    [Senate Hearing 107-926]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 107-926

                    S. 532, THE PESTICIDE HARMONIZATION ACT

    =======================================================================

                                    HEARING

                                   before the

              SUBCOMMITTEE ON PRODUCTION AND PRICE COMPETITIVENESS

                                     of the

                           COMMITTEE ON AGRICULTURE,
                            NUTRITION, AND FORESTRY

                              UNITED STATES SENATE

                          ONE HUNDRED SEVENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 JULY 18, 2002

                                   __________

                           Printed for the use of the
               Committee on Agriculture, Nutrition, and Forestry

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

                                     ______

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               COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

                           TOM HARKIN, Iowa, Chairman

    PATRICK J. LEAHY, Vermont            RICHARD G. LUGAR, Indiana
    KENT CONRAD, North Dakota            JESSE HELMS, North Carolina
    THOMAS A. DASCHLE, South Dakota      THAD COCHRAN, Mississippi
    MAX BAUCUS, Montana                  MITCH McCONNELL, Kentucky
    BLANCHE L. LINCOLN, Arkansas         PAT ROBERTS, Kansas
    ZELL MILLER, Georgia                 PETER G. FITZGERALD, Illinois
    DEBBIE A. STABENOW, Michigan         CRAIG THOMAS, Wyoming
    BEN NELSON, Nebraska                 WAYNE ALLARD, Colorado
    MARK DAYTON, Minnesota               TIM HUTCHINSON, Arkansas
    PAUL DAVID WELLSTONE, Minnesota      MICHEAL D. CRAPO, Idaho

                  Mark Halverson, Staff Director/Chief Counsel

                David L. Johnson, Chief Counsel for the Minority

                          Robert E. Sturm, Chief Clerk

                  Keith Luse, Staff Director for the Minority

                                      (ii)

                                C O N T E N T S

                                  ----------
                                                                       Page

    Hearing(s):

    S. 532, The Pesticide Harmonization Act..........................    01

                                  ----------

                            Thursday, July 18, 2002
                        STATEMENTS PRESENTED BY SENATORS

    Conrad, Hon. Kent, a U.S. Senator from North Dakota, Chairman,
      Subcommittee on Production and Price Competitiveness of the
      Committee on Agriculture, Nutrition, and Forestry..............    01
    Roberts, Hon. Pat, a U.S. Senator from Kansas, Ranking Member,
      Subcommittee on Production and Price Competitiveness of the
      Committee on Agriculture, Nutrition, and Forestry..............    04
    Baucus, Hon. Max, a U.S. Senator from Montana....................    11
    Dorgan, Hon. Byron, a U.S. Senator from North Dakota.............    02
    Pomeroy, Hon. Earl, a Representative in Congress from North
      Dakota.........................................................    08
                                  ----------

                                   WITNESSES
                                    Panel I

    Hawks, William, Under Secretary for Marketing and Regulatory
      Programs, United States Department of Agriculture, Washington,
      DC.............................................................    12
    Johnson, Stephen L., Assistant Administrator, Office of
      Prevention, Pestitcides, and Toxic Substances, Environmental
      Protection Agency,
      Washington, DC.................................................    14

                                    Panel II

    Bushue, Barry, President, Oregon Farm Bureau Federation, Boring,
      Oregon, on Behalf of the American Farm Bureau Federation.......    22
    Dalrymple, Jack, Lieutenant Governor, State of North Dakota,
      Bismarck, North Dakota.........................................    17
    Frederickson, David J., President, National Farmers Union,
      Washington, DC.................................................    24
    Johnson, Roger, Commissioner of Agriculture, State of North
      Dakota,
      Bismarck, North Dakota.........................................    20
    Vroom, Jay, President, CropLife America, Washington, DC..........    26
                                  ----------

                                    APPENDIX

    Prepared Statements:
        Bushue, Barry................................................    97
        Dalrymple, Jack..............................................    57
        Dorgan, Hon. Byron...........................................    40
        Frederickson, David J........................................   102
        Hawks, William...............................................    43
        Johnson, Roger...............................................    60
        Johnson, Stephen L...........................................    50
        North Dakota Farmers Union...................................   101
        Pomeroy, Hon. Earl...........................................    45
        Vroom, Jay...................................................   106

                                  ----------

                    S. 532, THE PESTICIDE HARMONIZATION ACT

                                  ----------

                            THURSDAY, JULY 18, 2002

                                           U.S. Senate,
      Subcommittee on Production and Price Competitiveness, of
         the Committee on Agriculture, Nutrition, and Forestry,
                                                        Washington, DC.
        The committee met, pursuant to notice, at 2 p.m., in room
    SR-328A, Russell Senate Office Building, Hon. Kent Conrad,
    [Chairman of the Subcommittee], presiding.
        Present or submitting a statement: Senators Conrad,
    Roberts, and Baucus.

      OPENING STATEMENT OF HON. KENT CONRAD, A U.S. SENATOR FROM
                              NORTH DAKOTA

        Senator Conrad. The hearing will come to order. The
    subcommittee meets this afternoon to hear testimony on S. 532,
    the Pesticide Harmonization Act, sponsored by my colleague from
    North Dakota, Senator Dorgan. I am pleased to be among the nine
    other Senators who are cosponsors of Senator Dorgan's bill.
        Senator Dorgan's legislation represents a thoughtful,
    straightforward, and responsible effort to address an issue
    that for several years has perplexed and frustrated U.S.
    agricultural producers, especially those who farm near the
    Canadian border. That issue has to do with the differential
    pricing for pesticides across the border and the dramatically
    lower prices available to Canadian farmers as compared to U.S.
    farmers for the very same pesticides.
        We have heard a lot about the integration of the U.S. and
    Canadian market during the more than 10 years since enactment
    of the U.S.-Canada Free Trade Agreement. The essentially open
    border between our two countries has, in fact, resulted in a
    huge increase in two-way trade between the two countries. For
    example, in fiscal year 2001, our two-way agricultural trade
    set a record in both directions, totaling nearly $17.5 billion.
        However, over the past decade, we have also seen the United
    States' historical agricultural trade surplus with Canada
    vanish, replaced by an agricultural trade deficit that last
    year favored Canada to the tune of $1.5 billion. It is no
    wonder, then, that our producers cry foul when on the one hand
    they feel firsthand the impact of Canadian commodities
    streaming across the border, and yet also see Canadian farmers
    benefiting from a competitive cost advantage that seems to have
    no rational explanation. Canadian wheat, barley, livestock, and
    meat can flow so freely across the U.S. border. Why can
    competitively priced pesticides not do the same?
        Just this past weekend, the Minot Daily News editorialized
    with the headline, ``It Just Isn't Right.'' The paper cited the
    recent case of six North Dakota farmers who had purchased a
    herbicide from a Canadian distributor that the farmers believed
    had a special authorization to allow the chemical to be brought
    into the United States. The herbicide, called Liberty, costs $9
    a gallon in Canada and twice that in the United States.
    According to the editorial, the manufacturer of the herbicide
    will not say--will not say--whether the formulation of the
    Canadian version is different from the U.S. version. It will
    not say whether there is any difference.
        The editorial in the Minot paper concludes with the
    following. ``So while it is against the law for North Dakota
    farmers to use Canadian Liberty, it is fully legal for Canadian
    canola treated with Canadian Liberty to be imported into the
    United States. This is an outrage.'' That is the statement of
    the newspaper, one of the four largest in our State.
        This afternoon, the subcommittee will hear from Senator
    Dorgan and from Congressman Pomeroy of North Dakota, who has
    championed this effort in the House of Representatives. We will
    also have a chance to hear from the U.S. Department of
    Agriculture and the Environmental Protection Agency.
        We will also have a chance to hear from the Lieutenant
    Governor of North Dakota, Jack Dalrymple, who chairs the
    State's Crop Protection Product Harmonization and Registration
    Board; North Dakota's Commissioner of Agriculture, Roger
    Johnson, who has been a leader on this issue for many years;
    Jay Vroom, the President of CropLife America; David
    Frederickson of the National Farmers Union; and Barry Bushue,
    representing the American Farm Bureau Federation.
        I want to welcome each of our witnesses here today, and in
    order to maximize the amount of time available for questions
    and discussion, I would ask each witness following our two
    Congressional witnesses to please summarize their statements in
    5 minutes or less. I appreciate all of the witnesses'
    cooperation on that matter.
        I want to welcome again all of the witnesses. I especially
    want to welcome my colleague from North Dakota, Senator Dorgan,
    who is the author of this legislation. Again, he has done a
    very careful and thoughtful job of putting this bill together
    and it is a privilege to have him before the subcommittee
    today. Welcome, Senator Dorgan.

       STATEMENT OF HON. BYRON DORGAN, A U.S. SENATOR FROM NORTH
                                 DAKOTA

        Senator Dorgan. Thank you very much, Senator Conrad. Let me
    say that this is a bipartisan piece of legislation. We have
    Republican and Democratic Senators as cosponsors, and I do not
    want you to minimize your role here. Although my name is first
    on the legislation and I introduced it, I worked closely with
    you and especially my colleague Congressman Pomeroy in the
    House, who introduced an identical piece of legislation.
        This is truly a team effort and you deserve a great deal of
    support for what you have done, and when we make this happen, a
    lot of Members of Congress will be very pleased, but especially
    pleased will be those American farmers who are shortchanged, or
    effectively cheated these days by not being able to access a
    virtually identical chemical north of the border and bring it
    back and apply it to their crops.
        Let me try to describe just briefly. You have done a good
    job in your opening statement. This legislation simply would
    permit a State to register a Canadian pesticide for
    distribution and use within that State if the pesticide is
    substantially similar or identical to one already registered in
    the United States.
        I want to say that I especially feel that the stimulus for
    this legislation comes from North Dakota Agricultural
    Commissioner Roger Johnson. He has worked with all of us for a
    good number of years to try to write a piece of legislation
    that is workable, that does not compromise safety in any way,
    and he is going to testify today, but I wanted to pay special
    mention to his contribution to this issue that has been
    extraordinary.
        It is interesting that we come to this point with the
    Environmental Protection Agency supporting this legislation. We
    have worked closely with them over the last several years. The
    Department of Agriculture supporting this legislation. This
    really is a good piece of legislation. It does not in any way
    compromise safety. It does allow our farmers to access a nearly
    identical chemical and pay a much lower price for it if the
    pricing practices of the companies are such that they would do
    that to the American farmer, that is, price theirs at multiples
    of what you could purchase it for north of the border.
        What has happened is we have discovered that some chemicals
    sold in Canada are almost identical. In some cases, they are
    identical, but in other cases, they have tweaked the formula
    just enough so as not to make a substantive difference in the
    chemical, but to be able to say, this is a different chemical.
    Therefore, they have been able to keep American farmers from
    being able to access that chemical. Well, that is just a
    charade. It is a game. The sad part of the game is it has cost
    farmers a great deal of lost opportunity and money. With the
    slim margins that exist on the farm today, it is very important
    to pass S. 532 to give farmers the opportunity to take
    advantage of the lower prices.
        I have a box here that I want to show you. This is a box in
    which the chemical Liberty will arrive. It would have five
    gallons of Liberty in this box and it will be sold in Canada
    and in the U.S. and these are the labels. This is a Canada
    label. This is a U.S. label. What you will see is this is an
    identical chemical. I mean, it is identical with respect to the
    labels. The difference is that if this box of Liberty is sold
    in Canada, this box is sold for $160. If the box of Liberty is
    sold to the American farmer, it is $450. It is a very dramatic
    price change, price difference.
        Our American farmers would like to access that lower-priced
    product, but they are told, under current law, that they may
    not do that, and so what happens is the Canadians put this
    lower-priced product on their canola and ship it to our country
    where the canola is processed and then put into our food
    supply. It is not that the Canadian canola is not becoming part
    of America's food supply. It is. It is just that American
    farmers are told, under current law, you cannot access the
    savings that comes with the Canadian prices.
        The circumstance in North Dakota is that for 15 selected
    pesticides, there will be $23 million, nearly $24 million in
    savings, according to a study that Roger Johnson will tell you
    about today. CBO says that this bill has zero cost. I mentioned
    EPA helped us draft it and is testifying that the language
    poses no safety threat to the environment or to public health.
        The organizations that support this, they are too numerous
    to mention, but the American Farm Bureau, National Farmers
    Union, National Association of Wheat Growers, North Dakota
    Soybean Growers, Canola Growers. The list is on and on and I
    will submit them for the record.
        It is my hope that with this hearing, for which I am deeply
    appreciative, that I will be able to include this piece of
    legislation on the agriculture appropriations bill. I am a
    member of that subcommittee and that will be marked up, I
    expect, next week.
        Once again, I am really pleased that you are holding this
    hearing. This piece of legislation should move quickly and I
    hope it will move easily, and the witness list you have today
    is excellent. It will describe why this ought to be done and it
    ought to be done now in the interest of American farmers.
        Senator Conrad. Thank you very much, Senator Dorgan. Thank
    you very much for the legislation and for your leadership on
    this issue. You know, I do not know how many times I have been
    to farm meetings in North Dakota and this has been brought up.
    It is vexatious. It angers people. It is inexplicable to
    people. This bill has really--you have done an excellent job of
    covering the bases. To have USDA and EPA and the major farm
    organizations all on the same page, that is not easy to do, and
    we appreciate the care that you have taken to put it together.
        [The prepared statement of Senator Dorgan can be found in
    the appendix on page 40.]
        Senator Conrad. We have been joined by my ranking member,
    Senator Roberts, who is an extremely important member of the
    full Agriculture Committee. It is hard to find people more
    knowledgeable and more dedicated to fighting for farmers than
    Senator Roberts. Welcome.

