[Senate Hearing 112-]
[From the U.S. Government Publishing Office]



 
   AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND 
          RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2013

                              ----------                              


                        THURSDAY, MARCH 29, 2012

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 2:03 p.m., in room SD-192, Dirksen 
Senate Office Building, Hon. Herb Kohl (chairman) presiding.
    Present: Senators Kohl, Pryor, Brown, Blunt, Cochran, 
Moran, and Hoeven.

                       DEPARTMENT OF AGRICULTURE

                        Office of the Secretary

STATEMENT OF HON. THOMAS VILSACK, SECRETARY
ACCOMPANIED BY:
        KATHLEEN MERRIGAN, DEPUTY SECRETARY
        JOSEPH GLAUBER, CHIEF ECONOMIST
        MICHAEL YOUNG, BUDGET OFFICER, OFFICE OF BUDGET AND PROGRAM 
            ANALYSIS


                 OPENING STATEMENT OF SENATOR HERB KOHL


    Senator Kohl. The subcommittee will come to order. Today, 
we begin our first hearing on the fiscal year 2013 budget 
request for the U.S. Department of Agriculture (USDA). 
Secretary Vilsack, we thank you for being here. We also want to 
welcome Deputy Secretary Kathleen Merrigan, USDA Chief 
Economist, Joseph Glauber, and Budget Officer, Michael Young. 
We look forward to hearing from you today.
    The fiscal year 2013 budget request for the USDA is $18.3 
billion. This represents a 7-percent increase over last year. 
Some programs are cut, while some programs are eliminated 
entirely. Several new initiatives are proposed and substantial 
increases are requested in some areas.
    The Women, Infants, and Children (WIC) program provides 
healthy food for women, infants, and children, and is increased 
by $422 million. This is mainly due to higher food prices.
    Public Law 480 program is reduced by $66 million. This is 
somewhat of a concern, as the humanitarian and food needs 
around the world, as we all know, have increased.
    Our job is to review all the priorities in the budget 
ensure that programs vital to people's health, safety, and 
livelihoods are adequately funded. We also need to make sure 
that tax dollars are spent wisely, as we all know we need to do 
more with less.
    The USDA is broad in scope and affects the lives of every 
American. Now, more than ever, it's essential that we set the 
priorities correctly to ensure the Department is both 
effective, efficient, and also serves the American people in 
the proper way.
    We face many challenges this year, as we move through the 
appropriations process. I hope to work closely with the 
Department, so we can produce a responsible bill.
    We also very much look forward to working with Senator 
Blunt and all members of the subcommittee. I'd like to thank 
Senator Blunt for the helpful and the bipartisan manner in 
which we have worked together. This subcommittee has a 
tradition of working in a bipartisan manner, and I assure all 
members that we will continue that practice as we move forward.
    Secretary Vilsack, we thank you again for being here, and 
we look forward to your statement. Before that, I would like 
ask Senator Blunt for any comments that he may have.


                     STATEMENT OF SENATOR ROY BLUNT


    Senator Blunt. Thank you, Mr. Chairman, and thank you for 
holding this hearing. I hope that with your leadership we can 
produce a bill again this year, and I'm going to do everything 
I can to be helpful in your efforts to get that done, as I 
believe others on the subcommittee will. It was good that the 
agriculture appropriations bill was the bill that became the 
host for the first appropriations bills that passed last year, 
and I hope we can do our work in the same manner this year.
    The President's budget proposes a net increase in spending 
in the USDA. Of course, as our Nation's debt increases, we have 
to look carefully at every part of the budget, including this 
one. But over the past year, the Agriculture subcommittee has 
made difficult and necessary decisions, as the Department has, 
including cutting discretionary spending by 15 percent.
    This year represents a significant anniversary for the 
USDA. It was 150 years ago, in 1862, that President Lincoln 
signed into law the bill that created the USDA. And today, the 
Department touches the lives of every American, every day. 
Activities undertaken by USDA include agriculture research, 
conservation, housing and business loan programs for rural 
communities, domestic and international nutrition programs, 
food safety, and trade promotion.
    The same year that President Lincoln signed the bill that 
created the USDA, he also signed a bill that was the Morrill 
Land Grant College Act. And over the course now of a century-
and-a-half research and extension conducted at those land grant 
universities, and now others, has transformed American 
agriculture into the most innovative and productive in the 
world. As a result, agriculture remains the brightest spot in 
our country's economy today.
    Last year, American farmers supported record agricultural 
exports and earned their highest income since the 1970s. U.S. 
farm exports alone helped support more than 1 million U.S. jobs 
in 2011. At the same time, however, USDA predicts farm income 
will decline by 6.5 percent this year, and recent studies show 
that farmers are less optimistic as surging fuel prices and 
increases in other inputs increase their costs.
    As we look ahead to fiscal year 2013, we have to be mindful 
of the important role that agriculture plays in our economic 
recovery. We have to make wise investments in those programs 
that will increase our agricultural community's competitiveness 
here and abroad, and sound agricultural research is the 
cornerstone to success in all aspects of the agriculture 
industry, whether it's developing more efficient production 
methods, eradicating pest and disease, developing biofuels, 
maintaining a safe food supply, or enhancing the nutritional 
quality of our diets, USDA is and will be involved.
    Agriculture research today makes it possible for one 
American farmer to feed 155 people. Continued investment in 
research will make it possible for us to meet the global food 
demand, which is expected to double, a number that always 
surprises me, but the global food demand expected to double by 
2050.
    I'm pleased to see the Department has increases in its 
plans for research. These programs and others are critical to 
our farmers' ability to increase production, and every $1 spent 
on research results in a $20 return to the U.S. economy.
    I'm glad the Secretary and his team are here today, and 
really believe that they are managing the Department in a 
really challenging time in a way that's transparent, and 
effective, and forward looking. And Mr. Secretary, glad you 
could join us today.
    Senator Kohl. Thank you very much.
    Secretary Vilsack.


                SUMMARY STATEMENT OF HON. THOMAS VILSACK


    Secretary Vilsack. Mr. Chairman, and Senator Blunt, and 
Senator Moran, thank you very much for the opportunity to 
appear today. You have my statement, and I would just simply 
ask for an opportunity to amplify on it just a bit.
    We want to thank the subcommittee for this opportunity, and 
we would like to start with a plea, and the plea is for an 
understanding that we need time and flexibility during these 
difficult times.
    While the budget that we propose does increase over last 
year, I would like to point out that it is several billion 
dollars less than it was in 2010. And that has resulted in us 
at USDA taking a look very carefully at the ways in which we 
expend taxpayer resources and are in the process of a variety 
of steps to try to make this a more efficient and more 
effective USDA.
    We need time to absorb the reductions that have taken 
place. We need time to fully implement our plans for additional 
savings, which includes a very top to bottom review of our 
administrative functions. And we need to have the opportunity 
and the flexibility to build on the success that we've 
experienced at USDA in the recent past.
    Senator Blunt mentioned the fact that we had record income 
last year. And while it is true that income is expected to be 
down just a bit, it will still be one of the best years in farm 
income in our history. It is a result of record exports, a 
record number of acres enrolled in conservation, a record 
number of crop insurance programs, a record amount of credit 
extended to producers, homeowners, and businesses, a record 
amount of investment in bio-based products, and a bio-based 
economy, as well as the expansion of local and regional food 
systems, a record investment in business growth in rural areas 
and community development, record lows in fraud and in error 
rates in many of our nutrition programs, including the 
Supplemental Nutrition Assistance Program (SNAP), expanded food 
safety efforts, and expanded effort to improve the nutrition of 
American families, with a particular emphasis on our school 
children. And as Senator Blunt indicated, an expanded effort at 
agriculture research, which is extraordinarily important for us 
to be able to meet the growing demands, not here just in the 
United States, but also globally.
    This has required us to make some tradeoffs, and you'll 
find that we actually had to make some difficult decisions 
concerning programs that were either duplicative, ineffective, 
inefficient, unnecessary, or in some cases, just inadequately 
funded to make a difference. We also had to take into 
consideration the impact of the farm bill discussions, which 
have just begun in the Senate and the House.
    We have very specific goals, and I'll conclude with that. 
We want a Farm Service Agency (FSA) that provides appropriate 
credit and maintains a safety net for our producers. We want to 
continue to expand trade and to establish food security 
globally through our Foreign Agricultural Service. We want to 
promote job growth and improve quality of life and energy 
security through rural development.
    Through our food safety efforts, we want better food safety 
more focused on prevention, surveillance, and detection, and 
more rapid recovery and response.
    Through the natural resources portion of our budget, we 
want to expand technical assistance to landowners so that we 
can get conservation on the ground sooner, and we want to focus 
on some high-priority landscaped areas, so we can improve soil 
and water quality, increase wildlife diversity, work with our 
friends and neighbors in the sportsmen field to expand outdoor 
recreational opportunities.
    In the Marketing and Regulatory Programs (MRP) area, we'd 
like to continue our efforts at expanding local and regional 
food systems, as well as prioritizing animal and plant health. 
The research area, we want to continue to focus on our ability 
to maintain competitive targeted research towards priorities, 
and within the administration of our food programs, we want to 
continue to provide access while improving the integrity of 
each and every one of the programs.
    Finally, in the administration of the Department, we want 
to continue the cultural transformation efforts to improve 
employee moral, expand on our process improvement efforts, 
which is provided for a more efficient use of our time, realign 
our workforce through early retirement incentives, and consider 
taking a look at our footprint, which has involved some very 
difficult and tough decisions concerning office consolidations, 
and at the same time, continue, as I indicated earlier, a 
fairly extensive process that's looking at our administrative 
services.


