDA continues to work to reduce the risk that imported
items could introduce BSE into the United States. We have placed
screening criteria in FDA's import data system, to flag imported
products that may contain animal protein. We request that the importer
provide information about the nature and origin of the product and to
identify if any ingredients may be of ruminant origin. If it appears
that a product contains ruminant material from a ``BSE-affected''
country, we refer the entry to USDA's Animal and Plant Health
Inspection Service, APHIS, for review and possible regulatory action
under USDA's authority.
In addition to reviewing imported product and ingredient
information, FDA may also physically examine the product and it's
labeling for any indication that it contains ruminant material. FDA has
issued a field assignment to its district offices to sample shipments
of animal feed and feed ingredients from BSE-affected countries for the
presence of undeclared animal product ingredients. We are also
providing intensive line entry and label review of an anticipated
175,000 import line entries for use in domestic commerce for the Animal
Drugs and Feeds Program.
In the fiscal year 2002 budget Congress provided 98 FTE to increase
Field efforts to prevent the occurrence of BSE in the country. These
resources are increasing import surveillance at ports of entry, the
information technology used to monitor imports and domestic activities,
collaboration with the States, and training for FDA staff, State
Officials and import filers and brokers. Although these FTE are not
split exclusively for import and domestic activities, I estimate that
more than 50 percent are devoted to improving import controls. FDA is
instructing all investigators working on import controls to monitor
imports for BSE, rather than devoting investigators exclusively to BSE
activities.
Question. You also note in your statement that FDA has taken steps
to improve BSE inspections in the U.S. animal feeding industry. Has the
FDA stepped up its review of domestic feed mills, or taken any
enforcement actions against firms that have been not following
prescribed practices to guard against BSE contamination?
Answer. Yes, FDA has stepped up its review of domestic feed mills.
FDA has prioritized the inspection process so that any firms found to
be out of compliance in their last inspection are placed in first
priority to be re-inspected. Firms that continue to be in violation
will be considered for appropriate enforcement action to correct the
problem. In addition, FDA will conduct yearly BSE inspections of all
known renderers and feed mills handling prohibited material, and for-
cause inspections, that is as a result of a sampling assignment.
Contracts for State inspections were increased and FDA and the States
will conduct inspections of randomly selected processors that are not
using prohibited material to ensure compliance with the regulation by
this segment of the industry.
In support of the domestic BSE inspection plan, during fiscal year
2002 FDA has conducted two training sessions for Federal and State
investigators in order to enhance the conduct, quality, timeliness and
accuracy of inspection findings and reporting; and provide updates on
the science of BSE and animal protein detection methods. FDA is also
implementing a new BSE inspection checklist, data entry procedures and
database in order to facilitate better, more timely collection and
distribution of data; the development and validation of detection
methods for prohibited mammalian protein in ruminant feed, in
collaboration with experts and foreign scientists; the development of a
domestic sampling plan which will collect and analyze 600 domestic feed
and feed component samples for BSE-related contaminants; the
development of a BSE feed ban Compliance program that will provide
clear inspection and enforcement guidance to the FDA field staff for
conducting BSE feed ban inspections and appropriate follow-up and
enforcement; and two workshops for FDA and State inspectors to provide
training on the new Compliance program and updates on BSE inspection
and compliance.
Question. What percent of the industry do you expect to cover this
year, including work contracted out to the States? What percent of the
work will be done by FDA, and what percent will be done by the States?
Answer. Starting in fiscal year 2002, FDA will conduct yearly
inspections of all known renderers, protein handlers, and feed mills
handling prohibited material. FDA also has prioritized the inspection
process so that any firm found to be out of compliance in their last
inspection are placed in first priority to be re-inspected. In
addition, FDA will conduct for-cause inspections, that is as a result
of a sampling assignment, and FDA and the States will also conduct
inspections of randomly selected processors that are not using
prohibited material to ensure compliance with the regulation by this
segment of the industry. Currently the States do approximately 80
percent of the domestic feed mill inspections. Many of the inspections
handled by the States are located in places that are remote from our
district offices, and it is imperative that we have people to get out
to the remote areas of the State to ensure the safety of the animal
feed.
The Agency has also implemented a domestic sampling plan to collect
and analyze 600 domestic feed and feed component samples for the
presence of mammalian protein which additional inspection may determine
to be prohibited from use in ruminant feed.
Question. Finally, you outline some of the ways FDA has been
coordinating with USDA on the prevention of BSE in this country. Please
elaborate on those efforts, and explain how they are funded in the
Administration's fiscal year 2003 budget.
Answer. FDA works closely with the U.S. Department of Agriculture,
USDA, the Food Safety Inspection Service, FSIS, the Animal Plant and
Health Inspection Service, APHIS, the Department of Defense, DOD, and
State agricultural and veterinary agencies regarding BSE issues. This
includes implementation of the Bovine Spongiform Encephalopathy
regulation and controlling imported products that might introduce BSE
into the United States.
The US Department of Agriculture, USDA has and enforces regulations
governing products of animal origin which pose a risk of harboring
animal disease agents for FDA regulated products with BSE-related
concerns. FDA issues import alerts and bulletins, carries out import
inspections at the border and airports, and inspects domestic
manufacturers. FDA also worked closely with the USDA in developing the
import alerts and bulletins issued by FDA to ensure all animal products
that might contain the BSE agent are identified and listed in the
alerts or bulletins and are prevented from entering the United States.
FDA, APHIS, and Customs have coordinated their response to the
potential importation of BSE-related products. After APHIS issued their
prohibition on the importation of BSE materials on December 7, 2000,
FDA issued Import Bulletin 71B-02 requesting that FDA's field offices
notify their local APHIS offices of any import suspected of containing
BSE material. FDA issued a new Import alert on January 20, 2001, and a
new Import Bulletin on March 1, 2001. These import documents provide a
detailed system for identifying at the ports products about which FDA
has potential BSE concerns.
FDA also coordinates with USDA through an interagency working group
on BSE. This group was started in 1996 and is comprised of
representatives from USDA's APHIS, FSIS, Agricultural Research Service,
or ARS, FDA, NIH, CDC, and DOD. This group shares information,
evaluates ideas and issues, and makes recommendations to participating
agencies.
With the increased resources provided in fiscal year 2002 and
continuing into fiscal year 2003, FDA will enhance its working
relationship with USDA. With resources available at this time, FDA
intends to continue BSE activities mentioned above and also plans to
update Federal and State inspectors on USDA/APHIS authority and
approach to BSE; reinforce the existing import ban, in collaboration
with USDA/APHIS, with more specific product information on FDA-
regulated products, including food products, dietary supplements and
cosmetics that contain bovine materials from BSE-identified countries,
so that banned products do not enter the U.S.; and coordinate with
APHIS and FSIS the testing of FDA's BSE Contingency Plans for use in
the event that BSE is discovered in the U.S.
president's management agenda
Question. As you have stated, the Administration's FDA budget
request for fiscal year 2003 reflects a decrease in some of the
administrative functions performed by the FDA. Specifically, the budget
reflects a $2.6 million decrease due to the elimination of 25
administrative and management positions, and a $7.3 million decrease as
a result of moving FDA's Public Affairs and Legislative Offices to
DHHS. I must admit, due to the sensitive and scientific nature of many
of FDA's activities, I wonder what effect these funding decreases will
have, specifically the consolidation of FDA's Public Affairs and
Legislative Offices to the Department. I'm not certain that when
competing with subjects as broad and equally important as Medicare and
mental health parity, FDA activities and the issues we examine in this
Subcommittee will receive the attention they deserve.
Please explain the benefits of consolidating the public affairs and
legislative affairs functions at a Department-wide level. Do you feel
that this consolidation will enhance the ability of FDA to respond
quickly and accurately to Congressional and public requests for
information?
Answer. In fiscal year 2003, FDA will transfer the public affairs
and legislative affairs functions to the Department to improve
communications and achieve cost savings. Advantages of the
consolidation will ensure a streamlined and efficient hierarchy that is
more efficient and effective. This will free personnel to focus on the
customer service efforts of the Agency. The consolidation will permit
the Agency to speak with one voice as a Department so that information
provided is clear and consistent.
Question. The Agency's restructuring plan appears to be
centralizing resources that have been recently de-centralized. What are
the reasons for this latest approach? Have you determined your overall
cost savings as a result of this centralization? Does this plan mean
that FDA will reduce its resource needs in these areas?
Answer. This proposal is part of an HHS initiative aimed at
efficiency in the operation of our Department. A key objective of the
President's Management Agenda is a responsive, more citizen centered,
Federal government. In few Federal agencies is the need for
organizational reform more acute than at HHS, where a long history of
decentralized decision-making has produced a Department with 13
operating divisions, functioning with relative autonomy. As a result, a
complex web of ever-proliferating offices has distanced HHS, from the
citizens it serves and has produced a patchwork of uncoordinated and
duplicative management practices that hinder its efforts to accomplish
its mission efficiently. The Administration supports and is committed
to solving this problem through Secretary Thompson's One Department
initiative, which will eliminate unnecessary layers of bureaucracy and
consolidate duplicative functions into unified offices. Streamlining
efforts in 2003 will focus on HHS' human resources, public affairs,
legislative affairs, and building and facilities management functions.
In fiscal year 2002 we plan to study the current organizational
structure to identify opportunities to consolidate and streamline
administrative functions. An administrative study services contract was
awarded in January 2002. The study is to evaluate all of our
administrative functions. The study will generate a comprehensive plan
to meet the requirements of the President's Management Agenda, the
Secretary's desire to implement management improvements, and the
Agency's goal of improving service to its customers. Thus the cost
savings and resource needs are still being identified.
Question. Besides the ones already proposed in this year's budget
request, are there plans to consolidate other administrative functions
at the Department? What are the advantages besides the cost savings in
the fiscal year 2003 budget? Have you determined out-year cost savings?
Answer. Personnel operations will be streamlined from six offices
to one, and EEO complaints management functions are being considered
for consolidation at the Department. The consolidation initiatives will
enable the FDA to more effectively carry out its mission of protecting
the health and safety of the U.S. citizen and will free personnel to
focus on the customer service efforts of the Agency. Out-year cost
savings have not yet been determined.
Question. Does FDA expect to re-program GSA rent funds at the end
of fiscal year 2002 as was done in the previous 2 years? Please
explain.
Answer. No. There are several reasons why the Agency does not
anticipate having excess GSA rent funds which would be available for
reprogramming. First, there are rent increases for several locations
due to inflation adjustments by GSA, or because FDA has moved its
offices within the same metropolitan area. Second, FDA is in the
process of acquiring a number of new offices around the country due to
our increased staffing in the Field, and the costs for some of these
locations will impact on our fiscal year 2002 costs. Also, the Center
for Food Safety and Applied Nutrition occupied its new building in
College Park, Maryland, in October of 2001, and the rent on this
facility is higher than the rent FDA was paying in fiscal year 2001 for
Federal Building 8 in Washington, which is being vacated by FDA.
medical gas
Question. In fiscal year 2002, this Subcommittee strongly
encouraged the FDA to reconsider its approach to AS validation
requirements through an enhanced good guidance process that would
include extensive industry input and interaction and formal response by
FDA to all significant comments. I understand that FDA representatives
and the Compressed Gas Association (CGA) recently met to initiate this
effort and that it was agreed that the FDA and CGA would undertake a
series of meetings to facilitate an in-depth exploration of ASU
validation issues and a better understanding of the views of the
regulated community. At the conclusion of this process, FDA will issue
a draft guidance that would then provide the basis for further comment
and refinement. Is my understanding of the procedural status of this
matter correct? Have any of the meetings mentioned above been scheduled
to date?
Answer. Yes, the Agency is currently in the process of developing
draft guidance on medical gas Current Good Manufacturing Process, or
CGMP, that addresses Air Separation Units, or ASU, validation
requirements. The guidance development process will be consistent with
the Agency's good guidance practices and will allow for extensive
industry input and interaction. The Agency did meet with the Compressed
Gas Association, or CGA, on March 7, 2002, to discuss ASU validation
issues, and we are trying to arrange meetings for April, May, and June
to continue that discussion. Once a draft guidance is issued, there
will be a comment period, and the Agency will review and seriously
consider all comments received during the comment period before
finalizing the guidance.
Question. I have also been informed that FDA will, in the near
future, be issuing a draft guidance on medical gas issues other than
ASU validation matters, and that it will allow for extensive industry
input and interaction on this draft guidance, address and respond to
each significant comment received as it would in a rulemaking process,
and refine this draft guidance as necessary in response to those
comments. Is this an accurate assessment of the situation? Please
provide an update on the status of this draft guidance.
Answer. Yes, the Agency is also currently working on draft guidance
for the medical gas industry on CGMP requirements relating to issues
others than ASU validation. Again, there will be ample opportunity for
comment before the guidance is finalized, and the Agency will review
and seriously consider all comments received during the comment period.
Question. Please provide for the record the amount of funds
utilized by the FDA in fiscal years 2001 and 2002, and the amount of
funds projected to be utilized in 2003, for activities related to
medical gas oversight, regulation and enforcement. How does this amount
compare to other pharmaceutical regulation activities performed by FDA?
Answer. I would be happy to provide the Agency resources used and
projected for oversight, regulation, and enforcement of manufacturing
quality requirements for medical gas products. In fiscal year 2001 the
Agency expended about $2 million in this area. It is estimated we will
expend about the same amount in fiscal year 2002 and fiscal year 2003.
The vast majority of FDA activities with respect to general
pharmaceutical regulation can be categorized as pharmaceutical
oversight, regulation, and enforcement. Funds utilized for field
activities related to oversight, regulation, and enforcement of other
pharmaceutical regulation activities include domestic drug process
inspections, foreign drug process inspections, domestic drug
surveillance including sampling, import drug surveillance, and pharmacy
compounding and laboratory methods. In fiscal year 2001, the Agency
expended about $27 million for these activities. It is estimated we
will expend around $35 million in fiscal year 2002 and 2003.
staffing
Question. Can you explain what progress FDA has made in all areas
with regard to hiring of new personnel for increases included in the
fiscal year 2002 appropriation, as well as the fiscal year 2002
supplemental?
Answer. FDA expects to hire all 832 personnel--655 personnel for
FDA's field component or Office of Regulatory Affairs, ORA, and 177
personnel for those non-field components--associated with the fiscal
year 2002 Counter Terrorism supplemental budget by the end of the 2002
fiscal year. As of March 18, 2002, ORA has hired 365 of the 655
authorized by the supplemental budget
Question. At what point will you notify Congress if you find you
are unable to hire the number of personnel planned? Do you plan to ask
to reprogram any of those funds?
Answer. The Agency expects to fully utilize the full-time
equivalent employees, or FTE, requested in the budget through the use
of full-time, part-time, and intermittent employees. It is not
anticipated, at this time, that a request to reprogram funds will be
made.
Question. If there are lapsed funds, what does the Agency plan to
do with them?
Answer. The Agency anticipates a lapse rate in hiring staff, and
intends to use these resources for information technology equipment and
other equipment needs of the Agency.
mqsa
Question. Can you tell us from a public health perspective what the
recent articles on mammography effectiveness mean? What is FDA's
position on the information contained in the articles?
Answer. FDA would defer to the National Cancer Institute, NCI,
which has the epidemiological and research expertise, to appropriately
address the specific statistical issues raised by recent articles on
mammography effectiveness. However, we would like to point out that NCI
data shows that the mortality rate from breast cancer has decreased
significantly since the widespread use of screening mammography became
commonplace. This is likely due to a combination of factors, including
mammographic detection of earlier cancers, changes in women's
lifestyles, and better treatment methods. Since the recent media
attention, NCI has reaffirmed its support for screening mammography.
FDA fully supports HHS Secretary Tommy G. Thompson's recommendation
as stated by the U.S. Preventive Services Task Force, USPSTF, that
calls for screening mammography, with or without clinical breast
examination, every one to 2 years for women ages 40 and over. The
USPSTF's recommendation is largely based on the review of eight
randomized controlled trials of mammography--four of mammography alone
and four of mammography plus clinical breast examination--that have
reported results with 11 to 20 years of follow up.
pdufa
Question. What is the status of your discussions with industry?
Answer. During the past 18 months, FDA has conducted a fair and
balanced effort to hear from all parties that have a viewpoint about
the Prescription Drug User Fee Act (PDUFA). In preparation for
submitting the Administration's PDUFA III proposal to Congress, the
Agency engaged in a comprehensive initiative to involve all PDUFA
stakeholders--consumers, health providers, patient groups, and the
manufacturers of drugs and biologics--in the development of PDUFA III
proposals. This process included two public hearings; Listening
sessions with consumer and patient groups; consumer roundtables where
PDUFA was a major topic of discussion; and, meetings with drug and
biologic manufacturers.
At our public hearings, FDA received 12 hours of testimony. Of the
total of 28 witnesses who provided testimony, 23 were representatives
from consumer, patient and health provider groups. Seventy-five
consumer, patient and health provider groups were also represented at
the ``listening'' sessions and roundtables. This is evidence of the
broad representation that served as a foundation for the
Administration's PDUFA III proposal and the development of the PDUFA
III performance goals.
These discussions allowed FDA to develop a draft reauthorization
proposal for PDUFA. The Administration forwarded this proposal to the
Congress in March, 2002.
Question. Please explain how the new PDUFA will be different from
the current PDUFA, including why the changes are necessary and the
effect they will have.
Answer. The most significant change in PDUFA is that it will
generate substantially more revenue to support the FDA drug review
process. With the additional revenue provided FDA should be able to
substantially strengthen its review program and improve the working
conditions and training opportunities in its drug review operations.
The additional revenue provided should enable the agency to employ
about 195 additional staff for drug review in fiscal year 2003, and
that number will increase to a little over 450 additional staff in
fiscal year 2006 and 2007. This will allow us to continue to meet the
PDUFA II performance goals and some additional new goals agreed to for
PDUFA III Cassuming continuation of appropriations at a level that
sustains the half of the drug review program funded by appropriations.
We are pleased that the proposed changes will also permit FDA to
spend fee revenues on risk management activities that span the approval
process and include the first 2 to 3 years after a product is approved.
The resources provided should permit the agency to double the size of
its current headquarters product safety staffsCnow about 100 FTE.
To further respond to your question I will submit for the record a
narrative explanation of most of the changes that are being proposed to
the financial provisions of PDUFA.
[The information follows:]
Changes in Financial Provisions for PDUFA III
pdufa ii revenue model and workload adjuster
Under PDUFA II, application fee amounts were set in statute and
were increased each year by an inflation adjustment. The number of
applications that would pay fees was estimated at the beginning of each
year, based on an analysis of the number of fee-paying applications
received since PDUFA was initiated. Total application fee revenue was
then estimated at the beginning of each fiscal year by multiplying the
amount of the statutory application fee, adjusted for inflation, by the
estimated number of fee-paying applications FDA would receive.
The estimated amount of application fee revenue then became the
revenue target for the amount FDA would collect for both product fees
and establishment fees. The number of fee-paying applications thus
became the de-facto workload adjuster--the surrogate for all FDA review
workload. But FDA experience has identified two major problems with
this approach.
Problem 1: Fee-Paying Applications are Not a Good Surrogate for FDA
Workload
Much of FDA's workload in reviewing applications is not captured by
this surrogate. A large and growing portion of FDA's review workload
occurs before a marketing application is ever submitted. The number of
investigational new drug (IND) documents submitted to FDA has grown
substantially and consistently each year since 1993, and they were not
captured by the PDUFA II workload adjuster. Further, many of the goals
under PUDFA II require additional work that FDA must do at the IND
review stage. This additional IND work includes:
--increase the number, complexity and timeliness of several kinds of
FDA meetings with industry,
--more rapid completion of action on complete responses from industry
on holds FDA placed on clinical investigations, and
--protocol assessments.
In addition, the number of manufacturing supplements submitted by
industry has been growing rapidly each year, and starting in 1998 these
submissions were also subject to PDUFA performance goals. A workload
adjuster is needed that takes these aspects of FDA's review workload
into consideration, as well as the number of marketing applications
submitted to FDA--whether or not an application is exempt from fees or
the fees are waived.
Problem 2: PDUFA II Over-adjusts after a Decline in Applications
Based on experience from 1993 through 1997, when the number of fee-
paying applications increased consistently from year to year by 7
percent, both FDA and industry expected that fee-paying applications,
and product and establishment fee revenues, would increase consistently
each year through 2002.
In fact, however, in two of the four years of PDUFA II, the number
of fee-paying applications fell significantly. In years when fee-paying
applications fall, FDA faces a double financial penalty. The experience
of fiscal year 2001 is a good example of this.
--At the beginning of fiscal year 2001, based on a linear regression
analysis of past fee-paying applications, FDA projected a total
of 164 fee-paying applications that would produce a total of
$51 million in application fee revenue. As the fiscal year
progressed, however, fee-paying applications dropped
precipitously, due in large part to an increase in the number
of applications exempt from fees. By year-end FDA had received
only 108 fee-paying applications that generated only $33
million--a shortfall of about $18 million.
--At the beginning of fiscal year 2001, linear regression analysis
projected that FDA would receive 171 fee-paying applications in
fiscal year 2002. This would provide $53 million in application
fee revenue and $159 in total revenue--since product and
establishment fees would each be set to generate the same
amount of fees that applications generate. But the 108 fee-
paying applications were factored into the linear regression
analysis at the beginning of fiscal year 2002, revised
projections forecast only 146 fee-paying applications in fiscal
year 2002, generating $46 million from application fees, and a
total of $138 million from all fees. This was $21 million less
than earlier forecasts.
The projection of an additional drop of $21 million in PDUFA
revenue in fiscal year 2002, on top of the $18 million loss in fiscal
year 2001, causes a total drop of $39 million over two years--all in
response to the drop in fee paying applications in fiscal year 2001.
Both FDA and industry agree that this drop in revenues is out of
proportion to any change in workload. Revenues have been too volatile
under PDUFA II. Both FDA and industry support a change in how revenues
and workload are structured beginning in fiscal year 2003.
proposed revenue model for pdufa iii
The proposed statutory language uses a revenue model that
incorporates aspects of both PDUFA I and PDUFA II, but that would
eliminate the problems with the volatility of revenues that occurred in
PDUFA II. The major elements include:
--Setting the revenue levels in Section 736(b) for each year, not the
amounts of application fees
--Keeping the current inflation adjuster and applying it to the
statutory revenue levels.
--Incorporating a new workload adjustment provision that accounts for
the major components of FDA's review work--(1) new marketing
applications, whether or not they pay fees, (2) efficacy
supplements, whether or not they pay fees, (3) commercial
investigational new drug submissions, and (4) manufacturing
supplements. This is a major improvement over using fee-paying
applications as a surrogate for workload as was the case in
PDUFA II.
workload adjuster
Section 736(c)(2) provides for annual revenue adjustments for
changes in review workload, after inflation adjustments are made. The
adjustment is to be determined by the Secretary, based on a weighted
average of the changes in the total number of:
--Human drug applications
--Commercial investigational new drug applications
--Efficacy supplements, and
--Manufacturing supplements.
The Secretary shall publish in the Federal Register the fees
resulting from this adjustment and the supporting methodologies.
Each of the 4 components is a defined category of applications that
FDA currently counts. Each component will be given a weighting factor
that corresponds to its percent of FDA review workload. The percent of
FDA review workload assigned to each of the components in a study
recently completed study by KPMG is:
--44.4 percent for human drug applications, whether or not they pay
fees;
--40.2 percent for commercial investigational new drug submissions;
--6.2 percent for efficacy supplements; and
--9.2 percent for manufacturing supplements.
These are the weights that the Secretary would use in calculating
the workload adjuster, and the percents that have also been disclosed
by FDA soon after they were initially reported to them by their
contractor, KPMG.
The workload adjuster envisioned for each component has as its base
the average number of applications of each particular type that FDA
received over the 5-year period of PDUFA II. It requires that a rolling
average of submissions also be calculated each year for the latest
five-year period that ends on June 30 before the end of each fiscal
year beginning on or after October 1, 2002. The percent change in the
latest 5-year average, compared to the base year, is then multiplied by
the weighting factor for that component. Then all 4 components of the
workload adjuster are added together, and the total percent that
results is the workload adjuster that will be used to further adjust
the inflation-adjusted statutory revenue levels each year after fiscal
year 2003. Use of 5-year rolling averages in this process dampens the
impact of revenue fluctuations--both up and down.
The revenue adjuster will never result in revenues lower than the
inflation-adjusted statutory revenue levels. The reason for this is
that in years when fee-paying applications fall below projections, FDA
will automatically experience a shortfall in revenues as a result of
that shortfall in fee-paying applications. Further downward adjustment
of the revenues would over-compensate for such a decline in workload.
This is a lesson learned form experience from 1998 through 2002.
If such a model had been in place for the past 5 years, revenues
during PDUFA II would have been much more predictable year to year
rather than exhibiting the volatility FDA experienced. Industry and FDA
both support this concept. Attachment I is a worksheet that shows how
this workload adjuster would have performed if it had been in effect
for the past five years. Both FDA and industry staff support this
approach to adjusting workload for revenues in PDUFA III.
change in due date for annual fees to october 1
The date annual fees are due and payable is being changed from
January 31 to October 1, the first day of the fiscal year. Currently
PDUFA specifies that two-thirds of the fees are due January 31, 4
months into the fiscal year. This has necessitated carrying forward
funds from a previous year to sustain operations for the first 4 months
of each new fiscal year. By changing the date for annual fees to be
paid to FDA, the necessity of carrying forward these large cash
surpluses from year to year is eliminated. Also, by making this change,
FDA will have access to revenue as early in fiscal year 2003 as it can
issue invoices and collect fees rather than having to wait until
January 31 to collect funds. This is especially important for FDA
operations in fiscal year 2003 because the agency does not expect to
have any appreciable carryover funds at the end of fiscal year 2002.
Making this change necessitates several other changes in the law.
In the past annual inflation adjustments were keyed to the higher of
the Federal pay raise applicable for employees in the fiscal year for
which the fees were set or the CPI for the previous year. In order to
collect fees on October 1, FDA will have to set fees and issue invoices
in August of each year, well before the pay-raise determination for the
next fiscal year is made. For this reason the inflation adjustment
factors are changed to the higher of the Federal pay raise for
employees in the Washington DC area for the previous fiscal year, or
the change in the CPI for the 12 month period ending June 30 before
fees are set for the following fiscal year, whichever is higher. Both
of these figures will be available in August when fees must be set. As
was the case previously, these inflationary changes will continue to be
cumulative and compounded.
Making the fee due and payable on October 1 necessitates a few
other changes as well. The word ``assessed'' is changed to ``retained''
in section 736(f)(1) and the word ``collected'' is changed to
``retained'' in section 736(g)(2)(A). Both of these changes are made to
permit FDA to issue invoices and collect fees before an appropriation
is actually made for the fiscal year. The change in wording keeps the
original intent of these two provisions intact, however, by asserting
that the conditions originally specified in each of those sections must
be fulfilled when all appropriations for the fiscal year, including any
supplemental appropriations, are enacted. If the conditions are not
fulfilled, FDA may not retain the fees it collects.
final year adjustment
A new subsection (c)(3) also allows FDA to make a one-time increase
in fees in fiscal year 2007, if necessary, to assure that the agency
will have no less than 3 months of operating reserves on hand at the
end of fiscal year 2007 when this legislation will expire. This will
allow the agency to operate for up to 3 months in fiscal year 2008 if
there is any delay in reauthorization of PDUFA at the end of fiscal
year 2007. Further, delaying this payment from industry until fiscal
year 2007 minimizes the need for FDA to carry large balances over from
year to year, reducing industry outlays until they are necessary to
support operations.
adding tolerance to the trigger governing spending from appropriations
Currently the provision in Section 736(g)(2)(B) dissolves FDA's
authority to collect and spend fees in any year that FDA fails to spend
from appropriations as much as it spent in fiscal year 1997, adjusted
for inflation. Under spending by even $1 causes the whole user fee
program to cease operation, presenting serious difficulties for the
drug review program. This would force FDA into a reduction-in-force and
other drastic actions.
The trigger is based on the amount FDA spends from appropriations
on the drug review process each year. FDA's accounting system measures
spending by organization component. Spending on the drug review
process, however, is usually only a portion of spending of organization
components in CDER, CBER and ORA. That determination can only be made
definitively by merging information from FDA's accounting system, after
the close of the fiscal year, with results from the time reporting
system that reflect the percent of time each organization component
spends on the drug review process. This provides the total dollar
figure that FDA spent on the drug review process. From this total, FDA
subtracts the amount of fee revenue that was spent to determine the
amount of spending on the process that came from appropriations. Since
this process does not finally identify exactly how much was spent from
appropriations until after the end of the fiscal year, FDA always
overspends to be sure that the agency is not in peril of spending less
than the trigger requires and causing the program to collapse.
The table below shows the amount of spending, in excess of the
amount required by the law, since PDUFA began in 1993:
----------------------------------------------------------------------------------------------------------------
Minimum
spending Actual
Fiscal year required by spending from Difference Percent
section appropriations difference
736(g)(2)(B)
----------------------------------------------------------------------------------------------------------------
1993................................................ $120,057,253 $126,515,577 $6,458,324 5
1994................................................ 123,380,438 129,337,138 5,956,700 5
1995................................................ 126,958,144 139,830,318 12,872,174 10
1996................................................ 124,302,476 152,289,387 27,986,911 23
1997................................................ 125,872,166 147,959,689 22,087,523 18
1998................................................ 147,959,689 151,836,635 3,876,946 3
1999................................................ 150,083,954 159,669,575 9,585,621 6
2000................................................ 153,508,177 167,646,122 14,137,945 9
2001................................................ 158,213,295 162,691,657 4,478,362 3
----------------------------------------------------------------------------------------------------------------
An addition is proposed to section 736(g)(2)(B) to provide FDA a
margin of error in its effort to meet this requirement of the law. This
section is being modified so that if FDA's spending is within 5 percent
of the amount required by this provision of law, the requirement of
this section is considered satisfied. If FDA under-spends by 3 percent
or less, there is no penalty. If FDA under-spends by more that 3
percent but not more than 5 percent, FDA will be required to reduce
collections in a subsequent year by the amount in excess of 3 percent
by which FDA under-spent from appropriations. The intent is to relieve
FDA of the need to overspend from appropriations each year, as it has
done consistently since 1993, to assure that this trigger is met.
Spending from appropriations on the drug review process each year is
still expected to be at or very close to the amount specified by this
trigger, and may never be more than 5 percent less than the trigger
amount.
changes to improve efficiency of billing for product fees
Amendments are proposed to allow the Secretary to use the
Prescription Drug Product List (the active portion) in the ``Approved
Drug Products with Therapeutic Equivalence Evaluations,'' (Orange Book)
as the basis for identifying which products should be considered to be
prescription drug products for fee assessment purposes. These proposed
changes should lead to a more efficient, less burdensome, billing
procedure. Under current law, any product eligible for drug listing is
subject to product fees. Determining eligibility for listing is
administratively complex and sometimes resource intensive. In addition,
listing is often controlled by a re-packer or distributor rather than
by the sponsor, but the sponsor must pay the product fee. The use of
the Orange Book, which is found on FDA's Internet site, as the basis to
identify products for user fee assessment purposes should not be
construed to affect the legal status of the book or the products in the
book. The purpose of using this method is merely a tool for the
Secretary to provide a public, efficient billing process. It also
provides sponsors an easier way to remove products from the list that
is the basis for billing. Also, the addition of the reference to the
list of products approved under human drug applications under section
351 of the Public Health Service Act created and maintained by the
Secretary refers to the current FDA method of identifying biological
products considered to be prescription drug products for fee assessment
determinations. This is not intended to be a change in practice; rather
it documents FDA's current practice. The list is to be provided on
FDA's Internet site
The proposal to delete the clause ``does not include a large volume
parenteral drug product approved before September 1, 1992'' would mean
that any large volume parenteral (LVP) product is a prescription drug
product and subject to a fee. However, coupled with a corresponding
change proposed to section 736(a)(3)(B), all LVP's would be exempt from
product fees in PDUFA III, including ones that were approved after
September 1, 1992. This change is intended to decrease FDA's
administrative burden in determining which products should be billed.
minor changes in the definition of prescription drug products
Amendments are proposed to Section 735(1)(A) and (B) that would
eliminate reference to 505(b)(1) and 505(b)(2) under the definition of
what is considered a human drug application for user fee purposes. The
change would state that any application submitted for approval under
section 505(b) would be considered a human drug application. The
changes in these sections mean that all new drug applications, whether
they are a 505(b)(1) or a 505(b)(2), would be subject to user fees
unless otherwise exempted. This technical change would greatly decrease
the Agency's administrative burden in the collection of fees and would
eliminate any controversy over whether any 505(b)(2) application is fee
liable. Further, since the non-fee paying 505(b)(2) applications have
been reviewed under the same rigorous performance goals as the fee
paying applications (505(b)(1)'s and 505(b)(2)'s), this change would
create a level playing field for all new drug applications. It is
expected that this technical change would not significantly increase
the revenue for the Agency because most of the 505(b)(2) applications
have already been assessed fees. The elimination of section 735(1)(B)
would also mean that all 505(b)(2) applications would be subject to
product fees (unless otherwise exempted).
This change would also allow FDA to collect application fees for
505(b)(2) supplements to 505(j) applications (see 21 CFR 314.54) that
require clinical data for approval. This change to the statute would
create a level playing field so that any supplement that requires
clinical data for approval would be subject to a fee.
Question. What will be the effect if PDUFA is not re-authorized
this year?
Answer. If PDUFA is not reauthorized promptly the effect would be
serious long-term harm to the drug review program. FDA currently has
about 2,400 staff-years devoted to the drug review process, and half of
the funds to support them come from PDUFA Fees. FDA will have virtually
no carryover PDUFA funds available to pay our employees when the fiscal
year ends on September 30, 2002.
That means that FDA will not have funds to pay about 1,200 of our
current employees working on drug review after September 30. No
reauthorization by then could lead to a furlough or reduction in force
at that time, and notices to employees of that possibility would have
to go out in advance. As we learned when PDUFA II was about to expire,
the atmosphere of uncertainty caused by the notice of a possibility of
a furlough or reduciton in force will result in FDA losing many well-
trained employees who will be difficult to replace.
To avoid this unfortunate outcome, we are hopeful that Congress
will reauthorize PDUFA as soon as possible. This would enable us to
avoid having to send notices to our employees that will certainly cause
distress and trigger an acceleration of turnover. Your help in this
effort will greatly advance the public health mission of our Agency and
will be sincerely appreciated.
los angeles laboratory
Question. What is the status of the Los Angeles laboratory?
Answer. Phase II completes the mechanical and electrical
infrastructure and completely fits-out both the laboratory and the
office at an estimated cost of $23.0 million. The total estimated
construction cost of the project is $43.0 million.
The contract for Phase II construction was awarded on November 29,
2001. The Los Angeles Laboratory project is on schedule with a
completion date of June 8, 2003, and the scheduled move-in is to begin
in August, 2003. As of March, 2002, the total project is approximately
45 percent complete.
Currently, operating and maintenance costs at the present location
are estimated at $779,000 for fiscal year 2002. When the Los Angeles
Laboratory project is completed and fully operational, we expect the
operating and maintenance costs to increase.
arkansas regional laboratory
Question. Why is work at the Arkansas Regional Laboratory being
``paused?'' When will the construction be completed? What effect will
this have on FDA activities? What amount of funds is necessary to fully
complete this project?
Answer. The first two phases of construction for Building 50
completed exterior demolition, structural work, roofing repair,
installation of an elevator and installation of a new exterior brick
facade. The interior architectural fit-out of the space has not been
completed nor has the installation of mechanical and electrical
infrastructure. Once funds have been appropriated, the remaining phases
will be completed within one year. The estimated buy-out cost in fiscal
year 2003 for completing Phase III of ARL is $4.2 million. This amount
was not included in the fiscal year 2003 request as higher Counter
Terrorism priorities took precedence.
bar coding initiative
Question. Please describe FDA's bar coding initiative.
Answer. In 2000, in response to the Institute of Medicine--IOM--
report titled, ``To Err is Human: Building a Safer Health System,'' the
Secretary of Health and Human Services instructed FDA to explore
possible regulatory approaches to reduce preventable medication errors.
Medication errors are a subset of the wider category of medical errors.
Medication errors are defined by the National Coordinating Council for
Medication Error Reporting and Prevention as--any preventable event
that may cause or lead to inappropriate medication use or patient harm
while the medication is in the control of the healthcare professional,
patient, or consumer. Such events may be related to professional
practice; healthcare products, procedures, and systems, including
prescribing; order communication; product labeling, packaging, and
nomenclature; compounding; dispensing; distribution; administration;
education; monitoring; and use.
Medication errors can lead to adverse drug events. It is estimated
that 770,000 adverse drug events leading to injury or death occur
yearly in U.S. hospitals alone, and that between 28 and 95 percent of
these are preventable, that is, they can be defined as errors.
Computerized hospital medication use and monitoring systems could
prevent many of these medication errors.
Errors related to dispensing and administration can be minimized
through the use of bar codes. For example, if a health professional
could use a bar code scanner to compare the bar code on a human drug
product to a specific patient's drug regimen, the health professional
would be able to verify that the right patient is receiving the right
drug, at the right dose, and at the right time. Bar code advocates have
recommended that the bar code contain a unique numerical code that is
dose specific to identify the manufacturer, product, and package size
or type, lot number, and expiration date.
The availability of bar codes for pharmaceuticals would also
facilitate other patient safety initiatives, for example, automated
drug prescribing or ordering, automated monitoring for drug toxicities
in hospitals, and as a component of the automated medical record.
Automation of the drug prescribing and ordering system, if linked to a
bar coding system, has the potential to not only minimize drug mix-ups,
but also to make sure prescribers have access to crucial information at
the point of prescribing.
We are considering whether to require human drug products,
including certain biologic products, to be bar coded. The bar code
would contain certain information about the product, such as a dose-
specific individually identifying number. We are considering whether to
require the bar code to contain other information, such as the drug
product's expiration date and lot number, to make it easier to identify
expired drugs and recalled drugs that may not be safe and effective for
use. The bar code, when used in conjunction with bar code scanners and
computer equipment, will enable health professionals to decrease the
medication error rate. We are also exploring issues surrounding bar
codes on medical devices.
We are planning to hold a public meeting this Summer to discuss the
technical issues regarding the development and implementation of a
possible bar code label. We anticipate that discussions will include
presentations from invited speakers as well as from members of the
public.
Once we have received this public input, we plan to proceed on
proposing a rule that will go through the formal procedures of notice
and comment rulemaking on the use of barcodes on labeling. At the same
time, FDA is working with a contractor to obtain cost estimates for a
possible bar code requirement that should be complete around mid-2002.
As additional background information, the IOM report released in
1999 cited research that there are an estimated 100,000 deaths in the
United States every year from preventable medical errors in hospitals
alone. The range of deaths reported, between 44,000 and 98,000 deaths,
was based on the 1984 Harvard Medical Practice Study and confirmatory
studies done in Colorado and Utah. These numbers reflect the entire
area of medical errors--including, for example, surgical errors,
iatrogenic infections, medication errors, and incorrect medical product
use. Of the projected 100,000 deaths, we believe that approximately 30
percent to 50 percent are associated with errors involving FDA-
regulated medical products, that is, drugs, devices, blood and blood
products, or vaccines. In addition to the human cost of errors
involving drugs, there are also significant economic costs. An article
published in 1995 estimated the direct cost of preventable drug-related
mortality and morbidity to be $76.6 billion, with drug-related hospital
admissions accounting for much of the cost. Another article published
in 2001, used updated cost estimates derived from current medical and
pharmaceutical literature to revise the $76.6 billion estimate to
exceed $177.4 billion; of which hospital admissions accounted for
$121.5 billion in costs, and long-term care admissions accounted for
another $32.8 billion.
______
Questions Submitted by Senator Tom Harkin
methylmecury
Question. How many seafood samples did FDA take last year for its
mercury monitoring program? What types of species were sampled? In
addition to its consumption advisories, how will FDA revise its
regulatory strategy for methylmercury or take other actions to prevent
tainted seafood from reaching consumers?
Answer. FDA did no sampling in fiscal year 2001 for methylmercury
monitoring. The public health question relating to methylmercury
focuses on how much methylmercury consumers accumulate from consumption
of seafood over time. This question requires data on both how much
seafood people are consuming and how much methymercury are in
commercial species. There is already considerable knowledge on both
points.
FDA recognizes the long term importance of upgrading and adding to
its database on average concentrations of methylmercury in commercial
fish and is planning on collecting and analyzing additional samples for
this purpose. The timing of this sampling program is subject to FDA's
overall sample collection and analysis priorities, including those
related to food security. Fortunately, our experience has been that
methylmercury concentrations in commercial species are stable over
time, so the need to accumulate new data is regarded as prudent but not
immediate.
FDA is committed to reviewing its overall public health strategy
for methylmercury. FDA developed an action level for methylmercury in
the late 1970's. Since then, a considerable amount of new data have
become available, both from epidemiological studies that provide
insight into the effects of methylmercury in humans, and from exposure
data that indicate how much methylmercury is in fish and how much fish
U.S. consumers are eating. The Agency is taking advantage of these new
data by re-examining its entire public health strategy for
methylmercury, including the action level.
In addition, FDA has announced that it will soon schedule a meeting
of its Food Advisory Committee to review issues surrounding
methylmercury in commercial seafood, including a re-examination of the
consumer advisory.
listeria
Question. What are your agencies doing today to protect consumers
from Lm-contaminated foods? What are the current monitoring programs
for Listeria monocytogenesin the products your agencies regulate? Dr.
Murano, what are you doing to speed the rulemaking process? What, if
any, regulatory action is FDA considering to reduce the risk to
consumers from foods that may contain Listeria?
Answer. The FDA conducted a draft Listeria monocytogenes (Lm) risk
assessment in collaboration with the U.S. Department of Agriculture's
Food Safety and Inspection Service, USDA/FSIS and in consultation with
the Centers for Disease Control and Prevention, CDC. The draft risk
assessment estimates the potential relative risk of listeriosis from
eating certain ready-to-eat foods. The draft risk assessment and a
draft action plan designed to reduce the risk of foodborne illness
caused by Lm were issued Jan 19, 2001 for public comment.
The comment period for the draft risk assessment and action plan
closed July 18, 2001. We anticipate issuing the revised risk assessment
in 2002. I will be happy to provide you more specific information for
the record.
[The information follows:]
highlights of the draft risk assessment and action plan
Consumer and health care provider information and education efforts
have been expanded through outreach to:
--Medical and health professionals through a continuing medical
education program developed in cooperation with the American
Medical Association, Diagnosis and Management of Foodborne
Illnesses--A Primer for Physicians, which includes a
reproducible patient handout alerting at-risk persons,
especially pregnant women, to the importance of avoiding foods
that may be a source of Listeria monocytogenes. Released in
January 2001, approximately 36,000 physicians and other health
professionals have received copies of the Primer;
--Some 50,000 State and local public health department health
educators, extension agents and school nurses across the
country who receive the FDA/USDA National Food Safety Education
Month (September) Consumer Education Planning Guide, which
included a reproducible Listeria monocytogenes consumer
education handout in 2001 and will again in 2002;
--Consumers, via release in June 2001, with USDA, CDC and the
International Food Information Council, of a consumer/patient
handout distributed through physicians' offices, public health
departments, and FDA and USDA field staff; and,
--The mass media through a media release and follow-up distribution
beginning June 2001 of a ``drop-in'' feature story on Listeria
monocytogenes which to date has generated 204 newspaper
articles with a potential readership of more than 15 million.
The following action items are completed, in progress, or are being
initiated:
--FDA Processor Guidance has been drafted for public comment
--Revision of the FDA Food Code (2003)
--Develop computer-based training for industry and food safety
regulatory employees (fiscal year 2002).
--Enforcement and regulatory strategies have been reviewed and
redirected and include microbial product sampling as
appropriate (FDA high risk food inspections, soft cheese
surveillance program, fiscal year 2002)
--FDA and FSIS are seeking the advice from the National Advisory
Committee on Microbiological Criteria for Foods on developing a
scientific framework for the establishment of safety-based
``use by'' date labeling. Expected completion in 2003
--Enhance disease surveillance and outbreak response through case
control studies (fiscal year 2002)
--In fiscal year 2001 the National Food Processors Association
completed a prevalence study of Listeria monocytogenes in
select, ready-to-eat foods at retail funded by FDA. Data from
this study will be incorporated into the next version of the
risk assessment.
--An FSIS/FDA collaborative study to develop Listeria monocytogenes
detection and enumeration methods for concentrations of
Listeria monocytogenes less than 1cfu/gm (fiscal year 2002).
______
Questions Submitted by Senator Richard J. Durbin
gene therapy tracking system
Question. I believe the FDA is planning on modifying their gene
therapy proposal so that it meets the congressional intent of tracking
patients rather than merely being an adverse events monitoring system.
Is that correct?
Answer. FDA is pursuing the development of a comprehensive Gene
Therapy Patient Tracking System--GTPTS--to help ensure the appropriate
oversight and safe development of these therapies. The GTPTS is a
system for the collection, analysis, and reporting of information
pertinent to the safety of gene therapy recipients. Far more than an
adverse event database, it represents a comprehensive, integrated
collection of procedures, policies, programs, databases and report
structures pertinent to the conduct of studies; the collection of
short-term and long-term outcomes information from recipients; the
transmission of information to FDA; the storage of information in
electronic databases in an accessible and analyzable format; and the
analysis and use of the information to make informed regulatory
decisions and to increase the understanding of researchers, subjects,
and the public. The GTPTS is to supplement or replace current systems
for assessing and promoting the safety of gene therapy so that the
oversight system will be optimized for dealing with some of the issues
specific to gene therapy.
Many types of outcomes and health status data were considered for
collection in the GTPTS database. Determination of which data to
include requires careful consideration of several factors. The GTPTS
should focus on capturing data that are important to safety assessment
and that can be collected with an adequate degree of reliability and
completeness. Collection of unnecessary data not only may be costly,
but also can make it harder to recognize critical findings. Collection
of unreliable or substantially incomplete data would impair the
validity of the analyses.
Most gene therapy patients have serious underlying diseases and
receive a variety of therapies, drug and otherwise, in addition to the
gene therapy. Each patient typically experiences many adverse events as
a result of disease, other therapies, and concomitant illnesses. The
collection of all such events, while creating a tremendous burden on
patients, sponsors, and investigators, would create a huge amount of
irrelevant data potentially obscuring important information. For these
reasons, it was decided that the GTPTS would only include adverse
events associated with treatment. Data regarding adverse events that
are deemed by the sponsor and investigator to have no reasonable
possibility of having resulted from the therapy would not be included
in the database. In addition, for each patient there is a vast amount
of health status data that comes from medical history, physical exam,
laboratory testing, medical imaging, etc. When not rising to the level
of an adverse event, such data, that is normal laboratory findings,
symptoms related to a disease not under therapy, can only be
interpreted in the context of the individual patient and would add
little or no value to the gene therapy database. This type of clinical
information will not be included in the gene therapy databases.
Long-term clinical data collection is an important and relatively
unique aspect of gene therapy assessment. Storage and facilitation of
analysis of such data is a critical function of the gene therapy
databases. This is particularly true because current medical and
regulatory systems were not originally designed to identify late-
occurring treatment-related toxicities, that is, years later, or to
examine the causal association of these toxicities with gene therapy.
FDA did substantial background work investigating the types of
long-term concerns, the classes of gene therapy products to which they
apply, and the feasibility of various approaches to collecting such
data. In these efforts, we gave careful consideration and deliberation
not only to the safety issues that need to be addressed, but also to
the practical difficulties in reliably collecting such data.
In considering these data, FDA sought the advice of its Biological
Response Modifiers Advisory Committee--BRMAC. In its deliberations,
BRMAC advised that the most significant risks associated with gene
transfer studies include treatment-related cancers, and hematologic,
neurologic, and autoimmune disorders. The Committee concluded that in
most cases, these conditions are expected to develop months or a few
years after initial administration of gene transfer product; however,
potential risks existed for initial presentation of second cancers and
some other treatment-related toxicities, 10 years or longer after
therapy. The Advisory Committee recommended that sponsors of gene
transfer trials collect specific clinical information on all subjects
for at least 15 years. However, the Committee also repeatedly cautioned
that FDA must take care to simplify long-term data collection and focus
it on critical information in order to have successful data collection.
Based on the recommendations of the BRMAC, the GTPTS will be expanded
to capture the necessary long-term clinical monitoring information.
Question. Will the gene therapy tracking system track health status
information, so that a Data System Monitor Board like entity can use it
to assess risk from specific protocols and vectors?
Answer. Through experience in the review and regulation of gene
therapy products, FDA has identified several concerns and issues raised
by gene therapy products that differ from those typically raised by
more traditional products. FDA agrees that public discussion of summary
safety information stemming from the GTPTS will promote awareness among
gene therapy study sponsors, research investigators, and the general
public of emerging issues in the medical, scientific, and ethical
aspects of clinical gene therapy research.
In the past, FDA has used existing systems to prepare summary
safety reports for presentation at FDA advisory committees--BRMAC--the
Recombinant DNA Advisory Committee--RAC--and various public forums
including the Drug Information Association--DIA--annual meetings and a
special satellite broadcast co-sponsored by DIA and FDA; the annual
meetings of the Society of Toxicology, the American College of
Toxicology and the International Society for Genetic Anticancer Agents;
meetings of the Pharmaceutical Research and Manufacturer's Association;
and the annual meetings of the American Society of Gene Therapy. In the
future, FDA intends to use the GTPTS in preparation of periodic gene
therapy safety reports intended both to solicit expert feedback from
FDA advisory committees and to disseminate information. Furthermore,
FDA will take part in a Gene Transfer Safety Assessment Board--GTSAB, a
working group established under the auspices of the NIH Recombinant DNA
Advisory Committee--RAC--by the NIH Office of Biotechnology Activity-
OBA. The GTSAB's specific functions will include reviewing in closed
session relevant safety information and analyses; identifying
significant trends or single events; reporting aggregated data and
assessment to the RAC; and, facilitating the dissemination of safety
information among gene therapy investigators and participants. This
Board is expected to enhance overview of gene therapy safety and
improve public understanding and awareness of the safety of human gene
transfer research studies as well as inform the decision-making of
potential trial participants.
Question. Given the problems with reporting by researchers of
adverse events, the tracking of health status information should be
carried out by FDA rather than by the clinical trial sponsor. Does the
FDA understand that it is the agency who has oversight responsibility
here and that such responsibility should not be delegated?
Answer. FDA is responsible for the regulatory oversight of gene
therapy clinical trials. In particular, 21 CFR 312.22 (a) states--FDA's
primary objectives in reviewing an IND are, in all phases of the
investigation, to assure the safety and rights of subjects, and, in
Phase 2 and 3, to help assure that the quality of the scientific
evaluation of drugs is adequate to permit an evaluation of the drug's
effectiveness and safety.''
Question. When can the committee expect that FDA to actually
provide us with a full budget and detailed implementation plan for the
gene therapy individual patient tracking system ?
Answer. The Gene Therapy Patient Tracking System detailed
implementation plan and cost estimate is under administrative review
and will be provided to the committee within the next several weeks.
reuse of medical devices
Question. Given the fact that multiple Senate offices including
requests from the staff of the Chairman and Ranking Member of the HELP
committee asked the agency to refrain from extending the deadline for
compliance with the reprocessing rules for 510(k) devices, it is
curious that the FDA decided to ignore these requests. Does the FDA not
agree that the public deserves better than to be exposed to devices of
questionable safety and efficacy?
Answer. Protecting the American public from harmful, unsafe medical
products is a part of our mission at FDA. We initially declined the
third party reprocessors' request to extend the deadline for obtaining
clearance for their Class II reprocessed single use devices. The DHHS
received over 50 letters from reprocessors, healthcare professionals,
hospitals, elected officials, and from several members of the U.S.
Senate and the House of Representatives, urging FDA to extend the
February 14, 2002, deadline. The letters from healthcare professionals
and hospitals stated that if FDA did not extend the deadline, hospitals
would face a medical device shortage problem which could result in a
serious financial hardship if the hospitals were suddenly required to
purchase large volumes of new single use devices. The letters from the
State officials reminded the Agency that many employees risk immediate
unemployment if the commercial reprocessors were forced to shutdown if
the February due date was not extended. The letters from members of
Congress encouraged FDA to consider extending the deadline if the
reprocessors had demonstrated ``good faith effort'' in meeting the
Agency's original due date.
After further deliberation, FDA granted a 6-month extension for
active enforcement of premarket notification submission requirements
for Class II single use devices until August 14, 2002. It is important
to note that the extension was granted with three very stringent
caveats. These caveats are that the reprocessor must have submitted a
510(k) by August 14, 2001; have not received a not substantially
equivalent determination; and, provide timely responses to FDA's
requests for additional information about their device in accordance
with 21 C.F.R. Sec. 807.87(1).
Like members of Congress and their staff, FDA believes that the
American people should not be exposed to devices of questionable safety
and efficacy. The Agency does not believe there is any significant risk
to the public from the limited extension for firms that have already
submitted their applications and are providing timely responses to the
Agency's information requests in accordance with 21 C.F.R.
Sec. 807.87(1).
Question. In the case of Class II reprocessed devices, the agency
has been meeting its statutory review time and in fact has approved
many devices prior to the original deadline of Feb.14, 2002. Only
submissions that were incomplete were still unapproved by the time of
the deadline. Why would the agency grant an extension for a product
whose submission was incomplete and for which the agency required more
data?
Answer. Many of the Class II single use devices that FDA has thus
far cleared for marketing are lower risk Class II devices that, in
general, are less complicated than other devices sharing the same
classification grouping. For this reason, FDA may require additional
information for more complex Class II devices. In addition, FDA is
aware that preparing 510(k) submissions is a new undertaking for single
use device reprocessors. FDA acknowledges that there may be a learning
curve for commercial reprocessors as they become familiar with FDA's
requirements as to what constitutes a ``complete'' 510(k) submission.
Question. Some of these submissions were still incomplete as of the
deadline, yet FDA allowed them to stay on the market without any
indication that their submission was even forthcoming. Can the agency
assure Congress that it will not extend these deadlines any further and
will ensure that patients are no longer exposed to reused devices of
questionable safety and efficacy?
Answer. The Agency wishes to assure Congress and the American
public that it intends to continue to fulfill its mission to protect
public health by only approving or clearing medical devices for which
reasonable assurance of safety and effectiveness has been established,
regardless of whether they are reprocessed single use devices or
devices manufactured by original equipment manufacturers. FDA recently
denied a third party reprocessor's request to extend the premarket
application submission deadline for reprocessed Class III devices.
Question. Is FDA actively enforcing the premarket regulations
against hospitals and third party reprocessors that reprocess Class III
devices?
Answer. Yes, FDA is actively enforcing the premarket regulations
for hospitals and third party reprocessors that reprocess Class III
devices. Shortly after implementation of FDA's reuse policy, the Agency
issued assignments to a cadre of field investigators who were
specifically trained to perform inspections of single use device
reprocessors. These investigators visited 35 hospitals. The inspections
revealed one hospital that was actively engaged in in-house
reprocessing of single use devices despite FDA's new reuse policy. The
investigator issued a FDA 483 or Notice of Adverse Findings to the
hospital's Chief Executive Officer who assured the Agency that the
hospital would immediately cease all reprocessing activities.
FDA also intends to issue assignments to the District Offices to do
follow-up inspections of the four commercial reprocessors who submitted
premarket applications, PMAs, for Class III cardiac ablation catheters
on August 14, 2002, but were unable to obtain FDA approval for these
devices by February 14, 2002. The purpose of these inspections will be
to ensure that these reprocessors have ceased reprocessing and
distributing reprocessed cardiac ablation catheters.
Question. Does FDA plan to investigate whether hospitals who have
reprocessed devices like ablation catheters in the past (and have
testified to Congress that they reprocess these devices) have
discontinued this practice?
Answer. Yes, FDA does plan to investigate whether hospitals that
have reprocessed devices like ablation catheters in the past have
discontinued this practice. FDA has learned that six hospitals may
possibly be engaged in in-house reprocessing of invasive cardiac
catheters despite the publication of FDA's reuse policy on August 14,
2000. The Agency has prepared high priority assignments to the District
Offices requesting that field investigators visit these six hospitals.
Question. When can we expect to see the first strong FDA
enforcement action against entities not complying with the FDA's
premarket policy for reprocessed devices?
Answer. The Agency cannot predict when such actions will take
place. FDA wishes to assure Congress that we plan to take appropriate
enforcement action against any reprocessor that is not in compliance
with FDA's reprocessing and reuse policy for both premarket and
postmarket requirements.
tissue and blood safety
Question. How much have you set aside in this budget request for
the implementation of the new tissue rules ?
Answer. There are many competing priorities to consider in
developing the Agency's budget request. The proposed increase of $123
million or nearly 8 percent above the fiscal year 2002 estimate
reflects the Agency's central role in the Nation's defenses against the
threat of terrorism, as well as FDA's strong performance as the gateway
for medical products. The Agency's fiscal year 2003 budget does not
contain a specific request to fund the implementation of the proposed
approach for the regulation of human tissues for transplantation.
Question. I sent a letter asking for this budget information in
January 2001, when do you think FDA is likely to respond?
Answer. FDA and DHHS staff met with members of your staff on March
18, 2002 to discuss issues related to the Agency's proposed approach
for the regulation of human tissue cells and cellular and tissue-based
products. During that meeting information, was provided in response to
budget information raised in your January 2001 letter to the Agency. If
there is additional information needed on this issue, we would be happy
to provide it. We appreciate your support and interest in this
important public health issue.
Question. As you know Brian Lykins, a 23 yr-old student in
Minnesota, died due to contaminated tissue. There have also been
several infections recently from a disease called Chagas disease and
one such infection led to a death. Given these tragic events, is FDA
moving quickly to finalize both the donor suitability and the good
manufacturing practice rules?
Answer. FDA has been moving to finalize both proposed rules. The
proposed rule, Suitability Determination for Donors of Human Cellular
and Tissue-Based Products, published on Sept. 30, 1999, with a 90 day
public comment period. In response to requests for an extension, FDA
re-opened the comment period on April 18, 2000, for an additional 90
days. FDA received over 500 comments to the docket, many of them about
scientifically controversial issues. FDA met with industry groups to
clarify their concerns and brought several issues to its advisory
committees. Another proposed rule, Current Good Tissue Practice for
Manufacturers of Human Cellular and Tissue-Based Products; Inspection
and Enforcement, published on Jan. 8, 2001, with a 120-day comment
period. FDA received 47 comments to this proposed rule. FDA is
proceeding with the necessary steps to finalize and publish the final
rules.
FDA is investigating recent reports of allograft-associated
bacterial infections. FDA recently issued a guidance, Validation of
Procedures for Processing of Human Tissue Intended for Transplantation,
in March 2002 for immediate implementation to remind tissue banks about
current FDA regulations for validation of procedures to prevent
contamination and cross-contamination during tissue processing.
The three cases of Chagas disease reported in the recipients of
organs are also of concern to FDA, but please note that organ
transplantation is not regulated by FDA, but rather by the Heath
Resources Services Administration, HRSA. There is currently no FDA-
approved test for donor screening for infection with Chagas disease.
Because of the shortage in organ donors, HRSA and the Centers for
Disease Control and Prevention, CDC have been reviewing the
appropriateness of donor screening questions in the organ transplant
setting. According to HRSA, the United Network for Organ Sharing, UNOS,
the organization under contract with HRSA to operate the nation's Organ
Procurement and Transplantation Network, is working with the Centers
for Disease Control and Prevention on drafting recommendations for
screening potential donors for T. cruzi infection. There have been no
reported cases of transmission of Chagas disease by transplanted
tissues, although the parasite has been found in liver, spleen,
cardiac, smooth and skeletal muscle, nerve tissue, intestinal mucosa,
skin, gonad, bone marrow, and placenta.
Question. Are the rules that were previously proposed sufficient to
ensure the health and well being of tissue recipients or do the
screening and manufacturing requirements need to be strengthened in the
light of these recent illnesses and tragic deaths?
Answer. FDA believes that the proposed rules, when finalized, will
strengthen public health protection. In general, the FDA's proposed
regulations are written in broad language, for two primary reasons.
One, they can be flexibly applied to account for new scientific
knowledge and future technological advances. Two, establishments can
tailor control measures to their particular circumstances to meet
standards contained in the regulations.
It is important to note that FDA review, inspection, and compliance
activities to monitor and enforce compliance with the regulations are
an integral and critical aspects of Federal oversight. These activities
are resource intensive.
Question. The Agriculture Appropriations conference report
contained language expressing our concern with the pooling of tissue
during processing. Given the lack of a detection system for the
detection of prions, can the FDA assure the Committee that they will
not grant any tissue processor a waiver from the pooling prohibition,
when the GMP rule is made final?
Answer. FDA's proposed Good Tissue Practice, GTP, rule, which
published on January 8, 2001, proposed prohibiting pooling of tissue
from two or more donors. FDA received comments about pooling, some of
which supported an absolute prohibition, and others that did not. FDA
recognizes the possibility that, as technology and scientific knowledge
advance, new methods may be developed that could be used in the
manufacture of human cells, tissues, and cellular and tissue-based
products or other unanticipated circumstances may arise that warrant a
departure from an approach detailed in the proposed regulations. The
proposed GTP rule, section 1271.155, included a provision that would
permit establishments to apply for an exemption or alternative from any
of the requirements in subpart C or D of part 1271. As proposed, such
an exemption could be granted if it is consistent with the goals of
preventing the introduction, transmission, and spread of communicable
disease, and if the information submitted with the request justifies
the exemption. FDA recognizes the need to encourage development of
validated procedures to address contamination and cross-contamination
with TSE-associated prions. The FDA intends to bring this issue for
public discussion before its Transmissible Spongiform Encephalopathies
Advisory Committee.
Question. Would the agency support legislative language that
further strengthens the legal authority of the agency to safeguard the
public from defective or contaminated tissue?
Answer. We would be pleased to discuss with you possible actions to
strengthen this authority while maintaining the flexibility to regulate
human cells, tissues, and cellular and tissue products appropriately
according to risk.
Question. Voluntary blood recalls have increased over 4.5 fold
since 1994. Can the agency explain some of the reasons for this
increase? Can you also provide us with a break out the numbers with
respect to Class I, II and III violations?
Answer. I would be happy to provide that for the record.
[The information follows:]
BIOLOGIC RECALLS CLASSIFIED
----------------------------------------------------------------------------------------------------------------
Fiscal year
MFR type -----------------------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000 2001
----------------------------------------------------------------------------------------------------------------
Blood................................... 400 592 669 1,423 1,524 1,202 1,196 1,817
Source plasma........................... 27 19 23 27 38 36 28 105
Blood derivative........................ 8 3 4 26 4 11 4 7
IVD..................................... 7 18 5 14 8 6 4 16
Vaccine................................. 1 0 1 2 0 1 0 3
Therapeutic............................. 0 0 0 3 0 4 2 5
Allergenic.............................. 10 0 0 6 4 13 22 16
Device.................................. 13 11 2 16 15 6 9 3
Tissue.................................. 3 5 3 2 5 19 24 34
-----------------------------------------------------------------------
Total............................. 469 648 707 1,519 1,598 1,298 1,289 2,006
----------------------------------------------------------------------------------------------------------------
It is clear that there has been a significant increase in blood
recalls during this time frame. There are a number of reasons for these
increases. Between the years 1993-1997, a number of firms in the blood
area entered into Consent Decrees with the FDA. These Consent Decrees
mandated correction of donor suitability records, resulting in
increased reporting and recalls. FDA investigators have also identified
more violations requiring recalls during the course of inspections, and
industry is also more vigilant in this regard. FDA has also issued a
number of memoranda and guidance documents to the industry. These
documents describe current good manufacturing practice in blood
establishments. The evolution of current good manufacturing practice
standards has contributed to increased warnings and recalls. A summary
of the content of these documents is listed below with their date of
issue:
--Recommendation for Deferral of Donors for Malarial Risk--July 26,
1994
--Donor Deferral due to RBC-red blood cell-Loss During Collection of
Source Plasma by Automated Plasmapheresis--December 4, 1995
--Recommendation for the Deferral of Current and Recent Inmates of
Correctional Institutions--June 8, 1995
--Recommendation for Labeling and Use of Units from Donors with
Elevated Levels of ALT-alanine aminotransferase--August 8, 1995
--Disposition of Products Derived from Donors Diagnosed with, or at
Known High Risk for Creutzfeldt-Jakob Disease--CJD--August 8,
1995
--Precautionary Measures to Further Reduce the Possible Risk of
Transmission of CJD by Blood and Blood Products--August 8, 1995
--Interim Recommendation for Deferral of Donors at Increased Risk for
HIV-1 Group O Infection--December 11, 1996
--Recommendation for the Quarantine and Disposition of Units from
Prior Collections from Donors with Repeat Reactive Screen Tests
for Hepatitis B Virus--HBV--Hepatitis C Virus-HCV- and Human T-
Lymphotropic Virus-HTLV-I--July 19, 1996
--Donor Screening for Antibodies to HTLV-II--August 1997
--Withdrawal of Human Blood Derived Materials because Donor Diagnosed
with, or at Increased Risk for CJD--December 11, 1997
--Blood and Blood Components: (1) Quarantine and Disposition of Units
from Prior Collections from Donors with Repeat Reactive Screen
Tests for Antibody to HCV; (2) Supplemental Testing and
Notification of Consignees and Blood Recipients of Donor
Testing Results of anti-HCV--September 1998
--Pre-Storage Leukocyte Reduction of Whole Blood and Blood Components
Intended for Transfusion (draft guidance 1/23/01)
--Biologic Product Deviation Reporting--August 10, 2001
--Revised Measures to Reduce the Possible Risk of Transmission of CJD
and new variant Creutzfeldt-Jakob Disease (vCJD) by Blood and
Blood Products--January 9, 2002
In addition, it has been FDA's experience that there is an increase
in reporting and recalls in the period following implementation of new
test methods. Since 1994, the following new methods have been
introduced:
--Coulter HIV-1 p24 3/14/96 (first HIV p24 donor screen)
--Abbott HIVAg monoclonal 4/23/96 (HIV p24)
--Ortho HCV 3.0 ELISA 5/20/96 (new generation HCV EIA)
--Abbott HTLV-I/HTLV-II EIA 8/15/97 (added HTLV-II specificity)
--Vironostika HTLV-I/II Microelisa System 1/17/98 (added HTLV-II
specificity)
--Chiron RIBA HCV 3.0 Immunoblot 2/11/99 (lookback and other policy
implications)
With regard to the classification of recalls, the following table
addresses the breakdown for all CBER regulated products. As indicated
in table 1, the majority of these are in the blood area:
RECALL CLASSIFICATION
----------------------------------------------------------------------------------------------------------------
Fiscal year
-----------------------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000 2001
----------------------------------------------------------------------------------------------------------------
Class I................................ 9 5 0 4 0 1 2 6
Class II................................ 300 408 504 1,160 1,270 944 1,021 1,513
Class III............................... 157 230 200 355 328 353 266 487
----------------------------------------------------------------------------------------------------------------
The Class I recalls for blood were nine in fiscal year 1994, five
in fiscal year 1995, and one in fiscal year 1999. The remainder was for
other CBER regulated products. It is also important to note that tissue
recalls were not classified until fiscal year 1997. The majority of
recalls has consistently been Class II by regulatory definition, and
represent situations where the probability of serious adverse health
consequences is remote. As these data show, there has been an increase
in recalls over the years.
Question. The agency is currently seeking court approval to fine a
blood center for repeated violations of the rules for biologics. Such
litigation is cumbersome and takes up valuable resources of the agency
that might be better spent on increased enforcement. Would the agency
support legislation that would give the agency authority to levy civil
monetary penalties for such violations similar to the authority
available for violations of the device laws without the necessity of
court action?
Answer. FDA's Center for Biologics currently has limited civil
money penalty authority under the provisions of the National Childhood
Vaccine Injury Act. Broader authority for violations of the provisions
of the PHS Act and the FD&C Act relating to biologics may be useful if
the additions were an effective enforcement option and did not preclude
other administrative or legal actions. However, the Administration has
no position on such legislative changes at this time.
latex allergies
Question. The fiscal year 2002 Agriculture Appropriations requires
FDA to report to Congress on a plan to eliminate latex exposure from
food handling. What is the status of that report?
Answer. The report which is due in August 2002, is under currently
being developed.
Question. Does FDA have legal authority to ban latex gloves because
they adulterate food with latex proteins?
Answer. Natural rubber latex, or NRL, is an approved indirect food
additive under 21 CFR 177.2600, rubber articles intended for repeated
use. As such, NRL may be used in the manufacture of gloves worn by food
processors and food handlers, including those in restaurants. If FDA
were to develop a sound scientific basis for concluding that natural
rubber latex is not a safe food additive, it could propose a rule to
amend or repeal the food additive regulation, in whole or in part. If
FDA were to repeal the food additive regulation pertaining to the use
of NRL, then its use in the manufacture of gloves used by food
processors and food handlers would be deemed to be unsafe, and thus,
unlawful under section 409 of the Federal Food Drug and Cosmetic Act.
The Agency is examining available information on potential risks of
allergic responses in consumers posed by the use of NRL in gloves worn
by food service workers. To date the Agency does not have sufficient
information to propose a repeal of the regulation in 21 CFR 177.2600,
nor has anyone petitioned the Agency to take such action A caution
concerning latex gloves has been added in the model guidelines for
retail food service operations--the 2001 Food Code.
Question. Could FDA modify their food code to accomplish the
purpose of eliminating exposure to latex from food handling?
Answer. The Food Code has certainly been an important tool in
alerting the food industry to questions that have arisen about the safe
use of latex gloves in food preparation. However, the Food Code is
voluntary model code for regulatory agencies; it is neither Federal law
nor Federal regulation. Eliminating the use of latex as an indirect
food additive would require notice and comment rulemaking by the FDA in
accordance with the Administrative Procedure Act. The Agency is
examining available information on potential risks of allergic
responses to NRL from used in latex gloves worn by food service workers
to determine whether there is sufficient information to propose a
regulatory action. If FDA finds that there is a sound scientific basis
for concluding that natural rubber latex is not a safe food additive,
the Agency could propose to amend or repeal 21 CFR 177.2600, in whole
or in part. Such Agency action would make a revision of the Food Code,
to accomplish the purpose of eliminating exposure to latex from food
handling, unnecessary.
The Conference for Food Protection provides a forum for government,
FDA, the Food Safety and Inspection Service, and the Centers for
Disease Control and Prevention as well as State and local agencies,
territories, and local and tribal nations, consumer, industry and
academia discussion of food safety issues as they relate to the model
Food Code. The Conference's Assembly of Delegates, through the
Conference's formal process, may recommend that FDA further revise the
model Food Code based on its findings regarding latex food service
gloves or in response to regulatory changes. This formal process
assures that all parties having a stake in setting food safety
standards are heard, before changes are made that may have a broad
impact. Revisions to the Food Code are accomplished through the
Conference for Food Protection, which recommends Food Code changes to
FDA. In 1999, a caution was added to the Food Code stating that NRL
gloves have been reported to cause allergic reactions in individuals
who wear latex gloves and even in individuals eating food prepared by
employees wearing latex gloves.
seafood haccp
Question. What has FDA done in the past year to further improve
industry-wide compliance with the seafood HACCP regulation?
Answer. In 2001, FDA increased inspectional emphasis on the control
of pathogens by processors of cooked, ready to eat seafood and smoked
seafood, and on the control of scombrotoxin by processors of scombroid
species. This action was taken because these areas represent the most
urgent public health issues identified in the evaluation for the
previous years. This mid-course correction included multiple
inspections of processors of these types of products when the
inspectional history of the firm documented significant noncompliance
with the regulation. Significant improvement was detected in 2001 in
the cooked, ready to eat segment. However, further problems were
uncovered in the breaded seafood segment. As a result, that segment was
added for priority coverage in 2002.
Additionally, FDA published the third edition of its Fish and
Fishery Products Hazards and Controls Guidance in June 2001. This
guidance provides up-to-date information on the hazards that affect
seafood and recommends preventive measures to reduce the risk of their
occurrence. The latest edition includes significant new information on
the control of scombrotoxin, which FDA anticipates will facilitate
compliance by the industry in that area. A satellite training course
was held in December 2001 to familiarize Federal and State regulators,
academia, and the seafood industry with the changes in the guidance and
to discuss continuing areas of concern, especially related to
scombrotoxin and pathogen control.
Question. What percentage of seafood firms have HACCP plans and are
adequately implementing them?
Answer. In fiscal year 2001, 88 percent of seafood establishments
had a HACCP plan or did not need one because no hazards were reasonably
likely to occur. Approximately 85 percent of the establishments
inspected in fiscal year 2001 were in substantial compliance with the
Seafood HACCP Regulation; that is, as a result of inspection, these
establishments were classified as either ``no action indicated,'' NAI,
or voluntary action indicated, VAI. A firm classified as NAI has
essentially no significant deficiencies; a firm classified as VAI has
one or more deficiencies, but they are not an imminent public health
threat and the firm is making satisfactory progress in correcting them.
Overall, significant progress continues to be made in reducing the
number and types of deficiencies, as indicated by fewer VAI
classifications and more NAI classifications.
Question. How frequently does FDA currently inspect domestic
seafood firms?
Answer. The Seafood HACCP program was accompanied by a significant
increase in the frequency of government--that is, FDA or State
regulatory agencies under contract with FDA or in partnership with
FDA--inspections of U.S. processors from an average of once every 4
years to approximately once every year. In fiscal year 2001, 85 percent
of the seafood establishment inventory was inspected by either FDA or
by State inspectors on our behalf, including virtually all seafood
firms who process seafood products classified as high risk. In
addition, raw molluscan seafood processors are inspected every year by
State regulatory agencies under a cooperative Federal-Ftate program.
Question. Does FDA plan to develop baseline data and performance
standards for seafood HACCP systems? How and when will this be
implemented?
Answer. This question addresses the issue of how the seafood HACCP
system should best be evaluated, and the extent to which evaluation
should focus on numerically based criteria, such as numbers of
illnesses or amounts of contaminants either present or absent. These
are questions that FDA continues to examine.
It is well known that reductions in illness are often not always
easily measured due to under reporting of illnesses, the skewing of
reported illnesses toward those that are easily diagnosable, and
similar factors. FDA is interested in determining whether illness
reduction could, at some point, serve as a direct indicator of program
success, but doing so has not been regarded as feasible so far.
Consequently, FDA has evaluated its program by measuring the extent to
which industry has adopted HACCP-based controls. It is reasonable to
conclude that processors that are effectively implementing adequate
HACCP plans are controlling seafood-related hazards. This is because
the cornerstone of the seafood HACCP program is hazard prevention
through the application of controls that are scientifically known to
work. For example, where it is known through scientific analysis that a
cooking step at a certain temperature and duration during commercial
processing will kill all pathogens, a valid indicator of public health
prevention is whether the processor's cooking step achieved that
temperature and duration. FDA has data about the application of
preventive controls before initiation of the HACCP program, and has
used that data as a baseline for measuring progress.
Another possibility for evaluation involves measurement of
contaminant levels, either on a firm-by-firm basis, or industry-wide,
or both. FDA is in the process of significantly increasing its sampling
as an adjunct to its HACCP-based inspections and is studying whether
and how program evaluations could take advantage of these kinds of
data. There are a number of issues that the Agency must take into
account. For example, in searching for an appropriate numerical
performance standard for seafood based on contaminant levels, it is
important to recognize that seafood is subject to many potential
hazards but suffers from no single pressing problem. In this respect,
seafood is fundamentally different from meat and poultry. Selecting a
single numerical measure under such circumstances would be of limited
value because, for example, monitoring fishery products for the
presence of a pathogen would provide no indication of how other hazards
are being controlled. Also, the frequency and occurrence of pathogens,
such as salmonella, tends to be low, partly because fish are cold-
blooded. This fact was confirmed in a baseline study FDA conducted on
salmonella in seafood. Nonetheless, the Agency is examining whether
several numerical indicators that are directed toward the most
significant hazards would be both feasible and appropriate as
indicators of program progress.
food safety
Question. If not, how will FDA ensure that establishments have
HACCP systems that are adequately identifying and controlling food
safety hazards?
Answer. FDA has evaluated its program by measuring the extent to
which industry has adopted HACCP-based controls. It is reasonable to
conclude that processors that are effectively implementing adequate
HACCP plans are controlling seafood-related hazards. This is because
the cornerstone of the seafood HACCP program is hazard prevention
through the application of controls that are scientifically known to
work. For example, where it is known through scientific analysis that a
cooking step at a certain temperature and duration during commercial
processing will kill all pathogens, a valid indicator of public health
prevention is whether the processor's cooking step achieved that
temperature and duration. FDA has data about the application of
preventive controls before initiation of the HACCP program, and has
used that data as a baseline for measuring progress.
Question. How does FDA plan to spend its fiscal year 2002
supplemental to better protect the food supply?
Answer. The Agency has developed a Food Counter Terrorism Plan
focusing on three strategies--Deterrence, Surveillance and Threat
Assessment, and Containment Through Rapid Response--to achieve the goal
of protecting the food supply. FDA's plan to better protect the food
supply will be executed on both the import and domestic fronts.
As part of its deterrence strategy, FDA's goal is to provide a
greater import presence than we have been able to provide in the past.
An increased presence can enhance our capacity and capability to
perform our normal import operations such as sample collection and
analysis, field examinations, inspections and will provide a deterrent
effect.
Our first priority is to perform more of these basic operations,
particularly import field examinations and sample analyses, which are
critical in detecting problems in the products we regulate. In
addition, we have emphasized those types of examinations that will
increase the likelihood of detecting intentional acts of potential
terrorism, such as looking for inconsistencies between shipping
documents and the physical product, evidence of tampering,
substitution, or counterfeiting, or suspicious or damaged merchandise.
Not including the new counter-terrorism efforts, much of the additional
basic operations work will be similar to our already designed workplan
assignments. It will include data integrity checks through filer
evaluations and entry review where aspects of the data being reviewed
are checked against existing information within the Agency.
Additional samples will be collected with the additional resources
that have been allocated towards counter-terrorism measures. Analyses
will be performed to detect toxins, poisons and microorganisms. As
additional screening methods are developed in our labs and other labs,
a greater array of analyses can be applied to samples collected. For
example, FDA's Forensic Chemistry Center plans to adapt an FDA toxin
screening method for application as a surveillance tool.
Physical checks of samples will be increased with a greater
presence at the borders. Exams will focus on evidence of manipulation
of shipments, verification against declaration, substitution, and out
of the ordinary physical conditions.
During domestic investigations and import filer audits, we will be
working with the regulated industry to ensure its attention to
potential terrorist activities, especially as they relate to raw
material receipt, inventory quarantine procedures, sourcing of foreign
products or ingredients, and vulnerable operations.
In the future, we will increase the level of sophistication that we
employ in our import operations, to include better information, better
examination techniques, and more powerful analytical tools.
Domestically, FDA will execute its deterrence strategy by regularly
inspecting foods and facilities deemed to be a strategic risk.
Additionally, the Agency will be involved in increased communication
and coordination with its stakeholders. It has already met with
consumer groups, the industry and other Federal agencies and held two
50 State conference calls to discuss preventive measures and steps that
can be taken to protect the nation's food supply from a terrorist
attack.
The Surveillance and Vulnerability Assessment strategy will be
supported by FDA's current import and domestic surveillance systems,
that is the Field Accomplishment and Compliance Tracking System, FACTS,
the Operational and Administrative System for Import Support, OASIS,
the Electronic Laboratory Exchange Network, eLEXNET, and the CFSAN
Adverse Event Reporting System, CAERS. These systems must be
strengthened so that a greater percentage of high risk food products
and adverse events associated with their consumption can be assessed
using state-of-the art technology. These systems must be able to
produce timely and pertinent product, company, and country information
that directly influence our decision to allow a food product to enter
the marketplace. FDA's surveillance systems must be closely coordinated
with other agencies, with foreign governments, and with the anti-
terrorist intelligence systems of the Federal intelligence agencies.
FDA must work with its partners to develop profiles of possible or
probable food threats and points of attack. This will permit rapid
response to suspected vulnerabilities.
Lastly, its strategy of Containment Through Rapid Response is an
attempt to develop the processes in place to readily respond to food
contamination. The quicker the Agency can respond to such a threat to
the food supply, the greater chance the Agency has to reduce the number
of injuries, illnesses or death. FDA must have the capacity to quickly
and accurately identify outbreaks that may be happening or about to
occur at any point in the food chain, and take prompt action to
mitigate their effects. Rapid field test methods will be developed to
identify hazards that may have been released by terrorists. The
PulseNet System should be enhanced to quickly apply DNA fingerprinting
over a wider range of biological threats. In the event of an identified
threat, FDA will deploy disaster response teams who can work with other
Federal, State, and local agencies to eliminate or contain the hazard
and reduce public health risks. In addition, FDA will work with HHS and
other government counterparts to ensure that consumers get update
information about risk indicators.
Question. How many new food inspectors will FDA hire with this
money? How many new inspectors have been hired to date?
Answer. FDA will increase the number of investigators and
analytical staff to provide more of a presence at borders, ports,
international mail facilities and courier hubs, as well as enhance our
domestic workforce capabilities. The Agency plans to hire a total of
655 new staff members for its field component. Of these, 635 are
authorized for food safety activities in the field with 600 for the
foods program, and 35 for the animal drugs and feeds program. As of
March 18, 2002, ORA anticipates that when all of the new hires are on
board, over 400 will either be stationed at border locations, or will
be working specifically on imports. Regardless of their physical
location, however, ORA anticipates that all new hires will be trained
in both import and domestic operations. The hires will be made up of
import consumer safety officers, import laboratory analysts, and import
criminal investigators. On the domestic side, the Agency plans to hire
143 domestic consumer safety officers and 49 domestic laboratory
analysts.
Question. When these positions are filled, what percentage of
imports and domestically produced foods will be inspected by FDA? What
percentage of these inspections will be conducted by States?
Answer. Generally, inspection frequencies vary depending on the
products produced and the nature of the establishment. In some of our
compliance programs, however, non-high-risk inspection frequencies are
established by FDA, such as in our Domestic Seafood Program, where the
frequency is every other year after achieving HACCP compliance. In most
of our other programs, instead of frequencies, specific Agency
priorities direct inspection priorities. The priorities may be based on
a firm's compliance history or coverage of new firms that have not been
previously inspected, such as in the Domestic Food Safety Program. FDA
districts would then apply their available level of non-high-risk
resources to cover non high-risk firms according to their priorities in
these programs. On average, with available resources, and including
State inspections, FDA has been inspecting these establishments about
once every 7 years.
Question. Does FDA support mandatory recall authority?
Answer. Current authority contained in 21 CFR parts 7, 107, 806 and
810 provide the means by which FDA can reasonably ensure that products
on the market are safe and effective.
Question. If not, how does FDA deal with instances where companies
refuse to recall a product or do not provide distribution information?
Answer. The answer depends on several factors including which FDA
Center involved, the seriousness of the health hazard involved with the
product defect, and the FDA regulations pertaining to the particular
product. FDA has very few instances in which firm's choose not to
recall a product that FDA considers in violation of the FD&C Act. In
the vast majority of recall situations, FDA regulated industry conducts
recalls voluntarily when it learns of a violative product and recalling
firms usually provide FDA with requested distribution information.
However, if a firm refuses to recall a violative product, FDA does have
some options. I would be happy to provide instances where companies
refuse to recall a product or do not provide distribution information
for the record.
[The information follows:]
instances where companies refuse to recall a product or do not provide
distribution information
FDA does not have the authority to order recalls of foods--except
for infant formula--cosmetics, dietary supplements, and human and
veterinary drugs. There are, however, specific areas where FDA does
have the authority to order a recall, or where the FD&C Act requires a
company to recall if FDA determines the product to be in violation.
The Agency has the authority to require a recall under section 412
of the FD&C Act for infant formula. Section 412 of the FD&C Act
specifies that when FDA determines that an infant formula presents a
risk to human health, a manufacturer must recall infant formula
consistent with recall regulations and guidelines issued by the FDA.
Thus, any recall by industry of such an infant formula would be a
requirement of the Act.
FDA has the authority to order recalls under Section 518 (e) of the
Act for medical devices when the ``Secretary finds that there is a
reasonable probability that a device intended for human use would cause
serious, adverse health consequences or death.'' This requires an
administrative proceeding which may take several to 10 days or more to
implement. This authority has rarely been used. The device industry
usually conducts voluntary recalls when it learns of violative
conditions or they are brought to its attention by FDA. Additionally,
21 CFR Part 806.10, Reports of Corrections and Removals, paragraph
(c)(11) requires all firms conducting removals or corrections of
products meeting the Class I or Class II recall definition to provide
``The names, addresses, and telephone numbers of all domestic and
foreign consignees of the device and dates and number of devices
distributed to each consignee. Based on 806 requirements, it is rare
that appropriate distribution for medical device recalls are not
provided to FDA.
In the case of human or veterinary drugs, should FDA and a firm
enter into a Consent Decree of Permanent Injunction based on failure to
meet Good Manufacturing Practice requirements, the consent decree may
contain a clause which requires the involved firm to conduct a
recall(s) if FDA inspection determines that violative products are on
the market and concludes that a recall is appropriate.
FDA has authority under the Public Health Service Act (PHS Act) to
order the recall of certain biological products (42 U.S.C. 262).
Consequently, if a determination is made that a batch, lot, or other
quantity of a product licensed under the PHS Act presents an imminent
or substantial hazard to the public health, the Secretary has the
authority to issue an order for the immediate recall of such batch,
lot, or other quantity of such product. The Agency has not had to use
this authority to date.
FDA also has the authority to order the recall or destruction of
banked human tissue such as bone, ligaments, tendons, cartilage, skin,
fascia, and corneas intended for transplantation that have been
collected or distributed in violation of regulations. FDA developed
these regulatory requirements under the legal authority of section 361
of the PHS Act (42 U.S.C. 264). The rule is in 21 CFR Part 1270.
For those products for which FDA does not have recall authority,
FDA may use one of several other options for removing a product from
the market, including:
--The Agency may sample and seize the product under court order.
(This option is generally not as good as a recall as it is
difficult to seize all products that may be in the marketplace
and, of course, it doesn't remove products from consumer or
user hands.)
--We may formally request that the firm recall the product(s). This
written request from the Associate Commissioner for Regulatory
Affairs is usually limited to serious health hazard situations.
The request usually contains a statement to the effect that the
FDA is prepared to take appropriate regulatory action should
the firm refuse the request and that the Agency will issue a
press statement alerting the general public about the hazardous
product and the firm's refusal to recall. This written request,
or verbal notice to the firm that FDA is prepared to issue such
a request. usually results in the necessary recall action.
--We may notify and coordinate activities with State health agencies
having jurisdiction over the product in question. On occasion,
State agencies are able to embargo violative products and/or
require recalls.
--In addition to these options, FDA may order recalls in selected
situations.
With respect to the refusal to provide distribution records, the
Agency has less recourse than the options listed for recalls.
Prescription and OTC drug and medical device distribution records are
required to be provided to, or made available for copying, to the FDA.
In addition, for infant formula recalls, manufacturers must provide FDA
under 21 CFR part 107, copies of recall communications with consignees,
distributors, retailers, and member of the public. Generally, FDA
investigators or other FDA district office personnel who interface with
recalling firms are able to convince them that distribution records are
necessary to FDA so that we may conduct audit checks at the firm's
consignees to assess the effectiveness of the recall. If the recalling
firm refuses to provide records, we can ``issue press'' by working with
State agencies to see if they have the authority to obtain the records.
Otherwise, there is little that can be done about such refusals except
to more closely monitor the firm's recall effort by reviewing its
records of notification and product returns as well as any
effectiveness checks that it may have done.
Question. What can FDA do to ensure that a product is fully
recovered when recalled?
Answer. Recalling firms have the responsibility for assuring that
their recall is effective in that the recalled product is actually
pulled off the store shelves and properly disposed of. FDA's role is to
monitor and/or audit the firm's efforts to remove the product from
channels of commerce and oversee proper disposition of the product. FDA
accomplishes this monitoring role through audits. Audits are conducted
by reviewing periodic recall status reports received from the recalling
firm and/or reviewing documentation of the recall operation and its
effectiveness during actual visits to the firm's consignees. In
addition, a manufacturer conducting a mandatory recall in accordance
with 21 CFR 810 is required to provide periodic reports to FDA on the
status of the recall, under 21 CFR 810.16.
Question. What precautions are being taking to ensure the safety of
our food since September 11?
Answer. Since September 2001, FDA has engaged in numerous types of
activities to ensure the safety of the food supply. These activities
range from enhanced and strategically focused import activities to
outreach with industry.
The supplemental funding for food safety has allowed FDA to develop
a Food Counter Terrorism Plan to achieve the goal of protecting the
food supply. FDA's will strengthen current import and domestic
surveillance systems so that a greater percentage of high-risk food
products and adverse events associated with their consumption can be
assessed using state-of-the art technology. Rapid field test methods
will be developed to identify hazards that may have been released by
terrorists. The PulseNet System will be enhanced to quickly apply DNA
fingerprinting over a wider range of biological threats. In the event
of an identified threat, FDA will deploy disaster response teams who
can work with other Federal, State, and local agencies to eliminate or
contain the hazard and reduce public health risks. Consumers will be
informed about risks in the event that an incident occurs.
Generally, FDA's primary goal in import activities is, to the
extent possible, to prevent and deter products from entering into the
U.S. that are adulterated or otherwise unsafe by reason of tampering,
misbranding, substitution, counterfeiting, or contraband. FDA will hire
and deploy 633 field personnel to include investigators for border
locations where FDA receives significant amounts of regulatory
products. To achieve this goal, FDA will seek to increase the
percentage of imported goods that are physically examined or sampled
and increase coordination with other Federal agencies including Customs
and the U.S. Department of Agriculture. FDA will focus this
coordination effort in the areas of enforcement, information and
surveillance of imported products and importers. FDA also will seek to
tighten import review and document management procedures, develop more
rigorous filer evaluation procedures, increase physical port presence
and surveillance, and apply new investigation, inspection and
analytical techniques and technologies as possible.
FDA continues to discuss security issues and the viability of
security devices, including anti-counterfeiting and anti-tampering
devices and technologies, with industry. FDA has also begun exploring
the value of track and trace technologies that industry might be able
to incorporate to increase transparency of the international
distribution chain. We continually encourage our industry partners to
work to combat potential threats by being observant, vigilant, and wise
in their negotiations for the purchase of goods and their receipt of
goods.
FDA has decided to expand an already existing contract with a
university for assistance in establishing, facilitating and documenting
several joint agency industry-working groups. These working groups
would be tasked with evaluating vulnerabilities in a particular
industry, that is foods, drugs or biologic products from the point of
manufacturing or processing, through international commerce and the
border process, into domestic distribution and down to the retail and
consumer level. The working groups would then consider technology
solutions for addressing those vulnerabilities. The vulnerabilities may
be identified as product counterfeiting, product security, product
tampering, weak distribution or supply chain transparency or control,
or container integrity. This will assist FDA's fight against product
counterfeiting or tampering through partnering with representatives
from multiple industry sectors, other Federal agencies, such as
Customs, the U.S. Postal Service, USDA, the Department of
Transportation, and State and foreign governments.
FDA also meets often with regulated firms and their trade
organizations in formal and informal settings. During such meetings,
FDA always stresses the need for security in all phases of company
operations. OCI has established relationships and open lines of
communications with security directors at manufacturing,
transportation, wholesale, and retail firms in several industries.
FDA has conducted a number of training sessions for importers and
brokers. For example, this past January the Northeast Region
coordinated with the American Association of Exporters and Importers in
producing a seminar in Jamaica, N.Y., attended by over 160 importers
and filers. The main topic of this seminar was the security of imported
foods and pharmaceuticals. The draft guidance on food security issued
on January 9, 2002, by CFSAN to the domestic and imported foods
industry was a point of discussion. FDA expects to conduct similar
seminars in other FDA regions throughout this year. FDA districts have
begun to work with various segments of both the import and domestic
industries on the issue of security. Whenever FDA interfaces with
industry on product security matters, we always urge them to notify
their local district offices if they identify a suspect shipment.
In addition to general Agency/Industry interactions on security
issues, FDA's Center for Food Safety and Applied Nutrition, CFSAN, has
been actively engaged with the food industry through more than 80 trade
associations and many individual firms. These meetings have focused on
a systematic approach to assessing risk and what preventive measures
may be implemented from a cost/benefit ratio. The food industry, in
turn, has formed an Alliance for Food Security convening on a weekly
basis to share information and collaborate on effective preventive
measures. The National Food Processors Association hosts the Alliance.
Also, FDA's Center for Veterinary Medicine along with the Animal
Health Institute and the National Renderers Association participated
with the American Feed Industry Association, AFIA, to produce a guide
intended to raise the level of awareness of biosecurity issues facing
animal agriculture. Representatives from those organizations served on
a special biosecurity task force and made significant contributions to
the document's development. The guide, published in November 2001, on
the AFIA website offers a concise set of suggestions covering several
different areas of industry operations. These include, among other
things, facility security, ingredient integrity, product integrity,
distribution, product recall, housekeeping, and personnel.
Question. Is our current food safety system able to adequately
protect consumers? What steps are needed to create a food safety system
that will provide the best protection to consumers?
Answer. The American food supply is among the safest in the world.
Ensuring the safety of the food supply has become increasingly
difficult in the United States. New challenges such as increased
variety of foods grown or produced in distant places, more meals eaten
outside the home, new and more deadly pathogens, and an increasingly
vulnerable population have all contributed to the 76 million foodborne
illnesses each year, resulting in 325,000 hospitalizations and 5,000
deaths. FDA's food safety efforts concentrate on what can be done to
better ensure that consumers have access to a safe and wholesome food
supply and on reducing foodborne illness to the greatest extent
possible.
The foundation of any successful food safety system must be built
on strong science. FDA must keep pace by learning more about foodborne
diseases and their causes, and by developing new scientific methods for
detecting and preventing foodborne hazards. A strong science base is a
prerequisite to meeting these food safety challenges and to maintaining
our leadership role both nationally and in the new global economy.
To gain a better understanding of foodborne disease, we must be
able to monitor not only human illness that has occurred but also the
human food and animal feed supply to identify new and emerging risks to
public health. New types of foods, evolving foodborne hazards, changing
eating habits, new production technologies, and increased trade between
all countries make this a challenging task.
The most significant reduction in foodborne illness will be
achieved through the development and implementation of successful
prevention programs. FDA has made important progress on establishing
prevention standards for some product categories, including seafood and
juice. However, additional standards are needed to prevent
contamination of all human foods and animal feeds over the farm-to-
table continuum whether such foods are produced domestically or abroad.
As FDA develops new prevention programs, vigorous education and
training are needed to make them work. Providing information on safe
food handling practices across the farm-to-table continuum lies at the
core of an effective food safety system.
A food safety system that will provide the best protection to
consumers must also inspect and monitor the food industry to ensure
application of appropriate preventative controls and must ensure that
imported foods meet the same level of consumer protection as domestic
foods. The safety of imported foods is ensured through inspections and
sampling at the border. Such inspections need to be complemented by an
enforcement program when needed.
Finally, a food safety system needs to have tools for measuring
progress in reducing foodborne illness so that strategies can be
modified, as needed.
With all of these steps in place, the result will be a stronger and
more credible food safety system that minimizes foodborne illness and
injury and maximizes consumer confidence.
Question. Does FDA support efforts to modernize food safety
statutes?
Answer. FDA welcomes efforts to modernize food safety statutes and
encourages dialogue on suggested modifications to them. For example,
the Administration recently submitted a bill addressing bioterrorism
involving foods that would provide FDA with significant new
authorities.
Question. What should be done to create a single voice on food
safety in the U.S., as recommended by the National Academy of Sciences?
Answer. The current food safety system is having real and
measurable positive effects. Through a surveillance system called
FoodNet, CDC has documented reductions in foodborne illness for a
number of important food pathogens.
The current system would benefit from being updated by regulatory
fixes and full funding of the President's Budget. Statutes are in need
of being modernized and resource shortfalls need to be addressed. The
statutes do not adequately recognize the need to assess risks
associated with foods, to put into place controls to prevent food
contamination, to allocate resources based on risk, and to measure
results. In addition, GAO issued a report in February 2001 that
identified the significant disparity between food safety resources and
FDA's food safety responsibilities.
dietary supplements
Question. What is the current FDA time line for release of Good
Manufacturing Practices (GMPs) for dietary supplements?
Answer. FDA's goal is to publish the proposed Current Good
Manufacturing Practices, CGMPs, for dietary supplements by the end of
fiscal year 2002.
Question. Will these GMPs incorporate elements from existing food
and drug GMP regulations or will they be based on food GMPs alone? What
is the rationale for this decision?
Answer. The statute lays out the framework for dietary supplement
Current Good Manufacturing Practices, CGMPs, and we are working within
that framework. The proposed CGMP regulation for dietary supplements
should provide the proper balance of regulation for the unique
properties of dietary ingredients and dietary supplements, including
vitamins, minerals, and botanicals, and should ensure that products,
whether manufactured as tablets, capsules, powders or liquids, have the
identity, purity, quality, strength, and composition that the
manufacturer intends.
Question. Would you agree that if a claim is made for a supplement
that it acts like, for instance, an anti-depressant, it would be more
appropriate to regulate it similar to other pharmaceutical products
that make such claims?
Answer. As discussed in the preamble to FDA's January 6, 2000 final
rule on structure or function claims, the Dietary Supplement Health and
Education Act of 1994, DSHEA, did not alter the legal treatment of
dietary supplement claims related to disease. Section 403(r)(6) of the
Federal Food, Drug, and Cosmetic Act added by DSHEA, specifically
provides that statements permitted to be made for dietary supplements
under that section may not claim to diagnose, mitigate, treat, cure, or
prevent a specific disease or class of diseases. Clearly, when a
product is claimed to be a member of a category of drugs intended to
treat a disease, the product is implicitly being represented to treat
the disease. Accordingly, when a dietary supplement is claimed to be a
member of a class of drugs intended to treat disease or a substitute
for such a drug, the dietary supplement meets the definition of a drug
and is subject to regulation as a drug.
Moreover, as also described in the January 6, 2000 preamble, there
are sound public health reasons that we should insist that such
products be regulated as drugs. While FDA believes that dietary
supplements have potential benefits for consumers, those labeled with
unproven disease claims, meaning those that have not met the
requirements of health claim authorization, new drug approval, or an
over-the-counter drug monograph, can pose serious risks. Such claims
may encourage consumers to self-treat for serious diseases without
benefit of medical diagnosis and may cause consumers to substitute
potentially ineffective products for proven ones, thus foregoing or
delaying effective treatment. Consumers may rely on disease prevention
claims and feel sufficiently protected from developing serious diseases
that they delay or forego regular screenings and thereby forfeit the
opportunity for early medical treatment that may be critical to
survival. And finally, using dietary supplements to treat disease may
increase the risk of adverse reactions due to the interaction of the
dietary supplement with other compounds a consumer is taking for that
disease or for other conditions.
Question. Without GMPs, how does a consumer know that the
supplements they are taking are uncontaminated? (Attached is a recent
report on contaminated supplements, also recent press on Olympic
athletes and supposed supplement contamination with hormones leading to
disqualification.)
Answer. Dietary Supplement Current Good Manufacturing Practice,
CGMP, are a useful tool for both the industry and FDA. Such would
provide a road map for the industry to help assure the purity and
consistency of dietary supplement products. CGMPs are also, an
important regulatory tool for consumer protection.
Question. Given that our Olympic athletes have exposure to the best
medical care, health and nutrition information, and yet they have been
exposed to potentially harmful supplements unknowingly, how is the
average US citizen to know what is actually in the supplements they are
using?
Answer. The law requires that manufacturers correctly label their
products' contents. The Dietary Supplement Current Good Manufacturing
Practices proposed rule we are developing would propose manufacturing
practices that would ensure consistency between what is on the label
and what is in the product.
Question. We have a system for reporting adverse events caused by
other FDA regulated products such as medical devices, drugs or
biologics. Last year, additional funding was appropriated to improve
the system of adverse event reporting for dietary supplements (as
current estimates suggest that FDA is notified of fewer than 1 percent
of supplement-related adverse events). What is the current status of
that system? How does FDA plan to make consumers and healthcare
professionals more aware of/more likely to use the AER system?
Answer. The first phase of FDA's Centralized Adverse Event
Reporting System, CAERS, is about one-half completed. CAERS is
currently undergoing user acceptance testing, training, and some
technological improvements.
In September 2001, FDA implemented a cooperative agreement with the
National Center for Natural Products Research, NCNPR. This agreement
between FDA and NCNPR created a partnership that allows for more
efficient use of resources to identify and analyze specific components
in botanical dietary ingredients, thereby enhancing overall public
health by ensuring that dietary supplements are safe and their labeling
is not misleading.
The NCNPR cooperative agreement for fiscal year 2001 was awarded on
September 28, 2001. Since the total Project Period is 5 years, the
additional 4 years of funding up to $1 million per year will depend
upon acceptable performance and the availability of future fiscal year
funding. In accordance with the procedures for supplementing
cooperative agreements, FDA must announce its intent, through a Request
for Application, RFA, to increase funding up to an additional $1
million to the NCNPR cooperative agreement in the Federal Register.
Once announced, NCNPR must submit a grant application to demonstrate
how it will meet the objectives of the RFA. The application will go
through a dual review process and FDA anticipates completing this
process and awarding the money to NCNPR in September 2002.
To date, the awarded monies from fiscal year 2001 have been used to
collect a number of authenticated botanical species for chemical
profiling and characterization. The species include ephedrine alkaloid-
containing species, for example ephedra, ma huang, aristolochic acid-
containing botanicals, comfrey, germander, and blue and black cohosh.
The NCNPR scientists are collaborating with FDA scientists to ensure
usefulness for evaluating potential safety issues and to coordinate
related FDA and NCNPR research activities. In this regard, FDA and
NCNPR scientists have jointly presented results of their scientific
collaborations at a professional meeting and are currently preparing
co-authored scientific manuscripts for publication in peer-reviewed
journals. The NCNPR is also completing plans for a scientific workshop
on authenticating botanical ingredients for use in dietary supplements.
The workshop will be held in August 2002, and will provide a basis for
scientists from academia, government and industry to discuss the
scientific issues involved in the authentication of botanical
ingredients. The issues discussed in this workshop will have broad
relevance for research, manufacturing and regulatory applications.
Question. Would the agency support a requirement that manufacturers
of dietary supplements report all adverse events known by the
manufacturer to the agency?
Answer. In April 2001, the Office of the Inspector General of the
Department of Health and Human Services issued a comprehensive report
on FDA's Adverse Event Reporting System for dietary supplements. The
report included a recommendation that such reporting be mandatory for
dietary supplement manufacturers. As stated in FDA's response to that
report, the DSHEA is silent on the subject of Adverse Event Reporting,
and FDA is evaluating whether or not such reporting could be required
under current law.
Question. How does FDA plan to make consumers and healthcare
professionals more aware of the potential risks of dietary supplements
(information contained within its AER system)?
Answer. When fully implemented, CAERS will provide information to
FDA on emerging potential hazards associated with dietary supplements,
food and food additives, and cosmetics. When the review of adverse
event reports identifies an association with a product, FDA will inform
the public using traditional tools including consumer advisories, press
releases, talk papers, MedWatch Safety Alerts, and letters to health
care professionals.
Question. FDA has purchased adverse event information from the
association of poison control centers in the past. What are FDA's plans
to purchase this information in the near future? How much money has
been requested in the FDA budget for this purpose?
Answer. In the past, FDA has purchased adverse event information
from the Association of Poison Control Centers for dietary supplements
that contain Kava, ephedrine alkaloids and gamma butyrolactone, or GBL.
FDA will continue to purchase such data on an as needed basis. No
additional funds for this particular purpose have been requested in
FDA's fiscal year 2003 budget.
Question. What other authorities or resources does FDA need to
ensure the safety of dietary supplements?
Answer. In January 2000, FDA published an overall Dietary
Supplement Strategic Plan. This plan incorporates substantial
stakeholder input and provides a road map to fully implement DSHEA. It
is a science-based regulatory program that will provide assurances for
safety, composition, and labeling of dietary supplements. The Plan
addresses activities that focus on safety, labeling, boundary issues,
enforcement, developing a science base, and outreach. In response to a
request from Congress, the Agency is developing a report to Congress on
the estimated cost to implement the Strategic Plan.
In the case of the current Administration, should there be
legislative proposals that are relevant to ensuring the safety of
dietary supplements or related topics, they would be submitted through
the appropriate and prescribed legislative channels.
Question. Other countries have seen instances of harm from dietary
supplements such as Kava. Under the current law, is the FDA able to
take action once another country has determined a supplement is
dangerous?
Answer. I do not believe that action by another country will
generally be enough to provide the sole basis for action by FDA.
Clearly, when another country takes action, we should be concerned and
carefully examine the reasons that country took the actions that it
did. But, we need to look at the underlying scientific and medical
evidence for the other country's action to determine what action, if
any, is appropriate under our regulatory framework.
Question. Do you think that we should always have to wait until
Americans are harmed before the FDA acts?
