[Senate Hearing 107-932]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 107-932

  IMPLEMENTATION OF THE FARM SECURITY AND RURAL INVESTMENT ACT OF 2002

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

                                HEARING

                               before the

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE


                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION


                               __________

                           SEPTEMBER 17, 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):

Implementation of the Farm Security and Rural Investment Act of 
  2002...........................................................    01

                              ----------                              

                      Tuesday, September 17, 2002
                    STATEMENTS PRESENTED BY SENATORS

Harkin, Hon. Tom, a U.S. Senator from Iowa, Chairman, Committee 
  on Agriculture, Nutrition, and Forestry........................    01
Lugar, Hon. Richard G., a U.S. Senator from Indiana, Ranking 
  Member, Committee on Agriculture, Nutrition, and Forestry......    02
Cochran, Hon. Thad, a U.S. Senator from Mississippi..............    12
Leahy, Hon. Patrick, a U.S. Senator from Vermont.................    09
Lincoln, Hon. Blanche, a U.S. Senator from Arkansas..............    35
Stabenow, Hon. Debbie, a U.S. Senator from Michigan..............    28
                              ----------                              

                               WITNESSES

Veneman, Hon. Ann M., Secretary, United States Department of 
  Agriculture, accompanied by Dr. J.B. Penn, Under Secretary, 
  Farm and Foreign 
  Agricultural Service, Dr. Keith Collins, Chief Economist and 
  Bruce Knight, Chief, Natural Resources and Conservation Service    02
                              ----------                              

                                APPENDIX

Prepared Statements:
    Harkin, Hon. Tom.............................................    52
    Crapo, Hon. Michael..........................................    58
    Leahy, Hon. Patrick..........................................    53
    Lincoln, Hon. Blanche........................................    60
    Stabenow, Hon. Debbie........................................    56
    Veneman, Hon. Ann M..........................................    62
Document(s) Submitted for the Record:
    Baucus, Hon. Max.............................................    74
    Request from Senator Harkin regarding information on how 
      states define a dairy operation............................    77
Questions and Answers Submitted for the Record:
    Harkin, Hon. Tom.............................................    84
    Lugar, Hon. Richard..........................................    89
    Baucus, Hon. Max.............................................   109
    Breaux, Hon. John and Hon. Mary L. Landrieu..................   112
    Cochran, Hon. Thad...........................................   113
    Conrad, Hon. Kent............................................   115
    Crapo, Hon. Michael..........................................   118
    Daschle, Hon. Tom............................................   129
    Fitzgerald, Hon. Peter.......................................   130
    Leahy, Hon. Patrick..........................................    91
    Lincoln, Hon. Blanche........................................   133
    Miller, Hon. Zell............................................   136
    Murray, Hon. Patty...........................................   138

                              ----------                              


 
  IMPLEMENTATION OF THE FARM SECURITY AND RURAL INVESTMENT ACT OF 2002

                              ----------                              


                      TUESDAY, SEPTEMBER 17, 2002

                                       U.S. Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:04 a.m., in 
room SR-328A, Russell Senate Office Building, Hon. Tom Harkin, 
[Chairman of the Committee], presiding.
    Present or submitting a statement: Senators Harkin, Leahy, 
Conrad, Lincoln, Miller, Stabenow, Wellstone, Lugar, Cochran, 
Fitzgerald, Thomas, Hutchinson, and Crapo.

    STATEMENT OF HON. TOM HARKIN, A U.S. SENATOR FROM IOWA, 
              CHAIRMAN, COMMITTEE ON AGRICULTRE, 
                    NUTRITION, AND FORESTRY

    The Chairman. The Committee on Agriculture, Nutrition, and 
Forestry will come to order on the hearing on the 
implementation of the new Farm bill.
    The Farm Security and Rural Investment Act of 2002 was 
passed with solid bipartisan majorities in both Houses of 
Congress and was signed into law with a strong statement of 
support by President Bush. It is a balanced and comprehensive 
bill that restores farm income protection, boosts conservation 
more than any previous bill, helps rural communities build 
economic growth and create jobs, and promotes farm-based 
renewable energy. It strengthens our support for trade, 
nutrition, food aid, and agricultural research.
    Implementing this new legislation properly is, of course, 
of critical importance to rural America. The committee is 
pleased to welcome Secretary Veneman; Under Secretary J.B. 
Penn; Bruce Knight, chief of the Natural Resources Conservation 
Service; and Keith Collins, USDA's chief economist. We look 
forward to a progress report on carrying out the Farm bill and 
addressing issues and questions that have come up in that 
process.
    At the outset, I want to thank the many conscientious 
employees at FSA, NRCS, Rural Development, and other USDA 
agencies for all their work toward making the promise of the 
new Farm bill a reality. I know in Iowa there have been a good 
number of informational meetings thanks to the USDA, the Iowa 
State University Extension and Farm and Commodity Organization. 
It all comes down to developing reasonable and workable rules 
and regulations and getting clear, consistent information out 
to those who need it. USDA must also have open lines of 
communications for listening, responding to suggestions, and 
answering questions.
    As I see it, we have a shared interest and responsibility 
to work together cooperatively to ensure that the Farm bill is 
implemented well, maximizing its benefits for our Nation. One 
of the reasons for this hearing is that I have heard in Iowa--
and I have talked with other members of the committee on both 
sides of the aisle, and we have been getting certain 
conflicting reports back from the field about how it is being 
implemented--a lot of questions. Now, some of those were 
cleared up in the last couple of weeks with a letter from the 
Secretary's office, but I felt it was important for us to have 
an open session with you, Madam Secretary, to go over the 
implementation of the Farm bill and perhaps respond to some of 
the questions that we are hearing from some of our constituents 
in the respective States.
    I would like to recognize Senator Lugar for a brief opening 
statement, and with the indulgence of the committee, I would 
like to then just go right to the Secretary. I would ask that 
if Senators have opening statements, just incorporate it with 
your first round of questioning.
    With that, I would recognize Senator Lugar.
    [The prepared statement of Senator Harkin can be found in 
the appendix on page 52.]

    STATEMENT OF HON. RICHARD G. LUGAR, A U.S. SENATOR FROM 
             INDIANA, RANKING MEMBER, COMMITTEE ON 
              AGRICULTURE, NUTRITION, AND FORESTRY

    Senator Lugar. Well, thank you very much, Mr. Chairman. The 
advice you have given to all of us is sound. We really want to 
hear from the Secretary, and so I will reserve my questions 
until the normal round. I appreciate the courtesy of your 
introduction, and we welcome the Secretary and all of her 
valued associates from USDA. We appreciate you very much.
    The Chairman. Madam Secretary, welcome to the committee. 
Your statements, all of them, will be made a part of the record 
in their entirety, and please proceed.

  STATEMENT OF HON. ANN M. VENEMAN, SECRETARY, UNITED STATES 
                   DEPARTMENT OF AGRICULTURE,

        ACCOMPANIED BY DR. J.B. PENN, UNDER SECRETARY, FARM AND FOREIGN 
            AGRICULTURAL SERVICE; DR. KEITH COLLINS, CHIEF ECONOMIST; 
            AND BRUCE KNIGHT, CHIEF, NATURAL RESOURCES AND CONSERVATION 
            SERVICE
    Secretary Veneman. Thank you, Mr. Chairman and Senator 
Lugar and members of the committee. I thank you for the 
opportunity to appear before you today to discuss the 
implementation of the Farm Security and Rural Investment Act of 
2002.
    I am pleased that you called this hearing to provide USDA 
an opportunity to share our hard work and progress on 
implementation of the new Farm bill. As you indicated, Mr. 
Chairman, we have with us today our Under Secretary for Farm 
and Foreign Agricultural Service, Dr. J.B. Penn; our chief 
economist, Keith Collins; and our chief of Natural Resources 
Conservation Service, Bruce Knight; and as well, we have a 
number of our other members of our USDA team with us today, all 
of whom have been very, very active in the implementation of 
this Farm bill.
    Mr. Chairman, what I would like to do today is summarize my 
formal statement and then respond to questions.
    As you know, this new law contains many complex issues and 
new programs that require a great deal of work to implement. 
This includes writing new computer programs, implementing new 
regulations, a massive updating of bases and yields, extensive 
training for USDA employees, working with producers to make 
sure they understand the changes in the new law so that they 
can best utilize and receive the programs and the benefits.
    USDA has had very short time frames to meet in terms of 
putting these new programs into place. Even with all of these 
challenges, I have to say I am very pleased and proud of the 
progress that the Department has made thus far in implementing 
the new Farm bill. The implementation planning that we did 
prior to the bill being passed has helped in that regard, and 
as soon as the Farm bill was signed by the President, USDA went 
into high gear to implement it. We will get checks to farmers 
on time.
    All this progress could not have been accomplished without 
the dedication and the hard work and the commitment of USDA's 
employees at every level around the country, and, Mr. Chairman, 
I appreciate you recognizing our USDA employees around the 
country in your opening remarks as well.
    Many times over the years our employees have been called 
upon to assist our Nation's farm economy. What we have seen 
during these past few months of the Farm bill implementation is 
no different. USDA employees around the country have worked 
tirelessly to implement the new Farm bill, and they deserve a 
great deal of praise for their efforts thus far.
    I also want to thank all the members of this committee as 
well as Chairman Combest and Congressman Stenholm and other 
members of the House Agriculture Committee for their continued 
interest in our work during the past few months. We have 
conducted several member and staff briefings and appreciated 
your input and suggestions as we have moved forward.
    We also appreciate the input from the farm community, 
particularly our farmers and ranchers who have made their views 
known on implementation. We have a lot of suggestions, and we 
have conducted listening sessions around the country, which has 
been helpful to make sure that we were acting in the best 
interest of our Nation's farmers as a whole, but at the same 
time taking into account regional considerations.
    We have been listening, and our recent announcement to 
provide clarification regarding bases and yields is just one 
example of our flexibility and desire to make the best 
available decisions as we implement the many changes required 
in the new law.
    As soon as the new Farm bill was enacted, we moved quickly 
to set up an internal structure for implementation, and we did 
this with a two-pronged approach. We established our sub-
Cabinet as the Board of Directors, and then we created a 
working group which was chaired by three people: Keith Collins, 
who is here with us, our chief economist; Hunt Shipman, our 
Deputy Under Secretary for Farm and Foreign Agricultural 
Service; and Scott Steele, who is a senior person in our budget 
office and very knowledgeable with farm programs. This group 
has coordinated the Department-wide implementation process, and 
they, along with all of the people they have worked with, have 
done a tremendous job.
    I issued delegations of authority assigning the program 
responsibilities to various Under Secretaries and agency 
administrators to ensure that quick actions would be taken, and 
we have developed a Department-wide tracking system for all 
farm bill actions so that we know the up-to-date status for 
each requirement under the law.
    A top priority during this time has been to keep Congress 
and the farm sector informed of our actions. As I said, we have 
held many briefings with members and staff, over two dozen; we 
have held at least 44 press briefings as well as farm bill 
implementation meetings with producers throughout the country. 
As well, we immediately established a farm bill website that 
has a myriad of information, questions and answers, and program 
details available for producers wanting to know more about the 
new law.
    In addition, we have undertaken one of the most thorough 
training programs the Farm Service Agency has ever had, 
including a train-the-trainer session in Chicago last July and 
another session in New Orleans just last week. Training is 
critical to farm bill implementation, and we have made it a 
very top priority from the beginning.
    Regarding the specific titles, we are very pleased with the 
overall progress that we have made so far in implementing Title 
I. In August, we announced the sign-up for the Direct and 
Countercyclical Payment Program will begin on October 1st, with 
payments starting soon thereafter. In order that producers can 
receive their payments, we are working closely with our State 
and local FSA offices and eligible producers to update acreage 
bases and yields.
    This will be the first time since 1985 that producers will 
have had a major opportunity to update program bases and 
yields. In this regard, we have recently issued special 
provisions for livestock producers who graze their crops or 
harvest grain, silage, or hay for feed.
    Another new program we are working hard to move forward is 
the milk income loss contract which provides countercyclical 
support payments to dairy producers. Thanks to the hard work by 
USDA staff in DC and in the field, sign-up began on August 
13th, and payments are scheduled to start early next month.
    The Peanut Program has gone through a historic overhaul. 
The market quota system, in place since the 1930's, has been 
replaced with a Direct and Countercyclical Payment Program. 
Peanuts are also eligible for the Marketing Loan Program, and 
we established a national weekly market price for loan 
repayment purposes.
    Peanut producers may sign up for the peanut quota buyout 
during the September 3rd through November 22nd time period. 
Payments will begin as soon as the rule is issued. All of these 
changes will make peanuts a more market-oriented commodity and 
help the industry become more competitive while easing the 
transition for peanut producers.
    Sugar is another very complex program, and I am pleased 
that we are able to move forward quickly in implementing the 
new provisions. In August, we published a final rule on program 
details and also announced the 2002 crop marketing allotment 
quantities for beets and cane sugar.
    Other implementation actions are moving along on schedule, 
with final rules in various stages of clearance. We are working 
very closely with OMB to ensure timely review and 
implementation.
    Turning to conservation, we are pleased with the strong 
conservation emphasis contained in Title II. The changes in the 
conservation policy supports the administration's commitment to 
a voluntary approach and provides the Nation's producers with a 
true portfolio of conservation options, including cost-share 
incentives, land retirements, and easement programs.
    We are now moving in a deliberate manner to continue those 
conservation programs which were re-authorized in the Farm 
bill, such as the Wetlands Reserve Program, the Wildlife 
Habitat Incentive Program, and the Farmland Protection Program. 
We are also revising those programs with major changes, such as 
the Environmental Quality Incentives Program and the 
Conservation Reserve Program, and we are initiating rulemaking 
on new programs, such as the Grasslands Reserve Program and the 
Conservation Security Program.
    Our initial focus has been on getting the additional fiscal 
year 2002 funding authorized by the Farm bill into the system. 
Funding has been made available for EQIP, WRP, WHIP, and FPP as 
warning letter as for ground and surface water conservation.
    Funding for these conservation programs will exceed $750 
million for the year 2002. We are also moving aggressively 
ahead with the expansion of direct technical assistance to 
producers from the private sector, the nonprofit sector, and 
State and local government sources to supplement technical 
assistance provided by NRCS. As we look ahead, we have 
scheduled the publication of proposed regulations in the near 
future for EQIP and FPP, for the 2003 programs, and an interim 
final rule for third-party technical service provider 
certification.
    We are also making steady progress toward the proposed 
rules for the Conservation Security Program, ensuring that this 
newest policy initiative is implemented properly. We are 
finalizing the delegation of authority for the Grassland 
Reserve Program.
    For other titles of the Farm bill, we are also making 
progress. While the time pressure is not as immediate as for 
Titles I and II, we are still working aggressively in these 
other areas. A detailed outline on progress for the other 
titles is in my prepared statement, but I want to briefly 
highlight a few areas.
    We are moving quickly ahead with implementing the 
provisions that bolster our market development efforts 
overseas. On August 12th, we announced the allocation of an 
additional $10 million made available for the Market Access 
Program for fiscal year 2002. On September 10th, we published 
regulations for the new Technical Assistance for Specialty 
Crops Program and requested proposals for fiscal year 2002 
funding.
    For the nutrition title, implementing memoranda were sent 
to all the States in June so that the food stamp provisions 
could be put into effect according to statutory requirements. 
Also in June, we announced the award of farmers' market grants 
to States through the WIC Farmers' Market Nutrition Program and 
the Seniors Farmers' Market Nutrition Program.
    The rural development title included a wide range of 
funding and new authorities to improve the economic prospects 
and quality of life in rural areas. One of the most important 
features of this title is to provide funding for the backlog of 
water and waste projects. This funding has already been awarded 
to 377 projects in 47 States and Puerto Rico, totaling more 
than $700 million. In addition, we expect to award $33 million 
in value-added grants in the near future.
    Numerous other provisions of that title that expand our 
authority for financing telecommunications, renewable energy, 
business and community projects are in the process of being 
implemented through the regulatory process.
    Under the miscellaneous title, we are developing voluntary 
guidelines for country-of-origin labeling that will be released 
in the near future. Also under this title, we are moving 
forward to appoint a new Assistant Secretary for Civil Rights.
    Mr. Chairman and members of the committee, before I 
conclude, let me discuss another issue of significant 
importance to our Nation's farmers and ranchers who have been 
stricken by severe drought conditions in many States around the 
country. This administration supports helping drought-affected 
farmers and ranchers who are most in need, particularly our 
livestock producers who do not have risk management tools to 
protect them during these difficult times. While the Congress 
has not completed work on a disaster assistance package for the 
President to consider, the administration has laid out its 
priorities for additional relief and is utilizing every 
available tool and program to help farmers and ranchers in need 
within our existing authorities.
    Through the heavily subsidized Federal Crop Insurance 
Program, the Congress has already provided tools for drought 
relief for our crop farmers. The crop insurance subsidy was 
increased dramatically in the year 2000 to avoid the need for 
disaster payments. The vast majority of crop acreage in the 
drought regions is covered by crop insurance. Almost 80 percent 
of the insurable acreage in the U.S. is covered. Based on 
current crop conditions, our preliminary estimates indicate 
that the program will provide $4.1 billion in indemnity 
payments for 2002 crop losses compared to $2.9 billion for 2001 
and $1.5 billion for the 1990's.
    We have also responded swiftly and worked with States to 
expedite approval processes for declaring emergency disaster 
areas so that farmers can receive low-interest emergency loans. 
We have expanded CRP haying and grazing eligibility nationwide 
and are working to get Non-insured Crop Disaster Assistance 
Program payments out to farmers and ranchers.
    Yesterday, we announced that $10 million of EQIP funding 
will be directed to States severely impacted by the drought. 
The Emergency Conservation Program will also help landowners 
deal with drought-related problems. Concerning livestock 
producers, we announced a $150 million Feed Assistance Program 
to help cow-calf operators in Colorado, Nebraska, South Dakota, 
and Wyoming. In these States, at least 75 percent of the 
pasture and range crop is currently rated as poor or very poor. 
We also need to be concerned about the long-term implications 
of the current drought situation and efforts to cope with it.
    First and foremost, we should not do anything that w be a 
disincentive for producers to participate in the Crop Insurance 
Program. Further, we need to continue working to improve and 
expand the program particularly with respect to forage and 
rangeland livestock insurance products.
    The Agricultural Risk Protection Act was an important step 
in the right direction. It provided a substantial increase in 
Federal funding for the Crop Insurance Program and important 
new authorities for improving the program. We have made 
substantial progress toward implementing this legislation. For 
example, two new livestock products were recently approved and 
are being pilot tested. However, much more needs to be done not 
only by USDA but also by the private insurance industry and 
producers groups to ensure that new and better insurance and 
other risk management products are developed and brought to the 
market. Producers should not have to wait for emergency 
appropriations for relief from natural disasters. They should 
have assurance of protection against risk before it occurs 
through their participation in the Crop Insurance Program. That 
is the goal that we are working toward.
    Mr. Chairman, that concludes my overview of where we 
currently stand on implementing the new Farm bill. Our team at 
USDA has worked hard to implement the new Farm bill in an 
efficient and expeditious and responsible manner to best help 
our farm and food sector receive the intended programs and 
benefits. We are committed to continuing to do the very best 
job we can to deliver the programs.
    We are also committed to continuing to work with Congress 
and other stakeholders to ensure that legislation in 
implemented fairly and properly.
    Again, thank you for having us here this morning, and we 
would now be willing to respond to your questions. Thank you 
very much, Mr. Chairman.
    The Chairman. Thank you, Madam Secretary. I will turn first 
to Senator Lugar, and we will start this with 5-minute rounds 
first.
    Senator Lugar. Thank you, Mr. Chairman.
    Madam Secretary, I would like to mention that in Indiana I 
visited with John Nidlinger, who is our Indiana Director of the 
Farm Service Agency, and he has conducted over 140 meetings 
attended by over 17,000 Indiana farmers, and the information 
that you have suggested today and the network that you have 
talked about, I simply want to make that report from the 
grassroots. It has been very helpful in terms of mitigating all 
the questions that would have come to our office otherwise, and 
that has been minimized by this good process.
    You mentioned that Congress provided authorization for USDA 
to use the private sector for conservation technical 
assistance. You mentioned in your opening statement work on 
that is continuing. You may not know the date at the moment 
that the regulations for the new authority will be ready, but 
if you could give me some notice after the meeting, I would 
appreciate it. There are many in our State who are eager, 
really, to proceed, and you are eager to help them.
    Now, my major question comes down to on the 7th August I 
wrote to OMB Director Mitch Daniels regarding food aid, and 
that letter was signed by Chairman Harkin, and Senator Leahy 
was copied, to you and to Dr. Rice because it expresses concern 
over the administration's food policy review. The 
administration is supposed to limit the 416, 416(b) Surplus 
Disposal Food Program, and rely instead upon P.L. 480, Title 
II. The concern has been that there ought to be transparency 
and better regulation, and I understand this.
    The net effect, however--I look at it now from the 
standpoint of the World Food Program, in which a colleague of 
mine, Jim Morris, is now the deputy of Kofi Annan, going 
through Afghanistan, Pakistan, various places of great interest 
to us--has been to drop the U.S. contribution from 6 million 
metric tons in fiscal year 2001 to 4 million this year or, 
rather, that is the estimate for, I guess, 2003, as we have the 
transition of this policy.
    That is a dramatic decrease in the face of the African 
problems, quite apart from our foreign policy situation in 
Afghanistan and Pakistan, and this is why I have asked both 
you, Condoleezza Rice, and the powers that be wherever, this is 
very, very serious, and we really need to change the policy.
    Now I am not certain how you can proceed to do that, but 
will you please give me some indication of your first reaction 
to this crisis and how we are going to get from 4 to 6, which 
we have to do, in one form or another. If we cannot improvise 
in this forum, please advise me sort of where, maybe starting 
with the President on down, we can do so because the 
humanitarian impact of this is very substantial.
    Secretary Veneman. Well, Senator, I do appreciate your 
concerns that you have raised. As you know, USDA has a very 
active role in food aid, but we do not act alone in food aid. 
It is an interagency process that includes AID, the State 
Department, and the OMB, the NSC, a number of agencies 
throughout Government that come together in an interagency 
process to make determinations of food aid.
    This food aid review group entered into discussions about 
how to create more consistent funding of the food aid, and it 
was believed that through P.L. 480 that it was a better 
mechanism to administer food aid. What the group did, however, 
was recognize that because there are emergencies that are 
beyond what one can anticipate in any given year, that the 416 
authorities would still be available, and so that review 
committee continues to meet and look at needs.
    I am aware of your concerns about the WFP, and certainly we 
are very pleased that Mr. Morris has come into that job and hit 
the ground running. We will continue to work with you to look 
at ways that we can satisfy the demands of the World Food 
Program, particularly during these times where there is a 
tremendous amount of need around the world.
    Senator Lugar. Well, we are constrained by the time, but 
will you please advise me what I can do personally to intervene 
because I am prepared to do so at any level. This is really a 
drastic problem and which people are going to die out there if 
we are not successful, despite our own bureaucracy and however 
efficient we thought this might be. Please give the orders.
    The last question I have deals with which agency will 
administer the McGovern-Dole International School Lunch 
Program. USDA and USAID have been suggested, maybe others. How 
is that sorting out?
    Secretary Veneman. That is another issue that is still 
being discussed interagency between whether or not it would be 
USDA, who has, as you know, been administering the program, or 
AID.
    My recommendation of the Farm bill language on the 
McGovern-Dole Program, which is the Global Food for Education 
Initiative, a replacement, is that the legislation itself did 
not specify who should administer the program. That issue is 
still in discussion.
    Senator Lugar. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Chairman Lugar.
    Senator Leahy.