      OPENING STATEMENT OF HON. PAT ROBERTS, A U.S. SENATOR FROM
                                 KANSAS

        Senator Roberts. Mr. Chairman, thank you for your very kind
    comments. I had originally thought that this hearing was on the
    Dorgan amendment to harmonize the two loan rates in the State
    for sunflowers.
        [Laughter.]
        Senator Dorgan. Without objection.
        [Laughter.]
        Senator Roberts. Unbeknownst, and I want the message loud
    and clear, and I have just talked with the Chairman,
    unbeknownst to many in the oilseed community, we have tried for
    20 years to buildup this industry and the USDA or somebody in
    the USDA, in the bowels of the USDA, somehow decided there
    would be two loan rates, one for confectionery and one for
    oilseeds, and what it is going to do is ruin the market for the
    confectionery side and we are going to lose a lot of support
    that we have for the oilseeds. I understand you may or may not
    have a bill. If you have a bill, put me on it.
        I had thought that was the hearing today, but I understand
    it is a different matter, so part of what I am doing is just
    sending a message down to the USDA that there will be a bill
    unless we can change this administratively, but it is a very
    serious matter, and I know it would be to my former colleague
    and friend from the House side, Congressman Pomeroy, as well.
        Thank you for holding the hearing today on S. 532. I do
    know what the legislation is, the Pesticide Harmonization Act.
    This has not been a big, major issue in Kansas, but I certainly
    realize it has been a very front-burner topic up on the
    Northern border, and your involvement in this issue, both from
    the standpoint of the Chairman and the two witnesses.
        Obviously, there are a number of questions surrounding this
    legislation. It is important that we are giving all the parties
    involved the opportunity today to comment on its impact.
        Mr. Chairman, I understand the concerns of many producers
    in your State. You just spoke to that. Did Senator Dorgan, and
    so will my esteemed friend from the House. All along the
    Northern border, we are concerned over the cost of pesticides
    and input costs, in general, especially in the tough times that
    we are in.
        Certainly, with the recent report that net farm income will
    drop by nearly $7 billion in 2002, input costs and how bills
    are paid are even more pressing. That is a problem that will
    even be more pressing for our producers.
        Now, I do find it somewhat ironic that Canada actually
    developed its own use program because pesticide prices were, on
    occasion, lower in the United States. Now, we are here today
    because some United States producers will argue that the prices
    are certainly lower in Canada.
        As we take a look at this issue, it is important that we
    keep several principles in mind and also ask ourselves several
    questions, and I am just going to submit those questions for
    the record in that I do have to go to the Intelligence
    Committee on yet another meeting on what went wrong and what we
    need to do right in regards to 9/11.
        We ought to take a close look at several issues. No. 1,
    what effect, if any, does the exchange rate have on the
    relative comparison of prices on these products?
        No. 2, what can we do to improve the harmonization process
    between the two countries?
        No. 3, this seems to be especially important to me. I am
    back on No. 2, really. As Mr. Jay Vroom in representing his
    organization, in his prepared testimony that I have read,
    indicates the review time for new products in Canada is 18
    months. It is 40 to 46 months in regards to the United States.
    There is no doubt this extended review time is adding to the
    costs in the United States, and that is very important.
        In addition, how do we protect the patents and the
    proprietary information in light of the differences between the
    two countries in these areas?
        Who is going to be allowed to bring these pesticides back
    across the border and use them and who will handle the
    registration and approve the process for these activities?
        The reasoning behind the bill is obvious. How we do this in
    terms of a pragmatic way that makes sense from a sound science
    approach is another matter. In my opinion, only individual
    approved applicators should be allowed to bring these products
    back across the border. This is especially important in the new
    world we have lived in since 9/11. I am not going to get into
    all the emerging threats and all of those dangers at this
    particular time, but they do represent a very factual challenge
    for us.
        The bottom line, it seems to me we cannot really decrease
    our border security as a result of this legislation. We ought
    to address the problem, but we cannot get into a problem of
    border security.
        Mr. Chairman, finally, while I have often had my own
    concerns with the approval and the labeling process under EPA,
    and that is probably the understatement of my statement, it is
    important that we have assurances in place that pesticides are
    not being simply brought across the border or trans-shipped and
    used for applications that are not approved in the United
    States.
        I am going to stop there. I know you have a large number of
    witnesses today. It has been estimated half the population of
    North Dakota is here today.
        [Laughter.]
        Senator Roberts. I will yield back my time and I, as I say,
    have an obligation in the Intelligence Committee. I am going to
    submit these questions that I mentioned for the record. I would
    ask that the witnesses perhaps address those concerns that I
    brought up.
        I want to thank you again for your leadership and thank
    you, Byron, for bringing this to the attention, and thank you,
    Congressman Pomeroy. It is good to see you again.
        Senator Conrad. Thank you so much, Senator Roberts.
        Senator Conrad. Let me just, if I could, return to where
    you started, and that is the question of this dual loan rate
    that USDA adopted. Senator Roberts would agree, that was never
    the intention anywhere in the process. It was not----
        Senator Roberts. It was in the manager's amendment to do
    the other thing. If John McCain--pardon me.
        Senator Conrad. No, go ahead. I like that.
        [Laughter.]
        Senator Roberts. If John McCain, pardon me, Senator McCain,
    the distinguished Senator from Arizona, insists that we read
    the manager's amendment on virtually every bill that is
    considered in the Senate to make sure that it is applicable and
    it is pertinent and there is no pork in there, et cetera, et
    cetera, for some reason, the Department of Agriculture
    indicated that what was in the manager's amendment and the
    report language had no effect. In the slide rule world that
    some live in within the bowels of the USDA, we decided to come
    up, well, we are going to reclassify all these loan rates. Oh,
    by the way, here is something we needed to do for some years
    back.
        Now, we have had letters back and forth from myself and my
    good friend Dan Glickman, when he was Secretary, even dating
    back to Ed Madigan. Well, if the manager's amendment and report
    language does not mean anything, why in the hell do we put it
    in there?
        I have a strong message for the USDA. I am upset about
    this, and I have talked to the Secretary about it. They are
    studying it. It seems to me they need to do administratively
    precisely what the Senator from North Dakota is addressing in
    legislation. We may not even have an agriculture appropriations
    bill the way we are headed. We might have a giant CR. I hope
    not. I hope we can get to that. You folks are more in charge of
    that than I am.
        Having said that, I have a little blood pressure about
    this. We are going to take an industry that it took us 20 years
    to buildup, to get out of mono-agriculture in the Great Plains
    and destroy it with some slide rule decision within the
    Department of Agriculture. Other than that, I do not have
    strong feelings about it.
        [Laughter.]
        Senator Conrad. We are glad you are here, Senator. We are
    glad you have expressed those feelings because we hope that the
    representatives of USDA that are here take back the message.
    Either they fix it or we are going to fix it, because it had
    absolutely no part of any of the Farm bill discussions. As a
    conferee who helped negotiate the result, I can say very
    clearly--in fact, I negotiated the loan rate on the minor
    oilseeds. There was no two-track. There was one track, one
    track, one loan rate, and that has to be fixed.
        I would just say, if I could, and I am very appreciative
    that Senator Roberts has joined us in sending this signal, that
    we have a problem on the flax loan rate, too. They lowered it.
    They are going to wipe out the flax industry. They are going to
    destroy it. Cramby, for some reason, they decided that Cramby
    is not part of the program. Well, it comes as a big surprise to
    those who planted thousands of acres in anticipation that it
    was included and always has been, at least in the recent past.
        Senator Dorgan.
        Senator Dorgan. Senator Conrad, might I make just three
    very brief points, and I have to go to an Appropriations
    Committee markup.
        No. 1, we have prepared some legislation. I would like to
    see if we could deal with the loan rates in the agriculture
    appropriations bill. It is not clear to me that we will be able
    to do that, but if we could solve this issue in the agriculture
    appropriations bill, we certainly will try to do that.
        Second, we have not been well served with harmonization
    promises for many, many years under administrations--this is
    not just one administration, several. We have this promise of
    harmonization of chemicals and so on with Canada, but it never
    really happens. Because it has not happened, we need to pass
    this legislation.
        Third, I did not mention that--I mentioned specifically
    Congressman Pomeroy and you, Mr. Chairman, and Commissioner
    Johnson and the important contribution made by all three. I did
    not mention that the North Dakota State Legislature,
    represented by the Lieutenant Governor, who has, headed a
    committee on this and has worked with us for a long, long
    while, has played a significant role, as well, and I should
    have mentioned that and did not. I know he is going to testify
    today, so I wanted to mention his role and the interest of the
    North Dakota State Legislature on this.
        Thank you for holding the hearing. I deeply appreciate it.
        Senator Conrad. Thank you. Thank you so much for what you
    have done.
        Senator Baucus of Montana has now joined us. I would ask if
    it would be appropriate at this point that we turn to
    Congressman Pomeroy for his testimony and then if we could come
    back to you for any opening statement. Would that be all right?
        Senator Baucus. Certainly. That would be fine. Thank you.
        Senator Conrad. Congressman Pomeroy, thank you. Thank you
    for your leadership. Thank you for introducing this bill on the
    House side. We have a good head of momentum and we appreciate
    very much all who have played a role. Clearly, you have been
    the lead on the House side. We are knocking at the door of
    getting this done.

