[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 5
                                                                   Page
 Natural Resources Conservation Service...........................    1
 Marketing and Regulatory Programs................................  307


    
                                ________
         Printed for the use of the Committee on Appropriations


   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 5
                                                                   Page
 Natural Resources Conservation Service...........................    1
 Marketing and Regulatory Programs................................  307


    
                                ________

                     U.S. GOVERNMENT PRINTING OFFICE
 48-543                     WASHINGTON : 2009

                                  COMMITTEE ON APPROPRIATIONS

                   DAVID R. OBEY, Wisconsin, Chairman



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

                              ----------                             

                                           Thursday, April 3, 2008.

                 NATURAL RESOURCES CONSERVATION SERVICE

                               WITNESSES

MARK REY, UNDER SECRETARY, NATURAL RESOURCES AND ENVIRONMENT, U.S. 
    DEPARTMENT OF AGRICULTURE
ARLEN LANCASTER, CHIEF, NATURAL RESOURCES CONSERVATION SERVICE, U.S. 
    DEPARTMENT OF AGRICULTURE
JOHN DONDERO, DIRECTOR, BUDGET PLANNING AND ANALYSIS DIVISION, NATIONAL 
    RESOURCES CONSERVATION SERVICE, U.S. DEPARTMENT OF AGRICULTURE
W. SCOTT STEELE, BUDGET OFFICE, U.S. DEPARTMENT OF AGRICULTURE
    Ms. DeLauro. The committee is called to order.
    Thank you. And let me welcome everyone here today. I want 
to welcome all of our guests.
    Mr. Steele, Mr. Lancaster, Mr. Dondero, very nice to have 
you with us today.
    Mr. Secretary, I am very pleased to see you. We are finally 
getting this off the ground. What was it, the 14th of February, 
that we had to reschedule?
    Mr. Rey. Valentine's Day.
    Ms. DeLauro. I am eager to get started, as I am sure you 
are, with today's hearing. But before we do, I want to 
recognize and thank the Department and NRCS for their valuable 
contributions that you are making to help the Nation's farmers 
and ranchers to protect the land and to enhance the 
environment.
    NRCS is tasked with a huge and important job, to address a 
host of natural resource concerns on millions of acres of land 
across the country. And the benefits from NRCS's work are two-
fold: not only help the individual farmer and the rancher, but 
also enhances the broader environment that neighboring 
communities depend on for their health and their quality of 
life.
    In that context, I am concerned about the administration's 
proposals again this year to cut back heavily on conservation 
efforts that are so important to rural America. And I am 
concerned with the NRCS's ability to be able to effectively 
deliver conservation. This budget's severe cuts to the agency's 
capabilities only increase those concerns.
    The 2009 budget funds NRCS discretionary programs at $800.7 
million. This is about $136 million, or 14.5 percent, less than 
available in 2008. The Resource Conservation and Development 
Program, for example, whose goal it is to improve the 
capability of local government and nonprofit organizations in 
rural areas to plan and implement resource conservation and 
developments, is targeted for elimination. The move could 
affect 375 councils currently serving 85 percent of U.S. 
counties and more than 77 percent of the U.S. population. The 
budget also zeros out funds for the Grazing Lands Conservation 
Initiative and the watershed and flood-prevention operations as 
well.
    I am also concerned by the administration's claims that the 
maintenance, repair and operation of the aging dams are a local 
responsibility, as justification for its move to cut watershed 
rehabilitation by 70 percent from 2008 to $6 million. You only 
have to travel throughout the agricultural areas in my own 
region in New England to understand what watershed work done by 
NRCS means. I think the American people, no matter where they 
live, have good reason to be concerned about what this budget 
may mean for the water resources that are so critical to their 
own effective agricultural practices.
    By requiring States and local authorities to suddenly take 
up these conservation responsibilities at the same time that 
Federal assistance is decreasing, the administration seems to 
be saying that if our rural communities want to continue 
thriving, then it will be up to them to put up the funds. 
Considering the very real and complex hardships that rural 
America faces today, I have to wonder about the logic behind 
that thinking. I have to wonder whether the NRCS budget 
undermines the conservation priorities this administration has 
outlined in the new farm bill.
    We have an obligation to our citizens and their communities 
to do better. The stewardship of our lands affects us all every 
day and will affect our children for years to come. The smart 
decisions that we make today will pay dividends well into the 
future.
    Under Secretary Rey, your team, I thank you for being here 
today. I look forward to your testimony and to hearing your 
answers to these questions and others from the subcommittee 
this morning, and understanding that knowing that we do want to 
work with you to confront the challenges of the agency in the 
weeks and months and the years ahead. Thank you very, very 
much.
    Mr. Kingston isn't here. Mrs. Emerson.
    Mr. Alexander was first?
    Mr. Alexander, do you have an opening statement?
    Thank you. Thank you for being here.
    Let me ask you then, Under Secretary Rey, if you would 
begin your testimony.
    And you all understand that the testimony is part of the 
record, so I will ask you to summarize in any way that you 
choose. Thank you.

                      Mr. Rey's Opening Statement

    Mr. Rey. Thank you. I am pleased to begin, and I will 
summarize. And let me thank you for your ongoing support and 
that of the Subcommittee of voluntary conservation of working 
lands, which enables American farmers and ranchers to achieve 
abundant agricultural production while simultaneously 
protecting our Nation's valuable natural resources.
    At the end of fiscal year 2007, over 208 million acres 
across the Nation were enrolled in one or the other of USDA's 
conservation programs. That is an area of land larger than the 
entire National Forest System, which is the other agency that I 
am involved with. Nearly 150 million acres were under contract 
through the Environmental Quality Incentives Program, and 
almost 37 million acres were enrolled in the Conservation 
Reserve Program.
    You will see proposals in the President's fiscal year 2009 
budget request for NRCS to produce savings in both mandatory 
and discretionary accounts. These savings will ensure the 
agency can continue to fulfill its critical mission of helping 
people help the land through the provision of conservation 
technical and planning assistance, as well as the delivery of 
farm bill programs.
    For the complete picture concerning our proposals, the 
President's budget should be viewed in concert with the 
administration's 2007 farm bill proposal, which seeks to add 
$775 million to farm bill conservation programs in fiscal year 
2009. As a result, the fiscal year 2009 budget request for NRCS 
provides over $3.4 billion in total funding. Of this total, 
$800.7 million is in discretionary funds and $2.6 billion is in 
mandatory funds, including $1.05 billion for the Environmental 
Quality Incentives Program.
    The President's fiscal year 2009 budget also proposes 
$181.5 million for the Wetlands Reserve Program, which is the 
principal vehicle for the President's wetlands initiative. The 
fiscal year 2009 program funding level and number of acres to 
be enrolled will be established in the new farm bill. A new 
farm bill is critical to raising acreage caps on the Wetlands 
Reserve Program and, for that matter, the Grasslands Reserve 
Program, as well as funding other conservation programs. A 
simple extension of the 2002 farm bill will accomplish none of 
those objectives and will leave roughly $5 billion in 
conservation spending on the table.
    Conservation Operations is the agency's core discretionary 
program and the foundation for the Department's conservation 
efforts with State and local partners. Conservation Operations, 
such as planning and technical assistance and soil and snow 
surveying, provide the support needed to successfully implement 
related farm bill programs.
    We are requesting a funding level of $794.8 million for the 
Conservation Operations program in fiscal year 2009. The 
administration's farm bill proposal also recommended increasing 
mandatory conservation funding by $7.8 billion over the 10-year 
baseline, a significant and needed investment in natural 
resources conservation and management.
    We also proposed streamlining and consolidating certain 
programs to make them more efficient and effective as well as 
easier for our customers to use. We remain committed to working 
with Congress on the enactment of the new farm bill in the very 
near future.
    The Nation can be confident in increasing its investment in 
working lands conservation because of NRCS's great strides in 
improving its accountability and performance measures. The 
agency is maximizing technology to enhance transparency in its 
reporting systems and to make NRCS program information more 
accessible to citizens.
    For example, since 2005, we have released four Web-based 
energy estimators for tillage, nitrogen fertilizer application, 
irrigation and animal housing. Each tool estimates energy 
savings realized under various management scenarios relevant to 
the producer's operation, management choice and location. To 
date, the energy awareness Web site has received over 3 million 
hits in a little over a year and a half.
    In fiscal year 2007, NRCS completed a prototype for the 
nitrogen training tool and will be validating the model on 
various water quality and trading projects in Maryland and 
Ohio. The nitrogen trading tool is a Web-based model that 
measures the changes in nitrogen losses based on changed 
management practices and calculates nitrogen credits available 
for water quality trading projects. Producers can use the tool 
to explore different agronomic scenarios and the associated 
nitrogen surpluses they may want to trade in the marketplace.
    But you don't have to take just my word for it that the 
NRCS is working hard to make conservation easier. A recent 
report from the Federal Consulting Group indicated that overall 
satisfaction with NRCS programs was typically higher than for 
the Federal Government sector as a whole. But the results based 
on American Customer Satisfaction Index Surveys point to NRCS 
staff and technical assistance as strengths the agency should 
continue to leverage in delivering services to its customers.
    In closing, I believe the President's fiscal year 2009 
budget request reflects sound policy and the administration's 
confidence in NRCS's ability to effectively support land owners 
and other partners in putting conservation on the ground. In 
concert with a new farm bill, it will prepare the agency to 
meet future challenges while fulfilling its traditional 
missions.
    That concludes my summary, and I will turn to----
    [The information follows:]

    

    Ms. DeLauro. I understand, Chief Lancaster, that you would 
like to make some remarks as well. So I will recognize you for 
your testimony.

                       Mr. Lancaster's Testimony

    Mr. Lancaster. Thank you. Good afternoon, Madam Chairwoman 
and members of the subcommittee. Thank you for the opportunity 
to appear before you today and, again, for your strong support, 
the subcommittee's strong support for conservation and our 
mission at NRCS.
    My full written testimony has been submitted for the 
record.
    Before I begin, I also want to indicate it is my pleasure 
to introduce Mr. John Dondero, our new Director of Budget 
Planning and Analysis, who will provide assistance during this 
hearing and throughout this budget cycle and future budget 
cycles.
    You may be interested to learn that, in addition to his 
many other qualities, John is a native of Connecticut and 
alumni of the University of Connecticut.
    Ms. DeLauro. Where in Connecticut?
    Mr. Dondero. Litchfield County.
    Ms. DeLauro. I know it.
    Mr. Lancaster. And before we look forward to the fiscal 
year 2009 budget, I would like to bring to your attention some 
of the past year's achievements in cooperative conservation 
work that, although done primarily in private means, yields 
substantial benefits for all land owners.
    In fiscal year 2007, NRCS provided technical assistance to 
more than 1 million customers, enabling farmers and ranchers to 
treat over 47 million acres of working lands and more 
effectively management water resources, enhance water and air 
quality, improve soils and increase wildlife habitat.
    In 2007, NRCS, in concert with valued partners, helped 
producers develop over 5,100 comprehensive nutrient management 
plans, provided site-specific soils information to over 1 
million users through our Internet-based Web Soil Survey, and 
issued more than 12,000 water supply forecasts. In addition, we 
utilized over 1 million volunteer hours, with an estimated 
value of $19 million, and signed agreements with 300 newly 
certified technical service providers.
    As we look to fiscal year 2009 and beyond, we will continue 
to fine-tune our business tools and practices, solidify 
progress with partners, farmers and ranchers, and ensure all 
potential gains for conservation are realized.
    An important priority for me has been to make conservation 
easier for our customers and for our employees. We have 
streamlined the conservation application process, developed new 
decision tools to calculate the benefits of conservation, and 
implemented the Customer Service Tool Kit. As a result, we 
developed 25 percent more conservation plans in 2007 than in 
2006.
    We know we must also prepare ourselves to meet new 
challenges, including those presented by rapid changes in 
science, technology, regulations and demographics of our 
customer base. We have outlined a 5-year investment strategy 
for technology, and we continue to execute our overarching 
strategic plan and the related human capital strategic plan.
    Finally, we are building the science case for conservation. 
We know we must prove to you, our partners, land owners and 
taxpayers, that good environmental practices are good 
investments as well as compatible with good economic 
performance for producers.
    The Conservation Effects Assessment Project, or CEAP, is 
designed to help us do just that. CEAP is a multi-agency effort 
to quantify the environmental benefits associated with 
conservation practices. We anticipate this summer the first 
release of CEAP data and recommendations that will help us 
direct programs and practices where they will do the most good 
and better enable us to tie conservation expenditures to 
specific outcomes.
    As we all know, two-thirds of the contiguous United States 
is crop land, ranch land, pasture land, and privately owned 
industrial forest land. With Conservation Operations and other 
programs, NRCS and its partners cooperate to get conservation 
on the ground, thus helping private land owners conserve 
landscapes, increase agricultural productivity, improve the 
environment and enhance the quality of life.
    The heart of our efforts to assist private land owners is 
our Conservation Operations. The President's fiscal year 2009 
budget request for Conservation Operations proposes a funding 
level of $794.8 million, which includes $680.8 million for 
Conservation Technical Assistance, $92.2 million for Soil 
Surveys, $10.8 million for Snow Surveys, and $10.9 million for 
the 27 Plant Materials Centers. We also request $5.9 million 
for the Watershed Rehabilitation Program.
    As was detailed in full in my submitted testimony, we do 
not request more funding for Watershed and Flood Prevention 
Operations and its related planning components, the RC&D 
Program, the Healthy Forest Reserve Program or the Agricultural 
Management Assistance Program.
    The administration's budget proposes $1.05 billion for the 
Environmental Quality Incentives Program, $360 million for the 
Conservation Security Program, funding for the Wetlands Reserve 
Program to bring the total enrollment to the 2.275-million-acre 
cap authorized by the 2002 farm bill, and $97 million for the 
Farm and Ranch Lands Protection Program.
    As Under Secretary Rey mentioned, the President's 
conservation budget should be viewed in concert with the 
administration's farm bill proposal and includes $775 million 
that is not included in the agency's current budget that I have 
just detailed.
    Madam Chairman, members of the committee, with your ongoing 
support and the commitment and stewardship of America's private 
land owners, we look forward to a more productive land and 
healthy environment in 2009 and beyond. I thank you again for 
the opportunity to appear before you, and I would be happy to 
answer any questions you may have.
    [The information follows:]

    

    Ms. DeLauro. Thank you very much.
    And I want to thank you both for your testimony.
    And let me begin with the mention of the farm bill. As we 
will consider how USDA will deliver a new farm bill, I would 
like to focus on your proposal for natural resources 
conservation.

                           BUDGET REDUCTIONS

    It appears the President's request is out of alignment with 
the rhetoric of the administration. At the very time the 
administration has proposed and Congress is considering an 
expanded conservation title in the farm bill, your budget cuts 
a total of $136 million and a little over 1,400 staff years 
from NRCS in 2009. And that is across the country.
    I know that, in aggregate, the numbers include a number of 
programs that the budget eliminates that do not directly impact 
the delivery of a farm bill program. So, just looking at the 
conservation operations account, of the main technical 
assistance account that funds the field staff to work with land 
owners to prepare them for participating in the farm bill 
programs, your budget appears to slash 690 staff years, or 
almost 10 percent of the workforce. When you look at the number 
of staff supported by farm bill program dollars, your budget 
assumes another cut of 253 staff years, or 7 percent of the 
workforce. By my count, your budget eliminates almost 1,000 
staff years that either directly or indirectly work on the 
delivery of farm bill conservation programs.
    In light of the budget and the upcoming reauthorization of 
the farm bill, we are left with two conclusions, at least in my 
mind: Either land owners and producers will experience worse 
customer service, longer delays for technical assistance, and 
lower-quality conservation planning, or NRCS will be forced to 
shave even more farm bill funding off the top of the various 
programs, such as EQIP, to pay for staffing costs. That means 
less money for producers and actual on-the-ground conservation. 
Ultimately, your budget is a back-door cut in the farm bill's 
conservation programs.
    So when I line up the Department's rhetoric and the 
promises for conservation, especially the goals for 
successfully implementing a new farm bill with an expanded 
conservation title, I look at it and I am dismayed. I am 
confused by the incongruity.
    So, Mr. Secretary, if you can explain how the budget 
supports conservation when it cuts, in 1 year, over 1,400 staff 
or almost 12 percent of your workforce from your lead 
conservation agency, what do you estimate will be the on-the-
ground impact of the staffing cuts, in terms of wait times for 
assistance and the application backlog? And how did the 
staffing cuts comport with your human capital strategic plan?
    Mr. Rey. I think the important thing here is to look at the 
farm bill proposal in concert with the budget proposal, as part 
of the large increase in conservation spending that we have 
proposed in the farm bill. We have proposed $775 million for 
technical assistance, which would support roughly another 1,600 
staff years, to implement farm bill programs. So, you know, 
that is the context in which these proposals were made.
    And the objective of that is to try to make the farm bill 
programs more self-supporting, in terms of their draw on NRCS 
staff time. Obviously, when you are juggling two roles, the 
farm bill and the--you have greater opportunity for one of them 
to fall on the ground.
    But I think what we have proposed, in its full context, is 
fairly described as a significant increase in conservation 
spending. And, yes, we would have to get a new farm bill for 
that to work. I have already acknowledged that.
    Ms. DeLauro. I understand. And you understand as well, 
because we--you know, we have been talking about a number of 
the programs, not just your agency but others, who have put a 
lot of the eggs in the farm bill basket. This has not been an 
easy ride for the farm bill, as I think you would concur.
    We do not know what is going to come out of the farm bill. 
We know we have, you know, deadlines and extensions, deadlines 
and extensions. We also are pretty sophisticated in 
understanding that you don't get everything that you want, and 
there are cuts and are always cuts, so there will be an impact, 
there will be an impact on the budget.
    And that context, quite honestly--and I am not just 
singling you out, Mr. Secretary. Almost every agency that has 
come up that talks about the farm bill doesn't come up with a 
contingency plan for ``what if,'' with either cutbacks or, you 
know--I don't want to even say doesn't happen, but a cutback. 
Let me leave it at that.
    Mr. Rey. Right.
    Ms. DeLauro. So what is the contingency? Will we see a 
formal budget amendment reflecting any discretionary changes 
needed after the farm bill enactment? And if it is 
significantly delayed, what is the impact on your operations, 
2008 and 2009? And based on the House- and Senate-passed 
versions, which program changes or new initiatives would most 
impact your budget?
    Mr. Rey. We are pretty comfortable with the broad 
discussion that is occurring right now between the House and 
the Senate conferees, that, if there is a new farm bill, that 
it will be close enough to what the administration has proposed 
in the conservation area that we will obviously have to make 
some adjustments but they won't be dramatic. If there is not a 
new farm bill, if there is rather an extension of the 2002 
bill, then we will have to take a harder look at what we have 
proposed.
    I guess the best news in all of that is that we will 
probably know the answer to that question relatively shortly, 
with enough time to work with you to readjust some of the 
discretionary accounts, taking into account what is finally 
arrived at as a result of the deliberations that the House and 
Senate are currently engaged in on the farm bill.
    But we think, at this point, at this moment in time--and, 
of course, that may be a brief moment, because the discussions 
are ongoing--we think we are looking at a conservation package 
in broad terms that isn't too far off what the administration 
proposed.
    Ms. DeLauro. My time is up; it was a couple of minutes ago. 
And I will just say, I want to be optimistic, as well. I have 
heard that there will be cuts in conservation, in nutrition and 
in other areas, that everything is going to take a cut. My hope 
is--because when we would produce the farm bill in the House 
and I had an opportunity to work with that, as a number of my 
colleagues on this committee did, we were specifically 
concerned about conservation and other areas. So I don't want 
to see it cut that much. But I think we have to take, in short 
order, a very hard look at what this means in terms of the cuts 
that you are proposing and the cuts that may be mandated for 
us, given where this farm bill comes out.
    Mr. Rey. I think that is fair. And we would be happy to 
work with the subcommittee on this.
    Ms. DeLauro. Mr. Alexander.
    Mr. Alexander. I yield to Mrs. Emerson.
    Ms. DeLauro. Mrs. Emerson.
    Mrs. Emerson. Thanks so much, Mr. Alexander.
    Thank you so much for being here, you all.
    Thanks, Madam Chair.

                    CERTIFICATION OF FOREST PRODUCTS

    Under Secretary Rey, I hope you forgive me. I just need to 
venture into forestry a teeny bit here. I want to take 
advantage of your being here. I hope that is okay with you. 
Something that has recently been brought to my attention, I 
want to ask you about it.
    As you know and as we have talked, the Missouri domestic 
timber market is declining, and many of our producers are 
looking for new ways to increase their exports. And they keep 
running up against what is called--this increasing need for 
accreditation from the Forest Stewardship Council, the FSC. I 
understand it is a voluntary and private international 
organization that certifies wood products as being produced in 
an environmentally sustainable way. And, obviously, you are 
familiar with that.
    Here is my concern, and here is the concern across the 
board, not only of the forest products industry but the Forest 
Service folks themselves: that with this FSC logo being 
virtually a prerequisite now to sales in some markets, 
particularly Europe, number one, there is some difference 
between the standards among countries. In other words, France 
might have one standard, and Germany might have one, and the 
Netherlands might have another. And also perhaps even 
throughout regions of a country, the standards are not uniform, 
number one.
    Number two, I had the list of all of the working group 
members of the FSC for our region and the country. And I am 
looking at this accreditation standard, and not only do I not 
see one person from the Forest Service, which is the largest 
land owner in my district and probably in the State, I don't 
see any Missouri foresters, any State foresters. I don't see 
any land owners or operators from the forest products industry 
whatsoever. And so, I guess I am concerned about this.
    And I want to know, is this something that the USDA is 
looking at? Are you all looking at participating in this 
accreditation process? Or do you have some kind of plan to give 
some oversight to these kinds of organizations?
    Mr. Rey. Okay, I think I can answer those questions.
    Just a little bit of background. FSC, the Forest 
Stewardship Council, is one of two international certification 
programs. Certification programs are, as you suggested, 
designed to certify that a forest product is grown in a 
sustainable fashion, for those people who want to be able to 
buy a forest product with that certification. The other system 
is the Sustainable Forestry Initiative, or SFI.
    There are some differences in the two, both in the way they 
approach the process and where they are used. As it turns out, 
SFI was originated in North America. SFI was originated in 
North America. FSC originated in Europe and is more widely used 
outside of North America than SFI is. So, in today's markets, 
those two systems are what are generally relied upon by people 
who want green building products.
    We have looked at both of them, and we have experimented 
with both of them, so we are familiar with the systems. I think 
one of the issues with FSC is that it is less familiar to some 
of our private-sector producers because it is not as common in 
North America. But if we can be of any assistance to the 
producers in Missouri to help them get to know the FSC system a 
little bit better, we would be happy to do that.
    We are familiar with both. Our general view is that their 
similarities are probably more significant than their 
differences. They tend to be, kind of, approaching a very 
common set of mechanisms for certifying forest products.
    Mrs. Emerson. So do you endorse this concept?
    Mr. Rey. We have neither endorsed it nor rejected it, as a 
Federal Government agency. It has been purely a private-sector 
initiative. We have studied both systems to, first, see how 
they would affect national forest management. Some people have 
suggested maybe the national forests should be certified. Other 
people have said, wait a minute, Congress sets the standards 
for how the national forest should be managed, not some 
private-sector entity. So, you know, there has been a very 
vibrant conversation both ways.
    We have used both systems on a select number of national 
forests, just to see how it turns out. It generally turns out 
that the way we are managing the national forest needs to 
require a mix of both systems, both the Forest Stewardship 
Council and Sustainable Forestry Initiative.

               THE FUTURE OF FOREST PRODUCT CERTIFICATION

    Mrs. Emerson. Just so I can tell--this is one of the 
biggest industries in the State. Just so I can tell my forest 
folks, do you think the FSC standard might become the standard 
over time? It is important for them for purposes of exporting, 
since there has been such a decline in use.
    Mr. Rey. Right.
    Mrs. Emerson. For their purposes, is this something that is 
a good investment for them?
    Mr. Rey. I would recommend so. What I think is going to 
happen over time--and this is just pure speculation on my 
part--is I think, because of the similarities in the systems, 
at some point in the future I am going to guess that they will 
merge.
    But right now, today, if you want to export into certain 
markets and your producers would be largely hardwood producers 
who would be looking at the European markets, FSC is more 
broadly used in Europe, I think, than SFI is. SFI is more 
broadly used in North America.
    Mrs. Emerson. Thank you very much. I am out of time.

                   AGRICULTURAL PRODUCTION AND SPRAWL

    Mr. Farr [presiding]. Thank you.
    I am next. And the Chair has asked me to chair, so if you 
could tell me when I am out of time, I would appreciate it.
    I always enjoy having this panel here, because I am a big 
believer that the forests of this Nation and the Department of 
Agriculture, which has more of a role in private lands than 
anybody, that, really, the open space of America is managed by 
the folks that are here at the table.
    And I am constantly reminded, my area is such a beautiful 
area and such a productive agricultural area that it is just a 
constant battle to try to keep land in production rather than 
just sprawl out and build housing all over it. The history of 
California is that sprawl wins. So when you have sprawled 
everything else out, then you discover that the most beautiful 
place in all of the State is right in the center of the State, 
the rush comes in. And I have a couple of observations about 
this.
    One, I would really like to try to get working really 
closely with you on these agriculture easements stuff, because 
I really think there is a lot of reform that can go in here. I 
don't think the Government ought be paying for what people 
shouldn't be farming anyway, just because they are in riparian 
corridors or they are a habitat that has to be protected under 
some other law. And therefore, there is no reason, you know, 
that we have to pay for that conservation protection. That is 
the local law, State law and Federal law.

                     MANAGING THE E. COLI BREAKOUT

    But, more importantly, what I am really interested in right 
now is, last year, we had this E. coli breakout. And it was 
unusual that it was not declared a natural disaster, so the 
normal ways of assisting the problem could not be funded at the 
Federal level. What we saw was the largest voluntary recall of 
food in the history of America and a personal loss of hundreds 
of millions of dollars because we never did help it. I tried to 
get some help in the bill, and everybody made a joke of 
spinach, and it never got anywhere.
    What stepped in, in the meantime, was these corporate risk 
managers who have been consistently, as agriculture and 
especially crop agriculture gets corporate--and you have 
organizations like McDonald's that come out and buy all the 
lettuce that can be produced by certain fields. So the growers 
are essentially growing lettuce for one company.
    And that company comes in and says, ``Well, now we are 
worried about E. coli, and we think the way you ought to keep 
E. coli out is to build a fence around your entire property.'' 
Well, this fence now is clearing everything NRCS has done in 
trying to develop, you know, integrated pest management 
programs, compatible buffer zones, in some cases riparian 
corridors. And the local governments have given waivers to get 
these things done because it is critical for the people to stay 
in production. For those who walk away and say, if you don't do 
what--and I went through the Salinas Valley last week, 100 
miles along that valley. And they have all these rodent traps 
out now poisoning everything that can crawl into these pipes. 
They are about every--about the length of this room from one 
end of the valley to the other, tied to the fences.
    So what you are seeing and what is frustrating the local 
science is that this has totally gotten outside of the 
ability--this is, kind of, chaos management. There is not a 
sense of the totality of pest management practices. And I 
really would like to see the Department kind of step in, 
because I think there is a vacuum here where there is no 
comment or backlash to say that we can't allow this kind of 
freelancing. It reminds me when they put together the vigilante 
teams, they just said, ``Let's go get 'em.'' and this is how it 
is being done.
    And everybody at the regulator level is just stuck, because 
they are operating out of a field that we have never done 
before. There are suggestions that all agricultural fields now 
have screens over them so that the birds can't fly over them, 
that the--I mean, the fences they have to build have to be 
strong enough that a wild boar couldn't get in. They have 
already done all the things that you have to do--move the 
cattle away from ag fields and so on.
    And I don't know what the answer to this is, but it needs 
leadership. And I would just ask if you have any suggestions of 
how we might take a look at it and provide that leadership. At 
least some of these practices are not in the best interest of 
productive agriculture.
    Mr. Rey. We would be happy to do that and maybe come up and 
sit down with my counterpart in the food safety mission area. 
Because I think what you are seeing there is a market reaction. 
It is somewhat of an overreaction. But you are right, it is 
driven by a couple of big purchasers that they have. That 
probably gives us at least some opportunity to sit down with 
them and walk through, you know, what a more appropriate 
reaction might be.

                              FOOD SAFETY

    Mr. Farr. Could we set a time where you and I could get 
together and see if we could draft out some protocols?
    Mr. Rey. I think we ought to involve Richard Raymond, my 
counterpart in the food safety area, because he is a lot more 
expert at, sort of, dealing with reaction to these kinds of 
food safety issues than I am.
    Mr. Farr. Because this is going to get out of control. They 
are going to start advertising, ``Our food is safer than your 
food, my lettuce is safer than your lettuce, because I do all 
this stuff.'' But at the same time, it is going to really be 
hard to manage the environment in a totalitarian way, which we 
have been trying to do, to help water conservation and soil 
erosion and so on.
    Mr. Rey. We would be happy to.
    Mr. Farr. My time is up.
    Mr. Lancaster. Congressman, might I add as well, we share 
that concern at the State level. We are developing the 
technical data to share with producers, private auditors, food 
safety inspectors, to show that balance of food safety and 
conserving our natural resources. We are working with the 
Western Growers Association and the signers of the Leafy Greens 
Marketing Agreement to get that information in the hands of 
growers.
    But, as well, those food safety regulators and those 
private auditors will be looking at those systems to say, 
``These are conservation benefits; there is no food safety 
concern related to those practices.'' It is something we have 
undertaken with numerous partners, including the Resource 
Conservation Districts, the State Departments of Agriculture. 
And we will----
    Mr. Farr. I don't think that message is getting out there 
very effectively.
    Mr. Latham.

                            PROGRAM PAYMENTS

    Mr. Latham. Thank you, Mr. Farr.
    And welcome, everyone. And please relay my thanks to your 
staff back in the States and who I think do an outstanding job 
and sometimes under difficult situations.
    Last fall, the GAO had a report talking about the conflict 
between conservation programs and payments, and they are at 
cross-purposes at certain times. Can you give us your point of 
view? And are, in fact, our conservation programs at cross-
purposes with the farm payment program?
    Mr. Rey. I wouldn't say cross-purposes. What I think the 
audit suggested is that there were some instances where the 
same farmers were getting payments from both the commodity and 
the conservation title programs. And we have been working since 
with the Farm Service Agency to eliminate those payments if 
they were not, in fact, justified as payments advancing two 
separate objectives.
    Mr. Lancaster. Congressman, I would add, as well, one of 
the things we see in response to markets' additional pressure 
on producers to grow on every acre and produce on every acre. 
We have looked at this opportunity to see higher net farm 
income as opportunities to invest in conservation, and we don't 
see that as incompatible. We see production agriculture--
keeping that land into agricultural production as very 
compatible with land conservation.
    What we strive to do is take that income, that money that 
is in the producer's pocket today, and get them to invest in 
conservation practices. When we see pressures to produce on our 
marginal lands, we are trying to get the data into the hands of 
those producers to show, you know, you can enroll in certain 
conservation programs and not produce on those marginal lands. 
There are ways to maximize your yields on those lands you 
really shouldn't be farming.
    But we are looking to take advantage of this opportunity 
where folks are acting in response to the market, in response 
to the safety net that we have, to ensure that the dollars they 
have available go into conservation.
    Mr. Latham. But you don't see any conflict with their--not 
really conflict--but the increased crop insurance and things 
like that? I think the biggest factor out there is the fact 
that you have got over $5 corn and $12, $13, $14 beans, which 
is wonderful, except that you are going to want to produce in 
every piece of square foot of dirt you can find.
    Mr. Lancaster. My biggest concern is actually conversion of 
agricultural lands to nonagricultural uses and the pressures 
that places on the environment. So we are looking to find ways 
that keep that land in agricultural production by helping 
working farmers with conservation measures. And, to me, that is 
a more significant threat to the environment.