                           PREPARED STATEMENT


    It has been a busy time at USDA, and we appreciate the 
subcommittee's opportunity to appear today, and look forward to 
your questions.
    Thank you.
    [The statement follows:]

               Prepared Statement of Hon. Thomas Vilsack

    Mr. Chairman and distinguished members of this 
subcommittee, I appreciate the opportunity to appear before you 
to discuss the administration's priorities for the Department 
of Agriculture (USDA) and provide you an overview of the 
President's 2013 budget. I am joined today by Deputy Secretary 
Kathleen Merrigan, Joseph Glauber, USDA's Chief Economist, and 
Michael Young, USDA's Budget Officer.
    When I made my first appearance before this subcommittee, 
our country and the Department of Agriculture faced historic 
challenges. The economy had deteriorated significantly. It was 
a crisis that cost the United States more than 8 million jobs 
and plunged the economy and the world into a crisis from which 
we are still fighting to recover. Three years later, thanks to 
the President's bold actions, the economy is growing again and 
creating millions of jobs in the private sector. Over the past 
22 months, the Nation's businesses have created 3.2 million 
jobs. Last year, we added the most private sector jobs since 
2005.
    I am proud to say that America's farmers, ranchers, and 
producers have helped fuel the beginnings of the recovery. The 
establishment of the Department 150 years ago underscored the 
importance of agriculture and rural America to the country. 
What was true then remains true today--agriculture and rural 
America matter. Agriculture plays a fundamental role in our 
economy--responsible for 1 in 12 jobs. That's not surprising, 
because at the time the Department was created, the Morrill Act 
established the partnership between USDA and the land grant 
universities. Because of this partnership, these institutions 
have graduated 20 million people, people who went on to jobs 
that built our economy. So, when American producers earn record 
income, as they did last year, everyone benefits through the 
creation of more jobs and higher wages, whether in food 
processing, packaging, or farm equipment manufacturing, the 
reduction of our dependence on foreign oil supplies, or the 
increased availability of more nutritious food.
    On February 10, 2012, I announced another record-breaking 
calendar year for farm exports. Total agricultural exports for 
calendar year 2011 were a robust $136.3 billion. We saw a rise 
in both the value and volume of U.S. agricultural exports 
worldwide in 2011, as international sales rose $20.5 billion 
over the previous record set in calendar year 2010. 
Agricultural exports have supported the creation of over a 
million jobs. USDA has expanded markets for American goods 
abroad by working aggressively to break down barriers to trade 
and provide U.S. businesses with the resources needed to reach 
consumers around the world. Last year, we exported an all-time 
high of $5.4 billion worth of beef and beef products, 
surpassing the previous record by more than $1.6 billion. The 
volume of shipments also surpassed the 2003 levels, the last 
year before a detection of bovine spongiform encephalopathy 
(BSE) disrupted U.S. trade. The return to pre-2003 levels marks 
an important milestone in USDA's steadfast efforts to open and 
expand international markets. The ratification of the trade 
agreements with South Korea, Colombia, and Panama will increase 
U.S. farm exports by an additional $2.3 billion--supporting 
nearly 20,000 American jobs--by eliminating tariffs, removing 
barriers to trade and leveling the playing field for U.S. 
producers.
    Agriculture has also led the development of our bio-based 
economy, where what we grow and raise is used to make fuel, 
chemicals, and polymers to complement our traditional 
production of food, feed, and fiber. Resilient, hard-working 
rural residents provide a model for creating economically 
thriving communities, which underscores why the unemployment 
rate is dropping more quickly in rural America than anywhere 
else in the country.
    At USDA we have been working to fulfill President Obama's 
vision for a Nation where everyone gets a fair shot and an 
economy that makes, creates and innovates. We have been working 
to implement the President's vision by laying a foundation for 
sustainable economic growth and job creation. USDA is at the 
forefront of developing the technology and tools necessary to 
transform rural America so that it can create and take 
advantage of new economic opportunities.
    We have generated rural wealth with our conservation and 
rural development programs. These programs help create green 
jobs, improve recreation and tourism, and facilitate the 
production of renewable energy. We have maintained a strong 
agriculture safety net through a system of income support, 
disaster mitigation, and a record number of farm loans.
    The Department has programs to help people in need by 
ensuring that they have access to a plentiful supply of safe 
and nutritious food. This is fundamental to the healthy 
development of every child in America and to the well-being and 
productivity of every family. In recent years, the Supplemental 
Nutrition Assistance Program (SNAP) has helped millions of 
families meet basic nutritional needs. The program currently 
serves as a bridge to recovery for over 46 million Americans 
who are at risk of being hungry when they face challenging 
economic times. More than half of those who rely on the program 
are children, elderly, or the disabled, and many participants 
are newly unemployed who may have never thought they would need 
this assistance.
    While SNAP has increased steadily since its last low point 
in 2000, and sharply during the recent economic downturn, the 
rate of increase has been declining since January 2010. And 
now, we estimate that rising employment and household income 
will reduce participation in SNAP in 2013, even as the program 
serves a larger share of those eligible. This is how the 
program is designed to work; participation rises during 
difficult economic times and falls in better times. Even under 
this period of rapid growth in participation, this 
administration has achieved historically high accuracy rates in 
SNAP, saving the taxpayer billions of dollars. We will continue 
to make improvements that protect program integrity, even as 
Federal and State budgets for oversight of the program are 
declining.
    We have accomplished a critical step on the road to deliver 
healthier, more nutritious food to our Nation's schoolchildren 
and to help them develop healthy eating habits for life. On 
January 26, 2012, we published the final rule that refines and 
improves the standards for meals available to over 51 million 
school children across the country every day. The new rule 
implements provisions of the Healthy, Hunger-Free Kids Act of 
2010 that are simpler and less burdensome than the ones they 
replace. The rule substantially increase offerings of fruits, 
vegetables, and whole grains; reduce saturated fat, trans fats 
and sodium; and set sensible calorie limits based on the age of 
children being served. Our understanding of the nutritional 
quality of food is built upon USDA science. We have seen the 
connection between what our kids eat and how well they perform 
in school. And we know that America's success in the 21st 
century is dependent on having the best-prepared and best-
educated workforce in the world. So it is critical that that 
all children have the basic nutrition they need to learn, to 
grow, and to pursue their dreams.
    These are just a few of the ways that USDA is helping to 
create jobs and work towards an economy built to last. But it's 
going to take more to keep moving forward, and that's the goal 
of President Obama.
    I share the President's vision for investing in activities 
that promote economic growth, while reducing our deficits over 
the long-term. We need to cut what we can't afford in order to 
pay for what really matters, but in a way that does not hamper 
growth or prevent us from helping businesses and American 
families that need assistance. At USDA we recognized, like 
families and businesses across the country, that we could not 
continue to operate as we did in the past and that we must 
innovate, modernize, and be better stewards of the taxpayers' 
dollars.
    Over the past decade, USDA has seen an increase in program 
complexity and demand for services while staffing has 
decreased. Therefore, for fiscal year 2012, I led a Department-
wide review of operations to make USDA work better and more 
efficiently for the American people. Agency leaders took a hard 
look at all their operations, both in headquarters and field 
offices. The result was our Blueprint for Stronger Service. The 
plan identifies administrative efficiencies, office closures, 
and targeted staffing reductions, to help us deal with 
reductions in funding. This plan will create optimal use of 
USDA's employees, better results for USDA customers, and 
greater efficiencies for American taxpayers.
    Under the Blueprint for Stronger Service, USDA is reducing 
expenditures for certain IT products, supplies, travel, 
printing, and other services. The Blueprint also calls upon 
USDA to strengthen its administrative services. Under this 
initiative, the Department identified 379 recommendations for 
improving USDA's office support and operations, which includes 
ways to streamline the provision of administrative services, 
such as civil rights, information technology, finance, human 
resources, homeland security, procurement, and property 
management. Twenty-seven initial improvements have been 
identified for first-phase implementation of this project that 
will realize efficiencies through improved administrative 
services, such as leveraging USDA's size through strategic and 
volume purchases as is demonstrated by the consolidation of 
over 700 cell phone plans down to approximately 10.
    To realize further efficiencies, USDA has proposed closure 
of 259 domestic offices, facilities, and labs across the 
country, as well as seven foreign offices while ensuring that 
the vital services they provide are not diminished. In some 
cases, the offices being closed are no longer staffed or are 
staffed by one or two people; many are within 20 miles of other 
USDA offices. In other cases, technology improvements, advanced 
service centers, and broadband service have reduced the need 
for brick and mortar facilities.
    Last year, many agencies put hiring controls in place, 
followed by voluntary early retirement programs and targeted 
separation incentive programs. We have offered these programs 
on a broader basis in fiscal year 2012. Over the last 15 
months, nearly 7,800 people have elected to take advantage of 
regular and early retirement opportunities. These departures 
have provided agencies the flexibility to eliminate or 
restructure positions to be more relevant to customer needs. 
Many of the vacated positions will not be refilled, and many of 
those refilled will be at lower grades than before. We opted to 
manage change rather than implement reductions-in-force or 
furloughs, which would have disrupted services that matter to 
the public.
    When fully implemented, these immediate actions along with 
other recommended changes will generate efficiencies valued at 
about $150 million annually. Further improvements are expected 
based on the realignment of the workforce. Most important, 
these actions will ensure that USDA continues to provide an 
optimal level of service to the American people within 
available funding levels. Ultimately, the Blueprint for 
Stronger Service will allow us to manage change in a way that 
allows us to provide a high level of services despite reduced 
operating budgets.
    I have made it a priority to transform USDA into a high-
performing and diverse organization. Under our Cultural 
Transformation initiative, we are focusing on improving several 
aspects of employee culture, including leadership 
accountability, employee development, talent management, labor 
relations, customer focus, and diversity of the workforce. By 
strengthening management operations and engaging employees, 
USDA will also improve customer service; increase employment 
satisfaction; and implement strategies to enhance leadership, 
performance, diversity, and inclusion.
    This in-depth evaluation and improvement of our operations 
provided a firm foundation for us to develop the fiscal year 
2013 budget. For 2013, the budget we are proposing reflects the 
difficult choices we are making to control spending, while 
maintaining investments that are critical to long-term economic 
growth and job creation.
    In total, the 2013 budget we are proposing before this 
subcommittee is $141 billion, an increase of $6.9 billion above 
the 2012 estimate. Of the increase, $6.4 billion is for 
mandatory programs, due primarily to a one-time shift in the 
timing of certain crop insurance costs mandated by the 2008 
farm bill. The budget also increases funding for the nutrition 
assistance programs to fully fund estimated participation 
levels. As we continue to create jobs and grow the economy, 
fewer families will need nutrition assistance.
    For discretionary programs, our budget proposes $19.3 
billion, approximately $478 million above the 2012 level. The 
majority of the increase is for the Special Supplemental 
Nutrition Program for Women, Infants and Children (WIC) and 
agricultural research. The discretionary funding request 
reflects the Department's continued efforts to innovate, 
modernize, and be better stewards of the taxpayers' dollars. 
Discretionary spending is partially offset through about $1 
billion of proposed limits on selected mandatory programs and 
other adjustments. For 2013, further administrative 
efficiencies, realignment of staff, and other actions are 
proposed to reduce costs. In addition, the budget proposes to 
reduce or terminate selected programs and reallocate resources 
to fund targeted investments in priority programs and 
infrastructure to provide a foundation for sustainable economic 
growth.
    This budget provides the resources we need to effectively 
deliver the level of service our customers and your 
constituents expect from USDA--whether it is applying for a 
farm operating loan, enrolling more acres into conservation 
programs, supporting business creation, seeking nutrition 
assistance, or any of the multitude of services provided by our 
dedicated workforce. Any further reduction in funding for our 
back office operations would significantly impair our ability 
to deliver critical services and would imperil our efforts to 
manage an increasingly complex workload with less money and 
fewer workers.
    Reducing the deficit is a critical part of the President's 
economic plan. The long-term stability of the economy depends 
on whether we have the will to act now. Farmers and ranchers 
know the importance of a healthy economy, which raises incomes 
and increases demand for their products. Therefore, the 2013 
budget reflects the President's Plan for Economic Growth and 
Deficit Reduction. The President's plan reduces the deficit by 
$32 billion over 10 years by eliminating direct farm payments, 
decreasing crop insurance subsidies, and better targeting 
