[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
   AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND 
                RELATED AGENCIES APPROPRIATIONS FOR 2009 

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS
                             SECOND SESSION
                                ________


     SUBCOMMITTEE ON AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG 
                  ADMINISTRATION, AND RELATED AGENCIES

                ROSA L. DeLAURO, Connecticut, Chairwoman

 MAURICE D. HINCHEY, New York          JACK KINGSTON, Georgia
 SAM FARR, California                  TOM LATHAM, Iowa
 ALLEN BOYD, Florida                   JO ANN EMERSON, Missouri
 SANFORD D. BISHOP, Jr., Georgia       RAY LaHOOD, Illinois
 MARCY KAPTUR, Ohio                    RODNEY ALEXANDER, Louisiana
 JESSE L. JACKSON, Jr., Illinois
 STEVEN R. ROTHMAN, New Jersey      

 NOTE: Under Committee Rules, Mr. Obey, as Chairman of the Full 
Committee, and Mr. Lewis, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.

       Martha Foley, Leslie Barrack, Jason Weller, and Matt Smith,
                            Staff Assistants
                                ________
                                 PART 3
                                                                   Page
 Department of Agriculture........................................    1
 Departmental Administration......................................  578
 Office of the Chief Financial Officer............................  746
 Office of the Chief Information Officer..........................  812
 Office of the General Counsel....................................  993
 Office of Communications......................................... 1056
 Office of the Chief Economist.................................... 1106
 National Appeals Division........................................ 1125
 Office of Budget and Program Analysis............................ 1131
 Homeland Security Staff.......................................... 1135
 Office of Civil Rights........................................... 1147
 Office of Congressional Relations................................ 1170
 Office of Inspector General...................................... 1177

                                ________
         Printed for the use of the Committee on Appropriations


















 PART 3--AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION,
              AND RELATED AGENCIES APPROPRIATIONS FOR 2009
                                                                      

                                                                      






















   AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND 
                RELATED AGENCIES APPROPRIATIONS FOR 2009

_______________________________________________________________________

                                HEARINGS
                                BEFORE A
                           SUBCOMMITTEE OF THE
                       COMMITTEE ON APPROPRIATIONS
                         HOUSE OF REPRESENTATIVES
                       ONE HUNDRED TENTH CONGRESS
                             SECOND SESSION
                                ________

     SUBCOMMITTEE ON AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG 
                  ADMINISTRATION, AND RELATED AGENCIES
                ROSA L. DeLAURO, Connecticut, Chairwoman
 MAURICE D. HINCHEY, New York             JACK KINGSTON, Georgia
 SAM FARR, California                     TOM LATHAM, Iowa
 ALLEN BOYD, Florida                      JO ANN EMERSON, Missouri
 SANFORD D. BISHOP, Jr., Georgia          RAY LaHOOD, Illinois
 MARCY KAPTUR, Ohio                       RODNEY ALEXANDER, Louisiana
 JESSE L. JACKSON, Jr., Illinois
 STEVEN R. ROTHMAN, New Jersey      

NOTE: Under Committee Rules, Mr. Obey, as Chairman of the Full 
Committee, and Mr. Lewis, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.

       Martha Foley, Leslie Barrack, Jason Weller, and Matt Smith,
                            Staff Assistants
                                ________
                                 PART 3
                                                                   Page
 Department of Agriculture........................................    1
 Departmental Administration......................................  578
 Office of the Chief Financial Officer............................  746
 Office of the Chief Information Officer..........................  812
 Office of the General Counsel....................................  993
 Office of Communications......................................... 1056
 Office of the Chief Economist.................................... 1106
 National Appeals Division........................................ 1125
 Office of Budget and Program Analysis............................ 1131
 Homeland Security Staff.......................................... 1135
 Office of Civil Rights........................................... 1147
 Office of Congressional Relations................................ 1170
 Office of Inspector General...................................... 1177

                                ________

                     U.S. GOVERNMENT PRINTING OFFICE
 48-056                     WASHINGTON : 2009






















                         COMMITTEE ON APPROPRIATIONS

                   DAVID R. OBEY, Wisconsin, Chairman

JOHN P. MURTHA, Pennsylvania        JERRY LEWIS, California
NORMAN D. DICKS, Washington         ALAN B. MOLLOHAN, West Virginia
MARCY KAPTUR, Ohio                  C. W. BILL YOUNG, Florida
PETER J. VISCLOSKY, Indiana         RALPH REGULA, Ohio
NITA M. LOWEY, New York             HAROLD ROGERS, Kentucky
JOSE E. SERRANO, New York           FRANK R. WOLF, Virginia
ROSA L. DeLAURO, Connecticut        JAMES T. WALSH, New York
JAMES P. MORAN, Virginia            DAVID L. HOBSON, Ohio
JOHN W. OLVER, Massachusetts        RODNEY P. FRELINGHUYSEN, New Jersey
ED PASTOR, Arizona                  JOE KNOLLENBERG, Michigan
DAVID E. PRICE, North Carolina      JACK KINGSTON, Georgia
CHET EDWARDS, Texas                 TODD TIAHRT, Kansas
ROBERT E. ``BUD'' CRAMER, Jr.,      
  Alabama                           ZACH WAMP, Tennessee
PATRICK J. KENNEDY, Rhode Island    TOM LATHAM, Iowa
MAURICE D. HINCHEY, New York        ROBERT B. ADERHOLT, Alabama
LUCILLE ROYBAL-ALLARD, California   JO ANN EMERSON, Missouri
SAM FARR, California                KAY GRANGER, Texas
JESSE L. JACKSON, Jr., Illinois     JOHN E. PETERSON, Pennsylvania
CAROLYN C. KILPATRICK, Michigan     VIRGIL H. GOODE, Jr., Virginia
ALLEN BOYD, Florida                 RAY LaHOOD, Illinois
CHAKA FATTAH, Pennsylvania          DAVE WELDON, Florida
STEVEN R. ROTHMAN, New Jersey       MICHAEL K. SIMPSON, Idaho
SANFORD D. BISHOP, Jr., Georgia     JOHN ABNEY CULBERSON, Texas
MARION BERRY, Arkansas              MARK STEVEN KIRK, Illinois
BARBARA LEE, California             ANDER CRENSHAW, Florida
TOM UDALL, New Mexico               DENNIS R. REHBERG, Montana
ADAM SCHIFF, California             JOHN R. CARTER, Texas
MICHAEL HONDA, California           RODNEY ALEXANDER, Louisiana
BETTY McCOLLUM, Minnesota           KEN CALVERT, California
STEVE ISRAEL, New York              JO BONNER, Alabama
TIM RYAN, Ohio
C.A. ``DUTCH'' RUPPERSBERGER, 
  Maryland
BEN CHANDLER, Kentucky
DEBBIE WASSERMAN SCHULTZ, Florida
CIRO RODRIGUEZ, Texas               

                  Rob Nabors, Clerk and Staff Director

                                  (ii)





































   AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND 
                RELATED AGENCIES APPROPRIATIONS FOR 2009

                              ----------                              

                                      Wednesday, February 13, 2008.

                       DEPARTMENT OF AGRICULTURE

                               WITNESSES

EDWARD SCHAFER, SECRETARY OF AGRICULTURE
CHUCK CONNER, DEPUTY SECRETARY OF AGRICULTURE
Dr. JOSEPH GLAUBER, ACTING CHIEF ECONOMIST, DEPARTMENT OF AGRICULTURE
W. SCOTT STEELE, BUDGET OFFICER, DEPARTMENT OF AGRICULTURE

                            Opening Remarks

    Ms. DeLauro. Good morning. The hearing will come to order.
    Welcome. Many thanks to all of you for being here today. I 
want to truly welcome everyone, and particularly I would like 
to welcome Secretary Schafer. Good to see you today. We had an 
opportunity yesterday to catch up for a bit in advance of 
today's hearing. And I offer you my congratulations.
    Secretary Schafer. Thank you.
    Ms. DeLauro. And good luck, and I truly do look forward to 
working with you in the next several months.
    I am pleased again to be with the subcommittee members and 
our Ranking Member, Mr. Kingston, as we begin the hearings for 
the fiscal year 2008 agricultural appropriations bill. I think 
it is 2009. In any case, that is where we are, 2009.
    I have said before, and so many of you have heard this 
before but I will repeat, that the issues that we confront on 
this subcommittee really do speak to what I view as the core 
responsibilities of the Federal Government. The work that we do 
here affects people's lives every day: keeping the control 
healthy and safe; preserving and strengthening our rural 
traditions, our traditional communities; thinking about 
problems like energy and its relationship to agriculture and 
what we can do in that area. And those are issues that are on 
the horizon. They are not just focused on what is our need 
today, but what we need to try to do in the future.
    And I believe that the USDA has a great opportunity to meet 
those obligations to its citizens: consumers who want safe 
drugs and food; farmers who rely on fair and functioning 
markets; children who need healthy food to be able to meet 
their full potential; and rural communities that need new 
opportunities to thrive.
    In order to achieve these goals, the agency must make sure 
that its actions keep up with its word. And I am afraid that 
with the budget that we have before us today, that may not be 
possible. With gross spending for all USDA programs in our 
bill, before offsets, cut by $402 million below 2008, we are 
going in the wrong direction. The WIC program, rural 
development, conservation, and research, all will encounter 
major shortfalls.
    Let me also add in terms of program termination, Community 
Connect broadband grants, community facility grants, farm labor 
housing, commodity supplemental food programs, multi-family 
housing direct loans, rural business grants, renewable energy 
programs, Section 9006 self-help housing grants, single-family 
housing direct loans, value-add producer grants--these are 
programs that are all eliminated. I believe that that is a 
problem.
    So I think that the trends are going in the wrong 
direction. Let me make a few specific comments about areas that 
I have concern with in the budget.
    Country of origin labeling continues to be a problem. I am 
afraid that its implementation is not moving it in an effective 
or timely manner. If we are in fact facing delays with COOL, we 
must know why and exactly how the USDA plans to get it back on 
track. Neither the subcommittee nor the American people should 
be willing to stay patient and to be able to just trust the 
administration considering the department's past record on 
COOL. I hate to say that the latest proposed user fee seems to 
be more of the same, thus another delaying tactic.
    Animal ID is also moving far too slowly. We have already 
made a significant investment, $118 million initiative, yet the 
program will not meet its January 2009 goal to have all 
registration complete. The previous Secretary indicated the 
program should be made mandatory, and then did the opposite. I 
have asked for clear cost estimates, and then received only a 
vague answer. No one should expect a blank check from this 
subcommittee.
    In addition, I am concerned that the budget undermines the 
priorities this administration has outlined in the new Farm 
Bill. With the conservation title, for example, the 
administration has proposed expanding it for the next five 
years. Yet this budget proposal includes significant cuts. The 
list goes on. Examples of a budget that flies in the face of 
the Farm Bill, the administration's rhetoric, and our nation's 
priorities.
    Some nutrition programs like CSFP that currently serves 
473,000 are zeroed out, while others like WIC are both short-
funded and allow for no increase in participation despite 
current trends. Rural development programs are short-funded as 
well, eliminating funds entirely, as I mentioned, for community 
facility grants, rural business enterprise, and opportunity 
programs.
    So, Mr. Secretary, I believe we have room for improvement 
in a number of areas. I thank you very, very much for being 
here today. I look forward to asking you about these concerns, 
some of which I expressed to you when we met yesterday. And I 
thank you in advance for working with us today and in the days 
to come.
    And I also am mindful that you were not the one that put 
together this budget. But regardless, again, as I said 
yesterday, you are the Secretary. You are the person to whom we 
need to address our questions and our concerns and figure out 
the ways in which we can carry out our goals and missions.
    Ultimately, all appropriations reflect our priority 
mission. We have big goals, and it is the detail, the budget 
and the basics that we discuss here today, that get us there. 
And I view, and I believe that you view, that we have the 
opportunity and the responsibility to get it right.
    So I thank you for being here. And with that, I would like 
to yield my time and recognize our Ranking Member, Mr. 
Kingston.
    Mr. Kingston. Thank you, Madam Chair. And let me welcome 
the Secretary and his team here. I am not going to say much. I 
do think that it is necessary to reduce the budget. I think 
that this budget is a good reflection of some of the needs that 
are out there. I would frankly like to see you go further. But 
I know that this committee always likes to have a good 
discussion about these matters, and we will.
    But I think that it is time that the agencies and the 
cabinets in Washington take a look at their budgets and try to 
figure out where there are some savings. So I applaud you on 
that. I think it is a good step. But I also know that in this 
process, there will be a lot of discussion in the months to 
come. And the chairwoman and I work closely on these things, 
and have philosophical disagreements here and there, but we are 
all very pro-rural America. And I know that you are pro-rural 
America as well.
    Before you leave, if you would----
    Ms. Emerson. I am going to come right back. I am going to 
come back. So you guys go ahead. I will be back.
    Mr. Kingston. And that concludes my statement, if Mrs. 
Emerson wants to say anything on that.
    Ms. Emerson. That is all right. I am happy to say welcome. 
But I will be back.
    Mr. Kingston. She has the normal task of all of us to be in 
two places at once. So that is why Congress was interested in 
the cloning bill. [Laughter.]
    Mr. Kingston. But I will yield back.
    Ms. DeLauro. How did you vote on that bill, Jack, by the 
way?
    I will ask my colleagues, members of the subcommittee, for 
opening statements and to put those in the record because we 
will proceed to testimony, Mr. Secretary. And I understand that 
your full statement will be put into the record. And we ask you 
to make your comments and summarize in any way that you see 
fit.

                  Secretary Schafer Opening Statement

    Secretary Schafer. Thank you, Madam Chairwoman. I do have 
some brief oral comments that supplement my written testimony, 
which we will submit for the record. Thank you for the 
opportunity to appear before the committee and the 
distinguished members of the committee.
    I am pleased to appear here to discuss the fiscal year 2009 
budget recommendation for the Department of Agriculture. I am 
joined today at the table by our Deputy Secretary, Chuck 
Conner, whom I believe you all know well. Our Budget Officer, 
Scott Steele, is on my left. And Joseph Glauber, our Acting 
Chief Economist, is here with us as well.
    I am grateful that the President provided me with this 
opportunity to serve the people of the United States in this 
role. And I will do my very best to promote and preserve and 
enhance the mission of the Department. And I hope that this is 
the beginning of us developing a relationship between the 
Department and this committee.
    And I can assure you, Madam Chairwoman, that while I am 
sitting in the chair of Secretary of Agriculture, we will give 
you the information you need. We won't have vague answers. We 
will make sure that we develop a working partnership and 
relationship here so that we can support you with the 
information you need to make your decisions.
    I am also really pleased to be able to lead this Department 
at a time in history when the agriculture economy has never 
been stronger. Market prices are at or near record levels for 
virtually all of our major crops, and income for 2007 in the 
agriculture arena will exceed $85 billion. That is up $18 
billion over the year before.
    Except for 2006, net cash income has been above $80 billion 
for each of the last five years. And we released just yesterday 
the estimates for 2008, which will establish a new record of 
over $96 billion of net cash income from farms and ranches in 
2008.
    I look forward to working with you, Madam Chairwoman, as 
well as the other members during this 2009 budget process to 
ensure that we have the resources that we need to continue 
making a positive impact on the well-being, the safety, and 
health of all Americans, while maintaining our fiscal 
responsibility.
    We are proud that the USDA's recommended 2009 budget 
advances the President's goal of achieving a balanced federal 
budget by 2012, while also encouraging economic growth and 
enhancing our security.
    Although I am new to the Federal budget process, and as you 
made the comment that I wasn't involved in generating this 
budget, certainly I have faced many challenges in developing 
budgets at the State level. As a Governor for eight years, I 
was required to make tough decisions on budget issues because 
of a balanced budget requirement by law in our State.
    Today I think we face similar challenges, trying to keep 
spending under control to meet the President's deficit 
reduction goals. But by focusing on priority spending, we 
believe that we present a good budget and sound budget for the 
Department.
    USDA's total budget authority request pending before this 
committee proposed an increase from $88 billion in 2008 to $93 
billion in 2009, while the discretionary appropriation request 
is at $17.4 billion, a decrease, as you mentioned, of 
approximately $400 million from the 2008 enacted level.
    The budget before you proposes to terminate about $1 
billion in lower priority earmarks and programs that duplicate 
other activities. But I would like to point out that even with 
a tight overall framework, this budget requests that additional 
funds be allocated to food safety, to nutrition, and high 
priority bioenergy research.
    The budget requests nearly one billion in appropriated 
funds for the Food Safety and Inspection Service, a record 
level of funding. This funding will ensure that the demand for 
inspection is met, and will build on our success in improving 
the safety of the food supply. We will continue to pursue the 
development and implementation of inspection systems that are 
better grounded in science, and that can increase the speed in 
which we detect and respond to outbreaks of food-borne illness.
    Our budget supports increased participation and food costs 
for the Department's three major nutrition assistance programs: 
Food Stamps, WIC, and Child Nutrition.
    The budget also includes additional funding for bioenergy 
research aimed at increasing the efficiency of converting 
cellulose to biofuels. Under the National Research Initiative, 
USDA will support efforts to develop and enhance feed stock 
sources and biocatalysts for cellulosic conversion. The 
Agricultural Research Service will focus on developing 
sustainable and efficient production of energy from a variety 
of agriculture sources and products, and enabling on-the-farm 
processing of cellulosic feed stocks.
    Our budget also provides support to ensure that critical 
program delivery systems are maintained so that the 
infrastructure is in place to build upon and meet the demands 
of implementing the new Farm Bill legislation and addressing 
other needs in rural America.
    The budget proposes funding needed to increase enrollment 
in our conservation programs at a record level of acres. These 
programs are essential to protecting and preserving our land, 
our water, and our air resources now, and for our future 
generations.
    Our budget provides $15 billion for Rural Development 
programs. This level of support maintains USDA's role in 
financing rural home ownership, rural utilities and business 
and industry, and includes almost $1 billion to protect the 
rents of low income rural residents.
    Within this program level, we are proposing to shift the 
emphasis from grants to loans, and from direct loans to loan 
guarantees. And I believe, Madam Chairwoman, you made some 
comments about the grants, and we will point out that we are 
not eliminating that support, that we are moving from grants to 
loan guarantees, which still allows the support programs to be 
delivered. These shifts really do allow us to continue to 
address the priorities of this committee and the agency, but at 
a lower cost to the taxpayer.
    All Americans, in particular our farmers and ranchers, know 
the importance of a healthy economy. It creates jobs and it 
boosts income. So keeping American agriculture strong means 
that we must continue to build on our recent successes in 
trade.
    We are forecasting record agriculture exports of $91 
billion in 2008, an increase of $22 billion in just the last 
two years. USDA has worked aggressively, along with USTR, to 
open new markets for American farmers and ranchers. And those 
efforts are showing results.
    Progress was made when the President signed the trade 
promotion agreement with Peru last December. Congress can 
continue to help create jobs and economic opportunity by 
passing the pending free trade agreements. Colombia, Panama, 
and South Korea are on the table now, and together with Peru, 
those four countries can provide the potential for $3 billion 
of increased agriculture exports from the United States. And we 
can see how important that trade is to our economy.
    To further support the pending free trade agreement with 
Colombia, I am hosting a CODEL to Colombia in mid-March. And I 
would invite you, Madam Chairwoman, to join us, and other 
interested members, and all Members of Congress to join me to 
learn firsthand how the free trade agreement between our two 
countries can increase economic opportunities for our farmers 
and ranchers here in the United States while helping to improve 
the lives of our Colombian friends.
    We also need to secure a new Farm Bill, Madam Chairwoman. A 
little more than a year ago, the Administration announced a 
comprehensive set of Farm Bill proposals for strengthening the 
farming economy in rural America. These proposals represent a 
reform-minded, fiscally responsible approach to supporting 
America's farmers and ranchers in our rural communities.
    We are working with Congress to shape a new Farm Bill, but 
as of today we don't have that new legislation in place. 
Because of that, the President's 2009 recommended budget for 
USDA is based on the provisions of the 2002 Farm Bill. It also 
reflects the Administration's new proposal. We do expect some 
changes to be made in the budget estimates when the new Farm 
Bill gets passed and signed by the President, and I am 
confident that will happen.
    In closing, I would like to emphasize that this budget 
provides the critical response and critical resources that we 
need to keep our agriculture economy strong, and it is in 
keeping with the President's policy of funding the highest 
priorities while restraining spending.
    Madam Chairwoman, I do submit my comments for the record, 
and our team is pleased to now take your questions.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                       COUNTRY OF ORIGIN LABELING

    Ms. DeLauro. Thank you very much, Mr. Secretary.
    Let me start with an issue that I mentioned in my remarks, 
and that is country of origin labeling. We need to make sure 
that USDA is on track and is going to implement COOL on time. I 
am concerned that we are not on track to follow the law and to 
be able to deliver the effort on time.
    As I said again, I believe that consumers have a right to 
know where their food is coming from. According to Food and 
Water Watch surveys, they have shown that over 80 percent of 
Americans want to know where their food comes from. The 
government, especially USDA, you have the responsibility to do 
that.
    We have a choice to avoid products that come from a country 
with a proven bad safety record when we know where they are 
coming from. You know, we have labels today for toys, clothes, 
electronic gadgets, but we appear not to have and can't get to 
having labels for what we put in our body and what we feed our 
family. I think there needs to be a common sense approach to 
make informed decisions about this effort.
    I will be straight out with you. I believe that there 
continues to be foot-dragging where it concerns COOL. Last year 
the House provided direction, a timeline to USDA to assure that 
the Department would implement the labeling law on time. USDA, 
unfortunately, missed the very first milestone.
    This committee directed that AMS republish a proposed rule 
for covered commodities by January 17, 2008. We are past that, 
a month past that milestone, and we are still waiting to see 
the published rule. Despite assurances from the staff that AMS 
is on track to meet the final September 30th deadline, the 
track record so far really doesn't bode well.
    Do you expect, Mr. Secretary, to meet the September 2008 
deadline for the other commodities?
    Secretary Schafer. I do. I have been catching up within the 
Department on this issue, and I am aware that we missed the 
September 17th deadline. But I believe that the agency has the 
resources and the dedication to be able to deliver this public 
policy by October 1st.
    Ms. DeLauro. And that includes all products, or just the--
is that fruits, fresh fruits and frozen fruits and vegetables, 
or it is with all the beef products, et cetera?
    Secretary Schafer. We are proceeding for all products.
    Ms. DeLauro. All products.
    Secretary Schafer. The Farm Bill, there are some issues in 
the Farm Bill that may change this. We don't know what is going 
to come out of----
    Ms. DeLauro. Well, you are accurate on some of the concerns 
within the Farm Bill. And what I don't want us to do is to go 
down a road that says, okay, and a few we can't get to resolve 
on the Farm Bill, though I will, as you will, work as hard as 
we can to make sure that we get a Farm Bill.
    What is the ability, if there are delays on the beef side 
of this issue, to deal with other commodities, to separate them 
out and get us on our way to where we need to go with the 
produce, with the fruits, vegetables, et cetera?
    Secretary Schafer. We are proceeding along the line that 
this----
    Ms. DeLauro. That we are going to do that?
    Secretary Schafer. That the public policy will be initiated 
on October 1st, and we will be prepared to deliver.
    Ms. DeLauro. Thank you. Let me also talk about the user fee 
proposal because I think that there is some concern with that 
effort, what ultimately winds up being a grocery store tax. And 
I think that that is the way it will be perceived, and that has 
its own set of repercussions.
    Given the delays surrounding the COOL over the years, my 
view is, as I again said in my opening remarks, that this is 
another delaying tactic. You are proposing legislation that 
would allow you to collect, deposit fees in an interest-earning 
account, and then use the fees and interest for random 
compliance audits on retail stores.
    Let me see if I can get a better understanding. What is the 
basis for the compliance checks? How would the compliance audit 
regimen differ from USDA's other food labeling and 
certification activities at the retail level? And how would a 
staff of ten, as proposed in the budget, cover 37,000 retail 
stores? How will USDA collect the fees from 10,000 grocery 
stores? And how have the food retailers responded?
    Secretary Schafer. Maybe Deputy Secretary Conner can walk 
us through that.
    Mr. Conner. Madam Chair, let me just say that in terms of 
enforcement of the country of origin labeling, I don't think 
the particular fee that is being proposed is going to impact 
that in terms of our audit and enforcement requirement. 
Obviously, we are proposing a----
    Ms. DeLauro. That we don't need the fee?
    Mr. Conner. Well, we need the fee because the budget is 
tight, Madam Chair. Now, if the fee is not provided, my point 
simply is that that doesn't mean we are not going to enforce 
country of origin labeling, and I don't want to leave the 
subcommittee with that particular thought.
    We are proposing an annual $260 fee for retailers. Now, 
that would be assessed against them. That would generate, I 
believe, 9.5, $9.6 million of revenue that we would use then to 
offset the general costs. But I want to be clear that that does 
not mean that if the money is not provided, this is not going 
to be an excuse for us to come in and say, we cannot do COOL. 
Okay? I want to be clear----
    Ms. DeLauro. So with that, we are keeping to the September 
30th deadline here?
    Mr. Conner. That is correct.
    Ms. DeLauro. With whatever we want to do. And what has been 
the response from the retailers?
    Mr. Conner. Well, let me just say I have not----
    Ms. DeLauro. Are they going to hear about it?
    Mr. Conner. I have not had any direct contact from them. I 
am certain they are preparing a response in this regard. I have 
no doubt that they don't like it. Most of them do not like the 
mandatory country of origin labeling rule to begin with, 
anyway. So----
    Ms. DeLauro. And keeping in mind in that regard, I took 
very seriously the earlier notions that we were loading on 
costs. And all along, the issue was, well, what are you going 
to be--what additional fees and costs are you going to put on 
industry and others, et cetera? So we have been trying to not 
add additional costs to be able to make sure that the costs are 
streamlined so we are not dealing with undue burdens.
    But I have your commitment that this is not getting in the 
way of any focus in terms of meeting the deadline that we have 
established last year?
    Mr. Conner. You do indeed.
    Secretary Schafer. That is correct. And Madam Chairwoman, I 
have just--to step back for a minute, I have some good----
    Ms. DeLauro. I would very much like to hear why we missed 
the first milestone, which I haven't heard yet. So, I mean, 
whether you--what has been the--why?
    Secretary Schafer. I am asking the same question.
    Ms. DeLauro. Thank you. Do we have an answer, Mr. Conner?
    Mr. Conner. Well, Madam Chair, I think the September 30th 
date is the key milestone here. And that is, I think, what we 
are focusing on. That is what the subcommittee is focused on, 
that this is operational this September.
    Now, this has been a tough challenge for USDA, Madam Chair. 
And I just--I will represent the interests of a lot of good 
career people who are devoting a lot of time to this issue. I 
mean, we have had, I believe, four legislative changes since 
the 2002 Farm Bill to country of origin, labeling dramatic 
changes in terms of implementation.
    We have been debating a Farm Bill for a year that has some 
fairly dramatic changes as well. That is not the easiest 
environment by which to put in a very, very major program. And 
this is a major program.
    Now, having said that, again, we are going to meet that 
September 30th date. But I will defend a little bit why we are 
not hitting absolutely every milestone on the money here 
because of--there has been problems along the way.
    Ms. DeLauro. Well, but the milestone deals with the rule. 
And so you have to have a rule before we are going to meet the 
date. So that is why, understanding where you are. Now the 
milestones were put in there, the dates were put in there, so 
we could get an understanding of what was happening, what was 
going on.
    So I believe that we need--you have truly an obligation to 
get back to us to let us know--I understand the problems and I 
understand good career people doing that. But you also have to 
have a rule that is forthcoming in order to do this.
    Secretary Schafer. Yes.
    Ms. DeLauro. When are we going to have a rule?
    Mr. Conner. Well, remember, we put out the proposed rule in 
2003 on this before we started having other legislative 
activity in this way. So we have----
    Ms. DeLauro. That is the point. 2003.
    Mr. Conner. Yes. So we haven't been sitting on this. We 
reopened comments on it based upon the most recent legislative 
changes, I believe some time last year, if I remember the early 
part of the year.
    So again, we have been moving on this, Madam Chair. And we 
are going to have this for you on September 30th.
    Ms. DeLauro. Well, I really, truly would love to have you 
get back to us on it. And I understand, and I would want to 
hear back on when we are going to deal with the proposed rule. 
I know the comment period was extended, the June 7th additional 
comment period. Please let us know----
    Mr. Conner. We will communicate with you on that. Yes.
    Ms. DeLauro [continuing]. How we are moving along this 
continuum so that this subcommittee is not in the dark. Thank 
you.
    [The information follows:]

                       Country of Origin Labeling

    USDA has developed a report regarding the implementation of country 
of origin labeling (COOL) provisions of the 2008 Farm Bill. We expect 
the report to be delivered to the House and Senate Agriculture 
Appropriation Subcommittees shortly. Our plan is to publish the rules 
in time to implement COOL by September 30th.

    Mr. Kingston. Madam Chair, what is this? Do you know 
offhand? It may be a motion to adjourn.
    As I understand it, we are angry at you guys, and I am sure 
we are right. [Laughter.]
    Mr. Kingston. I am sure we are right, but I am not sure 
why.
    Mr. Boyd. Are you angry?
    Mr. Kingston. Absolutely.
    Mr. Boyd. Tell us why you are angry.
    Mr. Kingston. Well, I am not completely sure why we are 
mad. But I am saying it is for good cause. I know that. But I 
think, actually, it has to do with FISA and that there may be a 
series of dilatory tactics. And the reason why I was asking 
that is because I was wondering what the Secretary's schedule 
was and what the chairwoman's schedule is and how we may 
navigate this, this unpleasant situation, which you all no 
doubt caused. [Laughter.]
    Mr. Boyd. No doubt.
    Mr. Kingston. Defending my position as a minority member 
here.
    Ms. DeLauro. I just would add a further. I thought members, 
at least a number of members, were on their way to California 
for the memorial service in California for our colleague, Tom 
Lantos. So I am surprised at the votes, to be very honest with 
you, and I--it is not today? The funeral is today.
    Mr. Kingston. Yes. I thought that was in the Capitol.
    Ms. DeLauro. No. That is tomorrow. That is the memorial 
service tomorrow.
    Well, obviously they made an order so that we are voting 
this morning. I don't know. Maybe you could tell us something 
about how many dilatory votes there will be, in which case we--
--
    [Laughter.]
    Mr. Kingston. Let me ask my staff to find out.
    Ms. DeLauro. I have plenty of time for the hearing.
    Secretary Schafer. As do we. We are on it.