     STATEMENT OF HON. EARL POMEROY, A REPRESENTATIVE IN CONGRESS
                           FROM NORTH DAKOTA

        Mr. Pomeroy. Mr. Chairman, thank you, and thank you for
    holding this important hearing.
        Let me begin by just reflecting on the words of my former
    chairman, Senator Roberts. Serving with him in the Agriculture
    Committee was always interesting and often entertaining,
    sometimes damned irritating, but that is another matter----
        [Laughter.]
        Mr. Pomeroy. I think very highly of the Senator.
        Senator Roberts. Not very often.
        Mr. Pomeroy. Not very often was it irritating. I think very
    highly of Senator Roberts.
        Senator Roberts. Very highly entertaining, though. He
    grabbed me out of here and said something entertaining to me,
    too.
        [Laughter.]
        Mr. Pomeroy. He is absolutely right on this confectionery
    loan rate. The question I would ask the U.S. Department of
    Agriculture is how much confectionery sunflowers do you want
    the Federal Government to own, because in 2 or 3 years, they
    are going to own a whole lot of them, having totally skewed
    planting decisions and disrupted the carefully developed market
    for sunflower oil.
        It is, astoundingly surprising, to use the most polite
    words I can think of, that they would advance this, and I hope
    we get it fixed. I would rather have it fixed administratively
    as quickly as possible as they look a little deeper into the
    consequences of it, but I am certainly prepared, Mr. Chairman,
    to join you legislatively with whatever we need to do to
    respond.
        I also think with regard to flax: why put flax out of
    business in terms of domestic production in this country? I do
    not think there is an answer to that question, but that
    certainly would be the effect of what the loan rates would do.
        Senator Conrad. I would say to my colleague, it is widely
    understood the Farm bill raised loan rates.
        Mr. Pomeroy. Exactly.
        Senator Conrad. How they got to a conclusion that on flax
    the loan rate got lowered, how that is in any way in concert
    with the policy passed on a bipartisan basis is absolutely
    beyond me, and I hope very much that those who are here from
    USDA carry back the message. If they want to have a fight, then
    get ready. We will have a fight, and it will get real tough
    real quick. We are not going to stand by and see a domestic
    industry liquidated because of--what would one term it, just
    foolish action.
        Mr. Pomeroy. The role of flax in the marketplace is going
    to continue. It will just be replaced with Canadian flax
    instead of ours. On the other hand, as you know, in the
    Northern Plains, without a lot of alternatives, producers need
    that crop in the rotation. Besides that, it has a lot of
    valuable contributions to make in terms of its impact on soils.
    It has continued in the rotation and, in fact, is experiencing
    some gradual development because of its end: market value in
    the Great Plains. We should not put it out of business.
        Turning to the issue at hand, Mr. Chairman, Agriculture
    Commissioner Roger Johnson, through his actions in the North
    Dakota Department of Agriculture, has demonstrated to this
    country the foolishness of the existing framework relative to
    pesticides and the restriction of bringing lower-priced
    pesticide across the border from Canada into North Dakota. His
    actions 2 years ago relative to Achieve at the State level
    allowed the import of substantially identical product.
    Ultimately, this action was stopped, I believe due to a
    Customs, if not EPA, requirement.
        The surprising thing, as I evaluated that action of our
    Federal Government, was that the action was not taken on behalf
    of public health because the product was substantially
    identical and being used for the identical purpose for which it
    had been approved in this country. It was taken simply to
    protect the discriminatory pricing practices advanced by the
    pesticide companies themselves.
        We had, when I was serving in the Agriculture Committee, a
    very interesting bit of testimony presented by an economist
    that essentially demonstrates pricing methodology comes down to
    this: You charge what the market will bear. There has been a
    determination that producers north of the border will bear a
    little less by way of charges than producers south of the
    border, and so the companies have price discriminated right
    along that bright line of national border.
        Now, this happens in spite of the fact that these very
    entities were all for NAFTA, right at the front of the parade
    for NAFTA, and enjoy post-harvest the blended market across
    borders. Closed market as they price their pesticides, blended
    market after harvest. Well, the net consequence, of course, is
    putting higher cost differentials on our farmers than Canadian
    farmers competing in the same market. It is totally unfair.
        A recent instance in North Dakota again demonstrates the
    ludicrous result of this. Farmers were bringing in a Canadian
    chemical product called Liberty. The U.S. has the Liberty
    product available, made by the same manufacturer. The only
    difference is the U.S. product cost $9 per acre more. Under
    laws as they are presently constructed, the importation of the
    Canadian Liberty was a violation of law. If people were to
    literally carry out the letter of what they are supposed to
    prosecute, we would probably have people prosecuted for seeking
    a product at a lower price just north of the border.
        Well, that has to change, and we have advanced a proposal
    that allows that change without any question of raising public
    health concerns. The legislation, the Pesticide Harmonization
    Act, if enacted would eliminate the current barriers by
    amending FIFRA to grant States the authority to issue State
    registrations to parties who wish to import Canadian pesticides
    that are identical or substantially similar to products
    registered with EPA for use in the United States.
        Now, this proposed legislation was well advanced 2 years
    ago. I have an awful lot of respect for the chemical and
    pesticide manufacturers and their trade association, ably led
    by Jay Vroom, but this is not a new question before them. Yet,
    if they look at this legislation, they will ask for more time
    to look and to study and to think, but this situation has been
    squarely before us for years.
        Now, Mr. Chairman, as you say, now is the time is to act.
    We can eliminate the barriers, create a free market for
    pesticides, and allow the U.S. and Canadian farmers to compete
    on a more level playing field. The legislation is reasonable
    and holds the potential, I believe, to make a substantial
    impact on ongoing harmonization issues between the United
    States and Canada. It will obviously create free marketplace
    pressure to bring down prices on the domestic side.
        I do not think that, in the end, if this legislation would
    pass, you would have this massive flow of chemicals from the
    north of the Canadian line to south of the Canadian line. You
    would have more equitable pricing south of the Canadian line in
    the U.S. market itself because pesticide companies no longer
    would be able to hide behind the border for purposes of
    surcharging, also known as gouging, U.S. farmers to the highest
    dimension the market will bear in their pricing. It is time we
    harmonized.
        Thank you for listening to me, Mr. Chairman. I will be
    happy to answer any questions.
        Senator Conrad. Thank you, Congressman Pomeroy. We
    appreciate very much your being here today and for your
    advocacy on this issue. It is, as you know, critically
    important to our farmers. Other than the Farm bill itself and
    the need for disaster assistance, there are very few things I
    hear about more often than this, and you have the same
    experience.
        Mr. Pomeroy. Mr. Chairman, I noted Roger Johnson's role in
    the issuance of the Achieve certificate, import certificate,
    our State registration. What I did not tell you is that
    thereafter, he, along with my staff, along with EPA officials
    under the prior administration, negotiated for months and came
    up with the Pesticide Harmonization Act. Roger Johnson, as the
    State regulatory official, brought all of that expertise and
    background to bear and was integrally involved in the
    development of this legislative proposal and I also want his
    involvement in that respect to be noted for the record.
        Senator Conrad. I appreciate that very much.
        [The prepared statement of Mr. Pomeroy can be found in the
    appendix on page 45.]
        Senator Conrad. Senator Baucus has joined us. Senator
    Baucus is a very active member of the full Agriculture
    Committee and has really taken the lead on disaster assistance
    this year, which is not before this committee at this time, but
    which is a critically important subject. I want to commend him
    publicly for his determination to get disaster assistance for
    our farmers this year. We could testify here at great length of
    the desperate need for that aid in the year 2002 and extending
    back to the disastrous conditions we faced in 2001.
        With that, I would turn to Senator Baucus for any statement
    that he might make.

       OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR FROM
                                MONTANA

        Senator Baucus. Thank you very much, Mr. Chairman.
    Congressman Pomeroy, you and Senator Dorgan and Senator Kent
    Conrad have just been aces when it comes to agriculture and
    defending your people. I admire you all three very much. You
    are terrific legislators.
        I might just say, too, the evidence just keeps piling up on
    disaster needs. I talked to a guy who called me up, George is
    his name, called me up just the night before last and just
    said, it looked like maybe the spring crops might be a little
    bit promising--this was in July, because we got a little bit of
    moisture. Then we had, as you all did in the Dakotas, record-
    breaking heat temperatures, 109, 112, 111, and he says that his
    spring crop, his barley crop just all baked. It is just gone.
        We all know that the administration is the stumbling block
    here. For example, Congressman Denny Rehberg, our only House
    member over in the House, has been working very hard to try to
    get something passed, too, but it is the administration that
    just said no, just no agriculture disaster assistance. It is
    unfortunate, to say the least.
        Anyway, on this issue, Mr. Chairman, I commend you and
    Senator Dorgan and others for pushing this. It is just gut-
    wrenching to see people living on the land, trying to eke out
    an existence, have a tough enough time with the weather and
    with the vagaries of markets generally, and then, because they
    need pesticides, need product to help get a good crop and get
    rid of the weeds and the pests and so on and so forth, are
    unable to get a decent price for their products, for their
    pesticides. That just compounds one problem upon another.
        In this latest problem, it is one not caused by nature, it
    is not one caused by the vagaries of the international markets,
    it is caused basically by an unfortunate action on the part of
    an industry that wants to segment the markets, the United
    States and Canada, that is, fellow human beings, either
    Americans or Canadians.
        It is just, as I said, it is gut-wrenching, and I just
    hope, Mr. Chairman, that we can pass this legislation very
    quickly because, clearly, farmers want a level playing field.
    American farmers, Montana and North Dakota farmers will compete
    with Saskatchewan and Albertan farmers as long as it is fair.
    It just is not fair when the pesticide market is not
    harmonized, it is segmented, and when people on our side have
    to pay so much more compared with others. Both Canadian and
    American farmers, at least along the border, we are all in the
    same boat together. Let us just grow our crops and be able to
    market our crops.
        It is not directly on subject, Mr. Chairman, but I met
    today with Ambassador Johnson, USTR Ambassador, and I urged him
    very, very strongly to followup on the 301 action with respect
    to the Canadian Wheat Board as we start commencing some CBD and
    other action. We have a 301 action at the WTO so we can start
    following up with deeds as well as words and help get some
    relief there from the Canadian Wheat Board, and I just urge all
    of us to followup in that regard, as well.
        To add to the tragedy in my State, so many Montana farmers
    are tempted to break the law, and in some cases feel they have
    to in order to provide for their family. It is just not right.
    It just plainly and simply is not right. It is also extending
    beyond border States. This is starting to reach now further
    south into the United States, Nebraska and other States. It is
    just not right.
        The Chairman just passed me a headline and the headline is,
    ``It is Just Not Right.''
        [Laughter.]
        Senator Baucus. Great minds think alike on the Northern
    border. Thank you. Thank you very much, and I will leave it
    there. It is just not right, and let us get on with this. Thank
    you very much.
        Senator Conrad. Thank you very much, Senator Baucus.
    Senator Baucus, of course, is Chairman of the Finance Committee
    that oversees and has responsibility for all trade laws and the
    oversight of all trade administrative decisions, so his opinion
    carries special weight in this regard.
        Again, Congressman Pomeroy, thank you so much for being
    here with us.
        Mr. Pomeroy. Thank you for holding this hearing. I look
    forward to what vehicles there may be to move the legislation
    this session yet. Thank you.
        Senator Conrad. I am going to call to the witness table
    panel one, Mr. William Hawks, the Under Secretary for Marketing
    and Regulatory Affairs, the U.S. Department of Agriculture.
    Welcome, Mr. Hawks. Stephen Johnson, the Assistant
    Administrator, the Office of Prevention, Pesticides, and Toxic
    Substances of the Environmental Protection Agency. Welcome to
    Mr. Johnson, as well.
        I would ask the two of you to summarize your testimony and
    the full testimony will be made a part of the record. We very
    much appreciate your presence here today. Thank you, Senator
    Baucus, for your participation. Thank you very much for being
    here, Mr. Hawks and Mr. Johnson. We do appreciate it.
        We will go to Mr. Hawks first, and then to Mr. Johnson.
    Again, my welcome.

     STATEMENT OF WILLIAM HAWKS, UNDER SECRETARY FOR MARKETING AND
     REGULATORY PROGRAMS, UNITED STATES DEPARTMENT OF AGRICULTURE,
                             WASHINGTON, DC

        Mr. Hawks. Thank you, Mr. Chairman. It is certainly a
    pleasure to be with you this afternoon. For the record, I will
    say that I heard what you said and we will deliver the message
    back to the Department of Agriculture. I do not have direct
    responsibility for loan rates, but we can certainly deliver
    that message back there.
        As I said, it is a great deal of pleasure with which I come
    here today to talk about pesticide harmonization and its
    potential impact on American farmers. The United States
    Department of Agriculture welcomes the opportunity to fulfill
    its role as the advocate of the American producer within this
    administration.
        As you know, although the Environmental Protection Agency
    is the lead agency for pesticide regulation, the USDA has been
    concerned with this issue of pesticide harmonization for some
    time. Although important progress has been made in
    harmonization of registration for new pesticides, harmonization
    for older pesticides have not been matched. USDA supports
    efforts to facilitate harmonized pesticide regulations so that
    our farmers will have equitable and economical access to safe
    and effective agricultural chemicals.
        The Department of Agriculture is very interested in
    proposals that offer to improve the competitiveness of our
    American growers in domestic and world markets. While
    recognizing there are many factors that can contribute to
    differential pricing between markets, some of which are
    marketing strategies, market size, demand, structural
    differences, and regulatory and legal systems that may have an
    impact on these issues.
        Before serving in this current position as Under Secretary
    for Marketing and Regulatory Programs, I grew corn, wheat, and
    soybeans in Mississippi, and often I said as a farmer in
    Mississippi that I can compete with any farmer anywhere in the
    world, but I cannot compete with other governments and other
    regulatory frameworks in the world, and that is what our
    government is for. I want to, in this role, I want to help
    break down barriers to create a level playing field for U.S.
    producers while continuing to protect public health and the
    environment.
        USDA supports EPA's efforts to harmonize pesticide
    registration as a means to promote the economic well-being of
    Americans farmers. In 1999, USDA commissioned a study to look
    at these differences. The study reported that pesticides
    accounted from ten to 18 percent of the overall cost of
    production. The report identified many factors affecting
    pricing on either side of the border, including difference in
    the patent protection length, difference in the market size and
    cost, difference in pesticide demand, and difference in the
    number of substitute products that were available.
        The Department has been an active participant in the North
    American Free Trade Technical Working Group on Pesticides and
    will continue to work with the EPA and the United States Trade
    Representative through the Consultative Committee on
    Agriculture to resolve trade issues related to pesticide
    harmonization.
        Thank you for the opportunity to address this issue on
    behalf of the American producers. We look forward to working
    with Congress and stakeholders to achieve pesticide
    harmonization with Canada and to eliminate the arbitrary
    differences that impact prices and availability.
        Senator Conrad. Thank you, Mr. Hawks. Let me just say
    publicly that you come here with a very good reputation being
    an advocate for farmer. I will tell you, you appear before this
    committee and you are respected by this committee and we are
    glad to have you here.
        [The prepared statement of Mr. Hawks can be found in the
    appendix on page 43.]
        Senator Conrad. Mr. Johnson, please proceed with your
    testimony.

