[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

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                                                                   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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