                        BENEFITS OF CONSERVATION

    Mr. Latham. Okay. On the CSP program, I would like to get 
your input as to what kind of changes you think that--or that 
maybe you have talked about with the Ag Committee, as far as 
rewriting the farm bill.
    And have you found a way to quantify benefits when you are 
talking about air quality and soil tills, water quality, on an 
individual producer's land? I mean, I can understand in the 
watershed on a regional basis. But is there any way to quantify 
the benefits?
    Mr. Lancaster. It is a struggle. One of the things that we 
have talked about is the Conservation Effects Assessment 
Project, which will give us that science-based data related to 
conservation practices and certain climates or certain 
geographies, so that we are better able to say what is the 
effect of that practice on that particular farm.
    So we do think that we are getting that data so that we 
will be able to quantify it. We are not able to now. It 
certainly is a challenge when we are looking at our 
conservation practices of how they are applied across different 
landscapes.
    With regard to the Conservation Security Program, the 
administration recognizes that a stewardship program is an 
important part of our toolbox. We did propose significant 
changes. We are working with the committee in the hopes that 
they will adopt some of those changes.

                     CONSERVATION SECURITY PROGRAM

    Mr. Latham. What changes?
    Mr. Lancaster. We proposed to reduce the number of tiers to 
use what the producer has been doing in terms of their level of 
stewardship to get them in the program, to make them eligible 
for the program, but our payments would be tied to 
enhancements, those new things that they are doing. So rather 
than paying a producer for those activities that they are 
already undertaking, we would use that as the bar to get in, 
but we would pay for those additional benefits associated with 
the program. And by tightening that, that is a true stewardship 
program, where the program would be designed from the beginning 
as one that is rewarding the best producers.
    We do have an acreage cap, and we are able to then, in our 
proposal, offer a CSP program in watersheds every year, as 
opposed to how we have had to enroll in the program based on 
the current funding restrictions.
    Mr. Latham. What would it cost if it was wide open?
    Mr. Lancaster. Under the current statute?
    Mr. Latham. That is what we have, yeah.
    Mr. Lancaster. Under the current statute, we had done a 
rough number of looking at 900 million acres of cropland 
potentially eligible in the country. We are seeing 50 percent 
of the enrollment in that, and we are averaging about $18 an 
acre.
    Mr. Rey. While he is doing the arithmetic, let me speak to 
your first question. We have done a lot of work with the 
Department of Energy in the air quality area and with the 
Environmental Protection Agency in the water quality area to 
quantify the sequestration benefits of different kinds of 
conservation practices. So if a particular conservation 
practice is followed, we can quantify how much carbon is 
sequestered as a consequence of that as compared to not doing 
it.
    Mr. Latham. On an individual farmer's piece of ground?
    Mr. Rey. The farmer would have to plug in his own specifics 
to get his numbers. But if he follows certain types of 
practices and certain circumstances, we can give him a number, 
going through the analysis in the registry that we have 
developed, so that he can have an answer to that.
    Mr. Lancaster. On your CSP question, we had done an 
estimate last year of, assuming those numbers, determining 
that. Assuming the number of acres that are eligible for the 
program, our current enrollment rates are $19 per acre. We had 
assumed about $9 billion for that program, but neither the 
House bill----
    Mr. Latham. $9 billion?
    Mr. Lancaster. Yes, sir. But neither the House bill nor the 
Senate bill proposed to continue current law under the CSP 
program. Both bills looked to cap that program in terms of the 
number of acres and what you are enrolling in it. In fact, the 
House bill did not propose enrollment in it for the next 5-year 
period.
    Ms. DeLauro [presiding]. The Senate bill does?
    Mr. Lancaster. The Senate bill does allow for enrollment 
but does cap those dollars and acres associated with the 
program and does streamline it somewhat.
    Mr. Latham. $9 billion.
    Thank you.
    Ms. DeLauro. Mr. Bishop.

                      SMALL AND BEGINNING FARMERS

    Mr. Bishop. Thank you very much.
    Secretary Rey, Chief Lancaster, Director Dondero and Mr. 
Steele, welcome.
    I am concerned about what is happening in our farming 
communities, particularly the fact that the average age of our 
farmers is getting higher and higher. I think somewhere now it 
is about 58.5 years. We are having fewer and fewer young people 
going into farming, and they cite difficulties in doing that.
    And, as you know, the purpose of the agency's small, 
limited and beginning farmer assistance program is to ensure 
that NRCS programs are administered in a way that enables 
small, limited-resource and beginning farmers and ranchers to 
maintain and develop economic viability in farm operations and 
to ensure that the NRCS's technical assistance programs and 
activities reach the small and beginning farmers and ranchers.
    Can you share with us how effective the program has been, 
how the program is working, the extent of participation, and 
how robust the agency has been in pursuing efforts to make sure 
that it works?
    And I would be particularly interested, if you could supply 
for the record, some statistical information, demographic 
information on the small, limited and beginning farm assistance 
program.
    Mr. Rey. What I would like to submit for the record is an 
exhibit that shows what percentage of the Environmental Quality 
Incentives Program is being enjoyed by small or limited-
resource or new farmers. We have been doing a lot of outreach 
in that area.
    Just as an interesting aside, the median age of a USDA 
employee is also about 57 years old today, so we are all, kind 
of, going off together into the sunset I guess. We will be able 
to have these debates in perpetuity. There will probably be 
enough of us in both places to have it, too.
    Mr. Bishop. Will somebody be producing our food, though?
    Mr. Rey. We have proposed in the administration's farm bill 
proposal a fairly significant increase in support for the small 
or limited-resource farmer. So that has been a focus area of 
the administration under current law. It was an area that we 
wanted to see emphasized in the new farm bill, as well.
    But I will submit this material for the record so you can 
see today what percentage of our programs are going to farmers 
in these categories.
    Mr. Bishop. Good. And I hope that you can share with us 
some of the demographic information so we know what is small, 
you know, what--a real description of who those participants 
are demographically.
    Mr. Rey. What the breakdown is among the categories, yes.
    [The information follows:]

    

    
                          NRCS STRATEGIC PLAN

    Mr. Bishop. Let me ask you about your strategic plan. Last 
year, NRCS began development of its new strategic plan. And can 
you tell us where you are in the process and how the current 
farm bill negotiations of the proposed changes would impact 
that plan, particularly in terms of the Department's internal 
and external assessments of natural resources, human capital, 
civil rights and other issues?
    Mr. Lancaster. We are making progress relative to our 
strategic plan. As you know, it sets forward, kind of, our 
overarching goals as we proceed as an agency and then has 
specific goals about measurable achievements with water quality 
or soil health and soil quality.
    I would be happy to provide for the record our performance 
measures and where we are based on our projected progress. We 
are meeting those targets. We are currently under way. We are 
currently undertaking an update to that strategic plan based on 
the information we have.
    As we get into a new farm bill, we will certainly look at 
those additional resources that might be provided in that farm 
bill to see how we adjust those priorities. And as Congress 
looks at adjusting its priorities and where those funds are 
allocated, we will look at that strategic plan.
    [The information follows:]

    

    
    Mr. Bishop. Is one of those metrics civil rights, so you 
are able to determine where you are there with respect to a 
program's participation with regard to staffing, with regard to 
all of the civil rights issues that the Department is concerned 
with overall? Is that a part of your strategic plan?
    Mr. Lancaster. It is part of our customer base and our 
customer targets for our strategic plan, but, as well, it is an 
important part of our human capital strategic plan, how we are 
investing in our people and ensuring that we are meeting the 
appropriate target.
    Mr. Bishop. Thank you.
    Ms. DeLauro. Mr. Boyd.
    Mr. Boyd. Thank you very much, Madam Chairman. I wondered 
what I had done there that took you so long.

                         CONSERVATION SPENDING

    Ms. DeLauro. I try to get the order here right.
    Mr. Boyd. No, I was just teasing.
    Secretary Rey, Chief Lancaster, others, thank you for being 
here. Thank you for your service.
    Indulge me for a moment. There are many, many challenges 
that the farmer, agricultural producer faces today. I think, in 
the long term, though, none more daunting than the one that 
Chief Lancaster has laid out, and that is the development 
encroachment and the removal of ag land from agricultural 
production. I happen to be from Florida and see that, maybe, in 
a greater way than maybe Mr. Latham does out in the West or 
some other traditional agricultural areas. But nevertheless, it 
is a problem, I think, all around the country--rising land 
costs, other uses, alternative uses.
    And I am also one who has a strong belief that we have to 
be able to produce our own food to survive here in this 
country. Now, your activities in conservation are critically 
important for that. I have maps in my office at home that show 
what the farm that I was raised on looked like in the 
Depression, and it was not pretty. It was nonproductive, in 
many ways, because of erosion and other lack-of-conservation 
problems.
    The United States Government made it a productive farm with 
the incentives and the programs that exist today to allow our 
farmers to get help, technical advice and sometimes even 
financial support to carry on those conservation practices.
    And my question to you, really looking at the proposed 
budget and where there are many, many conservation initiatives 
and programs that are totally eliminated or substantially cut--
grazing lands, conservation, watershed and flood prevention, 
watershed surveys, watershed rehab, RC&D, healthy forests, 
AMA--my question to you is, have we lost our understanding 
within the Department, within the professional and bureaucratic 
career staff at the Department, about the value of these 
conservation programs? Or is this something that is driven by 
administrative decisions relative to budgets?
    This is a simple question. It is not complicated.
    Mr. Rey. What I think you have to do, in reviewing this 
budget, is review it alongside of the administration's farm 
bill proposal. In the farm bill proposal, we have proposed to 
increase conservation title spending by $7.9 billion over 10 
years or by roughly $780 million, $790 million a year. So if 
you aggregate both of those proposals, what I think you have is 
a significant increase in conservation spending.
    And as we talked about earlier, we have to see what the 
final farm bill looks like. And depending on what it looks 
like, we may have to look at this budget and reassess it.
    But at least in terms of what we proposed, in its totality, 
I think that there is a significant commitment to increasing 
spending for conservation or with a focus on spending the money 
first on what are the most significant conservation challenges 
today. And that is, in one instance, to try to help land owners 
who are in the path of development keep their lands as working 
rural landscapes, and, in the second instance, try to provide 
them technical and financial assistance to manage their lands 
in a way that there are no air and water quality problems 
associated with the continued use of those lands as 
agricultural lands.
    Now, in the course of all that, we have proposed 
modifications to programs to make them more effective. The 
Healthy Forest Reserve Program, for instance, is one that we 
proposed funding through the farm bill and consolidating a 
similar program. And we have proposed a couple of programs to 
be eliminated because we thought, in the broad scheme of 
things, even if they were producing good results, they were 
less important results than other places where we thought the 
money could be better spent in the service of one of those two 
priorities.
    But, you know, those are the kinds of decisions that we 
will work on together as Congress completes work on the farm 
bill. And then, thereafter, we will work on this budget bill.

                        CONSERVATION COMMITMENT

    Mr. Boyd. So, Secretary Rey, I know I have worked with you 
for a long time, and I know where your heart is.
    Is your answer, then, that in the Department we have not 
lost our understanding of the need for solid Federal help in 
the area of conservation? If our farmers are going to stay in 
business--I will tell you, we have farmers in Florida that now 
their land is worth $10,000, $20,000, $30,000 an acre, and you 
know what that means when you start figuring the bottom lines 
and what you do with that land. You can never farm that out, it 
can never be passed on, unless there is some way to pass it 
onto the next generation. And that is, sort of, another battle. 
You can never buy that kind of land and make it work.
    We are very fortunate we have good commodity markets now. I 
mean, I have been doing this--I have been farming for 40 years 
myself, and just up and down. And you know what? It may be $5 
corn today, but in 3 years it may be $1.75. So it is going to 
be up, and it is going to be down.
    But we have to--a lot of people are on the land because 
they want to be there. And they have to have a partner in the 
Federal Government. So do I hear you saying that, in terms of 
the Department, we have the career people and the bureaucrats 
in there that really have the commitment to conservation?
    Mr. Rey. Absolutely. And I think that commitment was 
reflected in the farm bill that we sent up to Congress last 
year and that is currently under consideration. Conservation 
was one of the areas where we proposed the largest increases in 
the funding.
    And if you look at what we have done with the funding you 
have given us and that the Congress has given us with the 2002 
farm bill, you see a dramatic increase in the number of private 
acres that are involved in one or another of our conservation 
title programs.
    When I testified up here last year, I think the number I 
used was 190 million acres that are under one or another 
conservation title programs. The testimony I gave a few minutes 
ago has 208 million acres. So just within a period of a year, 
we have been able to bring more farmers into one or the other 
of the conservation title programs.
    Mr. Boyd. Thank you very much.
    And, Madam Chair, thank you for indulging me with a little 
extra time.

                          TECHNICAL ASSISTANCE

    Ms. DeLauro. I will recognize Mr. Kingston in a minute.
    Under Secretary Rey, as my colleague was talking to you, we 
keep referring to the farm bill. But as I understand this, the 
farm bill deals with the dollars for the contract that--in 
fact, what we are doing is what I said in my opening remarks, 
is we are undermining the ability to do precisely what Mr. Boyd 
is talking about, by cutting out the people who deal with the 
planning and doing the assistance of helping to carry out this 
effort.
    The farm bill has program money. It is not dealing with 
the--for contracts, not with what we are dealing with in terms 
of those who can help to sustain that agricultural base that 
Mr. Boyd is talking about.
    So I think we have to be--I think we have to really be very 
clear as to what is happening here and that Members and 
particularly the big farm communities that are represented on 
this community and throughout the Congress have to understand 
what, in fact, is happening to their ability to be able to 
sustain themselves.
    Mr. Rey. The only amendment I would make to what you said 
is that the farm bill we proposed did have money isolated for 
NRCS staff to make sure that we could deliver the programs that 
were proposed in that farm bill and in the 2009 budget.
    Now, you know, if the Senate and the House conferees choose 
not to do that, if that is a possibility, then we will have to 
sit down with you and reassess.

                            BUDGET AMENDMENT

    Ms. DeLauro. No. And I want to be specific about this. And 
I am sorry, Mr. Kingston, but because I did ask in my first 
question, will we see a formal budget amendment reflecting 
discretionary changes needed after the farm bill is enacted so 
that we know what precisely is needed and we come before here 
and talk about the dollars and cents.
    And what I also want to know, which we didn't get answered 
in the first go-around, is which program changes or new 
initiatives would most impact your 2009 budget based on the 
House and Senate-passed versions?
    I have listened to too many people coming before us, Mr. 
Secretary, again, as I said earlier, putting all of their eggs 
in the farm bill basket, and that is not a good bet at the 
moment. It is not a good bet.
    So will we see a formal budget amendment if there is a 
discrepancy?
    Mr. Rey. If there is a need for a formal budget amendment 
because there is a discrepancy, we will work with you to 
produce that. I am not yet willing to concede that that will be 
necessary, but maybe I am more of an optimist. I am always 
looking for the pony, and, you know, it is not over until it is 
over.
    Ms. DeLauro. Well, that is true. But, again, I think Mr. 
Boyd's question is pertinent, as to what the future is about. 
And that is the thing, we have to keep that core--that is the 
center of maintaining and sustaining people on the land.
    Mr. Kingston, sorry for the interruption.
    Mr. Kingston. Thank you, Madam Chair.
    Mr. Secretary, first of all, I want to thank you for 
helping the Waycross, Georgia, fire, which actually was about 
6,000 acres between my district and Mr. Boyd's district. And 
Mr. Bishop, I believe, had a little bit of it. But it was in 
southwest-central Georgia--south-central Georgia and northern 
Florida. And you guys were very helpful on that. We want to say 
thank you.
    I have a question about the budget that shows a decrease in 
staff for CTA from 6,096 work-years in 2008 to 5,525 in 2009, 
or a loss of 570 work-years in CTA, about a 10 percent 
reduction. At the same time, staffing for CCC-funded programs, 
especially CRP, is increasing. In fact, CRP staffing just about 
doubles from 475 work-years to 840.
    Can you explain that?
    Mr. Rey. I think that is a description of exchange we were 
just having. What that is, is that essentially we are funding 
some conservation technical assistance through our farm bill 
proposal, and that addition offsets the reduction in the 2009 
discretionary budget.

                    ORGANIZATIONAL STRUCTURE OF USDA

    Mr. Kingston. Okay. Does that tie in with the FSA proposal, 
to be more involved with conservation?
    Mr. Rey. No. I think what you are referring----
    Mr. Kingston. As I understand, that proposal has kind of 
died down in the farm bill discussions both in the Senate and 
the House.
    Mr. Rey. Yes. What you are referring to is a proposal that 
has been made by some for reorganization of some of the 
functions of the Farm Service Agency and the Natural Resources 
Conservation Service. And we have indicated the administration 
doesn't support that. And you are right, it has died down some. 
So that is a different issue all together.
    Mr. Kingston. Although they do feel that that proposal 
would put you folks more in the field and out of a desk 
situation, and that is why they feel like it is a good deal for 
the farmer. Do you want to comment on that?
    Mr. Rey. You know, we have run these programs together for 
a number of years under a couple of different structures. I 
think the arrangement we have with FSA today is probably the 
most effective one that we have had. So I don't know that 
farmers are going to be benefiting to any great degree if we 
change the boxes around one more time.
    Mr. Kingston. I will ask some more questions on that for 
the record. So maybe we could get back to that.
    But I want to say, if Congress agrees for some elimination 
of RC&D staff, would those FTEs go into CTA activities?
    Mr. Rey. Many of those people are doing conservation 
technical assistance as a portion of their jobs today. So, 
should Congress agree with our proposal, we would transition 
those staff largely into CTA-related positions.
    Mr. Kingston. And would that be enough to meet the 
technical needs of farmers and ranchers who are not 
participating in farm bill programs?
    Mr. Rey. We believe that the proposals that we have put 
forward, both in the farm bill and in the 2009 budget request, 
will meet the needs of farmers, both those who were 
participating in farm bill programs as well as those who are 
involved in the development of comprehensive nutrient 
management plans and other non-farm-bill-related developments.
    Mr. Kingston. Okay. I have a question. There was a New York 
Times article on January 13, 2008--and any time I start off 
with referring to a New York Times article, you can bet that 
the question came either from staff or from the Chairwoman, 
because it is not on my daily read.
    But apparently what the article said----
    Ms. DeLauro. Do something counterintuitive now.
    Mr. Kingston. I send her the Wall Street Journal on a daily 
basis.
    Ms. DeLauro. I read it every day.
    Mr. Kingston. And then I send her my NRA magazine. She 
sends me child nutrition stuff.
    Mr. Rey. But at least you are both well-read.

                        ASSISTANCE TO MEGAFARMS

    Mr. Kingston. But it talked about changes to the EQIP 
program in 2002, made the program mission for further 
concentration of agriculture into megafarms. And the reason was 
that the payment limitation for this program increased from 
$10,000 in 1996 to $450,000 in 2002.
    And what was the reason behind that? Even though most of us 
were here, we weren't on the farm bill negotiations at that 
time because it was more authorizing.
    Mr. Rey. Well, I think it is probably a stretch to say that 
the changes to the EQIP program were a driving force in the 
consolidation of animal agriculture. I think broader market 
issues have driven that.
    What the change in the EQIP program did, however, was make 
it possible by raising the cap for NRCS to provide assistance 
to much larger producers than would have previously been the 
case.
    Mr. Kingston. Well, was it done at the expense of smaller 
producers, in your opinion? And have you studied that perhaps 
that did have an inadvertent effect of that?
    Mr. Rey. I will let the Chief offer his thoughts. But I 
don't think it occurred at the expense of small producers. I 
think what it did, as a consequence of some of the changes in 
the program that Congress made in 2002, is focus the program on 
animal agriculture as one of the top environmental priorities. 
And I suspect what that was was a congressional response to 
some of the environmental implications of the consolidation of 
the livestock industry.
    Mr. Lancaster. Yeah, I would like to add on that. And I 
would be happy to submit for the record, as well, a letter we 
drafted to the reporter and shared with him to help him better 
understand some of the intricacies of the EQIP program and some 
data that he, I think, in the article admitted that he did not 
have.
    But what it shows, as well, is that our average contract 
size has not increased appreciably from our pre-2002 farm bill 
dollars. We are still doing many smaller contracts. We have 
very few contracts that are at that $450,000 limit.
    The intent, though, I think, of the program is to address 
those resource concerns regardless of the size of the 
operation, regardless of what you are producing. You know, we 
want to make that program available to you to help address your 
resource concerns.
    But the data shows that our contract size, our average 
contract size is still well below $20,000 as an average 
contract size. And I don't believe it has had an impact on 
smaller producers. We have to remember, in the context of the 
program, we were talking about a $174 million program prior to 
2002, $174 million a year, and now we are a little over $1 
billion annually.
    [The information follows:]

    

    
    Mr. Kingston. Okay. Well, obviously I am out of time.
    Ms. DeLauro. Ms. Kaptur.
    Ms. Kaptur. Thank you very much, Madam Chair.
    Welcome, gentlemen. I am really glad to have you here. And 
I am very supportive of the work of your agency and the 
critical work on conservation and natural resources that you 
all do. Thank you very much.
    I have several questions. Maybe we can tick through them 
quickly.

                           EMERALD ASH BORER

    First, on replacement tree planting, as we approach this 
spring season, particularly related to the emerald ash borer 
and the States that have been most heavily impacted, could you 
perhaps tell us when the trees have been lost and what special 
approaches you might be employing?
    I know we are looking at Earth Day and trying to figure out 
how to encourage more local groups to access trees from NRCS in 
the private sector. And we are talking about millions of trees. 
We need everybody's help to replant.
    Do you have, sort of, a magic plan to help us do this?
    Mr. Rey. I don't know how magic it is. But we estimate that 
we have lost about 20 million ash trees to the borer so far. 
Most of that loss has been concentrated in Michigan and Ohio, 
where the epidemic initiated.
    We have been, so far, successful in containing spot 
outbreaks that have occurred outside of the main infected zone. 
That is important and, we hope, something that we can continue 
to enjoy, because we have seen outbreaks in Pennsylvania, 
Maryland and West Virginia, which we have contained.
    We are providing assistance to State forestry agencies to 
help with tree replanting. We will probably have to increase 
that assistance as people start to deal with the epidemic 
within the infected area. And I can give you some figures on 
what we have spent so far on that for the record.
    [The information follows:]

        2008 Emerald Ash Borer (EAB) Expenditures for Replanting

Federal Forest Health (SPFH)
                                                                $500,000
Coop Forest Health (SPCH)
                                                                 495,000
Research and Development (FRRE)--approximately
                                                                 550,000
                    --------------------------------------------------------------
                    ____________________________________________________

Total Obligated
                                                              $1,545,000

    In FY 2008 Animal Health Inspection Service (APHIS) will spend 
approximately $30.4 million on the EAB. APHIS cooperates with several 
States (including Illinois, Indiana, Maryland, Michigan, Ohio, and 
Pennsylvania) to prevent EAB spread through survey, regulatory, 
outreach, and control efforts.

    Ms. Kaptur. All right, Mr. Secretary. I would love for you 
to take a look at using our Ohio delegation and what we could 
do, the whole of whatever districts are affected. And I don't 
want to exclude Michigan. I know your fondness for Michigan. 
But is there is something we can do now on our Web sites, at 
public events?
    I mean, we are already planning to do this. But it is a 
drop in the bucket; the need is so huge. If anybody over there 
is a genius on this, I would sure love for you to send them 
over and help us figure this out. I mean, we are knocking them 
down at 10,000 a shot with these machines that come in, and it 
is unbelievable to see this happen.
    Mr. Rey. I will arrange to come up and talk, because if you 
are willing to let us use some of your communication tools, 
this is the right time to be communicating.
    Ms. Kaptur. I would like for you to meet with the whole 
delegation. It goes all the way down into Ohio. Or you tell us 
how far down it goes. And if we want to do it with the 
Wolverines, we are happy to include the Michiganders too.
    But this is a really breathtaking set of occurrences that 
we are living through, and we have to fight back. I mean, we 
have to plant. And we are in a key moment here in the spring. 
So I would deeply appreciate a visit.
    Mr. Rey. The spring is important because one of the means 
of transmission is people moving firewood around. So, as we are 
getting into the camping and then fishing season, any 
communications tools that we can use to communicate with the 
public not to haul firewood north, south or west is helpful.
    Ms. Kaptur. Right. But we want to get them digging and 
putting trees in the ground.
    Mr. Rey. That, too.

                             URBAN WILDLIFE

    Ms. Kaptur. So any advice you can give us on how to 
maximize these efforts would be appreciated.
    Number two, this is probably not your jurisdiction, but I 
just want to make you aware, as you get into meetings over 
there at USDA, under the conservation and proper management of 
both the wildlife and plant life, USDA is not in charge of 
cities. That is somebody else's job.
    The problem is, in many places, there are no predators 
left. And what we are seeing in cities is explosions of 
populations of deer, coyotes, feral cats, squirrels, beyond 
normal levels. I can't seem to get my arms around this. You 
know, you have a dog warden, but you don't have a cat warden. 
Is it a local problem, or is it really--you try to take these 
animals out to the forest, they say you can't do that, that is 
a crime. What are you supposed to do with these animals?
    And we need somebody somewhere who has enough jurisdiction 
to help us figure out, in urban areas, where you have 
explosions of these populations, what do you do? All I am 
looking for you is, who is responsible? If the State is not 
doing it, if the mayor is not doing it.
    These animals move along stream beds, they do all kinds of 
things. And there is a problem there. There is a problem.
    So if you could give me advice on where to go, just in--
maybe do some test pilots in urban areas, particularly those 
with rising numbers of poor people. There is an explosion in 
these rodent and wildlife populations inside city limits.
    Do you have any comments on that?
    Mr. Rey. Only that most of that jurisdiction falls at the 
county level. Most every county has animal damage-control 
officers and an agency for that purpose. Usually the dog warden 
is, you know, a portion of that agency, but it varies in 
different jurisdictions.
    The closest we come to dealing with that is the Animal and 
Plant Health Inspection Service in the Division of Wildlife 
Services. But there we are called in typically when there is a 
conflict between agriculture and wildlife in a much more rural 
setting than what you are talking about. So APHIS, for the most 
part, hasn't come within the city limits historically.
    Ms. Kaptur. If somebody over there--and I will end with 
this, Madam Chair--but if somebody over there at USDA could 
give me an example of where in the country this is being done 
right, maybe somebody knows.
    I can tell you, in vast jurisdictions, it is not being done 
right. We shouldn't have deer populations, with lyme disease 
and everything else--isn't that what they carry, with the 
ticks? I can't tell you how many people have gotten that. You 
know, something is wrong here, and the urban people are ill-
equipped to deal with this.
    So we need some prototypes, we need some examples of where 
this has been done right to be shared more broadly.
    Mr. Rey. I will ask my counterpart who oversees APHIS' work 
what their suggestion might be, because they probably do 
interact with some of the county organizations. I do know they 
interact a lot with the Departments of Natural Resources, the 
Departments of Fish and Game in each State. But I think you are 
probably right; there is probably a gap, because the 
Departments of Fish and Game typically don't come within the 
city limits either.
    Ms. Kaptur. Exactly. It is a real issue, and unquantified. 
But I tell you, it exists.
    Thank you, Madam Chair.
    Ms. DeLauro. Thank you, Ms. Kaptur.
    Mr. Latham.

                 RESOURCE CONSERVATION AND DEVELOPMENT

    Mr. Latham. Thank you, Madam Chairwoman.
    Mr. Boyd was making a point about the value of farmland. We 
have gone from about $2,000 an acre, $2,500 an acre, up to 
$6,000, $7,000, $8,000 an acre for just farmland. This is not 
development ground.
    And I just think that the financial pressure of producers 
today, you are going to have a real problem getting people into 
more conservation programs. And I think we need to have a lot 
more technical assistance out there. It is very troubling what 
Jack was talking about with reductions there, elimination.
    The RC&D, from my understanding, you did a survey a year or 
so ago about the public's perception. That was one of the 
highest-rated programs that was out there. And I guess I am 
troubled somewhat as to why you would have the elimination of 
that when the public likes the program, they use it.
    And who is going to do the work if you do eliminate it?
    Mr. Rey. Well, we are trying to distinguish between the 
utility of the program and the Federal role in it. The program, 
in our view, will continue.
    Mr. Latham. Who is going to pay for it?
    Mr. Rey. Well, I think the RC&Ds themselves have proven to 
be very aggressive and competent fundraisers. Now, if the 
Federal Government continues to give the money to them, I am 
sure they will continue to take it.
    What we looked at is, could the vast majority of RC&Ds 
continue on with the program without the Federal money, which 
was supposed to be a catalyst to get them started and not a, 
sort of, limitless base of support? And the answer--and I think 
many of them would probably concede the point is--oh, yeah, it 
will be harder, but we will continue on, we can raise the money 
to cover those expenses.
    So this was a case of not diminishing or denying the value 
of the program, because it is a highly regarded program. It has 
been beneficial not only to NRCS but to the Forest Service as 
well. So it wasn't that so much as, in the broad scheme of 
setting Federal priorities in tight budget times, is this the 
best use of the Federal money?
    I initially, you know, years ago, concluded it was. We had 
an OMB budget examiner at the time who felt very strongly that, 
you know, that was one of the ways that you do effect good 
budget discipline, is to look at what the proper Federal role 
is. And he made, you know, he made a convert out of me.
    Mr. Latham. Be careful.
    Mr. Rey. But he is available to you now, too.
    Mr. Latham. Okay. You don't have your green eye shades with 
you or anything?
    Mr. Rey. No.

                          A WATERSHED APPROACH

    Mr. Latham. We talked earlier about the CSP program, the 
potential expenditure of $9 billion. And yet, an area where I 
think we could do a lot more good is if we looked at total 
watersheds.
    In your budget, you are cutting watershed rehabilitation 
pretty dramatically. And it is a small amount, comparatively 
anyway. But why don't we take a holistic approach rather than 
give individual farmers money to do something no one can 
quantify, when I think we all know that if we do a watershed 
basis, that that actually is where you are going to get the 
results? And you can have 10 good operators and one bad one, 
and you are going to have the watershed negatively affected. So 
why would you be cutting this and with all the money supposedly 
going to CSP?
    Mr. Rey. Well, in broad terms, we are trying to focus our 
conservation assistance programs on a watershed basis, because 
you are right----
    Mr. Latham. You are cutting the funding.
    Mr. Rey. Well, the program that you are referring to is one 
of the older programs that provides assistance to local 
governments for primarily structural watershed improvement 
work--in other words, to build small dams.
    It is an old program. It has been around for a long time. 
It has been 100 percent earmarked, except for the year that, 
through a clerical error, it was 110 percent earmarked. And we 
think, by and large, we are sort of running to the end of the 
road for those kinds of structural solutions, in any case.
    So, again, in the setting of budget priorities, we would 
rather spend the money with land-owner assistance programs and 
not building a whole bunch of more dams. And that is what this 
budget reflects.
    Mr. Latham. You are cutting technical assistance also.
    Mr. Rey. Well, no. We are shifting part of the 
responsibility to pay for technical assistance to our farm bill 
proposal. And, again, we will----
    Mr. Latham. Which has about a 10 percent chance of 
happening this year.
    Mr. Rey. I am still looking for the pony, as I said 
earlier.
    Mr. Latham. Well, I guess.
    Thank you, Madam Chairman.
    Ms. DeLauro. Mr. Farr.
    Mr. Farr. Thank you very much, Madam Chair.