              STATEMENT OF STEPHEN L. JOHNSON, ASSISTANT
      ADMINISTRATOR, OFFICE OF PREVENTION, PESTICIDES, AND TOXIC
      SUBSTANCES, ENVIRONMENTAL PROTECTION AGENCY, WASHINGTON, DC

        Mr. S. Johnson. Thank you, Mr. Chairman, and good
    afternoon. Thank you for the opportunity to appear before your
    subcommittee to discuss the concerns of American farmers with
    regard to pesticide pricing between the U.S. and Canada.
        Today, I would like to provide you with information on the
    long-term approach EPA is taking to address this issue, as well
    as discuss the current legislation which attempts to remedy
    these pricing discrepancies in the near term. I will also touch
    on some of the harmonization activities that my program has
    been involved in since I testified to Congress on this
    important matter last summer.
        As you know, EPA's legal authority over pesticides is to
    ensure the protection of public health and the environment. Our
    authority does not extend to pricing. Current U.S. pesticide
    laws require extensive scientific evaluation and a pesticide
    registration before it can be sold and distributed in the
    United States. Further, EPA is not aware of any evidence that
    indicates that national pesticide regulatory requirements
    contribute significantly to existing price differences. Many
    factors contribute to pricing, such as marketing, availability,
    and demand. As all parties have acknowledge, this is a highly
    complex issue.
        That said, I know that EPA has worked very closely with
    Congressional staff, State officials, and pesticide companies
    over the last few years to explore remedies that would help
    address price differences that U.S. farmers are experiencing.
    EPA continues to make progress on a variety of administrative
    and regulatory approaches that help facilitate equal access and
    harmonization.
        Let me describe some of the longer-term, more strategic
    actions that EPA has taken and partnerships that EPA has
    established to address this important issue. EPA continues to
    work closely with Canada and our other trading partners to
    break down barriers and facilitate trading competitiveness.
    Together, we are developing more consistent regulatory and
    scientific requirements, registering needed products, and
    supporting the principles of sustainable pest management.
        EPA's work on pesticide harmonization with Canada is
    increasingly providing benefits to the American farmer. In the
    long term, the creation and ongoing support of a North American
    harmonized market for pesticides will ensure a level playing
    field.
        EPA continues to make considerable efforts to receive input
    on harmonization approaches with representatives from industry
    and grower groups. This includes supporting and actively
    participating in the important work of the North American Free
    Trade Agreement, NAFTA, Technical Working Group on Pesticides.
        We have recently published the NAFTA Technical Working
    Group report, called the Milestone Report, and Mr. Chairman, I
    have copies for you and members of the committee. This report
    highlights the numerous accomplishments of the NAFTA Pesticide
    Group over the last several years and it provides a valuable
    perspective for setting an agenda for future harmonization
    work. Efforts like these are helping to break down the
    political and regulatory barriers with respect to the delivery
    and use of pest management tools on both sides of the border.
        An important part of this work continues to be the
    development of a NAFTA label, which will enable the sale and
    distribution of a pesticide across North America, thereby
    guaranteeing its availability at the same time in the U.S. and
    Canada. We continue to make great strides in putting this into
    practice, building on existing joint registration reviews. To
    date, our joint registration review program has resulted in the
    registration of 12 new pesticide products in the U.S. and
    Canada, with 11 additional products currently under review. We
    continue to believe that expansion of products under NAFTA
    labels will help break down potential trade barriers.
        EPA stands ready to work with Congress and others on
    possible legislative solutions that effectively address
    observed differences in pesticide pricing, as long as the
    protection of public health and the environment are not
    compromised. EPA believes that S. 532 is intended to create a
    structure which ensures that appropriate safeguards remain in
    place to enable EPA to achieve its primary mission, the
    protection of public health and the environment.
        However, I should mention that there remain some broad
    policy concerns with this legislation that we believe need to
    be further addressed and the consequences fully considered. For
    example, a legislative approach like this with a focus on one
    country alone may have international trade implications.
        Another potential concern is that of implementation. For
    example, there are some important questions regarding a State's
    ability to maintain confidential business information and other
    trade secrets.
        In conclusion, EPA has worked very closely with
    Congressional staff over the last few years, as well as State
    officials here today, to alleviate the concerns U.S. farmers
    have regarding differences in pesticide pricing. EPA continues
    to seek and create effective mechanisms that will ensure the
    safety of our health and environment while also ensuring an
    equal playing field for our farmers.
        In the long term, EPA continues to work to harmonize the
    availability of pesticide products between the U.S. and Canada
    through NAFTA. In the near term, with no adequate
    administrative or regulatory option available to fully address
    the potential pricing disparity between the U.S. and Canada,
    EPA supports seeking an appropriate legislative solution. The
    legislation as drafted does not compromise protection of human
    health and the environment. That is EPA's principal criterion.
        However, as I have mentioned, there are some implementation
    issues that should be addressed. Certainly, we commit to
    working with Congress, with States, with growers, with other
    Federal agencies and industry to resolve these concerns.
        Again, I look forward to working with you, Mr. Chairman,
    and other Members of Congress and other affected stakeholders
    on this important issue and I would certainly be happy to
    answer any questions you may have.
        Senator Conrad. Very good. Thank you very much for your
    testimony. Again, thank you for being here.
        [The prepared statement of Mr. S. Johnson can be found in
    the appendix on page 50.]
        Senator Conrad. Mr. Hawks, we are going to ask each of the
    witnesses here today, because there is strong interest on the
    committee and strong interest in the general body to move
    legislation this year, in that regard, the committee needs to
    know, do you or does the agency support enactment of S. 532 as
    proposed or with amendments?
        Mr. Hawks. I would have to say that we have not taken a
    position on this specific piece of legislation, so I would have
    to say that we are not in support of it, but we are not in
    opposition. We have not taken a position on this specific piece
    of legislation. Having said that, it is certainly my hope and
    my desire that we can address these concerns so that our
    farmers can have the same advantage or the same opportunity as
    farmers across the border.
        Senator Conrad. The committee would like to ask you, Mr.
    Hawks, to go back to USDA and ask them what amendments might be
    necessary to secure the Department's support for the bill.
        Mr. Hawks. I would be happy to do that.
        Senator Conrad. If you could go back and just ask, are
    there amendments that could be crafted here that would preserve
    the intent of this bill but allow the Department to support it,
    that would be useful to the committee.
        Mr. Johnson, I would ask you the same question. Is EPA in a
    position to support this bill as proposed or with amendments?
        Mr. S. Johnson. We certainly support, Mr. Chairman, the
    intent of the bill. There are, and as far as the EPA's role of
    protecting public health and the environment, we have no issue
    with the proposed legislation. As I mentioned, there are some
    implementation issues.
        One, for example, confidentiality, that inherent in the
    ability of the bill to work or to operate, a State has to be
    able to handle confidential information. Certainly in the case
    of North Dakota, that is the case. There is the case with the
    State of Washington and the State of Vermont that have
    disclosure laws which would appear to be in conflict with the
    needed confidentiality in this. That kind of implementation
    issue needs to be worked out, and if those were worked out,
    then certainly the agency would be fully supportive of the
    legislation.
        Senator Conrad. That is very important to know.
        Let me indicate that you have stated in your prepared
    remarks that you have had some concerns about the ability of
    States to protect confidential business information, and as I
    understand it, your concern lies with the specific statutes in
    a number of States, that is, the States that you named--
    Washington, and I cannot recall the other State----
        Mr. S. Johnson. Vermont, yes.
        Senator Conrad. Washington and Vermont apparently have
    statutes that require disclosure?
        Mr. S. Johnson. Yes.
        Senator Conrad. What would the disclosure requirements of
    those States be?
        Mr. S. Johnson. I am not specifically familiar with, or
    familiar with the specifics of it. What I do understand is that
    whatever information with regard to chemicals, chemistry that
    some might interpret as having an effect on health of the
    environment, that that information has to be disclosed and be
    made publicly available. Of course, the information that is
    necessary to say that a chemical is identical or substantially
    similar would require, if you will, the ability to look at the
    confidential statements of formula and be able to protect that
    confidentiality.
        Senator Conrad. Let me ask you this. Do most States not
    already exercise authority in emergency situations to register
    certain pesticides?
        Mr. S. Johnson.Under the Section 18 programs, States and
    Federal agencies have the authority to ask the agency for a
    Section 18. The agency is responsible for granting or denying
    the emergency exemption, and so we are the ones who are the
    overseers and controllers of confidential information, for
    example.
        Senator Conrad. Has that authority, to your knowledge, ever
    led to the wrongful release of industry data?
        Mr. S. Johnson. No.
        Senator Conrad. That is a model for how we might address
    this concern?
        Mr. S. Johnson. That would be one approach, yes, sir.
        Senator Conrad. All right. Well, that is important.
        Let me ask Mr. Hawks, before we go to the next panel, is
    there anything you would want to add, sir, to the deliberations
    of the committee on this legislation?
        Mr. Hawks. No, sir. I would just like to say that I am
    looking forward to working with the committee, with EPA, to
    alleviate this discrepancy in pricing that is certainly--we are
    looking forward and I have been working with--every speaker
    here has referenced Roger Johnson, and I would certainly add to
    that. I certainly enjoyed the opportunity to work with him
    within the NASDA association and am looking forward to continue
    to work with you all.
        Senator Conrad. We appreciate it very much. As I say, Mr.
    Hawks, you come here with a very good reputation as being a
    sincere advocate for farmers and we appreciate that, and we
    appreciate very much the two of you coming here this afternoon.
    Thank you very much.
        Mr. Hawks. Thank you.
        Mr. S. Johnson. Thank you.
        Senator Conrad. We will now go to our second panel, led by
    Lieutenant Governor Dalrymple of North Dakota; Agriculture
    Commissioner Roger Johnson; Mr. Barry Bushue, the President of
    the Oregon Farm Bureau; Mr. David Frederickson, representing
    the National Farmers Union; and Mr. Jay Vroom, the President of
    CropLife America.
        Thank you all for being here. Lieutenant Governor
    Dalrymple, why do you not proceed with your testimony. It would
    be the intention of the committee to hear from all of the
    witnesses and then open it up to questions, unless we do not
    follow that procedure.
        [Laughter.]
        Senator Conrad. Lieutenant Governor Dalrymple, welcome.