conservation funding to high-priority areas.
    As Congress initiates its deliberations on the 
reauthorization of the farm bill, we must remember that 
American agriculture has achieved its success today because of 
the policies and the investments that have been made over many 
decades. We are here because we've maintained a strong safety 
net so there is adequate financial help when times are tough 
and disaster strikes. We have supported research that has led 
to a significant increase in agricultural productivity and 
promoted vibrant markets. We are also here because policies in 
the farm bill for research, renewable energy, and broadband are 
providing rural America the tools to take advantage of new 
economic opportunities. Statutory authority for all disaster 
programs expired on September 30, 2011; accordingly, USDA 
cannot provide assistance through these programs to producers 
for losses due to natural disasters occurring after that date. 
As the farm bill is drafted, I encourage Congress to provide 
USDA the tools and the flexibility needed to address the 
challenges faced by American producers.
    Our 2013 budget protects the farm safety net, while 
achieving the President's goal for deficit reduction. Income 
support programs, including 2012 direct payments, 2013 counter-
cyclical payments, and Average Crop Revenue Election (ACRE) 
payments, are expected to total about $4.9 billion and outlays 
under the Federal crop insurance program are projected to reach 
$9.3 billion. Despite a strong farm economy, demand for USDA 
farm loans remains strong due, in part, to tighter private 
credit standards including higher down-payment requirements. 
The 2013 budget provides nearly $4.8 billion for loans to meet 
the expected demand for financing. The requested loan levels 
will serve nearly 30,000 farmers.
    In order to better serve producers with faster and simpler 
service, the budget continues to fund IT modernization 
activities of our Farm Service Agency (FSA). This investment 
will improve the Agency's ability to deliver increasingly 
complex farm program benefits, securely, reliably, and rapidly. 
Since 2003, staffing levels at FSA have declined over 30 
percent, making investments in IT infrastructure even more 
important.
    One of USDA's most important objectives is to protect our 
abundant natural resources. Over the last 3 years, we enrolled 
a record number of acres of private working lands in 
conservation programs. These programs help to preserve the 
soil, improve water quality, and promote wildlife diversity and 
add hundreds of millions of dollars to local economies in rural 
areas. For 2013, the budget provides approximately $6.2 billion 
to support approximately 358 million acres in farm bill 
conservation programs.
    For the Natural Resources Conservation Service (NRCS), the 
2013 budget proposes $828 million for conservation operations. 
NRCS will continue efforts to leverage technical assistance 
funds through agreements with its traditional partners, such as 
conservation districts, as well as with nonprofit organizations 
and State and local agencies. This approach of voluntary 
conservation works. That is why we are embracing locally driven 
conservation programs and entering partnerships that focus on 
large landscape-scale conservation programs, such as the 
Chesapeake Bay, the Bay-Delta region in California, the 
Mississippi River Basin, Gulf Coast, and the Great Lakes.
    Our budget for 2013 contributes significantly to the 
economic growth goals of the White House Rural Council by 
continuing to fund programs that promote renewable energy, job 
training, infrastructure investment, access to capital, and 
green jobs throughout rural America. Approximately $6.1 billion 
in direct loans will be made available to support the 
transformation from fossil fuels to cleaner technologies. 
Allowing financing for environmental upgrades will support the 
continued development of a national clean energy strategy. 
Almost $1 billion in loans will be used to support rural 
business and entrepreneurs, which will put more people back to 
work. USDA's efforts, including a regional approach to wealth 
and job creation, is one reason why the unemployment rate is 
dropping more quickly in rural America than anywhere else in 
the country. We are giving renewed opportunity to the nearly 50 
million people who live in those areas who don't necessarily 
farm.
    Cutting edge research remains key to the United States 
retaining its competitive edge and global leadership in 
agricultural productivity--estimated to need to increase 70 to 
100 percent by 2050 to meet growing global demands for food. 
The correlation between research and improved productivity 
could not be clearer. As a result of research at USDA, our land 
grant universities, and the private sector, American 
agriculture ranks second in productivity gains of all segments 
of the U.S. economy since 1980. Over the past 60 years, yields 
per acre of major crops--corn, soy, wheat, and cotton--have 
doubled, tripled, and in some cases even quadrupled. At the 
same time, livestock production and specialty crop production 
have become far more efficient. These incredible productivity 
gains were achieved through a sustained investment in research. 
We will continue to support a robust research program that will 
ensure sustainable agricultural production, economic growth for 
growers and greater choice for consumers. The 2013 budget 
proposes funding of $325 million for the Agriculture and Food 
Research Initiative (AFRI), an increase of $60.5 million, and 
$1.1 billion for our Agricultural Research Service (ARS). We 
will continue to focus additional research dollars in key 
areas, such as biofuel feedstocks, livestock and crop 
production and protection, and enhancing American agriculture's 
ability to meet growing global demand sustainably.
    Because we are still in a recovering economy, USDA 
recognizes the need to support those in need by ensuring access 
to safe and nutritious food, which is essential to the healthy 
development of every American child and to the well-being and 
productivity of every American family. The budget fully funds 
the expected requirements for the Department's three major 
nutrition assistance programs--WIC, the National School Lunch 
Program, and SNAP.
    The Department has had great success in promoting healthy 
eating habits and active lifestyles. Too many adults and 
children have poor diets and gain excessive weight contributing 
to poor health and increased medical costs. The Centers for 
Disease Control and Prevention data show that the prevalence of 
obesity among children tripled from 1970 to 2008 and it doubled 
among adults. However, data for 2009-2010 show the obesity rate 
for both children and adults has stopped increasing. Policies 
aimed at increasing access to more nutritious diets, promoting 
eating habits consistent with the Dietary Guidelines and 
encouraging healthy lifestyles are partly responsible for this 
change.
    One of the key challenges for providing healthier school 
meals is to modernize cafeteria equipment appropriately so 
schools can prepare attractive, wholesome meals with more whole 
grain, fruit and vegetables, and less fat and saturated fat. 
Helping schools to upgrade the nutritional quality of meals 
served is essential. So an important part of the budget request 
is $35 million to continue competitive grants to help schools 
purchase equipment to serve healthier meals as well as to 
expand the breakfast program. These grants will help about 
10,000 schools across America.
    The budget not only supports domestic food assistance, but 
also provides $1.4 billion to support programs that further the 
administration's global food security objectives, including 
those supporting preschool and school feeding programs carried 
out under the McGovern-Dole International Food for Education 
and Child Nutrition Program. In fiscal year 2013, the McGovern-
Dole program is expected to benefit more than 4 million women 
and children. Through the U.S. Government's leadership in 
global food security, we advance global stability and 
prosperity by improving the most basic of human conditions--the 
need that families and individuals have for a reliable source 
of quality food and sufficient resources to purchase it.
    The Obama administration and USDA are committed to 
partnering with rural communities to increase their economic 
competitive by helping them provide residents access to quality 
healthcare services, modern library facilities and school 
buildings, and reliable emergency equipment and services. 
Financing totaling $2 billion, an increase of approximately 
$700 million, will provide assistance to over 1,700 rural 
communities. Investing in rural communities is essential for 
growth and job creation.
    Helping rural residents obtain safe and affordable housing 
is also a key to maintaining stable communities and creating 
jobs. The 2013 President's budget requests a significant level 
of funding for housing programs. USDA continues to request that 
single family housing assistance be provided primarily through 
loan guarantees. The 2013 budget includes funding to support 
$24 billion for guaranteed loans. USDA's single family housing 
direct loan program is funded at $653 million, and will be 
targeted to teachers in rural areas, and very-low-income 
recipients of mutual and self help grants. These funds will 
create job opportunities and make the dream of home ownership a 
reality for over 184,000 families in rural America.
    Since the founding of President's Obama's Food Safety 
Working Group in 2009, USDA has collaborated extensively with 
other Federal partners to safeguard the food supply, prevent 
foodborne illnesses and improve consumers' knowledge about the 
food they eat. USDA is working to strengthen Federal efforts 
and develop strategies that emphasize a three dimensional 
approach to prevent foodborne illness: Prioritizing prevention; 
strengthening surveillance and enforcement; and improving 
response and recovery. Between 2000 and 2010, USDA reached a 
national goal of reducing E. coli rates by 50 percent, largely 
because of strengthened beef safety policy and enforcement. In 
2011, stricter Salmonella and Campylobacter performance 
standards were implemented to reduce these pathogens in turkeys 
and young chickens, which are expected to prevent as many as 
25,000 foodborne illnesses annually.
    Despite this success, we can and must do a better job of 
ensuring the safety of meat and poultry products regulated by 
USDA, but we need to do it more efficiently and effectively. 
The Food Safety and Inspection Service (FSIS) recently 
published a proposed regulation that will prevent thousands of 
food-borne illnesses, streamline poultry inspections, and 
reduce spending by approximately $90 million over the first 3 
years of implementation. We will revise current procedures and 
remove outdated regulatory requirements that do not help combat 
foodborne illness. The new procedures will use taxpayer dollars 
more effectively and efficiently; even with these program 
efficiencies, the budget includes approximately $1 billion for 
FSIS.
    The economic vitality and quality of life in rural America 
and the U.S. economy at large depends on a competitive, 
efficient, and productive agricultural system. In an era of 
market consolidation and intense competition, producers rely on 
fair and open access to markets and control over their 
decisions to thrive. Producers also rely on animal and plant 
resources being protected against the introduction of foreign 
agricultural pests and diseases. For 2013, the budget includes 
over $880 million in discretionary funding to improve 
agricultural market competitiveness and production for the 
overall benefit of consumers and producers.
    We have taken a close look at the budget for the Animal and 
Plant Health Inspection Service and have proposed a number of 
program reductions and implemented identified program 
efficiencies to ensure that scarce resources are being used 
efficiently. The budget achieves savings through a variety of 
means. It includes decreases for activities where eradication 
campaigns have been successful, such as boll weevil, and for 
pests and diseases where management is currently more prudent 
than eradication, such as emerald ash borer. Savings are also 
possible in animal disease testing while still meeting 
international standards. Further, the budget achieves other 
savings by acknowledging the role of the producer and other 
cooperators to directly reduce certain pests and diseases, such 
as Johne's disease. The budget also proposes modest increases 
to improve overall animal disease traceability and to provide 
protections against animal diseases that could impact human 
health. At the requested budget level, we estimate we will 
prevent and mitigate about $1.18 billion in damages as a result 
of selected plant and animal health monitoring and surveillance 
efforts.
    USDA's central Departmental Management provides human 
resource, procurement, information technology, and financial 
management oversight and services to agencies. Departmental 
staff offices provide legal and economic support, 
communications coordination, and program appeal hearings for 
the Department's program activities. These activities are vital 
to USDA's success in creating opportunities for America's 
farmers, ranchers, and rural communities. The 2012 
appropriations act made deep cuts in funding for these offices. 
Under these reduced funding levels, we took prudent actions to 
maintain critical functions needed to support the agencies' 
effective delivery of program operations. But further 
reductions in these areas cannot be sustained without 
deterioration in service. For 2013, the budget proposes funding 
to ensure that these offices maintain the staffing levels 
needed to provide leadership, oversight, and coordination. 
These efforts are critical to making the Department an 
efficient and effective organization.
    Since coming to USDA, I have made it a priority to resolve 
all of the civil rights cases facing the Department which the 
administration inherited. During this time, we have resolved 
large-scale class action lawsuits involving allegations of past 
discrimination by Black and Native American farmers and 
ranchers and provided an additional path to justice for women 
and Hispanic farmers and ranchers who allege discrimination. We 
have corrected past errors, learned from mistakes, and charted 
a stronger path for the future where all USDA employees treat 
all Americans with dignity and respect. The 2013 budget builds 
upon our progress by increasing funding for selected key 
priorities that will improve USDA's handling of civil rights 
matters and will address claims of potential discrimination in 
the delivery of programs.
    In conclusion, the President is deeply committed to 
reducing the deficit so that the economy can continue to grow 
over the longer term. This is a responsible, balanced budget 
that continues to meet key priorities and is consistent with 
the President's commitment. We will continue to achieve 
significant progress in administering more complex programs 
with fewer staff and resources by adopting reforms that will 
improve our programs and service to our customers.
    At this time, I will be glad to answer questions you may 
have on our budget proposals.