                           REGULATORY BURDEN

    Mark, I just want to sort of lay out something for you 
here. I was thinking about this committee and the experience of 
this committee. We don't have many new Members of Congress on 
here, and most of us have served in offices before we came to 
Congress. And I have 33 years of elected office, from county 
government to State government to Federal Government. And I 
think what I learned most about the Federal Government is you 
are not going to find a solution to a local problem without a 
Federal partner, because there is the regulatory process and 
the monetary.
    I am representing one of the most productive places in 
agriculture in the world. It is a 100-mile-long valley called 
the Salinas Valley. It produces 85 crops, sells them for about 
$3 billion. It is year-round agriculture. It is the largest 
farm worker community in the United States, living there, not 
migratory. All our water is local. We don't get it off the 
State water system.
    And what we have is land that is worth, you know, in the 
hundreds of thousands of dollars an acre. So, essentially, if 
you look at the land, there is nothing you can grow on that 
land that you can get a return on as equivalent to the value of 
the underlying land. And yet people want to stay in--they want 
to keep it in open space. They want to farm.
    The problem is, is we have so many regulatory issues, and 
it is not that they are going to go away. It is that they all, 
kind of, work in their own silos with their own budgets.
    And we see this now. We have an LBAM spraying program going 
on for the light brown apple moth, where, because the moth is a 
bad moth, you can't buy anything where this moth lies. You 
can't ship stuff. But it is the State Department of Agriculture 
that is responsible for getting rid of it, and they are 
spraying. And the spraying now is getting into--it is a 
pheromone; it is not a pesticide. It doesn't kill the moths. It 
just sort of drives them nuts. And then they go to mate, and 
they can't do that, and therefore it is supposed to get rid of 
them in a passive way. Well, this thing is going to come to a 
crashing halt because the PR is so bad on it, nobody wants to 
be spraying, even with water.
    So what I am trying to get at is I have worked with all 
these different agencies from time to time--Corps of Engineers, 
ARS, we have a research station in Salinas, and fisheries 
issues on our river, fish and wildlife issues, NRCS with the 
FSA, we are on the ag extension programs, with the Forest 
Service. We are also on one side of the valley and then Park 
Service on the other, with three universities--California State 
University at Santa Cruz, at Monterey, University of 
California-Santa Cruz, and community colleges.

                          BIG PICTURE APPROACH

    Now, have we ever been able--did you have any experience of 
ever putting together a whole team of really good experts that 
could take a look at these problems that are right out there?
    I mean, it is no longer that we are not going to do it. It 
is now just coping. How do we really build a sustainable plan? 
Cities are doing a sustainable plan, but they are doing it in a 
way where, every time we get to the edge of the city, we have 
to then do a sphere of influence for the outside, and then they 
are sucking in the ag land. And we are losing the most 
productive ag lands in America.
    What is going to happen is these kinds of crops can't be 
grown in other places in the United States. They will go to 
Mexico, and they will go to Central America. And all the other 
issues about all the food safety that we are talking about and 
pest management practices and good environmental trade-offs 
won't be--Mexico will probably do a pretty good job, but not to 
the quality standards that we insist and certainly not to the 
health standards that we insist. But we are going to lose that. 
We are going to lose that, because they are going to be able to 
grow and we can't.
    And my question is, have you ever put together--because I 
know you do a lot of things, and you like to go to those 
Burning Man conventions where everybody in the world shows up 
with ideas. Have you ever put together--had an idea of just 
putting an incredible, talented team of all of these various 
entities together and working with a community just to see if 
we can overcome?
    We have farmer housing problems, which, you know, is in the 
Department--we discussed this the other day. We have listings 
of fish and wildlife, the steering of the stream. This is a 
stream that delivers the water. You have to maintain it. It 
floods. When it floods, it is nasty.
    I am just kind of overwhelmed by having to problem-solve on 
a micro basis, on just micro, little problems, rather than 
looking at the big picture of how can we build a plan to 
sustain 100 miles of the most productive agriculture in America 
for the foreseeable future? And nobody has yet been able to 
kind of envision that.
    Mr. Rey. Actually, the vision for integrated approaches to 
a wider variety of environmental problems on a watershed basis 
is emerging from the field. It is reflected in the cooperation 
that has been going on the last 2 years in the Klamath Basin, 
and there are other places where that is occurring.
    We have been trying to encourage the development of that. 
And one of the proposals in our farm bill was the Regional 
Watershed Enhancement Program, designed specifically to provide 
financial assistance to the exercise of bringing all of the 
various State, local and Federal agencies and land owners 
together to try to look at trying to solve those problems.
    Mr. Farr. We do that. We have the largest monitoring of 
water quality in the United States. We monitor nine counties 
wide, and it is all voluntary. And this is water quality 
monitoring--it all ends up in Monterey Bay National Marine 
Sanctuary. But it is always built around a specific project.
    Let's do water quality. Let's get this river fixed up. It 
is a 100-mile-long river that is all privately owned. We have 
no Corps levies on it, where we have to get a Corps permit to 
get in it. How do you get in and do something? Then the Fish 
and Wildlife says you can't cut any trees because it is going 
to change the water temperature. We are stuck. The Corps says 
you have to cut the trees because you can't have floods.
    So we have a lot of these problems. We have problems of, 
where are you going to house people? You have, you know, the E. 
coli breakout, where the corporate world comes in and says, 
``Well, you are not going to grow the way you have always 
grown. You will now put up fences.'' and some people will even 
want you to put nets over the entire fields so the birds and 
insects won't be flying over them. They are nutty ideas, but 
they are coming from people who have a lot of clout in 
determining whether your product gets purchased.
    So it seems to me that, until we kind of grab a really--
like a city would do, to really do minute planning of how all 
of these integrated systems can work. And you have to get some 
controls on land. It can't just be, well, after you do all 
this, you will just go and sell it for urban sprawl. You can 
also ask to have conservation easements on it. And we have a 
lot of capability of doing that through buying out development 
rights. A lot of ranches have put themselves in a conservation. 
They will never be subdivided.
    But there needs to be some Federal leadership on it. And I 
am one of those, but I can't provide all that technical 
expertise.
    Mr. Rey. Uh-huh.
    Mr. Farr. And if I were trying to put together a team, I 
would like to know some ideas that you might have of how that 
team can be put together.
    Mr. Rey. Okay. I would be happy to visit with you on that.
    I think, you know, Salinas Valley would be the kind of area 
that we looked at, that we would look at as a candidate for the 
proposal that we send forward. Because our proposal, in 
essence, was one of providing financial assistance to bring all 
of the players together to look not exclusively at water 
quality issues but at what the other issues, the conservation 
issues, are that are affecting a particular watershed.
    In the Klamath, for instance, our experience was it started 
as a water dispute, but then as you looked to bring in all of 
the players necessary to try to effectuate a solution, what you 
found is you had to deal not just with water quality and 
endangered species but electricity rates because you were 
dealing with the power company, farming practices because those 
had some implications on water quality, land tenure because 
those affected the farming practices, and basically tribal 
claims on land because those were also wrapped in.
    So our experience was, you had to deal with all of those if 
you were even going to get to the core issue. And I think what 
you are describing in the Salinas Valley is roughly similar to 
that.
    Ms. DeLauro. Thank you, Mr. Farr.

                          FINANCIAL MANAGEMENT

    Mr. Secretary, let me just ask one or two other financial 
management questions.
    In the USDA's Consolidated Financial Statements report for 
2007, the Office of Inspector General noticed three significant 
deficiencies within the Department, the first being the need 
for improvements in overall financial management.
    As a part of the 2007 review, NRCS uncovered a significant 
number of obligations, legally binding agreements to spend 
Federal dollars that were no longer acceptable. In the end, 
NRCS had to cancel contracts for conservation projects valued 
at more than $560 million--more than a half a billion dollars. 
That is a lot of money.
    What happened? Why did NRCS determine that these contracts 
were no longer acceptable? And from what program were these 
contracts cancelled?
    Mr. Rey. Go ahead.
    The Chief has been fussing with this, so I will let him 
add----
    Ms. DeLauro. Let me ask, Chief, is $560 million the final 
amount of the contracts were cancelled? Or did NRCS cancel a 
large amount after a further review?
    Mr. Lancaster. We continue to obligate and deobligate 
money. So when you are looking at that deobligation number, 
that number will continue to change, and change daily. The 
reason those dollars are deobligated, there are many reasons 
for that.
    When you look at our various programs, mandatory programs 
as well as discretionary, we have our cost-share programs where 
we will enter into a contract with an individual producer to 
say--and by statute, those are up to 10 years. So we go into a 
contract with a producer who agrees on a schedule for when they 
will implement certain practices: We will put in fencing this 
year, we will put in a heavy-use area next year, we will put in 
an animal waste system the third year. So we work with 
producers very closely in each of those years to try and keep 
them on track.
    What happens in agriculture, as you well know, is weather 
happens, price change happens. And at some point in the context 
of that 5- or 10-year contract, a producer will come to the 
conclusion that they are no longer able to make that investment 
within the period of that contract.
    We base our contracts--we obligate that money when the 
contract is signed. So, in year one, we obligate the dollars 
associated with those practices that will be implemented in 
year five, and we base that on a certain cost-share rate of 
what that costs in today's dollars. Well, 5 years from now--you 
know, after Hurricane Katrina, concrete prices doubled, or 
plastic prices tripled. So the producer comes to the 
realization that they are no longer able to fulfill that 
contract based on the prices and based on the prices that they 
are getting.
    So we end up canceling the contract with the producer 
because they are no longer able to install those practices. 
That is a deobligation. We have obligated the money; we had to 
then deobligate it.
    With our easement programs, in many cases, we will order an 
appraisal as we get toward the point of actually--we will 
obligate the dollars into essentially a contract where we then 
move forward with appraisals. The producers may at some point, 
before they enroll their land in an opponent easement, may get 
cold feet and say, based on where prices are and based on what 
I want to do with this land, I have changed my mind. Those 
dollars are then deobligated.
    Any cost recovery we do related to those deobligations 
aren't balanced on the books against the deobligation. So if we 
recover our costs associated with the technical assistance or 
any fines or any cost recovery we charge them in terms of 
penalty, that is not offset against the deobligation. So you 
will see in WRP significant deobligations where producers 
backed out of what they initially intended to do in their 
contract.
    The Emergency Watershed Protection Program is a good 
example that shows with dollars--we will have a disaster event 
tomorrow. We will go out and do an assessment. At some point, 
we will obligate dollars into a contract to do that cleanup 
work. What we see in that program particularly is, you are 
always going to ensure you have the money to do that job. 
Because conditions have changed, because we may be able to get 
the work done more cheaply, we end up deobligating dollars out 
of EWP. That money then goes to the next project in line.
    So when Congress, when you consider supplemental 
appropriations bills and you fund EWP and you provide, say, $80 
million--our current backlog is about $90 million in EWP. If 
you were to provide $70 million, it is very likely that $70 
million will, dollars that are deobligated will be reobligated 
into other contracts, deobligated and then reobligated again, 
so that we move down our backlog list.
    We can provide for the record a list of all our programs.
    [The information follows:]

    

    
                        USE OF DEOBLIGATED FUNDS

    Ms. DeLauro. Yes, that is what I would like. I would like 
to do that.
    You mentioned the issue of backlogger, a list of unfunded 
applications for various--what we hear about at this 
subcommittee is a backlog particularly as it deals with the 
Environmental Quality Incentive Program. And, for instance, in 
fiscal year 2006, the agency reported they had on hand more 
than $600 million in unfunded EQIP applications. How many EQIP 
contracts could NRCS have enrolled with that $560 million that 
the agency cancelled last year? That is the----
    Mr. Lancaster. The money we get in those programs are our 
annual funds. So we will obligate it in--with EQIP for 2008, we 
will obligate those dollars in 2008. If those contracts fall 
out, if they are deobligated in 2010, those dollars are not 
available for obligation in 2010 contracts. We can only use 
them for contracts signed in 2008.
    We use that money for cost overruns. We use it if there is 
a disaster. If you had a contract in 2008 and you built 
fencing, and you had a fire within that wiped out all your 
fencing, we would go back and use that 2008 money that was 
deobligated to pay 100 percent of the cost to restore that 
fence. But we are not able to use that dollar for current-year 
projects.
    And when you talk about the discretionary dollars, in 
particular----
    Ms. DeLauro. You go back to the backlog of what you have 
left over from 2008 that didn't get funded?
    Mr. Lancaster. No. We are not able to do that.
    Ms. DeLauro. You are not able to do that either?
    Mr. Lancaster. Existing contracts where deobligations 
occurred.
    With our discretionary dollars, again, many of those 
dollars may fall out and be used over and over again. So the 
deobligation number is not an actual--$560 million was lost. 
Some of that money may have been lost year after year.
    Ms. DeLauro. How do we keep this from happening?
    Mr. Lancaster. We take it very seriously. We are very 
concerned with our deobligation numbers.
    One of the things we are doing with our--I gave the WRP 
example. We are moving the obligation period much closer to the 
close of that easement, which means we are going to invest more 
money before we actually obligate the money in terms of the 
technical assistance relative to the financial assistance for 
that farm bill program. We are going to spend more money before 
the dollars are obligated, which means we may be investing 
money in appraisals or other expenses.
    Ms. DeLauro. Whose idea was it, $3 billion in obligated 
dollars from the farm bill conservation program sitting on the 
books for various contracts?
    Mr. Lancaster. Those are open obligations. That is where we 
have entered in the contract, and the work has not yet been 
completed, so we have not yet paid that out.
    With EQIP--maybe this will help get to your concern--we are 
moving for shorter contracts rather than 10-year contracts or 
5-year contracts. We are moving toward much shorter contracts 
where we will be expending dollars much sooner to the date of 
obligation.
    Ms. DeLauro. What I would like to have from you, if you 
don't mind, what are your best thoughts on how we can prevent 
this from occurring, and help to educate us so when we are 
looking at this, there is an understanding of what we are 
dealing with, rather than, you know, seeing numbers that----
    Mr. Lancaster. We would be happy to work with you and your 
staff.
    Mr. Rey. We can describe how the process works now and then 
show you, you know, walk through how it----
    Ms. DeLauro. Right, the how does it work. But I would 
really like to know how you anticipate trying to fix it.
    Mr. Rey. Right.
    Ms. DeLauro. How do we fix this? So.
    Mr. Rey. Yeah. Obviously, the simplest fix would make these 
all no-year funds, but you may not want to do that.
    Ms. DeLauro. Probably not.
    Mr. Rey. But there are other ways of us reporting to you so 
you have a running tally of what the deobligation is.
    Ms. DeLauro. Ms. Kaptur.

                           WATERSHED PROGRAMS

    Ms. Kaptur. Thank you, Madam Chair.
    I wanted to specifically thank Mr. Lancaster for making the 
effort to come to Ohio and to see us struggle forward in our 
efforts to handle one of the watersheds. This is an important 
watershed of the Great Lake system, and I truly, truly 
appreciated that.
    And as I was listening to Congressman Farr describe his 
situation, I couldn't help but identify with the struggle that 
we have had to try to get all the relevant partners around a 
table to talk about a chunk of geography that we refer to as 
the Western Lake Erie Basin Partnership now, for lack of a 
better term. It is one of the watersheds in the Great Lakes 
region that has a precious global asset in the form of fresh 
water.
    I think one of the books that most impressed me in my life 
has been ``Cadillac Desert,'' reading that book and then 
watching my colleagues Sanford Bishop and Bobby Etheridge from 
North Carolina as they struggled for water, trucking in water 
last year during drought seasons. And I am thinking here, ``I 
sit in the water bowl, and we are wasting it. We are not 
managing the asset we have.''
    And subsequent, I think--I can't recall if, during your 
visit, Mr. Lancaster, we had the second flood down in Findlay, 
Ohio, or not. But, in any case, we really need a mechanism to 
better assess what is happening within this watershed and to 
plan for the proper use of its natural assets, including fresh 
water.
    Thank God you existed as an agency, as an instrumentality, 
NRCS. And the work that Terry Cosby and Steve Davis have done, 
they both need big gold crowns for what they have been doing 
over the last several years.
    And again, as with Mr. Farr, we have been searching for a 
way to get our arms around this. We think we are creating a 
model for a very large watershed. Because I represent the 
American equivalent of Amsterdam; it is flat. But it does have 
some slope, and the largest river that flows into the Great 
Lakes, the Maumee River, comes through my district, and also 
Mr. Latta's district and Mr. Souder's district. And we don't 
have a very good means.
    Mr. Rey, you talk about communication. Now that we 
understand more about what ails us, in terms of the 
mismanagement of this asset, it flows in the wrong places at 
the wrong times, we know we don't have installations like dry 
dams that can help us control where this water goes. But what a 
great problem to have, fresh water, when other places are 
starved for it.
    Our problem has been getting the parties around the table, 
the same problem Mr. Farr talked about. We are trying to keep 
the Army Corps of Engineers involved, trying to keep EPA 
involved, USGS involved. And now we are at the point, after 
several years of studying--your agency has been stellar in 
providing us with critical information we didn't even have--for 
instance, maps that are visually attractive that we can put on 
our major television stations, showing people, ``This really is 
soybean bowl, folks. Yeah, we have corn and we have other 
things, but this is what is really going on. We have 
phosphorous flowing into Lake Erie. And this is what you can do 
on your farm.'' And they can literally go right down to the 
parcel mill because of the technology that we have, we can show 
where we have crop enrollment, we can show where we have got 
wetland reserves enrollment, we can show where we don't have 
stream beds that have plant life. We have an incredible 
teaching vehicle now, but it is not without a lot of effort on 
the behalf of many, many people.
    And we still don't have the engineering solutions that we 
need to deal with the volume of water that we have, whether we 
put it in reservoirs, whether we store it underground. Whatever 
we are going to do with this, we still don't have that piece of 
it. And I notice in your budget you are canceling all your 
watershed programs.
    I was sitting here looking at the watershed and flood 
prevention account, the watershed surveys and planning account. 
I don't know what all that means. All I know is how hard it has 
been for us to get to a point where we can work more 
intelligently to handle this water asset and its involvement. 
If it weren't for NRCS, we wouldn't be as far as we are.
    And I guess my question to you is, why are you cutting 
these accounts? And have you replaced them? Now we have to move 
to implementation. Will USDA play a role in that? Do we have to 
depend on the Army Corps to do that?
    How do we get our arms around handling the water and 
natural resource challenges we have in this region, to handle 
these natural assets better, by your cutting the authorities 
that we thought we would use for implementation?
    Mr. Lancaster. I think--and again, we look at these 
programs globally. In the Maumee, the flood measures and the 
scale of any projects would exceed what we would do at NRCS. 
That would be a Corps project when we are looking at watershed 
structural practices.
    But what we have chosen to do is focus, really, on our land 
treatment efforts, our cost-share programs, our technical 
assistance. We are working with land owners to address those 
lands to look at all of our programs in concert where we are 
preserving ag land so that those farm lands don't become 
impervious surfaces that contribute more toward those 
hydrological conditions you are facing, when we have that 
ability for that land to serve as a sponge to absorb some of 
that water during rain events.
    So our focus, again, with those competing priorities for 
dollars, has been to focus our dollars in those programs that 
directly assist land owners on an individual basis rather than 
a watershed structural practice, where--as folks have 
indicated, we have put about $6 million into the Watershed 
Rehabilitation Program because we recognize that there are 
aging facilities out there that we need to ensure that they 
remain safe for those communities below it. But when we are 
challenged with addressing that rehabilitation need as well as 
those needs of private land owners, that, in some instances, 
should we be out there building new structures with our limited 
capability within those limited dollars?
    So, in your specific example, we are working to cross State 
boundaries as well. We have talked about--and we have worked 
with our State conservation partners in Indiana so that the 
focus is there. We treat this as an entire watershed, and 
watershed doesn't end at a State boundary.
    But those are specific NRCS-to-individual-land-owner 
contracts, where we are working to help them address their 
erosion issues, their flood control issues, and then we see the 
downstream benefits.

                        CONSERVATION TECHNOLOGY

    Ms. Kaptur. I just wanted to, Madam Chair, if I could, just 
take 1 extra minute.
    The visuals that have been produced are scientific right 
down to the acre, all right. Imagine this, imagine a slide that 
goes up and it will be broadcast on all of our television 
stations, which is within the capacity of the system to do this 
now. They can actually show where an acre of land has a given 
soil content, and it doesn't need as much nitrogen or as much 
fertilizer, or it needs more lyme rather than phosphorous. And 
they can show where a farmer has missupplied. And we have this 
problem of algal blooms in Lake Erie. We have all these 
pollution issues related to the bigger farming within the 
watershed. The scientific basis of this is unbelievable.
    The problem is what Mr. Rey said, who knows it? You know, 
how do you get this out there? How do you teach at the level 
that Mr. Farr is talking about? I am just talking about this so 
we can think more creatively about how to use the information 
systems we have, not just in our watershed but in other places 
across the country. We are trying to better manage these 
habitats. And we are creeping toward an answer, but it hasn't 
been easy. And without NRCS and without the resource people at 
USDA, we wouldn't be anywhere.
    But it shouldn't be this hard. I mean, it shouldn't be this 
hard to do this. And we have had our foot on the accelerator 
for almost a decade now, trying to do this. Something is wrong 
with the legislative authority that makes it so difficult for 
communities to plan intelligently how to manage their natural 
resource endowment.
    So I just--I thank you.
    And could you give me, in closing, the title of what 
section of the farm bill you are saying will do this better 
than we have done it in the past?

               REGIONAL WATERSHED ENHANCEMENT INITIATIVE

    Mr. Rey. In the Administration's proposal, we have proposed 
to include within the Environmental Quality Incentive Program a 
Regional WatershedEnhancement Initiative. So it would be in 
title 2, in the language that reauthorizes the Environmental 
Quality Incentives Program.
    Ms. Kaptur. And do you know at what level, Mr. Secretary, 
that is funded or requested?
    Mr. Rey. We requested $175 million a year for that, $1.7 
billion over the life of the cycle. I don't know what is in the 
House or the Senate proposal, in that regard. Both proposals 
treat EQIP pretty fairly, and so we would probably launch this 
initiative unless there is language prohibiting us from doing 
it with a portion of whatever is put into EQIP in the final 
farm bill solution.
    Ms. Kaptur. I thank you.
    Thank you, Madam Chair and members.

                           COST EFFECTIVENESS

    Ms. DeLauro. As a follow-up, in terms of water quality, let 
me ask you, which of the NRCS water conservation programs--and 
this is with regard to water quality--is most cost-effective? 
Which gives us the most bang for the buck in addressing water 
quality? And on the other side of the coin, which program is 
the least cost-effective?
    Mr. Rey. I would say the Environmental Quality Incentives 
Program is the most cost-effective. It is the program we have 
used across a larger number of ownerships to deal directly with 
water-quality issues and sometimes in cooperation with the 
Environmental Protection Agency.
    The ones that I think are least cost-effective are the ones 
that we have proposed for elimination--the structural watershed 
programs that basically go to building more small watershed 
structures, more of small dams. I don't think that, over the 
history, that those have shown the same level of water-quality 
improvement for the investment made.
    Ms. DeLauro. Overall, in terms of conservation programs, 
with regard to the programs, which of the programs is--just 
overall in terms of conservation, which program is the most 
cost-effective? This one was with regard to water quality, I am 
asking about.
    Mr. Rey. I would say probably the Conservation Technical 
Assistance, because even though we are not incentivizing any 
particular category of land owner with financial incentives----
    Ms. DeLauro. Right.
    Mr. Rey [continuing]. We are reaching probably the broadest 
number of land owners and providing them technical assistance 
that is materially affecting the quality of work that they do 
on their holdings.
    Ms. DeLauro. And that gets back to my colleague Mr. 
Kingston's questions--he isn't here; I am sure he would jump 
in--where he talked about the CTA. You know these issues, and 
you are dealing with the requests in the field, et cetera. But 
if CTA is the most effective, CTA is being cut, as I understand 
it.
    Mr. Rey. Well, here, again, I would call it a shift. And, 
you know, cost efficiency is one important barometer of how you 
look at programs.
    But, you know, there are people who would make an argument 
that the most important programs, period, are the easement 
programs, because they are the ones that are having the most 
material impact on what the future of the land involved looks 
like. Because once it has been subdivided and paved, you are 
not going to get it back into farm ownership. We are going to 
have to get a lot higher than the price per bushel for corn 
that we have right now before people are going to take 
jackhammers to their subdivisions and start planting corn.
    So even though you can't make a case that those easements 
are as cost-efficient as CTA, you can make a pretty good case 
that they are, in some areas, more important.

                         CSP COST EFFECTIVENESS

    Ms. DeLauro. I am going to follow that with a couple of the 
CSP questions and follow up on what Mr. Latham was saying.
    As you know, from 2004 to 2007, we provided almost $800 
million in funding for CSP. Annual costs don't account for 
long-term Federal obligations to continue 5- to 10-year 
contracts. Just based on our conversations, right now, in your 
estimation, Mr. Secretary, is the CSP program a cost-effective 
program?
    Mr. Rey. I think there are things that could be done to 
make it more cost-effective than the way it was implemented in 
the first round. We have proposed some of those changes in our 
farm bill proposal.
    I think the program has proven very valuable in terms of 
providing some incentives and some examples of high-quality 
stewardship. And I think we can make it better, and that was 
the purpose of our proposals.
    Ms. DeLauro. Let me ask you this, though. It probably does 
put you on the spot, but I think that this is important. 
Because if you could invest only another dollar in CSP or 
another farm conservation program like what we have been 
talking about of your choice, where would you recommend that we 
spend that additional dollar?
    Mr. Rey. I am probably going to have to spend the afternoon 
with Senator Harkin now. But I think if you asked me where the 
last marginal dollar that I have would go, my personal 
preference--and it is just a personal preference, not based on 
any empirical data--would be to put it into Farm and Ranch Land 
Protection or Grassland Reserve Program. And that is because I 
think that the consequences of the more intensive development 
of those lands are irreversible.
    You know, there may be some day in the future when you will 
give me $10 million more or $10 billion more, when the Federal 
budget is in a great surplus. And, at that point, I can reverse 
some of the effects of bad stewardship. But I don't think I am 
ever going to convince people to tear down their homes and 
plant crops or put land back into farming.

                       CSP ENVIRONMENTAL BENEFITS

    Ms. DeLauro. I am just going to leave this one for the 
record, because my time has run out and I have gone over.
    Beyond the anecdotal evidence which is out there, has NRCS 
made progress in estimating the program's environmental 
benefits? And if that is the case, I would like you to describe 
the findings in the area on the CSP and the environmental 
policies.
    Mr. Rey. We have done a lot in the process of trying to 
quantify what these programs are producing. And I would be 
happy to share for the record the complete part scores for all 
the programs.
    [The information follows:]

    

    
    Ms. DeLauro. That is what I would like. I am not asking to 
you do that here in a second, but to lay this out, because I 
think that this is one of the big questions as part of this 
program.
    Mr. Rey. Okay.
    Ms. DeLauro. Mr. Farr, I think you are up.

                       SALINAS VALLEY AGRICULTURE

    Mr. Farr. I just want to follow up on that earlier 
discussion. Have you ever put together a team of--not applying 
for grants, but a team made up of people like you were talking 
about--Corps of Engineers, ARS, Fish and Wildlife, NRCS, FSA, 
the ag extension programs, maybe even in this case USGS because 
we are the largest study of earthquakes in the area, Forest 
Service, Park Service--smart teams, I would call it, and take a 
look at the whole comprehensive plan of how to sustain 
agriculture in the Salinas Valley?
    Mr. Rey. We have done that in the Klamath Basin.
    Mr. Farr. Yeah, I heard you say that. Klamath is 
complicated. But it is almost easier because you don't have a 
lot of cities in the Klamath area.
    Mr. Rey. It is largely a rural landscape. We have done it 
in the Sonoma Valley, as well with the Sonoma grape growers, 
kind of spurred the interest in that.
    Mr. Farr. What was the Federal link there?
    Mr. Rey. We provided a lot of technical assistance to the 
work that they wanted to do, to try to develop a more 
comprehensive----
    Mr. Farr. Was it an invite to come in? How does it get 
launched?
    Mr. Rey. I think it was largely through the wine growers' 
interests. And NRCS responded to it, joining Fish and Wildlife 
Service and NOAA Fisheries.
    Mr. Farr. That is really the only agriculture they have in 
that area, wine growers. And they are the Cadillac of growers.
    Mr. Rey. There is some Forest Service involvement because 
we have land on the upper end of the valley.

              COLLABORATION TO PRESERVE AGRICULTURAL LAND

    Mr. Farr. Is it hard to get them all going to a spot?
    I mean, we have some demonstrations that are phenomenal. I 
think that one of the greatest farmers in the United States 
lives in my district. He is a cattleman, Jack Varian. I took my 
staff to see him, and they were just awed by him just talking 
about the ground. And most of them had no idea about 
agriculture. And he has put all his ranch, 20,000 acres, into 
ag reserve. He said, you know, my five kids aren't going to get 
to inherit one property. And he is bringing all the native 
grasses back. He is bringing back all the wildlife. He is doing 
it all without any money. He is just doing it on his own.
    And that is the kind of thing that his approach and that 
approach to sustainability--because he is looking at, how do I 
sustain the cattle business and five kids who are going to live 
here, who have grandchildren, on this piece of property 
forever? And he does a lot of recreation with, you know, 
limited hunting and so on. But it is fascinating because he has 
really thought about it.
    And what happens, though, is that if the ranchers around 
him fail to stay in that kind of--it is going to ruin the 
cattle business, and it is going to end up in urban sprawl. So 
what you find is that the anathema of open agriculture is the 
urban invasions of kids getting all-terrain bikes and dogs 
chasing wildlife and cattle, the fencing and lots of roads. 
And, you know, all of a sudden, people who come from the rural 
area bring all kinds of urban stuff with them, and they want to 
live an urban lifestyle in the rural area, and it is just 
totally contrasting with what is essential for ag practices.
    So how do you stop all that? How do you make sure that the 
agriculture is the first line of defense to urban sprawl? And I 
don't think we have really engaged in that very effectively.
    And I think the long-term ability of being able to grow in 
America and in California, which is still a lead ag state, this 
is the challenge. How do we bring agriculture into this 
century? It has essentially been respected, but now that the 
pressures on it are so great that people--multimillion-dollar 
operation in California of an almond grower. He told me he made 
$24,000 last year. And his kids are going to college. And he 
said, you know, if things don't change, I can't run this 
business, and lots of people are going to be unemployed, and I 
am going to have to sell the whole thing just to pay for my 
children's education.
    That is the kind of thing that I am struggling with is, how 
do we make sure that we use all of the talent that we have 
collected--and we certainly have a brain trust--really apply it 
to these problems that you can't just solve them inside a 
stovepipe?
    Mr. Rey. I think what you are seeing develop, particularly 
in California but increasingly in other parts of the country, 
is collaborative work among a large number of parties to 
address those kinds of problems. The growth of the land trust 
movement in the last 10 years, for instance, has been----

                RESIDENTIAL ENCROACHMENT IN RURAL AREAS

    Mr. Farr. We are working with all of that. What I am saying 
is there needs to be something more than just this scrapping 
around at the local level for the next crisis.
    And how do we get that team together? We need this vision 
of the departments so the services that you represent and 
others can come together--my God, if we collaborate in this 
thing, we can really make a difference here. We can sustain 
agriculture in the United States of America in the most 
expensive--I mean, 36 million people living in California, and 
they all want to live in the rural areas. And we have to be 
able to keep agriculture economically viable, or they will all 
live in the rural areas.
    Mr. Rey. But they are moving there with increasing 
frequency, spending a lot of money, fighting fires to protect 
their homes.
    Mr. Farr. Shouldn't have built them there in the first 
place.
    Mr. Rey. That is a hard case to make when the fire is 
burning.
    Mr. Farr. I know. Santa Cruz County I represented. We had 
earthquakes, fires. When the county said, ``You built them in 
the wrong place; you can't go back and rebuild them, so you are 
out,'' it was very controversial. But we ought not allow--with 
FEMA and all those organizations, we ought not allow people to 
go back who shouldn't have built in the first place, and we 
shouldn't bail them out, and they shouldn't be able to build, 
get insurance or their bank loans. We have pushed this stuff to 
allow a lot of bad things to happen, and then they ask the 
taxpayers and Government to bail them out for a stupid 
decision.