  STATEMENT OF HON. PATRICK LEAHY, A U.S. SENATOR FROM VERMONT

    Senator Leahy. Thank you, Mr. Chairman. Both thanks to you 
and to Senator Lugar for holding this hearing.
    I talked briefly with the Secretary before the hearing 
started, and I wanted to remind her that in the legislation, 
the National Dairy Program was designed to provide dairy 
farmers income support payments that are going to be virtually 
identical to what, for example, Vermont dairy farmers received 
under the Northeast Interstate Dairy Compact. Payments have be 
made retroactively, coveringproduction and low prices since 
December 1, 2001.
    Retroactive to that date, prices for Class I fluid milk 
fell below the compact's trigger level, $16.94, which is 
identical to this program, but prices have been below that 
trigger level ever since, and they continue to fall.
    We also note that the prices, as always happens in this, 
does not go down at all at the supermarket. What the consumers 
pay for milk is exactly the same. The prices drop precipitously 
to the farmers, and they are really getting a bad, raw deal. In 
fact, the farm level milk prices are at their lowest levels in 
over 10 years. In fact, only three times in the last 25 years 
have they been this low, and we have had both flood and 
drought, the worst combination possible this year. A lot of 
farmers have poor crops. They are going to have trouble 
feeding.
    Now we designed the National Dairy Program to be farmer 
friendly. It was designed to be easy to administer. We spent a 
lot of time doing that. I believe that the Department of 
Agriculture has taken this program that was going to be farmer 
friendly, they made it overly burdensome, overly complicated, 
overly restrictive. They are basically telling family farmers 
you better have a couple of lawyers and a couple of accountants 
on staff to help you out through this program. There are some 
accountants available right now. This is not what was intended.
    Now you and I have known each other for many years. I have 
an enormous amount of respect for you, Madam Secretary. I was 
going to tell you that during the Farm bill, the Department of 
Agriculture fought us on the National Dairy Program every step 
of the way in the House, and in the Senate, and during the 
committee conference. That is your prerogative. We won, and the 
Department lost.
    Now I fear what you are trying to do is to undo 
administratively what we accomplished legislatively. In effect, 
the Department of Agriculture is trying to veto a bill that the 
President of the United States signed, and that is wrong. We 
wrote a farmer-friendly dairy program. You are making it farmer 
unfriendly.
    The Department needs to maximize the payments, not minimize 
it. You should encourage participation, not discourage 
participation. Every dollar is going to pass through the hands 
of our farmers. It is going to have a great impact in our rural 
communities, and unless changes are made, thousands of Vermont 
dairy farmers, but tens of thousands of other dairy farmers 
across the country are not going to get what they should.
    Let me ask you a couple of questions. Some we will probably 
have to put in the record.
    I am concerned about your failure to meet the 
congressionally mandated deadline for implementation. Congress 
mandated that the Department of Agriculture begin entering into 
contracts on July 13th, but you did not allow producers to 
enter into a contract until August 13th. Then they mandated the 
first payments to be made no later than October 1st--less than 
2 weeks from now.
    Will producers start receiving their first checks by 
October 1st?
    Secretary Veneman. I believe, Senator, that we will get 
checks out during October. I am not sure about exactly on 
October 1st, but I am going to ask Dr. Collins to talk just 
briefly about how we implemented this dairy program, and how we 
implemented it in a way that we feel was fair to the most 
number of----
    Senator Leahy. Well, if we are going to do that, then let 
us also go into the question of the beginning month for the 
transition payments because that has wiped out, wiped out, the 
way you are doing it, a whole lot of dairy farmers.
    I want to know, in answering that, did officials in the 
White House Office of Management and Budget direct you to limit 
payments to dairy producers, either directly or indirectly, did 
anybody? Doctor, be very careful in your answer on this because 
if it is not accurate, you are going to have a chance to 
discuss this again before another committee that I am on.
    Did anybody in the White House direct you, directly or 
indirectly, to limit payments to dairy producers?
    Mr. Collins. Senator Leahy, no one directed me, personally, 
to limit payments to dairy producers.
    Senator Leahy. I am not talking personally. To your 
knowledge, did anybody?
    Mr. Collins. Nor to my knowledge do I know of the White 
House directing the Department to limit payments to dairy 
producers. What we have done here is implement----
    Senator Leahy. Well, then why did you take a plan that was 
very clear in the legislation, change it all around to do 
something entirely different than what we intended?
    Mr. Collins. The plan was far from clear in the 
legislation. To start with----
    Senator Leahy. It is a heck of a lot less clear now.
    Mr. Collins. When you look at the dairy language, you have 
to understand that you provided very complicated overlapping 
requirements. There is a transition period, and there is a 
contract period, and both are variable. The dividing line 
between the two is any time between May 13th, 2002, and 2005, 
depending upon the choice of the producer, and then over the 
top of these two variable periods which you constructed in law, 
you require us to implement an eligibility cap of 2.4 million 
pounds per producer on what they can receive payments, and you 
further require that eligibility cap to be enforced on a fiscal 
year basis, even though neither the transition period, nor the 
contract period, are on a fiscal year basis.
    I disagree with you if you think that that is abundantly 
clear and easy to implement.
    Senator Leahy. Well, but you are not allowing the producers 
to select the beginning month for the transition payments, and 
they could have.
    Mr. Collins. That is correct. We did not.
    Senator Leahy. I do not think you are following the law in 
that regard.
    Mr. Collins. Well, there are grounds for discussion here. 
When we first looked at the law, it was our belief that the law 
said the transition period started in December, and then the 
contract period, having an enforceable 2.4-million pound 
eligibility cap on a fiscal year basis, we figured the contract 
period and the 2.4 cap would start on fiscal years in October.
    When we first designed this program, we were going to have 
producers enroll in this program beginning in December 2001 for 
the transition period, get payments until they hit the 2.4-
million-pound cap. Then, the following October, and each 
October after that, start the clock again with a 2.4-million 
cap. That way producers would not have had any choice 
whatsoever to pick a month.
    We think that is consistent with the law, and it could have 
been implemented that way. However, we chose not to implement 
it that way. We chose to give producers the flexibility to pick 
the month from 2003 on through 2005. We went beyond what a 
straight reading of the law could have implied by giving 
producers that flexibility.
    It is true we did not give them the flexibility during the 
transition period. We said the transition period would start in 
December 2001, and the reason we did that was to provide, we 
think, consistency with all of our other programs, where once a 
price has been established, we do not allow producers to look 
back and pick a month to maximize a payment. We do not do it on 
LDPs for corn or wheat or anything else.
    Senator Leahy. There are a lot of things you did not do. I 
mean, you did not allow the sign-up time on the specific time 
that the statute required. You were a month late on that.
    Mr. Collins. We were a month late on that, and for that I 
can say that having been at USDA for many, many years, and 
having had to sign off on every significant, economically 
significant and major regulation of the Department, I can tell 
you, with a law passed on May 13th, having a regulation out by 
July 13th or July 12th is almost impossible.
    Every regulation that you put out under the Administrative 
Procedures Act or under various Federal Executive Orders 
requires a cost-benefit analysis, possibly an environmental 
assessment, possibly a risk assessment, an unfunded mandates 
assessment, a Small Business and Regulatory Flexibility Act 
assessment, a civil rights impact assessment and possibly an 
energy assessment.
    That all flows from the fact that Congress did not want 
Federal departments to regulate willy nilly and impose lots of 
requirements on us to be sure that when we put out a 
regulation, when we put out decisions, they are sound and well 
thought out.
    Unfortunately, it took us until July 12th to come to that 
conclusion on dairy, and we regret that, but we still think 
that we got it out in a fairly timely way by getting the sign-
up period beginning in August. In fact, even though we do not 
have our computer software done for the dairy program yet, we 
have started sign-up with manual sign-up in order to get as 
close as we could to the July 12th date.
    Senator Leahy. Mr. Chairman, I, obviously, disagree, and I 
will submit a number of questions to the regard because we have 
a situation where medium-sized farms did not do as well as 
large farms or small farms. They have left a huge gap in here.
    Thank you.
    The Chairman. Thank you, Senator Leahy.
    [The Statement of Senator Leahy can be found in the 
appendix on page 53.]
    Senator Cochran.