      STATEMENT OF JACK DALRYMPLE, LIEUTENANT GOVERNOR, STATE OF
                  NORTH DAKOTA, BISMARCK, NORTH DAKOTA

        Mr. Dalrymple. Chairman Conrad, thank you for the
    opportunity to provide a statement in support of S. 532, the
    Pesticide Harmonization Act. I must say, as one interested in
    North Dakota agriculture, I am thoroughly enjoying this hearing
    and the broad range of topics that you are touching on here.
        My name is Jack Dalrymple. I serve as Lieutenant Governor
    of the great State of North Dakota and I am here today in that
    capacity, as well as in my role as Chairman of the State's Crop
    Protection Product Harmonization and Registration Board. I also
    farm near Casselton, North Dakota, where my family raises
    wheat, soybeans, and barley.
        The North Dakota Crop Protection Product Harmonization and
    Registration Board was created by the State legislature
    specifically to address and resolve pesticide availability and
    pricing fairness issues for the State's farmers. The bipartisan
    board consists of elected State officials and farmers who have
    a common mission of working with regulators and pesticide
    manufacturers to make effective products available at fair
    prices.
        It seeks to promote the registration of new, safe crop
    protection products for farmers to use on the more than 70
    crops that are raised in North Dakota. The board is conducting
    an ongoing survey of farmers and pesticide retailers in an
    effort to establish possible additional applications for the
    products that are already available. Primarily, the board is
    focused on efforts to harmonize the availability and pricing of
    herbicides, fungicides, and insecticides to match those of our
    world competitors, most notably in Canada, our immediate
    neighbor to the north.
        The facts of North Dakota's agricultural economy and the
    variety of crops produced in the State will probably be
    addressed directly by Commissioner Roger Johnson. In summary,
    low-price commodities, higher input costs, and adverse long-
    term weather conditions leading to increased disease, weed, and
    insect pressure have challenged North Dakota farmers. These
    factors contribute to a poor profit outlook for producers.
    Costs are at a level where farmers simply cannot make a profit.
        Because of increased pest problems, coupled with high
    pesticide costs, the North Dakota Crop Protection Product
    Harmonization and Registration Board supports this and other
    legislation that can help make more crop protection products
    available to farmers at costs that are comparable to those paid
    by their world competitors. It is simply unfair that farmers,
    especially in a border State like North Dakota, are placed at a
    competitive disadvantage to other countries' farmers, both in
    terms of availability and price of pesticide products.
        Pesticide companies are able to charge higher prices in the
    United States because farmers are prohibited from purchasing
    the same products in Canada and importing those products to the
    United States. This bill seeks to provide the equivalent of
    joint labeling to effectively accomplish harmonization of
    pesticide products and their prices.
        By the way, Mr. Chairman, Canada has adopted laws that
    allow farmers to import their own pesticides. Why would the USA
    not have a similar provision?
        The Environmental Protection Agency here in the United
    States and its counterpart in Canada, the Pesticide Management
    Regulatory Agency, PMRA, have tried to address the issue of
    product availability in their respective countries. While the
    EPA and PMRA's progress regarding harmonization of new product
    registrations encourages us, the heart of the issue lies with
    existing product availability and pricing. While the pesticide
    companies often blame the regulatory agencies, it is often the
    manufacturers themselves who make registration timing
    decisions. The decision is impacted by expected return on
    investment and anticipated competition.
        This bill will effectively give the States the ability to
    co-label those products for the company, under the strict
    supervision of the EPA, if they are found to be essentially the
    same product. This simple mechanism will bring those products
    to market more quickly, to the benefit of the farmers and the
    manufacturers.
        North Dakota's legislature has worked to expedite the
    chemical harmonization process, including providing the
    Agriculture Commissioner with the authority to seek special
    emergency exemptions on products registered in both countries.
    The legislature has also shown how serious they feel this
    problem is by creating this special harmonization board and
    appropriating State funds for this purpose.
        American and Canadian growers produce virtually identical
    crops and are forced to compete with one another in the global
    market. Therefore, it is imperative that product availability
    and price stand on equal footing across borders. After all,
    Canadian wheat is allowed to move freely into the United States
    without any inspection to determine if it has been produced
    with chemicals that are banned in the USA.
        S. 532 will be an important step in eliminating the crop
    protection product trade disparities between our two countries.
    Free trade policies must be applied consistently. The
    legislation will prove to be a tremendous asset in the effort
    to standardize the prices paid for substantially identical
    pesticides on either side of our shared border.
        On behalf of the State of North Dakota and its Crop
    Protection Product Harmonization and Registration Board, I
    respectfully request your positive consideration of S. 532. It
    will provide the mechanism to level a competitive cost
    disadvantage facing American farmers. Thank you much for your
    attention.
        Senator Conrad. Thank you, Lieutenant Governor Dalrymple.
    Thank you very much for being here. Thank you for that
    excellent testimony.
        [The prepared statement of Mr. Dalrymple can be found in
    the appendix on page 57.]
        Senator Conrad. We will now hear from our Commissioner of
    Agriculture in North Dakota, Commissioner Johnson, who as many
    have said here today has made such a positive contribution
    here. I do not know of anybody who has more credibility on this
    question than Commissioner Johnson, right across the board, and
    I say that on behalf of members of this committee who have, on
    numerous occasions, recognized the important leadership that
    Commissioner Johnson has given, not only on this issue, but if
    I could take this opportunity to thank you for your leadership
    on the Farm bill. The members of this committee on many
    occasions said to me, thank you for the job Commissioner
    Johnson did in bringing together agriculture commissioners
    around a set of proposals. That made a meaningful difference
    here as we deliberated the Farm bill and I want to thank you
    for it.
        Commissioner Johnson.

              STATEMENT OF ROGER JOHNSON, COMMISSIONER OF
       AGRICULTURE, STATE OF NORTH DAKOTA, BISMARCK, NORTH DAKOTA

        Mr. R. Johnson. Thank you, Senator and Mr. Chairman. I,
    too, wish to thank you for the leadership you have taken. In
    particular, I want to thank you for holding this hearing and in
    being one of the cosponsors of this important piece of
    legislation.
        My testimony is very long, so I am just going to skip
    around and hit a few very quick high points and try to avoid
    repeating what has already been said.
        It is important for all of us to understand when we talk
    about pesticide harmonization that there are two fundamental
    things that come to play. One is access to product, in other
    words, is the same product available on both sides of the
    border, or another example of that is are new chemistries
    allowed to move into the countries simultaneously? That is the
    access issue. This bill does not deal with that.
        That is the harmonization question that a lot of us also
    want to work on, but this bill deals with the second part. That
    is pricing. It is where you have identical products or nearly
    identical products registered in both countries but priced
    differently because the law prevents producers or dealers, the
    network, from moving across the border and accessing those
    different price levels. This bill deals with pricing.
        A number of studies have been done to describe the nature
    of the disadvantage that we are faced with. The first
    attachment to my testimony is a study that was done at NDSU,
    concluding that about $24 million of extra costs are charged to
    North Dakota farmers alone by the use of this practice. If they
    had access to the Canadian prices, they would save $24 million.
        On page two of my testimony, I provide a table that we
    developed internally in the Department that comes very close to
    that number. It shows about $23.7 million and it lists
    pesticide by pesticide the price differences. You have already
    heard testimony about some of them.
        On the next page of my testimony, I provide the equivalent
    information, but a year earlier, to demonstrate that this has
    been an ongoing practice. The difference there was just over
    $32 million to our disadvantage.
        In many cases--in fact, the NDSU study said that in many
    cases, 10 percent of the net farm income of a farmer is
    comprised of pesticide costs and this issue is huge for many of
    the farmers that have substantial pesticide expenses. It is
    safe to say that for many of the products, a 40 or 50 percent
    increase in pesticide prices is what they pay as compared to
    the Canadian version of the identical product. For many of
    these producers, we are talking about bills that could range
    from $10,000 to $20,000 annually in differences that would be
    saved if this bill were adopted.
        There needs to be attention given to this. Specifically,
    that study also points out the impact to just hard red spring
    wheat producers in North Dakota. Their disadvantage that they
    face in the marketplace is almost $12 million alone, just for
    hard red spring wheat producers.
        On page four, I want to read a paragraph of my testimony
    because it is normally not our practice to talk about ongoing
    investigations, and what I am talking about, in fact, is one
    that is under investigation. Recent events in North Dakota
    illustrate the temptation these price differentials create for
    U.S. farmers struggling to remain economically viable. On June
    15 of this year, we were notified by representatives of Bayer
    Cropsciences that several North Dakota farmers were attempting
    to import and use Canadian Liberty, one of their products, a
    broad-spectrum herbicide. Six farmers were erroneously allowed
    to import the product by EPA Region 8 and U.S. Customs. They
    declared it at Customs and were allowed to bring it in.
        Our staff, working in consultation with EPA, stopped the
    importation because the information on the forms was incorrect
    and the product, in fact, was not registered by EPA. As such,
    it is illegal to bring the product across the border. We have
    tested this theory on numerous occasions, most recently 2 years
    ago with the importation of Achieve. In fact, we had a judge
    tell us you cannot do that.
        Our investigations determined that nine farmers attempted
    or succeeded to import approximately 8,000 gallons of Canadian
    Liberty. The price difference between the two products is $9.55
    an acre. If you are spraying this product on just 1,000 acres
    of canola, it is about a $10,000 savings. That is what drove
    these farmers to try to bring it in, and they thought what they
    were doing was legal.
        This issue needs to be addressed. As the Lieutenant
    Governor indicated, the legislature has weighed in on this
    issue. All of the ag commissioners have weighed in on this
    issue. All of the border State ag commissioners have weighed in
    on this issue. Even the ag ministers from Canada support this
    legislation, if you can believe that. In the last three
    international accord meetings that we have conducted, they have
    agreed with us on that issue.
        As has already been said, this bill does not compromise the
    environment or food safety, public health, in any fashion. That
    is principally EPA's concern and this bill is crafted to
    address those concerns and they have been addressed.
        Finally, I want to make a point about who ought to be
    importing if this bill passes, because there are a lot of
    misconceptions about this. The way the bill is crafted, it is
    likely that the folks who would import pesticides using this
    authority would, in fact, be the distributors in the dealer
    network. It would not be individual producers, and that is as
    it ought to be. Producers should not be required to drive to
    Canada to buy chemicals to treat their products any more than--
    well, I do not want to get into the drug issue, but it seems
    very similar. The bill has been crafted to safeguard the
    environment and to allow for the distribution channels to
    access the lower price at the distribution level and that is
    the way it would, in fact, play out.
        Mr. Chairman, when you get to the question and answer
    session, I am particularly interested in responding to the
    three questions that Senator Roberts raised, as well. Thank
    you.
        Senator Conrad. We welcome that.
        [The prepared statement of Mr. R. Johnson can be found in
    the appendix on page 60.]
        Senator Conrad. Let me just say, when we get to the
    question period, I have often found it more useful to have
    those who are part of a panel be able to respond to other
    members on the panel. We are not going to engage in some rigid
    hierarchy here. I have often found the most useful exchanges
    come when the most knowledgeable people are able to discuss
    among themselves evaluations of the positions that are being
    taken. Do not feel that you are restricted to answering my
    questions. If there is something somebody else says you want to
    comment on or you want to discuss, feel free to ask to be
    recognized for that purpose.
        Mr. Bushue, welcome very much. It is good to have you here.
    I noticed that you are from the town of Boring, Oregon. I do
    not know how a town came to be named Boring, but----
        Mr. Bushue. It is.
        [Laughter.]
        Senator Conrad. Well, maybe that explains it. Welcome. It
    is good to have you here, and please proceed.