    Senator Kohl. Thank you very much, Secretary Vilsack.

                          WIC PROGRAM FUNDING

    Mr. Secretary, the fiscal year 2013 budget includes $422 
million increase for WIC. Do you believe this budget is 
sufficient to cover the demand for the WIC program? How will 
the Department adjust should cost food costs and participation 
increase in 2013?
    Secretary Vilsack. Mr. Chairman, we do believe it is 
adequate. We do believe it's based on accurate estimates. We're 
a bit off this year, and so we wanted to be doubly sure that we 
focused on maintaining the WIC program so that there weren't 
waiting lines. We know that's something the Congress does not 
want us to have. But, also point out that we are expecting and 
anticipating that the food inflation will be moderate in 
comparison to last year. We saw fairly significant spikes at 
various points in time. We don't expect to see quite the high 
level of food price increases that we experienced last year. 
So, we do believe that that estimate is accurate.

                         SNAP CONTINGENCY FUND

    Senator Kohl. Mr. Secretary, the food stamp program, which 
is now called SNAP, saw a $2 billion increase to its 
contingency fund. This is not a small amount of money. Why is 
this additional amount of money needed, given the current state 
of the economy? Do you envision using any of the contingency?
    Secretary Vilsack. Mr. Chairman, what we have seen with 
reference to SNAP is a plateauing of our SNAP numbers, which is 
obviously a good sign, may very well be reflective of the fact 
that we're beginning to see an improved economy.
    Having said that, as noted earlier, high energy costs could 
potentially derail that recovery, and so we want to be in a 
position that if things don't continue to proceed in a positive 
way that we can respond to the nutritional needs of families, 
and also continue to focus on the fact that their nutrition 
assistance programs are not just for the struggling families, 
but it is, in a sense, part of the overall program to ensure 
the safety net for our producers. Sixteen cents of every food 
dollar goes into a farmer's pocket. So, as we look at the 
totality of our support, and help, and assistance for our 
farmers and producers, you have to look at all of the programs, 
including SNAP.

                         SNAP PROGRAM INTEGRITY

    Senator Kohl. Mr. Secretary, over the past few months we've 
heard a lot about the integrity of the SNAP program. This 
program provides a crucial safety net for millions of people. 
We certainly need to ensure that this program is managed in the 
most effective and efficient manner possible. What is your 
Department doing to address waste, fraud, and abuse in this 
program?
    Secretary Vilsack. Mr. Chairman, let me start off by 
pointing out that the fraud rates and the error rates are at 
historic lows. We've taken a number of steps.
    First, as it relates to individuals, we have in place a 
program that will allow us to check against death records, 
Social Security records, et cetera, to make sure that people 
are not inappropriately using other's identity. We also have a 
program for those individuals who live near border States to 
ensure that they don't try to collect in a number of States.
    I will tell you that in 2010, our latest numbers, nearly 
800,000 investigations were conducted by States, in terms of 
individuals, and more than 44,000 individuals were disqualified 
from the program as a result of being disqualified in those 
inspections.
    We have looked at approximately 15,000 businesses, stores, 
and we have an alert program, which allows us to begin looking 
at 18 different demographic factors and demographic pieces of 
information and data about how SNAP proceeds are being 
processed.
    For example, if we see a continuation of even no-cent 
purchases, $35, $50 even, that is a tip-off for us to really do 
a more thorough investigation of how the program is being 
utilized.
    We are also making sure that if a location is disqualified 
from the program, that there's not a transfer of ownership that 
is basically hiding the previous owner, so we're going into 
greater detail in terms of looking at the paperwork of these 
transfers.
    So, we take all of this very, very seriously. We understand 
it's important and necessary to maintain the integrity of these 
programs. While we are pleased that we are at record lows, 
we're not satisfied. We want to continue to work to ensure the 
integrity of these programs.

         FOOD SAFETY AND INSPECTION SERVICE POULTRY INSPECTION

    Senator Kohl. Thank you. The Food Safety and Inspection 
Service (FSIS) program, is responsible for ensuring that the 
Nation's commercial supply of meat, poultry, and processed egg 
products is safe and wholesome. This is done to a large degree 
by Federal inspectors and meat processing plants.
    However, FSIS's budget includes a $13 million cut in 
funding associated with implementing new methods of poultry 
inspection and reducing staff by 500 employees. Certain 
inspection responsibilities would shift from Federal inspectors 
to company employees.
    In light of continuing outbreaks of food-borne illness, 
we're concerned that this decision may put consumers at risk 
solely for budget savings. Do you believe this new inspection 
method will keep our food safe? What training will be required 
of company employees prior to assuming these new tasks?
    Currently, FSIS inspectors can evaluate up to 35 birds per 
minute. The new process is supposed to be five times faster, 
and is this safe for workers?
    Secretary Vilsack. Mr. Chairman, thank you for asking that 
question. First of all, let me suggest to you that we believe 
that this process will actually make the food safer, not as 
safe, but safer. And the reason for this is, based on the fact 
that we have had a number of pilot facilities around the 
country for a number of years use this new system that we're 
proposing, and from that, the data suggests that we can save 
5,200 food-borne illness incidences as a result of this new 
system.
    Second, it's important to know that essentially what we're 
doing in terms of company inspection is not so much in terms of 
food inspection and in terms of food safety, it has more to do 
with the cosmetic appearance of the poultry. At the beginning 
of the process, we are currently using individuals to look for 
defects in the cosmetic nature of poultry, which we think is 
really more about the marketing of the product, not the safety 
of it.
    What we'd like to be able to do is to have the company 
assume that responsibility for cosmetic review, and then shift 
the responsibility of the people that we currently have on that 
line to taking a look at the locations along the line where the 
hazards are greatest, and beef up that effort.
    It is true that this will result ultimately over time in 
roughly 500 to 800 fewer positions, but it will also result in 
more than 1,000 people actually receiving a higher paying job 
and a more sophisticated job, for which there will be 
additional training. We expect and anticipate that this will be 
factored in or phased in over a couple-of-years period in order 
to ensure the training is accurate.
    As it relates to the worker safety question, we are going 
to institute a study at the beginning of this process. We have 
a study, but we want to make sure that the results of that 
study are verified. And we are going to essentially look at a 
very complicated review of the safety of workers. If we see a 
problem with the safety, we will obviously adjust accordingly.
    The last thing I would say is that this whole process, this 
review process, this inspection process has been peer reviewed. 
And I think that the review suggests very strongly that this 
will actually result in a safer system, a safer food supply. It 
just happens to also save money for the Government and for the 
companies, but it is primarily for food safety that we're 
looking at this.
    Senator Kohl. Thank you, Mr. Secretary.
    Secretary Vilsack. Thank you.
    Senator Kohl. Senator Blunt.
    Senator Blunt. Thank you, Chairman.