    THE STATEMENT OF HON. THAD COCHRAN, A U.S. SENATOR FROM 
                          MISSISSIPPI

    Senator Cochran. Mr. Chairman, thank you very much.
    Madam Secretary, welcome to the hearing.
    First of all, I want to commend you and your staff for the 
hard work that you have turned in implementing this farm bill. 
It was a huge undertaking, very little time available to you 
between the enactment of that legislation and the sign-up 
periods that were going to be occurring for this crop year. I 
commend you. You have done an excellent job.
    I happened to run into Mr. Penn the other day at the 
airport, and we talked about some of the practical problems 
that were confronted, and the enormous burden that was really 
imposed on the Department by the Congress to do this in a very 
short period of time.
    I know there are going to be some difficulties encountered, 
one of which you mentioned in your statement on Page 3. You 
talk about the fact that you have a schedule for sign-ups, 
announcements, payments to farmers. I wonder whether you can 
share with us what the schedule is. We are asked by producers, 
when we go back to our States when can payments be expected, 
when will all of the sign-ups be scheduled. Is there anything 
you can tell us that we can pass on to our producers in that 
regard?
    Secretary Veneman. Well, we did announce last month that we 
would begin sign-up on October 1st, with payments to be 
distributed shortly thereafter, and we continue to stand by 
that time line, and we will be able to get payments out shortly 
after people sign up, on or around October 1st. We are on 
schedule and that we will get the payments out to farmers on 
time.
    Senator Cochran. Well, that is good news, and I commend you 
for that. I hope that we can cooperate with you if there is any 
way that we can be helpful.
    Now I know that a lot of these programs were changed in 
some fundamental ways. Farmers have the option, for example, of 
providing information on yields, past production of lands. Some 
of them are confused by what their options are and what the 
implications are. I know a lot of the Farm Service Agency 
offices are wrestling with how to answer the farmers' 
questions. I know one farmer told me he wished somebody could 
make that decision for him, that he does not know how it is 
going to turn out. He might want to change it, as a practical 
matter, later on, and would that be possible?
    These are some fundamental difficulties that producers are 
encountering, and I know the employees in the Farm Service 
Agency offices are encountering as well.
    Is there anything that you can tell us that we can pass on 
to the employees at the local level or the producers to help 
them address this situation more effectively?
    Secretary Veneman. Well, Senator, you are absolutely right 
when you say that this has been very complicated to implement, 
and because we knew it was going to be complicated, because 
there were so many changes, we did several things.
    First, we had a website up and running the first week, and 
we keep adding questions and answers that come up to that, as 
well as program decisions, time lines and so forth, and we hope 
that this is not only helping producers, but people in our Farm 
Service Agency county offices and anyone who wants information.
    We have conducted training sessions for FSA, knowing that 
they need to get the up-to-date information. We are doing a lot 
of joint training with NRCS and FSA to make sure that people in 
the county offices have the same information because so many of 
this contact you should be able to get some general information 
from any USDA employees in the field.
    Of course, we have done, and I, personally, have 
participated in several of these, but we have counted up all of 
the media briefings we have done through farm broadcasters, 
particularly, who are a wonderful source of getting information 
out to farmers and ranchers, and we have done, among all of our 
staff, 44 briefings on farm bill implementation with the press, 
trying to get the word out on how we can do some of these 
things because we know it is complicated. We are trying every 
way that we can.
    For those farmers that do not want to go log on the 
website, they can listen to the radio. We are doing radio spots 
through our USDA all of the time to try to get word out to 
farmers. There are a lot of complicated questions, and we are 
doing everything we can to try to get people educated about 
what they need to do to sign up, what kinds of information they 
need to bring in, and when they can expect to have the final 
sign-up and their payment.
    Senator Cochran. I know there is one difficulty that has 
developed between your department and the Office of Management 
and Budget with respect to a portion of the funds for technical 
assistance for conservation programs. I joined with Senator 
Herb Kohl of Wisconsin in signing a letter yesterday--he is 
chairman of the Appropriations Subcommittee for the Department 
of Agriculture--suggesting that it would be inappropriate to 
deny the use of CCC funds for technical assistance for these 
conservation programs, as OMB apparently is proposing without a 
reprogramming.
    We provided funding that we thought would be useful for the 
Department to carry out the conservation programs in the area 
of Conservation Operations. That is the name of the account. 
The funds that were included in that were to be used for 
operations. The technical assistance funding could come from 
CCC funds.
    I hope that you are able to renew your discussions with OMB 
and figure out some way to persuade them. I would hate to see 
us have to go back through this and figure out a way to 
legislate an answer to this problem.
    Can you bring us up-to-date as to what the status of that 
disagreement is, and is there any hope for resolving it?
    Secretary Veneman. Well, Senator, there has been a 
difference of legal opinions, in terms of the new law and 
whether or not it superseded Section 11 of the old law, as I 
understand it. The lawyers have been at complete loggerheads 
about how this particular provision has been interpreted, and I 
know that some of the committee members have specific ideas on 
how it should be interpreted, as well as the appropriators, and 
we appreciate that fact.
    We have our staff, particularly, Under Secretary Mark Rey, 
has worked to try to come up with a short-term resolution for 
the 2002 year because we were coming upon the deadline, as you 
know, with regard to the 2002 fiscal year, and we will continue 
to work through this issue for the subsequent years, but we 
have worked on a compromise for the 2002 year, which I can have 
our administrator talk about or our chief, I should say--
sorry--talk about for a moment, if you would like.
    Mr. Knight. Well, in brief, we have come to some form of 
resolution that will allow us to be able to move forward with 
implementation of the two programs that it was most important 
that we get the money out and implemented. Those are the 
Wetlands Reserve Program and the Farmland Protection Program. 
We announced each of those, the allocations out to the States 
on both of those programs, two Fridays ago and are proceeding 
ahead very, very rapidly on implementation of that so that we 
can get the actual funds on the ground for the conservation for 
the needs of the Wetlands Reserve Program and be able to 
achieve the objectives of both of those before the end of the 
fiscal year, and we will proceed with further discussions for 
2003.
    Senator Cochran. Thank you very much, Mr. Chairman.
    The Chairman. I have refrained from asking questions, but I 
want to pick up on this that Senator Cochran brought up.
    OMB released $5.9 billion, if I am not mistaken; is that 
right?
    Mr. Collins. In technical assistance, that is correct.
    The Chairman. My information is that that is not going to 
cover the need. I do not know how far you expect that to go, 
but that if your lawyers were to contact on both sides of the 
aisle, in the Senate and the House, you would find that there 
is a clear agreement on both sides to supersede the 1996 bill 
by providing that, under mandatory programs, technical 
assistance could be used out of those mandatory programs.
    The only thing that we allowed to continue under 2701(b) 
was for transfers from CCC. That would still be subject to the 
Section 11 cap, but for the mandatory programs that we put in, 
it was very clear.
    I have been befuddled, Senator Cochran, by why it seems to 
be confusing to lawyers. I have read it over. I know the 
problem. I have asked my staff to give it to me. We have read 
it over, and we have read it over, but as far as the mandatory 
programs go, I thought it was very clear, and that we left only 
Section 11 caps on the transfers from CCC.
    Do you have anything to say about that?
    Mr. Knight. The most important thing for us, sir, was to be 
able to move forward with providing the services on the ground 
this year for Farmland Protection and the Wetlands Reserve 
Program. We have a compromise worked out for 2002.
    The Chairman. Well, our problem is with OMB and not you, I 
assume. Senator Lugar and I have written twice to them 
informing them what we intended to do and repeating the 
appropriate section of the bill on Section 2701(a) as it 
provides that the Secretary shall use the funds, and that 
2701(b) was simply to keep the Section 11 cap on the transfers 
from the CCC.
    We still need $20 million for the Wetlands Reserve Program 
technical assistance. Where is that money? USDA asked for that 
and OMB denied it. Where is the money, Madam Secretary? Or 
anybody, where is the money? I mean, you asked OMB for it. They 
denied it. We still have a problem with the Wetlands Reserve 
Program.
    Secretary Veneman. Well, again, Mr. Chairman, as I 
indicated, there has been a difference among lawyers on this 
issue, and in order to resolve it, to the maximum extent 
possible, to be able to get some of this technical assistance 
done before the end of the fiscal year, we did reach this 
compromise.
    Now, I understand the frustration of the committee. There 
has been a disagreement about what the language means, and we 
will continue to work with the committee to try to resolve this 
for the subsequent years.
    The Chairman. Well, OK. Again, USDA asked for the $20 
million for technical assistance for WRP. OMB denied it. 
Senator Lugar, I am sure, wrote representing the Senators on 
his side. I wrote representing the Senators on our side. I 
believe letters also came from the House committee spelling 
this out for them. I don't know why there is any confusion. I 
just don't understand that at all. We still are missing the $20 
million. That is why I asked about the $5.9 million that was 
going out. That is not sufficient. We know that.
    I will have some more to say about that after a bit.
    Senator Conrad.
    Senator Conrad. Thank you, Mr. Chairman, and welcome to the 
committee, Madam Secretary and others from the Department. Mr. 
Penn, we had a chance to meet last week, and Dr. Collins, Mr. 
Knight.
    First, I want to thank the chairman for calling this 
hearing. It is critically important because there are things 
occurring here which I find very disturbing.
    Madam Secretary, in our system of government who makes the 
law?
    Secretary Veneman. I am sorry. I thought there was more to 
your question.
    Senator Conrad. In our system of government, which branch 
makes the law?
    Secretary Veneman. Congress makes the law.
    Senator Conrad. Congress makes the law. No executive 
department makes the law. Is that correct?
    Secretary Veneman. Well, the laws are made by the Congress 
and signed by the President.
    Senator Conrad. Made by the Congress. That is exactly 
right. That is not what is happening here. In item after item, 
example after example, you and your Department are defying the 
law, are defying Congress. I don't know how it could be more 
clear.
    Senator Leahy gave the examples in dairy. I would turn your 
attention first to the minor oilseeds. The statute says the 
loan rate for a marketing assistance loan shall be equal--
``shall be equal''--in the case of other oilseeds to 9.6 cents 
per pound.
    The managers' report says for sunflowers, ``In implementing 
the Marketing Assistance Loan Program for minor oilseeds, the 
managers expect the Secretary to establish a single sunflower 
loan rate.'' A single sunflower loan rate.
    That is not what you have done. For the first time ever, 
without consultation, without public notice, without a hearing, 
you have decided that what Congress said to do, what Congress 
put in the law is not acceptable to you, and instead you will 
establish a rate for the oil types of 9.15 and for confections, 
12.10. You are wreaking havoc on this industry.
    That is not what the law is. That is not what the managers 
said to do. Why aren't you doing it?
    Secretary Veneman. Well, Senator, let me first say that as 
we discussed, as Dr. Collins discussed with the Milk Program, 
there is a lot in this farm bill that is not abundantly clear 
in the law----
    Senator Conrad. What is not clear about a statute that is--
I want to know, what is not clear about a statute that says--
this is as clear as it can be. For the other oilseeds, the 
marketing loan rate shall be 9.6--not 12.10, not 9.15, 9.6. 
What is not clear about that?
    Secretary Veneman. Well, I was talking generally about the 
Farm bill----
    Senator Conrad. I am talking specifically. I have asked you 
a specific question.
    Secretary Veneman. I am going to get to that, but I would 
like to just be able to respond initially, and that we have had 
to make a lot of judgments in implementing this farm bill. I 
believe that our folks have done a tremendous job, and as I 
said in my opening statement, they deserve a lot of credit for 
that. The chairman recognized that. Many other committee 
members recognize that. They deserve a tremendous amount of 
credit. I am going to ask Dr. Penn and possibly Dr. Collins to 
comment specifically on how we came to the sunflower loan rate 
issue because it is a technical calculation that this group 
came together as a committee and made.
    Senator Conrad. I am asking you. You are the Secretary. You 
run that Department. This statute is as clear as it can be. The 
managers' instruction is as clears as it can be, only that is 
not what you have done. I want an explanation from you: Why are 
you not following the clear intent of Congress?
    Secretary Veneman. Again, I would like to let our folks who 
have gone through all the calculations respond to this question 
as to how we arrived at this.
    Senator Conrad. Well, I am interested in your answer. You 
are the Secretary. I want your answer. The people that I 
represent want your answer. This is a devastating effect out in 
the country. Farmers want to know. I mean, it is just as clear 
as it can be. The intent of Congress--can you tell me what 
could be more clear than a statute that says--and I will repeat 
the language. The statute says the loan rate for a marketing 
assistance loan shall be equal to, in the case of other 
oilseeds, 9.6 cents per pound.
    Have you provided a loan rate for sunflowers of 9.6 cents 
per pound or have you got a differential rate for confectionery 
and oil types?
    Secretary Veneman. I am going to ask Dr. Penn to respond to 
this.
    Mr. Penn. Senator Conrad, you and I have had this 
conversation before, but I do think we should respond for the 
record. The portion of the statute that you read is very clear. 
There are also, I am told by the lawyers, other portions of the 
statute that gives the Secretary some discretion to adjust loan 
rates by quality and type and other factors. This is a part of 
an overall process of establishing loan rates for all of these 
commodities in the new Farm bill.
    I would point out that we are establishing loan rates for 
17 different commodities spread across 3,000 counties in the 
country. We are trying to do this to take into account location 
and type and different market factors for each one of these 
products. It is a very difficult task so that we don't 
introduce distortion, so that we don't cause more harm than 
good with what we are trying to do here.
    In the case of the minor oilseeds, we did try to adhere to 
the 9.6 for all oilseeds, but it is part of a broader effort to 
try to establish individual loan rates for those commodities 
that have their own set of market fundamentals, and 
confectionery sun seeds have a different set of market 
fundamentals than do oil-type sun seeds. There has typically 
been a pretty substantial differential, historically about a $3 