Answer. FDA uses data from many sources in order to address issues
related to dietary supplement safety, including published literature,
human studies--where available--conducted in vitro and in a variety of
animal species, as well as information gleaned from adverse event
reports. The Dietary Supplement Health and Education Act, DSHEA gives
FDA authority to take action against dietary supplements that are
adulterated because, for example, they present a significant or
unreasonable risk of illness or injury. FDA will continue to seek, to
the extent that resources allow, the best and most appropriate
approaches to detecting and establishing significant or unreasonable
risk of dietary supplement products.
Question. How many adverse events relating to ephedra use has the
FDA received?
Answer. Between 1993 and March 2002, FDA has received approximately
1700 complaints of illnesses and injuries reportedly associated with
the use of ephedrine alkaloid-containing dietary supplements.
Question. How many more American's need to be harmed before the
agency moves to remove ephedra from the market?
Answer. The number of adverse reports received associated with the
use of ephedra is not the determining factor, but rather the overall
quality of available clinical data and other information addressing the
safety of the product.
Question. Why has FDA not yet taken action alerting consumers to
the dangers of ephedra- or Kava-containing supplements?
Answer. On March 25, 2002, FDA issued an advisory informing
consumers of the potential risk of severe liver injury associated with
the use of kava-containing dietary supplements.
With respect to ephedra-containing dietary supplements, over the
past 7 years, FDA has issued several press statements related to the
potential adverse health effects associated with the use of these
products. For example, in September 1994, FDA issued a medical bulletin
concerning adverse events associated with the use of ephedra and other
botanical dietary supplements. In February 1995, FDA warned consumers
against the use of a specific ephedrine alkaloid containing dietary
supplement, Nature's Nutrition Formula One. In April 1996, FDA issued a
statement warning consumers about the hazards associated with street
drug alternatives containing ephedrine alkaloids. In March 2000, FDA
announced in a talk paper the availability of documents related to
dietary supplements containing ephedrine alkaloids, including
information concerning adverse event reports associated with the use of
these products.
In conjunction with the Agency's ongoing effort to assess the
safety of these products, the United States Public Health Service
sponsored a public meeting designed to seek information on the safety
of dietary supplements containing ephedrine alkaloids in August 2000.
The meeting did not result in the resolution of the safety questions
surrounding the use of these products. Concerning future action, the
Agency has received a citizen's petition which requests, among other
things, that FDA issue an advisory to consumers advising them to stop
the use of ephedrine alkaloid containing dietary supplements due to the
established risk of injury. The petition is presently under review.
Question. Does FDA have plans to require St. John's Wort-containing
supplements to include warnings on the label regarding potential drug
interactions with St. Johns' Wort?
Answer. The use of warning statements on the label of St. John's
Wort--containing supplements is the subject of a petition currently
before the FDA. We are evaluating the information submitted in the
petition, other relevant scientific information, and current statutory
provisions, to determine what actions are warranted to ensure that St.
John's Wort as well as other dietary supplements are labeled in a
manner that adequately informs the consumer about the safe use of the
product.
______
Questions Submitted by Senator Tim Johnson
office of generic drugs
Question. I would like to address a few issues related to the
Generic Drug Program at the Office of Generic Drugs. Many South
Dakotans and others across the country concerned about access to
affordable and safe prescription drugs, and FDA's Office of Generic
Drugs (OGD) is charged with the responsibility of approving and
marketing new generic drugs as patents on brand-name drugs expire.
However, I believe more should be done to make health care providers,
managed care organizations, health insurers and consumer organizations
better informed and educated on the approval of generic drugs as
therapeutic equivalents to brand name pharmaceuticals. Lack of
knowledge and awareness about generic drugs reduces the likelihood that
these groups will recommend or use generic drugs when they are
available as a substitute to brand pharmaceutical products. In fact,
studies have indicated that a 1 percent increase in the use of generic
drugs will result in over $1 billion in savings to consumers and health
care providers. Last year, I inquired about the Office of Generic Drugs
implementing a consumer education program designed to increase the
awareness and safety of FDA approved generic drugs.
The FDA's fiscal year 2002 budget included funding for an education
campaign. Therefore, can you update me on the status of that education
campaign, and furthermore, if provided with additional funding, how
would that campaign be expanded?
Answer. The work for fiscal year 2002 is building upon plans
established in fiscal year 2001 to develop a standard message for the
public. Plans are in motion for physician focus groups to determine
attitudes and knowledge gaps about generic drug products in that
community. Based upon that information, continuing medical education
programs will be developed. Pharmacy continuing education is also
planned in coordination with the Association of the State Boards of
Pharmacy.
Standard messages for the public will appear in such media as print
ads, radio public service announcements and convention exhibit booths.
The material will also be distributed nation wide. Some of the
professional education will involve staff travel to professional
organizational meetings to present information on the generic drug
approval process that assures the quality of the drug products. Experts
in the field will also be contracted to provide educational information
on the topics.
direct-to-consumer advertising
Question. In relation to the FDA's enforcement and review of
direct-to-consumer (DTC) advertising, I have become increasingly
concerned over the increase of promotional consumer advertising and
healthcare professional promotion. I understand that FDA's Division of
Drug Marketing, Advertising and Communications is currently going
through a reorganization and hiring of additional DTC reviewers and
regulatory counsel.
In this effort, I would encourage the FDA to continue it's
vigilance in closely monitoring DTC advertising and, at this time,
would welcome any further information as to what the agency's on-going
review plan entails?
Answer. In 2001, the FDA reviewed about 130 proposed direct-to-
consumer, DTC, broadcast advertisements and about 250 DTC broadcast
advertisements that aired on television. FDA receives over 32,000
promotional pieces annually, of which approximately 5,000 are DTC
materials, including, magazine advertisements, patient brochures, and
mailers.
Since 1997, FDA's Division of Drug Marketing, Advertising, and
Communications, DDMAC has been in the process of hiring staff to fill
additional positions for a total of 39 staff members. Of the 39 staff
members, 20 will be primary reviewers and 5 will be secondary
reviewers. These reviewers are responsible for both professional and
DTC promotional material reviews. DDMAC applies a team approach to the
review of promotional material. A team comprised of the primary
reviewer, consumer promotional analyst, social scientists, and branch
chief completes the review of DTC broadcast advertisements. The team
ensures that the advertisements are accurate, balanced, and presented
in language that is easily understood by consumers. The most common
objections that DDMAC raises in DTC broadcast advertisements involve
inadequate communication of risk information, overstatement of
effectiveness, and implication of use for patients beyond the indicated
patient population.
In issuing both the draft and the final broadcast advertisement
guidance, FDA stated its intent to assess the impact of the guidance,
and of DTC promotion in general on the public health. As a part of this
assessment, FDA is currently conducting a repeat survey of patients, as
well as a survey of physicians. FDA intends to carefully examine all
available data in determining whether additional measures should be
taken to help ensure that the public health is protected.
In April 2001, FDA issued draft guidance on the required risk
disclosure for consumer-directed print advertisements. The guidance is
intended to improve the usefulness of risk disclosure associated with
DTC print advertisements. The guidance indicates that FDA does not
intend to object to the use of certain FDA-approved patient labeling,
written to be understandable to patients, as a ``brief summary'' for
DTC print advertisements. It is a focused guidance that does not
address all aspects of DTC advertising. FDA is also evaluating the
need, if any, to revise current regulations in light of DTC
advertising.
fda review times for medical devices
Question. I remain concerned with the current premarket review
times for medical devices at the Center for Devices and Radiological
Health (CDRH). It is my understanding that the average review time for
medical device premarket reviews is currently 411 days, wherein the
statutory review deadline is 180 days. It is my hope that FDA will
address its mission of ensuring timely patient access to safe and
effective medical technology.
However, I would like to find out why the current medical device
review times are over 400 days, and if additional resources are needed
to address this deficiency?
Answer. At this time, FDA is unable to provide the Committee with a
thorough and comprehensive review of resource estimates needed to meet
the statutory deadlines for all categories of medical device
applications. Device technology advances and global impact will
continue to effect review performance. In addition, submissions are
becoming increasingly more complex, which also contributes to review
performance. FDA received an increase of $1.5 million and 7 FTE in
fiscal year 2002, which will help us to meet some of our regulatory
responsibilities with respect to this program but not all. A recent
Inspector General report stated that FDA currently inspects
approximately 3.5 percent of the clinical investigators that are
conducting studies in a given year.
mad cow disease
Question. Last year, I met with the Director of FDA's Center for
Veterinary Medicine to discuss the efficacy of a 1997 rule that U.S.
rendering plants and feed mills end the mixing of animal protein in
manufactured ruminant feed, and that feed mills apply cautionary labels
on feed products with ingredients that may contain ``non-approved''
mammalian protein. This ban is critical to the ongoing success this
nation has had in preventing the outbreak of bovine spongiform
encephalopathy (BSE or mad cow disease).
Answer. As of March 11, 2002, 94 percent of all feed mills and
renderers that handle prohibited material were determined to be in
compliance with the Ruminant Feed Ban rule. Many feed mills and
renderers have ceased handling prohibited material as a direct result
of the Ruminant Feed Ban rule.
The Agency is in the process of inspecting all renderers and feed
mills handling prohibited material on an annual basis, regardless of
previous inspectional findings. Further, the Agency is closely
examining the non-compliant firms, noted above. Enforcement measures
are being considered for the renderers and feed mills found to have
significant violations of the BSE regulations. These enforcement
measures include seizure, injunction or prosecution. Additionally, the
Agency is working closely with State feed control officials to develop
additional approaches to obtain compliance with the ruminant feed ban.
______
Questions Submitted by Senator Thad Cochran
import inspections
Question. As I recall, when FDA testified before this Committee
last year, less than 1 percent of all entries offered for import into
the United States were being examined.
What level of physical inspection of imports do you expect to
achieve in fiscal year 2002 with the supplemental funds FDA received to
enhance its import inspection capabilities?
Answer. FDA classifies import coverage as a combination of import
field examinations and import laboratory analyses, which are both
physical evaluations of the product offered for entry. Import coverage
is the sum of these two activities as a percent of the number of line
entries. Import field exams are physical examinations performed at the
entry point. In fiscal year 2001, FDA performed about 12,000 food
import field exams and analyzed nearly 15,000 import samples. So for
fiscal year 2001, the Agency conducted physical examinations on 0.6
percent of the foods offered for import into this country of the total
line entries of 4.6 million. In fiscal year 2002, we will begin to see
real gains in our import coverage because of the increased funding. The
counter-terrorism funding will permit the field to double the number of
import field examinations and increase the number of samples analyzed
by nearly 50 percent in fiscal year 2002. Even with the number of food
import line entries increasing to 5.1 million, an increase of 10
percent, we will increase the coverage to 0.9 percent. In fiscal year
2003, when the new investigators are more fully trained and the number
of food imports is expected to increase to 5.4 million line entries,
the number of import field exams will increase to 48,000. Import
coverage will then increase to approximately 1.3 percent of the total
food entries.
Question. What do you consider to be the optimal level, in terms of
the percentage of imports that should be physically examined to
maintain a proper level of deterrence and surveillance? What additional
funding would be needed in each future fiscal year to reach this level?
Answer. FDA is thankful for the additional funding we received for
the inspection of domestic firms and for inspections of imported foods.
FDA did provide some preliminary information last year on funding
needed in both areas. However, the Agency has not conducted the
analysis necessary to develop long-range estimates for resource
increases of this magnitude and FTE needs in these areas. Additionally,
until such time as the Agency has realized the full potential of the
funding and personnel received with fiscal year 2002 for counter
terrorism we will be struggling to carry out such an analysis. Also,
the question suggests what is an optimal level of inspections in these
two areas. Due to constantly changing environments of operation, for
example, counter-terrorism and BSE, our domestic inspection and import
strategy cannot be defined in terms of a percentage of coverage through
inspections, physical examinations and sample analyses. It needs to be
a flexible blend of the use of people, technology, information and
partnerships to protect Americans from unsafe imported products.
The long term solution to a higher level of confidence in the
security and safety of food products lies in information technology
that will merge information on products, producers and intelligence on
anticipated risks to target the products for physical and laboratory
examination. It relies on data integrity activities that reduce the
opportunity for products to be incorrectly identified at ports. It
relies on cooperation from producers so that FDA can identify sources
that are unlikely to need physical testing. Even with such targeting,
improvements are limited by the available methodologies for assessing
threat agents and our ability to predict which tests ought to be used.
The relentless growth in the volume of domestic as well as imported
food products, which are increasingly in ready for consumer sale
packaging, means that FDA is unlikely to have budget increases to keep
pace. Food imports are now growing at 10 percent per year.
Historically, FDA import resource budgets have not kept pace. FDA needs
to use all the potential tools available to improve confidence in food
security and safety.
In short, while we are ramping up our food inspections, we need to
inspect smarter, not just more. That is why FDA is making significant
investments in technology and information resources. We are using funds
to work to further improve targeting and using force multipliers such
as IT.
application review performance
Question. In which product areas do there continue to be gaps in
application review performance versus statutory requirements? What is
FDA's plan for closing these gaps?
Answer. I would be happy to provide statutory requirement
information for the record. I would like to point out, however, that
the most current data is taken from our fiscal year 2001 Performance
Report to Congress. It reflects actions as of September 30, 2001. At
that time, action was still pending upon most of the applications
submitted in fiscal year 2001. More meaningful data on the fiscal year
2001 cohort of applications will be available next year.
[The information follows:]
medical devices
Question. I understand that 10 percent of all devices requiring
510(k) clearance are actually reviewed by the Center for Biologics
Evaluation and Research (CBER), and a significant number of devices
that are designated as combination products require CBER to consult
back to the Center for Devices and Radiological Health (CDRH). I
further understand that devices that require reviews or consults by
CBER are often subject to substantial delays. What can be done to
reduce the delays encountered by devices that require a CBER review or
consult?
Answer. It is difficult to compare review times for CDRH, and CBER
because of the complexity of the devices reviewed in CBER.
Approximately half of the 510(k)s submitted to CBER contain clinical
data whereas approximately 8 percent of the CDRH 510(k)s include such
data. In addition, in discussions with representatives of the device
industry, the methods for calculations of our review times, backlog,
and cycles last year were called into question. We are committed to
work with industry to determine the methods of analysis to parallel
their methods and to ensure that CBER's device review performance
statistics are developed in the same manner as CDRH's. We have taken
some positive steps to address this, but have not formalized those
steps in standard operating procedures. It should be noted that the
blood screening test kits are regulated as licensed biologics and these
follow the timelines and managed review standards that we use for all
licensed biologics. We meet these timelines.
Blood safety and availability are considered to be one of the
highest priorities of FDA and the Department of Health and Human
Services, DHHS. CBER's approach to regulation of blood encompasses
related tests because of the interrelation of testing and blood safety.
Performance of these tests is part of product manufacturing. CBER's
jurisdiction over in vitro diagnostic devices used to screen blood
donors is intended to promote a consistent and efficient overall
approach to blood regulation since testing is an integral part of blood
safety. The quality and safety of the blood product cannot be
determined independent of the performance characteristics of the tests
and the characteristics of screening tests suitable for use in the
blood bank setting may differ substantially from medical diagnostics in
general. For example, donor-screening tests for AIDS and hepatitis must
maintain sensitivity and specificity higher than in a diagnostic
setting since in a donor setting, test errors cannot be mitigated by
medical judgments. Also, blood-related screening tests must be designed
for automation in handling, high throughput and non-subjective readouts
compatible with the level of technician training that exists in blood
establishments.
CBER employs the licensing authorities of the Public Health Service
Act, the PHS Act, to approve recommended blood screening tests used to
ensure blood safety. Licensing of blood donor screening tests antedates
the Device Amendments of 1976. Application of the licensing provisions
of the PHS Act provides FDA with the ability to ensure the safest
possible blood products through requirements for manufacturing of the
blood screening tests under stringent current good manufacturing
practices, or CGMP's; controlled clinical studies to validate
performance of the tests; and lot-by-lot release to assure potency of
manufactured kit lots.
Question. The report titled Science at Work in CDRH: A Report on
the Role of Science in the Regulatory Process expresses concern
regarding whether CDRH has appropriate in-house expertise to assess the
technologies that will come before the agency in the form of future,
breakthrough medical device products. What options are being considered
that will help the Center for Devices and Radiological Health (CDRH)
access the necessary expertise to review these future breakthrough
products?
Answer. CDRH agrees with the Science Board's recommendation that we
need to enhance our ability to review the breakthrough technology
devices. We will employ various strategies including leveraging the
available expertise from other Centers within FDA, other agencies,
panel members, and outside experts; utilizing outside expertise via
contracts and consultants; and hiring additional personnel with
specialized experience.
prescription drug user fee act (pdufa)
Question. The user fee program for prescription drug review (PDUFA)
must be reauthorized this year. What are the agency's primary concerns
in negotiating the next phase of PDUFA?
Answer. We have three major concerns which are to assure the
continuation of resources for the program in fiscal year 2003 and
beyond without interruption; assure that the level of resources
provided from fees must be substantially increased if the Agency is to
be able to continue to meet the challenging goals agreed to in PDUFA
II, and, to include the risk management of new drugs within the set of
activities that are supported by user fees under PDUFA III. We believe
that the proposal that the Administration has sent to Congress
satisfies all of these concerns.
Question. Dr. Crawford, you indicate in your written statement that
one of the problems with the second reauthorization of the Prescription
Drug User Fee Act (PDUFA II) has been that FDA collected significantly
less in fees than projected due to a reduced number of new drug
applications and an increased number of submissions whose fees were
waived. What is being done to correct this problem in the next
reauthorization bill, i.e., to make sure that the resources are
adequate for FDA to achieve the goals it commits to?
Answer. Two things have been included in the Administration's
proposal to prevent the kind of resource variability we have
experienced in PDUFA II. First, instead of setting the fees in statute,
and having all of the revenue received vary up or down with application
fee receipts for each year, the Administration's proposal sets revenue
levels in the statute and gives FDA the ability to set fees each year
to achieve these revenue levels. This will result in a much more
predictable revenue stream from year to year. Second, a new workload
adjuster has been incorporated into the Administration's proposal. This
new workload adjuster is much broader than the one used in PDUFA II,
and is more representative of FDA's total review workload. We believe
that, if enacted, these two major improvements will provide much more
stability and predictability in our revenues for the next 5 years.
Question. What would be the impact on FDA of not reauthorizing
PDUFA by the beginning of fiscal year 2003? At what point this year
must this reauthorization be signed into law to avoid preparations for
a staffing reduction at the beginning of fiscal year 2003?
Answer. FDA currently has about 2,400 staff-years devoted to the
drug review process, and half of the funds to support them come from
Fees. FDA will have virtually no carryover PDUFA funds available to pay
our employees when the fiscal year ends on September 30, 2002. To avoid
the possibility of staff reductions, we want to ensure a continuation
of the program and work closely with Congress to attain PDUFA
reauthorization before the end of this fiscal year.
patient safety/medical errors
Question. Dr. Crawford, in the written statement you have
submitted, you indicate that FDA has awarded several contracts to
enable FDA to access commercial data bases on the actual use of
marketed prescription drugs in adults and children. Would you please
explain how this will help FDA determine the public health significance
of reports received through its Adverse Event Reporting System (AERS)?
Answer. Passive adverse event monitoring systems--like the current
Adverse Event Report System or AERS and MedWatch system--suffer from
problems of underreporting and the inability to determine the number of
adverse events in the context of actual use of a drug. In other words,
AERS reports provide the numerator in a ratio of number of adverse
events per number of people exposed to the drug. To supplement passive
surveillance, other systems must be used to provide the denominator for
the ratio--that is, the number of people actually using the drug. Some
of the other systems we have connected with, or are working to connect
with, include managed care system databases--wherein, both the number
of adverse events and the use are reported in the same system, third
party payer claims data systems, and population-based
pharmacoepidemiologic databases. By having information available for
both the number of adverse events and the actual use of the drug, we
can better evaluate the risk of a product.
In order to obtain actual use data in various forms, we have
obtained access to several databases through cooperative agreements or
contracts. We will provide a list for the record. All of these systems
help us better understand the risks associated with drug products.
[The information follows:]
adverse event databases
MS Health--this system provides data on the number of prescriptions
dispensed for drugs
Harvard-Pilgrim/Health Partners--this cooperative agreement
provides use data from three managed care/HMO systems
Kaiser Northern California--this system provides data from a
managed care organization on drug use, adverse events, and some details
of clinical care related to adverse events in a ``closed'' population
United Health Group--this system provides claims data from its
multi-state membership
Tennessee Medicaid--this system provides claims data from a
publicly funded medical care system
Johns Hopkins University and the Veterans Administration--these
systems provide use and clinical care data from their HIV/AIDS
populations
Child Health Corporation of America--this system provides use data
specific to the pediatric population
Advance PCS--this system will provide use data from an outpatient
population--including length of time on drugs and combinations of drugs
prescribed
Premier, Inc.--this system will provide data similar to Advance PCS
in a hospitalized population
United Kingdom's General Practice Research Database--this is the
world's largest pharmacoepidemiologic database with the highest quality
data based on 3 million participants over a 10 year period. This
database is used for hypothesis testing when a signal is ascertained
from AERS data.
Question. Dr. Crawford, your written statement also indicates that
FDA has proposed a new prescription drug labeling rule to support its
efforts to decrease medical errors. Would you please give us a brief
summary of what this proposed new rule requires?
Answer. This rule would revise current regulations to require that
the labeling of new and recently approved products include a section
containing highlights of prescribing information and a section
containing an index to prescribing information, reorder currently
required information and make minor changes to its content, and
establish minimum graphical requirements. These revisions would make it
easier for health care practitioners to access, read, and use
information in prescription drug labeling and would enhance the safe
and effective use of prescription drug products. This rule would also
amend prescription drug labeling requirements for older drugs to
require that certain types of statements currently appearing in
labeling be removed if they are not sufficiently supported. Finally,
the rule would eliminate certain unnecessary statements that are
currently required to appear on prescription drug product labels and
move other, less important information to labeling. These changes would
simplify drug product labels and reduce the possibility of medication
errors.
Question. Also, in your statement, you claim that half the deaths
and injuries associated with the use of FDA-regulated products could be
avoided by fully implementing FDA strategies to prevent medical errors.
What strategies, specifically, are you referring to?
Answer. The causes of medical errors are numerous and are related
to the various complex systems in which health care operates today.
FDA's hope is that it could reduce the number of deaths by 50 percent
for those errors associated with those causes over which FDA has some
influence. We have identified four areas in which we could improve our
functions and thereby improve medical product safety; risk
identification; risk communications; regulatory tools; and, research
and technological means.
The $5 million requested in the budget does not represent a fully
implemented plan, but only a part of that plan. A fully implemented
system would help to ensure that products are safe throughout the
entire life cycle by using surveillance systems to monitor the safety
of products, their use, and their consumption, and would prevent
unnecessary injury and death to the American public caused by adverse
drug reactions, injuries, medication errors, and product problems. In
order to achieve this goal, we are planning to use a stepwise, phased-
in approach. I will provide for the record a list of how the $5 million
requested for fiscal year 2003 will help us.
[The information follows:]
fiscal year 2003 request
Continue improving the Adverse Event Reporting System (AERS) to
include electronic data entry initiatives. This will encourage more
reporting by making it easier for drug manufacturers to submit reports.
The Agency will continue drafting regulations to support electronic
submissions;
Further enhance Agency postmarket surveillance through
implementation of International Conference on Harmonization (ICH)
commitments in the U.S. In addition, the Agency will participate in ICH
initiatives, including global analysis and evaluation of adverse event
reports and assessment of a product's risk versus benefits profile;
Implement the third phase of the Medical Device Surveillance
Network (MeDSuN) to include drug products. MeDSuN is a pilot program
designed to train hospital personnel to accurately identify and report
injuries and deaths associated with medical products;
Conduct additional risk management and risk communication research,
including pilot initiatives to minimize preventable adverse drug
reactions and medication errors;
Continue participation in DHHS' Patient Safety Task Force. The DHHS
task force coordinates the collection and analysis of data from
existing Federal systems; develops efforts to help avert risks to
patient safety; and communicates with other entities regarding
reporting systems and safe practices;
Continue developing an electronic drug registration and listing
system that will enable FDA to obtain more accurate information on
drugs currently marketed; and,
Enhance communications with the medical community on import drug
issues.
Question. The fiscal year 2003 request proposes an increase of $5
million to enhance FDA's existing efforts to identify risks associated
with the use of medical products and reduce the occurrence of adverse
events. What specific activities will be enhanced and/or undertaken
with the increased funding proposed?
Answer. In fiscal year 2002, FDA received an increase of $10
million to fund a portion of its systems approach to identifying and
responding to adverse events reported in the U.S. An important aspect
of this approach is the expansion of the MeDSuN system to additional
hospitals and user facilities for the reporting of adverse event
reports, as well as enhancing and linking other existing databases.
Additionally, FDA is expanding associated medical errors education
programs for consumer and health care professional, and increasing the
number of analyses and reports evaluated.
The $5 million requested in fiscal year 2003 will continue to build
on collaborative efforts with other Federal and State governmental
agencies, regulated industry, and the American public to ensure that
the safest and most effective products possible are made available in a
timely manner; and, that critical product safety information is relayed
quickly to the American public and health care professionals.
Question. Many new drugs are coming onto the market and are
available to patients more quickly. It is FDA's task to balance the
need to move products to market against an acceptable level of safety.
How many products approved each year have to be removed from the market
because of side effects? Has the percentage of products that need to be
removed from the market increased?
Answer. The rate of withdrawal of new drugs for safety reasons has
remained constant. Although recently the number of drugs withdrawn from
the market due to safety has increased, the number of drugs approved
for marketing has also increased. When analyzed by year of approval,
the rate of new drug withdrawals for safety in the United States has
been less than 2.8 percent for the last 3 decades.
The Agency continually monitors trends associated with withdrawals
and routinely calculates the rate of withdrawals and publicizes the
information. In 1999, senior officials at the Agency published an
article in the May 12, 1999 volume of the Journal of the American
Medical Association describing trends and withdrawals over the past
years.
food safety
Question. In a Washington Post article on Friday, March 15, 2002,
entitled ``U.S. Vows Tougher Inspections of Imported Meat'', Homeland
Security Director Tom Ridge is quoted as saying ``one of the questions
we need to answer is--whether or not we need multiple agencies dealing
with food safety responsibilities.'' How would you answer that
question?
Answer. Today, almost everyone says that if you had to start out de
novo with a new food safety system, you would have it in one Agency. We
did start out de novo at one point and all of it was in the Department
of Agriculture. Over time, for various reasons, many of those areas
have been spun off. The FDA was spun off in the 1940s, ending up in
what became the Department of Health Education and Welfare, now the
Department of Health and Human Services. The Environmental Protection
Agency didn't leave until the 1970s and then as a separate Agency
entirely.
So in one sense, we have been there and done that. But in another
sense, there is this tension and also these ambiguities in regulation
that are occasioned by having food safety in so many different
agencies. It was a problem to me when I was the administrator of the
Food Safety Inspection Service in terms of communication. I have been
around here long enough to know what the problem would be here, so I
can say that based on experience.
When we thought seriously about seafood inspection--and there was a
Congressional bill that passed the Senate and failed in the House some
12 years ago--the problem we ran into, quite frankly, was the
overlapping legislative authorities that was this mass of laws that had
been passed for good reasons. How to reconcile them, even just for
seafood, so that we could consolidate all seafood inspection into one
Agency was formidable indeed. I believe the record will show that there
were nine Congressional hearings on the subject and there were nine
subcommittees or committees that believed that seafood inspection was
in their jurisdiction. I remember having to agree that it was theirs
about nine times, and I think that is the issue.
With or without organizational changes, there is a need to
modernize food safety laws, particularly to fill important gaps in
FDA's regulatory tools. FDA lacks clear authority to inspect records of
food establishments and manufacturers, and cannot order recalls, impose
civil money penalties, or require registration of food establishments
and listing of products. Changes in the Federal food safety laws would
strengthen FDA's ability to provide a high level of public health
protection from foodborne hazards and make existing programs even more
efficient and effective.
Moreover, significant legislative changes would be needed for any
food safety consolidation to be effective. This is because it is the
law and not the organizations that require meat inspectors to inspect
meat plants, poultry inspectors to inspect poultry plants, etc. The
General Accounting Office recognized this need for legislative change
in their most recent report.
Question. Is the work FDA conducts duplicative of any work done by
USDA? If so, is this appropriate?
Answer. As with any division of duties, work done by FDA and USDA
may address similar issues. However, USDA and FDA make efforts to
communicate and collaborate to minimize duplication. Consequently, the
overwhelming majority of work done by either Agency addresses only
those issues or commodities specific to that Agency.
Question. Should Federal food safety inspection activities be
streamlined so that we don't have multiple government agencies working
on different aspects of food safety, but rather a cohesive unit working
to ensure the safety of America's food supply?
Answer. The current food safety system is having real and
measurable positive effects. Through a surveillance system called
FoodNet, CDC has documented reductions in foodborne illness for a
number of important food pathogens.
The current system would benefit from being updated by regulatory
fixes and full funding of the President's Budget. Statutes are in need
of being modernized and resource shortfalls need to be addressed. The
statutes do not adequately recognize the need to assess risks
associated with foods, to put into place controls to prevent food
contamination, to allocate resources based on risk, and to measure
results. In addition, GAO issued a report in February 2001 that
identified the significant disparity between food safety resources and
FDA's food safety responsibilities.
Question. Dr. Crawford, you mention in your prepared statement that
we have in place newer surveillance systems such as Foodnet, Pulsenet,
NARMS, and pilots for eLexNet which, in recent years, have strengthened
the safety of the Federal food system. I am not very familiar with
eLexNet. Could you please tell us more about that?
Answer. The electronic Laboratory Exchange Network--or eLEXNET--is
the nation's first internet-based, inter-agency food testing reporting
system. eLEXNET was developed by FDA to provide access to critical food
testing data in Federal, State, and local food safety laboratories. The
eLEXNET system was successfully piloted in 2000 with two Federal
laboratories, four State laboratories, and two local government Agency
laboratories. The eight laboratories that participated in the eLEXNET
pilot were the FDA's Southeast Regional Laboratory, USDA's Food Safety
and Inspection Service's Eastern Laboratory, Massachusetts Department
of Public Health, New Hampshire Public Health Laboratories, Florida
Department of Agriculture and Consumer Services, Tennessee Department
of Agriculture, City of Milwaukee Health Department, and the City of
Cincinnati Health Department.
While the initial pilot only included Escherichia coli O157:H7
data, the system was expanded in April 2001 and now includes data on
four other pathogens: all salmonella species, Listeria monocytogenes,
Campylobacter jejuni, and E. coli. FDA is currently working to expand
further the system to include at least two laboratories from each
State--a public health lab and an agriculture lab--to the project. As
of April 2002, 36 laboratories in 24 States are participating in
eLEXNET--this includes 7 FDA field laboratories and the Department of
Defense's Army Veterinary Command or VETCOM. To enhance the current
capabilities of eLEXNET, FDA in 2002 also plans to increase eLEXNET's
breadth from selected microbiological pathogens to other agents that
could endanger the food supply, such as chemical agents, mycotoxins,
and radionuclides.
ELEXNET will facilitate data information sharing and communication
and provide a means for increased collaboration among food safety
experts. It will significantly improve our nation's ability to exchange
seamlessly data, recognize problem products, and perform risk
assessments.
Question. Please provide a comparison, by Center and activity, of
FDA funding for food safety initiatives for each of fiscal years 1999
through 2002, and the funding requested for fiscal year 2003. Please
include the definition of ``food safety initiative'' used in each
fiscal year (1999-2003) and explain the reason for any changes to this
definition.
Answer. The old Food Safety Initiative or FSI definition originally
included only microbiological safety of foods and was used from the
inception of FSI through fiscal year 2001. In fiscal year 2002, the
definition was expanded to a new, broader definition that includes
chemical safety of foods and pesticides. Also in fiscal year 2002,
premarket, BSE, and counter terrorism were added to the food safety
definition. We do not distinguish what portion of the counter terrorism
supplemental is for microbiological pathogen work versus the new,
expanded definition, which adds chemical safety work. The events of
September 11, have changed the emphasis for the food safety field
program as all food safety activities are now considered part of
Counter Terrorism.
I would be happy to provide a chart with a 5 year history of FDA
food safety resources by activity and another by program. We will also
provide a more detailed chart with a comparison, by Center and
activity, of FDA funding for food safety initiatives for each of fiscal
years 1997 through 2002, and the funding requested for fiscal year
2003.
[The information follows:]
FOOD SAFETY RESOURCES BY ACTIVITY
[In dollars]
----------------------------------------------------------------------------------------------------------------
Food safety initiative definition Expanded food safety
------------------------------------ definition
Activity \1\ -----------------------
Fiscal Fiscal Fiscal Fiscal Fiscal
year 1999 year 2000 year 2001 year 2002 year 2003
----------------------------------------------------------------------------------------------------------------
Microbiological Safety.............................. 55.000 68.100 84.534 91.490 91.490
Chemical/Pesticide Safety........................... .......... .......... .......... 79.030 79.030
BSE................................................. .......... .......... .......... 22.082 22.082
Inspection Activities............................... 103.300 119.100 132.140 134.737 134.737
Premarket........................................... .......... .......... .......... 44.098 44.098
Counter Terrorism................................... .......... .......... .......... 97.925 98.048
Pay Increases....................................... .......... .......... .......... 13.842 23.442
Dietary Supplements, Nutrition, labeling............ .......... .......... .......... .......... 9.336
-----------------------------------------------------------
Center Subtotal............................... 66.300 94.222 94.222 214.125 223.822
===========================================================
Field Subtotal................................ 92.000 122.452 122.452 269.079 278.441
-----------------------------------------------------------
Total......................................... 158.300 216.674 216.674 483.204 502.263
===========================================================
Foods B Center...................................... 51,700 60,100 67,151 137,862 144,369
Foods B Field....................................... 92,000 108,400 122,452 241,745 250,560
Foods Program Subtotal (non-add).................... (143,700) (168,500) (189,603) (379,607) (394,929)
Animal Drugs & Feeds B Center....................... 5,400 9,100 15,398 54,297 56,260
Animal Drugs & Feeds B Field........................ 0 0 10,330 27,334 27,881
-----------------------------------------------------------
Animal Drugs & Feeds Program Subtotal (non-add)..... (5,400) (9,100) (25,728) (81,631) (84,141)
===========================================================
NCTR................................................ 500 1,000 3,000 4,596 4,688
Other Activities.................................... 8,700 8,700 8,673 13,807 14,424
Other Programs...................................... .......... .......... .......... 3,562 4,080
-----------------------------------------------------------
Total......................................... 158,300 187,300 216,674 483,204 502,263
----------------------------------------------------------------------------------------------------------------
\1\ Activity splits are estimates for fiscal 2002 and 2003.
CROSSWALK OF FDA FOOD SAFETY RESOURCES--FOOD SAFETY MICROBIOLOGICAL BASE
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
Food safety initiative categories year 1997 year 1998 year 1999 year 1999 year 2000 year 2000 year 2001 year 2001 year 2002
base increase base increase base increase base increase base
--------------------------------------------------------------------------------------------------------------------------------------------------------
Surveillance......................................... $0.7 $3.1 $3.8 $0.8 $4.6 $6.4 $11.0 $5.4 $16.4
Foods/CFSAN...................................... 0.6 1.6 2.2 0.0 2.2 1.8 4.0 0.0 4.0
Foods/Field...................................... 0.0 0.0 0.0 0.1 0.1 3.2 3.3 0.0 3.3
Animal Drugs & Feeds/CVM......................... 0.1 1.5 1.6 0.7 2.3 1.4 3.7 5.4 9.1
Animal Drugs & Feeds/Field....................... 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
NCTR............................................. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other Activities................................. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Coordination......................................... 7.2 0.5 7.7 0.2 7.9 0.0 7.9 0.0 7.9
Foods/CFSAN...................................... 3.6 0.5 4.1 0.2 4.3 0.0 4.3 0.0 4.3
Foods/Field...................................... 3.0 0.0 3.0 0.0 3.0 0.0 3.0 0.0 3.0
Animal Drugs & Feeds/CVM......................... 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Animal Drugs & Feeds/Field....................... 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
NCTR............................................. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other Activities................................. 0.6 ......... 0.6 0.0 0.6 0.0 0.6 0.0 0.6
Inspections.......................................... 73.2 9.0 82.2 21.1 103.3 15.8 119.1 17.0 136.1
Foods/CFSAN...................................... 9.9 1.0 10.9 7.8 18.7 4.1 22.8 2.5 25.3
Foods/Field...................................... 57.5 8.0 65.5 13.3 78.8 11.7 90.5 14.5 105.0
Animal Drugs & Feeds/CVM......................... 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Animal Drugs & Feeds/Field....................... 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
NCTR............................................. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other Activities................................. 5.8 0.0 5.8 0.0 5.8 0.0 5.8 0.0 5.8
Education............................................ 4.8 1.8 6.6 0.5 7.1 1.5 8.7 0.0 8.7
Foods/CFSAN...................................... 2.4 1.8 4.2 0.1 4.3 0.5 4.8 0.0 4.8
Foods/Field...................................... 2.0 0.0 2.0 0.3 2.3 0.5 2.8 0.0 2.8
Animal Drugs & Feeds/CVM......................... 0.0 0.0 0.0 0.1 0.1 0.5 0.7 0.0 0.65
Animal Drugs & Feeds/Field....................... 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
NCTR............................................. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other Activities................................. 0.4 0.0 0.4 0.0 0.4 0.0 0.4 0.0 0.4
Research & Risk Assessment........................... 23.4 9.6 33.0 2.4 35.4 5.2 40.6 7.6 48.2
Foods/CFSAN...................................... 14.2 7.1 21.3 0.9 22.2 2.0 24.2 4.6 28.8
Foods/Field...................................... 7.3 0.0 7.3 0.5 7.8 1.0 8.8 0.0 8.8
Animal Drugs & Feeds/CVM......................... 0.0 2.5 2.5 0.5 3.0 1.7 4.7 1.0 5.7
Animal Drugs & Feeds/Field....................... 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
NCTR............................................. 0.0 0.0 0.0 0.5 0.5 0.5 1.0 2.0 3.0
Other Activities................................. 1.9 0.0 1.9 0.0 1.9 0.0 1.9 0.0 1.9
Total FSI Program.................................... 109.3 24.0 133.3 25.0 158.3 28.9 187.3 30.0 217.2
Foods/CFSAN...................................... 30.7 12.0 42.7 9.0 51.7 8.4 60.1 7.1 67.2
Foods/Field...................................... 69.8 8.0 77.8 14.2 92.0 16.4 108.4 14.5 122.9
Animal Drugs & Feeds/CVM......................... 0.1 4.0 4.1 1.3 5.4 3.6 9.1 6.4 15.4
Animal Drugs & Feeds/Field....................... 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
NCTR............................................. 0.0 0.0 0.0 0.5 0.5 0.5 1.0 2.0 3.0
Other Activities................................. 8.7 0.0 8.7 0.0 8.7 0.0 8.7 0.0 8.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
CROSSWALK OF FDA FOOD SAFETY RESOURCES--EXPANDED FOOD SAFETY DEFINITION
----------------------------------------------------------------------------------------------------------------
Adj. Exp. definition
Fiscal year Fiscal fiscal Add chem Add fiscal year
Food safety action categories 2001 food year 2001 year 2002/ safety premarket 2002/food
safety base rescission FSAP base base base safety base
----------------------------------------------------------------------------------------------------------------
Science Base....................... $47.950 .......... $47.950 $21.599 ......... $69.5
Foods/CFSAN.................... 28.800 .......... 28.800 16.800 ......... 45.600
Foods/Field.................... 8.800 .......... 8.800 0.000 ......... 8.800
Animal Drugs & Feeds/CVM....... 5.450 .......... 5.450 4.134 ......... 9.584
Animal Drugs & Feeds/Field..... 0.000 .......... 0.000 0.000 ......... 0.000
NCTR........................... 3.000 .......... 3.000 0.000 ......... 3.000
Other Activities............... 1.900 .......... 1.900 0.665 ......... 2.565
Surveillance Systems............... 15.934 .......... 15.934 2.202 ......... 18.136
Foods/CFSAN.................... 4.000 .......... 4.000 0.500 ......... 4.500
Foods/Field.................... 3.300 .......... 3.300 0.000 ......... 3.300
Animal Drugs & Feeds/CVM....... 8.634 .......... 8.634 1.702 ......... 10.336
Animal Drugs & Feeds/Field..... 0.000 .......... 0.000 0.000 ......... 0.000
NCTR........................... 0.000 .......... 0.000 0.000 ......... 0.000
Other Activities............... 0.000 .......... 0.000 0.000 ......... 0.000
Prevention Standards............... 12.000 .......... 12.000 12.280 $42.598 66.877
Foods/CFSAN.................... 11.700 .......... 11.700 3.200 28.932 43.832
Foods/Field.................... 0.000 .......... 0.000 0.000 0.000 0.000
Animal Drugs & Feeds/CVM....... 0.300 .......... 0.300 9.080 13.666 23.045
Animal Drugs & Feeds/Field..... 0.000 .......... 0.000 0.000 0.000 0.000
NCTR........................... 0.000 .......... 0.000 0.000 0.000 0.000
Other Activities............... 0.000 .......... 0.000 0.000 0.000 0.000
Education and Training......... 8.7 .......... 8.650 1.876 ......... 10.526
Foods/CFSAN.................... 4.800 .......... 4.800 0.500 ......... 5.300
Foods/Field.................... 2.800 .......... 2.800 0.000 ......... 2.800
Animal Drugs & Feeds/CVM....... 0.650 .......... 0.650 1.376 ......... 2.026
Animal Drugs & Feeds/Field..... 0.000 .......... 0.000 0.000 ......... 0.000
NCTR........................... 0.000 .......... 0.000 0.000 ......... 0.000
Other Activities............... 0.400 .......... 0.400 0.000 ......... 0.400
Domestic Inspections............... 88.7 ($0.526) 88.126 29.680 ......... 117.806
Foods/CFSAN.................... 8.300 (0.049) 8.251 1.000 ......... 9.251
Foods/Field.................... 75.500 (0.448) 75.052 15.400 ......... 90.452
Animal Drugs & Feeds/CVM....... 0.366 (0.002) 0.364 1.120 ......... 1.484
Animal Drugs & Feeds/Field..... 0.000 0.000 0.000 9.917 ......... 9.917
NCTR........................... 0.000 0.000 0.000 0.000 ......... 0.000
Other Activities............... 4.486 (0.027) 4.459 2.243 ......... 6.702
Imports............................ ............. .......... 44.014 8.949 ......... 52.963
Foods/CFSAN.................... 9.600 .......... 9.600 2.700 ......... 12.300
Foods/Field.................... 32.500 .......... 32.500 5.100 ......... 37.600
Animal Drugs & Feeds/CVM....... 0.000 .......... 0.000 0.000 ......... 0.000
Animal Drugs & Feeds/Field..... 0.000 .......... 0.000 0.412 ......... 0.412
NCTR........................... 0.000 .......... 0.000 0.000 ......... 0.000
Other Activities............... 1.914 .......... 1.914 0.737 ......... 2.651
Total Food Safety Program:
Foods/CFSAN.................... 67.200 (0.049) 67.151 24.700 28.932 120.783
Foods/Field.................... 122.900 (0.448) 122.452 20.500 0.000 142.952
Animal Drugs & Feeds/CVM....... 15.400 (0.002) 15.398 17.412 13.666 46.476
Animal Drugs & Feeds/Field..... 0.000 0.000 0.000 10.330 0.000 10.330
NCTR........................... 3.000 0.000 3.000 0.000 0.000 3.000
Other Activities............... 8.700 (0.027) 8.673 3.645 0.000 12.318
----------------------------------------------------------------------------
Total........................ 217.200 (0.526) 216.674 76.587 42.598 335.858
----------------------------------------------------------------------------------------------------------------
CROSSWALK OF FDA FOOD SAFETY RESOURCES
--------------------------------------------------------------------------------------------------------------------------------------------------------
Adjusted Fiscal Total
Add BSE fiscal year 2002 Fiscal Fiscal year Fiscal fiscal
Food safety action plan categories base year 2002 food year 2002 2002 year cost Earmarks year 2002
base safety BSE inspections of living increases
--------------------------------------------------------------------------------------------------------------------------------------------------------
Science Base.................................................. $1.781 $71.330 $1.200 $1.600 ........... $1.668 ......... $4.468
Foods/CFSAN............................................... 0.847 46.447 0.500 1.100 ........... 0.650 ......... 2.250
Foods/Field............................................... 0.000 8.800 0.000 0.000 ........... 0.401 ......... 0.401
Animal Drugs & Feeds/CVM.................................. 0.934 10.518 0.300 0.500 ........... 0.341 ......... 1.141
Animal Drugs & Feeds/Field................................ 0.000 0.000 0.000 0.000 ........... 0.000 ......... 0.000
NCTR...................................................... 0.000 3.000 0.400 0.000 ........... 0.196 ......... 0.596
Other Activities.......................................... 0.000 2.565 0.000 0.000 ........... 0.079 ......... 0.079
Surveillance Systems.......................................... ......... 18.136 1.500 ......... ........... 1.028 $0.300 2.828
Foods/CFSAN............................................... ......... 4.500 1.000 ......... ........... 0.591 0.000 1.591
Foods/Field............................................... ......... 3.300 0.000 ......... ........... 0.148 0.000 0.148
Animal Drugs & Feeds/CVM.................................. ......... 10.336 0.400 ......... ........... 0.289 0.300 0.989
Animal Drugs & Feeds/Field................................ ......... 0.000 0.000 ......... ........... 0.000 0.000 0.000
NCTR...................................................... ......... 0.000 0.000 ......... ........... 0.000 0.000 0.000
Other Activities.......................................... ......... 0.000 0.100 ......... ........... 0.000 0.000 0.100
Prevention Standards.......................................... 0.676 67.553 1.200 0.300 ........... 1.440 1.200 4.140
Foods/CFSAN............................................... 0.000 43.832 0.500 0.000 ........... 0.916 0.000 1.416
Foods/Field............................................... 0.000 0.000 0.000 0.000 ........... 0.000 0.000 0.000
Animal Drugs & Feeds/CVM.................................. 0.000 23.045 0.700 0.000 ........... 0.525 1.200 2.425
Animal Drugs & Feeds/Field................................ 0.000 0.000 0.000 0.000 ........... 0.000 0.000 0.000
NCTR...................................................... 0.000 0.000 0.000 0.000 ........... 0.000 0.000 0.000
Other Activities.......................................... 0.676 0.676 0.000 0.300 ........... 0.000 0.000 0.300
Education and Training........................................ ......... 10.526 0.100 0.520 ........... 1.142 ......... 1.762
Foods/CFSAN............................................... ......... 5.300 0.000 0.000 ........... 0.916 ......... 0.916
Foods/Field............................................... ......... 2.800 0.000 0.000 ........... 0.131 ......... 0.131
Animal Drugs & Feeds/CVM.................................. ......... 2.026 0.100 0.520 ........... 0.079 ......... 0.699
Animal Drugs & Feeds/Field................................ ......... 0.000 0.000 0.000 ........... 0.000 ......... 0.000
NCTR...................................................... ......... 0.000 0.000 0.000 ........... 0.000 ......... 0.000
Other Activities.......................................... ......... 0.400 0.000 0.000 ........... 0.017 ......... 0.017
Domestic Inspections.......................................... 1.563 119.369 2.700 7.460 $0.300 5.739 ......... 16.199
Foods/CFSAN............................................... 0.000 9.251 0.000 0.000 0.000 0.591 ......... 0.591
Foods/Field............................................... 0.000 90.452 2.700 0.000 0.000 4.230 ......... 6.930
Animal Drugs & Feeds/CVM.................................. 0.000 1.484 0.000 1.180 0.100 0.079 ......... 1.359
Animal Drugs & Feeds/Field................................ 1.563 11.480 0.000 6.280 0.200 0.652 ......... 7.132
NCTR...................................................... 0.000 0.000 0.000 0.000 0.000 0.000 ......... 0.000
Other Activities.......................................... 0.000 6.702 0.000 0.000 0.000 0.188 ......... 0.188
Imports....................................................... ......... 52.963 2.700 4.620 2.297 2.826 ......... 12.443
Foods/CFSAN............................................... ......... 12.300 0.000 0.000 0.700 0.824 ......... 1.524
Foods/Field............................................... ......... 37.600 2.700 0.000 1.597 1.885 ......... 6.182
Animal Drugs & Feeds/CVM.................................. ......... 0.000 0.000 0.000 0.000 0.000 ......... 0.000
Animal Drugs & Feeds/Field................................ ......... 0.412 0.000 4.620 0.000 0.038 ......... 4.658
NCTR...................................................... ......... 0.000 0.000 0.000 0.000 0.000 ......... 0.000
Other Activities.......................................... ......... 2.651 0.000 0.000 0.000 0.079 ......... 0.079
Total Food Safety Program..................................... ......... ......... ......... ......... ........... ......... ......... .........
Foods/CFSAN............................................... 0.847 121.630 2.000 1.100 0.700 4.487 0.000 8.287
Foods/Field............................................... 0.000 142.952 5.400 0.000 1.597 6.795 0.000 13.792
Animal Drugs & Feeds/CVM.................................. 0.934 47.409 1.500 2.200 0.100 1.312 1.500 6.612
Animal Drugs & Feeds/Field................................ 1.563 11.893 0.000 10.900 0.200 0.689 0.000 11.789
NCTR...................................................... 0.000 3.000 0.400 0.000 0.000 0.196 0.000 0.596
Other Activities.......................................... 0.676 12.994 0.100 0.300 0.000 0.363 0.000 0.763
-----------------------------------------------------------------------------------------
Total................................................... 4.020 339.878 9.400 14.500 2.597 13.842 1.500 41.839
3.062 0.500
7.082 342.940 15.000
--------------------------------------------------------------------------------------------------------------------------------------------------------
CROSSWALK OF FDA FOOD SAFETY RESOURCES
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year 2003 changes
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal Starting Fiscal Fiscal Fiscal
Fiscal Counter year 2002 fiscal Add D/S year 2003 year 2003 year 2003
Food safety plan/action categories year 2002 Terrorism CT year 2003 nutrition CT pay ending FS
FS base base Suppl.l FS base base increase increase base
--------------------------------------------------------------------------------------------------------------------------------------------------------
Science Base.................................................... $75.798 ......... $1.050 $76.848 $1.842 -$0.825 $1.131 $78.996
Foods/CFSAN................................................. 48.697 ......... 0.000 48.697 1.051 0.000 0.473 50.221
Foods/Field................................................. 9.201 ......... 0.000 9.201 0.000 0.000 0.316 9.517
Animal Drugs & Feeds/CVM.................................... 11.659 ......... 0.000 11.659 0.000 0.000 0.266 11.925
Animal Drugs & Feeds/Field.................................. 0.000 ......... 0.000 0.000 0.000 0.000 0.000 0.000
NCTR........................................................ 3.596 ......... 1.000 4.596 0.791 -0.775 0.076 4.688
Other Activities............................................ 2.644 ......... 0.050 2.694 0.000 -0.050 0.000 2.644
Surveillance Systems............................................ 20.964 ......... 10.500 31.464 1.350 ......... 0.693 33.507
Foods/CFSAN................................................. 6.091 ......... 0.000 6.091 1.100 ......... 0.395 7.586
Foods/Field................................................. 3.448 ......... 10.500 13.948 0.000 ......... 0.079 14.027
Animal Drugs & Feeds/CVM........................................ 11.325 ......... 0.000 11.325 0.000 ......... 0.219 11.544
Animal Drugs & Feeds/Field.................................. 0.000 ......... 0.000 0.000 0.000 ......... 0.000 0.000
NCTR........................................................ 0.000 ......... 0.000 0.000 0.000 ......... 0.000 0.000
Other Activities............................................ 0.100 ......... 0.000 0.100 0.250 ......... 0.000 0.350
Prevention Standards............................................ 71.694 ......... ......... 71.694 1.013 ......... 1.038 73.745
Foods/CFSAN................................................. 45.248 ......... ......... 45.248 1.013 ......... 0.632 46.893
Foods/Field................................................. 0.000 ......... ......... 0.000 0.000 ......... 0.000 0.000
Animal Drugs & Feeds/CVM.................................... 25.470 ......... ......... 25.470 0.000 ......... 0.406 25.876
Animal Drugs & Feeds/Field.................................. 0.000 ......... ......... 0.000 0.000 ......... 0.000 0.000
NCTR........................................................ 0.000 ......... ......... 0.000 0.000 ......... 0.000 0.000
Other Activities............................................ 0.976 ......... ......... 0.976 0.000 ......... 0.000 0.976
Education and Training.......................................... 12.288 ......... ......... 12.288 ......... ......... 0.773 13.061
Foods/CFSAN................................................. 6.216 ......... ......... 6.216 ......... ......... 0.632 6.848
Foods/Field................................................. 2.931 ......... ......... 2.931 ......... ......... 0.079 3.010
Animal Drugs & Feeds/CVM.................................... 2.725 ......... ......... 2.725 ......... ......... 0.062 2.787
Animal Drugs & Feeds/Field.................................. 0.000 ......... ......... 0.000 ......... ......... 0.000 0.000
NCTR........................................................ 0.000 ......... ......... 0.000 ......... ......... 0.000 0.000
Other Activities............................................ 0.417 ......... ......... 0.417 ......... ......... 0.000 0.417
Domestic Inspections............................................ 135.568 $0.825 28.967 165.360 3.881 ......... 3.972 173.213
Foods/CFSAN................................................. 9.841 0.296 2.525 12.662 0.131 ......... 0.395 13.188
Foods/Field................................................. 97.382 0.101 24.552 122.035 3.400 ......... 2.999 128.434
Animal Drugs & Feeds/CVM.................................... 2.843 0.276 0.000 3.119 0.000 ......... 0.062 3.181
Animal Drugs & Feeds/Field.................................. 18.612 0.152 1.890 20.654 0.000 ......... 0.516 21.170
NCTR........................................................ 0.000 0.000 0.000 0.000 0.000 ......... 0.000 0.000
Other Activities............................................ 6.890 0.000 0.000 6.890 0.350 ......... 0.000 7.240
Imports......................................................... 65.406 ......... 56.584 121.989 0.731 0.948 1.993 125.662
Foods/CFSAN................................................. 13.824 ......... 5.126 18.950 0.131 0.000 0.553 19.634
Foods/Field................................................. 43.782 ......... 49.848 93.630 0.600 0.000 1.342 95.572
Animal Drugs & Feeds/CVM.................................... 0.000 ......... 0.000 0.000 0.000 0.948 0.000 0.948
Animal Drugs & Feeds/Field.................................. 5.070 ......... 1.610 6.680 0.000 0.000 0.031 6.711
NCTR........................................................ 0.000 ......... 0.000 0.000 0.000 0.000 0.000 0.000
Other Activities............................................ 2.730 ......... 0.000 2.730 0.000 0.000 0.067 2.797
Total Food Safety Program....................................... ......... ......... ......... ......... ......... ......... ......... .........
Foods/CFSAN................................................. 129.916 0.296 7.650 137.862 3.427 0.000 3.080 144.369
Foods/Field................................................. 156.744 0.101 84.900 241.745 4.000 0.000 4.815 250.560
Animal Drugs & Feeds/CVM.................................... 54.021 0.276 0.000 54.297 0.000 0.948 1.015 56.260
Animal Drugs & Feeds/Field.................................. 23.682 0.152 3.500 27.334 0.000 0.000 0.547 27.881
NCTR........................................................ 3.596 0.000 1.000 4.596 0.791 0.775 0.076 4.688
Other Activities............................................ 13.757 0.000 0.050 13.807 0.600 -0.050 0.067 14.424
---------------------------------------------------------------------------------------
Total..................................................... 381.717 0.825 97.100 479.642 8.818 0.123 9.600 498.183
Non Food Safety BSE & Dietary Supplements....................... ......... ......... 0.518 ......... ......... 4.080
---------------------------------------------------------------------------------------
Total w/ Non FS BSE, D/S.................................. 385.279 ......... ......... 483.204 9.336 ......... ......... 502.263
--------------------------------------------------------------------------------------------------------------------------------------------------------
generic drugs
Question. The budget requests an increase of $4.6 million to
improve the generic drug review programs and to allow FDA to act upon
75 percent of fileable original generic drug applications within 6
months. How does this compare to the current review time?
Answer. FDA is requesting an increase of $4.6 million in fiscal
year 2003 for the generic drugs program. Our goal is to review 75
percent of generic drug applications within the statutory timeframe by
the end of fiscal year 2003. FDA has been successful in achieving our
fiscal year 2001 goal of reviewing 50 percent of generic drug
applications within 180 days and anticipates achieving the fiscal year
2002 goal of reviewing 65 percent within 180 days.
Question. Increased funding has been provided to the Office of
Generic Drugs over the past few fiscal years. How have the increased
resources been utilized to speed-up the generic drug review process?
Answer. The fiscal year 2001 increase was used to annualize the
positions added in fiscal year 2000 and add several additional FTE. The
Office of Generic Drugs, OGD, continues to refine the review process to
increase efficiency. With these funds the Agency is exploring ways to
increase resources devoted to information technology for the review of
generic drug applications. The fiscal year 2002 increase of $2.5
million was used by the Office of Generic Drugs to increase the
efficiency of the review process and decrease the total time to
approval of generic drugs. This increase has allowed us to decrease the
average approval time by 2 months even with an increase in the number
of actual approvals. The increase will also be used to conduct research
that will allow us to address specific scientific questions regarding
bioequivalence and chemistry of generic products. This research will be
directed at evaluating ways to enable approval of generic drugs in
areas that currently lack generic alternatives such as, inhalational or
topical drug products.
Question. Provide a comparison of the funding for the Office of
Generic Drugs for each of the past five fiscal years, including that
proposed for fiscal year 2003.
Answer. I would be happy to provide that information for the
record.
[The information follows:]
OFFICE OF GENERIC DRUGS RESOURCES
----------------------------------------------------------------------------------------------------------------
FTE on board
Fiscal year \1\ Ceiling \2\ Millions \3\
----------------------------------------------------------------------------------------------------------------
1995............................................................ 137 144 12.8
1996............................................................ 121 125 10.3
1997............................................................ 121 127 10.3
1998............................................................ 123 132 10.0
1999 (base)..................................................... 130 119 11.2
1999 (actual with increase)..................................... 130 129 12.5
2000 (base)..................................................... 134 129 13.6
2000 (actual with increase)..................................... 134 139 14.8
2001 (base)..................................................... 141 132 13.3
2001 (actual with increase)..................................... 141 143 14.0
2002 (projected)................................................ .............. 157 16.8
2003 (projected)................................................ .............. 187 20.4
----------------------------------------------------------------------------------------------------------------
\1\ On Board figure for fiscal year 2001 is as of 9/30/01; for fiscal year 2002, as of 2/6/02.
\2\ Ceiling includes increases of 10 FTE for fiscal year 2000, 11 FTE for fiscal year 2001, and 14 FTE for
fiscal year 2002.
\3\ Funding level for fiscal year 2001 consists of actual total payroll and operating costs for OGD. Funding
level for fiscal year 2002 based on projected payroll and operating costs for OGD as of 2/6/02; projected OGD
payroll costs are based on an estimated average of $93,000 per FTE for fiscal year 2002. Funding level for
fiscal year 2003 based on projected payroll and operating costs for OGD as of 2/6/02; projected OGD payroll
costs are based on an estimated average of $96,000 per FTE for fiscal year 2003; projected OGD costs include
generic drugs program increase of $3.346M requested in fiscal year 2003 President's Budget.
antibiotic resistance
Question. FDA has been analyzing the effects of antibiotic use in
food-producing animals through the National Antimicrobial Resistance
Monitoring System (NARMS), specifically looking at antimicrobial
resistance. What agency decisions or priorities have been affected by
use of the NARMS data?
Answer. The NARMS data were used in the development of the
Campylobacter risk assessment. Based partly on the results of the
Campylobacter risk assessment, FDA proposed to withdraw approval of the
new animal drug application for use of the fluoroquinolone
antimicrobial drug enrofloxacin in poultry. The basis for this proposal
is the information indicating that the use of fluoroquinolone in
poultry has led to an increase in the level of human fluoroquinolone
resistance.
Since its inception, NARMS data have been used to identify public
health threats and initiate response. Federal agencies undertake joint
field investigations of outbreaks of illness marked by pathogens that
display unusual antimicrobial resistance patterns. All the
participating agencies have used the data to improve knowledge of risk
factors associated with the development of resistance and to stimulate
research in the molecular characteristics of resistance emergence and
transfer. The program has also triggered broader research projects
relating to prudent antimicrobial use in animals and the role of the
environment in the emergence and spread of antimicrobial resistance.
management/efficiency savings
Question. The fiscal year 2003 budget request indicates that FDA
will achieve $7.3 million in savings from the proposed consolidation of
staff associated with its public affairs and legislative functions at
the Department level.
What percent of FDA's current (fiscal year 2002) legislative and
affairs functions does this $7.3 million in proposed savings represent?
Answer. The proposed transfer represents all of FDA's staff in the
Office of Legislative Affairs and the Office of Public Affairs. These
two Offices combined have an estimated staffing level for fiscal year
2002 of 82 FTE. FDA estimates that two of these FTE can be saved
through administrative streamlining, and the remaining 80 FTE are
proposed to be transferred in fiscal year 2003 to the Department level
for these functions.
Question. How many legislative and public affairs full-time
equivalent positions does FDA currently have (i.e., fiscal year 2002
FTE level)? How many of these positions would be transferred to the
Department of Health and Human Services?
Answer. There are currently in fiscal year 2002 staffing levels of
48 FTE in the Office of Public Affairs and 34 FTE in the Office of
Legislation. Therefore, these two Offices combined have an estimated
staffing level for fiscal year 2002 of 82 FTE. FDA estimates that two
of these FTE can be saved through administrative streamlining, and the
remaining 80 FTE are proposed to be transferred in fiscal year 2003 to
the Department level for these functions.
Question. Will the transfer of FDA's legislative and public affairs
functions to the Department adequately serve FDA as a Federal
regulatory agency? How?
Answer. This proposal is part of an HHS initiative aimed at greater
efficiency in the operation of our Department. A key objective of the
President's Management Agenda is a more responsive, more ``citizen-
centered'' Federal government. In few Federal agencies is the need for
organizational reform more acute than at HHS, where a long history of
decentralized decision-making has produced a Department with 13
operating divisions, functioning with relative autonomy. As a result, a
complex web of ever-proliferating offices has distanced HHS, from the
citizens it serves and has produced a patchwork of uncoordinated and
duplicative management practices that hinder its efforts to accomplish
efficiently. The Administration supports and is committed to solving
this problem through Secretary Thompson's ``One Department''
initiative, which will eliminate unnecessary layers of bureaucracy and
consolidate duplicative functions into unified offices. Streamlining
efforts in 2003 will focus on HHS' human resources, public affairs,
legislative affairs, and building and facilities management functions.
Question. Specifically how was the savings included in the budget
request calculated?
Answer. The amount of $7.3 million for the proposed transfer of
these functions was based on the payroll and other operating costs for
the 80 FTE to be transferred to DHHS. Most of the cost is the cost of
salaries and benefits for the staff involved. Also included in the
proposed transfer are $345,000 for the applicable portion of central
services under the Other Activities program, and $320,000 for GSA Rent
for these staffs.
Question. The fiscal year 2003 budget also proposes to save $2.6
million in efficiency savings through the elimination of 25
administrative/management positions. Which positions will be eliminated
and how was this savings calculated?
Answer. As part of the President's Management Agenda, FDA is
reviewing its organizational structure and administrative processes to
seek increased efficiencies and reduce organizational layers of
management. The estimate of 25 FTE to be saved in fiscal year 2003 is
not based on specific positions, but on a projection that this many FTE
can be saved through the efforts under way to streamline the Agency.
The estimate of $2.6 million is based on the payroll and other
operating costs for the 25 FTE to be reduced, and includes small
reductions in all of the program lines that include FTE in FDA's budget
request. These reductions will be accomplished through attrition or by
assigning staff to other duties. The Agency estimates that two of these
FTE will be saved in the legislative and public affairs functions
before they are transferred to DHHS as proposed in the fiscal year 2003
request.
botanical dietary supplements
Question. What kinds of scientific studies should be performed on
dietary supplement products that are on the shelf in order to assess
their quality?
Answer. The quality of marketed products can be assessed by
analysis of product composition to determine that the claimed
ingredients are present in claimed amounts and that the product is
within tolerable limits for contaminants such as pesticides and heavy
metals. The scientific studies that are needed to provide the tools
necessary to do these assessments include the chemical and genetic
characterization of authenticated botanical and other ingredient
sources, the development and validation of analytical methods for
identifying and quantifying the key biologically active components and
contaminants in ingredient sources, and the development of validated
and standardized reference materials to provide a basis for analytical
laboratories to confirm the accuracy and reliability of the analyses
done in their own laboratories. Studies are also needed to identify
factors that affect the stability of ingredients through processing and
shelf-life.
Question. What scientific information is needed to help the FDA
determine if the dietary supplements on the market are safe?
Answer. Ingredients need to be characterized to identify the
components with biological activity, and the conditions of use under
which these components are effective and safe. An assessment of the
biological effects of combinations of product components and
ingredients is also needed. Also needed are evaluations of the
potential for lifestyle and other factors that may affect the safety of
marketed products, including the possibility of adverse interactions
with drugs being used by consumers. The investigations of biological
activity and safe conditions of use by consumers rely on laboratory
that is in vitro evaluation of biomarkers of biological activity,
animal and human studies.
Question. Has a study been done to assess the overall safety of
dietary supplements that are being sold in the U.S.?
Answer. The safety of dietary supplements being sold in the U.S. is
generally assessed on an ingredient- and product-specific basis. To
date, a limited number of such studies have been done. On a more global
basis, FDA has several activities underway to monitor the overall
safety of marketed dietary supplements. Through its MEDWATCH program,
FDA routinely monitors and evaluates reports of adverse events
associated with the use of dietary supplement products. FDA has
contracted with the Institute of Medicine of the National Academy of
Sciences to develop a framework and model monographs for evaluating
dietary supplement ingredient safety issues. FDA has also recently
instituted a Dietary Supplement Subcommittee under the Agency's Food
Advisory Committee to advise the Agency on dietary supplement
scientific issues, including issues relating to the safety of dietary
supplement products.
Question. How will the public be served better by conducting these
scientific studies?
Answer. Results from scientific studies on dietary supplement
ingredients and products can be used to provide greater understanding
of the biological effects of these products, the conditions of use
associated with both effectiveness and safety concerns, and the
development of more sophisticated tools to ensure that marketed
products contain what they claim to contain, do not contain
contaminants at unsafe levels, and have adequate scientific
substantiation for label information and claims. Thus scientific
studies will enhance our ability to define and monitor the safety of
products under their intended conditions of use, to evaluate the
truthfulness of label information, and to identify conditions of use
that are contraindicated and for which label warnings are needed.
Question. How would the FDA use the additional funds that you have
requested to improve the quality of dietary supplements?
Answer. I would be happy to answer that for the record.
[The information follows:]
caers
Fiscal year 2002 funds are being used for the design, development,
implementation, and maintenance of the CFSAN Adverse Event Reporting
System (CAERS). The FDA intends to use fiscal year 2002 funds for:
--Scanning and redaction of adverse event reports,
--Data entry of adverse event reports,
--Alert letters to manufacturers,
--Design and development of the CAERS database,
--Migration of legacy adverse event data into CAERS,
--An electronic link to the FDA Office of Regulatory Affairs Field
Accomplishment Compliance Tracking System (FACTS), and,
--CFSAN thesaurus development.
CAERS is currently undergoing user acceptance testing, training,
and some technological improvements.
In September 2001, FDA implemented a cooperative agreement with the
National Center for Natural Products Research (NCNPR). This agreement
between FDA and NCNPR created a partnership that allows for more
efficient use of resources to identify and analyze specific components
in botanical dietary ingredients, thereby enhancing overall public
health by ensuring that dietary supplements are safe and their labeling
is not misleading.
The NCNPR cooperative agreement for fiscal year 2001 was awarded on
September 28, 2001. Since the total Project Period is five (5) years,
the additional 4 years of funding up to $1 million per year will depend
upon acceptable performance and the availability of future fiscal year
funding. In accordance with the procedures for supplementing
cooperative agreements, FDA must announce its intent, through a Request
for Application (RFA), to increase funding up to an additional $1
million to the NCNPR cooperative agreement in the Federal Register.
Once announced, NCNPR must submit a grant application to demonstrate
how it will meet the objectives of the RFA. The application will go
through a dual review process and FDA anticipates completing this
process and awarding the money to NCNPR in September 2002.
To date, the awarded monies (from fiscal year 2001) have been used
to collect a number of authenticated botanical species for chemical
profiling and characterization. The species include ephedrine alkaloid-
containing species (e.g., ephedra, ma huang), aristolochic acid-
containing botanicals, comfrey, germander, and blue and black cohosh.
The NCNPR scientists are collaborating with FDA scientists to ensure
usefulness for evaluating potential safety issues and to coordinate
related FDA and NCNPR research activities. In this regard, FDA and
NCNPR scientists have jointly presented results of their scientific
collaborations at a professional meeting and are currently preparing
co-authored scientific manuscripts for publication in peer-reviewed
journals. The NCNPR is also completing plans for a scientific workshop
on authenticating botanical ingredients for use in dietary supplements.
The workshop will be held in August 2002 and will provide a basis for
scientists from academia, government and industry to discuss the
scientific issues involved in the authentication of botanical
ingredients. The issues discussed in this workshop will have broad
relevance for research, manufacturing and regulatory applications.
los angeles laboratory
Question. Funding to complete the new Los Angeles laboratory was
provided in the fiscal year 2002 Appropriations Act. Please provide a
progress report on this project.
Answer. Phase II completes the mechanical and electrical
infrastructure and completely fits-out both the laboratory and the
office at an estimated cost of $23.0 million. The total estimated
construction cost of the project is $43.0 million.
The contract for Phase II construction was awarded on November 29,
2001. The Los Angeles Laboratory project is on schedule with a
completion date of June 8, 2003, and the scheduled move-in is to begin
in August, 2003. As of March, 2002, the total project is approximately
45 percent complete.
Currently, operating and maintenance costs at the present location
are estimated at $779,000 for fiscal year 2002. When the Los Angeles
Laboratory project is completed and fully operational, we expect the
operating and maintenance costs to increase.
arkansas regional laboratory
Question. No additional funding is included in the fiscal year
request for the continued renovation of the Arkansas Regional
Laboratory. Please provide us with an update on this project. What
additional funds are needed to complete all phases of this project?
Could construction funds be used in fiscal year 2003 to continue work
on this project? How much would be needed?
Answer. The first two phases of construction for Building 50
completed exterior demolition, structural work, roofing repair,
installation of an elevator and installation of a new exterior brick
facade. The interior architectural fit-out of the space has not been
completed nor has the installation of mechanical and electrical
infrastructure. Once funds have been appropriated, the remaining phases
will be completed within one year. The estimated buy-out cost in fiscal
year 2003 for completing Phase III of ARL is $4.2 million. This amount
was not included in the fiscal year 2003 request as higher Counter
Terrorism priorities took precedence.
______
Question Submitted by Senator Arlen Specter
food labeling
Question. I understand that FDA has been sent a letter from the
Center for Science in the Public Interest urging enforcement action
regarding deceptive labeling of a product being marketed as a line of
``Quorn'' foods, containing a mycoprotein ingredient. This ingredient
is identified as ``mushroom in origin.'' Additionally, you may have
received a letter from two professors in the Department of Plant
Pathology at the Pennsylvania State University concerning the
misrepresentation of this labeling and the need for further testing of
the product's safety.
Pennsylvania produces over 50 percent of all the commercially
cultivated mushrooms in the United States. Consumers recognize this
commodity in the produce section of the grocery store, as ingredients
in prepared foods, or in restaurants as mushrooms. It is my
understanding that these ``Quorn'' products do not, in fact, contain
mushrooms.
What is the current status of this issue before your Agency? I
would like to be made aware of any response you have regarding this
topic.
Answer. FDA is currently evaluating the appropriateness of the use
of the statement ``mushroom in origin'' in the labeling of Quorn food
products containing a mycoprotein ingredient and whether this statement
is false or misleading under section 403 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 343). If we determine that the labeling of
these products is false or misleading, we will take appropriate
enforcement action as warranted.
CONCLUSION OF HEARINGS
Senator Kohl. We thank you, Dr. Crawford, gentlemen, for
your testimony today. If there are no other questions or
comments, this hearing stands recessed.
[Whereupon, at 2:46 p.m., Wednesday, March 20, the hearings
were concluded, and the subcommittee was recessed, to reconvene
subject to the call of the Chair.]
AGRICULTURE, RURAL DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR
FISCAL YEAR 2003
----------
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
NONDEPARTMENTAL WITNESSES
[The following testimonies were received by the
Subcommittee on Agriculture, Rural Development, and Related
Agencies for inclusion in the record. The submitted materials
relate to the fiscal year 2003 budget request for programs
within the subcommittee's jurisdiction.]
Prepared Statement of the Ad Hoc Coalition
Mr. Chairman, Members of the Subcommittee, this statement is
respectfully submitted on behalf of the ad hoc coalition \1\ composed
of the organizations listed below. The coalition supports sustained
funding for Title I of Public Law 480 at a baseline program level that
will ensure the continued viability of the program as a long-term food
aid and market development initiative for American agriculture.
---------------------------------------------------------------------------
\1\ The ad hoc coalition is composed of the National Council of
Farmer Cooperatives, U.S.A. Rice Federation, National Association of
Wheat Growers, U.S. Wheat Associates, Wheat Export Trade Education
Committee, American Soybean Association, U.S. Canola Association,
National Sunflower Association, American Maritime Congress, Maritime
Institute for Research and Industrial Development, Transportation
Institute, Sealift, Inc., TECO Transport Corporation, and Liberty
Maritime Corporation.
---------------------------------------------------------------------------
This statement is submitted at a time when the future of American
food assistance programs is uncertain. The administration has proposed
sharp reductions in total food aid for fiscal year 2003 and beyond, as
well as a major restructuring of the Food for Progress program, which
complements the assistance provided under both Title I and Title II of
Public Law 480. The authorizing committees are in conference on the
2002 Farm Bill, and both Houses of Congress have passed versions of the
bill which would make significant changes in the statutory framework
that governs the delivery of food aid to scores of countries throughout
the world with at-risk populations. Notwithstanding this uncertainty,
the Congress through the appropriations process must ensure that the
guiding principles of U.S. food assistance policy are respected in the
fiscal year 2003 budget cycle and beyond.
guiding principles of food aid policy
Mr. Chairman, the coalition respectfully suggests that American
food assistance policy is well-established and founded on certain
guiding principles, including the following:
--Meeting America's humanitarian obligation to sustain food
assistance programs, participation in which currently represent
more than 50 percent of all food aid worldwide.
--Employing food assistance programs to promote long-term market
development for American agriculture on commercial terms.
--Employing food assistance programs to promote respect worldwide for
American values and our economic system, thereby enhancing
goodwill toward America among disadvantaged populations that
are the breeding grounds for terrorism.
current food aid program levels
Mr. Chairman, these principles of American food assistance policy
have been supported strongly in recent years which is why America is
the world leader in humanitarian assistance and food aid. In fiscal
year 2000, programmed U.S. food aid reached 95 countries, and involved
donations or concessional sales of 35 different commodities. The fiscal
year 2000 program consisted of more than 6.7 million metric tons of
grain equivalent, valued at more than $1.4 billion. In fiscal year
2001, the final data, as reported on February 28, 2002 by the Foreign
Agricultural Service, show that the United States shipped 6.36 million
metric tons to 45 countries; consisting of 26 different commodities
valued at more than $1.28 billion. The administration's USDA budget
summary for fiscal year 2003 reports that the commodity value of
shipments for the current fiscal year (2002) will be reduced in the
section 416(b) donation program account alone by approximately $274
million, resulting in the loss of more than 1.3 million metric tons of
food aid shipments, as compared to the previous year's program levels.
the administration's budget for fiscal year 2003
Mr. Chairman, the administration proposes a further reduction in
total food aid programming for fiscal year 2003. Food for Progress
shipments supported by CCC funds would be eliminated; section 416(b)
programming would be virtually phased out, with a drop in program
levels from $650 million in fiscal year 2002 to an estimated $57
million in fiscal year 2003.
Overall, the administration's budget for fiscal year 2003 proposes
food aid programming of approximately 3.9 million metric tons of grain
equivalent. This consists of 3.7 million tons under the combined Food
for Progress and Public Law 480 programs and approximately 200,000
metric tons under the 416(b) donation program. The administration's
proposal, in other words, calls for a one-year reduction in total food
aid tonnage of 27 percent, with a 42 percent reduction of such
shipments in just 3 years.
restoration of food aid programming
Mr. Chairman, the coalition urges that food aid programming be
restored to sustainable levels in the range of 5.0 million to 7.0
million metric tons of grain equivalent in each fiscal year, beginning
in fiscal year 2003.
The administration proposes to increase baseline funding for the
Title II program of Food for Peace from $850 million in fiscal year
2002 to $1,185 million in fiscal year 2003. The coalition commends the
administration for this initiative, which represents an increase in
appropriated funding of nearly 40 percent over baseline. This request
reflects the importance of the Title II program, and should be strongly
supported by the subcommittee.
The coalition, however, recommends that Congress, in restoring food
assistance programming, recognize the significance and importance of
the Title I program, which has been a pillar of American foreign policy
for nearly half a century.
advantages of the title i program
Mr. Chairman, the Title I program offers countries long-term loans
and concessional payment terms for the purchase of U.S. agricultural
commodities. As such, Title I has advantages over other food aid
programs.
--Resource Efficient.--Because Title I is a concessional loan
program, appropriations required to support Title I, under the
terms of the Federal Credit Reform Act of 1990, cover only the
subsidy cost, and not the full commodity value. In the
President's budget for fiscal year 2003, the subsidy cost of
the Title I program is established for the fiscal year at 75.11
percent. Thus, under the Title I program, Congress ships $1.00
worth of U.S. agricultural products at an appropriated cost of
just over 75 cents. Moreover, the Title I program currently
recovers more dollars for the U.S. Treasury in loan repayments
than it costs in annual outlays.
--GATT-Legal.--The Title I program promotes market development while
remaining fully sanctioned by international trade
organizations. The high degree of concessionality of the Title
I program has resulted in its classification as a donation
program for GATT purposes.
--Commercial Sales Stepping Stone.--The Title I program is designed
to operate in markets which are neither poor enough to warrant
donations nor rich enough to purchase commodities on commercial
terms. Over the decades, numerous countries have graduated from
Title I partners to commercial markets for a broad range of
U.S. agricultural products. In fact, 43 of the top 50 consumer
nations of American agricultural products were once recipients
of U.S. foreign aid in some form. Tomorrow's commercial
commodity markets are today's Title I partners.
conclusions and recommendations
Mr. Chairman, the coalition is committed to maintaining U.S. food
assistance programs at responsible levels designed to meet world food
needs and promote the interests of American agriculture. Our
recommendation is to maintain annual shipments of food assistance at
program levels between 5.0 million and 7.0 million metric tons of grain
equivalent. This can be accomplished, as in the past, with a blend of
programs supported by direct appropriations and by CCC funding.
The administration proposes an appropriation for Title I which
would support a loan authorization level of $132 million at the 75.11
percent subsidy rate. This is well below the appropriated level for
fiscal year 2002, which supported new loans amounting to $154.7 million
in commodity value. Because the administration proposes to fund all
Food for Progress shipments from the Title I appropriated account, the
effect of this policy choice would be to eliminate more than $100
million in Food for Progress shipments made annually in recent years
with CCC funding.
The coalition recommends the following:
--Title I program levels should be increased in fiscal year 2003, and
increased responsibly in each succeeding year so that the
unique advantages of the program, highlighted above, are not
lost.
--Congress--through the fiscal year 2003 Agriculture Appropriations
Act--should direct the administration to establish a program
level for Food for Progress at not less than $100 million using
CCC funding (absent a Presidential declaration that such
amounts of food assistance are not required to protect American
interests).
--Congress should ensure that the Global Food for Education Program
is codified, and that the Program is supported with adequate
funding, either through CCC funding or direct appropriations,
or a combination of both.
Mr. Chairman, American farmers require strong commercial markets to
maintain their share of the world trade in commodities. These markets
are developed and often revitalized by Title I concessional sales. This
program, which has been a bulwark of American food aid policy since the
days of the Marshall Plan, deserves the strong support of your
subcommittee, the Congress and the entire nation.
The Title I program delivers more food assistance per dollar of
investment than any other program. For this reason, Congress should
reaffirm the principles which underlie Title I and provide increased
funding for the program. Moreover, the Title I program is fully
consistent with the administration's recently announced position that
aid to developing countries be tied to their adoption of reforms and
policies that make development lasting and effective.
Together with other food aid programs, supported both with direct
appropriations and CCC donations, the Title I program of Food for Peace
will continue to promote American commercial and humanitarian interests
and advance the cause of peace in the world thus ensuring America's
continued leadership in humanitarian assistance and food aid and the
prosperity of America's farmers.
Thank you, Mr. Chairman.
______
Prepared Statement of the Alachua County Board of County Commissioners
Mr. Chairman: Thank you for allowing the Alachua County Board of
County Commissioners to submit this written testimony before your
Subcommittee regarding two significant projects. They are the Partners
for a Productive Community Enhancement Initiative, and the Critical
Services to Underserved Areas Initiative.
partners for a productive community enhancement initiative ($2.3
million in funding requested)
In response to a spiraling crime rate in southwest Alachua County,
the Alachua County Sheriffs Office requested help from the Board of
County Commissioners in 1993. Specifically, the Sheriff reported that
57 percent of its 911 calls came from an area that had only 3.2 percent
of the County's population.
The County Commission responded by providing $38,000 in funding for
a Program Manager to staff the Partners for a Productive Community
(PPC) Program in fiscal year 1994. The PPC was launched as a strategic
planning effort with three goals: the establishment of neighborhood-
based services, the development of public/private partnerships and a
focus on crime prevention. This Program has enjoyed great success due
to the coordinated efforts of the Sheriffs Office, the Courts and the
Alachua County Department of Community Support Services. Furthermore,
since the inception of this Program, the County has budgeted over $1.6
million to support the Program through the Community Support Services
Department and Sheriff's Office. Additionally, over $2.4 million has
been leverage from other county departments, local social service
providers and the Sheriff's Office through a local law enforcement
grant.
The goal of the Sheriff's Office was to reduce the number of calls
from the area, and to develop a relationship of trust with the area's
residents. The goal of the Courts was to help with the swift
prosecution of cases, and to increase personnel in key areas. Finally,
the goal of the County's Department of Community Support Services was
to develop and implement a neighborhood needs assessment, and to
determine the social service needs in accordance with the results of
the assessment. The Community Support Services Department was also
responsible for developing public/private community partnerships, and
community based organizations comprised of tenants, property owners and
managers. Thus, this project represents a multi-agency strategy to
stabilize, revitalize and sustain five specific neighborhoods of
Alachua County. In addition to improving the area's basic
infrastructure, Federal funding is also being requested to provide
community recreational programs for the area's youth. These activities
will provide positive alternatives to crime, and allow youth to
participate first hand in community improvement programs. In doing so,
these programs will build and encourage positive self-esteem,
leadership skills and academic achievement. To complement these
programs, additional improvements will be made in the community Safe
Havens. Finally, the requested funding will also allow the PPC to
expand this successful demonstration program into other at risk Alachua
County communities such as Archer, Florida. Specifically, the PPC will
develop a partnership strategy to address the unmet needs of health
care, education, training, employment, youth recreation and
transportation for the residents of Archer.
This request for Federal funding is justified by the tremendous
improvements and accomplishments that have been made in these
neighborhoods since 1995. These achievements include: free community
day care for 75 children, 30 community day care slots, 24 in-home day
care slots, the creation of 30 new jobs by the Early Progress Center,
the reduction in 911 calls from 57 percent to 14 percent of total calls
in the area, and substantial increases in the property values for four
of the five neighborhoods.
Furthermore, the implementation of seasonal recreation programs in
the targeted communities by the Y.M.C.A. has been instrumental in
providing positive, character building activities for children,
teenagers and adults. Day camps are provided during the summer months,
and back-yard sports are provided at the end of the school day during
the school year. In addition, two 4-H Clubs serving 60 neighborhood
children were established along with after school and community teen
programs. Adult literacy and GED classes were made available at a
nearby school campus. Finally, other programs have been established for
the purpose of creating a sustainable neighborhood. These programs
include quarterly informational forums concerning small business
development, educational opportunities, self-help seminars, budget
management and landlord/tenant issues.
With respect to community-wide improvement programs, a total of
nine neighborhood cleanups were completed this year. With the active
involvement of the residents of the neighborhoods, the Alachua County
Office of Codes Enforcement has been able to reduce from twenty to two
the number of abandoned and vandalized buildings. Furthermore, a new
Waste Collection Ordinance which was supported by the PPC permits the
efficient and timely citation of violators.
The sustaining factor within this Program is the formally organized
Partners for a Productive Community Council. The Council is the guiding
force that deals with issues and determines unmet needs. For example, a
block captain organization was started this year with the assistance of
the PPC Council, and the Alachua County Sheriff's Office. This group
monitors and manages crime prevention programs block by block.
In recognition of the numerous accomplishments described above, the
PPC received the National Association of Counties' Achievement Award in
1996 for distinguished and innovative contributions to improving county
government. Additionally, the League of Women Voters presented the
County with a similar award for outstanding community service.
Furthermore, in December 1999 Alachua County received Official
Recognition from the Executive Office of Weed and Seed for two of the
neighborhoods being served by the Partners for a Productive Community
Program. Pursuant to this recognition, these communities have been
awarded a $175,000 Weed and Seed Grant for prevention and intervention
strategies focusing on Cedar Ridge and Linton Oaks neighborhoods. This
grant will further strengthen the long-term efforts to improve the
quality of life in these neighborhoods.
As noted above, the Federal funding requested will also be used to
expand the successful Partners Initiative into the rural community of
Archer, which is located in the southwestern portion of Alachua County.
Archer and the rural areas surrounding it have a population of 6,348,
of which 16 percent fall below the poverty level. While the City of
Archer has one elementary school, emerge fire and police services are
contracted from Gainesville/Alachua County. There are also two public
housing communities, and a small obsolete community center which is
used as a congregate meal site for senior citizens. Consequently, many
of Archer's residents travel to Gainesville for employment, social
services, recreational activities, adult and continuing education and
health care.
Recently, the University of Florida, School of Nursing received
$200,000 from the Florida Legislature to provide primary health care
through a clinic based in Archer. Presently, this clinic is on the
State Department of Health's list to be eliminated due to the limited
area that it serves. Should this occur, there will be a need for
additional funds to meet the health care needs in this area. Thus, a
portion of the Federal funding in this request could be channeled
through the Alachua County Health Department in our continuing effort
to develop partnerships, maximize resources and expand services to the
citizens of Alachua County through our rural service initiative.
Employment opportunities, recreation for teens and outreach social
services continue to be a challenge for the community of Archer.
According to the Alachua County Sheriff's Office, Archer's crime rate
is disproportionately high for a community its size. In 2000, the
Alachua County Sheriff's Office received 2,657 calls for service. Of
the dispatched calls, 30 were assaults and batteries, and 5 were for
sexual battery. The largest number of dispatched calls (869) concerned
burglary and theft.
In conclusion, Alachua County is requesting $2.3 million in Federal
funding to continue its highly successful and award winning
neighborhood revitalization programs; and to expand these successful
model programs to other neighborhoods, including the City of Archer,
Florida.
critical services to underserved areas ($1.81 million in funding
requested)
Without a safe and reliable source of public utilities, the
residents who live in the southeastern portion of the City of
Gainesville and Alachua County must rely upon the use of obsolete
private water systems, septic tanks and propane gas for their utility
services. In addition to the health and safety concerns, this lack of a
public utility infrastructure serves as a deterrent to the area's
economic revitalization.
While several subdivisions in the target area are in immediate need
of a public utility infrastructure, it is the County's intent to
approach this model program by focusing on the Kincaid Road subdivision
as Phase I of the Initiative. This subdivision currently has over 150
homes on septic tanks, with many of them also using propane gas for
heating. Historically, there are numerous health risks associated with
malfunctioning septic tanks, including the possible contamination of
ground water which could lead to the development of diseases within the
area.
Gainesville Regional Utilities (GRU) indicates that the
infrastructure needed to provide wastewater service to this area
includes: the wastewater collection system lift stations; grinder pumps
and on-site plumbing to connect to a new gravity sewer system. GRU
estimates that the construction and extension of a central wastewater
system to the Kincaid Road subdivision will cost approximately
$1,585,000, while the extension of the natural gas lines is estimated
at about $225,000. Thus, the total cost of Phase I of this model
program is $1.81 million. Finally, it's important to note that GRU is
currently planning wastewater facilities to serve the Kincaid Road
subdivision, and may perform additional engineering work as in-kind
services. The additional engineering work is estimated to cost
approximately $121,000.
While Alachua County is requesting assistance from the Federal
Government in funding this portion of the model program for the area's
revitalization, the County has already begun numerous other programs
and projects that have had an positive, significant impact on the
area's redevelopment. For example, in July of 1996, the County began a
series of neighborhood meetings in Greentree Village, which is a
subdivision of about 60 households in the target area. Residents were
encouraged to express their concerns about the area's problems and
establish priorities. As a result of these meetings, the County
assisted Greentree Village in the establishment of a crime watch
program and the creation of a backyard recreation program through the
Y.M.C.A.
Several new public buildings and facilities have also been located
within the target area to encourage its redevelopment. During 1998/99,
Alachua County expended about $5.5 million to purchase and renovate the
Eastgate Shopping Center for the Alachua County Sheriffs Office. This
new facility is 56,200 square feet in area, and it serves as the base
of operations for the County's 239 sworn deputies, and 260 non-sworn
administrative and support personnel. Completing this law enforcement
complex is the new Alachua County Communications and Emergency
Operations Center which recently opened adjacent to the new Sheriffs
Office. This facility cost about $5.3 million and operates as a joint
center for both Alachua County and the City of Gainesville.
Finally, with a contribution of approximately $430,000 from Alachua
County, the City of Gainesville has completed a new Technology
Enterprise Center (TEC) within the target area. This $3.0 million
business incubator consists of a new, two-story 30,000 square foot
facility located in the City of Gainesville Enterprise Zone. Over 60
percent of the construction funds for the TEC were provided by a grant
from the U.S. Economic Development Administration. The purpose of
business incubators is to promote the growth and development of new
enterprises by providing flexible space at affordable rates, a variety
of support services, access to management, technical and financial
assistance, and opportunities to interact with other entrepreneurs and
business experts. Even though this facility has just recently opened,
about 13,000 square feet of the TEC has already been leased to a
leading technology accelerator company specializing in speeding
pioneering technology entrepreneurs to the market. It is expected that
when fully operating, the TEC will foster the creation of higher wage
jobs, the expansion of the tax base and the augmentation of new
business development within the target area.
In conclusion, Alachua County is undertaking the redevelopment of
an existing urbanized area, which includes the modernization of its
utility infrastructure. These improvements will build upon numerous
previous programs and projects that have already had a positive impact
upon the area. Phase I of this model program includes the extension of
a central wastewater system to the Kincaid Road subdivision, as well as
the extension of natural gas lines. The support of this Phase of the
project through Federal funding will serve as an impetus for the
continued revitalization of these residential areas.
concluding comments for written testimony
The two initiatives described above represent well-conceived
programs that address the social, physical and economic needs of the
citizens of Alachua County. Furthermore, they demonstrate the County's
continuing commitment to programs that emphasize a balance between
environmental protection, economic development and social equity for
all of the residents of the County. Therefore, we hope that the
Subcommittee will find these two critically important projects worthy
of your support. Thank you for your consideration.
______
Prepared Statement of the Alliance for Continuing Nutrition Monitoring
Mr. Chairman and other members of the Subcommittee, thank you for
allowing the Alliance for Continuing Nutrition Monitoring the
opportunity to submit this testimony to this Subcommittee. The alliance
consists of 12 groups representing farmers, health professionals,
physicians, scientists, food technologists, educators, and food
manufacturers. The alliance is a diverse constituency of approximately
15 million individuals, and is united in its support of human nutrition
monitoring. The true tally of supporters could include the entire
population because everyone gains from the valuable contributions of
human nutrition research, as we illustrate in our testimony. I am Nancy
Chapman, a public health nutritionist, member, and volunteer of several
of the groups represented here today. I have used the health and
dietary information from the Federal surveys and the findings of
Federal nutrition research throughout my professional career as an
evaluator, educator, policy analyst, and communicator.
Chairman Kohl, you and your committee members have long been
champions of agriculture and human health and recognize that the
advances in these areas depend in large measure on high quality
research, conducted in both public and private institutions. Because of
your on-going support of USDA's role in food security and WIC, as well
as your concerns about prudent fiscal spending, the Alliance asks for
your support of data collection essential to policy making in all of
these areas. The Alliance wants to describe to you and your esteemed
colleagues the numerous uses that policy-makers, public health
professionals, food companies, commodity groups, food technologists,
and scientists have made of dietary data. Health and dietary
information gathered from the USDA/DHHS survey is critical to the
nation and plays a key role in shaping a variety of policies and
programs including food safety, food labeling, child nutrition
programs, food assistance, and dietary guidance. Human nutrition
monitoring helps:
--Establish a benchmark of what Americans usually eat that is
essential to identifying sub-populations that might be at risk
of intentional or unintentional contaminants (i.e. food
additives, food-borne illnesses, or pesticides)
--Develop a targeted WIC package that meets the needs of a growing
diverse constituency
--Determine the Thrifty Food Plan that forms the basis for food stamp
benefits
--Identify specific groups at-risk of malnutrition and diet-related
diseases such as obesity, heart disease, cancer, and diabetes
to implement effective public health programs targeting the
most nutritionally vulnerable individuals
--Analyze non-typical foods, phytochemicals and other health
promoting components in our food supply that enhances the
world-renowned USDA food composition database
--Create and enhance nutrition education and marketing campaigns,
such as the National 5-A-Day for Better Health Program
--Formulate nutrition labeling policies and monitoring food
fortification programs, such as the effectiveness of folate
fortification to reduce the incidence of neural tube defects
(NTD)
Return on Investment
Conservatively, the approximate $7 million investment in USDA
nutrition monitoring guides over $40 billion in food assistance
expenditures. The Federal investment in USDA dietary survey activities
has also guided the well-known nutrition labeling program and the USDA/
DHHS Dietary Guidelines for Americans. Research also guides the
nutrition education programs in schools, preschools, hospitals, and
elderly feeding programs as well as such public campaigns as, Five-A-
Day for Better Health. These and other nutrition education programs
have the potential for reducing some of the $200 billion annual costs
for treatment and care of diseases linked strongly to nutrition, such
as cardiovascular diseases, high blood pressure, diabetes, cancer,
obesity, and osteoporosis. Virtually all major chronic and degenerative
diseases are linked to nutrition. This will become increasingly
important as our country's population ages.
Request for Congressional Support
To ensure that the USDA/ARS nutrition monitoring activities for
fiscal year 2003 continue and include 2 days of dietary recall on 5,000
individuals, interviews for diet and health knowledge, food program
information, continued updating of food composition data, and prompt
coding and processing information, Congress should appropriate $7
million or an increase of $4 million above the fiscal year 2002 budget.
justification for request
Under an agreement between the Department of Health and Human
Services Centers for Disease Control and Prevention (CDC), National
Center for Health Statistics (NCHS), and the United States Department
of Agriculture Agricultural Research Service (ARS/USDA), the ARS and
NCHS agreed to collaborate on a program of national nutritional
monitoring. This agreement establishes a cooperative diet and nutrition
monitoring program integrating the previously conducted Continuing
Survey of Food Intakes by Individuals (CSFII) and the National Health
and Nutrition Examination Survey (NHANES) in 2002.
The Department of Agriculture, through its Agricultural Research
Service, has conducted the CSFII, which was designed to assess food
consumption and related behavior in the U.S. population using personal
interviews. The CSFII was conducted periodically with the most recent
survey being conducted in 1998. The Department of Health and Human
Services, through its National Center for Health Statistics (part of
the Centers for Disease Control and Prevention), conducts the NHANES,
which was designed to assess the health and nutritional status of the
U.S. population using personal interviews and direct physical
examination. NHANES, previously periodic, began continuous operation in
1999.
The backdrop for integrating the CSFII and NHANES is the National
Nutrition Monitoring and Related Research Act (NNMRRA) of 1990, which
set goals and mechanisms to bring about greater coordination of
nutrition monitoring activities across agencies. More recently,
leadership of DHHS and USDA has identified more comprehensive
integration of these two surveys as a major priority.
nutrition monitoring beginning january 2002
Data are being collected from a nationally representative sample of
5,000 persons each year as part of the NHANES. The contents of the
nutrition component of the survey will include initially two 24-hour
recalls (first in person, second by telephone), a dietary supplement
interview, body measures, and nutritional biochemistries. In 2003, the
USDA dietary survey activities will require approximately $7 million in
fiscal year 2003, a $4 million increase over the 2002 budget, to
collect, code, and process promptly 2 days of dietary recalls of 5,000
individuals, collect information on food program participation and diet
and health knowledge, and update continuously the food composition data
with information and comprehensive nutrition monitoring system. Without
adequate funding to carry out these basic USDA nutrition monitoring
activities, several critical uses of dietary and food composition data
are at risk:
Food Assistance
To focus Federal food programs where they are most needed.
--Food consumption data underpin the Thrifty Food Plan (TFP) on which
the food stamp benefit levels are based.
--Survey data are used by programs such as the Supplemental Food
Assistance Program for Women, Infants, and Children (WIC) in
determining what nutrients and foods should be targeted in the
WIC food package for recipients; data are also used to
determine the size of the potential WIC population.
Dietary Guidance and Nutrition Education
To devise strategies to lower the risk of malnutrition as well as
chronic diseases such as heart disease, cancer, diabetes, and
osteoporosis.
--The nutrition monitoring system provides information that assesses
changes in food consumption patterns of populations that may be
of relevance to health.
--USDA's Food and Nutrition Services use the Diet and Health
Knowledge Survey to develop nutrition education programs.
--USDA/DHHS Dietary Guidelines Advisory Committee uses dietary data
in evaluating the Dietary Guidelines for Americans.
--USDA uses the dietary data to develop and evaluate the Food Guide
Pyramid.
--NCI and Produce for Better Health Foundation use food consumption
data to track progress toward the ``5 servings of fruits and
vegetables-a-day'' goal.
Biosecurity
To obtain reliable estimates of the prevalence of eating certain
foods which may be the vehicles for intentional or unintentional
bioterrorist attacks.
--USDA could identify segments of populations at risk if specific
foods are found to be contaminated and obtain enough
information to craft useful educational messages for consumers
if such an attack occurs.
Public and Private Health Programs
To assess the nutritional data on the quality of diets and the
effects of health outcomes for the population and reduce health care
costs due to lower incidence of chronic diseases.
--The FDA uses the nutrition monitoring system to formulate food
fortification policies, define public health needs, determine
target and non-target populations for fortification, track how
fortification affects the population, and determine how
consumers use dietary supplements.
--The NIH, CDC, public health agencies, and voluntary health
organizations use the nutritional status data to identify
populations at risk of obesity, heart disease, cancer, and
other diet-related diseases.
Food Safety Regulations
To provide data for estimation of possible intake of incidental
contaminants, pesticides, and naturally occurring toxic substances as
part of regulating the use of certain substances.
--With passage of the Food Quality Protection Act, EPA relies on
USDA's dietary consumption data as a critical component in its
risk assessments and pesticide decisions. EPA incorporates USDA
data on dietary consumption, pesticide residues found on food
and in water, and actual pesticide use on crops to measure
exposure to pesticides when registering or reassessing a
pesticide product. If anything, EPA needs more USDA dietary
intake data, not less, in order to enhance good science in FQPA
implementation. A reduction in available dietary intake data
will hinder EPA's ability to make FQPA decisions.
--The Codex Alimentarius, an international policy making
organization, utilizes the food consumption data for policy
decisions regarding food additives, pesticides, food labeling,
and other critical issues.
Food Product Development and Marketing
To generate a more nutritious food supply by identifying health-
promoting properties of plants and animal foods in a balanced diet and
to identify public health problems that can be impacted through
nutrient fortification, macronutrient modification, and interventions
to prevent obesity.
--Farmers have bred livestock and plants to improve nutritional
composition and appeal to health-conscious consumers.
Monitoring data are essential in assessing these new foods.
--U.S. food industry currently uses the nutrition monitoring system
data to reformulate products, and create new ingredients and
products. Monitoring data are used when a new additive or
processing method is introduced.
An additional $4 million of funding will be needed to better
estimate nutritional risk, exposure to environmental contaminants, and
dietary exposure to pesticides and other substances based on usual food
intake. This supplement in the budget is critical in light of EPA's
review of pest control substances under the Food Quality and Protection
Act.
Food Composition data must reflect the current food supply
USDA has progressed in revising and maintaining food composition
tables to analyze the food consumption data from the combined NHANES
and CSFII, however, much more is necessary to make the nutrient
database more efficient and effective. With the rapid advancements in
technology to lower fat, sodium, and calories in foods and added
nutrient fortification, estimates of food and nutrient intakes would be
rendered inaccurate if food composition databases are not kept current.
Also, as science identifies health-promoting food components, USDA
needs to identify and quantify these substances (i.e., phytochemicals)
in a large array of foods. Forming partnerships with the food industry
and commodity groups would permit updating databases, using information
developed for nutrition labeling or similar purposes.
Role of private sector in advancing human nutrition research and
monitoring
Alliance members have supported basic nutrition research and
clinical trials, conducted food and nutrition research, surveyed
consumers about dietary and health behaviors, and assessed food
consumption patterns for selected groups. We all agree that the Federal
Government must maintain the primary responsibility for gathering
comprehensive data on all population groups and building the foundation
of fundamental nutrition monitoring research.
Conclusion
Senators, you face difficult decisions about how to set priorities
for agriculture research dollars. The practical public and private uses
of the data from nutrition research and monitoring efforts at USDA,
outlined in our testimony, are clear evidence that USDA nutrition
monitoring activities warrant your continued support. The Alliance
wants you to view nutrition research as a safeguard on Federal
expenditures. For every $1 spent on USDA nutrition monitoring research,
we assure that $5,000 of Federal funds allocated for USDA food
assistance programs are spent wisely. Factoring in the various ways the
USDA nutrition monitoring research data are applied, this multiplier
would be astronomical.
We thank you for giving the alliance a voice to explain the
significant benefits of nutritional research to agriculture and the
public well-being.
Group supporters
American Dietetic Association, American Heart Association, American
Institute for Cancer Research, American Public Health Association,
Consumer Federation of America, CropLife America, Grocery Manufacturers
of America, Institute of Food Technologists, National Food Processors
Association, National Association of WIC Directors, and Produce for
Better Health Foundation.
______
Prepared Statement of the American Farm Bureau Federation
The American Farm Bureau Federation has identified four USDA
program areas for which priority fiscal year 2003 funding is essential.
They are:
--programs key to the proper implementation of the Food Quality
Protection Act (FQPA);
--programs to expand foreign markets for agriculture;
--programs to ensure the development and use of biotechnology
products; and
--programs to guarantee proper implementation of CAFO regulations.
These priorities are highlighted in the first portion of this
statement. The second portion contains a list of additional programs
supported by Farm Bureau.
programs key to the proper implementation of the food quality
protection act (fqpa)
USDA has a critical role in achieving satisfactory implementation
of the Food Quality Protection Act (FQPA). Over the next 5 years (by
the FQPA deadline of 2006), USDA must work with EPA, agricultural
producers, food processors and registrants to ensure that agricultural
data and interests are fully considered in the tolerance reassessment
and pesticide re-registration process. During that time, between 5,000
and 6,000 separate food and feed tolerances must be reassessed for
nearly 400 different active ingredients. That process will affect
nearly 600 specialty crops, all major row crops and animal production.
USDA must have the resources to provide crucial economic benefits and
use information to the EPA to participate fully and effectively in the
tolerance reassessment process.
The following offices and programs are critical to proper
implementation of FQPA and must be funded at increased levels:
Office of Pest Management Policy (OPMP).--Primary responsibility
for coordination of USDA's FQPA obligations and interaction with EPA.
Major funding increases are necessary to review the tolerance
reassessments, particularly dietary and worker exposure information; to
identify critical use, benefit and alternatives information; and, to
work with grower organizations to develop strategic pest management
plans.
Agriculture Research Service (ARS).--Integrated Pest Management
(IPM) research, minor use tolerance research (IR-4) and research on
alternatives to methyl bromide. The Office of Pest Management Policy
should also be funded at increased levels with funding being designated
under the Secretary of Agriculture's office, rather than ARS.
Cooperative State Research, Education and Extension Service
(CSREES).--IPM research grant, IPM application work, pest management
alternatives program, expert IPM decision support system, minor crop
pest management project (IR-4), crops at risk from FQPA implementation,
FQPA risk avoidance and mitigation program for major food crop systems,
methyl bromide transition program, regional crop information and policy
centers, Pesticide Impact Assessment Program (PIAP) and the pesticide
applicator training program.