                            ALTERNATIVE FUEL

    Mr. Kingston. In the time remaining, Mr. Secretary, there 
is a big national debate about corn being devoted for ethanol 
as we try to make the six million gallons of alternative fuel. 
And I think--isn't it six that comes from corn ethanol, or 
four? I know the numbers have changed.
    But anyway, the debate being is that the corn requires 
nitrogen and a lot of energy to convert, and then it diverts it 
from food stock. And in the South, we can't get it anyhow 
because we don't have enough infrastructure to get enough of 
the corn ethanol. And yet, of course, we are interested in 
biodiesel. We are interested in ethanol, but we would like to 
see it come from other sources.
    How is the USDA geared up to that? Because there is a huge 
consensus in Congress right now to get off Middle East oil and 
come up with alternatives.
    Secretary Schafer. I appreciate the question because this 
is one we deal with a lot and it is one I have personal 
interest in as well. The merging of energy and agriculture is 
starting to be a huge issue. And you point out the positive 
aspects of it is developing a dependency-free energy resource 
in the United States of America today is important for us.
    This budget includes research in bioenergy feed stocks. And 
I think the important issue here on the feed versus fuel debate 
is as we move to the cellulosic feed stocks for ethanol, it 
moves away from price-distorting efforts on corn. And the 
resultant efforts in wheat and other crops as well is that 
acreage is moved into corn and out of other commodity products.
    So the research effort, I think, is to take the next step, 
which is to move the feed stocks into non-feed-distorting 
prices. There is $59 million in the budget to generate this 
research, including facilities that can advance the technology. 
And that is like a $20 million increase, I believe.
    And we think this is an important mission of the agency, 
and we are very prepared and interested to pursue a line of 
renewable energy that is based on feed stocks that will not 
distort prices in commodity programs.
    Mr. Kingston. Well, I want you to know that this committee 
on a bipartisan basis is fairly united on alternative fuel. So 
we are interested in that debate, and we want to be part of any 
thinking that you have in terms of being able to help you.

                        SAVANNAH SUGAR REFINERY

    Another question that I wanted to ask is provincial. We had 
a sugar refinery explosion in Savannah last week, a tragedy. 
Six people were killed and about 30 or 40 were severely burned. 
But from an economic--so a human tragedy is huge, but then on 
the economic standpoint, I understand that that refinery 
supplied something like 60 percent of the syrup in the country 
in terms of sugar. I am not 100 percent sure what the number 
is, but I know that our refineries are really down in America 
at the time when sugar almost has an oversupply because of the 
Mexican imports because of the NAFTA restraints coming off it.
    I wanted to bring that up to you. I don't have a proposal 
about that right now, but is there anything that the USDA could 
help in terms of maybe a transition or bridge economically, or 
low interest loan to help the folks get this refinery back on 
line as soon as possible? It could be down for two years. We 
just don't know yet. They are still trying to find two more 
bodies, it is such a mess.
    Secretary Schafer. Chuck, do you want to----
    Mr. Conner. Well, Congressman, let me just say that in 
terms of the assistance, we might want to look at a potential 
business and industry loan application. RD is a possibility 
here. My understanding is that plant--the 60 percent figure, 
that plant processes a lot of imported sugar that is brought 
into the United States, processed, and shipped back out because 
it is not--it doesn't have a quota for import and use in the 
United States. And I believe that plant is about 60 percent of 
that imported market, but then is re-exported as part of that.
    So it is an important consequence down there. It is 
probably not going to directly so much impact the U.S. sugar 
supplies as it will the amount of sugar exports going back out 
of this country.
    But perhaps we ought to sit down and see if there might be 
a fit within one of our RD portfolios to see about some help 
there.
    [The information follows:]

                        Savannah Sugar Refinery

    USDA staff have met with representatives from Imperial Sugar to 
discuss programs in the Department that could help with the 
reconstruction of their facilities and provide other assistance to the 
community. One program that is available is the Business and Industry 
(B&I) Guaranteed Loan Program, which can provide loan guarantees up to 
$25 million. Rural Development staff will be traveling to the site to 
continue these discussions in the near future.

    Mr. Kingston. Okay. I will yield back my time for now, and 
hope we do, if possible, do another round. And I appreciate 
that.
    Secretary Schafer. And Congressman, from USDA, we extend 
our sympathies and condolences to your constituents that were 
injured in----
    Mr. Kingston. It is actually Mr. Barrow's district, but he 
and I both live in the county and we are very involved in it, 
both of us.
    Ms. DeLauro. Congressman Hinchey. There are about five 
minutes left in the vote. I think you will be able to get your 
questions in. I am going to make a suggestion that what we do 
is that after that, we go to vote, we come back, and then if 
there are subsequent votes, then we do this--we move on a 
rotating basis so we can keep the hearing going.
    Mr. Hinchey. Well, thank you, Madam Chairman.
    And Mr. Secretary, thank you very much and congratulations. 
We are very happy to see you and happy that you are in this 
position. We need somebody who is very competent and capable to 
run this very important operation.
    Secretary Schafer. That is Chuck. [Laughter.]
    Mr. Hinchey. As I was about to add, you are surrounded with 
competent people with whom we are very familiar. And I think it 
is the other way around also.
    I think that one of the major problems we are facing, 
obviously, is the allocation of resources in this country. We 
are seeing, on a large scale, how the administration is 
focusing more and more resources, more and more of our tax 
money, on military spending, which is now up about more than 60 
percent of the overall budget, and the domestic spending is 
somewhere in the neighborhood of 40 percent of less.
    And all of that is having very negative consequences. We 
are now spending more on the military than every other country 
in the world combined. So obviously we are overdoing it.
    And we need a policy that is going to refocus our attention 
on our domestic, internal needs. And I think agriculture is one 
of the significant aspects of that. And I know that one of the 
consequences of the budget recommendations that we are 
confronting is the elimination of the Commodities Supplemental 
Food Program, the Renewable Energy Program in the agricultural 
context. The Resource, Conservation, and Development Program 
also goes away. Grassland Reserve Program. Wildlife Habitat 
Incentive Program. The Watershed Survey and Planning program. 
All of those are either dramatically reduced or completely 
eliminated.
    And that is a great deal of concern for all of us who come 
from rural areas, even in the state of New York, for example. 
So I just hope that we can work with you and focus our 
attention on this issue, and get a budget that deals with these 
issues more effectively.

                   BIOFUELS INITIATIVE AND FOOD COSTS

    We are also facing a general economy that is in very 
questionable condition now. It looks like a recession. The 
question is how deep and how long that recession is going to 
be. And one of the major aspects of that is also inflation. We 
are seeing a dramatic rise in the cost of oil, but we are also 
seeing a dramatic rise in the cost of food.
    And that dramatic rise in the cost of food, some of which 
is associated with the biofuels program, is having already a 
very negative impact on a lot of people. The poverty level in 
America is increasing. Malnutrition is going up. And the 
ability of families to function properly is being impacted by 
this.
    So I am wondering if you or other members can talk to us 
about how this biofuels initiative, which is drawing more and 
more agricultural land out of the production of food, raising 
the price of food, particularly cereals and things of that 
nature which are basic and fundamental to middle income and 
lower income people across the country, how does it make any 
sense for us to do that, particularly when all the new 
scientific research shows clearly that the production of 
biofuels is more expensive and it has a more negative impact on 
global warming? How can we reverse this process and pay more 
attention to the need for food and fiber and nutrition of the 
growing population across America?
    Secretary Schafer. Congressman Hinchey, I may ask our 
Acting Chief Economist for some comments here, as he has looked 
at the impacts of this budget on the economy and on the 
lifestyles of people in rural areas.
    Mr. Glauber. Thanks very much. Let me address a couple 
things. But first let me talk a little bit about biofuel. 
Again, as you have noted and others have noted, there has been 
a dramatic change over the last two or three years. Now we are 
seeing corn prices in the range of $5. And most baselines, most 
projections over the next ten years, show prices remaining 
very, very high for commodities.
    That said, I think we are looking at CPI for food to be in 
the 3 to 4 percent range. That is up from where it has been 
over the last decade, in the 2 percent range. We are expecting 
that to fall again. I think what was mentioned earlier, the 
real key will be the development of these longer run 
technologies, like cellulosic ethanol. And I think there, if 
you look at what it in the Energy Act of 2007, that a lot of 
the growth in the out years, of course, is attributable to 
cellulosic or non-corn-based ethanol or non-grain-based 
ethanol.
    So I think that what we are seeing, at least in our 
projections, is that the current situation will be tight 
because stock levels are so low. But we do expect to get more 
of an equilibrium, that prices will come down, moderate a bit. 
But this means tighter margins for cattle producers----
    Mr. Hinchey. Can I interrupt you and just ask what makes 
you think that? What makes you think the price is going to----
    Mr. Glauber. Largely----
    Mr. Hinchey. Demand is high.
    Mr. Glauber. Right.
    Mr. Hinchey. The population has increased. The economic 
circumstances are declining. The number of people suffering 
from malnutrition--in fact, the number of deaths in our country 
as a result of malnutrition--has gone up significantly.
    How do we imagine that this situation is going to alter and 
to reverse itself?
    Mr. Glauber. Largely through technological changes, both in 
terms of corn yields--which have been increasing at a fairly 
dramatic pace over the last ten years. We expect that to 
continue. We also see improvements in technology of just 
extraction of ethanol from corn itself, improvements there.
    There is no question, and I don't mean to look at this with 
a blind eye. We certainly see a tight situation, very tight--we 
had a tight crop this year. That would be a real concern 
because of the low level of the stocks.
    On the other hand, there is another area that can come into 
production. Back in 1996, for example, if you just look at the 
eight major field crops, we had 16 million more acres in 
production then. And in CRP acreage, the same. This isn't all 
in CRP. This is just to say there is an area out there that can 
come into production. We expect that it will come into 
production from other crops and we will see some supply 
response in higher prices.
    Mr. Hinchey. Well, I will be surprised, frankly, if that 
happens any time soon because all the momentum is in the 
opposite direction. And it seems the driving force is pushing 
that momentum in the opposite direction. I would hope that what 
you are saying is correct, but I think it is going to take some 
strong initiative on the part of your Department, the part of 
the Congress, and the Administration to deal with this. And I 
hope that we can cooperate with each other and try to address 
it in a productive way.
    Thanks. Thank you very much.
    Mr. Glauber. Thank you.
    Mr. Hinchey [presiding]. I guess we are going to have to 
call a brief recess, if that is okay with you.
    Secretary Schafer. We will be here.
    Mr. Hinchey. We will call a brief recess, and I am sure the 
chairwoman will be back directly. Thank you very much.
    [Recess.]
    Ms. DeLauro [presiding]. We are going to resume, and I will 
recognize Congresswoman Emerson.
    Ms. Emerson. So sorry. Thank you, Madam Chairman. I am so 
sorry I had to race off to the other hearing. But it was going 
to be done by 11:00, so I thought I had better do it first.
    And welcome, Secretary Schafer. I know it is a whole new 
ball game for you, but have great marks for being an excellent 
governor of North Dakota, and I know you are proud of your 
service to that state. And we are lucky to have you here in 
D.C. for however short a time it might be.

                         FARM PROGRAM PAYMENTS

    Anyway, I wanted to ask you a couple of questions, or 
several, but we will see how many I have time for. I understand 
that the Department is going to review the rule defining 
``actively engaged'' in farming, and has already begun 
reviewing the rule regarding the participation in farm programs 
by individuals involved in or engaged in cash rent, crop rent, 
crop share rent, and flex leases.
    And I know you also know that since this is a time of 
historically high prices and great opportunity for row crop 
producers, it is also a time of high risk. And changes to the 
``actively engaged'' rule and the rule regarding lease 
arrangements will likely impact farm program eligibility. These 
rules will also impact the amount of risk that an individual 
farmer will have to bear.
    My question is: Will the USDA accept the payment limit 
commissions recommendation and ``avoid the changes that force 
risk-shifting from a landlord to a tenant''? And is there any 
information that you all can share regarding the timing for 
that decision and the amount of time over which anything 
changes might be phased in?
    Secretary Schafer. Let me ask our Deputy Secretary to 
answer that question because he has been involved in it 
internally.
    Mr. Conner. Congresswoman Emerson, as you know, the current 
definition of ``actively engaged'' in farming really dates back 
a very, very long period of time. I am thinking the mid-1970s, 
although I am not totally sure about that. And this was a key 
issue that was discussed and debated as part of the payment 
limit commission report, which was mandated as part of the 2002 
bill.
    The payment limit commission was very, very clear about 
saying that any changes to the ``actively engaged'' in farming 
should be done at the same time that we put forth a new Farm 
Bill. They said we should not do it. The Department accepted 
that recommendation and did not attempt in that interim period 
to redefine ``actively engaged.''
    We have included it in our Farm Bill recommendations as an 
area that we are going to pursue in implementing the new Farm 
Bill to come up with a new, what we believe is a more modern, 
definition. I will tell you as well, though, Congresswoman, 
that we have also been clear that this is going to be a very 
open process.
    This is tedious business to try and slice it such--we all 
want farmers to be the beneficiaries of our farm program 
benefits. No question about that. That is easier said than 
done. We understand that. That is why it is going to be a very 
open and transparent process that we go about once we have a 
new Farm Bill in place to actually put this new definition of 
``actively engaged.''
    Ms. Emerson. So then are you basically saying, then, it 
will probably be phased in over a period of time as opposed to 
just like with meat axe or something like that?
    Mr. Conner. Well, it is going to take a while, I guess is 
what I am telling you. And I can't probably define it any more 
tightly than that. But, I mean, this is not something you are 
going to see us lay on the table the day after the Farm Bill is 
signed and say, okay for the 2008 crop, here is the new ball 
game in town. No. That is not going to happen.
    Ms. Emerson. I appreciate that. Thanks.

                          CUBA TRADE RELATIONS

    Mr. Secretary, in your bio it says how hard you worked to 
normalize trading relations with China and develop that nation 
as an export market for North Dakota farm products. And as you 
know, many of us have been working a long time to do something 
similar, perhaps not with the same vigor, with regard to the 
country of Cuba.
    And I greatly appreciate all the work that the 
administration has done with other countries to break down 
trade barriers. But this is really kind of the elephant in the 
room issue. It is something that many of us on this 
subcommittee feel very strongly about.
    And it is kind of hard for me to talk to my farmers, who 
really kind of brought the issue of Cuba up with me right after 
I got elected in 1996. It is hard to discuss with our Missouri 
farmers, and I know farmers from all across the country, 
including those in North Dakota, about how we need to make 
concessions in WT negotiations when we tie our hands and limit 
access to the Cuban market.
    And so I would ask, with the full knowledge that you do 
have a boss----
    Secretary Schafer. Thank you.
    Ms. Emerson [continuing]. That in your time as head of the 
people's department, that you do examine ways for the USDA to 
increase our agricultural exports by decreasing the obstacles 
that the administration kind of throws up time and time again.
    And I would just simply ask: Is this something that you 
would be willing to examine? And I won't ask you to go any 
further than that.
    Secretary Schafer. Yes. Thank you, Congresswoman. And I 
would point out that our cash sales for agriculture exports to 
Cuba are growing. They were up 10 percent from between 2006 to 
2007. And so we are finding ways to get products in that 
market.
    Importantly, the effort is to get food products into the 
hands of the people who need them in Cuba. And we are mindful 
of cash being used that otherwise could be diverted for other 
issues, and issues of security and responsibility for the 
United States as well. So the cash transfer for egg products is 
working. We are increasing our exports to the North Dakota 
farmers as well.
    And we will do everything we can to continue on that 
process, being aware that the President has said anything in 
the new Farm Bill that contains a lessening of those 
restrictions on Cuba will be vetoed.
    Ms. Emerson. Well, I mean, while we have increased our 
exports, the opportunity to further increase them is really 
there. And as one who has been several times to Cuba, and we 
actually do see that the foodstuffs that we are exporting get 
into the hands of normal people as opposed to tourists, and it 
is not just going to the tourists.
    Secretary Schafer. Sure.
    Ms. Emerson. But I know your sensitivity and I know how 
difficult it is. I don't mean to put you in a tough position on 
this issue.
    My time seems to be up. But let me stop here, and I have 
got some other questions. Thanks.
    Ms. DeLauro. I will just make two very quick points. If we 
are looking for new markets and new opportunities for our 
farmers, and this is a bipartisan issue, that we really ought 
to understand the nature of the Cuban market and begin to do 
business for our business people and our farmers and ranchers. 
I mean, I have been there. Mr. Farr has been there. Ms. 
Emerson. Several others on a bipartisan basis. Mr. Hinchey, et 
cetera.
    In addition to which is where cash gets diverted and so 
forth and so on, my God, we are looking at countries that we 
trade with that we have no idea where the cash or the money is 
going and what it is about. And in fact, they are Communist 
countries and they are harboring terrorists.
    Secretary Schafer. Good point.
    Ms. DeLauro. So not your--in any case, Mr. Farr, you are 
on.
    Secretary Schafer. The USDA is prepared to deliver the 
public policy that we have in front of us.
    Mr. Farr. Well, I hope you will also deliver some of that 
policy in your private talks inside the White House.
    I want to just congratulate you on your post. It is really 
important. This Department has got everything that all the 
other departments in government have, with the exception of 
DOD, and yet you feed DOD. So it is very, very important.
    And I am looking at your bio, and it is the same as my 
position here and background, working with the Western State 
Conference of Legislators, very involved with North Dakota 
legislators.

                        COLOMBIA TRADE RELATIONS

    Thank you for the invite to Colombia. I am a returned Peace 
Corps volunteer, lived in Colombia for two years, and spent the 
entire last week in Cartagena with 200 returned Peace Corps 
volunteers. Colombia is a very exciting country, very 
entrepreneurial.
    And I hope that there is one thing you will do on your 
trip, and that is where the question is being asked: He is not 
selling this trade agreement in Colombia; he is selling it 
here. And the concern that is here is a lot of the concerns 
that have been discovered post-NAFTA, which is about the 
negative impact to the countries.
    The imports that are coming in from Colombia are already 
here. I can't find one single new product that Colombia could 
bring into this country that they haven't already brought in.
    What I do hear a lot is what is going to happen. Because we 
are working very hard to prevent campesino farmers, who are in 
successful agriculture, of going into coca growing. And the one 
concern is what is our imports going to do to displace them?
    And that hasn't been a very well-answered question. So I 
hope that your CODEL will--your trip, and can start asking the 
Colombians, what are you going to do? We have all kinds of 
economic adjustment programs when people are impacted or 
dislocated in this country. I am not sure how good they are in 
Colombia, and I couldn't get that answer last week.

                            ENERGY RESEARCH

    I am also a little bit concerned about this jump in 
suddenness of putting all the research into new energy. First 
of all, it is the commodity programs that are looking for that, 
and they have already got a hell of a lot of help. And we have 
a Department of Energy. And I find the Department of 
Agriculture really the first responder.
    You are the first responder to what is nutrition and how do 
you get nutrition into schools. And I hope that any of that 
work you are doing and the research in those areas--and you are 
also the first responder to any bad bug that is here. And if 
this research money is being diverted now to look into this 
cellulose technology, I think the private sector and certainly 
Department of Energy and others can do that.
    California isn't waiting for anybody in the Federal 
Government to jump on the energy bandwagon. We got billions and 
billions of private dollars researching every aspect. So what I 
am worried is what you take away from to enter into this sort 
of new initiative.

                         LIGHT BROWN APPLE MOTH

    And while I am on that sort of bad bug issues, my district 
is the epicenter for the light brown apple moth, and you have 
put a lot of effort into it. But what has happened, I mean, is 
the CDF, California Department of Forestry, is doing the--
Agriculture is doing the spraying, and that spraying has just 
created a 100 percent protest.
    Even though it is a pheromone and inert and all of that, it 
is now the question that--the compound that it is mixed with. 
And there has yet to be any assurance from anybody at the 
medical level that this is safe, although you are spending a 
lot of money trying to do public relations.
    And my question is: Have you considered bringing together 
some Public Health Service officials, including the U.S. 
Surgeon General, to review the situation? You are going to 
begin the spraying. The Department is going to begin the 
spraying fairly soon, in the spring here--to provide some 
guidance to the public on the effects.
    And this is a huge backlash. And I think the pheromone was 
the least dangerous. But nobody likes being sprayed, even if it 
is water. And there has been lousy public relations. The 
Department has had to spend millions on kind of cleaning up bad 
public relations. Where the question lacked is--people are 
filing lawsuits and doing all kinds of stuff--is that there has 
been nobody from the health side. And I hope to bring that to 
bear. I am not going to ask-- maybe we can talk about that 
more.

                            SPECIALTY CROPS

    What I am also very interested in is that--the specialty 
crops. You know, the House level of funding was 200 million. 
And I think that is what you got--we got support from the 
Department.
    What I want to know is: What areas within the specialty 
crop industry does the Department plan to focus with this 
research initiative?
    Secretary Schafer. Areas meaning which foodstuffs or----
    Mr. Farr. Which areas of the research in the specialty crop 
industry? We provide 200 million. The House bill provides 200 
million in mandatory funding for five years, and the Senate 
version only provides 80 million.
    Secretary Schafer. I will let Chuck handle that.
    Mr. Conner. Congressman Farr, if I could, the resources 
that we put into this specialty crop industry, including the 
mandatory funding, really focused a great deal upon research. 
Most of that research activity is targeted at pest control 
situations. There is some varietal development dollars that we 
foresee using in that process as well. But a large percentage, 
we envision that going for pest research.
    Mr. Farr. Like E. coli?
    Mr. Conner. I am sorry?
    Mr. Farr. Like E. coli?
    Mr. Conner. You know, it could range anywhere from citrus 
greening. Obviously, we have been through a horrible situation 
with citrus canker, just to name two that have been sort of in 
the media a great deal. But that is not by any means an 
exclusive list.
    I will tell you some of those dollars as well that we have 
identified that are, I think, in our package as well as in the 
House-passed bill are in the market promotion area, MAP, for 
example. Big increases in funding for that particular program. 
So it is not all disease control, but that is a big percentage 
of it.
    Mr. Farr. Well, yes. We will get into more specifics. I am 
very interested in the leafy green, particularly the effects of 
E. coli. The leafy green consumption is way down.

                         CENSUS OF AGRICULTURE

    And lastly, because I know we are going to vote, I am very 
interested in your census. I am very concerned why you cut so 
much money out of it. Your budget has 39 million to complete 
the census, the agriculture census. In 2008, it was 52 million.
    And what we were very interested, I think, is in the 
organic data that you were being--you were collecting. Because 
we need--there is a long-term backlog of data that we need for 
organic, and that is a very fast-growing industry.
    Again, it takes the answer off the air. But I would really 
appreciate your looking into that. And I have a bunch of other 
questions on specialty block grants, but my time is up. Thank 
you.
    [The information follows:]

                         Census of Agriculture

    The FY 2009 budget requests a total of $39.5 million for the Census 
of Agriculture. Funding for the Census of Agriculture is currently 
cyclical. FY 2009 is a down year in the cycle, coming off FY 2008 which 
was the peak data collection year for the 2007 Census of Agriculture. 
The budget includes a proposal to maintain a consistent funding level 
for the next Census, rather than include cyclical increases and 
decreases in future budget years.
    The 2007 Census of Agriculture includes a entire section on basic 
organic data, as opposed to two questions in the 2002 Census of 
Agriculture. This expanded section will include information for 
organically produced crops and livestock. It will also allow the 
respondent to identify the commodity as certified organic, 
transitional, or organic but not certified. If they report certified 
organic, they will be asked to provide the certifying Agency. This will 
allow NASS to verify this is an accredited certifying Agency. The 
section was presented and agreeable to the House Organic Agriculture 
Caucus during questionnaire development. In addition to providing the 
most complete picture of organic production in the U.S., this effort 
will also provide a base list for any future detailed surveys on 
organic agriculture.

                         ANIMAL IDENTIFICATION

    Ms. DeLauro. Mr. Farr, let me start down the road on animal 
identification. I noted, Mr. Secretary, that there really isn't 
any reference in your testimony with regard to the Animal 
Identification Program. And oversight of that animal ID program 
has really been a priority for this committee. It is a topic we 
spent a lot of time discussing with your predecessor.
    It concerns me that it wasn't addressed in your testimony, 
particularly given the enormous sum of money that this 
subcommittee and the taxpayers have given to USDA for the 
program, almost $120 million we provided for the program. If 
the Congress previous the funding proposed in the 2009 budget 
that has been requested, a total of $24 million for animal ID, 
we will have given USDA almost $142 million for the program.
    It is a big investment, a massive investment that the 
public has made already. And this is compared with the delays 
in delivery, the Department's delivery. I was very disappointed 
to hear Under Secretary Knight's comments made in the press 
last week implying that Congress was the obstacle. And I want 
to quote Mr. Knight.
    ``If they come in less than $24 million, they will be 
making a decision to slow down implementation of animal ID and 
will be jeopardizing our nation's herd.'' That is in contrast 
to Deputy Secretary Conner's quote. In the omnibus funding law 
that was passed, lawmakers allotted $9.7 million for the 
national animal identification system compared to $33.2 million 
requested by the administration for fiscal 2008.
    And the quote which I know you will recall, Mr. Conner, 
that, ``I think we have the resources to continue on the path 
that we are on.''
    Now, despite the significant investment of the 
subcommittee's time and effort, and in the bipartisan way we 
came to a conclusion about last year's budget because of the 
delays in this program, it is not clear what the Department has 
produced with the almost $120 million that has been given. I 
just would like to tally some of APHIS's accomplishments to 
date.
    Out of more than 1.4 million premises, APHIS has only 
registered to date about 446,000 feed lots and sales barns. 
That is 31 percent of their goal, after four years and almost 
$120 million. One state, Wisconsin, comprises about one-seventh 
of the total registrations you have achieved to date. Just 
parenthetically, the Wisconsin program is a mandatory program.
    At your current rate of enrolling about 1500 premises per 
week, just the back of the envelope, I calculate that it will 
take APHIS another 13 years to achieve its goal of 100 percent 
registration. I believe that APHIS will miss its January 2009 
goal to have all the registrations complete. APHIS is already 
reportedly several years away from having 48-hour traceability 
for beef and for dairy cattle.
    If the Department is going to have a credible, effective 
animal ID system, there needs to be a change in the approach. 
Your predecessor stated that while the current system is 
voluntary, it, and I quote, ``could very well move to a 
mandatory system.''
    When I asked Secretary Johanns whether he believed it 
should be mandatory, he said, and I quote, ``I am fully 
anticipating that at some point this very likely is going to 
move to a mandatory system. I will be very shocked if any piece 
of the animal system gets 100 percent identification under a 
voluntary system.''
    Then in November 2006, out of the blue, USDA announced that 
the program would be strictly voluntary. As far as I know, and 
particularly with this Member of Congress, there was no 
discussion. I don't know if there was any discussion with other 
members.
    So, Mr. Secretary, let me ask you: Do you believe the 
country should have a--I am going to lay the questions out, and 
I want to go back for the answers--do you believe that the 
country should have a mandatory Animal Identification Program?
    Given the Department's management of the program over the 
past four years, if you could explain to the committee why we 
should provide the $24 million you are requesting. What is 
APHIS going to do with the $24 million, and what benefits are 
we going to see with the additional money?
    And because I ask every year and I do not receive a 
satisfactory answer, let me ask again this year: What is the 
estimated cost for 2009 for the point at which we have a 48-
hour trace-back of all covered species in and out of premises? 
What is your timeline for achieving a 48-hour trace-back for 
all species?
    Because the Department has elected to go forward with the 
voluntary animal ID system, what assurances do we have that the 
multiple state and private databases will be compatible with 
each other and provide not just privacy assurances that 
producers want, but the data integrity that the country needs 
for a viable trace-back system?
    Do you believe the country should have a mandatory animal 
identification program?
    Secretary Schafer. Madam Chairwoman, I am one who 
appreciates the industry, and I don't like government mandates 
and controls. And I support a voluntary system. We have almost 
one-third of the premises registered to date, and we are 
working hard to continue to get premises signed up, including 
my conversations with the Cattlemen's Association over the 
weekend.
    And I want to ask the Deputy to speak to your question 
about his comments on the issue. But I don't believe we have an 
answer for you today on the cost of fully implementing the 
system, but we can generate that number and get it to you. But 
philosophically, I believe we can do it on a voluntary basis.
    And you point out some statistics that doesn't show like we 
are doing the job there, and I understand that. And I am going 
to direct the agency to get this project completed. But I am 
going to let Chuck answer some of the technical issues about 
getting it done.
    Ms. DeLauro. Okay.
    Mr. Conner. Thank you, Mr. Secretary. Madam Chair, we had a 
healthy discussion on this last year as well.
    Ms. DeLauro. We have these conversations every year.
    Mr. Conner. Yes, we do. And we appreciate the support and 
oversight you have given us on this. And I don't want to in any 
way reflect that somehow we believe you haven't helped us in 
this process. And we know this is a cooperative arrangement. We 
are opposed to mandatory animal ID.
    Ms. DeLauro. So there will be no movement on mandatory 
animal ID by this----
    Mr. Conner. Yes. I want to be clear on that, that we are 
opposed to mandatory. We do believe that the livestock industry 
in particular works best when these identification efforts 
become very market-driven. And we are seeing some of this show 
up in the marketplace today in terms of premiums for products 
that can trace their identity and this type of thing. But it 
still has a long way to go.
    My own view is I think there will be a market that will 
continue to develop as people will demand more and more 
knowledge and information about the sources and where their 
product has been. And so as this develops, I think the industry 
is going to respond.
    It hasn't been moving as quickly as we had anticipated. I 
will just tell you that. I don't attribute that to resources.
    Ms. DeLauro. What are you going to do with $24 million?
    Mr. Conner. We are going to continue to register these 
premises.
    Ms. DeLauro. Do what?
    Mr. Conner. And I will say, too, that part of this effort 
is the analysis itself of the cost/benefit of the money that 
has been spent so far. And I think our folks have been up to 
brief you on that. But we are getting ready to have an outside 
vendor look at this cost/benefit analysis on the money that has 
been spent today.
    I think we have announced that in December, I believe, that 
that vendor is going to begin to take a look at this because I 
think we owe you a full explanation in terms of----
    Ms. DeLauro. You owe me. You owe this committee. You owe 
the taxpayers to let them know what you have done with almost 
$120 million----
    Mr. Conner. I agree.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Ms. DeLauro [continuing]. In the last several years where 
you have produced almost nothing in terms of animal 
identification. I hope you read--Mr. Secretary, I hope you have 
read the July 6, 2007, GAO report on this issue and what their 
recommendations have been over and over and over again.
    If the E.U., if Canada, if Japan, can deal with a mandatory 
system and get to where they want to go, what is wrong with the 
United States of America in being able to deal with this issue 
in animal identification?
    Mr. Conner. In further response to your question, Madam 
Chair, I am advised that the 2009 money specifically is going 
to go for cooperative agreements. The cost/benefit analysis 
that I made reference to is going to be completed early this 
fall. And just again in terms of the 24----
    Ms. DeLauro. Let me quote the GAO. Okay? Please let me 
quote the GAO. I don't make this information up.
    ``The USDA awarded 169 NAIS cooperative agreements totaling 
$35 million to 49 states, 29 tribes, 2 territories for fiscal 
years 2004 through 2006 to help identify effective approaches 
to register premises and ID track. To date, USDA has not 
consistently monitored cooperative agreements. As a result, the 
agency cannot be assured that the agreements' intended outcomes 
have been achieved. USDA has not formally evaluated or 
consistently shared the results of the cooperative agreements 
with the state departments of agriculture, industry groups, or 
other NAIS stakeholders which would enable lessons learned and 
best practices to inform the program's progress.''
    You have failed with $120 million to deal with this issue. 
I have no reason, and I don't know why this committee would 
have any reason, and Mr. Knight ought to read the GAO report 
and not talk about the Congress, but talk about an ineptness 
and a delaying and, if I might add, a pandering to the industry 
that says, we are not getting to animal identification, never 
mind 48-hour trace-back, which is all about what the public 
health is about and not what the special interests are about, 
which is what you should be about in terms of the public health 
and our getting there.
    I could go on and on and on in this very short GAO report. 
And it says that the agency, while they understood the 
recommendations, ``Regarding our recommendations, establish a 
robust process to select and independently test and evaluate 
the performance of annual ID and tracking devices to ensure 
they meet minimum standards. The USDA believes that these 
standards must be defined through a consensus of affected 
stakeholders, and that the stakeholders will resolve this 
issue, and it is imperative that they resolve the issue before 
selecting specific technologies for NAIS.''
    Who are we in business to deal with here?
    Mr. Conner. Well, Madam Chair, if I could, you are, as 
always, extremely well prepared for these hearings, and I 
appreciate that. I don't think our efforts have been totally 
futile. We have a very, very large livestock sector in this 
country. The fact that we are a third of the way there in terms 
of the premises, are we as far as we like? Absolutely not. But 
I think that is still a yeoman's task to get to that point.
    You mentioned specifically in terms of the cooperative 
agreements and the information, we have been slow in getting it 
but we are publishing all of that information online now in 
terms of the results of those cooperative agreements. I think 
that was one of the cruxes of the issue identified by the GAO, 
was just a transparency factor there.
    We have been slow in getting there, but we have put much of 
that information now online so that it is available and 
reviewable to the public as well.
    Ms. DeLauro. I am sorry to say, Deputy Secretary, that you 
don't have any answers to the questions we have here today. I 
am not going to leave it at that, but I am going to leave it at 
that for the time being.
    But I will just say this, and I will speak for myself and 
no one else on this committee: I don't know in good conscience 
that we can deal with $24 million for no answers, no progress, 
and a flawed system, and nothing that tells us how we are going 
to get to any answers.
    Ms. Emerson. Madam Chair, I actually have just a question. 
We have a voluntary program in Missouri that is done 
cooperatively with USDA. And I wonder, I know how the Missouri 
system actually works.
    Do you all have just different specifics about all of the 
cooperative agreements and exactly the process by which each of 
the states work that could at least--how each of those states 
implement their own programs that you could give us that 
information so that we can at least see how those monies have 
been spent?
    Because that would just be helpful to us because Rosa is 
correct. The money and not being able to justify or tell us 
exactly how it was spent, I mean, I know you are embarrassed 
that that is the case. But let me say that if you would give it 
to us, just some information just state by state by state, 
obviously there should be a better matrix set up, but at least 
we would be able to get some idea.
    I know the money has been spent on those programs, at least 
in my state. But I don't know anywhere else. So it would be 
helpful to----
    Mr. Conner. I think that is true in other places as well, 
Congresswoman Emerson. And I think you raise a good point. We 
have been slow to get it online. But the information that you 
refer to relative to the cooperative agreements is what we are 
putting online now. It is also obvious we owe this committee 
more information, and we are going to get that to you as well.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Ms. Emerson. Well, and perhaps you all can have a group to 
come up and meet with those of us whose districts are impacted 
by this and states are impacted, and we could just sit down and 
just go through a little notebook, just real simple. If 
possible, that would be helpful.
    Mr. Conner. Absolutely.
    Secretary Schafer. And may I add one thing? I appreciate 
your passion about this issue because I have some passion for 
it as well, and here is why. If we are going to properly 
implement the Country of Origin Labeling in this country, we 
have to be able to have a tracking system.
    Ms. DeLauro. Absolutely right, Mr. Secretary. And I 
appreciate the comment about passion, which I have a lot of. 
But this is more than passion. This is understanding that we 
don't have a process in place to get us in the direction that 
we have laid out over the last several years, and for which we 
have appropriated serious funds.
    And truly, I don't mean this in an offhanded way. I am 
going to ignore Mr. Knight's comment.
    Secretary Schafer. Thank you.
    Ms. DeLauro. Because I am going to view that he hasn't read 
any documents. But let's leave it at a passing. Congress is 
always--you can say whatever you want. But there is plenty of 
data to demonstrate where the fault lies here.
    I also will get the backup to this GAO report because if 
they identified 49 states and tribal groups and others, they 
must have done a lot of interviewing to find that out with 
regard to these cooperative agreements. And I am going to want 
to know what they have uncovered in this as well when we begin 
to talk about this.
    So Mr. Boyd.
    Mr. Boyd. Thank you, Madam Chairwoman.
    Mr. Secretary, welcome to the House Appropriations 
Committee Subcommittee on Agriculture.
    Secretary Schafer. Thank you.
    Mr. Boyd. I assume it is your first appearing before this 
subcommittee.
    Secretary Schafer. It is.
    Mr. Boyd. And let me start by--I know all of us regret the 
disruptions we have had with having to leave and go to the 
floor, so I apologize for that. It is not uncommon around here.
    Just briefly, before I ask my question, to the point that 
the chairman made on the animal ID. And without addressing the 
merits or editorializing on COOL, country of origin labeling, 
animal ID, I am an animal producer, livestock producer, and 
that is a relatively simple thing to do. I mean, it can be 
done.
    Identifying all the animals in this country with the 
technology we have today is a simple thing, I think. My sense 
is if all of us get on the same page, you won't have a great 
deal of push-back from the industry itself. I really don't.