                       NRCS COOPERATION WITH FSA

    Ms. DeLauro. Mr. Secretary, let me just ask a couple of 
more questions. I know Ms. Kaptur has one, and I will try to 
conclude with mine, and let Ms. Kaptur be the last question.
    And we appreciate your patience here. We are going to vote 
in a little bit as well.
    I want to talk about NRCS and FSA. Inspector General 
reports, audit report, August 2007, reviewed how NRCS and FSA 
were working together in California. The programs reviewed what 
was preserved, grasslands, emergency watershed protection 
program, for one State. OIG found FSA not communicating, FSA 
making millions of dollars in improper payments. We have land 
owners participating in both the farm subsidy in the 
conservation easement programs. Two agencies are supposed to 
share the information so that the public does not pay the land 
owner twice. So it really needs to have the two agencies 
coordinating to make the appropriate payments.
    What is more frustrating, however, was that OIG had made 
this same exact finding in an earlier audit of the same program 
in the same State. The earlier audit exemplified the need for 
the two agencies to get their acts together, improve their 
interagency communication. They had been talking about, OIG 
has, this issue as a major management challenge from at least 
2004 to 2007. The most recent audit found NRCS still not 
communicating conservation easement information to FSA. As a 
result, FSA made a host of improper farm subsidy payments to 
easement-encumbered land.
    Let me just say this, because I think it is important. OIG 
reviewed 28 reported easements for three programs in only eight 
counties in California. At such a small scale, OIG identified 
about $1.4 million in improper payments. If you look at 50 
States, 3,000 counties, you can begin to imagine the large 
dollar amount that we are looking at, significant costs for the 
failure of two agencies to communicate. I don't think you think 
it is acceptable. This subcommittee does not think it is 
acceptable.
    How would you characterize the degree of coordination, 
cooperation and communication between NRCS and FSA? What steps 
are being taken to improve the communication between the two 
agencies? And more concretely, what actions have the two 
agencies taken to address the findings, the repeat findings, in 
the OIG audit?
    Mr. Lancaster. Madam Chairwoman, we agree it is completely 
unacceptable. We have provided additional training to our 
folks.
    What is unfortunately more embarrassing is I don't think it 
is a result of a lack of coordination between FSA and NRCS. It 
was a lack of communication between NRCS employees. What had 
occurred when we look at the report, the local NRCS office 
believed, because the easement programs are coordinated through 
the State office, the local office believed that the State 
office was communicating the information to the Farm Service 
Agency so they would eliminate those base acres. The State-
level NRCS employees believed that the local office was 
communicating to FSA the terms of the easement and reduction of 
base acres.
    I believe that the coordination between the two agencies is 
very strong. I think that the relationship is very strong. The 
training has been provided, but this was clearly an incident 
where our staff internally was not communicating with one 
another on who was supposed to notify the Farm Service Agency. 
So it was more a coordination----
    Ms. DeLauro. If you can lay out what has been done to 
address this issue and to specifically address what the OIG 
recommendations are and if they are being complied with.
    And as you mention that--let me just go back for one second 
before I forget this, with regard to the question on CSP and 
the environmental issues. I know it was the part assessment. 
What I want to know is, what has happened since that 
assessment? So that goes back to the prior question that I 
asked about the CSP program.
    But, really, this is now 2004 to 2007. You have to lay out 
for us, you know, the stopping of this lack of communication, 
lack of coordination, internal difficulties with State 
agencies, how is this going to be ended so that we are not 
looking at these overlaps? And we have just done this one area, 
you know, this one area.
    Mr. Lancaster. I would be happy to provide that for the 
record.
    [The information follows:]

    

    
                              COST OF CEAP

    Ms. DeLauro. Let me ask a question about the CEAP program, 
which you talked about in your testimony, getting a handle on, 
again, what environmental benefits USDA is generating in the 
farm bill conservation program.
    Since 2004, what has been the total cost of CEAP? What 
level of funding are you assuming in 2009? My understanding is 
that the goal was to have the monitoring and evaluation data 
completed before the 2007 farm bill to better inform the public 
and Congress as it deliberated over the new farm bill. Again, 
it is my understanding that this program, CEAP, was to help 
justify the massive increases in conservation spending on the 
2002 farm bill.
    We are at the tail end of this farm bill process; at least 
we hope we are. And to our knowledge, NRCS has yet to release 
any CEAP performance information. After more than 4 years of 
funding, what has been the delay? And when will Congress be 
able to review the monitoring and the evaluation results?
    And again, let me just say this to you. We are coming to 
the next round of the farm bill. You are optimistic about it. 
Why should we continue to fund CEAP if it is not providing the 
public information it was set out to provide?
    Mr. Lancaster. Madam Chairwoman, I share your frustration. 
This is a program that USDA initiated in 2004 based on its 
interest in quantifying these benefits. And it did not meet the 
target it was necessary to provide good input for the 2007 farm 
bill.
    As I indicated in my testimony, we will provide initial 
cropland data in 2008. I will provide for the record the 
breakdown.
    This is something that I think is important to note. This 
is not an NRCS initiative. This is a USDA initiative where we 
have significant contributions from the Agricultural Research 
Service, the CSREES, USGS, EPA, Fish and Wildlife Service. This 
is one that we have partnered with across Government, with the 
private sector, to get this data so that we can truly assess 
this----
    [The information follows:]

    

    
    Ms. DeLauro. So none of it is available for this current 
farm bill?
    Mr. Lancaster. What we have been able to produce to this 
point is synthesis data on what research has been collected, so 
that we have provided that in a synthesis. But we have not been 
able to mature our models to the point that we are able to 
provide that specific detail on a watershed basis. We do expect 
in 2008, later, in summer, to have that data for the upper 
Mississippi River basin. We certainly will share that with the 
Committee.
    It has been one of my priorities since I have joined the 
agency. I have required monthly meetings on progress because it 
is something that I think is critical for all of us, if we are 
going to continue to make investments in all of these programs, 
to know what is the result of that on the ground and how can we 
quantify benefits so that we can move to that next phase of 
conservation Under Secretary Rey has talked about, in terms of 
market-based rewards for producers, so we can quantify those 
practices.

                             VALUE OF CEAP

    Ms. DeLauro. So it is your view that we should continue the 
program, even though it doesn't provide the information, but we 
are going to get the information?
    Mr. Lancaster. It is providing some information, at this 
point. What it is not--we are not able to do--we are currently 
moving forward with the peer review of that 2008 data. Our 
intent is that this data will be peer-reviewed and science-
based so that there will be no questions about what the data 
says.
    Ms. DeLauro. And its value.
    Mr. Lancaster. And its value. That is correct. This is 
something that--as you know, the peer-review process takes, in 
some cases, years before that information is published. We 
expect to have that upper Mississippi River basin watershed 
study completed now this year through that peer-review process.
    So I believe it has helped us. We are looking at better 
understanding from each case study on how those programs work. 
I will give you an example. And I would be happy to share this 
with the Committee. In Kansas, one of the CEAP projects is 
around Cheney Lake, which is the drinking water supply for the 
city of Wichita. What they were able to determine from CEAP is 
that 80 percent of the loading occurring in that lake was from 
an ephemeral gully, where, in many cases, we were targeting 
livestock practices and other areas and exclusions. What we are 
able to determine through CEAP is that the primary contributor 
to the water resource impairment was ephemeral gullies in this 
cropland. So we have been able to refine our practices, to 
refine what we are focused on within that watershed to target 
that resource concern.
    So we have some data, but we don't have that published, 
peer-reviewed data at this point.
    Ms. DeLauro. Let me just say this to you, because I think 
you make a case on the value of the program, and I am not going 
to doubt you on the value of the program. But what I am going 
to do and what I believe the subcommittee is going to do is to 
watch to see whether or not we are just funding something to 
which there really is a very limited return in terms of what it 
is supposed to do. And I think you understand that to be a fair 
response to this.
    And I have no reason to doubt that it is very valuable 
information, but I want to make sure it works. And if there are 
other parts or the other agencies that are not cooperative in 
this effort, that would be good for the subcommittee to know 
that as well. Let me just ask you, if you cannot get us timely 
data, let us know that, so that we can address that issue as 
well.
    Truly, Ms. Kaptur, the final, final question that I have 
here.

                      FEDERAL ROLE IN RC&D SUPPORT

    I am not going to go through all RC&D, because every year 
it comes up. Every year there are deeper cuts in what we are 
doing here. Two questions.
    You obviously view this as poor performance, lack of 
performance. There is some sort of a performance criteria that 
you are basing your activities on. Has the agency asked the 
councils to develop program improvement proposals? If the RC&D 
found previous proposals were problematic, what solutions have 
they offered to you to address your concerns with the program? 
And if the support for these programs is eliminated, what do 
you foresee happening with the existing RC&D areas? And have 
you surveyed all 375 councils to understand how your proposal 
would impact them?
    Mr. Rey. Going with your last questions to your first ones, 
we have talked with the RC&D councils. They are, as you would 
suspect and have heard, duly concerned about the loss of the 
Federal support. At the same time, it is our expectation, given 
the vibrancy of the way that they have done their job, that 
most, if not all, of them would continue even without the 
Federal support.
    The Federal support was envisioned originally as a catalyst 
to get these councils started and to allow them to have the 
financial support that they could enjoy as they went about 
raising the money associated with doing the things they do in 
the conservation and development area. Now, some of these 
councils have been around for over 20 years, so this is no 
longer a catalyst. You know, it is viewed maybe more accurately 
as an entitlement.
    The issue with this proposal is not that what the councils 
are doing is inadequate or, you know, in any way unimportant. 
It is being done well, and the work that is being done is 
important. The question that is presented in our proposal is, 
what is the appropriate Federal role? And is it to sustain 
these councils with a set amount of entitlement money 
indefinitely in the future? Or is this a case where the Federal 
Government has empowered innovation that can continue on its 
own? And should we take the money and look for other things to 
do which might produce results that wouldn't occur but for the 
Federal investment?
    Ms. DeLauro. What will you do if some of them do go away? 
What will you do with those areas?
    Mr. Rey. My guess is they won't go away entirely. They will 
combine so there will be mergers of the weaker ones merging 
into the stronger ones.
    Ms. DeLauro. Ms. Kaptur.

                       NRCS OBLIGATIONS BY STATE

    Ms. Kaptur. Thank you, Madam Chair.
    I wanted to just have you guess as to the NRCS budget and 
what percent would you guess would be spent west of the 
Mississippi and south of the Mason Dixon Line in your total 
budget? Is it a majority?
    Mr. Rey. I would say those two together probably would 
constitute a majority. But we actually have figures on what we 
spend in every State, so we can get you those. I am just having 
a hard time remembering off the top of my head.
    [The information follows:]

    

    
                          WATERSHED MANAGEMENT

    Ms. Kaptur. Okay. I saw an interesting map recently of the 
Great Lakes, and in two tiny little spots they represented the 
size of the Everglades and Chesapeake Bay. And it was very 
interesting to just sit back and contemplate this enormous 
fresh water asset we have up in the Great Lakes region.
    And listening to some of my colleagues and looking at some 
of your budgets dealing with irrigation, for example, and the 
amounts of money that we spend west of the Mississippi on 
water-related issues, I am very interested, as you can tell 
from prior questioning, in better managing the fresh water 
asset that we have. The most important fresh water asset in the 
world in our region, and I don't think we are doing the best 
job of it. So I just want to make sure you are hearing me on 
this.
    And we, in this century, have to do a lot better than in 
the past, with the size of the population. When I was born, 
there were 146 million people in the United States. There are 
now 300 million, and by 2050 we will probably have half a 
billion, 500 million, people in this country. So these 
pressures are going to grow, and the fresh water and its better 
management is a national imperative, in my opinion.
    So in terms of the Great Lakes, I would just point your 
attention there, making sure that we are using every tool that 
we have to better manage that.
    And if I use my watershed as an example, at least one of 
the two watersheds I represent, as an example of how well or 
poorly we are doing, America needs to do a lot better. Colorado 
has a much better sense of its water future than does our 
region, I think because we have been blessed with bounty, and 
we really haven't thought about what portends down the road.
    And so I just direct your attention to the Great Lakes 
region. Let's take a look at what is being expended there, 
maybe use the pilot there as an example of what needs to be 
done in other places.
    But America has to be much smarter about its management. I 
heard, Chief Lancaster, about what you said, that you work with 
individuals. I heard that very clearly. And yes, that is part 
of your mission. But I hope part of your mission is also the 
bigger picture, so that those individuals are part of a bigger 
plan. Because sometimes those individuals either aren't part of 
your conservation efforts or they don't know what is right to 
do. And we need to somehow have a broader vision that is shared 
across some of these regions, whether it is California, whether 
it is Ohio, whether it is Connecticut, so people act in their 
own self-interest.
    In working on this watershed study in our region, it came 
out that one of the ways that urban people could help, since 
they live in the bowl of this watershed, is to install rain 
gardens. We need 10,000 rain gardens now. That is not going to 
solve all the problems, but urban people can help. How do we 
reach them? We have to reach them through the media. So having 
a bigger vision, though, to which they are called I think is 
also part of NRCS's job. And I know you know that. But planting 
along strips--and not every person is a farmer. If people see 
what areas need to be planted, and they are called to do that, 
maybe they will help.
    So I think the broader vision is as important as what 
individual land holders might do. And we have to lead them in 
the right direction by that broader vision. So I hope you 
consider that as part of your mission as well.
    Mr. Lancaster. Absolutely. And I hope I didn't leave the 
Subcommittee with the impression that we aren't focused on 
watershed approaches where we are looking at the entire 
landscape. My reference was specifically to the financial 
system's dollars, where those are targeted in individual 
contracts. So it is either with the individual private land 
owner if we are doing a cost-share program. If we are doing an 
easement or enrolling individual parcels, we are not able to do 
really group contracts under those programs.
    And to address your first question about the scope, just 
looking at the allocations, I think, clearly, you know, the 
West and the Southeast get the bulk of the EQIP dollars. With 
our programs, we use an allocation formula that is resource-
based. There is an artificial factor associated with that, 
though.
    We are required through the farm bill to ensure that any 
State that would not get a certain level of funding, $12 
million in this instance, from our farm bill programs based on 
our resource allocation formula which looks at a number of 
items, including crop land, pasture land, range land, listed 
streams, coastline, especially crop producers, air quality--
those all go to our resource-based factor. But we also are 
required, if a State does not receive a certain amount of 
funding based on that, to pull money from States to those 
States that don't receive $12 million. So we have pulled on 
average about $50 million a year from our normal allocation to 
States, to redirect those States so that they meet that $12 
million floor.
    Ms. Kaptur. Thank you.
    You know, Madam Chair, I don't know that we can do this 
this year at some point, but I personally, and I think other 
members like Congressman Berry, are very interested in the 
water issue nationally. And as we look at the next 100 years, 
having good minds come in and talk to us about how we look at 
our country and what will be happening with the draining of the 
Ogallala, for example, what are Congressman Berry's problems in 
the Arkansas region, what are Congressman Etheridge's problems 
in the Carolinas, what are our needs in the Midwest where we 
sit right on the Great Lakes?
    I don't know who the best water experts are there at NRCS, 
but I think there are really good minds that think about this. 
And if I could suggest perhaps just for a briefing on the 
subject of water, inviting some of the authorizers who might be 
interested in these topics, and I think we would find quite an 
interest. It would help us secure more clarity in our own minds 
as we handle these various programs across different accounts.

                   AGRICULTURAL OPERATOR DEMOGRAPHICS

    Finally, in Mr. Lancaster's testimony, you have outlined a 
number of demographics of the customer base of agriculture, 
2002 census, indicating principle operator increases across a 
range of ethnic groups: 8.6 percent for African Americans, 20 
percent for Native Americans and Alaskans, 13 percent for 
women, and an extraordinary 51.2 percent for Hispanic and 
Latino operators.
    This interests me a great deal. I don't know if those 
percents looked so big because the base was so small that they 
started with. I would be very interested in what the breakout 
is, of where that might be, and how we could do a better job of 
linking some of the programs at USDA to assist those 
individuals and some of the populations that are in those same 
categories that are the most undernourished ones in this 
country.
    I am interested in what those numbers tell us.
    Mr. Lancaster. I am happy to work with my colleagues at the 
National Ag Statistics Service to come in and provide 
information to you.
    Ms. Kaptur. Thank you.
    Thank you, again.
    Ms. DeLauro. Thank you, Ms. Kaptur.
    Let me thank you, Secretary Rey, Chief Lancaster, Mr. 
Dondero, Mr. Steele, thank you very, very much for being here. 
We did go over a half-hour on our time. We appreciate your 
patience, and we appreciate the opportunity for the dialogue. 
It has been very, very informative and helpful. Thank you very, 
very much.
    Mr. Rey. Thank you.
    Ms. DeLauro. The hearing is adjourned.

    

    
                                          Wednesday, April 9, 2008.

                   MARKETING AND REGULATORY PROGRAMS

                               WITNESSES

BRUCE I. KNIGHT, UNDER SECRETARY, MARKETING AND REGULATORY PROGRAMS
LLOYD C. DAY, ADMINISTRATOR, AGRICULTURAL MARKETING SERVICE
CINDY J. SMITH, ADMINISTRATOR, ANIMAL AND PLANT HEALTH INSPECTION 
    SERVICE
JAMES E. LINK, ADMINISTRATOR, GRAIN INSPECTION, PACKERS AND STOCKYARDS 
    ADMINISTRATION
W. SCOTT STEELE, BUDGET OFFICER, DEPARTMENT OF AGRICULTURE

                       Introduction of Witnesses

    Ms. DeLauro. The hearing will come to order. Thank you, 
Under Secretary Knight, for being here, and Mr. Day, Ms. Smith, 
and Mr. Link, and, of course, what would the subcommittee 
hearing be without Mr. Steele. So, we thank you all for joining 
us today.

                           Opening Statement

    The marketing and regulatory programs mission area carries 
a big responsibility, the safety, health of agriculture, as 
well as for its economic health and the order of our markets. 
This became evident several months ago during the historic 143 
million pound beef recall involving the Westland Hallmark plant 
in southern California. As you know, over 50 million pounds of 
that recall beef was distributed to the National School Lunch 
Program. However, until this recall, a lot of people probably 
did not realize that the Agricultural Marketing Service is 
responsible for procuring commodities for all federal food 
assisted programs, including the school lunch program.
    In addition to procuring the commodities, the Agricultural 
Marketing Service is responsible for ensuring that the products 
it buys meet federal purchasing specification and that food 
suppliers comply with eligibility and food quality requirement. 
The agency has the authority to develop and revise food safety 
standards as needed and, in fact, it has worked with the Food 
and Nutrition Service and Food Safety and Inspection Service 
officials, as well as potential vendors, to develop 
specifications for product formulation, manufacturing, 
packaging, sampling, and testing, as well as quality assurance 
programs. In general, AMS has higher food safety testing 
standards than the Food Safety and Inspection Service, because 
the agency purchases food for programs that feed infants, 
children, the elderly, and other immune compromised persons.
    For example, E. coli and salmonella, the agency has higher 
safety standards, but for all beef products that test positive 
for these organisms, AMS standards prohibit the delivery of the 
product, whereas under certain conditions, FSIS standards would 
allow beef products that test positive for these organisms to 
be used for commercial sale. Of course, we could have the best 
standards on paper in the world, but they would become 
ineffective if an agency is not held accountable for 
implementing it properly.
    While a 2005 report from the USDA, Office of Inspector 
General found that Agricultural Marketing Service coordinates 
effectively with Food Safety and Inspection Service and the 
Food and Nutrition Service on Food Safety, I am concerned about 
the agency's potential failure to provide adequate oversight of 
the operations of Westland Hallmark.
    In preparation for this hearing, I wrote Mr. Day, asking 
him to provide the subcommittee with some information about the 
recall. Among the information I requested included a list of 
actions that AMS has taken to ensure that Westland Hallmark is 
being held liable for the recall pursuant to USDA policy. I, 
also, asked about the role the agency is playing in the 
recovery of the 143 million pounds of beef that was recalled. 
Thank you, Mr. Day, for your timely response to my letter and I 
look forward to discussing your answers in detail during the 
question and answer session.
    There are, of course, several other important issues to 
discuss during this hearing. One critical issue is country of 
origin labeling. In the fiscal year 2008 Omnibus Appropriations 
Bill, we included a time line that would lead to the 
implementation of country of origin labeling by September 30, 
2008. Unfortunately, USDA missed the first deadline, which was 
for AMS to republish a proposed rule for covered commodities, 
beef, fruits, and vegetables by January 17, 2008, almost three 
months past that deadline and we are still waiting. I realize 
that the provisions on COOL and the farm bill are--represents 
an agreement that was reached among the various stakeholders, 
so I understand that USDA may, therefore, be waiting for the 
farm bill to pass. However, USDA does not seem to have a 
problem making assumptions about the new farm bill in their 
fiscal year 2009 budget request, though it is interesting that 
they would ignore it when it pertains to COOL.
    I would also like to discuss the National Animal 
Identification Program. My position on this issue has always 
been clear. I support a mandatory animal ID program. I am 
concerned and frustrated by the seemingly slow and expensive 
progress on implementing an effective animal ID system in this 
country. Congress provides the funding proposed in fiscal year 
2009 in the budget, 24 million dollars. Taxpayers will have 
given USDA approximately 152 million dollars over the past five 
years for the National Animal ID Program with virtually nothing 
to show for it. That was why I surprised, Mr. Knight, when you 
said in February that Congress was an obstacle to implementing 
the program. I believe that Congress is doing its part, so we 
need to discuss how USDA and APHIS can follow through on their 
part.
    Mr. Link, I have not forgotten about the Grain Inspection, 
Packers and Stockyards Administration. During last year's 
hearing, we had a discussion about auditing meat packers and I 
want to follow with you on that. I, also, see that this year's 
budget request has an increase in personnel to strengthen 
GIPSA's compliance reviews and investigations and I hope that 
we can discuss that, as well.
    Thank you all for being here. I look forward to hearing 
your testimony, as well as your responses to our questions. And 
with that, let me recognize the ranking member of the 
committee, Mr. Kingston.
    Mr. Kingston. Thank you, Madam Chairman. I do not have an 
opening statement.
    Ms. DeLauro. Then, Mr. Knight, we will move to you for your 
testimony. And as you know, the full testimony of all of the 
witnesses will be made part of the record. So, we ask you to 
summarize it.
    Mr. Knight. Certainly. Madam Chairwoman DeLauro, ranking 
member Kingston, members of the subcommittee, good morning. I 
am Bruce Knight. I am pleased to testify before you today. I 
would like to begin by introducing my colleagues with me today. 
New at the table with you is Cindy Smith, who was appointed the 
Administrator, Animal and Plant Health Inspection Service in 
September of 2007. Cindy is the first woman to head the agency 
and she brings with her a great deal of vision, experience, in 
the work that she did at overhauling our biotechnology 
laboratory services. Also joining me today, of course, is 
Administrator Day, as well as Administrator Link, who are 
familiar faces at this stage before the committee.
    The three agencies have made real progress in a number of 
key areas this past year. APHIS has been working 
collaboratively to monitor and slow the spread of H5N, one 
highly pathogenic avian influenza overseas and to expand 
prevention and protection against the disease here at home. 
APHIS has also further progressed on the National Animal 
Identification System. We now have approximately 33 percent of 
all premises in the country registered in the system. AMS has 
provided voluntary grading systems to a wide variety of 
commodities, including virtually all U.S.-fed beef. The number 
of regulatory actions and investigations that GIPSA's packers 
and stockyards program conducted in 2007 exceeded 2,300 
investigations.
    The President's fiscal year 2009 budget proposes that MRP 
agencies carry out programs of close to two billion dollars. 
Four hundred and fourteen million dollars would be funded by 
fees charged to the direct beneficiaries of MRP services, 457 
million would be generated by Customs receipts. On the 
appropriations side, the President's budget request for APHIS 
is about 919 million dollars for salaries and expenses, seven 
million dollars for repair and maintenance of buildings and 
facilities. The request is approximately 77 million dollars for 
AMS and about 44 million dollars for GIPSA. The budget proposes 
user fees that if enacted, would generate about 57 million 
dollars in savings to the U.S. taxpayer.
    Let me highlight very briefly a few of the major activities 
we are engaged in. First, we share the agriculture quarantine 
inspection mission with the Department of Homeland Security. 
Our coordination with DHS, under Cindy's leadership, has 
increased significantly. Last April, APHIS and CBP formed a 
joint task force to evaluate and address stakeholder and 
congressional concerns and strengthen the agency's partnership.
    As I have said, we have also made significant progress with 
the voluntary National Animal Identification System. Animal ID 
is and will continue to be one of USDA's top priorities. Our 
ultimate goal is 48-hour traceability, that is, to have data in 
our hands within 48 hours of an incident. The initial focus in 
development animal ID has been encouraging farmers and ranchers 
to register their premise. Today, we have more than 457,000 
premises registered nationwide out of an estimated 1.4 million. 
That is about 100,000 more than when we last appeared before 
you. While we are continuing our efforts to encourage premise 
register, we are now focusing on moving towards our goal of 48-
hour traceability. APHIS has developed a business plan for 
increasing traceability and accountability that sets clear 
priorities, focuses on areas where we can accomplish the most, 
and building on the investments we have already made.
    NAIS cooperative agreements with states, tribes, and 
industry organizations have played a key role in the education 
and outreach and increasing premise registration. For each and 
every agreement, we have in place work plans with the 
cooperators that define the project's expectations and goals. 
We believe that these cooperative agreements are an effective 
means of leveraging our resources and I assure you that we will 
continue to closely monitor these agreements to ensure that our 
cooperators meet or exceed performance standards.
    NAIS's primary purpose is to provide critical animal health 
data, but the traceability also creates an enabling platform 
for marketing. Earlier this month, our Agricultural Marketing 
Service released a draft business plan to further NAIS 
implementation that is coordinated and is supportive of the 
APHIS business plan. Among other strategies, AMS is strongly 
encouraging the use of NAIS participation to identify animals 
involved in USDA's process programs and the quality systems 
assessment programs. This immediately provides the producer a 
twofold reward for a single investment. It ensures trace back 
to their animals for herd health reasons, provides benefits for 
marketing value added animals domestically and internationally.
    An official ID will also assist in meeting the objectives 
of the country of origin labeling program by identifying the 
origin of cattle upon arrival in the harvest facilities. 
Current requirements for COOL call for labeling of most red 
meat and produce on September 30, 2008. However, both the House 
and Senate versions of the farm bill would make changes in 
COOL. Therefore, after the farm bill conference is completed, 
we will have a very short time period to turn those changes 
into regulations. Secretary Shafer has pledged to this 
committee that we would have the regulations operable by 
September 30. I will do everything possible to make that 
happen. Regardless of the final determinations on the specific 
labels that would be required, we want to be clear that 
producers, who participate in official ID systems today, will 
essentially have a safe harbor under COOL with animal ID, that 
is, that packers, retailers, producers, who rely on official ID 
to determine the origin of their livestock and poultry, will be 
recognized by the Department as having demonstrated compliance 
with the COOL programs recordkeeping requirements.
    Madam Chairman, members of the committee, thank you. I will 
be pleased to answer any questions you may have.
    [The information follows:]

    

                 NATIONAL ANIMAL IDENTIFICATION SYSTEM

    Ms. DeLauro. Thank you, very much, Mr. Knight. Mr. Knight 
and Ms. Smith, there is an extended discussion in your 
testimony regarding APHIS's continuing work on a national 
animal identification system. In particular, let me thank you 
for your agency's effort and work with my staff to provide 
helpful information about your work on implementing NAIS. That 
said, I am sure that it comes to no surprise to you that I am 
concerned and frustrated by what is a seemingly slow and--what 
is, not--is a seemingly slow and very expensive progress on 
implementing an effective animal ID system in this country.
    The subcommittee and the taxpayers have given USDA enormous 
sums of money for animal ID, the fear of funding. If Congress 
provides the funding proposed in the 2009 budget that you have 
requested, a total of 24 million dollars for the animal ID 
program, as I said in my opening remarks, this will be 152 
million dollars for the program and we still have no meaningful 
system in place. This is a massive investment that the public 
has already made in the system and as compared with the delay 
in the Department's delivery. And so I will repeat, 
Undersecretary Knight, that I was really disappointed to hear 
your comments, and let me quote, and this was in February, 
implying that Congress was the obstacle, ``if they come in less 
than 24 million dollars, they will be making a decision to slow 
down implementation of animal ID and will be jeopardizing our 
nation's herd.''
    So, if we want to tally our delivery accomplishments talk 
about jeopardizing the nation's herd, let us do it. Congress 
has provided 128 million dollars to date in good faith to 
implement NAIS. Let us tally some of APHIS's accomplishments to 
date. Out of more than 1.4 million premises, APHIS has only 
registered to date about 457,000 feed lots, sales barn, less 
than 32 percent of your goal after four years and almost 128 
million dollars. One state, one state, Wisconsin, comprises 
one-seventh of the total registrations that you have achieved 
to date. I note for the record, that it is a mandatory program 
in Wisconsin. At your current rate of enrolling about 1,500 
premises per week, just back of the envelope, I calculate it 
will take APHIS another 13 years to achieve its goal of 100 
percent registration. Obviously, APHIS will miss its January 
2009 goal to have all registrations complete. APHIS is 
reportedly years away from having a 48-hour traceability for 
beef and dairy cattle.
    If the Department is going to have a credible and effective 
animal ID system, you will have to change the Department's 
approach. Given the Department's management of the program over 
the past four years, please explain why the committee should 
provide the 24 million dollars you are requesting. What will 
APHIS do with the 24 million dollars? What is your time line 
for achieving the 48-hour trace back for all species?
    Mr. Knight. Thank you, very much, for the question and let 
me add that as I have been asked to promote and manage and move 
animal ID forward, I have done a number of interviews to do 
that with the media. And that was not the best choice of words 
on my part and I sincerely apologize to you for that 
inopportune choice of words.
    However, let me----
    Ms. DeLauro. Thank you and I say that on behalf of the 
whole committee, because I think this committee has been very 
generous with its resources to have this system implemented. 
So, we thank you for that.
    Mr. Knight. Very generous with the resources and very 
patient with the performance. Now, as to the work that has been 
going on, on animal ID, some of the more difficult things to 
quantify is the actual advancements that have been made behind 
the scenes over the last several years on building the 
databases, the IT investment, the interconnectibility that will 
improve upon the 48-hour traceability. That has been a 
significant investment that is coming on line and becoming 
operational as we move forward.
    We, also, see with the new business plan that was published 
in December of last year that we have very specific goals now 
by species on how to achieve 48 hour traceability. We think 
that we have 48-hour traceability to date with poultry because 
of the experience with the National Poultry Improvement Plan 
and the kind of work that has been done historically with 
exotic Newcastle disease and avian influenza.
    We are almost to that point with pork as well, and the pork 
industry has stepped forward. They have set specific goals to 
help us in getting 100 percent of the commercial operations of 
pork enrolled in premise registration in moving forward. We 
should be able to achieve around 90 percent of the sheep 
industry at 48-hour traceability by the 2009 date as well. And 
so, we will have knocked off three of the major species and 
that is outlined in the business plan.
    That then has our focus from the business plan really on 
cattle, both dairy and beef, and the kind of inroads that need 
to be made there. We do believe that by 2009, at the end of 
2009, we should be able to achieve a critical mass that will 
greatly improve 48-hour traceability. That is a goal of 70 
percent of the cattle herd, meaning the number of cattle and 
the number of operations enrolled in animal ID. We had a major 
meeting last week at the National Institute for Animal 
Agriculture, seeking dialogue with the industry about how 
achievable each of these goals are and how to move forward.
    There are also embedded in the business plan a series of 
goals for critical control points and each of those goals vary 
by those. But with the critical control points, anytime a large 
number of animals come together to be intermixed and then get 
back into the countryside, there is a great deal of risk there 
associated with that. So, we have goals for premise 
registration for fairgrounds, livestock barns, packing 
facilities, each of those, all that are detailed in that 
business plan, to be able to, to really be able to get 
strategically at where to go.
    Perhaps the most significant aspect of the business plan 
that will dramatically move animal ID forward has been 
connecting it to the existing disease eradication programs and 
being able to really tie it to those programs. And so, each of 
Cindy's program managers that are handling those programs are 
in the process of embedding animal ID into the work that is 
being done on bovine tuberculosis, the brucellosis program, the 
scrapie program, rabies, each of those, because we really need 
to have measurable goals that we can hold the agency and 
ourselves accountable as we move forward.
    Ms. DeLauro. If you could fully get back to me on what you 
specifically are going to do with the 24 million dollars and 
give me the time lines again on the--you said--is it 2008, 
where we are dealing with poultry, with pork. Where are we 
going to be in 2009 for these other efforts? And the work that 
you said that you are doing with fairgrounds and these other 
areas, when do you propose to have the activities completed in 
these areas for us to take a look at? My time has expired. Mr. 
Kingston?
    [The information from USDA follows:]

    

    
                           PROPOSED USER FEES

    Mr. Kingston. Thank you, Madam Chair. Mr. Knight, thank you 
for being here. One of your assumptions in your budget is that 
you are going to get 57 million in fees. Now, in the remote 
possibility that this committee does not agree with that, it 
looks like we will have to cut your budget 57 million dollars. 
Where would you propose that that cut come from? Yes, look at 
Mr. Steele. [Laughter.]
    It was his idea anyhow.
    Mr. Knight. We would obviously need to go through each of 
the programs in the event of that and look very closely and 
very surgically at where we could generate cost savings in the 
event of the user fees not providing the expected income.
    Mr. Kingston. Well, I am certainly not picking on you or 
these agencies, but it is a practice for any administration to 
say, oh, yes, and the budget assumes collection of a user fee, 
which Congress never goes along with. So, basically, any budget 
that has a user fee that has not been signed off on by Congress 
is that amount of money over budget. So, we are already 
starting at 57 million dollars over and I would like you to 
take that back to Secretary Schafer and our good friend, Mr. 
Nussle, who--you know, these guys from Iowa, you have to watch 
anyhow. But, that is something that I think we should probably 
outgrow on a bipartisan basis in this town.
    I wanted to ask you about the chicken ban and let you talk 
a little bit about that. And do you think the ban will stay in 
place in 2009? And all the problems with Chinese chicken, is 
that over with now?
    Mr. Knight. Mr. Kingston, I am really not in the position 
to address the chicken ban with the committee. But, I would 
please to suggest to you Dr. Raymond to follow-up.
    Mr. Kingston. Okay. We can follow-up with it.
    Mr. Knight. Yes.