Economic Research Service (ERS).--IPM research, pesticide use
analysis program and the National Agriculture Pesticide Impact
Assessment Program (NAPIAP).
Additional funding for FQPA implementation activities is needed in
the following programs.--National Agriculture Statistics Service (NASS)
pesticide use surveys, Food Safety Inspection Service (FSIS) increased
residue sampling and analysis, Agriculture Marketing Service (AMS) and
the Pesticide Data Program (PDP).
programs to expand foreign markets for u.s. agriculture
Creating new overseas markets and expanding those that we have is
essential for a healthy agricultural economy. Continued funding of
export development programs is fundamental to improving farm income in
the short and long term. We recommend maximum funding of all export
development programs consistent with our commitments under the World
Trade Organization trade rules.
Foreign Agricultural Service (FAS).--AFBF supports an overall
increase in funding for the Foreign Agricultural Service's
International Programs and Activities. While AFBF supports proposed
budget increases in export credit and export subsidy programs and
maintenance of market development program areas, it is nonetheless
disappointed that funding for foreign food assistance programs,
particularly the Food for Progress and Section 416(b) programs have
been reduced by more than $260 million. One consequence of this
reduction is proposed to be the Global Food for Education (GFE)
program. AFBF strongly supports the GFE as a means to eliminate hunger
and foster educational improvement in developing countries. Funding for
the GFE program should be restored to at least its fiscal year 2002
level.
Public Law 480.--We support increased funding for Public Law 480
programs, the primary means by which the United States provides foreign
food assistance. The Public Law 480 programs provide humanitarian and
public relations benefits, positively impact market prices and help
develop long term commercial export markets. AFBF is opposed to the
transfer of all Public Law 480 Title II funding and program
responsibility to USAID. USDA is better positioned to administer the
program and its funding in close cooperation with the agricultural
community.
GSM Credits.--AFBF supports the full funding of the GSM credit
guarantee programs. These important export credit guarantee programs
can help make commercial financing available for imports of U.S. food
and agricultural products on deferred payment terms.
Market Access Program (MAP) and Foreign Market Development Program
(FMD).--Congress should fully fund the MAP and FMD programs. These
programs need the expertise of a fully supported Foreign Agricultural
Service that is expanded to cover all existing and potential market
posts.
Export Enhancement Program (EEP).--The 1996 FAIR Act authorizes
direct export subsidies of U.S. agricultural products through the EEP
program through fiscal year 2002 to counter the unfair trading
practices of foreign countries. AFBF supports the full funding and use
of this program in all countries, and for all commodities, where the
U.S. faces unfair competition.
Dairy Export Programs.--Farm Bureau supports full funding and use
of the Dairy Export Incentive Program to allow U.S. dairy producers to
compete with foreign nations that subsidize their commodity exports.
Sanitary and Phytosanitary Management.--To address the need for
additional inspections created by increased volumes of imports and
exports, Farm Bureau supports increased funding for USDA's Animal and
Plant Health Inspection Service (APHIS).
programs to ensure the development and use of biotechnology products
USDA must take the lead in biotechnology coordination efforts. It
is essential that the Department act in a timely manner to evaluate and
move approved products and technologies to the marketplace. USDA should
develop a positive national strategy for biotechnology research,
development and consumer education.
APHIS plays an important role in overseeing the permit process for
products of biotechnology. Funding and personnel are essential for
ensuring public confidence in biotechnology.
Grain Inspection, Packers and Stockyards Administration (GIPSA).--
Farm Bureau supports sufficient funding for the establishment and
maintenance of a GIPSA biotechnology test certification laboratory. The
creation of such a laboratory is a key element to the acceptance of
biotechnology. The ability to accurately test and identify products of
biotechnology for identity preserved and segregation purposes are
essential.
Codex Alimentarius Commission.--Farm Bureau supports adequate
funding for the U.S. CODEX office so that it can adequately represent
American interests in this important body which develops the
international food safety standards used as guidance by the World Trade
Organization. Increasingly, biotechnology is the focus of CODEX
discussions where an ongoing international effort is being led by the
European Union to place limits on our ability to export products of
biotechnology by incorporating the precautionary principle into the
CODEX general principles or biotechnology labeling discussions.
Agriculture Research Service (ARS).--Farm Bureau supports
sufficient funding for plant-breeding research programs because they
are important for maintaining a broad-based research and assuring
advancement of the technology.
proper implementation of cafo rules
The proposed Concentrated Animal Feeding Operation (CAFO)
regulation would impose billions of dollars in costs on agriculture
across the country. This attempt at regulatory expansion over
agriculture is not necessary to achieve improvement to nonpoint source
water quality. Voluntary, incentive-based programs have proven
effective by directly assisting farmers to obtain results while
maintaining the farm business.
Environmental Quality Incentives Program (EQIP).--EQIP is an
important program for assisting producers in dealing with increased
water quality regulation. We support a substantial increase in EQIP
funding over the previous years.
Conservation Technical Assistance (Natural Resources Conservation
Service).--Conservation program delivery and technical assistance must
be a priority for NRCS funding. Emphasis should be placed on
traditional technical assistance and the development of reliable
resource data for assisting producers dealing with nutrient management.
other issues: research
For over a century the food and agricultural research, extension
and education system has propelled U.S. agriculture into world
preeminence. It is imperative that the system supports, builds and
maintains facilities and a critical mass of well-trained scientists in
the public sector to ensure that the U.S. remains the leader in global
agricultural production. Farm Bureau recommends a doubling in
agriculture research funding over the next 5 years.
Emerging Diseases and Exotic Pests Research.--Disease has a direct
impact on food safety and is fundamental to international trade.
Funding is urgently needed to develop rapid diagnostics, vaccines and
products necessary to protect U.S. plants and animals from disease
outbreaks that occur naturally as well as those that could be
intentionally introduced. Farm Bureau supports full funding for ARS
emerging diseases and exotic pests research, including ways to prevent
the importation of exotic species in the ballast tanks of cargo ships.
Animal Pest Research.--Farm Bureau believes the control of plant
and animal pests is an important factor in reducing farm costs. Farm
Bureau supports research funding for TSE (Transmissible Spongiform
Encephalopathies)--especially scrapie, Johne's, PRRS (porcine
reproductive and respiratory syndrome), anthrax, cryptosporidosis, FMD
(foot-and-mouth disease), VS (vesicular stomatitis), BSE (bovine
spongiform encephalopathy), pseudorabies, hog cholera, salmonella, blue
tongue in livestock, E.coli, fire ants, and ways to immunize wildlife
against rabies.
Plant Pest Research.--Farm Bureau recommends continued research and
implementation of detection, exclusion, control and eradication
measures for plant pests including research for:
--prevention of aflatoxins and the use of aflatoxin-affected
commodities;
--lessening the impact of gypsy moth and the southern pine bark
beetle;
--methods to halt the spread of the Asian Longhorned Beetle, a deadly
threat to maple trees;
--an effective control of fire ants and ways to provide safer,
effective and practical treatments of multiyear certification
of field and container-grown nursery stock;
--ways to manage domestic European honeybees in the area where
Africanized honeybees exist;
--reducing the threat of the root-lesion nematode, Pratylenchus
neglectus; and,
--smut and bunt diseases of cereals, including karnal bunt. Farm
Bureau supports funding for the Pest Detection Initiative.
Food Quality and Safety Research.--Farm Bureau supports funding for
research to ensure the safety of food. Specifically we support funding
for research:
--to ensure the safety of food additives;
--on the irradiation (cold pasteurization) of food;
--on inspection methods to eliminate the risk from pathogens;
--food safety technology advances; and,
--voluntary food safety guidelines to help prevent microbial
contamination of fresh produce.
Aquaculture Research.--Farm Bureau supports full funding for the
regional aquaculture centers and supports federally funded U.S.
aquaculture research priorities that are developed with industry input
and direction.
Binational Agricultural Research and Development Fund.--Farm Bureau
supports increased funding for BARD and other similar programs that
maximize cooperative research efforts.
Genome Research.--Access to diverse genetic resource materials is
crucial for the development of new plant varieties that are more
resistant to insect infestation and disease and more tolerant to other
adverse environmental conditions. Genomic research is also important to
improving the economical traits of importance in livestock and poultry
that affect animal health and reproductive efficiency. Farm Bureau
supports additional money for plant, animal and microbial genome
research at USDA.
Natural Resources Research.--Farm Bureau supports funding to study
carbon credits and carbon sequestration. We favor continued research on
reuse of water; conversion of saline waters; air and water pollution;
water and soil conservation; recharging of groundwater basins;
drainage; forestry management and utilization; restoration of strip-
mined areas; weather forecasting and modification; treatment of
domestic, industrial and animal waste; coal desulfurization; causes of
pfiesteria and other natural resource problems. We support aggressive
research to address the inadequate scientific information concerning
phosphorus.
Research for new Products for Ag Commodities.--Farm Bureau supports
increased funding for research and development for new commodities and
for new uses of commodities currently under production, including
biomass, biofuels and ethanol.
Wildlife Pest and Predator Control Research.-- Farm Bureau supports
funding for research to develop practical recommendations on methods to
control wildlife pests. We also endorse research to document the losses
of livestock and game animals caused by predators and the resultant
economic loss.
Health and Nutrition Research.--Farm Bureau supports funding of
nutrition research on relationships between agricultural products and
coronary heart disease and cancer. We urge more education and research
on the impact of Lyme's Disease on animals and humans, and measures to
control West Nile Virus.
other issues: animal and plant health
Animal Health Emergency Management.--Farm Bureau supports funding
to protect agriculture and the nation's food supply, especially in
light of the terrorist attacks on September 11. Farm Bureau supports
funding for animal health monitoring, the Agriculture Quarantine
Inspection Program, programs to strengthen the capability of APHIS to
assess and monitor outbreaks of diseases in foreign countries, funding
for FSIS to improve the information technology infrastructure to
improve risk management systems, research to develop improved
detection, identification, diagnostic and vaccination methods to
identify and control threats to animal and plant agriculture.
USDA Biocontainment Facilities.--Farm Bureau appreciates the
funding received last year for upgrading USDA facilities and security,
however, more is needed. We support full funding for a joint APHIS and
ARS facility at Ames, Iowa, to meet national needs for research,
diagnosis and product testing for animal health. The existing
facilities are antiquated and inefficient and without this new
laboratory facility, the U.S. will fail to meet international standards
and to provide the level of animal disease protection necessary to
achieve a world-class National Animal Health Emergency Management
System. We support adequate funding for USDA biocontainment facilities
that are critical to maintaining world-class research on both foreign
and domestic diseases. Adequate funding is needed for the Animal
Disease Center, the National Veterinary Services Laboratory, the Center
for Veterinary Biologics and the Poison Plant Disease Center.
National Animal Health Emergency Management System.--Farm Bureau
supports full funding for the National Animal Health Emergency
Management System that was developed in cooperation with the states,
industry and the veterinary profession. These monies will enhance
APHIS's emergency preparedness and response capabilities to address
emergency animal disease issues that threaten the U.S. food supply.
Plant Pest Control.--Farm Bureau supports expansion of Plant
Protection and Quarantine personnel and facilities to take care of
increased plant imports and recommends support for the Q-37 plant
import protocol. Farm Bureau supports funding for control and/or
eradication programs for plant and animal pests including:
grasshoppers; multiflora rose; autumn olive; Johnsongrass and other
designated noxious weeds; eradication of fruit flies; Russian Wheat
Aphid; gypsy moth; southern pine bark beetles; and Plumpox virus.
Boll Weevil Eradication.--Farm Bureau recommends $77 million of
funding for boll weevil eradication to provide a 30 percent match with
producer funding and to facilitate the orderly eradication and/or
containment of the pest across the balance of the cotton-growing area.
County FSA offices should be required to maintain the collection of
funds and acreage information for the program.
Food Animal Residue Avoidance Databank (FARAD).--Farm Bureau
supports adequate funding for FARAD to allow for continued, fair,
immediate expert consultation to livestock owners and veterinarians in
the event of accidental drug or toxin exposure to livestock or poultry.
Pseudorabies.--Farm Bureau supports adequate funding to ensure that
psuedorabies stays eradicated in the U.S.
Brucellosis.--Farm Bureau supports funding for a brucellosis
control program leading to eradication of this disease in cattle. The
federal government should continue full funding of brucellosis control
activities in all infected states. Because brucellosis is communicable
from wildlife to domestic livestock and humans, we support funding to
compensate livestock owners for losses brought about by contact with
wildlife.
Johne's Disease.--Farm Bureau supports funding to develop an
accurate blood test for Johne's disease; to reduce producers' cost to
test for Johne's disease; and for a multi-year program to identify
Johne's disease-infected animals and to provide an indemnity payment
for the disposal of these infected animals.
Inspection and Grading of Meat and Poultry.--Farm Bureau recommends
that funding for any new federally mandated seafood inspection program
should be consistent with existing funding for other food commodities.
other issues: conservation
Conservation Operations.--We continue to be concerned about
adequate Natural Resources Conservation Service (NRCS) conservation
operation funding. Conservation program delivery and technical
assistance should be a priority for NRCS funding. Emphasis should be
placed on traditional technical assistance and the development of
reliable resource data for assisting producers to deal with nutrient
management and other conservation concerns.
Grazing Lands Conservation Initiative (GLCI).--We support funding
for technical assistance under the GLCI.
Environmental Quality Incentive Program (EQIP).--With regard to
conservation programs under the Commodity Credit Corporation Program
(CCC), we believe that emphasis should be placed on EQIP. EQIP is an
important program for assisting producers dealing with increased water
quality regulation and other conservation concerns. We support a
substantial increase in EQIP funding over the previous years.
Forestry Incentive Program (FIP).--Farm Bureau supports funding the
Forestry Incentive Program and adequate funding for Reforestation
Programs and for the Stewardship Incentive Program.
Farmland Protection Program.--Farm Bureau supports funding for the
Farmland Protection Program.
miscellaneous issues
Wildlife Services.--Wildlife Services should receive increased
funding for both operational and research programs.
Ag in the Classroom.--Most students no longer have firsthand farm
experience and, therefore, lack a basic understanding of our food and
fiber system. The Agriculture in the Classroom program provides real
world examples that teach about agriculture production, food safety,
nutrition and healthy lifestyles and career opportunities. Farm Bureau
supports an increase for Ag in the Classroom under CSREES.
Risk Management Agency.--Farm Bureau supports long-term funding for
the Risk Management Agency.
Ag Marketing Equity Capital Fund.--Farm Bureau supports funding for
the Agricultural Marketing Equity Capital Fund to help producers
develop value-added enterprises.
WIC Farmers Market Nutrition Program.--Farm Bureau is opposed to
elimination of both the Farmers Market Nutrition Program and the Senior
Farmers Market Nutrition Program. These programs provide locally grown
fresh fruits and vegetables for targeted at-risk populations while
providing income assistance to fruit and vegetable producers that is
not otherwise available from USDA programs.
Rural Development.--In the Rural Housing Service, Farm Bureau
supports increased funding for the Farm Labor Housing Program.
______
Prepared Statement of the American Federation of Government Employees,
Local 3354, and the American Federation of State, County, and Municipal
Employees, Local 3870
protecting inherently governmental functions
The loan and grant programs of Rural Development and Farm Service
Agency enable very low to moderate-income rural Americans to become
successful homeowners, small family farmers, and to provide economic
development in small rural communities. As the ``lender of last
resort'', these USDA agencies provide subsidies and supervised credit
loan servicing options to lower income citizens who cannot successfully
obtain credit from private sources. These specialized services include
eligibility determinations for interest credit, interest rate
adjustments, borrower's assistance, reamortizations, moratoriums, debt
settlements, deferrals, set-asides, rescheduling, write-downs, write-
offs, and net recovery buyouts, affecting the amount of government
funds that USDA customers receive and/or pay back to the government.
USDA employees in these agencies also disburse, collect, and account
for the government subsidies and loan funds.
Under OMB Circular A-76, only commercial activities, not inherently
governmental functions, are to be subjected to cost comparisons for
potential contracting out. This OMB policy is designed to avoid an
unacceptable transfer of official responsibility to Government
contractors. OMB's Office of Federal Procurement Policy (OFPP) Policy
Letter 92-1 defines an ``inherently governmental function'' as
``. . . function that is so intimately related to the public
interest as to mandate performance by Government employees'
Governmental functions normally fall into two categories: (1) the act
of governing, i.e., the discretionary exercise of Government authority,
and (2) monetary transactions and entitlement. . . An inherently
governmental function involves, among other things, the interpretation
and execution of the laws of the United States so as to:
``. . . bind the United States to take or not to take some action
by contract, policy, regulation, authorization, order, or otherwise;
``. . . significantly affect the life, liberty, or property of
private persons;
``. . . exert ultimate control over the acquisition, use, or
disposition of the property, real or personal, tangible or intangible,
of the United States, including the collection, control, or
disbursement of appropriated and other Federal funds. . .''
Clearly, the above-mentioned activities of the Farm Service Agency
and Rural Development are included in this OMB policy definition of
inherently governmental functions. In recognition of this fact, the
loan servicing activities of Rural Development have been removed from
that agency's list of commercial activities suitable for A-76
contracting out cost comparisons.
However, the farm loan activities of the Farm Service Agency that
are located in St. Louis, Missouri, have been listed in that agency's
inventory of commercial activities. Reportedly, some of these
activities are scheduled for an A-76 contracting out cost comparison in
2002 or 2003.
An effort to contract out any of the farm loan servicing functions
would violate the policy against contracting out of inherently
governmental functions. It would also cause the entire farm loan
servicing program throughout the country to be up for grabs. No private
sector entity would be interested in a portion of these activities
without trying to take over all of them. References in the USDA Budget
Blueprint to possible centralization of farm loan servicing activities
also suggest the danger of contracting out all such activities.
The success of USDA employees in servicing the farm loan programs
is described by the delinquency figures displayed in the following
chart. Since 1996, the rate of delinquency has dropped over 10 percent
for Direct Loans and over 2 percent for Guaranteed Loans.
------------------------------------------------------------------------
Fiscal year Direct loans Guarantee
------------------------------------------------------------------------
1996.................................... 26.58 4.44
1997.................................... 21.74 4.62
1998.................................... 19.68 4.97
1999.................................... 14.72 4.95
2000.................................... 17.06 3.54
2001.................................... 15.86 2.23
------------------------------------------------------------------------
Therefore, we are seeking inclusion of the following language in
the 2003 Agriculture Appropriations bill:
Inherently Government Functions
SEC. 7____. None of the funds appropriated or otherwise made
available by this or any other Act shall be available to enter into or
renew a contract at a total cost of $25,000 or more for the performance
of any function that affects eligibility determination, disbursement,
collection or accounting for government subsidies provided under any of
the direct or guaranteed loan programs of the Rural Development mission
area or the Farm Service Agency.
Such language may also be needed in a 2002 Supplemental
Appropriations bill, or other means may be necessary to keep this
contracting out from taking place during fiscal year 2002.
stop usda attempts at electronic snooping!
The Rural Housing Centralized Servicing Center (CSC) initiated an
effort to implement electronic surveillance and recording of low-income
rural homeowners who call the CSC for servicing assistance and
counseling. The Agency has not identified benefits in customer service
over and above the existing quality control mechanisms that would
result from such electronic surveillance--certainly not enough to
justify the invasion of borrowers' privacy or to outweigh the costs of
both the technology and the increased job stress to the employees.
The Rural Housing Service provides vital opportunities for rural
low-income borrowers, who otherwise would not be able to become
homeowners. Borrowers reveal important income and debt information, as
well as family obligations, during their calls with the Center. This
information assists RHS in its service to these families, by helping
families to work out any financial problems. Borrowers must have the
confidence in RHS to reveal personal information. Their privacy must
remain protected.
When Agriculture Secretary Ann Veneman appeared before the Senate
Agriculture Appropriations Subcommittee on February 27, 2002, Senator
Cochran (R-MS), on behalf of Senator Bond (R-MO), who was on the floor
helping manage the Election Reform bill, raised an issue that impacts
the Rural Housing Centralized Servicing Center in St. Louis and
citizens applying for low-income rural housing loans. Senator Cochran
asked Secretary Veneman to delay implementation of a new phone
conversation recording system until a series of Senator Bond's
questions that have been provided to the Department are answered.
Upon review of USDA's responses, the Senator has asked the
Secretary to permanently halt this effort. Should USDA implement
despite the Senator's request, we ask the Subcommittee to develop
appropriate bill language to ensure that USDA does not record telephone
conversations between customers and employees. We have developed the
following language to achieve that purpose, should it become necessary:
Electronic Surveillance
SEC. 7____. None of the funds appropriated or otherwise made
available by this or any other Act shall be available to record
telephone conversations between USDA employees and USDA customers.
afge and afscme funding priorities for agriculture appropriations
Increased Salaries & Expenses funding for the Department of
Agriculture's Rural Development mission area remains our No. 1 funding
priority for the Subcommittee's Appropriations for Agriculture, Rural
Development, and Related Agencies! We also support sufficient S&E
funding for the Farm Service Agency to at least maintain current
staffing levels.
Since 1995, the Congress has increased Rural Development programs
by 69 percent overall; yet, our staffing levels have been cut by 28
percent. Our servicing areas in the Field, and our workload in the
National and Finance Offices, has doubled or tripled. With decreased
staffing, customer service suffers. Almost no funds have been allocated
to training for the past six years! The situation has deteriorated to
the point where State Directors have had to stop most overtime work.
Use of privately owned vehicles for official travel has been
prohibited, and use of government-owned vehicles has been limited.
These restrictions on travel and overtime make it next to impossible
for our employees to do our jobs! Timely inspections are not completed.
Interviews of potential borrowers have to be conducted by phone. Night
meetings of housing developers, water districts, and community
development committees cannot be attended.
It is laborers and white and blue-collar workers that are the
infrastructure of our rural communities, in addition to our farmers. If
we can't provide housing, utilities, and jobs to enable them to be
productive taxpaying citizens, how can we say the cost outweighs the
benefits? Low-income rural Americans need public servants, with
sufficient expense funds to support travel, overtime, training and
information technology, to deliver these housing, community, and
business development programs.
The Rural Development (RD) loan and grant programs are just as
important, even more so in terms of number of people reached, as the
various programs delivered by FSA. RD needs staff to deliver these
programs, just like FSA needs staff to deliver its programs! It is even
more imperative that Congress increase the appropriated S&E funding for
Rural Development because RD does not have access to CCC funds,
university grants, user fees, or any other outside source of funds to
help support its employees.
Due to the President's proposal to charge retirement and health
expenses to individual agency Salaries & Expense accounts, a proposal
which we oppose, it is difficult to determine exactly what S&E amount
is proposed. It is our understanding that the proposal would maintain
essentially level staffing for Rural Development and Farm Service
Agency. This is an absolute must.
The House Budget resolution included a provision to ensure parity
in pay increases between the military and civilian employees. We
request the Subcommittee add sufficient additional funds to ensure that
existing staff levels can at least be maintained, assuming pay parity
between civilian and military employees again in 2003.
Increased public investments in Rural Housing are needed to provide
economic security and stimulus.
Since its inception in 1950, the Section 502 direct program has
produced over 1.9 million units of safe, decent, sanitary housing and
supported a variety of innovative housing development opportunities
such as the mutual self-help housing program (sweat equity). Over the
past ten years, however, the program's production capacity has declined
41 percent, from 26,203 units in 1988 to only 15,561 in 1998. It is
even more startling to compare the paltry 1998 production to the over
132,000 units produced in 1976.
There is currently a $5 billion backlog in applications for 502
direct loans. Especially considering that the cost per house to the
government has been only $10,000, Congress should invest much more in
the 502 direct loan program in order to provide relief for homelessness
and an economic stimulus to rural America.
AFGE and AFSCME support significant changes in Federal funding
levels for housing, including the following recommendations of the
Housing Assistance Council and coalitions in which AFGE participates to
increase Federal housing funds by $15 billion.
--Increase Federal housing funds by $15 billion. This spending will
open the door to economic recovery. It will give more than half
a million American families (including many senior citizens) a
decent, affordable place to call home. Today, these families
are spending more than half their incomes on housing or are
living in dilapidated or unsafe conditions. These funds would
spur the production of 85,000 new homes and preserve an
additional 225,000 through rehabilitation. This investment also
would provide a significant boost to the economy by creating
250,000 new jobs.
--Ensure that Federal housing programs' first priority is serving
people who are most in need, including poor rural households.
--Adopt the administration's proposed homeownership tax credit.
--Create a National Housing Trust Fund, as described by the National
Housing Trust Fund Campaign at www.nhtf.org. The fund should be
used primarily for rental housing, both new production and the
preservation or rehabilitation of existing housing that is
affordable for low-income people. The Trust Fund should be
capitalized with ongoing, permanent, dedicated and sufficient
sources of revenue to meet the goal of providing 1,500,000
housing units by 2010. At least 75 percent of the Trust Fund
dollars should be used for housing that is affordable for
extremely low income households, that is, those with incomes
under 30 percent of the area median.
--Recognize the interdependence of housing programs. For example, it
is counterproductive to increase SHOP funding while cutting
Section 502 loans. In rural areas, most homebuyers
participating in self-help production assisted by SHOP funds
get their mortgages from Section 502 because their incomes are
too low for conventional loans.
--Maintain 2002 funding levels for HUD's Rural Housing and Economic
Development program ($25 million) and for USDA's Rural Capacity
Development Initiative ($6 million). Local organizations in
many high-need rural areas need to increase their capacity to
meet their communities' needs. Both programs have helped to
achieve that goal.
At a minimum, we urge the Agriculture Appropriations Subcommittees
to
--increase 502 Direct loan funding to $1.5 billion for 2003, and
--increase 515 Rental loan funding to $300 million for 2003.
The recent GAO report (GAO-02-76), comparing the characteristics
and costs of Federal rental housing assistance, supports our contention
that 515 is a good program, the best for low and very low income rural
Americans. It would be a mistake to transfer this program to HUD, as
some have proposed.
AFGE and AFSCME urge Congress to re-examine the 515 Rural Rental
Housing program. Past problems were limited in scope and have been
corrected. 515 is being starved for appropriations, even though the GAO
report shows it to be one of the best rental programs the government
has--certainly the best for rural America. It is time to restore
realistic appropriations.
In the past two years alone there were approximately $137 million
requests for new construction and $270 million requests for repair and
rehabilitation. RHS spent all of its available funds, amounting to $100
million in new construction and $100 million for repair/rehab. It is
already estimated that for fiscal year 2003, there will be $120 million
in requests for new construction and $140 million for repair/rehab.
Additional rental assistance would also be needed to support this
additional new construction.
Section 515 serves the most needy of rural residents--fulfilling
USDA's stated Strategic Goal. Almost 1,000,000 rural renters suffer
from multiple housing problems including substandard living conditions
and cost burden. Section 515 has a low delinquency rate of only 1.6
percent. The average annual tenant income is $7,980, which is below 30
percent of the nation's rural median household income.
Public investments in Limited Resource and Beginning Farmers will
also improve homeland security and provide much-needed economic
stimulus to rural America.
Investment in the Farm Ownership Direct Loan program needs to be
increased, at least back to fiscal year 2000 levels. In many states, as
much as 70 percent of the farm land will change ownership over the next
fifteen years. Unless the direct farm ownership loan program is
significantly enhanced, most of that farm land will go to the existing
large farms, and the benefits and productivity of family farming will
continue to be wiped out.
We also ask the Subcommittee to provide the authorized amount of
$10 million for Outreach and Technical Assistance Program for Minority
Farmers. The Outreach and Technical Assistance program is the most
effective tool developed to carry out the mission of USDA as the
technical provider for small farmers. For a very small investment, the
program has significant multiplier effects in poor communities where
there exist few other possibilities for sustainable economic
development.
______
Prepared Statement of the American Honey Producers Association, Inc.,
and the American Beekeeping Federation
My name is Lyle Johnston of Rocky Ford, Colorado. I am President of
the American Honey Producers Association. With me is Pat Heitkam of
Orland, California, President of the American Beekeeping Federation. We
are submitting this joint statement on behalf of both of our
organizations. The American Honey Producers Association is a national
organization of commercial beekeepers actively engaged in honey
production throughout the country. The American Beekeeping Federation
has members in every state who are involved in all facets of the
beekeeping and honey industry.
First, both organizations wish to thank the Subcommittee for the
support it is has provided in the past for agricultural research
activities on behalf of the beekeeping industry. Such support has
enabled the Agricultural Research Service (``ARS'') to meet the
critical needs of the industry. To continue this valuable research, our
organizations request that Congress maintain Federal honey bee research
funding at the fiscal year 2002 levels.
the president's budget proposal
The President's fiscal year 2003 budget proposes deep cuts for four
Honey Bee Research Laboratories operated by ARS and located at Weslaco,
Texas; Baton Rouge, Louisiana; Beltsville, Maryland; and Tucson,
Arizona. These cuts, totaling more than $3.2 million--or 56 percent--of
the laboratories' current $5.7 million budget, would have a devastating
effect on the honey industry as well as on all pollination-dependent
agriculture and many native plants.
In the President's fiscal year 2003 budget, the research programs
conducted by these laboratories would sustain a disproportionate
setback. While suffering a 56 percent cut in funding, the ARS Honey Bee
Research Laboratories would bear almost one-third of the total net ARS
budget reductions for fiscal year 2003. This seems particularly
inappropriate considering the substantial benefits that flow from this
program, which helps assure the vitality of the American honey industry
and U.S. agriculture.
These four ARS laboratories provide the first line of defense
against exotic parasite mites, Africanized bees, brood diseases and
other new pests and pathogens that pose serious threats to the
viability and productivity of honey bees and the plants they pollinate.
The President's budget requires shuttering three of the four honey bee
research laboratories and eliminating over 50 percent of the personnel
supporting these research efforts. If such cuts were enacted,
scientists at the remaining laboratory at Weslaco would be overburdened
and forced to discontinue essential research, thereby jeopardizing the
U.S. honey bee industry and the production of agricultural crops that
require pollination by honey bees.
the importance of honey bees to u.s. agriculture
Honey bees fill a unique position in contemporary U.S. agriculture.
They pollinate more than 90 food, fiber, and seed crops. Honey bees are
necessary for the production of such diverse crops as almonds, apples,
oranges, melons, vegetables, alfalfa, soybeans, sunflower, and cotton,
among others. A Cornell University study, published in 2000, estimated
that the annual value of agriculture production attributable to honey
bee pollination exceeds $14.6 billion. The increased value of such
crops comes in the form of both better yields and improved quality. In
addition, honey bees are responsible for the production of an average
of 200 million pounds of honey annually, the sales of which helps
sustain this Nation's beekeepers.
Since 1984, the survival of the honey bee has been threatened by
continuing infestations of mites and pests for which appropriate
controls are being developed by scientists at the four ARS
laboratories. These pests and diseases, especially Varroa mites and the
bacterium causing American foulbrood, are now resistant to chemical
controls in many regions of the country. Unfortunately, there is no
simple solution to these problems, and the honey bee industry is too
small to support the cost of the needed research, particularly with the
current depressed state of the industry. Further, there are no funds,
facilities, or personnel elsewhere available in the private sector for
this purpose. Accordingly, the beekeeping industry is dependent on
research from public sources for the scientific answers to these
threats. The key to the survival of the honey industry lies with the
honey bee research programs conducted by ARS.
the work of the ars honey bee research laboratories
The ARS Honey Bee Research Laboratories work together to provide
research solutions to problems facing businesses dependent on the
health and vitality of honey bees. The findings of these laboratories
are used by honey producers to protect their producing colonies and by
farmers and agribusinesses to ensure the efficient pollination of
crops. Each of the four ARS laboratories focuses on different problems
facing the U.S. honey industry and undertakes research that is vital to
sustaining honey production in this country. Furthermore, each
laboratory has unique strengths and each is situated and equipped to
support independent research programs which would be difficult, and in
many cases impossible, to conduct elsewhere. Even consolidating these
laboratories would severely undercut recent gains in research because
of the uniqueness of localized conditions. Consequently, research
conducted at one location is not necessarily applicable to another due
to differences in climate.
Research at the ARS Weslaco Laboratory
Both the American Honey Producers Association and the American
Beekeepers Federation recommend that the appropriation for the Weslaco
laboratory be approved at not less than current levels. This facility
focuses its research efforts on developing technologies to manage honey
bees in the presence of Africanized honey bees, parasitic mites, and
other pests. In order to ensure that further pests are not introduced
into the U.S., scientists at the Weslaco facility provide technical
assistance to agriculture departments in foreign countries on the
control of parasitic mites. The laboratory has worked with officials in
Guatemala, Costa Rica, Mexico, and South Africa to protect the U.S.
honey bee population from further devastation by infestation of foreign
parasites, diseases, and other pests. This inter-governmental
cooperation is necessary to ensure the continued viability of the U.S.
honey bee industry.
Retaining the current (fiscal year 2002) level of funding for the
Weslaco laboratory will enable it to continue its work in finding a
chemical solution to parasitic mites that are causing a crisis for the
U.S. beekeeping and pollination industries. Varroa mites are causing
the loss of hundreds of thousands of domestic honey bee colonies
annually as well as devastating wild bee colonies. The only chemical
which has received a general registration for Varroa mite control,
fluvalinate, is being rendered ineffective by the development of
resistant mite populations. The ARS laboratory at Weslaco has been
developing alternative chemicals to control the Varroa mite. It appears
that the laboratory has found a chemical, coumaphos, with the potential
of being equally effective as fluvalinate. This is a real breakthrough
for the bee industry, but as of today we have only been able to obtain
section 18 emergency registrations. Much work remains to be done before
a section 3 general registration is granted by EPA.
Additionally, the laboratory is researching methods that may
control the small hive beetle. Since its discovery in Florida in 1998,
this pest has caused severe bee colony losses in California, Florida,
Georgia, South Carolina, North Carolina, Pennsylvania, Ohio, and
Minnesota. Estimates put these losses in just one season at over 30,000
colonies. The beetles are now spreading to other areas in the East
coast. Although it seems that coumaphos may help control this insect as
well as the Varroa mite, it has not yet received a section 3
registration. The ARS honey bee research scientists at the Weslaco
laboratory have been working overtime to find chemicals, techniques,
pheromones, or other methods of controlling the beetle. Time is of the
essence, as a control must be found immediately as all the bee colonies
in the Western Hemisphere are at risk.
Research at the ARS Baton Rouge Laboratory
Our organizations also recommend that the appropriation for the ARS
laboratory at Baton Rouge, Louisiana be kept at current levels. The
Baton Rouge facility is the only laboratory in the U.S. developing
long-term, genetic-based solutions to the Varroa mite. Existing stocks
of U.S. honey bees are being tested to find stocks which exhibit
resistance to the parasitic mites. Research scientists with the
laboratory have also been to the far corners of the world looking for
mite resistant bees. For example, in eastern Russia, they found bees
that have co-existed for decades with the mites and survived. Using
these bees, the laboratory develops stocks of honey bees resistant to
the parasites. Before these new stocks are distributed to American
beekeepers, the laboratory ensures that the resistance holds up under a
wide range of environmental and beekeeping conditions, testing
attributes such as vigor, pollination, and honey.
The Baton Rouge facility also operates the only honey bee
quarantine and mating station approved by the Animal and Plant
Inspection Service. These stations are necessary to ensure that new
lines of bees brought into the U.S for research and development are
free of diseases unknown in the U.S.
In addition, Baton Rouge research scientists are focused on the
applications of new technologies of genomics. This work has the
potential to enhance the proven value of honey bee breeding for
producing solutions to the multiple biological problems that diminish
the profitability of beekeeping.
Research at the ARS Tucson Laboratory
Both of our organizations also request that funding for the ARS
Honey Bee Research Laboratory in Tucson be kept at the current level
for fiscal year 2003. This research center is the only honey bee
laboratory serving the needs of beekeepers and farmers in the western
U.S. The facility works to improve crop pollination and honey bee
colony productivity through quantitative ecological studies of honey
bee behavior, physiology, pest and diseases, and feral honey bee
bionomics.
Because more than one million colonies are transported from across
the country for pollination into crops grown in the western U.S., the
Tucson research center addresses problems that arise from transporting
and introducing colonies for pollination of crops such as almonds,
plums, apricots, apples, cherries, citrus, alfalfa, vegetable seed,
melons, and berries. This research center has been instrumental in
disseminating information on technical issues associated with the
transport of bee colonies across state lines. Additionally, in order to
ensure that transported colony populations remain stable during
transport and also during periods before the crop to be pollinated
comes into bloom, scientists at the laboratory have developed an
artificial diet that stimulates brood production in colonies. A large
bee population is necessary to ensure that efficient pollination
occurs, creating superior quality crops.
Research at the ARS Beltsville Laboratory
Again, both organizations request that that funding for the ARS
Honey Bee Research Laboratory in Beltsville remain at fiscal year 2002
levels. This facility, the oldest of the Federal bee research centers,
conducts research on the biology and control of honey bee parasites,
diseases, and pests to ensure an adequate supply of bees for
pollination and honey production. Using biological, molecular,
chemical, and non-chemical approaches, scientists in Beltsville are
developing new, cost-effective strategies for controlling parasitic
mites, bacterial diseases, and emergent pests that threaten honey bees
and the production of honey.
The laboratory also develops preservation techniques for honey bee
germplasm in order to maintain genetic diversity and superior honey bee
stock. Scientists at the facility also provide authoritative
identification of Africanized honey bees and diagnosis of bee diseases
and pests for Federal and State regulatory agencies and beekeepers on a
worldwide basis. In operating this bee disease diagnosis service, the
Beltsville facility receives over 2,000 samples annually from across
the U.S.
conclusion
In conclusion, we wish to thank you again for your support of honey
bee research in the past. Both the American Honey Producers Association
and the American Beekeeping Federation would appreciate your continued
support by restoring the current level of funding for each of the four
ARS Honey Bee Research Laboratories located in Weslaco, Texas; Baton
Rouge, Louisiana; Beltsville, Maryland; and Tucson, Arizona. Only
through research can we have a viable U.S. beekeeping industry and
continue to provide stable and affordable supplies of bee pollinated
crops which make up fully one-third of the U.S. diet.
Furthermore, we urge you to reject any effort to cut the operating
budgets of these vitally important research laboratories by
consolidating their functions. If enacted, the proposed consolidation
and its resulting budget and staff reductions would significantly
diminish the quality of research conducted by these laboratories,
harming honey producers as well as farmers who harvest pollination-
dependent agriculture. Congress cannot allow these cuts to occur and
must restore this funding to the ARS Honey Research Laboratories.
Mr. Heitkam and I would be pleased to respond to any questions that
you or your colleagues may have.
______
Prepared Statement of the American Indian Higher Education Consortium
Mr. Chairman and Members of the Subcommittee, on behalf of the
American Indian Higher Education Consortium (AIHEC) and the 30 Tribal
Colleges and Universities that comprise the 1994 Land Grant
Institutions, we thank you for this opportunity to share our funding
requests for fiscal year 2003.
This statement is presented in three parts: (a) a summary of our
fiscal year 2003 funding request, (b) a brief background on Tribal
Colleges and Universities, and (c) an outline of the 1994 Tribal
College Land Grant Institutions' plan using our authorized land grant
programs, and the Rural Communities Advancement Program (RCAP), to
fulfill the agricultural potential of American Indian communities, and
to ensure that American Indians have the skills needed to maximize the
economic development potential of our resources.
summary of requests
We respectfully request the following funding levels for fiscal
year 2003 for our established land grant programs. Specifically, we
request: $5 million for the 1994 institutions' extension grants
program; $12 million payment to the Native American endowment fund; $3
million for the higher education equity grants; and $3 million for the
1994 institutions' research grants program.
In addition, we request $5 million be set aside out of the Native
American--Rural Community Advancement Program, for the 1994 Tribal
College Land Grant Institutions to help address the critical facilities
and infrastructure needs at the colleges that impede our ability to
participate fully as land grant partners.
background on tribal colleges and universities
Today, 140 years after enactment of the first land grant
legislation, tribal colleges, more than any other higher education
institutions, truly exemplify the original intent of the land grant
legislation. The first Morrill Act was enacted in 1862 specifically to
bring education to the people and to serve their fundamental needs. The
1994 land grants fit this definition well, as they are community-based
institutions.
The Tribal College Movement was launched in 1968 with the
establishment of Navajo Community College, now Dine College, serving
the Navajo Nation. A succession of tribal colleges soon followed,
primarily in the Northern Plains region. In 1972, the first six
tribally controlled colleges established the American Indian Higher
Education Consortium to provide a support network for member
institutions. Today, AIHEC represents 32 Tribal Colleges and
Universities located in 12 states, begun specifically to serve the
higher education needs of American Indian students. Collectively, they
serve approximately 30,000 full and part-time students from over 250
Federally recognized tribes.
Tribal colleges offer primarily 2-year degrees, although in recent
years some institutions have begun to offer baccalaureate and graduate-
level degrees. The vast majority of the tribal colleges are fully
accredited by independent, regional accreditation agencies.\1\ Tribal
colleges serve as community centers, providing libraries, tribal
archives, career centers, economic development and business centers,
public meeting places, and child care centers. Despite our many
obligations, functions, and notable achievements, tribal colleges
remain the most poorly funded institutions of higher education in this
country. Most of the 1994 Land Grant Institutions are reservation
based, located on Federal trust territory. States have no obligation
and in most cases, provide no funding to tribal colleges. In fact, most
states do not even fund our institutions for the non-Indian state
resident students who attend our colleges despite the fact that non-
Indian enrollment at the tribal colleges averages 20 percent.
---------------------------------------------------------------------------
\1\ The Tribal Colleges and Universities are accredited by regional
accreditation agencies and like all institutions, must undergo
stringent performance reviews on a periodic basis. The higher education
division of the respective regional accreditation agency accredits
twenty-seven of the TCUs. Two TCUs are at the Pre-candidate stage as
they complete work to attain Candidate status; one TCU is at Candidate
status. Two TCUs are accredited as ``Vocational/Adult Schools'' by the
respective regional accreditation agency.
---------------------------------------------------------------------------
Today, one in five American Indians live on reservations. As a
result of 200 years of Federal Indian policy--including policies of
termination, assimilation and relocation--many reservation residents
live in abject poverty comparable to that found in Third World nations.
Through the efforts of tribal colleges, American Indian communities are
receiving services they need to reestablish themselves as responsible,
productive, and self-reliant. It would be tragic not to expand the
modest investment in, and capitalize on, the human resources that will
help open new avenues to economic development, specifically through
enhancing the tribal colleges' land grant programs, and adequate access
to information technology.
1994 land grant programs--ambitious efforts to reach economic
development potential
Tragically, due to lack of expertise and training, millions of
acres on our reservations lie fallow, under-used, or have been
developed through methods that render the resources non-renewable. The
Equity in Educational Land Grant Status Act of 1994 is our hope for
turning this situation around. Our current land grant programs are
modest, yet vitally important to us. It is essential that American
Indians learn more about new and evolving technologies for managing our
lands. We are committed to being productive contributors to the
agricultural base of the nation and the world.
Extension Programs.--The 1994 Institutions' extension programs help
address economic development through land use. These programs have
grown substantially in idea and scope since they were initially
implemented in fiscal year 1996. The current single-year competitive
grants process, for what have developed into flourishing multiyear
projects, is no longer an effective or efficient way to administer
these important programs. A mechanism for multi-year funding needs to
be implemented to give these programs much needed financial stability.
In fiscal year 2002, the 1994 institutions were awarded $3,280,000
for extension grants. Additional funding is needed to support these
programs, designed to address the inadequate extension services
provided on Indian reservations by the states. It is important to note
that the 1994 extension program is specifically designed to complement
and build upon the Indian Reservation Extension Agent program, and is
not duplicative of other extension activities.
For the reasons outlined above, we request Congress support this
program by appropriating funding at the authorized level of $5 million,
and include report language to encourage the implementation of a multi-
year program model to sustain the growth and further success of these
essential community based programs.
Native American Endowment Fund.--Endowment installments paid into
the 1994 Institutions' account remain with the U.S. Treasury--only the
interest is distributed annually to our colleges. The latest annual
interest payment (fiscal year 2001) distributed among all 30 of the
1994 Land Grant Institutions totaled $1,192,019.
Just as other land grant institutions historically received large
grants of land or endowments in lieu of land, this sum assists 1994
Land Grant Institutions in establishing and strengthening our academic
programs in such areas as curricula development, faculty preparation,
instruction delivery, and beginning with the funds distributed this
year, to address our critical infrastructure issues. Many of the
colleges have used the endowment funds in conjunction with the
Education Equity grants funds to develop and implement programs. In
fiscal year 2001, language was included adding construction,
renovation, and repair of our facilities to the list of eligible uses
of the endowment funds. The first funds to be used for infrastructure/
construction needs are those that were disseminated to the 1994
Institutions this year. As earlier stated, tribal colleges often serve
as primary community centers and although conditions at some have
improved substantially, many of the colleges still operate under
deplorable conditions. Most of the tribal colleges report facilities
needs as one of their top priorities. Fort Belknap College in Harlem,
MT is planning on using a portion of their limited land grant endowment
funds for work on a GIS/GPS project on the campus and reservation. The
focus of the project is to provide a detailed map necessary for
strategic planning for campus facilities. When asked how the 1994
Institutions plan to use their endowment funds with regard to
facilities needs, the responses received echo one common message,
increased funds for facilities are essential for the colleges to
implement the various phases of their individual campus renovation/
upgrade and construction plans. However, the amount that each college
currently receives from this endowment is too little to address
curricula development and instruction delivery, and the necessary
facilities projects at the colleges. In order for the 1994 Institutions
to become full partners in this nation's great land grant system, we
need and deserve the facilities and infrastructure necessary to engage
in education and research programs vital to the future health and well-
being of our reservation communities. We respectfully request Congress
build upon this much-needed base fund by increasing the fiscal year
2003 endowment fund payment to $12 million.
1994 Institutions' Educational Equity Grant Program.--Closely
linked with the endowment fund, this program provides $51,619 per 1994
Institution to assist in academic programs. Through the modest
appropriations made available since fiscal year 1996, the tribal
colleges have been able to begin to support vital courses and planning
activities specifically targeted to meet the unique needs of our
respective communities.
The 1994 Institutions have developed and implemented courses and
programs in natural resource management, environmental sciences,
horticulture, forestry, buffalo production and management, and food
science and nutrition--to address epidemic rates of diabetes and
cardiovascular disease on reservations. If more funding were available
through the Educational Equity Grant Program, tribal colleges could use
their endowment funds to supplement other sources of funding for
facilities available to address their critical infrastructure issues.
We respectfully request an increase in funding to $3 million, to allow
the colleges to build upon the courses and activities that the initial
funding launched.
1994 Research Program.--As the 1994 Land Grant Institutions have
begun to enter into partnerships with 1862/1890 land grants through
research projects, impressive efforts to address economic development
through land use have come to light. Our research program illustrates
an ideal combination of Federal resources and tribal college-state
institution expertise, with the overall impact being far greater than
the sum of its parts. We are requesting increased funding for our
research program, which was authorized in the Agriculture Research,
Extension, and Education Reform Act of 1998, at ``such sums as
necessary.'' We recognize the budget constraints that Congress is
working under. However, we believe that $998,000, our fiscal year 2002
appropriated level, is simply not adequate when there are 30
institutions competing for these precious research dollars. This
research program is vital to ensuring that tribal colleges finally
become full partners in the nation's land grant system. Many of our
institutions are currently conducting agriculture-based applied
research, yet finding the resources to conduct this research to meet
their communities' needs is a constant challenge. This research
authority opens the door to new funding opportunities to maintain and
expand the research projects begun at the 1994 Institutions, but only
if adequate funds are appropriated. The following is an example of the
first projects to be funded under this vital new program.
Chief Dull Knife College in Lame Deer, Montana has launched a
research project to determine the ecological role of indigenous
functional plant groups as they relate to an invasive plant species.
The nutrient and hydrologic cycles as well as the energy (biomass) flow
of the non-indigenous invader (knapweed) and that of indigenous
functional plant groups will be determined. From this, ecological
processes on weed management and ecological impacts can be defined. The
evaluation phase of the project will be to implement invasive plant
management techniques on spotted knapweed infested rangeland on the
Northern Cheyenne Reservation. Results will be shared with the
cooperating institutions and disseminated through public interpretive
and informational meetings.
Other projects launched in the initial round of programs funded
include soil and water quality projects, amphibian propagation,
pesticide and wildlife research, range cattle species enhancement, and
native plant preservation for medicinal and economic purposes. We
strongly urge Congress to fund this program at $3 million to enable our
institutions to develop and strengthen their research potential.
Rural Community Advancement Program (RCAP).--In fiscal year 2001,
$24 million of the RCAP funds were appropriated for loans and grants to
benefit Federally recognized Native American Tribes. Report language
declared that the conference committee expected $4 million be made
available for community facility grants for Tribal College
improvements. As stated earlier, the facilities at many of the 1994
Land Grant Institutions are in desperate need of repair and in many
cases replacement. We urge the Subcommittee to designate $5 million of
the Native American RCAP funds to address the critical need for
improving the facilities at the 30 Tribal College Land Grant
Institutions. Additionally, we respectfully request report language
directing the Department of Agriculture to set aside a minimum of $5
million of these RCAP program funds for each of the next 5 fiscal years
to allow our institutions the means to solidly address our facilities
needs.
conclusion
The 1994 Land Grant Institutions have proven to be efficient and
effective tools for bringing education opportunities to American
Indians and hope for self-sufficiency to some of this nation's poorest
regions. The modest Federal investment in the tribal colleges has
already paid great dividends in terms of increased employment,
education, and economic development. Continuation of this investment
makes sound moral and fiscal sense. American Indian reservation
communities are second to none in their need for effective land grant
programs and as earlier stated, no institutions better exemplify the
original intent of the land grant concept than the 1994 (tribal
colleges) Institutions.
We appreciate your long-standing support of the Tribal Colleges and
Universities and are also grateful for your commitment to making our
communities self-sufficient. We look forward to continuing our
partnership with you, the U.S. Department of Agriculture, and the other
members of the nation's land grant system--a partnership that will
bring equal educational, agricultural, and economic opportunities to
Indian Country.
Thank you for this opportunity to present our funding requests
before this Subcommittee. We respectfully request your continued
support and full consideration of our fiscal year 2003 appropriations
requests.
______
Prepared Statement of the American Rivers
This year, American Rivers was joined by over 600 local, regional
and national conservation organizations \1\ from all 50 states in
calling for significantly increased funding for the Environmental
Quality Incentives Program (EQIP), the Wildlife Habitat Incentives
Program (WHIP) and in supporting an expansion of the Conservation
Reserve Program (CRP) and Wetlands Reserve Program (WRP) acreage limits
in fiscal year 2003. Each of these programs incorporates voluntary
landowner participation with a Federal investment in conservation of
the nation's farmlands and environment for future generations. I urge
that these increases be incorporated in the Agriculture Appropriations
bill for fiscal year 2003.
---------------------------------------------------------------------------
\1\ These groups have endorsed ``The River Budget 2003'', a report
of national funding priorities for local river conservation. A list of
groups endorsing the River Budget can be viewed at http://
www.americanrivers.org/riverbudget/default.htm.
---------------------------------------------------------------------------
environmental quality incentives program (eqip)
The health of America's agricultural lands is fundamental to the
nation's well-being. These lands support an industry of great value,
provide important habitat for a large portion of the nation's birds,
fish, and wildlife, and have a significant impact on river health. The
Environmental Quality Incentives Program (EQIP) is a voluntary program
that helps farmers and ranchers facing threats to soil, water, and
other natural resources develop and implement successful conservation
practices.
EQIP focuses largely on lands that face significant natural
resource problems or are particularly environmentally sensitive. As
these priority areas are identified locally, conservation districts
convene working groups of key Federal, State, and local agency
representatives to propose conservation plans for these areas.
Communities play a significant role in the planning process, ensuring
that the plans fully reflect local needs and priorities. Once Natural
Resources Conservation Service representatives select conservation
plans, EQIP staff provide technical, educational, and financial
assistance to farmers and ranchers to help them implement management
plans for nutrients, manure, pests, irrigation, water, and wildlife
habitat practices. Farmers may also apply for 5- to 10-year EQIP
contracts that provide financial incentives and cost-sharing assistance
to implement conservation practices outlined in the conservation plan.
Congress should appropriate at least $350 million for the EQIP
program, or the full amount of funding authorized in the Conference
Report of the 2002 Farm Bill.
wildlife habitat incentives program (whip)
In many rural areas, farms are the most abundant and essential
source of wildlife habitat. This program helps landowners voluntarily
develop and implement practices that will protect and preserve
important wildlife habitat. By helping restore habitat, WHIP can have a
positive impact both on the quality of life for participants and on
local economies. For example, according to the Fish and Wildlife
Service, wildlife watchers spent $29.2 billion on trips, equipment, and
other related expenditures in 1996 alone.
Under a WHIP agreement, participants develop wildlife habitat plans
with assistance from local conservation districts. Each plan describes
the landowner's goals for improving wildlife habitat, includes a list
of practices, and details what must be done to maintain the habitat for
the life of the agreement. There are many possible sources of funding
and expert advice for a project including the Natural Resources
Conservation Service, cooperating state wildlife agencies, nonprofits,
and private organizations. The Department of Agriculture covers up to
75 percent of the plan's implementation costs. Demand for WHIP funds
has been so great that the program exhausted the $50 million
appropriated for 1997-2002 in two years.
Congress should appropriate at least $100 million for the WHIP
program, or the full amount of funding authorized in the Conference
Report of the 2002 Farm Bill.
wetlands reserve program (wrp)
Wetlands are a critical component of many ecosystems, providing
myriad benefits for people and wildlife. They filter sediment and
pollutants from runoff water, protect water quality, provide critical
habitat for millions of birds and other wildlife, absorb water to
reduce floods, and improve soil moisture for vegetation. The economic
benefits of healthy wetlands are many, including improved wildlife
watching and photography. In 1991, almost 109 million people spent $59
billion on fishing, hunting, and wildlife watching and photography.
The Wetlands Reserve Program (WRP) is a volunteer program aimed at
protecting and restoring the nation's wetlands, bringing tangible
economic and environmental benefits to rural communities,
recreationists, landowners, and family farmers nationwide.
Participating landowners receive technical and financial assistance
from the Natural Resources Conservation Service to restore wetlands,
including marginal agricultural land. In exchange for selling a
conservation easement or entering into a cost-share restoration
agreement, landowners receive all or a percentage of restoration costs
and/or an annual payment. The program currently has more than 5,230
contracts in 48 states. Participating landowners retain control over
access to their lands and may lease them for undeveloped recreational
activities and other uses that are consistent with wetland protection
and enhancement.
The WRP program has helped stem the tide of wetlands loss in the
United States, and contributed significantly to implementation of the
North American Waterfowl Management Plan. Wetlands restored by WRP also
help reduce the ``dead zone'' in the Gulf of Mexico by intercepting
polluted runoff from farms and city streets along the Mississippi
River.
Congress should expand the program's total acreage cap and allow
WRP to enroll 250,000 acres annually.
conservation reserve program (crp)
With the Dust Bowl of the 1930s, the United States learned the hard
way about the destructiveness of agricultural erosion. In the years
since, the nation has also come to recognize the damage caused by
runoff that carries pollutants into rivers, lakes, and other bodies of
water.
One of the Federal Government's largest and most effective
environmental improvement programs grew out of concern about the
impacts of agricultural soil erosion and polluted runoff. The
Conservation Reserve Program (CRP), a voluntary program that partners
the Department of Agriculture with farmers and ranchers, helps protect
millions of acres of the nation's agricultural lands from erosion while
increasing wildlife habitat and protecting ground and surface waters.
The program provides incentives for farmers and ranchers to voluntarily
implement long-term conservation practices on erodible and
environmentally sensitive lands in return for annual rental payments
and cost-share assistance.
The benefits of CRP are clear. The total acreage of new wildlife
habitat created by the program is twice that of the National Wildlife
Refuge System and all state-owned wildlife areas in the contiguous 48
states combined. According to Natural Resources Conservation Service,
each acre enrolled in CRP reduces topsoil erosion by an average of 19
tons per year, improving water quality in lakes, rivers, and other
water bodies. USDA estimates show that, over the life of the initial
36.4 million-acre enrollment, CRP has resulted in a $2.1-$6.3 billion
increase in net farm income, $3.3 billion in future timber resources,
and up to $4.2 billion in surface water quality improvements. The Fish
and Wildlife Service estimates that the wildlife benefits total $1.4
billion for waterfowl hunting and $4.1 billion for non-consumptive
wildlife benefits such as photography and wildlife watching.
Congress should expand the program's acreage limit to 45 million
acres.
______
Prepared Statement of the American Sheep Industry Association
The American Sheep Industry Association (ASI) is a federation of
state member associations representing the nearly 67,000 sheep
producers in the United States. The sheep industry views numerous
agencies and programs of the U.S. Department of Agriculture as
important to lamb and wool production. Sheep industry priorities
include rebuilding and strengthening our infrastructure primarily
through the National Sheep Industry Improvement Center, critical
predator control activities, fully funded our national animal health
efforts, and expanding research capabilities.
The rapid changes that have occurred in the domestic sheep industry
and continue to take place put further emphasis on the importance of
adequately funding the U.S. Department of Agriculture programs
important to lamb and wool producers.
We appreciate this opportunity to comment on those portions of the
USDA fiscal year 2003 budget.
rural development
The National Sheep Industry Improvement Center is critical to the
industry and we fully support an appropriation of $5 million for fiscal
year 2003. The Sheep Center is currently involved with three major
initiatives, first, the Center has an Intermediary Low Interest Direct
Loan Program, which became operational in 2000 and has committed $14
million for lamb, wool and goat projects. Loans are being used to fund
a variety of large and small projects in every region of the country
with emphasis on targeting different marketing challenges through value
added and niche marketing initiatives. The second focus area involves
the use of $4.8 million in the Center starting in 2000 to fund American
Lamb product development, marketing, and promotion with projects in
every region of the United States. The third initiative is a direct
grant program that was started in 2002 and has already funded grants
this year with another round of grant awards planned for later this
fiscal year.
There are additional special initiatives planned in 2002 to address
specific industry needs, including a meats lab project. Most
importantly, we understand that loan proposals currently under
consideration will fully use the available funds. The demand for the
Center's funds is increasing and additional appropriations will be
required in fiscal year 2003 to meet the new project requests.
Furthermore the authority of the Center to receive Federal funds allows
for another $24.5 million during the next four fiscal years. ASI
supports appropriations at $5 million each fiscal year as a priority
for our industry and believes this is a better approach than waiting
and requesting half of more of the funds in the last 2 years of the
authorization.a The Center is a premier vehicle of the U.S. sheep
industry's adjustment plan and adequate funding is critical to the
industry.
animal and plant health inspection service (aphis)
Wildlife Services
With well over one-quarter million sheep and lambs lost to
predators each year, the Wildlife Services (WS) program of USDA-APHIS
is vital to the economic survival of the sheep industry. The value of
sheep and lambs lost to predators and predator control expenses are
second only to feed costs for sheep production. Costs associated with
depredation currently exceed our industry's veterinary, labor and
transportation costs.
Wildlife Service's cooperative nature has made it the most cost
effective and efficient program within Federal government in the areas
of wildlife management and public health and safety. Wildlife Services
has over 2,000 cooperative agreements with agriculture, forestry
groups, private industry, state game and fish departments, departments
of health, schools, county and local governments and others to mitigate
the damage and danger that the public's wildlife can inflict on private
property and public health and safety. WS is one of the few Federal
programs that have been consistently at or above the 50:50 Federal to
cooperative funding ratios. In fiscal year 2001, cooperator funding
made up 52 percent of the total operational budget.
ASI is very concerned with the Administrations` proposed $10
million cut in operations funding for Wildlife Services. Wildlife
Services would not just lose $9.96 million in funding, but would lose
an estimated $11.1 in Federal matching monies for airport safety,
endangered species, invasive species management and the protection of
livestock, crops and private property. Analysis also shows that $19.3
million in cooperative funding would be lost along with 596 Fderal in
cooperative staff years. A loss of over $40 million in funding and
almost 600 staff years would be devastating to the program, and ASI
must therefore oppose such cuts.
ASI is appreciative of the funds provided the National Wildlife
Research Center in fiscal year 2002 to offset building maintenance
costs. In June 2002, the National Wildlife Research Center will
complete construction of it new outdoor animal research pen complex. An
additional $1.5 is needed in the next budget year to maintain and staff
this new complex. The completion and funding of this complex should
greatly accelerate research on new non-lethal and selective lethal
methods of managing wildlife related conflicts.
Aerial hunting is one of Wildlife Service's most efficient and
cost-effective core programs. It is used not only to protect livestock,
wildlife and endangered species, but is a critical component of the
Wildlife Services rabies control program. ASI is very supportive of the
Administrations` $1.6 million budget recommendation to fully implement
the recommendations of the Aviation Safety Review Committee by the
December 2002 deadline.
Expansion of Federally protected wolf populations in Montana,
Idaho, Wyoming, Minnesota, New Mexico, Arizona, Wisconsin and Michigan
continue to create increased demand for assistance in managing wolf
depredation. Last year there were over 300 requests for assistance in
the management of wolf related conflicts. Wolf numbers in Montana,
Wyoming and Idaho now total 500. Minnesota has a wolf population of
nearly 3,000, and wolf numbers in Michigan and Wisconsin are now
increasing at rates of 34 percent and 30 percent respectively. An
additional $950,000 in funding is needed in fiscal year 2003 to manage
wolf related conflicts. A total of $750,000 in additional funds is
needed to manage current conflicts in Minnesota, Michigan and
Wisconsin. $200,000 in additional funding is needed to manage wolf
conflicts in Arizona and New Mexico.
Wildlife Services must document its operations in order to conduct
program analysis and comply with Federal reporting requirements. The
agency's current information technology support system has become
antiquated which could result in incomplete data collection and
analysis. To update and maintain the information system, an additional
$700,000 is needed.
scrapie
Adequate funding for scrapie eradication and other supportive
efforts, such as the Voluntary Scrapie Flock Certification Program and
the National Scrapie Slaughter Surveillance Study are of critical
importance to the sheep industry, as well as all segments of the
livestock industries. The regulation for scrapie eradication was
finalized by USDA in 2001 and is being implemented across the country.
The importance of this eradication program is supported by the
Administration's budget request of $26.621 million. ASI strongly
supports this funding level. We are aware that animal disease
eradication programs are now largely funded through CCC and we expect
that this will be the case with scrapie as well. However, it is
critical that USDA/APHIS receive adequate appropriated funds to conduct
``base-program'' activities such as hiring full-time personnel. We
therefore urge the subcommittee to support the Administration's request
of $26.621 million with a $5 million increase in appropriated funds
over the 2002 level of $3.1 million for a total of $8.1 million in the
appropriated budget for scrapie. As with the successful animal disease
eradication programs conducted by USDA/APHIS in the past, strong
programs at the State level are key. We therefore urge the subcommittee
to send a clear message to USDA to budget significant funding toward
cooperative agreements with the State animal health regulatory
partners.
agricultural marketing service
Lamb Market Information and Price Discovery Systems
The sheep industry strongly supports the fiscal year 2003 budget
for Market News of USDA-Agricultural Marketing Service. Furthermore ASI
supports necessary increases in appropriations for the full
implementation of the mandatory price reporting system for livestock.
We expect AMS will be fully implementing the price reporting system
this fiscal year with the inclusion of the imported lamb meat price
report.
foreign agricultural service (fas)
The sheep industry participates in FAS programs such as the Market
Access Program (MAP) and the Foreign Market Development Program. ASI
strongly supports continued appropriations at the current level for
these critical Foreign Agricultural Service programs. ASI is the
cooperator for American wool and sheep pelts and has achieved solid
success in increasing exports of domestic product. Exports of American
wool have been increased dramatically with approximately 30 percent of
U.S. production competing overseas.
natural resources conservation service (nrcs)
ASI urges increased appropriations for the range programs of the
Soil Conservation Service to benefit the private range and pasture
lands of the United States with conservation assistance. We support the
budget item and recommend an increased level for the Grazing Lands
Conservation Initiative, which ASI has worked with, along with other
livestock and range management organizations, to address this important
effort for rangelands in the U.S.
research, education and economics
Our industry is striving to be profitable and sustainable as a user
of and contributor to our natural resource base. Research, both basic
and applied, and modern educational programming is essential if we are
to succeed. We have been disappointed in the decline in resources USDA
has been targeting toward sheep research and out-reach programs. With
net increases in the animal systems category of the agriculture
research budget, for example, sheep and wool research has either
declined or remained static for the past several years. In order for
the sheep industry to be more globally competitive in the future, we
must invest in the discovery and adoption of new technologies for
producing, processing and marketing lamb and wool. We urge the
subcommittee to send a strong message to USDA supporting sheep research
and education funding increases.
Agricultural Research Service
Emerging, Reemerging and Exotic Diseases of Plants and Animals.--We
request the subcommittee's support for the administration's allocation
of $13.357 million in this area. The animal disease portion should be
substantial and is urgently needed to protect the U.S. livestock
industry. We appreciate the $5 million allocated in 2002 for BSE
research. We agree that BSE is an extremely important disease issue
globally and believe that research is needed to help keep the U.S. free
of this devastating disease. With this in mind, we remind the
subcommittee that scrapie is a TSE that is endemic in the U.S. and we
recommend that these monies for BSE research be utilized in such a
manner that the resultant research assists with scrapie eradication
needs. We also respectively remind the subcommittee that scientists in
the Animal Disease Research Unit (ADRU), ARS, Pullman Washington, have
made significant progress in the early diagnosis of TSEs, in
understanding genetic resistance to TSEs and in understanding
mechanisms of TSE transmission, which are all important in eradication
of TSEs. The programs of these scientists at ADRU should be enhanced
and expanded to include, for instance, the development of further
improvements in rapid and accurate TSE detection methods and to provide
an understanding of the role of environmental sources of the TSE agent
in the transmission of TSEs within the United States and world and to
further understand the basis of genetic resistance and susceptibility
to these devastating diseases.
We urge your support to restore the $300,000 for collaborative
research between ARS Animal Disease Research Unit in Pullman,
Washington and the U.S. sheep experiment station in Dubois, Idaho
concerning malignant catarrhal fever (MCF) research. These monies were
established by congressional action in 2000 and have been successfully
utilized to perform research leading to control methods for this
important disease of sheep and cattle. Health and disease management
was one of the four focus areas included in President's Section 201
relief decision. This funding is key in helping us address and develop
vaccines for this very important disease.
Research into Johne's disease has received additional funding
through ARS over the past several years, focusing on cattle. Johne's
disease is also endemic in the U.S. sheep population and is not well
understood as a sheep disease. The same food safety concerns exist in
both sheep and cattle; other countries are also very concerned about
Johne's in sheep. We urge the subcommittee to send a strong message to
ARS that Johne's disease in sheep should receive more attention at the
National Animal Disease Research Center (NADC) with an emphasis on
diagnostics.
economic research service
For over 20 years, there has been no publicly available retail
price data on lamb. Our industry suffers because of this void. We urge
the subcommittee to send a strong message to ERS that the publication
of a retail price series is imperative to pricing efficiency in the
lamb industry and that funding for mandatory price reporting include
collection and reporting of retail lamb price data.
cooperative state research education and extension service (csrees)
Minor Use Animal Drugs is a ``Special Research Grant'' that has had
great benefit to the U.S. sheep industry. The research under this
category and the companion ``NRSP-7'' program through FDA/CVM has
provided research information on therapeutic drugs that are needed for
the approval process. Without this program, American sheep producers
would not have effective products to keep their sheep healthy. We
appreciate the Administration's request of $588,000 for this program
and we urge the subcommittee to recommend that it be funded at least at
this level to help meet the needs of our rapidly changing industry.
On-going funding for the Food Animal Residue Avoidance Databank
(FARAD) program is critically important for the livestock industry in
general and especially for ``minor species'' industries such as sheep
where extra-label use of therapeutic products is more the norm rather
than the exception. FARAD provides veterinarians the ability to
accurately prescribe products with appropriate withdrawal times
protecting both animal and human health. We urge the subcommittee to
restore funding for FARAD at least to the 2002 level of $800,000.
Ongoing research in wool is critically important to the sheep
industry. ASI urges the subcommittee's support of $294,000 for fiscal
year 2003 through the special grants program of the CSREES for wool
research.
ASI appreciates the special research grant funding in 2002 for the
Montana Sheep Institute and for recognizing that sheep can be a
powerful contributor to environmental enhancement in the northern Great
Plains. We encourage the subcommittee to recommend funding of this
program in 2003.
The industry greatly appreciates this opportunity to discuss these
programs and appropriations important to the sheep industry.
______
Prepared Statement of the American Society for Microbiology
The Food and Drug Administration (FDA) represents a pivotal
position in national health and safety and successfully performs a
wide-range of duties as a protector of public health in the United
States. Last year the FDA reviewed the safety and efficacy of consumer
products worth $1 trillion, and monitored more than 100,000 U.S. firms
that manufacture or process these products. Agency inspectors annually
screen almost 8 million shipments of import goods at our national ports
of entry. Today heightened threats to our national security demand even
more vigilance and scientific expertise from FDA personnel. The
American Society for Microbiology (ASM), the largest single life
sciences society representing over 40,000 scientists, strongly supports
the Administration's fiscal year 2003 budget request of $1.7 billion
for FDA, an increase of $123 million, or nearly eight percent (8
percent) above the fiscal year 2002 level.
Increased funding for the FDA will help to expand both science-
based programs and well-trained personnel capable of responding to more
urgent and more complex demands for public protection. The ASM also
concurs with the programs given priority in the proposed budget: that
is, enhancing FDA's already intensive counter-terrorism programs,
expanding salary and staff resources, further emphasis in decreasing
medical errors related to medical products, and continuing a strong
defense against unsafe or ineffective consumer goods.
The widespread public trust in FDA activities is well deserved, as
the agency for decades has reviewed carefully both new and on-the-
market products, ranging from toothpaste to sophisticated medical
lasers and tissue transplants. Most of the food consumed in the United
States is under FDA surveillance as well, as are such health threats as
microbial resistance to antibiotics and in-hospital medical errors. The
ASM urges Congress to approve significant funding increases in
supporting the FDA's focus areas of food safety, safe and effective
medical products, and physical security of this country and its
citizens.
Science for Safety and Security
The role of the FDA is a complex blend of law and science B
consumer protection laws are upheld through careful reviews or
evaluations based on the latest in science and technology. With the
rapid scientific changes expected in coming years, the ASM believes it
is essential that the FDA remains at the forefront of these changes.
Up-to-date science is considered the agency's foundation, whether its
personnel are enforcing regulations, reviewing new-product
applications, or assisting in policy development. Among those current
FDA responsibilities dependent on solid science are the federal efforts
against antimicrobial resistance among pathogenic microorganisms,
attempts to understand and prevent transmission of bovine spongiform
encephalopathy (BSE, or ``mad cow disease''), and responsibility for
the safety of bioengineered foods and other products. Cutting-edge
areas under FDA purview will include medical imaging, stem cell-derived
products, biosensors, new drug delivery systems, robotics, organ
replacements, products from transgenic organisms, and more.
Only by staying ahead of the scientific curve can the FDA maintain
its credibility as the nation's principal protector of product safety
and efficacy. The short-staffed agency must be able to train additional
researchers and inspectors, as well as strengthen its extramural
research grant programs. Given the FDA's role in new-product approval,
the failure to provide adequate scientific resources to an already
overburdened organization could hinder both public health and public
safety initiatives. In the past, the agency has worked efficiently to
improve processes such as the review of new drugs, which has been
shortened from an average of 30 months to a year, and the number of new
drugs appeared annually has increased by almost 40 percent. Such
efforts have persisted within the framework of solid scientific
expertise.
The ASM strongly supports efforts to increase and enhance FDA's
science research base. FDA must be given the resources to keep pace
with accelerating technology and to take advantage of scientific
opportunities to best serve the American public. Basic research by the
FDA contributes to the Agency's ability to adapt to constant changes in
its consumer constituency and respond to future public health threats.
Counter-Terrorism at the FDA
The FDA has a well-deserved reputation of being able to assess
threats to public safety and managing those risks. Recent events of
terrorism and bioterrorism have altered specific FDA goals for the
coming year, but these goals fall firmly within the agency's long-
standing approach of risk identification and prevention. The FDA will
focus on three areas identified as security issues: safe and effective
medical products to treat victims of an attack, food safety, and
physical security of FDA facilities and programs. The FDA has been
entrusted with two functions within the national response to terrorism,
that is, to facilitate the ready supply of medications to prevent or
treat terrorism-related injuries, and to prevent the intentional
contamination of consumer products such as food and pharmaceuticals.
Included in the President's fiscal year 2003 counter-terrorism budget
is $159 million for FDA.
In recent months, the specter of bioterrorism shifted from theory
to threat, and then to reality. In 2000, the FDA approved a drug for
treatment of post-exposure inhalational anthrax, in anticipation of
such dire events. The agency now is a partner B along with the NIH, the
CDC, and others B in a new vaccine/drug development continuum devoted
to the prevention and treatment of such diseases as smallpox and
anthrax. The FDA will continue its regulatory functions, as all of its
centers focus on new biologics (vaccines and antibiotics), rapid
diagnostic devices, and additional trained personnel specializing in
bioterrorism. Other FDA counter-terrorism goals for the coming year
further reflect the agency's wide-ranging responsibilities, including a
doubling of the number of physical exams of import goods and an
intensified laboratory analysis of suspicious items, as well as the
inspection of imported goods coming through 45 ports of entry not
previously examined. In all of these efforts, the FDA adheres to its
stated principles of using solid science as a basis for accurate
decision-making; maintaining strong collaborations with industry,
government, and other stakeholders; regulating products throughout
their use by the public; and considering the global nature of product
development and consumption.
Product/Consumer Safety
The balance between benefits and risks of a proposed new product is
the central question asked by FDA personnel each time they evaluate new
drugs and biologics (vaccines, blood products, gene therapy,
biotechnology products), medical devices, or food additives. Such risk
assessment is absolutely vital to our national health and must be well-
funded from year to year. While the FDA does not itself develop new
products, it thoroughly assesses laboratory data in both pre- and post-
market reviews of consumer goods, a costly responsibility. The FDA
recently negotiated with product manufacturers to use industry funds
for product/device review. This is the first time that resources will
be allowed for risk management activities of products after they enter
the marketplace. The ASM recommends that FDA-regulated areas such as
blood product assessment be adequately funded. United States
investments in biomedical research, promises advances such as animal
organ transplants and cellular and gene replacement therapies. These
new products must each be evaluated by one or more of the FDA's
research centers before entering the public health arena.
At the Center for Biologics Evaluation and Research (CBER), FDA
investigators oversee biological products such as blood, vaccines,
therapeutics and related devices. They will be responsible for
implementing new regulations governing tissue and cell transplants,
made more important with today's increases in reconstructive surgery
and with the potential uses for animal tissues in treating human
disorders. FDA monitoring of transplantation tissue like bone, skin,
and corneas includes donor screening to prevent spread of communicable
diseases and rigorous record-keeping by medical centers. The agency is
in the process of revising its regulations, part of its on-going
efforts to refine and strengthen disease prevention. CBER also
regulates human gene therapy products, expected to be a major source of
medical treatments in the future. Genomics, informatics, and transgenic
animals are just some of the cutting-edge advances about which FDA
scientists must be thoroughly trained, as entirely new types of
products enter the regulatory system. In February, for instance, the
FDA approved the first nucleic acid test system to screen whole blood
donors for infections with both HIV and hepatitis C virus, providing
earlier and more sensitive detection of contaminated blood.
Other FDA institutes likewise deal with burgeoning products to be
reviewed within the context of innovative science. Last year the Center
for Drug Evaluation and Research (CDER) approved 66 new drugs, 24 of
which contained ingredients never before marketed in this country. Ten
drugs received priority status because of their clear benefit to public
health, including a new oral treatment for chronic myeloid leukemia
that the FDA approved in a record 2.5 months. The CDER also continues
to watch more than 10,000 drugs currently on the market, as well as
drug advertising to assure it is truthful. The Center for Devices and
Radiological Health (CDRH) contends with more than 20,000 firms
worldwide that produce more than 80,000 different medical devices for
the U.S. market, from contact lenses to heart valves. Among the
thousands of products approved last year was a skin substitute made of
human fibroblast cells, used to help heal diabetic foot ulcers. Over
the past five years, through streamlined efforts by the CDRH, approval
times for novel, high-potential medical devices declined by about half,
to 12 months.
The use of many thousands of medical products too frequently
results in adverse events, causing harm to patients. Recent studies
suggest that drug- and device-related mistakes are the single greatest
cause of preventable patient injury. Annual estimates of the damage in
the United States include up to 100,000 deaths, more than 3 million
hospital admissions, and an economic cost ranging from $20 million to
$75 million. The FDA records more than 350,000 reports of adverse
events annually, but believes that about half of the deaths and
injuries could be avoided through strict adherence to its patient
safety initiatives. These include clarifying instructions to physicians
and patients and expanding requirements for reporting adverse events.
The CBER and the CDC, for example, jointly manage the Vaccine Adverse
Event Reporting System, a post-market surveillance system to collect
information on vaccination side-effects. The FDA also has pioneered the
international harmonization of drug standards; as a result, producers
in the United States, the European Union, and Japan are coordinating
event reporting and drug instructions.
Food Safety
Nutritious food flows into American homes, restaurants, and markets
from overseas and from domestic producers, in large part due to the
diligence of FDA inspectors and scientists. Each year about $240
billion of food is produced in the United States, while an additional
$15 billion worth is imported from every part of the world. Roughly 80
percent of this abundant food supply is the responsibility of the FDA,
which regulates all but meat, poultry, and some egg products controlled
by the U.S. Department of Agriculture. The FDA's Center for Food Safety
and Applied Nutrition (CFSAN) and Center for Veterinary Medicine (CVM)
have a tremendous responsibility in assuring that this food is safe,
wholesome, and free from disease.
In the United States foodborne diseases cause approximately 76
million illnesses, 325,000 hospitalizations, and 5,000 deaths each
year. Annual hospitalization costs exceed $3 billion, plus the cost
from lost productivity may be an additional $8 billion. Food-related
outbreaks of infections from such pathogenic bacteria as Escherichia
coli and Listeria continue to plague Americans. Control of foodborne
illness is increasingly complicated because of emerging pathogens like
E. coli O157:H7 and the BSE agent; the fact that more food is prepared
and consumed outside the home; and the dramatic movement worldwide of
food imports and exports. Other factors likewise causes problems, such
as the link between antibiotic use in animal feeds and rising
incidences of human infections by antimicrobial resistant bacteria.
Consequently, the FDA rightly argues for tighter controls and more
education both among consumers and within the food production industry.
Last year, the FDA took specific steps to strengthen procedures
that prevent unsafe food from entering the United States, and to widen
its domestic efforts against food-related health threats. Using funds
from the fiscal year 2003 budget, the agency plans to double the number
of physical exams of food imports performed last year. It is a partner
in the multi-agency National Food Safety Initiative, with the goal of
``effective detection, response, and control of foodborne and
waterborne pathogens.'' It also is part of a coordinated effort, the
Egg Safety Action Plan, intended to cut in half the number of
salmonella-caused illness due to contaminated eggs by 2005. Drawing
from its considerable experience in information gathering and
dissemination, the FDA participates in several nationwide surveillance
and emergency response systems; e.g., PulseNet, which collects DNA
``fingerprints'' of bacteria that may be foodborne pathogens. CFSAN
initiated widespread use of the Hazard Analysis and Critical Control
Point (HACCP) system that inserts preventative controls at the most
contamination-susceptible points within food production processes. Thus
far, CVM inspectors have collaborated in nearly 10,000 inspections of
animal feed facilities, searching for sources of the ``mad cow
disease'' pathogen.
The FDA in an Era of Complexity
Today's complicated social, scientific, and economic pressures are
demanding more and more from FDA resources and personnel, creating a
clear and present need for increased support. The ASM is concerned that
growing shortages in trained staff and scientific capabilities will
diminish the FDA's traditional role as protector of public health. The
FDA has a labor-intensive, science-based mission that necessitates
sufficient numbers of well-trained employees. Most (60 percent) of the
agency's budget, in fact, goes towards payroll costs, and nearly half
of its employees are ``in the field'' inspecting and educating. The
number of import shipments of foreign-produced products under FDA
review rose from about 1.5 million in 1992 to 6 million in 2000. FDA
investigators are now able to sample less than 1 percent of all foods
entering the United States, due to the large volumes imported.
Challenges faced by the FDA are changing along with society and
science in this era of increasing complexity. An aging population of
Americans changes the types of new medical drugs and devices needed
most urgently. Advances in human genetics and artificial intelligence
create both unforeseen opportunities and unanticipated problems that
must be reviewed carefully by the FDA. Radiation safety issues and the
intentional release of chemicals or microbial pathogens have forced
recognition of bioterrorism as an FDA priority. More than 100 million
people consulted the internet last year for medical advice from FDA
sources, raising the agency's public outreach efforts to new levels.
International trade has formed an interlocking worldwide web of
inspections, product review, and education campaigns. Adapting to these
changes is critical, if the FDA is to continue to protect public health
and national security.
______
Prepared Statement of the American Society for Microbiology
The American Society for Microbiology (ASM), the largest single
life science organization in the world, comprised of more than 42,000
members, appreciates the opportunity to provide written testimony on
the fiscal year 2003 budget for the U.S. Department of Agriculture
(USDA) research and education programs.
The ASM represents scientists who work in academic, medical,
governmental and industrial institutions worldwide and are involved in
research to improve human health and the environment. Microbiological
research is directly related to agriculture involving foodborne
diseases, bioterrorism, new and emerging plant and animal diseases,
soil erosion and soil biology, agricultural biotechnology, and the
development of new agricultural products and processes. The ASM is a
member of the Coalition on Funding Agricultural Research Missions
(CoFARM), which represents scientific societies and organizations
involved in formulating research directions and needs for agricultural
research.
The U.S. agricultural system is one of the most productive and
efficient in the world, due in part to continued investments in
science. Agricultural research has led to many advances, including
biotechnology, which contributes to a more abundant and nutritious food
supply and a more environmentally friendly food production process,
while reducing agriculture's reliance on chemical fertilizers,
pesticides, and fungicides. Unfortunately, public investment in
agricultural research has been stagnant for several years impeding
scientific advancement and progress, despite the recognized importance
of the agriculture sector in the economy. According to the National
Science Foundation's (NSF) Division of Science Resources Studies,
agricultural research made up only 4 percent of all public funds
devoted to basic research and only 2 percent of total R&D expenditures
for fiscal year 2000.
U.S. agriculture, however, faces an array of challenges, including
the threats of new and reemerging diseases, agroterrorism, and public
concern about food security and its impact on the environment. It is
critical to increase the visibility and investment in research to
respond to these challenges. The ASM encourages the Subcommittee to
build upon the renewed focus on agricultural research supported in the
Administration's fiscal year 2003 USDA budget. This will not only
benefit U.S. agriculture but also the health and well-being of every
American.
infectious diseases in plants and animals
It is important to recognize a growing threat to the U.S.
agricultural system that requires immediate attention--the threat of
new and emerging infectious diseases. Like the human population, U.S.
agriculture is also experiencing severe problems caused by new and
emerging infectious diseases in plants and animals. Changes in
agricultural practices, agroterrorism, population growth, climate,
microbial evolution, animal migration, and international trade and
travel are all factors in introducing new plant and animal diseases
into the U.S. agriculture system and natural resources, such as oak
trees in California. The lack of knowledge to manage effectively and
control new and reemerging infectious diseases often leads to very
serious consequences from lost productivity from quarantines to
embargoes, and the destruction of plants and animals to control the
spread of diseases. For example, citrus canker has cost millions in
tree destruction in Florida. Research, monitoring, surveillance, and
new sources of resistant genetic material, including the use of
biotechnology, may enable continued growth of citrus trees commercially
and by homeowners. New technologies, e.g. the polymerase chain
reaction, now enables us to detect minute quantities of etiological
agents, including those previously ascribed to physiological problems
in plants, such as the class of viruses known as luteoviruses.
cooperative state research, education and extension service
In 1989 the Board on Agriculture of the National Research Council
(NRC) recommended that public investment through competitive research
grants in agriculture, food, and the environment be made a national
priority. To address this monumental task, Congress (1991) created the
National Research Initiative Competitive Grants Program (NRI) in the
hope of generating new knowledge and reinvigorating research in
agriculture, food, and environmental science (National Research
Initiative: a Vital Competitive Grants Program in Food, Fiber, and
Natural-Resources Research, NRC, 2000). The ASM strongly supports
competitive peer reviewed research that is open to all the nation's
scientists.
The ASM urges the Subcommittee to fund the NRI at the President's
requested $240 million budget. This level of funding would strengthen
the commitment of the USDA to the competitive merit review process,
provide funds for fundamental research with long-term potential for new
discoveries, and better sustain human resource opportunities in
agricultural research. Despite previous funding levels, the NRI has
yielded extensive scientific advancements that are comparable to some
of those made at other agencies that fund peer-reviewed research. For
instance:
--Microbial pathogens represent the most serious contamination
problem facing the U.S. food supply. This threat has expanded
to include the intentional release of food/animal/plant
pathogens into the U.S. agricultural system. Research supported
by the NRI has led to the development of immunomicrobial
biosensors for the detection of Salmonella in foods. Research
will continue to expand this technology to include Toxoplasma
and Escherichia coli 0157:H7. This technology is the foundation
of future advances in on-site, on-demand analyses of
agricultural products.
--Economic losses of animals and attendant pain and suffering can
occur due to diseases, such as Marek's disease virus (MDV), a
herpesvirus, in chickens and avian pneumovirus (APV) in
turkeys. These diseases are being examined at the genetic level
to understand pathogenic properties that would be candidate
disease intervention targets.
agricultural research service
The ASM recommends that the Subcommittee build upon the
Administrations proposed $1 billion budget for fiscal year 2003, which
is a $223 million decrease from fiscal year 2002. The Agricultural
Research Service (ARS) is the principal in-house research agency in
USDA in the area of natural and biological sciences. The imminent
threats of bovine spongiform encephalopathy (BSE) and foot-and-mouth
disease in animals and plum pox in plants are examples requiring new
and extensive research. Agroterrorism also presents a serious threat to
the American agricultural system and requires a renewed focus on animal
and plant pathogens. Therefore, the ASM recommends that increased
funding in this area be distributed equally between plant (emerging and
exotic diseases of plants ($5.4 million fiscal year 2003 increase)) and
animal research (emerging, reemerging, and exotic diseases of animals
($8 million fiscal year 2003 increase)) at $10 million each for fiscal
year 2003. This increase will allow ARS to focus on improving rapid and
accurate detection systems for animal and plant diseases and pathogens
and effective treatment protocols. Research will also be directed to
developing diagnostic and vaccine technologies that will ultimately
improve the nation's ability to control disease outbreaks, and mitigate
the threats of tomorrow to the nation's animal, plant, and grain
products.
The ASM also believes continued support of agricultural genomic
research is a critical component of our nation's research enterprise.
Increasingly, environmental factors are requiring new and novel
solutions to plant production, protection (pest), nutritional content
and food safety that are being addressed through genomic research. The
ASM endorses the Administration's increase ($6.9 million) for genomic
research, which includes funds for microbe sequencing and identifying
genes that affect resistance, reproduction, nutrition, and other
important traits.
The ASM is pleased to see the Administration continues to recognize
the pivotal role ARS will play in safeguarding U.S. agriculture. The
Administration proposes $5 million for biosecurity needs within the
ARS. This money will modestly fund research into new tools for
identifying specific genetic attributes of a pathogen, which will
improve global disease and pest surveillance, as well as enhancing U.S.
food security and its appeal in the global marketplace. The ASM highly
recommends increasing funding in this pivotal area in the fiscal year
2003 budget.
animal and plant health inspection service
U.S. agriculture is uniquely vulnerable, due to its size and
variety of products, to infectious diseases and pests. The Animal and
Plant Health Inspection Service (APHIS) has the critical role of
policing the U.S. infrastructure that is in place to prevent, diagnose
and respond to these threats. The U.S. needs to continue to upgrade its
biosafety systems to prevent foreign animal and plant diseases from
entering the domestic agriculture system. This sentinel network
requires new, accurate and cost effective diagnostic tools and updated
information technology. The ASM is pleased that the Administration's
budget reflects APHIS's daunting task of combating animal and plant
diseases by allocating additional resources ($48 million) for
monitoring and responding. The ASM is also encouraged by the
Administration's total funding for APHIS at $1 billion, which is level
with fiscal year 2002. While this amount is not an increase over fiscal
year 2001 or 2002, it does reflect the rapidly changing needs of APHIS
and its role in addressing animal and plant health monitoring and
outbreak management.
food safety
Foodborne illness continues to pose a major public health problem
in the U.S. The ASM recommends that the Subcommittee provide additional
funding to USDA to expand food safety research. In a recent report it
was estimated foodborne diseases cost the U.S. billions in medical
costs and lost productivity (salmonellosis, only 1 of many foodborne
infections, have been estimated to cost $1 billion/year) and an
estimated 76 million illnesses a year (CDC 2000). Further reducing
foodborne illness requires not only preventing contamination through
improved processing and inspection, but also educating consumers to
avoid unsafe consumption choices and to prepare food safely to avoid
cross-contamination. The 1997 Food Safety Initiative recognizes this
with funding for a national media campaign to encourage safe food
handling.
Microorganisms continue to adapt to their changing environments and
begin to ``out smart'' current techniques to control their presence.
Many foodborne microbes have developed resistance to conventional food
preservation and disinfection techniques and continue to proliferate.
It is also important to note that the diversity of microorganisms
affecting food safety changes with time, processing techniques,
location and other factors. To illustrate the growing problem, one need
only examine the number of USDA and FDA regulated food product recalls
because of harmful bacteria. In 1995 the USDA and FDA recalled 265
products due to microbial hazards; in 1999, the number of recalls rose
to 337.
microbial genomics
Microbes are involved in all aspects of agriculture, from
beneficial uses of microbes in food (i.e., yogurt, cheese, and bread),
to pest controls, to the spread of disease in plants and animals, and
the contamination of the food supply. Studying the genomes of
agricultural microbes is expected to enable development of new
technologies to provide improved foods and better pathogen control to
protect the nation's crops, to reduce the incidence of plant and animal
disease, and to ensure a safer food supply. Thus, ASM is highly
supportive of microbial genomics through the NRI program. Microbial
sequencing is also expected to lead to speedier and more accurate
identification of microbes, identify targets for intervention, as well
as potential new antimicrobial agents. Coordination and cooperation
with the National Science Foundation in this area is particularly
promising. In conjunction with an interagency working group on microbes
that focuses on sequencing and bioinformatics.
biobased products
The ASM continues to support the promising research to accelerate
the conversion of agricultural materials and byproducts into biofuels,
such as soybean oil conversion into (bio)diesel fuel. Such scientific
advancements in biobased product research have the added benefit of
enhancing farm income, strengthening U.S. energy security, rural
revitalization, and environmental stewardship. Current scientific
estimates suggest that energy production from biofuels could generate
up to 10 percent to 15 percent of the nation's energy needs. ASM
believes agriculture can play a positive role in achieving U.S. energy
security and encourages the Subcommittee to consider the benefit
biofuels represent to the entire agricultural and consumer community.
global competitiveness
Recent adoption of the Uruguay Round, which confines the use of
import restrictions on agriculture products of the General Agreement on
Tariffs and Trade (GATT) and the North American Free Trade Agreement
(NAFTA) pose great challenges to American agriculture. While domestic
advances in agricultural technology, including biotechnology, have
achieved great strides in food production, safety, and nutrition, they
will also provide similar advances to other nations. Agricultural
competitiveness in the global economy depends upon the ability of
producers and processors to make measurable production and quality
gains while providing desirable products that are reliable and safe.
Agricultural research in food safety, production systems, and
biotechnology will be key instruments in maintaining America's
agricultural competitiveness, while providing food security.
The ASM encourages Congress give high priority to agricultural
research for fiscal year 2003. Many of today's scientific achievements
leading to the development of biotechnology, genetically modified
foods, improved crops and plant-based products and an improved
environment have their roots in the basic research conducted by the
USDA. The future holds many challenges from the monitoring of the
ecological impact of transgenic plants to research in plant and animal
diseases that is requisite to combating agricultural bioterrorism. We
urge the Administration and Congress to assist the USDA to address
these issues.
The ASM appreciates the opportunity to provide written testimony
and would be pleased to assist the Subcommittee as the Department of
Agriculture bill is considered throughout the congressional process.
______
Prepared Statement of the American Society for Nutritional Sciences
The American Society for Nutritional Sciences (ASNS) is the
principal professional organization of nutrition research scientists in
the United States representing 3,000 members whose purpose is to
develop and extend the knowledge and application of nutrition science.
Our members include scientists involved in human as well as animal
nutrition research. ASNS members hold positions in virtually every land
grant and private institution engaged in nutrition-related research in
the United States as well as industrial enterprises conducting
nutrition and food related research.
the need for federally funded nutrition-related research
The need for nutrition science and research is critical within the
USDA. The USDA has a unique role in the area of nutrition research,
particularly as it applies to human nutrition. For example, although
there is a serious and obvious commitment to the funding of disease-
related research within the National Institutes of Health, issues
important to the basic mechanisms of nutrient function and the safety
of the food supply have traditionally been the purview of USDA funded
research. An NIH analysis of funding for biomedical research and
training calculates that less that 4 percent of total NIH funding is
linked to nutrition. This is in spite of heightened consumer interest
in nutrition and health, and in spite of potential cost-savings in
disease-prevention. This funding percentage has remained constant for
the past 10 years. Thus, the USDA is the preeminent Federal agency for
nutrition research in regard to maintaining human health.
A recent NRC report examining the National Research Initiative's
Competitive Grants program, characterized USDA support of human
nutrition research as having ``experienced considerably less funding
support in the National Research Initiative Competitive Grants Program
(NRI) than most other [divisions]''. However, competitive USDA funding
of nutrition research has only increased 18 percent in the past 5
years, which is a rate of increase far below the increase in total NIH
funding (15 percent per year for the past 4 years).
Most of the recent work on nutrient content and availability in
various foods has come from USDA-NRI supported research. From a
consumer perspective, it is this type of information that is often the
most useful. It is clearly an important extension of the commodity-
oriented research carried out by our land grant universities.
We need to continue to invest in research as greater challenges
face us in the future. Increasing populations, international economic
competitiveness, improving the environment and minimizing healthcare
costs through disease prevention are all areas that will continue to
demand solutions for the future. These solutions might include advances
in the understanding of the genetic basis of disease and the genetic
basis of nutrient requirements for optimal health, which will require
greater understanding of how nutrition and dietary information can be
used for disease prevention in at-risk populations. In recent years
nutrition research has led to nutritionally improved school lunches,
implemented changes in safety requirements, and increased awareness for
pregnant women, children and the elderly.
The economic impact on society in healthcare costs produced by
advances in nutrition research is significant in the number of dollars
saved by the American taxpayer. As health costs continue to rise, it is
imperative that our medical practices take a preventive approach. This
requires a thorough understanding of the role of nutrients in foods in
preventing chronic illnesses such as heart disease, cancer and
diabetes.
Nutrition and agricultural research are areas that impact the
constituents of every congressional district in the nation. New
technologies are demanded to reduce the likelihood of pathogen
transmission by food, to improve the quality of processed foods, and to
deliver greater nutritional value in foods. Research in the areas of
food safety and human nutrition has paid-off with considerable benefits
to society.
significant nutrition-related research accomplishments
Fighting Cancer with the Right Foods.--Cows that eat fish oil as
part of their feed produce milk with higher concentrations of
conjugated linoleic acid, a compound shown to help prevent cancer.
USDA-funded research shows that butter, yogurt, and ice cream produced
from this milk also contain healthful compounds and that consumers like
the taste. Efforts are under way to develop a corn hybrid that will
synthesize genistein, an isoflavone in soybeans that protects against
breast, prostate, and colon cancers.
Nutritional Value of Corn Increased.--Cereals provide about 70
percent of the protein in our diets. However, most of that protein
lacks all of the essential amino acids. Researchers have characterized
the mechanism by which genes mutation increases lysine in corn. Humans
require 5 percent lysine in their diet, while most maize contains only
about 3 percent. Scientists have discovered that a protein needed by
cells to function normally is rich in lysine (10 percent), and its
level doubled in the gene (opaque2) needed to increase lysine. Now,
laboratories around the world are applying this discovery to improving
protein quality in their locally grown corn varieties.
New Insights into the Causes of Obesity.--Current estimates show
that half the American population will be clinically obese by the year
2030. This is up from 30 percent today. The direct costs of treating
complications of obesity, plus the indirect costs from lost
productivity, represent a $100 billion annual burden on the U.S.
economy. Variation to dietary fat has been documented in mice.
Researchers studying fat-resistant and fat-sensitive mouse strains have
found that after being released from adipose tissue, leptin travels via
the bloodstream to the brain, where it binds to specific receptors in
the brain. These receptors produce a coordinated series of responses to
match rates of energy being utilized with rates of food intake. The
leptin resistant mice show a breakdown in the communication system
between adipose tissue and the brain, which regulates stabilization of
body weight. Scientists expect this research will show fundamental new
insights into the causes of leptin resistance and will serve as the
basis for developing treatments and strategies for this debilitating
condition.
research funding mechanisms and issues
Competitive Grants
The NRC report, ``National Research Initiative'', suggests that
inadequate funding for competitive research has ``limited its potential
and placed the NRI program at risk.'' A competitive system for
allocating government research funds is the most effective and
efficient mechanism for focusing efforts on cutting edge research aimed
at improving the health of the American people. Competitive grants
provide the most effective, efficient and economic return to the
public. ASNS strongly supports the competitive grants process as
reflected in the National Research Initiative and believes that an
open, merit and peer review process, applied as extensively as possible
throughout the research system, is the preferred way to distribute
research funds among qualified scientists and to support the most
meritorious new concepts. For these reasons, we strongly urge this
subcommittee to support the Administration's request to double the NRI
competitive grants program in fiscal year 2003 to $240 million.
Initiative for Future Agriculture and Food Systems
The Initiative for Future Agriculture and Food Systems (IFAFS) has
supported large, multi-disciplinary, multi-center research programs
with an educational outreach component. IFAFS includes provisions for
peer review and for public input. Research stemming for IFAFS
complement the individual investigator basic and applied research of
the NRI. Such broad-based efforts are necessary for complex problems
such as agricultural genomics. ASNS urges the sub-committee to consider
a stable mechanism of funding to continue this program.
Nutrition Monitoring
Under an agreement between the Department of Health and Human
Services Centers for Disease Control and Prevention (CDC), National
Center for Health Statistics (NCHS), and the USDA Agricultural Research
Service (ARS/USDA), the ARS and NCHS agreed to collaborate on a program
of national nutritional monitoring. This agreement establishes a
cooperative diet and nutrition monitoring program integrating the
previously conducted Continuing Survey of Food Intakes by Individuals
(CSFII) and the National Health and Nutrition Examination Survey
(NHANES) in 2002.
The USDA, through its Agricultural Research Service, has conducted
the CSFII, which was designed to assess food consumption and related
behavior in the U.S. population using personal interviews. The CSFII
was conducted periodically with the most recent survey being conducted
in 1998. The Department of Health and Human Services, through its
National Center for Health Statistics (part of the Centers for Disease
Control and Prevention), conducts the NHANES, which was designed to
assess the health and nutritional status of the U.S. population using
personal interviews and direct physical examination. NHANES, previously
periodic, began continuous operation in 1999.
The Senate has long supported USDA's role in food security,
progress on foot and mouth disease, WIC, and prevention of diseases
such as diabetes, cancer, and heart disease. And so, ASNS asks for your
support of data collection essential to policy making in all of these
areas. Health and dietary information gathered from the USDA/DHHS
survey is critical to the Nation and plays a key role in shaping a
variety of policies and programs including food safety, food labeling,
child nutrition programs, food assistance, and dietary guidance. To
ensure that the USDA/ARS nutrition monitoring activities for fiscal
year 2003 continue and include 2 days of dietary recall on 5,000
individuals, interviews for diet and health knowledge, food program
information, continued updating of food composition data, and prompt
coding and processing information, we urge you to appropriate $7
million or an increase of $4 million above the fiscal year 2002 budget.
Animal Welfare
Research using animals has been crucial to virtually every advance
in medicine in the past century. Agents for control of high blood
pressure and the management of diabetes, vaccines for the control of
poliomyelitis and mumps, development of artificial joints and heart-
lung machines, and many more medical advances have depended on animal
research. USDA's Animal and Plant Health Inspection Service (APHIS) is
charged by Congress to enforce the Animal Welfare Act (AWA).
The question of whether the USDA should extend the Animal Welfare
Act to rats, mice, and birds is one of many issues before this
committee. Although this sounds like a simple solution, it is not, and
that is why the research community has opposed this extension of the
USDA's responsibilities. Good animal care is important for both humane
and scientific reasons, but other oversight programs are in place to
cover the vast majority of rats, mice, and birds used in biomedical
research. Adding the USDA's oversight to those programs would force
research institutions to do more paperwork without improving the
welfare of these animals. We are, therefore, pleased to report to you
that in February the Senate by unanimous consent adopted a farm bill
amendment by Senator Helms that would codify the existing
administrative exclusion of rats, mice, and birds. It is ASNS's hope
that this provision becomes law and that this issue will be resolved.
conclusion
Agriculture has been and will continue to be important to human
health in terms of food that provides proper nutrition for healthier
people. As the future challenges us with more complicated diseases,
research is forced to expand outside the traditional disciplines and
approaches, such as the work that is being done is plant and animal
genomics. Transgenic plants and animals offer potential for new
developments never before thought possible. New approaches must be
implemented to address new societal concerns. For example, research in
areas of how our food is produced, biosecurity and terrorism, pesticide
usage, animal care and food handling issues also present demands to our
scientists. These demands and opportunities must be answered in a way
that sustains or enhances our quality of life. Although greater
challenges lie ahead, agricultural research funding continues to be
stagnant.
Thank you for considering our request for the NRI and other
important research programs within the USDA. We hope that you will call
upon the expertise of our members as the committee continues to
deliberate these very important research areas.
______
Prepared Statement of the American Society of Civil Engineers
Chairman Kohl and Members of the Subcommittee: The American Society
of Civil Engineers (ASCE) is pleased to offer this testimony on the
President's proposed budget for the Natural Resources Conservation
Service (NRCS) for fiscal year 2003.
ASCE was founded in 1852 and is the country's oldest national civil
engineering organization. It represents more than 125,000 civil
engineers in private practice, government, industry and academia who
are dedicated to the advancement of the science and profession of civil
engineering. ASCE is a 501(c)(3) non-profit educational and
professional society.
ASCE is concerned that for the second consecutive year, no funds
have been requested in the President's budget to fund the Small
Watershed Dam Rehabilitation Program that was authorized on November 9,
2000, in Public Law 106-472, Section 313. Congress corrected this error
in fiscal year 2002 and appropriated $10 million--the full authorized
amount. We urge the Committee to appropriate the fully authorized
amount for fiscal year 2003--$15 million. We hope the outcome of the
fiscal year 2003 appropriations process will enable this vital work to
continue and expand as we seek to preserve, protect and better manage
our nation's water and land resources. Every state in the United States
has benefited from the Small Watershed Program.
Of the 78,000 dams in the United States, 95 percent are regulated
by the states. Approximately 10,400 of these dams are small watershed
structures built under the United States Department of Agriculture
programs authorized by Congress beginning in the 1940s (primarily the
Flood Control Act of 1944, Public Law 534 and the Watershed Protection
and Flood Control Act of 1953, Public Law 566). By the year 2020, more
than 85 percent of all dams in the United States will be more than 50
years old, the typical useful life span.
the urgent need for federal action
The benefits from the 10,400 improved watershed dams are enormous.
The dams provide downstream flood protection, water quality,
irrigation, local water supplies and needed recreation. Yet these
benefits to lives and property are threatened. The small watershed dams
are approaching the end of their useful lives as critical components
deteriorate. The reservoirs become completely filled with sediment,
downstream development increases the potential hazards and
significantly changes the design standards, and many dams do not meet
state dam safety standards.
Although these dams were constructed with technical and financial
assistance from the Department of Agriculture, local sponsors were then
responsible for operation and maintenance of the structures. Now these
dams are approaching the end of their useful lives, yet the resource
need is still great. The flood control benefits, the irrigation needs,
the water supply, the recreation and the conservation demands do not
end. In fact, they are more necessary than ever as downstream
development has dramatically increased the number of people, properties
and infrastructure that are protected by the flood control functions of
these dams. The Federal Government has a critical leadership role in
assuring that these dams continue to provide critical safety and
resource needs.
The NRCS in the Department of Agriculture has estimated the cost of
rehabilitating the small watershed dams at $542 million. While the
average rehabilitation cost per dam is approximately $242,000, the
local sponsors typically do not have sufficient financial resources to
complete these necessary repairs to assure the safety and critical
functions of these dams. The Federal Government must recognize the
urgent need to provide assistance to maintain these dams. Congress
should reinforce its earlier commitment to the goals of the Flood
Control Acts of 1944 and 1953.
extent of the problem
ASCE views funding of dam safety repairs as a critical need. In
ASCE's 2001 Report Card for America's Infrastructure dams received a
grade of D. Nearly 2,000 unsafe dams have been identified in this
country and many of the owners do not have sufficient funding sources.