a hundredweight differential between the two, and it just seems 
to make sense to not cause distortions, not cause farmers to 
shift acres, not cause problems in the processing industry, nor 
with transportation and storage if you can delineate these. 
That is what we have tried to do, not only with the minor 
oilseeds but with the pulses and the other crops. We have tried 
to make these as fair and as equitable as we can among farmers 
and to minimize the distortions and enable farmers to be as 
efficient as they possibly can.
    Senator Conrad. Let me just say, you have substituted your 
judgment for the judgment of Congress. It is as clear as it can 
be what Congress said to do, not just there, flaxseed, same 
thing, 9.6 percent is what is provided for in the statute. You 
have set it at 6.98 percent--6.98 cents, and I can tell you, I 
have one farmer who is going to lose $30,000. You announce 
without public notice, without hearing, without consultation, 
that you on your own, defying the clear intent of Congress, go 
out and change the rules in the middle of the game. One farmer 
from my State, it is going to cost him $30,000. He acted in 
good faith. I don't think you have. It is just incredible to me 
that Congress gives you a clear direction and you don't follow 
it.
    Well, we will have more chance--I have many more examples 
that we are going to have a chance to go over before we end 
today.
    The Chairman. I thank you, Senator Conrad.
    Senator Thomas. Thank you, Mr. Chairman. Welcome, Madam 
Secretary. I know it must be a terrific job to implement this 
bill, and I hope that at least you get an opportunity to 
respond here in your own way.
    A couple of fairly broad ones. EQIP is very important to us 
and designed, of course, to promote production, environmental 
quality. There seems to be some confusion with the 
implementation. Some States are ahead of the Department in 
terms of doing it. Other States are moving forward without the 
guidance, apparently.
    What is the process the States are following with the rules 
of EQIP to get that program into place?
    Secretary Veneman. Well, as you know, Senator, the Farm 
bill put substantial amounts of new money into EQIP even for 
the 2002 year. We moved quickly to announce the availability of 
that money so that it could be utilized for projects that had 
been applied for and yet funding was not yet available.
    I am going to ask Bruce Knight to comment specifically on 
your question about how we are implementing it in the various 
States.
    Mr. Knight. We are using the existing rules and regulations 
to a large degree with very few minor--minor modifications for 
2002 so that we could implement the additional funding 
authority that we have, that you granted us in the Farm bill.
    For 2003, we will move forward with a rather robust, open, 
rulemaking process that will give us an opportunity for folks 
to make further comments on where to move forward on EQIP with 
the 2003 process.
    Senator Thomas. Grassland Reserve is also one that there 
has been some debate and some discussion as to whether that is 
going to be done under the jurisdiction of the Farm Service 
Agency or whether it is going to be done under NRCS or whether, 
in fact, it is going to be divided. Would you comment on that, 
please?
    Secretary Veneman. There are some programs like the 
Grassland Reserve program where we are still working out where 
the oversight and where the administration will take place. 
What I can tell you is that we have made it a strong policy in 
USDA that our agencies should work together because our 
constituents need consistency and availability of services from 
our people in the field, no matter who they are. Both Jim 
Little, who is our administrator of FDA, and Bruce Knight have 
been strong advocates of working together, making sure that our 
programs are administered effectively and efficiently out in 
the field, and that NRCS and FSA particularly are working 
together in the administration of these. How we are actually 
going to administer the Grasslands Reserve Program we are still 
working on, but it is one of these things that we are working 
closely in terms of the employees that have jurisdiction or 
responsibility for these areas.
    Senator Thomas. I have talked about it with some people 
before, actually, not during this implementation, but where 
Farm Service is doing the rental contract portion and NRCS is 
doing implementing the easement portion. Even though I agree 
with you they ought to work together, it does make it difficult 
when they split the responsibilities between two agencies, and 
perhaps it is something that the major responsibility ought to 
be with one. They can write the checks, I guess, over in the 
other one.
    Secretary Veneman. Well, we are trying to bring our 
agencies together in terms of computer software and hardware 
and programs so that we should be able to take all of these 
data bases that have been kept by these agencies on paper, and 
as we can bring them together into a common computing data 
base, we will be much more able to administer these programs 
effectively across agencies.
    Senator Thomas. I am sure that is right. Still, the 
responsibility needs to lie somewhere. The Rural Marketing 
Program, when do you think those assistance loans and 
deficiency payments, when will that program be finalized?
    Secretary Veneman. I am actually not sure when we are 
looking at the implementation of that program.
    Mr. Collins. I have to look up the calendar. We have a 
timetable here. We can certainly----
    Secretary Veneman. We can get that answer to you.
    Senator Thomas. I appreciate it.
    Just one other final question. In the Livestock Feed 
Assistance Program contained in the new drought amendment, will 
people be able to use their new payments for feed they have 
already purchased here in the past?
    Secretary Veneman. In the drought--I am not sure which 
drought amendment you are----
    Senator Thomas. I am talking about the one that is now in 
the process here. Just generally in drought, the payments don't 
get there for a good long time, and the operators have had to 
already spend the money to feed the livestock and so on. I 
presume those dollars will be available for what maybe that 
rancher has already spent.
    Secretary Veneman. Yes, I--go ahead.
    Mr. Penn. It depends on the language that is put in the 
final legislation, but I'm told that historically it has been 
true that farmers have been allowed to use the payments for 
feed that has already been purchased because of the timeliness 
of questions----
    Senator Thomas. It is pretty important because the critters 
are going to be hungry before that allocation of money is made. 
All right. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Thomas.
    Senator Miller.
    Senator Miller. Thank you, Mr. Chairman. Obviously, it is a 
very timely hearing, and thank you, Madam Secretary, for being 
here with your staff. Thank you for all your hard work. I know 
that it has been a difficult task to implement this farm bill.
    I guess it will come as no surprise to you. My question has 
to do with peanuts. I am about as predictable as Senator Leahy 
with his dairy questions.
    [Laughter.]
    Senator Miller. One of the main thrusts of the Peanut 
Program that we worked so hard on was to enhance our peanut 
producers' ability to export. If we continue with this formula 
that has been set up, it is going to be very difficult to do 
that. In fact, it is going to drive U.S. producers completely 
out of the export market.
    I have two or three questions, but my first question has 
two parts. Would someone please explain how this formula for 
the loan repayment rate for peanuts is calculated? Does the 
administration believe that the process of U.S. competitors 
should be used in developing the loan repayment rate?
    Secretary Veneman. I am going to ask Dr. Penn, who has been 
intimately involved in the Peanut Program, to get into the 
technical issues.
    Mr. Penn. Well, Senator, first let me say, as Chairman 
Harkin indicated in his opening statement about having lines of 
communication, this farm bill was passed late in the year, made 
applicable to the 2002 crop year. We were given the authority 
to go to, as you know, what is called interim final rules. We 
didn't have an opportunity to do the normal procedures which 
would be to promulgate some draft rules, make them available 
for comment, and then revise them and publish them in final 
form.
    What we have done at the Department is to try to have open 
lines of communication. In fact, in my office we have had 
meetings with anybody. Any group that has requested a meeting 
to give us their views on how these programs should be 
implemented, we have certainly met with them. That has been the 
case with the peanut industry. I am happy to say they have 
taken us up on that, and we have had numerous meetings with all 
aspects of the industry trying to get their views on how this 
program should be implemented, because as you noted, this is 
essentially a brand-new program. I mean, it is an industry that 
was in place, had a particular program for almost 70 years, and 
then all of a sudden it is changed. It is made into a Marketing 
Loan Program just like we have for the major commodities. The 
industry itself hasn't made all of the changes.
    We quickly got the quota buyout part of the program into 
place, and then following that, we started implementing the 
Marketing Loan Program. There is a marketing loan rate of $355 
a ton for all peanuts that is in the statute. The question then 
becomes what is the loan repayment rate, and unlike soybeans 
and corn and all of the other commodities, there are no cash 
prices for peanuts. What is one going to use as the loan 
repayment rate?
    Well, we think that after a while, after the industry is 
allowed to adjust to the new program, there will be cash 
markets emerge and that we will have reliable cash prices that 
can be used to determine the LDPs or the loan repayment rate, 
just like for the other commodities.
    In the meantime, as you have suggested, that has forced us 
to try to develop some sort of composite or national posted 
price to determine the loan repayment rate. Frankly, we called 
in all of the various portions of the industry. We have heard 
from them. We have heard from their experts. I am aware of the 
problem with trying to make our products competitive to try to 
get to the export market, and that too is our objective. I 
mean, we certainly want to do that, and we understand that that 
was the objective in basically reformulating this program. We 
have to go through this transition period here in which the 
markets begin to operate.
    In the meantime, we are publishing, as you noted, this 
weekly price. We use a whole variety of sources. We explored 
sources for peanuts, peanut prices all around the world. As you 
can imagine, for the European price, the prices of our 
competitors, they varied greatly by quantity, quality, type, 
and reliability of the price estimates are not always very 
good. We talked to a lot of traders. We talked to a lot of 
people who prepare the prices in Rotterdam and other places, 
and they tell us they are subject to manipulation. We couldn't 
just very well take one of those prices with any confidence.
    What we have done is to utilize information from a whole 
variety of sources. We get every transaction that we possibly 
can on peanuts in the United States for all purposes, those 
that are sold into the export market, those that are sold for 
the domestic crush for every single purpose. We try to take 
into account the prices of Argentinean peanuts and others in 
that formula.
    Now, this is not a formula that I can write down and hand 
to you. It has quite a bit of judgment in it. We call, we ask 
about transactions, and if we think that there is something 
suspicious about those, we exclude them. We are doing the very 
best we can in this interim period here to indicate what we 
think are the value of peanuts at this point in reference to 
this loan rate, and I note that our formula--we have published 
four now--has moved around a fair bit, several dollars a ton, 
and that we think that after a while it will begin to reflect 
the true cash prices. Not many of the new crop peanuts have 
been sold into the market yet, so we are waiting to see that.
    Senator Miller. Let me try to get this question in before 
my time runs out. We all agree that the goals associated with 
the loan repayment rate are to minimize potential loan 
forfeitures and to minimize accumulation of stocks and to 
minimize the cost of storage and storage.
    Does the administration agree that the current repayment 
rate will lead to large government stocks of peanuts and 
increased cost to the Government?
    Mr. Penn. Well, we are certainly aware of that problem, and 
the last thing we want is for a big portion of this year's crop 
of peanuts to go under loan and to be forfeited to the 
Government. I mean, we don't want to be in the inventory 
management business. We want those peanuts to go into the 
market.
    We are going to try our best to make sure that that 
happens, and the loan repayment rate, as I noted, is changed 
every week. As there are more transactions of new crop peanuts 
that are in the harvest process now, we think that a cash price 
will soon be established, and that that will reflect the 
opportunities to sell peanuts in the foreign markets and for 
the different purposes in the U.S. market. Our objective is the 
same as yours. We don't want any peanuts. We want to expand our 
exports. We want this new program to work for this industry 
because it is very market-oriented, it is a step in the right 
direction.
    Senator Miller. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Miller.
    Let's see. Senator Hutchinson.
    Senator Hutchinson. Thank you, Mr. Chairman.
    I agree with my colleagues in recognizing the great 
challenges the Department has and am sympathetic with the short 
timeframe and the great pressures that you are under to get 
this done.
    One of the questions that my farmers have raised that I 
would like if you could give us some help on, for the five 
options producers are given for base acres, is the Department 
willing to look at regulations with regard to crops that are 
rotated or are taken out of production for a year? In Arkansas, 
if a farmer rotates rice acres into soybean acres due to red 
rice infestation, my understanding is they would then have to 
average a zero year for their rice base. In Freedom to Farm, 
farmers were led to believe that they could shift planting 
choices and not be penalized for doing so. Rotating rice with 
soybeans or not planting now causes the resulting base to be 
substantially reduced. At one time this acreage could have been 
declared considered planted for program purposes, but under the 
new regulations, only a prevented planting declaration can be 
used in determining planting acreage and determining those base 
calculations.
    Obviously, having to figure in a zero because you are doing 
some good conservation practices, that creates a real problem 
in using that option. Is there any flexibility, is there any 
way to address this concern that our farmers have, Dr. Penn?
    Mr. Penn. Senator, yes, we are very much aware of that 
problem of the planted or considered planted portion of the 
regulation.
    There are several of these situations that are very 
particular to certain areas, certain kinds of rotations, corn-
soybean rotations where the whole farm is in a rotation, that 
just weren't anticipated, in the broad regulations that were 
promulgated and issued. There is some flexibility. We are 
looking at this. I understand the argument, and we are going to 
try to have an answer on this fairly soon.
    Senator Hutchinson. Could you let me know what is going on? 
We are getting a lot of calls on that concern.
    Mr. Penn. We will keep you posted.
    Senator Hutchinson. Many of the farmers in my State are 
concerned about having to get a new power of attorney to make 
decisions for the new Farm bill. As you know, they cannot make 
decisions or receive payments until those documents are 
available, and farmers only have, I understand, until April 1, 
2003, to get that done, to get all the paperwork finished.
    Are there any plans or contingencies for farmers who have 
difficulty dealing with out-of-State landowners, which is a big 
problem in Arkansas?
    Mr. Penn. Well, on that one, let me say as well that we 
have heard concerns expressed, and in every opportunity where 
we can explain what our objectives are, most people, most of 
the farmers agree that a little bit of extra trouble is 