                               FARM BILL

    I want to shift gears slightly, if I might, Mr. Secretary. 
And all of us here have--one of the things that is greatly on 
our mind is the Farm Bill. And I know we have many reports that 
there have been some high level talks between you and the House 
leadership on the Farm Bill in the last few days, and I would 
just like to ask you a couple of questions about that, if you 
could. And maybe any information that you feel free to share 
with us, you might.
    There are some reports that the administration now supports 
a ten-year Farm Bill versus a five-year Farm Bill. Is that 
right? And if so, what is the thinking behind a ten-year Farm 
Bill versus five?
    Secretary Schafer. I believe that we are focusing on a 
five-year Farm Bill. As you know, it has to be scored for ten 
years, five of the Farm Bill and five beyond. But I haven't 
been involved in any negotiations supporting a ten-year Farm 
Bill.
    Chuck is our lead negotiator, so I am asking you, Chuck, if 
there is a ten-year issue on the table.
    Mr. Conner. Well, I think they are talking about a Farm 
Bill longer than the traditional five or six years at this 
point primarily because of score-keeping situations in terms of 
meeting the ten-year PAYGO requirements. And I think there are 
budget dynamics that are driving that debate, and at least 
keeping on the table the thought that it might be something 
longer than a six-year or traditional five- or six-year Farm 
Bill.
    Mr. Boyd. As an advocate of PAYGO, if that is the reason 
you are doing it, then I am all for it, if that will help us 
get to where we need to go.
    There is a report that there is a House Agriculture 
Committee/White House proposal that has been agreed to. Can you 
speak to that? And if so, what is the Senate's involvement in 
it? Have they had any involvement, and have they agreed to the 
provisions?
    Secretary Schafer. We have been meeting with both 
agriculture leaders in the House and in the Senate, and we have 
shaped a framework with the House that we believe is moving in 
the right directions that contains the proposals that the 
President has been asking for and that would deliver an 
appropriate, fiscally responsible, reform-minded Farm Bill.
    We have mostly worked with the House because the door has 
been open there to the negotiations. And we believe that while 
there are a lot of negotiations that must continue, that we 
have arrived at a point with the House that is in an outline, 
if you will, that we could come to agreement on between the 
House and the administration.
    We have used that as a starting point or an opening 
negotiations with the Senate. And we have been, last night and 
this morning, continued those negotiations to move forward with 
what I believe--I am getting increasingly confident that we are 
going to be able to come to an agreement between the House and 
the Senate with the administration for a Farm Bill that the 
President would like to sign this year.
    Mr. Boyd. Mr. Secretary, the House and the Senate commodity 
programs, there are not really great differences in the two 
bills, the House bill and the Senate bill. Is the 
administration now prepared to support the current commodities 
titles that are close to what the House and the Senate have 
done in their individual bills?
    Secretary Schafer. Chuck, why don't you--as the lead 
negotiator, as far as the details. As I mentioned, we have kind 
of shaped an outline or a framework. Chuck, because of the 
detail, maybe you want to get into that.
    Mr. Conner. Congressman Boyd, let me just say that in the 
commodity titles of both the House and the Senate bill, there 
were provisions that were objectionable to the administration. 
And we have been calling for a greater reform specifically of 
that particular title.
    And so this framework agreement, if you will call it that, 
in terms of a way to proceed forward and get these negotiations 
going, does contain several changes that would be different 
than what is either in the House- or the Senate-passed versions 
of the Farm Bill.
    Mr. Boyd. Okay. And Madam Chairman, if I might with further 
questions, obviously if we have an agreement, there is going to 
be a great deal of pressure on your agency, Mr. Secretary, to 
put in place the needed tools to implement that agreement. That 
is going to put incredible pressure on the FSA and your other 
implementation agencies, departments.
    Are you going to make sure, are you guys going to make 
sure, that in this agreement framework that you have sufficient 
resources and funds for the FSA and the other implementation 
departments to get it implemented and get it so that we can 
serve the public like it is supposed to be served?
    Secretary Schafer. Yes, sir. I think one of the main 
missions that I have as the Secretary of USDA is to implement 
the public policy. And when we get a new Farm Bill, we are 
going to be prepared to implement that policy as best as 
possible. If we get it started off in the first months, it will 
go well in the following years.
    And as I mentioned in my opening comments, we prepared the 
budget without the implementation of the Farm Bill because we 
don't know what the Farm Bill is going to be. But we are fully 
prepared to fight for the resources that we need to implement 
the Farm Bill.
    We have got the base there, the structure there, that we 
can build on to deliver with our agencies and others and FSA, 
but other agencies, to make sure that the new Farm Bill will be 
implemented. That is one of my highest priorities.
    Mr. Boyd. Mr. Secretary, as you may know and certainly your 
staff knows, the previous administration cut, slashed, and 
merged, all in cooperation with the Congress, the Farm Service 
Agency and other agencies. I mean, it was all something that we 
agreed needed to be done. And this administration has continued 
to in some ways slash the funding that was needed for those 
merged offices.
    I just want to make sure that you understand, sir, that a 
Farm Bill that has no implementation arm out there really 
causes lots of problems in the country. And so I would 
encourage you, as you move through this framework and this 
development of this Farm Bill, to make sure that your 
departments, implementing departments in the country, are 
properly funded.
    Secretary Schafer. And I can assure you, Congressman Boyd, 
that being from North Dakota, I am aware of the delivery and 
the importance of the agencies being on the ground, and will be 
making sure that with the resources we are given, we will 
deliver that new Farm Bill.
    Mr. Boyd. Madam Chairman, thank you for your indulgence.
    Ms. DeLauro. Mr. Latham.
    Mr. Latham. Thank you, Madam Chairwoman. I apologize for 
not being here earlier. We were trying to keep the lights on 
here on the leg branch appropriations subcommittee.
    Welcome, Mr. Secretary, and congratulations on your 
appointment and confirmation. And just looking at your resume 
here, I see you have got Danish heritage, as do I. So maybe we 
will have some aebleskiver (phonetic) together.
    Secretary Schafer. I am ready.
    Mr. Latham. And the guy over here is going, ``how do you 
spell aebleskiver?''

                               HATCH ACT

    One thing that has been in the previous administration and 
this administration's budget every year, and goes nowhere, 
which it will go nowhere again, is the idea of cutting the 
Hatch Act funding. And I am always puzzled as to why this 
continues to be part of budget proposals because it is not 
going anywhere. I think it would just totally destroy the 
ongoing type of research that is absolutely critical in 
agriculture today to be able to plan long-term, to have 
projects that really are relevant for the future in 
agriculture.
    And I don't know if you have any comments on that. I mean, 
are we serious about this, or is this something that is just 
thrown in from habit or something, or what?
    Secretary Schafer. Well, maybe I could let our Budget 
Director answer the question.
    Mr. Latham. Good job. Divert it.
    Mr. Steele. The Secretary wasn't here when these decisions 
were made, so he needs, probably, some additional information 
about that.
    But Mr. Latham, as you know and you have said yourself 
today, that we have done this before in prior year budgets 
and----
    Mr. Latham. Well, the previous administration, the same 
thing.
    Mr. Steele. Yes. Previous administrations. And we have a 
knack of repeating proposals we have done in prior year budgets 
when we do new budgets, for some reason. We also have a very 
tight budget this year, as you well can imagine. We had some 
targets we had to hit.
    And so we were trying to see where we could get the biggest 
bang for the buck in terms of our resources, and over time, we 
tried to move more money into sort of competitive research 
funding mechanisms rather than formula funding mechanisms. And 
our proposals have been consistent in that regard for a number 
of years now.
    And so we again are trying to do that. And so that is one 
thing we are doing. We are trying to put more money in the 
competitive side of the equation here, and there is some 
reductions in the formula funding. It is the way the numbers 
came out, and we are trying to meet these targets. And I know 
where you are coming from.
    Mr. Latham. I hope so because that is where we are all 
coming from, yes, and where we are going.
    Mr. Conner. If I could, Congressman, let me just say, 
though, that within our Farm Bill recommendations, we are very 
strong proponents of research funding. And we have put a lot of 
money into our Farm Bill recommendations, some of which is 
mandatory, I will say to the committee, for high-priority 
agricultural research.
    But Scott is correct in that in terms of this particular 
request, we have proposed elimination of the earmarks and more 
of the formula funds being awarded on a competitive basis going 
forward.

                            BROADBAND LOANS

    Mr. Latham. Okay. Mr. Secretary, one thing in rural America 
that has brought a lot of attention is the broadband loans and 
the controversy about the Department making loans in areas that 
already have service. And I understand you have got a pretty 
extensive background, maybe, in this area.
    What do you say to the folks that say that we shouldn't be 
using taxpayer dollars to set up redundant systems that are 
already in place, and shouldn't we focus on areas that are not 
served or underserved today?
    Secretary Schafer. Well, as you point out, I have had some 
experience in this, both in the public sector as governor and 
the private sector in the business world. I feel strongly the 
government has a role in this area, that places that are 
underserved and unserved are so because of, often, wide open 
spaces with a lot of geography and few people, where a return 
on investment just doesn't make sense for the private sector.
    And if we look at the parallels of the railroads or the 
telephone utilities and electricity in the rural 
electrification and the communications efforts across this 
country, I believe that broadband application today is in the 
same area, where we need--where the private sector, having been 
there, our company could afford to invest only in certain areas 
where we got a proper return.
    Our company was focused on rural areas where the large 
telecommunications companies didn't know how to deal with 
markets that were even below three million in population. Some 
of them got down to a couple of hundred thousand in population. 
They have no idea how to get the proper return, how to raise 
the capital, how to get the business put in place in rural 
areas.
    I think the reason for the underserved and unserved area 
limitation is because we need to focus our dollars where they 
make sense. And if the conditions are such that private 
industry has already invested in those areas so there is a 
service provider there, it doesn't meet the criteria. We need 
to focus the tax dollars on the places where the private sector 
won't or can't get involved, and therefore the definitions of 
underserved and unserved.
    Mr. Conner. Congressman, if I could just quickly add as 
well, you are probably aware that we have a proposed rulemaking 
that has been underway that we published the middle part of 
last year. That comment period is closed, and I suspect 
probably within the next few months we will be coming out with 
a final rule that provides this definition of eligible rural 
communities that will be an update from the current rule. And 
to begin with, in a few months we will be coming out with that.
    Mr. Latham. Now, you're talking about communities in 
millions and, say, a couple hundred thousand. My home town 
where I grew up and lived was 168 people. We are not talking 
about hundreds of thousands of people; we are talking about----
    Secretary Schafer. And that is exactly why where the cost 
of the technology, depending on the systems you use, a $200 
thousand installation of a radio to deliver broadband in a 
community of 168 is not going to get you a return that a 
private investor is interested in. And we need to be able to 
shore up that effort.
    And I would add that I testified as a citizen and a 
business owner in the rulemaking process to the RUS on this 
program. I feel very strongly about it. And I believe that the 
current definition of eligibility on population is 20,000 or 
less. And those are appropriate focuses to be down in the areas 
where you are just not going to see the private investment.
    Mr. Latham. I see I am over time. Thank you, Madam Chair.
    Ms. DeLauro. Thank you, Mr. Latham. Mr. Farr.

                         LIGHT BROWN APPLE MOTH

    Mr. Farr. I wanted to follow up on that one question I had 
asked about the light brown apple moth, about whether you would 
be able to call in the health officials, including the U.S. 
Surgeon General, to at least review the situation and provide 
some guidance to the public on the effects. An ounce of 
prevention will save you a pound of cure.
    Secretary Schafer. I think that suggestion makes a lot of 
sense. I would point to the fact that we did an environmental 
assessment on the applications and chose the appropriate 
course. And we only use applications that are approved by the 
EPA.
    Mr. Farr. Well they have gotten very difficult because the 
compound used to mix the pheromone with in order to spray it 
had been part of that. And it is only the pheromone they looked 
into. And with lawsuits, then the judge required them to 
disclose what the ingredients were, which were proprietary 
information.
    And in that whole buildup, a lot of distrust as to the 
health effects; and, frankly, we have really not had anybody in 
the health field come out and say, it is okay. It is not going 
to cause problems. The Department of Health Services in 
California is taking complaints of health effects, and doctors 
have been seeing people.
    So all we are defending it on is wondering why we got to 
spray it, and people are--the opinion is, well, they don't care 
about some nursery stock in some other town or county. Why 
should they spray my house and my children? And I just think 
that the public relations on this has been not well thought 
out. And I would appreciate if we could get together with the 
Surgeon General or the people in her department about----
    Secretary Schafer. I met with the California Secretary of 
Agriculture on this issue last week, and with the same effort 
of how are we going to handle this. I believe there have been 
four major lawsuits, and I understand that at least one judge 
said that there would be a negative impact on the environment--
--
    Mr. Farr. There is. That is not the issue. It is not the 
issue of lawsuits and how you are going to--it is this 
leadership responsibility concerning adverse health effect.
    Secretary Schafer. Yes. And I agree with you, and we will 
try to generate a group of appropriate people to look at that 
public health aspect.

                           FLEX ACRE PROPOSAL

    Mr. Farr. Thank you. I noticed in your budget you want to 
eliminate the flex acres. I want to just tell you that Congress 
will kill that, as we always have, because as long as you are 
going to be able to plant with somebody that has other benefits 
coming to them, then what you are doing is taking people that 
have no marketing assistance for their crops, who are all total 
private sector high risk, and then giving farmers who don't 
take that same amount of risk, who also have other biofuels and 
things like that.
    It seems to me that this is not a smart way to try to get 
rid of the commodity program, by allowing people to grow 
strawberries at the same time that they are taking the benefits 
from the commodity program.
    Secretary Schafer. The administration's Farm Bill proposal 
asks that producers be allowed that flexibility to plant fruits 
and vegetables and rice, wild rice, on farm program base acres. 
And that is a direction which we are pursuing.
    Mr. Farr. Why?
    Secretary Schafer. And Chuck, maybe you want to get into 
how the policy is----
    Mr. Farr. Why would you give them that benefit when the 
other people don't get any?
    Mr. Conner. Congressman Farr, let me just say that our flex 
acre proposal in the Farm Bill was not the most popular 
provision that we put out there. And I would be the first to 
acknowledge that it came up against some strong opposition. We 
put it forward, honestly, because we have $5.2 billion of 
direct payments per year under our current price support 
programs that are in jeopardy of being considered as trade-
distorting if we don't correct this problem.
    Mr. Farr. But they would just cut them off. If you want to 
grow those crops, you just get out of being on the welfare 
system. Get out.
    Mr. Conner. Well, let me just say that the problem we have 
is the WTO--and I don't want to overstate this because this is 
not a formal ruling--but the WTO has raised concerns that by 
not allowing the planting of fruits and vegetables on those 
base acres that are eligible for the direct payment--it doesn't 
have anything to do with whether or not you plant them or not, 
but by restricting that eligibility, that you are in effect 
saying to the producer, you can only grow this select group of 
crops by getting the direct payment.
    And by that limitation and saying you must grow these 
crops, their claim is that that is trade-distorting, and 
therefore the $5.2 billion must be counted in that trade-
distorting category.
    If we end up having to count that as trade-distorting, 
Congressman, we have got problems with the WTO. And I won't 
elaborate any more on that. I would be happy to privately walk 
you through all the details on that. Now, we don't accept this 
and we have been defending the green box aspect of direct 
payments.
    But I am telling you it is a problem going forward. That is 
why we have raised the issue. Again, we understand that there 
is strong opposition to it out there. The key industry group 
that is pushing this issue is from my home state in Indiana. 
They have been given a large pilot project to take care of 
their concerns in terms of the growing of tomato crops and 
that.
    So we have been looking at this and we have been working 
back and forth on this. But that is the reason why, is we are 
trying to avoid a situation where a large chunk of our price 
support payments could be declared as trade-distorting and 
would cause us big problems.
    Mr. Farr. But you are going to wipe out other farmers by 
allowing them to do it in just the domestic competition, where 
you have got ones that have help from USDA and others that have 
no help.
    Mr. Conner. Yes.
    Mr. Farr. The ones that have no help will not be able to 
meet the market price. I just think it is----
    Mr. Conner. We talked about this at last year's hearing. We 
did put out that very detailed analysis from the--I believe it 
was Congressional--not Congressional Research, Economic 
Research Service, I am, the ERS. And it did show some impact, 
and we have acknowledged that.
    But it is a relatively small impact out there, and it's 
pretty sector-specific. There are only a couple of industries 
that are impacted by this very much. And I don't think anyone 
has disputed that analysis, and we have made that available to 
the folks as well because I think it is important you have good 
data before proceeding down this path.
    Mr. Farr. Well, whatever you do to try to lift it, I will 
do to try to stop it.
    Mr. Conner. I understand. We have a full understanding of 
that, sir.
    Ms. DeLauro. Thank you, Mr. Farr. Mr. Kingston.
    Mr. Kingston. Thank you, Madam Chair.
    Mr. Secretary, your budget eliminates some programs and 
some duplications. Could you give us an example or two of 
those?
    Secretary Schafer. Why don't I ask Scott to do that. And 
while he is looking----

                               BEEKEEPERS

    Mr. Kingston. While he is looking, let me say something 
that is unrelated. But we have an issue with the disaster 
payments to beekeepers, and it has to do with their 
participation in NAP. And so I think we may have a letter or an 
inquiry in front of you guys about that, but it doesn't seem to 
be moving.
    So without asking you to agree or disagree, I am just 
asking you if you can----
    Secretary Schafer. Check it? Yes.
    Mr. Kingston [continuing]. Yes, move it along. That would 
be very helpful. And then I will give you another question, 
give you another minute.

                            SCHOOL NUTRITION

    But this committee has been very interested in school 
nutrition and nutrition education, and often we found that the 
USDA does the nutrition formula and then the Department of 
Education actually tracks it a little bit better.
    And it seems to me, and we put report language in the bill 
last year, that there needs to be some coordination so that you 
know down the road if a child in the third grade gets some 
nutrition education and some physical education, how does he 
look five years later. Is it taking hold or not, or are these 
just kind of feel-good programs.
    MyPyramid, you did talk about the number of hits. But I 
don't know, they might be hits by USDA employees or providers. 
You never know. I mean, I know on my own political web page the 
hits are usually me or my opponent. [Laughter.]
    Mr. Kingston. Nobody that you are trying to really get to. 
But that report language was in the bill, and we would probably 
put that language or similar language in that. And so maybe 
during the course of the year, before we pass the bill--I mean, 
in the course of the next couple of months--you could respond 
to us on some movement in that direction.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                  BUDGET ELIMINATIONS AND DUPLICATIONS

    And then let me get back to the first question, if you----
    Secretary Schafer. Yes. Scott.
    Mr. Steele. Thank you, Mr. Kingston. Well, of course, I 
would start off by saying that a number of terminations in the 
budget relate to earmark-type programs off the bat, so----
    Mr. Kingston. This would be White House e-mails?
    Mr. Steele. No.
    Mr. Kingston. I was just curious.
    Mr. Steele. This would be the White House definition of 
earmarks.
    Ms. DeLauro. Which doesn't apply to themselves. Okay.
    Mr. Steele. Well, it's a one-way, yes. In any case, that is 
part of it, and we traditionally do that. It is not something 
new this year, obviously, that we have done.
    Another thing that the Secretary mentioned previously in 
his discussion was we have moved away from some grant programs 
in Rural Development, per se, and where we have an alternative 
program that offers the same--not necessarily a duplicate, but 
a similar type of program, where you have a direct loan program 
or a guaranteed program.
    We have tended to move away from the grant program aspect 
more to more of the loan programs because we only pay for the 
subsidy level of the direct loans and the guaranteed loans. And 
the guaranteed loans have a lower subsidy level than some of 
the direct programs, so we tend to move--so in cases like 
single family housing, we had a direct loan program. And so 
last year we proposed to go to a guaranteed--the single family 
guaranteed loan program.
    Mr. Kingston. Well, how about eliminations on things that 
aren't earmarks?
    Mr. Steele. Well, yes. We mentioned of the RC&D program, 
which is not necessarily an earmark. It is something that 
Congress has put in year after year. And we have proposed 
various alternatives to lower the funding in that program, and 
given the tight budget, it didn't score very high on our 
priority list. And last year we had cut it, I think, to $19 
million, and this year we have cut it to zero.
    Mr. Kingston. Which I think you did--was it two years ago? 
Was it last year?
    Mr. Steele. Yes. Zeroed out in October. It just comes up as 
a lower priority for us, and we know there are other ways of 
communicating our programs to the general public in terms of 
what programs might be available for them to apply for, through 
outreach and other aspects.
    Mr. Kingston. Well, let me ask you this. You know, often 
administrations do--and I have only worked with two, but I know 
that they will put in veterinarian fees and fee increases and 
things, knowing that it is never going to pass, but it kind of 
is some window decorating for their own budget, and eliminating 
things which they know Congress is going to build back in it.
    But were there any specifics that--hey, you got this 
program here, and it is so similar to this program here that 
why not consolidate it? Was there anything like that?
    Mr. Steele. Well----
    Mr. Kingston. And I will give you an example. One thing on 
earmark is if we are doing soybean research at an ARS station 
in Iowa and we are doing one also in Missouri, maybe we 
shouldn't do it at both places. Did you just randomly eliminate 
both of them, or did you say, this is good but we certainly 
should do it in Missouri and not Iowa? They don't even grow 
soybeans in Iowa, do they?
    Mr. Steele. Maybe Georgia, yes.
    Ms. DeLauro. What about the $13.2 million for Georgia, Mr. 
Kingston?
    Mr. Kingston. I am asking. You can--which $13 million is 
that? [Laughter.]
    Ms. DeLauro. But actually, you and the administration are 
on the same wavelength. They want to do away with earmarks, but 
they have got $13.2 million for Athens, Georgia. And I notice 
that that is an interest of yours as well.
    Mr. Kingston. Yes, it is.
    Ms. DeLauro. So shall we do away with earmarks?
    Mr. Kingston. It is an interest of mine, and that was 
eliminated in the past. So that is what I am asking. I mean, 
there are no secrets. They are all open for discussion.
    But on earmarks, did you find any duplications, or did you 
just say----
    Mr. Steele. Well, I don't think we did an analysis of all 
the earmarks. I think it was an across-the-board blanket policy 
decision.
    Mr. Kingston. And you know, the one in Athens, Georgia, 
Madam Chair, is what our proposal is to eliminate; there are 
four in the country, and to put them all under one roof. And it 
actually----
    Mr. Steele. You are talking about the poultry lab now?
    Mr. Kingston. Yes. And it actually does pass the 
consolidation type question. And I don't represent Athens----
    Ms. DeLauro. It is an earmark.
    Mr. Kingston. But I don't represent Athens, Georgia, 
either. I want to make sure you know that.
    Ms. DeLauro. That is okay.
    Mr. Kingston. Although it is a----
    Mr. Steele. We are patterning after the one in Ames, Iowa.
    Mr. Kingston. So what I'm hearing, though, is we haven't 
found something--for example, I know in another bill at another 
time, I read somewhere where the Federal Government actually 
has 72 different jobs programs. I don't know if that is 
accurate. This was five or six years ago. And it would appear 
to me that there would be plenty of room for consolidation of 
72 programs with the job title, that some of them could have 
been consolidated.
    Did you see anything like that?
    Mr. Steele. Well, I would say that it is hard. There is 
always a constituency for all these programs. And I think in 
the Rural Development area, we have a large number of small 
programs that could be combined into something--a more general 
type of a program.
    The Business and Industry Loan Program does cover some of 
the same kinds of constituents and applicants that some of the 
other smaller RD programs do cover. So we have shifted more 
towards this B&I industry loan program rather than doing some 
other smaller loan programs that we had available.
    So that would be an example. And I think some of the stuff 
in the conservation area as well--we have a number of different 
conservation programs that could be combined into a bigger 
program. I think some of our Farm Bill proposals head in that 
direction. I don't know. Maybe, Chuck, you might----
    Mr. Conner. Well, I mean, Congressman Kingston, I think one 
of the examples that you are looking for here, and frankly, it 
is one that is very controversial with this committee, is the 
Commodity Supplemental Food Program. And the Department is in 
no way suggesting that the people that are currently 
benefitting under the Commodities Supplemental Food Program 
should not receive food assistance.
    But we do think, as opposed to having a yet third program, 
that a better and more efficient way of running that program is 
for those people to be participating in the very large Food 
Stamp and WIC Programs as well. And so this is an example where 
again--and I know this is controversial----
    Mr. Kingston. Well, it is controversial. But that is why we 
came to this town. So it is a legitimate discussion.
    Mr. Conner. And that is the reason. I am not in any way 
suggesting those people aren't qualified and eligible, but 
believe that there is a better program and a more efficient way 
for us to serve those same people.
    Mr. Kingston. Well, I would like to see your reasoning on 
that if you have it, even though it is more of a authorizing 
question, and also, if WIC should be combined with it. I do see 
that you got a lot of poverty brokers who are protecting their 
own job and not necessarily putting the need of the recipient 
first.
    [The information follows:]

                  Commodity Supplemental Food Program

    The Commodity Supplemental Food Program (CSFP) is not a nationwide 
program, operating in parts of 32 States, in the District of Columbia, 
and through two Indian Tribal Organizations. CSFP benefits and target 
populations largely overlap with the Food Stamp Program (FSP) and the 
Special Supplemental Nutrition Program for Women, Infants, and Children 
(WIC). The Administration believes the needs of the CSFP population are 
best met by encouraging that population to participate in our core 
nutrition assistance programs: FSP and WIC.

                      CONSERVATION RESERVE PROGRAM

    I want to switch gears on one other thing, CRP. Would you 
support allowing, at a point of the tree growth, allowing 
people to harvest pine straw on the CRP program? And I think 
they cannot do it now. There is a nutrient question in the 
first five to ten years of the growth of the pine tree. But 
after that, it seems like they ought to be able to contract 
with a pine tree for harvest.
    Secretary Schafer. I will say I know nothing about that.
    Mr. Kingston. You don't have that in North Dakota? 
[Laughter.]
    Mr. Conner. If I could, Congressman, I think that generally 
speaking, and this is reflected in our own Farm Bill 
recommendations, we support greater economic use on certain CRP 
ground, particularly as it relates to potentially using that 
product from that land for biofuels production.
    And we have, I think, shown that we believe that there can 
be the benefits of CRP, but if managed properly, also some 
energy benefits that come off of that very same land, sort of a 
win/win situation, wildlife as well as energy.
    And I think, generally speaking, I am somewhat familiar 
with your situation with the trees, and I think it falls into 
that category of, in the future, we need to be looking at 
managed economic uses that also preserve the benefits of the 
CRP.
    Mr. Kingston. All right. Well, thank you. I yield back.