In 2000, Congress proposed funding of $600 million over 10 years to
rehabilitate small watershed dams, but the legislation enacted only
authorizes $90 million spread over 5 years. However, this is an
important first step in recognizing and resolving the enormous problem
with deteriorating and aging dams. Many of these urgent repairs and
modifications are needed because of the following: downstream
development within the dam failure flood zone, replacement of critical
dam components, inadequate spillway capacity due to significant
watershed development and increased design criteria due to downstream
development.
Many of the small watershed dams do not meet minimum state dam
safety standards and many that are being counted on for flood
protection can no longer provide flood protection due to excessive
sedimentation and significant increases in runoff from development
within the watershed. The dams suffer from cracked concrete spillways,
failing spillways, inoperable lake drains and other problems that
require major repairs that are beyond the capability of the local
sponsors.
the cost of no action
These small watershed dams have been a silent and beneficial part
of the landscape. Failure to make the necessary upgrades, repairs and
modifications will increase the likelihood of dam failures. Continued
neglect of these structures may easily result in reduced flood control
capacity causing increased downstream flooding. Failure of a dam
providing water supply would result in a lack of drinking water or
important irrigation water.
The floods in Georgia in 1993 and in the Midwest in 1994 are recent
reminders of natural events that can cause enormous disasters,
including dam failures. The failure to act quickly will clearly result
in continued deterioration and a greater number of unsafe dams until a
dam failure disaster occurs. The failure of a 38-foot tall dam in New
Hampshire in 1996, which caused $5.5 million in damage and one death,
should be a constant reminder that dam failures happen and can have
tragic consequences.
Completion of the needed repairs will result in safer dams, as well
as continued benefits. Failure to establish a mechanism to reinvest in
these structures will greatly increase the chances of dam failures and
loss of benefits, both having significant economic and human
consequences. Costs resulting from flood damage and dam failure damage
are high and unnecessarily tap the Federal Government through disaster
relief funds or the National Flood Insurance Program.
recommendation
ASCE urges the committee to approve full funding at the authorized
level of $15 million, for the Small Watershed Dams Rehabilitation
Program (Public Law 106-472, Section 313). Additionally, we would like
to see these rehabilitation funds be a separate line item in the NRCS
budget in an effort to better track the rehabilitation funding approved
by Congress. While, this is well short of the demonstrated need of $60
million a year for 10 years, it would be a step in the right direction.
The condition of our nation's dams, and the need for watershed
structure rehabilitation, should be a national priority before we have
to clean up after dam failures that we know are likely to happen if
nothing is done.
ASCE also supports a research and development (R&D) program as we
get the structural rehabilitation process underway. In the USDA, the
Agricultural Research Service (ARS) undertakes that work. We
respectfully request that $1.5 million be included in the ARS budget
for small watershed research. These funds would be used for evaluation
of upstream and downstream changes to the stream channel systems in
cases of decommissioning, evaluation of the water quality impact of
stored sediment releases, and the evaluation of impacts of the loss of
flood protection, among other things.
______
Prepared Statement of Aquatica Tropicals, Inc.
Mr. Chairman and Members of the Subcommittee, I appreciate the
opportunity to provide testimony in support of funding for the Regional
Aquaculture Center program. My name is J.M. Marty Tanner. I own and
operate Aquatica Tropicals, Inc., and Hi-Tech Fisheries of Florida,
Inc. I have been in the ornamental aquaculture business for 20 years.
For the last 6 years, I have had the privilege of serving on the
Industry Advisory Council of the Southern Regional Aquaculture Center
(SRAC). I also serve on the Board of Directors of the Florida
Aquaculture Association and the Florida Tropical Fish Farmers
Association.
It is important that the Subcommittee understand the importance of
aquaculture in the United States. Production of ornamental fish has
increased drastically over the years. We are currently the number one
valued aquaculture product out of Florida, and third in the United
States. Tropical fish producers are currently experiencing rapid
declines in market shares and have been assaulted by increased
competition from Asian countries. Having suffered drastic declines in
market after the September 11th attacks, the need for research and
development of new technology has never been as important as it is
today.
I feel that the Regional Aquaculture Center program is essential to
help meet the need for technology development. Through projects already
completed from the Regional Aquaculture Center, results have
significantly impacted the production of domestic aquaculture. Serving
as a Steering Committee member of several SRAC projects, the process of
scientists from the regional states working collaboratively to identify
and solve problems inherent to the Southern Region has saved millions
of dollars in lost production and labor.
Historically, projects supported through the Regional Aquaculture
Center programs have returned economic benefits many times the amount
invested. Additional funding of new research will help insure future
success and growth of U.S. aquaculture.
In summary, I am convinced that the Regional Aquaculture Center
programs are very productive and valuable. The need for continued and
increased funding could not be more timely.
Thank you for allowing me the opportunity to submit testimony on
behalf of the Regional Aquaculture Centers, and on behalf of the U.S.
aquaculture industry, I express my sincere appreciation for your
continued support.
______
Prepared Statement of Carolina Classics Catfish, Inc.
Mr. Chairman and Members of the Subcommittee: It is a pleasure to
have the opportunity to offer testimony in support of the Regional
Aquaculture Center program. My name is Robert Mayo and I am President
of Carolina Classics Catfish, Inc., a fully integrated company in the
farm-raised catfish industry. Headquartered in North Carolina, our
operations include feed milling, catfish production, and processing and
marketing. We also process the catfish grown by sixty family farmers
located in North Carolina, South Carolina and Georgia. We sell our farm
raised catfish fillets and other products to the food industry in the
eastern United States, Canada, as well as in Europe and Asia.
I started the business in 1985 as the first commercial catfish
operation on the U.S. East Coast, at a time when the U.S. farm-raised
catfish industry was producing 192 million pounds of catfish, primarily
in the deep south states. Our company has grown steadily along with the
U.S. catfish industry. Last year, the U.S. produced 597 million pounds
of farm-raised catfish on farms located from Virginia to California.
Today catfish is one of the major fish species consumed by Americans,
helping to offset the $3 billion trade imbalance in edible seafood.
Even as catfish continues to grow and represents the largest segment of
U.S. aquaculture, we find ourselves dwarfed by aquaculture industries
abroad, who are, frankly, growing in size and sophistication at a
faster rate than the U.S. In the coming years, catfish and all of U.S.
aquaculture must rise to the challenge of competition or our nation's
seafood imbalance will continue to widen.
The Regional Aquaculture Center program is, in short, the research
funding program that supports catfish and the other U.S. aquaculture
industries with research on the issues and problems that we face. I can
attest to the fact that the Southern Regional Aquaculture Center has
served and is serving the needs of the catfish industry through its
carefully-designed and funded programs of work. To give you an idea of
the breadth of work that SRAC funds, I would like to offer two project
examples:
Through funding from the Southern Regional Aquaculture Center,
research on the effluents from aquaculture ponds has produced extensive
data on the components of those effluents, and is leading to the
development of Best Management Practices for the operators of
aquaculture facilities. Information from this project is likely to be
used by regulators in the future, including the Environmental
Protection Agency as it develops Effluent Limitation Guidelines.
Through its funding of the project, the Southern Regional Aquaculture
Center has provided producers of catfish, baitfish, striped bass and
other species with the tools for adopting Best Management Practices
with regard to effluents, as well as establishing extensive data that
can be used in rulemaking efforts in the future.
The Southern Regional Aquaculture Center also funds a broad,
valuable pipeline of information that is transmitted to the aquaculture
industry through its ongoing Publications, Videos and Computer Software
project. This provides for widespread and quick access of information
on production and marketing of aquaculture products sourced from 113
authors. SRAC fact sheets, videos, and other publications are accessed
and used by a broad clientele of aquaculturists. I can tell you that
virtually all of the aquaculture producers that we work with have read
or used SRAC publications at one time or another on subjects ranging
from specific diseases to financial aspects of their operations. Our
company regularly retrieves and uses SRAC publications from the
internet for immediate, up-to-date information for issues on which we
need assistance.
Thank you for your time and support of the Regional Aquaculture
Center program. I strongly request that the program be funded for the
existing five Centers for fiscal year 2003. Full funding is needed to
support our U.S. aquaculture industry in its effort to continue to grow
and compete with the large industries developing abroad. U.S.
aquaculture provides jobs and commerce in rural areas, and serves to
help balance our nation's seafood trade.
______
Prepared Statement of the Catfish Farmers of America
Mr. Chairman and Members of the Subcommittee, I appreciate the
opportunity to provide testimony in support of the USDA Regional
Aquaculture Center program. My name is Hugh Warren, and I am Executive
Vice President of the Catfish Farmers of America. Founded in 1968, and
with current membership of over 1,700 from 40 states, the Catfish
Farmers of America is the trade organization that represents the
interests of the farm-raised catfish industry.
Production of farm-raised catfish has increased over 80-fold since
1970, a phenomenal rate of growth that is unmatched in other segments
of domestic agriculture. Per capita consumption of farm-raised catfish
now ranks fifth among all seafood products in the United States.
Because farm-raised catfish has become a widely accepted food item
throughout much of the United States, the demand for catfish should
continue to increase turn toward fish as part of their overall diet.
Production of safe, high-quality products is the foremost goal of
fish farmers. A recently completed project developed and sponsored by
the Southern Regional Aquaculture Center evaluated pesticide and metal
residues in farm-raised fish. The project involved scientists from six
states in the region--Alabama, Florida, Georgia, Louisiana,
Mississippi, and Texas. The study was initiated because of highly
publicized reports of contamination seafood products that did not
discriminate between wild-caught fish and farm-raised fish. This study
found that levels of harmful metals and pesticides in farm-raised fish
were many times lower--often more than 100 times lower--than FDA-
recommended levels. The study also showed that levels of contamination
in farm-raised fish are lower than fish caught from the wild because
the water used to raise fish on farms is cleaner than most natural
waters. This project has helped assure the quality and safety of
aquaculture products, and lets consumers know that fish products from
aquaculture are superior to most wild-caught fish.
Producing food in an environmentally sound manner is another
fundamental goal of American aquaculture. Research and extension
scientists in Alabama, Arkansas, Florida, Georgia, Louisiana,
Mississippi, North Carolina and South Carolina recently cooperated in a
Southern Regional Aquaculture Center project to evaluate waste
management practices that reduce the impact of aquaculture on the
environment. Results of the project showed that aquaculture ponds can
be operated with minimal impact on the environment by using simple
management practices that can be implemented with little or no extra
expense or labor. These practices have been widely adopted in the
southeast because aquaculture producers are aware that the use of
environmentally responsible farming practices can be part of the
marketing appeal of farm-raised fish.
The above two projects represent only a small part of the impact of
the Regional Aquaculture Center program, yet funding for the program
has not increased over the last 10 years, and the program has operated
at half its authorized funding level. Meanwhile, domestic aquaculture
has grown at a remarkable rate and the cost of conducting research has
increased. These trends make it difficult for the Center program to
address the needs of this important segment of American agriculture. I
respectfully request your sincere consideration of the Regional
Aquaculture Centers in the fiscal year 2003 budget, and I urge you to
provide funding at the full authorized level of $7.5 million for the
five Regional Centers.
______
Prepared Statement of the CES Mangrove Tropicals
Mr. Chairman and Members of the Subcommittee, I am writing this
testimony in strong support of the USDA Regional Aquaculture Centers in
particular the Center for Tropical and Subtropical Aquaculture (CTSA).
Hawaii is at the forefront of marine aquaculture technology due in part
to the benefits of having such strong support through CTSA. The
development of marine ornamental aquaculture in particular has been
greatly affected by the work done through CTSA. The marine ornamental
aquaculture industry is a new and growing industry. The demands on the
environment from wild collection and the growing trend toward
conservation have catapulted marine ornamental aquaculture to the
forefront of aquacultural sciences and presents tremendous business
opportunities.
Mangrove Tropicals, Inc. is a marine aquaculture facility in Hawaii
where we produce marine ornamental fish and invertebrates as well as
marine food fish fingerlings. With such diversified products, we have
many times taken advantage of CTSA research. We are the only U.S. farm
producing the Giant clams, Tridacnidae, which we learned from CTSA
technical publications (Spawning and Early Larval Rearing of Giant
Clams CTSA Pub. No. 130 and Nursery and Grow-out Techniques for Giant
Clams CTSA Pub. No. 143.) We have also had the benefit of communicating
with the author through CTSA to advance both his and our knowledge and
experience.
The Aquaculture of Marine Ornamentals project, is a research
project that led to the first time production of a highly valued marine
angelfish. This discovery is the most important first step in opening
up the majority of marine aquarium species to eventual commercial
production. The marine ornamental industry is a $250 million global
business and the advances made through this project will have a
definite effect on this market. The collection of wild caught species
will decline, as their captive-bred counterparts become more available.
My facility, as well as many others in this region, will have new
products that are particular to this region, which give us a tremendous
competitive advantage.
Mangrove Tropicals' other products include marine food fish: Moi,
Mullet, and Milkfish. Through CTSA projects, the eggs are made
available to commercial producers for hatching and growout. We have
been able to produce these species using techniques based upon CTSA
research and technical manuals. More species are being proposed for
study through CTSA projects and have the potential for a huge impact on
the future of the industry. The growing food fish industry in Hawaii is
in great need for food fish hatcheries and will depend on the eggs and
manuals provided by CTSA.
The impact of CTSA greatly extends past Hawaii and covers the
largest geographical distribution of any of the regions. This also
includes being involved with other countries and protected territories.
The difficulties that occur due to this diversity are monumental. CTSA
has to not only deal with the great distances to reach all the
constituents of the region but also the cultural and governmental
differences. Through all of these difficulties, CTSA has been able to
provide for the region and has helped business and research that
affects the global community. As a region, we have the potential to be
a leader in aquaculture production but our growth has been slow. I feel
that with increased funds, CTSA would be able to do much more and
possibly accelerate the rate at which they are helping aquaculture grow
in the Pacific.
I strongly urge you to support full or increased funding for all
the Regional Aquaculture Centers. These centers are extremely important
to all regions and deserve full funding and complete support of the
United States Senate Appropriations Subcommittee on Agriculture, Rural
Development and Related Agencies. I appreciate your time and
consideration.
______
Prepared Statement of the Coalition of EPSCoR States
Mr. Chairman and Members of the Subcommittee, thank you for the
opportunity to submit this testimony on behalf of the Coalition of
EPSCoR States \1\ regarding the U.S. Department of Agriculture
Experimental Program to Stimulate Competitive Research (USDA EPSCoR).
USDA EPSCoR is extremely important to agricultural research in the
state of Mississippi and in our nation. I appreciate the opportunity to
submit this testimony.
---------------------------------------------------------------------------
\1\ Alabama, Alaska, Arkansas, Idaho, Kansas, Kentucky, Louisiana,
Maine, Mississippi, Montana, Nebraska, Nevada, North Dakota, Oklahoma,
Puerto Rico, South Carolina, South Dakota, Vermont, West Virginia, and
Wyoming.
---------------------------------------------------------------------------
I would also like to extend my appreciation to you, Mr. Chairman,
for your strong support of USDA EPSCoR. This important program is
having a significant impact in Mississippi and in the other USDA EPSCoR
states. Your support and the support of this Subcommittee have been
absolutely crucial in establishing and maintaining this important
program. Mr. Chairman, those of us committed to improving Mississippi's
research and development capability deeply appreciate your support and
your effort. Thank you for your fine work representing Mississippi in
the United States Senate.
Seven Federal agencies have EPSCoR or EPSCoR-like programs,
including USDA. EPSCoR works to improve our country's science and
technology capability by funding activities of talented researchers in
states that have historically not received significant Federal R&D
funding. USDA EPSCoR was established in fiscal year 1992 with the goal
of increasing the amount of agricultural research at academic
institutions within states that have received limited competitive
funding from USDA.
The Mississippi EPSCoR program began in 1988 with the naming of the
state EPSCoR Committee by the Governor. Mississippi EPSCoR obtained its
first funding in 1989 from USDA EPSCoR's sister program in the National
Science Foundation. Since that time, EPSCoR has had an enormously
positive impact within the state and at the four research institutions
and their affiliates.
Because of the multi-institutional framework of EPSCoR and of the
commitment of the state EPSCoR Committee to creating a critical mass of
scientists and engineers around specific issues as well as a more fully
developed statewide infrastructure, Mississippi EPSCoR has produced a
stronger, more competitive research community and closer working
relationships among the institutions that participate in the Federal
EPSCoR programs: Jackson State University, Mississippi State
University, The University of Mississippi and The University of
Mississippi Medical Center, and The University of Southern Mississippi.
Mr. Chairman, USDA EPSCoR is helping to improve the quality and
competitiveness of agriculture research in Mississippi. Since the
program was established in 1992, a number of Mississippi researchers
have received USDA EPSCoR Strengthening Awards. These investigators
have been located at Mississippi State University, The University of
Mississippi Medical Center, and The University of Southern Mississippi.
Important examples of Mississippi's research include studies in
such areas as: kenaf processing, which is a potential economic
opportunity for rural states; rapid detection of E coli, an important
factor in food safety; and disease mechanisms in channel catfish, which
impacts a significant cash crop across the southern part of the
country. These projects and many, many others address issues important
to rural states and to the rest of the nation. USDA EPSCoR allows
researchers across our country to contribute to our economy and our
agricultural research knowledge base.
USDA EPSCoR states are those whose funding ranks no higher than the
40th percentile of all states, based on a 3 year rolling average. The
following states are eligible: Alaska, Arkansas, Connecticut, Delaware,
Hawaii, Idaho, Kentucky, Maine, Mississippi, Montana, Nevada, New
Hampshire, New Mexico, North Dakota, Rhode Island, South Carolina,
South Dakota, Utah, Vermont, West Virginia, Wyoming, and the
Commonwealth of Puerto Rico. Let me stress that EPSCoR relies on
rigorous merit review in order to ensure that it funds only high-
quality research.
USDA makes four types of competitive awards through USDA EPSCoR:
Research Career Enhancement Awards, Equipment Grants, Seed Grants, and
Strengthening Standard Research Project Awards. Proposals must be
related to the program priorities of the National Research Initiative
Competitive Grants Program, which address critical issues facing
agriculture today.
--Strengthening Standard Research Project Awards fund standard
research projects of investigators who have not received a
NRICGP grant within the past 5 years.
--Research Career Enhancement Awards help faculty enhance their
research capabilities by funding sabbatical leaves. Applicants
may not have received a NRICGP competitive research grant
within the past 5 years.
--Equipment Grants strengthen the research capacity of institutions
in USDA EPSCoR states. The maximum equipment cost is $250,000.
The USDA NRI contribution is limited to $50,000. Non-Federal
matching funds are required in all cases except for small and
mid-sized institutions requesting equipment costing $25,000 or
less and serving multiple uses within a research project or
which is can be used in multiple research projects.
--Seed Grants enable researchers to collect preliminary data in
preparation for applying for a standard research grant. Seed
Grant awards are limited to a total cost of $75,000, including
indirect costs, for 2 years and are nonrenewable. Applicants
must indicate how the research will enhance future
competitiveness in applying for standard research grants.
Through USDA EPSCoR, Mississippi and the other USDA EPSCoR States
contribute more effectively to our nation's science and technology
capability, and help provide our country with needed, high-quality,
peer-reviewed research. This program allows all regions of our country
to contribute to our nation's science and technology capability while
allowing flexibility to meet regional research needs. USDA EPSCoR is a
sound investment of taxpayer dollars.
Mr. Chairman, the Subcommittee has for several years directed USDA
to set aside 10 percent of USDA NRICGP funds for USDA EPSCoR. Those
funds have provided significant opportunity and significant success in
Mississippi and the other EPSCoR states. I request that the
Subcommittee once again include report language directing USDA to set
aside 10 percent of its NRI competitive grant funds in fiscal year 2003
for an EPSCoR program. These funds will allow the EPSCoR states to
continue providing for the agricultural research needs of rural America
and of our nation.
I thank the Subcommittee for the opportunity to submit this
testimony.
______
Prepared Statement of the Coalition to Promote U.S. Agricultural
Exports
As members of the Coalition to Promote U.S. Agricultural Exports,
we commend the Chairman and members of the Subcommittee for their
interest and support of U.S. agriculture and express our appreciation
for this opportunity to share our views.
The Coalition to Promote U.S. Agricultural Exports is an ad hoc
coalition of over 80 organizations, representing farmers and ranchers,
cooperatives, small businesses, regional trade organizations, and the
State Departments of Agriculture (see attached). We believe the U.S.
must continue to have in place policies and programs that help maintain
the ability of American agriculture to compete effectively in a global
marketplace still characterized by subsidized foreign competition.
Farm income and agriculture's economic well-being depend heavily on
exports, which account for one-third or more of domestic production,
provide jobs for millions of Americans, and make a positive
contribution to our nation's overall trade balance. In 2002, U.S.
agriculture exports are projected to be around $54 billion, down $6
billion from 1996. This is caused by a combination of factors,
including continued subsidized foreign competition and related
artificial trade barriers. U.S. agriculture's trade surplus is also
expected to be about $14 billion, down approximately 50 percent from
1996, with imports continuing at record levels.
According to recent USDA information, the EU and other foreign
competitors are outspending the U.S. by a factor of 20 to 1 with regard
to the use of export subsidies and other expenditures for export
promotion. In 1998 (the most recent year for which data is available),
in addition to spending $6 billion in export subsidies, our leading
foreign competitors spent a combined $1 billion on various activities
to promote their exports of agricultural, forestry, and fishery
products, including some $379 million by the EU.
According to USDA, spending by these competitor countries on market
promotion increased by 50 percent over the 1995-98 time period, while
U.S. spending remained flat. We have no reason to believe that this
trend has changed since then. Furthermore, almost all of this increase
has been directed to the high-value and consumer-ready product trade.
Information compiled by USDA also shows that such countries are
spending over $100 million just to promote sales of their products in
the United States. In other words, they are spending more to promote
their agricultural exports to the United States, than the U.S.
currently spends ($90 million) through MAP to promote American-grown
and produced commodities worldwide! In fiscal year 1999, the U.S.
recorded its first agricultural trade deficit with the EU of $1
billion. In fiscal year 2001, USDA reported that the trade deficit with
the EU had grown to $1.6 billion.
Because market promotion is a permitted ``green box'' activity
under World Trade Organization (WTO) rules, with no limit on public or
producer funding, it is increasingly seen as a centerpiece of a winning
strategy in the future trade battleground. Many competitor countries
have announced ambitious trade goals and are shaping export programs to
target promising growth markets and bring new companies into the export
arena. European countries are expanding their promotional activities in
Asia, Latin America, and Eastern Europe. Canada, Australia, New
Zealand, and Brazil have also sharply bolstered their export promotion
expenditures in recent years.
As the EU and our other foreign competitors have made clear, they
intend to continue to be aggressive in their export efforts. For this
reason, we believe the Administration and Congress should immediately
strengthen funding for MAP and other export programs, and ensure that
such programs are fully and aggressively utilized. Since MAP was
originally authorized, funding has been gradually reduced from a high
of $200 million to its current level of $90 million a reduction of more
than 50 percent. Again, given what our foreign trade competitors are
doing, we believe it's time to restore funding for this vitally
important program up to its original level. American agriculture is the
most competitive industry in the world, but it can not and should not
be expected to compete alone against the treasuries of foreign
governments.
In order to reverse the decline in funding for a number of our
agricultural export programs, the Coalition strongly supports an
increase in annual funding for MAP to $200 million, restoring the
program to the level at which it was funded approximately a decade ago.
The Coalition also supports separate funding of $43.25 million annually
for the Foreign Market Development (FMD) Cooperator Program. Both MAP
and FMD are administered on a cost-share basis with farmers and other
participants required to contribute up to 50 percent of their own
resources.
These programs are among the few tools specifically allowed under
the Uruguay Round Agreement to help American agriculture and American
workers remain competitive in a global marketplace still characterized
by subsidized foreign competition. The over 70 U.S. agricultural groups
that share in the costs of the MAP and FMD programs fully recognize the
export benefits of market development activities. In fact, they have
sharply increased their own contributions to both programs over the
past decade while USDA funds have actually dropped. Since 1992, MAP
participants have increased their contributions from 30 percent (30
cents for every dollar contributed from USDA) to almost 120 percent
($1.20 in industry funds for every USDA dollar). For FMD, the
contribution rate has risen from 76 percent to the current level of 120
percent. By any measure, such programs have been tremendously
successful and extremely cost-effective in helping maintain and expand
U.S. agricultural exports, protect American jobs, and strengthen farm
income.
For all these reasons, we want to emphasize again the need to help
strengthen the ability of U.S. agriculture to compete effectively in
the global marketplace. As a nation, we can work to export our
products, or we can export our jobs. USDA's export programs, such as
MAP and FMD, are a key part of an overall trade strategy that is pro-
growth, pro-trade and pro-job.
Again, as members of the Coalition to Promote U.S. Agricultural
Exports, we appreciate very much this opportunity to share our views
and we ask that this statement be included in the official hearing
record.
______
Prepared Statement of the Colorado River Basin Salinity Control Forum
The Congress concluded that the Colorado River Basin Salinity
Control Program should be implemented in the most cost-effective way
and realizing that agricultural on-farm strategies were some of the
most cost-effective strategies authorized a program for the Department
of Agriculture. With the enactment of the Federal Agriculture
Improvement and Reform Act of 1996 (FAIRA), the Congress concluded that
the Salinity Control Program could be most effectively implemented as
one of the components of the Environmental Quality Incentives Program.
Since the enactment of FAIRA, the Salinity Control Program has not been
funded at a level adequate to ensure that salinity damages from the use
of Colorado River water in the United States will not increase. This
testimony in support funding has been prepared in advance of
Congressional action on a new farm bill. We are encouraged that both
the House and the Senate have passed measures that significantly
increase funding for EQIP.
The Salinity Control Program has been subsumed into the EQIP
program without the Secretary of Agriculture giving adequate
recognition to the requirement in Section 202(c) in the Colorado River
Basin Salinity Control Act to carry out salinity control measures.
Water users hundreds of miles downstream are the beneficiaries of this
water quality improvement program. Agriculturalists in the Upper Basin,
however, see local benefits as well as downstream benefits and have
submitted cost-effective proposals to the State Conservationists in
Utah, Wyoming and Colorado. Priority Area proposals for EQIP funding
are ranked in each State under the direction of the Natural Resources
Conservation Service (NRCS) State Conservationist. Existing ranking
criteria, however, does not consider downstream benefits (particularly
out of State benefits) when proposals are being evaluated.
After longstanding urgings from the States and directives from the
Congress, the Department has concluded that this program is different
than small watershed enhancement efforts common to the EQIP program. In
this case, the watershed to be considered stretches more than 1200
miles from the river's headwater in the Rocky Mountains to the river's
terminus in the Gulf of California in Mexico. The Department has now
determined that this effort should receive a special fund designation
and has appointed a coordinator for this multi-state effort.
The NRCS has earmarked funds to be used for the Colorado River
Basin Salinity Control Program and has designated this an area of
special interest. This was done at the urging of this Senate
subcommittee. The Forum appreciates the efforts of the subcommittee in
this regard. Since the designation, there has been earmarked about $4.5
million annually. The States added about $1.5 million in up-front cost-
sharing and local farms, we estimate, contributed about another $2.0
million. The plan for water quality control of the river prepared by
the Forum, adopted by the States, and approved by the EPA requires that
the USDA portion of the effort to be funded at $12 million. Hence,
there is a shortfall from the Federal designated funds of about $7.5
million. State and local cost-sharing is triggered by the Federal
appropriation. The entire effort is only at about 40 percent of what is
needed. The USDA indicates that more adequate funding for the EQIP
program will result in more funds being allocated to the salinity
control program. The Basin States have cost sharing dollars available
to participate in on-farm salinity control efforts. The agricultural
producers in the Upper Basin are waiting for their applications to be
considered so that they might also cost share in the program.
The President's Budget includes an additional $73.5 billion in
funding over a 10-year period for Farm Bill programs. The Budget
assumes that a portion of this will be allocated to conservation
programs, including funds to support a $1 billion level for EQIP in
2003. The Forum urges that this subcommittee support the funding at the
$1 billion level from the CCC in fiscal year 2003 for EQIP. The Forum
also requests that this subcommittee advise the Administration that $12
million of these funds be designated for the Colorado River Basin
Salinity Control Program.
overview
The Colorado River Basin Salinity Control Program was authorized by
Congress in 1974. The Title I portion of the Colorado River Basin
Salinity Control Act responded to commitments that the United States
made, through a minute of the International Boundary and Water
Commission, to Mexico with respect to the quality of water being
delivered to Mexico below Imperial Dam. Title II of the Act established
a program to respond to salinity control needs of Colorado River water
users in the United States and to comply with the mandates of the then
newly legislated Clean Water Act. Initially, the Secretary of the
Interior and the Bureau of Reclamation were given the lead Federal role
by the Congress. This testimony is in support of funding for the Title
II program.
After a decade of investigative and implementation efforts, the
Basin States concluded that the Salinity Control Act needed to be
amended. Congress agreed and revised the Act in 1984. That revision,
while keeping the Department of the Interior as lead coordinator for
Colorado River Basin salinity control efforts, also gave new salinity
control responsibilities to the Department of Agriculture. Congress has
charged the Administration with implementing the most cost-effective
program practicable (measured in dollars per ton of salt removed). It
has been determined that the agricultural efforts are some of the most
cost-effective opportunities.
Since Congressional mandates of nearly three decades ago, much has
been learned about the impact of salts in the Colorado River system.
The Bureau of Reclamation has conducted studies on the economic impact
of these salts. Reclamation recognizes that the damages to United
States' water users alone are hundreds of millions of dollars per year.
The Colorado River Basin Salinity Control Forum (Forum) is composed
of Gubernatorial appointees from Arizona, California, Colorado, Nevada,
New Mexico, Utah and Wyoming. The Forum has become the seven-state
coordinating body for interfacing with Federal agencies and Congress to
support the implementation of a program necessary to control the
salinity of the river system. In close cooperation with the Federal
agencies and under requirements of the Clean Water Act, every 3 years
the Forum prepares a formal report analyzing the salinity of the
Colorado River, anticipated future salinity, and the program necessary
to keep the salinities at or below the levels measured in the river
system in 1972 and to control damages to downstream users.
In setting water quality standards for the Colorado River system,
the salinity concentrations measured at Imperial, and below Parker, and
Hoover Dams in 1972 have been identified as the numeric criteria. The
plan necessary for controlling salinity has been captioned the ``plan
of implementation.'' The 1999 Review, Water Quality Standards for
Salinity, Colorado River System, includes an updated plan of
implementation. In order to eliminate the shortfall in salinity control
resulting from inadequate Federal funding for the last several years
for USDA, the Forum has determined that implementation of the salinity
control program needs to be accelerated. The level of appropriation
requested in this testimony is in keeping with the agreed to plan. If
adequate funds are not appropriated, State and Federal agencies
involved are in agreement that damage from the high salt levels in the
water will be widespread and very significant in the United States and
Mexico.
State cost-sharing and technical assistance
The authorized cost sharing by the Basin States, as provided by
FAIRA, was at first difficult to implement as attorneys for USDA
concluded that the Basin States were authorized by FAIRA to cost share
in the effort, but the Congress had not given USDA authority to receive
the Basin States' funds. After almost a year of exploring every
possible solution as to how the cost sharing was to occur, the States,
in agreement with the Bureau of Reclamation, with State officials in
Utah, Colorado and Wyoming and with NRCS State Conservationists in
Utah, Colorado and Wyoming, agreed upon a ``parallel'' program wherein
the States' cost sharing funds will be used. We are now several years
into that program and, at this moment in time, this solution to how
cost sharing can be implemented appears to be satisfactory.
With respect to the States' cost sharing funds, the Basin States
felt that it was most essential that a portion of the program be
associated with technical assistance and education activities in the
field. Without this necessary support, there is no advanced planning,
proposals are not well prepared, assertions in the proposals cannot be
verified, implementation of contracts cannot be observed, and valuable
partnering and education efforts cannot occur. Recognizing these
values, the ``parallel'' State cost sharing program expends 40 percent
of the funds available on these needed support activities. Initially,
it was acknowledged that the Federal portion of the salinity control
program funded through EQIP was starved with respect to needed
technical assistance and education support. The Forum is encouraged
with the Administration's determination that 19 percent of the EQIP
funds will be used for technical assistance but observes that this is
still not adequate funding for the technical assistance needed. The
Forum urges this subcommittee to appropriate adequate funds for these
support activities rather than to direct NRCS to borrow these needed
funds from the CCC.
______
Prepared Statement of the Industry and Government Central California
Ozone Study Coalition
Mr. Chairman and Members of the Subcommittee: On behalf of the
California Industry and Government Central California Ozone Study
Coalition, we are pleased to submit this statement for the record in
support of our fiscal year 2003 funding request of $500,000 from CSREES
for the Central California Ozone Study (CCOS).
Most of central California does not attain Federal health-based
standards for ozone and particulate matter. The San Joaquin Valley is
developing new State Implementation Plans (SIPs) for the Federal ozone
and particulate matter standards in the 2002 to 2004 timeframe. The San
Francisco Bay Area has committed to update their ozone SIP in 2004
based on new technical data, and the Sacramento area also plans to re-
evaluate their ozone SIP in that timeframe. In addition, none of these
areas attain the new Federal 8-hour ozone standard. SIPs for the 8-hour
standard will be due in the 2007 timeframe--and must include an
evaluation of the impact of transported air pollution on downwind areas
such as the Mountain Counties. Photochemical air quality modeling will
be necessary to prepare SIPs that are approvable by the U.S.
Environmental Protection Agency.
The Central California Ozone Study (CCOS) is designed to enable
central California to meet Clean Air Act requirements for ozone SIPs as
well as advance fundamental science for use nationwide. The CCOS field
measurement program was conducted during the summer of 2000 in
conjunction with the California Regional PM10/PM2.5 Air Quality Study
(CRPAQS), a major study of the origin, nature and extent of excessive
levels of fine particles in central California. CCOS includes an ozone
field study, a deposition study, data analysis, evaluations of model
performance, and a retrospective look at previous SIP modeling. The
CCOS study area extends over central and most of northern California.
The goal of the CCOS is to better understand the nature of the ozone
problem across the region, providing a strong scientific foundation for
preparing the next round of State and Federal attainment plans. The
study includes six main components, some of which have been completed:
--Developed the design of the field study.
--Conducted an intensive field monitoring study from June 1 to
September 30, 2000.
--Developing an emission inventory to support modeling.
--Developing and evaluating a photochemical model for the region.
--Designing and conducting a deposition field study.
--Evaluating emission control strategies for the next ozone
attainment plans.
The CCOS is directed by Policy and Technical Committees consisting
of representatives from Federal, State and local governments, as well
as private industry. These committees, which managed the San Joaquin
Valley Ozone Study and currently manage the California Regional PM10/
PM2.5 Air Quality Study, are landmark examples of collaborative
environmental management. The proven methods and established teamwork
provide a solid foundation for CCOS. The sponsors of CCOS, representing
state, local government and industry, have contributed approximately
$8.7 million for the field study. The Federal government contributed
$2,150,000 for some data analysis and modeling. In addition, CCOS
sponsors are providing $2 million of in-kind support. The Policy
Committee is seeking Federal co-funding of an additional $6.75 million
to complete the remaining data analysis and modeling portions of the
study and for a future deposition study. California is an ideal natural
laboratory for studies that address Federal, agriculture-related
issues, given the scale and diversity of the various ground surfaces in
the region (crops, woodlands, forests, urban and suburban areas).
For fiscal year 2003, our Coalition is seeking funding of $500,000
through the U.S. Department of Agriculture (USDA) Cooperative State
Research, Education, and Extension Service (CSREES). Domestic
agriculture is facing increasing international competition. Costs of
production and processing are becoming increasingly more critical. The
identification of cost-effective options for addressing environmental
options affecting agricultural costs will contribute significantly to
the long-term health and economic stability of local agriculture. A
CSREES grant is needed to address the issue of biomass burning and
alternatives to open burning. Biomass burning is managed in order to
minimize smoke impacts and avoid violations of ambient air quality
standards. The air quality impacts of using biomass as a fuel source
and as an alternative to open burning need to be addressed. CCOS will
improve the ability to assess the impacts of biomass power plants. A
CSREES grant is also needed to improve livestock emission estimates in
the air quality modeling inventory. Recent studies have shown that
livestock emissions are poorly understood and can have significant
impacts on ozone formation.
There is a national need to address data gaps and California should
not bear the entire cost of addressing these gaps. National data gaps
include issues relating to the integration of particulate matter and
ozone control strategies. The CCOS field study took place concurrently
with the California Regional Particulate Matter Air Quality Study--
previously jointly funded through Federal, State, local and private
sector funds. Thus, CCOS was timed to enable leveraging the efforts of
the particulate matter study. Some equipment and personnel served dual
functions to reduce the net cost. From a technical standpoint, carrying
out both studies concurrently was a unique opportunity to address the
integration of particulate matter and ozone control efforts. CCOS was
also cost-effective since it builds on other successful efforts
including the 1990 San Joaquin Valley Ozone Study. Federal assistance
is needed to effectively address these issues and CCOS provides a
mechanism by which California pays half the cost of work that the
Federal Government should pursue.
Scientists at the University of Nevada, Desert Research Institute
(DRI) are involved with the CCOS. To expedite research studies related
to biomass burning and smoke management for CCOS, it is requested that
funds provided by CSREES be allocated directly to DRI.
We appreciate the Subcommittee's consideration of our request.
Thank you very much.
______
Prepared Statement of Columbia University
Mr. Chairman, thank you for this opportunity to submit a statement
for the Outside Witness Hearing Record. This statement provides a
recommendation to improve and refine one of USDA's primary missions and
goals relating to U.S. agriculture, the development of world supply and
demand estimates for agricultural production and products.
The supply and demand analysis that USDA conducts requires the most
accurate tools and mechanisms available. Columbia University's
International Research Institute for Climate Prediction is recognized
as the leader in climate modeling and interannual to seasonal
forecasting. The IRI's partnership with USDA would result in improved
supply and demand estimates, and therefore be of immense benefit to the
U.S. agricultural economy. The details of this proposed linkage are
discussed below.
objective
Continue Report language contained in the fiscal year 2002
Agriculture Appropriations Report in the Office of the Chief Economist
that encourages USDA to utilize the expertise and tools provided by the
International Research Institute for Climate Prediction in the
assessment of foreign agricultural supply and demand estimates.
background
USDA's World Supply and Demand estimates for agricultural products
could utilize the most sophisticated and accurate analytical tools
available. The importance of advanced planning in crop production and
reserve stocks in times of fluctuating foreign demand can assist the
agricultural economy in maintaining financial stabilization and provide
warnings to mitigate foreign famine. Foreign draught and famine, in
addition to the tolls of human life and suffering, cause social and
political unrest in third world countries, contributing to instability
and economic hardships on third world national economies. Improved
supply and demand estimates assist domestic producers and the entire
agricultural economy, as well as provide the advance planning necessary
to avoid or minimize damage in third world economies.
Columbia University's International Research Institute for Climate
Prediction has developed the world's most accurate and long-range
climate models and forecasting techniques in the areas of temperature
and precipitation variability from average conditions. These two
factors determine the surplus or deficit in foreign agricultural
production. Improvement of the accuracy of USDA's long-range supply and
demand estimates could be achieved with the involvement of IRI analysis
and expertise in the an effort to obtain the necessary and available
tools and mechanisms for foreign agricultural supply and demand
estimates.
Brazil represents one of the most uncertain climate and weather
driven agricultural variables in world food production. Tools available
to USDA, such as the IRI, can assist the development of more accurate
USDA monitoring of agricultural production and growing conditions in
Brazil. This, in turn, will provide more informed analysis and
estimates for U.S. decision makers in the public and private sectors
for the impact of Brazil's production on world markets.
Africa represents the most vulnerable continent to temperature and
precipitation variations caused by climate forcing agents such as El
Nino and La Nina. The IRI is establishing a Health and Food Security
Climate Project that will integrate global interannual to seasonal
forecasts with regional climate modeling to provide the most accurate
climate forecasting and predictive analysis for private and
governmental decision makers. The agricultural component of this effort
is crucial to the production of USDA's supply and demand estimates, and
also to key planting decisions both within the U.S. and abroad. The
IRI's Health and Food Security Climate Project will focus on Africa and
function as an independent institution that will work cooperatively
with the Federal Government in the accomplishment of USDA missions and
goals.
As a result of the Committee's Report language for fiscal year
2002, a constructive dialogue has developed between the IRI and USDA
officials on a number of potential projects. The IRI, at USDA's
invitation, conducted a forum on climate and agriculture at the annual
USDA Outlook Conference in February. as well as providing an IRI
exhibit in the Conference Exhibit Hall. These are positive first steps
in what we believe will be a constructive collaboration between the IRI
and USDA.
Thank you for this opportunity to submit this proposed linkage for
the Subcommittee's consideration in deliberations on the fiscal year
2003 Agriculture Appropriations Bill.
______
Prepared Statement of the Council for Agricultural Research, Extension,
and Teaching
Thank you, Mr. Chairman. I appreciate the opportunity to provide
testimony again this year in support of the Land-Grant University
System.
My name is Joseph E. Motz and I am the president of The Motz Group,
an integrated company involved in the construction and management of
high profile sporting field facilities around the world. Our offices,
as well as my home, are located in Cincinnati, Ohio. I also have the
privilege of serving as the Chairman of the Council for Agricultural
Research, Extension, and Teaching, or you may know it as CARET.
CARET is a national group of volunteers representing farmers,
ranchers, agribusiness leaders, consumers, and local elected officials
who strongly believe in and work on behalf of the Land-Grant University
System. The CARET group was formed a number of years ago for the
expressed purpose of enhancing national support and understanding of
the important role played by the land-grant colleges in the food and
agriculture systems (both nationally and internationally), as well as
the role of this system in enhancing the quality of life for all
citizens of the nation.
As you know, the Land-Grant University System has made innumerable
contributions to America's food, fiber, and agricultural production
system. You also recognize that the Land-Grant University System has
been an essential ingredient to the success of American agriculture and
the health of the American public--in essence, the foundation of this
nation's way and quality of life.
The Land-Grant University System is very unique and has been a
critical component to the long-term success of the nation's
agricultural community. It has provided technology and education
enabling farmers, ranchers, and other stewards of natural resources in
this country to manage their productive resources in a way that is
efficient, yields the greatest and most nutritious quality and quantity
of food in the world, and protects the natural environment. The
contributions of the Land-Grant University System to American
agriculture has had an enormous impact on the nation's economy, our
balance of trade, the quality of our workforce, and the health and
quality of life for every American citizen. Unfortunately, this
research and education system that has given so much to the country
continues to be taken for granted.
One of the most acute issues facing us today and that is the
security of country and its agriculture. This new subject demands new
research to enable our country to prepare for and prevent a terrorist
attack. The Land-Grant System has a proven track record in providing
cutting-edge research on homeland and agricultural security. We greatly
appreciate the support received from Congress in the past, without
which we would not have been able to do this research and education.
There are five necessary steps that the Land-Grant System could
take to help prevent and prepare for a terrorist attack on the U.S.
food supply. These steps are:
The first step is to prepare to respond to emergency outbreaks.--At
the onset, bio- logical attacks on our plant and animal species could
appear to be a natural occurrence. However, a purposeful introduction
will probably spread more quickly and from separate locations.
Immediate recognition that there is an unnatural outbreak of a disease
in multiple locations is critical if the spread of the disease is to be
contained. Modeling and communication tools need to be developed that
will facilitate early detection and recognition of unnatural outbreaks.
The food and fiber production process opens up many opportunities where
purposeful contamination could occur. Most existing safeguards were not
designed to protect against intentional attacks. The private sector,
the Federal Government and the universities will need to develop new
standards and protocols to: improve detection and monitoring practices;
develop a secure communication system that alerts appropriate agencies
and points of entry that a problem may exist, with guidance on
appropriate actions; improve the ability to trace contamination back to
its source; and, enhance communication networks with public health
agencies, law enforcement agencies and state and local officials.
The second step is to prepare to counteract terrorism.--
Agricultural sciences overlap with the medical sciences, particularly
in the areas of animal health, pathology and microbiology. For example,
much of the current knowledge about anthrax resides within the
agricultural sciences community. Stepping up pathology, microbiology
and other basic science research will provide us with the tools to
minimize biological threats to agricultural security. More information
about disease vectors would help shape both prevention and containment
strategies. Such research could include the development of vaccines,
agents to neutralize and treat the effects of disease outbreaks, and
other technologies that can reduce the potential for contamination.
Other types of research, such as GIS and spatial analysis, could help
determine the size and scope of a possible attack.
The third step is to build secure communities.--Producers,
processors, suppliers, retailers, and consumers may one day be the
first responders to an agro-terrorist attack and thus play a pivotal
role in quickly containing contamination. The Extension system can
offer and provide educational programs to the private sector on how to
secure their operations. Specialized training in agro-security for
Extension agents is needed so that as ``first responders'' they have
the ability to recognize possible threats and that they are trained in
the appropriate protocols for working with local and Federal law
enforcement and health agencies. Local communities will need assistance
in creating and implementing plans to improve their ability to
anticipate and respond to acts of agroterrorism. Just as the Department
of Health and Human Services needs to help strengthen the ability of
state and local health agencies to plan and prepare, so does the
Department of Agriculture need to work with state departments of
agriculture and rural community leaders to plan and prepare. USDA will
need to collaborate with the Land-Grant Rural Development Centers and
the Extension system to accomplish this mission.
In addition to building agro-security, there are additional
security issues facing our communities: economic security, health
security, and the need to build leadership and service at the local
level. The state and county Extension system is in place to facilitate
the implementation of multiple Federal agency security programs at the
local level in over 3,000 counties.
The fourth step is to address immediate security needs.--
Universities conducting agricultural research need to establish
protocols to secure sites where hazardous materials are used and
stored, including toxic chemicals, radioactive elements and contagious
microbiological agents. Appropriate protocols for securing these
materials should be developed in collaboration with USDA's Agricultural
Research Service (ARS), the Animal and Plant Health Inspection Service
(APHIS), and the Food Safety Inspection Service (FSIS).
University and Federal laboratory research often is openly
communicated and stored electronically on computer networks. These
networks could be used to locate and abuse hazardous materials. As
well, research results and data that could be abused are often easily
accessible via electronic posting and web sites. The universities and
Federal research laboratories must develop protocols to safeguard this
information while keeping necessary information and communication
channels open.
As we have sadly learned, equipment and materials used in farming
and ranching can be abused horribly. Fertilizers can be used in bombs
and crop dusting planes can be used to spread bioweapons. The Extension
system needs to develop a variety of agriculture and forest security
programs for agricultural producers, natural resource managers,
processors, suppliers and retailers to help them prevent, detect and
respond to agroterrorism. Extension needs to work in partnership with
state and local agencies and private operations to help them understand
and implement protocols to prevent the abuse of these tools and
materials.
In addition to better physical security for hazardous radioactive,
toxic and biological materials, it will be important for state and
Federal officials to be able to locate or track the location of these
materials over time. Recent questions about the location of anthrax
samples in Federal laboratories demonstrate why this new level of
security will be needed. An inventory of materials with the potential
for abuse needs to be aggregated across agricultural research
facilities. A Federal determination of materials required for inventory
should guide the process. As required for national security,
information regarding the quantity and location of such materials
should be provided to appropriate Federal, State and local emergency
management agencies. This information must be securely maintained and
updated regularly. There are, of course, databases for some of these
materials already in place; however, university-based agricultural
research materials may not be included in these systems. USDA needs to
take the lead in insuring that hazardous materials located in
university research facilities are included in the appropriate database
systems.
The fifth and final step is to educate scientists, teachers and
specialists.--Who will provide the expertise for these efforts in the
future? We will need people whose education concentrates on security in
agriculture and natural resources. Courses or degrees in agricultural
security will be necessary. This kind of expertise currently does not
exist in institutions and initially will require outside expertise.
Institutions will require help to design long-term educational programs
that can provide the scientists and educators the ability to address
the issues of agricultural security.
The costs of prevention are small. Severe economic disruption could
result to our production, distribution and trade system, if we do not
take responsibility to act now.
The purpose of my testimony today is to request support for the
fiscal year 2003 budget recommendations of the National Association of
State Universities and Land-Grant Colleges (NASULGC) Board on
Agriculture Assembly (BAA). I, along with the membership of CARET, feel
that the BAA budget recommendations adequately address the research and
education needs of the Land-Grant System in helping this nation prepare
for and prevent a terrorist attack upon any part of the agricultural
sector of the nation.
The President's fiscal year 2003 proposal provides over $6 billion
to address biosecurity issues. We believe that the Land-Grant System
can serve in a critical partnership with the United States Department
of Agriculture to address agriculture security issues. Thus, CARET
joins NASULGC in calling for a $212 million increase in the funding for
the Cooperative State Research, Education, and Extension Service
(CSREES), U.S. Department of Agriculture (USDA) in fiscal year 2003.
CARET supports the President's budget recommendation along with a
$212 million increase for CSREES/USDA for fiscal year 2003. There is an
urgent need to support this new funding to address agro-security issues
through our Land-Grant and State Colleges and Universities. The
President's proposed budget includes more than $6 billion in new
funding to address biosecurity concerns, including over $2 billion in
new funding for biosecurity research and development. Unfortunately,
the President's budget does not adequately address the biosecurity
issues facing the agricultural production and food-processing sector,
particularly in the areas of research, outreach, and education. It
appears that no funding has been proposed for USDA/CSREES to address
national agro-security issues at the state and local level. The
recommendations described here are for new funding, in addition to the
President's proposed budget for CSREES and above funding levels
provided in fiscal year 2002.
Additionally, CARET recognizes the President's proposed increase in
the National Research Initiative (NRI) of $120 million and strongly
supports this proposed increase in the NRI. However, those of us in
CARET would not support this increase in the NRI at the cost of losing
the Initiative for Future Agriculture and Food Systems (IFAFS)--an
invaluable program strongly supported by CARET.
The NRI supports critically needed basic, investigator-driven
research. IFAFS supports critical multi-disciplinary team projects to
address applied research and immediate problems facing farmers,
ranchers and communities. Both funding mechanisms are needed. The BAA
and CARET strongly urge the continuation of the IFAFS program. Of the
proposed $120 million increase for the NRI in the President's budget,
we recommend that at least $30 million be directed towards agro-
security, specifically in the areas of developing technologies to
counteract terrorism in the future. This would include investments in
microbiology and pathology, as well as the development of vaccines and
treatments for pathological materials.
In regard to facilities and security, CARET supports the BAA
recommendation of $50 million to address immediate security needs.
Security upgrades are badly needed at our research facilities. There is
legislative language proposed in several bills that would provide
guidance regarding the need to upgrade security at our university
research facilities. However, it is our understanding that adequate
authority currently exists for the Congress to provide funding to
upgrade security at our university research laboratories and
facilities.
CARET also endorses and supports the Administration's
recommendations to establish an International Science and Education
Grants program at $1 million and increase funding for Higher Education
Programs ($1.16 million for Challenge Grants and an increase of
$507,000 for the National Needs Graduate Fellowship Grants).
All of the technology and knowledge in the world are useless
without the well-trained mind of someone to learn from it, apply it,
and expand it. Undergraduate education in colleges of agriculture and
life sciences is largely neglected in Federal funding. All of the
nation's students need to be equipped to become leaders in our nation's
workforce. Their future and the nation's future are one in the same,
and the nation can ill afford to poorly invest in this critical area.
The budget recommendations that are being advanced by CARET on
behalf of the Land-Grant System are the result of a broad number of
stakeholder meetings and receipt of substantial input from those that
benefit from the research and education activities.
It is the strong belief of the CARET membership that increasing the
funding for the Cooperative State Research, Education, and Extension
Service (CSREES), U.S. Department of Agriculture (USDA) by $212 million
in fiscal year 2003 is the most cost effective and responsible way to
provide for our agro-security needs while equipping American
agriculture for the 21st Century. This amount of funding will secure
America's food and agricultural system through research, extension, and
education while facilitating the maintenance of America's competitive
edge throughout the broad range of the production, processing,
distribution, and retail system that moves commodities around the
world. CARET also firmly believes that this funding level for
agricultural science and education will enhance the health and welfare
for our own citizenry as well as the people of the world. Certainly, we
do not want the recent headlines about the food supply in the European
community and other places in the world to be the future headlines in
American newspapers.
Thank you for this opportunity to provide this testimony in support
of the appropriations for continuing the fine work being done and the
work that must be done at America's Land-Grant University System--a
true national treasure!
______
Prepared Statement of Delta Western, Inc.
Mr. Chairman and Members of the Subcommittee, I thank you for the
opportunity to provide testimony in support of the USDA-CSREES Regional
Aquaculture Centers. My name is Lester Myers. I own and operate a
catfish farm near Inverness, Mississippi, and am President and General
Manager of Delta Western, Inc., Indianola, Mississippi, the largest
catfish feed mill in the United States.
Over the last 20 years, aquaculture has become an important part of
United States agriculture. Production of channel catfish, the largest
sector of domestic aquaculture, has increased more than 30 percent in
the last 10 years--a growth rate matched by very few industries. Farm-
raised channel catfish now makes up a remarkably large proportion of
domestic seafood consumption and, on a value basis, catfish ranks
fourth in the United States, behind only shrimp, salmon, and crabs.
Further, a significant portion of the salmon consumed by Americans also
derives from aquaculture.
As the catch from wild fisheries continues to decline, with no end
in sight, the shortfall in seafood production must be met by increased
aquaculture production. However, continued expansion and profitability
of the aquaculture industry will depend on development of new
technology to reduce production costs and make production more
competitive in the global market. For the past several years, I have
been actively involved with the Southern Regional Aquaculture Center as
Chairman of the Industry Advisory Council, and I feel that the Regional
Aquaculture Center program is essential to help meet the need for
technology development. Already, results from the Regional Center
projects are having a significant impact on domestic aquaculture. I
would like to illustrate that point with the results of one project
that I am very familiar with through my role as General Manager of a
catfish feed mill.
Feeds represent about half the cost of raising fish in aquaculture,
so advances in feed formulation and feeding practices can have a great
impact on profitability. The recently completed project ``Improving
Production Efficiency of Warmwater Aquaculture Species through
Nutrition'' was one of the most successful projects developed through
the Southern Regional Aquaculture Center. Scientists from nine states--
Alabama, Arkansas, Georgia, Kentucky, Louisiana. Mississippi, North
Carolina, Tennessee, and Texas--cooperated on the project. These
researchers, working collaboratively, to identified the most cost-
effective levels of vitamin and protein supplementation in feeds. Their
work resulted in improved feed formulations and feeding practices that
have saved the catfish, baitfish, and striped bass industries millions
of dollars a year. For example, in the catfish industry alone, feed
costs have been reduced $2-4 a ton as a direct result of work on this
project. Assuming overall feed use of 600,000 tons per year in the
catfish industry, cost savings average $1.8 million annually-over three
times the amount spent on this project over its 3-year duration.
The project mentioned above is just one of many projects supported
through the Regional Aquaculture Center program that return economic
benefits many times the amount invested. This funding efficiency is the
result of the decentralized structure of the Regional Centers and the
unique cooperative process used to develop research projects.
In summary, representatives of the U.S. aquaculture industry are
convinced that the Regional Aquaculture Center programs are highly
valuable and productive. Additional new research findings will help
insure future success for aquaculture production in the United States.
The authorized level of funding for the five Regional Aquaculture
Centers is $7.5 million annually. Despite an outstanding performance
record and an organizational structure that has become a model for
collaborative research in agriculture, funding for the Regional Center
program has remained level at half the authorized level of funding, or
$4.0 million per year ($800,000 for each of the five Regions). This has
resulted in steady erosion of actual operating funds, at the very time
when industry expansion calls for greater investment in research and
development. I respectfully request that you recommend the full
authorized level of $7.5 .million for the existing five Centers to
support these extraordinarily important and effective programs.
On behalf of the U.S. aquaculture industry, I thank you for the
opportunity to present testimony in support of the Regional Aquaculture
Centers, and express my sincere appreciation for the support you have
provided in previous years. Again, I would like to emphasize that
significant benefits have already been provided from work conducted by
these Centers and additional funding is urgently needed by our
industry.
______
Prepared Statement of Florida State University
Mr. Chairman, I would like to thank you and the Members of the
Subcommittee for the opportunity to present testimony before this
Committee. I would like to take a moment to briefly acquaint you with
Florida State University (FSU).
Located in Tallahassee, Florida's capitol, FSU is a comprehensive
Research I university with a rapidly growing research base. The
University serves as a center for advanced graduate and professional
studies, exemplary research and top quality undergraduate programs.
Faculty members at FSU maintain a strong commitment to quality in
teaching, to performance of research and creative activities and have a
strong commitment to public service. Among the faculty are numerous
recipients of national and international honors, including Nobel
laureates, Pulitzer Prize winners as well as several members of the
National Academy of Sciences. Our scientists and engineers do excellent
research, have strong interdisciplinary interests, and often work
closely with industrial partners in the commercialization of the
results of their research. Having been designated as a Carnegie
Research I University several years ago, Florida State University will
approach $150 million this year in research awards.
FSU has initiated a new medical school, the first in the U.S. in
over two decades. Our emphasis is on training students to become
primary care physicians, with a particular focus on geriatric
medicine--consistent with the demographics of our state.
Florida State attracts students from every county in Florida, every
state in the Nation, and more than 100 foreign countries. The
University is committed to high admission standards that ensure quality
in its student body, which currently includes some 345 National Merit
and National Achievement Scholars, as well as students with superior
creative talent. We consistently rank in the top 25 among U.S. colleges
and universities in attracting National Merit Scholars to our campus.
At Florida State University, we are very proud of our successes as well
as our emerging reputation as one of the Nation's top public
universities.
Mr. Chairman, let me tell you about a project we are pursuing this
year through the U.S. Department of Agriculture. To give you some
background, in fiscal year 2001, Congress passed the Federal Crop
Insurance Act, which included funding of partnerships for Risk
Management Development and Implementation. This legislation authorized
the USDA, working with NOAA, to enter into partnerships for the purpose
of increasing the availability of tools for crop loss mitigation. The
partnerships give priority for producers of agricultural commodities
for specialty crops and under-served agricultural commodities. Congress
authorized the program through fiscal year 2008.
The Federal Government, which sets crop insurance rates, needs to
utilize new cost-effective ways to reduce risk by using modern ideas
such as El Nino-La Nina climate variability; this would allow more
appropriate and fair pricing of premiums for crop insurance. The
Florida Climate Research Consortium, which consists of Florida State
University, the University of Florida, and the University of Miami, has
been at the forefront of this climate prediction work. The Consortium
has worked in Florida and throughout the Southeastern U.S., with
support from NOAA, to develop new methods to predict the consequences
of climate variability. More recently, in actual real-life tests, these
methods and data have been applied to the problem farmers raising
specialty crops face relative to rainfall; the efforts have also
tremendous implication for officials in their fight against forest
fires. In both instances and with the support of Florida's Commissioner
of Agriculture, use of these methods and their application to these
challenges has been seen as successful and well received.
In this consortium, Florida State University will provide the
climate forecasts and risk reduction methodology. The University of
Florida will provide crop models for predicting the climate variability
effects on selected crops. The University of Miami will provide the
economic modeling of the agricultural system. Each university will
provide appropriate expert advice on interactions with farmers. In
particular, the expertise of the Florida Agricultural Extension Service
will be utilized.
FSU, on behalf of the FL Climate Consortium, is seeking $1.75M in
fiscal year 2003 for this activity through the Partnerships for Risk
Management Development account of the U.S. Department of Agriculture.
Utilization of these tools and their application to agricultural
problems in this project has the strong support of Florida Commissioner
of Agriculture, Charles Bronson.
Mr. Chairman this is an excellent project that will yield great
rewards for our Nation and is just one of the many ways that Florida
State University is making important contributions to solving some key
problems and concerns our Nation faces today. Your support would be
appreciated, and, again, thank you for an opportunity to present these
views for your consideration.
______
Prepared Statement of Easter Seals
Easter Seals appreciates the opportunity to report on the notable
accomplishments of the USDA Cooperative State Research, Education, and
Extension Service (CSREES) AgrAbility Program and request that funding
for the AgrAbility Program be increased to $4.6 million in fiscal year
2003.
The AgrAbility Program is an essential, unduplicated, hands-on
resource for farmers, ranchers, and farmworkers with disabilities and
their families. AgrAbility is the only USDA program dedicated
exclusively to helping agricultural producers with disabilities. It
demonstrates the value of public-private partnership by securing
donations of funds, talent, and materials to magnify the impact of a
modest federal investment. The fiscal year 2002 appropriation of $4.05
million will fund 22 state projects.
disability & agriculture
Agricultural production is one of the nation's most hazardous
occupations. According to the National Institute on Occupational Safety
and Health, each year, approximately 182,500 agricultural workers
sustain disabling injuries, about 5 percent of which permanently impair
their ability to perform essential farm tasks. Tens of thousands more
become disabled as a result of non-farm injuries, illnesses, other
health conditions, and the aging process. Nationwide, approximately
288,000 agricultural workers between the ages of 15 and 79 have a
physical disability that affects their ability to perform one or more
essential farm tasks.
The presence of a disability jeopardizes rural and agricultural
futures for many of these individuals. Rural isolation, a tradition of
self-reliance, and gaps in rural service delivery systems frequently
prevent agricultural workers with disabilities from taking advantage of
growing expertise in modifying farm operations, adapting equipment,
promoting farmstead accessibility, and using assistive technologies to
safely accommodate disability in agricultural and rural settings. Yet,
with some assistance, the majority of disabled agricultural workers can
continue to earn their livelihoods in agriculture and participate fully
in rural community life.
agrability's role and accomplishments
The AgrAbility Program was established under the 1990 Farm Bill in
response to the needs of farmers, ranchers, and farmworkers with
disabilities. The Farm Bill authorizes the Secretary of Agriculture to
make grants to Extension Services for conducting collaborative
education and assistance programs for farmers with disabilities through
state projects and related national training, technical assistance, and
information dissemination. Easter Seals is proud to be a partner with
the University of Wisconsin-Extension Cooperative Extension to provide
the national training and technical assistance portion of the
AgrAbility Program. Thousands of people in states with and without
state AgrAbility projects are aided through this initiative.
AgrAbility combines the expertise of the Extension Service and
disability organization staffs to provide people with disabilities
working in agriculture the specialized services that they need to
safely accommodate their disabilities in everyday farm and ranch
operations. AgrAbility received strong bipartisan support during the
1998 reauthorization of the USDA research and education programs, and
was extended through fiscal year 2004. The $6 million authorization
level for AgrAbility was continued.
Under the statute, state and multi-state AgrAbility projects engage
Extension Service agents, disability experts, rural professionals, and
volunteers to offer an array of services, including: identifying and
referring farmers with disabilities; providing on-the-farm technical
assistance for agricultural workers on adapting and using farm
equipment, buildings, and tools; restructuring farm operations;
providing agriculture-based education to prevent further injury and
disability; and, upgrading the skills of Extension Service agents and
other rural professionals to better promote success in agricultural
production for people with disabilities.
In 2002, USDA received an allocation from Congress of $4.05
million. These funds will support 22 state projects, the national
project, and USDA-CSREES administration of the Program. The competition
for the state project grants is currently underway and an announcement
of the new state projects is expected momentarily.
AgrAbility provides customized assistance to farmers, ranchers, and
farmworkers with disabilities and their families. The nature and degree
of assistance depends on the individual's disability, needs, and
agricultural operation. For example:
--Ryan Odens of Sibley, IA took over his family's 1,300-acre corn and
soybean farm after his father passed away suddenly when Ryan
was 20. When he was 23, Ryan was involved in a pickup truck
rollover accident that left him with a spinal cord injury. He
was not expected to walk again. With the help of therapy and
the use of a crutch, however, he regained his ability to walk.
AgrAbility and the Iowa Division of Vocational Rehabilitation
worked with him to add an extra step on his tractor, purchase a
four-wheel drive motorized cart to help him navigate the farm,
put lifts on several pieces of farm machinery, add a cement
floor to the machine shed to increase safety while working on
machinery. He has also added mirrors in his tractor to increase
his range of vision because rods in his back make it difficult
for him to turn. Ryan believes that, ``without Easter Seals and
Vocational Rehabilitation, I probably wouldn't be farming.''
--Grover Greer, of Anguilla, Mississippi, has farmed in the
Mississippi Delta for 26 years. Thanks to the work of
AgrAbility and other state agencies, his son is now doing the
same. Born with cerebral palsy, Jonathan, 17, operates a 25-
acre turfgrass business. A hoist and hand controls allow
Jonathan to independently operate his tractor to irrigate and
maintain the grass. While they anticipate the business growing
and providing Jonathan with employment, Grover says, ``The more
important point is that he is happy and self-sufficient.''
Jonathan is putting to good use his abilities and motivation to
be a successful turfgrass farmer.
--Richard Mauer, of Newport, Pennsylvania, has operated his 450-acre
dairy farm since he purchased it from his father in 1966.
Thirty years later, a stroke that left Mr. Mauer partially
paralyzed threatened his ability to remain in farming. After
reading about AgrAbility in a magazine, Mr. Mauer contacted
AgrAbility for Pennsylvanians to seek assistance. AgrAbility
staff helped Mr. Mauer make modifications to his farm including
extra steps added to tractors, a new more automated milking
system with computerized monitors and automatic shut-off
mechanisms, and a automatic wagon hitch that minimizes the
number of times Mr. Mauer must climb on and off a tractor.
These modifications have helped Mr. Mauer keep his farm
operation running; an operation that currently produces
approximately 550 gallons of milk a day. He also serves as a
mentor and peer supporter for other farmers with disabilities
throughout Pennsylvania.
Overall, AgrAbility Projects in 29 states along with the national
project accomplished the following between 1991 and 2001:
--provided assistance, including nearly 8,800 on-site visits, to over
10,000 farmers, ranchers and farmworkers or their families
affected by disability;
--educated over 200,000 agricultural, rehabilitation, and health
professionals on safely accommodating disability in
agriculture;
--recruited and trained more than 6,000 volunteers and peer
supporters to assist farmers, ranchers and farmworkers with
disabilities; and,
--reached 9,500,000 people through more that 8,000 exhibits,
displays, and demonstrations to increase awareness of the
challenges affecting and resources available to farmers,
ranchers and farmworkers with disabilities.
In 2000, the National AgrAbility technical assistance and education
grant was awarded to Easter Seals national headquarters and the
University of Wisconsin-Extension Cooperative Extension. This new
partnership is generating innovative and effective activities at the
national level that will have a significant impact on the effectiveness
of the state AgrAbility projects and the lives of agricultural workers
with disabilities. Some of the initiatives underway or planned at the
national level include:
--a Consensus Conference on Disability in Agriculture and Rural
America co-sponsored by the Farm Foundation and Easter Seals to
engage leading agricultural organizations and experts in
identifying and addressing challenges agricultural producers
with disabilities face;
--an expanded and refined AgrAbility website that includes AgrAbility
technical information, new publications, and on-line training
modules;
--a comprehensive training resource on rural case management; and,
--a ``virtual farm tour'' resource on accommodating disability to
include footage of actual farmstead and machinery
modifications.
impact of current funding levels
A funding floor of $150,000 per state was set in the 1990 Farm Bill
to assure that the state programs were appropriately resourced to meet
diverse, statewide agricultural accommodation needs. In the 1998
reauthorization of the USDA research and education programs, the
Committee reaffirmed a commitment to that funding floor of $150,000 per
state. Because funding had not approached the $6 million authorized
level prior to fiscal year 2002, however, state projects had only
received on average slightly under $100,000 per state. The funding
increase for AgrAbility in fiscal year 2002 provided USDA with the
ability to fund projects at the $150,000 base level. Easter Seals
strongly supports full funding of state projects to assure that they
continue to be effective for farmers with disabilities.
AgrAbility projects are underfunded relative to need and objective.
At the current funding level, only a few staff can be hired to provide
statewide education and assistance to farmers with disabilities,
educate rural professionals, recruit volunteers, and work with rural
businesses on disability-related issues. Rising demand for services and
the great distances that must be traveled to reach farmers and ranchers
severely strains even the most dedicated of AgrAbility's outstanding
staff. Easter Seals fears that failure to invest adequately in this
worthwhile program will ultimately cause it to falter.
An additional consequence of limited funding is that in every grant
cycle some states with existing AgrAbility programs and a demonstrated
need for services are not renewed and are forced to discontinue
services to farmers with disabilities in that state. These states often
have difficulty obtaining the access to the limited public and private
funding sources that the federal seed money granted them. More than a
dozen states have sought AgrAbility funding without success. Other
states, including Kentucky, Louisiana, Michigan, Montana/Idaho, New
Jersey, New York, South Carolina, Ohio, and Vermont/New Hampshire had
USDA-funded AgrAbility projects in the past. Each of these states can
demonstrate significant unmet needs among farm and ranch families
affected by disability that AgrAbility could potentially address. Any
loss of programs will greatly affect farmers with disabilities in
states where AgrAbility is the primary resource through which they seek
information and assistance on farming with a disability.
The fiscal year 2003 request of $4.6 million would allow USDA to
(a) continue to fund states up to the $150,000 base level and add new
projects in states currently unserved by AgrAbility or (b) increase the
budgets of currently funded projects to allow much-needed expansion of
existing services.
funding request
The need for AgrAbility services has never been greater, and its
accomplishments to date are remarkable by any standard. Easter Seals is
proud to contribute to the ongoing success of the USDA-CSREES
AgrAbility Program. Please support the allocation of at least $4.6
million for AgrAbility in fiscal year 2003 to ensure that this valuable
public-private partnership continues to serve rural Americans with
disabilities and their families. Thank you for this opportunity to
share the successes and needs of the USDA AgrAbility Program.
______
Prepared Statement of the Florida Sugar Cane League
importance of sugarcane to the economies of florida and the u.s.
Sugarcane is Florida's most valuable row crop. It is surpassed in
value to the state's economy only by tourism and the citrus crop.
According to a recent study by LMC International, Ltd., Florida
sugarcane growing and milling have an economic impact in Florida of two
billion dollars annually and provide nearly 21,000 full time equivalent
jobs for the economy.\1\
---------------------------------------------------------------------------
\1\ LMC International, Ltd. 2001. The Importance of the Sugar and
Corn Sweetener Industry to the U.S. Economy. Report prepared for the
American Sugar Alliance.
---------------------------------------------------------------------------
The United States is the world's largest sweetener market, using
over 20 million tons of caloric sweeteners annually. About half of
this, 10 million tons, is provided by sugar (sucrose) produced from
sugarcane and sugar beets. The other half is mainly corn sweetener
(fructose) produced from maize in the United States. We are not
currently self-sufficient in sucrose, producing only about 8 million
tons from sugarcane and sugar beet crops in the United States on an
annual basis. The deficit in U.S. sugar needs is met through
preferential trading arrangements with 41 separate countries from which
we purchase sugar under a tariff-rate quota system administered by USDA
and the U.S. State Department.
sugarcane in agricultural research
Sugarcane is a large grass, and being mainly a tropical crop, is
grown in only four U.S. states, Florida, Louisiana, Texas and Hawaii.
There is a total of only 1 million acres of sugarcane in the United
States. By comparison, there are over 75 million acres of corn (maize).
This is why sugarcane is considered a minor crop in the United States,
even though we are the sixth largest producer of cane sugar in the
world.
Sugarcane is unusual among crops in that it is vegetatively
propagated, i.e., it is planted from stalk cuttings, not seeds.
Sugarcane is also a perennial, ratooned crop, meaning that it regrows
several annual crops from one planting. This is significant in that
seed companies have never entered into the business of developing new
varieties for growers since once a grower has a new variety, he need
only reserve a small portion of his crop each year for replanting.
There is no profit for seed companies in sugarcane past an initial
sale, and they are therefore not interested in breeding new strains.
This is a major reason why USDA has remained in sugarcane variety
research and development on behalf of U.S. sugarcane farmers.
Sugarcane is a difficult crop to perform genetic research and
improvement on by virtue of its large size, long generational interval,
and complicated genetics. Special facilities are needed for rearing the
plants, forcing flowering, and making crosses. In addition, the true
seed are extremely small and fragile. Special greenhouse facilities and
rearing techniques are required for successfully growing them as
seedlings that are the basis of new variety selection. It is necessary
to set out over 100,000 seedlings annually to field plantings in a
sugarcane breeding program, and over 10 years of selection, replanting,
and testing are required to develop a successful variety from that
original crop of seedlings.
The expertise for breeding sugarcane in the United States lies
largely with USDA-ARS through their facilities at Canal Point, Florida
and Houma, Louisiana. This infrastructure and expertise has been
developed by USDA with industry support beginning in the 1920s, and is
world-renowned within international sugarcane research circles.
history of the usda sugarcane field station at canal point, florida
The USDA Sugarcane Field Station was established on Collins Key
(now Miami Beach, Florida) in 1918 and relocated to its current site,
Canal Point, Florida, a small town on the southeastern shores of Lake
Okeechobee, in 1920. Canal Point was selected as an ideal site by the
founding superintendent, Dr. E.W. Brandes, who chose it for its
protection from cold by the nearby waters of Lake Okeechobee, its
favorable climate, rich soils, and proximity to Florida's infant sugar
industry.\2\
---------------------------------------------------------------------------
\2\ Leo P. Hebert. 1971. U.S. Sugar Cane Field Station, Canal
Point, Florida--First 50 Years 1920-1970. Sugary Azucar.
---------------------------------------------------------------------------
The primary objective of the station has always been the production
of improved sugarcane varieties. The impetus for this objective was
originally provided by Louisiana, at the time, the leading producer of
sugar on the mainland U.S., where a devastating complex of sugarcane
diseases had decimated their production based on old world sugarcane
varieties. The Sugarcane Field Station was established largely in
response to industry requests to USDA to help with recovery of the
industry in Louisiana through development of improved, adapted, hybrid
varieties of sugarcane.
The Florida and Louisiana sugarcane industries have always worked
closely with the Sugarcane Field Station through cooperative agreements
between their State Cooperative Extension agencies and industry
organizations.\3\ The first formal arrangement of this type, dating to
1924, was between USDA and the Louisiana State University Agricultural
Experiment Station. It provided for annual contributions to the Canal
Point station for propagating hybrid seedlings as the basis of
development for new varieties of sugarcane for Louisiana. Florida's
sugar industry saw a large expansionary period from 1960 to 1970
following the Cuban embargo and the inability of Puerto Rico to meet
its domestic production quota. During this period, the Florida industry
promoted and signed a three-way agreement between the USDA Sugarcane
Field Station, the University of Florida Experiment Station and the
Florida Sugar Cane League (a Florida sugar industry trade association)
to provide for the testing, increase and distribution of promising new
varieties to Florida's sugar cane growers. This three-way agreement is
still in effect, and is often cited as an exemplary case of successful
cooperative experimentation between Federal, State and industry
agencies in agricultural research. The three-way agreement has been an
excellent vehicle for shared responsibility and costs of the program.
The Federal and State agencies are responsible for maintaining test
fields at experiment stations and on grower cooperator farms, while
Florida Sugar Cane League representatives supervise the increase and
distribution of new varieties. The three-way agreement is also the
foundation for direct industry support in terms of manpower and funds
to the program. Currently, Florida's sugar industry provides about
$400,000 annually in direct support of the program at Canal Point
through a dedicated research assessment on production paid by growers,
and approximately $125,000 annually through in-kind contributions of
cooperating grower farms in the testing program.
---------------------------------------------------------------------------
\3\ Benjamin A. Bourne. 1972. Significant Developments in the Early
Phases of the Florida Cane Sugar Industry. Sugar y Azucar.
---------------------------------------------------------------------------
research mission of the usda sugarcane field station
According to Dr. Jimmy D. Miller, Research Leader at the Sugarcane
Field Station,\4\ the mission of the station has remained relatively
constant over the years with the following emphasis:
---------------------------------------------------------------------------
\4\ J.D. Miller. 2002. The Last 30 Years (1970-1999) at the U.S.
Sugarcane Field Station, Canal Point, Florida. Unpublished manuscript.
---------------------------------------------------------------------------
--Produce true seed of recommended crosses for the ARS breeding
programs at Houma, Louisiana and Canal Point, Florida. In
recent years, ARS has entered into a three-way memorandum of
understanding with Texas A&M University and the Rio Grande
Valley Sugar Growers Cooperative to supply them with true seed
also.
--Conduct a cooperative (USDA-ARS, University of Florida, and Florida
Sugar Cane League) sugarcane cultivar development program for
Florida.
--Conduct a sugarcane pathology program that is closely coordinated
with the breeding program to efficiently screen selections for
disease resistance and evaluate the status of diseases in the
Florida industry.
Recently, three additional missions have been assigned:
--Breed varieties of sugarcane that are tolerant of high water tables
--Conduct agronomic and genetic research that will strengthen
sugarcane production in Florida and improve compatibility
between sugarcane production and the natural Everglades
--Conduct research aimed at reducing the rate of soil subsidence
while maintaining sugarcane production
research accomplishments
The USDA Sugarcane Field Station has released 44 varieties in
Florida since 1970. In the 1999-2000 harvest season, there were 34
USDA, Canal Point (CP) varieties being grown commercially. The Florida
industry has had record yields the past 3 years, and at least some of
this can be attributed to improved tonnages and increased sugar content
of CP Varieties. CP varieties are grown on about 70 percent of the
acreage in the Florida industry.
Adequate seed has been produced by the crossing program to provide
sufficient seed (mostly of recommended crosses) to supply the needs of
the ARS sugarcane breeding programs at Houma, Louisiana and Canal
Point, Florida and the breeding program conducted by Texas A&M
University. Since 1970, the mainland sugarcane breeding programs have
released four new varieties for Texas and introduced and made available
to growers others previously released in Louisiana and Florida.
Fourteen new varieties have been produced for Louisiana through the
program.
The breeding program has been effective in minimizing the effect of
damaging disease outbreaks in Florida. Since 1970, new disease and
outbreaks in Florida have included sugarcane smut, mosaic, sugarcane
bacilliform virus, rust (several new races), a new race of leaf scald
disease, yellow spot disease, purple spot disease, dry top rot, yellow
leaf syndrome and continuing problems with Ratoon Stunting Disease. Due
to the large diversity of varieties being grown, no industry wide
losses of production can be attributed to a specific disease. Although
individual diseases have caused serious economic losses in individual
fields, growers were able to quickly shift to resistant varieties and
thus avoid significant losses.
Progress was made in development of techniques to screen for
diseases in the sugarcane breeding program which has led to higher
levels of disease resistance for some diseases, most notably Ratoon
Stunting Disease.
Significant progress has been made in breeding for higher cold
weather tolerance of sugarcane varieties.
Development of mapping populations for use by molecular biologists
has resulted in identification of several individual genes for both
sucrose accumulation and reduction. More crosses are planned to expand
these studies.
True seed were produced from most of the clones of wild ancestral
canes of the species S. spontaneum and stored in the National Seed
Storage Laboratory in Fort Collins, Colorado. That contribution should
preserve the availability of this germplasm for use by sugarcane
breeders for the next 50 years.
Experiments with water tables at 15 and 30 cm levels in field
ditches between 1 June and 1 November (during the rainy season in
Florida) have identified differences among cultivars in their yield
reactions at both water tables. This should permit growers to reduce
pumping costs by holding higher water tables on tolerant sugarcane
varieties.
national and domestic research linkages
The Sugarcane Field Station is the primary sugarcane breeding
facility for mainland United States sugarcane growers. It enjoys
national and international recognition in this role, and hosts
scientists interested in sugarcane genetics and breeding from many
countries in the world for training and information exchange. In the
past 10 years, excess seed to program needs has been shared with
sugarcane breeding programs in Argentina, China (PRC) Colombia, Congo,
Costa Rico, Ecuador, Egypt, El Salvador, Guatemala, Mexico, Morocco,
Nicaragua, Pakistan, South Africa, Sri Lanka, Sudan, Switzerland,
Thailand and Viet Nam. CP sugarcane varieties are also an important
component of production in many foreign countries and serve
additionally as parental material in their crossing programs. Examples
of foreign countries growing CP varieties include: Morocco, Australia,
Mexico, Iran, Argentina, Dominican Republic, Colombia, Guatemala and
Pakistan to name some.\5\
---------------------------------------------------------------------------
\5\ Gilherme Rossi Machado, Jr. 2001. Sugarcane Variety Notes and
International Directory, 7th Rev. Guiherme Rossi Machado, Jr., Pub.
Piracicaba, Brazil.
---------------------------------------------------------------------------
The Sugarcane Field Station plays an important coordinating role in
managing the World Collection of Sugarcane Clones housed at the USDA
Horticultural Research Station in Miami, Florida. Requests for
propagative material from the collection by overseas cooperators are
often coordinated through the Sugarcane Field Station. The World
Collection of Sugarcane Clones is an important genetic repository of
sugarcane varieties and ancestral sugarcanes collected by USDA and
other researchers throughout the world over the last century.
USDA researchers at Canal Point are active in worldwide sugarcane
research, and represent USDA-ARS as a member of the International
Consortium of Sugarcane Biotechnology, a multi-country research
consortium dedicated to the furtherance of biotechnology for the
improvement of sugarcane.
future research needs and funding
The primary research priority for the Sugarcane Field Station is to
retain its current mission of breeding superior sugarcane varieties for
Florida, Louisiana and Texas growers. The following specific
improvements to the Canal Point, Florida portion of the USDA-ARS
Sugarcane Variety Development Program are recommended:
--Continue and improve the production of true sugarcane seed in
numbers sufficient to provide the broadest possibility for
selection of sugarcane varieties that maintain acceptable
yields under reduced production inputs.
--Implement molecular marker-assisted breeding strategies consistent
with USDA-ARS research in other crops such as corn, small
grains and vegetables.
--Utilize molecular tools and techniques to screen for specific
traits to improve disease, weed and insect resistance toward
minimizing pesticide use.
--Strengthen facilities, infrastructure and agency collaboration to
improve selection and screening for varieties under prevailing
conditions including management for improved soil and water
conservation.
To maintain program viability, and to elevate the research effort
to the level of excellence expected of ARS research centers, it is
essential $1.5 million be added as a recurring appropriation to the
current budget of the USDA-ARS sugarcane research effort at the Canal
Point Sugarcane Field Station. These funds should be used toward
strengthening the breeding, pathology and soil conservation projects
currently underway, including improving staff, equipment and research
facilities.
Special thanks to Dr. Jimmy D. Miller, Research Leader, USDA-ARS
Sugarcane Field Station, Canal Point, Florida, and Mr. James M. Shine,
Jr., Agricultural Research Director, Sugarcane Growers Cooperative of
Florida, for their contributions to this report.
______
Prepared Statement of the Friends of Agricultural Research--Beltsville,
Inc.
Mr. Chairman, and Members of the Subcommittee, thank you for this
opportunity to present our statement supporting funding for the
Department of Agriculture's Agricultural Research Service (ARS), and
especially for the Agency's flagship research facility, the Henry A.
Wallace Beltsville Agricultural Research Center (BARC), in Maryland.
Our organiztion--Friends of Agricultural Research--Beltsville--is
dedicated to supporting and promoting the Center's agricultural
research, outreach, and educational mission.
Mr. Chairman, we know these are difficult times for the Federal
budgetary process. The unspeakable acts of September 11 and their
aftermath join with a slower economy to create complications for fiscal
year 2003 appropriations. Yet the case for maintaining essential
agricultural research must be made, and defended. This is our purpose:
to add voice to the recommendations of our finest agricultural
researchers and managers. Producers, processors, transporters,
marketers, agribusinesses will be the beneficiaries. Ultimately, the
big winner will be the American consumer With that, we turn to our
specific recommendations. Though we don't propose to present our
recommendations in any particular order of importance, we will begin
our specific comments with a solid recommendation to keep Beltsville's
Bee Research Laboratory in Beltsville.
Beltsville Bee Research Laboratory
Just as the Beltsville Agricultural Research Center is the flagship
agricultural research facility to the nation and the world, the
Beltsville Bee Research Laboratory is the flagship bee research
facility to the nation and the world. The Beltsville location is not
only a boon to honey bee research, but to all of production
agriculture. The nation's oldest Federal bee research facility, the
Laboratory and its predecessors in the Washington area have existed for
over 100 years. Generally considered the world's premier bee disease
laboratory, the Beltsville laboratory provides bee disease, parasitic
mite, and Africanized honey bee identification services for beekeepers
worldwide. It also supports the mission of other Federal agencies,
including the Animal and Plant Health Inspection Service, the
Environmental Protection Agency, and the Food and Drug Administration.
Moreover, the Bee Research Laboratory provides training for bee disease
diagnosticians from other states and countries including Mexico,
Canada, the United Kingdom, South Africa, New Zealand, Pakistan, Chile,
and others.
I. Barton Smith of the Maryland Department of Agriculture recently
described the need for the Beltsville Laboratory this way: ``The
beekeeping industry is in dire need of the work . . . due to problems
with resistant mites and foulbrood. The Beltsville Bee Research Lab
provides bee disease and pest diagnosis to state regulatory agencies
and beekeepers. Last year, that lab diagnosed 96 bee disease samples
for the Maryland Department of Agriculture (MDA). The MDA does not have
the expertise to do this work.''
A recent Cornell University study estimated the value of increased
agricultural production attributable to honey bee pollination at $14.6
billion annually. This value comes from increased crop yields and
superior quality. Between 1993 and 1997, numbers of bee colonies and
yield of honey per U.S. colony declined sharply. A 1998 report pointed
out that a quarter of North America's wild and domesticated honey bees
had disappeared over the previous 8 years at a cost to American farmers
of $5.7 billion a year. Managed bee colonies and their pollination
benefits will survive only if these trends can be reversed, according
to the report.
Full-scale honey bee research of this quality can't stand in
isolation. The Beltsville location provides research cooperation that
is unavailable anywhere else. Bee research requires the expertise not
only of apiculturists, but of pathologists, geneticists, and chemists.
Beltsville provides all these and more. For example, the Beltsville Bee
Lab is the only laboratory committed to preserving honey bee germplasm.
It is uniquely positioned to take advantage of the avian and porcine
germplasm research being conducted at Beltsville. This type of
cooperative research allows research groups to meet daily if needed and
it provides the savings of shared instrumentation. Also, the lab
spearheads the USDA effort seeking FDA approval for two antibiotics to
control American foulbrood disease of honey bees. The causative
bacterium is showing resistance to the only approved antibiotic, and is
devastating bee colonies across the nation. The Beltsville Bee Lab has
developed new controls for parasitic mites, including an ARS-patented
gel formulation of formic acid. The commercially available,
environmentally friendly product offers a 90-100 percent control.
Nowhere in the country is a Federal bee laboratory located in the close
proximity to such prestigious institutions as the National Institutes
of Health, Johns Hopkins University, the University of Maryland,
Georgetown University, and the Smithsonian Institution.
The Beltsville Bee Laboratory is the only Federal honey bee
research facility located in a climate representative of the majority
of U.S. beekeeping areas. Honey bee experts from the Mid-Atlantic
Region say that a sustained base of research support would be lost if
the Beltsville Laboratory were to be re-located to Wesalco, Texas.
Within a 400 miles radius of Beltsville, growers use honey bees to
pollinate major acreages of crops such as apples, blueberries, and
cranberries. Those crops are unavailable for pollination studies in the
arid Southwest. Further, migratory beekeeping is a vital management
practice near Beltsville, where honey bee colonies are moved up and
down the eastern agricultural corridor.
Federal Africanized honey bees dominate Weslaco's arid Southwestern
location. By no means do we diminish the importance of Africanized
honey bees to the six states where they have been reported. Still,
scientists say that Weslaco's atypical honey bee situation is ill-
suited for traditional European honey bee research. They say
traditional honey bee research at Weslaco would be both highly
impractical and extremely costly. Also, we would note that several
state universities are cutting back on honey bee research. The net
effect overall is to cut honey bee research to the bone when more, not
less, research is badly needed. Thus, for many reasons, we respectfully
recommend keeping the Beltsville Bee Research Laboratory intact. This
is not the time to cut bee research at Beltsville.
Animal Improvement Programs Laboratory
This venerable Beltsville laboratory and its predecessors have
contributed over a century of steady genetic progress to America's milk
production industry. Its reach is worldwide, helping producers
everywhere make better informed genetic decisions and promoting export
of American germplasm and breeding stock.
For many years America's dairy cows have steadily increased milk
production at the rate of about 45 gallons per year. Approximately two-
thirds of those increases can be traced to genetic progress. Much of
the credit for that success stems from the cooperative national and
international genetic evaluation programs of BARC's award winning
Animal Improvement Programs Laboratory. The future of dairy industry
will be greatly influenced by the research of the Animal Improvement
Programs Laboratory. In recent years, the Laboratory staff has
decreased as inflation and salary increases have eaten away at
operating funds. Without additional funding, the lab will be so
strapped for funds it will be unable to function. With the requested
funding, the lab can support the current program and expand it by
hiring another Research Geneticist. We recommend continued funding
support for the Laboratory.
Barley Health Foods Research
Barley contains carbohydrates called beta-glucans that help control
blood sugar and cholesterol. We recommend continued support for
research to determine if barley-containing foods may affect the risks
of such chronic conditions as cardiovascular disease, diabetes, and
obesity. This research is needed to assess the bioavailability and
efficacy of food components found in barley and to identify foods,
health practices, and attitudes associated with successful maintenance
of weight loss.
Biomineral Soil Amendments for Nematode Control.
Losses to soil nematodes cost farmers billions every year. The
soybean cyst nematode alone can cut soybean yields by 10 percent, often
more. Citrus and vegetable crops also are vulnerable to intensive
nematode damage. Growers are squeezed by expanding nematode
infestations, nematicide resistance, and de-registration of traditional
nematicides because of environmental concerns. BARC in cooperation with
industry and others is pursuing new, more effective approaches to
nematode control. Promising research lines include using such re-
cyclable soil amendment as animal wastes, composts, and mineral by-
products. We recommend continuing the increased funding for these
promising approaches.
Foundry Sand By-Products Utilization
Municipalities and industries generate vast quantities of by-
products. By-products, such as foundry sand from the metal castings
industry, have potential uses in agricultural and horticultural
production processes. The Animal Manure and By-Products Laboratory will
use the funding to identify beneficial new uses and assess risks to
human health, safety, or the environment from using foundry sand in
agriculture. A new soil scientist will be hired to support this work.
We recommend continuation of this funding.
Poultry Diseases
The mission of the Parasite Biology, Epidemiology, and Systematics
Laboratory is to reduce the economic costs of parasites in livestock
and poultry. Coccidiosis causes the greatest economic loss to the meat
chicken industry from disease. But traditional chemical controls are
becoming ineffective; and new non-chemical control methods are needed.
New funding will be used to conduct functional genomics and proteomics
analysis of coccidia to identify potential proteins that can be used in
diagnostic tests and as targets for potential vaccine development. We
recommend continuation of this funding.
Biomedical Plant Materials
There is a growing need for functionally active, protective
molecules for human and animal pathogens. We need them at lower cost
and without risk to humans, animals, or the environment. Such molecules
include recombinant antibodies, vaccines, and enzymes. Also, we need
non-contaminated, lower-cost, more reliable diagnostic reagents.
In recent years, scientists have produced biomedical reagents from
plants in the laboratory. The potential benefits are huge. For one
example, replacing poultry vaccine injections with edible plant-
produced vaccines would substantially lower poultry production costs.
Beltsville is uniquely equipped to develop necessary systems and to
test their efficacy in cooperation with other ARS facilities working on
livestock and poultry diseases. This is a cooperative project with the
Biotechnology Foundation, Inc., in Philadelphia. We recommend
continuation of this funding.
National Germplasm Resources System
This laboratory supports the national database that provides data
storage and retrieval systems for collecting and disseminating
germplasm information. It provides accurate taxonomy, transport,
geographic, evaluation, inventory, and cooperator information for plant
and animal germplasm holdings nationwide. This is an ARS mission-
critical activity. We recommend continuation of funding.
Bovine Genetics
Somatic cell nuclear transfer (cloning) technology has tremendous
biomedical and agricultural potential. Yet the frequency of successful
births from cloning has been relatively low. Many pregnancies fail
before completing gestation. New funding will support collaborative
research by the Gene Evaluation and Mapping Laboratory and the
University of Illinois aimed at improving cloning efficiency. A new
Molecular Biologist is being hired to support this effort. We recommend
continuation of this funding.
IR-4: Registration of Minor Use Pesticides
``Minor crops'' have great economic value, but are not among the
top ten crops like corn and soybeans that provide huge markets for
pesticide manufacturers. Manufacturers often do not see a large enough
market to justify the expense of doing the research needed to register
a pesticide for a ``minor crop.'' Without the IR-4 program, growers
would have fewer options for pest control. The Beltsville Environmental
Quality Laboratory operates a minor crop pesticide residue laboratory.
This lab vigorously enforces EPA-prescribed protocols for all
experimental procedures, and prepares comprehensive final reports. New
funds enhance the overall mission of the Agency's IR-4 program. We
recommend that this funding be continued.
Invasive Species Initiative
Globalization has lowered trade barriers over much of the world. It
also has contributed to the ease with which exotic organisms--or
invasive species--enter U.S. habitats and environments. Invading pest
species not only create ecological and economical problems, they also
threaten biodiversity and the financial stability of U.S. agriculture.
Once invaders become successful competitors in natural or agricultural
ecosystems, producers must spend millions every year to combat them.
Collateral damage, such as loss of native diversity, may not be evident
for years. Moreover, exotic species represent a biosecurity risk
through deliberate introduction into the United States.
Beltsville laboratories are at the vanguard of invasive species
research, covering prevention, detection, identification, and control.
Invasive species research includes: insects, plants, fungi, nematodes,
and other arthropods. Certain labs provide stand-by, 24-hour
identification services for possible alien intruders. Others provide
basic taxonomic information targeting preventive and control measures
for use before or after invasive species have become established.
Beltsville can point to many past successes in the battle against
invasive species. Overall, Beltsville has the strongest invasive
species programs in the nation. The President's fiscal year 2003 Budget
proposes an increase of $775,000 for Beltsville for Control of Invasive
Species. We strongly support this recommendation.
Tornado Damage and Recovery Needs
On September 24, 2001, BARC-West took a direct hit from a rare, 200
mph, Force-3 tornado. Unprecedented in Beltsville, the powerful storm
smashed windows and ripped roofing from buildings, damaged half of the
Center's greenhouse space, destroyed 60 vehicles and damaged many
others. It wreaked havoc on several laboratories, destroying equipment,
reagents, and supplies--miraculously, no one was hurt. The work of 75-
100 scientists was set back by months, a few by years. Some
irreplaceable environmental samples, plant clones, and the like were
lost permanently. Damage to facilities and vehicles and to equipment
and supplies has been conservatively estimated at $21.5 million.
The BARC landscape took a big hit, too.--Acres of trees and shrubs
were lost, including a majestic 100 year-old American elm. BARC
Director Phyllis Johnson has appointed a committee of leading
horticulturists from BARC and the National Arboretum to develop and
implement a comprehensive landscape restoration. We are pleased to
report, Mr. Chairman, that FAR-B is working closely with the landscape
committee. Thus far, we have raised over $15,000 for clean-up, site
preparation, and plant material purchases. Also, we have received or
have commitments for thousands of dollars of donated or discounted
plant materials. Despite the limited availability funds, repairs to the
landscape are coming along well
Repairs to buildings, greenhouses, labs and lab restocking--not to
mention vehicle replacements--pose a more formidable challenge.--Still,
by using thoughtful management, BARC is making excellent progress. For
instance, using ARS Headquarters support, BARC has completed $1.3
million of emergency roof repairs. Also, BARC has committed another
$3.8 million of Headquarters funds and $407,000 from its R&M accounts
to repairs.
Moreover, BARC is making excellent progress toward replacing its
all-important greenhouses. BARC plans to use $3 million of fiscal year
2002 Building and Facility funds to replace three greenhouses. The
President's fiscal year 2003 budget proposes $4.18 million for building
and facilities, which BARC would use to replace four other greenhouses.
Still other greenhouses will be replaced with hoop houses. Together,
these measures and funding would generally complete tornado-related
facility repairs, though they do not address vehicle and laboratory
equipment and supplies replacement.
Lastly, we would emphasize our support for other BARC needs,
including a poultry research facility ($3 million) and phase III of the
Human Nutrition Complex ($22 million).
Mr. Chairman, that concludes our statement. We are grateful for
your past support of the BARC mission. And, we again thank you for the
opportunity to present our testimony.
______
Prepared Statement of the Grocery Manufacturers of America
On behalf of the member companies of the Grocery Manufacturers of
America (GMA) and our partner association, the Association of Sales and
Marketing Companies (ASMC), I appreciate the opportunity to submit
testimony to the Senate Appropriations Subcommittee on Agriculture,
Rural Development, and Related Agencies. We ask that you support the
Administration's recognition, in its budget request, of the continuing
need to increase resources for the Food and Drug Administration (FDA)
as you consider their fiscal year 2003 funding request.
GMA is the world's largest association of food, beverage and
consumer product companies. With U.S. sales of more than $460 billion,
GMA members employ more than 2.5 million workers in all 50 States. The
organization applies legal, scientific and political expertise from its
member companies to vital food, nutrition and public policy issues
affecting the industry. Led by a board of 44 Chief Executive officers,
GMA speaks for food and consumer product manufacturers at the State,
Federal and international levels on legislative and regulatory issues.
The association also leads efforts to increase productivity, efficiency
and growth in the food, beverage and consumer products industry.
GMA particularly supports increased funding for the Center for Food
Safety and Applied Nutrition (CFSAN), whose role is invaluable in
ensuring the public that the United States has today--as it always has
had--the safest and most wholesome food supply in the world. The
Center's role has been highlighted in the months since the tragic
attack on our country threatened our inherent sense of safety and
renewed our commitment to find ways to further enhance the safety of
our food supply. The resources Congress appropriated for FDA and CFSAN
in the bioterrorism supplemental appropriation went a long way toward
assisting the agency's activities; it is crucial for the fiscal year
2003 budget to continue this commitment. We note that FDA has moved
quickly to hire the new consumer safety officers Congress provided for
in last year's supplemental, and are expected to reach the 600 level
this week.
We believe it is essential for FDA to have the resources it needs
for research into new and improved methods to detect contaminants in
foods, particularly substances that when introduced deliberately, turn
a safe and nutritious product into an agent for harm. Additionally, we
strongly support FDA's proposal in the budget request to work
cooperatively with other health and agriculture agencies in national
surveillance and emergency response programs designed not only to
detect problems accurately and scientifically but to communicate risk
appropriately to the public and to take actions that are properly
rooted in science. We continue to support FDA's activities, together
with those of USDA, in ensuring that problems affecting food and
agricultural products in other countries--such as BSE and foot and
mouth disease--do not enter the U.S. Finally, we support FDA's
consistent policy of rejecting non-scientific approaches to decisions
regarding the incorporation in food technology of the new scientific
approaches of biotechnology.
In communication with this Committee last year, we urged you to
ensure the inclusion in the FDA budget of funds to cover FDA's
government cost-of-living increase; we reiterate that request for this
appropriations cycle. This funding will both ensure that other programs
are not placed in deficit to cover this mandatory cost and that FDA
will have the resources it needs to add appropriately skilled and
trained technical staff consistent with its expanding mission in this
new climate.
At USDA, we support the USDA/ARS nutrition monitoring program and
ask the committee to appropriate the $7 million that is needed for this
effort in fiscal year 2003. Such funding will allow for 2 days of
dietary recall on 5,000 individuals, interviews for diet and health
knowledge, food program information, continued updating of food
composition data, and prompt coding and processing information. The
information gathered in this survey is invaluable to both the public
and private sectors, and we ask for the committee's continued support.
We also support the Administration's request for $3 million in funding
within FSIS to coordinate U.S. participation in the Codex Alimentarius
Commission, a critical activity for our industry.
We recognize that the confidence of the public in our food supply
depends both on our industry's continuing commitment to safety and
quality and on FDA's ability to work with us to achieve this. We
support FDA's mission to protect the public health, and we urge you to
provide the funds necessary to do this. If we may be of any assistance
as you proceed with your work on this important appropriation, please
do not hesitate to contact me.
Thank you for your consideration of our views.
______
Prepared Statement of the Harrison Fish Farm
I would like to open by thanking you for the opportunity to speak
on behalf of the Regional Aquaculture Centers. I come from a family
farm that has been owned and operated as a row crop and livestock
operation for the past 138 years. The year 2000 found our farm vacant
of cows and hogs. In our known history, this was the first time that
``traditional'' livestock did not play a vital role in our cashtlow.
I graduated from college in 1987 with the intentions of becoming an
engineer. In May of 1987, my father called with the devastating news
that he was selling the farm as my two older brothers were moving to
other employment opportunities. My oldest became a State Patrolman and
my next oldest became a U.S. Postal carrier. It is very sad to say that
this is a common occurrence in family farms today. With my return to
our farm came the realization that I was not going to survive without
additional income. It was a love of the outdoors and luck that turned
my attention to Aquaculture. A hobby farmer retired and sold his
equipment to me. One truck, two steel tanks, several cages and limited
equipment and supplies was what I started out with. I have grown from
one three acre lake in 1990 to over 180 acres of surface water in 2001.
We are still growing and are excited about the Aquaculture industries
outlook. With our imports far exceeding our exports it is no small
surprise that this segment of Agriculture will not be able to keep up
with the growing demand of farm raised aquatic products. Now more than
ever, we need your financial support in funding our Regional
Aquaculture Centers.
The internet and computer software has transformed the information
highway into a marketing tool. We need you to support our efforts to
include more farmers and innovative leaders in Aquaculture. We have an
opportunity to help our American Farmer by including him in an
agricultural sector that shows great promise. Look around, it is quite
easy to find success stories of fish fanning and their related
endeavors. Regional Aquaculture Centers play an increasingly vital role
in getting this information out to State extension agencies. We need to
inform the farmer as well as the public on the benefits of producing
American products for American people.
Ever since their inception, our RAC's have not received full
funding at their authorized level. We need your support now to change
this dangerous and discouraging trend. We as American citizens realize
this past year has brought about financial stress that we will feel for
years to come but please do not let the pressure for spending cuts
dictate against wise decision making. The value of one dollar is not
what it was when our RAC's were created. We are getting the same dollar
in 2001 as we did when we were originated. In essence, we are getting
less, and to top this off, we must withstand an administrative cost
now. Pay raises, rising costs, higher overhead, all these dictate that
something must be done soon. Please demonstrate your support of
Aquaculture by supporting our RAC's. Level funding is not the answer,
we need your true support by funding us at our fully authorized level.
Please do not let history repeat itself again, give us, YOUR AMERICAN
FARMER, a true chance at survival. It made a difference here in
Missouri, and I know it can make a difference in our Country. Thank
You.
______
Prepared Statement of the Humane Society of the United States
As the largest animal protection organization in the country, we
appreciate the opportunity to provide testimony to the Agriculture,
Rural Development and Related Agencies Subcommittee on fiscal year 2003
funding items of great importance to the Humane Society of the United
States and its 7 million supporters nationwide.
Enforcement of Animal Welfare Laws
We are grateful for the Committee's strong support last year of
Animal Welfare Act enforcement funding, and we urge you to continue
providing modest increases for improved enforcement by the U.S.
Department of Agriculture of key animal welfare laws, as explained
below. The increases above fiscal year 2002 funding that we seek for
fiscal year 2003 will help protect the welfare of millions of animals
at facilities across the country including commercial breeding
facilities, puppy mills, laboratories, zoos, circuses, horse shows,
airlines, and slaughterhouses. Sound enforcement will also benefit
people by helping to prevent: (1) injuries to slaughterhouse workers
from animals struggling in pain; (2) orchestrated dogfights and
cockfights that often involve illegal gambling, drug traffic, and human
violence; (3) the sale by puppy mills of unhealthy pets by commercial
breeders commonly referred to as ``puppy mills''; (4) laboratory
conditions that could jeopardize may impair the scientific integrity of
animal based research; (5) risks of disease transmission from, and
dangerous encounters with, wild animals in or during public exhibition
public display;, and (6) injuries and death of pets on commercial
airline flights due to mishandling and exposure to adverse
environmental conditions improper environment and handling. The
enforcement funding increases we request are as follows:
Food Safety Inspection Service: $2.5 million to hire inspectors to work
solely on enforcement of the Humane Slaughter Act
The Humane Slaughter Act (HSA) requires that livestock be rendered
unconscious before they are slaughtered. However, as reported in the
Washington Post last spring, while this law has been on the books for
decades, chronically weak enforcement and intense pressure to speed up
the slaughterhouse assembly line have resulted in animals being
skinned, dismembered, and boiled while they are still alive and
conscious. USDA food safety inspectors are not routinely tasked with
checking for or reporting violations of HSA, and some slaughter plants
even have barriers that make it impossible for inspectors to see live
animals. Inspection activity centers on the examination of body parts
and carcasses, with inspectors stationed far down the production line,
well past where the animals are killed. Although a USDA directive
instructs inspectors to stop the production line when an HSA violation
is observed, this rarely occurs. Inspectors and slaughter plant workers
themselves support improved enforcement of this law, which would not
only reduce animal suffering but also improve worker safety. Congress
provided a $1 million increase to the Food Safety Inspection Service
(FSIS) in the fiscal year 2001 Supplemental to begin addressing this
problem, and the Senate and House have passed resolutions calling for
tougher enforcement. For fiscal year 2003, we seek a $2.5 million
increase along with language directing FSIS to use these funds to hire
50 employees to work solely on HSA enforcement through full-time ante-
mortem inspection, particularly unloading, handling, stunning and
killing of animals at slaughter plants.