probably worth the effort.
    The last time we requested that the powers of attorney be 
updated was 1996. That was a fairly simple farm bill, as you 
know. This one is much more complex, and it requires decisions 
to be made on updating the acreage bases and the yields where 
the farmers only get one chance to make that decision for the 
entire life of the Farm bill. These are too important to not be 
taken very seriously, and what we want to avoid is a case where 
a year later somebody comes in and says, Why am I in this 
situation? Who made that decision for me? It was done under an 
old power of attorney.
    When we explain to farmers that this is something they need 
to do, that it is really important, that we need to get the 
records updated, that there are new programs and new decisions 
in this farm bill that were never envisioned under the previous 
farm bill and under the old power of attorney, that we really 
do need to have the new up-to-date legal records. It is well 
worth the effort.
    It is some difficulty, I know, for people to chase dow 
numerous landowners or to go to the nursing home to find people 
because there are a lot of landlord-tenant situations. It will 
be well worth the effort in this case.
    Senator Hutchinson. Madam Secretary, in making many of the 
decisions on commodity options, there is a need to access the 
Internet so they can use the various models to determine which 
option is going to be the best that is going to serve them the 
best.
    In Arkansas, only 26 percent of the State has Internet 
access, and most of that Internet access is in the urban areas, 
not out with our farmers. What is the USDA doing, what efforts 
are you undertaking to make these resources available to these 
rural areas? Are there alternative forms or means by which the 
best option can be determined for our farmers?
    Secretary Veneman. Well, Senator, it is an important 
question, and there are a couple of things I would like to 
bring up in that regard. One is that we have tried to put 
together some Internet programs so that you can actually try to 
figure out which scenario is best for the particular farmer. It 
works like retirement planning programs that you can get on 
Quicken or something. That is an important tool for farmers and 
ranchers, something we have not been able to do in farm bill 
implementation before.
    Now, we can make these programs accessible through the Farm 
Service Agency office for people who don't have their own 
Internet access. This also brings up another important part of 
the Farm bill, and that is, in the rural development title, 
there is a recognition that rural America should not be left 
behind with regard to Internet access, broadband availability 
and so forth. In that regard, we are also working to try to 
bring some of these services to rural America, but in the 
meantime we will work through our Farm Service Agency offices 
to work with farmers who don't have the availability in their 
own operations.
    Senator Hutchinson. Well, thank you. That is the key. Most 
of what I am hearing is that implementation of the Farm bill, 
the time allowed, the paperwork required, while trying to 
operate their farm operations, that it is just very, very 
difficult unless there is going to be assistance and 
flexibility shown by the Department. That is my plea. Thank 
you, Mr. Chairman.
    The Chairman. Thank you, Senator Hutchinson.
    Senator Wellstone.
    Senator Wellstone. Thank you, Mr. Chairman.
    First of all, Mr. Chairman, let me ask to have a complete 
statement in the record.
    The Chairman. Without objection.
    Senator Wellstone. Second of all, let me just take note of 
the fact that my colleague Senator Dayton would be here, but 
there is a Senate Armed Services security closed hearing with 
Secretary Rumsfeld and others, and that is why he is not here, 
and he wanted me to make that clear to you, Madam Secretary.
    As long as we are talking about Senator Hutchinson's last 
question, don't forget the telework provisions in this bill, 
too, which are really going to be important to greater 
Minnesota and rural America in terms of making sure that we are 
not left behind in this information technology economy.
    I want to, first of all, say to you, I want to thank all of 
you for being here. I want to really echo the words of Senator 
Leahy on dairy and just make the following request rather than 
getting into a big battle with you, which is, first of all we 
are now 950 and we need to get these countercyclical payments 
out ASAP; and, second of all, to call on you to really make 
some adjustments here in terms of the formula because I really 
do think that the mid-sized dairy producers are now at a 
disadvantage in terms of the formula you have, and I that is a 
big mistake, and it goes against what we clearly intended, the 
legislative intent. I would urge you all to take that into 
account.
    Madam Secretary, the big question I have for you as a 
Senator from Minnesota goes to the vote last week on the Senate 
floor, which was 79 to 16, 31 Republicans voting for the 
disaster relief bill. I want to try to get you on the record 
and see where you stand in relation to this. I was in northwest 
Minnesota this weekend, and time is not neutral. People are 
absolutely desperate and, of course, there was such support for 
this because in a lot of parts of the country it is the same 
story.
    The one quote I have here is from White House spokesman 
Scott Stanzel, and I quote from the article, and he says, ``We 
support the disaster aid, but it's going to come out of the pot 
of money earmarked for subsidies for Midwest corn, soybeans, 
and wheat, and for rice and cotton grown in California, Texas, 
Arkansas, and Louisiana.''
    My question for you is whether or not you support the 
disaster relief assistance that passed in the Senate because 
that is disaster relief assistance taken out of the Farm bill. 
That is the way we always do disaster relief assistance. We 
take it out of general revenue. We don't take it out of 
agriculture. We don't take it out of highway.
    Do you or do you not support this vote in the Senate, this 
effort to get the money to farmers?
    Secretary Veneman. Senator, let me say a couple things 
about the disaster situation, and as I said in my opening 
statement, both in the written one as well as my oral one, we 
recognize the severe drought situation in the country.
    Senator Wellstone. In our case it is flooding. In other 
cases it is fire.
    Secretary Veneman. We have certainly had to deal with a lot 
of fires this year as well, as you know.
    The administration has made it clear that we do support 
disaster relief, particularly for those who don't have risk 
management tools available. As I indicated in my opening 
statement, about 80 percent of the cropland is covered by crop 
insurance, so we are really looking primarily at those 
producers, especially in the livestock area, that don't have 
the risk management tools available that others have.
    We have also--and I want to reiterate what I did in my 
statement, the proactivity that this administration has taken 
with regard to the drought. Early on we began designating 
disaster areas as quickly as possible so that low-interest 
loans would be made available. We did CRP haying and grazing 
very early on. We then extended that from August 31st to 
November 30th. Then just a week or so ago we extended that to 
the entire country.
    We have had the Emergency Conservation Program funds for 
States to develop water resources. We just announced yesterday 
another $10 million in EQIP funds for severely affected States. 
We announced this innovative 150----
    Senator Wellstone. Could I interrupt you just for 1 second, 
Madam Chair, because I am going to run out of time. I 
appreciate what you have done, but there is a disconnect here. 
First of all, even for those producers that have crop 
insurance, they are lucky if it covers 70 percent; a 30-percent 
loss is the end for a lot of our independent producers.
    My question is whether or not--I understand some of the 
things you have done, but it doesn't, frankly, have any bearing 
on what we are dealing with in northwest Minnesota. My question 
is: A, do you support the Senate amendment? Are you going to 
support this disaster relief assistance, 79 votes? Yes or no?
    Secretary Veneman. We have----
    Senator Wellstone. You are the Secretary of Agriculture.
    Secretary Veneman. The Senate amendment that was passed, we 
did send a letter to Senator Daschle which clearly lays out the 
administration's position on that. This is not a bill that is 
passed out of both Houses of Congress and is on the President's 
desk to sign. We don't have a bill that has been passed and is 
conferenced, and we will continue to work with the Congress for 
appropriate disaster assistance within the principles that we 
have laid out as an administration.
    Senator Wellstone. Can I just take 30 more seconds? I know 
there are lots of people here that are interested and there are 
journalists, and I am not trying to grandstand, and I will try 
to say it quietly. I just think this is disingenuous--not 
dishonest. You are not a dishonest person and you work hard. 
The administration--this is a little disingenuous because if 
you as the Secretary of Agriculture support this amendment 
passed by 79 Senators, with only 95 there and we all know darn 
well that the House will move this forward. We need your 
support now. I can't for the life of me understand your 
resistance.
    I will tell you--I mean, I don't know, maybe you could 
start outlining exactly how much you are going to take out of 
corn, how much you are going to take out of soybeans, how much 
you are going to take out of wheat, how much--CBO won't let you 
do it, anyway. I mean, you are not going to be able to get the 
scoring that way. You could support this. You won't. If we 
don't get the support from the President and from the Secretary 
of Agriculture, I am really worried that the help will not be 
there for people. Then they will go under.
    Are you sure you can't today say ``I support this,'' it had 
strong bipartisan support, it is the right thing to do? You 
can't do that as Secretary of Agriculture?
    Secretary Veneman. I understand your concern, Senator, and, 
again, I will reiterate that the President has been clear on 
the principles that he had laid out for disaster assistance, 
and we continue to want to work with the Congress on disaster 
relief which is consistent with those principles.
    The Chairman. Thank you.
    Senator Fitzgerald.
    Senator Fitzgerald. Thank you, Mr. Chairman. Following up 
on Senator Wellstone's questioning, I just want to say I 
disagree with Senator Wellstone, and I actually agree with the 
administration. I want to compliment you for having the courage 
to say that we ought to give this relief within certain 
principles, and there is no easier way to score political 
points in Washington than just giving money to everybody. 
Everybody who comes in my office every day wants more money. 
Everybody wants more money. Somebody has to pay for it, and the 
money that we are giving out around here is not manna from 
heaven. It actually comes from the taxes and paychecks of 
people who work every day, and so we have a responsibility to 
treat that money very carefully and not just get out the ladle 
and not ask questions. I want to compliment you for your very 
careful approach in that regard.
    Madam Secretary, I authored a section of the new Farm bill 
that establishes a commission on the application of payment 
limits for agriculture, and it required the members of the 
commission be appointed 60 days after enactment, and I believe 
it was enacted July 13th. I am wondering if your Department has 
turned its attention to the appointment of commission members, 
and would you be able to give me an update on where the USDA is 
in the nomination process?
    Secretary Veneman. I would be happy to, Senator. As you 
know, this is a commission that is going to consist by law of 
ten members, one of whom the Congress appointed itself, and he 
is sitting right next to me. We do have one member appointed, 
but they are appointed three by the Senate, three by the House, 
and three by the Department of Agriculture.
    I can tell you that with regard to the--we have not 
received any announcement on the three by the Senate or the 
House. I have had meetings with my staff just this week on this 
very issue. We are very close to making final selections on 
individuals that we believe will do a good job on this 
commission. We would hope to be able to announce the USDA 
selections in the very near future.
    Senator Fitzgerald. Well, I appreciate that, and I am glad 
you are on top of it, and I just thought I would ask.
    I had hoped that the Farm bill would have included stronger 
limitations that I sponsored with Senator Grassley, and I do 
think it is at least good that we are having a commission to 
look into the effect of essentially unlimited payments to 
certain very large farmers.
    It has been called to my attention that the USDA has been 
in the business of buying mountains of nonfat dry milk that 
costs--we were talking a little bit earlier about it costing 
the taxpayers. This is costing the taxpayers millions of 
dollars every week for purchases and for ongoing storage. While 
the USDA has the authority to adjust the tilt twice a year, 
many have been surprised that the Government instead has chosen 
to continue to buy milk powder. My question is, Madam 
Secretary, when, if ever, will USDA decide to get out of the 
nonfat dry milk business?
    Secretary Veneman. Well, Senator, as you say, we do have 
mountains of it. We have over a billion pounds, maybe 1.4.
    Mr. Penn. 1.3.
    Secretary Veneman. 1.3 now, 1.3 billion pounds of nonfat 
dry milk in storage. I use this a lot when I talk to people, 
and they are shocked. I have actually been out to Kansas City 
and seen some of this milk stored in the caves. It only stays 
in condition about 3 years, and then we have to sell it for 
pennies on the dollar for pet food.
    Fortunately, we were very innovative--and I commend our 
staff at USDA for coming up with this Livestock Feed Assistance 
Program where we have been able to use just a small fraction of 
that milk, but it was an innovative way to help our livestock 
farmers and use some of that milk.
    We have issues like the tilt under consideration constantly 
at USDA. As you know, there is a tremendous amount of interest 
in this by various groups within the industry, the broad sense 
of the industry, from producers to processors and so forth. It 
is an issue that we continue to take under consideration, and 
even I have had some of the producers come to me as well and 
say we do need to figure out a way to get a handle on the 
amount of nonfat dry that is going into storage because it is a 
cost to the Government and the taxpayer, and so we are 
continuing to look at that very carefully.
    Senator Fitzgerald. Why do we buy it?
    Secretary Veneman. Why do we buy it?
    Mr. Penn. Well, this is a price support program. As you 
know, the Congress mandates that we support the price of milk 
at $9.90 a hundredweight, and since we can't physically buy 
milk, we have to buy products. We buy nonfat dry cheese and 
butter as a way to hold the price of fluid milk at $9.90. This 
is a price support program like any other, and the Government 
is the market of last resort.
    Unfortunately, these products, much like we were talking 
about loan rates, each product has its own set of market 
fundamentals, and oftentimes they get out of whack and they 
need to be adjusted. Nonfat dry is a case where we have had an 
excess supply, more supply than was demanded. The Government 
has been the market for that.
    If we adjust, we have to be careful that we don't adjust 
too far in the other direction. Then we just buy cheese or 
butter instead of nonfat dry. It is a very precarious balance 
that we are trying to maintain there, and we are watching this 
very closely, as Secretary Veneman said.
    Senator Fitzgerald. Well, if there anything we can do to 
help you get off this treadmill, please let us know. I 
certainly would be glad to assist you.
    It looks like I am running out of time, so I just want to 
thank you very much, Madam Secretary. I really appreciate your 
hard work. You weren't given a lot of time to implement this 
farm bill, so I want to compliment you and your staff for all 
that you have done to implement a very complex bill under a 
very short, tight deadline. We thank you for your good work for 
our Nation's farmers. Thank you, Madam Secretary.
    The Chairman. Thank you.
    Senator Stabenow.