                           IMPROPER PAYMENTS

    Ms. DeLauro. Thank you very much, Mr. Kingston. There are 
about 473,000 people who are the beneficiaries of this 
supplemental program. Let me just mention this to you in terms 
of duplication because I think it is interesting. USDA cannot 
assure that it is not making improper payments to individual or 
entities. This is GAO again, I don't make up the numbers, I 
could not make this up: From 1999 through 2005, USDA paid $1.5 
billion in farm payments in the names of 172,801 deceased 
individuals, either as an individual recipient as a number of 
an entity. Of this total, 40 percent went to those who had been 
dead for more than three years, 19 percent of those dead for 
more than seven.
    Most of these payments were made to deceased individuals. I 
could go on. Do you want to talk about duplication and 
consolidation and eliminating programs? I sometimes wonder. In 
2006, USDA admitted it made $2.8 billion of improper payments 
to farmers. Do you mean we cannot deal with the technology to 
address that issue and save taxpayers' money, if you want to 
save money. We are on the same wave length, maybe we have 
different pieces of it.

                          FSA COMPUTER SYSTEM

    But let me just get to another issue which addresses this 
issue of overpaying and duplication, which are the FSA 
computer. We have talked about it at length because it is about 
the delivery system, it is about the various payments, et 
cetera, and this computer system, we renewed it in January 
2007. It was inoperable for a period of one month. And the 
Secretary again testified before this subcommittee on the 
computer problems. Breaking Point focused particular attention 
on this.
    Last week, we delivered our business plan for revamping the 
FSA computers. We expect approval of the court order and 
resources are going to be substantial. The Farm Bill would 
probably have to address the issue but it needs to come ahead 
of the Farm Bill just to get the current problems worked out, 
your responses? Thirty seven and half million in a supplemental 
last spring for the network because it needs to be in place for 
database application stabilization and the other needs. We have 
provided resources again addressing the problems, but we have 
yet, Mr. Secretary, to get a business plan for our budget 
request for the near term or the long-term plan.
    Let's talk about the Farm Bill for a second; have people 
met with the authorizers to request funding in the Farm Bill? 
What is the status of the business plan for the IT issue in the 
Farm Bill as a first question?

                           IMPROPER PAYMENTS

    Mr. Schafer. Madame Chairwoman, if I may back up just to 
the issue of making payments to dead farmers. I would point out 
that often farm programs are contractual between the U.S. 
government and farm and ranch owners. And that the death of a 
recipient does not mean that we do not have obligations with 
contracts for the estates and things like that. So while the 
land may remain in ownership of a family member, the payment 
goes to an individual that is named in the contract. Those need 
to be sorted out with the estate. They often take a long period 
of time, and I think the bigger issue here was the FSA field 
offices were likely delivering that program inconsistently.
    Ms. DeLauro. They make mention of that but there is not a 
process in essence to deal with----
    Mr. Schafer. Right.
    Ms. DeLauro [continuing]. The entities, if they are being 
paid for two years, for one year, for whatever it is. So there 
isn't again a system in place in which to try to deal with the 
inequities.
    Mr. Schafer. My point is that just because the GAO says 
that they were improper payments does not make them improper. 
And we believe that in many cases, those payments were proper, 
maybe the wrong name, it might have been an extended estate 
deal. It might have been a contractual relationship that we 
were obligated to pay. But we very much take this to heart and 
are concerned about making sure that taxpayers' dollars are 
spent wisely and appropriately.
    Ms. DeLauro. Well, but it says here again in GAO, I'm sorry 
to interrupt you, for example, over one half of the 1.1 billion 
entities from 1999 to 2005, in one case specifying a member of 
an entity deceased in 1995, over $400,000 in payments for 1999 
to 2000. USDA relies on the farming operation's self-
certification that the information provided USDA is accurate. 
Operations are also required to notify USDA of any changes, 
such as the death of a member. Such notification would provide 
you with the current information. It is complex, but we do not 
have systems or processes in place that deal with the 
complexity so we do not deal with duplication.

                          FSA COMPUTER SYSTEM

    Now, we have also talked about in the conservation portion 
of your budget, again the Farm Bill talks about conservation, 
talk about a high priority for conservation, and yet we are 
going to look at--this gets to the point of management as well, 
the budget cuts of $136 million for NRCS and 1,440 staff years 
from NRCS that have been cut in 2009. In the aggregate, these 
numbers include a number of programs that the budget eliminates 
that did not directly impact the Farm Bill program, but if you 
just take a look at this, these are the main efforts to provide 
technical assistance for people in the field to budget is going 
to seriously impede the ability of trying to address what 
services are going to have to be supplied to people from the 
Farm Bill. And that would seem to me to be--we have asked again 
and again and again I said in a short-term/long-term, we 
provided money on an immediate basis for the computer systems. 
I was in Kansas with my colleague Jerry Moran looking at the 
system there, which are a problem, so that it is about the 
service delivery, whether it is computers, whether it is the 
ability to deal with what NRCS has to do, there is a disconnect 
between what we lay out for the future and what the budget 
document reflects, and I do not know how you are going to be 
able to----
    Mr. Schafer. Well, let me say this, we were very 
appreciative last year when we had the problem in the FSA 
offices of program delivery that your committee supported 
additional resources to fix that problem. Those dollar 
resources went to hardware servers, hardware type assistance 
that we needed to fix. And I would also point out that while we 
fixed the hardware side of things, we still have modernization 
to do in the software applications.
    Ms. DeLauro. We understand that with regard to the 
computers it is about $456 million to do this. I do not know if 
that is accurate.
    Mr. Schafer. Well, what we know is not accurate; is any 
estimate in the hardware delivery system is going to be more. 
IT is always in a cost overrun.
    Ms. DeLauro. How do we pay for this?
    Mr. Schafer. It is hugely expensive.
    Ms. DeLauro. How do we pay for this?
    Mr. Conner. If I could, Madame Chair, let me just say in 
terms of the expected cost, I am advised here, literally just 
now, that our total MIDAS implementation costs $305 million.
    Mr. Schafer. As you know as well, I would just add that for 
the Chair's sake----
    Ms. DeLauro. Is that based on a plan because GAO also 
intimated that there was not a plan? Where is the plan? Where 
again is the plan? We said, ``Here is the money, get us a plan 
for us to take a look at.'' We wound up--I cannot remember what 
the agency was, but we spent $25 billion someplace and then it 
could not interface with somebody within the agency, it could 
not interface with somebody else's set of computers.
    Mr. Conner. Madame Chair, I think you would see that the 
record from our testimony last year, I was fairly critical what 
the agency, how we had performed in this way. We do now have a 
business plan in place. That business plan took a long time to 
develop internally. It is done, it has been approved by the 
Office of Management and Budget. I believe that was done around 
the first of December. I am not sure what the process is here, 
Madame Chairman, but you all should have a copy of that 
business plan. And if you do not, we will attempt to rectify 
that situation immediately because that has now cleared through 
USDA, cleared by OMB. We for the first time believe we have got 
the business case and the business plan on really how to 
proceed here, and that has been something we have been 
demanding on the management level within the agency for a long 
time and have been frustrated by, to be real candid.
    Ms. DeLauro. Well, $305 million, $456 million, I do not 
know where we get the money.
    Mr. Conner. We will get that plan to you. I am advised that 
if it is not here, we will make sure.
    [The information follows:]

            FSA Computer System Business Plan and Timetable

    The business case for the effort to modernize farm program delivery 
systems known as Modernize and Innovate the Delivery of Agricultural 
Systems (MIDAS) has been approved by OMB and a project manager has been 
hired. Two small management contracts for business process mapping and 
project planning have now been awarded. A request for proposals (RFP) 
for the initial major phase of the project for acquisition of software 
and integration services is under review with a target of awarding a 
contract in FY 2009 assuming funding can be secured in 2008. A second 
major contract required for hosting the system would be awarded six to 
twelve months after the software contract is awarded. The project is 
planned to be largely completed about 2 years after awarding the 
software acquisition and integration contract. However, total time 
required for full completion could take from 2 to 4 years.
    The business case will be provided to the Subcommittee staff at a 
meeting to be scheduled during March.

    Ms. DeLauro. But there is no--if I do not ask the question, 
where is the request if this is important? Not ``if'' it is, it 
is critical. It is critical for the farm service agents, what 
they do. It is going to be critical when the Farm Bill gets 
passed and what NCRS is going to be able to do. It is critical 
in order for you to maintain your budget integrity and of 
duplicates of payment. I look at all kinds of things that come 
down the pike that show us we are going to avoid the 
duplication here or avoid the duplication here but there is no 
mechanism, no infrastructure in place to avoid that, so it goes 
on and on and on. And I do not know if the GAO recommends that 
we go and get the $75,000 that was overpaid or this or that. 
Honestly, obviously we will say they will forget about it after 
a while because there are other things that we are doing, but 
if you want to take a look at saving and cutting back on 
spending, there are some real places to go before we begin to 
cut the commodity supplemental food program which appears to 
work or the community facilities program, which these 
communities rely on. That is my point.
    Mrs. Emerson.
    Mrs. Emerson. I will change the subject, although quite 
frankly I would like to continue on that subject, and I will 
say that obviously when you have got so many computer problems, 
and we are going to get a new Farm Bill written here, just 
putting the software together to implement the new Farm Bill is 
going to be mighty scary. So it will be very useful us to see 
the plan, the business plan and your timetable for total 
deployment.

                     DRIED DISTILLERS GRAIN EXPORTS

    Secretary Schafer, all of us in Congress and the 
administration have made a commitment to increasing domestic 
renewable fuel production. Obviously, you worked very hard on 
your end when you were in North Dakota. Obviously, too, this is 
going to require increased Ethanol production over the near 
term and rapid development of cellulosic Ethanol. I believe 
that it is pretty clear, well, we can all pretty well agree 
that there has been an impact on the cost of feed for livestock 
because of this. And I read with some note that we export a 
large portion of the dry distillers' grains, the DDGs, while US 
via survey indicated that only 30 percent of domestic feeding 
operations are considering utilizing those DDGs, so the 
question is what are you all doing to increase the adoption of 
dry distillers' grains? Is it an educational challenge? Is it 
logistical? Is there something that we in this committee can do 
to help?
    Mr. Schafer. Well, logistical issues are one of the 
problems, and we have examples of where feed lots are being--
background lots are being put together or close to Ethanol 
facilities so that distillers' grain can move correctly. I do 
not at this point in time do not have identified any particular 
issues or public policy requirements that we would need to 
pursue the higher use of distillers' grains. I can assure you 
from speaking with industry that the Ethanol industry is very 
interested in keeping healthy livestock operations out there as 
a market for these distillers' grains, and I am aware of the 
private programs to sell this byproduct.
    Mrs. Emerson. Right.
    Mr. Schafer. But I guess as a direct answer, I am not sure 
that we have any particular direction to put on the table to 
say we need help with this. We are aware of the issue and are 
making sure that the distillers' grain out there is mold free 
and E. Coli free and things so it is a proper cattle feed.
    Ms. DeLauro. Mrs. Emerson, let me just interrupt for a 
second because we have three minutes left on a vote, so I 
wanted to mention that.
    Mrs. Emerson. I see.
    Ms. DeLauro. Okay, because we are going to have a vote and 
come back.
    Mrs. Emerson. Okay, well, I guess I then will not ask my 
next question because we have to run, and I will submit it for 
the record. Thanks.
    Mr. Schafer. Thank you.
    Ms. DeLauro. We will adjourn for the moment.
    [Recess.]
    Ms. DeLauro. The hearing is called to order. I thank you 
and beg your indulgence. I did not realize there would be five 
votes. We have a procedural motion, so we will finish quickly 
with remaining questions.

                       NRCS AND FSA COORDINATION

    Mr. Secretary, as I mentioned to you when we were in the 
hall, I am going to send some information to you with regards 
to NRCS and the FSA coordination communication issue, which 
appears to be a serious issue in terms of its implication for 
policy in this coordination of effort that we were talking 
about. And there again there is the information that exists 
from if there is an IG report or a GAO report which spells out 
what some of the issues are. So let me get that into you for 
the record.
    Mr. Schafer. Thank you.

                             IMPORT SAFETY

    Ms. DeLauro. I want to ask about the action plan for FSA. 
Deputy Secretary Conner, when the plan was released, you said, 
``USDA looks forward to working with our federal partners and 
stakeholders to make the plan's recommendation a reality. In so 
doing, we will bolster the state's product.'' In the report, 
USDA is mentioned about 27 times and was given some 15 separate 
assignments to deal with in terms of the import safety issue. 
This was a very high profile administration plan, and it comes 
to the level of the highest officials in each agency to take 
responsibility for it. When I look at the news page of 
www.importsafety.gov, the only two press releases since the 
November release of the plan relate to the FDA. It does not 
look like there were any other actions mentioned or agencies 
mentioned, but I really want to try to ascertain what USDA is 
doing in terms of its import safety plan, your plan, going 
forward on your assignments and what the interaction with 
agencies are and meetings, et cetera, and how are you going to 
respond to the assignment?
    Mr. Conner. Congresswoman DeLauro, let me just say that I 
think we will have to supply for the record for you, you 
mentioned the 50 action items----
    Ms. DeLauro. Fifteen, 15 action items, 27 references to 
USDA and you have got 15 assignments.
    Mr. Conner. I think probably the best would be for us to 
supply that for the record for you. I think as we talked 
yesterday in your office, one of the outgrowths, if you will, 
of the import safety working group was really a greater 
emphasis, if you will, upon the notion of keeping products that 
we do not want in this country out of our borders. And I think 
our system in the past has relied too heavily upon finding it 
at the borders and stopping it at that point, and obviously our 
ability to put enough resources at the border to see that 
level. And I think our food imports in this country are in the 
$60-plus billion range, record high quantities of imports in 
addition to record exports, so you are just not going to see 
that much product. And so the emphasis of the working group was 
really to sort of go at the point of origination for much of 
our food supply and work with those countries and those 
companies for certification and auditing requirements so that 
product that we do not want in this country never gets on its 
path toward coming to this country. Not to say that border de-
emphasized but I think the key enforcement is to go to the 
country of origin and have the food safety measures in place so 
that this product is safe when it starts to head to the U.S. In 
a nutshell, that sort of summarizes the general intent of the 
Import Safety Working Group. Again, we will be happy to supply 
the details.
    Ms. DeLauro. That would be very, very helpful in terms of 
where USDA is and obviously when FDA comes up, I will talk to 
them about their responsibility.
    Mr. Conner. Yes, absolutely.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                              FOOD SAFETY

    Ms. DeLauro. Let me as a follow-on to that question, and I 
just say to this to you, Mr. Secretary, I know you are new and 
last January the GAO did issue a report, which listed our food 
safety as high risk. I do not know if you have had a chance to 
see that report yet. If you have not, I urge you please to do 
so because there are so many implications that follow from what 
that report has laid out. And the USDA Inspector General added 
food safety to her list of major management challenges that 
face the Department as well. We have asked for a report, the 
House and Senate subcommittees have asked for a report from 
USDA and the FDA as to how they intend to respond to that 
effort, and I look forward to reading those. To be very honest 
today, we have not had the FDA or USDA specifically respond to 
some of the pieces that GAO laid out of a year ago. I think it 
is an important report, and I think it describes a lot of what 
our interests are.
    Mr. Schafer. Very good, yes.
    [The information follows:]

                           GAO High Risk List

    The GAO high-risk listing of food safety activities is very broad 
and concerns the overlapping authority for food safety activities among 
FSIS, the Food and Drug Administration (FDA), national Marine Fisheries 
Service, the Environmental Protection Agency, and the Department of 
Homeland Security. It also recommends that Congress enact uniform food 
safety legislation. FSIS is working with the other agencies to 
determine the best approach for addressing the weaknesses identified by 
GAO.

    Ms. DeLauro. Mrs. Emerson.

                    DRIED DISTILLERS GRAIN RESEARCH

    Mrs. Emerson. Thanks, Madame Chairman. Let me go back to 
this DDGs issue that I had to kind of leave for a vote. If we 
are exporting 70 percent of that to Japan and Europe, it still 
seems to me that there is something missing here because 
logistically, we obviously in some instances have a logistics 
problem, but on the other hand, I have to believe there is in 
many cases an educational problem too. And I do not know if 
there is something that you all can do through FSA or even with 
our NRCS folks who work with the livestock guys a lot, 
something that we can do to start trying to keep some of that 
here and trying to do something also simultaneously that is 
going to abate the high cost of any kind of feed for our 
livestock?
    Mr. Schafer. Well, we have--and Chuck can talk too here--we 
do have money in the budget for some research on the benefits 
of using distillers' grains as a feed. And of course all that 
is included in the research is the communication of the 
findings.
    Mrs. Emerson. Right.
    Mr. Schafer. And, Chuck, if you want to elaborate more?
    Mrs. Emerson. Even through our extension services.
    Mr. Schafer. Sure, yes, exactly.
    Mr. Conner. I think most of that funding is included in the 
funds for the Agricultural Research Service, mainly those 
dollars are used for feeding trials because, obviously I think 
you are aware, that different species react differently to 
different concentrations.
    Mrs. Emerson. Right.
    Mr. Conner. And this is kind of a new field, and so we have 
been doing a lot of that feeding trial research just to figure 
how much, for example, DDGs can be fed in pork without it 
impacting the----
    Mrs. Emerson. Digestive systems.
    Mr. Conner [continuing]. Digestive system as well as the 
consistency of the meat itself. So I want to say the figure is 
$6.9 billion, it sticks in my mind, but I may be off on that, 
but there is money within the ARS budget for that purpose and 
has been prior to this as well.
    Mrs. Emerson. So we have actually done research, we have 
started research on this. For how long has it been ongoing, do 
we know?
    Mr. Glauber. We had a co-op in South Dakota state doing 
some things on the sorts of things to make DDGs more edible for 
non-ruminants.
    Mrs. Emerson. Or figure out how to mix it with XY and Z.
    Mr. Glauber. Yes, and I think that export figure is going 
down. The industry is transforming so rapidly, and we are 
beginning to see I think----
    Mrs. Emerson. But is the information from the research 
getting out to the population who would benefit from knowing 
that you take 20 percent of this or 10 percent because 
obviously it is great to have the research and if we have some 
conclusive results, surely we would want to tell somebody or 
why would we be spending the money for it?
    Mr. Conner. I am not sure I can answer that directly, 
Congresswoman. I can only give you anecdotal evidence and that 
is there are people feeding DDGs today who two years ago would 
not have imagined ever doing so, and obviously there is the 
factor of the economics of that. But I think our information is 
getting out there and again that figure--I think that export 
number is coming down pretty dramatically as our producers are 
demanding----
    Mrs. Emerson. Well, it would be helpful, and if you do keep 
those statistics, I would be curious to know what that is.
    Mr. Conner. We will do that.
    [The information follows:]

                         Dried Distillers Grain

    Exports of industrial co-products of corn (including corn gluten 
feed and meal and dried distillers grain) have fallen slightly (6 
percent) from FY 2006 to FY 2007 largely due to reduced demand by the 
European Union for corn gluten feed. However, the demand for DDG has 
surged, virtually doubling in just 2 years and up 50 percent from FY 
2006 to FY 2007 as Mexico, Canada, and Asian countries seek cheaper 
feed ingredients compared to corn and U.S. supply expands with more 
ethanol production.

                RENEWABLE FUEL STANDARDS WAIVER PROCESS

    Mrs. Emerson. A week ago today I guess the corn futures on 
the CBOT fell based on the rumor of RFS waiver and given the 
impact that such rumors can have on the price farmers receive, 
I would be interested in knowing whether or not you all have 
any input into that decision to implement an RFS waiver?
    Mr. Schafer. No idea.
    Mrs. Emerson. Chuck.
    Mr. Schafer. Yes, Chuck.
    Mr. Conner. Yes, I think we actually talked about this 
yesterday, Congresswoman, just to be clear on this because the 
statute took so many different turns. But, yes, USDA is 
actually involved in the legislative consultation process. We 
are required to be at the table when decisions are made by 
statute is my understanding.
    Mrs. Emerson. And so those consultations have begun?
    Mr. Conner. I am going to let Joe--I apologize for passing 
on this one.
    Mr. Glauber. I know there is a process. We have been in 
contact with EPA on a whole variety of issues but on the waiver 
issue, yes.
    Mrs. Emerson. So how does that whole thing work as a 
process? How does the process work? I'm just curious.
    Mr. Glauber. Yes, well, the cases are brought before the 
parties.
    Mrs. Emerson. Right.
    Mr. Glauber. This is not just EPA but also USDA and DOE. 
And without commenting on the decision-making itself, a variety 
of factors are looked into to include availability to all of 
the issues that Californians raise, whether or not those are 
valid concerns.
    Mrs. Emerson. And that group of three, if you will, then 
says yea or nay?
    Mr. Conner. Just for clarification, these are petitions 
from the state.
    Mrs. Emerson. Right.
    Mr. Conner. And I think you know that.
    Mrs. Emerson. Right.
    Mr. Conner. I think by statute EPA is the----
    Mrs. Emerson. Lead agency.
    Mr. Conner [continuing]. Overseeing or lead agency, there 
you go, lead agency, and it is in consultation with ourselves 
in both departments and then they get the final.

                MCGOVERN-DOLE FOOD FOR EDUCATION PROGRAM

    Mrs. Emerson. Can I ask another question? How long have you 
been in the post now?
    Mr. Schafer. Two weeks.
    Mrs. Emerson. Two weeks, yes. Are you familiar with the 
McGovern-Dole Food for Education Program?
    Mr. Schafer. I believe I had a quick briefing on that.
    Mrs. Emerson. It is a great program, and we are grateful 
that we had $100 million to spend on it last year. In essence, 
it allows us to feed, particularly young girls, but kids going 
to school in very difficult circumstances where girls do not 
traditionally go to school. I believe, quite frankly, that it 
probably helps if you are able to feed a child as opposed to 
having a runaway or a terrorist group come in and say, ``I will 
take your child to school, and I will feed them so you do not 
have that burden,'' that we are doing a great service with the 
McGovern-Dole. I guess you could call it a ``soft power'' type 
of issue but needless to say it is very, very important.
    I know that the World Food Program and some of the NGOs are 
really concerned because it is more expensive now to not only 
transport our feed grains and other commodities and because of 
that we are going to be able to reach fewer people. I do not 
think there is any doubt that if you talk to USAID, as well as 
to the USDA folks who participate, that this program has made a 
huge difference in people's lives. And we actually graduate 
countries from it, and they have been able to fulfill some of 
the prerequisites, if you will. But I am worried because the 
administration basically put in their budget the same amount of 
money but yet, at least as Josev Sharon told me when I talked 
to her maybe 10 days ago now, that they had 20 percent less 
product to give out, and so we are not reaching that many 
people. I do not know, do you think there is any way that we 
can work together to mitigate the harm in what is now a 
diminished contribution on the part of the United States, even 
though it is the same amount, it is obviously 20 percent less 
people that we can reach? Is there some other way we can kind 
of fill in a backstop or use other programs and kind of 
rearrange the budget so that we are able to not cut back on the 
number of people?
    Mr. Schafer. Should we ask our budget master here?
    Mrs. Emerson. I do not know, do you have any idea? Our 
money is just not going as far so $100 million last year is 
worth $80 million this year, and so it is problematic because 
this is such an important program.
    Ms. DeLauro. Will the gentlelady yield for one second on 
that?
    Mrs. Emerson. Yes.
    Ms. DeLauro. I do not know what your view is, Mr. 
Secretary, on making McGovern-Dole a mandatory program? It is 
currently obviously a discretionary program. In the House bill, 
the----
    Mrs. Emerson. Yes, we obviously would very much like it to 
be a mandatory program.
    Ms. DeLauro. So I do not know what your view is?
    Mrs. Emerson. So anyway the question is since we have less 
money, and if our committee is able to plus that up, that is a 
lot of money, what can we do?
    Mr. Schafer. As you mentioned, there is $100 million in the 
bill for the program in our recommended budget and that covered 
about three million children, I believe, in the last year. Our 
anticipation is we can with the $100 million in the budget 
approach that same number even with higher transportation 
costs, et cetera. One of the ways that we believe that we can 
impact this is through commodity credit corporation sales. Two 
days ago, we sold $65 million worth of grain, wheat 
specifically, at a good price. And we are going to take 80 
percent of those dollars and get them into food banks and 
community food programs and nutrition programs not only here 
but internationally.
    Mrs. Emerson. So you think you are supplementing or 
backstopping that?
    Mr. Schafer. Correct. And actually we are working on a 
program that would infuse communities as recipients for 
matching programs to again leverage the strength of the USDA 
commodity programs to provide more food and nutrition.
    Mr. Conner. Those commodities would be distributed 
specifically to McGovern-Dole as well.
    Mrs. Emerson. Oh, they would be, so they would be 
earmarked. Is that pretty easy to do since it is coming from a 
different pot, if you will?
    Mr. Schafer. We probably better get the experts commenting 
on that.
    [The information follows:]

                             McGovern-Dole

    USDA is working to maintain the number of beneficiaries it has been 
serving under McGovern-Dole through innovative actions like the 
``Stocks-for-Food'' program, which was extremely successful during FY 
2007 and is being continued in FY 2008. To offset part of the increase 
in commodity costs, in July 2007, former Secretary Johanns authorized 
the exchange of uncommitted Commodity Credit Corporation (CCC) owned 
bulk commodities for finished food products that can be programmed 
under McGovern-Dole and several domestic food assistance programs. 
During FY 2007, the Stocks-for-Food initiative provided additional food 
products to McGovern-Dole of almost $10 million. USDA did not initiate 
new program grants but rather was able to maintain the level of 
recipients at more than 2.5 million children. The initiative is being 
continued during FY 2008, and McGovern-Dole is expected to receive 
approximately $10 million of additional commodities this year.

    Mrs. Emerson. Alright.
    Mr. Schafer. I do not know whether it is easy or not but it 
is obviously necessary to get that----
    Mrs. Emerson. Well, I would be grateful if we could get a 
little information just like programmatically how you are going 
to make that work because this is such a success story and this 
is one of the good things that our country does, and it is so 
important that we continue using these types of programs to 
help people like us a little bit better. Alright, Madame Chair, 
I am out of time, sorry.

                              FOOD SAFETY

    Ms. DeLauro. Very, very good question. Again, there are so 
many areas in this subcommittee where there is bipartisan 
support for efforts, and this is clearly one of them. I 
mentioned food safety before, Mr. Secretary, it is obviously an 
issue near and dear to my heart. Let me just ask you as a new 
Secretary, in looking at what is been our difficulty with food 
safety, both domestically and internationally, what you are 
prepared to do about this issue? What are you trying to do in 
terms of goals on this issue? I am not talking about bio-
terrorism, and I know that is part of it, but what you want to 
do?
    Mr. Schafer. Well, I certainly as a consumer appreciate 
food safety out there, and really one of the strong missions of 
the USDA is to deliver a safe, abundant supply of food to the 
citizens of the United States and to the world actually, and we 
plan on doing that. Obviously, we have limited resources. We 
are trying to deal with the projects as best we can. And one of 
the ways that we have talked about, and you and I spoke about 
it the other day, yesterday, is the risk-based assessments, the 
risk-based inspections, and we believe that working with 
producers, that we have the ability to assess the risk and put 
the resources of our inspectors where we have the most risky 
places. There seems to have been last spring a rash of 
incidences of food safety that were put upon us in a group that 
we had not expected and had not seen before and all of a sudden 
we had a whole bunch of cases back to back. And that opened our 
eyes I believe at the USDA about focusing on those higher risk 
areas. We have changed some of the inspection procedures. And 
this important issue, I think, is top of mine personally and 
top of mine for USDA as a Department, that our strongest 
mission is to deliver safe food. As I mentioned, we have the 
ability for the science, we have the ability for assessment, we 
have the ability for enforcement, and it is an important issue, 
and we are going to deliver it strongly.
    Ms. DeLauro. Let me add, if you will, if I can for a moment 
our trade agreements. You referenced trade agreements in Peru 
and the others that are pending in Colombia and Venezuela. By 
the way, there is an article in yesterday's or today's 
Washington Post that actually talks about the real chaos in 
Colombia, the political chaos and whether you are a cattleman 
or businessman and so forth, there is a record number of 
hostage taking without any dialogue and what is going on across 
the border from Venezuela. Venezuela is obviously very 
concerned, but I think it is a good article to read in that 
context.
    But let me get to the food safety issue on our trade 
agreement. As I understand it, for instance, with Peru, and 
obviously trade agreements bring in more product, both exports 
and imports, my understanding on the food side of the exports, 
we have seen a number--we have seen contaminated product come 
from Peru. Now, there will be an increased volume of 
contaminated product or there will be more use of product of 
which will be contaminated. Also, my understanding is the 
legality when this happened, if we then try to place 
restrictions, if you will, on the Peruvian government to talk 
about standards, we are then liable to WTO, to get adjudicated 
with the WTO, to litigate because then we are in fact placing a 
restraint or a restriction that was something new, so that is 
already signed. I look at these trade agreements for a whole 
variety of issues. One of the things you just said is you 
thought one of the strong missions of USDA was safe food. So to 
date, I have not seen any real discussion or focus or language 
in our trade agreement that talk about the increased volume, 
especially when we know the product has had real difficulty 
with contamination. So my sense is we are in a position with 
Peru of increased volume of potentially contaminated product 
that we will not have any legal course. When looking at free 
trade agreements, we believe they are important, important of 
our public health, food, I believe has got to be at the top of 
that list. I would just ask you to comment?
    Mr. Schafer. Well, I am in agreement that it is an issue, 
and I can tell you this, if it comes down to worrying about 
legal recourse in WTO or food safety for the American people, I 
am going to fall on the side of food safety for the American 
people. I will let the lawyers fight it out over there, but I 
am sure Ambassador Schwab does not appreciate me saying that. 
Food safety is very important. There are standards of safe 
foods in the trade agreements. They must be met. And if they 
are not met, then we do have recourse according to the 
agreements, and we will continue to do so. But in lieu of 
agreements, our first mission is America first. We have to make 
sure that our food supply is safe. If I have to get black and 
blue because we protected the food supply for the American 
people, I am willing to do that.
    Mr. Conner. Congresswoman, if I could just add something to 
that as well.
    Ms. DeLauro. Sure.
    Mr. Conner. As you know, in terms of regulation, we have 
jurisdiction over meat and poultry products at the Department. 
But in order to import, and this is true in Peru, this is true 
in countries where we have free trade agreements, it is true in 
any country that desires to ship to us, we audit the plants 
that are proposing to ship to us to ensure that they have 
equivalency to U.S. food standards. And there is nothing in any 
trade agreement that is pending out there that in any way 
supersedes our right to regulate on that equivalency basis. The 
standard simply being that we would treat that country and that 
foreign plant the same as if something were happening in a 
plant in the United States. And I do not think that there is 
any provision in any trade agreement that alters that 
fundamental principle in any way.
    And I might just add, once we review these plants and 
approve them, they are subject to annual audits as well, so it 
is not just a one time and then you are free to go.
    Ms. DeLauro. But our trade agreements are expansive in that 
dimension, so you are a party of these talks, negotiations or 
these deliberations and therefore have your obligation with 
food safety at large and whatever other agencies, whether it is 
Commerce, whether it be the FDA or so forth. And people see the 
GAO report, we have got 15 agencies that deal with food safety 
in this government, which is of itself a problem. So let's put 
that aside for the moment in terms of our trade agreements.
    Mrs. Emerson. Madame Chair, let me just ask how do you 
define an ``audit'' of a facility? Does that mean you 
physically send somebody down there to look at it and go 
through a checklist?
    Mr. Conner. I know it is a live body audit.
    Mrs. Emerson. A live body audit.
    Mr. Conner. But, Congresswoman, much beyond that, I am 
going to need to get you the experts on that.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mrs. Emerson. Okay, I was just curious if it was a physical 
inspection.
    Mr. Conner. It is definitely, we put people there in the 
plant.
    Mrs. Emerson. Okay, and that would be before every single 
trade agreement that would have----
    Mr. Conner. That would be before any plant anywhere can 
ship to the United States, meat, poultry and egg products, 
whether they have a pending free trade agreement or not.
    Mr. Schafer. And this goes back to the Deputy's comments 
earlier about making sure that we inspect the products there 
before it gets to our shores.
    Mrs. Emerson. Right, right, okay. Thank you, Madame Chair.