APHIS/Investigative and Enforcement Services: $800,000 to establish a
special investigative unit focused on animal fighting cases
Congress is poised to finalize legislation, contained in both the
Senate and House farm bills and overwhelmingly supported in both
chambers, to close loopholes in the Animal Welfare Act (AWA) regarding
cockfighting and dogfighting, and to boost the penalties for Federal
animal fighting violations. The AWA already prohibits most interstate
commerce of animals for fighting but, in more than 30 years, USDA has
pursued no cockfighting cases and only three dogfighting cases, despite
rampant activity across the country. To improve enforcement of this
part of the AWA, we seek $800,000 to hire, train, and equip a special
unit within Investigative and Enforcement Services, comprised of 6-10
agents, to focus exclusively on animal fighting cases, and bill
language to permit this IES team to carry arms to protect themselves,
given the dangerous nature of animal fighting enforcement work. This
approach will permit a cadre of specially training investigators to
develop the expertise needed to crack the underground animal fighting
network, working closely with State and local law enforcement personnel
to complement their efforts. USDA has apparently received innumerable
tips from informants and requests to assist with State and local
prosecutions, but has routinely ignored or declined such requests.
APHIS/Animal Welfare: current funding plus $800,000 to hire additional
inspectors
Thanks to appropriations increases in the past three years,
Congress has enabled USDA to begin to reverse a serious decline in the
number of AWA compliance inspections. However, the President's fiscal
year 2003 budget proposal--which suggests $1.7 million less for the
Animal Care division than in fiscal year 2002--would fail to cover the
salaries of recently-hired inspectors and substantially undo the gains
Congress provided last fall. Moreover, the need for additional
inspectors is still great. Many facilities continue to escape oversight
for long periods of time, giving rise to situations that threaten both
human and animal health and safety. Nearly half of the sites that do
get inspected are found to have apparent violations of the minimum
standards under the Act and, therefore, follow-up visits are badly
needed. We seek an $800,000 increase above fiscal year 2002 funding to
hire, train, and equip an additional 8 inspectors, bringing the total
number of inspectors to 100 (responsible for approximately 10,000
sites).
APHIS/Horse Protection: $78,000 for improved enforcement of the Horse
Protection Act
Congress enacted the Horse Protection Act in 1970 to end the
obvious cruelty of physically soring the feet and legs of show horses.
In an effort to exaggerate the high-stepping gate of Tennessee Walking
Horses, unscrupulous trainers use a variety of methods to inflict pain
on sensitive areas of the feet and legs for the effect of the leg-jerk
reaction that is popular among many in the show-horse industry. This
cruel practice continues unabated by the well-intentioned but seriously
underfunded and understaffed APHIS inspection program. As recommended
in the President's fiscal year 2003 budget, we seek an increase of
$78,000 to bring this program to its authorized annual funding ceiling
of $500,000. We also urge the Committee to oppose any effort to
restrict the USDA from enforcing this law to the maximum extent
possible.
Agricultural Research Service/Animal Welfare Information Center:
current funding
Thanks again to the Committee's support last year, Congress
provided a $400,000 increase for the Animal Welfare Information Center
(AWIC), which serves as a clearinghouse for those involved in the care
and use of animals for experimentation. AWIC provides valuable
information on training for laboratory employees, and legal
requirements and appropriate care for animals in research, including
minimizing pain and distress, preventing duplication of experiments,
and reducing or replacing animals in research when possible. The
President's fiscal year 2003 budget proposal would return AWIC to its
previous inadequate funding level. We seek to maintain the increase
provided in fiscal year 2002.
Hoop Barns/Leopold Center for Sustainable Agriculture: $325,000
The hoop barn is an emerging alternative for livestock production
that offers many advantages to the factory farm system of animal
housing. A typical hoop barn is shaped like a Quonset hut (a half
cylinder lying on its flat side) and contains a deep bedding of straw
or corn stalks. No individual cages confine the animals, and open ends,
which can be closed if weather requires, allow access to pasture.
Animals in hoop barns enjoy greater freedom of movement and have the
opportunity to interact socially.
Because they are not tightly confined in an overcrowded, high-
stress environment, animals in hoop barns tend to be healthier than
their counterparts in factory farms. That means farmers using hoop
barns do not need to rely on antibiotics to prevent disease and promote
growth, a common practice on factory farms that is contributing to the
development of antibiotic-resistant strains of bacteria that threaten
public health. Products from hoop producers are being sought out by
meat suppliers and restaurants based on the enhanced flavor and texture
characteristics of the meat. In addition, hoop barns are better for the
environment, because they use solid manure composting rather than the
liquid waste disposal systems used by factory farms, which jeopardize
groundwater and produce noxious odors. Furthermore, they offer an
affordable alternative for farmers. Hoop barns are approximately one-
third the cost of conventional factory farm structures. They are easy
to install and versatile (they can be used for different species or for
storage of hay or equipment). This flexibility helps family farmers
withstand fluctuations in market demand and avoid corporate buyouts.
We appreciate the Committee's support in fiscal year 2002 for this
promising technology. As a result of the Committee's action, Iowa's
Leopold Center for Sustainable Agriculture--which is in the forefront
of research and development on hoop barns--received $187,072 to expand
understanding and adoption of hooped structures as low-cost, humane,
environmentally-friendly production housing systems for swine and other
agricultural animals. The hoop research is promoting viable and timely
production options for struggling small and medium sized farmers as
well as helping to open new markets. Specifically, the fiscal year 2002
funds will allow:
--Completion of a comprehensive manual of hoop barn use for swine
production;
--Collection and distribution of information on uses of hoop
structures for other livestock species;
--Establishment of a hoop barn network of producers and demonstration
sites; and
--A national workshop on Hoop Barn Swine Production.
The fiscal year 2002 funds will also allow the Leopold Center to
begin work on the remaining objectives set out in last year's $325,000
proposal:
--Evaluation of hoop barns as a total production system, including
labor and resource economics;
--Development of protocols for using hoop barns to raise
disadvantaged and light-weight pigs for welfare, medical and
production reasons;
--Systematic investigation of farmers' perceptions of benefits and
limitations of hoop structures;
--Evaluation of meat quality characteristics of hoop pork; and
--Determination of genetic and production interactions on pork
quality traits.
We are again requesting your support for an appropriation of
$325,000 in fiscal year 2003. Part of this request is to further the
remaining objectives set out in the original proposal. The additional
part of this request would allow expansion of the original objectives
to broaden the farmer network of hoop users, to support on-going
efforts to create a marketing infrastructure that facilitates consumer
access to hoop products, and to tighten nutrient cycles on individual
farms. This continuing work will enable the Leopold Center to make the
benefits of hoop barns available on a wider scale.
National School Lunch and Breakfast Programs/Forced Molting of Egg-
Laying Hens
At the end of their production cycle, egg-laying hens in 75 percent
of U.S. flocks are starved until they lose up to 35 percent of their
body weight--typically for 5-14 days--in an effort to shock their
systems into a new egg-laying cycle. Once placed back on feed, those
hens who survive the starvation period will produce more and bigger
eggs. Such ``forced molting'' is a threat to the health and safety of
consumers, because eggs produced at facilities using this high-stress
practice have a greatly increased incidence of Salmonella enteritidis
(SE). Forced molting is a husbandry strategy that extends the
productive life of those birds who survive, but it comes with severe
consequences for the health of consumers and for animal welfare.
Salmonella is the second most common food-borne illness in the
United States (an estimated 500-1,000 people die from it annually). SE
is the second most common Salmonella strain. Most SE infections are
caused by the consumption of eggs. Starvation causes severe stress to
hens and makes them highly susceptible to Salmonella infections.
Research indicates that hens who have been force molted in this way
shed significantly more SE bacteria than hens with access to food. Dr.
Fred Angulo, the chief medical epidemiologist for food-borne diseases
at the Centers for Disease Control and Prevention, has determined that
outbreaks of SE in schools have been traced back to layer houses where
hens were molted using starvation. In 1998, USDA's Food Safety and
Inspection Service (FSIS) Director wrote that ``highly stressful forced
molting practices. . . .[f]or example, extended starvation and water
deprivation practices, lead to increased shedding of Salmonella
enteritidis (SE) by laying hens,'' and recommended that ``egg producers
eliminate forced molting practices and adopt alternatives that reduce
public health risks.''
Intentionally starving a hen so that she loses up to 35 percent of
her body weight is cruel. Almost every State anti-cruelty statute
specifically bars the deliberate starvation of animals, but this
standard is not typically enforced for routine animal husbandry.
Alternative methods to forced molting, which are more humane, safer,
and economically comparable, are available to the U.S. egg production
industry. Major fast food companies, including McDonald's, Burger King,
and Wendy's, have stopped buying eggs from farms that use forced
molting. It is time for Congress to ensure that meals provided at
public schools are at least as safe as fast food.
Under the National School Lunch and Breakfast Programs, schools
spent more than $14.2 million on fresh and raw eggs for food service
during the 1996-97 school year, according to a USDA study (the number
may well be higher now, since the breakfast program has greatly
expanded since that time). With three-quarters of all flocks in the
U.S. currently force molted, there is a very high risk that school
children are being exposed to SE bacteria. In 2000, the USDA announced
that it would no longer allow the use of downed animals in the school
lunch program because it could not count on the safety of the meat.
School districts incorporate Federal requirements (e.g., to comply with
nutritional guidelines, ``Buy American'' laws, and health department
inspections) in their detailed specifications for each food item
contained in their contracts.
To reduce animal cruelty and protect schoolchildren, we urge the
Committee to include bill language to end USDA's support under the
National School Lunch and School Breakfast Programs for the purchase of
eggs produced at facilities that force-molt hens through deprivation of
food or water.
Birds, Rats and Mice in the Animal Welfare Act
We commend the Committee for allowing USDA to proceed with its
rulemaking to begin regulating birds, rats, and mice under the Animal
Welfare Act, as required by a court settlement in 2000. These species
account for approximately 95 percent of animals used in research, and
they deserve basic minimum standards of care. Ensuring that they
receive adequate care is imperative not only as a humane matter, but
also as a matter of sound science, since animal suffering compromises
the integrity of research results. We urge the Committee not to include
any language in the fiscal year 2003 bill or committee report that
would interfere with USDA's ability to carry out this important
rulemaking on a timely basis.
Again, we appreciate the opportunity to share our views and
priorities for the Agriculture, Rural Development and Related Agencies
Appropriation Act of fiscal year 2003. We hope the Committee will be
able to accommodate these modest funding requests to address some very
pressing problems affecting millions of animals in the United States.
Thank you for your consideration.
______
Prepared Statement of the Illinois Soybean Association
We appreciate the opportunity to provide testimony on behalf of the
Soybean Disease Biotechnology Center, an important initiative for
soybean producers in Illinois and the United States.
Request
The Soybean Disease Biotechnology Center was established with an
$800,000 Federal appropriation in fiscal year 2002. This important
action on the part of the Congress and the leadership of Illinois's
legislative champions is very much appreciated. The initial request
came from the Illinois Soybean Association, an organization of
approximately 4000 leading soybean producers, and the University of
Illinois, a major land-grant institution. They proposed to establish a
Soybean Disease Biotechnology Center within the National Soybean
Research Laboratory (NSRL) at the University of Illinois. The effort to
bring the Center to its full potential is underway. To continue this
important effort, we request a Federal appropriation of $3.5 million.
The Illinois Soybean Checkoff Board will consider proposals from
Center scientists for future program support, and the University of
Illinois will contribute core staff, space, general support services,
greenhouse facilities, and utilities. This will greatly leverage
Federal support of soybean disease biotechnology research.
Rationale
About 15 percent of total soybean production is lost to disease
each year. That amounted to approximately 12 million bushels in 2001.
While there were significant improvements in soybean yields during the
last few decades, there was no reduction in the percentage of crop lost
to disease. Soybean cyst nematode (SCN), sudden death syndrome (SDS)
and other diseases continue to be major threats to the U.S. soybean
industry.
The Soybean Disease Biotechnology Center will be the first line of
defense against major soybean diseases, especially the soybean cyst
nematode (SCN), that threaten the industry. The Center is bringing the
power of new scientific advances in structural, comparative, and
functional genomics and genetic transformation to bear on SCN and other
disease threats, including diseases not yet in the U.S., such as
soybean rust.
Center researchers will identify and create new and improved
mechanisms of disease tolerance and resistance to protect the soybean
crop and increase its profitability throughout the industry. Genetic
stocks of the National Soybean Germplasm Collection, located at the
University of Illinois, provide a unique, readily accessible resource
for the Center, as will wild species that are related to soybean and
have novel sources of disease resistance.
Objectives
Reduce yield losses to the U.S. soybean crop from plant diseases.
Identify resistance genes in Glycine soja and perennial Glycine to
major soybean diseases, especially soybean cyst nematode (SCN) and
sudden death syndrome (SDS).
Move resistance genes from Glycine soja and perennial Glycine into
elite soybean cultivars utilizing modern biotechnology techniques.
Measure and optimize effects of newly introduced disease resistance
genes on other economically important attributes such as yield,
protein, and oil content.
Disseminate results to the soybean industry through web-based
programs such as the Varietal Information Program for Soybeans (VIPS),
scientific publications, university extension publications,
publications of the National Soybean Research Laboratory (NSRL), and
through presentations at professional and industry conferences.
Location advantages
The Soybean Disease Biotechnology Center is strongly supported by
two unique campus resources, the Keck Center for Comparative and
Functional Genomics and the National Center for Supercomputing
Applications. They offer high throughput genetic sequencing, unequaled
bioinformatics capabilities, and unique, one-of-a-kind genetic analysis
tools, including micro-arrays. Center researchers also have ready
access to the University of Illinois Biotechnology Center, which
provides recombinant DNA and protein services, immunological resources,
flow cytometry, high capacity transgenic plant production, and cell and
tissue culture facilities.
Outstanding USDA-ARS programs in soybean pathology interact
directly with the Center, and there is direct access to superb
conventional greenhouse and controlled environment facilities in
adjacent, connected structures. As part of this project, a bio-
containment greenhouse will be constructed to provide the levels of
isolation and protection required for sophisticated disease
biotechnology research. An elaborate system of research farms is
available for testing new developments in a wide range of soil and
climatic conditions. Specialized, state-of-the-art laboratories to
house the Center are under construction in the National Soybean
Research Laboratory.
The Soybean Disease Biotechnology Center works with the new St.
Louis-headquartered Danforth Plant Science Center and participates in
the Illinois-Missouri Biotechnology Alliance. Its association with the
NSRL will ensure that research in the Soybean Disease Biotechnology
Center will fully complement and benefit from other public and private
soy research programs across the nation. This will ensure that the
results of fundamental soybean disease biotechnology research are
quickly translated into practical technology, useful information, and
sustainable competitive advantage for the industry.
This initiative is timely because the University of Illinois is
expanding its nematology and post-genomics biotechnology programs. A
multi-million dollar investment of State funds is providing new
biotechnology faculty positions in functional genomics, bioinformatics,
developmental biology, microanalytic systems, and cellular and
molecular bioengineering and is creating elaborate new facilities for
basic biotechnology and bioinformatics research. New positions in plant
disease biotechnology have already been filled with outstanding
scientist/educators who already have established impressive track
records. The new State-funded Post Genomics Institute (to be
constructed in 2003) will enable a much-expanded basic biotechnology
research program that will support and complement activities of the
Center. The Center will also benefit from Illinois's investment in an
expanded University of Illinois business incubator and two new
University research parks to ensure rapid commercialization of
promising new technologies from the University's research program.
Progress to date
The Soybean Disease Biotechnology Center is in very early stages of
development, but important progress has already been made. The
organizational structure is established, with the Director of the
National Soybean Research Laboratory serving as Director of the Center.
The Center faculty and staff have been recruited. State funds were used
to create two new senior faculty positions in nematology. Proposals for
specific research efforts to be funded through the Center have been
solicited. A soybean cyst nematode task force is organizing the overall
SCN effort and developing new strategies for controlling this major
pest.
Summary
We request that $3.5 million be appropriated to establish a Soybean
Disease Biotechnology Center within the National Soybean Research
Laboratory at the University of Illinois. These funds, complemented by
State funds and industry contributions, will be used to continue to
staff, equip, house, and operate the center, and launch and sustain its
programs. We greatly appreciate the legislative initiatives that
created the National Soybean Research Laboratory and the Soybean
Disease Biotechnology Center and look forward to this opportunity to
enhance the returns on those investments.
______
Prepared Statement of the International Association of Fish and
Wildlife Agencies
usda/aphis--wildlife services
The President's fiscal year 2003 proposed budget for the APHIS
Wildlife Services' Operations is $68,745,000, and reflects a
$14,626,000 increase from the fiscal year 2002 level. For Methods
Development, the proposed budget is $16,310,000, a $486,000 increase
from the fiscal year 2002 level. For Aquaculture, the proposed budget
is $764,228, a decrease of $174,000 from the fiscal year 2002 level.
The increases for all three line items include proposals to fund GSA
rent, employee pension, and the Federal Employee Compensation Act from
the program's budget.
Wildlife Services (WS), a unit of APHIS, is the Federal agency
responsible for controlling wildlife damage to agriculture,
aquaculture, forest, range and other natural resources; for protecting
public health and safety through the control of wildlife-borne
diseases; and for wildlife control at airports. Its control activities
are based on the principles of wildlife management and integrated
damage management, and are carried out cooperatively with State fish
and wildlife agencies. Most APHIS WS operational work is cost-shared
between the Federal WS program, State and county governments,
agricultural producers, and other cooperators.
The cooperation and support of the agricultural community are
essential to maintaining wildlife populations, because much of the
Nation's wildlife exists on private agricultural lands. A progressive
wildlife damage management program which reduces the adverse impact of
wildlife populations is necessary to maintain the support of the
agrarian community and to counter increasing pressures for indemnity
due to wildlife damage.
Since Congress transferred the WS program to USDA in 1986, the
Association has worked closely with this program on numerous issues
critical to the State fish and wildlife agencies, including those
related to migratory birds and endangered species. The Association
commends the WS program for its professionalism and continuing effort
to be attuned to the changing public values for the Nation's wildlife,
while remaining responsive to emerging wildlife problems.
The Association is concerned with the Administration's proposal for
the near level funding for Methods Development. Although the fiscal
year 2003 budget contains a $486,000 increase, the majority is for
salary increase costs. Many of the current control tools such as traps,
snares and other restraining devices are becoming less acceptable to
the public as, similarly, are wildlife toxicants and are actually being
prohibited in many States because of public referendums. The only
source of identifying and perfecting new methods is through research.
We commend Congress for recognizing the need to relocate the WS
research facility from Denver to Fort Collins, Colorado, and for
recognizing the need to fund maintenance and operations costs in the
current budget. However, current operating and maintenance costs still
exceed current funding by $500,000, and no funds are provided to
address the development of new innovative methods for wildlife damage
management. The Association requests an increase of at least $5.0
million to the Methods Development line item to adequately continue
non-lethal methods research and address the increased operating and
maintenance costs, including the funds to maintain the current program
for trap testing being done in cooperation with the Association and the
State fish and wildlife agencies to help implement and carry out U.S.
international understandings to improve animal welfare in State-
regulated wildlife trapping programs.
The Association recognizes the importance of aircraft to WS for
predator control activities to protect both livestock and wildlife, the
distribution of oral vaccine baits for rabies control projects, and for
the removal or capture of problem wolves. We commend Congress for
providing $1 million in fiscal year 2002 ($1.2 million was provided in
fiscal year 2000 and an additional $1 million in fiscal year 2001) to
WS to continue implementing improved safety procedures for their aerial
operations. The Association supports the proposed funding in the fiscal
year 2003 budget of $1.6 million to fully implement the safety
recommendations contained in the aerial safety report.
The Association remains concerned with attempts by various
organizations and individuals in the past several years to
significantly reduce WS' funding for wildlife damage management
activities in the United States. A recent report by the General
Accounting office documented that wildlife damage throughout the United
States is significant and increasing because of high wildlife
populations. The Association therefore opposes the proposed $9.96
million reduction to the WS operations budget, as this reduction will
directly affect that agency's efforts to protect agricultural and
natural resources, and property. The rationale for this reduction is
that cooperators will pick up the cost. One of the principal
cooperators with WS is the State fish and wildlife agencies which in
fiscal year 2001 were already picking up over 50 percent of the cost.
The Association strongly urges Congress to restore the $9.96 million
reduction to WS operations. WS cannot continue to expand into new areas
and provide effective service to current customers and cooperators
unless its operations budget is appropriately funded.
The Association is pleased with the accomplishments of the Berryman
Institute located on the Utah State University campus in Logan, Utah.
However, we would like to see the Institute enhance its capabilities to
conduct social science research, expand continuing education programs,
and start a new high quality scientific journal for wildlife damage
management that would be patterned after other established journals. To
reach these new goals, the Association supports an increase of the
funding to the Berryman Institute by an additional $300,000.
The Association commends Congress for increasing the funding in
Montana, Idaho, and Wyoming by $1 million in fiscal year 2001 and by
$1.3 million in fiscal year 2002, to deal with the increasing wolf-
related conflicts. However, wolf conflicts also continue to increase in
Minnesota, Wisconsin, and Michigan. That three-state area has a
population that exceeds 3,100 animals, as compared to approximately 500
wolves in Montana, Idaho and Wyoming. In Minnesota, Wisconsin and
Michigan, WS personnel responded to approximately 200 wolf complaints
in fiscal year 2001, as compared to 120 complaints in the three western
States. The Association requests that Congress appropriate an
additional $750,000 in fiscal year 2003 to deal with wolf-related
conflicts in Minnesota, Wisconsin and Michigan in addition to the $1.3
million in funding for Montana, Idaho and Wyoming.
The Association recommends that Congress make $1.8 million
available in fiscal year 2003 to allow WS to continue to implement the
new Management Information Reporting System. The implementation began 3
years ago and will occur over a 5-year period, at a total cost of $6-8
million. The new system will standardize WS reporting systems and allow
WS to provide specific information on resources protected, damage
levels, trend information, and data on measurements and outcomes now
required by the Government Performance and Results Act, and to comply
with requirements of the National Environmental Policy Act.
The Association recognizes the increased emphasis being placed by
USDA APHIS on the detection of foot and mouth and other foreign animal
disease in this country. Such detection efforts include a greatly
accelerated surveillance program, as evidenced by a request for $8.2
million in the fiscal year 2003 WS budget. WS has a long and impressive
record of coordination with State fish and wildlife agencies on all its
ongoing activities. The Association supports this new role for WS, so
long as WS and other USDA agencies remain mindful and respectful of
State management authority over resident wildlife species. This will
require constant coordination and cooperation with the State fish and
wildlife agencies as this surveillance takes place.
Security at Federal laboratory and research facilities has taken on
new meaning and dimension in the aftermath of the events of September
11, 2001, and the ongoing terrorism threat in this country. WS has had
firsthand experience with security breaches and resulting damage at two
facilities within the past 5 years. The Association supports the
allocation of fiscal resources afforded under the Emergency
Supplemental Appropriation Act to WS to address the homeland security
needs of these facilities, thereby not diminishing the base budget for
other important agency programs and services.
usda/aphis--veterinary services
Brucellosis
The Association is concerned about the $738,000 reduction in the
amount being requested for the Brucellosis Program in the fiscal year
2003 budget. While we understand some of this may be offset by the
$25,357,000 (36 percent) increase in the Animal Health Monitoring and
Surveillance Program budget--in essence the core infrastructure of
APHIS-Veterinary Services--it will be problematic if the entire
requested amount is not acted on favorably by Congress. The Association
supports the $96,288,000 being requested for the Animal Health
Monitoring and Surveillance Program.
The Association also supports the request from the States of
Montana, Idaho and Wyoming for $600,000 in the fiscal year 2003 USDA/
APHIS/Veterinary Services, Program Diseases, Brucellosis Program
budget, to enable those States to continue their participation in the
Greater Yellowstone Interagency Brucellosis Committee (GYIBC). Like
amounts ($600,000) have been included as Congressional add-ons in both
fiscal year 2001 and fiscal year 2002. The GYIBC is working to
coordinate Federal, State and private actions involved in eliminating
brucellosis from wildlife in the Greater Yellowstone Area and
preventing transmission of brucellosis from wildlife to cattle. Given
the priority for eradicating this disease, it would seem prudent that
Veterinary Services include this amount in its base Brucellosis Program
budget, rather than the States having to rely on Congressional add-ons
to obtain relief. The Association recommends this amount ($600,000) be
identified in the base budget for the Brucellosis Program beginning in
fiscal year 2004 and beyond, until such time as eradication of the
disease has been achieved.
Chronic Wasting Disease
The Association commends APHIS-Veterinary Services for taking
actions to destroy and dispose of captive cervids exposed to chronic
wasting disease (CWD) because these animals represent a tremendous risk
to this country's wildlife resources. The Association supports the
$7.233 million request for funding a new program to eliminate CWD from
captive cervids and strongly encourages Veterinary Services to use a
significant part of the funding to assist State wildlife management
agencies with surveillance for CWD, and to provide funding for research
directed toward better diagnostic testing and increased knowledge of
the epidemiology and epizootiology of CWD. The Association supports
this role for Veterinary Services in the context that Veterinary
Services and other USDA agencies remain mindful and respectful of State
management authority over resident wildlife species. This will require
constant coordination and cooperation with the State fish and wildlife
agencies as this certification and control program is launched.
Import/Export
Exotic ticks may carry disease agents that could potentially
devastate wildlife populations and therefore, prevention of their
importation is essential. The Association supports the $2.74 million
(33.6 percent) increase in fiscal year 2003 funding in the Import/
Export Program for inspection of imported reptiles and amphibians for
exotic ticks, and further recommends that Veterinary Services work
closely with the U.S. Fish and Wildlife Service in addressing this
issue.
Tuberculosis
The Association supports the $11.4 million (131 percent) increase
in the fiscal year 2003 funding request in the Tuberculosis Program for
the control of bovine tuberculosis, a continuation of an accelerated
program begun in fiscal year 2001 to address inadequate national
surveillance as it relates to international trade needs and enhanced
tuberculosis testing, training and Mexican eradication efforts, with a
goal of total eradication in domestic livestock by January, 2004. The
Association recommends that APHIS-Veterinary Services work closely
with, and provide financial support to, State fish and wildlife
agencies involved in this activity. Funding should be provided to State
fish and wildlife management agencies for TB surveillance, research,
and control operations, and must be accompanied by close coordination
and respect for State management authority over resident wildlife.
Veterinary Diagnostics
The Association recognizes that wildlife disease investigations
often are dependent upon the USDA's animal disease resources for test
reagents, consultations, and sample referrals, and commends APHIS for
assistance with testing of free-ranging wildlife for diseases such as
brucellosis, chronic wasting disease and bovine tuberculosis. The
Association supports the $6.73 million (37 percent) increase in fiscal
year 2003 funding for increasing diagnostic capabilities at the Plum
Island Animal Disease Diagnostics Laboratory in New York and at the
National Veterinary Services Laboratories in Ames, Iowa.
Security
As was the case with USDA/APHIS-Wildlife Services, security at
Veterinary Services laboratories and research facilities is of great
concern, particularly in the aftermath of September 11, 2001. The
Association supports the allocation of fiscal resources afforded under
the Emergency Supplemental Appropriation Act to Veterinary Services to
address homeland security needs of these facilities, thereby not
diminishing the base budget for other important agency programs and
services.
cooperative state research, education, and extension service (csrees)
u.s. department of agriculture
The Association recognizes that the research and educational
programs of the CSREES and its Land Grant partners effect relevant,
positive changes in attitudes and implementation of new technologies by
private landowners, communities, decision-makers, and the public. This
results in significant benefits to the Nation through development of a
productive natural resource base in concert with agriculture. Since
over two-thirds of our land is privately owned, it is appropriate that
the CSREES-Land Grant System, with its grass roots credibility and
delivery system, be adequately funded to transfer knowledge that helps
all private landowners move towards sustainability. However, in the
fiscal year 2003 budget proposal, we see little emphasis on natural
resources research and education directed toward these clientele. In
fact, the total number of farmers based on recent statistics is just
slightly over one million--only one-tenth of all private landowners--
and, the majority of CSREES' budget is directed toward production
agriculture on these lands. Conversely, only $4.093 million is budgeted
(out of a total of $1.033 billion) for the Renewable Resources
Extension Act (RREA) which assists the over ten million private
landowners who own and manage most of the Nation's natural resources.
The Association notes with gratitude that the appropriation for fiscal
year 2002 is $.8 million larger than the Administration proposed and
that the increase is carried into the fiscal year 2003 budget request.
The Association is still seriously concerned that the amount ($4.093
million) is so small as to be ineffective and we encourage
Congressional reconsideration of this amount to better reflect the need
to reach a higher percentage of all landowners.
The Association strongly recommends that the Renewable Resources
Extension Act be funded at a minimum of $15 million in fiscal year
2003. The RREA funds, which are apportioned to State Extension
Services, effectively leverage cooperative partnerships at an average
of four to one, with a focus on development and dissemination of
information needed by private landowners (in rural and urban settings).
The increase to $15 million would enable the Extension System to
accomplish the goals and objectives outlined in the 1991-1995 Report to
Congress. The need for RREA educational programs is greater than ever
today because of fragmentation of ownerships, urbanization, the
diversity of landowners needing assistance, and increasing societal
concerns about land use and its effect on soil, water, wildlife and
other environmental factors. It is important to note that RREA has been
reauthorized through 2002 and was originally authorized at $15 million
annually; however, even though it has been proven to be effective in
leveraging cooperative State and local funding, it has never been fully
funded. An increase to $15 million would enable the Extension Service
to expand capability to assist more private landowners to improve
management of additional land while increasing farm revenue.
The Association strongly encourages that McIntire-Stennis Forestry
Research funds be increased from the $21.884 million in the fiscal year
2002 budget to a level of $25 million. These funds are essential to the
future of resource management on non-industrial private forestlands.
The rapid reduction in timber harvests from public lands bring expanded
opportunities for small private forest owners to play an increasingly
important role in the Nation's timber supply. In some places, these
added opportunities are creating pressures and situations where timber
harvest on private ownerships exceeds timber growth.
The Association is pleased to see $12.97 million in the budget for
Water Quality Integrated Activities but believes that this amount is
insufficient considering the growing public concern over water quality,
particularly on agricultural landscapes and therefore the Association
recommends the appropriation be increased to $20 million. And, we are
concerned that there is no line item budget for water quality specific
to educational programs under Smith-Lever in Extension activities. The
Association recommends a minimum of $3.5 million in Extension programs
to focus on water quality education targeted at agricultural producers
and other private landowners and managers. We believe that such program
efforts are urgently needed to help these landowners learn how to
address water quality degradation, which seriously affects drinking
water, human health and fish and wildlife habitat. The Clean Water Act,
TMDL's, Gulf of Mexico hypoxia and expanded animal feeding operation
(AFOs) are just a few of the water quality issues that need to be
addressed through Cooperative Extension efforts.
The value of National Research Initiative Competitive Grants is
recognized by the Administration in a 100 percent increase in
recommended funding to $240 Million. It is important to note the great
needs for creative and competitive grant programs to provide valuable
new information to broaden approaches to land management, especially
with integrated timber and wildlife management on private lands. There
are few truly competitive programs in wildlife science and USDA NRI has
a great opportunity to make a unique contribution with this type of
program. This program will fund creative and new ideas in ways that
``formula'' funding cannot. The Association applauds and supports that
funding level and requests Congressional approval.
farm service agency (fsa)
An adequately funded budget for the FSA is essential to implement
conservation related programs and provisions under FSA administration
and/or in cooperation with the Natural Resources Conservation Service
(NRCS) as a result of passage of the Federal Agricultural Improvement
and Reform (FAIR) Act of 1996 and the new Farm Bill of 2002. The
Association strongly advocates that the budget include sufficient
personnel funding to service a very active program and strongly
believes that the past erosion of staffing levels has been inconsistent
with the demonstrated need of agricultural producers. The Association
is deeply concerned that the fixed level of staffing (17,057 FTE)
proposed by the Administration is far too low to adequately address the
need.
FSA programs have tremendous quantifiable impacts on natural
resources, and yield substantial public as well as private benefits.
Building on the provisions of the 1985 FSA, the 1990 FACT Act, and the
1996 FAIR Act, the Association wants to ensure that each program
accomplishes the broadest possible range of natural resource
objectives, and encourages close cooperation between FSA, NRCS and the
State Technical Committees in implementing the 2002 Farm Bill.
Conservation Reserve Program (CRP)--The continued administration of
CRP under the guidelines of the 1996 FAIR Act is a very significant and
valuable commitment of USDA and the FSA. The Association applauds FSA
efforts to fund and extend CRP contracts for the multiple benefits that
accrue to the public as well as the landowner. The Association provides
special thanks to FSA for the continuous CRP sign-up of high value
environmental practices and applauds the addition of new incentives to
increase landowner participation, as well as ensure that practices
incorporate fish and wildlife needs, along with soil and water
considerations.
The commitment of FSA to provide high wildlife benefits in CRP
contracts has been obvious since the advent of the Environmental
Benefits Index (EBI) in the 15th sign-up. The Association applauds FSA
in those efforts with their special emphasis on native grasses,
endangered species and enlightened pine planting and management and
urge that strong emphasis on the establishment and management of
wildlife friendly cover be continued and where possible strengthened.
Management/maintenance strategies are essential to ensure continuation
of soil, water and wildlife benefits throughout the life of the CRP
contract. The up-to-$5/acre' maintenance payment presently included in
CRP contracts tends to be viewed by many landowners as additional
rental payment, whether maintenance practices are performed or not. It
makes sense to ensure and pay for maintenance when maintenance is
needed and prudent to save public funds when maintenance is not needed.
The Association encourages FSA to convert the annual maintenance fee in
future contracts to cost-share on an as-needed basis to ensure soil,
water and wildlife objectives reflected in the EBI are realized as well
as to ensure wise use of public funding for CRP.
natural resources conservation service (nrcs)
The Natural Resources Conservation Service has immense
responsibilities for implementing the conservation provisions of the
1985 Food Security Act (FSA), the 1990 Food, Agriculture, Conservation
and Trade (FACT) Act, the Federal Agricultural Improvement and Reform
(FAIR) Act of 1996 and are expected to be carried through in the 2002
Farm Bill. In addition, the 2002 Farm Bill presently in Congress
contains a promising new Grassland Reserve Program (GRP) as well as a
much-needed revised Forestry Title to address conservation on non-
industrial private forestland.
WRP, WHIP, FPP, EQIP, proposed GRP and Forestry Title programs--The
Wetlands Reserve Program (WRP), Wildlife Habitat Incentives Program
(WHIP) and Farmland Protection Program (FPP) have reached their
authorized acreage or appropriation caps and, in the absence of
legislation that continues these programs, NRCS does not include
funding in the fiscal year 2003 budget proposal. Neither does the NRCS
budget propose funding for the proposed GRP or Forestry Title programs.
Since passage of the 2002 Farm Bill is imminent, and inclusion of the
existing and proposed conservation programs are expected to be part of
the new Farm Bill, NRCS is encouraged to provide the appropriate cost
projections for these programs.
With approximately 50 percent of the land in the United States in
agricultural production, conservation is inextricably linked with
agriculture and, therefore, the importance of USDA conservation
programs cannot be overemphasized.
Wetland conversions continue and wetland resources cannot be
sustained without a proactive program like WRP that compensates
landowners for voluntary restoration of wetlands. WRP is currently
over-subscribed by a factor of 5, with many eligible landowners already
qualified but unable to enter the program due to lack of funding.
Similarly, many wildlife species reside on agricultural landscapes
with nowhere else to go--they must survive on those landscapes if they
are to survive at all. WHIP has helped many landowners make significant
contributions to conservation of imperiled species on lands where
wildlife is a primary purpose. In complementary fashion, EQIP has
tremendous potential to help interested agricultural producers
incorporate fish and wildlife considerations, along with soil/water/
other resource considerations, on lands that are managed with
agricultural production as the primary purpose. This approach
simplifies paperwork and conservation for landowners in that EQIP can
be used as a self-contained program to address all resource needs
(including fish and wildlife) on production lands and WHIP can be the
vehicle on lands where wildlife is a primary purpose.
New programs, such as the GRP, present great opportunity to provide
agricultural producers with an economic alternative to conversion of
dwindling native prairie to other uses. GRP would enable producers to
keep irreplaceable prairie in forage production, a use to which these
lands have historically been so well suited. Programs proposed in the
Forestry Title could provide a much needed boost to conservation of
forest resources on agricultural ownerships across the Nation. This is
important because these lands contribute to on-farm agricultural income
just as do grasslands and cropland. And, forest lands are just as key
to conservation of soil, water and wildlife resources as are grasslands
and cropland.
In a like manner, the FPP has been important in places where urban
encroachment diminishes the long-term viability of the local farming
economy and interest in the program far exceeds budget allocations.
All of the existing conservation programs have been tremendously
successful and significant interest has been expressed in the proposed
GRP and additional Forestry Title conservation programs. Due to the
overwhelming success, customer interest and public benefits of these
programs, the Association strongly encourages Congress to provide
annual funding for these programs in the amount of $286 million per
year for WRP (reflecting an enrollment cap of 250,000 acres per year),
$100 million for WHIP, funding for a 400,000 acre enrollment in GRP,
$300 million for EQIP, $100 million for Forestry Title programs and $65
million per year for FPP.
Technical Assistance.--The NRCS Strategic Plan for 2000-2005
establishes natural resource priorities in support of agriculture and
identifies staffing levels needed to achieve success. The Strategic
Plan projects a steadily increasing need for technical assistance
through 2005. Adequate technical assistance will be essential to ensure
private landowners can deliver the conservation of natural resources
while also providing affordable food for our citizens. However, despite
increased workloads and increased societal demands on land and natural
resources, NRCS staffing levels have been on steady decline since the
1980's, even in the face of increased landowner interest and Farm Bill
emphasis on conservation. While the fiscal year 2003 budget proposal
reflects a carryover of the NRCS staffing level of fiscal year 2002, it
is far short of the 24,000 staff years identified in the NRCS Strategic
Plan for fiscal year 2000-2005.
Since NRCS provides essential and complementary (to FSA) support to
agricultural producers, it is prudent for both agencies to be
adequately staffed to adequately deliver services. In addition, the
Conservation Reserve Program (CRP), WRP, WHIP and EQIP all reflect
long-term contracts that necessitate continuous technical support to
participants, whether or not there is new sign-up. NRCS can draw some
program funding for technical assistance but only in the year in which
sign-up occurs and, consequently, program funding does not fully
address the long-term technical assistance support these programs
demand. It is essential for NRCS to maintain adequate staffing to
address all on-going needs for which landowners need technical
assistance. The Association strongly encourages Congress to provide
NRCS with funding to better address the need for the nearly 24,000
staff years identified in the NRCS Strategic Plan for 2000-2005.
In these times of compelling conservation need, many State fish and
wildlife agencies are contributing staff time to help NRCS field
offices service fish and wildlife aspects of USDA assistance to
landowners. Such partnerships help NRCS deliver specialized technical
expertise to private landowners at less cost than adding NRCS staff
with such expertise. The 2002 Farm Bill, presently in Congress,
contains third party vendor aspects that could allow USDA to contract
with State fish and wildlife agencies to provide fish and wildlife
expertise more inexpensively and effectively than could be provided by
adding NRCS staff to fill the discipline need. And, importantly, State
fish and wildlife agencies have State-level constitutional authority
for fish and wildlife resources of the State and are, therefore, in an
excellent position to help service related aspects of Farm Bill
programs. The Association strongly encourages the Administration and
Congress to emphasize partnering arrangements, between NRCS and State
fish and wildlife agencies and others that result in cost-efficiencies.
The Association also encourages the Administration to develop a third
party vendor certification system that fully recognizes the technical
expertise and constitutional authority of State fish and wildlife
agencies.
Wetland Determination.--We believe the need for wetland
determination, certification, and mapping is significant and urge NRCS
to proceed as soon as possible, under the guidance of the FAIR Act of
1996. The Association urges expeditious completion of the wetland
determinations required to implement the Swampbuster provisions of the
1985 FSA, 1990 FACT Act, and the 1996 FAIR Act. The FAIR Act directed
interagency cooperation, whereby NRCS assumed responsibility for
wetland designation for Section 404 (Clean Water Act) purposes on
farmland, including tree farms, rangelands, native pasture, and other
private lands used to produce or support the production of livestock.
The Association and individual State fish and wildlife agencies will
continue to work with NRCS to help achieve these goals.
Emergency Watershed Program (EWP).--This program provides an
important alternative to agricultural producers faced with localized
and/or national natural disaster. Of particular importance is the
aspect of EWP that provides compensation to landowners for removing at-
risk land from production (via easement) and, therefore, a continual
and expensive cycle of repair and income uncertainty. Utilization of
the floodplain protection element of EWP saves the government money in
the long-run, provides needed assistance to producers and benefits
natural resources including water quality and fish and wildlife. The
Association supports the level of funding for EWP as reflected in the
fiscal year 2003 budget proposal.
National Buffer Initiative.--NRCS has implemented this initiative
in cooperation with industry and other partners. The National Academy
of Sciences has found that buffer strips can reduce off-field pollution
by 70 percent, thus also contributing to meeting non-point source
remediation goals under the Clean Water Act. Unfortunately, the level
of sign-up by producers remains relatively low in many places with
conservation need. The reason for this needs to be identified and
addressed based on actual field experience. In previous years, NRCS
committed special emphasis and a major effort to use buffer practices
in the continuous CRP and other programs like EQIP. However, there is
no mention of the National Buffer Initiative in the fiscal year 2003
budget narrative. The Association encourages Congress to mandate that
NRCS continue the National Buffer Initiative as a high priority effort
and provide the necessary funding.
Forestry Incentives Program (FIP).--The Forestry Incentives
Programs (FIP) has multiple resource values for fish, forests,
wildlife, clean water and erosion control. Many farms contain forest
resources that are as much in need of conservation treatment as are
cropland and grassland. The Association opposes the NRCS proposed
intention to zero out FIP funding and strongly recommends that the
fiscal year 1999 level of $16.325 million be restored in the fiscal
year 2003 budget.
______
Prepared Statement of the Joslin Diabetes Center
introduction
Mr. Chairman, thank you for this opportunity to submit a statement
for the public witness hearing record. The subject of this short
statement is the continued funding in fiscal year 2003 for the Diabetes
Project in the Extension Service of CREES. We have developed a plan for
fiscal year 2003 that will require continued funding at the current
year's level of $906,000. This includes costs of Federal
Administration, participation expenses of the states of Washington, New
Mexico and Hawaii, and the personnel, equipment and associated costs of
Joslin Diabetes Center within the total cost of the program.
fiscal year 2001-2002 background
I would like to express Joslin Diabetes Center's sincere
appreciation to Senator Domenici and the Subcommittee for actions in
the fiscal year 2002 process in providing $906,000 for the third year
of the Diabetes Project. We know you faced difficult decisions
concerning funding priorities. We feel that the allocation of these
funds indicates support for the growing community role and
organizational flexibility of the Extension Service.
In May, Joslin, Washington State, Hawaii, New Mexico and Federal
Extension personnel will meet with representatives of more than 20
sites within 12 different states to develop strategies for widespread
use of the ``On the Road'' programs and materials.
The Diabetes Project in Washington State is working in partnership
with clinics in 6 counties, collaborating with 47 community health
centers using ``On the Road'' programs and materials, and actively
involving Native Americans from the Colville tribe.
In New Mexico the Diabetes Project is working directly with Sangre
de Cristo Community Health Partnership in Sante Fe, Las Clinicas Del
Norte in El Rito, and the San Juan San Juan Pueblo; developing
educational programs and materials with 12 clinics of the statewide
Diabetes Collaborative; and implementing a partnership with the New
Mexico Department of Health in District 3, the northwest part of the
state.
Working in partnership with the Hawaii State Diabetes Prevention
and Control Program, the Diabetes Project is expanding outreach within
the Big Island to rural neighborhoods and biweekly ``On the Road''
educational programs and on Oahu with the Hispanic population through
the Hispanic Education Center. Through fiscal year 2002 funding retinal
imaging equipment will be installed in all three states, with image
acquisition and training, and image reading procedure in place. At a
rate of 30 patients per day per site, the three units will have the
capacity to screen 18000 patients annually. This actually involves the
examination of 36,000 eyes, because a patient can develop diabetes
retinopathy in only one eye.
All participants remain committed to goals and objectives of the
original project and are planning cooperatively for this and the coming
fiscal year.
fiscal year 2003 plan
For fiscal year 2003, the mission and objectives for the three
state pilot programs will be implemented on two levels:
--Continuation of distribution of educational materials for diabetes
awareness and dieting/health guidelines;
--Retinal screening for diabetes mellitus in all three states.
--Assessment of progress and revision of materials and internal
processes within each state will be conducted for refinement
for each state's target population.
Joslin Diabetes Center will continue to welcome additional
participation within the three states of the pilot project to better
educate consumers about diabetes and the most effective methods to
address diabetes and its complications.
While continuing current programs and activities fiscal year 2003
plans call for:
--Washington state expansion to provide educational programs to 2
additional counties, to provide JVN retinal screening for
interested community clinics, and further outreach to Native
American and Hispanic minorities;
--New Mexico expansion to reach out to the Navajo Nation and Zuni
tribes, to include outreach in the southwest part of the state,
and to enhance activity with the rural clinics of the New
Mexico Diabetes Collaborative;
--Hawaii State expansion to extend diabetes education in Native
Hawaiian clinics through partnership with Native Hawaiian
Health, and to introduce diabetes education into school systems
starting with Kumaya Maya schools.
Mr. Chairman, this concludes my brief statement. We are submitting
a detailed budget for the fiscal year 2003 funds of $906,000 to the
Committee for continuation of this project with the Extension Service.
If you or the Committee staff have any questions we may answer
concerning this project, we would be pleased to meet and discuss the
details in more detail.
The Extension Service and Joslin Diabetes Center appreciate your
confidence in our capabilities and your focus on the improvement of
quality of life in rural America. We respectfully request continued
funding of $906,000 in fiscal year 2003 to fully demonstrate the
benefits and potential national returns that can be derived from this
pilot effort.
______
Prepared Statement of the Kent SeaTech Corporation
Mr. Chairman and Members of the Subcommittee: My name is James M.
Carlberg. I am President of Kent SeaTech Corporation, the largest
aquaculture company in California. I have been involved in aquaculture
research and production for more than 32 years. I have served on the
Board of Directors of the National Aquaculture Association, was a
Founder and President of the U.S. Striped Bass Growers Association, and
serve as a member of the Industry Advisory Council for the Western
Regional Aquaculture Center.
I am writing to inform you of the need for continued funding for
high quality research in the growing field of aquaculture. Kent SeaTech
Corporation is a perfect example of the value of nationally funded
research in aquaculture. During 1970-79, we conducted aquaculture
research funded by the Sea Grant Program at UCSD Scripps Institution of
Oceanography. In 1980, based on the successful results of extensive
laboratory research, we obtained private funding and developed the
first and largest striped bass culture operation in the world. The
facility has grown to be the largest aquaculture operation in
California and produces nearly four million pounds of high quality
seafood each year, valued at nearly $10 million. More importantly, the
research has resulted in the development of an entirely new form of
aquaculture for the U.S., the culture of striped bass and striped bass
hybrids. This new industry, based entirely on preliminary research
funded by the federal government, has quickly expanded to become the
fifth largest form of fish culture in the U.S., trailing only catfish,
trout, salmon and tilapia farming. Often, the annual production of
striped bass from U.S. aquaculture facilities exceeds the entire wild
fishery harvest. This important new source of supply relieves the
fishing pressure on fragile ocean stocks and provides new employment at
all levels of the seafood industry. This is truly a success story in
which research supported by the federal government has grown into a
multi-million dollar new industry that has provided significant
benefits to the nation.
On behalf of Kent SeaTech Corporation, I would like to express our
strong support for the Regional Aquaculture Centers and urge you to
provide full funding for the next fiscal year. The valuable research
supported by the Centers has been very supportive of our industry and
is addressing the most important problems encountered in aquaculture
facilities throughout the nation.
Aquaculture is an extremely large industry worldwide, where more
than 20 million metric tons of fish and shellfish are produced each
year. The U.S. lags far behind many other countries such as China,
India, and Russia in aquaculture, producing only a small fraction
(about 2 percent) of the world's total supplies. The majority of U.S.
production involves freshwater fish, primarily catfish, trout, tilapia,
and striped bass. Aquaculture has become a one billion dollar industry
in the U.S., providing nearly 15 percent of our seafood supplies.
Aquaculture production in the U.S. is rapidly approaching 450 million
kg annually. Annual production of catfish in the U.S. is estimated to
be about 200 million kg, with trout between 22 and 27 million kg,
salmon over 9.0 million kg, domestic tilapia production at 70 million
kg, and hybrid striped bass at nearly 4.5 million kg.
Aquaculture is expanding at an annual rate of 20 percent and is the
fastest growing sector of the agriculture industry. Predictions from
independent surveys of the food industry indicate that aquaculture
could become the most productive sector of food production in the U.S.
within the next two decades. Furthermore, these studies suggest that
most of the additional production will come from intensive culture, and
that the culture will focus on the luxury species using innovative
technologies. However, these advances can only occur if a coordinated
effort is made to provide the technical and engineering breakthroughs
needed to allow this new industry to develop.
Unfortunately, foreign competition is having a major impact on some
U.S. aquaculture operations. More than 60 percent of our seafood
supplies are now imported, resulting in a large annual trade deficit of
$7 billion. Many of the competing countries are located in tropical and
sub-tropical climates, where large quantities of warm water are
available for aquaculture. Also, land costs are low, there are few
competing uses of water resources, semi-skilled labor is widely
available for a fraction of U.S. costs, and often there are few
controls on the quality of water discharges to the environment or the
use of antibiotics and other disease treatments illegal in the U.S.
Foreign competition also is beginning to have an impact on our
segment of the industry, the culture of striped bass. In the last 3
years, competition from Taiwan has increased significantly. Foreign
farmers are now purchasing more than 200 million striped bass juveniles
each year, which is about 20 percent of all of the fingerlings
available from the U.S. hatcheries. The only means of protecting and
fomenting the U.S. industry is to develop significant technological
improvements in the culture process, so that U.S. producers will not be
at a disadvantage.
Although aquaculture offers extremely high potential, some
observers liken the status of our technology to the status of land-
based agriculture in the 1950's. There is a real need for the
development of high-tech solutions for many problems we face, such as
the development of methods to treat and reuse wastewater, improved feed
formulations, controlled reproduction and genetic improvements, and the
testing of new medications to maintain healthy fish populations in
culture systems. Well-planned aquaculture research programs could have
extremely important commercial applications in the U.S. Almost every
major review of aquaculture as described the critical need for improved
culture technologies if this new industry is to continue to expand in
the U.S. The National Aquaculture Act and the revised National
Aquaculture Plan highlight the importance of aquaculture research and
development. The Congressional Joint Subcommittee on Aquaculture and
the National Research Council promote a ``national agenda to encourage
the development of advanced aquaculture technologies and
environmentally sound, renewable resources'', as part of the
Presidential Initiative on Sustainable Development. Similar emphasis is
placed on the topic by the Cooperative States Research, Education, and
Extension Service (CSREES) Program, and the Sustainable Agriculture
Research and Education Program (SARE). Aquaculture has been declared a
National Need having top priority by the Agriculture in Concert with
the Environment (ACE) program, a joint effort of the USDA and the EPA.
As former recipients of Sea Grant funding from the U.S. Department
of Commerce (1970-80), and Small Business Innovation Research funds
from several agencies (1982-present), we are fully aware of the
difficulty that Congress faces each year in deciding which national
research programs are of real merit to the country and should be
funded. Now, as scientists who have become successful members of the
seafood industry in California, please accept our sincere
recommendation that this proposal would be of significant benefit to
the growing aquaculture industry in the nation. In our view the
importance of continued funding for aquaculture research programs
cannot be overstated. It is the only means of studying the complex life
cycles of aquatic species and developing the basic scientific concepts
that future industry start-ups will need if they are to successfully
develop new seafood farming ventures. We hope that the committee will
agree with us regarding the importance of the Regional Aquaculture
Centers and continue to provide funding at the highest possible level.
We would be glad to provide more information if required.
______
Prepared Statement of the Leopold Center for Substainable Agriculture
The Leopold Center for Sustainable Agriculture thanks you for your
leadership and support last year in providing $187,072 of our $325,000
request to expand understanding and adoption of hooped structures as
low-cost, humane, environmentally friendly production housing systems
for swine and other agricultural animals. The hoop research is
promoting viable and timely production options for struggling small and
medium sized farmers as well as helping to open new markets.
Specifically, first year funds will allow:
--Completion of a comprehensive manual of hoop barn use for swine
production.
--Collection and distribution of information on uses of hoop
structures for other livestock species.
--Establishment of a hoop house network of producers and
demonstration sites.
--A national workshop on Hoop Barn Swine Production.
The first year funds will also allow us to begin work on the
remaining objectives set out in the original proposal:
--Evaluation of hoop barns as a total production system, including
labor and resource economics;
--Development of protocols for using hoop barns to raise
disadvantaged and light weight pigs for welfare, medical and
production reasons;
--Systematic investigation of farmers' perceptions of benefits and
limitations of hoop structures;
--Evaluation of meat quality characteristics of hoop pork; and
--Determination of genetic and production interactions on pork
quality traits.
We are again requesting your support of an appropriation of
$325,000 in fiscal year 2003. Part of this request is to further the
remaining objectives set out in the original proposal. The additional
part of this request would allow expansion of our original objectives
to broaden the farmer network of hoop users, to support on-going
efforts to create a marketing infrastructure that facilitates consumer
access to hoop products, and to tighten nutrient cycles on individual
farms.
We expect that the two year total request of $512,072 will allow us
to make significant progress toward the goals of the project.
It is critical to have unbiased research about the costs and
benefits of production alternatives. Farmers need some less expensive,
more ecologically-friendly production methods--as well as some
encouragement and assistance before reentering or remaining in pork
production. We will very much appreciate your leadership in obtaining
continued funding for this important project. If you have any
questions, please feel free to contact me. Thank you for your
consideration.
______
Prepared Statement of the Massachusetts Department of Food and
Agriculture
Mr. Chairman and Members of the Subcommittee: The Massachusetts
Department of Food and Agriculture within the Executive Office Of
Environmental Affairs is a State agency whose mission is to help insure
a safe secure supply of locally grown food, and to support, promote and
enhance the long-term viability of Massachusetts agriculture with the
aim of helping the State's agricultural businesses become as
economically and environmentally sound as possible. To that end we have
recognized the importance of aquaculture and the opportunities that
aquatic farming presents to our Commonwealth and have undertaken
numerous efforts to promote aquaculture development in Massachusetts.
Our efforts to promote aquaculture development in Massachusetts
primarily came about as a result of a fisheries crisis that commenced
in 1994 and has lingered to the present. Through the development of the
Gubernatorial directed Massachusetts Aquaculture White Paper and
Strategic Plan, it became clear that aquaculture; presented employment
opportunities for individuals displaced from their traditional
commercial fishing activities, provided a source of high quality,
wholesome fisheries products and offered economic development
opportunities that are a ``good fit'' for our coastal communities.
However, as a new initiative the Aquaculture Development Program at the
Massachusetts Department of Food and Agriculture it was imperative to
network and develop organizational relationships that were capable of
fostering program development without competing or dampening existing
efforts that had similar goals. To our great fortune one the United
States Department of Agriculture's (USDA) five (5) Regional Aquaculture
Centers is located in Massachusetts (i.e. Northeastern Regional
Aquaculture Center, NRAC) and it was without hesitation that the NRAC
provided access to informational resources and opportunities for
programmatic development benefiting from industry insight.
True to its mission statement, NRAC has served as a principal
public forum for the advancement and dissemination of science and
technology needed by Northeastern, aquacultural producers and support
industries. Further, we have had the pleasure of working with NRAC
through a variety of projects and fora that have facilitated regional
stakeholder communications-linking industry and government
representatives to university scientists and educators. These events
have lead to efforts that are appropriately targeted and responsive to
the often-diverse needs of the northeastern aquaculture industry.
Considering the farm gate value of the United State's aquaculture
industry that represents less than 2.5 percent of the global $40
billion industry, as a nation we currently lag many other countries
that view aquaculture as a significant if not primary contributor to
their nation's economy and food supply. As the health benefits of
seafood consumption are realized surely U.S. per capita consumption
will increase. With this in mind and in regard to the availability of
fish and seafood, the United States has what can be boiled down to two
options; 1. Increase fish and seafood imports or 2. Undertake and
promote activities that increase availability of domestic fish and
seafood products. Already fish and seafood imports represent the second
largest contributor, behind petroleum products, to the U.S. natural
resources trade deficit. And considering the status of global fisheries
resources, it is not unlikely that the availability of foreign wild
harvest fisheries products will also be reduced as populations grow and
global demand for fish and seafood increases. Further, considering the
increased importance and emphasis on food security and the safety of
our food supplies, it is now, perhaps more than ever before, important
to shift our current reliance on foreign food sources toward that
produced domestically. We have already seen the impact of increasing
domestic fish and seafood production when approached with sole reliance
on the natural productivity of our aquatic environments. It resulted in
an over capitalized industry and resources that may have been impacted
beyond the point of recovery. Fortunately, aquaculture presents
opportunities to enhance resources while at the same time providing
employment and economic development opportunities that rely on
sustainable practices.
If we are to realize the fill benefit and potential of aquaculture
in the United State's there are a number of activities and services
that must be available including research, development and the transfer
of appropriate information and technology. Not coincidentally, the USDA
Regional Aquaculture Centers provide these services and have done so on
limited budgets in a way that is guided by the public, industry,
researchers and government agencies. The role of the Regional
Aquaculture Centers as an intersection for the myriad of interests
associated with aquaculture is essential for continued industry
development. Further, the support that the Regional Aquaculture Centers
provide promotes efforts and publications that are likewise critical
for industry progress and product development. With this in mind we
strongly support the work of the Regional Aquaculture Centers and
encourage continued support and increased program funding to the
authorized level of $7.5 million.
With the above in mind and the promise that aquatic production
holds for our country, we respectfully request that Congress consider
the opportunity at hand and support funding of the Regional Aquaculture
Centers at the full authorized level. We would also like to offer our
deepest gratitude for this opportunity to express our concern and
support for this important innitiative and look forward to your
continued interest, encouragement and support.
______
Prepared Statement of the Metropolitan Water District of Southern
California
The Metropolitan Water District of Southern California (MWD)
appreciates the opportunity to submit testimony regarding the U.S.
Department of Agriculture's (USDA) fiscal year 2003 budget, for the
Hearing on Agriculture, Rural Development and Related Agencies
Appropriations. MWD is a public agency that was created in 1928 to meet
the supplemental water demands of people living in what is now portions
of a six-county region of southern California. Today, the region served
by MWD includes 17 million people living on the coastal plain between
Ventura and the international boundary with Mexico. It is an area
larger than the State of Connecticut and, if it were a separate nation,
would rank in the top ten economies of the world.
Included in our region are more than 225 cities and unincorporated
areas in the counties of Los Angeles, Orange, San Diego, Riverside, San
Bernardino, and Ventura. We provide nearly 60 percent of the water used
in our 5,200-square-mile service area. MWD's water supplies come from
the Colorado River via the district's Colorado River Aqueduct and from
northern California via the State Water Project's California Aqueduct.
introduction
MWD continues to favor USDA implementation of conservation
programs. MWD firmly believes that interagency coordination along with
cooperative conservation programs, that are incentive-based and
facilitate the development of partnerships are critical to addressing
natural resources concerns, such as water quality degradation, wetlands
loss and wildlife habitat destruction. It is vital that Congress
provides USDA with the funding necessary to successfully carry out its
commitment to natural resources conservation.
Our testimony focuses on USDA's conservation programs that are of
major importance to MWD. In particular, MWD urges your full support for
funding for USDA's Environmental Quality Incentives Program (EQIP).
Funding for this program is essential for achieving Colorado River
Basin salinity control objectives through the implementation of
salinity control measures as part of EQIP. Sufficient Federal funding
for USDA programs is necessary to achieve source water quality
protection objectives in the Colorado River Basin.
environmental quality incentives program
EQIP provides cost-sharing and incentive payments, technical
assistance and educational assistance to farmers and ranchers for the
implementation of structural practices (e.g., animal waste management
facilities, filterstrips) and land management practices (e.g., nutrient
management, grazing management) that address the most serious threats
to soil, water and related natural resources. EQIP is to be carried out
in a manner that maximizes environmental benefits per dollar expended.
This assistance has been focused in conservation priority areas
identified by the Natural Resources Conservation Service's (NRCS) State
Conservationists, in conjunction with state technical committees and
Farm Service Agency personnel.
In Public Law 104-127, Congress amended the Colorado River Basin
Salinity Control Act to direct the Secretary of Agriculture to carry
out salinity control measures in the Colorado River Basin as part of
EQIP. Beginning with the first full year of EQIP funding in 1997,
USDA's participation in the Colorado River Salinity Control Program
(Salinity Control Program) has significantly diminished. The mechanism
by which funding had been allocated by USDA inherently masked projects
for which benefits are interstate and international in nature. After
requests had been made by the Colorado River Basin Salinity Control
Forum (Forum), the interstate organization responsible for coordinating
the Basin states' salinity control efforts, and others, and directives
from the Congress, USDA has concluded that the Salinity Control Program
warranted a multi-state river basin approach. The Forum is composed of
Gubernatorial appointees from Arizona, California, Colorado, Nevada,
New Mexico, Utah, and Wyoming. Clearly, Colorado River salinity control
has benefits that are not merely local or intrastate in nature, but
continue downstream. The President's Budget includes an additional
$73.5 billion in funding over a 10-year period for Farm Bill programs.
The budget assumes that a portion of this will be allocated to
conservation programs, including funds to support a $1 billion level
for EQIP in 2003. This level of Federal funding through financing
provided the Commodity Credit Corporation is critical for
implementation of EQIP in order to achieve nationwide EQIP objectives.
This level of funding would allow acceptance and funding of additional
EQIP proposals nationwide compared to previous years. USDA staff have
indicated that a more-adequately funded EQIP would result in the
availability of more funding for the Salinity Control Program.
The Colorado River is a large component of Southern California's
regional water supply and its relatively high salinity causes
significant economic impacts on water customers in MWD's service area,
as well as throughout the Lower Colorado River Basin (Lower Basin). MWD
and the Bureau of Reclamation (Reclamation) completed a Salinity
Management Study for Southern California in June 1999. The first phase
of the study (completed in February 1997) updated the findings of
previous studies and concluded that the high salinity from the Colorado
River continues to cause significant impacts to residential, industrial
and agricultural water users. Furthermore, high salinity adversely
affects the region's progressive water recycling programs, and is
contributing to an adverse salt buildup through infiltration into
Southern California's irreplaceable groundwater basins. In April 1999,
MWD's Board of Directors authorized implementation of a comprehensive
Action Plan to carry out MWD's policy for management of salinity. The
Action Plan focuses on reducing salinity concentrations in Southern
California's water supplies through collaborative actions with
pertinent agencies, recognizing that an effective solution requires a
regional commitment. MWD, the Association of Groundwater Agencies, the
Southern California Association of Publicly Owned Treatment Works, and
the WateReuse Association of California have formed a Salinity
Management Coalition. During 2002, the Coalition is being expanded to
include major water and wastewater agencies throughout Southern
California. Initial activities of the group are focusing on education,
coordination, and development of local and regional solutions to
problems associated with high salinity. In addition, Metropolitan and
representatives from Arizona and Nevada have been collaborating to
explore opportunities to develop a program that would address salinity
issues associated with brine disposal in the region.
Reclamation estimates that water users in the Lower Basin are
experiencing hundreds of millions of dollars in annual impacts from
salinity levels in the river, and that impacts would progressively
increase with continued agricultural and urban development upstream of
California's points of diversion. Droughts will cause spikes in
salinity levels that will be highly disruptive to Southern California
water management and commerce. The Salinity Control Program has proven
to be a very cost-effective approach to help mitigate the impacts of
higher salinity. Adequate Federal funding of the Salinity Control
Program is essential.
The Forum issued its 1999 Review, Water Quality Standards for
Salinity, Colorado River System (1999 Review) in June 1999. The 1999
Review found that additional salinity control was necessary with normal
water supply conditions beginning in 1994 to meet the numeric criteria
in the water quality standards adopted by the seven Colorado River
Basin states and approved by the U.S. Environmental Protection Agency
(USEPA). For the last nine fiscal years (1994-2002), funding for USDA's
salinity control program has not equaled the Forum-identified funding
need for the portion of the program the Federal Government is
responsible to implement. While NRCS has designated Colorado River
Basin salinity control as an area of special interest, appointed a
multi-state coordinator, and allocated about $5.5 million in fiscal
year 2002, with states and local cost-sharing adding about $4.3
million, it is essential that implementation of salinity control
efforts through EQIP be accelerated to reduce economic impacts. The
Basin states and farmers continue to stand ready to pay their share of
the implementation costs of EQIP.
The Forum has determined that allocation of $12 million in EQIP
funds in fiscal year 2003 is needed for on-farm measures to control
Colorado River salinity. This level of funding is necessary to meet the
salinity control activities' schedule to maintain the state adopted and
USEPA approved water quality standards. With this level of Federal
funding, an additional $9.3 million in states and local cost-sharing
could be committed.
conservation technical assistance
MWD also supports adequate funding for Conservation Technical
Assistance (CTA) within the NRCS Conservation Operations Program.
Conservation technical assistance provides the foundation for
implementation of EQIP and other conservation programs. While USDA has
determined that 19 percent of the EQIP funds will be available for
technical assistance, adequate funding for technical assistance and
educational activities should be provided through the Conservation
Operations Program, permitting these EQIP funds to be utilized for
contracts with agricultural producers. USDA staff has indicated that
the percentage of EQIP funds available for technical assistance is
inadequate. Consequently, the Basin states have agreed that 40 percent
of the states' cost sharing funds be utilized for technical assistance
and educational activities. However, only through adequate Federal
funding for technical assistance and educational activities can advance
planning, proposal preparation assistance, comprehensive proposal
review, and periodic verification of contract implementation occur.
conclusion
MWD urges you and your Subcommittee to support funding of $1
billion for EQIP and adequate funding for NRCS CTA, and advise USDA
that $12 million in EQIP funds be designated for the Salinity Control
Program. Thank you for your consideration of our testimony. USDA's
conservation programs are critical for achieving Colorado River Basin
salinity control objectives, as well as broader source water quality
protection objectives in the Colorado River Basin.
______
Prepared Statement of the Mountain Watershed Association
The Mountain Watershed Association, Inc. (MWA) is a grassroots,
community-based group working to restore the Indian Creek Watershed in
Fayette and Westmoreland Counties. Most of the damage to this watershed
is caused by mine discharges from abandoned mines. The area,
particularly the degraded section in Fayette County, is one of the
poorest in Pennsylvania with the second highest illiteracy rate in the
state second only to inner city Philadelphia.
Over one hundred and 50 years of coal mining in this community have
left us with mine discharges dumping 5,853.31 pounds per day of acid,
1,120.55 pounds per day of iron, and 363.45 pounds per day of aluminum
into the streams and backup public water supply. This adds up to:
2,136,458.15 pounds of acid per year; 409,000.75 pounds of iron per
year; and 132,659.25 pounds of aluminum per year. This has resulted in
dead streams, mine drainage in homes, and yards and fields consumed and
rendered useless.
Two years ago, MWA went through a lengthy process to qualify for
Federal assistance through the Public Law 566 program. This assessment
showed that mine drainage remediation in this watershed would glean a
net average annual benefit of $523,000 for this impoverished community.
It has come to our attention that President Bush's proposed 2003 budget
provides no funding for the Public Law 566 program or the Watershed
Protection and Flood Prevention Act, (Public Law 83-566). The USDA
Natural Resources Conservation Service administers the program.
This program adapts to local needs, creates economic growth,
attracts other Federal, State and local dollars to projects, and solves
major environmental problems and protects natural resources. For every
Public Law 566 dollar spent, 6.3 dollars has been leveraged from local,
state, and other Federal sources. The program has been a tremendous
impetus to treatment and cleanup of agricultural and mine drainage
problems.
With all of the economic and environmental problems in Pennsylvania
we desperately need this program. It will help revitalize the economy
in our area while remediating serious environmental problems caused
from mine discharges.
With the help of local sponsors, NRCS has developed 6 watershed
plans for the treatment of abandoned mine drainage and one for
agricultural land treatment. The total estimated cost of Page two,
Subcommittee on Agriculture, Rural Development and Related Agencies the
95 projects identified in these plans is $19,544,000.00. As of February
of 2002, 33 of these projects have been completed, or are under
construction, for a total cost of $9,084,030. The Public Law 566
program provided $1,229,206 of this total; the remaining $7,854,824
came from other Federal, State and local sources. Again, this means
that every single Public Law 566 dollar leveraged 6.3 dollars of other
money. All of these projects have a positive benefit to cost ratio.
This means that every dollar spent will create a local benefit greater
than the cost of the project. It also means that 122 miles of streams
in western Pennsylvania will have water quality improvements allowing
the return of economic sport fisheries.
The agricultural land treatment watershed is Yellow Creek in
Bedford County. This project has an estimated cost of $2,903,517. NRCS
has entered into contracts with 42 landowners for a Public Law 566 cost
of $1,292,517 that will treat 4,528 acres to reduce soil erosion and
animal waste pollution in Yellow Creek. Other funds in the amount of
$789,871 have been leveraged for this project. This project has an
average annual benefit of $332,600.
The Raystown reservoir benefits from this project because Yellow
Creek flows into the reservoir. The reduction in chemical fertilizers,
and animal waste nutrients reaching the reservoir will reduce or
prevent detrimental algae blooms in the reservoir.
This program will help us restore 95 percent of the Indian Creek
Watershed, ostensibly total restoration, and could be instrumental in
bringing over $523,000 each year into the Indian Creek Watershed toward
economic revitalization. This restoration could take as little as 7
years if we keep this funding source. Or, it could never happen without
funding.
Given the facts above, we hope you will agree that the Public Law
566 program needs to be fully funded so that Pennsylvania can continue
to receive the economic and environmental benefits of this excellent
program administered by the USDA Natural Resources Conservation
Service. Please support a fully funded Public Law 566. The people of
the Indian Creek Watershed need this funding. Pennsylvania needs this
funding. All coal-producing states need this funding.
______
Prepared Statement of the National Association of Conservation
Districts
The National Association of Conservation Districts is the
nonprofit, nongovernment organization that represents the nation's
3,000 conservation districts and more than 16,000 men and women who
serve on their governing boards. Established under state law,
conservation districts are local units of state government charged with
carrying out programs for the protection and management of natural
resources at the local level. They work with nearly two-and-half
million cooperating landowners and operators--many of them farmers and
ranchers--to provide technical and other assistance to help them manage
and protect private land in the United States. In carrying out their
mission to coordinate and carry out all levels of conservation
programs, districts work closely with USDA's Natural Resources
Conservation Service (NRCS) through its Conservation Technical
Assistance Program (CTAP) to provide the technical and other help
farmers and ranchers need to plan and apply complex conservation
practices, measures and systems.
The partnership of conservation districts, state conservation
agencies and the NRCS provides farmers and ranchers with critical help
in protecting and improving the quantity and quality of our soil and
water resources while meeting both domestic and international food and
fiber needs. America's agricultural producers provide many benefits to
our citizens including clean water and air, fish and wildlife habitat
and open space. Many of the conservation practices producers apply on
their land also take carbon out of the atmosphere and store it in the
soil, providing a hedge against global climate change. As stewards of
the nation's working lands, farmers and ranchers manage the vast
majority of America's private lands and provide tremendous
environmental benefits to the country.
On behalf of America's conservation districts, I am pleased to
provide our recommendations on selected conservation programs carried
out through the U.S. Department of Agriculture, especially those of the
Natural Resources Conservation Service.
Conservation districts' top funding priority for USDA conservation
programs for fiscal year 2003 is to strengthen the Natural Resources
Conservation Service's Conservation Technical Assistance Program (CTAP)
to ensure that the nation's Federal, State and local conservation
technical assistance infrastructure is able to provide private
landowners and operators the technical assistance needed to support the
application of sound conservation practices and systems on the nation's
private working lands.
conservation technical assistance program
Our request for the NRCS Conservation Technical Assistance Program
(CTAP) is for a total of $856.736 million. This request includes, among
other increases, a $48.7 million increase to be used for base technical
assistance staff. This amount represents a 7.2 percent increase
relative to total CTAP spending in fiscal year 2002. I note that the
President's budget includes a requested increase for the same amount.
We believe it is critical that this basic and essential program be
strengthened to help landowners and operators address the nation's
natural resource needs on private working lands. In order to cover
inflation and increased pay costs our request also includes the same
amount requested by the President for this purpose, $22.5 million. We
estimate that these increases will be needed in order for NRCS field
staff to be able to make some headway on growing concerns such as soil
erosion, water quality, animal waste management, wetlands conservation
and other natural resource issues.
In addition to the base Conservation Technical Assistance Program,
conservation districts support full funding for the Grazing Lands
Conservation Initiative authorized to be carried out through NRCS by
the Federal Agricultural Improvement and Reform Act of 1996. Resource
problems such as brush, weeds and accelerated water or wind erosion
threaten the capacity of nearly 300 million acres--more than 50
percent--of these lands to satisfy production needs and meet natural
resource values. Working with partners such as the National Grazing
Lands Conservation Initiative, conservation districts and their
partners have determined that at least $60 million is needed to fund
the CPGL program. This amount represents a $38.5 million, or 5.7
percent, increase relative to total fiscal year 2002 CTAP spending and
will allow us to begin reversing the negative trends that affect both
production and environmental concerns on these lands.
The President's budget request includes a proposal to cut almost
$31 million from CTAP relative to fiscal year 2002 levels to account
for increases in ``administrative efficiencies.'' NACD's request does
not include this cut. NACD is fully supportive of the Administration's
objectives of streamlining administrative functions so that more
resources can be used in the field to support landowners and managers.
But our experience with the practical details of what has been
developed by the Administration to this point has been that these
changes will result in administrative cost increases, not decreases. We
do not see how such proposals can really help deliver more conservation
assistance to the field, and accordingly, we encourage you to reject
the Administration's proposal and the cut in funding that goes along
with it.
When considering discretionary funding for NRCS relative to the
mandatory spending that will likely be made possible by the new Farm
Bill, it is important to keep in mind the real limitations of the Farm
Bill programs and the fact that CTAP will be needed to fill the major
gaps that remain. We have been strong and forceful advocates for
increased conservation spending in the Farm Bill, and we welcome the
major gains that Congress is proposing in this bill. But even under the
best scenarios, the new Farm Bill's working agricultural lands
conservation programs will reach less than 25 percent of the nation's
agricultural lands, and an even smaller percentage of the nation's
farms and ranches.
There are approximately 2.1 million farms and ranches in the U.S.
today that cover much of the 1.5 billion acres of the nation's private
land. These private working lands-cropland, grazingland and private
forestland-comprise nearly 70 percent of the country's land mass. Two
of the programs in the farm bill now being debated, EQIP and the
Conservation Security Program (CSP), are directed towards conservation
being applied to such lands if they are still in agricultural
production. EQIP today has approximately 97,000 active contracts
involving some 43 million acres, 11 million of which are crop acres.
Even if the new Farm Bill results in a 6-fold increase in funds for
these two programs, to apply conservation on lands still in production,
NACD estimates they would reach approximately only 33 percent of the
farms, and 20 percent of all working lands and cropland acres.
That means that CTAP, and the states' own conservation cost-share
programs that CTAP helps support, will be needed to provide quality
technical assistance to the other 1.4 million farms and ranches and the
approximately 1.2 billion working acres that will not be reached by
Farm Bill programs. CTAP was intended as a program itself with the
purpose of helping the nation's farmers and ranchers and other
landowners address their resource conservation needs by providing
technical support at the local level. It also helps to support the many
state and local conservation programs and initiatives that complement
NRCS goals and objectives and address the nation's natural resource
priorities. Many states also depend on NRCS technical guidance and
standards to ensure that complex conservation treatments are installed
properly.
NACD is committed to securing enough technical assistance funds to
work with the producers managing these private lands to help ensure
that good conservation is practiced wherever possible. NACD's fiscal
year 2003 CTAP request makes only a very small start on the total
increase necessary to reach this objective.
Lastly, with regard to CTAP, NACD's request also includes the
$67,758,000 proposed in the President's budget for health care,
pension, rental and other costs. These costs have historically been
carried in one single USDA account, not in CTAP. NACD has no policy
objection if Congress chooses to carry these costs in this account if
they are added to the funding level as requested by NACD.
The following table shows how our request is broken out.
[In millions of dollars]
Fiscal year 2002 CTAP Funding................................. 679.139
Increase in Base CTAP......................................... 48.689
Increase in Grazing Lands Conservation Initiative............. 38.500
Inflation and Pay Costs....................................... 22.650
Transfer for Rent/Pension Costs from USDA Account............. 67.758
--------------------------------------------------------------
____________________________________________________
Total CTAP................................................ 856.736
watershed protection and flood control program
Through its Watershed Protection and Flood Control Program, NRCS
and local sponsors address numerous water-related and other natural
resource issues, conduct studies, develop watershed plans and implement
resource management systems. Projects are carried out primarily under
the authority of Public Law 83-566 and Public Law 78-534. More than 500
active watershed projects primarily target land treatment measures for
water quality and water supply management and flood prevention.
Although the President requested no funding for the Watershed
Protection and Flood Prevention Program or Watershed Surveys and
Planning, NRCS documents an immediate need and ability to effectively
utilize $170 million and $20 million, respectively, for these programs
that address important watershed-based public health and safety issues
across the nation and we urge you to make these funds available.
A related priority facing private lands conservation is the
rehabilitation needs of the nation's aging watershed infrastructure--
many of them built under the authority of the above programs. NRCS
estimates that approximately 2,200 watershed structures, including
dams, are in immediate need of rehabilitation and that more than 650 of
these dams pose potential threats to public health and safety. Unless
these issues are addressed, the magnitude of the problems will only
increase as the infrastructure continues to age. We recommend funding
Watershed Structure Rehabilitation efforts at $25 million in fiscal
year 2003 to begin the work needed.
Conservation districts fully support the President's request for
$111 million for the NRCS Emergency Watershed Program as an important
step toward creating a separate, stand-alone account for helping
landowners and operators respond to flooding and other emergencies.
resource conservation and development (rc&d) program
RC&D Councils play an important role in rural development and
natural resource conservation. USDA has indicated that it takes
$161,000 to fully support an RC&D council. There are 368 existing
councils and 20 pending applications. Conservation districts recommend
that Congress appropriate $64 million to fully support the existing
councils and additional applicant areas.
Additional recommendations for USDA's discretionary-funded private
lands conservation programs are contained in the attached chart.
mandatory programs
In 1985, Congress recognized the important role that farmers and
ranchers play in environmental protection when it enacted the first
Farm Bill conservation title that required producers to incorporate
conservation into their operations if they wanted to continue receiving
USDA farm program benefits. The title also included a land retirement
program--the Conservation Reserve Program (CRP)--to give farmers
financial incentives to take sensitive lands out of production. In
subsequent Farm Bills and other statutes, lawmakers added more
incentives programs--the Wetlands Reserve Program (WRP), Environmental
Quality Incentives Program (EQIP), Farmland Protection Program (FPP),
Wildlife Habitat Incentives Program (WHIP) and Agricultural Management
Assistance (AMA) Program--to provide additional incentives to increase
conservation.
The authorizations for all of these programs expire at the end of
fiscal year 2002. Conservation districts support extending these
programs and, since all have tremendous backlogs of unfunded requests,
expanding their funding levels to meet producer and environmental
demands.
Conservation districts also support fully funding the new
initiatives proposed in both the House and Senate Farm Bills, including
a stand-alone conservation incentives program and a grassland reserve
program.
Congress has not yet finalized the funding levels for the above-
referenced Farm Bill conservation programs that will be funded through
the mandatory accounts of the Commodity Credit Corporation.
Nonetheless, we urge you to allow for their full funding once the new
Farm Bill is enacted and signed into law.
conclusion
As you continue your work on providing funding for critical NRCS
programs, we again urge you to keep in mind that NRCS is the only
Federal agency whose primary role is to provide conservation assistance
on the nation's private lands. There are a few other agencies with
narrowly targeted purposes, but no other agency even comes as close to
touching all of America's private working lands as do NRCS and
conservation districts. It is critical, therefore, that we strengthen
the nation's commitment to providing adequate resources to help these
land managers conserve and protect natural resources on America's
private working lands.
On behalf of the nation's 3,000 conservation districts, we
appreciate the opportunity to provide our views on fiscal year 2003
funding recommendations for select USDA conservation programs. We look
forward to working with you over the next few months in finalizing your
proposals.
FISCAL YEAR 2003 RECOMMENDED APPROPRIATIONS FOR NRCS AND CCC CONSERVATION PROGRAMS--FEBRUARY 2002
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------
Fiscal year
-----------------------------------------------------------------
2002
2002 admin 2002 NACD enacted 2003 admin 2003 NACD
----------------------------------------------------------------------------------------------------------------
U.S. Department of Agriculture Natural
Resources Conservation Service
Discretionary Spending:
Conservation Operations (CO):
Technical Assistance.................. 678.000 809.000 657.435 765.500 796.736
Grazing Lands......................... (18.000) 60.000 21.500 21.500 60.000
Soil Surveys.......................... 80.000 82.00 81.497 90.000 90.500
Snow Surveys/Water Forecasting........ 6.000 6.250 8.516 9.000 9.500
Plant Materials Centers............... 9.000 9.300 9.849 11.000 11.000
-----------------------------------------------------------------
Total............................... 773.000 966.550 778.797 897.000 967.736
=================================================================
Emergency Watershed Program............... N/A N/A N/A 111.000 111.000
Watershed Protection & Flood Prevention... 100.000 250.000 106.590 0.000 170.000
Watershed Structure Rehabilitation........ 0.000 60.000 10.000 0.000 25.000
Watershed Surveys & Planning.............. 11.000 20.000 10.960 0.000 20.000
RC&D...................................... 43.000 60.000 48.048 52.000 66.000
FIP....................................... 0.000 25.000 6.800 0.000 10.000
Transfer of RAMP funds from Interior...... 0.000 25.000 0.000 0.000 25.000
Mandatory (CCC) Programs:\1\
EQIP.................................. 174.000 550.000 200.000 200.000
AMA................................... 6.000 7.000 7.000 7.000
WRP (acres)........................... 0.000 250,000 0.000 0.000
WHIP.................................. 0.000 50.000 0.000 0.000
FPP................................... 0.000 65.000 0.000 0.000
Conservation Incentives Program....... N/A N/A N/A N/A
Grassland Reserve Program............. N/A N/A N/A N/A
=================================================================
US Department of Agriculture Farm Service
Agency--Mandatory Programs
CRP (In millions of acres).................... ............ ........... 36.4 36.4 ...........
----------------------------------------------------------------------------------------------------------------
\1\ America's conservation districts support full funding and enrollment at the authorized levels for the
mandatory conservation programs of the Commodity Credit Corporation.
______
Prepared Statement of the National Association of Farmers Market
Nutrition Programs
Dear Subcommittee: The National Association of Farmers' Market
Nutrition Programs (NAFMNP) respectfully submits testimony on the
fiscal year 2003 appropriations for the U.S. Department of Agriculture
relating to funding for the Farmers' Market Nutrition Programs for both
WIC participants and Seniors.
In fiscal year 2001, on a mere $35 million in federal
appropriations (supplemented by more than $10 million in state matching
resources), the WIC and Senior FMNPs:
--delivered benefits--in the way of fresh, locally grown, nutritious
fruits and vegetables--to nearly 2.7 million low-income women,
infants, children, and seniors to help improve their diet and
health and combat obesity and chronic diseases;
--provided over $32.5 million in increased sales and income to more
than 14,600 independent fruit and vegetable farmers; and
--supported the operation of more than 3,200 farmers' markets, farm
stands, and community supported agriculture programs, many of
them serving low-income neighborhoods with limited access to
fresh produce.
Sufficient, unconditional funding is essential for the
uninterrupted operation of these small but cost effective and valuable
programs.
NAFMNP strongly urges appropriators to provide fiscal year 2003
funding that is not contingent on unused funds from other nutrition
assistance programs.
The WIC FMNP requires $25 million next year to maintain the current
programs of states, Indian Tribal Organizations (ITOs), and
territories, allow for modest expansions within those jurisdictions,
and permit new entities to join the program. We urge Congress and the
Appropriations Committee NOT to make any portion of these funds
contingent on caseload needs in the WIC Program or any other program.
In regard to funding for the Senior FMNP, the NAFMNP also endorses
a $25 million funding level for this program in fiscal year 2003. Prior
to the enactment of fiscal year 2003 appropriations for USDA, passage
of the Farm Bill may secure mandatory funding for this program at a
level of at least $15 million annually. We urge appropriators to
augment mandatory funding by $10 million or fully fund the program at
$25 million if there is no Farm Bill provision.
Thank you for your consideration of these funding concerns.
______
Prepared Statement of the National Association of Professional Forestry
Schools and Colleges (NAPFSC)
The National Association of Professional Forestry Schools and
Colleges (NAPFSC) is comprised of the 69 universities that conduct the
Nation's research, teaching, and extension programs in forestry and
related areas of environmental and natural resource management. NAPFSC
strongly supports increased funding for federal forestry research
programs, including those operated by the USDA's Cooperative State
Research Education and Extension Service (CSREES).
The management of nonfederal forestlands has become a critical
economic, environmental, and security issue. Owners and managers of
nonfederal forestlands are simply not equipped to deal with the
tremendous changes in forest land use and management that have occurred
in the last decade nor the pressures of the 21st century. The programs
outlined below are key to addressing the stewardship of these lands.
These programs are: the McIntire-Stennis Cooperative Forestry Research
Program (McIntire-Stennis), the Renewable Resources Extension Act
(RREA), the National Research Initiative (NRI), and the Initiative for
Future Agriculture and Food Systems (IFAFS). The first three of these
programs have stimulated the development of vital partnerships
involving universities, federal agencies, non-governmental
organizations and private industry, and the newest program--IFAFS--a
competitive grants program, offers great potential for developing new
uses for forest products, improving natural resource management, and
building multi-state and multi-university partnerships for research and
outreach activities.
NAPFSC RECOMMENDATIONS
[Amounts in dollars]
----------------------------------------------------------------------------------------------------------------
Fiscal year
---------------------------------------------------------------
2003 Bush 2003 NAPFSC
2001 enacted 2002 enacted budget recommendation
----------------------------------------------------------------------------------------------------------------
MCINTIRE-STENNIS................................ 21,884,000 21,884,000 21,884,000 30,000,000
RREA............................................ 3,192,000 4,093,000 4,093,000 15,000,000
NRI............................................. 105,767,000 120,110,000 240,000,000 150,000,000
IFAFS........................................... 120,000,000 0 0 120,000,000
----------------------------------------------------------------------------------------------------------------
The Case for Enhanced Forestry Research Funding.--The past,
present, and future success of forestry research and extension
activities arising from the NAPFSC member institutions results from a
unique partnership involving federal, state, and private cooperators.
Federal agencies have concentrated on large-scale national issues while
state funding has emphasized applied problems and state-specific
opportunities. University research in contrast, with the assistance of
federal, state and private support, has been able to address a broad
array of applied problems related to technology development and
fundamental biophysical and socioeconomic issues and problems that
cross ownership, state, region, and national boundaries.
The 1998 Farm Bill and various subsequent reports and conference
proceedings have identified the need for greater attention on the
emerging issues confronting non-federal forest landowners. NAPFSC is
pleased to be one of the cofounders of the National Coalition for
Sustaining America's Nonfederal Forests. The founding of the Coalition
and its subsequent report emerged from a Forestry Summit held in 1999
that brought together key forestry leaders and landowners from across
the nation. The Coalition has documented a plan of action to conserve,
protect, and sustain our nation's nonfederal forest lands. The nation's
recent experience with international terrorism heightens the importance
of this plan. The plan stresses the importance of cooperation among the
public universities, state forestry agencies, federal agencies, and the
many stakeholders in the natural resources arena. Key elements of this
plan are research capacity and concerted action on stakeholder
priorities.
The forests and other renewable natural resources of this country
are primary contributors to the economic health of the nation; are
reservoirs of biodiversity important to the well-being of our citizens;
are significant to the maintenance of environmental quality of our
atmosphere, water, and soil resources and provide diverse recreational
and spiritual renewal opportunities for a growing population.
Tremendous strains are being placed upon the nation's private forest
lands by the combination of increasing demands for forest products
coupled with dramatic changes in timber policies concerning our
National Forests. Because of the changes in federal forest policy,
private forest lands in the United States are now being harvested at
rates not seen since the beginning of the 20th century.
To meet this challenge, research priorities must be adjusted to
better address the needs of private landowners, and to specifically
enhance the productivity of such lands through economically efficient
and environmentally sound means. These challenges can be substantially
addressed by the university community through the building of
integrated research and extension programs assisted by McIntire-
Stennis, RREA, and NRI.
There are currently approximately 10 million private forestland
owners in the U.S. These landowners control nearly 60 percent of all
forestland in the country. And it has been to the universities, with
strong support from CSREES, that landowners traditionally look for new
information about managing their lands. The overwhelming majority of
the 10 million private landowners are not currently equipped to
practice the sustained forest management that is critical to the health
of our environment and economy. The combination of research conducted
by the forestry schools, combined with the dissemination of that
research through the cooperative extension network, has never been more
essential.
McIntire-Stennis Cooperative Forestry Research.--The Cooperative
Forestry Research Program (McIntire-Stennis Act) is the lead forestry
effort administered by the USDA Cooperative State Research, Education,
and Extension Service (CSREES). This program is the foundation of
forestry research and scientist training efforts at universities.
Funding this program provides for cutting-edge research on
productivity, technologies for monitoring and extending the resource
base, and environmental quality. The program is critically important
today since universities provide a large share of the nation's
research. Additionally, universities train nearly all of the nation's
scientists in forestry. The main categories of need are:
--Significantly enhance sustainability and productivity of nonfederal
forests;
--Increase the financial contributions of nonfederal forests to
benefit landowners, the rural community, state and national
economies, and environmental values; and
--Conserve and sustain the nonfederal forests and other natural
resources for future generations.
The Cooperative Forestry Research Program is currently funded at
$21.884 million and matched more than three times by universities with
state and nonfederal funds. The program is currently funded at little
more than one-fifth its authorized level. We recommended funding
McIntire-Stennis at a level of $30,000,000 for fiscal year 2003. The
requested additional funding would be targeted at:
--Sustainable and productive forest management on private lands to
address issues of competitiveness and economic growth ($2.8
million);
--Forest inventory, monitoring, and assessment with emphasis on new
technologies ($1.9 million);
--New products, improved processing technologies, and utilization of
small trees to extend the forest resource and improve
environmental quality ($1.0 million);
--Forest health and risk to address issues of fire, pest species, and
other disturbances affecting domestic resource security and
downstream impacts ($1.0 million); and,
--Assessing social values and tradeoffs to facilitate the
understanding of policy options, economic impacts, and informed
decisions at all levels of government ($1.4 million).
The NAPFSC schools further recommend that CSREES provide this
support to universities with direction to focus on new or existing
approved projects for the explicit purpose of near term progress in
addressing one or more of these research targets in each school's state
or region. It is recognized that progress will be dependent on a
critical mass of scientific effort, and collaboration among schools is
thus encouraged. Additionally stakeholder advisory mechanisms should be
a part of the funding allocation process. In the process of funding
these projects, NAPFSC would also recommend that portions of this
funding be used to build research capacity, including a provision
calling for training of much needed new forestry scientists.
Renewable Resources Extension Act.--The Renewable Resources
Extension Act (RREA) is the lead forestry extension effort administered
by the USDA Cooperative State Research, Education, and Extension
Service (CSREES). This program is the foundation of outreach and
extension efforts at universities.
Funding for this program addresses critical forestry and related
natural resources extension and stewardship needs in states, and would
address the critical issues of forest management for productivity and
environmental quality on non-federal lands brought about by diminished
harvest levels on federal lands. NAPFSC is pleased that the House and
the Senate, during their discussions of the 2002 Farm Bill, have both
agreed to increase the authorization level of RREA to $30 million.
Audiences for the products of outreach and extension are as diverse
as are the stakeholders. Of highest priority are the owners of
nonfederal forestlands and those involved in implementing forest
management. Outreach programs that (1) solve immediate problems; (2)
transfer research technologies and new knowledge; and (3) increase
their awareness of the benefits of active management would best serve
these groups.
It is vital that Congress increase funding for this important
program for distributing the knowledge gained through our research
institutions to the private landowners. NAPFSC recommends funding RREA
at a level of $15 million for fiscal year 2003. This increase would
take RREA to its current full authorization level.
With nearly ten million nonfederal forest landowners, the most
compelling priority areas for extension and outreach are:
--Develop databases and communication systems for landowner education
and the delivery of information tailored to address owner
values and objectives ($4.0 million);
--Identify best management practices together with readily accessible
information on programs, services, and benefits of natural
resources management and planning to integrate water, wildlife,
timber, fish, recreation and other products and services ($3.5
million);
--Identify opportunities such as landowner cooperatives and other
organizations linked to professional services, price reporting
systems, and cooperative marketing to address local issues
within the framework of landowner's objectives ($1.9 million);
and
--Use these databases, communication systems, and opportunities to
communicate information on managing the risks from fire, pests,
and other disturbances to simultaneously address local and
larger scale issues of environmental and resource security
($1.5 million).
The NAPFSC schools further recommend that CSREES provide this
support to universities with direction to focus on new or existing
approved projects for the explicit purpose of near term progress in
addressing one or more of these outreach/extension targets in each
school's state, region, or nationally. It is recognized that progress
will be dependent on a critical mass of extension educator effort, and
cooperation among schools is thus encouraged. Additionally stakeholder
advisory mechanisms should be a part of the funding allocation process.
In the process of funding these projects, NAPFSC would also recommend
that portions of this funding be used to build outreach/extension
capacity, including a provision calling for training of much needed new
extension educators and associated technical support staff.
National Research Initiative Competitive Grants.--The National
Research Initiative Competitive Grants program (NRICGP) is a
significant source of funding for basic cutting-edge and applied
research in categories important to sustainable forest management.
Among these categories are (1) natural resources and the environment,
(2) plants, (3) markets, trade and rural development, and (4)
processing for value added/new products. This program is administered
by the USDA Cooperative State Research, Education, and Extension
Service (CSREES).
This program is currently funded at $120 million of which
approximately ten percent goes to successful forestry research
proposals. NAPFSC supports the Administration's efforts to greatly
increase the funding for this program for fiscal year 2003--with at
least 20 percent of the increase directed to forest resources related
research priorities in categories (1)-(4) above under existing and/or
new research areas. However, we urge that part of the Administration's
proposed increase be directed to base programs, particularly to move
the Cooperative Forestry Research Program to the above noted $30
million level. Addressing the base program needs will in turn build the
capacity to compete effectively for competitive grants.
Initiative for Future Agriculture and Food Systems.--The Initiative
for Future Agriculture and Food Systems (IFAFS) is a new research,
extension, and education competitive grants program designed to address
a number of critical emerging issues in the broad area of agricultural.
These issues encompass future food production, food safety,
environmental quality, natural resource management, and farm income.
Priority program areas include (1) the agriculture genome; (2) new and
alternative uses and production of commodities and products; (3)
biotechnology; and (4) and natural resource management, including
precision agriculture. Priority for funding is for those proposals that
were multi-state, multi-institutional, or multi-disciplinary, or that
integrated research, extension, and/or education. This program,
administered by CSREES, was funded at $113.4 million in fiscal year
2001, but was suspended for fiscal year 2002. NAPFSC strongly supports
this competitive grants program and urges your Subcommittee to provide
the full $120 million for fiscal year 2003 with an expansion of the
focus to allow greater consideration of forestry and related natural
resources issues.
conclusion
The needed investment is substantial, but the potential returns are
considerable. Disciplined and rigorous implementation of research and
education on forest resources issues will contribute greatly to
attaining our vision for America's nonfederal forests for the future.
NAPFSC urges cooperation at federal, state, and University levels to
make this investment and the vision and security it will support a
reality.
______
Prepared Statement of the National Association of State Universities
and Land-Grant Colleges
Mr. Chairman, I am delighted to be able to submit testimony today
in support of the International Science and Education grants program
(ISEP) that has received an appropriation of $1,000,000 in the
Administration's Department of Agriculture fiscal year 2003 budget
under the Integrated Activities Account of CSREES. I respectfully
request that you include this funding in your fiscal year 2003
Agriculture Appropriations budget.
Mr. Chairman, I am the current chair of the International
Agriculture Section of the Board on Agriculture Assembly of the
National Association of State Universities and Land Grant-College
(NASULGC). As the Section chair, it is my privilege to submit this
testimony to you in support of this critically important program.
NASULGC's Board on Agriculture Assembly, Budget and Advocacy
Committee has requested a $212 million increase for USDA/CSREES in
fiscal year 2003 of which one small part is the International Science
and Education grants program. This increase is necessary to address
immediate security needs for U.S. agriculture. This is a small price to
pay for a safe and secure food supply. The International Science and
Education grants program enhances the agro-security research,
extension, and education program by providing an international link. In
addition, this program seeks to incorporate substantive international
activities into programs related to food systems, agriculture and
natural resources at U.S. land-grant colleges and universities.
The Cooperative State Research Extension and Education Services
(CSREES) of USDA intends to administer the International Science and
Education grants program through a competitive grants system. We have
worked closely with CSREES in the past to develop a solid program that
meets real and demonstrated needs. In fact, we estimate that there is a
demonstrated need of approximately $8 million to address agro-security
needs, although we are thrilled to see the $1 million appropriation in
this year's budget.
After 5 years of activity, GASEPA (Globalizing Agricultural Science
and Education Programs for America) has succeeded in receiving funding
through ISEP in the Administration's fiscal year 2003 budget. GASEPA/
ISEP represents a global agenda for sustainable agriculture, food,
natural resources, rural development and related science programs. It
represents a broadening in focus from aid to trade and national
security, including economic cooperation and the need to strengthen
global competencies of U.S. citizens.
These grants will address five primary goals:
--Enhance global competitiveness of U.S. agriculture through human
resource development;
--Develop and disseminate information about international market,
trade, and business opportunities for U.S. agriculture;
--Establish mutually beneficial collaborative global partnerships;
--Promote trade through global economic development; and
--Promote global environmental quality and the stewardship of natural
resources management.
This grants program is intended to help position U.S. agriculture
to continue to be a major contributor to global food security in the
post-Cold War and post 9/11 era. Its tenets of human resource
development, global environmental conservation, global market creation,
and increased participation in global markets have important
implications for the US university community.
Our institutions of higher education continue to serve the needs of
the citizens of their respective campuses, communities and states. They
will also have an important role to play in this new era of heightened
security--particularly in the area of bio-security--and global
cooperation.
As we position U.S. agriculture for the 21st century, we are
cognizant that education, research, and outreach programs at our land-
grant and similar universities will need to address global issues more
than in the past. We urgently need to find ways to increase the level
of engagement of our resident teaching faculty, research scientists,
and extension agents in addressing global dimensions of food and fiber
industries, and the natural resource base on which they rely. Only in
this way will we adequately serve the needs of the citizens of our
respective states.
As I mentioned earlier, the International Science and Education
Grants program is strongly supported by the National Association of
State Universities and Land-Grant Colleges (NASULGC) and it's Budget
Committee. As you know, the land-grant higher education community has a
strong tradition of commitment to a global agenda for sustainable
agriculture, food, natural resources, rural development and related
science programs. It also enhances agro-security programs by providing
a complimentary international link. We seek to help position U.S.
agriculture as a major contributor to global food security in today's
new era of heightened national security.
This new funding line will directly contribute to addressing agro-
security concerns, but it will also deal with some of the more
fundamental issues facing our students today. We must ensure that our
students are being sufficiently trained in the reality of today's
international markets and that they have an understanding of other
parts of the world in order to prevent some of the issues that have now
emerged in the arena of agro-security.
I strongly believe that the International Science and Education
grants program will play an important role in the domestic and
international agriculture world of the 21st century. But it will depend
on the appropriation of Federal funding. I look forward to working with
you to meet this goal.
Mr. Chairman, again, thank you for the opportunity to submit this
testimony to your committee today. I sincerely appreciate your
favorable consideration of this request.
______
Prepared Statement of the National Association of State Universities
and Land-Grant Colleges
Mr. Chairman, Members of the Committee, it is my pleasure to submit
to you testimony regarding the fiscal year 2003 budget. I am commenting
on behalf of the National Association of State Universities and Land-
Grant Colleges, Board on Agriculture Assembly.
There is one critical issue facing the United States today that
brings us before you; the need to secure the United States from a
biological attack and the attendant concerns related to the security of
the U.S. food production system. In addition to jeopardizing public
health and safety, biological attacks on the U.S. agricultural sector
would cause our nation and the world's food supply substantial damage,
and undermine the U.S. economy. United States agricultural exports
alone reached $50.9 billion in fiscal year 2002. As noted in a study
issued by the Department of Defense in January of 2001:
The potential threats to U.S. agriculture and livestock can come
from a variety of pathogens and causative agents. With one in eight
jobs and 13 percent of the gross national product dependent on U.S.
agricultural productivity, economic stability of the country depends on
a bountiful and safe food supply system. Similar to the human
population, the high health status of crop and livestock assets in the
U.S. creates a great vulnerability to attack with biological agents.
The President's fiscal year 2003 proposal provides more than $6
billion across several Federal agencies to address biosecurity issues.
Unfortunately, very little of this proposed investment is targeted to
address the homeland security issues facing agriculture, our food
production, natural resources, distribution system, or our rural and
urban communities. We fully recognize that there is an immediate need
to address public health, defense and law enforcement homeland security
issues. However, it is just as important and just as urgent to protect
our food production and distribution system. It is important not to
alarm the public or our trading partners unnecessarily. It is even more
important to take the immediate and straightforward steps that will
ensure that there is no tampering with our food supply system.
The Land-Grant University (LGU) system is unique in the world in
that it was designed to work in partnership with the Federal, State and
local agencies. We were designed to address national issues at the
state and local level. This partnership is critical in providing the
science base and education outreach programs that are uniquely
important in food production and distribution. This same distributed
network will be critical in addressing homeland security needs. Our
universities provide much of the innovative research and have the
science knowledge base regarding biological pathogens that. could
impact the food production system and natural resources. Our
Cooperative Extension System provides a network of personnel in every
county of the country, with staff that are already trained to work with
local community leaders to plan and respond to natural and civic
disasters, as well as years of experience designing and implementing
education programs for producers, processors, and consumers. The LGU
system's premier teaching facilities can also educate the next
generation of scientists about agro-security. It is imperative that the
security issues facing our food production system be addressed. It is
essential that the existing distributed information and outreach system
that resides within the Land-grant universities be harnessed and
integrated into the efforts of all Federal agencies seeking to
collaborate with rural communities.
I respectfully offer the following testimony to describe the bridge
between land-grant research and extension activities and the health
sciences, security, and emergency management conducted by other Federal
agencies. I will. also offer ways in which the land-grant universities
could be a valuable resource in the Federal, State, and local
government solution to coordinating and conducting the prevention and
response to biosecurity threats.
capabilities of the land-grant university system
The Federal Government created the LGU System in 1862 and is
anchored in every state and U.S. territory. In partnership with the
local, state, and Federal Governments, the LGU System addresses
national issues at the local level. Central to the LGU System are the
State Agricultural Experiment Stations (SAES) that conduct research and
the Cooperative Extension Service (CES) that provides outreach from the
university to our communities across the country.
SAES, with over 10,000 highly specialized researchers, has for
years engaged in research that is relevant to protecting the nations
food production, processing and distribution system from acts of
terrorism. CES has an established presence in communities across the
country with 3,150 local offices that continuously manages and controls
emergencies, particularly natural disasters. CES' unique capacity to
self-evaluate its program effectiveness constantly improves agriculture
and community safety. Moreover, multi-institutional/multi-state
procedures for coordinating the research of SAES and integrated
activities with CES are already in place, ready for immediate
engagement.
what must agriculture experiment stations and the cooperative extension
system do to enhance agro-security?
Address Immediate Security Needs
Securing Experiment Station Research
Research results and data are often openly communicated and stored
electronically via electronic posting and web sites and could be easily
used to locate and abuse hazardous materials. SAES and Federal research
laboratories must develop protocols to safeguard this information while
keeping necessary information and communication channels open.