                         SCHOOL LUNCH PURCHASES

    Mr. Kingston. Let me ask you this and Ms. Smith, I think 
this would come to you, and I am not quite sure, in terms of 
marketing, and the Chairwoman mentioned it in her opening 
statement about school lunch programs. What is your 
relationship, in terms of animal inspection?
    Mr. Knight. If I could ask Mr. Day to address the school 
lunch program.
    Mr. Day. I am trying to understand the question about--I do 
not quite understand what you are saying.
    Mr. Kingston. Well, I am trying to understand what is the 
relationship between beef that could have been contaminated and 
the school lunch program and your department.
    Mr. Day. Right. Well----
    Mr. Kingston. And the Chairwoman mentioned it in her 
opening----
    Mr. Day. Right.
    Mr. Kingston [continuing]. Opening comment.
    Mr. Day. AMS procures the meat that goes into the school 
lunch program. And as the Chairwoman mentioned, we follow the 
FSIS guidelines for food safety. But because these are 
vulnerable communities, children and the elderly mostly, we 
have additional requirements, as any large buyer does, for the 
product that we purchase. And with that, what we do is we go 
in--first, for someone to do business with us, they have to 
request to do business with us. Then, they have to submit a 
plan on how they are going to adhere to all of the standards 
that we have in place, which is above and beyond just 
traditional safety standards. Following that, we do an audit to 
ensure that they can comply to that. Once that happens, then 
they are an eligible vendor and they are able to bid on a 
procurement announcement that we make for beef, chicken, 
vegetables, fruits, whatever.
    Once that happens and we award a bid, we have a person on 
plant, at that facility, to ensure that they are compliant with 
our standard. In addition to that, we test every lot for 
microbial pathogens. And as the Chairwoman mentioned, if we 
find microbial pathogens, they cannot submit that lot into the 
school lunch program. So, we have, indeed, a very intense 
surveillance of these programs to make sure that they are in 
compliance, above and beyond standard food safety.
    Mr. Kingston. Do the compliance issues go beyond the 
testing of the product and go into, say, business practices?
    Mr. Day. Yes, indeed. In fact, and we audit that on a 
regular basis.
    Mr. Kingston. Well, one of the concerns I have from some 
poultry manufacturers is that they are playing by the rules, as 
respects the legal aliens and others are not. And if they are 
both competing on the school lunch program, it puts the one, 
who is----
    Mr. Day. Right.
    Mr. Kingston [continuing]. Going loose on I&I and gives 
them a competitive advantage. Do you guys get into that at all?
    Mr. Day. We do not get into that. That would be DHS.
    Mr. Kingston. If there was a legitimate complaint, could 
you be helpful, in terms of getting it to the right spot?
    Mr. Day. I do not know the answer to that, but I will----
    Mr. Kingston. If you could give me the name of who I could 
talk to about a specific case, that would be helpful.
    Mr. Day. Well, you could certainly pass that information to 
me and I could investigate within the interagency as to how 
that process works.
    Mr. Kingston. Okay, thank you. And I am out of time.
    Ms. DeLauro. Mr. Boyd.

                       QUARANTINE EXPORT FACILITY

    Mr. Boyd. Thank you, Madam Chair. And Mr. Knight, 
gentlemen, Ms. Smith, thank you for your service. I have three 
brief questions that I would like to get answered in the few 
moments that I have here.
    Mr. Knight, last week, you met with Florida cattlemen about 
the Indiantown in Florida, Quarantine Export Facility, cattle 
export facility. I would like for you to share with the 
committee your conclusions after that meeting and what can we 
do together to make Indiantown a viable facility, to ensure 
that our cattle industry has a place to export their stock 
from.
    Mr. Knight. I met, as you are aware, I met with the Florida 
cattlemen on the Indiantown facility. We are resolved to try to 
assist them in finding creative ways to address their issues. 
For the committee, this is an export facility that does not 
meet official standards and specifications and needs to be 
upgraded. It is a rather nominal investment in infrastructure, 
they are looking for assistance on doing. Within APHIS, we lack 
the grant funds to be able to address that and so we have been 
trying to open doors within the Department to be able to do 
that. We are going to continue to work with them on how to get 
that facility to standards. Certainly, an export facility for 
Florida cattlemen, as we start to open these markets in Central 
and South America for live cattle, will be very desirable for 
all of us.
    Mr. Boyd. The closest export facility, I understand, is in 
Texas.
    Mr. Knight. That is my understanding. And with the recent 
opening of Mexico for live cattle exports, we have got a 
tremendous marketing opportunity for heat tolerant cattle 
throughout the southeast and we need this additional facility.
    Mr. Boyd. Mr. Knight, can you share with the committee in 
writing what the cost for upgrading that facility to make it 
viable would be?
    Mr. Knight. We will. We have been working closely with the 
cattlemen. They have been talking about a quarter of a million 
dollars, but we will get a more precise number for you.
    [The information follows:]

    Cost To Upgrade Indiantown (Florida) Quarantine Export Facility

    Mr. Knight met with the Florida Cattlemen's Association on April 4, 
2008. During this meeting, the cattlemen agreed to develop a 5-year 
business plan proposal for Indiantown to become a permanent export 
facility. The plan is to include information on current and potential 
export markets, with estimated numbers of animals to be exported, and 
estimated user fee amounts, among other things.
    Two other facilities, Sagamore Farm and Horse Country Club in 
Florida have adequate infrastructure to support exporting cattle. The 
Sagamore Farm is permanently approved for equine exports, and has 
temporary approval for cattle. Temporary approval is granted on a case 
by case basis. Sagamore Farm can handle approximately 50 cattle at one 
time. Horse Country Club is also permanently approved for equine 
exports and small ruminants, and is currently pursuing options for 
temporary approval to handle cattle. Plans are also underway to 
construct facilities for permanent approval to handle cattle exports. 
Once the plans are approved, it would take approximately one year to 
complete construction.
    The Florida Cattlemen's Association requested $250,000 for the 
facility upgrade in a letter to APHIS dated March 27, 2008.

                         CITRUS GREENING SUMMIT

    Mr. Boyd. If you would do that, I would be grateful. I know 
it would not be a marketing and regulatory program hearing, 
Madam Chair, without me asking about citrus. So, you expect 
this question, do not you?
    Ms. DeLauro. I do expect it and I am hoping you will open 
up the door to the pesticide issues.
    Mr. Boyd. Right. Well, let me just be brief here. There was 
a summit held by USDA in December on this issue of greening 
diseases. I know that the report has not yet been released. Is 
there something that you can share at this moment with the 
committee about the findings and conclusions of that summit and 
when the findings will be published?
    Mr. Knight. The report should be published within days. It 
is now a matter of just queuing it up for printing and for 
release. The greening summit is most significant in that with 
that, we brought together what is at times a very competitive 
industry in getting California, Florida, and Texas citrus 
producers unified on ways to address what is the single most 
significant disease problem I see facing the citrus industry. 
It has been very good as far as bringing together and 
coordinating the research activities, the experiences that have 
come to bear in Florida, to ensure that we do not have this 
problem in other countries and that we get it under control 
within Florida.
    [The information follows:]

                    Citrus Greening Summit Findings

    The final report, Citrus Greening Summit Findings and National Plan 
Development, is available at the APHIS home page: http://
www.aphis.usda.gov/plant_health/plant_pest_info/citrus_greening/
downloads/pdf_files/citrusgreening_summit_plan.pdf.

    Mr. Boyd. As you know, for the committee's information, 
Madam Chair, there are many counties in Florida, I think, that 
are quarantined because of this greening issue and there are 
other states that have quarantined areas, also, I understand.
    Mr. Knight. That is correct.
    Mr. Boyd. Also, this problem is--we thought citrus canker 
was serious. This is even more serious and the whole industry 
across this country has been devastated. And that has so many 
serious economic ramifications for us, as a nation, and 
certainly states and local areas. Mr. Knight, can you tell us 
if USDA is committed to dedicating a significant portion of the 
proposed--you have 22 million in what we called a short fund, 
the Citrus Health Response Program. Is a good portion of that 
going to be dedicated to this research on citrus greening 
disease?
    Mr. Knight. I may need to turn to Administrator Smith----
    Mr. Boyd. Okay.
    Mr. Knight [continuing]. On this level of detail.
    Ms. Smith. Our funding does not go to conducting research 
per se. We are in development of a national plan for this, and 
I think that plan is going to focus around communication and 
coordination more between us and Mexico in terms of both 
understanding pathways and in gearing up all activities.
    Mr. Boyd. Okay. Madam Chair, members of the committee, you 
heard that and there really is no ARS or USDA plan now. I mean, 
if we do not get some money into this, solving this problem, 
and I think given the sort of the political nightmare we have 
around here relative to earmarks, that is the only way we get 
this kind of funding in many cases. This is just something that 
I want the committee to be aware of, that this is a disease 
that is more serious than canker and it will finish off the 
citrus industry if we are not careful in this country. So, I 
want to make the committee aware of that and we have to focus 
on it at some point in time. Madam Chair.
    Ms. DeLauro. Thank you, and let us spend some time talking 
about it.
    Mr. Boyd. Thank you. Thank you, Mr. Knight.
    Mr. Knight. Thank you.
    Ms. DeLauro. Mr. Latham.

                         CONTINUING RESOLUTION

    Mr. Latham. Thank you, Madam Chairwoman and welcome 
everyone in the panel. Mr. Knight, there has been a lot of 
conversation around here on the House side probably getting our 
appropriation bills down, the Senate has basically said they 
are going to punt this year, what does the CR do to you, as far 
as any initiatives that you have forthcoming and are you 
preparing for the fact that there will be a CR this fall?
    Mr. Knight. As the process moves along, we would certainly 
be prepared, in the event that it would move to a CR, for being 
able to continue those programs. Obviously, there is certainly 
management issues associated with the CRs that become a real 
challenge on how do you address emerging priorities, areas that 
have increased challenges, those types of things. Given the 
nature of the regulatory side of the three agencies here, that 
is fairly constant. We can manage that well under a CR. The 
emergency aspects that the three agencies are faced with are 
the emerging issues that you see are the greatest challenges to 
manage.
    Mr. Latham. How about things like animal ID?
    Mr. Knight. Animal ID, in a CR, we would be in a very 
awkward situation if we were operating under a CR, given the 
current budget level. We are using carryover funds to be able 
to continue a robust animal ID system this year. We will have 
fully utilized and invested all of those carryover funds by the 
end of this fiscal year.

            VOLUNTARY COMPLIANCE WITH PACKERS AND STOCKYARDS

    Mr. Latham. Okay, thank you. Mr. Link, you have been 
ignored so far. In your budget, you say you are going to 
promote greater voluntary compliance with the packers, the 
stockyards. Can you tell us what you are going to do to 
facilitate this compliance that you have not been doing in the 
past?
    Mr. Link. Well, we have got a much more visual presence in 
the market. We have added some more employees where funds were 
available. We sped up standard operating procedures so that 
everyone across the country is operating the same. It is due to 
the scale checking of every packer that goes over a thousand 
head of livestock a year. And we have added some new market 
inspectors that strictly go on sale days that show a presence 
to check scales and have a presence with the market there. And, 
again, by adding auditors, we are doing more financial audits 
than we have been able to do in the past.
    Mr. Latham. Does that promote greater voluntary compliance? 
I guess I do not--what you said does not say much about 
voluntary compliance. We have had mandatory price reporting in 
the past and we are not there right now. Can you give us any 
idea as to the voluntary compliance with the intent of price 
reporting, both in hogs and beef?
    Mr. Link. Well, the voluntary price reporting, of course, 
goes to AMS, but we utilize that information in some of our 
investigative work. And so far, the compliance, voluntary 
compliance, particularly on the work in the beef industry, has 
been very high. They have stayed with the course and they have 
kept volunteering the information of prices to us.
    Mr. Latham. Okay. Mr. Day, any comment?
    Mr. Day. I will just echo what Administrator----
    Mr. Latham. Why don't you pull your mike up?
    Mr. Day. I will echo what Administrator Link said, that on 
the beef and pork side, the voluntary compliance has been 
excellent. It has not been as good on the lamb side. And I 
would just like to thank you for not ignoring Administrator 
Link, because we are concerned that sometimes he does not get 
enough questions, it seems, than I do.

                  COORDINATION WITH HOMELAND SECURITY

    Mr. Latham. Okay. As far as with--I do not want to miss 
anybody here--with APHIS, as far as working with Homeland 
Security and as far as shipments into the U.S., do you have the 
cooperation, are you working closely with Homeland Security, as 
far as products coming into the country? What has happened?
    Ms. Smith. We have done a number of things to really 
strengthen the relationship between us and Homeland Security. 
Some of the things I have personally done is increase 
communications at several levels within the agency between us 
and them. We, also, have a project that is----
    Mr. Latham. Can you hear--I do not know if you can pull 
your mike up closer there. You are very soft.
    Ms. Smith. We, also, are doing two other primary things. 
One is a series of working groups that have--we have identified 
10 areas where we need to work more closely together. We would 
like to work more closely together and we have action plans 
that are addressing each of those 10 areas. It is a very broad 
group of people that we worked with. Stakeholders put together 
these action plans and we are reporting periodically on the 
results of those. We have a meeting coming up in May, in which 
we are going to get a full reporting of the progress that we 
have made in those 10 areas.
    The other thing that we do are joint review processes, 
where we go to ports of entry jointly and we evaluate how well 
that particular location is doing their work. We use the 
results from those reviews to develop action plans for any 
enhancements that we need to make.
    Mr. Latham. Okay. Thank you, Madam Chairwoman.
    Ms. DeLauro. Mr. Bishop.

                           PROPOSED USER FEES

    Mr. Bishop. Thank you, Madam Chairwoman. Welcome all. I 
want to follow-up on the line of questioning Mr. Kingston 
raised regarding the 57 million proposed revenues, which would 
be generated, of course, by a user fee, whose authority to 
recover the cost to administer the packers of the Packers Act, 
both grain standards, inspect entities regulated under the 
Animal Welfare Act. Also, the fees for the APHIS Veterinary 
Biology Regulatory Services Program, financing the monitoring 
and enforcement activities for country of origin labeling, and 
some legislative proposals to collect fees from retailers. My 
question is whether or not the Department has fully analyzed 
the potential impact that these fees, and I will put tax 
increases, would have on the agricultural industry and 
particularly on the farmers at the ranchers, as well as the end 
consumer, and whether or not you have had any public hearings, 
provided any other opportunities for feedback from the 
stakeholders, such as the farmers or ranchers or consumer 
groups, the wholesale grocers, the retail grocers, and what 
impact it will have on our feeding programs, the school lunch 
program, in terms of prices? How is that going to impact these 
end users, who have limited budgets? Did you do an analysis of 
that, get any feedback? Or if you did, can you provide the 
committee with the results of that?
    Mr. Knight. Certainly. For the user fees that are proposed 
in our budget, it is, I think, important for me to note that 
with all three of these agencies, there are a number of 
programs that are user-fee funded today, especially in the case 
of the marketing programs. It has long been a philosophy that 
those who have the benefit or regulated ones that are paying 
those fees. And so, in many ways, it is a very logical 
progression for us to look at several of these items. It 
certainly weighed heavily in the decision on the country of 
origin labeling, recognizing that we had an important 
legislative initiative that we were going to have implemented 
this year and recognizing that we needed to put before everyone 
what we would have as the cost associated with that. So, we 
have proposed the user fee structure on that.
    We are currently in the process of clearing the legislative 
language to forward to the respective committees that it would 
take to move those user fees forward. And I will need to look 
at and respond to the record for you, sir, as to any of the 
public outreach that we may have done to date, as we move 
forward.
    [The information follows:]

                    Public Comment on COOL User Fee

    If the proposed Country of Origin Labeling (COOL) user fee is 
enacted by statute, USDA will publish a proposed rule in the Federal 
Register with a request for comments from interested parties and 
stakeholders. All comments and information received in response to the 
proposed rule will be evaluated and addressed in the final rule 
published to implement the COOL user fee.

                    COUNTRY OF ORIGIN LABELING FEES

    Mr. Bishop. I am particularly interested in the additional 
fees that you are going to toss retailers, because that will 
have a direct impact on the consumer and mom and pop at the 
grocery store. And if you did do any kind of study to gauge 
what that impact would be, of course, we would like to get 
that. But, it seems that given the economic times that we are 
faced with now, that this is not a particularly good time to be 
adding fees to retailers.
    Mr. Knight. If I could expand for the record on that 
particular item for your benefit. That specific retailer fee is 
our proposal to offset the additional implementation costs for 
country of origin labeling. Country of origin labeling, as the 
statute is defined, applies at the retail level. It does not 
apply to a farmer, it does not apply to a packer, but rather it 
applies to the retail level. Therefore, to move that user fee, 
we are looking at that being applied at a retailer level. It 
would be about 260 dollars a year for a given retailer, 
recognizing that most small grocery stores would be exempt. 
Most butchers, most fish mongers would fall under the gross 
sales limit; COOL does not apply to those, as the statute is 
drafted. As a matter of fact, it would apply to really the only 
very largest of the retail stores.
    Mr. Bishop. I am trying to understand the relationship 
between the retailer. How is the retailer--I mean, how is he 
the ultimate user to benefit from that, other than complying 
with the law?
    Mr. Knight. The country of origin labeling applies only at 
the retail level and, as such, that is where we would have the 
authority to assess the user fee.
    Mr. Bishop. I guess what I am trying to get at, in order 
for the--the retailer just presents the product to the 
customer. The retailer buys it from the wholesaler.
    Mr. Knight. Yes.
    Mr. Bishop. And, of course, in the grocery business, it may 
be from the direct producer or it may not be. There is usually 
a middleman somewhere in that process in most of the products. 
So, what I am trying to get at is you are tying it only to the 
retailer, when the retailer is going to have to depend on all 
of these other aspects of the marketing process to get access 
to that information.
    Mr. Knight. That is correct. In the proposal that is moving 
through the farm bill process, it is suggested that that be 
largely an affidavit-based system. A producer would say this 
was of U.S. origin. That affidavit would move through the 
system for the----
    Mr. Bishop. You mean from the producer all the way up 
through the retailer?
    Mr. Knight. Yes. That is essentially what you see occurring 
today with fish and shell fish on implementation of COOL. That 
is why today, if you go into a grocery store, you will see 
quite often a hand-marked card next to that piece of fish or 
shell fish indicating which country it would have been a 
product of.
    Mr. Bishop. Okay. Just one more statement, just five 
seconds. I just do not see how it is fair to put all of that 
burden on the retailer, when you have so many other people that 
participate in the process and I have questions about that. We 
have not enacted it yet, so----
    Ms. DeLauro. If I might add, Mr. Bishop, to get around to 
asking it again, in my view, it is one more way to delay the 
process of moving toward country of origin labeling. Mrs. 
Emerson.

                    INTERNATIONAL TRADE NEGOTIATIONS

    Mrs. Emerson. Thank you, Madam Chair. You mentioned in your 
testimony that APHIS provides sanitary and phytosanitary 
expertise during international trade negotiations. This is my 
personal opinion, but it does become very frustrating. I really 
do think that the sanitary and phytosanitary regulations are 
just a smokescreen for non-tariff barriers trade, my personal 
opinion. But, as we continue to hear rumors that the Doha Round 
may actually produce more results, I just want to ask you a few 
questions. Number one, what is the state of SPS barrier of 
trade in the world? What is the trend? Who are the greatest 
abusers? And do we know the cost that such non-tariff barriers 
to trade place on U.S. producers?
    Mr. Knight. In this arena, certainly bringing down SPS 
barriers to trade is one of the greatest challenges that both 
USDA and the U.S. Trade Rep's Office have and we coordinate 
very closely between APHIS's technical work, the Foreign Ag 
Service, and USTR in being able to work at those. I am very 
proud to say that we had a significant advancement about two 
weeks ago in bringing down a post-BSE barrier that we had 
between ourselves and Mexico and Mexico has agreed to resume 
imports of live cattle. I mention this because this is a very 
real example of the impact for producers. Prior to this barrier 
coming up, Mexico was importing about 11 to 13 million dollars 
worth of breeding animals per year. We expect this first year 
for it to far exceed that level. We recently reopened live 
animal movements with Costa Rica, Turkey, quite a number of 
countries in a post-BSE environment. So, we see these SPS 
barriers that have gone up that we need to bring down 
systematically and they are certainly a major investment for 
USDA's time and a high priority for us.
    Mrs. Emerson. Who are the greatest abusers?
    Mr. Knight. I may have to ask folks to come back to the 
record for you on how to quantify which countries would fit 
into that category.
    Mrs. Emerson. Do you ever see us being able to get 
together, for example, with the European Commission and really 
come up with some standards that all of us can agree upon?
    Mr. Knight. There are glimmers of opportunities in our 
relationship with the European Union that we see out there. Mr. 
Day has just returned from Europe, where he was working on 
issues associated with aflatoxin and almonds and the European 
Union is our largest market for California almonds. And so, it 
has been extraordinarily important work and it is one that has 
gone very well. We have a great deal of work that remains to be 
done with Europe on non-hormone treated beef and being able to 
address that. Yet, at the same time, you see where that market 
has--the European Union has a real shortage of red meat and of 
protein products, and so they are looking for imports. That 
gives an opportunity for advancements to be made. Another 
notable one that we should mention, hatching eggs with the 
European Union, that has recently been worked through and that 
is about a 25 million dollar market with the Europeans.
    Mrs. Emerson. So, these glimmers of hope, as you say, that 
is definitely positive. Do you think it will be long-lasting? 
It is just interesting, having been at a meeting with the 
secretary general for trade of the European Commission and 
asking him about this, he was actually responsive and said, you 
know, maybe we really do need to sit down and try to whittle 
away, whittle away. But, do you have to go product, by product, 
by product? Is that the way it is?
    Mr. Knight. Most of this work tends to be product-by-
product or bilaterals, country-by-country. So, every time you 
have a free trade agreement that comes up, you have an 
opportunity to discuss, debate, address some of those things. 
Then, you have the country-by-country efforts or product-by-
product efforts that are driven by a particular market 
opportunity. And so, we have to seize upon each of those.
    We, also, use the international standard setting for us as 
a means of ensuring that decisions are constantly moving on all 
parts to a sound scientific basis. And in the case of the work 
in the post-BSE environment, we talk a lot about the 
International Organization for Animal Health, OIE. We use 
similar standards-setting bodies for movements of seed and seed 
products in the same way from the plant side of things.
    Mrs. Emerson. Okay. Is there something you want to add? 
Okay. Thank you, very much.
    Ms. DeLauro. Thank you, Mrs. Emerson. I think you have 
opened up a very good area and line of questioning for study 
and I would only add to that, that we may think about taking 
that up in a specific way at some other time and hearing and 
potentially add to that the whole area of the free trade 
agreements and what we have tied ourselves to, in terms of food 
safety, and what either opportunities or constraints that these 
agreements put on us with regard to trying to look at 
protecting food supply here, domestically, but what is coming 
in internationally. So, we should talk about maybe thinking 
through how we might address that.
    Mrs. Emerson. Thank you, Madam Chairwoman. I would very 
much like to do that.
    Ms. DeLauro. Thank you. Mr. Farr.

                         LIGHT BROWN APPLE MOTH

    Mr. Farr. Thank you, very much, Madam Chair. I have a lot 
of questions, because just as we get over the national incident 
of E. coli in spinach, we now are being bombarded by aerial 
spraying for LBAM, which stands for the light brown apple moth. 
And what happens is this is an apple moth and basically a 
species, in which we have zero tolerance for, and the 
Department, working with the California State Department, has 
decided that the best way to get rid of this pest is to use 
aerial spraying. And pheromone, which is not an insecticide, 
but the ingredient in which they mix the pheromone is very 
controversial.
    And I want to ask you a series of questions, because I 
think this is going to end up being national news, the fact 
that the spraying has been ordered now in San Francisco, San 
Mateo, Berkeley. I think this moth only lands in liberal 
communities. [Laughter.]
    Maybe we ought to turn the name to liberal brown apple 
moth--and Santa Cruz, which I represent. And all of those 
counties are using all their legal powers to sue you, sue the 
state, sue the Feds, and it is basically getting back to why 
was this--what was the process used for blacklisting an 
invasive species like this. I am just going to ask you a bunch 
of questions and then submit another 50 to you. So, there are 
just tons of questions. This is the hottest issue and my 
colleague in the state legislature told me that of all the 
issues that we have ever faced in our district, this has gotten 
more interest, more people attending hearings, 800 people, more 
concern than any issue ever, more than the Iraq--well, more 
than anything and these are activist communities that turn out 
for these things. So, it is the worst public relations program 
I have ever seen in my life. It took a problem and turned it 
into an incredible crisis. And I, frankly, think at the end of 
the day, aerial spraying will be stopped. I think the courts 
will stop it and that we are going to have, then, all kinds of 
issues of how you can do the twist ties, which I think people 
will voluntarily do. But, the biggest problem is going to be 
what is going to happen to California agriculture and it is 
going to be a confrontation between the state and the Feds on 
essentially why was this species blacklisted in the first 
place.
    And I want to know that. I want to know what specific 
regulatory hurdles for the pest to be included on the 
blacklist. Has a blacklisted insect ever been reclassified? If 
so, what are the circumstances? When was LBAM blacklisted by 
USDA/APHIS? Can USDA/APHIS produce the original documents that 
it relied upon to place LBAM on the blacklist? Was U.S. the 
first country to blacklist LBAM. If not, please note which 
countries and when the classification occurred? Was the 
September 2003 mini-risk assessment by the University of 
Minnesota's Department of Entomology the primary study relied 
upon to maintain LBAM on the blacklist? If not, what studies 
were referenced? At the time of classification, was the 
biological assessment of LBAM conducted by USDA/APHIS? At the 
time of the classification, was the economic assessment cost 
benefit analysis to assess comparative risks of various options 
for managing LBAM, including managing containing the pest and 
eradication, conducted by USDA/APHIS? Was USDA/APHIS presently 
conducting an economic assessment of LBAM, as recommended by 
TWG? If so, when will the assessment be completed and what 
countries have sanitary and phytosanitary measures in place for 
LBAM and when were those measures established?
    These are questions that are being asked now at the 
community level and a lot of other issues regarding the 
approval of the checkmate pesticide that is being sprayed. But, 
basically, what is the background for getting this listed and 
has any species ever been de-listed, any insect been de-listed?
    Mr. Knight. This is a very exhaustive list on----
    Mr. Farr. I do not expect you to have all of the exact 
answers right now.
    Mr. Knight. We will certainly----
    Mr. Farr. But, you know I was going to ask some of these.
    Mr. Knight. Reply for the record, yes. This is certainly 
one of the thorniest issues that is facing both APHIS, 
California Department of Agriculture, and certainly the 
localities that we are dealing with. The light brown apple moth 
is a leaf roller, which makes it very difficult to control, 
because its action causes the leaf to roll around it. And so, 
that gives it an inherent protection on it. It impacts--well, 
most of the debate, unfortunately, has just been on the 
agricultural impact. The impact's horticultural plants, a large 
number of the plants that are in these communities----
    Mr. Farr. However, I have to admit, since it has been 
there, no one has ever detected any problems on any of the 
native horticultural or trees or anything.
    Mr. Knight. Yes. It is, according to the experts, has a 
potential of impacting, I think, somewhere in the neighborhood 
of 250 different plants. It has a host range that if it would 
go beyond California, would extend to almost the entire 
southern tier of states in the United States. So, you think of 
the investment that this committee has made on bollworm 
eradication over the years and you would be looking at a very 
similar size and scope and range that that would have to----
    Mr. Farr. If, indeed, it has that impact.
    Mr. Knight. If it would have the impact is feared and if it 
would get out of California. We have over a 70 million dollar 
CCC emergency authorities that have been given to move forward 
with this effort. The primary challenge now, of course, is the 
public relations issue and it is a very serious one and one 
that has to be dealt with very appropriately and very 
respectfully in the communities, because the intensity of the 
debate, as Congressman Farr is very well aware of, it is 
incredibly hot. It is going to be a very large problem or a 
challenge for us.
    The pheromone is, in fact, an organic product. The debate 
rests largely about aerial spraying. I wish we were not even 
referring to it as aerial spraying, because actually it is not 
an aerosol in the traditional thing. It is put on a small 
fiber, some sort of chip to distribute the pheromone. I have 
told folks that I wish we were calling it a distribution method 
or aerial distribution method.
    Mr. Farr. Planes flying over people's houses at night, they 
are told to cover their furniture, it has no impact, but take 
precautions, wash off stuff. Mothers are terrified. But, you 
have lost this argument. The press is against you. You are 
beginning to even get the farming community, because it has put 
them--they make them the bad guys and it is essentially a 
policy that is developed by our country and the people are 
questioning the policy of why you need to list this in the 
first place. People say it has been here for a long, long time. 
We have had scientists go to Australia and New Zealand, they 
cope with it. They are saying that it is not having the 
negative impact. It is very much related to another moth 
species that has been there forever. So, I think the public 
relations on why you need to spray, I think you are losing that 
very quickly. And the question is, if you lose that, do you 
rethink this thing? I mean, if it does not have that big of an 
impact, can it just, instead of zero tolerance, reach some of 
the tolerance levels that we live with. As somebody says, there 
is a threshold of--I am going to come back to it. But, I want 
some really serious answers to these questions, because we 
appropriate the money.
    Mr. Knight. Yes. And we will provide you responses to every 
one of these questions. I, also, am in the process of clearing 
a response to your letter of about a month ago on some of the 
additional questions that you had, as well.