                        MEAT SLAUGHTERING PLANTS

    Ms. DeLauro. Ms. Kaptur.
    Ms. Kaptur. Thank you, Madame Chair. I apologize for being 
late. We had four simultaneous hearings. I am just glad that 
the women of this committee have held up. And we have an 
opportunity to welcome the Secretary and your able staff.
    Mr. Schafer. Thank you.
    Ms. Kaptur. Very glad to have you here today. The first 
issue I want to raise is a parochial one, to ask the 
Secretary's help, someone in your office, to work with us on a 
particular problem we are having in Ohio with the federal 
certification of meat slaughtering plants and their ability to 
serve local agriculture, where you do not have huge mega lots, 
cattle lots or feeding lots, and then the cost of this to a 
small slaughterhouse compared to a massive operation, which 
dissuades our local cattlemen from being able to both slaughter 
and then ship their product out of state. If you could find 
somebody in your organization over there that could work with 
us, I would be pleased to send you a letter from our local 
cattlemen explaining how the current feed structure is really 
very onerous on the smaller producers and see what can we do to 
allow them to compete in this market. Perhaps someone, I am not 
quite sure who under JIPSA or who ever there really is 
responsible for this, but I would surely be grateful for that.
    Mr. Schafer. Well, I think to start with, you found the 
person, who is myself.
    Ms. Kaptur. Okay, great.
    Mr. Schafer. This is an item that I am interested in. We 
pursued this in North Dakota when I was Governor. We supported 
legislation that allowed small, local processors to ship their 
meat into other states and other areas. It is something that I 
have a lot of interest in, and I would love to work with you on 
it.
    Ms. Kaptur. Alright, sir, I will send you a letter from our 
local extension office, working with all these producers and if 
we could figure out a way to work through this, I would be 
forever grateful because they really have been trying very 
hard. And they should have a right, if they have a quality 
product, they should be allowed to compete in this country. And 
we at the federal level should not discriminate against them 
for however it is happening with price structure or whatever. 
And there is some sort of federal beef scale that appears to be 
very onerous on smaller producers.
    Mr. Schafer. And we are also working with state cooperative 
agreements as well, I believe, to help ease those rules in 
states that qualify.
    Ms. Kaptur. Alright.
    Mr. Schafer. So it is an item of interest for me, and I 
would be glad to work on it with you.
    [The information follows:]

             Meat Slaughter/Processing Plant Certification

    Since January 1, 2006, FSIS has sent out 33 information packets on 
obtaining Grants of Inspection to requestors from Ohio.
    FSIS provides a variety of outreach activities to assist the 
smaller meat slaughter plants. For example, the agency conducts 
outreach visits to small and very small establishments to improve 
communication between FSIS and small business owners. FSIS personnel 
explain the purpose and process the agency uses when conducting Food 
Safety Assessments and offer resources to plant owners and operators to 
help them become prepared for an assessment. FSIS also holds Regulatory 
Education Sessions to bring inspectors and plant operators together to 
hear a common message about the regulations. Educational net seminars 
are conducted to review compliance guidance that is prepared 
specifically for small and very small operators. The seminars are 
recorded and posted on the FSIS web site. FSIS has a small and very 
small plant web page that includes Frequently Asked Questions and 
information on how to access resources such as model food safety and 
food defense plans. Most recently, FSIS has offered educational 
materials and outreach to small and very small slaughter operators on 
the control of Specified Risk Materials and E. coli 0157:H7.

                                IMPORTS

    Ms. Kaptur. Thank you. Thank you very, very much. I notice 
in your testimony that you mention how many more exports the 
United States is sending out. That has to do a lot with our 
excellent producers, but also the value of the dollar. What 
about imports? Can you tell us as an agency what has happened 
with imports over the last year in the same manner in which you 
have--someone is looking for that, if you do not have it yet, I 
will wait for the answer on that. I would be very interested in 
the trend of exports and imports if you could present that in a 
few seconds.
    Mr. Schafer. Joe is our Acting Chief Economist.
    Ms. Kaptur. Okay.
    Mr. Schafer. And I think he will be glad to answer.
    Mr. Glauber. I did not have a chance to correct the Deputy 
before but imports are up around $75 billion, so they too have 
increased largely because of the cost, the price levels for a 
lot of these items, just like it is for our exports, have 
increased substantially. We have a net trade balance of around 
$15 billion.
    Ms. Kaptur. Fifteen billion, and can you give us the trend 
on that over a decade, kind of talk to us about where are the 
lines?
    Mr. Glauber. Sure, the export levels, if you were to go 
back to the mid-90's, in the mid-90's, we had at the time 
record export levels. They dipped a bit in the late 90's, both 
with the Asian financial crisis and the fact that we had very 
high year over year bumper crops worldwide, and so price levels 
of all the commodities fell, and of course we remember that is 
when we had very large CCC outlays as well. They started to 
pick up again in 2002 and again over the last two years, we 
have been seeing just rapid growth. In fiscal year 2006, for 
example, exports were at $69 billion, last year, $82 billion, 
and our 2008 forecast is $91 billion.
    Ms. Kaptur. Okay, what is happening with imports then?
    Mr. Glauber. Imports over that period have been fairly 
steady growth. If I were to go back to just the last three 
years in 2006, it was $64 billion, so we only had a net trade 
surplus in agriculture of around of $4.6 billion, again the 
$68.6 billion compared to the $64 billion. Last year, we 
imported $70 billion, again up from where it had been in 2006 
but a net trade balance of $11.9 billion. And then this year 
going to $75.5 billion. And it has been fairly steady.
    A lot of our imports are counter-seasonal, that is they 
come from South America or the southern hemisphere or even 
Mexico and other places where we are not necessarily growing 
that crop at the time. They will come in in the winter months, 
in the shorter seasons. A lot of the imports, we also count 
alcoholic beverages or at least beer, beer is included in our 
imports, and that has been going up fairly rapidly as well.
    Ms. Kaptur. But compared to 20 years ago, the amount of 
imports have really----
    Mr. Glauber. Yes, absolutely.
    Ms. Kaptur [continuing]. Displaced a lot. I wanted to bring 
this to the Secretary's attention if the Chair would give me 
just a couple of extra minutes on this point if that is 
alright. One of the issues I have struggled with through my 
whole career here is how better to capture food dollars to 
empower our local farmers and producers. Yesterday, I had a 
great experience, the chair lady would really be interested in 
this. I went out to one of the few places in the world where 
there is adult housing for individuals with autism, adult 
housing, and they were dedicating a hoop house.
    And in this hoop house, they are working to raise--they 
were raising lettuce, mustard greens, radishes in Ohio, 
harvesting in February. Do you know how cold it is there right 
now? And their goal is to make money by selling these products 
on a rotating basis through all four quarters of the year and 
identifying people in the restaurant community and 
institutional users and so forth entering the marketplace. And 
I said to them, ``Let us think about this. You could put a 
farmer's market right out there on the street in front of you, 
and you could sell to the public. You can get your EBT transfer 
or you can cash in food stamp cards right there.'' And you are 
very interested in the Internet and electronics, I noticed by 
your resume, so I am going to try to communicate this idea.
    What if we were to somehow put the power of USDA together 
in some pilot efforts around the country using the Senior 
Farmer's Market Coupon Program, which is a program that 
operates about half of the states, in about one congressional 
district in every state, and the WIC Farmer's Market Coupon 
Program where we have just added fruits and vegetables to the 
WIC Program and put the Food Stamp Program with that, knowing 
in those regions you have your producers that are already 
identified and participating, these are real local farmers 
trying to make it in this very complex marketplace.
    If we were to somehow electronically help them, sooner 
rather than later, so that they could begin to capture some of 
the food dollars that are being drained off food stamps, WIC 
and Senior Farmer's Market Coupon Program for local production. 
Now, with Senior Farmer's Market you have to buy local. With 
WIC Farmer's Market, the requirements are not quite as 
stringent and with food stamps, not at all. So large numbers of 
our food stamp dollars are being drained off to all these 
supermarkets where the shelves are full of foreign imports, and 
I am saying to myself how can we, through electronics, get 
these farmer's markets more equipped so that they can at least 
begin to move up the chain and recapture some of those food 
dollars? I want to share that idea with you because my career 
in Washington, it has been a while now, and I have found that 
the production side of USDA really does not communicate well 
with the nutrition side, and that is where most of the dollars 
are, the nutrition side. So if you could look at some pilot 
efforts in your tenure, there are places ready to go. I am sure 
the chairwoman has some, we have some, other members of our 
committee, nobody has fought harder for those in need than 
Congresswoman Emerson, I just think we are almost there but 
nobody has ever had your background in the Secretary's 
position. My time has expired, but I wanted to draw your 
attention to that. And I have other questions after others have 
an opportunity.
    [The information follows:]

                            Farmers Markets

    FNS supports the participation of farmers' markets in the Food 
Stamp Program (FSP) by allowing alternative approaches (paper script, 
tokens and wireless point-of-sale (POS) technology) to process food 
stamp transactions when traditional EBT POS equipment cannot be used. 
We have had some success, Farmers' Markets' participation in the FSP 
has risen 22 percent between 2006 and 2007. In 2006, 436 farmer's 
markets were authorized to accept food stamp benefits; by 2007, 532 
were authorized. FNS continues to look at various ways to assist 
farmers' markets to accept food stamp EBT benefits efficiently and 
securely. As part of this goal, FNS became a founding member of USDA's 
Farmers' Market Consortium. The Consortium was formed in November 2005 
to further the cause of farmers' markets and includes five USDA 
agencies and representatives from the U.S. Department of Health and 
Human Services, the Kellogg and Ford Foundations, Drake University, and 
Project for Public Spaces.

    Mr. Schafer. Thank you.
    Ms. DeLauro. Mrs. Emerson.
    Mrs. Emerson. Madame Chair, I am ``questionless.''

                              WIC PROGRAM

    Ms. DeLauro. Let me ask a couple of questions if I can, one 
has to do with the WIC Program, and we did talk about this. I 
will not go through any narrative but in 2008, let me just 
ask--and this is not a fair question to you, Mr. Secretary, so, 
Mr. Conner, let me ask you, why did the department not revise 
budget requests for Fiscal 2008 when it became apparent that 
the budget request as submitted would not be adequate to 
maintain our participation in the WIC Program?
    Mr. Conner. You are talking about 2008, Congresswoman, am I 
correct on that?
    Ms. DeLauro. Right, Congress requested $5.4 billion for the 
WIC Program. We saw dramatic increases in the time of the 
President's budget and when--was enacted. Congress provided 
over $6 billion for WIC, which was $630 million more than the 
Department requested for the program. There are trends.
    Mr. Conner. Yes, Congresswoman, if I could, just generally 
speaking, and this is applicable to both as well as the 
situation in our 2009 budget, we found ourselves chasing this 
WIC Program level up substantially. In fact, chasing it--it was 
moving faster than we were able to really deal with it in terms 
of our own budget process. I think, as I noted to you in our 
private meeting yesterday, we did receive additional dollars 
for the WIC Program from OMB and additional allocation which we 
were grateful for. I will tell you during the course of time 
that it took to get that additional money, the cost estimates 
of the program went up just about as much as what we had 
sought, that we thought was a full funding for the situation. 
So the cost increases have been great. I do not think--if I 
could, just real quickly, I do not think that we have got a 
situation at all where anyone has been denied access to this 
program. It has put a lot of strain on our total discretionary 
budget, but yet we understand that this is something that we 
have got to do. This is an important program, and again I do 
not think anybody has been turned away to date even though we 
have had trouble keeping up with the program increase.
    Ms. DeLauro. We had the $400 million in emergency 
supplement.
    Mr. Conner. In emergency, that is right.
    Ms. DeLauro. Because you mentioned 2009 so I will as well, 
and the contingency fund, as I understand for 2009, we are 
looking at some similar sets of circumstances. I do not know 
why we will assume that there will be a decrease in 
participation for 2009. We see the volatility as you have 
pointed out. Is it wise to assume no contingency fund will be 
available in 2009 if it does not decrease as you anticipate? I 
am going to ask two things. Will we get a revised budget 
request if you find that the submitted budget request will not 
be adequate to cover the food cost and the participation for 
2009? That is one question. The other thing is what we need to 
do is we need to get monthly reports on WIC. I think the 
conference report, what we set out in the conference report was 
to require that we get those reports. Again, this program is 
near and dear not only to my heart but to others as well. What 
I do not understand is some of the rationale in looking at next 
year given what we know. Can we get these reports, monthly 
reports on expenditures?
    Mr. Conner. Let me just say obviously, Congresswoman, we 
will----
    Ms. DeLauro. Because it is required, I am asking if we can 
get it.
    Mr. Conner. Whatever information we can possibly generate 
for you, and I assume that is monthly. Okay, Dennis said we 
collect this monthly.
    Ms. DeLauro. Okay, but let me also mention the reports are 
required. It is not just, okay, maybe this month, maybe next. 
The reports are required by the conference report.
    Mr. Conner. Okay, alright, well, if we have not been 
meeting the requirement, Madame Chairwoman, we will make sure 
we are if that has not been the case. You mentioned lower 
participation, I guess we are not seeing dramatically--a 
dramatic increase in participation, but we are seeing some 
under our own numbers and again perhaps we can share those with 
you just by comparison. But I think we are showing----
    Ms. DeLauro. My understanding is the participation in 
October of 2007 was over 8.6 million. The budget requests 
assumes the average participation will be 8.6 million for the 
whole year.
    Mr. Conner. Okay, we can reconcile the numbers. The data I 
have got showed us at 8.5 million at 2008, and we are going to 
be up to 8.6 million in 2009, but I think we can reconcile 
those numbers with you and your staff on that point.
    [The information follows:]

  The Special Supplemental Nutrition Program for Women, Infants, and 
                                Children

    Since 2001, the Administration has consistently sought to ensure 
that all eligible women, infants and children seeking to participate in 
the WIC program can be served. USDA has developed the requested monthly 
report on the Special Supplemental Nutrition Program for Women, 
Infants, and Children (WIC). We expect the report to be delivered to 
the House and Senate Agriculture Appropriation Subcommittees shortly.

    Ms. DeLauro. Will you provide a revised budget request 
because the budget is not adequate either for participation----
    Mr. Conner. Well, Mr. Secretary, I will just continue on I 
guess. I will tell you I cannot commit to what the President 
and the Office and Management and Budget may do in terms of 
supplemental requests. You know that that is not something that 
is done lightly because of the difficulty of getting 
supplemental requests through clean is always challenging, both 
for you as well for us in that process as well. I would just go 
back and note though that we have denied access to the program 
to no one, even in years of a difficult budget situation. So, 
again, while I cannot commit to what Mr. Nussle and the White 
House would do in terms of a supplemental, our track record I 
think is pretty good on this one.
    Ms. DeLauro. And I think we will have the debate and 
discussion around the administration's cap.
    Mr. Conner. Yes, absolutely.
    Ms. DeLauro. Ms. Kaptur.

                               FOOD BANKS

    Ms. Kaptur. Thank you, Madame Chair. I just wanted to make 
the Secretary aware that in parts of America that are already 
in recession, our food banks are hard up for food. I do not 
know what USDA might be able to do, I gather you do not have a 
lot of surpluses out there, I do not know. But I can tell you 
in our area, we need dry milk, we need protein. And is this an 
issue that you are focusing on elsewhere in the country? We 
have feeding kitchens that need immediate help, they are down 
to tuna fish and noodles five times a week. Can you take a look 
at this issue or are you taking a look at this issue for our 
country for those areas that are being particularly hard hit 
right now?
    Mr. Schafer. Yes, I believe we talked about this a little 
bit maybe before you got here.
    Ms. Kaptur. Okay.
    Mr. Schafer. And we were pleased to announce that yesterday 
we sold $65 million worth of wheat to put into the barter 
commodity program for food banks across this country. We also 
are trying to find other areas of surplus that we can put into 
this program. We have had vivid examples of food banks that do 
not have--that have empty shelves, that do not have enough 
food.
    Ms. Kaptur. We used to give away bread, we do not give away 
bread anymore.
    Mr. Schafer. We are committed to moving products into that. 
We are also working on a program that would encourage 
communities, a way to involve a community in matching the food 
that would come in so we can generate, we can leverage the food 
that we can move into the food bank now to a higher level. And 
it is something we are aware of and, like I said, we have taken 
some action just yesterday and will continue to do so.
    Ms. Kaptur. I am really glad to hear that, and I want to 
encourage you to perhaps send some of your staff to visit some 
of these areas. One of our local food banks that gets the 
federal commodities under CFSP and TFAP, they are even thinking 
about how can they grow some of their own food, and we have 
farmers going bankrupt. It seems so ridiculous to have land and 
greenhouses not under production while people go hungry. I am 
encouraging you at the departmental level, and I offer my 
district just because I am selfish here this morning, it is my 
chance to talk to you, to come to an area like ours. In fact, 
we have the head of the nutrition service I think coming out in 
a week or so, and how can we connect whatever you have to meet 
the growing need of hungry people and undernourished people? 
Our food banks have not faced this in a long time. And maybe 
there is a way to, as we are facing this planting season, I 
want to think out of the box here a little bit, what if we use 
some of our farmers and said to them plant an extra acre of 
that or that or that, and they could get a payment for that but 
then that food would go to those food banks or if we have 
gleaning. We have stuff being put under the soil in the fall, 
if we could involve our Workforce Investment Programs, our WIA 
programs over at the Department of Labor to involve some of 
those folks in gleaning. We are just not organized at the 
federal level to make those connects. You are a businessman, 
you can understand this, but I would encourage you to think 
about looking at certain areas that are being heavily hit and 
kind of ask yourself the question, how can you send somebody 
out to help us piece together in the disarray in the federal 
establishment and use the powers we have to move more food into 
these kitchens and shelves as the year proceeds. It is not 
going to get any better this year. And I think the planting 
season is about to happen, and the gleaning season will happen 
a few months from now, and we have the opportunity to do 
something, maybe there are some powers there you have that you 
could exercise, sir. So I just again put that one on the 
record. Maybe when the Assistant Secretary comes out, she could 
spend some time there too because this is really on our minds, 
how to do this and trying to help our local people out.
    Mr. Schafer. Thank you, Congresswoman, because we have been 
involving Nancy Johner in these issues and trying to say how 
can we use the programs we have already better----
    Ms. Kaptur. Right.
    Mr. Schafer [continuing]. To get food into the food banks 
and really it was generated from someone inside the department, 
just like you, that this is a food bank in New York City and 
went, there are empty shelves here and that is a bad deal.
    [The information follows:]

                               Food Banks

    USDA is aware of the economy's affect on food banks and has been 
trying to be creative with ideas on how to address the needs of the 
food banks. As you know, the types and amounts of bonus commodities 
available are dependent on market conditions. When agricultural markets 
are strong there is less need for USDA to make purchases to support 
American agriculture. However, earlier this year, USDA began a new 
initiative to barter government-owned bulk commodities with U.S. food 
processors in exchange for value-added agricultural products that can 
be distributed through USDA's domestic and international food 
assistance programs. Although market conditions and the availability of 
government-owned stocks will determine the future scope of this 
program, it is a novel initiative that will provide additional foods to 
the Emergency Food Assistance Program (TEFAP) over the next few months. 
In addition, the Secretary's Farm Bill proposal included an additional 
$2.75 billion over 10 years for fruit and vegetable purchases for the 
nutrition assistance programs, including TEFAP. We recognize bonus food 
donations have declined and intended that this proposal provide a 
steadier, on-going stream of nutritious foods for the program. We will 
continue to look for ways to help address this problem.

    Ms. Kaptur. I had every food bank director--and I do not 
want to abuse the time here, but every food bank director in 
our region, the feeding kitchens, the food pantries, the Toledo 
ministries, all the ministers and those people stood in my 
waiting room, they are so exhausted. And they are dealing with 
really sick people many times. And the figure that shocked me, 
I said, ``Who are your clientele?'' They said, ``Marcy, well 
over half of them are mentally ill.'' So these people are 
coming in, so they become another last resort for the de-
institutionalization of our mentally ill but the facts are they 
are trying to serve a difficult and repetitive population, and 
I just know, I just know the resources are there within USDA 
and Labor to do this right, and maybe even HHS, we just have 
not had the creativity, we have not had the spark at the top 
that can help us put this together. So just know we are out 
there, we are needy, we need help right now.

                                COLOMBIA

    Totally different subject, when you go down to Colombia, 
are you going to go to the Afro-Colombian area on the northwest 
coast, which is very impoverished, as you look at what can be 
done to help stabilize Colombia?
    Mr. Schafer. The trip is just two days. We will be only in 
Medellin and the surrounding area, and we will be meeting with 
a cross-section of labor leaders, both for and against the free 
trade agreement. Also with people who have generated new farms 
and new flower-growing operations and new ways to get out of 
the drug-induced poverty nation into a private enterprise-
generated economic base for the people of Colombia. We are 
going to try to understand that. We will not be getting into 
the areas you are talking about because of the limitations of 
the time, but we are aware of the situation there.
    Ms. Kaptur. Right, I wanted to place that on the record. It 
is a deep concern to many individuals in our area that have 
done missions there. Thank you, Madam Chair.

                           CLONED ANIMAL MEAT

    Ms. DeLauro. I essentially have really one more question. 
This has to do with the meat from cloned animals.
    Mr. Schafer. Yes?
    Ms. DeLauro. I have several questions. The FDA announced on 
cloning, USDA announced that it was encouraging the ``cloning 
of--voluntary moratorium so the industry can come together and 
discuss the necessary steps''. What are the necessary steps 
that you are referring to, what are the necessary steps? Will 
you give me a commitment to include consumers as well, but what 
are those necessary steps?
    Mr. Schafer. Madam Chairwoman, this obviously is an issue 
that has been at the top of the headline view for most people. 
And I think, just to reiterate the situation, the FDA said this 
was safe feed and food products in the area, and we rely on 
them to provide that safety. We are working with various 
stakeholder groups to say the consumer is not ready for this 
yet. We need to be able to understand the consumers' concerns, 
look at proper labeling, look at how we are going to distribute 
and not mix and those kinds of things. We are trying to better 
understand the role of technology in this by meeting with the 
stakeholder groups. We think a voluntary moratorium right now 
is appropriate because everybody is agreeing to the voluntary 
moratorium. As we look at the industry and talk to the folks, 
it is moving properly. Should that start to shift, and we 
cannot hold the people to the voluntary moratoriums until we 
can understand the proper direction here, then the USDA is 
going to have to act in a more forceful manner. But at this 
point in time, we think the voluntary moratorium has been 
agreed to by industry. They understand the consumer education 
that needs to take place, and we are working with them strongly 
to be able to deliver that in the future.
    Ms. DeLauro. Tell me about your views on labeling.
    Mr. Schafer. Well, my view, and we discussed this a little 
bit with the Country of Origin Labeling, I think consumer 
choice is based on the best information you can get. And while 
there are a lot of scientific issues in labeling as far as what 
is used and what is not and what it constitutes, we have to 
sort that out from a scientific standpoint about what can be, 
what should be and what is not misleading or what is proper on 
labeling. But my own personal philosophy is the more 
information a consumer has, the better choices they are going 
to make, and labeling plays a strong issue there.
    Ms. DeLauro. Would you support voluntary labeling?
    Mr. Schafer. For anything?
    Ms. DeLauro. No, for cloned products.
    Mr. Schafer. I do not know if I am smart enough to say that 
yet. We are just starting to develop this. The FDA said it is 
safe. We are trying to walk through the process with the 
producers here. On the outside, admittedly not knowing much 
about this, if a producer came and said we want to label our 
product as coming from a cloned animal, I do not particularly 
see anything wrong with that. I am sure we have to vet it 
through a thousand lawyers.
    Ms. DeLauro. Or not come from a cloned animal.
    Mr. Schafer. If an industry would like to label something 
in that manner, we would try to work out a way to do so.
    Ms. DeLauro. Also from the standpoint because the USDA said 
it ``would be open to discussion with industry on possible 
verification'' of its applied chain management plan for the--
trading partners are aware of whether or not they were cloned 
or non-cloned products. And I know in trade here, is the USDA 
supportive--where do you come down on the issue of the labeling 
with regard to our trading partners and whether it is cloned or 
a non-cloned product?
    Mr. Schafer. I cannot say that I have addressed that, 
Madame Chairwoman. Have we talked about that internally? I do 
not know.
    Mr. Conner. If I could, Madam Chairwoman, I want to be 
clear here that I do not think anyone has questioned science 
here in terms of the safety of the cloned animals. They have 
been determined to be as safe as the original. And on that 
basis, we have no reason or desire in any kind of mandatory way 
to require regulation of this product, labeling this product 
for either domestic or international markets.
    Ms. DeLauro. I asked about voluntary.
    Mr. Conner. And in terms of the voluntary labeling----
    Ms. DeLauro. You are not interested in it in terms of 
mandatory, in terms of the domestic?
    Mr. Conner. Because, again, these products have been 
determined to be as safe as the original. There would be no 
difference to regulate them differently, if that makes sense. I 
am probably not articulating that well.
    On the international side, let me just say though that we 
have a number of certification programs we operate within USDA, 
certified Angus beef, all kinds of things that are not safety 
related. They are commercial market related. And to the extent 
that there is a desire within the industry to market, if you 
will, a guarantee to not be cloned sort of label on their 
product, that is a certification program that we could operate 
again just like we operate other commercial types of 
activities. We could do that domestically. We could even work 
with the industry to find that kind of certification for 
international markets but that is obviously very voluntary and 
initiated between the buyer and the seller and not necessarily 
initiated from the Department of Agriculture as a regulator in 
that process.
    Ms. DeLauro. I know the European Union has determined that 
it is a safe product, but the European Union has 27 different 
countries, and my understanding is I think that each of those 
countries can make a determination of what they want to do. 
Now, we are going to sell product to a number of countries. In 
order to tell you that you must label, they do this in some 
instances as GMO, as I understand it, and do we comply on an 
international basis with a labeling process because it is part 
of our trade protocol, but we will not deal with a labeling 
process as part of a domestic market or some other reason, 
which I have difficulty understanding. And I think, first of 
all, I will just say honestly, what is wrong with labeling a 
product? If we are of certainty of its safety, let us let the 
free market reign and have an individual who walks into a store 
say, ``I am going to buy a cloned product today and it is so 
labeled, and tomorrow I may not want to buy a cloned product'' 
in the same way I am looking at whatever else it comes from, an 
organic product, a non-organic product? But my point is I am 
looking at what you are saying, I am trying to read between the 
lines, I am trying to understand the languages, we may be 
looking at a different set of rules and regulations of the 
domestic market than we are looking at in terms of an 
international market and it is going to be predicated on what 
the industry wants to do. Am I wrong?
    Mr. Conner. The only thing I would add is it is not 
predicated on what the industry wants to do but predicated on 
buyer and seller transactions, and this is something the buyer 
is requesting. I think we need--it is our job in this case as 
this overseer, is to provide and facilitate that operation.
    Ms. DeLauro. So we equate the international buyer with the 
US buyer, are they two different entities, the US buyer?
    Mr. Conner. Again, it is buyer and seller. We have made the 
determination that the product is safe, and we have performed 
that regulatory function. After that, it is simply our 
responsibility to respond to----
    Ms. DeLauro. FDA also said that they--I think what they 
said was is there is no basis to require labeling of food 
products and clones for their products.
    Mr. Conner. Yes, key word ``require.''
    Ms. DeLauro. But we are dealing with, to require the label 
clones of their products, but if the buyer requires that, then 
you are open internationally to doing that and you are open 
domestically to doing that so if somebody says, ``Hey, I am 
going to do this, I require a label on this''?
    Mr. Conner. Let me just quickly respond here. I hope I am 
not leaving anything out to try and read between the lines, 
Congresswoman, because that is not my intent. There are two 
different voluntary aspects of this, there is the straight 
commercial aspect of a buyer who requests that his suppliers 
send me only clone-free products, and the supplier provides 
that assurance and the buyer accepts that assurance and the 
transaction occurs. In that case, obviously, there is virtually 
no role for the Department of Agriculture in that commercial 
transaction. There is another transaction though that could 
conceivably occur in the future where there is a market out 
there for this product, if the seller of this product wants to 
provide any certification that is a cloned-free product, much 
like organic or certified Angus beef or whatever the case may 
be where we develop standards that the industry would have to 
meet in order to have a cloned-free product. If they meet those 
standards, we audit them and there is some kind of a stamp that 
goes on that as a USDA cloned-free animal. Again though that is 
initiated by buyer and seller in this transaction, and they 
would come to us. We have a process that they petition for us 
to consider that type of an arrangement.
    Ms. DeLauro. But Safeway wants to have labeled this 
product, and we say whatever you do here, we want it labeled, 
you will concur with their request?
    Mr. Conner. Well, there is a petition process that Safeway 
and its suppliers then would go through in order for us to 
develop a certification process. Now, to be clear, 
Congresswoman, that certification process is not an overnight 
process. The standards that we have to put in place, the 
enforcement mechanism, it is a process.
    Ms. DeLauro. What would you think about if consumers rose 
up, it is about buyers, it is about sellers, it is about 
industry, what if consumers--and we know where consumers are on 
this issue, I think we know. Consumers are very edgy and their 
right to know. Where do consumers fit in this?
    Mr. Schafer. Madam Chairwoman, I share your interest in 
this because I think it is something, as you said, all of the 
consumers out there are going: what is going on, what is 
happening? I think the point is that if we look at a market-
driven system, if Safeway, for instance, said we are only going 
to accept meat that is labeled clone-free or is cloned, I do 
not know, whatever they want, then it is up to the sellers of 
that product to say if we are going to sell our product in 
there. We have to meet the requirements that they are telling 
us to do so. They can petition them, the USDA, to come up with 
the appropriate labeling and protocol to get the labeling and 
the inspection area to get the labeling so that they can meet 
the demands of their buyer. And I think that is the business 
process of the buyer and seller.
    Ms. DeLauro. Exactly, you characterize it as a business 
process, but you go into markets today, you turn it over and 
you look at nutrition value--over 100 stores and so forth to 
deal with labeling. We do have stuff that is labeled now that 
is organic, non-organic. I do not fully understand why the 
consumers' view on this seems to be at a second tier level in 
terms of a label. We are positing that the science is safe, and 
we also have some concerns and that is not your jurisdiction, 
the science, given the science review board analysis of the 
risk assessment ability of FDA. That is a whole other 
subsidiary here, which we do not have to go into, but you posit 
that, why then do we have a follow-on that says no labeling? I 
have a hard time with that. We are going to go around on a 
circle on this.
    Mr. Schafer. Sure.
    Ms. DeLauro. You are going to talk about the business 
model, I take it from a consumers' perspective.
    Mr. Schafer. And I believe, Madam Chairwoman, that the 
consumer is represented in this equation because it would be 
the demand of the consumer for, in this example, a clone-free 
product from the supermarket requesting that product to be 
labeled, so the consumer really is what is going to drive the 
store to say that that is the kind of product we want to stock 
because our job is to meet the demands of the consumer. So I 
believe the consumer is represented in this and should be 
strongly.
    Ms. DeLauro. I hope so, I am not sure, but we will follow 
it and we also could do legislation for the labels.
    Mr. Schafer. Sure.
    Ms. DeLauro. It just needs to be fair in the marketplace 
and it is an appropriate role for the government to be able to 
play in it. Ms. Kaptur.