Furthermore, it will be important for state and Federal officials
to be able to locate or track the location of these materials over
time. Recent questions about the location of anthrax samples in Federal
laboratories demonstrate why this new level of security will be needed.
There should be a national list of potentially dangerous materials
inventoried across agricultural research facilities that would be
maintained and updated regularly and available to appropriate Federal,
State and local emergency management agencies.
While laboratories should be secured, there should also be respect
for the information sharing between scientists. Legitimate
communication mechanisms and efforts should not be thwarted as a result
of the, added security. Therefore, security plans should be made in
conjunction with SAES and Federal laboratories to ensure the
continuation of secure and critical agricultural research and
communication.
Training Industry to Secure Their Operations
In a natural partnership with SAES, CES provides educational
programs to the private sector on how to secure their operations. As we
have sadly learned, equipment and materials such as fertilizers and
crop dusting planes can be used as bioweapons. Appropriate protocols
for securing these materials should be developed in collaboration with
USDA's Agricultural Research Service (ARS), the Animal and Plant Health
Inspection Service (APHIS), the Food Safety Inspection Service (FSIS),
and other appropriate Federal agencies.
Secure Communities
Producers, processors, suppliers, retailers, and consumers may one
day be the ``first responders'' to an agroterrorist attack and thus
play a pivotal role in quickly containing contamination. CES agents
need to be trained to recognize possible threats and employ the
appropriate protocols for working with local and Federal law
enforcement and health agencies. CES has a unique role to play in
training community leaders to prepare and plan for potential terrorist
activity. CES can help rural and urban communities, businesses and
farms develop tools to determine points of exposure and risk, so that
they can develop programs at the local level that best meet their
needs. Because rural communities are sparsely populated, the
infrastructure may not already exist to mitigate a disaster. Many of
the mitigation strategies will deal with preparedness and training of
community volunteers. With more research on disease vectors, these
communities could better shape both prevention and containment
strategies via vaccines and agents to neutralize and treat the effects
of disease outbreaks. CES has already developed a way to communicate
with and keep on the same page as partner agencies called the Extension
Disaster Education Network (EDEN). EDEN is a clearinghouse for
educational and related materials used for disaster mitigation. The
recovery process for communities and their constituents may require
sustained presence within the communities and the mobilization of
significant research resources.
Respond to emergency outbreaks
A purposeful biological attack on our plant and animal species
would probably spread quickly and from separate locations. Immediate
recognition that there is an unnatural outbreak of a disease in
multiple locations is critical if the spread of the disease is to be
contained. Although the food and fiber production process opens up many
opportunities for purposeful contamination, most existing safeguards
were not designed to protect against intentional attacks. Modeling and
communication tools need to be developed that would facilitate early
detection and recognition of unnatural outbreaks. The private sector,
the Federal Government, and the LGU System will need to develop new
standards and protocols to:
--improve detection and monitoring practices such as enhanced border
screening practices;
--develop a communication system that alerts appropriate agencies and
points of entry that a problem may exist, with guidance on
appropriate actions;
--improve the ability to trace contamination back to its source; and
--enhance communication networks with public health agencies, law
enforcement agencies and state and local officials.
The timing of the recognition and response is also critical. If a
purposeful introduction of a biological agent is recognized quickly,
the impact can be greatly reduced. A difference of several days can
mean the difference between curtailing a viral outbreak and losing
control over the spread of a contagion. As mentioned, with a lower
population base distributed across vast areas, rural America typically
lacks the infrastructure to recognize and respond to terrorist attacks.
Educate scientists, teachers and specialists
Who will provide the expertise for these efforts in the future? We
will need people whose education concentrates on security in
agriculture and natural resources. Courses or degrees in agricultural
security will be necessary. This kind of expertise currently does not
exist in institutions and initially will require outside expertise.
Institutions will require help to design long-term educational programs
that can provide the scientists and educators the ability to address
the issues of agricultural security.
linking the land-grant system with federal agencies
The LGU System offers across the broad experience with agricultural
security research and extension that lends itself to the purposes of
other Federal agencies. The attached budget summary table links funding
requests from different agencies with biosecurity activities.
United States Department of Agriculture
The LGU System has a long historic relationship with USDA in
protecting our food production system. We are recommending a $212
million increase in new funding for USDA/CSREES to address agro-
security and food safety issues. The LGU have a historic working
relationship with USDA and our recommendations for agro-security
funding have been detailed in testimony submitted to the House and
Senate Agriculture Appropriations Subcommittees. While the LGU have
worked with each of the following Federal agencies, we have not done so
in a systematic way, and so we provide more detailed description of
what our expanded cooperative efforts should include.
Department Of Defense
Science and Security: Linking SAES with National Agro-
Security Efforts
The LGU System proposes to develop new ways in which to collaborate
with the Department of Defense in order to engage the SAES and CES in
providing Federal, State, and local governments with rapid access to
the best information and services for eliminating, avoiding or
mitigating domestic and foreign threats to national food systems and
U.S. agricultural production. The SAES could help to provide the
Department of Defense with support services in the following areas:
--National advisory service for research site security;
--Organization of research facilities (domestic and international);
--Strategic planning facilitation;
--Document services;
--Research outcome reporting;
--Resource mobilization and allocations;
--Financial accountability;
--Information security and confidentiality assurances; and
--Rapid responses for requested information.
Moreover, we recognize that certain data collection and monitoring
activities, threat assessments; interventions, and related training
activities are necessarily classified; and therefore, we propose
forming with others a partnership that would draw upon selected
(cleared) experts from the LGUs and from pools within intelligence and
law enforcement certain expertise to provide decision makers specific
support in the following areas:
--Security firewall for engaging the LGU expert community at large;
--Conduct, oversee and/or advise on classified data collection and
monitoring activities;
--Conduct, oversee, advise and/or participate in classified research
and assessments; and,
--Education and training programs for:
--First responders;
--Incident monitoring systems;
--Diagnostic services providers; and,
--Risk and threat assessment resources.
Preparing Our Civil Defense
Since World War II, CES has worked with the military in our rural
communities to coordinate civil defense needs. The CES network could
heed the call once more to increase our civil defense, and prepare it
for biosecurity aspects through volunteer training programs conducted
in collaboration with the military. Additionally, CES has ongoing
family programming designed specifically for those families living on
military bases. CES could adapt these programs to discuss and address
potential biological threats to family security on military bases.
Funding
The costs of prevention are small relative to the cost of a
terrorist attack. Severe economic disruption could result to our
production, distribution and trade system, if we do not take
responsibility to act now. We are recommending a beginning funding
level of $171 million in fiscal year 2003 from the DOD for the
following purposes:
--$136 million to link land-great research with DOD agro-security
issues;
--$76 million to collaborate in securing research facilities and
developing a system for appropriate security screening and
background checks for individuals with access to sensitive
materials; and
--$35 million to initiate CES technology transfer and networking
activities related to improved diagnostic and testing
technologies.
Federal Emergency Management Agency
FEMA is charged with working closely with state and local
governments and agencies to ensure their planning, training, and
equipment needs are addressed and to ensure that the response to
weapons of mass destruction threats is well organized. Stepping up the
partnership between CES and FEMA could improve the management of
emergency agro-terrorism situations by employing programs for risk
awareness, risk assessment, mitigation, and recovery.
Coordinated Emergency Planning and Training
CES has collaborated with FEMA for many years to manage and control
emergencies, although to date, most disasters have been natural such as
floods, storms, droughts and disease outbreaks. In addition, CES has
almost 100 years of experience in the recruiting, training, utilization
and management of volunteers. CES works with thousands of volunteers
every day, is familiar with all aspects of volunteer training and
management and has a reputation of being a ``volunteer organization''
in the community. Many of the volunteers seek more intensive training
through one or more of the ``master volunteer'' programs which target
specific community or program needs such as agro-terrorism mitigation.
As part of its emergency management work, CES created the Extension
Disaster Education Network (EDEN), a clearinghouse for educational and
related materials used for disaster mitigation. Most recently, CES
mounted a nationwide train-the-trainer program to prepare small and
rural communities and public and private organizations for Y2K. CES
trained hundreds of thousands of individuals, families, and private and
public organizations to manage the Y2K threat in little more than 1
year.
Building on EDEN, CES could assist FEMA in ensuring that first
responders at all points in the food production system are well trained
in new technologies and techniques to improve emergency response
efforts. Such a program could involve training first responders and
citizen volunteers in biosecurity risk assessment and mitigation. The
program could have four parts: (1) risk awareness to inform communities
and leaders about the potential threats of terrorist activity; (2)
self-directed risk assessment that allows for flexibility required in
given community of producers, processors, retailers, and consumers; (3)
mitigation; and (4) recovery.
Awareness.--This training would inform communities and leaders of
the potential threats of terrorist activity including: likely
approaches of terrorists, materials that may be used and their
indicators, the symptoms of affected plants and animals, how materials
might spread, the contacts to identify or verify contamination, and the
ways in which the effects of materials manifest themselves in the
community. This training could occur based on specific information
about the nature of the threat and rapidly mobilized and disseminated
through pre-organized train-the-trainers networks, the CES
communications system, and local offices. Various State and Federal
agencies could also be resources for this training.
Risk Assessment.--This would involve building self-directed risk
assessment instruments. These instruments would make it possible for
the communities, organizations and households that create them to
rapidly determine and prioritize points of exposure. Risk assessment
templates could be adapted to different types of threats and be used to
monitor the progress of the communities, determine the elements of the
communities involved, and determine where those who live in the
communities feel the most susceptible. The latter information would be
valuable in adding to the strategy for intervention and additional
training.
Mitigation.--With risk assessments made, the users of the
instrument are ready to deal with mitigation. What are the major areas
of risk? How do they vary within and among communities, what are the
efficient strategies, given the ``distribution'' of perceived and
actual risk? Many of the mitigation strategies would deal with
preparedness and training of community volunteers. Training
certifications could adapt to the changing nature of terrorist threats.
Using its close link with existing State and Federal programs, CES
could leverage the distribution of the mitigation materials and
training. Volunteer and community leader trainings could be delivered
cooperatively with various State and Federal agency staff.
Recovery.--The recovery does for communities may require sustained
presence within communities and the mobilization of significant
research resources. The recovery process may itself be unknown and
require close cooperation between the researchers and CES staff working
``on the ground'' in impacted communities. The land grant model that
links strong research capacity with a field presence is likely to be of
value to all agencies involved.
In addition to the risk assessment training program, CES could also
develop education programs that would mitigate public health and
economic disruptions to rural communities from terrorist attacks. A key
example of a mitigation strategy is preparing individual families for
an agro-terrorist attack. Families need to have survival kits on
constant standby that would mitigate the effects of an attack. Should
an attack occur, they may need to know how long their food will stay
fresh in the refrigerator or how they can sustain their crops if
contaminated. In partnership with appropriate Federal agencies, CES
could develop proper survival kits and train the families to implement
the survival tools in the case of a disaster.
Linking Research to Extension and Asking New Research
Questions
The State Agricultural Experiment Stations (SAES) within land-grant
colleges and universities have significant research capacity. The
researchers within the land-grant system are used to working with CES
and have established communication mechanisms about new technologies
and techniques. Thus, CES and the land-grants can be supportive of the
mitigation approaches and the identification of the materials that may
have been introduced by the terrorists. SAES is engaged in a breadth of
issues relating to technologies that would mitigate a disruption to
nation's food safety and economic health from a terrorist attack.
There are many key examples of how SAES could support mitigation
the effects of an agro-terrorist attack on rural communities. One topic
could delve into the extent of a community's social capital. Is there a
network of interested non-profits to address its community's particular
piece of counter-terrorism? Another topic would be determining the
impact on security by population variables. Demographics such as
ethnicity, religious beliefs, and income levels are critical pieces of
information in developing a mitigation plan for health and economic
disruptions. Finally, research would need to be done on how to retain
consumer trust. If there is a biological attack on the crops, consumers
might question the safety of their food. SAES could determine methods
that would alleviate these real or perceived fears.
Funding
To address emergency planning and training needs, the LGU system
recommends--
--a beginning funding level of $237 million in fiscal year 2003 to
incorporate biosecurity concerns into the emergency and
disaster education network, design and implement risk
management training programs, and train community leaders and
citizen volunteers--
--$87.5 million for risk management education packages and training
--$50 million for research to improve identification and
intervention strategies and technologies
--$25 million for monitoring and evaluation of training program
results
--$75 million to enhance communication and education systems
Health and Human Services
Agriculture production is inextricably linked to food safety and
public health. There is necessary overlap between the health and
agricultural sciences that should be reflected in the budget and in
research efforts.
Health Resources and Services Administration (HRSA)
HRSA functions on the frontlines of public health protection in
communities and will develop programs to address the emerging need for
public health emergency response teams in the event of a biological
attack. As part of HRSA, Health Centers provide public health education
in under-served communities. The Centers' effectiveness is due in part
to their ability to train and mobilize public health volunteers in
these communities. Such training programs will need to be expanded to
address new Homeland Security aspects such as biosecurity. With nearly
100 years of experience in recruiting, training, utilizing and managing
volunteers, CES can add to the Center's capacity to meet the Homeland
Security challenge. For decades, CES has successfully partnered with
FEMA to prepare communities and families to respond effectively during
natural disasters and can draw on this experience to collaborate with
the Centers in designing biosecurity-public health emergency response
plans. Health Centers also use volunteers to help assess operational
capability at the community level and then provide on-site support to
affected communities. CES could offer additional resources to the
Centers in this area as well. In many states, CES is the public gateway
to science-based information developed in academic disciplines across
the university. CES could engage its research and evaluation tools,
community planning experience, and facilitating skills in support of
community capacity building.
National Institutes of Health (NIH)
NIH is charged with promoting biomedical research, and other
scientific inquiries that may lead to medical advances, and will be the
lead research agency in the Federal Government's effort to fight
bioterrorism. Within NIH, the National Institute of Allergy and
Infectious Diseases (MAID) will lead research activities aimed at
developing biomedical tools to detect, prevent, and treat infection by
biological agents.
The State Agricultural Experiment Stations (SAES) and veterinary
diagnostic labs within land-grant universities have broad and deep
research portfolios to improve public understanding of disease vectors,
particularly for infectious diseases that can cross between animal and
human populations. They also perform critical research in applied
animal science designed to serve medical advances. With this knowledge
base, the land-grant universities can provide a critical research
foundation for the development of diagnostic technologies and treatment
of infectious diseases suitable for responding to the circumstances
surrounding purposeful exposure.
Funding
To initiate the activities described in this testimony, the LGU
system recommends funding for fiscal year 2003 of $265 million, which
would be used to support the following activities:
--A total of $165 million in support of SAES research and research
facilities--
--$100 million for basic and applied research through the NIH
--$15 million for enhanced research facility security through the
NIH
--$25 million for integrated food safety research through the FDA
--$25 million for basic and applied research through the CVM
--A total of $100 million in support of CES education and outreach
activities, with a budget estimate of $500,000 per state per
program--
--$25 million for Extension education and outreach to general
public on food safety through FDA
--$25 million for integrated Extension for training in new food
contamination detection and containment technologies through
FDA
--$25 million for integrated Extension for farmer and rancher risk
management program through CVM
--$25 million for Extension volunteer program development and
training through HRSA
conclusion
I would like to thank the Senate Appropriations Committee for
taking the leadership to look at how our country is addressing homeland
security issues across the Federal Government. Only by taking this
comprehensive view can we insure that our Federal, State and local
agencies are working together in the most effective way. The land-grant
university system stands ready to provide its distributed research and
education network to work in partnership with each of the Federal
agencies to help them successfully address their specific homeland
security missions.
MULTI-AGENCY BIOSECURITY--AGRO-SECURITY BUDGET LAND-GRANT UNIVERSITIES
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------
USDA DOD HHS FEMA Total
----------------------------------------------------------------------------------------------------------------
By funding Mechanism:
Research Formula; NRI............................ 64 60 100 n/a 224
Extension Formula................................ 62 35 50 124.5 271.5
Integrated Sec. 406, RREA........................ 28 n/a 100 87.5 215.5
Facilities....................................... 50 \1\ 76 15 n/a 141
Education........................................ 8 n/a n/a 25 33
----------------------------------------------------------
Total.......................................... 212 171 265 237 885
==========================================================
By Agro-Security Issue--in millions:
Respond to \2\ Outbreaks......................... 49 \3\ 55 75 137 316
Counteract Terrorism............................. 30 \4\ 40 100 n/a 170
Secure \5\ Communities........................... 45 n/a 75 75 195
Address Immediate Security Needs................. 80 \6\ 76 15 n/a 141
Education Scientists, Teachers, and Specialists.. 8 n/a n/a 25 33
----------------------------------------------------------
Total........................................ 212 171 265 237 885
----------------------------------------------------------------------------------------------------------------
\1\ Includes funding for site security assessment, security upgrades, and background check system.
\2\ All Extension and Integrated funding split between Respond to Outbreaks and Secure Communities.
\3\ Includes $30 M for research, $25 M for extension.
\4\ Includes $30 M for research, $10 M for extension.
\5\ See reference 1.
\6\ National Association of State Colleges and Land-Grant Universitites.
______
Prepared Statement of the National Commodity Supplemental Food Program
Association
Mr. Chairman and subcommittee members, I am Andrew Fox, President
of the National Commodity Supplemental Food Program (CSFP) Association.
Our Association of state and local CSFP operators works diligently with
the Department of Agriculture Food, Nutrition, and Consumer Service to
ensure a quality supplemental nutrition assistance commodity food
package program for low income persons aged sixty and older, and low
income mothers, infants, and children. The program, which was
authorized in 1969, serves approximately 450,000 individuals every
month in 28 states, 2 Tribal Organizations and the District of
Columbia.
This 32 year old CSFP stands as testimony to the power of
partnerships between community and faith-based organizations, private
industry and government agencies. The CSFP offers a unique combination
of advantages unparalleled by any other food assistance program:
--The CSFP specifically targets our nation's most vulnerable
populations: the very young and the very old.
--The CSFP provides a monthly selection of foods specifically
tailored to the nutritional needs of the population we serve.
Each eligible participant in the program is guaranteed [by law]
a certain level of nutritional assistance every month.
--The CSFP purchases foods at wholesale prices, which amounts to one-
third the cost it would be to provide the same supplemental
nutrients at retail voucher cost. The average food package cost
for fiscal year 2002 is $15.35, and the retail cost would be
approximately $45.00.
--The CSFP involves the entire community in the problems of hunger
and poverty. Thousands of volunteers as well as many private
companies donate money, equipment, and most importantly time to
deliver food to homebound seniors. These volunteers not only
bring food but companionship and other assistance to seniors
who might have no other source of support.
--For these historical reasons I would like to submit the National
CSFP Association legislative issues and a report of our 2001
survey of monthly volunteer labor hours to support our
requests.
Chairman Kohl, the committee has consistently been helpful with
funding support for our very prudent way of providing nutritional
supplements to low income senior citizens and mothers and children.
Please help us continue.
2002-2003 issues and goals
2002 Farm Bill.--A top priority is to ensure that the Conference
Committee's final bill retain the Senate version's language regarding
the CSFP ``administrative funding fix:'' increasing the per-caseload-
slot administrative funding level each year by the State and Local
Government Index of Inflation.
Fiscal Year 2002 Funding.--Increasing Participation and Funding
Shortfall Require a $5 Million Supplemental Appropriation.--Demand for
CSFP services increased significantly during the last quarter of 2001,
due to the national recession. A majority of CSFP States saw monthly
participation increase between September, 2001 (normally the highest
participation month of the year) and December, 2001, with some
increases higher than 10 percent.
However, CSFP States operating in fiscal year 2001 saw their total
assigned caseload decline from 453,481 slots in fiscal year 2001 to
438,121 slots in fiscal year 2002, a 3.4 percent decline. Twelve States
experienced significant caseload reductions, the median decrease being
-9.5 percent, with a range from -2 percent to -42 percent. Total
funding for the program declined from $105 million to $103.7 million
(the latter dollar figure being called upon to support five new State
programs). Thus, program resources are declining at the same time that
demand for services is reaching a new peak.
A $5 million supplemental appropriation for fiscal year 2002 would
restore States that lost caseload to their fiscal year 2001 levels and
allow for additional participation generated by the weakened economy.
Fiscal Year 2003 Caseload and Funding Request.--500,000 Caseload
Slots, Including Four Additional States--$118,650,000 Requested
Caseload Requirements:
Restoration of fiscal year 2001 Caseload for
Existing Prog-
rams.............................................. 453,481 slots
Continuation Caseload for Five States Added in
fiscal year 2002.................................. 21,000 slots
Four Additional States (4,000 slots apiece) (Alaska,
Indiana, Nevada, South Carolina).................. 16,000 slots
Expansion for Existing States:...................... 9,519 slots
--------------------------------------------------------
____________________________________________________
Totals.......................................... 500,000 slots
Required Food Funding: $15.35 (average package cost)
12 months 500,000 slots......... $92.1 million
Required Administrative Funding: $50.25 (fiscal year
2002 per caseload slot) 102.5 percent
(estimated State and Local Government Inflation
Index for 2002) 500,000 slots............. $25.75 million
Estimated USDA Costs for Procuring Commodities.......... $.8 million
(Restore Senior Income Guidelines to 185 percent of Poverty.--
Current income eligibility for senior clients is set at 130 percent of
the poverty income guidelines, as opposed to 185 percent of poverty for
CSFP women, infants, and children and clients of the WIC Program and
the Seniors Farmers Market Nutrition Program. Many seniors are
struggling with high housing, medical, and utility costs, and at the
130 percent poverty guideline, even the slightest inflation increase in
Social Security income renders many seniors ineligible for CSFP.
NATIONAL CSFP ASSOCIATION CSFP ADMINISTRATIVE EXPENSE/VALUE SURVEY FOR FISCAL YEAR 2001 MARCH 2002
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Goods & Extra goods
USDA Not reimbursed CSFP Services Volunteer Annual total Percent paid donated to
Programs reimbursed by USDA cash expenditures donated to labor hours program value by USDA CSFP
cash cash agency value value participants
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
New Hampshire................................................... $499,073 $41,109 $540,182 $6,250 $122,627 $669,059 75 $1,000
New York \1\.................................................... 2,206,437 .............. 2,206,437 .............. 28,241 2,234,678 99 ..............
Vermont \1\..................................................... 516,502 .............. 516,502 .............. 47,360 563,862 92 ..............
Wash, DC........................................................ 539,148 705,902 1,245,050 365,500 141,378 1,751,928 31 ..............
Kentucky........................................................ 316,214 67,007 383,221 .............. 171,260 554,481 57 ..............
Mississippi..................................................... 160,386 3,761 164,147 .............. 56,327 220,474 73 17,500
North Carolina.................................................. 66,628 27,750 94,378 .............. .............. 94,378 71 ..............
Tennessee \1\................................................... 866,965 75,738 942,703 .............. .............. 942,703 92 ..............
Illinois \1\.................................................... 860,530 .............. 860,530 .............. .............. 860,530 100 ..............
Michigan \1\.................................................... 4,629,473 1,404,811 6,034,284 29,500 4,569,293 10,633,077 44 80,150
Ohio............................................................ 117,364 90,767 208,131 43,803 51,079 303,013 39 ..............
Red Lake, MN \1\................................................ 10,631 .............. 10,631 .............. .............. 10,631 100 ..............
Minnesota....................................................... 631,290 221,709 852,999 24,325 81,444 958,768 66 ..............
Louisiana....................................................... 3,937,862 .............. 3,937,862 819,723 861,039 5,618,624 70 ..............
New Mexico...................................................... 1,122,764 125,250 1,248,014 61,687 159,225 1,468,926 76 260,792
Texas........................................................... 259,262 .............. 259,262 .............. 57,251 316,513 82 10,882
Colorado........................................................ 1,199,722 230,562 1,430,284 36,925 425,607 1,892,816 63 822,637
Iowa............................................................ 241,625 423,315 664,940 .............. 5,387 670,327 36 229,654
Kansas.......................................................... 326,117 83,989 410,106 40,500 143,066 593,672 55 18,000
Montana \1\..................................................... 250,200 4,091 254,291 250 13,974 268,515 93 ..............
Nebraska........................................................ 728,021 38,029 766,050 21,315 507,885 1,295,250 56 32,730
South Dakota \1\................................................ 33,043 .............. 33,043 .............. .............. 33,043 100 ..............
Arizona......................................................... 1,002,056 436,681 1,438,737 .............. 521,590 1,960,327 51 3,826,785
California \1\.................................................. 2,323,386 699,171 3,022,557 35,177 1,701,226 4,758,960 49 990,335
Oregon \1\...................................................... 56,499 .............. 56,499 .............. .............. 56,499 100 ..............
Washington \1\.................................................. 27,321 .............. 27,321 .............. .............. 27,321 100 ..............
-------------------------------------------------------------------------------------------------------------------------------
Total..................................................... 22,928,519 4,679,642 27,608,161 1,484,955 9,665,259 38,758,375 59 6,290,465
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Full Survey Data Not Received; USDA Reimbursed Cash=fiscal year 2001 Final state Administrative data; Goods and Services Donated to Agency=facilities, warehouse space, transportation
services, etc needed to operate and distribute food packages; Volunteer Labor hours=$15.39/hour (determined by Points of Light Foundation Washington, D.C.); Extra Goods Donated to
Participants=donations in addition to CSFP monthly food package, ie. food, clothing, books, immunizations, carseats; Percent Paid by USDA=USDA Reimbursed Cash/Annual Total Program Value
(calculations do not include value of Extra Goods donated to participants.
______
Prepared Statement of the National Congress of American Indians
On behalf of the National Congress of American Indians (NCAI) and
its more than 200 member tribal nations, we are pleased to have the
opportunity to present written testimony on fiscal year 2003
appropriations for the Department of Agriculture.
The tragic events of September 11 brought forth the strength and
the determination of our nation to survive in the face of adversity. It
is this same spirit that has carried Indian Country through years of
annihilation and termination. It is this same spirit that has propelled
Indian Nations forward into an era of self-determination. And it is in
this same sprit of resolve that Indian Nations come before Congress to
talk about honoring the federal government's treaty obligations and
trust responsibilities throughout the fiscal year 2003 budget process.
On February 4, President Bush proposed a $74.4 billion budget for
the Agriculture Department that freezes funding for most Indian-
specific programs within USDA, continuing the trend of consistent
declines in federal per capita spending for Indians compared to per
capita expenditures for the population at large. This trend
demonstrates the abject failure of the federal government to commit the
serious resources needed to fully honor its trust commitment to Indian
tribes.
The federal trust responsibility represents the legal obligation
made by the U.S. government to Indian tribes when their lands were
ceded to the United States. This obligation is codified in numerous
treaties, statutes, Presidential directives, judicial opinions, and
international doctrines. It can be divided into three general areas--
protection of Indian trust lands; protection of tribal self-governance;
and provision of basic social, medical, and educational services for
tribal members.
NCAI realizes that Congress must make difficult budget choices this
year. As elected officials, tribal leaders certainly understand the
competing priorities that members of Congress must weigh over the
coming months. However, the fact that the federal government has a
solemn responsibility to address the serious needs facing Indian
Country remains unchanged, whatever the economic or political climate
may be. We at NCAI urge you to make a strong commitment to meeting the
federal trust obligation by fully funding those programs that are vital
to the creation of vibrant Indian Nations. Such a commitment, coupled
with continued efforts to strengthen tribal governments and to uphold
the government-to-government relationship, will truly make a difference
in helping us to create stable, diversified, and healthy economies in
Indian Country.
NCAI's statement focuses on our key areas of concern surrounding
the President's budget request. Of course, there are numerous other
programs and initiatives within USDA that are important to American
Indians and Alaska Natives. Attached to this testimony is a breakdown
of key programs for which we urge your support at the highest possible
funding level as the appropriations process moves forward.
rural economic development programs
The Census Bureau's Poverty in the United States for 2000 showed
that American Indians and Alaska Natives remain at the bottom of the
economic ladder--with 25.9 percent of our population falling below the
poverty line. This compares to an 11.9 percent poverty rate for all
races combined.
Congress has authorized USDA's rural development programs to assist
in building economic growth in the rural areas of the nation with the
highest percentage of low-income residents. The tribal program
allocation within the budget request is only a very small percentage of
the total funding available for Rural Community Advancement Programs,
but it will go a long way toward helping to address the needs of some
of America's poorest communities.
The President has requested level funding of $24 million for the
Rural Community Advancement Program Indian Set-Aside. Within both the
fiscal year 2002 appropriation and the fiscal year 2003 request, $4
million of this amount is earmarked for community facilities grants to
tribal colleges and $250,000 is for a grant to provide technical
assistance on rural transportation. The remainder of the funds may be
used for water and waste disposal grants and loans to tribes, as well
as for rural business opportunity grants and rural business enterprise
grants to tribes.
NCAI urges that the Subcommittee adopt language to specify further
how this tribal funding should be allocated among the various rural
development programs, as follows: $1 million for rural business
opportunity grants; $5 million for community facilities grants for
tribal colleges; $15 million for grants for drinking water and waste
disposal systems; and, $3 million for rural business enterprise grants.
Water and Wastewater Grants.--We urge Congress to authorize USDA to
provide 100 percent of project costs for the most economically
disadvantaged tribes that otherwise would not qualify for a loan.
Tribal Colleges.--Many of the nation's tribally controlled
community colleges (TCCCs) are housed in substandard facilities, where
common hazards include leaking roofs, asbestos insulation, exposed and
below-code wiring, and crumbling foundations. TCCC's are located on
federal trust land, and the upkeep of their physical plants is a
federal responsibility.
Rural Business Enterprise and Opportunity Grants.--Today,
unemployment rates in Indian Country are the highest in the nation,
sometimes topping 50 percent. The development of new and diverse
businesses in Indian Country is one cornerstone of self-sufficiency.
NCAI supports a $3 million amendment in rural business enterprise
grants to support the development of small and emerging tribal business
enterprises. These funds can be used to develop land, construct
buildings and factories, purchase equipment, provide road access and
parking areas, extend basic utilities, or provide technical assistance,
startup and operating costs, or working capital for new business. We
also urge $1 million for tribal rural business opportunity grants to
help tribes to analyze business ventures that will make use of existing
economic and human resources. Funding can also be used to train tribal
entrepreneurs and to establish business support centers.
extension services
Since fiscal year 2001, funding for extension agents on Indian
reservations has been frozen at $2 million. The Extension Indian
Reservation Program, authorized under the Food, Agriculture,
Conservation and Trade Act, has provided services to Indian Country
since 1991 on issues ranging from crop and animal production practices
to farm business management. It also has furnished extension agents,
employees of the State Cooperative Extension System, who work with
tribal advisory committees to develop educational programs in
agriculture or agriculture-related youth programs that respond to
tribal priorities. NCAI strongly supports an increase to $5 million for
fiscal year 2003 so that the program can hire additional extension
agents on large Indian reservations to help promote productive and
efficient land use.
food distribution program on indian reservations
The Food Distribution Program on Indian Reservations (FDPIR) is
administered at the federal level by the Food and Nutrition Service
(FNS) in cooperation with 98 tribal organizations and six state
agencies. Many Native Americans actually participate in the FDPIR
rather than the Food Stamp Program because of rural isolation and the
lack of easy access to food stores.
The $26.25 billion request for the Food Stamp program would provide
full funding to FDPIR, which is critical to providing nutrition
assistance to low-income households on reservations and to Native
American families residing in designated areas near reservations.
In fiscal year 2001 and fiscal year 2002, up to $3 million in FDPIR
funds were reserved to purchase bison from Native American producers
and cooperatives. Bison meat is a healthy meat product, low in
cholesterol, fat, and calories, and it is a culturally preferable food
choice for many Native Americans. NCAI strongly supports the inclusion
of a similar provision in the fiscal year 2003 Agriculture
appropriations bill.
Tribally Controlled Community Colleges
The fiscal year 2003 budget request once again freezes funding for
tribally controlled community colleges. Although tribal colleges are
relatively new to the Land Grant community, they are making impressive
strides with limited resources. More support is needed, however, for
them to achieve full participation in the Land Grant system and to
realize their full potential.
Executive Order No. 13021 on Tribal Colleges and Universities,
issued on October 19, 1996, reaffirms the important role tribal
colleges play in reservation development by directing all federal
departments and agencies to increase their support to the colleges.
According to recent testimony before the Senate Committee on Indian
Affairs by Tom Corwin, the Deputy Assistant Secretary of the Office of
Elementary and Secondary Education, President Bush intends to reaffirm
the Executive Order in the near future.
In the meantime, we urge Congress to show its support for TCCCs by
increasing funding for 1994 Institutions Equity Grants (currently
funded at $1.5 million) and the Agriculture Research Initiative
(currently funded at $1.0 million).
conclusion
Thank you for this opportunity to present written testimony
regarding the fiscal year 2003 appropriations for the Department of
Agriculture. The National Congress of American Indians calls upon
Congress to fulfill the federal government's fiduciary duty to American
Indians and Alaska Native people. This responsibility should never be
compromised or diminished because of any political agenda or budget cut
scenario. Tribes throughout the nation relinquished their lands and in
return received a trust obligation, and we ask that Congress maintain
this solemn obligation to Indian Country and continue to assist tribal
governments as we build strong, diverse, and healthy nations for our
people.
Attachment A.--The Fiscal Year 2003 Budget Request for Agriculture
Programs Benefiting Tribes
The fiscal year 2003 USDA budget request is $74.4 billion, $2.2
billion less than the current estimate of fiscal year 2002
expenditures, including $146 million for food safety-related homeland
security and an increase in nutrition program spending. Among the
decreases is funding for telecommunications access grants. In most
instances, funding for Indian-specific programs remains frozen at
current levels.
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------
Fiscal year
USDA -----------------------------------------------
2001 enacted 2002 enacted 2003 request
----------------------------------------------------------------------------------------------------------------
Rural and Economic Development:
Rural Community Advancement Program Indian Set-Aside \1\.... 24.0 24.0 24.0
Water/Sewer Grants for Alaska Rural and Native Villages..... 20.0 24.0 20.0
Enterprise Zone/Empowerment Community Grants................ 15.0 11.7 7.1
Circuit Rider Program....................................... 9.5 11.0 9.5
Distance Learning and Telemedicine Grants and Loans \2\..... 26.9 49.4 31.1
Rural Development Loan Fund Indian Set-Aside................ 2.0 1.7 1.7
Indian Tribal Land Acquisition Loans........................ 2.0 2.0 2.0
Extension Services: Tribal Colleges Extension Services 3.3 3.3 3.3
Indian Reservation Agents....................................... 2.0 2.0 2.0
Food Programs:
Food Stamps (incl. Food Distribution Program on Indian 20,100.0 22,922.0 26,250.0
Reservations) \3\..........................................
WIC......................................................... 4,000.0 4,348.0 4,751.0
Tribal Colleges:
Endowment Fund.............................................. 7.1 7.1 7.1
1994 Institutions Equity Grants............................. 1.5 1.5 1.5
Agriculture Research Initiative............................. 1.0 1.0 1.0
Alaska Native and Native Hawaiian-Serving Institutions...... 3.0 3.0 3.0
----------------------------------------------------------------------------------------------------------------
\1\ Within the fiscal year 2002 set-aside and fiscal year 2003 request for the Rural Community Advancement
Program, $4 million is provided for community facilities grants to tribal colleges. This funding may be used
for water and waste disposal grants and loans to tribes, as well as for rural business opportunity grants and
rural business enterprise grants to tribes.
\2\ In fiscal year 2002, $22 million was set aside for broadband transmission and local dial-up Internet service
in rural areas, including $12.5 million in grants. The fiscal year 2003 request cuts this level to $6.1
million. The remainder of the Distance Learning and Telemedicine funds in both fiscal year 2002 and the fiscal
year 2003 request will finance an estimated loan program level of $80 million for broadband and Internet
access and $300 million for distance learning and telemedicine.
\3\ In fiscal year 2002, up to $3 million is reserved to purchase bison for the Food Distribution Program on
Indian Reservations from Native American producers and cooperatives.
______
Prepared Statement of the National Council of Farmer Cooperatives
The National Council of Farmer Cooperatives (NCFC) appreciates very
much this opportunity to submit its views regarding the fiscal year
2003 agriculture appropriations bill, and respectfully requests this
statement be made part of the official hearing record.
overview of ncfc and farmer cooperatives
NCFC is a national trade association representing America's farmer-
owned cooperative businesses. Our members include nearly 60 national
and regional marketing, supply and credit cooperatives which, in turn,
are comprised of more than 3,000 local cooperatives whose member owners
represent a majority of our nation's nearly 2 million farmers. In
addition, NCFC's membership includes 31 separate state councils.
Farmer cooperatives are farmer owned and controlled. They exist for
the mutual benefit of their farmer members. As farmer-owned businesses,
they handle, process and market virtually every type of commodity
produced in the U.S.; manufacture and sell farm supplies; and provide
credit and related financial services for and on behalf of their member
owners. Earnings from such activities are returned to their farmer
owners on a patronage basis, thereby helping improve their income and
providing greater opportunities to capture more of the value of what
they produce beyond the farm gate. With approximately 300,000 full-time
and seasonal employees, farmer cooperatives also represent an important
source of employment in many rural communities, and contribute
significantly to the local, state and national economy.
public policy and farmer cooperatives
For these reasons, public policies and programs that serve to
encourage and enhance the ability of farmers to join together in
cooperative self-help efforts should be strongly supported and fully
funded to achieve their objectives.
Such action is necessary if farmers are to be able to:
--Improve their income from the marketplace;
--Better manage their risk;
--Capitalize on potential new market opportunities, especially value-
added; and
--Compete more effectively in a rapidly changing global economy.
recommendations for fiscal year 2003
To help achieve these important objectives, we recommend the
following for fiscal year 2003:
USDA Farmer Cooperative Programs.--Programs to help foster and
promote cooperative self-help efforts by farmers need to be revitalized
and given a high priority. Funding for such programs should be
specifically provided at not less than $6 million. Further,
consideration should be given to re-establishing a separate agency
within USDA to carry out such programs.
In addition, funding for USDA research, education and technical
assistance programs in support of cooperative self-help efforts by
farmers should be strengthened. We recommend not less than $3 million
for cooperative research agreements and not less than $3 million for
cooperative education grants. We also recommend that USDA continue to
work closely with the private sector to carry out programs to provide
farmers with greater access to the information and technical assistance
needed for organizing and operating a farmer owned cooperative
business.
B&I Loan Guarantee Program and Farmer Cooperatives.--One of the
major challenges facing farmer-owned cooperatives in helping farmers
capture more of the value of what they produce beyond the farm gate is
access to capital. Farmer cooperatives, being farmer owned and farmer
controlled, can not go to Wall Street for equity capital as easily as
other types of businesses. Instead, they generally must look to their
farmer owners as a source of capital, a particularly limited pool of
capital--especially at a time of low commodity prices and continued
economic stress, or rely on debt equity.
To help address this challenge, both the House and Senate farm
bills would expand eligibility for farmer cooperatives under USDA's
business and industry (B&I) guaranteed loan program and make other
needed improvements in the program for the benefit of farmers. With the
hope that Congress will soon complete action on the farm bill, it is
vital that this important program be fully funded to help meet the
needs of farmers and their cooperatives, and to achieve its overall
objectives. At a minimum, the program should be maintained at not less
than the level for fiscal year 2002 with recognition that additional
increases may be needed in future years.
Value-Added Market Assistance Grants.--Both the House and Senate
farm bills authorize increased funding for this important program,
which provides technical assistance and other support to help farmers
through cooperative efforts become more involved in value-added
activities to improve their income. We strongly support such increased
funding.
Export Programs.--We also believe it important to maintain and
strengthen funding for USDA's export programs, and we endorse the
recommendations of the Coalition to Promote U.S. Agricultural Exports
of which NCFC is a member, with regard to the Market Access Program
(MAP) and Cooperator Program (FMD). We also urge continued funding for
other related USDA export programs, including the Export Enhancement
Program (EEP), Dairy Export Incentive Program (DEIP), GSM Export Credit
Guarantee Program, and Public Law 480 Programs. These programs
encourage U.S. agriculture exports, meet humanitarian needs, counter
subsidized foreign competition, protect American jobs, and strengthen
farm income.
Agricultural Research.--Another important area of emphasis when it
comes to enhancing the global competitiveness of farmer cooperatives
and American agriculture is research. NCFC endorses the recommendations
of the National Coalition for Food and Agricultural Research of which
NCFC is a member, which has set an objective of doubling Federal
funding over the next 5 years.
Conservation Programs.--Water quality issues are presenting
increasing expectations and regulatory requirements for farmers and
ranchers, particularly those with animal feeding operations. USDA's
Natural Resources Conservation Service (NRCS) is the lead technical
agency within USDA offering ``on-farm'' technical and financial
assistance, principally through EQIP and CTA programs. We strongly
support full funding for both programs, which provide farmers and
ranchers with needed assistance to meet important environmental goals
through adoption of best management practices. We also support funding
of incentive payments for technical assistance that can be carried out
in partnership with the private sector, including farmer-owned
cooperatives, as provided in the House-passed farm bill. Farmer
cooperatives have invested heavily in developing the technical skills
of their employees to help their farmer owners address environmental
concerns. It is estimated that 90 percent of all members of the
Certified Crop Advisor (CCA) program, for example, are employed by the
private sector and majority of those are employed by farmer
cooperatives.
Meat Inspection/User Fees.--We continue to be opposed to user fees
relating to Food Safety and Inspection Service (FSIS) for meat
inspection. Such inspection programs provide important public benefits
relating to food safety and quality and should continue to be publicly
funded.
conclusion
Mr. Chairman, on behalf of NCFC and its members, we want to again
thank you for the opportunity to share our views with regard to the
fiscal year 2003 agriculture appropriations bill. We look forward to
working with you.
______
Prepared Statement of the National Dry Bean Council
Dry & Snap beans (Phaseolus vulgaris L.) are versatile short
season, high value food crops that niche well into shorter production
seasons of the northern and intermountain states, providing vital
alternatives to growers where crop options are limited. Beans offer the
consumer a healthy, tasty and inexpensive food choice as either low-
fat, low-calorie vitamin/mineral-rich green bean pods or as a protein-
rich source of complex carbohydrates and fiber in a variety of canned
and dry bean products differing in color, size, shape, and flavor.
Clinical studies have documented that the soluble fiber or pectin
content of dry bean seed has potent effects in the prevention and
treatment of chronic medical conditions such as cardiovascular disease,
diabetes mellitus, obesity, hypertension, cancer and diseases of the
digestive tract. Beans are currently endorsed by the American Heart
Association, the American Cancer Society, and the American Diabetes
Association.
Processing.--The canning and freezing industry for both seed and
pod types is diverse and located across the country offering employment
outside the 20 major production states. Over 90 percent of the navy
bean crop is processed as canned baked beans, while only 20 percent of
the pinto bean market class is processed as a canned food. The same
processing industry which cans over half the dry bean crop as beans in
either clear brine, sauce with pork, or chili has seen an increase in
production in the last 10 years of 10 million cases. This volume
represents an increase of $160 million to a current value in excess of
$900 million.
Production.--Phaseolus dry edible beans are planted on
approximately 1.9 million acres (1.1-2.6) in the U.S. Production
fluctuates around 22 million hundred weight (cwt) annually, ranging
from 15 million cwt in 1983 to over 32 million cwt in 1990, 1991 and
1999. On-farm value of this crop ranges from $350 to $700 million,
depending on the season and price. The major production states ranked
in order of acreage are: ND, MI, NE, MN, CO, CA, ID, WY, WA, NY, KS,
and MT. Ten dry bean commercial classes are produced in the U.S. and
these classes are differentiated by color, size and shape of the bean.
In addition to production of Phaseolus dry beans, green bean (snap
bean) production occurs in several regions of the U.S. (approximately
220,000 acres), with an estimated value of $110 M annually. States
leading in snap bean production for processing are WI, OR, IL, MI, and
NY. Snap beans for fresh market are grown primarily in FL, with smaller
acreages in NJ, AR, and TN. Snap beans for fresh market are grown on
approximately 80,000 acres nationwide with an additional value of $80
million annually.
Utilization and Exportation.--Approximately 60 percent of the total
U.S. dry bean production is consumed nationally. Per capita dry bean
consumption has increased from 5.7 to 7.8 pounds since 1984. This
represents a 36 percent increase that is largely due to the recognition
of the food and health value of beans. A large share of the U.S. dry
bean production is now targeted at export markets. Exports peaked in
the early 1980's at over 12 million cwt. Currently, 40 percent of the
U.S. production is exported with certain commercial classes grown
exclusively for export. Cultural preferences in certain export markets
for specific commercial classes of dry bean allows for diversification
of U.S. dry bean agricultural production. Bean exports have played an
important role in reducing the balance of payment deficit the U.S.
suffers in world trade. Bean exports are becoming increasingly
important because they are an indispensable protein source in Latin
America and many developing countries, particularly those in East
Africa. Their value in famine relief in these countries is vital. The
array of seed types currently grown in the U.S. makes beans an
important choice to meet the energy and protein needs of the estimated
21 million people at risk of death from starvation and disease in
Central Africa.
These four programs represent the only Federal effort on bean
research and the only projects with a national scope for these crops.
Currently four scientists carry out this effort. The national
leadership extended by ARS scientists in areas of pathology, germplasm
maintenance and enhancement and food quality genetics has strengthened
the entire bean industry nationally. The National Dry Bean Council
(NDBC) truly believes that a continued and strong investment by the
Federal Government in research and subsequent development and
distribution of new technologies provides a return to the consumer many
times the cost of the research investment.
vegetable and forage crop production research unit, prosser, washington
The ARS Bean Project at Prosser, Washington has been long standing
with a reputation of excellence for research conducted on the
pathogenic variability of bean common mosaic virus (BCMV), the
production problems caused by the soil root-rot complex of pathogens,
and the introgression of diverse resistance genes into snap and dry
bean germplasm. The project has made significant contributions to bean
development by the release of more than 10 snap bean lines and 18 dry
bean lines in six distinct market classes. A number of the dry bean
lines have become successful dry bean varieties in the West and
Intermountain states (CO, ID, MT, OR, WA, and WY) and the upper-Midwest
(ND). The dry bean varieties developed by ARS, Prosser, WA have
generated about $500 million in income to farmers in the Pacific NW
over the past 25 years. Over 90 percent of the foundation and certified
bean seed (dry and garden) is produced in California, Washington and
Idaho. The ARS bean project at Prosser, WA has saved the Western bean
seed industry considerable sums of money that could have been lost to
disease epidemics.
The ARS Prosser, WA bean project is currently under the leadership
of Dr. Phillip Miklas who, in addition to introgressing genes from
diverse germplasm, is conducting basic genetic studies on the
resistance to different strains of BCMV, common bacterial blight, root
rot, and white mold. Worldwide, Dr. Miklas is considered an authority
on the development and application of DNA marker-assisted selection
technologies for the improvement of bean. Dr. Miklas has developed
effective cooperative research efforts with ARS and SAES scientists at
several locations in the U.S. and Puerto, Rico, and with commercial
plant breeders in CA, ID, FL, and WI. Over the years the facilities at
Prosser, Washington have evolved to a point where there is an excellent
infrastructure in which dry and snap bean disease and germplasm
enhancement research is conducted productively, efficiently, and has
garnered a wide customer base. A rapport has been established with this
customer base that is extremely supportive of ARS research efforts. In
addition, nurseries have been established that facilitate long term
research and breeding for resistance to white mold, curly top virus,
and the pathogen complex of root rot.
The NDBC calls on Congress and ARS to maintain bean research at
Prosser, WA and increase funding by $220,000 to enable ARS-Prosser to
better meet the needs of the bean seed industry located in the West,
and to better address chronic disease and environmental stress problems
that face bean production nationwide. For example, ARS Prosser is
currently addressing the new virus disease complex of snap bean in the
Great Lakes region (IL, IN, MI, OH, PA, NY, and WI) and has recently
developed germplasm with resistance to an emerging fungal disease
problem affecting dry bean production in North Dakota and Minnesota.
The additional funds will also enable maintenance and enhancement of
several important long-term nurseries that have been established at or
near Prosser to conduct bean pathology research. The project is
currently undergoing a downsizing of field research activities and
losing technical help due to insufficient funds.
sugar beet & bean research unit, east lansing, michigan
Dr. G.L. Hosfield, the incumbent of the ARS Food Quality Position
at East Lansing, Michigan, is the ARS lead scientist to improve the
availability of nutrients and consumer acceptance of dry beans as a
food source. Dr. Hosfield is expected to provide new and fundamental
knowledge that increases our understanding of the current food-value
limitations in dry bean relevant to indigestibility of seed proteins
and starch and their interactions with seed coat flavonoids, darkening
of seed coats in storage, hardening of seeds, prolonged cooking time
(due to a hard-to-cook phenomenon that restricts cell wall breakdown
during cooking), and flatulence caused by indigestible starch, protein,
hemicellulose, raffinose family oligosaccharides. Knowledge of the
factors that define food quality in bean will permit the inherent
complexity of food quality to be dissected into a number of component
characters that can individually be measured, selected, and altered via
genetic technology. The resulting extension of new, and/or the
alteration of existing fundamental concepts and techniques impacts
significantly the food-quality breeding of other food-legume crops. The
incumbent releases new germplasm with improved food quality,
architecture, horticultural characteristics and multiple and durable
disease resistance to breeders and industry along with methodologies
that enable breeders to efficiently screen and transfer food-quality
genes into commercial cultivars. The improvement of food quality in
bean contributes positively and significantly to the highest national
research priorities established by the National Research Council and
the President's initiatives. Improved food quality of dry bean promotes
and optimizes human health and well-being through better nutrition,
increased productivity, maximized use of agricultural products for
domestic and export markets, decreased vulnerability of beans to
adverse weather and disease stresses, and the transfer of technology to
users. The research contributes positively to the U.S. trade balance.
This program is highly productive. Dr. Hosfield is internationally
recognized for his research on the use of genetic technologies to
improve the biological utilization and consumer quality of dry bean and
the development of new knowledge and methodologies to select dry bean
germplasm with improved food quality. Procedures developed by Dr.
Hosfield for testing bean quality have been adopted in bean quality
laboratories in other countries. The incumbent receives numerous calls
for advice and is consulted regularly by industry, other researchers,
and the general public on food quality issues. Frequently, those
consultations impact across food legume crop species. Dr. Hosfield
cooperates effectively with other USDA, ARS scientists, SAES
researchers in at least seven states, commercial plant breeders, and
industry personnel. He has invented and co-invented numerous bean
germplasms and varieties in several market classes.
The NDBC calls on Congress and ARS to increase funding by $125,000
for this critical and productive food quality improvement research
program at East Lansing, MI to allow the project leader to work more
efficiently in the germplasm enhancement area. There is a critical need
to screen germplasm from a wider base of national and international
programs and expand research efforts into the study of the relationship
between antioxidant potential and the health related benefits of these
compounds in beans, the effect of bean diets on decreasing the
incidence of some forms of cancer, and the hard seed problem that
limits consumer acceptance and reduces the availability of nutrients to
consumers.
vegetable laboratory, beltsville, maryland
The ARS Bean Project at Beltsville, Maryland has been long standing
with a presence of excellence under the legacy of Dr. J.R. Stavely, who
devoted 100 percent of his research effort to the study of fungal and
viral pathogens attacking beans. Historically, Dr. Stavely studied the
foliar fungal pathogen causing rust disease in dry and snap beans. He
developed important technologies for introgressing rust resistant genes
into adapted and useful germplasm. He is also studying the new viral
disease, Bean Golden Mosaic Virus, introduced in 1993 in South Florida.
This disease has the potential to ``wipe-out'' the snap bean industry
in Florida and cause economic losses in other snap bean production
areas in the Eastern seaboard. Under the leadership of Dr. Stavely,
this highly productive ARS project released 43 processing and 24 fresh
market snap beans and 41 dry bean germplasm lines in three market
classes: 9 great northern, 20 pinto, and 12 navy. Research has focused
on the introgression and pyramiding of rust resistance genes into both
snap and dry beans as the most effective control of the variable rust
pathogen.
This long-term germplasm enhancement project involves
identification of novel sources of resistance present in the USDA Plant
Introduction collection, the genetic characterization of these new
disease resistance genes, and the incorporation of these genes, both
individually and as groups, into snap bean and several dry bean market
classes. In addition, the incumbent monitors the pathogenic variability
of the bean rust pathogen and uses this information to identify
strategies that result in durable and sustainable bean production. The
project also aims to conduct basic plant pathological studies on the
epidemiology and genetics of the rust fungus.
The current project leader Dr. M.A. Pastor-Corrales cooperates
effectively with other USDA scientists, SAES researchers in at least
nine states, and commercial plant breeders. This position serves the
national needs for bean research in the area of fungal pathogens
attacking beans and provides leadership to SAES and industry in both
dry and snap bean breeding efforts.
The NDBC calls on Congress and ARS to increase funding by $90,000
to maintain the program in bean rust pathology germplasm enhancement
research at Beltsville, MD and expand the program into anthracnose and
bean golden yellow mosaic disease breeding and pathology. Increased
funding would allow this project to perform at optimum efficiency to
develop improved rust, anthracnose, and bean golden yellow mosaic-
resistant germplasm lines. An increased emphasis on the genetics of
pathogen virulence will offer insights on the development of strategies
needed to obtain stable rust and broad-based genetic resistance to
variable fungal and viral pathogens.
tropical agriculuture research station, mayaguez, puerto rico
Currently, Dr. J. Smith is the Bean Germplasm scientist at the
Tropical Agriculture Research Station (TARS), in Mayaguez, PR. Dr.
Smith is working to increase the genetic diversity of U.S. bean
germplasm, domesticate unadapted tropical germplasm, and develop
multiple disease-resistant beans for tropical and temperate regions.
Through the years, the ARS bean position in Puerto Rico has played a
vital part in supplying many of the bean breeding programs in the U.S.
with improved germplasm. Strategically, the location allows evaluation
of tropically adapted lines that would not be possible in northern
temperate climates where the bean lines would not flower. In a given
year, three field seasons can be conducted at each of three locations
on the island with distinct environmental stresses and disease problems
which serves to expedite germplasm evaluation and development. Thus,
the tropical location of Puerto Rico is ideal for germplasm enhancement
work, and is very functional as a bridge between tropical and temperate
regions.
Tropical lines developed by TARS, with adaptation in Michigan, have
been used directly by the breeding program at MSU. The variety
Mayflower has a TARS line (2W-33-2) as a parent. Mayflower is a popular
high yielding navy bean in Michigan that is credited with contributing
to the 25 percent increase in commercial bean yields in the state over
the last 5 years. Currently over 40 percent of the navy beans produced
in the U.S. are marketed overseas, mainly in the UK. British Food
Health Legislation now requires that information be made available on
the pesticides used in bean production. Breeding for disease resistance
using new sources of resistance is vital to help reduce the use of
chemicals in our bean production. The health of the industry is
dependent on maintaining and expanding these overseas markets. Black
beans are becoming an increasingly important national and export
commodity, so disease resistance and productivity is vital to maintain
a competitive edge in world markets, where 95 percent of the crop is
exported. In a white mold trial, a black seeded line from TARS topped
the trial and outyielded the check variety by over 30 percent under
disease pressure. This is the kind of bean germplasm that is
desperately needed by our industry.
Minor market classes like Cranberry beans are a vital part of the
bean industry in the U.S. Work at TARS in recent years has been
directed at the improvement of this market class since commercial
companies cannot direct resources to these minor market classes. All
the cranberry beans produced in the U.S. are exported. The devastation
of the winter snap bean crop in Florida was caused by the presence of a
recently imported viral disease, bean golden mosaic virus, from the
Caribbean. Resistance germplasm at TARS was made available to local
breeders to assist in breeding for resistance to this devastating
disease in Florida.
The NDBC calls on Congress and ARS to increase funding by $65,000
to maintain the Mayaguez program for bean germplasm enhancement and to
strengthen the program's capacity for molecular marker development and
basic agronomy support. Increased funding would allow the project to
refill an agronomist position, recently vacated due to insufficient
funding, and to fill a technician position in molecular biology. This
would enable the expansion of germplasm screening and evaluation, the
``pyramiding'' of multiple resistance genes from diverse sources, and a
more efficient integration of resistance genes to alleviate biotic and
abiotic stresses.
funding needs for the future
The National Dry Bean Council (NDBC) is urging Congress to approve
appropriations in fiscal year 2003 for the USDA Agricultural Research
Service (ARS) Plant Science Program that increases funding from fiscal
year 2002 levels to ensure that each existing bean CRIS (Current
Research Information System) is funded at $350,000. This appropriation
will enable ARS to provide the necessary support to existing programs.
Specifically, the NDBC is recommending that Congress address the
following priority needs in bean research.
For existing ARS bean programs \1\ at Prosser, WA (add $220,000
\2\); East Lansing, MI (add $125,000); Beltsville, MD (add $90,000);
and Mayaguez, PR (add $65,000), increase funding to approximately
$350,000 each. This additional funding of $500,000 will allow the
incumbents to maintain critical core programs and to discover new
knowledge about the biology and genetics of abiotic and biotic stresses
that limit bean yields; expand studies on antioxidants, folate, and
other nutritional compounds in beans that improve human health; address
emerging pathogen problems; and develop new export markets by adapting
exotic bean germplasm for U.S. production. The new knowledge base and
farming technologies made possible by the increased base funding will
facilitate sustainable bean production to meet export and local
consumption demands and help promote and optimize human health and
well-being by solving problems impacting digestibility, nutrition, and
processor and consumer acceptance of beans. The new cultivars developed
with improved stress resistance will promote a cleaner environment and
safer food through reduced use of agricultural chemicals and increased
water use efficiency.
---------------------------------------------------------------------------
\1\ Note: it has been more than 10 years since any ARS-Bean Project
has attained an additional influx of funds for research and germplasm
development.
\2\ Also please note that the Prosser, WA bean research project is
partnered with the equally important and financially strapped edible
legume pathology project that addresses bean, chickpea, lentil and pea
problems. To keep bean research viable at Prosser both projects of the
single CRIS require funding of $110,000 each; thus, the reason for
requesting $220,000 for this location.
---------------------------------------------------------------------------
______
Prepared Statement of the National Organization for Rare Disorders,
Inc.
Mr. Chairman and members of the Senate Appropriations Subcommittee
on Agriculture, Rural Development, Food and Drug Administration and
Related Agencies, the National Organization for Rare Disorders (NORD)
wishes to express its views regarding appropriations for the Orphan
Products Research Grant Program administered by the Office of Orphan
Product Development (OOPD) at the Food and Drug Administration (FDA).
NORD is a federation of approximately 140 voluntary health
organizations and over 70,000 individual patients, healthcare providers
and clinical researchers dedicated to helping the 25 million people in
the United States suffering with rare ``orphan'' diseases. An orphan
disease is defined by statute as any disease or condition impacting
fewer than 200,000 Americans (The Orphan Drug Act of 1983). It makes no
difference whether you are male or female, rich or poor, young or old,
white, African-American, Latino, Asian or American Indian. These
diseases affect everyone.
In 1989 the HHS National Commission on Orphan Diseases estimated
that only 30 percent of the 25 million patients suffering with rare
diseases receive a diagnosis in 3 to 5 years after the onset of
symptoms. That works out to about 7.5 million patients who are shuffled
from specialist to specialist, year after year. Fifteen percent, or 3.7
million people, wait 7 years or more. And even after diagnosis, they
can only hope that someone, somewhere, will conduct research to develop
a treatment for their disease.
Recognizing that the rare disease community has not received
sufficient funding, Senators Edward Kennedy and Orrin Hatch introduced
the Rare Diseases Act of 2001, S. 1379, on August 3, 2001. This
important legislation would provide additional funding for the Orphan
Product Research Grant Program at the FDA in the amount of $25 million.
On March 20, 2002, Mr. Mark Foley, cosponsored by Representatives
Henry Waxman, John Shimkus, Sherrod Brown, Marge Roukema, Bobby Rush,
James Greenwood, John Dingell, Peter King, James McGovern, Steve Horn
and Christopher Smith, introduced the Rare Diseases Orphan Product
Development Act of 2002, H.R. 4014, which would increase funding to $25
million for the Food and Drug Administration's Orphan Product Research
Grants Program.
Note: The Rare Diseases Act of 2002, H.R. 4013, was also introduced
on March 20, 2002, by Mr. John Shimkus, and cosponsored by the same
Representatives above, which would provide for the statutory
authorization for the existing Office of Rare Diseases (ORD) at the
National Institutes of Health (NIH) in order to enhance the national
investment in the development of diagnostics and treatments for
patients with rare disorders. Additional funding for the office will
augment NIH Institutes' research for neglected rare diseases in order
to take advantage of emerging research opportunities.
On behalf of the 25 million Americans suffering with the over 6,000
known rare ``orphan'' diseases and the 119 organizations currently
advocating for increased funding for this worthy program, we
respectfully request that this Subcommittee support H.R. 4014 and
appropriate the necessary funding authorized by this legislation. Just
one dollar for each and every person suffering with a rare disease
appropriated for the FDA'S Orphan Products Research Grant Program
represents a minimal investment by the Federal Government in the
development of lifesaving treatments in which the private sector has no
interest. But the return on investment could be phenomenal if only a
few new orphan drugs or devices are developed to reduce the burden of
disease and death for thousands of patients with rare disorders.
Appropriating just one dollar for each rare disease patient in
America, rather than the current funding level, is a win-win
proposition. Patients win when their symptoms are alleviated or cured.
Families win when their loved ones no longer suffer. Society, as a
whole, wins when patients are able to return to school or work to
become productive tax-paying citizens. Pharmaceutical and biotechnology
companies win when they are able to market new therapeutic products
when part of the development costs are subsidized. The scientific
community wins when the knowledge it gains can be applied to more
prevalent diseases. And, finally, the government wins when the drain on
healthcare dollars is minimized.
fda orphan products research grant program
This Subcommittee created the research grant program in fiscal year
1983 to provide funding for pivotal clinical trials on new orphan
drugs, medical devices, and medical foods for rare diseases. The funds
have been made available to academic scientists and small companies. By
definition, ``orphan products'' are treatments for rare conditions that
have small potential markets and thus are not attractive to the
commercial sector. Such treatments were not being developed for
``orphan'' diseases by the private sector until the Orphan Drug Act was
enacted in 1983.
Since then, the FDA has approved 227 orphan drugs for marketing,
and more than 800 additional drugs are in the research pipeline. Of
those products approved for marketing, 27 (23 drugs and 4 medical
devices) were developed with funding from the orphan product grants.
These 27 treatments would not be on the American market today saving
the lives of thousands of Americans, enabling them to return to school
or work, if this Subcommittee had not created this small but critically
important pool of research funds.
Most of FDA's Orphan Products Research Grants support small
clinical trials at academic institutions throughout the nation to
develop the preliminary evidence that is necessary to attract
commercial sponsors. It is the quintessential model for a successful
government/industry partnership. There is no more appropriate program
deserving of Federal support because it fills a major gap between
academic research and the private sector, and it creates lifesaving
products that are needed throughout the world.
For example, children with Severe Combined Immune Deficiency
(``Bubble Boy Disease'') no longer have to live in a plastic bubble
because now their immune systems can fight off germs, thanks to an
orphan drug developed with these grant funds. Children with urea cycle
disorders no longer slip into a coma and die because an orphan drug
enables their bodies to eliminate toxic levels of ammonia. Babies born
without ribs no longer suffocate in infancy because an artificial rib
(orphan medical device) is being developed now with funds from the
Orphan Products Research Grant Program that allows the children's lungs
to expand and breathe. Cystic fibrosis, Crohn's disease, and multiple
sclerosis drugs are on the market today only because these grants
supported some of their research.
Unfortunately, there are many diseases and conditions that are
simply too rare to attract private investment because the commercial
sector is not interested in developing treatments for small markets.
The investment necessary for research and development of new drugs and
devices is too large in comparison to the size of the potential market
for a rare disease. Case in point, there are only about 125 patients in
the United States suffering with an orphan disease called
fibrodysplasia ossificans progressiva (FOP), only 15,000 with
Huntington's disease, and only 30,000 with cystic fibrosis. Many of the
genetic diseases each impact no more than 40,000 Americans, whereas
drugs for cancer, arthritis and hypertension each affect many millions
of Americans, representing several billion dollars in potential sales
each year.
Given the fact that the Orphan Products Research Grant Program is
attracting greater attention, more researchers are eager to participate
each year. Therefore, it is very unfortunate that the annual
appropriation for this program cannot begin to cover all of the
meritorious grant requests for promising research projects. About 100
grant applications are received annually, but many scientifically
important applications are never funded simply because the
appropriation is too small to meet the needs of the program. In fact,
the appropriation now is less than it was in fiscal year 1995, and has
remained between $10 to $12 million for many years.
Mr. Chairman, if the government does not fund this research, who
will? The private sector is simply not interested in rare diseases. If
this Subcommittee does not meet the need of this unique sector of
scientific research, people with rare diseases will be further
victimized by the injustice of the supply and demand marketplace. For
these diseases, no company wants to supply a treatment when the market
demand is small.
conclusion
And so, on behalf of the medically disenfranchised Americans and
their families, we respectfully request that the members of this
Subcommittee appropriate no less than $25 million to the FDA Orphan
Products Research Grant Program for fiscal year 2002. We are relying on
the members of this Subcommittee to fill the void between government
and the private sector, and propel these treatments forward from
academic laboratories to our local pharmacies. Ultimately, your
compassion and insight will put new orphan drugs and devices into the
waiting hands of critically ill patients. If you don't provide adequate
resources for the Orphan Products Research Grant Program, unfortunately
no one else will.
For additional information about the Rare Diseases Act of 2001, S.
1379, please contact Diane E. Dorman, Vice President for Public Policy,
(202) 496-1296 or via e-mail at [email protected]. Thank you.
Attachment I.--Supporting Organizations
Alph-1 Association, Minneapolis, MN
Alpha-1 Foundation, Miami, FL
Alpha1VOICE, Evansville, IN
Alstrom Syndrome International, Mount Desert, ME
American Brain Tumor Association, Des Plaines, IL
American Hemochromatosis Society, Lake Mary, FL
American Laryngeal Papilloma Foundation, Spring Hill, FL
American Syringomyelia Alliance Project (ASAP), Longview, TX
Angel Flight America, Virginia Beach, VA
Angel Flight Samaritans, Fairfax, VA
Angel Flight for Veterans, Fairfax, VA
ARPKD/CHF Alliance (Autosomal Recessive Polycystic Kidney Disease &
Congenital Hepatic Fibrosis), Kirkwood, PA
Association of Glycogen Storage Disease (U.S.), Durant IA
Barth Syndrome Foundation, Perry, FL
Batten Disease Support and Research Association, Reynoldsburg, OH
Biotechnology Industry Organization (BIO), Washington, DC
Blepharophimosis, Ptosis, Epicanthus Inversus (BPEI) Family
Network, Pullman, WA
Cardio-Facio-Cutaneous Family Network, Vestal, NY
CARES (Congenital Adrenal Hyperplasia Research, Education &
Support) Foundation, Short Hills, NJ
Carol Ann Foundation, The, Tucson, AZ
Celgene Corporation, Chevy Chase, MD
Children's Angel Flight, Virginia Beach, VA
Children's Brittle Bone Foundation, Pleasant Prairie, WI
CDG Family Network Foundation, The, Shannon, IL
Chromosome 9p- Network, Las Vegas, NV
Chronic Granulomatous Disease Family Network Foundation
Coalition of Advocates for Research on the Eye (CARE), Sharon, MA
Coalition of Heritable Disorders of Connective Tissue, Sharon, MA
Cornelia de Lange Syndrome (CdLS) Foundation, Avon, CT
Corticobasal Ganglionic Degeneration (CBDG) Support Group, Haslett,
MI
Cystinosis Foundation, Oakland, CA
Cystinosis Research Network, Burlington, MA
Dubowitz Syndrome Information & Parent Support, Visalia, CA
Dystonia Medical Research Foundation, Chicago, IL
Ehlers-Danlos National Foundation, Los Angeles, CA
Fabry Support & Information Group, Concordia, MO
Families of Spinal Muscular Atrophy (SMA), Libertyville, IL
FFF Enterprises, Temecula, CA
FOD (Fatty Oxidation Disorder) Family Support Group, Greensboro, NC
FORCE: Facing Our Risk of Cancer Empowered, Coral Springs, FL
Foundation for Ichthyosis & Related Skin Types, Lansdale, PA
Genetic Alliance, Washington, DC
Genetics Information and Patient Services, Phoenix, AZ
Hallervorden-Spatz Syndrome Association, El Cajon, CA
Hermansky-Pudlak Syndrome (HPS), Oyster Bay, NY
Hydrocephalus Association, San Francisco, CA
Immune Deficiency Foundation, Towson, MD NORD, April 2002
Incontinentia Pigmenti International Foundation, New York, NY
International Children's Anophthalmia Network (ICAN), Philadelphia,
PA
International Joseph Disease Foundation, Livermore, CA
International Morquio Support Group, Tucson, AZ
International Rett Syndome Association, Clinton, MD
International Society for Mannosidosis & Related Diseases,
Baltimore, MD
Interstitial Cystitis Association, Rockville, MD
Joubert Syndrome Foundation, Baltimore, MD
Kennedy's Disease Association, Simi Valley, CA
Kids With Heart National Association for Children's Heart
Disorders, Green Bay, WI
Klinefelter Syndrome and Associates, Roseville, CA
LAM (Lymphangioleiomyomatosis) Foundation, Cincinnati, OH
Les Turner ALS Foundation, Skokie, IL
Lewy Body Disease Association, The, Brooklyn, NY
Lowe Syndrome Association, West Lafayette, IN
MAGIC Foundation, The, Oak Park, IL
Mannosidosis and Related Diseases, The International Society for,
Baltimore, MD
Medical Journeys Network, Alexandria, VA
Mercy Medical Airlift, Virginia Beach, VA
Mastocytosis Society, Spanish Fork, UT
National Coalition for PKU & Allied Disorders, Mansfield, MA
National Foundation for Ectodermal Dysplasias, Mascoutah, IL
National Hemophilia Foundation, New York, NY
National Incontinentia Pigmenti Foundation, New York, NY
National Marfan Foundation, Port Washington, NY
National MPS (Mucopolysaccharidoses/Mucolipidoses) Society,
Downington, PA
National Multiple Sclerosis Society, Washington, DC
National Organization for Rare Disorders, New Fairfield, CT
National Patient Travel Center, Virginia Beach, VA
National Society of Genetic Counselors, Wallingford, PA
National Spasmodic Torticollis Association, Fountain Valley, CA
National Tay-Sachs & Allied Diseases Association, Boston, MA
National Urea Cycle Disorders Foundation, La Canada, CA
Noonan Syndrome Support Group, Upperco, MD
Organic Acidemia Association, Plymouth, MN
Orphan Medical, Minnetonka, MN
Osteogenesis Imperfecta Child Advocacy (OICA), Woodville, WI
Osteogenesis Imperfecta Foundation, Gaithersburg, MD
Osteogenesis Imperfecta Parents' Support Group, San Diego, CA
Parents of Galactosemic Children, Sparks, NV
Pediatric/Adolescent Gastroesophaegeal Reflux Association (PAGER),
Germantown, MD
Pediatric Neurotransmitter Disease (PND) Association, Plainview, NY
Periodic Paralysis Association, Monrovia, CA
Peutz-Jeghers Syndrome Online Support Group Pierre Robin Network,
Fowler, IL
Polyarteritis Nodosa Support Group (PNSG), Pittsburgh, PA
Polychondritis Educational Society, Somerton, AZ
PRISMS (Parents and Researchers Interested in Smith-Magenis
Syndrome), Francestown, NH
Project DOCC--Delivery of Chronic Care, Oyster Bay Cove, NY
PXE (Pseudoxanthoma Elasticum) International, Sharon, MA
Reflex Sympathetic Dystrophy Syndrome Association, Milford, CT
Restless Legs Syndrome Foundation, Rochester, MN
Rupertus Foundation to Cure ALS, Virginia
Sarcoid Networking Association, Sumner, WA
Scleroderma Foundation, Byfield, MA
Sickle Cell Disease Association of America, Culver City, CA
Sigma Tau Pharmaceuticals, Gaithersburg, MD
Society for Progressive Supranuclear Palsy, Baltimore, MD
Sotos Syndrome Support Association, Pueblo, CO
Stickler Involved People, Augusta, KS
Sturge-Weber Foundation, Mt. Freedom, NJ
Tourette Syndrome Association, Bayside, NY
Transkaryotic Therapies, Inc., Cambridge, MA
Trigeminal Neuralgia Association, Barnegat Light, NJ
Trimethylaminuria Support Group, New York, NY
Tuberous Sclerosis Alliance, Silver Spring, MD
Tyler for Life Foundation, Winston, GA
Von Hipple-Lindau Family Alliance, Brookline, MA
United Mitochondrial Disease Foundation, Monroeville, PA
Wegener's Granulomatosis Association, Kansas City, MO
Wilson's Disease Association, Brookfield, CT
Zeroderma Pigmentosum Society, Poughkeepsie, NY
XLH (X-linked Hypophosphatemic Rickets) Network, Bowie, MD
Attachment II.--Department of Health and Human Services Office of
Inspector General
In a Department of Health and Human Services report entitled ``The
Orphan Drug Act--Implementation and Impact (May, 2001, OEI-09-00-
00380), the Office of Inspector General concluded that:
The Orphan Drug Act's incentives and the Office of Orphan Products
Development's clinical superiority criteria motivate drug companies to
develop orphan products. Since Congress passed the Orphan Drug Act of
1983, the Food and Drug Administration has awarded more than 1,000
designations and approved more than 200 products.
Advocates report that orphan products are usually accessible to
patients. Orphan products are usually accessible, although they can be
costly and in limited supply. Insurance typically pays for the
treatments, and companies offer patient assistance programs to help
patients obtain their products.
The Office of Orphan Products Development provides a valuable
service to both companies and patients. Companies report an excellent
relationship with this office, which awards orphan product designations
and disseminates public information about orphan products.
Orphan products meet the legal prevalence limit, and most fall well
below the threshold of 200,000 patients. Average patient population has
climbed since 1983 but remains well below the legal limit.''
Attachment III.--Grant Supported Products with Marketing Approval
Product: 4-methylpyrazole (trade name Antizole); Fomepizole
Indication: Ethylene Glycol and Methanol Poisoning
Approval Date: 12/04/1997
Institution: Orphan Medical, Inc.
Investigator: Dr. Dayton Reardan
Product: Actimmune
Indication: Osteopetrosis
Approval Date: 02/11/2000
Institution: Medical University of South Carolina
Investigator: Dr. Lester Key
Product: Auditory Brainstem Implant
Indication: Bilateral deafness
Approval Date: 10/24/00
Institution: Cochlear Corp.
Investigator: Dr. Steven J. Staller
Product: Anti-TNF (cA2) (trade name Remicade)
Indication: Severe Crohns Disease
Approval Date: 08/24/1998
Institution: Centocor, Inc.
Investigator: Dr. Richard McCloskey
Product: Baclofen Intrathecal (trade name Lioresal)
Indication: Severe Spasticity
Approval Date: 06/25/1992
Institution: Rush-Presbyterian-St. Lukes' Medical Center
Investigator: Dr. Richard Penn
Product: Betaine (trade name Cystadane)
Indication: Homocystinuria
Approval Date: 10/20/1996
Institution: University of Virginia
Investigator: Dr. William Wilson
Product: Busulfan IV
Indication: Bone Marrow Ablation
Approval Date: 02/04/1999
Institution: UT MD Anderson Cancer Center
Investigator: Dr. Borge Andersson
Product: Cladribine (trade name Leustatin)
Indication: Mycosis fungoides and hairy cell leukemia
Approval Date: 03/01/1993
Institution: Scripps Research Institute
Investigator: Dr. Ernest Beutler
Product: Clonidine (trade name Duraclon)
Indication: Intractable pain in cancer patients
Approval Date: 10/02/1996 Institution: Wake Forest University
Investigator: Dr. James Eisenach
Product: CroFab
Indication: Crotalid snake bites
Approval Date: 10/02/00
Institution: Therapeutic Antibodies, Inc.
Investigator: Dr. Richard C. Dart
Product: Cysteamine (trade name Cystagon)
Indication: Nephropathic Cystinosis
Approval Date: 08/15/1994
Institution: University of California, San Diego
Investigator: Dr. Jerry Schneider
Product: Ganciclovir Intravitreal (trade name Vitrasert)
Indication: CMV Retinitis
Approval Date: 03/04/1996
Institution: University of Kentucky Research Foundation
Investigator: Dr. Thomas Smith
Product: Glatiramer acetate (trade name Copaxone)
Indication: Relapsing remitting multiple sclerosis
Approval Date: 12/20/1996
Institution: Lemmon Company
Investigator: Dr. Yafith Stark
Product: Histrelin Acetate (trade name Supprelin)
Indication: Central precocious puberty
Approval Date: 12/24/1991
Institution: Massachusetts General Hospital
Investigator: Dr. Paul Boepple
Product: In-Exsufflator (trade name Cofflator)
Indication: Assist Ventilator dependent patients
Approval Date: 02/01/1993
Institution: University of Medicine and Dentistry of New Jersey
Investigator: Dr. John Bach
Product: Iobenguane sulfate I-131
Indication: Localization of Pheochromocytoma
Approval Date: 03/24/1994
Institution: University of Michigan
Investigator: Dr. Brahm Shapiro
Product: Levocarnitine (trade name Carnitor)
Indication: Primary and Secondary Carnitine Deficiency of Genetic
Origin
Approval Date: 12/16/1992
Institution: Duke University
Investigator: Dr. Charles Roe
Product: Nafarelin Acetate Intranasal (trade name Synarel)
Indication: Central Precocious Puberty
Approval Date: 02/06/1992
Institution: Baylor College of Medicine
Investigator: Dr. John Kirkland
Product: Neurostimulator implantable electrodes
Indication: Quadra-paraplegia with loss of hand function
Approval Date: 08/18/1997
Institution: Case Western Reserve University
Investigator: Dr. Paul Peckham
Product: Pegademase (trade name Adagen)
Indication: ADA replacement in Severe Combined Immunogenicity
Disease
Approval Date: 03/21/1990
Institution: Enzon, Inc.
Investigator: Dr. Abraham Abuchowski
Product: Pulmonary angioscope
Indication: Visualization of pulmonary emboli
Approval Date: 01/31/1989
Institution: Regents of the University of California
Investigator: Dr. Deborah Shure
Product: Sodium phenylbutyrate
Indication: Urea cycle disorders
Approval Date: 04/30/1996
Institution: Johns Hopkins University
Investigator: Dr. Saul Brusilow
Product: Succimer (trade name Chemet)
Indication: Lead Poisoning in Children
Approval Date: 01/30/1991
Institution: The Kennedy Institute
Investigator: Dr. J. Julian Chisolm
Product: Sucrase enzyme
Indication: Sucrase-isomaltase deficiency
Approval Date: 04/09/1998
Institution: Hartford Hospital
Investigator: Dr. Jeffrey Hyams
Product: Tobramycin for inhalation (trade name Tobi)
Indication: Management of CF patients with Pseudomonas Aeruginosa
Approval Date: 12/22/1997
Institution: Pathogenesis Corporation
Investigator: Dr. Alan Montgomery
Product: Tretinoin (trade name Vesanoid)
Indication: Acute Promyelocytic Leukemia
Approval Date: 11/22/1995
Institution: Memorial Hospital for Cancer and Allied Diseases
Investigator: Dr. Raymond Warrell, Jr.
Product: Zinc Acetate (trade name Galzin)
Indication: Wilson's Disease
Approval Date: 01/28/1997
Institution: University of Michigan
Investigator: Dr. George Brewer
Attachment IV
FDA Office of Orphan Products Development fiscal year 2001
Accomplishments FDA's Office of Orphan Products Development (OPD)
encourages the development of drugs, biologics, medical devices, and
medical foods for rare diseases and conditions by offering the sponsors
of these products financial incentives.
Since the Orphan Drug Act was enacted in 1983, FDA's Office of
Orphan Products Development (OPD) has designated 1,152 products to
treat many rare conditions. Of these, 228 orphan products are now
available to treat a potential patient population of more than 11
million people in the U.S.
During fiscal year 2001, OPD received 129 applications for orphan
designation. The OPD medical and pharmaceutical review staff approved
78 of those applications for orphan status and six orphan products
received FDA market approval.
A significant component of OPD is the Orphan Products Grants
Program, which funds studies to develop treatments or diagnostic
products for rare diseases. Since the Orphan Drug Act began, FDA has
funded 150 million dollars in rare disease research.
In 2001, Congress appropriated 12.5 million dollars for the
program, which provided funds for both new studies, and for the
continuation of previously funded studies.
The grants program funded 24 new studies to test products to treat
rare diseases in 2001 and currently, 84 OPD grant studies are underway.
OPD staff made ten grant site visits to advise and support clinical
investigators. Since 1983 the orphan products grant program has led to
the development and approval of 29 new products to treat or diagnose
rare diseases.
OPD continues to facilitate the development of treatments for rare
diseases worldwide. This year the OPD director consulted with
interested European Community legislators, and spent considerable time
briefing and mentoring members of the Committee on Orphan and Medicinal
Products of the European Agency for the Evaluation of Medicinal
Products. The OPD hosted visits from foreign legislative organizations
currently investigating new strategies for orphan product development.
______
Prepared Statement of the National Potato Council
My name is Dave Warsh. I am a potato farmer from Colorado and
current Vice President, Legislative/Government Affairs for the National
Potato Council (NPC). On behalf of the NPC, we thank you for your
attention to the needs of our potato growers.
The NPC is the only trade association representing commercial
growers in 50 states. Our growers produce both seed potatoes and
potatoes for consumption in a variety of forms. Annual production in
2001 was 444,766 cwt with a farm value of $2.9 billion. Total value is
substantially increased through processing. The potato crop clearly has
a positive impact on the U.S. economy.
The potato is the most popular of all vegetables grown and consumed
in the United States and one of the most popular in the world. Annual
per capita consumption was 138.7 pounds in 2000 up from 104 pounds in
1962 and is increasing due to the advent of new products and heightened
public awareness of the potato's excellent nutritional value. Potatoes
are considered a stable consumer commodity and an integral, delicious
component of the American diet.
The National Potato Council's fiscal year 2003 appropriations
priorities are as follows:
Cooperative State Research Education and Extension Service (CSREES)
Potato Special Grant Program.--The NPC urges that the $1.568
million provided by the Congress in fiscal year 2002 be maintained and
that $1.6 million be appropriated for fiscal year 2003. This has been a
highly successful program and the number of funding requests from
various potato-producing regions are increasing.
The NPC also urges that the Congress, once again, include Committee
report language as follows:
``Potato research.--The Committee expects the Department to ensure
that funds provided to CSREES for potato research are utilized for
varietal development testing. Further, these funds are to be awarded
competitively after review by the Potato Industry Working Group.''
Agricultural Research Service (ARS)
The NPC urges that the Congress once again add Committee report
language urging the ARS to work with the NPC on how overall research
funds can best be utilized for grower priorities.
The NPC urges that the Congress maintain all increases for potato
research provided in fiscal year 2001 and 2002 including funding for
Orono, Maine, Aberdeen, Idaho and golden nematode research at Cornell
University.
Grand Forks and East Grand Forks.--Appropriate $350,000 for a new
scientist to be located at the Potato Research worksite in East Grand
Forks, Minnesota. The scientist would address the effects of
postharvest storage and treatments on potato market quality and value
added traits. Since over 70 percent of the U.S. fall potato crop is
placed into storage for year around sale, this research will benefit
potato growers throughout the country.
Fort Collins, Colorado.--Appropriate $300,000 for the Soil, Plant,
and Nutrient Research Program at Fort Collins to conduct research to
enhance water and soil quality with precision conservation farming.
Aberdeen, Idaho.--Appropriate $30,000 for additional work by the
potato breeder at Aberdeen. In fiscal year 2002 the Congress provided
$120,000 out the $150,000 needed for this researcher. Since an
estimated 96 percent of the current budget is committed to salaries and
fixed costs, this additional funding is needed to provide for the
development of a strong molecular biology program component to speed
the incorporation of disease resistance from wild potato species into
the cultivated potato.
Appropriate funds for the construction of an advanced molecular
genetics laboratory at the National Small Grains Germplasm Research
Facility. This facility at Aberdeen is needed to assure the
continuation of advanced molecular genetics research for potatoes and
small grains. It is estimated that total construction costs will be
$4.6 million. In fiscal year 2002, the Congress provided $400,000 in
design funds.
Beltsville, Maryland.--Improving the nutritional value of potatoes
is a high priority of the NPC. Research should also be initiated at the
Beltsville Vegetable Laboratory that combines traditional breeding and
plant biotechnology to increase the nutritional value of the potato and
add value to the crop. The nutrition research currently underway in the
Beltsville potato breeding program relates to the development of potato
tubers with anti-cancer properties (high lutein/carotene) and a product
to help alleviate osteoporosis (high available tuber calcium).
Approximately $150,000 is currently devoted to this newly developing
field. The NPC urges that $300,000 be appropriated in fiscal year 2003
for this important research effort.
Plant Protection and Quarantine Service (APHIS-USDA)
The NPC urges that the Congress appropriate at least $810,000 for
the Golden Nematode Quarantine Program. The National Potato Council
also supports the budget request of $72 million for the AQI
appropriated fund account and $27 million for pest detection. As new
trade agreements are negotiated, the agency must have the necessary
staff and technology to deal with the threat of pests and diseases.
FQPA Funding
The NPC also supports the appropriation of $2.6 million for the
USDA Office of Pest Management Policy (OPMP). The NPC has devoted
considerable time and resources to the evaluation of pesticides
required by the FQPA. However, it is essential that the USDA have
adequate resources to assist in this effort. Otherwise, given the tight
time frame for these assessments, the EPA will rely on default
assumptions in the absence of actual data.
______
Prepared Statement of the National Rural Housing Coalition
Mr. Chairman and members of the Senate Subcommittee on Agriculture,
my name is Robert Rapoza and I wish to testify on behalf of the
National Rural Housing Coalition.
I wish thank you for the Subcommittee's support of the Rural
Development programs of the United States Department of Agriculture and
to urge you to support an increase in its budget for fiscal year 2003.
As you may know, the National Rural Housing Coalition (the
Coalition) has been a national voice for rural low-income housing and
community development programs since 1969. Through direct advocacy and
policy research, the Coalition has worked with Congress and the
Department of Agriculture to design new programs and improve existing
programs serving the rural poor. The Coalition also promotes a non-
profit delivery system for these programs, encouraging support for
rural community assistance programs, farm labor housing grants, self-
help housing grants, and rural capacity building funding.
The Coalition is comprised of approximately 300 members nationwide.
We hope to work with you to assure that the voices of rural America are
heard and its needs met. Our concerns are focused on rural housing and
rural water and sewer systems.
the need for affordable rural housing
A disproportionate amount of the nation's substandard housing is in
rural areas. Rural households are poorer than urban households, pay
more of their income for housing that their urban counterparts, and are
less likely to receive government-assisted mortgages. They also have
limited access to mortgage credit and the secondary mortgage market,
making them prime targets for predatory lending. Rural America needs
programs which focus on the issues facing it. The Rural Housing Service
of Rural Development provides many of these needed programs.
Renters in rural areas are the worst housed individuals and
families in the country. Thirty-three percent of rural renters are
cost-burdened, paying more than 30 percent of their income for housing
costs. Almost one million rural renter households suffer from multiple
housing problems, 60 percent of whom pay more than 70 percent of their
income for housing. The Section 515 rural rental housing loan program
at USDA serves low and very-low income families with safe affordable
housing.
Although issues around rental housing are of vital concern,
homeownership is the principal form of housing in rural America.
However, there are a number of obstacles to improving homeownership in
rural areas including high rates of poverty and poor quality of
housing. According to a 1999 Economic Research Service report, the
poverty rate in rural America was 15.9 percent, compared to 13.2
percent in urban areas. Minorities in rural areas have much higher
rates of poverty with an average of 34.1 percent compared to urban
minorities at 28.1 percent. More than 1.6 million low-income rural
households live in moderately to severely inadequate housing. These are
units without hot or cold piped water, and/or have leaking roofs,
walls, rodent problems, inadequate heating systems, and peeling paint,
often lead-based.
Rural residents also have limited access to mortgage credit. The
consolidation of the banking industry that accelerated throughout the
1990s has had a significant impact on rural communities. Mergers among
lending institutions have replaced local community lenders with large
centralized institutions located in urban areas. Aside from shifting
the locus of loan-making, this has resulted in the diminishment of a
competitive environment which, in the past, encouraged rural lenders to
offer terms and conditions that were attractive to borrowers.
Because of the gap left by traditional lenders, rural households
are often prime targets for predatory lenders. Predatory lending
practices include excessive fees, prepayment penalties, and loan
flipping into high cost subprime loans. Rural America depends upon the
affordable loans through USDA's Section 502 single family direct loan
program for homeownership.
usda's rural housing service
I would like to begin with the rental housing program.
Section 515 rental housing program
Although we often talk about the surge in homeownership and all of
its benefits, not all us are or are prepared to be homeowners. USDA's
Rural Housing Service Section 515 rural rental housing program is
invaluable to low-income residents in rural areas. The portfolio
contains 450,000 rented apartments in Section 515 developments. The
delinquency rate is a low 1.6 percent. The average tenant income is
$7,900, which is equal to only 30 percent of the nation's rural median
household income. More than half of the tenants are elderly or disabled
and one-quarter are minority.
Federal policy faces two challenges regarding rural rental housing.
The first is to increase the production of affordable rental housing
units in rural communities. The second is to maintain the existing
stock of Section 515 units.
This year, the President's budget cut Section 515 almost in half to
$60 million and limited it to repair, rehabilitation, and preservation.
If the fiscal year 2003 budget request for Section 515 is approved, it
will be the first time in more than 30 years that the Federal
government provides no new rental units for rural America. All new
construction is postponed pending a comprehensive program review, which
will cost up to $2 million.
As I mentioned earlier, almost one million households either cannot
afford their rents, live in unsafe, unsanitary conditions, or both. The
capital replacement needs alone for 2001 were $130 million, with only
$50 million in funding available.
Section 521 rental assistance is used in conjunction with Section
515 to help families who cannot afford even their reduced rent. In
recent years, mostly in response to an escalating number of expiring
contracts, appropriations for rental assistance have gone up. Despite
the fact that the current appropriations stand at $701 million (fiscal
year 2002), the funds are insufficient. Although about 50 percent of
the 450,000 Section 515 households receive rental assistance, almost
90,000 Section 515 households who need assistance do not receive it.
The need for rental assistance is projected to increase to $937 million
by 2006.
Prepayment of 515 properties is a real threat to two-thirds of the
portfolio over the next 7 years. Prepayment often means the units are
lost for low-income residents. In 1987, Congress enacted legislation
restricting prepayment, and providing financial incentives to owners to
stay in the program. However, Section 515 funding has fallen off
dramatically, and stands at $114 million, its lowest level in 25 years.
This allows little money to provide incentives and other resources for
preservation.
The demand for incentives is estimated at approximately $100
million for equity loans alone. This includes $11 million in approved,
but un-funded requests some of that date back three to 4 years.
Spending for Section 515 rental subsidized housing has been cut by 73
percent since 1994. And rural rental housing unit production by the
Federal Government has been reduced by 88 percent since 1990.
For fiscal year 2003, we recommend a total of $250 million for
section 515. With these funds, we proposed that $100 million be used
for basic maintenance and preservation and $150 million for loans for
new construction. In addition we recommend an increase of $50 million
for rural rental assistance that will be used in conjunction with
section 515 and farm labor housing, described later.
Section 502 single family direct loan program
To qualify for the direct loan program, borrowers must have very
low or low incomes but be able to afford mortgage payments. Also,
applicants must be unable to obtain credit elsewhere, yet have
reasonable credit histories. The average income of households assisted
under Section 502 is $18,500. About nine percent of households have
annual incomes of less than $10,000. Since its inception, Section 502
has provided loans to almost two million families.
The cost to the government per house under the Section 502 direct
loan program is only $10,000. However, this effective program has also
received severe cuts in recent years. Fund was available for 132,000
units in 1976, but because of funding, production has dropped by 89
percent to fewer than 15,600 units.
Currently funded at $1.1 billion, the President's budget cuts this
program by 13 percent to $957 million in program level.
Of particular interest in the budget is the unexplained increase in
the subsidy rate for section 502 direct loans. At a time of
historically low interest rates, in a budget that does not project an
increase in long-term rates, the subsidy rate for section 502 direct
loans increases from 13.16 percent to 19.37 percent. What has changed?
Are there increases in subsidy costs or in default or delinquency rates
that led to this adjustment? Is this change based on recent experience?
Is this a change in the assumptions that underlie the subsidy? If so,
what are those changes? Our understanding is that the cost of the
program has not changed, only the model that is used to estimate the
cost to the government.
We urge the Committee to restore section 502 to at least the
current rate of $1.08 billion. There is a $5 billion backlog in
applications for 502 direct loans. No other program provides home
ownership assistance to rural low-income families. The cost of
continuing section 502 at the current rate will add $23 million to the
cost of section 502 to the government. It will also add over 2,500
units of additional housing for low-income families.
Work with Non-Profit Organizations
With dramatic program reductions and continued strength in the
nation's real estate market, the private sector delivery system is no
longer dominant as it was when funding levels were higher, and in many
rural communities does not even exist. In some rural areas, non-profits
have picked up the slack and pursued a multiple funding strategy.
Skilled local organizations meld Federal, State, local and private
resources together to provide affordable financing packages to low-
income families. But there is not a dedicated source of Federal support
to promote a non-profit delivery system for rural housing.
As one way to improve its programs, USDA has expanded its
cooperation with non-profit housing and community development
organizations. Two successful programs are Mutual and Self-Help Housing
and the Rural Community Development Initiative.
Under Mutual and Self-Help Housing, with the assistance of local
housing agencies, groups of families eligible for Section 502 loans
perform approximately 65 percent of the construction labor on each
other's homes under qualified supervision. This program, which has
received growing support because of its proven model, has existed since
1961. The average number of homes built each year over the past 3 years
has been approximately 1,500. For fiscal year 2003, we recommend a
total of $35 million for self-help housing. This is the same as fiscal
year 2002.
The Rural Community Development Initiative (RCDI) program enhances
the capacity of rural organizations to develop and manage low-income
housing, community facilities, and economic development projects. These
funds are designated to provide technical support, enhance staffing
capacity, and provide pre-development assistance--including site
acquisition and development. RCDI provides rural community development
organizations with some of the resources necessary to plan, develop,
and manage community development projects. Using dollar-for-dollar
matching funds and technical assistance from 19 intermediary
organizations, some $12 million in capacity building funds were
distributed to 240 communities. There is a tremendous demand for
capacity building funding. In the fiscal year 2000 funding round,
USDA's Rural Housing Service received some $80 million in applications
for $6 million in appropriated funds. This valuable program is also at
risk in the budget request this year--it has been eliminated. For
fiscal year 2003, we recommend $6 million for the Rural Community
Development Initiative to continue level funding for fiscal year 2002.
Section 514 loan and Section 516 grant farm labor housing programs
Two additional rental housing programs specifically address the
needs of farm laborers. Migrant and seasonal farmworkers are some of
the nation's most poorly housed populations. The last documented
national study indicated a shortage of some 800,000 units of affordable
housing for farmworkers.
Farmworker households are also some of the least assisted
households in the nation. Some 52 percent of farmworker households'
incomes are below the poverty threshold, four times the national
household poverty rate, and 75 percent of migrant farmworkers have
incomes below the poverty line. Yet little more than 20 percent of
farmworker households receive public assistance; most commonly food
stamps, rarely public or subsidized housing.
There are only two Federal housing programs that specifically
target farmworkers and their housing needs: Sections 514 and 516 of the
Housing Act of 1949 (as amended). Borrowers and grantees under Rural
Housing Service Sections 514 and 516 receive financing to develop
housing for farmworkers. Section 514 authorizes the Rural Housing
Service to make loans with terms of up to 33 years and interest rates
as low as one percent. Section 516 authorizes RHS to provide grant
funding when the applicant will provide at least 10 percent of the
total development cost from its own resources or through a 514 loan.
Non-profit housing organizations and public bodies use the loan and
grant funds, along with RHS rural rental assistance, to provide units
affordable to eligible farmworkers. These funds are used to plan and
develop housing and related facilities for migrant and seasonal
farmworkers. Current funding for Sections 514/516 totals $37 million in
program authority. This amount provides about 700 units of housing. The
estimated need is two to three times the appropriated level.
We applaud the President for proposing an additional $8 million in
loans for fiscal year, and hope that you will recognize the even
greater need for funding. We recommend that funding for farmworker
housing grants and loans be increased to $100 million in budget
authority for fiscal year 2003. We ask that these funds be equally
divided between loans and grants authorized under sections 514 and 516.
This will result in approximately $150 million in financing for much
needed farmworker housing.
the need for rural water and sewer systems
Hundreds of rural communities nationwide do not have access to
clean drinking water and safe waste disposal systems. A 1995 USDA needs
assessment of rural areas showed that more than one million households
had no indoor plumbing, and 2.4 million households had critical
drinking water needs. In its 1997 Drinking Water Infrastructure Needs
Survey, the Environmental Protection Agency estimated that over the
next 20 years, water systems serving communities of less than 10,000
people will require $37.2 billion in funding for water systems
improvements and upgrades. And regarding wastewater, a 1996 EPA Survey
demonstrated that small communities with up to 10,000 residents will
need 21,000 wastewater treatment facilities by 2016 at a cost of
approximately $14 billion. According to EPA's numbers, approximately
$51.2 billion will be needed to address the basic water and wastewater
needs of small communities.
Many projects that the Rural Utilities Service funds are under
consent order from the State EPA office for immediate action. The
problems that the agency deals with range from communities and systems
that are out of compliance with health and pollution standards, to
communities without sewer systems where raw sewage runs in ditches
after a heavy rainfall. Because so much time and money are spent on
critical needs, the State offices spend less time on prevention. The
programs and communities do not have enough resources to address issues
before they become larger problems.
The issue of affordability moves to the forefront with waste
disposal systems, which are generally more expensive than water
systems. Waste systems naturally succeed water systems--with central
water comes indoor plumbing, washing machines, dishwashers, etc., all
of which eventually require an efficient wastewater disposal system.
Low-income communities often already pay as much as they can afford for
water service alone and are unable to manage the combined user fees for
water and waste. According to EPA data, ratepayers of small rural
systems are charged up to four times as much per household as
ratepayers of larger systems. In some extreme situations, some
households are being forced out of homeownership because they cannot
afford rising user costs.
As I mentioned earlier, rural communities have limited access to
much-needed debt and equity capital, and small water and wastewater
systems lack the economies of scale needed to reduce costs on their
own. In order for communities to cut back on project costs and have
affordable rates, operation and maintenance are typically
underestimated in the budgets for many new systems. This often results
in limited or no capital improvement accounts for future upgrades and
expansions needed for community development including stabilization of
local small business, affordable housing development, and other needed
industrial development.
usda's rural utilities service
USDA's Rural Utilities Service (RUS) is the primary Federal force
in rural water and waste development, providing loans and grants to
low-income communities in rural areas. The agency assists low-income
rural communities that would not otherwise be able to afford such
services. Approximately one-fifth of the communities served live below
the national poverty line.
In providing these important services, the program also protects
public health and promotes community stabilization and development.
Aging municipal sewage systems alone are responsible for 40,000
overflows of raw sewage each year. The overflows cause health hazards
including gastrointestinal problems and nausea, as well as long-term
damage to the environment. Businesses and industries are unable or
reluctant to locate in areas without functioning water and sewer
systems. But with the assistance of RUS, communities are able to have
the services they need so that their health and economies may benefit.
Although the need for RUS services continues, the level of
available funds has continued to remain low. In fiscal year 1995, $1.35
billion was obligated by the Federal program to the States. Due to
decreasing appropriations and increasing interest rates, the
obligations decreased. By fiscal year 2000, funding was at $1.24
billion--a decrease of over $100 million--and was approximately 90
percent of its fiscal year 1995 level. Fortunately, these programs
received a boost in fiscal year 2001 and fiscal year 2002, and are
currently at $1.46 billion. However, the Administration's budget
request again asks for a decrease down to $1.4 billion.
Through Federal and State initiatives, RUS is working to confront
the challenges faced by rural communities. With increasingly restricted
time and money, State offices are using other resources such as
leveraged funds and technical assistance from the Rural Community
Assistance Program (RCAP). Funds are being leveraged through HUD's
Community Development Block Grant program and the EPA's State Revolving
Loan Funds, as well as some private lenders. Through the RCAP technical
assistance program, more than 2,000 communities and over 1.6 million
households in 49 States have received assistance to identify solutions
to water problems, improve and protect water quality, and construct and
operate facilities. The RCAP program has proven to be an effective and
efficient way of ensuring that small rural communities receive the
information, technical assistance, and training needed to provide for
the water and waste disposal needs of their residents.
Mr. Chairman and members of the Committee, we look to you for
continued support of the efforts of Rural Development. These programs
are vital to the survival of our small communities nationwide. They
address the most basic needs of affordable housing and clean water that
still exist all over the country. Because of the overwhelming need, we
wish to submit the following proposals for increases to Rural
Development funding:
[In millions of dollars]
------------------------------------------------------------------------
Fiscal year 2002 Fiscal year
Program final 2003 proposed
------------------------------------------------------------------------
USDA Programs:
502 direct........................ 1,100 1,700
502 guarantee..................... 3,100 3,700
504 grants........................ 30 50
504 loans......................... 32 50
514 loans......................... 28 100
516 grants........................ 17.9 50
515 loans......................... 114 250
521 rental assistance............. 701 800
523 self-help grants.............. 35 35
Water sewer loans................. 894 1,050
Water sewer grants................ 584 700
Community facilities.............. 210 250
Community facilities grants....... 14 50
RCDI.............................. 6 25
------------------------------------------------------------------------
______
Prepared Statement of the National Rural Telecom Association
summary of testimony requests
Project involved: Telecommunications lending programs administered
by the Rural Utilities Service of the U.S. Department of Agriculture
Actions proposed:
--Supporting loan levels for fiscal year 2003 in the same amounts as
those contained in the fiscal year 2002 Agriculture
Appropriations Act for hardship, cost-of-money, Rural Telephone
Bank and guaranteed loan programs and the associated subsidy to
fund those programs at the existing level. Opposing the budget
recommendation to not fund new Rural Telephone Bank loans in
fiscal year 2003.
--Supporting continued funding, as requested in the President's
budget, in the amount of $31 million in loan and grant
authority designated for distance learning and telemedicine
purposes, $6.1 million of which to continue to be made
available through the pilot program to finance broadband
transmission and dial-up Internet service in rural areas.
--Supporting an extension of the language removing the 7 percent
interest rate ceiling on cost-of-money loans.
--Supporting continuation of the restriction on retirement of Rural
Telephone Bank class A stock at the level contained in the
fiscal year 2002 Agriculture Appropriations Act and an
extension of the prohibition against the transfer of Rural
Telephone Bank funds to the general fund. Opposing the proposal
contained in the budget to transfer funds from the unobligated
balances of the liquidating account of the Rural Telephone Bank
for the bank's administrative expenses.
Mr. Chairman, Members of the Committee: My name is John F. O'Neal.
I am General Counsel of the National Rural Telecom Association. NRTA is
comprised primarily of commercial telephone companies which borrow
their capital needs from the Rural Utilities Service of the U.S.
Department of Agriculture (RUS) to furnish and improve telephone
service in rural areas. Approximately 1000, or 71 percent of the
nation's local telephone systems borrow from RUS. About three-fourths
of these are commercial telephone companies. RUS borrowers serve almost
6 million subscribers in 46 states and employ over 22,000 people. In
accepting loan funds, borrowers assume an obligation under the act to
serve the widest practical number of rural users within their service
area.
program background
Rural telephone systems have an ongoing need for long-term, fixed
rate capital at afford able interest rates. Since 1949, that capital
has been provided through telecommunications lending programs
administered by the Rural Utilities Service and its predecessor, the
Rural Electrification Agency (REA).
RUS loans are made exclusively for capital improvements and loan
funds are segregated from borrower operating revenues. Loans are not
made to fund operating revenues or profits of the borrower system.
There is a proscription in the Act against loans which would duplicate
existing facilities providing adequate service and state authority to
regulate telephone service is expressly preserved under the Rural
Electrification Act.
Rural telephone systems operate at a severe geographical handicap
when compared with other telephone companies. While almost 6 million
rural telephone subscribers receive telephone service from RUS borrower
systems, they account for only four percent of total U.S. subscribers.
On the other hand, borrower service territories total 37 percent of the
land area--nearly 1\1/2\ million squares miles. RUS borrowers average
about six subscribers per mile of telephone line and have an average of
more than 1,000 route miles of lines in their systems.
Because of low-density and the inherent high cost of serving these
areas, Congress made long-term, fixed rate loans available at
reasonable rates of interest to assure that rural telephone
subscribers, the ultimate beneficiaries of these programs, have
comparable telephone service with their urban counterparts at
affordable subscriber rates. This principle is especially valid today
as the United States endeavors to deploy telecommunications
``information superhighway'' technology and as customers and regulators
constantly demand improved and enhanced services.