                 NATIONAL ANIMAL IDENTIFICATION SYSTEM

    Ms. DeLauro. Mr. Farr, there will be additional rounds. Mr. 
Knight, let me get back to you, this is again on animal ID, 
because you spoke about the business plan. So, let me ask 
questions with regard to the business plan. I, also, have, and 
I do not know if I can get them into this round, but questions 
about the cooperative agreements and also this whole issue of 
mandatory versus voluntary.
    But, on the business plan, which was released December 
2007, I will make this comment and maybe you feel it is 
gratuitous, but this four years late. But, we have a business 
plan now and let us take a look at it. But, I tried to look at 
this business plan and your budget request as an investor, 
review a company's operations and its performance. You produced 
a business plan that does not identify the total cost of the 
project, develop and operation of an effective national ID. 
There is no total cost. The first thing I would want to know is 
how much money you are looking for, to get for your company, 
what is it going to take to get the company up and running and 
making it profitable. According to your own business plan, your 
overhead costs are approaching 25 percent. As investors, we 
have put in 128 million over five years. You have not produced 
significant results. The company met less than a third of the 
promised deliverables, premises registration. We do not know 
where you are with respect to other important deliverables, the 
animal registration targets. You are years away from releasing 
one of your penultimate products, the 48-hour trace back on 
cattle. You now come back to your financial backers and you say 
you need 24 million dollars more without much explanation of 
how it ties to the business plan, what are the tangible 
deliveries that we are going to see from a next round of 
funding.
    I have got to ask you, what investor is going to continue 
to spend good money after bad? I honestly have not decided how 
I will recommend that we proceed with funding animal ID in the 
2009 bill. It depends on a number of factors, not least of 
which is our allocation and the administration's new found 
dogma on funding for domestic programs creates some difficult 
choices for our subcommittee. But, if we do proceed with 
funding for NAIS in 2009, we will require a high degree of 
accountability from the USDA. I would like to ask for your 
help, Mr. Knight, in providing the accountability and the 
transparency that I believe this program needs, if we are going 
to continue to fund the system.
    In addition to the action targets outlined in the draft 
business plan, what aggressive milestones would you recommend 
that Congress use to evaluate APHIS's progress? Most of the 
plan's targets do not occur until 2009, as you mentioned before 
and, as I mentioned before, as well, I want more concrete and 
near term measures. As we look forward to the next 
administration, could you recommend animal ID implementation 
measures beyond 2009? Why five years into the program does USDA 
still not have a handle on short term, let alone, long term 
costs? How does your 2009 request for an additional 24 million 
fit into the business plan? Since your budget and the business 
plan were developed at about the same time, we assumed that 
they were developed in concert. So, please, be specific as to 
how they link. Will the benefit cost study that you have 
contracted for evaluate alternative scenarios and, in 
particular, will it estimate the total costs of a national 
animal ID system that is voluntary versus a mandatory program 
and is that part of the specs, if you will, in this contract? 
And with the contract, I would very much like to know when it 
was put out for bid, what were the specifics, and what has the 
research entity been asked to specifically take a look at?
    Mr. Knight. Thank you for those questions. A large number 
of those do tie to the cost benefit analysis that we put out 
for bid. That went out late last summer/early fall, if I recall 
correctly. The primary contractor is Kansas State University, 
with linkages to several other universities.
    I will be very pleased to provide for the record all the 
details on that contract, and the scope of the work that is 
there.
    [The information follows:]

    

    Ms. DeLauro. Does it include a contrast between a voluntary 
program and a mandatory program in the cost?
    Mr. Knight. I do not believe that that is included in that 
analysis. If it is your desire, I would examine the possibility 
of adding that question and looking into those scopes, because 
I think it is a very key question that needs to be addressed.
    I would also be very pleased to work with you on those 
items that we believe would be mutual accountability measures 
for the appropriations process. We can pull those out of the 
business plan for goals of each of the years that are out 
there.
    Ms. DeLauro. Why does your business not talk about the 
total costs; short term costs, long term costs? This is not day 
one.
    Mr. Knight. It is not day one.
    Ms. DeLauro. It is five years.
    Mr. Knight. I would agree in that I would have preferred to 
have had a robust business plan like what we have before you 
today, five years ago.
    Ms. DeLauro. But it is not robust in the sense it does not 
give us any short term costs or long term costs. Anybody can 
take a business plan, you know, to the SBA. With this kind of 
data, it is thumbs down. It is a no, you know, if anybody is 
doing due diligence here. If our responsibility is to do due 
diligence, we say no. Why can you not give us numbers?
    Mr. Knight. I will be very pleased to provide you the 
results that come from the cost benefit analysis that will give 
us a good estimate on those long term needs for animal ID. I am 
very reliant on the cost benefit analysis to help us on the 
next steps.
    Ms. DeLauro. When is it due?
    Mr. Knight. It is due mid-summer, if I am not mistaken.
    Ms. DeLauro. Let me throw this in as a final question. I am 
very, very, very serious. Because Mr. Bishop's questions have 
to do with this, and it has been one of my questions as well. 
We are talking about a user fee for the grocery folks, for the 
retailers, and they are going to come out of the woodwork, and 
that is going to delay your process.
    Clearly, it has been recommended, I know, by GAO on cost 
benefit. But if you are doing the cost benefit on a voluntary 
program, you have got the industry all over you--all over you--
telling you that it is going to increase their costs.
    From my perspective and point of view, we are doing every 
single thing--not we--you, the agency, is doing every single 
thing with regard to cooperation with the industry to slow this 
thing down as much as we can, and you need to let me know. We 
have got eight months to go. What are we going to get in the 
next several months that is going to move this program to where 
it needs to be?
    I do not know if my colleagues are tired, but I am tired. 
But that does not mean I am going to stop asking the questions. 
If this cost benefit analysis does not deal in a specific way 
with mandatory versus voluntary programming and what the costs 
are, and it is another whitewash to have the industry come back 
and tell us that, you see, it cannot be done because this is 
what it is going to cost us.
    That is no longer tolerable by this committee, Mr. Knight; 
no longer tolerable; Mr. Latham.

                       COUNTRY OF ORIGIN LABELING

    Mr. Latham. Well, on that bright note, I appreciate that.
    Speaking about costs, Mr. Knight, in the Farm Bill 
proposal, there is a form of COOL in there. Do you have any 
estimate of what that will cost, as far as inside the system, 
and who will pay the cost?
    Mr. Knight. I will defer to Administrator Day on that 
question.
    Mr. Day. Yes, our proposal for a user fee for COOL 
estimates that.
    Mr. Latham. We are not going to do any user fees. Just 
forget that.
    Mr. Day. We assume it is going to cost about $9.6 million 
for enforcement of country of origin labeling.
    Mr. Latham. No, I am talking about inside the system. The 
way I see it, you are going to have two sectors be able to 
recover any costs as far as record keeping. It is going to be 
the packers who will reduce bids to the farmers, and the 
retailer will increase prices to the consumer. Have you done 
any estimate as far as what the increased cost to consumers 
will be?
    Mr. Day. That will be in the rule that we publish related 
to country of origin labeling. So that has not been published, 
yet.
    Mr. Knight. The changes in the Farm Bill, sir----
    Mr. Latham. Right.
    Mr. Knight [continuing]. Because they add goat meat, they 
add poultry not turkeys, add macadamia nuts, each of those, as 
we do the rule, we are having to do a new cost benefit analysis 
associated with that, and that will be part of that rule when 
we publish.
    Mr. Latham. You are not talking about cost to the 
Department. You are talking about cost in the system.
    Mr. Knight. In the system, which I believe was the nature 
of your question, sir.
    Mr. Latham. But I mean, there are two people inside the 
system that are able to recover the costs; and that would be 
the packers by reduced bids to the farmers, and the retailers 
would be able to recover by increased costs on the shelf.
    Mr. Knight. All of us in agriculture are very acquainted 
with that for the farm that, as a rule, producers are price 
takers; and it is further up the chain that folks have the 
ability to pass costs either up or down the value chain.

                 NATIONAL ANIMAL IDENTIFICATION SYSTEM

    Mr. Latham. Yes, I will be interested to see what those 
costs are, especially the consumer side. When we are talking 
about the animal ID--and I guess it would be Administrator 
Smith here--how many private veterinarians are actually using 
the USDA animal ID application. For this, I do not want to know 
how many are registered. How many are actually using the 
system?
    Ms. Smith. This is for the VSPS system?
    Mr. Latham. The USDA animal ID applications, right, yes.
    Ms. Smith. Yes, we currently have had 243 accredited 
veterinarians using that.
    Mr. Latham. Are they actually using it, or are they 
registered?
    Ms. Smith. Those are the ones who are actually using it.
    Mr. Latham. Out of how many registered?
    Ms. Smith. I do not have that figure. I will be happy to 
get that for you.
    [The information follows:]

     National Animal Identification System--Registered Accredited 
                             Veterinarians

    APHIS currently has 1,010 veterinarians registered for the 
Veterinary Services Process Streamlining system. Of this number, 243 
veterinarians are actively using the system, based upon the number of 
veterinarians that have written Interstate certificates of veterinary 
inspections.

    Mr. Latham. Are you looking at systems? The frustration I 
share with the Chairman, and part of that frustration is the 
fact that I know there are systems that are commercially 
available, where people are registering with you and then using 
other systems basically to do the same thing, that you are 
trying to achieve after $100-some-million dollars of 
expenditures. There have been systems commercially available 
out there for a long time that have worked and been 
extraordinarily successful.
    Ms. Smith. I know one of the components, of course, of the 
animal ID that we have been putting a lot of effort into is 
looking at what kinds of systems are already out there, 
communicating about our requirements for those to be 
compatible, and then certifying those as systems that could 
potentially be used.
    Mr. Latham. One big problem is, you went to K State rather 
than Iowa State; so anyway. [Laughter].
    Ms. DeLauro. Mr. Latham.
    Mr. Latham. Yes.
    Ms. DeLauro. Could you just yield for a second, and then 
obviously you can take all the time that you need. I do not 
know, Ms. Smith, if this was your testimony. But there were 
eight devices--eight devices.
    Let me just say this to you. You have got eight devices. Do 
we have the capability to look at the eight devices? Why is the 
Federal Government not sending out a request that says, these 
are our specifications; this is what we need; let us get a bid; 
let us have one device? Why are we complicating this? This 
leads me again to my frustration. But I thought the noting that 
there are eight devices now, this is not a system that wants to 
get itself underway.
    Mr. Latham. Right; Mr. Knight, one concern that producers 
have--and you brought the word ``traceability'' up two or three 
times today--how far up this chain are you saying there is 
going to be traceability?
    Obviously, producers have a great concern about, if there 
is a problem with ground beef someplace, that somehow they are 
tracing it back to that individual producer when they have lost 
control of the product after things slaughtered or being ground 
or being packaged and everything else. How far up are you 
talking about traceability?
    Mr. Knight. The traceability system that is being built 
with national animal ID is solely about animal health; and as 
such, is to be utilized for those purposes. It is only in the 
event of a disease outbreak that one would be doing that level 
of traceability.
    That traceability exists today. It simply takes a great 
deal more time to move forward. One of the things that I have 
explained to producers around the country is that animal ID 
does not in any way change their risk or liability associated 
with any sort of food contamination issue. That risk is very 
much the same today, with or without an animal ID system.

                       COUNTRY OF ORIGIN LABELING

    Mr. Latham. Is there any correlation with country of origin 
labeling and food safety?
    Mr. Knight. The country of origin labeling is perceived by 
some folks at the grocery level that as such, and I am 
implementing that in law.
    Mr. Latham. Was it ever the intent of country of origin 
labeling to be a food safety issue?
    Mr. Knight. I am a rancher from South Dakota. There are a 
large number of my neighbors who are advocates of country of 
origin labeling; and their desire for that is about using it as 
a non-tariff trade barrier against imports of basically 
Canadian cow beef.
    Mr. Latham. Or a marketing aspect?
    Mr. Knight. Or a marketing aspect.
    Mr. Latham. Okay; thank you very much, Madam Chairwoman.
    Ms. DeLauro. Thank you. Mr. Farr.

                         LIGHT BROWN APPLE MOTH

    Mr. Farr. In Australia and New Zealand, where they use just 
natural means, it is listed there as a minor insect. Why is 
this a zero tolerance pest in this country?
    Mr. Knight. My understanding, the reason for our position 
lies largely with the fact that there are no natural vectors in 
the United States that would lend control to that.
    I do recognize that as the debate has heated up on this 
issue, there are a few folks that are offering that they have a 
hypothesis; that there are natural vectors within the United 
States that would control this.
    We will take a look at that. I find that, just as a 
thumbnail sketch, fairly unlikely, given the level of exposure 
and the intensity or the presence of the light brown apple moth 
in those same areas.
    Mr. Farr. Also, in Australia and New Zealand, which grow a 
lot of California trees and Monterey pine as the commercial 
tree in New Zealand and Australia, and they even grow the 
redwood trees native to California, they have never found any 
negative impact on those trees.
    Are not your statements in California that these moths will 
attack all native oaks and pines and redwoods? There is a lot 
of doubt about that, since they have been there and have not 
been attacking them; and two, there have not been any 
indications that they attack those trees in those countries.
    Mr. Knight. And we have got also folks in New Zealand, 
farmers, who are producing agriculture crops that are doing 
repeated sprays to control the light brown apple moth. So we 
definitely need to make the investment in going through each of 
these issues.
    Mr. Farr. I understand that New Zealand has no spraying 
program. They have stopped it, because they feel that it is at 
a classification that it is not a serious impact on 
agriculture.
    As I understand, Canada and Mexico have the same standards 
that we have. Is there any discussion, any talk at the April 16 
to 18 tri-national agriculture court meeting in Sacramento, 
California, with those countries about changing the policies 
regarding LBAM and an actual pest?
    Mr. Knight. Sir, this is an extraordinarily large agency; 
and I am, from your question, just learning about this meeting. 
So I will have to check on that and respond back to you.
    [The information follows:]

       Light Brown Apple Moth--Classification in Other Countries

    There was no discussion at the Sacramento meeting regarding plans 
to change policies for dealing with light brown apple moth (LBAM). 
After the initial LBAM detection in March 2007, Canada quarantined the 
entire State of California, and Mexico refused shipments of all host 
crops from anywhere in the State, regardless of any inspection results. 
However, this program's eradication plan and progress has convinced 
Canada and Mexico to relax their trade restrictions and accept LBAM-
host crops from non-infested California counties without restriction. 
APHIS' strategy, then, is to reduce the impact of both countries' 
phytosanitary restrictions on LBAM-host articles from California by 
continuing to pursue eradication. If we suspend our eradication 
efforts, Canada and Mexico are very likely to impose more stringent 
phytosanitary requirements.

    Mr. Farr. Why is LBAM not an actionable pest for European 
countries and their produce?
    Ms. Smith. Because it is not present in the EU.
    Mr. Farr. If these lawsuits challenge the emergency status, 
which is what you are using to distribute the spray, and lots 
of people think that they can challenge the labeling that says 
an emergency, is it possible that Federal funds allocated for 
the eradication can be reassigned to non-emergency programs of 
control, emphasizing ecological methods? Have you ever shifted 
from an emergency fund to just a non-emergency program?
    Ms. Smith. We do not have the authority with our emergency 
funding to re-direct it in that way. Emergency funds are 
requested and may be used for emergency types of situations, so 
we cannot pull those funds to use them for another situation.
    Mr. Farr. But you could pull them from spraying and go to 
ground manual eradication.
    Ms. Smith. That is correct.
    Mr. Farr. Who ends up classifying this moth as a zero 
tolerance? Is that your department?
    Ms. Smith. I am not sure it is the term zero tolerance. 
What we did in this case is, we conducted a thorough scientific 
analysis; and we convened a group of international scientists 
that are coming from the countries New Zealand and Australia 
that have dealt with this pest.
    So we base this on science and the most widely available 
science that we can, which is what we did in this case.
    Mr. Farr. That was 25 years ago that we listed it.
    Ms. Smith. What I am speaking to is, in terms of our 
strategy that we are developing to respond to LBAM is a 
convening of scientists. So we have the most current 
information, and we have the benefit of drawing upon years of 
experience that New Zealand and Australia have had with the 
pest.
    Mr. Farr. So what is the worst case scenario? If you cannot 
eradicate it by spraying or you get the spraying stopped, what 
is this going to do? Are you going to impound all the 
agriculture from California?
    Ms. Smith. That would not be our intention. The potential 
long term consequence of not using spraying to stop this pest, 
which we have had some success in doing, is that this is a pest 
that could spread across the entire U.S. and be particularly a 
problem in the southern states, where it is warmer all year 
round, and in other states in the summers.
    But it has the potential to be a really serious pest, which 
is why since we have a combined strategy, it has allowed us to 
eliminate it in the counties that it started in.
    Mr. Farr. Where was that?
    Ms. Smith. I think that is Los Angeles County and Napa 
County. It was originally in 12 counties.
    Mr. Farr. You did not do area spraying in those two 
counties.
    Ms. Smith. Not in those two counties.
    Mr. Farr. I will just come back in another round. I want to 
think about how I want to put this.
    Ms. DeLauro. Mr. Kingston.

                           ANIMAL WELFARE ACT

    Mr. Kingston. Thank you, Madam Chair.
    Ms. Smith, I am curious, as the Animal Welfare Act has not 
provided for the regulation of pet stores. But there are 
facilities that have rats and mice and birds, not used in 
research, that have been infected. What do you attribute that 
to?
    Ms. Smith. Since most rats and mice are bred for research, 
most of the new facilities that we would be talking about would 
be pet bird breeders and dealers.
    Mr. Kingston. Why is that a Federal Government function?
    Ms. Smith. Because that was the direction that we were 
given as a result of the issue being raised. This was something 
that came about. There was a settlement with the Department of 
Justice, that the Government agreed to this coverage of the 
rats, mice, and birds.
    Mr. Kingston. A lawsuit could put you in a new business?
    Ms. Smith. As part of the settlement in that Department of 
Justice lawsuit, as I understand, the lawsuit was seeking for 
us to have greater coverage than the AWA.
    So there was subsequent legislation in the 2002 Farm Bill 
that came about as a result of this issue being raised 
initially and the lawsuit.
    Mr. Kingston. Is it constitutional for the Federal 
Government to have a rat inspection program? I know the Federal 
Government is the alpha and omega of all good things, and the 
enforcement of rat regulations is very important to the 
taxpayers. But is that what we need to be putting our resources 
in?
    Ms. Smith. Well, all I can tell you is, it was in the Farm 
Bill. The legislation was there for us to take on the 
responsibility or evaluate the responsibility of that.
    Mr. Kingston. Regardless of a state law that would allow 
state inspection of pet stores--so now pet stores would be 
subject to a state inspector and federal inspectors?
    Ms. Smith. Not pet stores directly.
    Mr. Kingston. Okay, well, pet breeders who supply rats to 
pet stores--that has got to be a real difficult business to be 
in. Because I know they hate breeding and growing a rat 
population is so hard. But now we are going to have forms and 
everything that say how big the cage has to be for a rat, and 
Federal inspectors who will go by and make sure that they are 
being treated humanely.
    Is that what I am hearing? How much is this going to cost? 
I can tell that you are very proud of this program. [Laughter.]
    Ms. Smith. In the 2009 budget request, there is an 
additional $314,000 being requested.
    Mr. Kingston. So we are going to spend $314,000 to inspect 
rats, even though the state government could be doing it and is 
doing it in many states, correct?
    Ms. Smith. APHIS is anticipating that the large amount of 
work--well, what this is really going to get down to in terms 
of the work that we would be doing is really going to be more 
of the pet bird breeders and pet bird dealers.
    Mr. Kingston. Who was the judge? This is what the Ninth 
Circuit of California was responsible for. [Laughter.]
    I am just trying to figure out how the Federal Government 
gets involved in this.
    Mr. Farr. It was just by legislation. The state legislature 
standardizes all the cage sizes for all animals.
    Mr. Kingston. Okay, but if the state has a program, would 
the gentleman agree that maybe the Federal Government should, 
similar to the McCarran-Ferguson Act on insurance, where the 
state is regulating that the Federal Government would not need 
to.
    Mr. Farr. First of all, this is the commercial raising of 
rats for pets and things like that. I frankly think that 
whenever you have commercial utilization of animals, then you 
ought to have some humane standards, and they ought to be 
standards set for across the nation.
    I think the reason that ours applies to potential 
universities or the ones that have this research is that in 
their own protocols, they have to have humane procedures. When 
they are doing research from one university to another, you 
certainly want to have national standards, rather than just 
every state having a separate standard.
    Mr. Kingston. I agree they should be treated humanely. I 
just question that we need to have a Federal standard.
    Mr. Farr. That is what happens when all the states start 
adopting these things and they are all different. Then they 
come screaming to the Federal Government and say, standardize 
it.
    Mr. Kingston. We will talk about that. Who was asking for 
the legislation?
    Mr. Farr. That is typically what happens. You know, these 
anti-smoking laws and anything else, with the health and 
safety, usually it starts with a community, a county, or a 
city, and then several cities in those states.
    They come to the legislature and say, we cannot live by 
this. We have 58 counties in California and 58 different 
standards. Make a state standard. Then after a few states adopt 
it, they come to the Federal Government saying, we need a 
national standard.
    That is usually the way standards are set. We are the last 
to set them, except for things like aviation and interstate 
commerce.
    Mr. Kingston. Do you know how many people it is going to 
take to do this? An amount of $314,000 is not huge dollars by 
Federal standards; but you say 10,000 facilities.
    Ms. Smith. In the 2008 budget, we have seven staff members 
associated with this; and then we would be requesting to add 
two additional staff.
    Mr. Kingston. So they do not go out in the field, 
obviously. Oh, they do?
    Ms. Smith. They do.
    Mr. Kingston. They do or they do not? With nine people, you 
do not really have a field staff.
    Ms. Smith. Yes, we would most likely have some of these in 
the field, and some may be at headquarters, as well.
    Mr. Kingston. Okay, Mr. Farr and I will discuss this a 
little more.
    Mr. Farr. Yes, if you will enlighten me, I did not even 
know this was an issue.
    Mr. Kingston. Yes.
    Mr. Farr. I have not been keeping up on the rats.
    Mr. Kingston. Well, it just caught my attention in terms of 
Federal Government involvement in things. Now I am out of time, 
having yielded so generously to you. If I could ask one quick 
question, though.
    Mr. Farr. Yes.

                 NATIONAL ANIMAL IDENTIFICATION SYSTEM

    Mr. Kingston. We did talk about the Kansas State University 
study on national ID. When is that going to be ready? Because I 
thought that there were some findings already out.
    Mr. Knight. It will be this summer. I cannot recall off the 
top of my head whether it is a June or July delivery date. But 
it will be this summer that we will have the preliminary 
findings.
    Mr. Kingston. You know, in the Farm Bill deliberations, 
they will not have the benefit of this study.
    Mr. Knight. They will not.
    Mr. Kingston. They do get together by the 18th.
    Mr. Knight. There is nothing at present in the Farm Bill in 
reference to ID, other than one provision regarding 
confidentiality of the information. So the Farm Bill has 
virtually no impact on the ID program.
    Mr. Kingston. Okay, I yield back. I am going to have 
another question on another subject.
    Mr. Farr [presiding]. Ms. Kaptur.

                             WIND TURBINES

    Ms. Kaptur. Welcome, it is good to have you here today, and 
I guess I will start with APHIS and Administrator Smith.
    Last year, in the 2008 Appropriations Bill, our committee 
directed the agency to pay particular attention to the effect 
of bird strikes from wind power generation. All over America 
and really the world, the fastest growing segment of renewable 
energy is wind turbines.
    It is my understanding that the agency did not act on this 
directive from Congress. Could you please tell me why and what 
we might be able to do to help develop better data where these 
turbines may be intersecting with flyways and so forth?
    Ms. Smith. Certainly, I would be happy to. Just a point of 
clarification, we did receive funding for our air safety 
program, which is ensuring that our aerial operations are 
conducted in a safe manner to protect our employees.
    We did not receive specific dedicated funding with respect 
to the aerial safety issue with respect to birds and the wind 
turbines. But we are doing some research at the Sandusky Field 
Station, where we are doing research on visual warnings for 
birds; both looking at how they respond to specific light 
wavelengths and pulse frequency combinations. We are hoping 
that this research will lead to some potential warning 
mechanisms that can be used in association with these turbines.
    I would also just share that the Fish and Wildlife Service 
and the Department of Energy have authorities, as well, related 
to bird conservation and energy development. We are aware that 
they are working together to develop wind power turbine design 
and identify areas where the placement of these turbines would 
have minimal impact on migrating species.
    So we are talking to other agencies so that we are aware of 
what they are doing, and we are also doing some specific 
research at the Sandusky Field Station.
    Ms. Kaptur. All right, if you could give me any direction; 
if we have not given you enough authority, if we have not 
provided sufficient funding. This is a particular issue in the 
Great Lakes--Lake Erie is the Saudi Arabia of wind--or also on 
the intersection of the Mississippi and Atlantic flyways.
    We have to find an answer to this. I happened to run into 
somebody; and I got the best answer sitting next to somebody 
sitting next to somebody on an airplane, a researcher up at the 
Michigan State University, who has done extensive research on 
bird turbine issues.
    I just wonder whether your APHIS people, would they be 
doing a search of studies? I think this person was part of the 
faculty up there at the agriculture school. Would you be in 
receipt of that information?
    Ms. Smith. I would imagine we would be. The standard 
approach for us in terms of deciding what types of research 
projects we undertake, we start with an assessment of what is 
needed. Part of that is evaluating the literature that is 
currently available.
    So certainly, if it is anything peer reviewed, or if this 
individual is active in the professional community, then our 
researchers should be aware of it. But, of course, I would be 
happy to take that back and make sure that we are.
    Ms. Kaptur. Okay, if you could tell us who to work with at 
Sandusky, because we have a huge task force working. I 
represent the longest coastal district in Ohio. These involve 
people from NASA, Department of Energy, EPA, all these 
different people.
    There has been a lot of money being put into this, and it 
is like, hey, build the windmills. I mean, get them up. We are 
spending all this money on bird research, and we have got the 
highest power rates in the country. We have to find power 
solutions here.
    So if there is a scientific issue, you know, we really need 
USDA's help in this. So I am glad to hear there is somebody 
over there. They are certainly not known to me.
    But if you could give us more information on that. Also, if 
you need more of something in legislation that we have not done 
to give you the authority, I hope you will let me know that.
    Ms. Smith. Okay; thank you.

                      VIRAL HEMORRHAGIC SEPTICEMIA

    Ms. Kaptur. In the area of, again, the Great Lakes, viral 
hemorrhagic septicemia--we appropriated last year $5.56 million 
for APHIS to prevent its spread.
    As we look at the expenditure of those dollars, I guess 
what is a little bit of concern is why the majority of funds--
and it is not that much; $5 million out of billions and 
billions of dollars--the expenditure is not happening in the 
front line states being affected by this disease.
    In not just the Great Lakes States, but the Mississippi and 
Ohio connecting riverways, the agency seems to have signed 
agreements with Montana, Wyoming, Colorado, New Mexico, Texas, 
Kansas, where there is no evidence of the disease.
    We are a little confused, and I know the Chairman of the 
full Appropriations Committee, Chairman Obey, is very 
interested in this issue, as well, of why were the dollars not 
spent in the places where the disease is prevalent; and on the 
basis of what has been done already, is the disease being 
contained?
    Ms. Smith. I am not sure specifically what kind of 
agreements you are talking about or work you are talking about. 
But what we did do, speaking to your issue, is that we 
implemented cooperative agreements with the eight state 
agencies bordering the Great Lakes. Then the next tier of 
agreements we entered into was the next 11 states that are 
located alongside those states. So we did put cooperative 
agreements in place for the most directly affected states.
    Ms. Kaptur. Have you contained the spread of the disease?
    Ms. Smith. Right now, we are doing a national survey where 
we are focusing more surveying on the high risk states. So it 
is a survey based on the higher risk. At the end of this 
national survey then, we will have a fuller picture of the 
status of this.
    Ms. Kaptur. I am going to share with you, I mean, you have 
got agreements with Alabama, Connecticut. I do not know if you 
have viral hemorrhagic septicemia in Connecticut--Delaware, 
Mississippi, New Jersey, New Hampshire. Anyway, you know, the 
people in the Great Lakes are a little unhappy, to say the 
least. So we are just curious as to what kind of thinking would 
not focus where the problem was the greatest.
    Mr. Knight. If I could, we will look at this and make sure 
we give you a good comprehensive response for the record on 
this.
    I do believe that part of what you are seeing are the funds 
for this comprehensive survey. As we were dealing with VHS, I 
recall last summer, we have those states that are definitely on 
the front line. So it is the Great Lakes that are experiencing 
the challenges with this.
    But because this is an emerging disease problem, we do not 
know the extent of its presence in the entire United States, 
and that is what this national survey is intended to do; to 
really be able to scope the extent and to be able to make an 
informed decision on how to control VHS.
    So I am speculating, and this is pure speculation, that 
that is why you see the investments in some of the states that 
are beyond the known front line of the VHS problem.
    [The information follows:]

    

    
    Ms. Kaptur. Madam Chair, the Chairman of the full committee 
also wanted me to present this information. I will end with 
this statement, so we see if we are working from the same 
database or not here.
    But of the $5.56 million for APHIS, four activities 
relating to combating VHS and its spread, you have spent $1.8 
million for 39 state cooperative agreements and one tribal 
organization; $1.4 million for a lab at Ames, Iowa; 20 percent, 
$1.1 million for administrative overhead, and we have a 
question mark what that is for. Then there was another $1.26 
million left. We do not know what that was spent for. So we are 
very interested in pinning down where these dollars are being 
spent and for what purpose.
    Finally, I believe that you had proposed in your budget a 
$3 million cut from APHIS's aquaculture program. If that is 
true, if you have not contained the spread, why are you cutting 
the funds for aquaculture, when we have to restore the fish 
population? We do not really understand that.
    Mr. Knight. If we could, I will have our follow-up work go 
through each of those numbers and respond to you.
    [The information follows:]

    

    
    Ms. Kaptur. Thank you.