                              WIND ENERGY

    Ms. Kaptur. Thank you, Madam Chair. I wanted to ask you, 
Mr. Secretary, is there anybody over there at USDA that you 
would term your best ``wind expert,'' power, wind energy 
expert? You probably have a lot of wind farms in North Dakota.
    Mr. Schafer. We do, yes.
    Ms. Kaptur. We do not have a single one in Ohio. We have 
got one municipal landfill up in my area, the first place in 
the state of Ohio that has decided to bring wind on and it is 
very, very successful. I can tell you the farmers in our area 
want it, but we are not a state with renewable energy credits. 
We do not have a renewable energy portfolio. So do you have 
anybody over there at USDA tasked with wind energy?
    Mr. Schafer. Congresswoman, I first thought your question 
was wondering if we had any politicians over there. [Laughter.]
    Which we do. But I do not know the renewable--I do not know 
if we do. Renewable energy is a big deal and certainly North 
Dakota, as you mentioned, has been called the ``Saudi Arabia of 
wind energy.''
    Ms. Kaptur. Oh, interesting, I represent Lake Erie. We are 
the Saudi Arabia of wind in the Midwest, so we are competing.
    Mr. Schafer. But I do not know if we have any wind experts, 
it is really kind of not in our purview there.
    Ms. Kaptur. Okay.
    Mr. Schafer. But renewable energy is, and I am sure that as 
an adjunct to the renewable bio-energy folks, there are some 
issues that crop up on wind generation. I do not know, but we 
will be glad to find somebody if there are.
    Mr. Conner. Yes, we certainly have a number of people that 
are involved in alternative energy, and I would consider them 
experts. I do not know if any of them specifically focused just 
on wind though. We will find out.

                          USDA ENERGY PROGRAMS

    Ms. Kaptur. Well, I would be very interested in who you 
might discover over there. I am going to ask you to submit for 
the record a cross-cut of your budget regarding all USDA energy 
programs because according to what we currently--so we can 
compare it to last year. According to the data I have, energy 
alternatives through Agriculture seem not to have fared well in 
your budget but programs like bio-diesel fuel education, 
Renewable and Energy Efficiency Improvement Program, Bio-mass 
Research and Development Program, the CCC Bio-energy Program 
and value-added agricultural product market development all 
were zeroed out in your budget. I am someone who is 
extraordinarily interested in energy production in our country 
through sustainable sources, many of them in agriculture, and 
therefore would want to see how you look at your energy 
responsibilities across various accounts and then compare it to 
the prior year. Do you happen to have that now or will you have 
to prepare that?
    Mr. Schafer. I think we have it.
    Mr. Steele. Yes, we have it.
    Ms. Kaptur. Oh, great. And, Budget Officer Steele, could 
you summarize briefly for the record what it shows?
    Mr. Steele. Thank you, madam.
    Ms. Kaptur. Compared to prior years, are my numbers wrong?
    Mr. Steele. No, your numbers are accurate. We do not have a 
request in the budget for the CCC Bio-energy Program. The 
market itself has taken off substantially out there, and we do 
not have to provide a lot of credit to the private sector to 
produce Ethanol as we did in the past, so that program does not 
show up in the budget.
    We have also, as you point out, lowered some of our 
activities in the grants area, and we would be moving that 
business, the 9006 Program for example, into our Business 
Industry Loan Program, which also has the authority to make 
energy loans. And we also have a big increase in our Farm Bill.
    Mr. Conner. $1.6 billion.
    Mr. Steele. $1.6 billion to really help ramp up our 
activities on energy.
    Ms. Kaptur. I am a little nervous about the 9006 since I 
wrote that title in the House and Tom Harkin in the Senate for 
the first time in American history, so we sort of guard the 
energy footprints in our farm bills very, very closely because 
they were hard fought up here.
    Mr. Steele. I understand.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                       ALTERNATIVE ENERGY EXPERTS

    Ms. Kaptur. So I would appreciate that for our own perusal 
and for the record. I also wondered, Mr. Secretary, in pushing 
this agenda for sustainable and renewable energy through 
agriculture, do you have a team of people that travel? For 
example, I come from a state with no renewable energy 
portfolio. They are trying to get it down there in our state 
capitol, but you were governor and you know what that is like. 
And yet we have a region right on Lake Erie with all this wind, 
we have the asset. And I am bringing in lots of grant money and 
other money to our region to tool up wind energy and solar and 
geothermal but not through Agriculture. Do you have a team of 
energy experts that could look at what we are doing and maybe 
partner with us where it is appropriate with some of our 
schools, places that exist on rural campuses where perhaps the 
rural electric provider, the adjacent rural electric provider 
could cooperate with them? I do not know, you are sort of out 
there and you are not connected but yet as I see you as 
potential. Do you have a group of energy people that travel the 
country? Do you have a team that looks at areas and looks for 
potential?
    Mr. Schafer. I think, as the Deputy Secretary mentioned, we 
do have alternative energy experts in USDA. I believe with our 
focus and our limited resources, they are there in the bio-
energy field. I am not sure that we have the capability to go 
in and measure a wind tunnel or test geothermal wells or things 
like that to see if they have potential. In my opinion, having 
been governor, it seems to me that that is a state purview, 
knowing the infrastructure and capabilities of alternative 
energy from the state level I think is most important. But I am 
reluctant to say we have a lot of information and availability 
of experts in wind and geothermal and other things that are not 
bio-based renewable energy. We know that area, I am not sure 
that we really have a lot of smarts in the other areas.
    Ms. Kaptur. Okay, that is an honest answer. I would 
appreciate a summary that your department might give us that 
talks about the energy programs you do have, the bio-energy 
programs that you do have, the loan programs, value-added, 
whatever it might be, that we could share with our farmers and 
our local rural town executives because our state is behind the 
others. Chances are they do not know.
    Mr. Schafer. And we are glad to provide that. And I would 
also point out that through the Rural Development Programs, 
that we do have loan programs, we do have assessment 
capabilities of business plans, which would include using the 
proper technology and resources. So we are able to deliver 
support and grant loan and direct loan--or loan guarantee 
programs.
    Ms. Kaptur. Alright.
    Mr. Schafer. Or businesses that develop in rural areas, so 
we can look at it from a business standpoint, whether it is an 
appropriate investment and get appropriate return on investment 
from that standpoint. Again, we will give you all those 
programs, we will get you what we have. They are available 
through your local rural development agency.
    Ms. Kaptur. Okay.
    [The information follows:]

                            Energy Programs

    Under the direction of USDA's Energy Council, an Energy Matrix was 
created to assist the public in navigating the numerous USDA programs 
that respond to energy-related issues and opportunities. The Matrix 
allows the public to search either by agency, technology type or 
program. The website is: http://www.usda.gov/rus/index2/0208/
EnergyPrograms.htm.
    This site contains a comprehensive listing of the USDA programs 
that provide outreach and education, technical assistance, financial 
support for infrastructure, and the adoption of energy-saving products 
by USDA. The list of programs includes those that are directly involved 
in energy-related issues and those that may have ancillary involvement.

    Mr. Schafer. And there is a strong USDA support group out 
there to help your local businesses in rural areas to expand.
    Ms. Kaptur. Well, I would like to make this information 
available to them. And, Madame Chair, I do not know if you face 
this in Connecticut or not, but let me give you an issue, Mr. 
Secretary, where again we need attention at the top. One of the 
counties I represent, Lucas County, has a population of over 
450,000. Its major city is Toledo. The county government has 
decided to power the downtown, the county government has its 
headquarters in the downtown of a city of 350,000, so it is not 
in a rural area, but the county government, which does include 
a lot of rural lands on the outside, decided that they were 
going to create a power system in the downtown where they were 
going to procure bio-mass to fuel their burner that they are 
going to be using and to put this through a steam plant in the 
downtown. I said, ``Who are you working with on this?'' They 
said, ``Chevron.'' I said, ``Chevron? Where are you going to 
buy your product?'' ``Well, we will let Chevron worry about 
that.'' I said, ``No, why not work with our farmers in the 
region?'' ``Well, Marcy, where would we get the corn cobs, 
where would we get the input?'' I said, ``Well, that is exactly 
where you get it, from some of our co-ops.'' But where I would 
appreciate help, if you could identify somebody in your 
department that I could introduce to our county commissioners 
and say this is how you think--to these urban country 
commissioners, this is how you think about networking with the 
country even though USDA does not see inside the city yet, they 
want to partner with a rural provider that would be Rural 
Development, that would be providing this input over a long 
period of time. If there is somebody in your shop there that 
you could refer me to that I could put them in touch with, I 
would be grateful because I think there is a marriage here.
    Mr. Schafer. Well, we will do that. I am pretty sure that 
we have a Rural Development agency in Toledo, so we can make 
that hook up.
    Ms. Kaptur. Thank you, Madame Chair.
    Ms. DeLauro. I have no more questions. We are going to 
conclude the hearing. Let me just offer my appreciation to you, 
Mr. Secretary, Deputy Secretary Conner, Dr. Glauber, and to Mr. 
Steele, who is our steady participant over the next several 
months. I appreciate your patience and your willingness to be 
so forthcoming, and I look forward to a very productive 
relationship, Mr. Secretary. Thank you very, very much.
    Mr. Schafer. Thank you, Madame chairwoman.
    Ms. DeLauro. The hearing is concluded. Thank you.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.050
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.051
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.052
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.053
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.054
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.055
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.056
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.057
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.058
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.059
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.060
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.061
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.062
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.063
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.064
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.065
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.066
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.067
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.068
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.069
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.070
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.071
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.072
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.073
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.074
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.075
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.076
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.077
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.078
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.079
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.080
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.081
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.082
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.083
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.084
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.085
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.086
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.087
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.088
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.089
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.090
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.091
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.092
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.093
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.094
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.095
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.096
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.097
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.098
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.099
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.100
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.101
    
                                       Thursday, February 28, 2008.

           UNITED STATES DEPARTMENT OF AGRICULTURE OVERSIGHT

                               WITNESSES

PHYLLIS K. FONG, INSPECTOR GENERAL, USDA
KATHLEEN S. TIGHE, DEPUTY INSPECTOR GENERAL, USDA, OFFICE OF INSPECTOR 
    GENERAL
ROBERT W. YOUNG, ASSISTANT INSPECTOR GENERAL FOR AUDIT, USDA, OFFICE OF 
    INSPECTOR GENERAL
KAREN L. ELLIS, ASSISTANT INSPECTOR GENERAL FOR INVESTIGATIONS, USDA, 
    OFFICE OF INSPECTOR GENERAL
SUZANNE MURRIN, ASSISTANT INSPECTOR GENERAL FOR MANAGEMENT, USDA, 
    OFFICE OF INSPECTOR GENERAL
W. SCOTT STEELE, BUDGET OFFICER, USDA, OFFICE OF BUDGET AND PROGRAM 
    ANALYSIS
    Ms. DeLauro. Good morning. I want to welcome everyone who 
is here. I've said it many times before, but you truly are the 
people's eyes and ears at the USDA and the work that you do is 
so critical to our success and our achievement. And while the 
USDA's programs are complex, expansive, your reviews bring a 
clear opinion and objective perspective that we need in order 
to be able to get a full picture of what is at stake. One can 
always find fault, but I think your reports take the next step 
in so many of the cases to identify systemic problems we must 
confront in order to be able to make progress.
    I'll tell you, I'm going to be asking a number of questions 
about major programs at the USDA. We have addressed some of 
these before. I will continue to press you on them because we 
have a responsibility to get them right. In particular, one, I 
thank you for the report, but I also then want to further 
examine the Department's move toward risk-based inspection. 
Your work this year has confirmed our long-standing concerns 
that the Food Safety Inspection Service lacks the coherent data 
to support a risk-based inspection system.

                   FOOD SAFETY AND INSPECTION SERVICE

    The report is clear. FSIS did not have the data and still 
does not have the data to move forward with risk-based 
inspection, and yet the agency rushed to implement the system 
anyway without the necessary information. Worse still, you 
found that FSIS failed to implement earlier recommendations 
from your office even though they could have facilitated risk-
based inspection implementation in processing facilities.
    FSIS has agreed to strengthen security over information 
technology resources and application controls in response to 
two previous reports. Now your latest report that confirms that 
FSIS systems remain vulnerable and exposed to unnecessary 
risks. I look forward to hearing your analysis of their efforts 
and reactions to your reports.

                       FOOD AND NUTRITION SERVICE

    Another issue I'm interested in discussing involves food 
service management companies. That is an issue that my 
colleague, Ms. Emerson, cares about deeply. In December 2005, 
your office presented the results of an audit of cost 
reimbursable contracts between school food authorities and a 
food service management company. The audit found that the 
management company did not pass on at least $1.3 million in 
savings it received, even though its contract specifically 
required the crediting back of funds. In addition, I have also 
heard complaints in my own district about the lack of quality, 
nutritional food being served in the New Haven public school 
system.

                     AGRICULTURAL MARKETING SERVICE

    I also want to discuss serious concerns about the 
agricultural marketing services management controls. The latest 
Hallmark/Westland beef recall raises red flags about the 
standards that we are using to maintain the safety and the 
quality of the food we are using in our federal assistance 
programs, including the school lunch programs. I think you'll 
concur that the American taxpayers and American children whose 
diets and daily safety depend on an effective school lunch 
program and that they deserve honest answers.

     NATURAL RESOURCES CONSERVATION SERVICE AND FARM SERVICE AGENCY

    Still more questions raised by a recent review of the 
relationship between the National Resources Conservation 
Service and the Farm Service Agency in California. With 
multiple conservation programs in the mix, it's clear that a 
failure to communicate can have serious consequences. Limited 
taxpayer funds are at stake, and so are the precious natural 
resources we are supposed to be protecting in the first place.

                               FARM BILL

    In addition, upon review of the USDA budget, we noted that 
there is a massive and growing unbalance--a growing balance--of 
unspent funds for farm bill conservation programs. This raises 
questions about the Department's capability to deliver these 
programs' services in a timely way and in an efficient manner. 
I hope that we can talk about some of these problems and begin 
to address them systematically. Otherwise, we are just doing--
you know, we're developing short-term solutions.
    Ms. Fong, I appreciate the dedication, the long-term 
strength in the agencies that you review. My colleagues and I 
may express frustration at times while you're testifying before 
the committee, but it's not you. It's the issues that are 
raised and the problems that you highlight within the 
Department.
    I want to make another comment if I can before I yield to 
the Ranking Member. I took--I think--not I think--we took very 
seriously last year your testimony and the works that you were 
doing and also the areas that we asked you to examine. And 
given that, when we put together our House Appropriations bill, 
we talked about almost $86 million for this agency. The 
difference between the House and the Senate was about $4.3 
million in the funding. I want you to know--it was at $79.492.
    I just want to say, and to say it for the record, that we 
appreciate the work that you do and the need for resources. And 
when I read your testimony and I looked to the various, you 
know, the hiring freezes or the FTEs that would have to be let 
go or the projects that we can't work on or the information 
that will not be readily available, it's very troubling.
    And so we will continue to do our utmost to make sure that 
you have the resources to do the job that you're tasked to do, 
and obviously that comports with what we have to do overall in 
the budget process. So I just wanted to say that for the 
record.
    So I thank you again for meeting your responsibilities to 
the American people and for being here today, and with that, 
will yield to the Ranking Member of the Committee, Mr. 
Kingston.
    Mr. Kingston. Thank you, Ms. DeLauro and Mr. Latham. I 
apologize for being late. On Thursdays I'm chairing another 
meeting and had to get away, so.
    Ms. DeLauro. I was prepared to recognize Mr. Latham. 
[Laughter.]
    Mr. Kingston. You want to say----
    Ms. DeLauro. Do you feel bad, Mr. Latham? Do you want to--
go for it.
    Mr. Latham. Actually, I feel much better. [Laughter.]
    Mr. Latham. No, I just was going to say, some of my 
concerns relate to illegal activities and potential fraud in 
farm programs, crop insurance and farm loan programs. 
Additionally, what's happening in the avian influenza arena and 
with some of the costs related to illegals in the feeding 
programs who, by law, would not be eligible whether because of 
their immigration status. I appreciate very much the job that 
this panel does, because you're our source of information, and 
we look forward to hearing your testimony.
    Mr. Kingston. And I do have an opening statement. What I 
want to say to you, Ms. Fong and your team, I think you 
potentially and probably do have the most interesting job in 
Washington, D.C. or maybe in government because it's so target 
rich of things to investigate. [Laughter.]
    Mr. Kingston. And so--it could be Mr. Steele that has a 
more interesting job, because he seems to know everything. He's 
like the right hand of the Lord. He just quietly follows behind 
taking notes, and it's scary at times, but. [Laughter.]
    Mr. Kingston. My question is to you that I hope you will 
discuss during your testimony is do you feel that you're on a 
police beat in a high crime area? Are things getting better or 
worse? Are we listening to you as much as we need to be? And, 
you know, that would be sort of what I'd like to hear a 
discussion on as we go through the questions.
    So, thank you for being here, and we always are very 
interested in what you have to say.
    Ms. DeLauro. Yes. I want to move to the testimony. I'm 
moving to the testimony. Pulled it out to go through while 
you're speaking. And if you would, you obviously know that what 
we need you to do is to summarize if you can, but the entire 
document will be in the record.

                  INSPECTOR GENERAL OPENING STATEMENT

    Ms. Fong. All right. Thank you, Madam Chairwoman and 
Ranking Member Kingston, Mr. Latham, and Mr. Alexander. We're 
very, very pleased to be here today, as we always are, to visit 
with you about the work that we have done. And I do want to 
take the time to express to all of you our sincere appreciation 
for your interest in what we do. It makes all the difference in 
how effective we are to know that we have your support, your 
interest, your requests for work, and the fact that we have to 
be accountable to you. So we do appreciate all of that.
    I want to just quickly introduce for you the members of my 
team who are here to answer all the tough questions. Sue 
Murrin, the AIG for Management. Karen Ellis, our new AIG for 
Investigations. Bob Young, you know, head of Audit. Kathy 
Tighe, Deputy IG, and Scott Steele, who you know very well. And 
I also want to recognize Rod DeSmet, who is our AIG for 
Inspection and Research, who may be available to answer 
questions also.
    Okay. Today we have a substantial body of work to talk 
about with you, as summarized in my written statement. I won't 
go through all of them, every single issue, because I think 
that would take a lot of time. But very basically I want to 
mention to you that we are very pleased with the statistical 
results of our work. It was a very productive year last year. 
We had--we issued 61 audit reports. We had dollar, potential 
dollar impacts from our audits and investigations of over $150 
million. Our work resulted in 520 indictments and 440 
convictions. So overall, it was a very productive year in terms 
of the kinds of statistics that the IG Act requires us to 
report.
    But more importantly, apart from the statistics, we have 
issued a number of reports that have significant, we believe, 
significant recommendations for the Department in terms of 
improving its programs. And this past year we have focused a 
good deal of our effort on the area of food safety. I want to 
highlight that today, because I know it's a matter of 
particular interest to you and to the American public at this 
time in particular.

                   FOOD SAFETY AND INSPECTION SERVICE

    So just to briefly go over the work we've done in food 
safety and security. As directed by this subcommittee, in 
coordination with your Senate counterparts, we assessed the 
Department's proposed RBI program for meat and poultry 
establishments. We offered numerous recommendations to FSIS to 
consider, and as the chairwoman noted so aptly, we questioned 
at the time of our audit whether or not FSIS had systems in 
place that could provide reasonable assurance that risk could 
be properly assessed. We'll be happy to discuss that in more 
detail.
    In another area of food safety, in response to a recall 
that happened last fall involving contaminated ground beef, 
beef contaminated with E. coli, the then-Acting Secretary, now 
the Deputy Secretary, asked that we look at whether FSIS could 
improve its sampling and testing procedures for E. coli. So we 
undertook that work for him. We issued a memorandum report on 
that, and we concluded that while FSIS had some good 
initiatives underway, it could be even more effective if it 
focused on strengthening its HACCP verification activities.
    Finally, in the area of work that we have right now, I want 
to mention that we have a very active investigation going on 
into recent allegations concerning the inhumane treatment of 
cattle in a California meat slaughter and processing facility 
and the whole issue of whether adulterated beef may have 
entered the food supply. That is a very active case that we are 
working currently.
    We have also initiated an audit, Mr. Young's side of the 
house, to look at whether that facility complied with FSIS 
procedures for ensuring that only animals fit for slaughter 
enter the food safety. That audit we initiated this week. It is 
again very active and ongoing. And when we finish our work, we 
will report our findings.
    In addition to those areas of high interest, we have two 
other noteworthy audits in the food safety arena that we are 
working on right now. One is a follow-up review of the 
Department's inspection system for meat and poultry imports, 
which is of great interest, and another is a review of FSIS' 
recall procedures for contaminated product that has already 
entered the food distribution chain.
    In addition to all of this food oversight work, we are of 
course doing the full panoply of work on the broad array of 
USDA programs of importance to you, such as the nutrition 
programs, the farm programs, rural communities, and of course 
the Department's financial management and IT security, which 
continue to be issues that we devote a substantial amount of 
time to.
    So in closing, I just want to reiterate my appreciation for 
all of your support and to ask you, if you can do it, to 
support the President's request for our office for this year. 
It would go a long way towards halting the decline in our 
workforce, and it would enable us to address the issues of 
interest to you and the American public.
    So that concludes my statement. We all stand ready to 
answer your questions.
    [The information follows.]
    [GRAPHIC] [TIFF OMITTED] T8056A1.102
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.103
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.104
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.105
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.106
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.107
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.108
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.109
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.110
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.111
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.112
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.113
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.114
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.115
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.116
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.117
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.118
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.119
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.120
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.121
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.122
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.123
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.124
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.125
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.126
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.127
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.128
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.129
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.130
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.131
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.132
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.133
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.134
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.135
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.136
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.137
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.138
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.139
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.140
    
    [GRAPHIC] [TIFF OMITTED] T8056A1.141
    
     NATURAL RESOURCES CONSERVATION SERVICE AND FARM SERVICE AGENCY

    Ms. DeLauro. Thank you very much. I would like to start 
with the NRCS and FSA coordination and communication. We were 
concerned when we read the OIG's August 2007 audit that 
reviewed how NRCS and FSA were working together in California. 
The report surveyed how USDA was delivering free conservation 
programs in California. The Wetlands Reserve Program, Grassland 
Reserve Program, Emergency Watershed Protection Program.
    The findings are that NRCS and FSA were not communicating, 
and FSA was making millions of dollars in improper payments. 
When landowners participate in both farm subsidy and the 
conservation easement programs, the two agencies are supposed 
to share information so that the public doesn't pay the 
landowner twice. It's double dipping. First for purchasing the 
conservation easement, and second for crop subsidy payments on 
base acres. So they are supposed to coordinate, as we 
understand it, to make appropriate payment.
    What's more frustrating, however, was that OIG had made the 
same exact finding in an earlier audit of the same program in 
the same state. In August 2005, OIG reviewed Wetlands Reserve 
Program in California, found that NRCS had not informed FSA of 
several conservation easements they had purchased, resulting in 
FSA making improper payments to landowners.
    The earlier audit exemplified the need for the two agencies 
to get their acts together, in essence, and to deal with 
interagency communication. And OIG again had identified the 
very issue as a major management challenge from at least 2004 
to 2007. You reviewed 58 recorded easements for three programs 
and only eight counted in California. Even on such a small 
scale, you identified about $1.4 million in improper payment.
    In one's mind, if you magnify the programs across all 50 
states and 3,000 counties, you can begin to imagine fairly 
large dollar figures, some fairly significant cost to the 
public for the failure of the agencies to communicate with one 
another and to share simple data. It shouldn't be rocket 
science to be able to do that.
    Let me ask you a couple of questions as a follow to laying 
this out. Is this a confined case of poor communication between 
these two agencies, or is this a broader and systemic failure 
to coordinate their program responsibilities? Should the 
committee be concerned that similar double payments are 
occurring in more than just California, for potentially in all 
50 states?
    Are there other programs such as conservation compliance 
that OIG is aware of where NRCS and FSA regularly fail to 
coordinate? If so, what's the magnitude of this lack of 
communication, and has the cooperation between NRCS and FSA 
improved since your August 2007 audit report? And what steps 
have the agencies taken to address your findings?
    Ms. Fong. Okay. There are a lot of questions in there. I 
will address of a few of them, then I will turn to Bob, and he 
will probably have some other thoughts. In terms of the 
broadness of the issue, as you know, we do a management 
challenge report every year, as to what we believe the top 
management challenges facing the Department are.
    And one of the challenges we have identified for a number 
of years is the need for better coordination in general within 
the Department, between agencies. And this would be an example 
of the need for very close coordination between agencies.
    I think, to answer another one of your questions, we've 
seen an issue between RMA and FSA where there's a need to 
coordinate both programs to avoid duplicate payments as well. I 
think it's an issue that, you know, in the food safety arena, 
with FSIS and APHIS. We've in the past also pointed that out.
    In terms of this particular issue in conservation----
    Ms. DeLauro. So my conclusion from that is that we do have 
difficulty with the agencies really coordinating and 
cooperating with one another. This isn't just these two 
agencies where there's poor communication, and the 
ramifications of that have essentially to do with what kinds of 
resources are being spent and being able to not be involved in 
duplicate payments, if that's the case or other areas where you 
deal with inefficiencies in either services or resources. Is 
that accurate?
    Ms. Fong. I think it's fair to say that this is a challenge 
that a huge entity would face. And, yes, we do see examples of 
it.
    Ms. DeLauro. Fine.
    Ms. Fong. Okay. Bob.
    Mr. Young. Yes.
    Ms. Fong. Would you like any more----
    Ms. DeLauro. Well, I don't know if you were going to 
address any----
    Ms. Fong. The conservation program?
    Ms. DeLauro [continuing]. Of the other areas----
    Ms. Fong. Yeah. In terms of----
    Ms. DeLauro [continuing]. Going to be Bob. Go ahead.
    Ms. Fong. I guess the question that you also posed is 
whether this is an issue confined to California or whether it's 
potentially a conservation issue across the country. And, Bob, 
you might have more insight into that.
    Mr. Young. Yes. We confined our reviews to California and 
have been working with both NRCS and the Farm Service Agency. 
They agreed that this was a systemic problem across the U.S. In 
other words, wherever the programs were being implemented. And 
they agreed with our findings. They--both agencies have since 
the issuance of the report, provided additional guidance to 
their states and counties where they were to exchange 
information, and that effort would prevent this from happening 
again.
    Now we haven't done any additional work with the actions 
they proposed and have taken, but we feel that will go a long 
way to addressing these issues. As far as problems in USDA, 
there's a lot of problems along those lines. Many of these 
agencies were established as stovepipe agencies. In other 
words, they had their programs, they delivered their programs, 
and they didn't worry about sharing with others.
    In some instances--we can look at NRCS. For years, they 
didn't make payments. The payments were all processed through 
the Farm Service Agency. So in many instances, these--with NRCS 
having funds and making payments, that's new to them. So in 
some of this, it's a growing learning process that they have to 
go through that they need to work with one another and share 
information. This also holds true for other programs in the 
farm area.
    Ms. DeLauro. Just quickly, how will you monitor these 
efforts? Or is that part of your responsibility is to monitor--
because the question is, have they improved since 2007, or----
    Mr. Young. Well----
    Ms. DeLauro. Just last August, I'm just asking--how do we--
--
    Ms. Fong. Well, there are two things that we do. When we 
issue an audit recommendation, we work with the agency to make 
sure that they respond to that recommendation, we try to reach 
an agreement as to what they're going to do to actually deal 
with the problem. And that's the first step.
    The second step is for us to wait a period of years, as we 
did with California in this case, and then to go back in and 
take another look at it and see if the action that the agency 
took actually did fix the problem or whether the problem is 
still there.
    Ms. DeLauro. Very quickly, and I will yield to Mr. 
Kingston. Does it make sense to understand the--doing this 
nationwide where it occurs, try to get some more in-depth 
knowledge, or do you think we have enough information to 
extrapolate what the cost to the taxpayer is in these 
overpayments?
    Mr. Young. As far as OIG determining what the total cost, 
we don't have sufficient data to do that. However, going back 
to the agency, one of the things they agreed to was to, when 
they put out the guidance, was to have their counties work to 
determine if there were any overpayments made. So through their 
efforts, hopefully, they had collected any improper payments.
    We could, through NRCS and the Farm Service Agency, 
hopefully come up with what that figure is. We don't have it 
currently.
    Ms. DeLauro. Okay. Thank you. Mr. Kingston.

                            HURRICANE ISSUES

    Mr. Kingston. Thank you, Madam Chairman. I wanted to ask 
you, Ms. Fong, about Katrina. Your testimony kind of broad 
brushes it, but what I was looking for are stats on how much 
potential waste there is out there. I think that Katrina was 
certainly a low point in terms of the government to respond, 
and respond effectively. There's been a lot of publicity about 
the 35,000 trailers with formaldehyde.
    But, you know, I guess I am saying I'm looking for some 
stats on how--tell me how well USDA's role was or how bad it 
was.
    Ms. Fong. Okay. Our general sense was that USDA did a very 
good job of responding----
    Mr. Kingston. Remember the President's famous words to 
Michael Brown?
    Ms. Fong. Yes. Yes. Exactly.
    Mr. Kingston. Be careful. [Laughter.]
    Ms. Fong. I take that back. [Laughter.]
    Did a pretty good job.
    Mr. Kingston. Nobody did a good job. That's okay, you know.
    Ms. Fong. There's always room for improvement, of course. 
We did undertake a number of audits. I think we did eight or 
nine of them across the range of programs that dealt with 
hurricane emergency relief, and we also had some investigative 
work because there were allegations that people were taking 
advantage of the situation.
    And what we found--and Bob can offer more detail on the 
audit work--was that in particular in the housing programs, 
there were some duplicate payments that were made because the 
coordination between the agencies that make payments was not as 
good as it could have been. I'm thinking in particular that HUD 
has responsibilities, FEMA has responsibilities, and USDA does.
    We all offer payments to people who have been displaced. 
And one of the things, one of the lessons learned that we 
gathered from that is that there needs to be closer 
coordination among those three departments whenever there's a 
disaster and there are housing issues. We found in our 
particular case, we looked at multifamily housing. We found 
that there were about $2.6 million in emergency rental housing 
funds that were provided that were duplicative and probably 
shouldn't have been provided. So that gives you a sense of that 
program.
    In terms of the emergency food stamp program, we looked at 
it from a control standpoint, and Bob can talk about that. From 
the investigative standpoint, we have a number of cases 
involving individuals who may have filed for emergency food 
stamp benefits for which they were not eligible. Those cases 
have been working their way through the prosecution system. 
We've gotten a number of convictions. The dollar fraud tends to 
be rather small in terms of individuals, so I'll defer to Karen 
for more detail on that. Bob.
    Mr. Young. Well, I can--from an audit perspective, the 
sheer volume of what these agencies were handling during the 
hurricane just quadrupled in many cases. A good example might 
be in Mississippi where they normally have approximately 25 
applications per year for assistance, for housing assistance, 
during the hurricane or right after the hurricane, they 
received 1,677 applications. So you can see the sheer volume 
was huge.
    So under those circumstances, I think they did a fairly 
good job. But with that stated, we found a number of cases 
where the individuals tried to, you know, get extra payments. 
They were involved in defrauding the program. The three that I 
can mention was the Food Nutrition Service had their disaster 
food stamp program.
    I think they were able to go out and service a huge number 
of food stamp--people participating in the food stamp program. 
In the process, one of the problems they had was the states 
were to develop plans to handle disaster food stamps, and their 
plans didn't always cover everything they needed to.
    One of the things they didn't cover was how to prevent 
fraud. And we had individuals going out and trying. If they 
didn't get the food stamps at one location, they would go back 
and try again, or they would use a different member of the 
family to try to get food stamps. The states weren't 
necessarily collecting the data on who had been turned down and 
data for other family members. So as a result, there's no way 
to catch or to identify that fraud.
    Mr. Kingston. Now on your best practices recommendations, 
would that take care of that problem?
    Mr. Young. Yes. What we tried to do is, we made 
recommendations that if anything of this type of disaster would 
happen again, what are the things that need to happen now so 
the agencies are prepared to implement the programs if there 
was ever a disaster again?
    And so one of the things that we recommended to the Food 
Nutrition Service that they needed to provide better guidance 
to the states on what they needed to do when it comes to the 
food stamp disaster plans.