At the same time, the underlying statutory authority which governs
the current program has undergone significant change. In 1993,
telecommunications lending was refocused toward facilities
modernization. Much of the subsidy cost has been eliminated from the
program. The subsidy that remains has been targeted to the highest
cost, lowest density systems. Other loans are made at Treasury's cost-
of-money or greater, and, in fact, involve negative subsidies.
We are proud to state once again for the record that there has
never been a default in the RUS/REA telephone program! All loans have
been repaid in accordance with their terms--almost $10.5 billion in
principal and interest at the end of the last fiscal year.
need for rus telecommunications lending continues
The need for rural telecommunications lending is great today,
possibly even greater than in the past. Technological advances make it
imperative that rural telephone companies upgrade their systems to keep
pace with improvements and provide the latest available technology to
their subscribers.
These rapid technological changes and Federal policies of
competition and deregulation in the telephone industry, as evidenced by
passage of the ``Telecommunications Act of 1996'', underscore the
continuing need for targeted assistance to rural areas. The inherently
higher costs to serve these areas have not abated. Regulatory trends
encouraging competition among telephone systems increase pressures to
shift more costs onto rural ratepayers. Interstate subscriber line
charges continue to shift substantial costs to local exchange
customers. Pressures to recover more and more of the higher costs of
rural service from rural customers to foster urban competitive
responses will further burden rural consumers. The Telecommunications
Act of 1996 responded to a number of rural needs and differences with a
series of safeguards to ensure that rates, services and network
development in rural America will be reasonably comparable to urban
telecommunications opportunities.
The ongoing process of implementing the new law continues to raise
troubling uncertain ties and concerns about whether the FCC and the
states will honor the balance Congress achieved in its policy, as
regulators (a) radically revise the mechanisms for preserving and
advancing ``universal service,'' (b) adjust the cost recovery
responsibilities and allocations of authority between Federal and State
regulation, (c) effectuate the Act's somewhat different urban and rural
ground rules for how new companies and incumbent universal service
providers connect their networks and compensate each other and (d) peel
back layers of regulation developed over a century. The FCC continues
to be overzealous in expanding the Act's market-opening provisions to
give new entrants a regulatory head start and advantage at the expense
of the Act's rural development and universal service provisions. The
FCC is trying to usurp the role of competition by dictating a whole
new--and wholly inadequate--way to measure the costs of modern,
nationwide telecommunications access to information. The FCC needs to
reorder the sequence of its proceedings to ensure that rural Americans
are not denied the ongoing network development and new services the Act
requires. Rural telephone systems with universal service obligations
must not be thwarted in their efforts to upgrade and provide rates and
services reasonably comparable to urban offerings.
expanded congressional mandates for rural telecommunications
Considerable loan demand is being generated because of additional
mandates for enhanced rural telecommunications standards contained in
the authorizing legislation. These mandates coupled with the need for
stable financing sources to meet the infrastructure demands envisioned
for rural areas by the 1996 telecommunications act amply demonstrate
the continuing need for this important program at the following levels:
[In dollars]
5 percent Hardship Loans................................ 75,000,000
Cost-of-Money Loans..................................... 300,000,000
Guaranteed Loans........................................ 120,000,000
Rural Telephone Bank Loans.............................. 175,000,000
--------------------------------------------------------
____________________________________________________
Total............................................... 670,000,000
These are essentially the same levels established in the fiscal
year 2002 appropriations act for the hardship, cost-of-money, Rural
Telephone Bank and guaranteed loan programs. The authorized levels of
loans in all programs were fully obligated in fiscal year 2001 and we
expect these levels to be met in fiscal year 2002. We believe that the
needs of this program balanced with the minimal cost to the taxpayer
make the case for its continuation at the stated levels.
rural telephone bank loans
The administration again proposes to not fund new Rural Telephone
Bank (RTB) loans in fiscal year 2003.
The Rural Telephone Bank was established by Congress in 1971 to
provide supplemental financing for rural telephone systems with the
objective that the bank ultimately would be owned and operated by its
private shareholders. The bank's mission is not complete--far from it!
If Rural Americans are to be full participants with their urban
neighbors in the Information Age, that job is just beginning!
Economists agree that modern telecom infrastructure is the key to rural
economic development which generates jobs and tax revenues for the
government.
The administration proposal will not ``generate increased member
and borrower support for statutorily authorized privatization'', as
suggested in the President's budget documents. That already exists!
Privatization of the RTB began in 1995 under the current law and is
proceeding annually at the rate of approximately $25 million per year.
The Bank has now retired over $139 million, or over 20 percent, of the
government's $592 million investment. As we pointed out in our
testimony last year, not funding new loans in could actually impede
privatization of the Bank since the law requires that the Bank annually
retire government stock at the rate of at least 5 percent of the amount
of Class B stock sold in connection with new loans. If no new loans
were made, there would be no minimum requirement for retirement of
additional government stock.
The current loan level of $175 million has remained the same for
many years. As a matter of fact, after factoring in the eroding effect
of inflation, loan levels over the years have actually been reduced
systematically. Despite this fact, we believe that the $175 million
level is adequate to meet current program needs and strikes a cost
effective balance for the taxpayer. This amount was fully obligated in
fiscal year 2001 and we expect it to be met again this year. If no bank
loans were made in fiscal year 2003, the budgetary outlay savings would
be minimal because RTB loans are funded over a multi-year period.
Moreover, if administration interest rate predictions are accurate, RTB
loans could actually generate a profit for the government because of
the minimum statutory interest rate of 5 percent!
specific additional requests
Continue the Removal of the 7 percent Cap on Cost-of-Money Loans
Again this year we are supporting removal of the 7 percent ceiling
on cost-of-money loans even though long-term Treasury rates are
currently below this level.
Continue the Restriction on Retirement of Class A Government Stock in
the Rural Telephone Bank (RTB) and also Continue the
Prohibition Against Transfer of RTB Funds to the General Fund
and Require the Payment of Interest
The Committee should continue the restriction on retirement of the
amount of class A stock by the Rural Telephone Bank in fiscal year
2003. The Bank is currently in the process of retiring the government's
stock as required under current law. We believe that this process which
began in fiscal year 1996 should continue to be an orderly one as
contemplated by the retirement schedule enacted 6 years ago and
continued through last year's bill to retire no more than 5 percent of
the total class A stock in 1 year. The Rural Telephone Bank board,
earlier this year, commissioned a private firm to perform a
privatization study. This study is expected to be completed later this
year. In this year's budget documents, the administration has indicated
a desire to fully privatize the bank by the end of 2003. After
reviewing the results of the pending study, both Congress and the rural
telephone industry will be in a better position to evaluate the
feasibility of that timetable as well as the appropriate level of
retirement of the government's Class A stock in the future. In the
meantime, we urge the Committee to continue the prohibition against the
transfer of any unobligated balance in the bank's liquidating account
which is in excess of current requirements to the general fund of the
Treasury along with the requirement that the bank receive interest on
those funds. The private Class B and C stockholders of the Rural
Telephone Bank have a vested ownership interest in the assets of the
bank including its funds and their rights should be protected.
Previous appropriations acts (fiscal year 1997 through 2002) have
recognized the ownership rights of the private class B and C
stockholders of the bank by prohibiting a similar transfer of the
bank's excess unobligated balances which otherwise would have been
required under the Federal credit reform act.
Reject Budget Proposal to Transfer Funds from RTB Liquidating Account
for Administrative Costs
The President's budget proposes that the bank assume responsibility
for its administrative costs by a transfer of funds from the
unobligated balances of the bank's liquidating account rather than
through an appropriation from the general fund of the Treasury. This
recommendation is contrary to the specific language of Sec. 403(b) of
the RTB enabling act and would require enactment of new authorizing
legislation as a prerequisite to an appropriation. It would not result
in budgetary savings and has been specifically rejected by this
Committee in previous years. No new justification is contained in the
budget.
Loans and Grants for Telemedicine, Distance Learning and Internet
Access
We support the continuation in fiscal year 2003 of the $31 million
in loan and grant authority provided in the President's budget for
telemedicine and distance learning purposes. Loans are made at the
government's cost-of-money. The purpose is to accelerate deployment of
telemedicine and distance learning technologies in rural areas through
the use of telecommunications, computer networks, and related advanced
technologies by students, teachers, medical professionals, and rural
residents. We also support making available $6.1 million of the above
amount available for continuation of the pilot program to finance
broadband transmission and local dial-up access to the Internet in
rural areas, as recommended in this year's budget. This 2-year old loan
and grant pilot program continues to be oversubscribed each year and is
effectively accomplishing its program mission.
conclusion
Thank you for the opportunity to present the association's views
concerning this vital program. The telecommunications lending programs
of RUS continue to work effectively and accomplish the objectives
established by Congress at a minimal cost to the taxpayer.
______
Prepared Statement of the National Telecommunications Cooperative
Association
summary
NTCA makes the following fiscal year 2003 funding recommendations
with regard to the Rural Utilities Service Telecommunications Loan
Program and related programs.
--Support the provisions of the president's budget proposal calling
for the required subsidy to fully fund the RUS
Telecommunications Loan Program's Hardship Account at a $75
million level, Cost of Money Account at a $300 million level,
and the Guaranteed Account at a $120 million level.
--Reject the provisions of the president's budget proposal calling
for zero funding for the Rural Telephone Bank (RTB). Instead,
provide the required subsidy to fully fund the bank at last
fiscal year's $175 million level.
--Support an extension of language that temporarily sets aside the 7
percent interest rate cap on loans made through the RUS Cost of
Money fund.
--Support an extension of the restriction against RTB Liquidating
Account funds from being transferred into the general Treasury.
--Support an extension of language prohibiting the expenditure of RTB
Liquidating Account funds to provide for the subsidy or
operational expenses of the bank.
background
NTCA is a national association representing more than 550 small,
rural, cooperative and commercial, community-based local exchange
carriers (LECS) located throughout the nation. These locally-owned and
operated LECS provide local exchange service to more than 2.5 million
rural Americans. Since the creation of the RUS Telecommunications Loan
Program, more than 80 percent of NTCA's member systems have been able
to utilize the Federal program to one degree or another.
NTCA's members, like most of the country's independent LECS,
evolved to serve high-cost rural areas of the nation that were
overlooked by the industry's giants as unprofitable. On average, NTCA
members have approximately 6 subscribers per mile of infrastructure
line, compared with 130 for the larger urban-oriented LECs. This
results in an average plant investment per subscriber that is 38
percent higher for NTCA members compared to most other systems.
Congress recognized the unique financing dilemma confronting
America's small rural LECS as early as 1949, when Congress amended the
Rural Electrification Act (REA) to create the Rural Electrification
Administration Telephone Loan Program. Today, this program is known as
the RUS Telecommunications Loan Program. Through the years Congress has
periodically amended the REA to ensure that original mission--to
furnish and improve rural telephone service--was met. In 1971, the
Rural Telephone Bank (RTB) was created to as a supplemental source of
direct loan financing. In 1973, the RUS was provided with the ability
to guarantee Federal Financing Bank (FFB) and private lender notes. In
1993, Congress established a fourth lending program--the Treasury Cost
of Money account.
rus helps meet infrastructure demands
While the RUS has helped the subscribers of NTCA's member systems
receive service that is comparable or superior to that available
anywhere in the nation, their work is far from complete. As the
Telecommunications Act of 1996 and other Federal policies continue to
evolve, and as policymakers and the public alike continue to clamor for
the deployment of advanced telecommunications services, the high costs
associated with providing modern telecommunications services in rural
areas will not diminish.
RUS telecommunications lending has stimulated billions of dollars
in private capital investment in rural communications infrastructure.
In recent years, on average, less than $13 million in Federal subsidy
has effectively generated $670 million in Federal loans and guarantees.
For every $1 Federal funds that were invested in rural communications
infrastructure, $4.50 in private funds were invested. The RUS is also
making a difference in rural schools, libraries, and hospitals. Since
1993, the RUS Distance and Learning Telemedicine Grant program has
funded hundreds of projects throughout the nation of interactive
technology in rural schools, libraries, hospitals, and health clinics.
In addition, two other RUS-related programs are making a difference
in rural America. Formerly known as the Zero Interest Loan and Grant
Program, the Rural Economic Development Grants Programs, and the Rural
Economic Development Loans Programs are now managed by the Rural
Business Cooperative Service. The two programs provide funds for the
purpose of promoting rural economic development and job creation
projects, including for feasibility studies, start-up costs, incubator
projects and other expenses tied to rural development.
ntca's fiscal year 2003 appropriations recommendations
Fully Fund The Entire RUS Telecommunications Loan Program
It is imperative that the entire RUS Telecommunications Loan
Program be funded at the following levels:
Hardship Account........................................ $75,000,000
Cost of Money/Treasury Account.......................... 300,000,000
Guaranteed Account...................................... 120,000,000
Rural Telephone Bank Account............................ 175,000,000
Additionally, to support the operations of the RUS, it is critical
that Congress provide at least $36 million in administrative
appropriations the president's budget proposal envisions.
Reject the President's Proposal To Provide Zero RTB Funding
The President's budget contains a proposal that suggests the Rural
Telephone Bank should not be funded in fiscal year 2003. In presenting
last year's budget, the administration stated that the RTB had outgrown
its need and usefulness. The demand for advanced telecommunications
services continues to grow and NTCA members continue to meet this
demand. To this end, we believe the president's decision to zero out
funding for the RTB is without merit. When the Bush administration
presented its first budget to Congress, it too included a proposal to
zero out funding for the RTB, stating it was a result of the RTB moving
towards privatization.
Privatization of the RTB is moving at a Congressionally mandated
pace, and while Congress must stay aware of changes to the RTB program
as it proceeds toward privatization, NTCA remains concerned about
unnecessary disruptions that would cause instability to shareholders,
borrowers, and taxpayers. In light of this fact, as well Congress'
decision to reject the president's previous proposal to zero out RTB
funding, we urge Congress to again reject this ill-conceived proposal
and instead fully fund the bank at its regular $175 million annual
level.
Prohibit The Transfer Of Unobligated RTB Liquidating Account Balances
NTCA also recommends that Congress continue the prohibition against
the transfer of any unobligated balances of the Rural Telephone Bank
liquidating account to the general fund of the Treasury. This language
has routinely been included in annual appropriations measures since the
enactment of the Federal Credit Reform Act (FCRA, Public Law 101-508)
that allows such transfers to potentially occur. Restatement of this
language will ensure that the RTB's private class B & class C
stockholders are not stripped of the value of their statutorily
mandated investment in the Bank.
Prohibit RTB From Self Funding Subsidy and Administrative Costs
NTCA urges Congress to maintain its prohibition against unobligated
RTB Liquidating Account Balances being used to cover the bank's
administrative and operational expenses for the following reasons: (1)
such action would require amending the REA, (2) the proposal appears to
be in conflict with the intent of the FCRA, (3) the proposal will not
result in Federal budgetary savings, (4) it is unnecessary to the
determination of whether the bank could operate independently, and thus
would amount to wasting the resources of the bank which could be put to
better use upon its complete privatization.
Extend Removal Of the Interest Rate Cap On Treasury-Rate Loans
NTCA is also requesting that Congress again include language
removing the 7 percent interest rate cap on Treasury-rate loans. This
provision has been included in recent appropriations measures to
prevent the potential disruption of the program in the case where
interest rates exceed 7 percent and insufficient subsidy cannot support
authorized lending levels.
Continue Distance Learning and Telemedicine Loan and Grant Program
The RUS Distance Learning and Telemedicine Loan and Grant program
has proven to be an indispensable tool for rural development. In this
regard NTCA urges Congress to provide adequate funding for this
critical program. NTCA supports the recommendations for this program
that are contained in the president's budget proposal.
Preserve RBCS Rural Development Grant and Loan Programs
Likewise, NTCA has witnessed the good these programs have done for
rural communities. NTCA urges Congress to ensure adequate funding is at
levels that are adequate to meet current demand for the programs.
conclusion
The RUS Telecommunications Loan Program bears a proud record of
commitment, service and achievement to rural America. Never in its
entire history has the program lost a dollar to abuse or default--
unparalleled feat for any government-sponsored lending program. Cleary
such a successful program should remain in place to continue ensuring
rural Americans have the opportunity to play a leading role in the
information age in which we live. After all, an operational and
advanced rural segment of the nation's telecommunications
infrastructure is critical to truly ensuring that the national
objective of universal telecommunications service is fulfilled. We look
forward to working with you to accomplish this objective.
______
Prepared Statement of the National Treasury Employees Union
Chairman Dorgan, Ranking Member Campbell, and distinguished members
of this Subcommittee, my name is Colleen Kelley and I am the National
President of the National Treasury Employees Union. NTEU represents
more than 155,000 Federal employees across the Federal government,
including the employees who work at the Food and Drug Administration. I
want to thank you for giving me the opportunity to present testimony on
behalf of these dedicated men and women who work to ensure the safety
of our food, drugs, cosmetics, and medical devices.
The past 6 months have been a very trying time for the American
public. In particular, the tragic events of September 11th and the
anthrax outbreak in October and November brought to light how
vulnerable our nation is to such a wide variety of attacks. Without
question, these horrible events have focused the attention of the
American public and our elected leaders on the need to invest in a
highly wined, highly skilled, dedicated Federal workforce to respond to
and prevent these attacks. Our nation depends on these patriots who
work for the Federal Government.
The men and women who work at the Food and Drug Administration have
been on the front lines in our nation's war on terrorism. They have
been protecting the public against contaminated foods coming in through
our ports and borders. They have been working overtime to facilitate
the availability of safe and effective vaccines to protect Americans
from anthrax or other bioterrorist attacks, even during a period when
FDA's own facilities were thought to be contaminated with anthrax. And
they are working to protect the health of our troops abroad who are at
great risk for exposure to biological and chemical weapons. This is
only a sampling of the efforts FDA employees contribute to our nation's
war on terrorism. But it was not September 11th or the spread of
anthrax that created these roles for FDA. Rather, the FDA workforce has
been a critical component of our homeland defense for decades.
It has been the FDA employees day in and day out--during times of
war and times of peace--who have responded to the call of the American
people for ensuring our food supply is safe and more effective drugs
and medical products are brought to consumers more quickly. In fact,
the FDA regulates more than $1 trillion worth of products that account
for about 25 cents out of every dollar of American consumer spending.
The FDA is staffed with experts in an extraordinary range of fields.
Microbiologists, chemists, consumer safety officers, and others are
working around the clock testing, approving, and regulating new drugs,
robotics, and other medical devices, that will not only improve the
health conditions for millions of Americans, but in many cases actually
save lives. They are working to ensure the food we eat is safe and free
of disease-causing contaminants, and working to ensure new food
products, food additives, and dietary supplements pose no threat to our
health.
And the FDA employees who work in the field offices and
laboratories located throughout the country have developed valuable
working relationships with top scientists, health officials, and local
industries. These employees help protect consumers from mislabeled
foods, food borne diseases, defective medical devices, or unsafe
cosmetics or drugs. And they work very closely with Customs, USDA, and
others at our borders and ports, to inspect and test imported foods and
drugs.
We would like to offer our feedback on a few critical areas of the
FDA budget for fiscal year 2003. First, while the Administration has
requested a $123 million budget increase for the FDA over last year's
funding level, more than half of that increase is attributed to a
budget gimmick suggested by the Administration, that would, for the
first time, require the agency to pre-fiend future retiree health and
retirement costs from current appropriations. On March 13, the House
Budget Committee declined to include this proposal in its fiscal year
2003 Budget Resolution unless, and until, the appropriate authorizing
committee makes this change into law.
Thus, the ``real'' increase in funding over last year's levels is
merely $60 million. Congress should not be misled about the impact
these new creative accounting procedures being used by the Office of
Management and Budget will have on the FDA and other agencies.
NTEU urges Congress to provide significantly more finding than the
amount requested by the Administration so that FDA can better respond
to the constantly changing and complex public health threats facing our
nation. Denying FDA adequate staffing and resources to do its job will
deny Americans the public health protections and benefits they expect
and deserve. It is impossible to put a dollar figure on the lives saved
by expediting the approval of a new medical device or detecting a food
borne pathogen before that food product makes it to the supermarket
shelf. But what is clear is that dollars spent in the FDA budget today
will reap enormous benefits for the American public tomorrow.
With regard to programs aimed at ensuring the safety of our food
supply, NTEU believes the FDA budget falls short. Each year in the
United States alone, there are 76 million food borne illnesses, which
result in 325,000 hospitalizations and 5,200 deaths annually. NTEU
applauds Congress for providing funds in the current fiscal year for
FDA to hire and train additional staff to inspect, test, and
investigate food imports and our domestic food supply. But without more
funding for staffing to conduct additional inspections, our food supply
will remain vulnerable.
Next, regarding drug and medical device activities, the budget
request for FDA does not come anywhere near the amount needed to match
the dramatic increases in funding for research by the National
Institutes of Health and the private sector. NIH, pharmaceutical
companies, and academia have nearly tripled the amount of money spent
on medical research over the past ten years, from a total of
approximately $20 billion in 1992 to nearly $60 billion in 2002. Yet
during this same period, the FDA budget, adjusted for inflation, has
remained flat. If Americans are to benefit as quickly as possible from
medical breakthroughs resulting from our research investments, then the
Administration and Congress must ensure the FDA the agency charged with
regulating these new drugs and medical technologies--receives, at a
minimum, funding increases proportionate to the increases for the NIH.
While the Administration did request a modest increase for drug and
medical device programs, the increase does not provide enough funding
to staff the increased workload in approving and ensuring the safety of
drugs and medical devices before they reach the public.
NTEU was also very disappointed the Administration requested only a
$1 million increase for counter terrorism activities performed by FDA
employees. Last year, in the emergency supplemental appropriations
bill, Congress recognized the need for increased counter terrorism
resources for the FDA by appropriating nearly fifty percent more
funding than what the Administration had requested. Yet even with
Congress' strong endorsement of FDA's role in the war on terrorism, the
Administration requested an increase of less than one percent over last
year's funding level for FDA counter terrorism activities. If provided
with additional funding, the FDA could rapidly train and place in the
field an additional 500 employees to bolster counter terrorism efforts.
Next, I would like to express NTEU's concerns about the proposal to
transfer the FDA Offices of Legislative and Public Affairs to the
Office of the Secretary at the Department of Health and Human Services.
This proposal would also require the consolidation within HHS of
communications, legislative, and public affairs offices from other
agencies such as NIH and the Centers for Disease Control and
Prevention. While NTEU recognizes the importance of keeping the
Secretary involved in FDA activities, we believe the decentralized
public information and legislative affairs structure within HHS has
given lawmakers and the American public the access to experts they need
to get specialized information in science and medicine. Consolidation
of these important functions will likely slow the flow of information
from the agencies and could also lead to inaccurate and/or incomplete
communications to the public and to Congress.
Finally, we wish to express our concerns about a different
consolidation proposal being floated by Governor Tom Ridge, the
Director of the Office of Homeland Security. This proposal would
consolidate the food inspection programs at the FDA with meat
inspection functions at the Agriculture Department. While the FDA and
Agriculture inspection activities are similar in many ways, they have
many differences that should not be overlooked. Before moving forward
with this consolidation, the Office of Homeland Security should work
with the front-line employees actually doing the inspections now, to
determine how best to improve our food inspection programs. Again,
agencies should not consolidate merely for the sake of consolidating.
There ought to be measurable operational efficiencies and benefits
gained for the American public by doing so.
Thank you for giving NTEU the opportunity to share our views on the
FDA budget for fiscal year 2003. We thank this subcommittee for its
support of FDA programs in the past, and we urge you to work with the
Administration to provide FDA with the staffing and resources necessary
to protect and improve the health of the American public.
______
Prepared Statement of the National Turfgrass Evaluation Program
Mr. Chairman and Members of the Subcommittee: On behalf of the
National Turfgrass Evaluation Program (NTEP), I appreciate this
opportunity to provide the Subcommittee with the turfgrass industry's
perspective in support of continuation of the $55,000 appropriation for
the National Turfgrass Evaluation Program (NTEP) included in the
President's fiscal year 2003 budget request for the Agricultural
Research Service (ARS). Also, I appreciate the opportunity to present
to you the turfgrass industry's need and justification for continuation
of the $490,000 appropriated in the Presidents's fiscal year 2002
budget for the full-time turfgrass scientist position within ARS. In
addition, I appreciate the consideration of an additional appropriation
of $3,500,000 for the establishment of a national turfgrass research
laboratory, as a part of the national turfgrass research initiative
proposed by ARS, with ten new research scientist positions.
Justification of $55,000 Appropriation Request for Program Support.
Once again, NTEP and the turfgrass industry come to the
appropriations process to request continuation of the $55,000 basic
program support in the ARS budget for NTEP's activities at Beltsville.
We appreciate the Subcommittee's continuation of this amount as in
previous fiscal years, and hope that you will agree with us that this
request is justified for the ensuing fiscal year.
The National Turfgrass Evaluation Program (NTEP) is unique in that
it provides a working partnership that links the Federal Government,
turfgrass industry and land grant universities together in their common
interest of turfgrass cultivar development, improvement and evaluation.
The National Turfgrass Evaluation Program is the primary means by which
cultivated varieties of turfgrass are evaluated in this country. It
provides unbiased information on turfgrass cultivar adaptations,
disease and insect resistance and environmental stress tolerance. The
public and private sectors of the turfgrass industry use this
information to develop cultivar recommendations for home owners, sod
producers, sports turf and parks managers, golf course superintendents
and highway vegetation managers.
Our nation's awareness of safety is at an all-time high. Turfgrass
provides multiple benefits to society including child safety on
athletic fields, environmental protection of groundwater, reduction of
silt and other contaminants in runoff, green space in home lawns,
parks, golf courses, etc. With the advancements being made to
turfgrasses that require less pesticides, water and other inputs as
well as other efforts to improve integrated pest management programs,
recycling, etc., the USDA has a unique opportunity to take positive
action in support of the turfgrass industry. With a minuscule
investment of Department funds, in relative terms within USDA's budget,
a tremendous return can be gained for society and the turfgrass
industry.
While the vast majority of the USDA's funds have been and will
continue to be directed toward traditional ``food and fiber'' segments
of U.S. agriculture, it is important to note that turfgrasses (e.g.,
sod production) are defined as agriculture in the Farm Bill and by many
other departments and agencies. Further, it is estimated by the
Economic Research Service that the turfgrass industry, in all its
forms, is a $35-40 billion industry. It should also be noted that the
turfgrass industry is the fastest growing segment of U.S. agriculture,
while it receives essentially no Federal support. There are no subsidy
programs for turfgrass, nor are any desired.
For the past 70 years, the USDA's support for the turfgrass
industry has been modest at best. The turfgrass industry's rapid
growth, importance to our urban environments, and impact on our daily
lives warrant more commitment and support from USDA. Failing to support
the National Turfgrass Evaluation Program, would be a tremendous
oversight of a major opportunity. USDA's basic support of NTEP at the
$55,000 level does not cover all costs. In fact, NTEP represents an
ideal partnership of the public and private sectors in terms of program
cost sharing. The NTEP relies most heavily on turfgrass industry (i.e.,
public sectors, end-users) support. However, it is essential that the
USDA maintain its modest financial support and work closely with NTEP.
The turfgrass industry relies heavily on NTEP for unbiased information.
Discounting this support will also eliminate a highly reliable and
credible level of objectivity that is associated with the NTEP program.
Justification of $490,000 Appropriation Request for the ARS Scientist
Position as well as $3,500,000 Appropriation Request for the
Establishment of a National Turfgrass Research Laboratory
NTEP and the turfgrass industry are requesting the Subcommittee's
support for $490,000 continuing funding for the full-time scientist
staff position at ARS, focusing on turfgrass research, that was
appropriated in the fiscal year 2002 budget. We also request that the
Subcommittee appropriate an additional $3,500,000 for establishment of
the initial stage of a national turfgrass research laboratory within
USDA, ARS, which ARS estimates will be a $20 million venture over
several years of development. This laboratory would address the
specific need of collecting, evaluating and enhancing turfgrass
germplasm. For this undertaking, we ask that five new scientist
positions be created and located at the Beltsville Agricultural
Research Center in Beltsville, MD. In addition, we ask that five new
scientist positions be created to conduct watershed-level modeling
research on turfgrass and development of management systems to minimize
surface runoff and groundwater impacts from turf inputs. These five
positions may be located at existing ARS centers of watershed quality/
modeling expertise.
Our society is becoming increasingly more urbanized. Currently,
turfgrasses impact more than 90 percent of all people in the U.S.
through exposure to home lawns, business landscapes, roadsides, parks,
or recreational turf on a daily basis. As more and more cropland is
converted to houses, office parks, shopping centers, etc., the acreage
of turfgrass is increasing exponentially. However, with the increasing
urbanization comes a greater demand on resources, such as potable
water. Also, with the general public experiencing heightened awareness
of the environment and its protection, use of inputs such as
fertilizer, pesticides and water on turfgrass areas is coming under
greater scrutiny. In some jurisdictions, use of these inputs will
either be banned or severely restricted for turfgrass use. In addition,
the urbanization of America is leading to an overuse of current
recreational facilities such as parks, athletic fields and golf
courses. New facilities are being considered or constructed, many on
abandoned sites such as landfills, industrial wastelands, gravel pits
or mine spoils. Turfgrasses in these areas will play an important role
in reclamation vegetation, recreational turf or both.
The USDA needs to initiate and maintain ongoing research on
turfgrass development and improvement for the following reasons:
The value of the turfgrass industry in the U.S. is $35-$40 billion
annually. Turfgrass is the number one or two agricultural crop in value
and acreage in many states (i.e. MD, PA, FL, NJ, NC).
As our society becomes and more urbanized, the acreage of turfgrass
will increase significantly. Consequently, state and local
municipalities will require the utilization of other water sources
(i.e. effluent, reclaimed, etc.), reduction of pesticide use and
elimination of nutrient runoff from turfgrass. However, demand on
recreational facilities will increase while these facilities, for
safety reasons, will still be required to provide safe, attractive
athletic fields, parks and grounds.
Private and university research programs are working to develop
improved turfgrasses, but they do not have the time nor resources to
identify completely new sources of beneficial genes in commonly used
species or the usefulness of potential new species. In addition, new
plant materials collected by these institutions most often are not
placed in the National Plant Germplasm System for use by all interested
parties. Additionally, long-term research to identify and transfer
desirable genes from other species (turfgrass or other crop species) is
not being undertaken by public and private interests. ARS scientists
working with turfgrass will enhance the ongoing research and
development currently underway within the public and private sectors of
the turfgrass industry.
Water management is a key component of healthy turf and has direct
impact on nutrient and pesticide losses into the environment. New and
improved technologies are needed to monitor turf stresses and to
schedule irrigation to achieve the desired turf quality. Increasing
demands and competition for potable water make it necessary to use
water more efficiently for turf irrigation. Technologies are needed to
more efficiently and uniformly apply irrigations to achieve desired
turf quality for the intended use. Also, there is greater competition
for potable water. Therefore, to increase water availability for turf
irrigation, waste water (treated and untreated) from both animal and
municipal sources as well as from food processing plants must be
utilized. Some of these waste waters contain contaminants such as
pathogens, heavy metals, and organic compounds. consequently, movement
and accumulation of these contaminants in the atmosphere, soil profile,
and ground water must be determined.
USDA conducted significant turfgrass research from 1920-1988.
However, since 1988, no full-time scientist has been employed by USDA,
Agricultural Research Service (ARS) to conduct turfgrass research
specifically.
Research on florist, nursery and ornamental crops is significant
within USDA, industries with far less public and commercial value than
turfgrass.
A new turfgrass research scientist position within USDA, ARS was
created by Congress in the fiscal year 2001 budget. Accordingly, in
January 2001, the turfgrass industry met with USDA, ARS officials to
discuss the position description, hiring process, facilities needed,
etc. for the new position. ARS welcomed the new position but felt
strongly that just one person working in turfgrass research would be
ineffective in addressing the needs and concerns of the industry.
Therefore, in January 2002, ARS held a customer workshop to gain
valuable input from turfgrass researchers, golf course superintendents,
sod producers, lawn care operators, athletic field managers and others
on the research needs of the turfgrass industry. As a result of the
workshop, ARS is developing and proposing a national strategy to
address the specific needs and concerns within the turfgrass industry.
The highlights of this strategy are below:
a national strategy for ars turfgrass research
Research Objectives.--Conduct long-term basic and applied research
to provide knowledge, decision-support tools and plant materials to aid
in designing, implementing, monitoring and managing economically and
environmentally sustainable turfgrass systems including providing sound
scientifically based information for use in the regulatory process.
Research Focus.--To make a significant contribution in developing
and evaluating sustainable turfgrass systems, ARS proposes developing
research programs in six major areas:
Component I. Turf Germplasm, Genetics, and Genomics
Rationale.--Grasses that better resist diseases, insects, drought,
traffic, etc. are deparately needed. Also, a better understanding of
the basic biology of turfgrass species is essential.
Component II. Soil Management for Turf
Rationale.--Research is needed to characterize limitations to turf
growth and development in less than optimum soils and to develop cost-
effective management practices to overcome these limitations.
Component III. Turf Water Supply and Use
Rationale.--New and improved technologies are needed to monitor
turf stresses and to schedule irrigation to achieve desired turf
quality but with greater efficiency or using other water sources.
Component IV. Turf Pest Control and Management
Rationale.--New tools and management practices are needed to
adequately control weeds, diseases, insects and vertebrate pests while
reducing input costs and pesticide use.
Component V. Environmental Aspects of Turf
Rationale.--The need is great to quantify the contribution of turf
systems to water quality and quantify of vital importance in addressing
the potential role of turf systems in environmental issues.
Component VI. Integrated Turf Management
Rationale.--To develop needed tools for turf managers to select the
best management practices for economic sustainability as well as
environmental protection.
The turfgrass industry is very excited about this new proposal and
wholeheartedly supports the efforts of ARS. Since the customers at the
workshop identified turfgrass genetics/genomics and water quality/use
as their top priority areas for ARS research, for fiscal year 2003, the
turfgrass industry requests that the following units be established
within USDA, ARS:
A turfgrass genomics unit (five new positions) to conduct the
following research:
--Plant Germplasm Collection and Evaluation.--The new position
created in the fiscal year 2001 budget will fulfill these
duties.
--Genomics/Genetics Studies.--A molecular geneticist or
cytogeneticist to betterunderstand the genomics of various
turfgrass species, collected wild germplasm and their
evolution.
--Transfer of Desirable Genes.--A molecular geneticist to identify
desirable genes and how they may be transferred to current
turfgrass species.
--Evaluation and Enhancement of Genetically Altered Grasses.--A
turfgrass breeder to evaluate and enhance the genetically
altered plants from the program.
--Turfgrass Entomology.--An entomologist to identify insect resistant
germplasm and evaluate promising new species and potential
releases.
--Turfgrass Pathology.--A pathologist to identify disease resistant
germplasm and evaluate promising new species and potential
releases.
A turfgrass water quality/systems unit (five new positions) to
conduct the following research:
--Watershed Modeling.--To first conduct watershed modeling of
existing turf systems on a regional basis. This research is
essential to document the contribution of turf to the overall
quality of surface and groundwater in the U.S.
--Management Systems.--This unit also needs to conduct research on
management systems designed to reduce/eliminating any runoff
and groundwater contamination from turf inputs.
In conclusion, on behalf of the National Turfgrass Evaluation
Program and the turfgrass industry across America, I respectfully
request that the Subcommittee continue the vital $55,000 appropriation
for the National Turfgrass Evaluation Program (NTEP) as well as the
$490,000 appropriated in fiscal year 2002 for the new turfgrass
scientist position within the Agricultural Research Service. I also
request that the Subcommittee appropriate an additional $3,500,000 for
the establishment of a turfgrass genetics/genomics unit and a turfgrass
water quality/systems unit within USDA, ARS.
Thank you very much for your assistance and support.
______
Prepared Statement of the National Watershed Coalition
Mr. Chairman and Members of the Subcommittee: Mr. Chairman and
members of the Subcommittee, I am Larry Smith from Berkeley Springs,
West Virginia, and I am pleased to represent the National Watershed
Coalition (NWC) as its Chairman. The National Watershed Coalition is
privileged to present this testimony in support of the most beneficial
water resource conservation programs ever developed in the United
States. The Coalition recognizes full well the need to use our tax
dollars wisely. That makes the work of this Subcommittee very
important. It also makes it imperative that the Federal programs we
continue, are those that provide real benefit to society, and are not
programs that would be nice to have if funds were unlimited. We believe
the Watershed Program (Public Law 83-566) and the Flood Prevention
Operations Program (Public Law 78-534) are examples of those rare
programs that address our nation's vital natural resources which are
critical to our very survival, do so in a way that provide benefits in
excess of costs, and are programs that serve as models for the way all
Federal programs should work. The President's proposed budget, which
would eliminate these most beneficial programs, is illogical and
completely unacceptable to watershed project sponsors throughout the
United States.
general watershed program observations
The watershed as the logical unit for dealing with natural resource
problems has long been recognized. Public Law 566 offers a complete
watershed management approach, and should have a prominent place in our
current Federal policy emphasizing watersheds and total resource
management based planning. Proper watershed management improves water
quality. Why should the Federal Government be involved with these
watershed programs?
--They are programs whose objectives are the sustaining of our
nation's precious natural resources for generations to come.
--They are not Federal, but Federally assisted, locally sponsored and
owned. They do not represent the continued growth of the
Federal Government.
--They are locally initiated and driven. Decisions are made by people
affected, and respect private property rights.
--They share costs between the Federal Government and local people.
Local sponsors pay between 30-40 percent of the total costs of
Public Law 566 projects.
--They produce net benefits to society. The most recent program
evaluation demonstrated the actual ratio of benefits to costs
was approximately 2.2:1. The actual adjusted economic benefits
exceeded the planned benefits by 34 percent. How many other
Federal programs do so well?
--They consider and enhance environmental values. Projects are
subject to the discipline of being planned following the
National Environmental Policy Act (NEPA), and the Federal
``Principles and Guidelines'' for land and water projects. That
is public scrutiny!
--They are flexible programs that can adapt to changing needs and
priorities. Objectives that can be addressed are flood damage
reduction, watershed protection (erosion and sediment control),
water quality improvement, rural water supply, water
conservation, fish and wildlife habitat improvement,
recreation, irrigation and water management, etc. That is
flexibility emphasizing multiple uses.
--They are programs that encourage all citizens to participate.
--They can address the needs of low income and minority communities.
--They are targeted to address the most serious resource problems.
--And best of all--they are programs the people like!
The National Watershed Coalition is concerned with the
Administration's lack of support for these watershed programs, and
trusts your support will cause the outcome of the fiscal year 2003
appropriations process will enable this vital work to continue and
expand as we seek to preserve, protect and better manage our nation's
water and land resources. Every State in the United States has
benefited from the Small Watershed Program.
national watershed coalition usda water resource program budget
recommendations
Watershed and Flood Prevention Operations
In order to continue this high priority work in partnership with
states and local governments, the Coalition recommends a fiscal year
2003 funding level of $170 million for Watersheds and Flood Prevention
Operations, Public Law 83-566 and Public Law 78-534. The current
unfunded Federal commitment for this program is currently over $1.4
billion.
We recommend that $30 million of this amount be for Public Law 78-
534 projects. For some years now, the Federal budget has eliminated the
separate line items for the Public Law 534 and Public Law 566 watershed
projects, and just lumped a total figure under Public Law 566 with a
note that some amount ``may be available'' for Public Law 534 projects.
This is an entirely unsatisfactory way of doing business. Public Law
534 still exists in law; it has not been repealed. It should be funded
as a separate program. This tactic is unfair to both Public Law 566 and
Public Law 534. We ask that the Public Law 534 projects be funded at
$30,000,000.00, and that it be separate from Public Law 566. These are
two distinct authorities that should not be confused. The current
situation really penalizes both Public Law 534 and 566, as 534 has no
funds at the outset, and in order to provide a little something to the
Public Law 534 watershed projects, NRCS has to take money from the
Public Law 566 accounts which are already very underfunded. Please
restore funding for Public Law 534 watershed projects to $30 million in
fiscal year 2003.
The $170 million request represents the actual amount watershed
project sponsors across the country have indicated they can use now for
projects ready for installation. It is a real, documented need.
Watershed Surveys and Planning
We recommend that watershed surveys and planning be funded at $20
million. Watershed sponsors throughout the country have indicated a
need for $35 million for surveys and planning, however the National
Watershed Coalition believes the $20 million amount is a more
reasonable request when all national water resource priorities are
considered.
Watershed Rehabilitation
We also suggest that $25 million be used for structural
rehabilitation and replacement, in accordance with Public Law 106-472,
the Small watershed Rehabilitation Amendments of 2000, passed by the
Congress and signed into law on November 9th, 2000, and that another $5
million be available for a thorough assessment of rehabilitation needs.
The condition of our nation's dams, and the need for watershed
structure rehabilitation, is a national priority. We are very
disappointed to see the Administration's proposed budget apparently
doesn't believe it is a national priority to protect the lives of
America's citizens. Congress has indicated it is with passage of Public
Law 106-472.
The issue of the current condition of those improvements
constructed over the last 50 years with these watershed programs is a
matter of great concern. Many of the nearly 11,000 dams that NRCS
assisted sponsors build throughout the United States no longer meet
current dam safety standards largely as a result of development, and
need to be upgraded to current standards. A USDA study published in
1991 estimated that in the next 10 years, $590 million would be needed
to protect the installed works. Of that amount, $100 million would come
from local sponsors as their operation and maintenance contributions.
NRCS also conducted a more recent survey, and in just 22 states, about
$540 million in rehabilitation needs were identified. We are
recommending starting with $30 million ($25 million for rehabilitation
work and $5 million to start a more precise assessment of needs) for
the work necessary to protect these installed structures, and commend
Congress for their leadership in passing Public Law 106-472. Watershed
project sponsors throughout the U.S. appreciate your leadership on this
vital issue. We now have the authorization, and need the
appropriations. If we don't start to pay attention to our rural
infrastructure needs, the ultimate cost to society will only increase,
and project benefits will be lost. This is a serious national issue.
Since most of these structures were constructed in the 1950's, 60's,
and 70's, and were originally designed for a 50-year life, it is
apparent we need to look at their current condition. If we do the
rehabilitation work to bring these older structures up to current
health and safety standards, they will continue to provide benefits far
into the future. We are appalled that the Administration's budget would
eliminate this work. Elimination is not acceptable to watershed project
sponsors.
Emergency Watershed Protection (EWP)
We also suggest $20 million be provided for the Emergency Watershed
Protection (EWP) program. This would allow NRCS to start providing
disaster planning and survey assistance in a timely manner while
supplemental natural disaster appropriation bills are being considered.
These funds should not be taken from watershed protection and flood
prevention, or the watershed surveys and planning accounts.
Watershed Research and Development
There is also a research and development (R&D) need as we get the
structural rehabilitation process underway. In USDA, that work in
undertaken by the Agricultural Research Service (ARS). That need is
estimated at $2.0 million, and we ask that it be included in the ARS
budget. It would be used for evaluation of upstream and downstream
changes to the stream channel systems in cases of decommissioning,
evaluation of the water quality impact of stored sediment releases, and
the evaluation of impacts of the loss of flood protection, among other
things.
People should understand these funds are only a part of the total
that is committed to this vital national, conservation purpose. The
local project sponsors in these ``federally assisted'' endeavors have a
tremendous investment also. Congress increasingly talks of wanting to
fund those investments in our nation's infrastructure that will sustain
us in the future. Yet past budgets have regularly cut funding for the
best of these programs. This makes absolutely no sense! We can't seem
to invest and re-invest in our vital watershed infrastructure. That is
simply unconscionable. Isn't water quality and watershed management a
national priority? We believe it is.
The President's Budget Proposals
While we have mentioned it in this testimony, we would like to once
again express our dismay with the Administration's budget proposals to
eliminate all watershed program funding in fiscal year 2003. The
President's budget was released February 4th, and since then sponsors
from all across the U.S. have told us these proposals are unacceptable.
Once again we are disappointed with what appears to us to be a lack of
Administration commitment for these very beneficial conservation
programs. The Administration needs to recognize watershed natural
resources conservation as a high national priority, as you do. It's
only common sense.
The Coalition appreciates the opportunity to offer these comments
regarding fiscal year 2003 funding for the water resource programs
administered by USDA's Natural Resources Conservation Service (NRCS).
With the ``downsizing'' the NRCS has experienced, we would be remiss if
we did not again express some concern as to their ability to provide
adequate technical support in these watershed program areas. NRCS
technical staff has been significantly reduced and budget constraints
have not allowed that expertise to be replaced. Traditional fields of
engineering and economics are but two examples. We see many states
where NRCS capability to support their responsibilities is seriously
diminished. This is a disturbing trend that needs to be halted. This
downsizing has a very serious effect on state and local conservation
programs. Local Watershed and Conservation Districts and the NRCS
combine to make a very effective delivery system for providing the
technical assistance to local people--farmers, ranchers and rural
communities--in applying needed conservation practices. But that
delivery system is currently very strained! Many states and local units
of government also have complementary programs that provide financial
assistance to land owners and operators for installing measures that
reduce erosion, improve water quality, and maintain environmental
quality. The NRCS provides, through agreement with the USDA Secretary
of Agriculture, ``on the land'' technical assistance for applying these
measures. The delivery system currently is in place, and by downsizing
NRCS, we are eroding the most effective and efficient coordinated means
of working with local people to solve environmental problems that has
ever been developed. Our system and its ability to produce food and
fiber is the envy of the entire world. In our view, these programs are
the most important in terms of national priorities.
We continue to be disappointed that the subcommittee no longer has
a practice of accepting oral testimony from organizations such as the
National Watershed Coalition. When we were allowed to make an oral
presentation in the House, we were able to talk to subcommittee members
who could ask us questions. It was a chance for them to actually talk
with people doing the work on the land. That personal contact in both
houses is now missing, and it would be easy to think that our written
testimony may not be seriously considered. We hope you will reconsider
this practice in future years, and again allow oral testimony.
The Coalition pledges its full support to you as you continue your
most important work. Our Executive Director, Mr. John W. Peterson, who
has over 40 years experience in natural resource watershed
conservation, is located in the Washington, DC area, and would be
pleased to serve as a resource as needed. John's address is 9304 Lundy
Court, Burke, VA 22015-3431, phone 703-455-6886 or 4387, Fax; 703-455-
6888, email; [email protected].
Thank you for allowing the National Watershed Coalition (NWC) this
opportunity.
______
Prepared Statement of the Nez Perce Tribe
The Nez Perce Tribe requests the following funding amounts for
fiscal year 2003, which are specific to the Nez Perce Tribe: $228,708
through the United States Department of Agriculture, Animal and Plant
Health Inspection Service for the biological control of noxious weeds
for implementation, monitoring, and education.
The Tribe urges support for the full and adequate funding of tribal
programs through the Department of Agriculture fiscal year 2003 budget,
with the specific request discussed below.
Nez Perce Tribe Biological Control Center Funding: USDA, $228,708
The Nez Perce Tribe established the Bio-Control Center in 1999
thanks to grant funds from the USDA-Business Cooperative Services
program. Since its inception, the Center has developed partnerships and
networks to coordinate the biological control of weeds through the
State of Idaho and worked collaboratively with the USDA to develop and
implement monitoring protocols. The Center has been instrumental in
providing biological control agent releases and monitoring under
contractual agreements with private landowners and state and Federal
agencies throughout the region. In coordination with the University of
Idaho, the USDA-APHIS Plant Protection and Quarantine staff in Idaho,
Oregon, Montana, and Washington, and the ARS Western Regional Research
Unit, the Center has established biocontrol organism nurseries,
distributed biocontrol organisms, and has monitored the results to
biocontrol on targeted weed infestations. The Center is also an active
participant in several Cooperative Weed Management Areas within Idaho.
The biological control of weeds uses the weeds' natural enemies to
reduce the weeds' ability to compete with the desired vegetation.
Biological control techniques have been used in the West since 1940 to
reduce weed density on range and wildlands where cultural and chemical
control methods are not economically feasible or practical. This
allocation would enable the Tribe to continue to rear and provide
biological control organisms to private and public entities at no cost,
to monitor the impacts, develop technology transfer materials, and host
seminars and other educational programs for all interested parties.
For fiscal year 2003, the Nez Perce Tribe requests that Congress
earmark $228,708 from the USDA Animal Plant Health Inspection Service
to continue the Biocontrol Center's efforts to establish nurseries to
increase biological control availability, distribute biological control
organisms throughout weed infestation areas, monitor the impacts, and
provide annual technology transfer seminars to Cooperative Weed
Management Area partners. This program will be developed in
coordination with USDA, local universities, and regional experts.
Biological control offers long-term solutions to the management of
invasive weeds through the West. As biological control organisms reduce
the weeds' competitive edge over desirable and native vegetation, both
tribal and non-tribal users of the region's wildland resources will
benefit and become more aware of the advantages of a biological weed
control approach.
______
Prepared Statement of the New Jersey Aquaculture Association
Mr. Chairman and members of the Subcommittee: The New Jersey
Aquaculture Association membership represents about fifty individuals
and companies that are engaged in a variety of aquaculture activities,
ranging from shellfish, ornamentals and finfish production to research
and technical assistance for the producer community. I have personally
been involved in aquaculture initiatives for over forty years in
applied research, technology development and as a small scale producer
of shellfish. I have participated in the evolution of the Northeastern
Regional Aquaculture Center since its inception, having served on its
Board of Directors and Executive Committee as an industry advocate for
server terms. My origin in the research community, a close liaison with
governmental resource management agencies and a long and intimate
association with commercial aquaculturists in America and in Europe
have fostered a perspective in this field which is somewhat broader
that that of most observes. The operational strategy of the RAC system
incorporates formulating and executing research, development and
extension projects. I am convinced that this is probably the most cost-
effective approach to increasing out aquaculture production capacity. I
have seen this strategy applied successfully in implementing many of
the projects supported by the NRAC.
It is clear that yields from the wild fisheries have reached a
plateau, and in many cases are in decline; however, the demand for
fisheries products continues to expand and will soon greatly exceed the
productivity of wild populations. Aquaculture is an obvious means to
satisfy the impeding production deficit. Other countries, having long
since recognized that reality of this vexing shortfall, have taken the
initiative to develop a strong aquaculture industry. The majority of
research that originates within the academic community, though
scientifically valid, seldom addresses the immediate technical problems
of the aquaculturist. The RAC approach, by virtue of the program's
mission, is ideally suited to selecting and funding the types of
research and development projects that are critical to successfully
meeting the goal of increasing levels of aquaculture productivity.
There is a considerable potential for benefits to accrue from a
relatively small investment dedicated to increasing aquaculture
production, as envisioned and fostered by the RAC program. These
benefits will have substantial positive impact, not only for the
industry, but for the consumer, for auxiliary businesses and for
society in general. Therefore, we request that your committee give
careful consideration to adequate support for this program and
recommend to Congress that it provide funding at the level authorized
in the Food Security Act of 1985.
______
Prepared Statement of the Northwest Indian Fisheries Commission
Mr. Chairman and Members of the Committee, I am Billy Frank, Jr.,
Chairman of the Northwest Indian Fisheries Commission (NWIFC), and on
behalf of the twenty-Western Washington member Tribes, I submit this
request for appropriations to support the research, sanitation and
marketing of Tribal shellfish products. We request the following:
$500,000 to support commercial harvests costs which will assist the
tribes in fulfilling the demands for their shellfish products both
domestically and abroad;
$1,000,000 to support water and pollution sampling, sampling and
research for paralytic shellfish poisoning and coordination of research
projects with State agencies; and,
$1,000,000 to support data gathering at the reservation level for
the conduct of shellfish population surveys and estimates.
treaty shellfish rights
As with salmon, the tribes' guarantees to harvest shellfish lie
within a series of treaties signed with representatives of the Federal
Government in the mid-1850s. In exchange for the peaceful settlement of
what is today most of Western Washington, the tribes reserved the right
to continue to harvest finfish and shellfish at their usual and
accustomed grounds and stations. The tribes were specifically excluded
from harvesting shellfish from areas ``staked or cultivated'' by non-
Indian citizens. Soon after they were signed, the treaties were
forgotten or ignored.
The declining salmon resource in the Pacific Northwest negates the
legacy Indian people in Western Washington have lived by for thousands
of years. We were taught to care for the land and take from it only
what we needed and to use all that we took.
We depended on the gifts of nature for food, trade, culture and
survival. We knew when the tide was out, it was time to set the table
because we live in the land of plenty; a paradise complete. Yet,
because of the loss of salmon habitat which is attributable to
overwhelming growth in the human population, a major pacific coastal
salmon recovery effort ensues. Our shellfish resource is our major
remaining fishery.
At least ninety types of shellfish have been traditionally
harvested by the Tribes in Western Washington and across the continent
Indian people have called us the fishing Tribes because of our rich
history of harvesting and caring for finfish and shellfish. Our
shellfish was abundant and constituted a principal resource of export,
as well as provided food to the Indians and the settlers which greatly
reduced the living expenses.
Clams, crab, oysters, shrimp, and many other species were readily
available year round. The relative ease with which large amounts could
be harvested, cured, and stored for later consumption made shellfish an
important source of nutrition second only in importance to salmon.
Shellfish remain important for subsistence, economic, and ceremonial
purposes. With the rapid decline of many salmon stocks, due to habitat
loss from western Washington's unrelenting populous growth, shellfish
harvesting has become a major factor in tribal economies.
The tribes have used shellfish in trade with the non-Indian
population since the first white settlers came into the region a
century and a half ago. Newspaper accounts from the earliest days of
the Washington Territory tell of Indians selling or trading fresh
shellfish with settlers. Shellfish harvested by members of western
Washington's Indian tribes is highly sought after throughout the United
States and the Far East. Tribal representatives have gone on trade
missions to China and other Pacific Rim nations where Pacific Northwest
shellfish particularly geoduck is in great demand. Trade with the Far
East is growing in importance as the tribes struggle to achieve
financial security through a natural resources-based economy.
Treaty language pertaining to tribal shellfish harvesting included
this section:
``The right of taking fish at usual and accustomed grounds and
stations is further secured to said Indians, in common with all
citizens of the United States; and of erecting temporary houses for the
purposes of curing; together with the privilege of hunting and
gathering roots and berries on open and unclaimed lands. Provided,
however, that they not take shell-fish from any beds staked or
cultivated by citizens.''
(treaty with the s'klallam, january 26, 1855)
In exchange for the peaceful settlement of what is today most of
western Washington, the tribes reserved the right to continue to
harvest finfish and shellfish at all of their usual and accustomed
grounds and stations. The tribes were specifically excluded from
harvesting shellfish from areas ``staked or cultivated'' by non-Indian
citizens.
Tribal efforts to have the Federal Government's treaty promises
kept began in the first years of the 20th Century when the United
States Supreme Court ruled in U.S. v. Winans, that where a treaty
reserves the right to fish at all usual and accustomed places, a state
may not preclude tribal access to those places.
Sixty years later, the tribes were again preparing for battle in
court. After many years of harassment, beatings and arrests for
exercising their treaty-reserved rights, western Washington tribes took
the State of Washington to Federal court to have their rights legally
re-affirmed. In 1974, U.S. District Court Judge George Boldt ruled that
the tribes had reserved the right to half of the harvestable salmon and
steelhead in western Washington.
The ``Boldt Decision,'' which was upheld by the U.S. Supreme Court,
also re-established the tribes as co-managers of the salmon and
steelhead resources in western Washington.
As a result of this ruling, the tribes became responsible for
establishing fishing seasons, setting harvest limits, and enforcing
tribal fishing regulations. Professional biological staffs, enforcement
officers, and managerial staff were assembled to ensure orderly,
biologically-sound fisheries.
Beginning in the late 1970s, tribal and state staff worked together
to develop comprehensive fisheries that ensured harvest opportunities
for Indian and non-Indian like, and also preserved the resource for
generations to come.
It was within this new atmosphere of cooperative management that
the tribes sought to restore their treaty-reserved rights to manage and
harvest shellfish from all usual and accustomed areas. Talks with their
state counterparts began in the mid-1980s, but were unsuccessful. The
tribes filed suit in Federal court in May 1989 to have their shellfish
harvest rights restored.
The filing of the lawsuit brought about years of additional
negotiations between the tribes and the state. Despite many serious
attempts at reaching a negotiated settlement, the issue went to trial
in May 1994.
In 1994, District Court Judge Edward Rafeedie upheld the right of
the treaty tribes to harvest 50 percent of all shellfish species in
their Usual and Accustomed fishing areas. Judge Rafeedie also ordered a
shellfish Management Implementation Plan that governs tribal/state co-
management activities.
After a number of appeals, the U.S. 9th Circuit Court of Appeals
let stand Rafeedie's ruling in 1998. Finally, in June 1999, the U.S.
Supreme Court denied review of the District court ruling, effectively
confirming the treaty shellfish harvest right.
Assist the tribes in fulfilling the demands fortheir shellfish
products, $500,000
Shellfish harvested by members of Western Washington's Indian
tribes is highly sought after throughout the United States and the Far
East. We request $500,000 which will assist Tribes in promoting our
shellfish products, in both domestic and international markets. We are
now at a point in time when telecommunicating is both cost effective
and timely when marketing products. Tribal fishers are not capable of
supporting such an effort individually, but, could collectively benefit
if such a network could be developed through the Northwest Indian
Fisheries Commission and the Northwest Indian College in Bellingham,
Washington. This institution is capable of providing the technology
needed to implement such a marketing program for Tribal shellfish
products.
Water and pollution sampling, sampling and research for paralytic
shellfish poisoning and coordination of research projects
withState agencies, $1,000,000
Shellfish growing areas are routinely surveyed for current or
potential pollution impacts and are classified based on the results of
frequent survey information. No shellfish harvest is conducted on
beaches that have not been certified by the tribes and the Washington
Department of Health. Growing areas are regularly monitored for water
quality status and naturally-occurring biotoxins to protect the public
health.
However, both Tribal and non-Indian fisheries have been threatened
due to the lack of understanding about the nature of biotoxins,
especially in subtidal geoduck clams. Research targeted to better
understand the nature of biotoxins could prevent unnecessary illness
and death that may result from consuming toxic shellfish, and could
prevent unnecessary closure of tribal and non-Indian fisheries.
Data gathering at the reservation level for the conduct of shellfish
population surveys and estimates, $1,000,000
Very little current data and technical information exists for many
of the shellfish fisheries now being jointly managed by state and
Tribal managers. This is particularly true for many free-swimming and
deep-water species. This lack of information can not only impact
fisheries and the resource as a whole, but makes it difficult to assess
50/50 treaty sharing arrangements. Additionally, intertidal assessment
methodologies differ between state and tribal programs, and can lead to
conflicts in management planning.
Existing data systems must be enhanced for catch reporting,
population assessment and to assist enhancement efforts. Research on
methodology for population assessment and techniques also is critical
to effective management.
Onsite beach surveys are required to identify harvestable
populations of shellfish. Regular monitoring of beaches also is
necessary to ensure the beaches remain safe for harvest. Additional and
more accurate population survey and health certification data is needed
to maintain these fisheries and open new harvest areas. This
information will help protect current and future resources and provide
additional harvest opportunities.
conclusion
We ask that you give serious consideration to our needs. We are
available to discuss these requests with committee members or staff at
your convenience.
______
Prepared Statement of the Organization for the Promotion and
Advancement of Small Telecommunications Companies
Summary of request
The Organization for the Promotion and Advancement of Small
Telecommunications Companies (OPASTCO) seeks the Subcommittee's support
for fiscal year 2003 loan levels for the telecommunications loans
program and Rural Telephone Bank (RTB) program administered by the
Rural Utilities Service (RUS) in the following amounts:
[In millions of dollars]
5 percent hardship loans.......................................... 75
Treasury rate loans............................................... 300
Guaranteed loans.................................................. 120
RTB loans......................................................... 175
In addition, OPASTCO requests the following action by the
Subcommittee: (1) removal of the statutory 7 percent cap on Treasury
rate loans for fiscal year 2003; (2) removal of previous appropriations
act language limiting the retirement of Class A stock of the RTB to 5
percent; (3) a prohibition on the transfer of unobligated RTB funds to
the general fund of the Treasury; and (4) funding of the distance
learning/telemedicine and broadband grant and loan programs at
sufficient levels.
General
OPASTCO is a national trade association of more than 500 small
telecommunications carriers serving rural areas of the United States.
Its members, which include both commercial companies and cooperatives,
together serve over 2.5 million customers in 42 states. Approximately
half of OPASTCO's members are RUS or RTB borrowers.
Perhaps at no time since the inception of the RUS (formerly the
REA) has the telecommunications loans and RTB programs been so vital to
the future of rural America. The telecommunications industry is at a
crossroads, both in terms of technology and public policy. Rapid
advances in telecommunications technology in recent years have already
begun to deliver on the promise of a new ``information age.'' The
Federal Communications Commission's (FCC) ongoing implementation of the
landmark Telecommunications Act of 1996, as well as modernization
resulting from prior statutory changes to RUS's lending program, will
expedite this transformation. In addition, both Federal and State
policymakers have made deployment of advanced telecommunications
services a top priority. However, without continued support of the
telecommunications loans and RTB programs, rural telephone companies
will be hard pressed to build the infrastructure necessary to bring
their communities into this new age, creating a bifurcated society of
information ``haves'' and ``have-nots.''
Contrary to the belief of some critics, RUS's job is not finished.
Actually, in a sense, it has just begun. We have entered a time when
advanced services and technology--such as broadband fiber optics, high-
speed packet and digital switching equipment, and digital subscriber
line technology--are expected by customers in all areas of the country,
both urban and rural. Unfortunately, the inherently higher costs of
upgrading rural wireline networks, both for voice and data
communications, has not abated.
Rural telecommunications continues to be more capital intensive and
involves fewer paying customers than its urban counterpart. Nationally,
the population density in areas served by rural carriers is only about
13 persons per square mile. This compares to a national average
population density of 105 persons per square mile in areas served by
non-rural carriers. The FCC's most recent report on the deployment of
advanced telecommunications capability noted that a positive
correlation persists between population density and the presence of
subscribers to high-speed services. Indeed, the report stated that
high-speed subscribers were reported in 97 percent of the most densely
populated zip codes but in only 49 percent of the zip codes with the
lowest population densities. In order for rural telephone companies to
modernize their networks and provide their customers with advanced
services at reasonable rates, they must have access to reliable low-
cost financing.
The relative isolation of rural areas increases the value of
telecommunications services for these citizens. Telecommunications
enables applications such as high-speed Internet connectivity, distance
learning, and telemedicine that can alleviate or eliminate some rural
disadvantages. A modern telecommunications infrastructure can also make
rural areas attractive for some businesses and result in revitalization
of the rural economy. For example, businesses such as telemarketing and
tourism can thrive in rural areas, and telecommuting can become a
realistic employment option.
While it has been said many times before, it bears repeating that
RUS's telecommunications loans and RTB programs are not grant programs.
The funds loaned by RUS are used to leverage substantial private
capital, creating public/private partnerships. For a very small cost,
the government is encouraging tremendous amounts of private investment
in rural telecommunications infrastructure.
Most importantly, the programs are tremendously successful.
Borrowers actually build the infrastructure and the government gets
paid back with interest. There has never been a default in the history
of the telecommunications lending programs.
The Telecommunications Act of 1996 has heightened the need for the
telecommunications loans and RTB programs
The FCC's implementation of the Telecommunications Act of 1996 will
only increase rural telecommunications carriers' need for RUS
assistance in the future. The forward-looking Act defines universal
service as an evolving level of telecommunications services that the
FCC must establish periodically, taking into account advances in
telecommunications and information technologies and services. As
anticipated, in August 2001, the Federal-State Joint Board on Universal
Service sought comment on its review of the services supported by the
universal service mechanism. RUS has an essential role to play in the
implementation of the law, as it will compliment support mechanisms
established by the FCC and enable rural America to move closer to
achieving the federally mandated goal of rural/urban service and rate
comparability.
A $75 million loan level should be maintained for the 5 percent
hardship loan program
One of the most vital components of RUS's telecommunications loans
program is the 5 percent hardship loan program. These loans are
referred to as hardship loans for good reason: They provide below-
Treasury rate financing to telephone companies serving some of the most
sparsely populated, highest cost areas in the country. The commitment
these companies have to providing modern telecommunications service to
everyone in their communities has made our nation's policy of universal
service a reality and, in many cases, would not have been possible
without RUS's hardship loan program. Companies applying for hardship
loans must meet a stringent set of eligibility requirements and the
projects to be financed are rated on a point system to ensure that the
loans are targeted to the most needy and deserving. In fiscal year
2002, the government subsidy needed to support a $75 million loan level
was only $1.74 million. Given the necessity of this indispensable
program, it is critical that the loan level be maintained at $75
million for fiscal year 2003.
Removal of the 7 percent cap on Treasury rate loans should be continued
With regard to RUS's Treasury rate loan program, OPASTCO supports
the removal of the 7 percent ceiling on these loans for fiscal year
2003. This Subcommittee appropriately supported language in the fiscal
year 1996 Agriculture Appropriations Act to permit Treasury rate loans
to exceed the 7 percent per year ceiling contained in the authorizing
act. The language has been continued in each subsequent year. Were
long-term interest rates to exceed 7 percent, adequate subsidy would
not be available to support the Treasury rate loan program at the
authorized levels. Accordingly, OPASTCO supports the continuation of
this language in the fiscal year 2003 appropriations bill in order to
prevent potential disruption to this important program.
A $175 million loan level should be maintained for the rtb program
As previously discussed, the RTB's mission has not been completed
as rural carriers continue to rely on this important source of
supplemental financing in order to provide their communities with
access to the next generation of telecommunications services. In fiscal
year 2002, the government subsidy necessary to fund a $175 million loan
level was only $3.74 million, or 2.14 percent of the capital that the
program generates. The ongoing need for the RTB program makes it
essential that a $175 million loan level be maintained for fiscal year
2003.
The 5 percent limitation on the amount of class a stock of the RTB that
can be retired should be removed
OPASTCO believes it would be appropriate to remove or change the
language contained in previous agriculture appropriations acts
restricting the retirement of Class A stock of the RTB to 5 percent.
This restriction is an impediment to the timely privatization of the
RTB, as envisioned by the Rural Electrification Act of 1936. OPASTCO
further suggests that Congress, the Administration, and the RTB Board
of Directors develop a schedule and plan for privatizing the bank in a
timely manner. OPASTCO believes that the timely privatization of the
RTB is of great importance to rural telecommunications carriers as they
seek to upgrade their networks for the provision of advanced services
to their customers.
The prohibition on the transfer of any unobligated balance of the RTB
liquidating account to the Treasury and requiring the payment
of interest on these funds should be continued
OPASTCO urges the Subcommittee to reinstate the language introduced
in the fiscal year 1997 Agriculture Appropriations Act, and continued
in the years following, prohibiting the transfer of any unobligated
balance of the RTB liquidating account to the Treasury or the Federal
Financing Bank which is in excess of current requirements and requiring
the payment of interest on these funds. As a condition of borrowing,
the statutory language establishing the RTB requires telephone
companies to purchase Class B stock in the bank. Once all loans are
completely repaid, a borrower may then convert its Class B stock into
Class C stock. Thus, all current and former borrowers maintain an
ownership interest in the RTB. As with stockholders of any concern,
these owners have rights which may not be abrogated. The Subcommittee's
inclusion of the aforementioned language into the fiscal year 2003
appropriations bill will ensure that RTB borrowers are not stripped of
the value of this required investment.
The distance learning/telemedicine and broadband programs should
continue to be funded at adequate levels
In addition to RUS's telecommunications loans and RTB programs,
OPASTCO supports adequate funding of the distance learning /
telemedicine and broadband grant and loan programs. Through distance
learning, rural students gain access to advanced classes which will
help them prepare for college and jobs of the future. Telemedicine
provides rural residents with access to quality health care services
without traveling great distances to urban hospitals. In addition, by
continuing the pilot broadband program, more rural communities will
gain access to the Internet and other enhanced services. Loans are made
at the government's cost-of-money, which should help to meet demand for
the programs in the most cost effective way. In light of the
Telecommunications Act's purpose of encouraging deployment of advanced
technologies and services to all Americans--including schools and
health care providers--sufficient targeted funding for these purposes
is essential in fiscal year 2003.
conclusion
The development of the nationwide telecommunications network into
an information superhighway, as envisioned by policymakers, will help
rural America survive and prosper in any market--whether local,
regional, national, or global. However, without the availability of
low-cost RUS funds, building the information superhighway in
communities that are isolated and thinly populated will be untenable.
By supporting the RUS telecommunications programs at the requested
levels, the Subcommittee will be making a significant contribution to
the future of rural America.
______
Prepared Statement of Public Citizen's Critical Mass Energy and
Environment Program
Chairman Kohl, Ranking Member Cochran and members of the
Subcommittee. My name is Wenonah Hauter and I am Director of Public
Citizen's Critical Mass Energy and Environment Program. Public Citizen
is a consumer organization that was founded by Ralph Nader. We
currently have some 150,000 members.
As you know, Title VI of H. Rept. 107-225, the Conference Committee
Report that accompanied the fiscal year 2002 Agriculture, Rural
Development, Food and Drug Administration and Related Agencies
Appropriations Bill, directed the Food and Drug Administration (FDA) to
report to the House and Senate Appropriations Committees the ``outcome
of recent focus groups regarding the labeling of irradiated food
products and to report on how the results will be integrated into
future rulemaking decisions.''
For the past 5 years, there have been efforts by irradiation
proponents to weaken the labeling requirements for foods that have been
irradiated. At the present time, FDA regulations require that most
foods that are irradiated display the radura--the international symbol
for irradiation--and the disclosure ``treated by irradiation'' or
``treated with radiation.'' There have been some in the food
irradiation industry who have tried to convince the FDA that it should
be permissible to call irradiation either ``cold pasteurization'' or
``electronic pasteurization.''
In 1999, the FDA issued an advanced notice for rule-making that
called for public comments on proposed changes to the labeling
regulations for irradiated foods. The proposed changes would have
permitted the phrases ``cold pasteurization'' and ``electronic
pasteurization'' to be used in place of the term ``irradiation.''
The agency received over 20,000 comments, 98.2 percent of which
opposed changing the current labeling requirements for irradiated
foods.
At the request of Congress in the fiscal year 2001 Agriculture-FDA
Appropriations Bill, the FDA was directed to revisit the issue. In
response to that congressional directive, the FDA impaneled six focus
groups of consumers in Calverton, Maryland; Minneapolis, Minnesota; and
Sacramento, California during the summer of 2001. Public Citizen and
the Center for Food Safety were permitted to send observers to watch
the focus group deliberations at all three locations, as was the food
irradiation industry. What was remarkable about all of the focus groups
was the fact that the consumers who participated in them were unanimous
in their opinion--the word ``pasteurization'' has no business being
included in the labeling used to describe irradiated food. This feeling
on the part of consumers did not change even after the FDA altered its
script to make the association between pasteurization and irradiation
stronger.
Since Public Citizen and the Center for Food Safety were able to
secure copies of most of the transcripts from these proceedings, we
distributed a summary to each member of the Subcommittee back in
January of this year.
I would like to convey to you some of the comments that focus group
participants made about using ``pasteurization'' to label irradiated
foods:
--``That's deceitful.''
--``Pasteurization is not going to translate in anybody's mind to
irradiation.''
--``I think it's nasty trying to mask this.''
--``The choice between `treated by cold pasteurization' and `treated
by cold pasteurization (radiation)' is a difference between a
lie and bad lie.''
--``I think it's totally unbelievable. It's, it has the potential to
make people worry about pasteurization, rather that making them
feel good about irradiation''
--``It's an oxymoron. You can't heat something up and it be cold.''
--``Because they're trying to fool you. Pasteurization has nothing to
do with irradiation.''
--``They're pulling the wool over your eyes.''
Associate FDA Commissioner Lester Crawford, when testifying before
the House Subcommittee on Agriculture, Rural Development, Food and Drug
Administration and Related Agencies Appropriations on March 21, 2002,
stated that consumers viewed any attempt to supplant the term
``irradiation'' with ``pasteurization'' as a ``. . . ruse to conceal
the fact.''
Public Citizen has also conducted public opinion research on this
issue. In January 2002, we polled 1000 consumers in a national public
opinion survey conducted by Lake, Snell, Perry and Associates. We asked
consumers two questions on food irradiation labeling.\1\
---------------------------------------------------------------------------
\1\ Question 1. Do you favor or oppose requiring food be labeled to
indicate whether it has been irradiated? (If favor/oppose) Is that
strongly (favor/oppose) or not so strongly (favor/oppose)?
---------------------------------------------------------------------------
Overwhelmingly, consumers favored irradiated foods to be labeled.
Nearly three-quarters of the respondents (73.4 percent) favored such
labeling. This seemed to be especially important to working women (80
percent), homemakers (81 percent), and women with children living at
home (82 percent).
On the issue of what to call irradiated foods, consumers
overwhelming rejected those terms that used ``pasteurization'' in the
description: 16.4 percent of the respondents favored ``electronic
pasteurization''; 12.5 percent favored ``cold pasteurization''; 47.1
percent preferred ``irradiation''; 5.7 percent did not like any of the
choices presented them; 18.3 percent were not sure. Again, working
women (54 percent), homemakers (50 percent) and women with children (57
percent) were more likely to favor clear and unambiguous labeling that
called the process ``irradiation''.
These poll results corroborate those from a public opinion survey
conducted by the Center for Science in the Public Interest (CSPI) in
1999 when only about a quarter of the respondents favored describing
irradiation as either ``cold pasteurization'' or ``electronic
pasteurization.''
In a related matter, Public Citizen requested a clarification from
the Food Safety and Inspection Service (FSIS) of the United States
Department of Agriculture (USDA) about a claim made by an irradiation
firm--the SureBeam Corporation of San Diego, California--that it had
secured permission from the USDA to describe its process as a form of
pasteurization. We received correspondence from Philip Derfler, Deputy
Administrator for the Office of Policy, Program Development and
Evaluation at FSIS who stated:
``The Food Safety and Inspection Service (FSIS) has no information
as to whether the SureBeam Corporation irradiation equipment is capable
of pasteurizing meat and poultry products. . . (N)either SureBeam nor
any other firm has yet presented FSIS with data proving that their
irradiated meat and poultry products are, in fact, `pasteurized.'
Additionally, neither Surebeam (sic) nor any other firms has yet
presented FSIS with labeling bearing the term `pasteurized' that was
not viewed as misleading.'' \2\
---------------------------------------------------------------------------
\2\ Question 2. Irradiation is a process of exposing food to
radiation to kill bacteria. The government and the food industry have
proposed various terms for use in the labeling of irradiated foods.
Which do you think should be used:--treated with electronic
pasteurization,--treated with cold pasteurization, or--treated by
irradiation? (choices were rotated).
Letter from Philip Derfler to Tony Corbo, Public Citizen, dated
September 29, 2001.
We believe that the FDA has received enough guidance on this issue
and it should leave the current labeling regulations for irradiated
food in place. All of the recent consumer data collected on this issue
in addition to the professional opinion rendered by those responsible
for administering our food safety laws clearly indicate that weakening
the current labeling requirements for irradiated foods is not good
public policy.
I thank the Subcommittee for this opportunity to share our views on
this very important consumer issue.
______
Prepared Statement of the Red River Valley Association
Mr. Chairman and members of the Committee, I am Wayne Dowd, and I
am pleased to represent the Red River Valley Association as its
President. Our organization was founded in 1925 with the express
purpose of uniting the citizens of Arkansas, Louisiana, Oklahoma and
Texas to develop the land and water resources of the Red River Basin.
As an organization that knows the value of our precious water
resources we support the most beneficial water and land conservation
programs administered through the Natural Resources Conservation
Service (NRCS). We understand that since the 11 September terrorist
attack we have had to re-evaluate our national priorities; however, we
cannot sacrifice what has been accomplished. NRCS programs are a model
of how conservation programs should be administered and our testimony
will address the needs of the nation as well as our region. We strongly
believe that this national program must be preserved.
The President's fiscal year 2003 budget for NRCS indicates an
increase of $75.4 million from fiscal year 2002. In reality NRCS
actually took a major decrease in program funding and staff years.
Fiscal year 2003 is the first year additional administrative overhead
burdens, totaling $145 million, were directed to be absorbed by the
agency. This increase in overhead, from within the agency's
Conservation Operation Account, provides for less funding for technical
assistance to land owners. Even worse, the Administration took $111
million used to assist landowners in ``Watershed and Flood Prevention''
and placed it in ``Emergency Watershed Protection'', which has
traditionally been Congressional Supplemental Appropriations, in
addition to the NRCS appropriated budget. This amounts to $256 million
of the fiscal year 2003 budget that in the past has been used for
landowner assistance that will not be available for assistance in
fiscal year 2003. This is also reflected in the fact that NRCS manpower
for fiscal year 2003 will decrease by 254 staff years.
This means that NRCS programs will not be adequately funded, to the
detriment of the agency and our natural resources. We would like to
address several of the programs administered by the NRCS. Failure to
adequately fund these initiatives would reduce assistance to those who
want it and the resources that need protection.
Conservation Operations.--This has been in steady decline, in real
dollars, over the past several years. It has occurred partly as a
result of funds being reduced from Conservation Operations to balance
increases in technical assistance for mandatory conservation financial
assistance programs. The President's budget included $897 million,
which even though reflects an increase of $118 million from fiscal year
2002, is not the case. This account, for the first time, is required to
absorb additional burdens totaling $145 million. These include
mandatory pay raises, pensions and health benefits previously funded by
OMB; GSA rent and decreased funding due to anticipated administrative
efficiencies. In fact, a reduction of over $27 millions is realized
from fiscal year 2002 for assistance to landowners. This is far short
of what is required to serve the needs of our nation's private lands.
We request a total of $796 million be appropriated For Conservation
Technical Assistance, increasing Conservation Operations to
$927,190,000.
Conservation Technical Assistance is the foundation of technical
support and a sound, scientific delivery system for voluntary
conservation to the private users and owners of lands in the United
States. It is imperative that we provide assistance to all working
lands' not just those fortunate few who are able to get enrolled in
programs. Working lands are not just crops and pasture (commodity
staples) but includes forests, wildlife habitat and coastal marshes.
The problem is that personnel funded from programs' can only provide
technical assistance to those enrolled in cost share programs, leaving
the majority of the agricultural community without technical
assistance. We recommend that this funding for technical assistance be
placed in ``Conservation Technical Assistance'', and allow NRCS to
provide assistance to everyone.
We do not support the use of third party vendors for technical
assistance. We would then have to address the question of quality
assurance and administration for these programs. Why establish a new
process that will ultimately cost more then using the in-house
expertise that now exists and has proven to be successful.
Watershed and Flood Prevention Operations (Public Law 566 & 534).--
We are greatly disappointed that the President's Budget provided
absolutely NO funding for watershed operations. There is no doubt that
this is a Federal responsibility, as well as for the local sponsor. We
ask our legislators to support the local sponsors in this national
issue.
We DO NOT agree with the Administration's proposal to eliminate the
``Watershed and Flood Prevention Program'' line item and putting it
under ``Emergency Watershed Protection''. It appears they are trying to
hide these programs and must not be allowed to do so. We request that
Congress maintain the ``Watershed and Flood Prevention Program'' as a
separate line item.
There are many new projects, which are awaiting funds for
construction under this program. We strongly recommend that a funding
level of $170 million be appropriated for Watershed Operations, Public
Law 534 ($35 million) and Public Law 566 ($135 million) programs. This
is realistic and comparable to appropriation levels in the years prior
to 1994.
More than 10,400 individual watershed structures have been
installed nationally. They have contributed greatly to conservation,
environmental protection and enhancement, economic development and the
social well being of our communities. More than half of these
structures are over 30 years old and several hundred are approaching
their 50-year life expectancy. Today you hear a lot about the watershed
approach to resource management. These programs offer a complete
watershed management approach and should continue for the following
reasons:
--They protect people and communities from flooding.
--Their objectives and functions sustain our nation's natural
resources for future operations.
--They are required to have local partners and be cost shared.
--The communities and NRCS share initiatives and decisions.
--They follow NEPA guidelines and enhance the environment.
--They often address the need of low income and minority communities.
--The benefit to cost ratio for this program has been evaluated to be
2.2:1.
What other Federal programs can claim such success?
There is no questioning the value of this program. The cost of
losing this infrastructure exceeds the cost to reinvest in our existing
watersheds. Without repairing and upgrading the safety of existing
structures, we miss the opportunity to keep our communities alive and
prosperous. It would be irresponsible to dismantle a program that has
demonstrated such great return and is supported by our citizens. We
cannot wait for a catastrophe to occur where life is lost to decide to
take on this important work.
Watershed Rehabilitation Program.--It was a great step forward to
have the ``Lucas Bill'' passed; now adequate appropriations must be
provided. A 1999 survey, conducted in 22 states, showed that 2,200
structures are in need of immediate rehabilitation at an estimated cost
of $543 million. With no funding authorized in the President's budget
we neglect our community needs. We request that $5 million be
appropriated for NRCS to conduct assessments of the rehabilitation
needs nationwide. We request that $20 million be appropriated to
provide financial and technical assistance to those watershed projects
where sponsors are prepared to commence rehabilitation measures.
Watershed Survey and Planning.--In fiscal year 2002 $11 million was
appropriated to support this extremely important community program.
NRCS has become a facilitator for the different community interest
groups, State and Federal agencies. In our states such studies are
helping identify resource needs and solutions where populations are
encroaching into rural areas. The Administration decided to zero out'
this program and provided NO funding. We strongly disagree with this
action and ask Congress to fund this important program.
As our municipalities expand, the water resource issue tends to be
neglected until a serious problem occurs. Proper planning and
cooperative efforts can prevent problems and insure that water resource
issues are addressed. We request this program be funded at a level of
$20 million.
Emergency Watershed Protection Program.--This program has come
under Watershed and Flood Prevention Operations, but is a separate line
item. It has traditionally been a zero budget line item; however, there
will always be emergency needs, which were funded through Supplemental
Appropriations.
As our land use expands to include sensitive environmental
ecosystems, major weather events will have an adverse impact requiring
NRCS assistance. It is important that NRCS is prepared for a rapid
response, not waiting for legislative action. With some funds
available, they would be able respond immediately to an emergency when
it occurs.
We appreciate that $111.4 million was in the President's Budget for
fiscal year 2003; however, it is obvious that this funding was taken
from ``Watershed and Flood Prevention Operations''. NRCS cannot pay
staff years from this account unless it is in reaction to an emergency.
We request that $20 million be appropriated as seed funding to allow
NRCS to react to an emergency while the full need is determined and
added through a supplemental appropriation. We also request that $110
million be placed in ``Watershed and Flood Prevention Operations'' as a
separate line item.
This is another example of a major budget cut to NRCS. This funding
must be used for emergencies and not for technical assistance to
landowners; therefore, it is a realized $111.4 million reduction to the
NRCS budget from fiscal year 2002.
Forestry Incentives Program.--Congress transferred this program to
NRCS from the Farm Service Agency as a restructuring in the Federal
Agricultural Improvement and Reform Act of 1996. Forestry on small,
privately owned lands is recognized as a farming activity. NRCS is the
best agency to administer this program, which assists farmers in
production agriculture. It is more than just a timber production
program. Forests are the most effective use of land as they relate to
water quality, non-point source pollution, air quality, greenhouse gas
reduction and wildlife habitat.
Again, the Administration provided NO funding for this program and
we request Congress fund the Forestry Incentives Program at a level of
$7 million for fiscal year 2003.
Environmental Quality Incentives Program (EQIP).--Request for
assistance through the EQIP program has been overwhelming. Requests far
exceed the available funds and place an additional workload on NRCS's
delivery system. Additionally, adequate funding for technical
assistance must be provided to administer the program at a minimum of
19 percent of total program cost.
The EQIP Financial Assistance program for fiscal year 2003 should
be appropriated at the $200 million authorized and the technical
assistance budgeted at $38 million to meet the 19 percent TA level.
Irrigation Project ``Earmarks''.--Findings in the Natural Resources
Inventory (NRI) have concluded that irrigated agriculture is moving
from western states to the east. A prime example of this is the
interest to irrigate along the Red River in Arkansas and Louisiana.
The recent drought conditions have accelerated the efforts of
different regions to form irrigation districts and start the process to
install irrigation systems. The farmers along Red Bayou, Caddo Parish,
Louisiana, and Walnut Bayou, Little River County, Arkansas have been
very aggressive in their attempts to become operational.
Red Bayou Irrigation Demonstration Project, LA.--The impacted
region has formed an Irrigation District and established a process to
collect funding for operating and maintaining the system. The total
project would cost approximately $5.5 million; $2.7 million off-farm
components and $2.8 million on-farm components; with cost sharing
involved with the Irrigation District. To initiate this project
$200,000 would be required in fiscal year 2003 to complete the plans
and environmental assessment. This will provide a more detailed cost
analysis for the project.
We request an `earmark' in the fiscal year 2003 appropriations
under the watershed operations program.
Language: Not withstanding any other provision of law, Secretary of
Agriculture, acting through the Natural Resource Conservation Service,
shall provide $200,000 for planning and design associated with the Red
Bayou Irrigation Demonstration Project, LA. These funds will be from
watershed surveys and planning and be accompanied with an equivalent
increase in funding over current fiscal year 2003 appropriations.
Walnut Bayou Irrigation Project, AR.--We appreciate the $250,000
allocated in fiscal year 2002 for the planning and design of this
project. It is important to continue with the next phase of
construction. We request that the funding for this project be
earmarked' in the fiscal year 2003 appropriations.
Language: Not withstanding any other provisions of law, Secretary
or Agriculture, acting through the Natural Resource Conservation
Service, shall provide $4,000,000 for construction associated with the
Walnut Bayou Irrigation Project, AR. These funds will be from watershed
surveys and planning' and be accompanied with an equivalent increase in
funding over current fiscal year 2003 appropriations.
Over 70 percent of our land is privately owned. This is important
in order to understand the need for NRCS programs and technical
assistance. Their presence is vital to ensuring sound technical
standards are met in conservation. These programs not only address
agricultural production, but sound natural resource management. Without
these programs and NRCS properly staffed to implement them, many
private landowners will not apply conservation measures needed to
sustain our natural resources for future generations.
There have been new clean water initiatives, but why do we ignore
the agency that has a proven record for implementing watershed
conservation programs? Congress must decide; will NRCS continue to
provide the leadership within our communities to build upon the
partnerships already established? It is up to Congress to insure NRCS
is properly funded and staffed to provide the needed assistance to our
taxpayers for conservation programs.
All these programs apply to the citizens in the Red River Valley
and their future is our concern. The RRVA is dedicated to work toward
the programs that will benefit our citizens and provide for high
quality of life standards. We therefore request that you appropriate
the requested funding within these individual programs, to insure our
nation's conservation needs are met.
I thank you for the opportunity to present this testimony on behalf
of the members of the Red River Valley Association and we pledge our
support to assist you in the appropriation process.
______
Prepared Statement of the Seminole Tribe of Florida
The Seminole Tribe of Florida is pleased to submit this statement
regarding the fiscal year 2003 budget for the Natural Resources
Conservation Service (NRCS) in the Department of Agriculture.
The Seminole Tribe of Florida asks that Congress earmark a total of
$200,000 in the Natural Resources Conservation Service's (NRCS)
Watershed Operations 06, Watershed Planning account that funds the
Small Watershed Program, as authorized by Public Law 83-566, for
planning of a portion of the Tribe's Water Conservation Plan on the Big
Cypress Reservation. The Tribe has worked with the NRCS in Florida for
six years to develop this small watershed project as a part of the
Tribe's overall Everglades Restoration Initiative. The results of this
small watershed project will complement the joint effort of the Tribe
and the Corps of Engineers to complete the Initiative.
the seminole tribe of florida
The Seminole Tribe lives in the Florida Everglades. The Big Cypress
Reservation is located in the western basins, directly north of the Big
Cypress National Preserve. The Everglades provide many Seminole Tribal
members with their livelihood. Our traditional Seminole cultural,
religious, and recreational activities, as well as commercial
endeavors, are dependent on a healthy Everglades ecosystem. In fact,
the Tribe's identity is so closely linked to the land that Tribal
members believe that if the land dies, so will the Tribe.
During the Seminole Wars of the 19th Century, our Tribe found
protection in the hostile Everglades. But for this harsh environment
filled with sawgrass and alligators, the Seminole Tribe of Florida
would not exist today. Once in the Everglades, we learned how to use
the natural system for support without harm to the environment that
sustained us. For example, our native dwelling, the chickee, is made of
cypress logs and palmetto fronds and protects its inhabitants from the
sun and rain, while allowing maximum circulation for cooling. When a
chickee has outlived its useful life, the cypress and palmetto return
to the earth to nourish the soil.
In response to social challenges within the Tribe, we looked to our
Tribal elders for guidance. Our elders taught us to look to the land,
for when the land was ill, the Tribe would soon be ill as well. When we
looked at the land, we saw the Everglades in decline and recognized
that we had to help mitigate the impacts of man on this natural system.
At the same time, we acknowledged that this land must sustain our
people, and thereby our culture. The clear message we heard from our
elders and the land was that we must design a way of life to preserve
the land and the Tribe. Tribal members must be able to work and sustain
themselves. We need to protect the land and the animals, but we must
also protect our Tribal farmers and ranchers.
Recognizing the needs of our land and our people, the Tribe, along
with our consultants, designed a plan to mitigate the harm to the land
and water systems within the Reservation while ensuring a sustainable
future for the Seminole Tribe of Florida. The restoration plan will
allow Tribal members to continue their farming and ranching activities
while improving water quality and restoring natural hydroperiod to
large portions of the native lands on the Reservation and ultimately,
positively effecting the Big Cypress National Preserve and Everglades
National Park.
The Seminole Tribe's Big Cypress Initiative addresses the
environmental degradation wrought by decades of federal flood control
construction and polluted urban and other agricultural runoff. The
interrupted sheet flow and hydroperiod have stressed native species and
encouraged the spread of exotic species. Nutrient-laden runoff has
supported the rapid spread of cattails, which choke out the periphyton
algae mat and sawgrass necessary for the success of the wet/dry cycle
that supports the wildlife of the Everglades.
The Seminole Tribe designed an Everglades Restoration Initiative to
allow the Tribe to sustain ourselves while reducing or eliminating
impacts on the ecosystem. The Seminole Tribe is committed to improving
the water quality and flows on the Big Cypress Reservation. We have
already committed significant resources to the design of the projects
and to our water quality data collection and monitoring system. Within
the next few months, the Tribe will begin construction on the
conveyance system that will serve as the backbone to Big Cypress water
control system. We are willing to continue our efforts and commitment
of resources, for our cultural survival is at stake.
small watershed project on big cypress
As a part of the Tribe's Everglades Restoration Initiative, the
Tribe completed a water conservation plan for the design and
construction of surface water management systems to remove phosphorus,
convey and store irrigation water, improve flood control, and rehydrate
the Big Cypress National Preserve. This water conservation plan has
been permitted for construction under the Clean Water Act Section 404
program.
Through the Corps of Engineers (COE) critical project program
authorized by the Water Resources Development Act of 1996, the Tribe is
building part of that water conservation plan. The first phase of the
critical project, for which construction is about to begin, is to
construct a conveyance canal system that will supplement and improve
the existing system. The balance of the critical project will construct
water storage and treatment areas on the east-side of the Reservation.
Over the last six years, the Tribe has enjoyed the support of the
Florida State Conservationist and the Florida staff of the NRCS in the
development of a small watershed project to address some needs
identified in the water conservation plan. While some preliminary
planning has been completed, an existing funding commitment prevented
commencement of the small watershed project until fiscal year 2004. In
fiscal year 2003, both the Tribe and the NRCS in Florida are prepared
to begin planning of water storage and treatment areas on the west-side
of the Reservation. To do so, Congress must appropriate the initial
funding.
While all the project component options have not been fully vetted,
the cost estimates range from downward from $34.6 million. This project
is approved to operate with a 75 percent federal and 25 percent Tribal
cost share. The timing of the design and construction are dependent on
the funding stream.
conclusion
Everglades restoration is a well-recognized national priority. The
Tribe's goal of sustainable agriculture is consistent with the goals of
the NRCS and the restoration activities in South Florida. The NRCS's
support of the Tribe's conservation measures in the past, along with
the implementation of future programs, will make a significant impact
on the Big Cypress Reservation and the South Florida Ecosystem.
Through its assistance to the Tribe, NRCS has provided valuable
technical assistance to date. Beginning in fiscal year 1999, NRCS has
provided programmatic support through EQIP and WRP, which is
anticipated to continue. Additional programmatic assistance through the
small watershed program will provide the needed design and construction
to complete the water conservation plan. None of the joint objectives
of the Tribe and the NRCS can be accomplished, however, without
sufficient funding.
The Tribe has demonstrated its economic commitment to the
Everglades Restoration effort; the Tribe is asking the federal
government to also participate in that effort. This effort benefits not
just the Seminole Tribe, but all Floridians who depend on a reliable
supply of clean, fresh water flowing out of the Everglades, and all
Americans whose lives are enriched by this unique national treasure.
Thank you for the opportunity to present the request of the
Seminole Tribe of Florida. The Tribe will provide additional
information upon request.
______
Prepared Statement of the Society for Animal Protective Legislation
The Society for Animal Protective Legislation appreciates the
support that this Subcommittee has provided consistently to the above-
referenced programs of the United States Department of Agriculture
(USDA) and respectfully requests modest increases in the annual
appropriation for their operation in fiscal year 2003. These additional
funds are essential to ensure the adequate enforcement of and
compliance with Federal laws enacted to ensure the welfare of animals
and prevent unnecessary animal suffering.
$17.7 Million is needed for the Animal and Plant Health Inspection
Service Animal Care Program
A coalition of organizations including the American Veterinary
Medical Association, the American Zoo and Aquarium Association, the
Humane Society of the United States, and the Society for Animal
Protective Legislation has worked together to secure additional funds
to ensure adequate enforcement of the Animal Welfare Act by APHIS
Animal Care staff. The Animal Welfare Act is the chief Federal law for
the protection of animals. The USDA seeks compliance with its minimum
standards for the care and treatment of animals during transportation
and at the approximately 10,000 sites of dealers, research, testing and
teaching facilities, zoos, circuses, carriers and handlers. In fiscal
year 2000, Animal Care inspectors conducted over 11,000 compliance
inspections.
Approximately forty percent of the facilities that are inspected by
USDA are found to be noncompliant. Facilities with serious deficiencies
require reinspections to ensure that corrective action is taken but
lack of funds has prevented USDA from conducting this much-needed
follow-up.
In 1966, the Laboratory Animal Welfare Act (later renamed the
Animal Welfare Act) was adopted to prevent the sale of lost or stolen
pets into research. Pet theft and fraudulent pet acquisition for sale
into research continues to be a serious problem. In an attempt to
remedy this situation in the 1990s, Animal Care instituted a policy of
conducting quarterly inspections of random source dealers. Since
stepping up enforcement in this area in 1993 (which has come at the
expense of inspections conducted elsewhere), six Class B dealer
licenses have been suspended, twelve have been revoked, six cases were
under investigation (at the end of fiscal year 2000) and nearly
$525,000 in fines were levied. The number of random source, Class B
dealers, who supply dogs and cats to research, has dropped from over
100 to 23.
This approach, with respect to regulating and inspecting Class B
dealers, illustrates the value of frequent, unannounced inspections of
licensees and registrants. Increasing the ability to conduct these
inspections more frequently will ensure effective compliance with the
law. Facilities found to be consistently out of compliance with the
minimum standards of the Animal Welfare Act should not be in business.
The 1985 amendment to the AWA mandates at least one inspection per
year of all registered research facilities. A vigorous inspection
program is critical to maintaining public confidence in the quality of
research and ensuring the humane treatment of animals used in
experimentation. With the need to evaluate performance, as well as
engineering standards, each inspection is time-consuming and
necessitates skilled veterinary inspectors.
An appropriation of $17.7 million would enable APHIS Animal Care to
hire much needed inspectors, upgrade computer software, establish an
emergency reserve for confiscated animals, and enhance the enforcement
program to reduce the number of problem facilities, among other
laudable goals.
$1,150,000 is needed for the Animal Welfare Information Center at the
National Agricultural Library
The Animal Welfare Information Center (AWIC) was established by the
1985 amendments to the Animal Welfare Act, the ``Improved Standards for
Laboratory Animals Act,'' to serve as a clearinghouse and educational
resource of information on alleviating or reducing pain and distress in
experimental animals (including anesthetic and analgesic procedures),
reducing the number of animals who are used for research and
identifying alternatives to the use of animals for specific research
projects.
AWIC is the single most important resource for educating research
facility personnel on their responsibilities under the Animal Welfare
Act. There are more than 1,200 registered research facilities
nationwide, and the services of the AWIC are available to all
individuals at these institutions including the members of the
Institutional Animal Care and Use Committees.
AWIC staff responds to requests for information on topics related
to the Animal Welfare Act. The staff conducts training sessions in
workshops for Federal regulatory agencies, research facilities,
military facilities, and universities. The staff also attends
conferences where they maintain informational exhibits. The number of
requests to AWIC has increased substantially. According to the latest
information available in APHIS's 2000 Animal Welfare Report, AWIC staff
responded to roughly 18,000 information requests in the year and
distributed more than 40,000 published documents. The valuable AWIC
website (www.nal.usda.gov/awic) received an average of 58,000 hits per
month in 2000, almost doubling the previous year's monthly average.
Additional funding is vital to maintain the level of excellence
exhibited by AWIC and to advance the Center appropriately. $1,150,000
specifically designated for AWIC would allow AWIC to increase the
number of full-time staff, improve the search capabilities on the AWIC
website and enable documents to be converted into different programs,
thus improving user-friendliness, continue providing useful AWIC
workshops, update information on animals in laboratories such as
alternatives to animal models and appropriate animal housing
documentation, develop an audiovisual library on animal welfare to
improve the training of APHIS inspectors, among other important
advancements.
Again, it is imperative that this money be earmarked specifically
for the AWIC program.
$10,049,000 is needed for Investigative and Enforcement Services
Investigative and Enforcement Services (IES), the enforcement arm
within APHIS, is responsible for conducting investigations, tracking
unresolved cases, coordinating investigations within APHIS and between
APHIS and other Federal and/or State agencies and training APHIS
inspectors in the collection of evidence and documentation of
violations. IES provides support to Animal Care and to three other
APHIS programs.
A $10,049,000 appropriation would enable IES to investigate
competently alleged violations of the Animal Welfare Act. In 2000, IES
inspectors already began implementing technological advancements to
improve their work, including the use of digital and video cameras to
document situations that reflect noncompliance with the law. Additional
money in fiscal year 2003 would help IES keep pace with the
inflationary costs of recently-filled field positions while
concomitantly improving IES's ability to engage in its important work.
Additional money would assist in the continued filling of animal
care investigator positions in significant border/port areas. Four or
five additional inspectors in fiscal year 2003 would complement the
already improved staff level. Similarly, intelligence gathering is a
substantial part of the work of IES. Analysts, funded by this
additional appropriation, would ensure that data is collected and
analyzed properly regarding, for instance, animal dealer activities,
the operations of traveling animal acts or exhibitors, or animal
fighting ventures. To this end, on animal fighting, an additional
appropriation would assist in the enforcement of existing animal
fighting prohibitions and the possible addition of legislation
currently moving through Congress to prohibit the interstate shipment
of birds for fighting purposes. A specific unit could be developed of
between six to ten people to coordinate these activities against
illegal animal fighting ventures.
$500,000 for the Horse Protection Act
Congress adopted the Horse Protection Act (HPA) more than 30 years
ago yet soring of Tennessee Walking Horses continues to be a widespread
problem. Soring is defined by APHIS as ``the application of any
chemical or mechanical agent used on any limb of a horse or any
practice inflicted upon the horse that can be expected to cause it
physical pain or distress when moving.'' Horses are sored to produce an
exaggerated gait.
The most effective method of reducing the showing of horses who
have been sored is to have Animal Care (AC) inspectors present at the
shows. AC has been restricted to attending about 10 percent of horse
shows because of insufficient funds. Unless funding is provided to
enable AC to attend more events, the industry will continue to defy the
law with impunity. Certain members of the Walking Horse industry with a
careless disregard for the HPA have utilized a variety of strategies to
prevent fair and proper enforcement of this law. The current effort to
undermine the law is to deny inspectors the ability to use digital
palpitation of the pastern to determine soreness in horses. Use of
digital palpitation, an accepted veterinary diagnostic technique, is
vital to AC's ability to enforce the law.
Lack of financial support has made it necessary for AC to rely
heavily on the industry to assume responsibility for enforcement of the
law. This is the same industry that has turned a blind eye to
compliance with the law sine 1970! ``Designated Qualified Persons''
(DQPs) are the ``inspectors'' from industry who are supposed to assist
AC identifying sore horses and pursuing action against the individuals
who are responsible. The history of DQPs reveals their failure to
achieve the level of enforcement of the unbiased, well-trained,
professional AC inspectors. The gap is widening between the enforcement
when AC inspectors are present versus the level of enforcement by
unsupervised DQPs, clearly demonstrating the abysmal failure of the
industry to regulate itself. For example, in fiscal year 1999 the rate
at which DQPs turned down horses for soring was .44 percent. The
turndown rate more that tripled to 1.49 percent when government AC
inspectors were present to oversee the activities of the DQPs. The
record was still worse for certain Horse Industry Organizations like
the Kentucky Walking Horse Association; there was a nearly 12-fold
increase in horses who were turned down for soring when AC inspectors
were present as compared to when DQPs were unsupervised!
We respectfully request that the Subcommittee resist all efforts by
the industry to restrict AC's ability to enforce the Horse Protection
Act. An increase in appropriations to $500,000 would allow Animal Care
to attend a greater percentage of horse shows, thereby ensuring
significantly stronger compliance with the HPA.
$2.5 Million is needed for additional line inspectors to enforce the
Humane Slaughter Act
The USDA budget includes specific budget increases related to the
Food Safety and Inspection Service (FSIS) activities, including
maintaining 7,600 meat and poultry inspectors. However, these
inspectors are primarily tasked with slaughter epidemiological surveys
and risk prevention activities regarding disease and microbiological
contaminants on animal carcasses. Specific additional funds are
necessary to hire inspectors dedicated to enforcement of the Humane
Slaughter Act to ensure that animals are stunned properly as they move
through the slaughter process. An additional appropriation of $2.5
million would enable the hiring of approximately 50 new employees to
work exclusively on enforcement of the Humane Slaughter Act through
full-time inspection of unloading, handling, stunning, and killing of
animals at slaughter plants.
The Washington Post expose, ``Modern Meat: A Brutal Harvest,'' from
April 10, 2001, reveals that the Humane Slaughter Act is frequently
ignored at ``overtaxed'' slaughterhouses ``with cruel consequences for
animals as well as workers. Enforcement records, interviews, videos and
worker affidavits describe repeated violations of the Humane Slaughter
Act at dozens of slaughterhouses, ranging from the smallest, custom
butcheries to modern, automated establishments such as the sprawling
IBP, Inc. plant. The attached article from the Animal Welfare Institute
magazine, the AWI Quarterly, ``Gutting the Gordian Knot,'' describes in
great detail the historical increases in slaughterhouse line speeds and
the needs for more diligent enforcement of the Humane Slaughter Act.
To this extent, Resolutions were introduced in both the Senate and
House of Representatives to call for greater enforcement of the Humane
Slaughter Act. Both Senator Fitzgerald's and Congresswoman Morella's
resolutions were attached to the 2002 Farm Bill and a compromise
version of the Resolution presumably will be approved during the
deliberations of the Farm Bill Conference Committee.
Birds, Rats and Mice in the Animal Welfare Act
In 1970 and again in 1985 the United States Congress passed and
improved on laws ensuring the protection and coverage of all ``warm
blooded animals'' under the Animal Welfare Act (AWA). Last year The
Honorable Robert Dole, distinguished former U.S. Senator and author of
1985 AWA amendments wrote a letter on the protections of birds, rats,
and mice and recent misrepresentations regarding the intent of their
coverage. In his letter he stated:
``I would hope that the Bush Administration and Members of the
present Congress, some of whom stood with me in 1985 in advancing my
amendments, will recognize that all animals used in experimentation
deserve the benefit of the modest requirements of the Animal Welfare
Act. I would urge them to allow USDA to achieve this end by pursuing a
full and fair rulemaking as provided in the settlement agreement.''
We commend the Committee for allowing USDA to proceed during fiscal
year 2002 with its rulemaking regulating birds, rats, and mice under
the Animal Welfare Act, as required by a court settlement in 2000.
These species account for approximately 95 percent of animals used in
research, and they deserve basic minimum standards of care. Ensuring
that they receive adequate care is imperative not only as a humane
matter, but also as a matter of sound science, since animal suffering
compromises the integrity of research results. We urge the Committee
not to include any language in the fiscal year 2003 bill or committee
report that would interfere with USDA's ability to carry out this
important rulemaking on a timely basis.
______
Prepared Statement of the State of Arizona
As a member of the Colorado River Basin Salinity Control Forum
representing the State of Arizona, I wish to indicate strong support
for the designation of funds for the Colorado River Basin Salinity
control effort within the Environmental Quality Incentives Program
(EQIP).