STATEMENT OF HON. DEBBIE STABENOW, A U.S. SENATOR FROM MICHIGAN

    Senator Stabenow. Well, thank you, Mr. Chairman.
    First I would ask that an opening statement be inserted in 
the appropriate place in the committee's minutes, and thank you 
for holding the hearing.
    First, to Madam Secretary and your staff, I have heard many 
positive comments about your website, so I want to thank you 
for putting that together. It has been something that people in 
Michigan have found very helpful, and I hope you will continue 
to expand that.
    Michigan, because of its diversity, is impacted by every 
title in the Farm bill. Every provision, what colleagues have 
raised as issues are of concern to me in a wide variety of 
ways. I won't speak to other things that colleagues have 
raised, but I do want to emphasize the disaster bill, and also 
the impact that it has on the one question that I wanted to 
focus on.
    When we look at disaster relief and, Madam Secretary, when 
you talk about crop insurance and 80 percent of the insurable 
land being in crop insurance, the problem is that we have 
uninsurable land. In a State like Michigan, with a high level 
of specialty crops, our fruit and vegetable farmers do not have 
a comprehensive program. We have a few pilot programs that we 
are experimenting with that I was involved in helping to create 
in the last number of years, but we are talking about part of 
agriculture that doesn't have the full, comprehensive impact of 
crop insurance, which is of great concern to me. In Michigan, 
we have seen not one but 2 years for our grape growers now that 
are devastated, apples, cherries. In some cases on our 
orchards, we literally do not have enough cherries for one 
cherry pie, which is--it is incredible what is happening for 
folks.
    We are very much impacted. We appreciate in Michigan low-
interest loans but our farmers, frankly, have enough loans. 
This disaster package is very, very important.
    As it relates to the Farm bill--and I realize it is 
complicated in many provisions, and I appreciate the hard work 
that it takes to put it together. I share the concern about 
provisions in the Farm bill where we were very clear and where 
our expectation is that, in fact, these will be implemented. I 
speak, as no surprise, to areas of specialty crops and the 
commodity purchase. I am pleased to be co-chair of the Produce 
Caucus along with Senator Gordon Smith. We have faxed a letter 
to you signed by 31 Senators expressing great concern that the 
commodity purchase provisions that really are historic--
because, again, fruits and vegetable growers are not part of 
the Farm bill traditionally. They are not program crops, as you 
know. This commodity purchase is very important to them, and it 
was historic that we were able to get this into the Farm bill.
    I am concerned that--we said two things in there. We said 
that there would be a minimum of a $200 million purchase made 
every year, and in addition to that, we were very clear--and I 
would read--``The managers' intend that the funds made 
available under this section are to be used for additional 
purchases of fruits and vegetables over and above the purchases 
made under current law.'' This is very important. We know that 
there are purchases made every year under Section 32, and we 
want to make sure that this is a new program of an additional 
amount of $200 million a year. I would like to know from you 
if, in fact, you intend to follow through on this provision 
that is in the Farm bill, that is so important to a group of 
people who aren't covered on other pages of this document and 
who also find themselves in disaster situations where they 
aren't covered by crop insurance, and then they get hit on all 
sides. This is a very important part of agriculture in 
Michigan. While we are very diverse, this is an important part 
of agriculture for us. I am going to do everything in my power 
to see that the Department follows through on this language in 
the Farm bill as it relates to the commodity purchase, and I 
would like to know your intent.
    Secretary Veneman. Well, thank you, Senator. As someone who 
comes from California, you know that in my home State we hear a 
lot of the same concerns about some of the specialty crops that 
you are expressing from your constituents in Michigan.
    Let me first address the crop insurance issue that you 
raised. One of the things that we have continued to do since 
the implementation of the 2000 crop insurance reform and 
through our Crop Insurance Board, which we just appointed in 
the last several months, which is very active, looking at new 
products, new tools for crop insurance. Dr. Collins has been 
very involved since the 2000 bill was implemented and could 
comment more if you would like, as well as Dr. Penn, who 
oversees the Risk Management Agency.
    I do appreciate your issues about crop insurance. Crop 
insurance has been expanded to more and more commodities. We 
are constantly looking at new tools both in the specialty crop 
areas as well as the livestock areas, because these are--we do 
need to look at risk management opportunities here.
    With regard to the purchases, I am aware of your letter and 
the number of people who have signed it and the concern. As you 
know, we purchase a tremendous amount of product under Section 
32, primarily for our school lunch programs. My information is 
that for 2002 we have purchased $187 million already, as well 
as another $50 million through DOD for fruits and vegetables, 
and we are going to continue to purchase the maximum amount 
that we can through Section 32.
    I understand the managers' language, and there has been 
some disagreement about what this means in terms of the 
language of the bill versus the managers, but we are continuing 
to work that out with our lawyers.
    Senator Stabenow. Well, if I might just say, traditionally 
in the Congress language put in through the managers has been 
followed as a part of the statute. My position is that that is, 
in fact--we agreed, everyone sat around the table and agreed 
that, in fact, this was in addition. This is $200 million in 
additional dollars, and it is very, very important that this be 
viewed in that light.
    Let me also just say, back to crop insurance and all of the 
areas that are being looked at now, I know that there has been 
some discussion saying that our specialty corps could qualify 
under NAP. Let me just also say on their behalf that these 
farmers don't normally go to the FSA office, so they are not 
aware of what is available there. We had only 20-some farmers, 
20 or so that signed up through there because that is not the 
structure through which they work. It is very important in 
looking at these farmers to do this in a way where they are 
informed, where it is really something that is going to work 
for them, and we are not yet there. I really encourage you, as 
we are expanding crop insurance, to be aware of those 
mechanisms.
    Finally, I would just say--and I know my time is up. I 
would just say that from my perspective and on behalf of the 
fruit and vegetable growers that we are very concerned that 
there be a maintenance of a strict enforcement under 
restrictions that were in the 1996 bill and in the 2002 bill as 
it relates to planting fruits and vegetables on program crop 
acres. I know I have a different position than the leadership 
on the committee, but I have to say on behalf of our fruits and 
vegetable growers, they are very concerned that the 
restrictions and the enforcement of those remain in place.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Stabenow can be found in 
the appendix on page 56.]
    The Chairman. Thank you, Senator Stabenow.
    Senator Crapo.
    Senator Crapo. Thank you very much, Mr. Chairman. In fact, 
I am going to follow-up. My very first question was exactly 
what Senator Stabenow just finished on, and that is, the 
question of the prohibition on the planting of fruits and 
vegetables on acres enrolled in commodity payment programs. As 
you know, that was in the 1996 Farm bill. We continued it in 
the Farm bill we just passed. I am disturbed by reports that I 
am hearing that the USDA may be considering weakening those 
rules and the regulations and penalties relating to that 
prohibition. Can you provide me assurance that the USDA is not 
intending to weaken these prohibitions?
    Secretary Veneman. On the----
    Senator Crapo. This is the prohibition on planting of 
fruits and vegetables on acres that are enrolled in the 
commodity payment programs.
    Secretary Veneman. Right. We are maintaining the 
restrictions that were in the 1996 Act. I know there has been a 
lot of concern about that, but we are continuing to maintain 
those restrictions because we believe that is the intent of 
Congress.
    Senator Crapo. Good. I appreciate that. I just wanted to be 
sure that I covered that with you.
    Let me move to pulse crops next. On September 3 of this 
year, the USDA announced the loan rates and loan repayment 
rates for peas, lentils, and chickpeas. You know where I am 
headed. Unfortunately, it appears that the loan rates are based 
on No. 1-graded products, whereas Congress spoke clearly in 
establishing the loan program that it should be based on feed 
peas, No. 3 grade lentils, and on No. 3 grade chickpeas. 
Congress based these rates on these lower grades to provide a 
broader safety net and to create a system with less forfeiture 
and prevent the need for discount schedules. Growers recognized 
the need for a broader, less disruptive safety net and 
supported this approach.
    It is troubling to me that the USDA is acting contrary to 
congressional direction and without consultation with the pulse 
industry, and I would like to ask you what steps you are going 
to take to reverse this announcement on September 3 and do what 
Congress directed in the Act.
    Secretary Veneman. Again, as Dr. Penn pointed out maybe 
before you got here, there has been a complex calculation on 
the number of loan rates that we have had to do in USDA, and I 
am going to have him comment directly on the way that we 
arrived at the pulse loan rates and how we calculated those.
    Senator Crapo. Dr. Penn.
    Mr. Penn. Well, let me say that this is the first time ever 
that pulses have been included in the loan program.
    Senator Crapo. Correct.
    Mr. Penn. Most of this crop is contracted, and it is not a 
set of crops that USDA normally gathers information for because 
it has been contracted. There is not very much information 
available on acreage, on production, on prices, on utilization.
    To start a loan program from scratch, required that we have 
to go and find all of the information that we possibly could. 
We were not able to implement this program in the same detail 
that we would have liked to, and so we announced the national 
loan rate, no regional loan rates for these products, but we 
intend to do that in 2003, and we have announced that we are 
going to have a series of meetings with the various 
stakeholders, the producers, the processors, the contractors 
and others to try to develop this information and to try to 
make regional loan rates where possible. That is part of the 
background.
    To get to the specific point, this is another one of those 
topics that Senator Conrad and I have had some discussions 
about, and he has expressed the same concerns that you have.
    I have to tell you that there is an honest misunderstanding 
with the respect to the pulse loan rate. For instance, the 
$6.33-number that is put in the statute as the loan rate for 
dry peas is way above the market price for this crop for a long 
time. I mean, it has been several years since this crop reached 
that price. In fact, it has only been at that level in 2 out of 
the last 11 years. Because that was so much above the market 
prices, we thought that was the food price, rather than the 
feed price. We thought that was the price of, No. 1, dry peas, 
rather than feed quality peas.
    What we want to do, in establishing the loan rate, is to 
make sure that we have the loan rate and the repayment rate the 
same. We set the loan rate and said that is for food quality, 
and then we set a loan repayment rate for food quality as well.
    Senator Crapo. What you are saying is you do not believe 
that Congress clearly directed that we focus on feed peas, and 
No. 3-grade lentils, and No. 3-grade chickpeas?
    Mr. Penn. I understand that is what is in the managers' 
report, but I am saying because that price, the $6.33 was so 
far above where market prices had been, we thought that was the 
food-grade price, rather than the feed-grade price.
    Senator Crapo. Well, you are hearing from us that that is 
not what we meant.
    Mr. Penn. Well, as I said, we are trying to work with the 
various producers and with the trade association for this set 
of crops and to gather information so that in 2003 we can make 
changes in this program as are required.
    Senator Crapo. Do I understand you to say, then, that you 
are intending to move in 2003 to the feed peas, No. 3-grade 
lentils, and No. 3-grade chickpeas?
    Mr. Penn. We certainly want to follow the intent of the 
Congress, as Senator Conrad reminds me over and over. We 
certainly do. In this particular case, unlike the sunflower 
case, I mean, it was just a misunderstanding about that. 
Because these prices are so high, I mean, you understand it is 
going to cause acreage distortions, it is going to distort the 
economics among the various crops, it is going to draw acreage 
perhaps from wheat and other things because the guaranteed 
price is so high. We just did not think that that would be the 
intent, to tell you the truth.
    Senator Crapo. I understand. There can be quite a debate on 
what the impact of your decision will be as well, and the 
program was put together with a lot of careful facts. I 
appreciate your comments, and I am going to work together with 
my colleagues to see that we get this where we intended it with 
Congress.
    One last quick question. First of all, I have a lot of 
questions I will not get to, and I would appreciate the chance 
to submit them to you for response.
    The last quick question is that I do commend you for your 
implementation, Madam Secretary, of the sugar program. There is 
one part of that implementation I am a little concerned about, 
and that is that in the Farm bill, Congress eliminated the 1-
percent surcharge on CCC interest rates on sugar nonrecourse 
loans. Unfortunately, it appears that in implementing this 
rule, USDA has not eliminated the sugar loan rate.
    Do you intend to take action to correct that?
    Mr. Penn. No, Senator. This is a case where again, there is 
going to be a disagreement as to what is allowable in terms of 
implementation, but if I remember correctly, the statute allows 
us the discretion as to whether or not to lower this interest-
rate charge by 1 percentage point, 100 basis points.
    In effect, when the CCC operates the loan program, the 1996 
Farm bill obligated us to increase the interest rate by 1 
percentage point over the cost of borrowing money from the 
Treasury, and we do that for every commodity, and it is 
required in the law. It is only for sugar and only in this farm 
bill that the language was changed that you may not charge that 
for sugar.
    Because we wanted to keep consistency and fairness among 
all of the crops, and we wanted simplicity in implementing the 
program, we elected to leave it as it had been in the past.
    Senator Crapo. Even though Congress directed that we 
eliminate the surcharge, because we did not specify the loan 
rate, you are going to continue to apply the surcharge?
    Mr. Penn. It said we may or may not charge the additional 1 
percent. It did not mandate that we do that, Senator.
    Senator Crapo. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Crapo.
    [The prepared statement of Senator Crapo can be found in 
the appendix on page 58.]
    Senator Conrad.
    Senator Conrad. Thank you, Mr. Chairman.
    I would like to go back to the pulse-rate question and put 
up--again, I hope you understand the frustration, after 
spending hundreds of hours writing this farm bill, and 
basically you all fought us every step of the way, we get the 
job done in a way that we intended, and now we see you undoing 
what we spent hundreds of hours crafting.
    On the pulse crops, Senator Crapo has raised, and I 
appreciate, Senator, your raising the subject because it is 
another example of defying the intent, a clear intent of 
Congress.
    This is the managers' language with respect to the pulse 
crops, and this is language that I wrote. I do not know how it 
could be more clear. The conference substitute established a 
marketing assistance loan program for pulse crops, dry peas, 
lentil and small chickpeas. The loan rate for dried peas is 
based on U.S. feed pea prices. The loan rate for lentils is 
based on the price of U.S. No. 3 lentils, and the loan rate for 
small chickpeas is based on the price of chickpeas that drop 
below a 20/64 screen.
    That is what Congress said. That is what Congress directed. 
The statute specifies the rate, but that is not what you have 
done. You have created this differential.
    Now I heard in the responses to Senator Crapo what I hope 
to be an opening here. Madam Secretary, will you reconsider the 
actions that have been taken with respect to the so-called 
pulse crops?
    Secretary Veneman. Well, as Dr. Penn indicated, that it is 
clear from his answer that we will take another look at this, 
as we look at these for the 2003 crop year.
    Senator Conrad. You will not reconsider for 2002.
    Secretary Veneman. Well, we are in a position where we have 
tried to implement this farm bill, as has been indicated by a 
number of the members here, in a very short amount of time. Our 
people have done yeoman's work trying to do that and make the 
calculations. We are learning things from it, and we will 
reconsider certain things for the 2003 crop year. There is no 
question about it. Dr. Penn has indicated that.
    Let me----
    Senator Conrad. Can I just ask why were those of us who 
wrote it not asked? We are a phone call away. The intent of 
Congress, you have already acknowledged, should prevail. Why 
did anybody from the Department not pick up the phone and call 
us up, if you were confused about it, and just ask?
    Secretary Veneman. Let me just say, Senator, and this is 
very important, every meeting that our folks have had on the 
implementation of this farm bill has been attended by our 
lawyers. We are doing nothing contrary to what our lawyers 
advise that we can do with regard to the implementation of this 
farm bill. I just do not want people to get the impression that 
we are not following the law here because we are taking every 
action.
    There is, as I said before, a lot of discretion that the 
Department has to determine with regard to this farm bill, but 
I feel very strongly about getting legal advice, and our folks 
have had lawyers at every single meeting.
    Senator Conrad. You have said, Madam Secretary, you have 
said the lawyers disagreed. There was a disagreement among the 
lawyers. The lawyers do not run USDA, you run USDA. You make 
the decision, you have been appointed by the President, 
confirmed by the Congress to make those decisions.
    I would say to you, Madam Secretary, if you have lawyers 
that are confused on this point, you need new lawyers. It could 
not be----
    Secretary Veneman. I did not say lawyers were confused on 
this point. I talked about lawyers not agreeing on the Section 
11 issue with regard to technical assistance, and that was 
not----
    Senator Conrad. Are you saying that your lawyers 
consistently have advised you, all of your lawyers are telling 
you that what you have done is what Congress intended on 
sunflowers, on pulse crops? All of your lawyers are telling you 
that that was the intent of Congress?
    Secretary Veneman. Our lawyers are telling us that what we 
are doing is within the scope of the law that has been passed 
by Congress.
    Senator Conrad. Well, I will tell you, that is truly, it is 
unbelievable to me. I mean, I have read from the statute with 
respect to the oilseeds. I have read to you from the managers' 
report with respect to pulse crops. I wrote the section. There 
is no question whatever on what was intended. Everybody who 
participated in those talks knows what was intended, but that 
is not what you have done, and I find that very troubling 
because you have decided just to go your own way and defy what 
Congress has said.
    It is pretty clear you took $165 million out of this farm 
bill that Congress intended farmers to receive. Because when we 
went to CBO and asked them what it would cost to reverse 
course, they said it is $165 million. You took, on your own, 
$165 million right out of the minor oilseeds. I do not know 
what other conclusion one can come to. That is, this 
administration, through you, this department, you, you are the 
one that made these decisions, saying to Congress, ``We do not 
care what you guys say. We have our own view of what makes 
sense,'' and that is wrong.
    Mr. Penn. Senator Conrad, let me just respond that it is 
certainly not our intent--you talk about the intent of the 
Congress--but it is not our intent to violate the intent of the 
Congress. I mean, what we are trying to do, as the Secretary 
said, is implement these programs in the most fair, equitable, 
efficient way that we can.
    This conference was a long, drawn-out, protracted process. 
We had people in the conference, in all of the sessions. We had 
lawyers there. We had program analysts there. All of our people 
were privy to all of the discussions, and as Secretary Veneman 
said, our lawyers are not saying go against the intent of the 
Congress, we are just trying to interpret the statutes in the 
best way we can and use the flexibility that we have to try to 
put together these programs in a way that makes sense, and so 
we are trying to carry out the intent of the Congress. It is 
just that we do not always agree as to exactly what you 
intended, and there is not always unanimous intent among the 
Members of the Congress as to what was intended.
    Senator Conrad. I could just say to you, in conclusion, 
with respect to these provisions, I was there for every minute. 
I wrote these provisions. It is just as clear as it can be what 
was intended. The language is clear, and I hope we are able to 
resolve it.
    Mr. Collins. Could I just join this party for 1 second? I 
am not going to comment on your legal interpretation, Senator 
Conrad, but the impacts that you have described are something 
that I am not sure that we would agree with. We have been 
fortunate, for perhaps unfortunate reasons, to have very high 
oilseed prices this year, prices that are above loan rates.
    The description you gave earlier of a farmer who is losing 
quite a large amount of money because of this decision or the 
costs that you just gave of our decision, in terms of leaving 
$160 million on the table, quite frankly, I do not think I 
could support those kinds of estimates.
    Senator Conrad. That is what you told CBO.
    Mr. Collins. I never told CBO any such thing.
    Senator Conrad. Well, USDA told CBO that it would cost $165 
million. That is where the number came from.
    Mr. Collins. That may be somebody's version of baseline 
scoring, but in the real world, oilseed prices are well above 
loan rates right now, and we are not going to see those----
    Senator Conrad. Well, I will tell you it would be helpful 
if you had not told when Congress moved to put in place what 
they intended in the first place, that you did not act to 
subvert it by putting in a high score. You told them it would 
cost $165 million.
    The Chairman. Senator Lincoln.