                           AGENCY EFFICIENCY

    Mr. Kingston. Okay. I wanted to ask one more question, and 
I'm dangerously close to being out of time. But the question 
that I have for you, Ms. Fong, is a little bit different. Do 
you ever study agency efficiency? One of the things that drives 
all of us crazy on a bipartisan basis is when we put language 
in a bill and the USDA seems to ignore it or drag their feet 
for whatever reason, or make decisions on kind of a casework 
basis, grants and loans, and then kind of back off it. And it 
seems like we spend a tremendous amount of time getting USDA to 
do what's already been decided. And have you ever studied that 
kind of agency inefficiency?
    And if not, what I would like to do is be able to write you 
and say, hey, you know, they are supposed to be doing blank. 
Can you explain to me why I'm wrong in criticizing them for not 
doing it?
    Ms. Fong. We try to look at efficiency in virtually every 
audit and review that we do. And I think, you know, if you look 
at the kinds of work that we do, we're going in there to see 
whether or not the program is delivering the way Congress 
wanted it to deliver and whether or not it's being done in a 
cost effective and efficient way. We try to answer those 
questions in most of our reviews.
    If there is a particular program or issue that you're 
interested in, we would be very happy to work with you on that.
    Mr. Kingston. I think there would, because I know 
frequently, you know, sometimes it works in our favor. 
Sometimes it works against us, but it does seem like it just 
drives you crazy when we fight hard to come up with 
legislation. Whether you're on the winning side or the losing 
side, you think the battle is over with, and then it gets to 
the agencies, and, you know, we may or may not ignore that 
particular language. So I think that would be useful for all of 
us to know that you would be, you know, a third party.
    I yield back.
    Ms. DeLauro. Mr. Latham.

                    DEPARTMENT COMMUNICATION ISSUES

    Mr. Latham. Thank you, Madam Chairman. I want to follow up 
just a little bit on your concerns with FSA and NRCS, and I 
think also management.
    What--is the problem--and this has just bothered me for 
years and years. We have tried to fix it as far as the--you 
talked about the stovepipe mentality down there. Are they able 
to communicate with each other by computers any more? You know, 
the FSA had a horrible problem last year. They had to work at 
night. They closed their offices for service to farmers in the 
daytime, just because of the backup of the computers, I think 
in Kansas City. Just the situation was causing havoc all 
through the entire system.
    But are they even able to communicate with each other? I 
don't think, you know, we haven't really gone, you know, we're 
still trying to get into the 20th Century sometimes, let alone 
the 21st Century I think. And with the mentality errors or just 
institutional resistance to communication? What is it?
    Ms. Fong. I don't attribute this to any negative intent or 
bad intent. I think what we're dealing with here, as you point 
out, is, and as Bob has pointed out----
    Mr. Latham. Is it just the nature of the bureaucracy?
    Ms. Fong. It's such a huge organization. It's a multi-
entity corporation in a lot of ways. I think when we have our 
conversations at the policy level, the managers and heads of 
the agencies understand the issues, and then it filters down. 
But it does take time to change an organizational culture and 
to turn a ship around.
    In terms of the IT systems, I know that the Department is 
trying very hard to modernize and to bring into play a system 
that will allow everyone across the Department to communicate 
effectively. That's going to take time. It's going to take a 
lot of dollars.
    Mr. Latham. We've been pumping hundreds of millions of 
dollars, for years and years, into the system to try and get 
people to integrate. At least I think we've gone now to the 
point where the North Building can talk to the South Building. 
[Laughter.]
    Mr. Latham. But, I mean, this is outrageous. I mean, is 
there a similar problem with risk management as far as 
communication with FSA? Is it just an isolated problem, or is 
this just department-wide?

                    DEPARTMENT COMMUNICATION ISSUES

    Mr. Young. Well, yes, it's--I think there's department-wide 
issues. The example between the Farm Service Agency and the 
Risk Management Agency, oftentimes, the best example we can use 
is that you have one agency, and they talk about fields, and 
their programs what's planted in each field. You have another 
agency being risked and they talk about tracts of land, which 
can be multiple fields.
    So, you know, the problem isn't just, you know, being able 
to communicate back and forth. In some instances, the problem 
is much deeper, as the programs are set up much differently. 
And to be able--those two agencies, for example, need to talk 
to one another. If you have a loss, okay, what impact does that 
loss have on the programs in say the Farm Service Agency?
    But if you can't identify exactly what field they're on 
because we're using different terminology, it makes it more 
difficult for those agencies to coordinate payments to make 
sure there's not overpayments or underpayments. So it's a huge 
problem.
    Mr. Latham. So what are we doing? What would you suggest? 
Do you have a recommendation?
    Mr. Young. Well, we've made a number of recommendations. 
Right now in that particular case I just mentioned, they have a 
team pulled together with representatives from both agencies 
working to develop systems where they use common terms. They 
adjust the programs so they're using, you know, the same 
description for a field.
    Unfortunately, that process has been very slow. And I think 
they're still talking about it taking another four to five 
years to get this in place.
    Mr. Latham. Isn't it a huge problem for you to find waste, 
fraud and abuse, especially fraud, if you have systems that are 
not compatible? And how do you actually identify these things 
if there's no set standard throughout the Department?
    Mr. Young. Yes, it does make it more difficult for us. 
[Laughter.]
    Ms. Fong. You know, we have been pointing out this 
particular issue for a number of years, and it relates back, as 
Mr. Kingston mentions, this relates back to the ARPA of 2002, 
which mandated that those two agencies get together and develop 
a common database. And I know that they've been trying to do 
it. They haven't yet succeeded. And we report it as often as we 
can.
    Mr. Latham. I remember at least six, eight years ago 
sitting here and we had put $110 million I think into IT to try 
and upgrade and have everybody talking. And still they come 
back the next year and go, well, I don't think it's going to 
work, you know. I don't know. Somebody ate the book, I guess.
    Thank you, Madam.
    Ms. DeLauro. Then I want to recognize Mr. Alexander. But I 
think oftentimes one of the, as I understand it, in many 
instances, both of these agencies are in the same office. 
They're in the same office. I mean, at least when I went out to 
Kansas, they were in the same office. And talk about--I 
mentioned in my statement 2004 to 2007, this was NRCS and FSA 
trying to get them to communicate with one another.
    You go to RMA, the Risk Management, to date, they've only--
they haven't reached a management decision on three of four 
recommendations from the 2002 OIG report. It really is 
staggering. And in the meantime, you're talking about four to 
five years.
    You know, this is serious waste. I don't want to 
characterize it as fraud, because I don't want to, you know, 
tag people with saying that they're doing something wrong. But 
the ineptness of the agency is--or the agencies--is wasting 
millions of taxpayer dollars. And then we figure out--and we 
wonder why people are concerned about what it is that we do at 
the Federal Government, so. Anyway, that was my----
    Mr. Latham. If I may, I mean, you're right. It's waste. But 
it opens the system up for fraud, also.
    Ms. DeLauro. Without question. And I didn't want to imply 
it, but I'm just saying is, is that look, if you just, you 
know, didn't want to make that implication, we ought to be 
efficient enough to be able to know who we've paid and who we 
haven't paid. I mean--and it should not take four to five 
years.
    Mr. Alexander. I'm sorry to hold you up.
    Mr. Alexander. That's okay, and good morning to you all. 
Expanding on what everybody else has already talked about, 
something that fascinates me is the fact that we have 
individuals that will come before the committee--I sit on the 
Budget Committee also, and we'll hear about agency heads 
patting themselves on the back because we found somebody out 
there abusing the system. For instance, you've already talked 
about landowners that might get paid to farm and get paid for 
conservation on the same piece of property.
    We've heard testimony in the Budget Committee of dentists 
that have been charged--or charging the taxpayers with 900 
procedures in one day. Well, it shouldn't take an auditor to 
find that. Does somebody--somebody, somewhere has to approve 
the payment of that. Is it--are we to assume that somebody just 
said, this is a real busy dentist. Let's just go ahead and pay 
it. [Laughter.]
    Mr. Alexander. The point being, we never hear about 
individuals on the inside. We know there are those outside that 
want to abuse the system, but what about the mistakes and the 
abuse taking place inside? Are there agencies--we don't have 
any way of knowing whether there may be individuals out there 
that get conservation payments, two or three, for the same 
piece of property. You know, if we have to assume they're 
getting paid to farm and conserve the property, too, then we 
have to assume there are those out there that are getting 
multiple checks for the same piece of property.
    But, again, the point being that we never hear about those 
inside that are writing these checks getting caught and having 
to be punished, for whatever that's worth.
    Thank you.
    Ms. DeLauro. Well, maybe the thought came up--I don't know 
if agencies have any self-auditing capacity. Do any of these 
agencies have self-auditing capacity?
    Ms. Fong. Well, I believe a number of them do have 
management review and quality control operations. FSA does, 
RMA, FSIS, and APHIS to name a few.
    Mr. Alexander. Well, Madam Chairman, that's the point I was 
trying to make. It shouldn't take an auditor. Somebody had to 
approve a dentist getting paid 900 times for----
    Ms. DeLauro. Right. But I don't know what the internal 
mechanism is.
    Mr. Alexander [continuing]. For a procedure in the same 
day.
    Ms. DeLauro. You know, for oversight. Who is monitoring 
that process? Maybe--I just thought with the California, and I 
don't know if this is doable with the--and I know nationwide 
these are expensive efforts, these audits--if there would be a 
couple more states that might be looked at. Just get a size or 
scope of where we are on this. Is that doable, or?
    Mr. Young. We can certainly----
    Ms. DeLauro. But you need more resources to do it? I know. 
I know.
    Mr. Young. They're expensive audits.
    Ms. DeLauro. Yeah.
    Mr. Young. Because of the travel involved in them. In most 
cases, if we can get an agency to agree that they have a 
problem and to move out and take corrective action based on 
only looking at one or two states rather than going to 10 or 
12----
    Ms. DeLauro. Right. Yeah.
    Mr. Young. And essentially, that's--we look at that as a 
success. Because it saves us resources and gets the issues 
addressed.

                     CONSERVATION SECURITY PROGRAM

    Ms. DeLauro. I'm going to just try and wrap up on my 
questions with regard to conservation. And I noted in your 
December 2000 semi-annual report to Congress that the OIG plans 
to conduct an audit of the Conservation Security Program, the 
CSP program, and they're going to do that in 2008.
    And, quickly, what triggers your concern about the program? 
What aspects of the program will your audit focus on? Have you 
started the audit? And when do you have--when do you assume 
you're going to have it completed?
    Mr. Young. I--yes. One of the reasons we picked that area 
to look at, is we try to look at funding. There's a lot of 
money going into that program, so that was the reason, the main 
reason for picking it to include in our audit program. Also 
it's an area we haven't done a lot of work in. So that was the 
reason for including it. We're just getting started. We don't 
have a lot of information about what's transpired to date.
    Ms. DeLauro. Okay.
    Mr. Young. The idea being, you know, again, to look at the 
internal control processes over the program. Are the objectives 
being met, and are they being met in the most effective and 
efficient manner possible?

                   FOOD SAFETY AND INSPECTION SERVICE

    Ms. DeLauro. That would be helpful, because just 
anecdotally, I understand there are overpayments that are 
existing in that area. But that's anecdotal, and, you know, I 
think then it's worthwhile to see where we come out.
    If I can, I'd like to move to food safety. It's a top 
priority of mine, as you know. I appreciate the work that 
you've done in this area. And I think that the Hallmark/
Westland--I think that's--this is an example, if you don't mind 
my saying this, that this is about the inhumane slaughter of 
animals. And we do have laws. Secondly, we do have laws with 
regard to downer cows moving into our food supply. And third, 
we have the potential of contaminated meat going to the 
national food lunch program, which I just think these all fit 
together.
    And what I'll do a little bit later on, I've got some 
questions with regard to AMS and the contract, because I think 
these all fit together. It's not stovepipe. It's just these 
all--I think that they fit together. When do you expect that 
you're going to have your investigation audit completed and 
released publicly?
    Ms. Fong. That's a really good question. On the 
investigation side, it's very hard to predict because we have 
to follow the evidence where it leads. When we talk to people, 
that opens up more leads. When we look at documents, that opens 
up more leads. And so we're just going to have to work with the 
Department of Justice and the prosecutors and take that 
wherever we can.
    Ms. DeLauro. The areas that I mentioned, pretty much like 
four areas, one being, you know, the downer cows, one being the 
inhumane slaughter, the other this lunch program, and then 
we're looking at how the AMS and the contracts. Are those in 
the mix of things that you're going to concern yourself with?
    Ms. Fong. I would say generally, yes. We are looking to see 
what the culpability, if any, is, for any individual. And then 
we're looking, as I mentioned in terms of the audit, in terms 
of the systems in place, whether this was an isolated incident 
or whether it's a systemic issue. And we're looking at the 
programs there.
    Ms. DeLauro. Sampling and testing for E.coli. You released 
a memorandum advising the Deputy Secretary suggestions for 
strengthening FSIS's E.coli sampling and testing program. 
October of last year, FSIS announced a number of actions to 
improve its sampling and testing program based on a significant 
increase in E.coli positive test results related to illnesses 
and beef recalls. You note in your memorandum that FSIS's 
proposed actions would indeed improve its E.coli program and 
provide information to monitor the pathogen. However, you also 
indicated that strengthening FSIS's Hazard Analysis and 
Critical Control Point, the HACCP activities, would provide 
better assurance that processing establishments are properly 
identifying and controlling their food safety hazards. Can you 
please expand for us your conclusion that reinforcing HACCP 
would be a better investment of resources, and if so, to what 
extent is FSIS also pursuing better oversight of its HACCP 
activity? Anyway, those are my questions. Expand on that 
conclusion of reinforcing HACCP. What do you mean? What would 
be a better--what should they be doing?
    Ms. Fong. Well, as you know, the whole purpose of HACCP is 
for an establishment to analyze its process and identify where 
the potentially risky areas are and then to put some safeguards 
into place to address those issues.
    Ms. DeLauro. HACCP was initiated when? How many years?
    Ms. Fong. Oh, thank you. That was before my time.
    Ms. DeLauro. 1996, yes.
    Ms. Fong. And this program has been in effect for a while.
    Ms. DeLauro. Okay.
    Ms. Fong. And theoretically, it should be operating well. 
What we are finding in terms of E.coli testing is that testing 
is important. It's important to do it. But there are certain 
limitations with the testing itself.
    It's difficult to detect E.coli. You know, it's present 
sporadically. It's not necessarily present continuously on a 
sample. The program that FSIS has is not designed to give a 
statistically valid assessment. There are some other issues 
with the program as it's run.
    And so our thought here has been that if FSIS could focus 
on overseeing implementation of HACCP to make sure that the 
plants are really doing what they should be doing to identify 
where their weak points are, and then engaging in appropriate 
interventions to address anything, any problems that they 
identify, that would really be the most effective way to go 
after this.
    And, you know, again, I invite Bob to add.
    Ms. DeLauro. But currently, there isn't real oversight of 
the HACCP process, in the way that it ought to be since it 
started up in 1996 and has moved forward, and you know, we're 
12 years later.
    Ms. Fong. We think that there could be improvements in 
oversight. You know, clearly, FSIS is trying to do it, and they 
have their resources and priorities.
    Ms. DeLauro. Well, my time has expired. Mr. Kingston.
    Mr. Kingston. Thank you, Ms. DeLauro. I wanted to make a 
couple of points, and number one, on risk-based inspection, I 
continue to be a supporter of it, but found it very difficult 
to ally myself with Dr. Raymond.
    As my friend, Ms. DeLauro, who's on the opposite side of 
this issue knows, I found the USDA department that was 
promoting RBI to be very tepid in their own support and very 
unconvincing in terms of testifying for it.
    So, I'm just going to say I'm ready to play, coach, if we 
decide we're going to play this game. But, frankly, it's very 
difficult to lead a charge up a hill on behalf of the USDA when 
they're still sitting on the bench themselves, so. But I think 
philosophically, it is a sound proposal, but I am very 
frustrated with USDA.
    So I'm interested in what you have done on that, and I'm 
going to submit my questions for the record because I just see 
the thing almost being academic right now until the USDA itself 
is convinced. And I'm glad that you did look into it. I also 
wanted--but I will submit those questions.

                            ANIMAL FIGHTING

    And I want to say on dog fighting, it almost appears that 
you could go to any random dog fight in any friendly 
neighborhood and find out that half the people in there are 
criminals, based on your investigation, if they didn't have an 
illegal gun, they had illegal food stamps or they had marijuana 
or something. You know, while I'm glad about that, I also do 
believe, though, that dog fighting should be a state--I think 
that the Federal Government really is better--better spends its 
resources elsewhere.
    And yet I know there's a federal hook in there is you can 
generally--you know, the Federal Government can just about 
investigate everything, anything and with its money find a 
federal hook. And in this case, for you, food stamps.
    But, you know, I do think that the state laws and also 
interstate commerce, I guess. But I do think the states really 
should stay after dog fighting and you should stay after, you 
know, other bigger, more expensive, more pressing problems, not 
to say that--you know, I mean, who likes dog fighters? I mean, 
Vick has gone from the top of the world to the bottom.
    And, you know, we were more upset in our country about 
Chinese tainted pet food than we are about, you know, humans 
dying in many, many cases. I mean, we love our pets. We love 
our dogs, and I understand how politically incorrect it is for 
me to say the Federal Government has bigger fish to fry, but I 
do think that it really does. Because the states should be 
monitoring that kind of thing.
    And, again, you know, I know there's a justification, but 
you could come into any situation and eventually come up with a 
federal hook. And, you know, we see that, frankly, over and 
over again with the Department of Justice on their myriad 
examples of fishing trips that eventually they're going to be 
able to find something to nail somebody on if they throw up 
enough indictments.
    I would rather see you spending your time on some of the 
other issues that are you are doing, whether I agree or 
disagree with them, but I do think, you know, getting after the 
farm program, acreage enrollment and Operation Talon and 
livestock, beef recall, RBI, I think those are better things.
    I just wanted to make that editorial comment. And with 
that, I'll yield back the balance of my time. That's not to 
criticize you. I'm just--wanted to remind you that there are 
things that are traditionally better handled by the states.
    And often when people come up to us as a Member of Congress 
and they say, oh, you know, you've got to do something about 
the murder rates. You know, murder is traditionally still 
something that state courts do. And even though it's bad, the 
Federal Government doesn't necessarily have to rush into it 
just because there's a political market for it and there's 
angst about a problem. So, let me yield back.
    Ms. DeLauro. Mr. Latham.

                     CONSERVATION SECURITY PROGRAM

    Mr. Latham. Thank you, Madam Chairwoman. I'm kind of 
concerned about CSP as far as double payments and maybe 
payments going where they shouldn't.
    You've got a case here potentially where you may be triple 
paying in that you get a direct payment to that farmer for 
having a conservation plan in place to begin with, and they're 
just direct payments. Then you can get the commodity payments 
also if the prices would happen to go down. And then you get a 
CSP payment for tier one for basically doing nothing other than 
what you're already doing. You can get additional payments then 
with additional efforts supposedly.
    I would ask in your audits if you can find a way to 
quantify benefit to the taxpayer on an individual farmer basis 
for his actions. The idea supposedly is to improve air quality, 
soil till quality and water quality. I would submit there is no 
way, on an individual farmer basis, that you can quantify those 
results for the taxpayer.
    You can do it on a watershed basis. You can do it maybe on 
a regional basis on air quality. There is no technical way. 
Maybe if USDA wants to get into that, to go out and have 
somebody sitting there monitoring the field on a 24/7 basis to 
quantify that the farmer is actually improving on tier two and 
three, it's not possible.
    Ms. Fong. Okay. We will take a look at that.
    Mr. Latham. And I would really like it--if you have a way 
of quantifying the taxpayer benefit on CSP on an investigation 
basis, I would like to see that. I don't know if you have any 
comment. Is there any effort in that regard today?
    Mr. Young. We have not--our review may touch on that, 
various tiers and how they would determine what tier. As far as 
going in, as far as trying to ascertain the success of the 
program in those--you know, as far as addressing the 
improvements in the land, I think we'll touch on it. I think 
based on your question, we'll take another look to see if we 
can do more in that area. But right now we're--yes, we're 
looking at it but not to the depth that you've just described.

                             FARM PROGRAMS

    Mr. Latham. Okay. And in my original opening, I'm still 
trying to get there, I guess, talking about the farm programs, 
which I think is interesting. We haven't quite got the rules 
down from the last farm program yet and being able to implement 
them. Now we're going to write a new farm program and probably 
write the rules again, so here we go again.
    What are the biggest areas of fraud you're seeing as far as 
the entitlement programs? And is it just the confusion between 
departments, or what are the biggest areas of fraud you're 
seeing today, and what kind of--how many indictments or 
prosecutions have you had?
    Ms. Fong. Well, let me just start off by saying we do have 
quite a bit of work going on in the crop insurance area, as we 
always do. We also have some work in payment limits. And then 
usually we get a number of cases involving misuse of collateral 
on loans and things like that. But I'll defer to Karen on 
additional detail.
    Ms. Ellis. Yeah, during 2000.
    Mr. Latham. I've been waiting to hear your voice. 
[Laughter.]
    Ms. Ellis. I'm sure. In 2007 our investigations ended up 
with 35 convictions and $21.6 million in monetary results in 
both the FSA and the RMA programs. And those are investigations 
involving things like crop insurance, limitations, as well as 
conversion of collateral.

                            FOOD STAMP FRAUD

    Mr. Latham. Okay. I guess I have a few seconds, yet. One 
thing that I touched on here was the feeding program. There are 
some estimates out there noting close to $2 billion being spent 
on people either in Food Stamps or WIC, school lunch programs, 
people who would not legally qualify because possibly, for 
various reasons including their immigration status.
    Can you give us any kind of an update as to what is being 
done? Is that number real? Is it not? What are you seeing as 
the light turns red?
    Ms. Fong. Again, I'll defer to Karen. I'm not sure that 
immigration status had surfaced as a major issue for us in 
terms of allegations of criminality.
    Mr. Latham. But what are the rules?
    Ms. DeLauro. The rule on food stamps is that you have to be 
legal to get food stamps--a legal resident--to get food stamps. 
As a matter of fact, what was done several years ago after the 
Welfare bill was passed, illegal immigrants were disallowed to 
get food stamp benefits.
    Mr. Kingston. And then we backed off that, totally caved. 
[Laughter.]
    Ms. DeLauro. For legal immigrants.
    Mr. Latham. Right.
    Mr. Kingston. Who are supposed to traditionally have a 
sponsor for five years and be independent and on their own. 
There was a very good reason that was put in there and the 
reason it was backed off was weak-kneed politics.
    Mr. Latham. Can I withdraw my question? [Laughter.]

                            FOOD STAMP FRAUD

    Mr. Latham. My question is is there any kind of an estimate 
about how much of the benefits are going to people who would 
not normally or legally qualify?
    Ms. Ellis. I think that the folks who do need it are 
getting it. There is fraud in the program, definitely, and that 
is a large area of our time already spent with regard to the 
immigration issues, and recipients, we do rely on the States to 
do those investigations.
    We concentrate here on the retailers, the retailer fraud, 
and even then go after the larger retailers, and especially 
folks that may be sending funds overseas. We concentrate on 
those areas and working through our joint efforts with the 
JTTFs around the country.
    Mr. Kingston. Would the gentleman yield?
    Mr. Latham. I am out of time, but I will yield the time I 
don't have, sure.
    Mr. Kingston. Why would you only concentrate on the 
retailers on that if there is potentially abuse and potentially 
widespread abuse?
    Ms. Ellis. The reason is that the food stamps are given to 
the recipients at the State and County levels and so they do 
have County and State enforcement authorities.
    Mr. Kingston. Well, if you will yield a minute, getting 
back to the dogfight, there are laws in every State against 
dog-fighting. But you have spent, I think you said, six years 
investigating dog-fighting in Virginia. So you've got time to 
investigate dog-fighting, but this potentially could be 
millions of dollars.
    And I might be wrong. In fact, I'd love to know what that 
number is to find out, you know, what Mr. Latham is getting at. 
But it seems selective that you are only going for retailers 
and not the end users.
    Ms. Ellis. The retailers, the fraud in that is a very large 
dollar, which is why we concentrate on the retailers. Because 
what we are also finding is that when we do prosecute these 
retailers, they are coming back into the program again through 
various means; and, so, we are trying to reduce the fraud where 
we would have the most impact.
    Mr. Kingston. But when somebody signs up, are they signing 
up with the State government only?
    Ms. Ellis. The retailers sign up through FNS.
    Mr. Kingston. What about the individuals?
    Ms. Ellis. Individuals go through the States.
    Mr. Kingston. So it's all the States.
    Could you, and I don't know, it might be in here already, 
but could you answer Mr. Latham's questions for the record? If 
you don't know, can you follow up?
    Ms. Ellis. We'll answer it for the record, then.
    [The information follows:]

    FNS maintains an Error Rate Estimate for the Food Stamp Program, 
which is available to the public upon request. The most current 
information available is from Fiscal Year 2006, which indicates that 
overpayments to recipients totaled $1,452,920,380. The overpayments 
were issued to individuals who did not qualify due to reasons such as 
under reporting of income, fraud, etc.
    FNS also conducts a study every 10 years on the Special 
Supplemental Nutrition Program For Women, Infants and Children (WIC) 
program. The last study conducted was in 1998 and is available on the 
FNS website. Over 8 million individuals received WIC food benefits in 
Fiscal Year 1998. In the study, FNS cited a 4.5% error rate related to 
the ``percentage of enrollees (recipients) certified to receive, but 
not eligible for, WIC benefits.'' The annual dollar error (amount of 
total WIC food funds spent on ineligible participants) for Fiscal Year 
1998 was $120 million, out of a total of $2.6 billion in WIC benefits 
that were distributed.
    OIG spends its resources investigating retailer fraud in the food 
stamp program. Retailers are where the majority of the high dollar food 
stamp and WIC fraud is conducted. We especially concentrate our efforts 
on cases where we have determined that the funds obtained from food 
stamp fraud may have been sent overseas. In Fiscal Year 2007, we spent 
37% of our time working cases in this area, which resulted in 126 
indictments, 87 convictions, and $27.9 million in monetary results.

    Mr. Kingston. And while sometimes the chair and I have 
philosophical disagreements on various issues, we both agree 
very strongly that agencies that don't follow up will see a 
reflection of that in their budget. [Laughter.]
    Mr. Latham. May I reclaim the time that I don't have and 
yield back the time I don't have?
    Ms. DeLauro. I think it is interesting to note about the 
Food Stamp Program, particularly, because I think it is well 
worth knowing, and maybe it is an interesting number. With 
regard to the electronic benefits transfer program, has really 
done so much to mitigate against fraud and that is at the 
individual level, now that has been assisting us and put into 
place.
    It really has been very, very effective. I think you are 
right in terms of the retailers. And much of the fraud today, 
as I understand it, is at the retail end versus the individual 
side of this equation. I'm sad to say that there is some fraud 
out there, but I think one of the best things it's ever done 
was the electronic benefit transfer program.
    Ms. DeLauro. Let me make a comment, because this has to do 
with Mr. Latham and his question about the environmental 
benefits. This is an OMB assessment. NRCS has difficulty 
estimating the environmental benefits that CSP generates. 
Unlike share programs that directly impact the environment, CSP 
largely provides awards for previous conservation actions.
    In fact, the department's economic analysis, the CSP's 
interim rule estimated, and under all of the alternatives 
consider the program produced a negative net benefit for 
society. According to USDA's analysis, CSP would cost the 
American taxpayer more than it generated. So, I mean, I think 
there's validity in the direction that you have pointed out.

                   FOOD SAFETY AND INSPECTION SERVICE

    I am going to go back to my food safety question on public 
health information system. And, it would appear that FSIS is 
going to rely on the development of its public health 
information system as a solution to many of the past 
information technology programs. Again, based on FSIS's past 
record, we cannot just assume that it will be the right answer.
    How confident are you that this new system will be markedly 
better than PBIS and the other IT systems that FSIS has been 
using?
    Mr. Young. We don't know. The bottom line is the idea is 
solid. It is going to pull information from a variety of 
systems. The information that we are going to try to pull 
together is the type of information that they need in order to 
manage.
    So based upon that, it sounds like a good thing. Now, 
they're just beginning this. So, you know, it's hard for us to 
ascertain just how effective it may or may not be, you know, 
currently.
    Ms. DeLauro. Do you have any notion of how much money it 
will cost to implement this new system fully? Was there any, do 
you know?
    Mr. Young. I don't have that information.
    Ms. DeLauro. Do you have any sense of when it will be up 
and running?
    Mr. Young. As of right now, I am not sure. Right now, I 
think they're in the process that they're just at the initial 
stages. I think as far as the total dollars it will cost to 
pull all this together, the amount of time to get the full 
system implemented, I don't have those estimates. I don't know 
if the agency even has those estimates right now.
    Ms. DeLauro. I just want to add to that. I noted in the 
testimony this is the issue of egg safety and that the egg 
inspection activities have fallen out of the control structure 
such as HACCP, as we mentioned before, and PBIS.
    There was apparently a rule to be established with regard 
to this. What's the status of that rule?
    Ms. Fong. We understand that FSIS is working to get this 
implemented in March of '08.
    Ms. DeLauro. Well, we can check it.
    Ms. Fong. Okay.
    [The information follows:]

    In its response to the subject report, FSIS indicated that the 
proposed rule for egg inspections would be issued March 2008. In the 
FSIS regulatory agenda issued in December 2007, the date was changed to 
July 2008. Issuance of the proposed rule depends on how quickly it can 
move through the clearance process.