                  WIC PROGRAM INCREASES IN CALIFORNIA

    Mr. Secretary, in the WIC program, I think there's been, 
particularly in California, an increase in costs. It's the 
largest program, of course, but it's increased a whole lot 
faster than in other States. And I wonder if you could tell us 
a little bit about what you're doing to look at that, and what 
might be the cause for that.
    Secretary Vilsack. Senator, there may be a number of 
reasons, but the one that concerns us the most is that there 
are very, very small stores that have dramatically overpriced 
products in the WIC package. And we have advised the State of 
California that this has taken place. We have asked the State 
of California to first and foremost stop any further approvals 
or permission for those sized stores to continue to participate 
in the WIC program. We've asked them to review their protocols 
for the analysis of those smaller stores, and we have been 
advised by the State of California that they will be coming up 
with a new regime this spring that will address in a very 
serious way, in a very concrete way, and a very quick way, the 
fact that there have been stores that have taken advantage of 
folks, and taken advantage of this program.
    So, that's one of the concerns that we've had, and we've 
notified the State, the State has responded, and they are in 
the process of fixing the problem.
    Senator Blunt. Just a curiosity here. I'm glad you're 
looking at this carefully, and it sounds like you're working 
with them to solve it. Do these stores have a different section 
for WIC customers, or do they just assume that most people 
won't buy the more expensive gallon of milk, the more expensive 
loaf of bread, or whatever they're pricing at this higher rate?
    Secretary Vilsack. Senator, I'm not sure if they have a 
different section. My understanding was, and I could be wrong 
about this, that this was sort of mixed in with their overall 
operation, and basically taking a fairly significant advantage 
of folks. When we're seeing the price of various items being 
two, three, four, maybe even higher at times what you would 
normally see in a regular grocery store. And I think one of the 
keys for us, as this is----
    Senator Blunt. Did you say two, three, or four times as 
high?
    Secretary Vilsack. Or higher.
    Senator Blunt. To understand this, if you're a WIC 
recipient, you have a coupon that allows you to get this 
product that has nothing to do really with the price of the 
product where you buy it.
    Secretary Vilsack. That's correct. And then the grocery 
store or the convenience store puts in a bill, if you will, for 
reimbursement for that, and were charging a substantial amount 
for that product far, far in excess of what the market was 
currently charging for that product, whether it be cereal, or 
whatever it might be.
    We noticed this in our review of the data, and we contacted 
the State and said this is a serious problem. First and 
foremost, what we are going to tell you is we don't want any 
further businesses of this size, if you will, in these high-
risk areas to basically be permitted, and then second, we want 
you to take this very seriously and rethink the way in which 
you are providing oversight. As you know, these programs, the 
administrative oversight is initially at the State level to 
provide oversight so that this doesn't happen.
    And, again, I think California did respond. Governor Brown 
and his team have looked at this, and they said, yes, you're 
right. This is not right. We're going to fix it, and we're 
going to fix it quickly.
    Senator Blunt. Do you feel like this might be happening on 
maybe even a lesser level, but in other places?

                   NUTRITION PROGRAMS FRAUD DETECTION

    Secretary Vilsack. I'm not aware of it happening in other 
States, Senator. I know that we're looking at this, and being 
careful about it. And the point I would make, with reference to 
nutrition programs, generally, is--as we look at the farm bill, 
and as we talk about this issue--I think we need to take a look 
at the definition of stores that qualify for these various 
programs, because right now we see a lot of issues with 
relatively small facilities. That's where many of our concerns 
are relative to error rates or fraud in many of these nutrition 
programs. So, I think we really need to be careful about the 
permission we grant. There are more than a quarter-of-a-million 
stores, for example, that provide SNAP, and a relatively small 
percentage of those stores sell a disproportionate amount of 
SNAP food. It's maybe less than 20 percent sells 80 percent of 
the food. That type of ratio. So, I think we need to really 
take a look at that.
    Senator Blunt. I'm going to ask a technology question next, 
so it may be the answer.
    Is there any way your system can monitor whether some area 
is way out of bounds on pricing of specific products?
    Secretary Vilsack. I think there is. Certainly, in a couple 
of programs we do have that review, and we're continuing to 
look at ways in which we can mine data that we collect to be 
able to identify problems, as I said earlier.
    For example, if we see a store where there are a lot of 
even purchases. I mean no one goes into a grocery store and 
gets $35 worth of groceries. They get $35.18 or $35.16. We see 
a pattern of that. That gives us a tip that there's a problem 
there, and that triggers a review and investigation.
    Senator Blunt. And you say for both WIC and SNAP this is 
something that you're watching carefully.
    Secretary Vilsack. Yes. And that's why we had 15,000 store 
reviews. That's why we had nearly 800,000 individual 
investigations and reviews, in terms of the program. And that's 
why several hundred stores were disqualified, and 44,000 
individuals were taken off the program. And that's why our 
fraud rate and our error rate are at historic lows.
    Senator Blunt. On technology, I thought about that. I 
thought well, I probably ought to go to this technology 
question, too.

               FARM SERVICE AGENCY INFORMATION TECHNOLOGY

    With the FSA offices, I understand the technology there has 
been about as old as any technology anybody's still using, and 
to some extent, individual farm records were essentially 
captive to whatever machine they were in 1984, or whatever. You 
could tell me more about this. The Modernize and Innovate the 
Delivery of Agricultural Systems (MIDAS) program is the program 
that would upgrade that?
    Secretary Vilsack. That's correct. And we spent the last 
several years, with the resources provided by this 
subcommittee, building the design for the new system. And the 
good news, this year we'll begin to see actual on-the-ground 
construction or building of the system, starting with acreage 
reports, and starting with some of the farm record development 
as a strong foundation. And then the following year, we will 
build on top of that foundation, and hopefully, within the next 
year or 2, our farmers will begin to see a much more convenient 
approach from the FSA offices. And hopefully, we will get to a 
point in those places where there's sufficient broadband 
Internet access that folks can work literally from their homes.
    Senator Blunt. From their home. Now, my belief is that the 
equipment that the FSA office has been using is like mid-1980s.
    Secretary Vilsack. It's not so much the equipment. It's the 
software.
    Senator Blunt. It's the software system.
    Secretary Vilsack. Yes. And so when you have a farm bill 
every 5 years, what happens is oftentimes those systems, many 
of them have to be manually coded, if you can imagine that. And 
that's why it takes a long time to implement things. But, MIDAS 
is designed to address that. And it's taken a number of years 
to do it right, a lot of feedback from those who work on the 
ground, in the field, to make sure that we design it properly, 
and to test it properly.
    Senator Blunt. And this has almost $12 million in it. Would 
that complete MIDAS?
    Secretary Vilsack. Oh, no. No. No. It's far more than that, 
Senator. This is a very, very significantly expensive 
operation.
    Senator Blunt. There's a $12 million increase, though. 
$11.78 million, I guess.
    Secretary Vilsack. We are asking for a substantial increase 
this year. Just to give you a sense of this, the 
implementation, in fiscal year 2011, we asked for $45 million. 
In fiscal year 2012, it's $112 million. And the reason it goes 
from $45 million to $112 million is because we're not actually 
building the infrastructure to do this. And we're going to 
build the foundation this year, and a lesser amount next year 
should complete the process.
    Overall, we had anticipated and estimated years ago that 
this would cost several hundred million dollars, and that 
estimate is going to be correct.
    Senator Blunt. So, in fiscal year 2012, the budget year 
we're in right now, this is the big year for MIDAS.
    Secretary Vilsack. This is the big year. And fiscal year 
2013, we're reducing it, but it's still a substantial amount of 
money. It's nearly $100 million. So, it's less than this year, 
but it's still substantially more than the previous years, 
because we're now building it, as opposed to designing it and 
testing it.
    Senator Blunt. And this is more of a software problem than 
a hardware problem?
    Secretary Vilsack. That's my understanding. I'm not a 
technical expert, and maybe someone here on the panel can 
amplify on this. But it's primarily----
    Senator Blunt. No one's raising their hand on the panel.
    Secretary Vilsack. It's primarily.
    Secretary Blunt. You're on your own.
    Secretary Vilsack. It's, as I understand it, primarily a 
software issue. If I'm wrong about that, we will let you know. 
But the reality is, it is an expensive proposition, but 
eventually, it should get to the point where if you have 
Internet access, you will be able to be at your kitchen table, 
call up your files, and basically be able to work with FSA 
offices online. That's the goal.
    [The information follows:]

    MIDAS focuses on software, specifically adapting commercial-off-
the-shelf software (COTS) to run Farm Program applications in a Web-
accessible environment. The Department's Common Computing Environment 
(CCE) focuses on refreshing the system hardware and upgrading the 
network used by the USDA Service Centers.
    Regarding MIDAS, the Farm Service Agency (FSA) has completed the 
initial design for MIDAS, which includes business requirements 
documentation, design of re-engineered processes, improved access to 
data, and creation of a network comprised of Service Center employees 
to ensure the new software meets the needs of the business. The MIDAS 
Program is now in the build phase, during which the system software is 
configured to meet the requirements, and all technical components are 
set up and tested.
    In fiscal year 2012 the emphasis of CCE is network optimization 
which is the effort to replace the aging infrastructure--desktop 
computers, servers, data storage capacity, bandwidth to support 
applications--to ensure that the core network infrastructure meets the 
demands of many of USDA's and FSA's IT modernization efforts including 
MIDAS. At completion, it will be possible for farmers and ranchers to 
access MIDAS online, via Internet access, e.g., ``from your kitchen 
table.''

                FARM SERVICE AGENCY OFFICE CONSOLIDATION

    Senator Blunt. Now, if you go to a new FSA office, based on 
consolidation, will your records be there? Do you know that 
they're there?
    Secretary Vilsack. Not only will the records be there, but 
most likely, the person who dealt with you at the previous 
office will also be there. There are about 170 people that are 
impacted specifically by what we're proposing, and all 170 of 
those folks will still be able to work at FSA, if they choose 
to do so.
    Senator Blunt. Mr. Chairman, do you think we'll have time 
for a second round?
    Senator Kohl. Yes.
    Senator Blunt. If so, I'll go ahead and wait for that 
second round for other questions.
    Senator Kohl. Thank you very much.
    Senator Pryor.
    Senator Pryor. Thank you, Mr. Chairman. I thought Senator 
Moran was here before me.
    Senator Kohl. I thought I'd rotate.
    Senator Pryor. Okay. Thank you, Mr. Chairman.