STATEMENT OF HON. BLANCHE LINCOLN, A U.S. SENATOR FROM ARKANSAS

    Senator Lincoln. Thank you, Mr. Chairman.
    Once again, Mr. Chairman, thank you for bringing us here 
this morning and for your continued leadership on the Farm bill 
process.
    Thanks to our panel, particularly Secretary Veneman, for 
coming to the Hill today to visit with us and answer our 
concerns about the Farm bill implementation process. We have 
all spent some months at home in August with our farmers and 
our agricultural industries, and we are full of questions and 
concerns, and we do want to work together to resolve them.
    Like all of my colleagues here on the committee, I have 
been watching closely the Department's efforts to put our farm 
bill back into action. Farmers in Arkansas have been waiting 
anxiously for an implementation process that accurately and 
faithfully reflects the Farm bill that Congress passed; the 
reason being is that we worked closely with our producers when 
we were working hard on that farm bill.
    When we came to those committee meetings and when we came 
to those conference meetings, we came with the concerns of our 
producers and our agricultural workers. Many of those farmers 
really have made their planting and financing decisions based 
on what we discussed and what we fought hard for. That is where 
a lot of our really deep concerns come from is that we fought 
these battles based on what our farmers told us they absolutely 
had to have. They based their decisions on the fact that we 
passed that, and so here we find ourselves in a situation where 
we want to do what is best for the producers and the 
agricultural community of our country.
    Now we have the harvest is already upon our farmers in many 
parts of the country. Ours comes earlier than most in planting, 
and now we are already at harvesting. It is vitally important 
that the implementation rules be made and set into motion. If 
there is anything that frustrates farmers, it is being left in 
limbo, and for years they have been left in limbo, and that is 
what we want to resolve.
    The crisis that spurred Congress to an early rewrite of the 
old Farm bill still exists. These farmers are still confused. 
They are still not sure. They are still doubtful that 
Government understands their concerns and their problems. It 
has only been further exacerbated by the natural disasters that 
we have talked about. You have mentioned drought, flood, 
disease, of which we are all very, very aware.
    The anxiety that is surrounding the implementation process 
comes on top of all of these other existing problems, and being 
a farmer's daughter and from a seventh-generation Arkansas farm 
family, I know what it does to the family and to everybody else 
in the community when these crises exist, as well as these 
anxieties build.
    Farmers from my State are increasingly alarmed by the 
direction implementation seems to be taking in the Farm bill. 
Frankly, many of them are wondering what kind of farm policy 
the USDA is going to give them, and our hope is that you will 
work with us for a better understanding of what our intent was. 
Again, that intent definitely comes from the work that we have 
done with our producers and the constituency that we serve, and 
our hope is that you would want to serve that same constituency 
and making sure that we do implement it in a way that is 
consistent with what our intent was.
    They are still hurting, just as they were last year, and 
they wonder if the new farm policy is going to help them out. 
There is not a great deal of faith in the ag community as to 
what Government is going to provide them.
    With this in mind, I would like to voice my concerns about 
some specific implementation issues. I am sorry. I came 
earlier, I had to leave, and I am back, and I know everybody 
has been here for a long time. If I can just touch on a few of 
these, if you have some answers there. If there are others, we 
can certainly submit them in writing.
    One issue that many farmers back home are very worried 
about, and I believe Senator Hutchinson may have been brought 
this up earlier, was in regard to the calculation of updated 
base acreage, particularly involving soybeans. The point of 
including soybean acreage into an updated base plan was to 
enable the support payments to reflect the crop a current 
farmer would grow, a current farm would grow.
    It is vitally important that USDA try to get a fair picture 
of oilseed acreage history so that a farmer can receive the 
full support intended for him or her by the Farm bill.
    I also strongly urge you to work with farmers and help them 
come up with a fair way of updating their base. We had a few 
panic attacks when we were home in August with farmers who had 
gotten word that they were going to have to have their updated 
base acreage in by the end of August. Then we found out later, 
that that was just the beginnings of the process and that the 
deadline was not until later in early spring. Still, they are 
going to have to have the assistance of FSA and USDA to help 
them work through that.
    Similarly, I also want to urge you to work with farmers to 
find the fairest way of providing updated yields. That is going 
to be a critical part of what they have to do as well. Again, 
it is your field staff that is out there working with them, and 
I hope that they are going to get the correct directive from 
you.
    There are a variety of ways to indicate reliably a farm's 
production of a given crop from past years, so it seems really 
unnecessary to restrict the types of records that a farmer can 
use to do so. I hope that you will be flexible in that and you 
can work with them.
    I am also concerned about the ongoing problems with 
payments from settlement of the Pickford lawsuit. I do not know 
if anyone else has brought that up; the minority class action 
lawsuit that was settled a couple of years ago. To me, this is 
precisely the sort of issue for which we created a new 
Assistant Secretary of Civil Rights position. I would really 
like to know where the administration is in filling this new 
position. Are we moving forward?
    I know that there have been some demonstrations of the 
minority community of how important this is to them at your FSA 
offices and other places. I do not understand why we cannot 
move forward and resolve some of this and certainly find 
someone for that position. We created it. Let us utilize it.
    Finally, while I was pleased to see that the administration 
agreed to indemnify the poultry growers whose flocks were 
destroyed due to the avian influenza outbreak, I am extremely 
disappointed that USDA will apparently withhold a large portion 
of the money that was originally approved for the 
indemnification.
    Given the degree of damage this outbreak has unleashed, I 
urge you to review your decision on that, and release the full 
amount that was dedicated. This is a critical case where 
something could just devastate us. It did in many regions. If 
we do not act promptly on these, if the growers do not act 
promptly, it can become a nightmare nationwide, and many of 
them did act quickly, and we want to make sure that they know 
that USDA and the Government supports them in taking the 
correct kind of action.
    Just a short list of my concerns, Mr. Chairman. I am sorry. 
I know my time is up, and I just wanted to bring them up to you 
face-to-face, and if we have time, you can answer any of those 
or if you would like, you can also write me.
    The Chairman.
    The Chairman. Thank you, Senator.
    [The prepared statement of Senator Lincoln can be found in 
the appendix on page 60.]
    The Chairman. Senator Crapo, do you have any follow-up 
questions?
    Senator Crapo. Yes, Mr. Chairman. I have a bunch, but I 
will submit them. I just have one I would like to ask.
    Madam Secretary, the 2002 Farm bill creates a National 
Dairy Market Loss Payment Program, as you know. Also, as you 
know, I strongly opposed this program. I continue to have 
strong reservations that this program is not going to help 
dairy producers, and that recent studies lend credence to these 
criticisms that this program will result in lower prices for 
dairy producers, increased cost for the taxpayer, and sadly 
will do nothing to stop the number of failing dairies in the 
Northeast and the Midwest.
    Nonetheless, if we are to be saddled with this program, 
that its implementation ought to be fair. One of the concerns I 
have--I understand it has been raised, an issue that has been 
raised earlier by Senator Leahy--that in the outyears, you have 
indicated that the dairy producers will be allowed to choose 
the month at which they will begin the program.
    The question I have is with regard to the transition period 
and why that same approach will not be utilized in this initial 
transition period because it seems to me that it discriminates 
against the mid-sized dairies, the very ones that the argument 
was made it should have been created for.
    Is there anything that is going to be done to allow 
producers to choose the month that their payments begin in the 
transition period?
    Secretary Veneman. Senator, Dr. Collins addressed the dairy 
program in some detail, but the thing that we tried to do with 
regard to the transition period is make it the most fair that 
we possibly could, and so the decision was made to go back to 
December of 2001, which is the retroactive period for this 
particular program, the only one that is retroactive in 
operation.
    The fairness issue revolved around the fact that you 
already knew the prices, when you have a retroactive program, 
and that we do not do that with any other program, and that is 
why we said it would be fairest to everyone to put them back to 
the initial time period, and so that is why there was not a 
choice, and yet for 2003, and beyond, the producers will be 
able to choose because they will not have the benefit of 
knowing what the price is already going to be for the 
subsequent months, and so that is why the decisions were made. 
Dr. Collins went into that in much more detail, and we can have 
him do that again if you would like.
    Senator Crapo. Go ahead.
    Mr. Collins. If I could, at the risk of stepping into one 
more controversial issue. A criterion that people are using to 
judge our decisions as being unfair is the statement that large 
producers are benefiting more than small- and medium-sized 
producers.
    Senator Crapo. Right.
    Mr. Collins. Unfortunately, the way this program is 
constructed, that is the expected case no matter what you do, 
not only for this year, but for future years as well.
    Senator Crapo. I agree with you on that.
    Mr. Collins. The reason for that, of course, is that there 
is a 2.4-million-pound eligibility cap, not a payment limit. 
Congress could have chosen a dollar payment limit. Instead they 
chose a volume cap. That means, for a large producer, they are 
going to reach their cap within 1 or 2 months. By giving a 
large producer, and all producers, an opportunity to choose the 
starting month so that they can maximize their payment, guess 
what? The large producers market the whole 2.4 million pounds 
in the months with the weakest prices. They will choose April 
and May or whatever to start the clock under 2.4 million 
pounds.
    It is inevitable that the expected value of this program is 
the large producers will have a higher average payment rate 
than small- and medium-sized producers. There is no way around 
that. People keep criticizing us for that being an outcome of 
this program; it is endemic, it is inherent in the way the 
program was constructed.
    Senator Crapo. Doctor, I understand that. In fact, when we 
debated this, that was one of the arguments I made about the 
unfairness of the program and the impact that it was going to 
have.
    That having been said, it seems to me that at least we 
ought to try to do what we can within the flexibility of the 
program to minimize that impact, and that is the reason for my 
question.
    Mr. Collins. Fair enough.
    Senator Crapo. Thank you, Mr. Chairman.
    Secretary Veneman. Senator or Mr. Chairman, if I might, 
just for a minute, respond to Senator Lincoln's questions just 
quickly, and we can provide more for the record.
    I absolutely agree with you. We want to do the right thing 
with regard to implementation and do it as fairly as possible. 
Obviously, we are having to work under very quick time frames. 
Your colleague from Arkansas, Mr. Hutchinson, raised some of 
these issues as well, and we responded that we are working 
through our FSA offices to help producers make the kind of 
decisions that you have talked about in terms of bases and 
yields and the kinds of things that need to be updated and that 
they will need assistance from FSA.
    We have computer programs. Senator Hutchinson brought up 
the fact that not everybody has access to computers, but we can 
make that available through FSA, and we will do that and work 
with our FSA folks.
    Senator Lincoln. Even our FSA offices, some of their 
computers does not even coincide with the software that you 
send them, so they have to take it home.
    Secretary Veneman. We have a massive undertaking in terms 
of common computing environments. As I have testified at some 
other hearings, where USDA was on just computer hardware and 
software, I mean, we have a long way to go, but it is a very 
big focus, and one of the main reasons for the focus is 
because, if we do it right, we can better deliver programs to 
farmers, and we need to make them farmer friendly. That is a 
big area of concern.
    You raised the poultry issue, and I have to say, with 
regard to this avian influenza, USDA stepped in and took over 
basically the control of this disease because it was so quickly 
spreading. I have to say that I believe that was the right 
decision. It is normally left to the States to deal with this, 
but because of the speed with which this disease was spreading, 
we came in and took that over.
    We are now in the process of compensating the producers who 
were impacted, and there were, in terms of the amount of money 
that OMB approved, it actually anticipated that we had 
slaughtered more birds than we actually did in the end, which 
is why there is some discrepancy.
    I just want to emphasize that I could not agree with you 
more that these programs of eradication are absolutely critical 
to what we do in this country in agriculture. Whether it is 
avian influenza or it is a Medfly outbreak or it is the threat 
of foot and mouth disease, this is a major focus of what we do 
at USDA. We are working to do everything we can to make sure 
that the affected producers get their payments, and we are 
going to continue to do that.
    Senator Lincoln. Can I just comment that that is so 
important because it builds the faith so that the next time, if 
we go to, and we need the eradication, they actually believe 
that we are going to come through for them after they eradicate 
their----
    Secretary Veneman. We need to continue to work with 
industry so we do not get these outbreaks again because, as you 
know, it affects our exports and a whole variety of other 
things that we do, and so it is critical.
    The Pickford settlement issue has been something we put a 
tremendous amount of focus on, and I want to commend so many 
people, including FSA, and my chief of staff, Dale Moore, who 
have spent a tremendous amount of time on not only the Pickford 
settlements, but dealing with some of the civil rights issues 
because we take them very seriously.
    We are restricted, in many ways, on these Pickford 
settlements, by the very terms and the structure of the 
settlement itself. It is not a USDA issue as much as the 
structure of the settlement. Within the structure of that 
settlement, we are doing absolutely everything we can to get 
everything done as quickly as possible.
    We have spent millions of staff hours or thousands of staff 
hours and millions of dollars in trying to get these cases 
settled and this behind us and move on, and we are looking at 
new and innovative programs. I just set up, having met with 
some of the affected farmers, I know that they are concerned 
about whether or not they can get the kind of information they 
need from their FSA offices, so we have set up a hotline so 
they can call Washington directly.
    We are trying to address the issues in every way that we 
can, and we do take them very seriously.
    Senator Lincoln. How about the appointments?
    Secretary Veneman. Oh, I am glad you brought that up again. 
Civil rights, I have been interviewing candidates. We have not 
yet selected a candidate, but I started interviewing candidates 
probably 6 weeks ago, if not 2 months ago. We have been 
actively engaged.
    The Chairman. Thank you. Thank you.
    Madam Secretary, I want to pick up a little bit on the 
point that Senator Conrad has been making, and I want to focus 
it on the conservation provisions. Now I heard you talking 
about some discrepancy in the legal opinions regarding 
conservation or Section 11. Well, let us walk through it. Dr. 
Penn, Dr. Collins, let us walk through this.
    In the 1996 bill, Section 11 was added or created. At that 
time, EQIP was taken out and was not subject to the cap under 
Section 11 for technical assistance. It was specifically 
provided for EQIP and the authority separate from Section 11.
    Do we agree on that point? I just want to make sure we 
agree as we go down this ladder here.
    In the 2002 bill, we put all of the conservation programs 
on the same footing as EQIP by specifically providing the 
technical assistance apart from Section 11. Hence, all programs 
are exempt from any Section 11 cap on technical assistance, as 
long as the technical assistance money is provided through the 
authority separate from Section 11.
    Now, again, I am going to read a couple of things; one, the 
law. Section 1241. ``For each of fiscal years 2002 to 2007, the 
Secretary shall use the funds, facilities and authorities of 
the Commodity Credit Corporation to carry out the following 
programs under Subtitle (d), including the provisions of 
technical assistance,'' and then we list them all. 
``Conservation Reserve Program, Wetlands Reserve Program, 
Conservation Security Program, Farmland Protection Program, 
Grasslands Reserve Program, Environmental Quality Incentives 
Program, and the Wildlife Habitat Incentives Program.''
    Now there is a paragraph (b). It says that ``Nothing in 
this section affects the limit on expenditures for technical 
assistance imposed by Section 11 of the Commodity Credit 
Corporation Charter Act.''
    This was added to say that, when we talked with your people 
while we were developing this, we wanted to make it as clear as 
possible, and that is why we separated out and listed them 
separately, the conservation programs. That is why we said in 
the opening paragraph, including the provision of technical 
assistance for all of those programs and then we added 
paragraph (b).
    Paragraph (b) provides technical assistance under CCC for 
other things, for computers and other kinds of things outside 
of conservation. We asked for, and we obtained, from your 
general counsel, the memorandum to you, dated August 15th--
(Nancy Bryson).
    ``In passing the 2002 act, Congress intended to provide a 
new funding authority for the technical assistance that is to 
be made available to the participants in the seven listed 
programs,'' which I read for you. ``That is, funding from the 
program funds authorized by Section 1241(a).'' That is what I 
read. They intended an ``adequate level of funding...'' That is 
our wording. ``...not one subject to the arbitrary limit 
contained in Section 11 of the CCC Charter Act.''
    ``The conference managers rejected the Senate's approach of 
leaving technical assistance funding under Section 11, but 
exempting such funding from the cap to obtain adequate funding 
levels. Instead, they took as their guide,'' and this is key, 
``the funding mechanism for technical assistance under EQIP, 
which was outside of and not restricted by Section 11. Not only 
is this apparent from the text of Section 1241(a) `including 
the provision of technical assistance,' but it is stated as the 
intent of the conferees in the conference report accompanying 
the Conference Bill H.R. 2646.''
    ``It is clear from the text of Section 1241(a) and the 
underlying legislative history, that Congress intended the 
various programs made available under the section to be the 
primary source of funding for the technical assistance related 
to the respected programs.''
    Now I will say that in the back of this is an addendum from 
OMB saying they disagree, but you run the Department of 
Agriculture. I want to know why the legal opinion of the USDA 
general counsel is invalid and why it is disregarded by you in 
this provision.
    Secretary Veneman. Mr. Chairman, I have not disregarded the 
opinion of our general counsel. As you point out, you have the 
documents. There is a disagreement between the general 
counsels, and we have tried----
    The Chairman. Between the general counsel and whom? There 
is no disagreement. I just read it to you. I have the whole 
thing from the general counsel. There is no disagreement.
    Secretary Veneman. Well, you said you had another memo that 
disagrees from OMB.
    The Chairman. That is from OMB. That is right. I am just 
talking about why you are disagreeing with your general 
counsel's position.
    Secretary Veneman. I am not disagreeing with my general 
counsel, sir.
    The Chairman. You agree with general counsel.
    Secretary Veneman. Well, my counsel has given me that 
advice, and I do not disagree with the advice.
    The Chairman. Then what you are saying is that for those 
seven programs, that they do not fall, and according to you, 
they do not fall under Section 11 caps.
    Secretary Veneman. That is the advice we have been given by 
our general counsel.
    The Chairman. You agree with that advice.
    Secretary Veneman. I have no reason to disagree with that 
advice.
    The Chairman. Well, then, why was technical assistance then 
provided for EQIP and WHIP, two of them that were listed here, 
but not for the WRP and the Farmland Protection Program? USDA 