       STATEMENT OF BARRY BUSHUE, PRESIDENT, OREGON FARM BUREAU
      FEDERATION, BORING, OREGON, ON BEHALF OF THE AMERICAN FARM
                           BUREAU FEDERATION

        Mr. Bushue. Thank you. As a word of explanation, it is
    named after the name of the century farm who donated the
    original land for the original school in what was a rural
    community and has now become a very small rural town.
        Senator Conrad. It is a family name.
        Mr. Bushue. Yes. Still, the Boring Farm still exists.
        Good afternoon, Chairman, and unfortunately, not any other
    committee members. I am Barry Bushue, a farmer from Boring,
    Oregon, where I operate a family nursery stock and berry
    operation. I am also the President of the Oregon Farm Bureau
    Federation and a member of the Board of Directors of the
    American Farm Bureau Federation. I am testifying today on
    behalf of the American Farm Bureau Federation.
        Farm Bureau is the nation's largest farmer and rancher
    organization, with over 5.1 million member families in all 50
    States and Puerto Rico. As you know, Mr. Chairman, farmers and
    ranchers in all 50 States have been facing some rather hard
    times these past few years. These difficult times have forced
    us, those of us in production agriculture, to take a closer
    look at our bottom line and attempt to do whatever we can to
    reduce any unneeded costs and hopefully realize a profit, or if
    we are lucky, maybe even break even.
        This has been hard to achieve in recent years. This
    examination has exposed a number of increasing costs that
    farmers are now voicing concern about and attempting to
    mitigate. Such expenditures include ever-increasing
    environmental regulation costs, labor costs, energy costs, and
    agricultural chemical costs, which is what we want to focus on
    today.
        Let me begin by saying that American Farm Bureau strongly
    supports S. 532, the Pesticide Harmonization Act sponsored by
    Senator Dorgan. This legislation will allow farmers,
    cooperatives, and farm supply stores access to lower-priced
    Canadian agricultural chemicals that are identical or
    substantially similar to those sold in the United States.
        The high cost of some pesticides in the U.S. is
    contributing to the current farm crisis by inflating
    agricultural producer input costs. Producers in other nations,
    such as Canada, use pesticides substantially similar in content
    to those used in the United States, but the foreign products
    are often less expensive. Under current law, U.S. producers
    cannot import these pesticides from other nations.
        We farm in a global market. Our competitors are not just
    down the road, but around the world. To remain competitive and
    hopefully profitable, we must constantly search for ways to
    reduce our production costs. From the producers' point of view,
    there is a price disparity amongst some agricultural chemicals
    in the U.S. and Canada that impedes our competitiveness and
    profitability. We believe that this legislation will work to
    remove that disparity.
        Under the Pesticide Harmonization Act, States could
    petition the Environmental Protection Agency to issue pesticide
    labels that could be placed on Canadian products when the only
    significant difference between the two is the price. The U.S.
    product label would allow our farmers to buy the Canadian
    pesticide for use on their farms in the United States.
        Farm Bureau believes this legislation is a significant step
    toward achieving the goals of gaining access to affordable and
    needed products for U.S. farmers while at the same time
    maintaining U.S. standards designed to protect consumers,
    farmers, and the environment. Farmers in this country need a
    level playing field to compete with foreign growers, and having
    equal access to less expensive crop protection materials will
    improve the competitive position of United States producers.
        Studies have been conducted on cost differences by USDA and
    others, and the results demonstrate that similar compounds used
    on both sides of the border can be priced differently.
    Sometimes, these price differences are significant. Senator
    Dorgan has stated that recent surveys have found that U.S.
    farmers can pay as much as 117 to 193 percent more than farmers
    in Canada for virtually the same product.
        A USDA study puts this in perspective by stating that
    although pesticide expenditures are not high for the study
    crops in the Canadian-U.S. prairie area compared with some
    crops in areas, they are relatively high compared with per-acre
    profits. A few dollars of extra cost can make a significant
    difference between a profitable and an unprofitable year.
        The American Farm Bureau and the Canadian wheat pools have
    sponsored producer meetings for the last 3 years. This effort
    has resulted in forming the Canada-U.S. Producer Consultative
    Committee on Grain. These exchanges have resulted in the
    identification of issues that are important to grain producers
    in Canada and the United States. We reached consensus that
    harmonization of pesticide registration and labeling was
    desirable. If we can solve this trade or border irritant,
    perhaps we can solve some other issues.
        I applaud EPA's efforts to work with our international
    trading partners to promote consistency in the various
    regulatory and scientific requirements regarding pesticides,
    such as the work being conducted with the Technical Working
    Group for Pesticides under NAFTA. However, while the
    administration's actions are helpful, they have not resolved
    the issue.
        Farm Bureau does understand that because pesticides must be
    registered in the U.S. before they can be sold and distributed,
    there are certain limits on EPA's involvement. EPA must
    continue to work within current authorities to find solutions.
        We were pleased to hear the statement of EPA Assistant
    Administrator Steve Johnson during his confirmation hearing
    regarding the need for legislation to address this problem, and
    I quote, ``I believe that legislation is needed because there
    does not appear to be adequate administrative or regulatory
    solutions.''
        Thank you, Mr. Chairman, for the opportunity to comment,
    and I will be happy to address any questions you may have for
    me and the rest of the panelists, if any.
        Senator Conrad. Thank you for that.
        [The prepared statement of Mr. Bushue can be found in the
    appendix on page 97.]
        Senator Conrad. I would ask those who are in the audience,
    if you have pagers or cell phones, that those be disconnected
    during the pendency of the hearing. That is a Senate rule and
    all chairmen are encouraged, indeed, required to enforce that
    rule.
        Mr. Frederickson, welcome.

      STATEMENT OF DAVID J. FREDERICKSON, NATIONAL FARMERS UNION,
                             WASHINGTON, DC

        Mr. Frederickson. Thank you, Mr. Chairman. I am Dave
    Frederickson, President of the National Farmers Union. However,
    for the purposes of you and this committee, I am also an FORJ,
    Friend of Roger Johnson.
        [Laughter.]
        Mr. Frederickson. On behalf of our members, members of the
    National Farmers Union, farmers and ranchers across this
    country, it is an honor to appear before you today to discuss
    S. 532, the Pesticide Harmonization bill, and the effect of our
    current pesticide regulation that allows differential pricing
    between the U.S. and Canadian agricultural markets.
        Mr. Chairman, before I summarize our written testimony, I
    would request that, on behalf of the North Dakota Farmers
    Union, that their statement, which I believe you have and a
    letter addressed to you from North Dakota Farmers Union, signed
    by their President, Robert Carlson, be included as part of the
    hearing record.
        Senator Conrad. Without objection, that will be the order.
        Mr. Frederickson. Thank you.
        [The prepared statement of Mr. Carlson can be found in the
    appendix on page 101.]
        Mr. Frederickson. Also, Senator Conrad, we commend you for
    convening the hearing and for joining with your colleagues,
    Senators Burns and Baucus, Daschle, Dorgan, and Johnson, in
    sponsoring S. 532.
        The key element that has disadvantaged U.S. producers
    relative to our Canadian neighbors is the impact of U.S.
    regulations that effectively curtails competition in the retail
    pesticide markets between the U.S. and Canada. Our trade
    agreements and domestic regulations have resulted in a
    hypocrisy that reduces the competitiveness and potential
    profitability of U.S. producers. The hypocrisy, Senator, is
    this. The U.S. allows the importation of food products from
    other countries that are produced with pesticides that are not
    registered in the U.S. at the same time our farmers are
    prohibited from purchasing crop protection products in Canada
    that are substantially similar or identical to products that
    are registered for use in this country.
        The economic impact of these regulations on American
    producers can and is significant. Last year, National Farmers
    Union developed a comparison of the per acre costs for a
    variety of registered pesticides for the wheat and barley crops
    typically produced in both the U.S. and Canada. For a typical
    1,500-acre wheat farm located near the border, the price
    differentials between the U.S. and Canadian pesticide markets
    resulted in a farm chemical bill that is about $13,400 per year
    greater for the U.S. producers than his or her Canadian
    counterpart for the same products.
        That is substantial and that is significant, particularly
    in the down market that we are experiencing. This represents 12
    to 15 percent of the typical farm's total gross crop income,
    assuming average yields and current market prices, and conveys
    a significant competitive advantage to our Canadian competitors
    in both U.S. and global markets.
        We believe the purpose of FIFRA is to utilize the best
    available science in ensuring the safety of consumer food
    products treated with pesticides, as well as ensure their safe
    and effective use by producers and farm workers. We do not
    believe it was the intent of Congress to provide a shield for
    the manufacturers and marketers of crop protection products to
    allow and encourage price gouging of their farmer customers.
    Unfortunately, that is the experience we confront under current
    U.S. regulations.
        The National Farmers Union is certainly not seeking to
    reduce the level of regulation or oversight provided by EPA to
    ensure the safety of agricultural pesticides. In fact, we
    support a more globally harmonized system of safety regulations
    based on scientific principles and risk assessment for those
    products that reflects the U.S. system. This legislation does
    not weaken that objective or its enforcement. It simply
    provides U.S. producers access to a more competitive pricing
    system through a State registration system of Canadian products
    that are the same or comparable to those that have already been
    approved for use in the U.S.
        We support this legislation because it helps achieve fair
    market conditions and increased competition between the U.S.
    and Canada by reducing the potential for differential pricing
    by pesticide manufacturers.
        Mr. Chairman, I appreciate the opportunity to appear before
    your subcommittee today and offer the support of the National
    Farmers Union for the Pesticide Harmonization legislation you
    and many of your colleagues have introduced. We certainly look
    forward to working with you to achieve passage of this
    important bill, and I particularly appreciate the opportunity
    to sit shoulder-to-shoulder with my colleagues from the
    American Farm Bureau Federation in support of this issue. Thank
    you very much.
        Senator Conrad. Thank you. I appreciate that testimony very
    much and I appreciate your willingness to participate in the
    hearing today.
        [The prepared statement of Mr. Frederickson can be found in
    the appendix on page 102.]
        Senator Conrad. Let me indicate for the record, if I can,
    the number of cosponsors now, because it has grown. Senator
    Dorgan is, of course, the lead sponsor. The lead cosponsor is
    Senator Burns of Montana, joined by Senators Baucus, Cleland,
    Clinton, Conrad, Crapo, Daschle, Dayton, Johnson, and Levin. I
    would say that support for this bill is growing, and I have
    talked to a number of other Senators today who have signaled to
    me an interest in joining in this legislation as soon as their
    aides have had a chance to study it so that they understand its
    full implications.
        Mr. Vroom, welcome. It is good to have you here. Thank you
    very much, and please proceed with your testimony.