    Ms. DeLauro. They do have upcoming audits. This involved 
food safety and FSIS among the subject matter that includes--
and I just want to see if this is accurate--you can get back to 
me on this for the record--FSIS is meat and poultry, recall 
procedures.
    FSIS is oversight of meat and poultry imports. The food 
emergency response network implementation of the performance-
based inspection, the enhancement of the food safety team 
inspection and vacancy rates, FSIS food defense verification 
procedures.
    My questions are what are the schedule dates for completion 
and the publication of these audits, and if it makes a little 
more sense you can get back to me.
    Ms. Fong. And we'll provide that for the record.
    [The information follows:]

    We estimate that our audit of FSIS oversight of meat and poultry 
imports will be issued by the end of May 2008. The other audits (food 
emergency response network, food safety team inspection and vacancy 
rates, and FSIS' food defense verification procedures) have all been 
delayed due to other priorities. These audits will be started when 
resources become available.

    Ms. DeLauro. Okay. Am I out of time?
    Thank you, very much, Mr. Kingston. I will proceed on food 
safety. This is about risk base, and you have uncovered a host 
of concerns with the IG report, in summary FSIS plan to begin a 
risk-based inspection before completing an assessment of and 
determining the data needed for a comprehensive risk 
determination and process establishment.
    FSIS does not currently have adequate management control 
processes or an integrated IT system in place to report it 
timely, reliable risk-based program, total. OIG made 35 
recommendations for improving their food safety assessment 
system in the process, and based on the agency's responses, the 
report indicated that you had reached management decisions on 
all of the recommendations.
    I think you know that Congress's concern is to how FSIS 
intends to proceed with a risk-based inspection. Current law 
prohibits FSIS from implementing the risk-based program until 
FSIS has addressed and resolves the issues identified by the 
OIG. The crucial point is that it is necessary, but not 
suspicion for FSIS to reach management decision with OIG on the 
35 recommendations.
    The agency also has to effectively demonstrate that it has 
implemented the OIG's concerns before it can proceed. I will 
tell you that I had a hearing yesterday on drug safety where we 
discussed the fact that the FDA has still not implemented IG 
and GAO recommendations from 10 and 15 years ago so that the 
mere management agreement doesn't guarantee any.
    What is your office doing to ensure that the 
recommendations are actually being implemented by FSIS first, 
and then have you received a timetable from FSIS when the 
agency expects to resolve all of the 35 recommendations. So can 
you submit that timetable for the record?
    Ms. Fong. In general, when we issue an audit 
recommendation, we try to reach a management decision. In order 
for us to agree to a management decision with an agency, they 
have to give us very specific detail as to what they plan to do 
and when they plan to do it for us to reach a management 
decision. In this case, on the 35 recommendations, as you 
mentioned, we have reached a decision.
    We have dates and specified actions from FSIS as to how 
they intend to address our concerns for each of our 35 
recommendations. The dates range, depending on the task, some 
of them dealing with I think in particular the IT systems will 
take a little bit longer than some of the others.
    Ms. DeLauro. Timetable?
    Ms. Fong. We can provide you with the detail on those dates 
for the record.
    [The information follows:]
    [GRAPHIC] [TIFF OMITTED] T8056A1.142
    
    Ms. DeLauro. Timetable. And again, in terms of that 
implementation your monitoring process of that, has that been 
the realm of the possible, monitor what they do? I am serious, 
because I had FDA here yesterday, 10 years ago, 15 years ago, 
and there is no implementation of the recommendations. So at 
least it's all breathtaking, especially when you are dealing 
with public health.
    Ms. Fong. We are in constant communication with FSIS on 
these issues and we will certainly be tracking their progress, 
and I am sure you have your own oversight mechanisms.
    Ms. DeLauro. Well, at least we believe that if we are not 
vigilant and we don't have a way in which we are monitoring all 
of this, but we need your help on the issues. We can't, you 
know.
    Mr. Young. We plan to continue our audit in the inspection 
area, so as part of that process, we will be looking at what 
actions have been taken to our prior audit recommendations. So 
we have to give them a little space to work to get these 
corrected before we come back.
    Ms. DeLauro. I understand that, but again as I pointed out, 
not just agreeing these efforts is not the implementation which 
that means that you can't proceed until we are implementing the 
recommendation. That is the clarity that we have to achieve on 
it.
    I understand at a February 5 meeting at a National Advisory 
Committee on Meat and Poultry Inspection FSIS has distributed a 
tentative timetable for the implementation of the elements of 
risk-based inspection and processing, and a public health-based 
inspection of poultry slaughter.
    Have you reviewed that timetable? Have you seen that 
timetable? And, do you believe it is realistic?
    Ms. Fong. We have just started to get involved in the 
poultry piece of this. We, I believe, became aware of it at the 
same time as the public announcement; and, so, we are starting 
to look at that and work with FSIS on it.
    Ms. DeLauro. So you have the document that they distributed 
their timeline?
    Ms. Fong. Yes, we have that now.
    Ms. DeLauro. Fine, and if you can take a look at that and 
look at it and give us that in addition to the timeline that we 
spoke about earlier today.
    Ms. Fong. Okay. Mr. Latham.
    [The information follows:]

    We attended the National Advisory Committee on Meat and Poultry 
Inspections (NACMPI) meeting held on February 5-6, 2008, where two 
technical reports with over 700 pages of appendices were to be 
discussed. All participants at this meeting expressed displeasure that 
they had not been provided sufficient time to read and digest this 
voluminous amount of material for an informed response. The NACMPI 
responses to the reports have been posted on the Internet. In addition, 
FSIS will continue to accept comments on the topics discussed at the 
meeting until March 24, 2008. We have not had an opportunity to study 
these documents and, therefore, cannot make an informed assessment of 
the reasonableness of FSIS' timetable. We would state, however, that 
based on the actions FSIS has committed to accomplish in response to 
our recent audit of Risk-Based Inspection, their timetable appears to 
be optimistic.

    Mr. Latham. Yeah, I understand we have some votes on the 
floor and I think there's a re-vote.

                            AVIAN INFLUENZA

    I mentioned, earlier, avian influenza. Apparently GAO did 
some work last summer, but I just wondered in your budget 
notes, that part of your requested increase is devoted to 
improving the effectiveness of those investigations related to 
avian influenza. I just wondered. Have you interacted with the 
GAO on their work and what's been done relative to USDA 
planning for outbreaks?
    Ms. Fong. Go ahead.
    Mr. Young. Well, all the work done in that area was 
coordinated with GAO or they coordinated their efforts with us. 
So we don't duplicate our resources, looking at the same thing. 
We've done two reviews. The first review, we looked at what 
APHIS was doing as far as monitoring what was happening out 
there until they identified any high pathogen, avian influenza, 
they could take actions to address that.
    Our second review more or less centered around the Homeland 
Security Council and the requirements they came up with, 
approximately 300 tasks that needed to be done in order to 
prepare a strategy for Avian influenza. And Agriculture was 
responsible for 98 of these tasks, so we were looking at 
Agriculture to see if in fact they had addressed those tasks 
and they were timely addressing them. And what we found was 
they were doing a fairly good job of moving out and taking 
action.
    We also looked to make sure in our prior report if they had 
taken corrective action; and, we found in most cases they had 
moved out and taken corrective action based upon our prior 
findings.
    Mr. Latham. Are you going to be issuing a full report or 
what the status is? I'd really like to know the results. You 
said they were doing a pretty good job, but is there a way to 
quantify that?
    Mr. Young. Yeah, we've issued both reports. Right now, we 
don't have a third report in the mix as of today. So in other 
words we haven't initiated any other work.
    Mr. Latham. Okay. Madam Chairwoman, I can submit questions 
for the record, but I probably will not be returning.
    Ms. DeLauro. These are the last votes of the day, so.
    Mr. Latham. Really? Another tough day. [Laughter.]
    Ms. DeLauro. Yeah.
    Mr. Latham. Maybe you should do an audit.
    Ms. Fong. Oh, no. No, that's a matter for the House IG I 
think.
    Ms. DeLauro. That would be very revealing. I am going to 
try to press on, because I would come back, but I think I could 
be the only one here. And I honestly will do a run of the 
committee members to see if anyone will come back. But let me 
just throw out some things, if I can, at the moment. And I'll 
go as long as I can before I am going to miss a vote.

                     AGRICULTURAL MARKETING SERVICE

    This has to do with AMS, and I express to you my concern 
about AMS, and it is the compliance controls, the management 
controls on compliance. Has AMS resolved the six 
recommendations that the OIG made in the audit report?
    I also went back to your report in 2005 and it was very 
troubling to me that some of these companies are just non-
conforming, and we continue over and over and over again to 
give them contracts. And there are a different set of standards 
that we identified for the school lunch program, for the 
federal assistance programs, and people who were violating 
these standards are continuing to get contracts.
    So what have they dealt with? Have they dealt with your 
recommendations and have they been implemented? At least from 
what I could tell, several were not totally implemented back to 
2005 at the time. This is on ground beef.
    Ms. Fong. Okay. I'm sorry, I was thinking about food 
service management companies.
    Ms. DeLauro. No, I am going to get to them as well. All 
right. That's a question that I had because they are not 
passing on the dollars. The marketing service that controls to 
insure compliance with purchase specification requirements for 
ground B.
    Mr. Young. Yes. My understanding is, I mean, I think we 
have management decision as far as whether they fully 
implemented all aspects of those. I can't answer it.
    Ms. DeLauro. That's what happens and that's what is a 
concern to me, so I am hoping that when you are doing your work 
with Hallmark/Westland that the AMSP is very, very much apart 
of that; and, I believe you said you are doing a separate audit 
on that piece as well. So I thank you.
    The food service management company, I'll just say, is of 
parochial interest here. I have had concerns from a food 
service management company, Aramark, in my community. They are 
keeping cost savings that it receives when purchasing products, 
even though the contract requires that it be passed on. There 
are also live requests for GAO to look into the food service 
management companies.
    Are you going to do a follow-up with them to see if they 
are complying with contractual agreements?
    Ms. Fong. Well, just as background, we did a review back in 
2002 on this whole issue and we looked at six or eight FSMCs 
and we found that there was some improper retention of 
benefits, which is exactly what you are talking about. And the 
controls were not adequate in terms of claiming benefits for 
meals.
    We work with GAO very closely. We know that they have 
started a review on this, and so I am sure we will be talking 
to them about our prior review and the issues, and the 
concerns, that we have. But since they are doing the work, we 
would not normally schedule similar work at the same time.
    Mr. Young. Currently, they are working on getting 
regulations out. Once they have those regulations out, we will 
probably take a look at how effective they are being 
implemented.
    Ms. DeLauro. If there isn't any objection, I will submit 
questions to the record.
    When do you expect to release a follow-up audit on the 
broadband loan program?
    Mr. Young. That work is just being initiated in the past 
month, so we are just at the outskirts of that work. So we are 
talking a minimum of six months from now.
    Ms. DeLauro. Quickly, FAS market development activity, I've 
got a report here. Yeah, this is the OMB report that says the 
market development programs are designed to be on a competitive 
basis. However, it is not easy to determine whether any 
individual activities would have been conducted with or without 
the program. Much of the funding for the MAP program is going 
to large, national, promotion groups that are broadly supported 
by a number of large corporations and producer groups.
    Furthermore, some MAP funding is provided to branded 
products and multinational corporations. These promotion 
entities and corporations do not need stress government funding 
to promote their product overseas. You did a February 2007 
audit. Can you apply OIG's findings to FAS's other trade 
promotion programs? Can FAS demonstrate how its trade programs 
help U.S. exporters in the work you have done?
    Mr. Young. That was one of the issues we had, is how 
effective were these programs and how useful had they been in 
developing new markets?
    Ms. DeLauro. Are we getting any value from the program?
    Mr. Young. That's the question we asked and that's the 
types of information the Foreign Agriculture Service needs to 
collect to make that determination.
    Ms. DeLauro. Did this obviously concur with where OMB is? I 
don't know.
    Ms. Fong. This is an area where we have done a couple of 
audits in the past two years and I think FAS takes a different 
view of how effective the programs are and how they measure 
them than we do. There's just a basic disagreement there.
    Ms. DeLauro. We still haven't resolved three of the five 
recommendations from the February audit; and, you are working 
on the open recommendations of that? Phil.
    Mr. Young. Yes, I mean, we have constant dialog. We're 
still working.
    Ms. DeLauro. Let me just ask that again. You have a set of 
data that you have collected. You are in disagreement as to 
where you are. How does that get itself resolved? We are 
spending a lot of money in these programs; and, apparently, OMB 
has a problem with this as well.
    So we have got the inspector general, OMB, find we are 
having not much bang for the buck here and yet you still have 
FAS that disagrees with this.
    Mr. Young. Well, in trying to address that we are getting 
closer. They have modified their approach a little bit. I think 
we can agree to some of the actions that they are proposing, so 
we are getting closer to an agreement as far as how to find 
positions.
    Ms. DeLauro. I will make one final point, because I don't 
know if I am coming back.
    You have got 74 GAO audits with open recommendations dating 
back to 2002. I think we want to just keep getting focused on 
having people meet those recommendations that you have 
determined and provided, clear the books on the recommendations 
made back in that regard.
    Thank you.
    Okay, we will wait.
    [Recess.]
    Ms. DeLauro. My apologies. We tried to find out if other 
members were coming back, but these are the last votes of the 
day, so people are leaving.
    With that, again, thank you, very, very much for your 
candidness, for the good works, that you do appreciate it, and 
we will obviously follow-up with questions for the record.
    The hearing is adjourned.










                           W I T N E S S E S

                              ----------                              
                                                                   Page
Christopherson, C.R., Jr.......................................733, 951
Connelly, Christopher............................................  1051
Conner, Chuck....................................................     1
Ellis, K.L.......................................................  1177
Fong, P.K........................................................  1177
Glauber, Dr. Joseph.............................................1, 1073
Kesselman, Marc..................................................   969
Klurfeld, R.J....................................................  1123
McKay, M.M.......................................................  1143
Murrin, Suzanne..................................................  1177
Rutherford, B.K..................................................   569
Schafer, Hon. Edward.............................................     1
Steele, W.S.....................................................1, 1177
Tighe, K.S.......................................................  1177
Young, R.W.......................................................  1177















                               I N D E X

                              ----------                              
                                                                   Page

                       Department of Agriculture

Administrative Costs for Earmarks................................   525
Advisory Committees............................................434, 599
Alternative Energy Experts.......................................   146
Alternative Fuel.................................................    34
Animal Identification............................................    43
Apple Rootstock Research.........................................   534
Avian Influenza..................................................   513
    APHIS........................................................   513
    ARS..........................................................   514
    CSREES.......................................................   515
Backlog of Farmers Applying for Conservation Technical Assistance   530
Backlog of Farmers Willing to Participate in Easement Programs...   530
Beekeepers.......................................................    94
Biofuels Imports.................................................   540
Biofuels Initiative and Food Costs...............................    36
Bison in Yellowstone National Park...............................   534
Bonuses and Awards...............................................   400
    For Political Appointees.....................................   406
Broadband Loans..................................................    91
BSE..............................................................   523
Budget Eliminations and Duplications.............................    97
Buy Out Authority................................................   464
Census of Agriculture............................................    42
Civil Rights Enterprise System...................................   455
Colombia Trade Relations.........................................    40
Colombia.........................................................   131
Commodity Supplemental Food Program........................99, 558, 562
Congressional Relations........................................409, 453
Conservation Programs, Adequate Funding for......................   532
Conservation Reserve Enhancement Program........................99, 538
Contract Employees...............................................   474
Contracting, USDA................................................   455
Country of Origin Labeling.......................................30, 33
Cuba Trade Relations.............................................    39
Doha Round of Multilateral Trade Negotiations....................   549
Dried Distillers Grain...........................................   112
    Exports......................................................   103
    Research.....................................................   111
E. Coli Initiatives..............................................   555
Early Outs and Buyouts.........................................462, 586
Electronic Government Information................................   445
Energy Programs, USDA.....................................136, 517, 543
Energy Research..................................................    41
Environmental Quality Incentives Program.........................   525
Farm Bill........................................................    87
Farm Loan Program Delivery.......................................   531
Farm Program Payments............................................    38
Farm Service Agency Budget.......................................   531
Farmers Markets..................................................   127
Food and Agriculture Defense Initiative..........................   520
Food Banks.....................................................129, 131
Food Safety Inspectors...........................................   555
Food Safety....................................................111, 115
FSA Computer System............................................100, 101
    Business Plan and Timetable..................................   103
GAO High Risk List...............................................   111
Grants and Loans.................................................   476
Hatch Act........................................................    90
Headquarters Personnel...........................................   464
Hurricane Assistance...........................................504, 511
Import Safety..................................................104, 549
Imports..........................................................   125
Improper Payments..............................................100, 101
Indiana Food Stamp Modernization Project.........................   536
Light Brown Apple Moth...........................................41, 92
Mandatory Funded Information Technology..........................   523
McGovern-Dole Food for Education Program.......................112, 115
Meat Slaughter/Processing Plant Certification....................   125
Meat Slaughtering Plants.........................................   124
Milk Price Safety Net............................................   566
Non-Program Costs................................................   436
NRCS and FSA Coordination........................................   104
Opening Remarks..................................................     1
Opening Statement, Secretary Schafer.............................     3
OSEC Staffing....................................................   412
Outside Counsel..................................................   457
Outsourcing Competitions.........................................   453
Public Affairs...................................................   406
Questions for the Record.........................................   149
    DeLauro......................................................   149
    Kingston.....................................................   525
    Hinchey......................................................   527
    Kaptur.......................................................   540
    Jackson......................................................   561
    Obey.........................................................   564
Renewable Fuel Standards Waiver Process..........................   112
Research Funding Cuts............................................   533
Risk-Based Budget Request........................................   554
Rural Assistance Programs........................................   527
Rural Electric CO-OPs............................................   547
Salmonella Initiative Program..................................554, 555
Savannah Sugar Refinery..........................................34, 35
Schedule C Training..............................................   464
School Nutrition.................................................    94
Specialty Crops..................................................    42
Summer Food Service Program......................................   537
Supplemental Nutrition Assistance................................   530
Travel Costs
    Agency.......................................................   222
    Conferences, USDA............................................   224
    Political Appointee..........................................   194
    USDA Secretary...............................................   189
U.S.-Colombia Trade Promotion Agreement..........................   550
Unauthorized Appropriations......................................   518
Unmet Need for Flood Prevention..................................   529
Watershed Programs Fulfilling a Core Responsibility of Government   533
Web-Based Supply Chain Management System.........................   189
Wind Energy......................................................   135
Wisconsin Dairy Industry.........................................   564
Woman, Infants, and Children (WIC)........................127, 129, 562
Written Statements...............................................   569

                      Departmental Administration

AgLearn..........................................................   629
Agriculture Buildings and Facilities.............................   598
Aircrafts........................................................   588
Assessments and Investigations Sent to EPA.......................   608
Asset Management Program.........................................   719
Biofuels and Biobased Products...................................   715
Budget Object 25.3 Increase......................................   727
Building Repair and Maintenance Increase.........................   724
Change to General Provision......................................   721
COOP Increase....................................................   726
Credit and Purchase Cards........................................   586
DA Organizational Chart..........................................   717
Department of Homeland Security Costs............................   620
EmpowHR Human Resource System....................................   585
Energy Cost Saving Measures......................................   722
Excellence Ceremony..............................................   585
Expiring Leases..................................................   625
Fair Labor Standards Act.........................................   725
Federal Excess Personal Property.................................   592
Federal Facilities Compliance Act................................   602
Field Service Center Office Closures.............................   581
Foreclosure......................................................   578
FTE Increases....................................................   717
Fuel Conservation and Use of Alternative Fuels...................   731
Funds Transferred to Land Grant Universities.....................   589
GSA Rent Account Increase........................................   722
GSA Space Rent Shortfall.........................................   625
Hazardous Materials Management (HMM).............................   601
    Increase.....................................................   727
    Cleanup Efforts..............................................   611
    Funding Matrix...............................................   601
    FY 2009 Funding for BARC.....................................   728
    Program Funding..............................................   606
    Policy Council...............................................   617
    Spending History.............................................   727
Headquarters Complex Rental Charges..............................   596
Homeland Security................................................   625
Human Resources Initiatives......................................   619
Idaho Mines Investigations.......................................   729
Life Safety and Security Support.................................   726
Motor Vehicles...................................................   587
Number of Foreclosures in FSA Inventory..........................   607
Office of Ethics Consolidation...................................   720
OIG and GAO Audits...............................................   715
Pay for Performance..............................................   629
Personnel and Document Security..................................   628
Physical Security Enhancements...................................   618
Prior Year Unobligated Balances..................................   723
Procurement Reform...............................................   584
Recruitment and Student Employment Program.......................   620
Renovated Space..................................................   623
Rental and Repair Costs to GSA...................................   597
Salaries and Expenses (HMM)......................................   606
South Building Renovation........................................   617
South Building Space Conditions..................................   717
Strategic Space Plan.............................................   592
Swing Space and Non-Renovated Space..............................   624
Transfer of Funds................................................   723
USDA Human Resources Information System..........................   719
Utilities Cost Increases.........................................   725
Written Statement by Rutherford, Boyd K., Assistant Secretary for 
  Administration, USDA...........................................   569

                 Office of the Chief Financial Officer

A-76/Competitive Sourcing........................................   763
Acquisition of Plant and Capital Equipment.......................   770
Administrative Costs.............................................   787
Annual Financial Statement Audit.................................   808
Audit Work.......................................................   769
Audits, GAO and OIG..............................................   760
Competitive Sourcing.............................................   805
Corporate Property Automated Information System and E-Travel 
  System.........................................................   747
Corporate Systems................................................   746
Debt Collection..................................................   796
Feasibility Study................................................   772
Foundation Financial Information System (FFIS)...................   754
FY 2009 Budget Request...........................................   808
Human Resources Line of Business.................................   805
Improve Computer Security........................................   766
Information Technology Weaknesses................................   809
Material Weaknesses..............................................   803
Modernizing Corporate Systems....................................   768
National Finance Center (NFC)..................................759, 787
New Financial Management System..................................   801
New Revolving Fund...............................................   810
NFC Reduction-in-Force Actions...................................   803
NFC Reimbursements...............................................   789
Object Class Breakdown...........................................   796
Outstanding Debt and Credit Management...........................   762
Payroll System...................................................   761
Primary Computing Facility.....................................769, 772
Problem Credit...................................................   792
Quarterly Status Report..........................................   798
Spending for the Hurricane Katrina Disaster......................   796
Staff Years for Preparing Financial Statements...................   766
Travel Management................................................   795
Unobligated Balances.............................................   770
USDA Offices.....................................................   789
USDA Travel......................................................   752
Working Capital Fund (WCF)...........................748, 773, 801, 807
Written Statements Christopherson, Charles R., Jr., Chief 
  Financial Officer, USDA........................................   733

                Office of the Chief Information Officer

Common Computing Environment.....................................   911
Contractor Support...............................................   885
Cyber Security (CS) Program......................................   891
E-Government Initiatives.........................................   882
Enterprise License Agreement.....................................   844
Grants.gov.......................................................   903
Information Risk Management Program..............................   892
Internet Program Delivery........................................   861
IT Expenditures..................................................   844
IT Security......................................................   904
Modernize and Innovate the Delivery of Agricultural Systems 
  (MIDAS)........................................................   940
Office of Inspector General Audits...............................   818
OMB Management Watch List........................................   927
Smart Choice Initiatives and USDA Shared Services................   868
Telecommunications...............................................   893
USDA Information Technology Budget...............................   812
Written Statements: Christopherson, Chuck, Chief Information 
  Officer, USDA..................................................   951

                     Office of the General Counsel

Animal Welfare and Horse Protection Act Programs.................  1044
Attorney Hours by Agency.........................................   995
Attorney Hours by Category.......................................   994
Attorney Locations...............................................   997
Bovine Tuberculosis Eradication..................................  1036
Business and Industry............................................  1039
Child Nutrition Act, Legal Opinion...............................  1045
Civil and Criminal Cases.........................................   997
Consolidated Appropriations Act, 2005............................  1045
Debt Collection Activities.......................................  1042
EEO Commission...................................................  1034
Examples of Recent Progress......................................   999
FSA Claims.......................................................  1036
Funding Increase.................................................  1043
FY 2009 Staff Year Increase......................................  1043
Hazardous Materials Management Program...........................  1042
IT and Communication Expenditures................................  1038
Law Library......................................................   998
Legal Opinions...................................................  1039
Maintain and Support Staff.......................................  1037
Mission Areas and Staff Years....................................  1037
Multifamily Housing Project......................................  1038
Object Class Breakout............................................  1035
Pigford Case.....................................................  1042
Priorities.......................................................  1034
Private Counsel..................................................   996
Regulatory Activities............................................  1046
Reimburseable Authority..........................................  1044
Staff Years......................................................   994
User Fee Programs................................................   993
User Fee Proposals...............................................  1036
World Trade Organization (WTO)...................................  1044
Written Statements: Kesselman, Marc L., General Counsel, USDA....   969

                        Office of Communications

Consultants......................................................  1066
Departmental Web Sites...........................................  1064
Difference Between OC and OCIO Components of USDA Web Site.......  1064
Efforts in Response to the Hallmark-Westland Meat Recall.........  1066
FTE Positions....................................................  1065
IT System and Service Upgrades...................................  1069
Joint Information Center.........................................  1068
Media Services...................................................  1061
Press Releases Issued............................................  1062
Public Affairs Activities........................................  1056
Reimbursements from Other USDA Agencies..........................  1062
Resources and Staff Levels.......................................  1059
USDA Web Site Common Look and Feel...............................  1064
Video News Releases..............................................  1065
Working Capital Functions........................................  1065
Written Statement by Christopher Connelly, Director of 
  Communications, USDA...........................................  1051

                     Office of the Chief Economist

Administrative Appeals...........................................  1129
Bovine Spongiform Encephalopathy (BSE)...........................  1109
Budget Request...................................................  1120
Commodity Market Information System..............................  1120
Energy and Environment Issues....................................  1113
Food Safety......................................................  1109
GIPSA............................................................  1110
Offices Outside Washington, DC...................................  1109
Organizational Chart/Resources...................................  1106
Preferred Procurement Programs...................................  1110
Risk Assessment..................................................  1107
Rulemaking.......................................................  1106
Weather Analysis.................................................  1119
Written Statement by Joseph Glauber, Chief Economist, USDA.......  1073

                       National Appeals Division

Appeals and Decisions............................................  1125
Farm Trade Shows.................................................  1128
FY 2009 Budget Request...........................................  1130
Hearings and Reviews Conducted...................................  1126
Public Awareness Campaign........................................  1127
Reviews Conducted................................................  1129
Right to Appeal..................................................  1128
Types of Cases...................................................  1129
Unfilled Positions...............................................  1126
Written Statement by Roger J. Klurfeld, Director, National 
  Appeals Division, USDA.........................................  1123

                 Office of Budget and Program Analysis

Code of Federal Regulations......................................  1132
Legislative Proposals........................................1132, 1133
Staffing Levels in OBPA..........................................  1134
Strategic Objective and Funding Matrix...........................  1131
USDA Budget Summary and Annual Performance Plan..................  1133

                        Homeland Security Staff

Emergency Response...............................................  1138
Food Defense and Biosecurity Policy Coordinator..................  1141
Participation in Other Homeland Security Councils/Committees.....  1135
Plant Biosecurity Policy Coordinator.............................  1140
Protective Security Detail.......................................  1139
Radiological Emergency Coordinator...............................  1135
Staff Year Distribution..........................................  1136

                         Office of Civil Rights

Alternative Dispute Resolution...................................  1165
Center for Minority Farmers......................................  1157
Civil Rights Action Plan.........................................  1154
Complaint Process................................................  1147
Complaint Processing Time........................................  1151
Compliance Activities............................................  1166
EEO Appeals......................................................  1166
EEO Complaints...................................................  1167
Employees with Targeted Disabilities.............................  1156
Enterprise System............................................1153, 1165
Equal Employment Opportunity Complaints..........................  1151
Greenbook Charges................................................  1158
Historically Black Colleges and Universities.....................  1153
OIG Audit........................................................  1167
Outreach Efforts.................................................  1162
Pigford Case.....................................................  1165
Process Time for EEO Final Decisions.............................  1157
Program Complaints Received......................................  1150
Programs.........................................................  1159
Reimburseable Staff Years........................................  1164
USDA/1890 National Scholars Program..............................  1151
Written Statement of Margo M. McKay, Assistant Secretary for 
  Civil Rights, USDA.............................................  1143

                   Office of Congressional Relations

Budgetary Materials..............................................  1170
Congressional Relations Staff....................................  1174

         Department of Agriculture--Office of Inspector General

Agency Efficiency................................................  1226
Agricultural Marketing Service...............................1178, 1241
Agricultural Research Service (ARS)..............................  1281
Agriculture Risk Protection Act of 2000 (ARPA)...................  1275
Animal and Plant Health Inspection Service.......................  1270
Animal Care Audit................................................  1268
Animal Fighting/Cruelty......................................1232, 1267
Asset Forfeiture Transfers.......................................  1257
Audit and Investigative Activities...............................  1255
Avian Influenza..............................................1241, 1285
Border Security..................................................  1266
Bovine Spongiform Encephalopathy (BSE)...........................  1268
Budgetary Resources..............................................  1255
Canadian Imports, Oversight......................................  1272
Conservation Security Program................................1230, 1233
Crop Insurance...................................................  1274
Department Communication Issues..............................1226, 1227
Farm Bill........................................................  1178
Farm Program Entitlements........................................  1283
Farm Programs....................................................  1234
Farm Service Agency (FSA)....................................1276, 1278
Financial Management Systems, USDA...............................  1248
Financial Statement Audits.......................................  1245
Financial Statements, USDA.......................................  1247
Food and Nutrition Service...................................1178, 1263
Food Safety and Inspection Service (FSIS)..1177, 1180, 1230, 1236, 1261
Food Stamp Fraud.............................................1234, 1235
Fraud in FSA/RMA Programs........................................  1278
Fraud in USDA Nutrition Programs.................................  1285
Homeland Security (HS)...........................................  1259
Hurricane Issues.................................................  1224
Improper Payments Related to Farm Programs.......................  1284
Information Technology (IT) Strategic Plan...................1249, 1251
Information Technology Investments FY 2007.......................  1251
Information Technology Investments FY 2008.......................  1252
Information Technology Investments FY 2009.......................  1254
Inspector General Opening Statement..............................  1180
Joint Agency Quality Assurance Program...........................  1266
National Finance Center (NFC) Audit..............................  1248
Natural Resources Conservation Service and Farm Service Agenc1178, 1222
Nutrition Programs, Fraud........................................  1285
Office of Inspector General......................................  1245
Outside Public Accountants.......................................  1247
Oversight, Imports from Canada...................................  1272
Questions Submitted by Congressman Latham........................  1283
Questions Submitted by Congresswoman Delauro.....................  1245
Risk Management Agency (RMA).................................1272, 1278
Rural Utilities Broadband Grant and Loan Program.................  1280
Women, Infants, and Children Program (WIC).......................  1265
Working Capital Fund (WCF).......................................  1248
Written Statement by Phyllis K. Fong, Inspector General, USDA....  1182

                                  