The Colorado River Basin Salinity Control Program is funded within
EQIP and has been designated as an area of special interest. Under this
designation, about $4.5 million have been earmarked for the Colorado
River Basin Salinity Control Program. These funds, together with cost-
sharing from local farms and the Colorado River Basin states, have
produced projects which demonstrate an effective methodology for
controlling salinity in the Colorado River. However, the water quality
control plan, which is prepared by the Forum, adopted by the Colorado
River Basin states, and approved by the EPA, recommends that the USDA
portion of these efforts be funded at $12 million. An appropriation of
this amount would allow the implementation of the approved water
quality control plan and help control the economic damages in the Lower
Basin states due to salinity from the Colorado River.
Arizona's cities, industries, farms, and Indian Tribes depend on
the Colorado River. As we import the water to support our growing
economy, we also import the salt that has accumulated in the river.
Approximately 1.5 million tons per year of salt are now being imported
into Arizona via the Colorado River. If the accumulation of salt in the
river can be reduced, the economic costs of salt disposal and salt
damages will be reduced. Currently, the damages due to salt are
estimated to be over half a billion dollars annually in Arizona,
Nevada, and Southern California. These damages would be significantly
higher if the Colorado River Basin Salinity program had not been in
place during the last three decades.
Over the last few years the salinity control efforts under the EQIP
program have been under-funded, resulting in control efforts lagging
behind goals agreed upon by the Colorado River Basin states to meet the
EPA criteria adopted pursuant to the Clean Water Act. The $12 million
in earmarked funds for Colorado River salinity control would provide
the appropriations necessary to more aggressively meet these goals and
reduce the significant economic costs to the Lower Basin States.
In addition to controlling water quality for water users in the
United States, the Salinity Control program helps the United States to
comply with Minute 242 of the Mexican Water Treaty of 1944. The United
States has always met the commitments agreed to in Minute 242, but
water quality at the International Boundary continues to be a subject
of discussion between the United States and Mexico sections of the
International Boundary and Water Commission.
Thank you for your subcommittee's consideration of additional
funding for the Colorado River Salinity Control Program and we hope to
have your continued support of this vital program.
______
Prepared Statement of the State of Wyoming
Dear Chairman Kohl and Ranking Minority Member Cochran: This
statement is sent in support of the designation of $12,000,000 of
fiscal year 2003 Environmental Quality Incentive Program (EQIP) funding
for the Department of Agriculture's Colorado River Salinity Control
(CRSC) Program. Pursuant to Public Law 104-127, the USDA's CRSC Program
is a component program within EQIP. The USDA's Natural Resources
Conservation Service designated the Colorado River Salinity Control
Program as a national conservation priority area in fiscal year 2000.
Wyoming views the inclusion of the CRSC Program in EQIP as a direct
recognition on the part of Congress of the Federal commitment to
maintenance of the water quality standards for salinity in the Colorado
River--and that the Secretary of Agriculture has a vital role in
meeting that commitment.
The State of Wyoming is a member state of the seven-state Colorado
River Basin Salinity Control Forum. Established in 1973 to coordinate
with the Federal Government on the maintenance of the basin-wide Water
Quality Standards for Salinity in the Colorado River System, the Forum
is composed of gubernatorial representatives and serves as a liaison
between the seven States and the Secretaries of the Interior and
Agriculture and the Administrator of the Environmental Protection
Agency (EPA). The Forum advises the Federal agencies on the progress of
efforts to control the salinity of the Colorado River and annually
makes funding recommendations, including the amount believed necessary
to be expended by the USDA for its on-farm CRSC Program. Overall, the
combined efforts of the Basin States, the Bureau of Reclamation and the
Department of Agriculture have resulted in one of the nation's most
successful non-point source control programs.
For the past 18 years, the seven State Colorado River Basin
Salinity Control Forum has actively assisted the U.S. Department of
Agriculture in implementing its unique, collaborative and important
program. At its recent October 2001 meeting, the Forum recommended that
the USDA CRSC Program should expend $12,000,000 in fiscal year 2003. In
the Forum's judgment, the approximately $4,500,000 being designated
annually for the CRSC Program by the NRCS is inadequate to implement
the needed program and to gain any ground on the ``shortfall'' in
program funding. ``Catch-up'' funding in the future will require
expending greater sums of money, increase the likelihood that the
numeric salinity criteria are exceeded, and create undue burdens and
difficulties for one of the most successful Federal/State cooperative
non-point source pollution control programs in the United States.
The State of Wyoming greatly appreciates the Subcommittee's support
of the Colorado River Salinity Control Program in past years. We
continue to believe this important basin-wide water quality improvement
program merits support by your Subcommittee. We request that your
Subcommittee direct the expenditure of $12,000,000 for the USDA's CRSC
Program during fiscal year 2003. Thank you in advance for your
consideration of this statement and its inclusion in the formal record
for fiscal year 2003 appropriations.
______
Prepared Statement of the Taylor Shellfish Farms
Mr. Chairman and Members of the Subcommittee: My name is William
Dewey. I am the Project Development Division Manager for Taylor
Shellfish Farms. Our company employs approximately 250 people farming
clams, oysters, and mussels on approximately 8,500 acres of tidelands
across Washington State. I am president of the Pacific Shellfish
Institute and past president of the Pacific Coast Oyster Growers
Association. I am the Governor appointed representative for the
shellfish industry on the Puget Sound Council, and serve on the
Interstate Shellfish Sanitation Conference Executive Board. I am also
chair of the Industry Advisory Council for USDA's Western Regional
Aquaculture Center which is housed at the University of Washington in
Seattle.
I have been professionally involved in shellfish aquaculture for
over 20 years and I am familiar with all aspects of growing,
harvesting, processing, and marketing shellfish. Recent technological
advances, particularly in hatchery technology and seed production have
positioned our industry to play a major role in meeting the nation's
seafood demand and in offsetting the immense seafood trade deficit. We
are further encouraged by recent national support for aquaculture
development through the Joint Subcommittee on Aquaculture's efforts to
develop a National Aquaculture Development Plan as well as Department
of Commerce and NOAA Fisheries aquaculture policies.
The continued growth and success of the shellfish industry hinges
on our ability to do crucial research in areas such as disease,
genetics, integrated pest management, harmful algae blooms, human
health issues, marketing and the ecological impacts associated with out
culture systems. The USDA Regional Aquaculture Centers support this
critical research as well as extension of the results to the industry.
Most importantly, unlike a number of other competitive grants programs,
the mechanism by which the Regional aquaculture Centers fund research
assures they are addressing priorities specifically identified by the
aquaculture industry.
Funds supporting aquaculture research and development have
historically been limited. To achieve anything close to the five-fold
increase in 25 years projected by the department of Commerce's new
aquaculture policy, this is going to have to change. The diversity of
species and culture systems involved in marine farming versus
traditional land based agriculture and today's increased environmental
scrutiny require a greater investment in R&D to achieve successful
outcomes.
Funds supporting aquaculture research and development have
historically been limited. To achieve anything close to the five-fold
increase in 25 years projected by the Department of Commerce's new
aquaculture policy, this is going to have to change. The diversity of
species and culture systems involved in marine farming versus
traditional land based agriculture and today's increase environmental
scrutiny require a greater investment in R&D to achieve successful
outcomes.
Aquaculture is the fastest growing segment of U.S. agriculture.
Successful aquaculture directly offsets the seafood trade deficit and
in the northwest brings economic relief to regions severely depressed
from the decline in timber and fishing jobs. Clearly there is much to
be gained by continued growth in the aquaculture industry. We therefore
urge your support for funding the five Regional aquaculture Centers at
the fully authorized level of $7.5 million.
Thank you for the opportunity to provide testimony in support of
this very important appropriation.
______
Prepared Statement of the University of Illinois, the University of
Missouri, and the Southern Illinois University
Our testimony is on behalf of the federally funded project entitled
the Illinois-Missouri Alliance for Biotechnology (IMBA). We much
appreciate the strong, continuing support of the committee for this
effort. The project continues to produce valuable results and open new
options for the corn and soybean industries in the Midwest and for the
nation as a whole.
Request.--In order to enhance this productive and strategically
focused program, we request that $3.0 million be appropriated for IMBA
for fiscal year 2003. It is particularly important to push this
initiative forward at this time because of the race among nations to
capitalize on dramatic findings in the field of genomics. Powerful
tools are now available to determine the function of genes in
microorganisms, plants, animals, and humans. Knowledge of gene function
will allow much better targeting of projects on genes of major
economic, health, and social promise. The increased appropriation will
allow us to fund a larger proportion of worthy proposals, expand use of
the powerful tools of genomics, and include more socioeconomic research
that addresses stakeholder concerns about product quality and safety as
well as economic and social impacts of biotechnology. Additional
federal support will provide significant economies of scale and scope,
increasing the funds directly allocated to research and the leveraged
contributions to about $9 million.
Needs and opportunities.--IMBA is focused on the world's most
important agricultural challenge, meeting the nutritional needs of a
growing population. Rapidly growing population, urbanization, and
affluence, especially in Asia, are resulting in dramatic increase in
the consumption of animal protein. These changes are leading to
unprecedented growth in animal production and global markets for animal
products. Corn and soybeans are economically and nutritionally superior
to other grain crops for feeding swine, beef, dairy, poultry, and
confined fish. These classes of livestock are increasingly being
produced in large scale facilities around the world. With superior
technology, Illinois, Missouri, and surrounding Midwestern states can
be principal global suppliers, not only of corn and soybeans, but also
of value-added food products produced from these crops. To capture
these emerging markets, however, the U.S. will have to compete
vigorously against sophisticated foreign producers and we will have to
address consumer concerns about quality, safety, and efficacy of
products containing genetically modified corn and soybeans.
Mission, objectives, and strategy.--IMBA seeks to maximize the
benefits of biotechnology for the American agriculture and food sector
and the American consumer by improving the quality, safety,
affordability, and acceptance of agricultural and food products. It
accomplishes this mission by supporting competitively funded, cutting-
edge biotechnology research conducted as part of research programs
organized around clearly defined, practical objectives. IMBA scientists
are strongly encouraged to work closely with the private sector to
assure that promising new discoveries move rapidly to practical
application in Midwest agriculture.
To avoid spreading the IMBA research investment too thinly, the
scope of the program is limited to the corn and soybean industries;
geographical scope to Illinois, Missouri, and other Midwestern states;
and disciplinary scope to biotechnology, including technical, economic,
and social dimensions of that subject.
IMBA-funded biotechnology research grants are awarded
competitively, based on relevance to IMBA objectives, soundness of
proposed research strategy, and scientific merit. Proposals are
evaluated by scientific peers to assure that the best strategies are
brought to bear on agricultural problems and opportunities that are
important to the region. A Program Manager located at the University of
Missouri, www.imba.missouri.edu, works with an Executive Management
Committee to design and develop a biotechnology research investment
portfolio that addresses the following objectives: (1) Develop new and
improved uses for corn and soybeans and increase the value of these
crops as raw material for manufacturing various products, (2) lower the
cost of producing, processing, and utilizing these products, (3)
maximize positive and minimize negative impacts of the corn and soybean
industries on the environment and conserve nonrenewable resources that
are consumed by the corn and soybean industries, (4) anticipate and
understand the economic and social impacts of agricultural
biotechnology and capture as many benefits as possible for the American
agriculture and food sector, (5) define the roles of experts and
knowledge systems in resolving social conflicts over agricultural
biotechnology so as to understand and manage agricultural biotechnology
risks as perceived by consumers, and (6) understand and improve
economic, organizational, and institutional approaches to value-
enhancement and identity preservation.
Recent achievements of IMBA research.--IMBA continues to support
AgBioForum, a unique, web-based, peer-reviewed journal designed to
reach and educate a broad audience on issues of central importance.
AgBioForum articles are widely reproduced in the classroom, by the
media, and as references in academic journals. Total readership has
surpassed 175,000 and includes scientists and interested lay persons
from universities, industry, government, international organizations,
and commercial sites. In 2001, AgBioForum produced and distributed a
major special issue on the influence of governmental policy on the
development of agricultural biotechnology in Europe.
Proprietary protocols for soybean transformation have been
developed to incorporate peptide carrier protein genes into soybean as
a way to protect against the fungal pathogen, Phytophthora. The
intellectual property from this project is being prepared for patent
application.
IMBA-funded scientists are studying the process of apomixis, which
allows seed to be produced in the absence of sexual reproduction. If
hybrid corn plants could be produced that produce seed through
apomixis, that seed would produce plants genetically identical to the
hybrid parents, unlike seed produced on current hybrid plants. This
would enable farmers to save seed from hybrid parents for use as seed
the next year. Eastern gamma grass, Tripsicum dactyloides, the closest
apomictically reproducing relative to corn, has already been used to
visually characterize the chromosomes of selected offspring plants
obtained from crosses. DNA sequences to distinguish the two parents
also have been identified.
With funding from IMBA, scientists produced genetically transformed
soybeans with significantly higher levels of oil than conventional
lines--and better fatty acid composition. Linkage maps and fast oil
analysis procedures developed by this group are simplifying selection
of soybean lines for oil and protein content. Analysis of nucleotide
sequence information is revealing the specific genes involved in
protein and oil synthesis in soybeans and how these genes differ among
lines with different oil quantity and quality.
In a joint project with leading French scientists, a group of IMBA
investigators has found that time of maturity has a major effect on
levels of isoflavones in soybean seeds. These compounds have important
functional food properties and could be used to enhance the value of
soybean as an American crop. There is a two-fold range in total
isoflavones among commercial U.S. cultivars with similar maturity and a
four-fold range in exotic accessions.
Phytic acid contains much of a plant's phosphorus. It is relatively
indigestible to non-ruminant animals, including humans, and so it is
excreted. In this way, phosphorus is passed into ground and surface
waters, creating pollution. IMBA scientists are working to produce
soybeans with low levels of phytic acid. Using an E. coli phytase gene,
an embryo-specific promoter, and a series of other signal sequences,
they have successfully introduced this gene into the model plant,
Arabidopsis. The gene is active, and transgenic plants produce phytase
and store lower levels of phytic acid than controls. This research
group is now working to introduce phytase into soybeans.
Several IMBA scientists are cooperating to develop high oil, high
oleic acid oil, corn hybrids. Grain produced with these hybrids will
command a premium based on higher digestible energy level, added value
in manufacturing certain kinds of food products, and potential human
health benefits. These scientists have identified molecular markers
that will make it much easier to select for oil concentration and for
specific fatty acid profiles. They also have developed new genetic
constructs that, when introduced into elite germplasm, should enhance
oil concentration and oleic acid concentration.
Cooperators.--Current cooperators in IMBA projects include the
Universities of Illinois and Missouri, Southern Illinois University,
University of Nebraska, Iowa State University, the USDA-Agricultural
Research Service group at Woodward, Oklahoma, and ESA-Purpan in
Toulouse, France. Private, non-profit cooperators include Sapient's
Institute and Northwestern University. Commercial firms cooperating or
involved in negotiations include Monsanto Company, ICI Garst, Inc.,
DuPont/Pioneer, ADM-Growmark, Clarkson Grain, Cargill, Biosys, Zeneca
Agrochemicals, Novartis, DowElanco, Genentech, Healthtech,
Electropharmacology, and others. Each project is generating potential
new and improved products, and private firms are evaluating the
commercial potential of each product of IMBA research.
Summary.--We believe IMBA projects constitute an outstanding
portfolio of promising research investments focused on the major
problems and opportunities associated with the U.S. corn and soybean
industries. Because of the economically important subject matter being
addressed by IMBA, unique opportunities afforded by advances in
genomics, outstanding capabilities of participating institutions, and
the innovative research management approach being employed, we believe
that IMBA will continue to be highly productive and will generate an
unusually high return on the federal investment. An appropriation of
$3.0 million is requested to continue the project in fiscal year.
______
Prepared Statement of the University of Illinois
We propose to establish a Future Foods Initiative based at the
University of Illinois in Urbana-Champaign. This will be a unique
program for discovery, development and evaluation of new foods, food
ingredients, and food functionality, including health-related,
genetically enhanced foods, building on the seminal research work now
being done at the University of Illinois. A competitive process is
envisioned for research teams to address the most significant issues
related to the functionality and benefits of new foods and food
components and to create the necessary procedures and protocols that
can lead to practical acceptance and effective use of such foods. We
request $3 million to fund the initial research and development
program.
Background.--The global food industry is in the midst of a new
health and business trend termed ``functional foods,'' fueled in part
by rapid development of new technologies applied in food production and
processing. For improved human health and greater value for food and
agricultural products, functional foods offer tremendous potential.
Functional foods are defined by the National Academy of Sciences as . .
. any food or food ingredient that may provide a health benefit beyond
the traditional nutrients it contains.'' During the past decade,
considerable scientific evidence has indicated that foods we consume
and their bioactive components can promote optimal health and
contribute to reduced risk factors for chronic diseases, such as heart
disease and cancer. Consumers readily accept the notion that food is an
important part of healthy and high quality lifestyles. Leadership is
needed in academia, government and industry to ensure that consumers
obtain safe and effective products based on sound, scientific data. The
Centre for Food and Health Studies in London depicts the world's food
industry as ``looking to leverage their nutritional and scientific
expertise in pursuit of the health benefits of food'' making food and
health ``just about the biggest food industry business and product
development issue for the new century.'' The functional foods market is
presently valued at $18 billion in the United States and is projected
to reach $50 billion worldwide by 2004.
Vision.--The long-term goal of the University of Illinois is to
establish a center of excellence that will stimulate unique,
multidisciplinary research collaborations on the most critical
questions for discovery, development and evaluation of new and improved
foods and will contribute essential scientific information and testing
procedures to help bring beneficial products to the public. Researchers
in the food, agricultural and biomedical fields will focus particularly
on bioactive food components and health, generating and providing
consumers with accurate food and health information, leading to
development of effective and safe food products. This initiative is
critically important and timely as the world's consumers are faced with
an increasingly wide and diverse array of new food products and
ingredients, many being generated through new applications of
biotechnology.
Benefits.--Products developed and evaluated in the Future Foods
Initiative will address major issues of human health and welfare. Some
will have enhanced protein, carbohydrate, lipid, and fiber quality,
contributing to overall nutritional value and addressing malnutrition.
Some will contain enhanced levels of vitamins, minerals, and other
functional components that are essential to human health. Many products
will be generated from research in the Illinois Post-Genomics
Institute, a large functional genomics research facility to be
constructed at the University of Illinois in Urbana-Champaign, and in
other research programs and facilities across the nation. A healthier
population and business opportunities for producers, processors and
others in the food value chain will provide a needed stimulus to the
American economy.
Function.--Research projects conducted under the Future Foods
Initiative will be overseen by University of Illinois scientists and
other specialists. The program will leverage major strengths across
research disciplines to study the implications for nutrition and
health, aspects of food safety, and processes in the agricultural and
food industries that are essential to bring the potential benefits of
nutritionally enhanced foods to consumers. Because of close association
with basic biotechnology research, scientists involved will be able to
conduct unique tests, designed to detect subtle effects, both positive
and negative, and create new understanding of the biochemical and
genetic interactions between people and the foods they consume.
Setting.--The University of Illinois provides an ideal setting for
the Future Foods Initiative, since it is already the home for the
nation's first full-scale scientific program dedicated to studying the
roles of naturally-occurring food components in preventing disease and
promoting health and optimizing their concentrations in food products.
The Functional Foods for Health program, conceived in 1992, involves
more than ninety scientists from multiple disciplines located at the
University's campuses in Urbana and Chicago and receives support from
twenty-five industry affiliates. Scientists from highly ranked
Colleges, for example ACES, Medicine, Pharmacy, and Engineering, and
the Department of Food Science and Human Nutrition provide the world-
class scientific leadership. The University of Illinois is unique among
public institutions in having led a successful effort to obtain F.D.A.
approval for a health claim for a food ingredient, namely soy.
Previously, thirty studies had demonstrated the cholesterol-lowering
effect of soy protein in the diet. However, the data was inadequate to
support a health claim, because some of the research was not conducted
under the strict protocols required by F.D.A., and certain cohorts of
human subjects had not been studied. The University worked closely with
F.D.A., soybean commodity groups, and soy processing firms to correct
these deficiencies and achieve the claim.
The University of Illinois has a proven track record for managing
research programs that address specific problems in food and
agricultural systems with crucial societal outcomes. Successful
examples include the C-FAR Sentinel programs and Strategic Research
Initiatives, the National Soybean Research Laboratory, the Dudley-Smith
Initiative for sustainable agriculture, and the Illinois-Missouri
Biotechnology Alliance, to name a few. Thanks in part to significant
Federal investments, the University of Illinois mounts one of the
largest and best equipped public sector biotechnology research programs
in the world with major strengths in both agricultural and biomedical
applications of biotechnology. Major state commitments totaling over
$130 million in the Post-Genomics Institute and Illinois Food and
Nutrition Institute will improve an already superb infrastructure for
basic and developmental research on foods and food ingredients.
Estimated cost.--We request $3 million to initially fund the Future
Foods Initiative. To maintain America's competitive leadership for the
emerging opportunities in new food functionality and to ensure that
consumers derive the potential benefits of new and improved foods and
food ingredients, especially those resulting from biotechnology
research, this request is of utmost importance. We thank the committee
for its strong support of food and agriculture research and ask your
consideration of this very important initiative.
______
Prepared Statement of the University of Illinois
Our testimony is on behalf of the Livestock Genome Sequencing
Initiative (LGSI), an extremely important scientific initiative with
profound implications for the future of U.S. agriculture and for the
biological security of our nation's animal resources. We appreciate the
strong support of the Committee for this effort that began in fiscal
year 2002. To continue the effort in fiscal year 2003, we request that
funding of $1.6 million be appropriated through USDA, to complete the
funding of Stage I for the cattle genome and Stage I of the pig genome
mapping effort.
Concept.--International participants in the Livestock Genome
Sequencing Initiative will create maps of the entire genomes of cattle
and pigs and will sequence all the DNA in those genomes, so that every
gene in each of the two species is identified by its unique sequence
and location on specific chromosomes. The resulting map and sequence
information will be placed in databases that can be accessed by
scientists using bioinformatics to help establish the function of each
of tens of thousands of genes, thus leading to valuable practical
applications. Similarities to the human and mouse genomes will be
extremely useful in the mapping and sequencing effort and subsequent
research.
Funding provided to the University of Illinois, as a member of
international consortia, will lead to the completion of the whole-
genome physical maps for cattle and for the pig. Specifically, the
funding is being used to sequence the ends of approximately 120,000
bacterial artificial chromosomes (BACs) that contain large inserts of
cattle and pig DNA. This enables scientists to build and enhance the
quality of a whole-genome, high-quality physical map for each species,
the critical first step in sequencing these livestock genomes.
Progress.--During the first year of the Livestock Genome Sequencing
Project (fiscal year 2002), 60,000 new sequences from the cattle genome
(cattle genomic inserts in bacterial artificial chromosomes, or BACs)
were generated at the University of Illinois. These 60,000 new
``sequence tagged sites'' are being integrated with maps that are being
created collaboratively with the USDA-ARS and the British Columbia
Cancer Research Centre. The sequences generated provide the necessary
``anchoring'' of the cattle map to the map of the human genome. The
second year's work will allow the sequencing of 60,000 additional
cattle BAC-ends for the whole-genome cattle map and 60,000 BAC-ends for
the swine gene map. When completed, the resulting maps will permit
rapid isolation and characterization of genes affecting health, well-
being and productivity of cattle and pigs and will provide an
indispensable template for the DNA sequencing of both genomes.
Preliminary discussions are already underway with other institutions
and federal agencies to create the funding base for complete sequencing
of the cattle and pig genomes.
Justification.--For the long-term protection and security of our
nation's food supply, the ability to rapidly diagnose and respond to
threats from exposure to infectious and chemical agents rests
increasingly on our knowledge of the genomes of critical plant and
animal species. Mapping and sequencing genes are the essential first
steps to learning the function of each gene. Knowledge of gene location
and sequence, as is amply demonstrated by the human genome-sequencing
project, opens a whole new vista of approaches to health, welfare, and
quality of life issues and serves as the basis for future biological
research. Diagnostics and cures for some of the major scourges of
mankind, including cardiovascular disease, cancer, diabetes, and
obesity are among the potentials of this initiative. In livestock, the
initiative will enable powerful, environmentally safe approaches to
disease prevention, resistance, and treatment; stress alleviation;
increased productivity and profitability; improved food quality,
safety, functionality, and diversity; improved odor and waste
management; improved environmental quality; and enhanced quality of
life for food animals. Above all, the initiative will address the
growing aspirations of the world's population for nutritious, healthy,
safe, and affordable livestock products and will provide new technology
to secure those products against bioterrorist threats.
Even though it is an international undertaking, there is a very
important global competitiveness dimension to this initiative, as well.
To illustrate, China, the world's largest pork producer, and Denmark,
the largest pork producer per capita and a major world exporter of pork
and pork products, have launched an aggressive swine genome sequencing
initiative. Independent efforts to sequence the cattle genome are
underway in New Zealand. If the U.S. is to remain technologically
competitive in global food markets, it is absolutely essential for the
U.S. to be among the first to map and sequence food animal genomes.
This fundamental biological information is the foundation for
sustainable competitive advantage.
Economic development impact.--Focusing on the agricultural and food
implications alone, rapid population growth, urbanization, and growing
affluence in the most populous parts of the world are resulting in
rapidly expanding world markets for livestock products. Enormous future
growth is very likely, as developing countries improve both political
and economic systems. To compete effectively for those markets,
Illinois and the nation must be among the first to implement new
livestock technology derived from genomics. Livestock production is the
leading source of added value for the feed grains and oilseeds produced
in Illinois and the Midwest, and technological leadership will allow
that value to be captured in the areas where the new technology is
implemented. This increased value would accrue to Illinois and the
nation as increased profits throughout the swine and cattle industries,
greater demand for feed grains and oilseeds, reduced costs of
government farm programs, increased employment and economic
development, and improved consumer products. Substantial economic
returns can also be expected from applications of this technology to
various aspects of human health. New technology emerging from the
interface of animal genomics with nanotechnology will yield new
opportunities to produce biosensors that will protect the nation's
cattle and swine from biological threats.
University capabilities.--The University of Illinois is uniquely
positioned to lead in mapping the pig and cattle genomes. The
Biotechnology Center, which includes the W. M. Keck Center for
Comparative and Functional Genomics, provides one of the highest-
throughput public gene mapping and sequencing capabilities in the
nation, as well as a number of state-of-the-art genetic analysis
capabilities, such as microarray analysis. Cutting edge bioinformatics
capabilities are provided by the National Center for Supercomputing
Applications.
These superb research support capabilities enabled University of
Illinois scientists to become leaders in research concerning cattle,
swine, and soybean genomes. The infrastructure is further enhanced by
sizeable public investments in facilities, including the Edward R.
Madigan Laboratory and the Post-Genomics Institute. The University of
Illinois was also selected by USDA to establish the ``Agricultural
Genome Sciences and Public Policy Training Program.''
Additional state appropriations are enabling many distinguished
scientists of demonstrated excellence to join a faculty that is already
internationally preeminent in the genomics area. Also, the University
has a long history of productive alliances and cooperation with other
public and private institutions, both here and abroad, in biotechnology
research. For example, the University was the first in the Western
Hemisphere to import Chinese swine and exploit their advantages in
prolificacy, disease resistance, and superiority for genetic research.
Sponsor and funding status.--Under the leadership of USDA-ARS and
University of Illinois scientists, international consortia for cattle
and pig genome mapping and sequencing are being formed. The consortium
that has initially undertaken the mapping of the cattle genome is
presently comprised of the USDA-ARS, the University of Illinois,
Shirakowa Institute of Animal Genetics (Japan), and the Alberta
Livestock Genomics Initiative (Canada). The international consortium
for sequencing the pig genome is being established with USDA-ARS and
the University of Illinois to also include the Sanger Center--Cambridge
(UK) and INRA (France).
The long-term objective of the multinational, multi-institutional
Livestock Genome Sequencing Initiative (LGSI) is to obtain the complete
sequences of the cattle and pig genomes with a total expected
investment of approximately $100 million per species. The first stage,
anchored by the initial federal appropriation ($800,000) in the fiscal
year 2002 LGSI initiative, is creating the physical maps of the cattle
and pig genomes from the sequence-ready bacterial artificial
chromosomes (BACs). Continuing appropriation of $1.6 million in fiscal
year 2003 will allow for completion of this stage. The second stage, to
be accomplished in the third through the 5 years, will result in
targeted sequencing of chromosomal regions containing genes of economic
importance to the livestock industry or approximately eight million DNA
bases annually for each species. This will lead to the eventual
complete genome sequences, three billion DNA bases for each species,
with funding recruited from public and private sources by the
international consortia.
Request and summary.--For fiscal year 2003, $1.6 million is
requested to be appropriated through the USDA to complete the funding
of Stage I for cattle and of Stage I of the pig. If appropriated, these
funds will be provided to the University of Illinois, as a member of
the international consortia, to lead the completion of the whole-genome
physical map for cattle and for the pig. Specifically, the funding will
be used to sequence the ends of approximately 120,000 bacterial
artificial chromosomes (BACs) that contain large inserts of cattle and
pig DNA. This will greatly speed and facilitate building a whole-
genome, high-quality, physical map of each species, the critical first
step in sequencing the genomes.
______
Prepared Statement of the University of Southern Mississippi
Mr. Chairman, distinguished Members of the Subcommittee, I would
like to thank you for this opportunity to provide testimony describing
ongoing research and commercializing efforts of The University of
Southern Mississippi (USM) and the Mississippi Polymer Institute. I am
very grateful to the Subcommittee for its leadership and the continued
support of the Institute and its work. This testimony will include an
update on the progress of the Institute since my testimony of
approximately one year ago. During the past year, our efforts have
focused principally on two commercialization thrusts. One effort
involves our novel, agricultural-based inventions in emulsion
polymerizations, and the other is to produce a commercial,
formaldehyde-free, soybean derived adhesive for a variety of composite
board materials, i.e., particle-board or oriented strand board (OSB).
During the past year, we have continued to refine the adhesive and have
prepared particle boards from our novel adhesive that meet commercial
specifications. We are optimistic that these materials can be
commercialized. We are currently working to reduce the cost of the
adhesive in order to improve its commercial viability. With respect to
the agricultural derived emulsions, I am happy to say that they have
found commercial viability at this time. However, much more needs to be
done in order to exploit the many uses of this novel technology. It is
my belief that many applications exist, and our efforts to date have
uncovered but a few applications. I will discuss the progress made with
the two inventions separately in order to offer more clarity.
In the case of castor and soy oil, we have designed and synthesized
almost one hundred novel vegetable oil macro-monomers (VOMM) or polymer
building blocks that offer state-of-the-art technology. For instance,
the attributes of this technology include the ability to produce odor
free, solvent free, non-polluting latex coatings. This represents the
best-available technology for the production of solvent free latex
coatings. The success of the technology depends on the use of
agricultural materials as a building block of emulsion derived polymers
offering a new opportunity for ag derived materials as a raw material
in the polymer industry. By contrast, contemporary latex coatings
contain 250 grams/liter or more of air pollutants or volatile organic
content (VOC) per gallon. Moreover, this novel technology, if
practiced, would allow governmental regulatory agencies to tighten the
restrictions on VOC emissions of applied coatings without financial
harm to the coatings industry. The fundamental scientific principles
regarding its mode of action have been confirmed, yet additional data
must be collected as even more novel monomers, or polymer building
blocks, are designed and synthesized. We have identified emulsion
polymerization as a synthetic technique particularly suited for use of
these materials. We have also found that it holds much promise in
ultraviolet cured polymers in that hard, scratch resistant coatings are
produced in seconds from this novel technology. We have utilized this
technology in the design and fabrication of industrial coatings that
offer high performance, flexible, and non-blocking products. We have
secured a pilot scale manufacturing facility for this material, and as
a result, can produce 20 gallons of VOMM per run. Financial assistance
was obtained via the USDA SBIR division competitive grant applications.
We have met our SBIR objectives for Phase I and are currently
implementing the Phase II award protocol. As a result of this work, we
are now able to provide sufficient quantities of product to prospective
users of this technology. We have sampled many interested parties and
are continuing negotiations with several firms regarding
commercialization. Finally, we have manufactured and shipped VOC free
and low odor paints to the Pentagon for use in renovation and
maintenance of this facility.
Over the past year, new patent applicants have been filed and
others have been issued. Foreign patent filings have also been
affected. New patent applications will certainly be submitted during
the coming year.
In summary, commercialization efforts have continued over the past
year with sales of paint to the Pentagon and polymer for textile
treatments. Patents have been approved, new patent applications have
been submitted, several toll manufacturing runs have been made, a USDA
SBIR grant is in force to assist in the development of this technology,
new industrial coatings have been designed, manufactured, formulated,
and tested, and formulation efforts have been directed toward the
generation of high performance, low odor, and low VOC coatings. We are
optimistic that sales of these ag derived products will expand
dramatically during 2002!
In yet another of our novel ag based technologies, we have
developed formaldehyde-free adhesives for use in the composites
industry, specifically for particle board and oriented strand board.
The new adhesives are composed of more than 98 percent agricultural
products and are comparable in properties with traditional formaldehyde
adhesives. Formaldehyde emissions are regulated as formaldehyde is
considered a potential cancer producing agent. Consequently, there is a
move afoot to remove formaldehyde from articles of commerce. This work
to reduce water absorption values has been successfully completed.
Moreover, while water absorption values are within limits so are values
for internal bond strength, modulus of elasticity, and modulus of
rupture. These developments represent major technical advancements
during the past year. The cost of the soy adhesive is higher than
formaldehyde derived adhesives, and our current goal is therefore to
reduce adhesive costs while maintaining adhesive properties.
In 1983, the Mississippi Legislature authorized the Polymer
Institute at USM to work closely with emerging industries and other
existing polymer-related industries to assist with research, problem
solving, and commercializing efforts. The institute has maintained that
thrust during the past year with much success. In fact, while
manufacturing jobs alone in Mississippi have declined over the past 10
years, manufacturing jobs in the plastics sector have risen and
continue to rise.
The Institute provides industry and government with applied or
focused research, development support, and other commercializing
assistance. This effort complements existing strong ties with industry
and government involving exchange of information and improved
employment opportunities for USM graduates. Most importantly, through
basic and applied research coupled with developmental and
commercializing efforts of the Institute, the School of Polymers and
High Performance Materials continues to address national needs of high
priority.
The focus of my work is commercialization of alternative
agricultural crops in the polymer industry. We are having success! This
approach offers new opportunities for agriculture since the polymer
industry is the largest segment of the chemical products industry in
the world, and heretofore has been highly dependent upon petroleum
utilization. However, the theme of our work is simple; high
performance, and environmentally friendly technology utilizing
agricultural (sustainable) crops when possible. In this way, we as a
Nation can improve our environment, reduce our dependence on imported
petroleum, and keep America's farmlands in production. As farm products
meet the industrial needs of the American society, rural America is the
benefactor. Heretofore, this movement to utilize alternative
agricultural products as industrial raw materials has received some
attention but much less than opportunities warrant. Your decisions are
crucial to the accomplishment of these goals as funding from this
Subcommittee has enabled us to implement and maintain an active group
of university-based polymer scientists whose energies are devoted to
commercializing alternative crops. We are most grateful to you for this
support, and ask for your continued commitment.
The faculty, the University, and the State of Mississippi are
strongly supportive of the Mississippi Polymer Institute and its close
ties with industry. Most faculty maintain at least one industrial
contract as an important part of extramural research efforts.
Polymers, which include fibers, plastics, composites, coatings,
adhesives, inks, and elastomers, play a key role in the materials
industry. They are used in a wide range of industries including
textiles, aerospace, automotive, packaging, construction, medical
prosthesis, and health care. In the aerospace and automotive
applications, reduced weight and high strength make them increasingly
important as fuel savers. Their non-metallic character and design
potentials support their use for many national defense purposes.
Moreover, select polymers are possible substitutes for so-called
strategic materials, some of which come from potentially unreliable
sources.
As a polymer scientist, I am intrigued by the vast opportunities
offered by American agriculture. As a professor, however, I continue to
be disappointed that few of our science and business students receive
training in the polymer-agricultural discipline as it offers enormous
potential. The University of Southern Mississippi, the School of
Polymers and High Performance Materials, and the Mississippi Polymer
Institute are attempting to make a difference by showing others what
can be accomplished if appropriate time, energy, and resources are
devoted to the understanding of ag based products.
I became involved in the polymer field 38 years ago and since that
time, have watched its evolution where almost each new product
utilization offered the opportunity for many more. Although polymer
science as a discipline has experienced expansion and a degree of
public acceptance, alternative agricultural materials continue to be an
under-utilized national treasure for the polymer industry. There is
less acceptance of petroleum derived materials today than ever before,
and consequently the timing is ideal for agricultural materials to make
significant inroads as environmentally friendly, biodegradable, and
renewable raw materials. These agricultural materials have always been
available for our use, yet society for many reasons, has not recognized
their potential. The following examples are included and represent
opportunities other than those already described which supports this
tenet:
--A waterborne, waterproofer has been designed and formulated with
the help of several natural products. It is being evaluated by
select chemical companies as a possible product in their
product mix. The material functions as a waterproofer yet is
carried in water. However, after application to the intended
substrate, typically wood or cementous products, the material
becomes hydrophobic and highly water resistant. We have
collected two and one-half years of exposure data on this
product with excellent success. We have made additional
contacts with industrial firms during the year in hopes for
commercialization but industry is complacent and no driving
force for change exists. For instance, unless VOC emission laws
are tightened, little movement will be toward new,
environmentally friendly, products. However, we will continue
our efforts to promote the use of ag based products offering
improved environmental attributes, i.e., high performance
accompanied by low odor and low VOCs.
--We have exploited the potential of lesquerella, a crop that
produces a triglyceride similar to castor oil. Several high
performance products have been prepared and include polyesters,
stains, foams, pressure sensitive adhesives, and 100 percent
solid ultraviolet (UV) coatings. This technology was
highlighted at the AARC/NASDA meeting in Washington, DC. We
have developed a cooperative relationship with Alcorn State
University, Lorman, MS to grow and thus evaluate the agronomics
of lesquerella as a new crop for the Southeastern U.S. region.
Consequently, we have fabricated ag based foams for use as weed
retardant mulches. The new foams are under test as this report
is being written.
U.S. agriculture has made the transition from the farm fields to
the kitchen tables, but America's industrial community continues to be
frightfully slow in adopting ag based industrial materials. The prior
sentence was included in my last two testimonies but continues to ring
true, even as I write this report. However, we are making progress and
we must persist. We must aggressively pursue this opportunity and in
doing so:
--Intensify U.S. efforts to commercialize alternative crops and
dramatically reduce atmospheric VOC emissions and odor. The
result will be much cleaner and less noxious air for all
Americans.
--Reduce U.S. reliance on imported petroleum.
--Maintain a healthy and prosperous farm economy.
--Foster new cooperative opportunities between American farmers and
American industry.
Mr. Chairman, your leadership and support are deeply appreciated by
the entire University of Southern Mississippi community. While I can
greatly appreciate the financial restraints facing your Subcommittee, I
feel confident that further support of the Mississippi Polymer
Institute will continue dividends of increasing commercialization
opportunities of agricultural materials in American industry. Advances
in polymer research are crucial to food, transportation, housing, and
defense industries. Our work has clearly established the value of ag
products as industrial raw materials and we must move it from the
laboratories to the industrial manufacturing sector. Only then can the
U.S. enjoy a cleaner and safer environment which these technologies
offer, as well as new jobs, and expanded opportunities for the U.S.
farmer. We are most grateful for the support you have provided in the
past. The funding you have provided has allowed laboratory work to be
conducted, pilot commercial manufacturing to be completed, and limited
sales of products derived from this technology. However, additional
funds are needed to make these technologies cost effective while
maintaining the high performance standards of which we are accustomed.
Pilot scale processes are necessary to move this technology into the
market place and this will be the principal focus of our upcoming work.
Of course, while working to achieve commercialization, continued
technology advancement will be in effect, as will basic research on
those topic areas where knowledge is required.
Since our testimony last year we have reached new levels of
commercializing efforts in that we have manufactured final and finished
products for sale. Indeed, the technology has matured and marketing and
sales must move parallel with continued commercial development of new
products. Thus, we are in need of additional resources to take these
technologies to the market place and to continue our developments of
other exciting technologies. We therefore respectfully request $1.5
million in federal funding to more fully exploit the potentials of
commercializing the technologies described herein. We have shown that
we can be successful, yet we need additional resources in order to
optimize the potential of this technology. Our efforts will be
recognized as instrumental in developing a ``process'' for
commercialization of new ag based products. That is, we will have taken
a technology from the ``idea'' stage to commercialization in several
market areas. The development of this process, and to show it
successful, is extremely important to all entrepreneurs who believe in
ag based products. Thank you Mr. Chairman and Members of the
Subcommittee for your support and consideration.
-_____
Prepared Statement of the Upper Mississippi River Basin Association
The Upper Mississippi River Basin Association (UMRBA) is the
organization created in 1981 by the Governors of Illinois, Iowa,
Minnesota, Missouri, and Wisconsin to serve as a forum for coordinating
the five states' river-related programs and policies and for
collaborating with Federal agencies on regional water resource issues.
As such, the UMRBA has an interest in the budget for the U.S.
Department of Agriculture's conservation programs and technical
assistance.
Funding for conservation programs on private lands has eroded over
time and is now less in constant dollars than during the depths of the
Great Depression. The USDA's conservation programs and technical
assistance are crucial alternatives to a totally regulatory approach to
improving water quality. These important programs are inadequately
funded, and many require reauthorization in the pending Farm Bill,
making coordination of the authorizing and the appropriations processes
absolutely critical this year. The UMRBA supports continuation and
expansion of these programs, and urges Congressional appropriators to
make adequate provisions for programs pending in the Farm Bill.
Of particular importance to the UMRBA is funding for the
Conservation Reserve Program (CRP), Wetlands Reserve Program (WRP), and
Environmental Quality Incentives Program (EQIP). Taken together, these
three Commodity Credit Corporation-funded programs provide an
invaluable means for the USDA to work with landowners, local
conservation districts, and the states to ensure that agricultural
productivity is maintained while protecting the nation's soil and water
resources. Moreover, they do this in a voluntary, non-regulatory
fashion. CRP, WRP, and EQIP will be key non-regulatory elements in the
states' efforts to address agricultural sources of water quality
impairment through the Total Maximum Daily Load program. In addition,
these conservation programs will be absolutely essential to addressing
the growing national concern with hypoxia in the Gulf of Mexico through
the reduction of nutrient loads from agriculture. As stewards of some
of the nation's most productive agricultural lands and important water
resources, the five states of the Upper Mississippi River Basin (UMRB)
believe these programs are vital. Strong farmer interest and state
support demonstrate the region's commitment to the objectives of these
programs. In 1998, state, local, and private entities matched every
dollar of NRCS investment in the five states with an additional $0.80.
conservation reserve program
Under President Bush's fiscal year 2003 budget request, funding for
the CRP would increase modestly to $1.856 billion. While this increase
is certainly welcome, it is not adequate to fund the expanded CRP
provided for in both the House- and Senate-passed Farm Bills. Since its
inception, enhancements to the CRP have increased its effectiveness in
improving water quality, soil conservation, and habitat. These same
enhancements, which include noncompetitive enrollment for filter
strips, riparian buffers, and similar measures, as well as
establishment of the Conservation Reserve Enhancement Program (CREP),
have made the program more flexible and thus more attractive to
farmers. In Illinois, Iowa, Minnesota, Missouri, and Wisconsin, CRP
enrollment currently totals 6.6 million acres, or almost 20 percent of
the national total. All five states also have active CREP programs
tailored to meet their priority conservation needs. Current CREP
enrollment in the UMRB states is almost 146,000 acres, or 50 percent of
the national total. These rates of participation clearly demonstrate
the importance of the CRP and CREP in the nation's agricultural
heartland and reflect the compatibility of these programs with
agricultural productivity.
However, while demand for the program is up, the CRP has been
unable to capitalize fully on its increased attractiveness and
effectiveness because of its 36.4 million acre cap, which USDA projects
will be reached this calendar year. Currently, new enrollments are
limited to priority areas through noncompetitive enrollment, the CREP,
and a farmable wetlands pilot. Thus, it is essential that Congress act
this year to increase the CRP enrollment cap and then provide
sufficient funding to support the program, thereby ensuring that the
CRP will continue its vital role in helping states, local communities,
and landowners meet their water quality and conservation goals.
wetlands reserve program
Equally pressing is the need to fund and expand the enrollment cap
for the WRP, which has already reached its 1.075 million acre cap.
Citing the cap, President Bush has not requested any fiscal year 2003
funding for the WRP. Since the WRP's establishment in 1996, its
easements have proven to be important tools for restoring and
protecting wetlands in agricultural areas. This is clearly evident from
the overwhelming landowner response and the resulting improvements to
water quality and habitat. WRP enrollment in Illinois, Iowa, Minnesota,
Missouri, and Wisconsin totals almost 178,000 acres, or more than 15
percent of the national total. But, as of 2001, the backlog of land in
these five states offered for WRP enrollment totaled almost another
122,000 acres. As with the CRP and CREP, the WRP is a vital tool in the
agricultural conservation toolbox. Clearly the time is right for
Congress to secure the WRP's future this year by significantly
expanding the acreage cap and providing continued funding for this
valuable program.
environmental quality incentives program
The CRP and WRP have been extremely effective in helping Midwest
farmers to protect land and water resources by curtailing production on
some of their most sensitive land. And there are certainly many more
opportunities to make good use of the CRP and WRP in the region.
However, it is also essential to support sound conservation practices
on the far greater amount of land that remains in production. EQIP is
the USDA's largest and most effective means of assisting farmers and
ranchers to implement conservation practices on land currently in
production. EQIP assistance can, for example, help operators balance
the new dynamics of livestock production with the need to protect soil
and water resources.
Like many other conservation programs, EQIP funding has not kept
pace with demand. In 2001, unmet requests for EQIP assistance in
Illinois, Iowa, Minnesota, Missouri, and Wisconsin alone were estimated
at $147.9 million. The President has requested the current authorized
funding level of $200 million for EQIP in fiscal year 2003. Moreover,
should EQIP be reauthorized this year, the President's budget has
recommended up to $1 billion for the program in fiscal year 2003. The
states are gratified by the Administration's support for EQIP and
concur that the program offers the best opportunity to support
conservation measures on working lands.
conservation technical assistance
The UMRBA remains concerned with the adequacy of funding and
staffing levels in the NRCS's conservation operations account. The
technical assistance funded through conservation operations provides
the foundation for the USDA's voluntary conservation planning. The
Administration has proposed an increase of $46 million in conservation
technical assistance funding for fiscal year 2003. However, this
overall increase would be more than entirely consumed by a $48 million
increase directed toward technical assistance for animal feeding
operations. While the states agree that the water pollution problems
associated with such operations must be addressed, they are concerned
that other critical technical assistance functions would actually
experience a net decrease under the President's budget. As a result,
NRCS field staff will continue to have difficulty providing the timely,
comprehensive technical assistance that farmers need if they are to
participate effectively in the USDA's conservation programs and related
state programs. A 2001 National Workload Analysis found that the NRCS
needs approximately 1,900 employees at the field level in Illinois,
Iowa, Minnesota, Missouri, and Wisconsin. At the time, actual field
staff in the five states numbered about 1,250, or one-third below the
estimated needs. Under the Administration's fiscal year 2003 budget,
overall NRCS staffing would continue its multi-year decline, further
reducing the effectiveness of technical assistance. The House- and
Senate-passed Farm Bills would both authorize NRCS to work with third
party vendors to deliver conservation technical assistance. This
approach has the potential to alleviate problems associated with
insufficient NRCS field staff. However, regardless of who delivers the
technical assistance, it will remain imperative for Congress to ensure
that the NRCS has resources necessary to effectively meet landowners'
needs for such assistance.
watershed programs
The UMRBA is extraordinarily disappointed by the President's
failure to fund three critical watershed programs--i.e., Watershed and
Flood Prevention Operations, Watershed Surveys and Planning, and the
Watershed Rehabilitation Program. These programs all provide
significant local, regional, and national benefits in the areas of
erosion, sediment, and flood damage reduction; conservation; water
supply; and development. They are soundly within USDA's tradition of
working with states and local communities to enhance rural America. By
shifting the Watershed and Flood Prevention Operations account entirely
to emergency response work, the Administration would transform a
proactive program to an entirely reactive one. Together with
terminating funding for Watershed Surveys and Planning, this would
virtually eliminate the NRCS's ability to address vital rural water
resource needs. Similarly, the states oppose the President's proposal
to eliminate funding for the Watershed Rehabilitation Program. This
program was established under the Small Watershed Rehabilitation
Amendments of 2000 and authorizes the NRCS to assist local sponsors in
rehabilitating aging Public Law 534 and Public Law 566 flood control
structures. A 1999 estimate put national rehabilitation needs at $543
million, with needs in Illinois, Iowa, Minnesota, Missouri, and
Wisconsin accounting for more than 10 percent of the total. These are
very real needs, with very real potential public health and safety
implications. As Congress rightly concluded when it authorized the
program in 2000, the Federal Government has an appropriate role in
addressing those needs. The states urge Congress to restore funding for
these three important watershed programs.
______
Prepared Statement of the U.S. Apple Association
The U.S. Apple Association (U.S. Apple) appreciates the opportunity
to provide this testimony on behalf of our nation's apple industry.
Our testimony will focus on the following three areas: the Market
Access Program (MAP); Food Quality Protection Act (FQPA)
implementation; and Agricultural Research Service (ARS) funding.
U.S. Apple is the national trade association representing all
segments of the apple industry. Members include 40 state and regional
apple associations representing the 9,000 apple growers throughout the
country as well as more than 500 individual firms involved in the apple
business. Our mission is to provide the means for all segments of the
U.S. apple industry to join in appropriate collective efforts to
profitably produce and market apples and apple products.
Market Access Program (MAP).--U.S. Apple strongly supports
increasing the annual appropriation for MAP from $90 million to $200
million.
The apple industry receives roughly $3 million annually in export
development funds from the U.S. Department of Agriculture's Market
Access Program (MAP). These funds are matched by grower dollars to
promote apples in more than 20 countries throughout the world. Since
this program's inception in 1986, the U.S apple industry has expanded
fresh apple exports by 277 percent, thanks in large part to the foreign
promotions made possible by this program. One-quarter of U.S. fresh
apple production is exported, with an annual value of roughly $400
million.
The U.S. apple industry faces keen competition around the globe
from competitors who receive significant government funds for generic
promotions. The governments of our foreign competitors spend
approximately $500 million on export promotion and market development.
It has become increasingly difficult for U.S. exporters to compete with
European and Chinese producers who receive massive government
assistance. Increased funding for this critical program will assist
U.S. apple producers to better compete and revive export demand in
countries recently hit by adverse economic conditions.
Food Quality Protection Act (FQPA) Implementation.--U.S. Apple
strongly supports full funding for the following programs intended to
facilitate fair FQPA implementation and to offset its anticipated
negative impact on apple growers.
Specifically, U.S. Apple supports the U.S. Department of
Agriculture's following budget requests.
--$14.8 million for the Pesticide Data Program, administered by the
Agricultural Marketing Service (AMS);
--$8.0 million for the National Agricultural Statistics Service
(NASS) pesticide-usage surveys;
--$2.6 million for the Office of Pest Management Policy administered
by the Agricultural Research Service (ARS);
--$3.6 million for minor-use registration of crop protection tools
(IR-4) administered by ARS;
--$7.2 million for area-wide Integrated Pest Management research
administered by ARS;
--$13.5 million for the Integrated Pest Management Research Grant
Program administered by the Cooperative State Research,
Extension and Education Service (CSREES);
--$10.5 million for minor-use registration of crop protection tools
(IR-4) administered by CSREES; and
--$12.5 million for the Pest Management Alternatives Program,
Regional Pest Management Centers, Crops at Risk and Risk
Avoidance and Mitigation Program also administered by CSREES.
Temperate Fruit Fly Research Position--Yakima, Wash.--U.S. Apple
requests continued funding of $300,000 to conduct critical research at
the USDA-ARS laboratory in Yakima, Wash. on temperate fruit flies, a
major pest of apples.
The Yakima, Wash., USDA Agricultural Research Service (ARS)
facility is conducting research critical to the crop protection needs
of the apple industry. FQPA implementation has reduced the number of
pesticides currently available to growers for the control of pests,
such as cherry fruit fly and apple maggot. Left unchecked, these
temperate fruit flies can be devastating. Thus, research is needed to
develop alternative crop protection methods as growers struggle to cope
with the loss of existing tools. While Congress appropriated $300,000
last fiscal year for this critical research, the administration's
proposed budget for fiscal 2003 rescinds this funding.
Post Harvest Quality Research Position--East Lansing, Mich.--U.S.
Apple requests that the committee provide continued funding of $309,600
for postharvest-quality research at the ARS laboratory in East Lansing,
Michigan.
The East Lansing, Mich., USDA Agricultural Research Service (ARS)
facility is conducting research critical to the future economic
recovery of the apple industry. Using a series of new sensing
technologies, researchers at this facility are developing techniques
that would allow apple packers to measure the sugar content and
firmness of each apple before it is offered to consumers. Research
indicates consumer purchases will increase when products consistently
meet their expectations, suggesting consumers will eat more apples once
this technology is fully developed and employed by our industry. While
Congress appropriated $309,600 last fiscal year for this critical
research, the administration's proposed budget for fiscal 2003 rescinds
this funding.
Technology Roadmap.--U.S. Apple urges the Committee to support the
apple industry's efforts to improve its competitiveness by providing
increased Federal funding for the development and application of new
technologies.
Worldwide apple production increased by 126 percent between 1990
and 2000, while U.S. apple production grew by 10 percent during this
same period. This dramatic increase in global apple production
continues to threaten the profitability of America's apple growers.
Global oversupply, subsidized foreign competition and unfairly priced
imports have caused apple prices to plummet, while regulatory,
production and distribution costs are steadily increasing. The U.S.
apple industry's future survival may depend on its ability to develop
and utilize new technology to decrease costs, while improving apple
quality. Thus, the industry is seeking Federal support of a research
initiative to develop new technology to automate orchard and fruit
handling operations, optimize fruit quality, nutritional value, and
safety, and integrate digital technologies and communication.
The U.S. Apple Association thanks the committee for this
opportunity to present testimony in support of the U.S. apple
industry's Federal agricultural funding requests.
______
Prepared Statement of the U.S. Marine Shrimp Consortium
Mr. Chairman, we greatly appreciate the opportunity to provide
testimony to you and the Subcommittee, to thank you for your past
support and to discuss the achievements and opportunities of the U.S.
Marine Shrimp Farming Program.
We would like to bring to your attention the success of the U.S.
Marine Shrimp Farming Consortium and its value to the nation. The
Consortium consists of institutions from six states: The University of
Southern Mississippi/Gulf Coast Research Laboratory, Mississippi; The
Oceanic Institute, Hawaii; Tufts University, Massachusetts; Texas A & M
University, Texas; The Waddell Mariculture Center, South Carolina; and
the University of Arizona, Arizona. These institutions have made major
advances in technology to support the U.S. shrimp farming industry, and
the program's excellent performance through multi-state collaboration
has been recognized by the USDA in its recent program reviews. The
Consortium is at a point of making significant contributions to
building the U.S. industry, reducing the trade deficit, and satisfying
increasing consumer demand for shrimp. Seafood imports constitute the
second largest trade deficit item for the U.S. at $7.1 billion and
shrimp represents approximately half of this deficit.
accomplishments
The Consortium, in cooperation with private industry, industry
associations, and government agencies has generated new technologies
for producing premium quality marine shrimp at competitive prices. To
date the program has: (1) established the world's first and currently
most advanced breeding and genetic selection program for marine shrimp;
(2) completed pioneering research and development of advanced
diagnostic tools for disease screening and control; (3) described the
etiology of shrimp diseases associated with viral pathogens; (4)
fostered shrimp production at near-shore, inland/rural farm and even
desert sites; (5) served a lead role in the Joint Sub-committee on
Aquaculture's efforts to assess the threat of globally transported
shrimp pathogens; (6) supplied the U.S. industry with selectively bred
and disease resistant shrimp stocks; (7) developed advanced technology
biosecure shrimp production systems to protect both cultured and native
wild stocks from disease; and (8) developed new feed formulations to
minimize waste generation. These substantial accomplishments advance
the continued growth of our industry, place an important emphasis on
environmental sustainability, and increase market competitiveness.
Judging from the state of our industry today, USMSFP programs continue
to have measurable positive effects. The coastal industry continues to
lead in the production of farmed raised shrimp in the U.S. Recent
improvements in farm management practices have resulted in bumper crops
for the industry. The year 2001 resulted in the largest harvest ever
for U.S. farmers at over 10 million pounds. This represents a 50
percent increase in U.S. production over the last 8 years.
industry vulnerability
While exceptional progress has been made, this emerging and
important industry is continually confronted with new challenges. It
depends on the U.S. Marine Shrimp Farming Program (USMSFP) for high-
health and improved stocks, disease diagnosis and production
technologies. As a result of the consortium's support, the U.S.
industry has maintained relative stability while other countries have
had major losses in their production due to diseases and environmental
problems. Disease losses due to exotic viruses in Asia and Latin
America during the past 5 years have approached $6 billion U.S. There
have been no outbreaks of notifiable disease in the U.S. during the
last 3 years and a commensurate increase in shrimp production during
the same period. With reliable protection in place, we have also seen a
commensurate geographic expansion of the industry within the U.S. A
broader industry base, while increasing production through the addition
of new farms, also provides additional protection to the industry by
geographically isolating different regional sectors of the industry in
the event of disease outbreaks or natural disaster. Significant amounts
of shrimp production now comes from a wide part of the South with farms
now operational in South Carolina, Florida, Alabama and Texas. Arizona
and Hawaii have also greatly expanded production during the same
period.
THE STATE OF THE U.S SHRIMP INDUSTRY, 2001
------------------------------------------------------------------------
Production
States in lbs Farms Hatcheries
------------------------------------------------------------------------
AL............................... 400,000 4 0
SC............................... 435,000 10 2
FL............................... 500,000 4 3
AZ............................... 500,000 4 1
HI............................... 1,000,000 7 5
TX............................... 7,500,000 18 1
--------------------------------------
Total...................... 10,335,000 47 12
------------------------------------------------------------------------
But, while significant progress has been made in risk assessment
and risk management with visible success, to further improve the
competitiveness of the U.S. industry, the industry and the USMSFP must
remain constantly vigilant. In addition to providing significant input
on the development of national and international regulatory standards
for shrimp farmers, important service work for government agencies and
NGOs keeps us continuously apprized of new developments pertaining to
emerging regulations so that USMSFP research plans can be kept
proactively responsive to dynamic shifts in industry needs.
industry independence
As a result of the work of the Consortium, investor confidence is
increasing. In addition to supporting today's industry, advanced
biosecure shrimp production systems will allow the expansion of shrimp
farming into near-shore, inland/rural, and desert sites away from the
environmentally sensitive coastal zone. Importantly, these new
production technologies produce the highest quality shrimp at world
competitive prices, consume U.S. grains as feed, and do not pose any
threat to the environment. Shrimp farming is the newest agricultural
industry for the U.S. and USDA/CSREES has suggested that our program
represents a model program for resolving important problems and
capturing opportunities in both agriculture and aquaculture. Clearly
the U.S. shrimp farming industry has emerged from the early 90's with a
larger and more diverse industry for the new millennium.
To begin completion of our remaining tasks, an increase in the
current funding level from $4.277 million to $5 million is being
requested. Allocation of $5 million per year for the next few years to
work in cooperation with the private sector, to support existing
efforts, and to build this new industry with its associated jobs and
economic benefits is in the best interests of the nation.
Mr. Chairman, the U.S. shrimp farming industry and our Consortium
deeply appreciate the support of the Committee and respectfully ask for
a favorable consideration of this request.
______
Prepared Statement of the United States Telecom Association
summary of request
Project Involved.--Telecommunications Loan Programs Administered by
the Rural Utilities Service (RUS) of the U.S. Department of
Agriculture.
Actions Proposed.--Supporting RUS loan levels and the associated
funding subsidy for the hardship, cost of money, Rural Telephone Bank
and loan guarantee programs in fiscal year 2003 in the same amount as
loan levels specified in the fiscal year 2002 Agriculture
Appropriations Act. Opposing the Administration's proposal to not fund
Rural Telephone Bank loans in fiscal year 2003. Also supporting an
extension of the language removing the 7 percent interest rate cap on
cost of money loans. Also supporting an extension of the prohibition
against the transfer of Rural Telephone Bank funds to the general fund.
Opposing the proposal contained in the budget to transfer funds from
the unobligated balances of the liquidating account of the Rural
Telephone Bank for the Bank's administrative expenses. Supporting
funding in the amount of $6.1 million of the distance learning and
telemedicine loan and grant authority to extend the pilot program to
finance broadband transmission and local dial-up Internet service in
rural areas.
The United States Telecom Association (USTA) represents over 1,400
telecom companies that provide telecom services. USTA members range
from large publicly-held corporations to small family-owned companies,
as well as cooperatives owned by their customers. I am Walter B.
McCormick, Jr., President and CEO of USTA. I submit this testimony in
the interests of the members of USTA and their subscribers.
USTA members firmly believe that the targeted assistance offered by
a strong RUS telecommunications loan program remains essential in order
to maintain a healthy and growing rural telecommunications industry
that contributes to the provision of universal telephone service. We
appreciate the strong support this committee has provided for the
telecommunications program since its inception in 1949 and look forward
to a vigorous program for the future.
a changing industry
As Congress recognized through passage of the Telecommunications
Act of 1996, telecommunications in the United States is in the midst of
the most significant changes any industry has ever undergone. Both the
technological underpinnings and the regulatory atmosphere are changing
at an extraordinarily rapid pace. Without system upgrades, rural
customers will be left out of the emerging information revolution.
The need for modernization of rural telecommunications technology
employed by RUS borrowers. Primarily, rural telecommunications
companies, has never been greater. In addition to upgrading switching
capability to allow new services to be extended to rural subscribers,
it is critical that rural areas be included in the nationwide drive for
greater bandwidth capacity. In order to provide higher speed data
services, such as Digital Subscriber Line (DSL) connections to the
Internet, outside plants must be modernized and new electronics must be
placed in switching offices. With current technology, DSL services
cannot be provided to customers located on lines more than three miles
from the switching office. Rural areas have a significant percentage of
relatively long loops and are therefore particularly difficult to serve
with these higher speed connections. Rural telecommunications companies
are doing their best to restructure their networks to shorten loops so
that DSL may be provided, but this is an expensive proposition that may
not be totally justified by market conditions. However, these services
are important for rural economic development, distance learning and
telemedicine. RUS-provided financial incentives for additional
investment encourage rural telecommunications companies to build
facilities which allow advanced services to be provided. The
externalities measured in terms of economic and human development more
than justify this investment in the future by the federal government.
Greater bandwidth and switching capabilities are crucial
infrastructure elements that will allow rural businesses, schools and
health care facilities to take advantage of other programs available to
them as end users. The money spent on having the most modern and
sophisticated equipment available at businesses, schools or clinics is
wasted if the local telecommunications company cannot afford to build
facilities that quickly transport and switch the large amounts of data
that these entities generate. RUS funding enhances the synergies among
the FCC and RUS programs targeted at improving rural education and
health care through telecommunications.
The RUS program provides needed incentives, in the form of a
reliable source of fairly priced, fixed rate long term capital, to help
offset regulatory uncertainties related to universal service support,
interstate access revenues and interconnection rules. RUS is a
voluntary incentive program that encourages local telecommunications
companies to build the facilities essential to economic growth.
RUS endures because it is a brilliantly conceived public-private
partnership in which the borrowers are the conduits for the federal
government benefits that flow to rural telephone customers, the true
beneficiaries of the RUS program. The government's contribution is
leveraged by the equity, technical expertise and dedication of local
telecommunications companies. The small amount of government capital
involved is more than paid back through a historically perfect
repayment record by telecommunications borrowers, as well as the
additional tax revenues generated by the jobs and economic development
resulting from the provisioning and upgrading of telecommunications
infrastructure. RUS is the ideal government program it generates more
revenues than it costs; it provides incentives where the market does
not for private companies to invest in infrastructure promoting needed
rural economic development; it allows citizens to have access to
services, which can mean the difference between life and death; and, it
has never lost a nickel of taxpayer money.
impact of credit reform on the rural telephone bank
Contrary to the intent of Congress, the interpretation of credit
reform by the Office of Management and Budget (OMB) has significantly
affected the operation of the Rural Telephone Bank (RTB). One of the
most damaging impacts of OMB's interpretation of the credit reform law
is to essentially split the RTB into two banks--a liquidating account
bank, which is responsible for pre-credit reform loans, and a financing
account bank, which is responsible for post credit reform loans. USTA
has protested this arrangement since it began, since it prevents the
relending of borrower repayments to fund new loans in direct
contravention of Sec. 409 of the bank's enabling act. This, in turn,
forces the RTB to borrow unnecessarily from the Treasury to fund new
loans. It also permits funds to build up in the liquidating account
that were generated by GAO-documented interest rate overcharges,
instead of those funds being returned through relending to the same
universe of borrowers that initially generated them. OMB should adhere
to Sec. 409 of the Rural Electrification Act and allow those repayments
to be used to fund new RTB loans.
recommendations
Continuation in fiscal year 2003 of the loan levels and necessary
associated subsidy amounts for the RUS telephone loan programs that
were recommended by this Committee and signed into law for fiscal year
2002 would maintain our members' ability to serve the nation's
telecommunications needs, maintain universal service and bring advanced
telecommunications services to rural America.
USTA strenuously objects to the proposal in the budget
recommendation to not fund RTB loans in fiscal year 2003. The proposal
is fundamentally flawed. The RTB's mission is far from complete. Loans
made today are to provide state of the art telecommunications
technology in rural areas. If no bank loans were made in fiscal year
2003, the budgetary outlay savings would be minimal because RTB loans
are funded over a multiyear period. Moreover, because of the minimum
statutory interest rate of 5 percent, the RTB has an excellent
opportunity to actually generate a profit for the government!
Not funding RTB loans will not ``generate increased member and
borrower support for statutorily authorized privatization''. This
ignores the fact that privatization of the RTB began in 1995 under the
current law and is proceeding annually. Over $139 million, or more than
20 percent, of the government's equity investment in the bank has
already been retired. In fact, not funding new loans in fiscal year
2003 actually could impede privatization since the law requires that
the bank annually retire government stock at the rate of at least five-
percent of the amount of new loans. With no new loans, there is no
minimum requirement for retirement of government stock.
The Administration's budget proposes that funds be transferred from
the unobligated balances of the bank's liquidating account to fund the
bank's administrative expenses, instead of those expenses being funded
through an appropriation from the general fund of the Treasury. This
proposal would not result in budgetary savings and has been
specifically rejected by this Committee in previous years.
For a number of years, Congress has eliminated the seven percent
``cap'' placed on the insured cost-of-money loan program through the
appropriations process. The elimination of the cap should continue. If
long term Treasury interest rates exceeded this seven percent ceiling
contained in the authorizing act, adequate support for the program
would not be available at the authorized level. This would be extremely
disruptive and would hinder the program from accomplishing its
statutory goals. Accordingly, USTA supports continuation of the
elimination of the seven percent cap on cost-of-money insured loans in
the fiscal year 2003 appropriations legislation. The Committee should
also continue to protect the legitimate ownership interests of the
Class B and C stockholders in the bank's assets by continuing to
prohibit a ``sweep'' of any unobligated balance in the bank's
liquidating account in excess of current requirements funds into the
general fund.
Recommended Loan Levels
USTA recommends telephone loan program loan levels for fiscal year
2002 as follows:
[In millions of dollars]
RUS Insured Hardship Loans (5 percent)............................ 75
RUS Insured Cost-of-Money Loans................................... 300
Rural Telephone Bank (RTB) Loans.................................. 175
Loan Guarantees................................................... 120
______
Total....................................................... 670
Broadband Pilot Program
USTA supports continued allocation of $6.1 million of the distance
learning and telemedicine appropriation for the pilot program of loans
and grants to finance broadband transmission and local dial up access
to the Internet in rural areas. RUS was founded on the premise that
rural Americans should have comparable services, facilities and prices
for telephone service as those who live in more densely populated,
lower cost areas. As we move into the Information Age, in which
increases in productivity, economic development, education and medicine
can greatly benefit from the tremendous potential of the Internet, it
is a continuation of the historic mission of RUS to support the
extension of vital new services to rural America.
conclusion
Our members take pleasure and pride in reminding the Subcommittee
that the RUS telecommunications program continues its perfect record of
no defaults in over a half century of existence. RUS telecommunications
borrowers take seriously their obligations to their government, their
nation and their subscribers. They will continue to invest in our rural
communities, use government loan funds carefully and judiciously and do
their best to assure the continued affordability of telecommunications
services in rural America. Our members urge the Subcommittee to
continue to recognize the importance of assuring a strong and effective
RUS Telecommunications Program through appropriation of adequate loan
levels.
______
Prepared Statement of the Working Group to Preseve the Animal Welfare
Act
My name is Nancy Blaney and I am the coordinator of the Working
Group to Preserve the Animal Welfare Act, which includes the following
organizations: American Humane Association, the American Society for
the Prevention of Cruelty to Animals, Alternatives Research and
Development Foundation, Doris Day Animal League, Humane Society of the
U.S., Massachusetts Society for the Prevention of Cruelty to Animals,
and the Society for Animal Protective Legislation. This statement
supports allowing USDA to proceed with a rulemaking process to extend
the AWA to the 95 percent of research animals covered by the law but
not the regulations
In 1970, the U.S. Congress amended the Animal Welfare Act to extend
its protections to all ``warm-blooded species'' used in research. It
amended it again in 1985 to strengthen those humane handling and care
standards. However, for 30 years, USDA has ignored the law by excluding
birds, rats, and mice used in labs from its regulations implementing
the AWA.
We commend the Subcommittee and the full Committee for allowing
USDA to proceed during fiscal year 2002 with its rulemaking finally to
bring birds, rats, and mice under the Act, as required by a court
settlement in 2000. Twenty million of these animals 95 percent of the
total number of experimental animals are used each year in research,
and they deserve coverage under these basic minimum standards of care.
We urge you to allow this process to continue.
Ensuring that these research animals receive adequate care is
imperative not only as a humane matter, but also as a matter of sound
science, since animal suffering compromises the integrity of research
results. A ``survey of Institutional Animal Care and Use Committee
members reveals that most researchers actually favor AWA regulation of
these species A clear majority of animal researchers and other IACUC
members favored AWA coverage for mice, rats, and birds. Even animal
researchers in psychology, psychopharmacology, and behavioral
neuroscience support AWA coverage of these animals, despite the fact
that these disciplines would be among the most affected by AWA
regulation of mice, rats, and birds.'' [Survey conducted by Scott Plous
(Dept. of Psychology, Wesleyan University) and Harold Herzog (Dept. of
Psychology, West Carolina University), Science, v.290, 10/27/2000.]
Support also comes from, among others, the American College of
Laboratory Animal Medicine, The American Association for Laboratory
Animal Science, Procter & Gamble, Scientists Center for Animal Welfare,
Johns Hopkins University Center for Alternatives to Animal Testing, and
DuPont Pharmaceutical Co.
The fact of the matter is, however, that without the oversight and
enforcement that only USDA can provide, good animal care cannot be
assured. Just in the past couple of weeks, very serious cases of abuse
of birds, rats, and mice in laboratories have come to light:
--At the University of North Carolina-Chapel Hill, an undercover
investigator documented animal mistreatment that violates NIH
guidelines and accreditation standards, including:
--Extremely sick and injured mice and rats being left to die with
no veterinary care
--Paralyzed animals who had had their necks broken but were still
alive being placed in the dead animal cooler
--The use of death as an ``endpoint'' in experiments when such an
endpoint is prohibited by policy
--Severely overcrowded cages
--A nonresponsive and ineffectual Institutional Animal Care and Use
Committee
--A former researcher at the National Jewish Medical and Research
Center in Denver told of a colleague who, among other acts,
failed to adequately anesthetize mice before piercing the
eardrums of mice to hold their heads in place in a frame and
then drilling into their skulls. In this case, no effort was
made to stop this scientist, even though a member of the
Institutional Care and Use Committee observed these behaviors.
--At the University of California San Francisco, the minutes from a
meeting of the Committee on Animal Research reveal that ``for
the third time in just over one month, live mice were found in
the dead animal freezer, indicating improper euthanasia
technique.''
Unfortunately, NIH conducts no inspections; grantees must provide
written ``assurances'' of their compliance with the guidelines. The
Association for the Assessment and Accreditation of Laboratory Animal
Care conducts announced site visits once every three years. Once in
awhile, AAALAC catches something:
--Last week it was reported that Johns Hopkins University is under
scrutiny by USDA for violations of the AWA related to protected
species. According to the Baltimore Sun of April 18, 2002,
``[in] about a dozen cases, (USDA) inspectors found that
animals were given inadequate pain medication after
experimental procedures and may have suffered unnecessarily ``
Alerted by the USDA investigation, AAALAC came in and, among
other things, raised questions about JHU's housing and handling
of its rats and mice. Had USDA also been required to inspect
these species, a red flag would have been raised and corrective
steps taken that much sooner.
These cases, and others, underscore the indisputable need for and
value in having birds, rats, and mice covered by the AWA and subject to
the oversight of USDA veterinary inspectors. As the distinguished
former Senator Robert Dole author of the 1985 AWA amendments wrote in a
letter last year:
``I would hope that the Bush Administration and Members of the
present Congress, some of whom stood with me in 1985 in advancing my
amendments, will recognize that all animals used in experimentation
deserve the benefit of the modest requirements of the Animal Welfare
Act. I would urge them to allow USDA to achieve this end by pursuing a
full and fair rulemaking as provided in the settlement agreement.''
We urge the Committee not to include any language in the fiscal
year 2003 agriculture appropriations bill or committee report that
would interfere with USDA's ability to carry out this important
rulemaking on a timely basis.
LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS
----------
Page
Acord, Bobby R., Administrator, Animal and Plant Health
Inspection Service, Department of Agriculture.................. 415
Prepared statement........................................... 425
Ad Hoc Coalition, prepared statement............................. 605
Alachua County Board of County Commissioners, prepared statement. 607
Alliance for Continuing Nutrition Monitoring, prepared statement. 610
Alsop, James C., Acting Administrator, Rural Housing Service,
Department of Agriculture:
Biographical sketch.......................................... 258
Prepared statement........................................... 253
American:
Beekeeping Federation, prepared statement................... 622
Farm Bureau Federation, prepared statement................... 613
Federation of:
Government Employees, Local 3354, prepared statement..... 618
State, County, and Municipal Employees, Local 3870,
prepared statement..................................... 618
Honey Producers Association, Inc., prepared statement........ 622
Indian Higher Education Consortium, prepared statement....... 625
Rivers, prepared statement................................... 628
Sheep Industry Association, prepared statement............... 630
Society:
For Microbiology, prepared statements..................633, 636
For Nutritional Sciences, prepared statement............. 639
Of Civil Engineers, prepared statement................... 642
Aquatica Tropicals, Inc., prepared statement..................... 644
Biermann, Suzanne M., Deputy Under Secretary for Food, Nutrition,
and Consumer Services, Department of Agriculture............... 451
Bosecker, R. Ronald, Administrator, National Agricultural
Statistics Service, Department of Agriculture:
Biographical sketch.......................................... 285
Prepared statement........................................... 281
Bost, Eric M., Under Secretary for Food, Nutrition and Consumer
Services, Department of Agriculture:
Prepared statement........................................... 453
Statement of................................................. 451
Braley, George A., Acting Administrator, Food and Nutrition
Service, Department of Agriculture............................. 451
Prepared statement........................................... 457
Byrd, Senator Robert C., U.S. Senator from West Virginia,
questions submitted by......................................... 335
Carolina Classics Catfish, Inc., prepared statement.............. 644
Catfish Farmers of America, prepared statement................... 645
CES Mangrove Tropicals, prepared statement....................... 646
Coalition:
Of EPSCoR States, prepared statement......................... 647
To Promote U.S. Agricultural Exports, prepared statement..... 648
Cochran, Senator Thad, U.S. Senator from Mississippi:
Questions submitted by......................190, 339, 386, 502, 585
Statements of................................................2, 356
Collins, Keith, Chief Economist, Office of the Secretary,
Department of Agriculture......................................1, 197
Prepared statement........................................... 200
Statement of................................................. 198
Colorado River Basin Salinity Control Forum, prepared statement.. 649
Columbia University, prepared statement.......................... 653
Council for Agricultural Research, Extension, and Teaching,
prepared statement............................................. 654
Craig, Senator Larry, U.S. Senator from Idaho, statement of...... 3
Crawford, Lester, Deputy Commissioner, Food and Drug
Administration, Department of Health and Human Services........ 511
Prepared statement........................................... 513
Davidson, Ross J., Jr., Administrator, Risk Management Agency,
Department of Agriculture:
Biographical sketch.......................................... 229
Prepared statement........................................... 226
Delta Western, Inc., prepared statement.......................... 657
Dewhurst, Steve, Budget Officer, Office of the Secretary,
Department of Agriculture...................................... 1
Dorgan, Senator Byron L., U.S. Senator from North Dakota:
Prepared statement........................................... 4
Questions submitted by................................174, 179, 567
Statement of................................................. 3
Easter Seals, prepared statement................................. 659
Fleischman, Joyce N., Acting Inspector General, Office of
Inspector General, Department of Agriculture, prepared
statement...................................................... 52
Florida:
State University, prepared statement......................... 658
Sugar Cane League, prepared statement........................ 662
Friends of Agricultural Research--Beltsville, Inc., prepared
statement...................................................... 665
Gallegos, Lou, Assistant Secretary for Administration,
Departmental Administration, Department of Agriculture,
prepared statement............................................. 43
Glavin, Margaret O'K., Acting Administrator, Food Safety,
Department of Agriculture...................................... 389
Biographical sketch.......................................... 413
Prepared statement........................................... 402
Grocery Manufacturers of America, prepared statement............. 668
Harkin, Senator Tom, U.S. Senator from Iowa, questions submitted
by...........................................................497, 565
Harrison Fish Farm, prepared statement........................... 669
Hawks, William T., Under Secretary for Marketing and Regulatory
Programs, Department of Agriculture............................ 415
Prepared statement........................................... 416
Hefferan, Dr. Colien, Administrator, Cooperative State Research,
Education, and Extension Service, Department of Agriculture:
Biographical sketch.......................................... 275
Prepared statement........................................... 273
Herglotz, Kevin, Deputy Chief of Staff and Director of
Communications, Office of Communications, Department of
Agriculture, prepared statement................................ 47
Hobbs, Ira L., Acting Chief Information Officer, Office of the
Chief Information Officer, Department of Agriculture, prepared
statement...................................................... 21
Humane Society of the United States, prepared statement.......... 670
Illinois Soybean Association, prepared statement................. 674
Industry and Government Central California Ozone Study Coalition,
prepared statement............................................. 651
International Association of Fish and Wildlife Agencies, prepared
statement...................................................... 675
Jen, Joseph J., Under Secretary for Research, Education and
Economics, Department of Agriculture........................... 197
Biographical sketch.......................................... 268
Prepared statement........................................... 264
Questions submitted by....................................... 583
Statement of................................................. 262
Johnson, Senator Tim, U.S. Senator from South Dakota:
Prepared statements..........................................5, 212
Questions submitted by................................187, 337, 498
Statement of................................................. 5
Joslin Diabetes Center, prepared statement....................... 682
Kaplan, Dennis, Deputy Director, Office of Budget and Program
Analysis, Department of Agriculture.....................389, 415, 451
Kelly, James Michael, Acting General Counsel, Office of the
General Counsel, Department of Agriculture, prepared statement. 29
Kent SeaTech Corporation, prepared statement..................... 683
Knipling, Dr. Edward B., Acting Administrator, Agricultural
Research Service, Department of Agriculture:
Biographical sketch.......................................... 273
Prepared statement........................................... 269
Kohl, Senator Herb, U.S. Senator from Wisconsin:
Opening statements......................................1, 197, 355
Questions submitted by.......................92, 305, 385, 474, 536
Legg, Hilda Gay, Administrator, Rural Utilities Service,
Department of Agriculture:
Biographical sketch.......................................... 252
Prepared statement........................................... 249
Leopold Center for Substainable Agriculture, prepared statement.. 685
Little, James R., Administrator, Farm Service Agency, Department
of Agriculture:
Biographical sketch.......................................... 225
Prepared statement........................................... 221
Lumpkin, Dr. Murray, Principal Senior Associate Commissioner,
Food and Drug Administration, Department of Health and Human
Services....................................................... 511
Massachusetts Department of Food and Agriculture, prepared
statement...................................................... 685
McPherson, Edward, Chief Financial Officer, Office of the Chief
Financial Officer, Department of Agriculture, prepared
statement...................................................... 48
Metropolitan Water District of Southern California, prepared
statement...................................................... 686
Moseley, James, Deputy Secretary, Office of the Secretary,
Department of Agriculture...................................... 1
Biographical sketch.......................................... 21
Mountain Watershed Association, prepared statement............... 689
Murano, Elsa, Under Secretary for Food Safety, Department of
Agriculture.................................................... 389
Biographical sketch.......................................... 401
Prepared statement........................................... 391
Murano, Peter S., Ph.D., Deputy Administrator for Special
Nutrition Programs, Food and Nutrition Service, Department of
Agriculture, biographical sketch............................... 457
National:
Commodity Supplemental Food Program Association, prepared
statement.................................................. 705
Congress of American Indians, prepared statement............. 708
Council of Farmer Cooperatives, prepared statement........... 710
Dry Bean Council, prepared statement......................... 712
Organization for Rare Disorders, Inc., prepared statement.... 716
Potato Council, prepared statement........................... 723
Rural Housing Coalition, prepared statement.................. 724
Rural Telecom Association, prepared statement................ 729
Telecommunications Cooperative Association, prepared
statement.................................................. 732
Treasury Employees Union, prepared statement................. 735
Turfgrass Evaluation Program, prepared statement............. 736
Watershed Coalition, prepared statement...................... 740
National Association of:
Conservation Districts, prepared statement................... 690
Farmers Market Nutrition Programs, prepared statement........ 693
Professional Forestry Schools and Colleges (NAPFSC), prepared
statement.................................................. 694
State Universities and Land-Grant Colleges, prepared
statements...............................................697, 698
Neruda, Michael E., Deputy Under Secretary for Rural Development,
Department of Agriculture...................................... 197
Biographical sketch.......................................... 248
Prepared statement........................................... 245
Statement of................................................. 243
New Jersey Aquaculture Association, prepared statement........... 743
Newsome, James E., Chairman, Commodity Futures Trading
Commission:
Prepared statement........................................... 358
Statement of................................................. 356
Nez Perce Tribe, prepared statement.............................. 743
Northwest Indian Fisheries Commission, prepared statement........ 744
Offutt, Susan E., Administrator, Economic Research Service,
Department of Agriculture:
Biographical sketch.......................................... 281
Prepared statement........................................... 276
Organization for the Promotion and Advancement of Small
Telecommunications Companies, prepared statement............... 746
Penn, J.B., Under Secretary for Farm and Foreign Agriculture
Services, Department of Agriculture............................ 197
Biographical sketch.......................................... 220
Prepared statement........................................... 215
Statement of................................................. 213
Pierson, Merle D., Deputy Under Secretary for Food Safety,
Department of Agriculture...................................... 389
Biographical sketch.......................................... 401
Public Citizen's Critical Mass Energy and Environment Program,
prepared statement............................................. 749
Red River Valley Association, prepared statement................. 751
Reed, Pearlie S., Chief, Natural Resources Conservation Service,
Department of Agriculture, prepared statement.................. 240
Rey, Mark E., Under Secretary for Natural Resources and
Environment, Department of Agriculture:
Biographical sketch.......................................... 239
Prepared statement........................................... 238
Statement of................................................. 236
Rosso, John, Administrator, Rural Business Cooperative Service,
Department of Agriculture:
Biographical sketch.......................................... 262
Prepared statement........................................... 258
Seminole Tribe of Florida, prepared statement.................... 754
Shipman, David R., Acting Adminstrator, Grain Inspection, Packers
and Stockyards Administration, Department of Agriculture....... 415
Prepared statement........................................... 441
Smith, Nancy L., Acting Director, National Appeals Division,
Department of Agriculture, prepared statement.................. 52
Society for Animal Protective Legislation, prepared statement.... 755
Southern Illinois University, prepared statement................. 761
Specter, Senator Arlen, U.S. Senator from Pennsylvania:
Question submitted by......................................195, 604
Statement of................................................. 81
State of:
Arizona, prepared statement.................................. 759
Wyoming, prepared statement.................................. 759
Stevens, Senator Ted, U.S. Senator from Alaska, statement of..... 356
Taylor Shellfish Farms, prepared statement....................... 760
Terpstra, Ellen, Administrator, Foreign Agricultural Service,
Department of Agriculture:
Biographical sketch.......................................... 236
Prepared statement........................................... 229
U.S. Apple Association, prepared statement....................... 771
U.S. Marine Shrimp Consortium, prepared statement................ 773
United States Telecom Association, prepared statement............ 775
University of:
Illinois, prepared statements.........................761, 763, 764
Missouri, prepared statement................................. 761
Southern Mississippi, prepared statement..................... 766
Upper Mississippi River Basin Association, prepared statement.... 769
Veneman, Hon. Ann, Secretary of Agriculture, Office of the
Secretary, Department of Agriculture........................... 1
Letters from.................................................70, 77
Prepared statement........................................... 12
Weber, Jeff, Senior Associate Commissioner for Management and
Systems, Food and Drug Administration, Department of Health and
Human Services................................................. 511
Weems, Kerry, Acting Deputy Assistant Secretary for Budget, Food
and Drug Administration, Department of Health and Human
Services....................................................... 511
Working Group to Preseve the Animal Welfare Act, prepared
statement...................................................... 778
Yates, A.J., Administrator, Agricultural Marketing Service,
Department of Agriculture...................................... 415
Prepared statement........................................... 436
SUBJECT INDEX
----------
DEPARTMENT OF AGRICULTURE
Page
Additional committee questions..................................91, 305
Administrative:
And operating (A&O) expenses................................. 228
Expenses..................................................... 248
Support...................................................... 225
Agricultural:
Marketing.................................................... 296
Research Service (ARS)....................................... 341
Resource management survey............................277, 345, 346
Appropriate technology transfer for rural areas.................. 261
Barriers to U.S. agricultural exports............................ 309
Base funding reduction........................................... 342
Broadband loans and grants....................................... 251
Budget........................................................... 276
Request....................................................223, 233
That leads................................................... 249
Bush Administration Food Aid Review Summary of Conclusions....... 306
Business and industry guaranteed loan program.................... 259
Census of agriculture............................................ 347
Centralized Service Center....................................... 332
Cochran Fellowship Program....................................... 351
Commodity Credit Corporation...................................216, 223
Commodity inventories........................................ 289
Funded conservation programs................................. 242
Congressional spending priorities................................ 314
Conservation:
Operations program........................................... 238
Programs..................................................... 217
Programs/Natural Resources Conservation Service (NRCS)....... 341
Reserve enhancement program.................................. 295
Cooperative programs............................................. 261
Cooperative State Research, Education, and Extension Service
(CSREES)....................................................... 349
Costs of carrying out the new farm bill.......................... 312
Crop insurance underwriting gain................................. 313
Customers, partners, and stakeholders............................ 281
Dairy options pilot program...................................... 304
Discretionary funding............................................ 240
Distance learning and telemedicine loans and grants.............. 252
E-Government..................................................... 348
Economic Research Service......................................334, 345
Contributions to mission area goals.......................... 276
National Agricultural Statistics Service Agricultural
Resources Management Survey................................ 333
Electric program................................................. 249
Emergency conservation program................................... 217
Empowerment zones and enterprise communities earmark............. 330
Ensuring we have the proper tools................................ 232
Ewe lamb expansion program and LMAAP............................. 338
Export:
Programs..................................................... 235
Promotion and market development programs.................... 219
Farm:
Bill payment limitations..................................... 339
Labor housing................................................ 324
Loan programs.........................................217, 224, 290
Program delivery............................................. 216
Service Agency............................................... 216
Service Agency (FSA), Rural Development (RD), Natural
Resources Conservation Service (NRCS) field offices........ 351
Service Agency staffing levels............................... 294
FAS:
Program activities........................................... 230
Salaries and expenses........................................ 219
FCIC fund........................................................ 228
Fiscal year 2003 plans........................................... 284
Focusing our marketing strategy.................................. 233
Food:
Aid.......................................................... 352
Assistance and nutrition research program.................... 334
Foreign:
Agricultural Service......................................... 218
Food assistance............................................220, 235
FSA farm credit.................................................. 332
Guarantee 538 multi family housing............................... 325
Guaranteed housing............................................... 322
Homeland security................................................ 344
Honey bee research.............................................339, 342
Initiative for future agriculture and food systems............... 315
Integrated activities............................................ 349
Intermediary relending program................................... 259
International:
Food assistance.............................................. 299
Humanitarian food assistance................................. 305
Invasive:
Pests and diseases........................................... 280
Species initiative........................................... 346
Investing where resources are most limited....................... 250
Liberalization of trade in agriculture, continuing the........... 231
Loan rates....................................................... 338
Locality based agricultural estimates............................ 348
Lower Mississippi delta research................................. 342
Mission.......................................................... 276
Modern telecommunications in rural America....................... 251
NAP payments..................................................... 294
National:
Agricultural Statistics Service.............................. 346
Rural development partnership................................ 330
Native Americans benefit from RHS assistance..................... 256
Obstacles/solutions.............................................. 227
Other appropriated programs...................................... 224
Outlook for:
Farm finance................................................. 201
Farm income.................................................. 201
Major crop and livestock commodities......................... 202
U.S. and world economies..................................... 200
U.S. agricultural exports.................................... 200
Prime............................................................ 337
Priorities for 2002 and 2003..................................... 231
Proposal to CAP underwriting gains............................... 339
Proposed:
Increases for buildings and facilities....................... 272
Pay costs.................................................... 272
Program:
Decreases................................................ 271
Increases................................................ 269
Transfers.................................................... 272
RBS-guaranteed business and industry loans....................... 329
Recent accomplishments........................................... 226
Research program implementation.................................. 341
Resource conservation and development............................ 239
Risk Management Agency.........................................218, 335
Rural business:
Enterprise grant program..................................... 260
Opportunity grant program.................................... 260
Cooperative services......................................... 246
Rural:
Community advancement program................................ 330
Cooperative development grant program........................ 261
Development.................................................. 350
Budget request........................................... 246
Eeconomic development loan program........................... 260
Housing and farm credit shift from direct to guaranteed
lending.................................................... 310
Utilities Service..........................................246, 326
Rural Housing Service (RHS)...................................... 247
Demonstration program........................................ 334
502 housing.................................................. 319
Homeownership programs reach the underserved................. 253
Partners with private and nonprofit organizations to increase
homeownership opportunities................................ 254
Programs serve America's farmworkers......................... 256
Provides:
Essential facilities to distressed rural communities..... 255
Rural America's elderly with safe, affordable housing and
essential community facilities......................... 256
Rental programs serve the most vulnerable rural Americans.... 254
Supports rural America and local community needs............. 257
Section 515 multi-family housing................................. 315
Tax-exempt financing, Rural Housing Service/Rural Utilities
Service........................................................ 314
Terrorism response funding....................................... 292
Three program areas, working together............................ 252
Timing of new farm bill.......................................... 289
Treasury rate, guaranteed, and hardship loans.................... 251
U.S. contribution to world food assistance....................... 286
Updated yields................................................... 338
USDA response to drought conditions.............................. 23
AG production................................................ 335
Rural communities............................................ 337
Water and enviromental programs.................................. 250
Watershed and flood prevention:
Activities, elimination of................................... 336
Operations................................................... 239
Commodity Futures Trading Commission
Additional committee questions................................... 385
Commodity Futures Trading Commission on the futures industry
response to September 11....................................... 364
Employee attrition and pay parity................................ 363
Hiring and retaining high-level professionals.................... 386
Initial review of preparedness efforts........................... 377
Overview of funding levels and operational effects............... 362
President's budget............................................... 385
Proposed transaction fee......................................... 386
Regulatory authority over derivatives............................ 387
Reopening the futures markets.................................... 366
Restoring commission operations.................................. 374
Role of the:
CFTC......................................................... 364
Futures markets.............................................. 364
Food, Nutrition, and Consumer Services
Additional committee questions................................... 474
Agricultural Marketing Service (AMS)............................. 505
Cranberries.................................................. 480
Aquaculture...................................................... 484
Biological control............................................... 484
Brucellosis...................................................... 495
Cattle ticks..................................................... 483
Certification.................................................... 453
Child:
And adult care food program.................................. 479
Nutrition.................................................... 452
Programs................................................. 456
Chronic wasting disease.......................................... 460
Codex alimentarius............................................... 481
Commodity supplemental food program administrative funding....... 508
Country of origin labeling....................................... 498
Emergency management system program.............................. 495
Farmer's market nutrition program................................ 454
Farmers market................................................... 452
Food Program Administration....................................480, 509
Food:
Safety and Inspection Service (FSIS)......................... 502
Automated corporate technology suite..................... 483
Stamps....................................................... 452
Fruit fly exclusion and detection................................ 483
Golden nematode.................................................. 486
HACCP system..................................................... 472
Highest-ever funding for WIC..................................... 454
Imported:
Fire ant..................................................... 487
Meat......................................................... 460
Products..................................................... 463
Increases in obesity rates....................................... 500
Inspection services.............................................. 497
Invasive species................................................. 493
Johne's disease.................................................. 496
Legal immigrants in the food stamp program....................... 508
Listeria monocytogenes in ready-to-eat products.................. 498
Mandatory recall authority....................................... 464
Nonlethal predator control methods development................... 494
Noxious weeds.................................................... 487
Pest threats..................................................... 484
Pink bollworm.................................................... 487
Program integrity................................................ 453
Reimbursement rates in child nutrition programs.................. 507
School:
Breakfast start-up grants.................................... 475
Meal reimbursements.......................................... 499
Screwworm........................................................ 483
Senior farmers' market nutrition program......................... 477
Special supplemental nutrition program for women, infants and
children (WIC)................................................. 456
Studies and evaluations.......................................... 478
Supplemental appropriations for:
APHIS........................................................ 467
FSIS......................................................... 466
Supreme beef and pathogen standards.............................. 497
Targeted slaughter epidemiological surveys....................... 474
Trade issue resolution and management............................ 483
Tuberculosis..................................................... 496
Universal animal identification and database retrieval system.... 495
USDA veterinarian overtime pay................................... 502
Veterinary biologics............................................. 497
Voluntary recall................................................. 469
WIC.............................................................. 452
Childhood immunization....................................... 476
Electronic benefits transfer................................. 475
Farmers market nutrition program............................. 476
Food package................................................. 476
Immunization action plan..................................... 506
Infrastructure grants........................................ 506
Program participation........................................ 505
Vendor management study...................................... 505
Wildlife services operations..................................... 488
Wolf control..................................................... 491
Food Safety
Budget request, fiscal year 2003...............................399, 411
Budget requests.................................................. 391
Enhancing effectiveness.......................................... 404
Food safety education and outreach efforts....................... 409
Goals of FSIS.................................................... 390
Infrastructure................................................... 402
International activities......................................... 411
My vision........................................................ 392
President's management agenda.................................... 398
Risk-based, science-based programs............................... 405
Workforce of the future.......................................... 408
Marketing and Regulatory Programs
Agricultural Marketing Service................................... 417
Animal and Plant Health Inspection Service....................... 419
Budget:
Proposal..................................................... 439
Request:
AMS' 2003................................................ 419
APHIS' 2003.............................................. 422
Fiscal year 2003......................................... 447
Our fiscal year 2003..................................... 434
Summary.................................................. 441
Commodity Purchase Services...................................... 440
Electronic Goverment initiatives................................. 439
Federal seed..................................................... 440
Funding sources.................................................. 417
Global:
Agricultural marketing....................................... 437
Market expansion............................................. 439
Grain Inspection, Packers and Stockyards Administration.......... 423
Federal Grain Inspection Service............................. 444
Packers and stockyards programs.............................. 442
Making our mark.................................................. 417
Mandatory price reporting system................................. 438
Marketing agreements and orders.................................. 441
Mission.......................................................... 436
National organic program......................................... 438
Organization..................................................... 441
Pesticide data program.........................................437, 440
Protection of Agriculture and the food supply.................... 439
Office of the Secretary
Agricultural research............................................ 91
Agriculture:
Appropriations projects, fiscal year 2002.................... 185
Buildings and facilities..................................... 46
And rental payments...................................... 144
Allocation of homeland security funds............................ 141
Animal:
Sciences research............................................ 138
Welfare...................................................... 169
Annual crop forecasts............................................ 60
APHIS Commodity Credit Corporation transfers..................... 163
Assistance for socially disadvantaged farmers.................... 144
Bee research program............................................. 190
Biofuels, use of................................................. 45
Biological control............................................... 166
Biosecurity...................................................... 163
Biotechnology...................................................65, 169
Boll weevil eradication program.................................. 172
Broadband grants................................................. 176
BSE/mad cow disease.............................................. 181
Budget request, fiscal year 2003.............................42, 48, 50
Buildings and facilities......................................... 139
Business process reengineering................................... 59
Changing environment, preparing for a............................ 21
China, trade with................................................ 65
Chronic wasting disease.......................................... 173
Civil rights.....................................................40, 43
Commodity conversion and delivery research....................... 138
Common computing environment..................................... 143
Computer security................................................ 56
Conflict prevention and resolution OHRM's........................ 46
Crisis planning and management................................... 44
Current activities and issues.................................... 30
Dairy compact.................................................... 82
Departmental management.......................................... 20
Direct appropriation............................................. 47
Electronic Government............................................ 27
Enterprise architecture.......................................... 24
Erroneous loan deficiency payments............................... 84
EZ/EC program.................................................... 177
Farm:
And foreign agricultural services............................ 13
Bill......................................................... 179
Funding..............................................67, 82, 84
Implementation........................................... 68
Payment limitations...................................... 190
Proposal--extending food stamp benefits to legal
immigrants............................................. 77
Farm Service Agency--farm loans.................................. 177
Federal excess personal property program......................... 45
Financial integrity.............................................. 58
Fiscal year 2002 NRCS conservation operations earmark status
report as of 3/31/2002......................................... 99
FNS elderly feeding program (nutrition services incentive
program)....................................................... 157
Food:
Aid.......................................................... 80
And Nutrition Division....................................... 31
And Nutrition Service........................................ 149
Safety....................................................... 15
And farm programs........................................ 56
And Inspection Service................................... 157
In the national school lunch program..................... 79
Recall authority......................................... 79
Food Stamp Program.........................................58, 152, 186
Food, Nutrition, and Consumer Services........................... 16
Foreign:
Agricultural assistance...................................... 168
Food assistance............................................175, 185
Fuels, renewable................................................. 179
General Law Division............................................. 39
Global food for education initiative............................. 185
Government:
Ethics program............................................... 46
Functions--contracting out................................... 162
Harvard study shows very low risk of BSE in the United States--
Government continues to bolster prevention programs in effort
to continue providing important safeguards to protect consumers
and agriculture................................................ 181
Hazardous materials management................................... 47
Homeland security...............................................53, 191
Supplemental................................................. 66
Human:
Nutrition research........................................... 139
Resources management......................................... 46
Humane slaughter................................................69, 159
Illinois River................................................... 169
Imported meat and poultry products, inspection of................ 61
Information:
Officer, Office of the Chief Information Officer............. 21
Security, strengthening...................................... 22
Technology budget summary, USDA'S fiscal year 2003........... 22
Inspection of foreign meat-packing plants........................ 160
Inspector General................................................ 162
International affairs and commodity programs..................... 30
Introduction and overview........................................ 52
Leaking agricultural market forecast............................. 187
Legislation Division............................................. 40
Litigation Division.............................................. 40
Loan deficiency payments......................................... 83
Local television loans........................................... 178
Marketing and regulatory programs................................ 15
Mission..........................................................29, 52
National school lunch program.................................... 184
Natural resources................................................ 36
And environment.............................................. 17
News release..................................................... 181
NRCS:
Conservation reserve program technical assistance............ 92
Forestry incentives program.................................. 134
Watershed:
And flood prevention operations.......................... 123
Earmark status report, fiscal year 2002.................. 126
Rehabilitation program................................... 133
OCIO working capital fund activities............................. 29
Office of:
Assistant Secretary for Congressional Relations.............. 149
The Chief Financial Officer/Working Capital Fund............. 190
Olympics......................................................... 56
Organization..................................................... 29
Outreach......................................................... 43
Physical security................................................ 44
Plant science research.........................................135, 174
Prime question................................................... 187
Procurement policy............................................... 45
Protecting U.S. Agriculture...................................... 195
Public corruption................................................ 58
Regulatory and marketing programs................................ 32
Research, education, and economics............................... 19
Results:
Achieved recently............................................ 49
On which we are currently focused............................ 49
RHS--rural community development initiative grants............... 148
Rural development............................................18, 35, 74
Coordination................................................. 75
Rural:
Housing Service.............................................. 91
Telephone bank............................................... 178
Water and waste loan program................................. 75
RUS--Broadband................................................... 162
Section 515 multi-family housing................................. 179
Security over hazardous material................................. 55
Seniors' farmers' market nutrition program....................... 157
Service center modernization initiative--information technology.. 25
Single Food Safety Agency........................................ 183
Small and disadvantaged business utilization..................... 43
Soil, water and air sciences research............................ 134
Streamlining/CSRS and rental payments............................ 143
Tracing financial transactions................................... 55
West nile virus.................................................. 173
WIC:
Farmers' market nutrition program............................ 156
Program...................................................... 154
Shortfalls on funding........................................ 186
Workforce:
And organizational streamlining.............................. 192
Planning, IT................................................. 28
Working capital fund............................................. 51
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
Additional committee questions................................... 536
Accomplishments--counter terrorism............................... 514
Adding tolerance to the trigger governing spending from
appropriations................................................. 561
Adverse event databases.......................................... 589
Animal cloning................................................... 540
Antibiotic resistance.....................................517, 535, 600
Antimicrobial resistance/NARMS................................... 536
Application review performance................................... 586
Arkansas regional laboratory...................................564, 603
Backlog of product review........................................ 533
Bar coding initiative............................................ 564
Biotechnology--medical products.................................. 518
Blood safety..................................................... 543
Botanical dietary supplements.................................... 602
Bovine spongiform encephalopathy (BSE).........................517, 553
Funding...................................................... 534
Inspections.................................................. 534
CAERS............................................................ 602
Cancer patients.................................................. 521
Challenges....................................................... 523
Change in due date for annual fees to October 1.................. 560
Changes to improve efficiency of billing for product fees........ 562
Counter terrorism................................................ 524
Decisions on pediatric rule...................................... 529
Diabetes......................................................... 522
Dietary supplements.......................................535, 541, 580
Direct-to-consumer advertising................................... 584
FDA:
Commissioner................................................. 542
Dietary supplement adverse event reporting system............ 541
Orange book.................................................. 547
Review times for medical devices............................. 585
Final year adjustment............................................ 561
Financial provisions for PDUFA III, changes in................... 559
Fiscal year 2003 request......................................... 590
Food:
Labeling..................................................... 604
Safety................................................516, 575, 591
Gene therapy..................................................... 520
Tracking system.............................................. 567
Generic drugs........................................518, 526, 543, 600
Global trade and global production--international standards and
harmonization.................................................. 522
Heart patients................................................... 521
Highlights of the draft risk assessment and action plan.......... 566
Hiring activities................................................ 549
Homeland security................................................ 549
Import inspections............................................... 585
Infectious diseases.............................................. 521
Instances where companies refuse to recall a product or do not
provide distribution information............................... 577
Internet sale of drugs........................................... 531
Latex allergies.................................................. 573
Listeria......................................................... 566
Los Angeles laboratory.........................................564, 603
Mad cow disease.................................................. 585
Management/efficiency savings.................................... 601
Medical:
Device and animal drug user fees............................. 533
Devices...................................................... 587
Gas.......................................................... 556
Methylmecury..................................................... 565
Minor changes in the definition of prescription drug products.... 562
MQSA............................................................. 558
NARMS activities................................................. 529
New products approved............................................ 520
Office of Generic Drugs.......................................... 583
Our most valuable resource....................................... 524
Patient safety/medical errors.............................519, 526, 589
Pediatric:
Exclusivity.................................................. 544
Rule......................................................... 528
Personal importation and internet drug sales..................... 548
Physical security enhancements................................... 532
Prescription Drug User Fee Act (PDUFA).........................558, 588
PDUFA II revenue model and workload adjuster................. 559
PDUFA III..................................................527, 560
Proposed revenue model for............................... 560
President's management agenda..................................526, 555
Progress on counterterrorism supplemental........................ 530
Reuse of medical devices......................................... 568
Safe blood....................................................... 520
Seafood HACCP.................................................... 574
Staffing......................................................... 557
Stockpiles of products........................................... 532
Surveillance and counterterrorism................................ 530
Tissue and blood safety.......................................... 570
Workload adjuster................................................ 560