         STATEMENT OF JAY VROOM, PRESIDENT, CROPLIFE AMERICA,
                             WASHINGTON, DC

        Mr. Vroom. Thank you, Mr. Chairman. It is a pleasure to be
    here. I also want to thank you for holding this hearing and
    allowing me to represent my industry as part of this esteemed
    panel of witnesses.
        I am Jay Vroom, President of CropLife America Association,
    formerly, the American Crop Protection Association. Our
    association represents about 80 companies that are engaged in
    most of the pesticide manufacturing, formulation, discovery,
    distribution, as well as the leading companies in crop
    biotechnology in the United States and, around the world. Our
    business is, a global business and it is a shrinking business,
    shrinking in part because of the fact that our farm markets and
    the agriculture economies of agriculture here and around the
    world have been put on a diet, as we all know.
        Just as an aside, I would like to mention that I am an
    Illinois farm boy, and I still own my family farm. I inherited
    that ground from my parents, who are deceased and my cousin
    still operates that farm. My wife grew up on a family farm
    about 40 miles away in a different county in Illinois. My
    brothers-in-law farm that ground and we own part of that
    operation. I get to pay for pesticides, fertilizers, other
    inputs and the Federal Land Bank mortgage note every year. I am
    personally acquainted with the challenges that are involved
    with the economies of farming today and I do not dismiss in any
    way, either as the executive officially representing my
    industry association here today or from my personal experience,
    any of what these witnesses have said already about the
    challenges of the farm economy today.
        I would also like to observe that the American farmer is
    the best customer that my industry has in the world. With all
    due respect to some of the comments that were made, perhaps ad
    lib, earlier in the hearing by Senator Dorgan and Congressman
    Pomeroy, I have been in this job for 14 years. I have been all
    over the world, including across the United States and Canada
    with representatives of my industry and I have never in 14
    years witnessed anyone practicing marketing procedures or
    regulatory processes that are intended to gouge the American
    farmer.
        We just finished a meeting of my board of directors and
    Roger was kind enough to have breakfast with us this morning
    and enter an open dialog with the leaders of my industry about
    this issue. There may be a problem with regard to the
    differentials that do exist. I would point out that there are a
    lot of products that are also cheaper in the United States than
    they are in Canada or in other markets.
        Because of the visibility that this issue has and the
    examples that have been cited, including those that have been
    studied in North Dakota and the USDA survey and others, we
    believe that it is inevitable that legislation will move and we
    would like to be a part of that process. We have some
    constructive ideas to suggest which we discussed with
    Commissioner Johnson this morning at our meeting. We are
    prepared to offer some of those ideas to your staff and with
    Senator Dorgan's staff and others and hope to be part of the
    process of finding something that we can live with as we go
    forward.
        It is truly unfair and unfortunate that the American farmer
    has this disparity of having Canadian grain, flooding into the
    United States when inputs, pesticides in particular, are not
    regulated, equally.
        As an industry, we are regulated in two separate
    marketplaces by two sovereign governments and that is an
    absolute fact. We agree that there has been substantial
    progress in the NAFTA harmonization process. Steve Johnson's
    testimony from EPA did speak to the fact that industry and the
    governments in the United States and Canada have made
    significant progress in harmonizing the testing protocols and
    some of the other processes.
        What has come up short in terms of harmonization is
    implementing the harmonization process, actually getting
    simultaneous reviews and mutual acceptance of reviews between
    the two governments in the United States and Canada. It has not
    progressed as quietly as should have. One of the things we
    would like you to consider and Senator Dorgan to consider would
    be more hard deadlines and requirements for PMRA and EPA to
    that industry implement some of these harmonization steps so
    and the American farmers can enjoy the benefits long-term.
        Short-term, you are planning to take some legislative steps
    to relieve the pricing differential perception that exists, and
    we believe that is a reality. Keeping EPA more closely in
    charge of that short-term regulatory process than S. 532 would
    provide is appropriate. We hope you will consider some
    suggestions specific to Section 24 of FIFRA, to expand, the
    special local need supplemental label provisions that are
    already there, precedent already established. It would be
    fairly easy to expand the definition of a special local need to
    include these trade irritant issues around pesticide pricing
    through petitions by State governments to EPA, and to mandate
    quick action.
        We thank you once again for the opportunity to be here and
    to acknowledge that this is a real problem, both in perception
    and reality. We stand ready to work with you to find a solution
    that we can live with as an industry that will continue to
    provide incentives for long-term harmonization that we think is
    so vital. It is a huge frustration for us right now. Once we
    get past this issue, hopefully it will look only like a speed
    bump. We want to be a part of the long-term solution and
    continue to bring new, innovative products in both pesticides
    and biotechnology to American farmers to help keep them the
    most important producers and viable producers in the world.
    Thank you very much.
        Senator Conrad. Thank you, Mr. Vroom. Thank you for your
    very constructive testimony. I want to make clear that all of
    us view your industry as a responsible industry and one that
    has served American farmers well and served really world
    agriculture well. We know it is a very difficult time for the
    industry because of the economics of agriculture. It is a
    difficult time because of a number of these irritants to the
    relationship between all those who are players in the market,
    and we want to acknowledge that. We look forward very much to
    working with you to try and resolve these places where there
    are differences so that we can have even broader support for
    the bill. I thank you for that testimony.
        [The prepared statement of Mr. Vroom can be found in the
    appendix on page 106.]
        Senator Conrad. Let me just go through the witnesses and
    ask the question that I have asked the other witnesses, and
    that is do you support the enactment of S. 532 as proposed or
    with amendments, and if amendments are required for your
    support, what would those amendments entail? I would start with
    you, Lieutenant Governor Dalrymple.
        Mr. Dalrymple. Chairman Conrad, the North Dakota
    Harmonization Board would support S. 532 exactly as it is. We
    have reviewed the legislation. We feel that it is sound, it is
    a result of a lot of background work that has already been
    done.
        The only thing I would add to that is that we, like
    everyone at this table, would like to see a good law that will
    work well when implemented. The implementation will be
    challenging, and any ideas that come forward that would make
    the law work better, we would certainly support.
        Senator Conrad. Can you tell us if the National Governors
    Association or Lieutenant Governors Association have endorsed
    this bill or if there are any plans to get their endorsement?
        Mr. Dalrymple. Chairman Conrad, there has not been an
    official endorsement of it that I know of. As you know, this is
    sort of a--it is quite a formal process of submitting the
    resolution well in advance, building support, and gaining the
    support and that type of thing. If that is something that you
    think would be helpful, we would be happy to expend more energy
    and spend time in getting that done.
        Senator Conrad. I do think it would be useful. I can tell
    you that I do not have the concern so much for the committee. I
    do have a greater concern when we get to the floor. Any
    additional endorsements that would come from the Governors,
    Lieutenant Governors, would be very useful.
        Commissioner Johnson, the same question I would pose to
    you. Do you support the enactment of S. 532 as proposed or
    would it require amendments for you to support it, and if so,
    what would those amendments be?
        Mr. R. Johnson. Mr. Chairman, I support it just the way it
    is. I agree with what the Lieutenant Governor said. If folks
    want to offer amendments, I certainly think we would look at
    them. There was a lot of work that went into crafting this
    language.
        I do want to make it clear that we worked very closely with
    EPA to make sure that they would not be saying, we cannot
    support this bill, and that is sort of a litmus test that needs
    to be met, because if the administration support drops off or
    if, in fact, it turns to opposition, it seems to me that would
    be a real problem. I certainly support it as it is drafted.
        Senator Conrad. You did make in your testimony, and I want
    to acknowledge for the record, a number of recommendations on
    technical changes to the bill. We have asked the staff to
    explore those proposals----
        Mr. R. Johnson. Yes.
        Senator Conrad [continuing]. Make a judgment on each of
    those. In looking at them, they look to me to be reasonable and
    common sense----
        Mr. R. Johnson. Yes.
        Senator Conrad [continuing]. Implementation issues to make
    it a bill that is more easily administered, if you will, and we
    are taking a close look at those proposals.
        Mr. R. Johnson. I would call them just technical
    corrections, just to clarify intent and so forth.
        Senator Conrad. I appreciate that.
        Mr. Bushue, if I can ask you, do you support this bill as
    proposed or would it require amendments to garner your support,
    or are there amendments that you would urge us to consider?
        Mr. Bushue. Certainly, American Farm Bureau Federation
    supports the bill as proposed and we will continue to do so.
    However, we would be remiss in at not least looking at an
    opportunity to look at other amendments which may make the bill
    more workable and perhaps more passable and help our friends in
    the agricultural chemical industry. I certainly have to address
    the fact that they do have some confidentiality issues and some
    liability issues that perhaps some of the amendments that Mr.
    Vroom brought up would be opportunistic. We like the bill the
    way it is and we will work with you however you wish to
    proceed.
        Senator Conrad. Thank you very much.
        Mr. Frederickson, same question, if I can, to you.
        Mr. Frederickson. Mr. Chairman, generally speaking, the
    same answers. Our organization, the National Farmers Union,
    together with many of the border State organizations, North
    Dakota, Minnesota, Montana, and on across, have time after
    time, year after year, submitted resolutions both to the local,
    the State, and the national organization in support of this
    effort, and so we have read and examined the legislation and my
    compliments, Commissioner, for your hard work. We support the
    legislation as drafted and certainly reserve the right to have
    an opinion on various amendments that may be forthcoming. At
    this point in time, Mr. Chairman, we like it the way it is.
        Senator Conrad. All right. Thank you very much.
        Mr. Vroom, what would your response be to that set of
    questions with respect to support for the bill as proposed or
    amendments that you would consider necessary?
        Mr. Vroom. Mr. Chairman, we would be willing to consider
    support for the legislation with amendments in six key areas,
    some of which actually collapse together, but if I may just
    elaborate on those quickly.
        No. 1, to address the protection of business data
    confidentiality.
        No. 2, to provide a liability waiver should import
    supplemental label regulations for imported Canadian products
    be granted over the objection of the registrant and that
    registrant could submit to EPA a rationale for why they believe
    that the particular label would create either personal injury
    or product, crop damage, liability potentials, that there could
    be some mechanism there for that process to be allowed for,
    liability waiver.
        We would like to see EPA, instead of on the back end of the
    process, on the front end of the process the way I had
    described in my oral remarks, an amendment perhaps to Section
    24 of FIFRA to enable----
        Senator Conrad. Is this still No. 3?
        Mr. Vroom. Yes, that is No. 3.
        Senator Conrad. OK.
        Mr. Vroom [continuing]. Border States to petition for
    special local needs supplemental labels.
        No. 4, we prefer to see this restricted to farmers and
    their neighbors being able to bring product through Customs for
    their own use and not extend it to the commercial trade. I
    would cite, for example, in the 2002 Farm bill, there are
    amendments that mandate that Congress asks that EPA study the
    impact of electronic commerce on the trade of pesticides within
    the United States, and that speaks to the fact that there are
    already a lot of disruptions going on within our marketplace
    and we believe that a farmer-owned use provision would mirror
    the type of mechanism that already exists in Canada coming the
    other direction, would harmonize that way and provide a little
    more stability to our marketplace.
        No. 5, we would like to ask you to consider including an
    amendment that would direct the USDA and Ag and Agri-Food
    Canada, their counterpart agency in Canada, to update the study
    they did a few years ago on the situation--Under Secretary
    Hawks referred to that earlier in his testimony--with
    particular attention to how, over a couple of years' period of
    time, if such amendments that I am suggesting were implemented,
    what impact was being achieved or not.
        Then No. 6, a hard deadline on EPA to mandate that they and
    PMRA walk this talk in implementation of the harmonization of
    the standards.
        That may sound like a long list, but we have already
    drafted some legislative language amendment ideas along those
    lines and could be quickly prepared to sit down and work with
    your staff on seeing if we could iron those out.
        Senator Conrad. I would ask you if you could work quickly
    to submit any language that you have in each of these six
    areas.
        Let me, if I could, turn to Commissioner Johnson. I do not
    know what the subject was of your breakfast meeting, whether or
    not you have heard these six areas before, whether you have had
    a chance to think about them or react to any or all of them,
    but I would want to give you that opportunity. Then any other
    member of the panel, if you feel there is something you want to
    comment on, do not hesitate to just raise your hand and we will
    call on you. We do not have to be overly formal here.
    Commissioner Johnson.
        Mr. R. Johnson. Thank you, Mr. Chairman. Let me respond to
    each of these and preface it by saying, as I told Mr. Vroom and
    his board of directors this morning, that all of us in
    agriculture absolutely depend upon their industry. You
    acknowledged that, and I want to second that. If there is a way
    that we can come to agreement on acceptable amendments, we
    certainly ought to do it. The goal is to equalize the price to
    create a level playing field, and as long as we can accommodate
    that, that is what we are after.
        First of all, the issue of confidentiality, I certainly
    think that no State should be allowed to use this provision
    unless they can guarantee that confidential information remains
    confidential. That is a reasonable request. The bill prescribes
    some way for that to happen, and if a State cannot meet the
    prescription that is outlined in the bill, then, frankly, they
    should not receive the confidential business information. If
    they need to change a law in a State, they ought to change the
    law. I mean, that ought to be a condition. I certainly concur
    with them on that point.
        Senator Conrad. Let me stop you on that point, if I can,
    because I want the record to be complete. Are you familiar with
    impediments to that position with respect to the States of
    Washington and Oregon? Have you heard this before?
        Mr. R. Johnson. No, I have not. We have looked at it in
    North Dakota. It was actually Washington and Vermont, were the
    States that were mentioned.
        Senator Conrad. Yes. I want to stand corrected, Washington
    and Vermont.
        Mr. R. Johnson. I am not familiar with those, but I am
    familiar with open meetings and open records laws. We have them
    in North Dakota, but we also have, and perhaps the Lieutenant
    Governor can better address this because he has been in the
    legislature for a long, long while, but we have the ability to
    receive confidential business information and maintain its
    confidentiality, and we would demonstrate that to EPA and the