                 NATIONAL ANIMAL IDENTIFICATION SYSTEM

    Ms. DeLauro [presiding]. Thank you very much, Ms. Kaptur. 
Let me ask if we can put the chart up. Can we put that chart 
up? I will really wind up with two additional questions on the 
animal ID program, and then I want to move to AMS and to GIPSA.
    But this whole area of cooperative agreements, we are not 
really clear what the department has produced the whole $128 
million for. We talked about, I think it may even be 51 percent 
of it. It is $35 million that we have talked about from 2004 to 
2006 on a cooperative agreement. That does not include 2007.
    Let me just quote the GAO on cooperative agreements. ``USDA 
has not consistently monitored cooperative agreements and, as a 
result, cannot be assured that the agreement outcomes have been 
achieved.''
    I would just explain the chart. Each one of the dots 
represents a state. Then you have the dollar amounts on the 
horizontal line at the bottom. The vertical line tells you what 
percentage of the goal has been met in terms of premise 
registration.
    So what we see, if you go to absolutely the far end of the 
right side of the chart, we have got $2.2 million there that 
has been in this particular agreement with this state. We have 
got, you know, maybe 15 or so percent where we are dealing with 
what has been accomplished.
    The point of the chart is that really the dollar amounts 
that are being spent in the states and the premise 
registration, there is no connection. There is no connection 
that if you spend more money, you are getting more 
registration. So you have spent significant amounts of money on 
agreements, and they still have not enrolled the premises.
    Some states have spent $9, Wisconsin; $15, Michigan, $18 
per premises in Indiana per premises registered. Other states 
have spent $421, California; $383, Kansas; $340, Colorado per 
premises registered. So we have no connection between the 
amount of money you are spending per state versus what is being 
registered.
    Now I am going to ask these three questions which are for 
the record, because I want to, as I said, wind up with one more 
question. What value are taxpayers deriving from these 
cooperative agreements? Why should taxpayers continue to fund 
cooperative agreements? How has APHIS stepped up its oversight 
and evaluation of these cooperative agreements since the 
release of the GAO findings? That question is, what are the 
lessons learned here?
    How is APHIS evaluating the performance of the states that 
have effectively used Federal dollars in sharing these best 
management practices with other states?
    I would just add one final note there. I read in testimony 
that you have also set up cooperative agreements with industry. 
I would be interested to know whom those folks are, what they 
are doing, and the monitoring of those efforts, as well, and 
the costs involved in that effort, as well. I think 
graphically, this demonstrates what is happening.

                  MANDATORY VERSUS VOLUNTARY ANIMAL ID

    Let me make a comment. I am not going to belabor mandatory 
versus voluntary and re-litigate that effort again. But I am 
concerned though about another comment that you made. These are 
remarks to animal identification form at the cattle industry 
annual convention in Reno, Nevada this past February.
    You acknowledge that NAIS set a trigger for it to become 
mandatory in 2009 if there was insufficient participation. This 
is your quote. ``But I took that out behind the barn and shot 
it to death. It is no longer there.''
    I need to ask, to what extent did you in the USDA evaluate 
other countries' experiences with implementing animal ID 
systems before you took our ID system out back and shot it to 
death?
    I am also going to mention the Secretary's comments just 
recently, I think, this week. This is about animal 
identification. He sends a strong message that we need to 
gather the information and put a system in place in the United 
States of America now.
    We look to our good neighbors to the north in Canada. They 
have got well done and a good functioning animal ID system, and 
it has proved valuable to them many times. It was born out of a 
crisis. But do we have to have a crisis here before responding?
    I will also mention to you, I think it is imperative to 
note that Argentina, Australia, Brazil, Canada, the European 
Union, which makes up 27 countries, all have mandatory ID 
systems. They have had them now for the last several years.
    Has USDA reconsidered its decision to move forward with a 
mandatory ID system for certain species? Have you re-thought 
this issue; and what is the compelling public interest to not 
allow us to move forward with a mandatory system?
    Mr. Knight. Certainly, to the first round of questions, we 
will be pleased to respond on the record. They are excellent 
questions and deserving of a good response.
    The voluntary versus mandatory issue continues to be one of 
the more controversial issues that we have pertaining to ID. We 
have areas of very, very intense and strongly-felt producer-led 
grassroots opposition to animal ID.
    I have met with many of those individuals. There is a very 
intense opposition to ID in Missouri, very intense and active 
groups in Virginia. In New England, Vermont has been very 
difficult. In Maine, Maine has been extraordinarily difficult. 
Montana and Washington have very strong opposition to ID, 
mandatory or voluntary.
    The decision to proceed with a voluntary program is a very 
pragmatic effort to move past those pockets of opposition to a 
program that can become robust in a very coordinated manner.
    The investments that have been made over the last several 
years, as far as integrities of the database, standardization 
of the rules, every one of those things are an extraordinarily 
sound investment that would work every bit as well under a 
mandatory system as a voluntary program. So you have got a good 
sound underpinning there as we move forward with animal ID.
    [The information follows:]

    

    
    Ms. DeLauro. You acknowledge that the NAIS set a trigger 
for it to become mandatory in 2009 if there was insufficient 
participation. I think there is ample evidence that there is 
insufficient participation.
    But you felt that this movement--and you are the Under 
Secretary here--that you took it behind the barn and you shot 
it to death. You know, I understand going to conference and 
throwing, excuse me, red meat out. But you know, your words 
follow you; and what you say gives us some insight to what your 
view is about this program.
    Let me just say this. The GAO report revealed that earlier 
on in the development of the animal ID system, USDA recognized 
that a fully functional tracking system will keep the U.S. 
competitive in international markets.
    Given the Administration's focus, your focus on trade, and 
your focus on supporting the industry, I find it necessary to 
return to that decision that you have made to hobble our animal 
ID system and to weaken our competitive position. I believe 
that that is the result; and if the Department is going to have 
a credible and effective animal ID system, there has got to be 
a change in the department's approach.
    Maybe the sense is that it will not be on your watch and we 
will wait and pass the time for another day and another 
Administration. If that is the case, I think you have done a 
disservice to our competitive position and to our industry.
    Mr. Knight. If I may?
    Ms. DeLauro. Sure.
    Mr. Knight. The reason that I have confidence in a 
voluntary system lies with the market forces that are leading 
people towards voluntarily embracing identification and those 
marketing systems. I see both domestic and the international 
market forces asking for increased traceability and putting 
greater and greater reliance upon that, and so I see this 
coming about quite naturally because of the market forces, as 
opposed to a government fiat. And so as--
    Ms. DeLauro. Argentina, Australia, Brazil, Canada, the 
European Union and 27 countries which make up the European 
Union. This goes back. 1992, sheep and goats in the European 
Union fined since 1992. Cattle, buffalo, bison, equine for 
2000. These are nations, these are our trading partners. They 
make it mandatory. They protect, if you will, their industry. 
We have left our industry exposed, and I think that ultimately 
that will be--well, we will see where we go but I do not think 
that there is, quite honestly, any of the data that points in 
the direction that we have taken this issue as seriously as we 
should have.
    Mr. Farr.

                         LIGHT BROWN APPLE MOTH

    Mr. Farr. Thank you very much. You will never guess what I 
want to ask you about. I was just reading some of the articles 
here. There are 30 cities in California that adopted 
resolutions to oppose a spraying for LBAM and other state 
legislatures considering a dozen bills right now, and they are 
moving. I know Senator Boxer and Senator Feinstein are going to 
be inquiring about these issues. I am the only westerner that 
sits on this committee, so I am sort of raising these issues 
for all the California Congress members. There are 54 of us, 
and I am sure if it spreads to the other Western states I will 
probably be asked those questions by those legislators as well.
    So I would like to, since this has been declared an 
emergency and you are assisting the state with eradication, 
what is your budget request for 2009 for funding for the LBAM 
program?
    Mr. Knight. $24 million.
    Mr. Farr. 24 million?
    Mr. Knight. Yes.
    Mr. Farr. Is there any state match for that?
    Mr. Knight. There is no state match in that number.
    Mr. Farr. I have heard that the current eradicative 
strategy may take up to five years to be successful. Are you 
preparing funding forecasts that support that expectation?
    Mr. Knight. The 74 million dollars in emergency funding, I 
believe, includes the capacity to go multiple years on those 
efforts.
    Mr. Farr. And do you have, does the USDA have a plan that 
provides the technical and economic feasibility for eradicating 
LBAM in California by using the aerial application, or was that 
a state--is this your plan or their plan?
    Ms. Smith. We are the ones with the plan, but if I could 
just clarify,----
    Mr. Farr. Please.
    Ms. Smith. The 74 million was for one year, and we have a 
proposed plan for lesser amounts in future years.
    Mr. Farr. 74? You said 24 for 2009.
    Ms. Smith. 24 is 2009, and he referenced 74, that was for 
the--
    Mr. Farr. That is for the whole, any kind of emergency?
    Mr. Knight. The 74 was the CCC fund. I believe in my 
response I had implied to you that that would carry into the 
multiple years, and Administrator Smith is trying to very 
delicately correct my statement.
    Ms. Smith. Maybe not so delicately. [Laughter.]
    Mr. Farr. But appropriately. So how much do we have for 
2009?
    Mr. Knight. 24 million for 2009.
    Mr. Farr. That is including CCC?
    Mr. Knight. That is not including the CCC request.
    Mr. Farr. And how much to add the CCC?
    Mr. Knight. Those are emergency funding requests, and we 
use those as the bridge money up front.
    Mr. Farr. And that was 74?
    Mr. Knight. That was 74 million.
    Mr. Farr. For 2008.
    Mr. Knight. Beginning in 2008, because that was not 
anticipated.
    Mr. Farr. Has USDA or any other agency eradicated LBAM 
using a pheromone?
    Mr. Knight. The scientific advisory panel, when they had 
looked at all the alternatives, came to the conclusion that, 
given the complexity of this issue, that the pheromone would be 
the best possible response.
    Mr. Farr. Is that eradication response, because you have 
zero--the standard is zero tolerance, so it has to be 
eradication. The question is, is it a tool to eradicate or is 
it a tool to control?
    Ms. Smith. It is a tool to control and eradicate, and of 
course, that is supplemented in the more heavily infected areas 
with the application of pesticides.
    Mr. Farr. Yes, and in those applications of pesticides you 
are requiring, we have a lot of organic farmers who are 
complaining that the organic phosphates that they use are, you 
know, do not allow that they have been--market their produce 
organic.
    Ms. Smith. And perhaps those are not in the more heavily 
infested areas. I mean, what we have put together is a 
comprehensive strategy of multiple tools, and which tools will 
be applied would be dependent upon the specific environment 
that we are trying to achieve.
    Mr. Farr. But that environment is managed at a county 
level, so if you are an affected county, then you have to abide 
by these spray protocols in order to get your produce--or 
infections to get your produce certified so it can be shipped 
out of the county. Is that correct?
    Ms. Smith. A point of clarification is that the Bt 
insecticide, which is a common one being used, is considered an 
organic insecticide.
    Mr. Farr. If the state is unable to launch an aerial 
application of pheromone over urban areas because of lawsuits 
and other things in state court, will USDA take over and 
conduct an eradication program?
    Ms. Smith. We will have to see where we are if such a thing 
were to happen.
    Mr. Farr. Have you done that before, sort of federalize 
the----
    Ms. Smith. In any other kind of program?
    Mr. Farr. Mm-hmm.
    Ms. Smith. I am not certain if we have. Yes, we have.
    Mr. Knight. We would have to look very carefully at any 
decision along those lines. If we were not----
    Mr. Farr. But see, this is the point. Our laws and 
regulations are driving it.
    Mr. Knight. Yes.
    Mr. Farr. The state is doing this because the federal laws 
require it in order to ship out of this number one ag state, 
number one specialty crop state. The counties where they 
usually are found are in specialty crop areas. There is a lot 
of debate by host countries, by scientists at Davis and so on 
that you will never be able to eradicate it. New Zealand and 
Australia were able to control it through natural license, and 
as I read, that New Zealand has stopped any kind of spraying 
program.
    So I think there is going to have to be revisiting, first 
on the initial policy of how bad this pest is and whether it 
really does eat up all these things that it says it does, 
because so far, the evidence is that it has not. So we are 
having a hard time standing on our federal policy. Meanwhile, 
the states are going nuts about having to do--meet your 
standard, even though they have used a pheromone which is, you 
know, we thought was going to be a very passive way of 
confusing this moth, and--but the public rejects it from a 
spraying standpoint and has raised some serious issues about 
the ingredients that the pheromone is mixed in that is sprayed.
    I think it is really important, and these questions really 
get to, is to this long-term commitment of whether we ought to, 
one, revisit the policy of how dangerous is this specie, and do 
we have to have zero tolerance? Perhaps we need a little more 
time to study that, and at the same time, I think we might have 
to step in, and you know, I do not know how you are going to 
win a public relations war that the state is losing.
    There are just some serious issues here, where the public 
might be able to stop the Department from using the spray 
technique, and are we going to then go to ground twist ties and 
things like that. I think these things really have to be 
thought through and have a budget for it, and really, this is 
like an emergency. This is the Katrina of agriculture right now 
in California.
    Mr. Knight. No doubt about it, it is a major event that is 
worthy of serious dialogue and consideration on how we go 
forward. The advisory panels that have looked at this have come 
to us with the recommendation that the current eradication 
strategy would be most cost-effective.
    Mr. Farr. But if that does not work, what is plan B?
    Mr. Knight. Plan B would be to fall to a containment 
strategy. I am fundamentally concerned about a containment 
strategy, or how to contain it in the current geographic area 
in California, because of the potential of disruptions in 
movements of fruits, vegetables, propagated material, perhaps 
within California, but certainly outside of California, very 
concerned about the potential for both domestic and 
international business impact.
    Mr. Farr. If science warrants a reclassification, cannot 
you do that? I mean, there seems to be nobody asking, putting 
money and research into the assumptions on which this policy 
was adopted. It is 24 years old.
    Mr. Knight. I am certainly willing to, per your request, 
take a look at that and we will see what assumptions we can, 
what we can do and find.
    [The information follows:]

   Light Brown Apple Moth--Next Steps if Eradication Is Not Feasible

    If eradication is not feasible, APHIS can reclassify a pest based 
on new scientific analyses. In 2003, APHIS had the University of 
Minnesota's Department of Entomology conduct a mini-risk assessment on 
Light Brown Apple Moth (LBAM) updating the 1984 analyses. The 2003 risk 
assessment indicated that LBAM is considered highly likely to become 
established in the United States and that the consequence of its 
establishment in the United States to agricultural and natural 
ecosystems would be high or severe. This conclusion supports LBAM's 
classification as a quarantine pest.

    Mr. Farr. Thank you.
    Ms. DeLauro. Ms. Kaptur.

                            TRADE WITH JAPAN

    Ms. Kaptur. Thank you, Madame Chair. I have got a lot of 
questions and not much time.
    On, Mr. Knight, Agricultural Marketing Service, are normal 
beef marketing relationships reestablished with Japan?
    Mr. Knight. Trade with Japan is restricted to beef under 20 
months of age. There is a great deal of work to be done to 
fully reopen that market.
    Ms. Kaptur. I would very much like to work with you and the 
Japanese embassy on bringing in their officials to northern 
Ohio, and to go to some of our family farmers who are tagging 
animals, and they know everything they have eaten, no hormones, 
no antibiotics, et cetera, and to see if we cannot begin to 
restore some of that beef market. I am not exclusive to Ohio. 
You can do this in any state, but I sort of do defend Ohio 
quite a bit--to see if we cannot begin to reestablish that 
relationship by buyers gaining confidence at the farm level.
    If that is possible to do through you, I would very much 
like to do that.
    Mr. Knight. We would be willing to do that, or working with 
some of my other colleagues that do that sort of trade work, we 
could coordinate a USDA effort.
    Ms. Kaptur. Okay. Honda operates in Ohio. It is one of our 
big corporations there, and there are a lot of flights that 
happen between Columbus and Tokyo. All right, so I am thinking, 
you know, if we would need a freezer at the airport, but we 
have got to have people confident this is good product, but I 
think it is good if the--however the Japanese arrange it, if 
they send in their buyers, to get to know people and to gain a 
confidence level on how it is not a huge feed lot with, you 
know, 40 to 100,000 animals, that they are individually raised, 
and so forth, I would love to try that if it would aid you in 
your efforts to open up that market.
    Mr. Knight. Certainly, and I would be remiss if I did not 
note that my counterpart, Under Secretary Mark Keenum is before 
you tomorrow, and he has the primary lead on this topic.
    Ms. Kaptur. Okay. All right. What would be your role, then?
    Mr. Knight. From the animal ID side, I could assist you. 
From the aspect of the AMS export verification, we could assist 
you. From the aspect of the phytosanitary issues, the APHIS 
side of the house could take care of it. Under Secretary 
Keenum, Under Secretary of Farm and Foreign Ag Service, FFAS, 
has the lead on the international relations on market 
development.
    Ms. Kaptur. Okay, whatever you can put together for me over 
there, help me do it. Okay? I am going to try with the Ohio 
Cattle Association to do this the right way.
    Mr. Knight. Okay.

                           URBAN WILD ANIMALS

    Ms. Kaptur. Okay. Small question to Administrator Smith, 
urban--though it is not your job, but wild animals within the 
urban environment, how can I get USDA to partner with whomever 
I have to get them to partner with to look at exploding 
populations of deer, coyote, rodents, in cities? The animals do 
not know where the border of a municipality is. They go along 
the rivers. They go along the creeks. Urban people treat 
anything that breathes as a pet.
    How do you know when you have reached a tipping point in 
terms of too many of something wild within your city limits? 
Quite frankly, because we are in the North American flyway up 
in the Lakes area where I live, we have too many geese. They 
are literally now polluting our urban borer pits where we have 
these reservoirs that we have created. I do not know what the 
solution is. In terms of cormorants, we have managed to put oil 
on some of the eggs out in the nests that line the shore just 
for that one bird, but what is the role of APHIS and others, 
where we could put a team together to look at maybe some 
prototype urban areas and what could be done to control the 
wild animal populations that are growing that nobody has 
responsibility for?
    We have a dogcatcher. That is all we have within the urban 
limits. What do we do?
    Ms. Smith. I very much appreciate the question. Of course, 
we do have Wildlife Services, and within that program, of 
course, we have authority to provide assistance to public and 
private entities to manage urban areas. Of course, it is not 
part of our appropriated funding, so we do it on a reimbursable 
basis, but we do get involved in that kind of work. We have 
been involved in, for example, you mentioned the cormorants.
    We worked with that in the Fish and Wildlife Services and 
conducted environmental impact statements to look at double-
breasted cormorants, we did that back in 2003, and their impact 
on water bodies and on other places, and certainly we recognize 
that--coyotes are another example of something that has become 
a pest in urban areas. They can go all the way across the 
country. Raccoons and coyotes both transmit rabies and bring 
other types of problems for people in Ohio, and then of course, 
we have got the whole issue of deer with populations that have 
moved to a level that are creating more than $1.1 billion a 
year in damages through vehicle collisions.
    So there are certainly a lot of these areas. I would be 
happy to talk with you further about how we might look at this 
a little bit from equals, work with some others in terms of 
getting answers to your questions on kind of what is the 
tipping point. In the meantime, we will conduct environmental 
assessments and environmental impact statements when we have 
specific projects that we are asked to work on.
    Ms. Kaptur. I would like you to help me think of how to do 
this. Madame Chair, I will just take 30 seconds to say that I 
am not quite sure who to put around a table, but I want to do 
that since I do not even have data in terms of raccoon rabies, 
where its spread is and then looking at the explosion of 
raccoons in our region. If I look at deer, I do not know the 
extent of lyme disease, where it is spread, where it is in the 
country. I do not have all these researchers on my staff that 
can do all this for me, and then looking at the exploding deer 
population in the city of Toledo.
    Coyotes is another issue. I know we have a lot of them. You 
know, these people, integrated pest management, all these 
companies that go out and try to catch these things when they 
are in people's yards, how do you measure this? Who do we get 
together to look at this and to work with our local officials? 
We have a huge feral cat problem within the city. We are not 
the only city that does, but there is this tiny little program 
to neuter cats, but somebody has got to give us a sense of how 
does an urban area work in conjunction with the wild, and what 
are normal limits?
    If geese are polluting all of your city play lots, you have 
reached a tipping point, and you know, what do you do? Nobody 
has responsibility. So if you could help me figure out how to 
put people around a table, I cannot believe we are the only 
city in America that has this situation.
    Ms. Smith. We would be happy to have that discussion with 
you.
    Ms. Kaptur. Thank you.
    Ms. DeLauro. Thank you, Ms. Kaptur.

                      NUTRITION PROGRAM PURCHASES

    Mr. Day, we get a lot of scrutiny of the school food 
programs of late because of what happened at Westland/Hallmark 
and the recall. I think it would help the subcommittee, the 
press and the public to try to clarify some basic points about 
the role that AMS plays in the purchasing of commodities for 
the school food program. Let me just try to go through this if 
I can.
    The IG described your role as follows: ``AMS obtains 
commodity orders from FNS, and is responsible for issuing and 
accepting bids and awarding and administering contracts. Also, 
AMS is charged with overseeing the contractors' production and 
shipment activities to ensure conformance to product 
specifications. In addition, AMS works with the Food Safety and 
Inspection Service to ensure that products are wholesome and 
processing plants operate under sanitary conditions.'' Is this 
accurate?
    Mr. Day. Yes, ma'am.
    Ms. DeLauro. You buy products for programs other than the 
school lunch programs?
    Mr. Day. That is correct.
    Ms. DeLauro. Are your specifications for purchases of a 
product the same----
    Mr. Day. Yes.
    Ms. DeLauro [continuing]. Regardless of the program served? 
School lunch versus TEFAP, for instance.
    Mr. Day. Yes, ma'am.

                          PURCHASING STANDARDS

    Ms. DeLauro. Okay. In terms of the standards, let us use 
ground beef as an example. You have a very long ``technical 
requirements schedule,'' in which you lay out your 
specifications, for example, the ground beef must be only from 
U.S.-produced livestock, be from humanely handled cattle in 
compliance with all FSIS rules, not come from non-ambulatory 
cattle, have gone through two pathogen intervention steps, must 
have been subjected to certain microbial tests and be within 
certain standards.
    Who decides what your standards should be?
    Mr. Day. We decide what those standards are.
    Ms. DeLauro. AMS decides?
    Mr. Day. Yes.
    Ms. DeLauro. Does the final decision on standards come from 
FNS, FSIS, AMS? Do you all have to agree to those standards?
    Mr. Day. We agree that they must meet FSIS requirements, 
and then on top of that, AMS has other standards because of the 
vulnerable communities about which you spoke, to ensure that, 
as any large procurer, we are getting what we want and we are 
protecting school kids or the elderly from the potential of 
pathogens.
    Ms. DeLauro. So your standards go above the FSIS standard?
    Mr. Day. I would just say they complement them, but they 
are higher.
    Mr. Knight. Yes.
    Ms. DeLauro. They are higher standards?
    Mr. Day. They are in addition to those standards.
    Ms. DeLauro. In addition to. And the ones that I have 
mentioned, those are the--only U.S.-produced livestock, 
humanely handled cattle in compliance with--having not come 
from non-ambulatory--are those the current standards?
    Mr. Day. Correct.
    Ms. DeLauro. Your standards?
    Mr. Day. Yes.
    Ms. DeLauro. Okay. And I think I know the answer to this 
question. Do you always choose the highest standard from a 
public health perspective?
    Mr. Day. Well, FSIS has the highest standards from a public 
health perspective. We have additional requirements as a major 
procurer of commodities.
    Ms. DeLauro. And your standards then are based on--they are 
higher because of?
    Mr. Day. They are higher because of the fact that we are 
feeding these vulnerable communities, and the fact that we are 
a large procurer, therefore, we can insist on higher standards, 
and we model those standards on what some of the largest 
procurement operations in the country do that are private as 
well.
    Ms. DeLauro. So do you choose the higher standard from a 
public health perspective?
    Mr. Day. No.
    Ms. DeLauro. Let me try to bring two issues together at 
once. Let me just go back. So your standards are just for 
procurement purposes? They are not as you have to deal with the 
populations that you are charged with procuring the product 
from?
    Mr. Day. We feel a great deal of responsibility to ensure 
that our communities that receive the commodities we procure 
have the highest standard in both the public and private 
marketplace for procurement. The standards based on public 
health are set by FSIS.
    Ms. DeLauro. So the public health standards are set by 
FSIS.
    Mr. Day. Correct.
    Ms. DeLauro. You do not set public health standards.
    Mr. Day. Correct.

                  FOOD PROGRAM PURCHASES AND ANIMAL ID

    Ms. DeLauro. Let me try to bring two issues together at 
once here. AMS purchases for food programs, and the animal ID 
issue that we have been talking about. Some have suggested that 
one way to boost participation in the animal ID program, in the 
absence of a mandatory program, would be to require that all 
meat purchased by AMS come from producers who have registered 
their premises. We could even require the animals themselves to 
be tagged.
    This could increase participation in the animal ID program. 
Also, in a case such as Hallmark/Westland, we would know about 
the history of the animals involved, which could help address 
public health concerns. I believe your technical requirements 
schedule does say that the meat bought by AMS must be traceable 
to domestic sources. The best way to ensure that is to require 
sellers to register their premises and their animals.
    What do you think about this?
    Mr. Day. Well, one of the issues around this is that 
probably at this point we do not have the ability, or this 
might preclude some animals from coming into the system if we 
required animal identification. I have been working very 
closely with Under Secretary Knight, whose very high priority 
is animal identification, to find ways in which we can enhance 
the marketing value of having animal identification, and some 
of that effort is around things like our export markets, as 
well as, potentially, country of origin labeling.
    What you are raising is something that we can certainly 
look into and find out if there would be some kind of market 
impediment or attraction to having this as a requirement. Right 
now we conduct audits to ensure that----
    Ms. DeLauro. What do you see would be a market impediment 
to doing that? In other words, you have to deal with--you are 
dealing with the highest standards with regard to procurement.
    Mr. Day. Right.
    Ms. DeLauro. And those standards, you would be able to meet 
those highest standards with what your regulations are, this 
traceable to--meat bought by AMS must be traceable to domestic 
sources. Would it not then make sense--I mean, I am just 
trying, you know, for--we then, those who are going to be 
supplying the food programs here that you have lifted standards 
on, that then requiring them to register their premises and 
their animals, would that in fact enhance your ability to meet 
those highest standards which you have?
    Mr. Day. It would, but we need to evaluate whether it could 
potentially price us out of the market, because at the same 
time, we are trying to buy as much beef at as good a price as 
possible so we can supply an ever-increasing number of 
recipients. But it is certainly something that we can look 
into.
    Ms. DeLauro. Yes, well I think that we ought to try to take 
a look at this, because I think it makes enormous sense to do 
that because I said, and I said in my opening remarks, you have 
higher standards, and they are directly related to the 
procurement piece, and if it is directly related to 
procurement, these are folks who want to sell their product to 
you, and you want to procure their product, therefore, let us 
try to achieve the highest standard, which are your standards, 
which you have laid out, and I think very rightly so, that it 
would make enormous sense to me to try to move in this 
direction.
    So I really do want to pursue this with you and see if that 
is something that we can really try to consider. Can I just ask 
a question which is probably a frivolous question? Who 
recommended Westland/Hallmark for the supplier of the year 
award for the lunch program?
    Mr. Day. I assume our Livestock and Seed Division evaluated 
their performance on contract and meeting of specific 
requirements and specifications, and they did a good job on 
that, and thus they were awarded that, but given what we know 
now, we have retracted that award based on what they have done.
    Ms. DeLauro. I understand the award has been retracted. 
Okay. Thank you. I really do want to pursue this, and we will 
be back to you about this. Thank you.
    Mr. Farr.

                        AGRICULTURAL INSPECTIONS

    Mr. Farr. Thank you very much. I have been grilling you, 
but I also have not thanked you for being public servants, and 
I really appreciate that. We appreciate your professional work.
    Ms. Smith, you know, a lot of us at Congress think we made 
an error back in 2002 when we moved the agricultural inspection 
from the oversight of USDA to the Department of Homeland 
Security, and it sort of looks like now that it is piecemeal, 
ad hoc, emergency appropriations that have become necessary to 
eradicate pests, and when they were in your department, it fit 
better for your responsibilities. I noticed in your testimony 
that you stated that you are responding to new outbreaks of 
tuberculosis, emerald ash borer, the potato cyst nematode, the 
light brown apple moth, and some other programs.
    Do you still think that the APHIS folks in Homeland 
Security are doing a better job there of pest exclusion than 
they would be in USDA?
    Ms. Smith. I do think there are--I have had the opportunity 
to go to a couple of ports of entry since I have taken this 
position, and one thing that they have there that gives them a 
leg up from what they had with us, they have the technology 
that Customs, that CBP has, in terms of looking for drugs or 
guns or other things, things smuggled into the country. It is a 
very nice technology that they have access to. It is just an 
example of something that----
    Mr. Farr. But the complaints are that then they have to 
spend their time looking for drugs, not looking for bugs.
    Ms. Smith. Well, they have different ways that they 
approach the resources, and that is one of the specific areas 
when I mentioned earlier that we have 10 areas that we have 
identified that we are working in partnership with them, and 
the management of the staff of the inspectors that do that work 
is one of those areas, and looking at how you provide the right 
management structure over them, but we dedicate agricultural 
inspectors that just do that, and they are supplemented by some 
inspectors that are doing a variety of tasks as well as the 
management work. I think we are reaching some agreement about 
additional dedicated managers that oversee the AQIs.
    Mr. Farr. Well, we are going to submit some questions of 
just how much pests they have detected outside of the U.S., and 
how much of it is sort of the learning at ports of entry, or 
like light brown apple moth, how much just gets discovered 
state by state that it has gotten in here somehow. I think this 
whole question of where we put our resources is under review, 
and I know there are many members of Congress who feel that we 
ought to move APHIS back into your department rather than 
Homeland Security's, and I am sure that will be a discussion 
for legislation next year, but we will submit some questions on 
that.

                     PHYTOSANITARY CERTIFICATE FEES

    I wanted to turn to another, which is really the regulation 
area. Our county ag inspectors have the responsibility for 
inspecting every single shipment. I am the leading agriculture 
county in the United States in sales, and probably in just 
movement of cartons, probably number one in the world. Those 
things all have to be inspected by hand locally, and it is a 
cost to our county ag commissioner and they have to take over 
the entire fairground. I do not know what we are going to do 
when the fair starts, but that is this age, and the question 
there is, what program area line contains the allocation for 
issuing the phytosanitary certificate?
    Is that in your, Mr. Knight, in your budget? Do you 
reimburse the counties, states and counties on this?
    Mr. Knight. I am going to defer to Administrator Smith to 
give you the response on the certificates.
    Ms. Smith. We charge fees for those certificates.
    Mr. Farr. So you require the locals to collect? What 
assumptions did you make regarding the change to the fees 
charged for issuing these certificates?
    Ms. Smith. I am sorry. Would you repeat the question?
    Mr. Farr. I guess the question is, how are these fee rates 
set? What is the basis for it?
    Ms. Smith. I would be happy to get that information again 
and provide it to you.
    Mr. Farr. Because it is not cost effective, whatever the 
rates are, and obviously it goes into competition if that is 
the cost of doing business, but it is affecting just those 
counties that are quarantined. Is there any, in the emergency 
money, any way of helping out the local ag commissioners in 
carrying out their responsibilities for issuing these 
phytosanitary certificates without just relying on the fee 
rate?
    Mr. Knight. If I am understanding the question correctly, 
you are inquiring as to the additional costs associated with 
issuing the phytosanitary certificates in these counties that 
are in the light brown apple moth quarantine area, because we 
have got a fee schedule for phytosanitary certificates, for the 
normal commerce of that. Now those counties are facing an 
additional unanticipated cost----
    Mr. Farr. That is correct.
    Mr. Knight [continuing]. Associated with that. Okay, now 
that I understand the question, I think we can get an answer 
for you on those costs and where that is going. If I recall 
correctly, I believe we are counting those additional costs as 
the state and local government match for the emergency work, 
but I would like to check on that and respond to the record to 
make sure that I am accurate, but I do think we use those fees 
to be the state and local government match associated with 
that, but we will look into that for you.
    [The information follows:]

    

    
    Mr. Farr. Yes, okay.
    Ms. DeLauro. Ms. Kaptur.