           FARM SERVICE AGENCY OFFICE CONSOLIDATION CRITERIA

    Mr. Secretary, I think a bad way to start a hearing is when 
one of us writes you a letter on February 21, and we don't get 
the response until March 28, at 4 p.m., hand-delivered the day 
before a hearing. I'd like to follow-up on some of the 
questions I asked in that letter, one, in particular, that you 
did not answer. And that would be my question No. 2 in the 
letter, where I ask you ``to provide all relevant criteria 
relating to the closure of offices within specific distances, 
along with the formula used to determine mileage between county 
offices. I'd appreciate if this included copies of mapping 
data, provided by any internal or external source, used to 
determine the mileage between all proposed office closures in 
Arkansas.''
    And the reason I ask that is because you have chosen to use 
Euclidean miles, which is defined ``as the crow flies,'' as 
compared to road miles. Had you used road miles, 7 of the 10 
offices in Arkansas would not be closing now, but you chose to 
use Euclidean miles. So, could you tell us why you decided to 
use ``as the crow flies,'' instead of the mileage that people 
actually have to drive to get to the office?
    Secretary Vilsack. Senator, we had a process that involved 
not just the offices in DC, but also the State offices that 
assisted us in making the calculations. And candidly, we're 
confronted and faced with two realities in the farm service 
world. One is that over a period of time, we have seen 
operating budgets reduced by the Congress. And second, 10 years 
ago, there were 18,000 people working for FSA. Today, there are 
around 12,000 people. So, we have seen one-third fewer workers. 
We've seen an increase in workload. We were faced with a very 
difficult decision, whether we would take a look at roughly 130 
offices that were within 20 miles ``as the crow flies,'' as you 
have indicated, for closure, or whether we would institute 
furloughs or layoffs. And I will tell you, sir, from my 
perspective, as long as I'm Secretary, the last thing I want to 
do is furlough a worker or lay one off. And if I can prevent 
it, that's what I'm going to do.
    Senator Pryor. Why did you choose to use ``as the crow 
flies,'' as opposed to road miles? Was it to close more 
offices?
    Secretary Vilsack. Not necessarily. It was what the staff 
recommended. It was not necessarily to close more offices. It 
was basically to make sure that we were operating within the 
directive of the Congress. The Congress was not clear, and was 
not definitive and specific. It just said 20 miles. So, we felt 
that that was the simplest way to do it.
    And it's true that there may be situations and 
circumstances in your State and other States where it may take 
longer, or it may require more of a distance, but again, the 
reality is the choices. You either do that, or you basically 
create potential chaos in 2,000 offices with furloughs or 
potentially chaos in a number of offices with layoffs. We felt 
focusing on offices that had no employees, we found that 35 of 
the 131 offices had no full-time employees. Offices that had 
one employee, where if you were sick or if there was a ballgame 
you needed to see, there was no one there to service the needs. 
It was a better idea to basically provide for larger staffed 
offices, and perhaps within 20 miles or so of where the 
previous office was.

                     BLUEPRINT FOR STRONGER SERVICE

    Senator Pryor. Now, I've heard that your proposed savings 
on this are going to be $150 million. Is that per year?
    Secretary Vilsack. No, sir. That's not accurate.
    Senator Pryor. How much do you save on this?
    Secretary Vilsack. The office closings themselves are about 
$6.5 million. The $150 million figure comes from a combination 
of a number of things that we've done. A reduction in travel, a 
reduction in supply purchases, a reduction in conferences, and 
the administrative services process, in which we've identified 
379 recommendations for changes internally within USDA, 27 of 
which we're in the process of implementing. An example is 
taking over 700 cell phone contracts that we had at USDA and 
consolidating them into 10 to 15 contracts, so we get quantity 
discounts, things of that nature. When you combine all of those 
steps, that's where you get the $150 million number.
    Senator Pryor. Yes. That's a helpful clarification. All 
right.

                FARM SERVICE AGENCY OFFICE CONSOLIDATION

    I want to ask you about three offices in Arkansas. I'll 
probably have to come back on the second two. But, we have one 
in Izard County, in Melbourne, Arkansas, that is 18.5 miles 
``as the crow flies,'' but it's 21.8 miles to the nearest FSA 
office if you drive it. The problem is, to drive it on those 
highways and those roads it's 44 minutes each way. So, it's 1.5 
hours roundtrip, if you want to go over to that next county's 
office and pick up a form, or whatever it may be.
    Now, in the farm bill in 2008, in the closure criteria, we 
use the phrase, ``To the maximum extent possible,'' which, to 
me, sounds like we gave you discretion on hardship cases like 
this, where it may be technically 20 miles away, even though 
this is longer than 20 road miles away. It seems like you would 
have some discretion to make exceptions or to understand the 
hardship that you'd be causing on people to close the office. 
Did you make any exceptions for anyone in the country?
    Secretary Vilsack. We've not made exceptions as of today, 
Senator. And the reality is that I think probably every single 
member of Congress and every Senator could probably make a good 
persuasive local case for why a particular office should stay 
open and not be closed. This is a very difficult set of 
circumstances that we're confronted with. We have less money 
and we have substantially fewer people.
    We've had a substantial increase in the number of 
retirements. In order to avoid substantial layoffs and 
furloughs, we had to have an early retirement, an early 
separation package, which in the last 15 months we've seen 
7,000 of our most experienced people leave.
    This is not an easy process. We have tried desperately to 
avoid furloughs and layoffs. That's basically where I'm coming 
from. And I'm not hiding anything here. We're doing everything 
we possibly can to try to squeeze out every buck that we can in 
a way that allows us to continue a record amount of activity.
    Senator Pryor. Thank you, Mr. Chairman.
    Senator Kohl. Thank you.
    Senator Moran.
    Senator Moran. Chairman Kohl, thank you. Mr. Secretary, 
thank you for being here.
    Mr. Secretary, you're going to be in Kansas in a few days, 
a couple of weeks, and I wanted to welcome you to our State. 
Very much appreciate you accepting the opportunity to speak at 
a Landon lecture in Manhattan, Kansas. Also want to thank you 
for your ongoing and continued support for the National Bio and 
Agri-Science Research facility and your efforts to see that it 
gets built.
    I want to ask a couple of questions, and I'm going to try 
to ask them so I can get them both in in the 5 minutes that I'm 
allowed.

                         UNIVERSAL SERVICE FUND

    Two different topics. First of all, Rural Utilities Service 
(RUS), it's a lending agency that you have a jurisdiction over. 
It provides loans for electric, water, sewer, and 
telecommunications. The telecommunications loan portfolio is 
more than $4 billion. In October, the Federal Communications 
Commission (FCC) adopted an order that significantly modifies 
the Universal Service Fund and inter-carrier compensation 
formulas. On February 15, I wrote you a letter. I'm not yet 
complaining that it hasn't been responded to, but I've raised 
this topic with USDA, with you, in particular, trying to 
discover what your analysis is about the impact of the FCC's 
Universal Service Fund and inter-carrier compensation order, 
what the consequences are to the RUS loan portfolio, as it 
relates to telecommunications.
    Are you concerned with that order? If so, what's RUS USDA 
doing to explain to the FCC and within the administration? I'm 
worried that the potential now exists for significant loan 
defaults of RUS, because one of the main features by which a 
rural telephone company has to repay their loan to RUS is 
Universal Service Fund dollars that no longer will be flowing 
to those telephone companies.
    Secretary Vilsack. Senator, I'm not sure if that's one 
question or two.
    Senator Moran. That was one question.
    Secretary Vilsack. Okay. Do you want to ask the second one?
    Senator Moran. Thank you very much for that opportunity, if 
the chairman will let me get by with that.

                       LEAN FINELY TEXTURED BEEF

    The second one is certainly a different topic, but Kansas 
is certainly a beef State. And lean finely textured beef has 
been front and center in the last few weeks. If lean finely 
textured beef is no longer used, it will take 1.5 million more 
head of cattle to make up for the lost beef, and the cost to 
producers is estimated to be about $15 a head.
    You said yesterday, and this is your quote, ``Let me 
reiterate, without any equivocation, something that we have 
said hundreds of times, this product is safe, and there's no 
question about it.'' I would like to make certain that that's a 
statement that you believe to be true. And isn't it true that 
finely textured beef is just beef?
    I notice that one of the newspapers today called it filler. 
There's nothing to this product except beef. And I would like 
to give you the opportunity to have you explain to us, but to 
the consumer the safety of this product.

                         UNIVERSAL SERVICE FUND

    Secretary Vilsack. Okay. Senator, let's talk about the 
Rural Utilities Service first. That was your first question. 
When the FCC proposed its initial order, we did, in fact, 
communicate with the FCC about the fact that rural utility 
providers count on the Universal Service Fund. They count on 
inter-carrier rates. They also count on the infrastructure 
assistance that we can provide at USDA. Those three are three 
sort of pillars upon which the whole system operates.
    And we expressed to them the need for them to consider, as 
they put together this proposal, enough flexibility to be able 
to address the need for expanded broadband, which we support. 
At the same time, recognize that there may be circumstances and 
situations where that order may have an impact on a particular 
carrier, that we would have to work with those carriers, and 
they need to give us the flexibility to do so.
    We have asked the folks that we are currently doing 
business with to basically give us more information on the 
specifics as it relates to their individual operation, so that 
we have a better understanding on an individual basis how they 
see the potential impact.
    We have asked the FCC, as they are flushing out this 
process, and it still has not been completed. We've asked them 
to take a look at the waiver system that's in place, to give us 
that flexibility that we've asked for, and if we have it, then 
I think we can make adjustments. We're also aware of the fact 
that the regression factor that they're using to calculate 
various fees and so forth is also being looked at.
    So, this process is not complete. We have weighed in and 
asked for an understanding of its impact on individual 
operations. We've asked those individual operations to provide 
us with information so we could do an appropriate analysis, and 
we've also begun our process of figuring out precisely how we 
will approach things differently if this ultimately comes to 
fruition.
    So, we are aware of it. We've engaged in it. We continue to 
engage in it. We are sensitive to the concerns that you've 
expressed. And we are hopeful that the FCC, with the waiver 
process, will give us enough flexibility to be able to address 
any anomalies or any concerns that might arise.