    industry's satisfaction that that would happen.
        With respect to the liability waiver, the way the bill is
    crafted, whoever played a role in doing whatever, they would be
    liable for the role that they played, and that is sort of a
    standard practice, as I understand, that applies across many
    industries. If there is specific language, we would certainly
    be willing to look at it, but we crafted it with sort of the
    standard language----
        Senator Conrad. That is correct.
        Mr. R. Johnson.--that is used not just in agriculture, but
    across much of the economy.
        The third issue, the special local needs registration and
    using supplemental labels, in fact, as we crafted the bill, we
    talked about creating--a special local need is actually what is
    referred to in the trade as a 24(c) registration. That is a
    State registration instead of an EPA registration and there are
    certain requirements that need to be met and we routinely issue
    those, as do other States.
        We crafted this bill, following that model. In fact, I do
    not recall whether the final version had this, but we talked
    about creating a new section of the law that would be created
    24(d). I mean, it was intended to follow that sort of
    procedure.
        Senator Conrad. That is something we should be able to work
    out?
        Mr. R. Johnson. I would certainly think so. It was intended
    that way.
        Senator Conrad. Let us go to No. 4.
        Mr. R. Johnson. No. 4, restricting access to individual
    farmers, we spent a lot of time dealing with this issue, and
    frankly, this was, I know, one of the questions that Senator
    Roberts posed. It would be a mistake to restrict it to
    individual farmers. I do not think EPA will support that. There
    are lots of integrity questions that arise. There are lots of
    procedural problems that arise.
        Senator Conrad. Integrity--maybe we could just be specific.
    Integrity, not with respect to the product.
        Mr. R. Johnson. With respect to the process. The problem
    you have if you have individuals accessing it is who is going
    to prove what is where? Who is going to prove that the Canadian
    product is identical to the U.S. product? There has to be
    somebody that can make that judgment. In fact, judgment is the
    wrong term, that absolute determination.
        Currently, it is EPA. Currently, they have the confidential
    statement of formula and the bill is designed such that that
    formula would remain confidential. If we start opening it up
    just to individual farmers, you raise lots of questions about
    how do you prove that the product is the same as the one we
    have here? That is the fundamental issue that we had with
    Achieve. That is the issue that presents itself with Liberty.
    Unless you have the confidential information, you cannot make
    that proof.
        Senator Conrad. Let me just stop there and say to Mr.
    Vroom, I detected that you wanted to say something on that
    point.
        Mr. Vroom. I am not sure we were talking about the same
    thing. In the concept that I was trying to describe in terms of
    farmer-owned use, that would be the mechanism by which
    individuals who could actually bring, using the supplemental
    label that EPA would have already drafted and established for
    trade irritant designation, the mechanism is only farmers would
    be able to cross Customs using that supplemental label, as
    opposed to any commercial enterprise----
        Senator Conrad. Distributors?
        Mr. Vroom [continuing]. Distributors, dealers. Again, that
    is the mechanism that the Canadian government had put in place
    some years ago----
        Senator Conrad. Their own use.
        Mr. Vroom. There is some industry experience with regard to
    that impact in the marketplace on either side of the border for
    the Canadian----
        Senator Conrad. This is clearly an area where we have a
    problem.
        Mr. Vroom. Yes.
        Mr. R. Johnson. Yes.
        Senator Conrad. As I hear it, one through three of what you
    raised, Jay, are things we can work out. We have a problem on
    No. 4.
        Mr. R. Johnson. If I can add to that, the real problem you
    would have here is not just what I have described, but it is
    what would be the impact on the dealer network in border
    States. If individuals were forced to drive to Canada to buy
    their pesticides, what would that do to the local pesticide
    dealer, to the local co-op, to that whole regulatory system,
    the whole farm supply system, I should say, that we have?
        Senator Conrad. Just the efficiency of it is----
        Mr. R. Johnson. Absolutely. I mean, why would you want
    someone from South Dakota to have to drive all the way through
    North Dakota to go to Canada to buy a product when if you could
    make it accessible through the dealer network, it would be much
    more efficient. That----
        Senator Conrad. Let us go to No. 5, if we could.
        Mr. R. Johnson. As I heard No. 5, it was to direct USDA and
    Canada Agri-Food to do another study and to sort of----
        Senator Conrad. Update their study, as I heard.
        Mr. R. Johnson. I do not have an issue with that. I do not
    know that that would need to be in the bill. We could just ask
    USDA and Agri-Food Canada to do it and they would probably do
    it.
        Senator Conrad. We might be able to do report language or
    something like that.
        Mr. R. Johnson. Sure, and your conversation earlier is
    evidence of that. I suspect USDA heard what you said.
        Senator Conrad. Let us go to No. 6, if we could, on the
    hard deadline on the implementation. This is with respect to
    EPA's deadlines.
        Mr. R. Johnson. You know, frankly, I agree with the
    industry on this issue. I am not just exactly sure how we do
    it. In my opening remarks, I describe sort of harmonization as
    being this two-step thing. It is access to products and it is
    pricing. This is about access, and frankly, the bill does not
    deal with it. If we can figure out a way to have the bill deal
    with it, I would certainly be open to that.
        Senator Conrad. Can I just raise this point with respect to
    No. 6. We have a very hard time making that part of this bill,
    and I say that because we get into all kinds of jurisdictional
    issues as soon as we cross that line. We are immediately over
    into Environment and Public Works Committee jurisdiction. I
    mean, that is the way they will see it. That creates lots of
    problems.
        I agree with you, Roger. I agree with the industry on this.
    They have a very reasonable concern and complaint here and we
    need to find a way to address it. I have real reservations
    about this bill being the place because I know what it would
    lead to. We would immediately be into a referral question with
    respect to jurisdiction and EPW has, if you go to the backlog
    of what they are dealing with in terms of the issues that are
    before them, including the whole matter of highway funding this
    year, a highway bill, and their four pollutants legislation,
    and so forth, that is a problem.
        The industry has a very legitimate concern here and I am
    struggling in my own mind at the moment as to how we address
    it. Jay.
        Mr. Vroom. Mr. Chairman, I do think that there are sections
    in FIFRA, and unfortunately, among the things I have here at
    the table with me is not my copy of FIFRA, but there are
    sections that deal with harmonization and international
    movement of pesticides. Certainly, I am not interested in
    having to go over to that other committee you mentioned, so----
        [Laughter.]
        Mr. Vroom. That was not my intent. We can stay----
        Senator Conrad. I did not think it would be.
        [Laughter.]
        Senator Conrad. All of us would be much happier if we did
    not go through that.
        Mr. Vroom. I will retreat from that if that is proven to be
    the case, but I actually do think that this amendment that we
    have in mind could be clearly deemed to be a FIFRA amendment in
    the jurisdiction of the Agriculture Committees.
        Senator Conrad. Let me say this to you. We get into a whole
    series of issues. I did not go down my whole list, but I can
    tell you, this gets to be a resource question at EPA in terms
    of prioritization of the use of resources. It gets to be an
    Appropriations Committee question. I can just tell you, the way
    this place works, we get drawn into a swamp of the
    Appropriation Subcommittee, the EPW Committee, this committee's
    jurisdiction, and a mud wrestling match with respect to an
    amendment like this on this particular bill.
        I am not sure, I just raise these red flags for the purpose
    of being very direct with everybody on that particular
    amendment. You have a very good case. There is no question in
    my mind. We have had many meetings in my office--Roger Johnson
    has been at some of them--with EPA for years and we go around
    and around and around and all these things are going to happen
    and some of them do, but a lot of them do not, and these
    deadlines are set up and I do not know, their idea of a
    deadline, some of these people, is a lot different than my idea
    of a deadline.
        Those of us who were brought up in the Midwest, it really
    means something to us. If somebody says, be someplace at 10,
    our understanding is that you are there at 10. That is not the
    culture of this institution, I can tell you that.
        [Laughter.]
        Senator Conrad. I am still 20 minutes early for almost
    every meeting. You would think I would figure it out by now.
        [Laughter.]
        Senator Conrad. You know what I am saying. It applies to
    these deadlines. I mean, a lot of them, they just--I do not
    know, they think that is advisory or something. It is not
    compulsory, it is like, well, if you get it done by then,
    great, but it does not really matter, and that is impossible
    for an industry to function under that kind of regime.
        Mr. Vroom.
        Mr. Vroom. The resource question is also eminent with
    regard to the pesticides program at EPA because we have
    statutory authorities that expire the end of September and we
    had, thanks to Chairman Harkin, a very good comprehensive
    solution in the Senate version of the Farm bill, which
    unfortunately got kicked out at the very end on the weekend
    before you finished the Farm bill in conference.
        Senator Conrad. I was there.
        Mr. Vroom. It was there, but Senator Harkin's staff, in
    fact, called us again today, so I guess that Senator Mikulski
    is planning to mark up VA, HUD, and Independent Agencies next
    week and there may be an opportunity to do something there in
    this broad context.
        To the point of resources to do more of the harmonization
    implementation or walk, frankly, I believe the case could be
    made that it could result in less work for the U.S. regulatory
    agencies and the Canadian agencies if they were actually
    implementing mutual acceptance of reviews because then only one
    of them would do this and they would trust the other one to
    have done the job. It begs the question.
        Senator Conrad. I will tell you something, sign me up. Sign
    me up. This has been a matter of I do not know how many hours
    of meetings in a meeting room in my office. I can remember at
    least three lengthy, detailed meetings in which we discussed
    that very matter. We trust the Canadians to guard our northern
    border with fighter aircraft. That is the way it works. The
    protection of the northern border of the United States, do you
    know whose responsibility it is? It is the responsibility of
    the Canadian Air Force. We trust them to protect our northern
    border. We cannot trust them to evaluate these kinds of
    applications on a similar basis and work-up? Come on, I mean,
    this is not that tough.
        The fact is, much of their procedure and approach is the
    same as ours. Somehow, we have a turf battle. Let us just say
    it the way it is. It is a turf battle, and that has to get
    resolved. It is in the interest of everybody to do it. I hope
    that message goes back out of this meeting, that we have had
    enough meetings. For God's sake, let us get the job done.
        Mr. Bushue.
        Mr. Bushue. Chairman Conrad, I would appreciate it if I
    could be excused. You mentioned deadlines.
        Senator Conrad. Yes, sir.
        Mr. Bushue. I have a flight to catch.
        [Laughter.]
        Senator Conrad. I would say to Mr. Bushue and other members
    of the panel, we indicated that we would finish by 4 and that
    is our intention. We understand you need to leave for a plane.
    You are excused, and I would say to the other members, we have
    about completed. Certainly, you take your leave so that you do
    not miss your flight.
        Mr. Bushue. Thank you, Mr. Chairman.
        Senator Conrad. We appreciate very much your appreciation
    here today.
        If there are any last thoughts or observations, we would
    entertain those at this time. Lieutenant Governor Dalrymple.
        Mr. Dalrymple. Mr. Chairman, I also have a flight, but I
    also have one last comment. Thank you.
        I just wanted to point out that I did meet about a year ago
    now this summer with some of the leaders, also, of the Crop
    Protection Product Association and some of these ideas or
    concerns, I guess you could say they had, were mentioned then,
    protection of business data, liability waiver, farmer own-use
    importation, and I asked them at that time if they would
    produce for me some suggested language or a suggested amendment
    to cover some of these issues.
        I guess what I am reporting to you is that a year later, I
    am still waiting for that to come to me, and now that we have
    had a hearing, I hope that we can ask the association to show
    us in detail what it is that they would like to see and that we
    would not simply wait for that.
        Senator Conrad. No, waiting is over. We are done. This is
    it. The train is moving. You get on board or you are going to
    get left behind. That is the message out of here.
        Let me just say, on the question of confidentiality, on
    page 13 of the bill, under No. 4, if the State certifies to the
    Administrator that the State can and will maintain the
    confidentiality of any trade secrets and commercial or
    financial information provided by the Administrator to the
    State under this subsection to the same extent as is required
    under Section 10--this is preceded by this paragraph.
        The EPA Administrator may disclose to a State that is
    seeking to register a Canadian pesticide in the State
    information that is necessary for the State to make the
    determinations required by paragraph four if the State
    certifies to the Administrator that the State can and will
    maintain the confidentiality of any trade secrets and
    commercial or financial information provided by the
    Administrator to the State under this subsection.
        That is designed to get at this question. If it does not
    accomplish it, then we need to address it. There is a good
    faith desire to do precisely that.
        Are there any other final comments?
        Mr. Vroom. Mr. Chairman, one thing I did want to mention
    earlier, and that is that we worked with all the other
    organizations and witnesses here on a range of issues and have
    enjoyed their support on things like the Food Quality
    Protection Act and TMDL, water quality regulations, tough
    scientific and emotional issues and we appreciate the
    partnerships that we have had, as well as with the Senate
    Agriculture Committee's support on those kinds of issues. I
    just want to thank those that have been so supportive of us.
    NASDA and Commissioner Johnson have been involved in so many of
    those kinds of issues. We want to put this contentious issue
    behind us.
        The Lieutenant Governor is absolutely correct. He did ask
    for that and we have been struggling to try to get our
    membership together to address this issue in a consensus way.
    It has not been easy. Part of the reason, as I mentioned at our
    breakfast meeting this morning with the Commissioner, is that
    we are constrained by antitrust regulations also before us that
    makes it very difficult for price-related issues to be
    discussed in an association context. As we try to gather our
    own price information data, it has to all come through legal
    counsel and be carefully vetted. It has just been a very
    difficult issue, not necessarily any more difficult than any of
    the others I just mentioned, but different in nature. I
    apologize for appearing to have been dragging our feet, and in
    fact, we probably have at times. Some of it has just been the
    nature of this issue.
        I appreciate the chance, again, to be here. We want to be
    at the table and we want to be on the train. Thank you.
        Senator Conrad. I appreciate that, and I just will send a
    very clear, distinct message here. We are going to move to
    completion and we are going to do it quickly, but we are going
    to do it with reaching out to everybody. We are going to listen
    respectfully. We are going to reach conclusion. We have just
    got to do that.
        I want to again thank all the witnesses for what has been a
    very constructive and productive hearing, and I thank you.
        With that, the committee will be adjourned.
        [Whereupon, at 4:02 p.m., the subcommittee was adjourned.]

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                                A P P E N D I X

                                 July 18, 2002

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