requested it, by the way. Why was it not?
    Secretary Veneman. Mr. Chairman, as I indicated, there has 
been a disagreement among the lawyers of the two, of USDA and 
OMB, on the interpretation of this section, and as a result of 
that disagreement, a compromise was worked out for the 2002 
year because the time was growing very short, and we would 
welcome the opportunity to continue to work with you and other 
Members of Congress to try to resolve this issue for the 
outyears, but we felt it was in the best interests of getting 
some of this technical assistance out to agree to this 
compromise for the 2002 year because of the shortness of the 
time.
    The Chairman. Well, this letter from Phillip Perry, whoever 
he is, at OMB, I hope he is not a lawyer. He is doing a 
disservice to his law school wherever he went, if he is indeed 
a lawyer, because he says, in his response to you, he refers to 
a colloquy between me, Senator Lugar and Senator Cochran. ``I 
assured Senator Lugar, on this colloquy on the floor,'' and he 
puts it here, ``that funding for technical assistance will no 
longer be affected by Section 11, as it pertains to these 
programs.''
    Then this guy, whoever he is, Phillip Perry, he says that 
``Although this colloquy adequately reflects the Senate's 
position and its version of the bill, the Senate's position had 
already been rejected by the Conference Committee, which 
dropped the Senate's amendment to Section 11 and added language 
that Section 11 limitation was not affected.''
    Is Phillip Perry sitting here? Well, maybe we have to have 
him up here. That is not worth the paper it is printed on as an 
opinion. Your general counsel is absolutely right. Senator 
Lugar believes that and so does Senator Cochran. Like I said, 
we sent a letter earlier last month. We sent it to OMB, and 
they have not responded. OMB will not respond to a letter sent 
joint by Senator Lugar.
    Now what am I to take of this? What is going to happen with 
the CRP program next year? Will the CRP program fall under 
Section 11 cap? Can you tell me?
    Secretary Veneman. Again, Senator, we are continuing to 
work on this issue with regard to 2003. As I indicated before, 
we would be happy to work with you and other Members of 
Congress to try to resolve this issue. Again, the reason we 
wanted to work out an agreement for the 2002 year is because 
the time was running short.
    We cannot spend the money without OMB's approval because 
they have to sign the apportionment, and therefore we thought 
it was in the best interests of the farmers and ranchers who 
are going to depend on this technical assistance, to get some 
agreement on the 2002 year, rather than sit at a stalemate 
because of the inability to come to agreement.
    Now, for the 2003 year, we will work with you and other 
Members of Congress to try to get this straightened out.
    The Chairman. Madam Secretary, we are going to have a real 
problem here, and it is a problem for Senator Conrad. I mean, 
we know what we wrote. We wrote a letter to OMB. Now what does 
Congress do? I am speaking past you, now, but what is Congress 
to do when the executive branch, through OMB, thumbs its nose 
at what we said, wrote, and what we clearly intended? What do 
we do?
    This is very frustrating. It is very frustrating. Maybe I 
should come to some conclusions that the administration, A, 
does not support conservation; that this administration, for 
all of their talk about supporting conservation, really does 
not support conservation, and this is the way they are going to 
get at it. They are going to bleed it dry because they will not 
provide the technical assistance mandatory that we provided in 
the bill. Again, I am talking past you.
    I hope that the people at OMB hear this, and if I have to, 
we will have them down here, and we will subpoena them. If they 
will not come, we will bring them down here, and I want this to 
be loud and clear. This is unconscionable what they have done 
in this.
    You are right. You are right, and your counsel is right. 
Senator Lugar, Senator Cochran, I found no disagreement on this 
in the way we structured this and what we intended. I do not 
find one disagreement in it. I cannot speak for the House side, 
but I do not find one disagreement over here.
    Again, I just wonder is CRP going to be subject to the cap 
for next year? Will the Conservation Security program be 
subject to the cap next year? That was never our intent. We 
have a real problem here when OMB just thumbs its nose at you 
and at us. I mean, you guys can fight amongst yourself, I mean, 
the administration, but when they thumb their nose at us, then 
we have a real problem.
    It is just frustrating, and I do not know that much about 
the pulse crops and everything, but I am sure that that must be 
frustrating for Senator Conrad, also.
    Let me pick up a couple of other things before I end my 
time here.
    Senator Hutchinson brought up this point about the rotation 
with the rice and the soybeans. Well, we have a similar problem 
with soybeans and corn. I have made the suggestion--I make it 
to you openly now--it seems to me, and I have asked our staff, 
and our legal people here, to see if there is any problem with 
this. They tell me there is not. Why do you not just use the 4 
years? Rather than trying to segment it year after year after 
year, why do you not just take the 1998 to 2001 and just 
average it over the 4 years? It would seem to me that would 
give you a better reflection of the base that you need for the 
program crop, in our case corn; evidently, in their case rice. 
Why can we not just use the 4 years?
    Mr. Penn. It would probably cost more money, and OMB would 
not let us do it.
    [Laughter.]
    The Chairman. Now there is an honest man.
    [Laughter.]
    Mr. Penn. That was a joke.
    [Laughter.]
    Mr. Penn. I am aware of that issue, and just like the 
question of the rice, soybean, wheat rotation in Arkansas, we 
are looking at that. We will try to find something practical. I 
mean, our objective is the same as yours. I mean, we have all 
of these rules and regulations, and we always find situations 
that do not exactly fit, and we want to do what is practicable 
and workable, so we will take a look at that.
    The Chairman. Well, I do not know, if we have to do 
something, maybe we will have to do it, maybe we can do it in 
Ag Appropriations or something, but it just seems to me the 4 
years makes sense. It makes sense to everyone I have talked to. 
It seems to be the most equitable way of doing it because then 
you do not penalize someone for maybe doing a total rotation 
every year rather than a 50/50 rotation every year.
    It just seems to me to make sense, and the most equitable. 
I do not know. Maybe we will have to get a cost estimate on it 
or something. I do not know, but it seem so to me that we have 
to work on that, and I look forward to working with you to find 
out how we answer that.
    On the drought bill, again, I will only say this. I read 
your letter, Madam Secretary, that you sent up on the drought 
assistance measure. I know a lot has been talked about here, 79 
votes here in the Senate. In it--I do not have it in front of 
me--but in it you stated it was the administration's position 
not to exceed the $180 billion that was in the Farm bill for 
the 10-year period of time.
    I did not ask you to bring this with you, but do any of you 
here have some estimate now, a later estimate of about how much 
we are going to save on LDPs this year? The last I saw it was 
$5.6 billion. Is that still ballpark, maybe a little bit more?
    Mr. Penn. The number that Senator Conrad obtained is the 
last one that I have seen.
    The Chairman. Is that about right?
    The point I made at the time is it seems to me then what we 
envisioned in the Farm bill is working, that we have a 
countercyclical payment, that our farmers, and some, God bless 
them, are going to get good prices for their corn and their 
beans in Iowa and other States this year--in Illinois, too, and 
other places--so then we do not pay them Government payments. 
That is the way we intended for this to work. If the prices are 
high, you get it from the marketplace, no Government payments.
    In the savings that accrue if there are some farmers 
hurting someplace because of acts of God, because of droughts, 
and floods, and tornadoes, and hurricanes and whatever else 
not, that it would seem to me we could take that savings, and 
rather than putting it back in the general fund, use that 
savings. We had $180 billion allotted to agriculture. Why could 
we not take that savings and apply it to the drought, which is 
estimated to be around about $6 billion?
    What I am saying to you, Madam Secretary, is that I do not 
believe we are going over the $180 billion. We are simply using 
it to respond to a legitimate hurt and a legitimate need that 
many farmers and ranchers have in this country. That is why I 
was a little dismayed at the letter. I was dismayed because it 
was opposing it, but to say that somehow we were not going to 
exceed the $180 billion. Why should the General Treasury take 
back the savings in LDPs? Why can we not use that for farmers 
that are hurting?
    It is just an open question? Why can we not use the savings 
from the LDP?
    Secretary Veneman. Well, again, these are complicated 
scoring issues that involve CBO and what can be counted as a 
saving and what cannot be counted as a saving, much beyond my 
capability to explain at this point. Again, we have laid out 
fairly clear principles for the drought assistance both in the 
letter and in numerous comments that we have made, including at 
this hearing, and we want to assist the producers that are most 
in need.
    It is important to point out, as I did in my testimony, 
that the Congress hasn't passed a drought relief bill, but what 
the USDA has done in the absence of a bill is we have taken 
every tool that we possibly can find to try to provide as much 
relief as we can under the circumstances. That is what we have 
continued to try to do at USDA, and we are continuing to look 
at even more tools if they are available.
    For example, this $150 million Feed Assistance Program was 
very unique. It was very innovative. It helped, as was brought 
up earlier, to use some of our dairy stocks. Everyone from--it 
is the first time haying and grazing has ever been opened up 
nationwide.
    We have tried to be very flexible in what we have done to 
try to address the issues of particularly the drought this year 
but other disasters as well.
    The Chairman. I compliment you on that. You have acted 
aggressively within whatever things you have available to 
address these issues on haying and grazing. Quite frankly, 
there needs to be some funds out there, too, because no matter 
how much haying and grazing you open up this year we still have 
the problem of last year's, both prevented planting and drought 
that we had last year that we tried to put in the Farm bill. We 
didn't get it in. We thought we were going to come back again 
and we did. There are a lot of farmers today still paying 
interest rates and paying back loans that they took out last 
year because they thought they were going to get a drought or a 
prevented planting assistance last year. They didn't get it, 
and then they thought, well, they were going to get in the Farm 
bill, and they didn't get it, and so there is still that 2001 
that has to be taken care of, and there is nothing you can do 
about that unless we have the money.
    Secretary Veneman. Well, and as you know, the 
administration supported drought assistance within the context 
of the Farm bill. We made that clear last year--or during the 
farm----
    The Chairman. We don't want to get into that.
    [Laughter.]
    Secretary Veneman. OK.
    The Chairman. We just really don't want to go down that 
road.
    Let me ask you about the Conservation Security Program. Can 
you assure us that USDA is moving forward with implementation 
of the Conservation Security Program as an uncapped national 
program consistent with the Farm bill's legislative language 
and congressional intent?
    Secretary Veneman. We are moving ahead to implement this 
provision. I might ask Bruce Knight to talk about what our 
timeframe is on this provision, but we are looking at all of 
the various issues that needed to be resolved in order to 
implement this program.
    Mr. Knight. We are continuing to move forward on 
implementation in keeping with the direction that was provided 
to us in the law. As we proceed forward with this, it is a very 
innovative, very new program. Every step we uncover more areas 
that we have to look at. We are now looking wide-ranging at 
what sort of standards need to be reviewed internally both for 
CSP and other programs that may result of having to look at 
these things, going through systematically to ensure that any 
efforts and every decision that is done here has to be done 
right. We believe strongly that it is more important to do it 
correctly than to do it rapidly and are trying to move forward 
in a very responsible, fiduciary manner in developing all these 
rules and regulations.
    The Chairman. Can you give us some idea of when we might 
see the first proposed rules? Because the final rules under the 
law are supposed to be issued next February. Do you have some 
idea of when we might see some proposed rules?
    Mr. Knight. Quite honestly, sir, I have been much more 
focused on getting the dollars out on the 2002 programs than 
moving forward with 2003 in the priorities that were provided 
by Congress in the direction that they had given--you had given 
us with the third-party technical service providers, then 
following systematically with those in as rapid a manner as we 
can. In that context, the CSP on the publication status that we 
have thus far appears that we should be able to come out with 
proposed rules late fall of this year.
    The Chairman. That would be good. Will your staff work with 
my staff to keep my office up-to-date on the schedule for 
implementation and developments in the process and so forth on 
this. I appreciate that.
    Regarding on the Grasslands Reserve Program, there is a lot 
of interest in the Grasslands Reserve Program. Have you made 
any decisions as to what agency is actually going to administer 
this?
    Secretary Veneman. No, we--someone else brought that up as 
well, Senator, and we are in the process of having FSA and NRCS 
work together on that issue and make the determinations of how 
the agency responsibilities will be defined, and I am sure we 
will get that decided in very short order.
    The Chairman. A lot of interest in that.
    One last thing here. Someone mentioned the website. Very 
good. Excellent. I compliment you highly on that. It is very, 
very good. Of course, there are a lot of people out there who 
don't have Internet access, but we did put something in there 
to expand broadband access, so I hope that is going ahead.
    This is a question that I encounter all the time. What is 
the mechanism in place for a local FSA official to forward a 
farmer's comment and/or questions on to the appropriate bodies 
within USDA? If, for example, the FSA official does not know 
the answer or it is a comment or suggestion for implementation, 
I have had a lot of farmers say, well, we went to the FSA 
office and we asked this question and they didn't know, but 
they were going to find out, and we have never heard back. Do 
you have a mechanism in place so that farmers, when they go 
into the FSA office and ask a question and this question has 
gone up the ladder, they get a return on it somehow? Do you 
have a mechanism in place for that?
    Mr. Penn. Well, Senator, I don't know if we have a formal 
mechanism that has a name, but----
    The Chairman. No, I don't care about that, just as long 
as----
    Mr. Penn. All of the people in the county FSA offices have 
been urged to send questions for which they don't have answers 
to Washington. They can do that through the State Executive 
Director, or they can pick up the phone and send it directly. 
Now, of course, with e-mail they can certainly send them in. We 
have been taking special pains, when we see two or more 
questions on the same topic, to try to as quickly as we can 
prepare an answer, get it back to the people who posed the 
question, but, more importantly, put it on the FSA website in 
the Q&A column there so that it is available to everybody all 
over the country.
    We appreciate your compliments on the website because we 
have really tried to use that as a new medium this time to 
disseminate information.
    The Chairman. Good.
    Mr. Penn. It gets picked up by the press. It is picked up 
by the extension services. It is utilized by lots of people.
    I don't know if we have a formal mechanism, but we have 
encouraged everybody when they run into something they don't 
know about to get it to somebody who does, and we try to 
prepare an answer and make it available widely.
    The Chairman. I appreciate that.
    I just have two other things. One, on the Rural Business 
Investment Program--and I am concerned about how we are moving 
ahead on that. The Farm bill has been passed now 4 months. I 
understand that USDA still has not signed an interagency 
agreement with the SBA toward development of rules and 
management of this important program. Again, can you give me 
some idea of how we are moving on that? I know you have a lot 
on your plate. I understand that. The need for investment 
capital in rural America is drastic. Can you give me some idea 
of how we are progressing with the SBA on this?
    Secretary Veneman. Senator, we will get you a response on 
this issue. I can't give you an exact timeframe, but I know 
that you and I agree on the importance of these rural 
development programs and investment in rural America. You 
mentioned our Broadband Program which is new in the Farm bill. 
We have a tremendous number of grants out with new funds that 
were provided by the Farm bill in the rural development areas, 
and we will check on this and get an answer back to you as to 
what timeframe.
    The Chairman. OK. I appreciate that. I have some, again in 
my own State--that is what happens when you go out for a month. 
You hear all these things, and what I heard was that people are 
looking at this provision and they want to know when they can 
start applying for some of this assistance. We have had some 
farm credit organizations, even some banks in Iowa, have asked 
me about it. I said, well, we just--I am sure that soon we will 
have some regulations out on it and get this agreement made 
with the SBA to move ahead on it. I hope that, again, your area 
of rural development that is doing this will move ahead 
expeditiously, working with the SBA to get this agreement made.
    I will close on a good note. I just want to personally 
thank you and your staff, particularly those at the Food and 
Nutrition Service, for your outreach and preliminary 
implementation work on the nutrition title. I have heard back 
really good things on it. You have made some terrific strides 
in simplifying program rules and expanding food stamp benefits. 
Now just make sure States know about the various options 
available to them and implement the food stamp changes and 
other programs like the free fruits and vegetables. I am 
getting a lot of interest in this free fruits and vegetables 
program, and, again, my staff has told me and I have 
experienced it at least a couple of times where your people in 
FNS have been really very good at getting information out and 
support and that type of thing. Thank you for that.
    Well, Madam Secretary, do you have anything else that you 
would like to add before I adjourn?
    Secretary Veneman. Well, Mr. Chairman, I would just like to 
thank you for holding this hearing. Again, I know there are 
disagreements in some areas, but I just want to say that the 
USDA staff at every level, from the top to the county office 
staff, have done a tremendous amount of work to implement this 
Farm bill in a very short amount of time, and our farmers and 
ranchers and all of us owe them a tremendous amount for 
everything they are doing to try to do the best job they 
possibly can.
    The Chairman. Well, I thank you. I would just note for the 
record that in your statement you said the bill includes 10 
titles and over 400 pages. I just want you to feel good. The 
1990 Farm bill had 25 titles and 751 pages.
    [Laughter.]
    The Chairman. We are making some progress, I guess.
    Well, thank you very much, Madam Secretary. We look forward 
to working with you, but we do have these problems in terms of 
carrying out what we believe is the law and the intent. Senator 
Conrad went over his; I went over mine, my problems with OMB, 
and this cannot stand. This cannot stand. Our Government 
operates--I am not going to give you a lecture on Government. 
You have been in it as long as I have, practically speaking. We 
only operate on comity and recognizing our spheres and where we 
act. We pass laws, and we put our intents. We write our reports 
to give clear indication of what we intended. If the 
administration--and I don't mean this one, any administration--
thumbs its nose at us, that breaks down the structure of our 
Government, breaks down the structure in which we operate. I 
don't like to see a Government operate where we are clashing 
all the time and continue to clash. That just breaks down, the 
very structure that has enabled our Government to succeeed for 
so long. OMB is on a dangerous course here. To the outside 
observer, that might seem small, well, this is just 
agriculture, what the heck? I am telling you, it is big. We are 
going to have to have some real serious meetings with OMB to 
get them to understand this.
    Thank you very much, Madam Secretary.
    Secretary Veneman. Thank you, Senator.
    [The prepared statement of Secretary Veneman can be found 
in the appendix on page 62.]
    The Chairman. Thank you. The committee will stand 
adjourned.
    [Whereupon, at 12:48 p.m., the committee was adjourned.]
   
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                         QUESTIONS AND ANSWERS

                           September 17, 2002



      
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