                       LEAN FINELY TEXTURED BEEF

    We appreciate the fact that folks are now joining us in a 
discussion of lean finely textured beef. We have been talking 
about this issue, Senator, for a number of weeks. Sometimes we 
have been the only ones talking about it. So, we appreciate 
your question.
    It is beef. And it is safe. And it's got less fat. It's 
something we've been saying for literally almost a month now.
    I can't tell you how many times USDA, myself, Dr. Hagen, 
and other members of the FSIS family have been quoted or 
alluded to in reports, and articles, and broadcasts, and in 
news radio interviews about the safety of this product.
    We have two issues, two responsibilities to USDA. One is to 
attest to the safety of a product. The other is as a purchaser 
of items for school lunch and school breakfast programs. In 
that context, we have to be responsive to our customers. We're 
not in the position to mandate that people do a certain thing 
or buy a certain thing, or have a certain thing.
    Several hundred school districts have contacted us asking 
for choice. We have to be responsive to our customers. We've 
provided that choice. But we want to make sure that if they 
make that choice, they're making it based on the facts, and 
that they're not making it on the assumption or belief that 
this product is unsafe, because it is not.
    Senator Moran. Mr. Secretary, thank you very much. And if 
you'd ask somebody in your office to take a look at my February 
15 letter to you in regard to RUS, I'd appreciate it.
    Thank you.
    Senator Kohl. Thank you very much.
    Senator Brown.
    Senator Brown. Thank you, Mr. Chairman. Mr. Secretary, 
thank you. Again, thank you for your trip to Ohio recently, and 
the contribution you made there.

                    AGRICULTURAL RESEARCH FACILITIES

    We've talked a lot about agriculture research, and I 
appreciate the work you've done in Wooster to help us after the 
tornado there. Agriculture is my State's--as the case in just 
about everybody here, I think--number one industry. Both the 
Center for Innovative Food Technologies--near Toledo, and you 
met some people from there--and Ohio State University's 
Agricultural Research Service (ARS) research station in Wooster 
have conducted groundbreaking research in many ways.
    Last year, several of the ARS stations, including the North 
Appalachian Experimental Watershed Research Station in 
Coshocton, Ohio, eastern Ohio, were slated for closure. The 
facility provides valuable information on how farming practices 
affect water quality, data that is important, particularly 
important, given the algal blooms in the Western Lake Erie 
basin, which we discussed, and you learned even more about than 
you already knew the other day.
    This subcommittee provided USDA with the option of 
transferring the land and the facility slated for closure at 
certain other institutions. Could you just give me sort of an 
update? To what extent is USDA open to partnering with eligible 
institutions to develop and implement a use for these 
facilities? How do you plan to move forward on that, inform us, 
and let us know sort of every step of the way, as you go 
forward?
    Secretary Vilsack. ARS basically has got to follow a 
certain set procedure, which we are in the process of doing. We 
are certainly amenable to working with partnerships, land grant 
universities, and others. In fact, in some of the facilities 
that are slated for closure, those discussions, negotiations 
have already taken place, and are taking place.

                           BEGINNING FARMERS

    I will say that, if I can take your question to a slightly 
different place, not only should we think about the 
partnerships with universities, but we have a real problem in 
terms of beginning farmers in this country, in terms of how 
young people, who might be interested in farming, could get 
into farming and be able to afford to get into farming.
    To the extent that the Federal Government is the owner of 
land, or finds itself with land that it needs to dispose of, we 
might want to give consideration to expanding the opportunities 
available to ARS to basically lease or sell to beginning 
farmers, at a reasonable price that land, to make it a little 
bit easier to get young people engaged in farming. The average 
age of the farmer today, I'm guessing, is close to 60 years of 
age now. And I think it's something that we really need to be 
sensitive to.
    So, Senator, we are following the rules as the statutes and 
regulations require. We are making efforts to reach out and 
find out if there is interest. And if there is interest, under 
what circumstances the arrangements could be made for the 
transfer.
    We understand that there are restrictions on what that land 
can be used for, and we will follow those prescriptions and 
those restrictions.
    Senator Brown. Thank you. And I think that your point about 
beginning farmers will pique a lot of interest in a lot of 
places in Ohio, and we've discussed that. I think your idea is 
a good one there, and we will pursue that.

                            BROADBAND ACCESS

    Let me follow-up with a slightly different twist on what 
Senator Moran said about broadband. Yesterday, I did my fifth 
annual, since 2008, my second year in the Senate, I bring 
college presidents from around Ohio to the Capitol for a day, 
and we had about 50, 55 of them yesterday. At the dinner the 
night before, a number of them were talking about broadband 
access or the lack of broadband access. One college president 
said he believes about 29 out of Ohio's 88 counties don't have 
full broadband access. Only one county has none, until a local 
community action agency applied for one of the first ever USDA 
rural development broadband grant. What you-all did, and what 
we did together in the Recovery Act for the $7 billion, and a 
good amount of that went to USDA, and that helped a lot in my 
State, but it's still not enough.
    We must ensure the funding through the rural broadband loan 
program; the community connect programs ensure that funding 
provides it direct to the most underserved areas in the most 
rural communities.
    Tell me what you're doing to ensure that the program 
integrity there in bringing services, especially to those 
underserved low-income and small communities that all of us 
represent.
    Secretary Vilsack. With reference to the Recovery Act 
proceeds, that was the principal effort on the part of USDA, 
was to make sure that we had a focus on areas that were remote 
and rural. In some cases, those remote rural areas probably 
would not be in a position to support full-blown broadband. We 
looked at additional ways in which we could enhance technology 
and make it fiscally responsible and accountable. Part of the 
Recovery Act money was used to create satellite opportunities 
and an upgrade of technology. So, whether it's full-blown 
broadband or whether it was an upgrade, we did focus on remote 
and rural areas.
    As it relates to our regular program, which we're now in 
the process of instituting, there's a very small part of what 
we get from the Congress that is in the form of grants, and it 
is specifically directed, and it is roughly $13 million. It's 
not a great deal of money. It's specifically directed to trying 
to expand opportunities in remote and rural areas.
    In addition to that, there's roughly $25 million that's 
available for distance learning and telemedicine grant 
opportunities. Then, of the $822 million that is in this pot of 
money for telecommunications, about $94 million of it will be 
made available for loan guarantees for expansion in rural 
areas. So, there is a significant effort here, either through 
grants, loans, or the Recovery Act.
    We have, in the last 3 years, funded roughly 600 projects. 
If you take the Recovery Act, the distance learning, the 
telemedicine, and the Connect program, we basically have funded 
roughly 600 projects. Now, it doesn't anywhere near address 
this from a national perspective, which is why the Commerce 
Department has a map that shows where the areas are that still 
need attention, and that should drive additional decisions and 
future decisions.
    Senator Kohl. Thank you very much.
    Senator Cochran.
    Senator Cochran. Mr. Chairman, thank you for convening this 
hearing.

                    WATERSHED REHABILITATION PROGRAM

    Mr. Secretary, I notice in the Department's budget request 
that we see described a budget summary of the Watershed 
Rehabilitation Program. We've had a good many problems in the 
lower Mississippi River Valley with flooding and challenges 
that have resulted from erosion, and it has been clear that 
there's a lot of money that's going to be needed to repair and 
refurbish existing watershed programs, dams, and other 
impoundments that have reached the end of their design lives.
    The budget request doesn't have a specific request for 
funding of any activity in this area, and I wonder what your 
suggestion is. Is there going to be a supplemental budget 
request submitted, or what is the intention of the 
administration in providing assistance to local and district-
wide governments and associations to rehabilitate these 
structures that are in need of attention?
    Secretary Vilsack. Senator, one of the reasons why there is 
not an appropriation amount is that at the time these 
facilities were constructed, I think there was a basic 
understanding that they became a local and State 
responsibility. Second, the amount of money that has been 
appropriated in that program is relatively small, given what 
could very well be a very significant national need.
    So, if we're going to do this, I would say two things. One, 
it needs to be done on a much larger scale than this budget 
conversation we're having today. And two, if we're going to do 
it, it needs to be in conjunction with and in partnership with 
States and local governments, because they have at least an 
equal responsibility, if not a greater responsibility, given 
the fact that these structures are theirs.

                         CONSERVATION PROGRAMS

    Having said that, we are investing a substantial amount of 
money in conservation and in landscape-scale efforts to try to 
avoid and to try to do a better job of controlling water. We 
still have a long way to go, but we're working on it. We have a 
record number of acres now enrolled in conservation, and the 
budget before you would allow us to add another 29-30 million 
acres to the 330 million acres that are currently enrolled of 
the 1.4 billion acres that could potentially be subject to 
conservation programs of the amount of farmland in this 
country.
    So, I would say we'd be happy to work with you on a much 
larger, much, much larger infrastructure discussion. I mean, I 
think this is part of why there has been a suggestion for an 
infrastructure bank, why there's been a suggestion for a large-
scale infrastructure appropriations, because when you talk 
about $20 or $30 or $40 million, it really has very little 
impact on the overall problem that you're alluding to.
    Senator Cochran. I appreciate your personal attention to 
the situation and your willingness to explore possibilities for 
providing some Federal assistance in this area.