                           LOCAL AGRICULTURE

    Ms. Kaptur. Thank you, Madame Chair.
    Mr. Day, I am going to ask you to think creatively with me 
here for a minute, and I always use my district as a barometer 
for the rest of the world. My goal is to do my best to connect 
local farmers to local consumers, and to figure out why the 
system does not work to that end. Also, I am very interested in 
providing better nutrition to all people in my community, 
regardless of income. Last year we submitted a question on data 
assistance by USDA to farmers markets.
    I found farmers markets to be one of the most effective 
ways that local farmers can make product available to the 
public, and we asked your agency to comment about what more was 
being done to help to promote farmers markets, and we pretty 
much got a status quo answer on that. I note from the testimony 
today that in the Farmers Market Promotion Program, you 
provided $1.3 million, over 300 applicants submitted 
applications and only 23 were able to be funded.
    This is a significant dysfunction within USDA. There is a 
desire for local agriculture to market its products, and I just 
want to point out to you, I do not think USDA is doing 
everything it can to put its shoulder to the wheel to help to 
connect local agriculture to local consumers. Now, just let me 
continue here for a second at some of your other programs. You 
have tremendous authority to buy, to procure, and one of my 
questions to you would be, what structures have you set up to 
procure from local farmers?
    Example, I met with a group of our farmers yesterday who 
are specialty crop producers, and you know, they are able to 
sell their bell peppers, for example, that have no red spots on 
them, they have not ripened too much, and those go to the major 
chain, but, and I do not think this is a secret anywhere, all 
across the country, farmers plow under a third to a half of 
what they produce because of market--they do not want to 
interfere with market price locally, but there ought to be a 
way for USDA through your service to find a way to collect 
that, to help us get it processed locally, we will work on 
that, and then to get it to the hungry people in our regions, 
including our senior citizens and our food pantries, which are 
empty in areas where the recession has been a reality for a 
long time.
    We have great food needs, but I do not see that the local 
farmers are being empowered in this. Same thing with your 
specialty crop program. I was looking at that and I wondered 
how much of that procurement is actually being done by local 
producers. I want to give you an insight. For years I have been 
a big supporter of the senior farmers market coupon program up 
here and the WIC Farmers Market Coupon Program, because it 
empowers local agriculture and it feeds hungry people and it 
gives them better nutrition.
    There is a network now set up--it is very loose, but it is 
out there--if you come to a district like mine, over 150 
farmers are now registered to work with the Senior Farmers 
Market Coupon Program and bring healthy, nutritious food to our 
seniors. That is a very good network that could be built on. 
They do not see themselves as a network, but it did not exist 
10, 15 years ago when we got started on this. Those are people 
that could work with you, but I bet you do not see them.
    You probably work with big food brokers or something like 
that, so my question to you really is, what can you do through 
the AMS and the powers you have, and I want you to think about 
this. You cannot just answer me off the top of your head. What 
can you do in my district and across the country to use your 
considerable powers to help local agriculture feed the 
consumers closest to them?
    Mr. Day. Well, thank you very much for your question, 
Congresswoman Kaptur. There is a lot that is going on in terms 
of our marketing programs as well as our procurement programs 
that is focusing on buying locally. A lot of the schools demand 
locally produced items. In our Farmers Market Promotion 
Program, much of what we do is focused on ensuring that people 
have the opportunity to buy food in a farmers market area, and 
one of the strongest contenders have been those that are 
putting in the electronic benefits transfers materials in those 
farmers markets so that lower income people can have the 
opportunity to buy fresh fruits and vegetables and meats and 
other things.
    In terms of our procurement, we buy product on an as-
delivered basis, and that gives a preference to local firms. 
Also, states get to choose who does their reprocessing, and 
then we deliver to them, so that is another incentive for 
locally produced items. There are opportunities within the 
state specialty crop block grants for local production and for 
finding out how to market better to the schools as well as the 
feeding programs in terms of local production, and we also, for 
feeding programs, when there is a surplus and we go out and we 
buy additional commodities, much of that goes into the local 
distribution as well.
    So we are very cognizant of this movement. We are working 
with the schools and the Food and Nutrition Service to find a 
way that we can do this. Our job when we take bids is to get 
the best value for the dollar, but we buy from across the 
country and many small businesses as well, and that is all 
delivered locally. So there is much of this that goes into the 
feeding programs, but----
    Ms. Kaptur. Do you have a best community? Do you have 
someplace in America that is just doing it right?
    Mr. Day. Perhaps. I would have to look into that, but there 
is a lot of local production, especially in a state like 
California.
    [The information follows:]

    

    
    Ms. Kaptur. The biggest room in the world is room for 
improvement, and I will tell you, in my area, there is a huge 
room for improvement, so I would love to follow up on this with 
you, and I am sure all of our other members would be happy to.

                  COUNTRY OF ORIGIN LABELING TIMELINES

    Ms. DeLauro. Thank you, Ms. Kaptur. Let me just--well, we 
have three votes coming up and I want to just tick off a couple 
of things. The country of origin labeling, you can get back to 
us next week, next Friday if you can. What are the scenarios? A 
farm bill? What happens with country of origin labeling 
scenario, no farm bill, what happens? And we need to really 
know that information. Let me ask a question if I can for our 
colleague, Representative Rodriguez.

                           CATTLE FEVER TICK

    This is the Texas-Mexico border, the cattle fever tick. As 
a result of the heavy rains there, the administration budget is 
requesting $2 million for this program. USDA and APHIS have 
acknowledged the worsening of the threat. They have released 
$500,000 in contingency funds, recently dedicating 5.2 million 
emergency funding to hire more inspectors. State officials 
estimate the need of $13 million. They also contend they need 
42 million for a five-year plan that includes expanding 
eradication.
    The state is obviously at the farm more than your budget. 
If you very quickly can explain the discrepancy between the 
states' projected need and APHIS's budget request. Somebody.
    Mr. Knight. The primary gap had to do with the emergency 
funds, in that--well, excuse me. The emergency funds, we had 
the gap there because we were not paying for the long-term 
equipment needs that were associated with that. That portion 
was not able to be done, so the $5.2 million for tick riders 
plus the pesticide work, each of those things. The 2 million 
that we had in our budget proposal was the best estimate of the 
needs at the time that the budget was developed.
    Ms. DeLauro. And the discrepancy between the 13 and 42 that 
the states have come up with?
    Mr. Knight. The state estimate of their needs reflects 
their current experience as the problem has grown larger.

                       FSIS AND AMS COMMUNICATION

    Ms. DeLauro. Let me do this by way of--and again, you know, 
a more timely response. This is about communications between 
FSIS and AMS. Do the agencies communicate their findings to 
each other?
    Mr. Day. Yes.
    Ms. DeLauro. Is there overlap in what the agencies are 
looking for?
    Mr. Day. Sometimes.
    Ms. DeLauro. If FSIS finds a violation during an inspection 
that relates to an AMS contractor, they inform AMS?
    Mr. Day. Yes, if they find a violation.
    Ms. DeLauro. If FSIS finds a violation during an inspection 
that relates to an AMS contract, do they inform AMS?
    Mr. Day. Not necessarily. They do not inspect for our 
requirements. They inspect for their own, but we have constant 
contact both in Washington as well as in the field.
    Ms. DeLauro. So that you, AMS, notifies FSIS when it finds 
a problem?
    Mr. Day. Yes.
    Ms. DeLauro. Does AMS check to see if FSIS is actually 
following up on what AMS tells it?
    Mr. Day. I would assume they do.
    Ms. DeLauro. Well, you are AMS. Do you follow up?
    [Electronic interference.]
    Well, if you tell them that there is a violation someplace, 
how do you follow that up?
    Mr. Day. I am sure they follow it up, but I can have 
consultations with my FSIS colleagues and get back to you on 
their follow-up procedures----
    Ms. DeLauro. Well, your follow-up procedures as well. How 
do you follow up with--you said AMS notifies FSIS when it finds 
a problem. You notify them that there is a problem.
    Mr. Day. Right.
    Ms. DeLauro. And how do you follow up with them?
    Mr. Day. I will have to get back to you on that.
    [The information follows:]

                    Procurement Contract Violations

    If an AMS employee observes conditions or products in a federally-
inspected facility that pose a potential food safety hazard, the Food 
Safety Inspection Service (FSIS) Inspector-in-Charge (IIC) is 
immediately notified. It is important to note that AMS employees 
performing assignments on the premises of FSIS-inspected facilities are 
required by written instruction to notify the FSIS IIC of any 
observation of conditions that appear unsanitary or products that may 
be unwholesome for appropriate disposition. Since these types of 
situations fall under the jurisdiction and responsibility of FSIS, no 
follow-up is required on the part of AMS. If an FSIS employee observes 
non-conformances with AMS contractual or specification requirements, 
they notify the local AMS officials of their findings for appropriate 
action by AMS.
    AMS notifies the appropriate FSIS officials of all positive 
microbial test results for Salmonella and E. Coli 0157H:7.

                           HALLMARK/WESTLAND

    Ms. DeLauro. Okay. Your letter, Mr. Day, this is--I do not 
want to go through all of the efforts. I asked a series of 
questions. What actions has AMS itself taken to ensure that we 
do not see a recall the like of Hallmark/Westland ever again?
    Mr. Day. Well, we have done a number of different things. 
One, I think the recall itself has put an incredible burden on 
that company, and I think it will send a shiver throughout the 
industry to not violate the rules of FSIS in terms of non-
ambulatory animals.
    Ms. DeLauro. But the fact of the matter is that the Humane 
Society discovered this. What are you going to do with regard 
to your own agency that would allow you to be able to do this?
    Mr. Day. We are working with FSIS on enhanced surveillance 
techniques, and we ourselves are enhancing our own audits of 
these facilities applying to our program to ensure that they 
are complying with all the requirements.
    Ms. DeLauro. Senate hearing, Secretary Schafer yesterday as 
USDA may have found major humane treatment violations at two or 
three other plants that supply beef to the school food program. 
Are you aware of this?
    Mr. Day. I heard about that, yes.
    Ms. DeLauro. Can you have any discussion with us on this?
    Mr. Day. We are certainly going to look into that, and look 
into all the----
    Ms. DeLauro. Okay, could you get back to us on that?
    Mr. Day. Certainly, yes.

                            WARRANTY CLAIMS

    Ms. DeLauro. You, in the near future you say you are going 
to send an initial warranty claim to Westland/Hallmark seeking 
reimbursement of money paid for recalled product, and that you 
will submit additional warranty claims for removal and disposal 
costs. Has the initial claim been sent yet?
    Mr. Day. Yes, we sent that last week.
    Ms. DeLauro. How much are you seeking in the initial claim, 
and what do you estimate in total?
    Mr. Day. $67.2 million was the initial claim, and I cannot 
speculate on what additional costs may be, but if there are 
additional costs, we will submit those as part of the----
    Ms. DeLauro. Can you estimate for us and get back to us on 
what you think might be the additional costs?
    Mr. Day. Certainly.
    [The information follows:]

                       Beef Recall Warranty Claim

    The additional costs associated with any further warranty claim 
against Hallmark/Westland will primarily be those submitted by States 
for reimbursement of transportation, processing and disposal costs of 
the recalled products. Since we have only received claims from four 
States and have no way of estimating the total expenses incurred by 
State and local food service authorities, any estimate at this time 
would be premature. Once the State costs are known, we can provide 
detailed cost information.

                         RECALL REIMBURSEMENTS

    Ms. DeLauro. Based on what--okay. You say that you 
anticipate starting making the reimbursement payments as early 
as this week. Have you started this?
    Mr. Day. We have received information from three states, 
West Virginia, New Jersey and I cannot remember what the third 
state is, Maryland, and I believe we are in the process of 
processing them this week.
    Ms. DeLauro. How much do you estimate you will be spending 
on this?
    Mr. Day. We estimate that the total costs will be somewhere 
in the neighborhood of $50 million.
    Ms. DeLauro. Can you get to us what you are covering and 
how are you determining how much states lost?
    Mr. Day. The states end up--the individual districts go to 
a state distributing agent, and that person compiles everything 
for the state and sends it to us. We review that and then we 
submit a check to the state that they then pass out.
    Ms. DeLauro. So you are taking the states' word for what 
they--
    Mr. Day. We are, but we are also doing appropriate due 
diligence to ensure that----
    Ms. DeLauro. Okay, and can you get us information on what 
that appropriate due diligence is, what are you looking for in 
that process?
    Mr. Day. Certainly.
    [The information follows:]

                    Recall Reimbursements to States

    Each claim submitted by a State Distributing Agent for 
reimbursement by USDA must first be reviewed to ensure each of the 
itemized expenses is authorized and substantiated by documentation. 
Reimbursement expenses are limited to the costs incurred for storage, 
processing costs if the commodity products were further processed, 
transportation to a disposal site and disposal fees. The actual 
products are directly replaced by USDA or the State's entitlement 
account is credited for future use. Once USDA officials determine that 
the expenses incurred by the State and local jurisdictions are 
appropriate, reasonable and supported by documentation, the claim 
vouchers are approved for payment. Payments are made by electronic 
transfer of funds.

                            POULTRY IMPORTS

    Ms. DeLauro. And any of those questions that I have just 
mentioned, if there is additional information, it would be 
helpful to us, and as I say, in a timely way. This is now, you 
are beginning to move forward. There will be additional 
questions for the record with regard to avian flu, and more 
cases involving the smuggling of poultry products into the U.S. 
from countries. There are a lot of articles these days about 
China, about South Korea, etc., where they are finding--I know 
my colleague Mr. Kingston mentioned the chicken issue, but the 
fact of the matter, you must have somewhere, somehow, some 
indication in your own psyche about whether or not it makes 
sense for us to be importing Chinese poultry into the United 
States, and whether or not we ought to deal with the issue of 
processed chicken as well, given our lax record on inspections 
of China.

                      MICROBIOLOGICAL DATA PROGRAM

    The microbiological program, I will submit a question. I 
happen to think it is a good program. I hope we can work 
together to see how that is a program that ought to be 
maintained. We have one minute to go to vote. I thank you all 
very, very much for your time and for your efforts and your 
work, and I will gavel down the hearing. Thank you very much.

    


                           W I T N E S S E S

                                                                   Page
Day, L. C........................................................   307
Dondero, John....................................................     1
Knight, B. I.....................................................   307
Lancaster, Arlen.................................................     1
Link, J. E.......................................................   307
Rey, Mark........................................................     1
Smith, C. J......................................................   307
Steele, W. S.....................................................1, 307


                               I N D E X

                              ----------                              --
--------
                                                                   Page
Natural Resources Conservation Service
Accountability Measures..........................................9, 118
Administrative Costs...........................................278, 280
Administrative Operations........................................   279
Agricultural Land, Collaboration to Preserve.....................    76
Agricultural Management Assistance Program.......................    34
Agricultural Operator Demographics...............................    89
Agricultural Production and Sprawl...............................    40
Allocation Formulas..............................................   291
American Customer Satisfaction Index (ACSI) Results..............    10
Animal Feeding Operations........................................   149
Assistance to Mega-Farms.........................................    53
Big Picture Approach.............................................    62
Budget Amendment.................................................    51
Budget Reductions................................................    36
Budget Request, President's FY 2009..............................     6
CCC Funded Programs..............................................   261
Centers and Institutes...........................................    91
Certification of Forest Products.................................    38
Colleges and Universities........................................   105
Conservation Commitment..........................................    50
Conservation Compliance Activities...............................   128
Conservation District Program Activities.........................    94
Conservation Effects Assessment Project........................237, 260
    Cost of......................................................    82
    Funding....................................................239, 244
    Small Watershed Studies......................................   240
    Value of.....................................................    84
Conservation Innovation Grants...................................   206
Conservation Operations...............................22, 127, 149, 155
Conservation Plans...............................................   133
Conservation Programs............................................    95
Conservation Reserve Program...................................212, 279
Conservation Security Program (CSP)...............32, 43, 262, 275, 303
    Cost Effectiveness...........................................    73
    Environmental Benefits.......................................    74
Conservation Spending............................................    49
Conservation Technical Assistance..............................264, 304
Conservation Technology..........................................    71
Conservation, Benefits of........................................    43
Cooperation with FSA.............................................    78
Cooperative Soil Surveys, Funding and Staffing of................   148
Cost Effective Programs..........................................   236
Cost Effectiveness...............................................    72
Cost of Moving Employees and Reassigning Them....................   109
CRP Reimbursements...............................................   280
Dam Rehabilitation...............................................   265
Deobligated Funds, Use of........................................    68
Duplicate Payments...............................................   276
E. Coli Breakout, Managing the...................................    40
Emerald Ash Borer................................................    57
Emergency Watershed Program....................................166, 173
Environmental Quality Incentives Program.........................    28
EQIP Allocation................................................202, 274
EQIP Financial Assistance to Livestock...........................   207
Equal Employment Opportunity.....................................   280
Farm and Ranch Lands Protection Program.........................34, 263
Farm Bill........................................................     8
    Administration Proposals.....................................     8
    Apportionment................................................   223
    Authorized Programs..........................................    28
    Benefits.....................................................   294
    Conservation Programs........................................   259
    Program Allocations..........................................   212
    Unobligated Balance..........................................   234
Farm Program Payments............................................   303
Field Offices....................................................   111
Financial Management.............................................    64
Floodplain Easements Program...................................162, 170
Food Safety......................................................    41
Foreign Assignments..............................................   102
Forest Production Certification, Future..........................    39
GIS Activities...................................................   136
Grassland Reserve Program........................................    31
Grazing Lands...................................................156-158
Healthy Forests Reserve Program..................................    27
Heritage Rivers..................................................   155
High Commodity Prices............................................   293
Indirect Cost Charged per NRCS Program...........................   186
Information Technology...........................................   110
Invasive Species.................................................   229
Livestock Production.............................................   210
Local Offices....................................................   293
Motor Vehicles...................................................   245
National Grazing Land Technology Institute.......................   158
National Headquarters Funding....................................   154
National Soil Information System.................................   136
Natural Resources Inventory......................................   270
New Plants Releases..............................................   139
Nutrient Management and Water Quality Concerns...................   151
Object Class Tables..............................................   103
Obligations by State.............................................    86
Office Closure.................................................111, 294
Office Consolidations............................................   295
Open Obligations.................................................   231
Opening Statement, Mark Rey, Under Secretary, Natural Resources 
  and Environment................................................     2
Opening Statement, Mr. Arlen Lancaster, Chief, Natural Resources 
  Conservation Service...........................................    12
Organizational Chart............................................52, 119
PART Assessment.................................................75, 301
Personnel Action.................................................   109
PL-534 Projects, Status of.......................................   162
Plant Materials Centers..........................................   139
    Annual Operating Costs.......................................   138
    Facility Construction........................................   139
    Index........................................................   145
    Royalty Collections..........................................   146
Program Evaluation Studies and Reviews...........................    97
Program Payments.................................................    42
ProTracts System.................................................   230
Questions Submitted by Chairwoman DeLaur.........................    91
Questions Submitted by Congressman Bishop........................   274
Questions Submitted by Congressman Kingston......................   259
Questions Submitted by Congressman Latham........................   303
Questions Submitted by Congresswoman Kaptur......................   290
Rapid Watershed Assessment Concept...............................   272
Regional Projects................................................   198
Regional Water Enhancement Program...............................   272
Regional Watershed Enhancement Initiative........................    72
Regulatory Burden................................................    61
Residential Encroachment in Rural Areas..........................    77
Resource Conservation and Development Program26, 59, 175, 269, 296, 304
    Allocations..................................................   187
    Coordinators...............................................181, 300
    Councils.....................................................   190
    Performance..................................................   301
    Reporting System.............................................   181
    Support, Federal Role in.....................................    85
Resource-Based Allocation Process................................    99
Salinas Valley Agriculture.......................................    76
Schedule C Appointees............................................   119
Senior Executive Service Training................................   121
Small and Beginning Farmers......................................    44
Small Farmer Initiative..........................................   207
Soil Survey Reimbursements.......................................   137
Soil Surveys...................................................135, 151
Staff Years....................................................102, 151
Staffing.........................................................   263
Stand-Alone Audit................................................   236
Status of Outsourcing............................................   117
Strategic Plan..................................................47, 275
Streamlining and Cost-Savings Initiative.........................   119
Technical Assistance, Definition of..............................   129
Technical Assistance.............................................    51
Technical Service Providers....................................228, 264
Technology Support Centers.......................................   226
Training.........................................................   227
Unfunded Applications............................................    66
Urban Wildlife...................................................    58
Water Quality Incentives.........................................   147
Water Quality Trading Cooperative Program........................   271
Watershed and Flood Prevention Operations...24, 163, 170, 171, 269, 292
Watershed and Rehabilitation Construction Projects...............   168
Watershed Approach...............................................    60
Watershed Development............................................   291
Watershed Evaluations............................................   305
Watershed Management.............................................    88
Watershed Programs..............................................69, 161
Watershed Projects, Authorized...................................   169
Watershed Projects, Backlog......................................   170
Watershed Rehabilitation Program................................26, 174
Watershed Surveys and Planning..................................25, 171
Western Lake Erie..............................................292, 295
Wetlands Reserve Program........................................30, 121
Wildlife Habitat Incentives Program..............................    33
Written Statement, Mark Rey, Under Secretary, Natural Resources 
  and Environment................................................     5
Written Statement, Mr. Arlen Lancaster, Chief, Natural Resources 
  Conservation Service...........................................    14
WRP Easement Enrollment..........................................   126
Marketing and Regulatory Programs
Administrative Expenses..........................................   469
Aflatoxin Inspections............................................  1031
Agricultural Inspections.........................................   456
Agricultural Marketing Service.......................322, 326, 359, 367
Agricultural Quarantine Inspections............................638, 685
Ames Master Plan.................................................   581
Ames National Veterinary Services Laboratory (NVSL)..............  1003
Animal and Plant Health Inspection Service......315, 318, 334, 350, 637
Animal and Plant Health Regulatory Enforcement Violation Cases...   619
Animal Care Inspection Activities................................   623
Animal Damage Control Research Spending..........................   581
Animal Identification....................................455, 585, 1009
Animal Import Centers............................................   584
Animal Welfare Act............................................435, 1009
Animal Welfare............................................619, 620, 636
Animal-Related Biotechnology Activities..........................   619
Anti-Competitive Barrier, GIPSA..................................  1044
APHIS Aquaculture FY 2009 Budget Request.........................  1005
Aquaculture, WI..................................................  1005
Asian Longhorned Beetle........................................686, 771
Auction Market Failures..........................................  1035
Audit of the Four Largest Beef Meatpackers.......................  1050
Audit Verification Services......................................   364
Avian Influenza...............................................687, 1019
Aviation Safety..................................................   690
Biotech Crops....................................................  1020
Biotechnology Regulatory Services (BRS)..........................   690
Blacklisting Invasive Pests......................................   806
Boll Weevil......................................................   995
Bovine Spongiform Encephalopathy (BSE)...........................   692
Bovine Tuberculosis..............................................   694
Brown Tree Snake.................................................   696
Brucellosis......................................................   696
Canadian Imports.................................................   699
Carcass Merit Purchasing Technologies............................  1046
Carryover........................................................   701
Cartagena........................................................  1047
Cattle Tick Eradication..........................................   701
Chronic Wasting Disease.......................................702, 1007
Citrus Canker....................................................   705
Citrus Greening Summit...........................................   402
Classical Swine Fever............................................   707
Codex............................................................  1040
Commodity Credit Corporation.....................................   713
Commodity Purchase--Farmer Cooperatives..........................   473
Commodity Purchasing Management System...........................   365
Common Computing Environment.....................................   767
Companies Subject to the Packers and Stockyards Act..............  1036
Compliance Audits................................................  1037
Continuing Resolution............................................   404
Coordination with Homeland Security..............................   405
Cotton Pests...................................................708, 995
Country of Origin Labeling.................365, 372, 431, 433, 471, 578
    Fees.........................................................   406
    Timelines....................................................   464
Dealer Failures..................................................  1039
Dealer/Order Buyer Financial Failures............................  1033
Department of Homeland Security..................................   712
Digital Technology...............................................  1048
Duty Officer in Asia.............................................  1048
Economic and Statistical Analysis................................  1039
Emerald Ash Borer................................................   772
Emergency Authority..............................................   713
Emergency Funding, Responses to Foreign Pest Infestations........   968
Emergency Management Systems (EMS)...............................   723
Emergency Preparedness...........................................  1020
Exotic Newcastle Disease.........................................   724
Export and Import Applications...................................   727
Export Verification..............................................   472
Exported Grain Complaints........................................  1030
Farmers Market Promotion Program..........................371, 473, 576
Federal and Non-Federal Funds....................................   728
Federal ID Card..................................................   733
Federal Seed.....................................................   374
Federal-State Cooperation........................................   366
Fees.............................................................   996
Fire Ant.........................................................   733
Food and Agriculture Defense Initiative (FADI)...................   733
Food Program Purchases and Animal ID.............................   454
Food Safety......................................................   480
Food-and-Mouth Disease (FMD).....................................   735
Foreign Animal Diseases..........................................   736
Foreign Pest Infestations, Emergency Funding for Responses to....   968
Four Firm Concentration Ratio....................................  1034
Fruit Fly Exclusion..............................................   740
FSIS and AMS Communication.......................................   464
FSMIP Proposal Selection Criteria................................   513
Funding Sources..................................................   314
Grading..........................................................   483
Grain Dust Explosions............................................  1029
Grain Facilities.................................................  1023
Grain Inspection, Packers and Stockyards Administration..329, 332, 1043
Hallmark/Westland................................................   465
Homeland Security MOA............................................   640
Indemnity Funds..................................................   742
Information Systems Acquisitions.................................   743
Information Technology...................................486, 488, 1043
International Activities.........................................   744
International Monitoring Program.................................  1041
International Trade.......................................407, 450, 489
International Wheat Market.......................................  1038
Invasive Pests, Blacklisting.....................................   806
Johne's Disease..................................................   748
Laboratory Networks..............................................   749
Light Brown Apple Moth.................409, 433, 447, 808, 976, 980-994
Live Weight Livestock Purchases..................................  1045
Livestock Complaints.............................................  1022
Livestock from Captive Supplies and/or Forward Contracts.........  1036
Livestock Industry Integration and Consolidation.................  1053
Livestock Mandatory Price Reporting..............................   489
Local Agriculture................................................   459
Market News...............................................360, 368, 490
Measures of Carcass Quality......................................  1046
Microbiological Data Program..............................375, 467, 492
National Animal Health Monitoring System (NAHMS).................   757
National Animal Identification System...........393, 411, 431, 437, 444
    Spending Plan................................................   396
    Voluntary vs. Mandatory......................................   396
National Organic Program.......................................362, 369
National Zoo Investigations......................................   764
Noxious Weeds....................................................   766
Nutrition Program Purchases......................................   453
OCIO & CCE Payments..............................................   487
Office of the Chief Information Officer..........................   767
OIG Audit Report.................................................  1049
Opening Statement, Chairwoman DeLauro............................   307
Organic Program..................................................   498
Packers and Stockyards Act, Companies Subject to the.............  1036
Payments to States and Possessions...............................   511
PCIMS............................................................   487
Perishable Agricultural Commodity Act Program....................   509
Pest and Disease Outbreaks.......................................   767
Pest Detection...................................................   770
Pest Exclusion..................................................857-967
Pesticide Data Program...............................373, 516-528, 1040
Phytosanitary Certificate Fees.................................457, 975
Pierce's Disease.................................................   770
Pigweed..........................................................   995
Pink Bollworm....................................................   995
Plant Variety Protection.........................................   528
Post Entry Plant Quarantine Facility.............................   774
Potato Cyst Nematode.............................................   775
Poultry Complaints...............................................  1032
Poultry Imports..................................................   467
Proposed User Fees.............................................400, 405
Pseudorabies.....................................................   775
Purchasing Standards.............................................   453
Qualified Through Verification (QTV) Program.....................   477
Quarantine Export Facility.......................................   401
Questions Submitted by Chairwoman DeLauro................468, 581, 1022
Questions Submitted by Congressman Bishop........................   995
Questions Submitted by Congressman Farr..........................   806
Questions Submitted by Congressman Jackson.......................   576
Questions Submitted by Congressman Kingston.............578, 1009, 1053
Questions Submitted by Congressman Obey..........................   997
Rabies Program...................................................   777
Rapid Response, GIPSA............................................  1044
Recall Reimbursements............................................   466
Referenda........................................................   529
Regulatory Enforcement Staff Years...............................   622
Remaining Funds..................................................  1004
Removal of Surplus Commodities...................................   535
Research and Promotion Programs..................................   530
Research Cooperative Agreements..................................   532
Sanitary/Phytosanitary Trade Barriers.........................780, 1018
School Lunch Purchases...........................................   400
Scrapie..........................................................   781
Screwworm........................................................   783
Section 32......................................................533-546
Select Agents....................................................   784
Service Expenses, Other..........................................  1049
Specialty Crop Support...........................................   363
Spending on Competition, Fair Trade Practices, and Financial 
  Protection.....................................................  1038
Standardization Program..........................................   547
State Department Reimbursements..................................   785
Sudden Oak Death.................................................  1017
Threatened and Endangered Species Spending.......................   786
Tobacco Program..................................................   549
Trade Issues Resolution and Management...........................   787
Trade with Japan.................................................   450
Transfer of Funds, GIPSA.........................................  1044
Transportation Regulatory Actions................................   550
Trap Testing Spending............................................   788
Travel...........................................................   789
Tropical Bont Tick...............................................   792
Trust Fund Agreements............................................   794
Unannounced AWA Inspections......................................   624
Urban Wild Animals...............................................   451
User Fees.....................................636, 685, 795, 1047, 1054
Veterinary Biologics.............................................   796
Violation Cases..................................................  1040
Violation Report Calls...........................................  1031
Viral Hemorrhagic Septicemia..............................439, 997-1002
Voluntary Compliance with Packers and Stockyards.................   404
Warranty Claims..................................................   466
Web-Based Supply Chain Management System..................371, 486, 488
West Nile Virus..................................................   797
Wholesale Market Development.....................................   551
Wildlife Predation Pilot Project Spending........................   798
Wildlife Services................................................   799
Wind Turbines....................................................   437
Wolf Control.....................................................   804
Written Statement, Bruce Knight, Under Secretary, Marketing and 
  Regulatory Programs............................................   312
Written Statement, Cindy J. Smith, Administrator, Animal and 
  Plant Health Inspection Service................................   334
Written Statement, James E. Link, Administrator, GIPSA...........   376
Written Statement, Lloyd Day, Administrator, Agricultural 
  Marketing Service..............................................   359

                                  
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