                       CATFISH INSPECTION PROGRAM

    One area of interest, too, that I wanted to mention at 
today's hearing involved our domestic fish program and the 
development of what has become a very substantial financial 
investment throughout the southern part of the country. Catfish 
inspection and expansion of markets, dealing with competition 
from overseas in the United States are all parts of this area 
of concern and interest.
    I know that as we are preparing for this new farm bill 
that's being considered, there's an opportunity for defining 
some statutory responsibilities for inspection and standards.
    Do you have any information that you can provide the 
subcommittee giving us a status report of where we are on 
developing an inspection program for domestically produced 
catfish?
    Secretary Vilsack. Senator, can I offer some advice before 
I answer your question?
    Senator Cochran. Sure.
    Secretary Vilsack. If you work on this in the farm bill, to 
the extent that you can define what a catfish is, it would be 
helpful.
    Senator Cochran. You can tell by looking.
    Secretary Vilsack. That's what I thought, too, coming from 
Iowa, but I found out in this process that there are at least 
39 different varieties, and depending upon where you are 
domestically, or where you are internationally, catfish is not 
necessarily a catfish, which is why we received a substantial 
number of comments to the proposal.
    As you know, we asked for input from folks to give us a 
better understanding of precisely how the world defines 
catfish, and we're in the process of evaluating those 
responses. And literally, it is a very difficult circumstance 
and situation, because depending upon how narrow or how broadly 
you define that term, it impacts and affects quite a bit. So, 
we're in the process of trying to figure out precisely what was 
meant, and there's some conflict in terms of the congressional 
history of this. And so, it would be helpful if there was 
clarity from the Congress in terms of precisely what variety or 
type of catfish you were referring to, or maybe you're 
referring to all types of catfish.
    Senator Cochran. We look forward to working with you on 
this issue. It is very important, and I think it needs our best 
efforts.
    Secretary Vilsack. I understand, sir.
    Senator Kohl. Senator Hoeven.
    Senator Hoeven. Thank you, Mr. Chairman. Mr. Secretary, 
good to see you again.

                           WATER BANK PROGRAM

    I want to thank you for your help on the Water Bank 
Program, and your folks are working to implement it. We think 
that would be very helpful on Devils Lake. So I just want to 
thank you for that.

                              WIC PROGRAM

    Also, I want to bring up the WIC program, specifically 
regarding potatoes. I and others feel potatoes need to be 
included with fruits and vegetables. Your thoughts?
    Secretary Vilsack. Senator, the WIC program is basically a 
supplemental program. It's designed to supplement and to 
encourage nutritious eating. What we do in developing the 
package is we take a look at what people are already consuming, 
in terms of fruits and vegetables, and then what we try to do 
is to amplify or add to that. What we found from the review is 
that people are already consuming quite a bit of--the potatoes 
are not something that they don't consume. They consume quite a 
bit of that. What they don't consume as much of are dark green, 
orange vegetables, things of that nature. So, the WIC program 
is designed to essentially complement what people are already 
deciding to do or already eating.
    Senator Hoeven. Are you willing to encourage that potatoes 
be included with the WIC supplemental nutrition program? I 
think there's a lot of people who feel that it should not have 
been left out, and we'd like to see it included. Are you 
willing to work towards that objective?
    Secretary Vilsack. Senator, again, the purpose of this is 
to complement what people are already doing. If they're already 
consuming enough of one item, it would basically mean that we 
would have to reduce our commitment to some other item that 
they're not consuming a great deal of, and probably ought to, 
if they want to have a balanced and nutritious opportunity for 
their young children. So, this is a complementary. This is not 
a situation where people aren't eating any potatoes. These are 
situations in which people are eating quite a lot of potatoes, 
but they aren't eating a lot of the other types of vegetables 
and fruits. So what we want to do is make sure that they have 
access to those other options.
    Senator Hoeven. All right. I understand your point and 
would encourage its inclusion.

                             BLENDER PUMPS

    But, I want to move to blender pumps. I believe that you've 
looked at funding blender pumps out of the Rural Energy for 
America Program (REAP). Is that correct?
    Secretary Vilsack. That's right.
    Senator Hoeven. And in the President's budget, there's $4.6 
million in REAP funding. Give me your thoughts on what portion 
of that can and should go to blender pumps. I know you and I 
share a common belief that blender pumps are a good thing, can 
help give consumers more choice, better pricing, help stimulate 
renewable fuel, production, and distribution. What are your 
thoughts in terms of what you can put towards blender pump, 
promoting blender pumps and helping gas station owners get 
blender pumps on their premises?
    Secretary Vilsack. I agree, Senator. And I may be 
misstating this, and if I have, I'll correct it. I believe we 
received instructions from the House that they were not 
particularly interested in us using monies for blender pumps. 
I'm not sure if there's a prohibition. I think there was at one 
point.
    I don't know that I'd necessarily want to commit to a 
certain percentage, because there are an awful lot of good 
ideas that come out of the REAP program. We were a little 
concerned about the fact that it was substantially reduced in 
this current budget, which made it more difficult for us to do 
everything we'd like to do.
    We've had 13,000 different projects, energy efficiency, 
anaerobic digesters, energy audits, windmill solar systems, as 
well as blender pumps. We've funded, I think, a couple hundred, 
maybe 250 blender pumps. We obviously want to do more than 
that. And depending upon the amount of resources that the 
Congress allocates to this program, we're going to continue to 
fund blender pumps, if there's not a prohibition restriction.
    Senator Hoeven. I know there's been some legislation 
offered that would restrict it. I don't know of any restriction 
in place. I mean last year, I think the funding was about 
$3.4----
    Secretary Vilsack. You mean in terms of what went to 
blender bumps, or the overall REAP money, because it was more 
than that.
    Senator Hoeven. Oh. Blender pumps. I think it was around 
$3.4. Does that sound right?
    Secretary Vilsack. You're probably right.
    Senator Hoeven. In any event, I'd like to work with you to 
see what we can do. I know there is some pushback on it, but 
look, I think in terms of renewable fuels, we're trying to find 
more market-based approaches to continue to develop renewables 
from the standpoint of giving customers choice and helping with 
pricing. I think blender pumps is the way to do it. So, I'm 
interested in working with you in the context of your budget as 
to how we can do more of it.
    I thought REAP might be the best program. You may have 
other ideas. If so, I'd love to hear what they are.
    Secretary Vilsack. To me, when you deal with the farm bill, 
you deal with rural development programs, and you deal with the 
energy title within the farm bill, to the extent that we can 
have flexibility, that's the key. We may have to have fewer 
programs, but if we have flexibility, we can use maybe the 
business and industry loan program to work with a consortium, 
for example, of convenience store owners to assist them in 
putting blender pumps in, as opposed to an individual grant to 
an individual business. Maybe that's a possibility. That's 
currently not necessarily a possibility under the business and 
industry loan program.
    Senator Hoeven. Who would we work with on your staff to 
really figure out what makes most sense, in terms of trying to 
develop this?
    Secretary Vilsack. Sarah Bittleman. We'll get you her 
contact information, Senator.
    Senator Hoeven. Thanks, Secretary.
    Secretary Vilsack. Thank you.
    Senator Kohl. Thank you very much.

                     FOOD FOR PEACE TITLE II GRANTS

    Mr. Secretary, we all know that many, many millions of 
people around the world suffer from chronic and acute hunger. 
We've seen how rising food prices have caused instability to 
some of the most vulnerable populations, and yet, the budget 
includes a decrease of $66 million in the Public Law 480 
program.
    What is the rationale for cutting this program when the 
need for food assistance around the world is increasing? And if 
less funding is provided for this program, is this 
administration prepared to respond to an emergency, as we saw 
last year in the Horn of Africa?

                     INTERNATIONAL FOOD ASSISTANCE

    Secretary Vilsack. Senator, we work with our sister agency, 
the U.S. Agency for International Development (USAID), to make 
sure that we're providing the assistance and help that's 
necessary. We have the Bill Emerson Humanitarian Trust, as you 
well know, that provides some degree of assistance and help, an 
entity that may, for example, be utilized when North Korea is 
requesting food assistance. There's a possibility of that.
    These are difficult times. If you say to add the money back 
that you reduced from that, then the question is, where does it 
come from? Does it come from the WIC program? Does it come from 
rural development programs? Does it come from the food safety 
program? Where does it come from? I mean the reality is we're 
dealing with constrained budgets. So, tough choices have to be 
made.
    We think that there's a substantial amount of money that's 
committed to these programs. It's $1.4 billion, plus the 
McGovern-Dole program, which we did maintain at a status quo 
funding. We think we're still in a position to help millions of 
people with this. And we also believe it's not just the United 
States' responsibility, which is why we've been working with 
General Assembly countries and the Group of Twenty (G-20) 
Agricultural Ministers to discuss a more coordinated and global 
response to these concerns. A discussion, for example, of 
developing virtual reserves, grain reserves, so that we're in a 
position to be able to respond internationally and in 
partnership in a collaborative effort. That's the reason why we 
have the Feed the Future initiative, which is not just designed 
to provide food assistance, but also to take a look at how we 
might make producers in other countries more productive, so 
that they can do a better job of meeting their own needs. So, 
we reduce the need for this kind of assistance.
    So, I think you have to look at the totality of what we're 
proposing, and look at what we're doing internationally to try 
to stretch and leverage these resources.

    ANIMAL AND PLANT HEALTH INSPECTION SERVICE FUNDING AND STAFFING

    Senator Kohl. Mr. Secretary, the Animal and Plant Health 
Inspection Service (APHIS) promotes the health of animals and 
plants and guards against invasive species. The budget proposes 
7-percent funding reduction as well as elimination of 151 
employees. How do you plan to meet the responsibilities of 
APHIS with such severe cuts in funding and staff? Can you 
provide assurances that existing safeguards against intrusion 
of new invasive pests will not, in fact, be weakened?
    Secretary Vilsack. Senator, what we have done is we've, 
first of all, engaged in a fairly significant process 
improvement initiative within APHIS, so that we can do our job 
in a quality way, in a better way, and spending less time. 
There are a number of permitting regulatory and licensing 
responsibilities that APHIS has, where we have substantially 
reduced the amount of time. We can provide you and the 
subcommittee with a copy of our process improvement manual that 
shows the number of days that we've saved from biotechnology 
reviews, et cetera. That's one strategy.
    [The information follows:]

         Streamline Decisions for Genetically Engineered Plants

    While maintaining strong oversight to ensure the safety of 
genetically engineered (GE) products, APHIS is reforming its processes 
so that the time it takes to consider petitions for deregulating the 
use of GE crops will be cut in half, reducing to 13-16 months the 
potential adoption of new seeds with traits that can deliver a variety 
of improvements such as improved yields or reduced inputs. APHIS 
announced the start of this process in November 2011 as part of other 
streamlining improvements. APHIS reviewed its approval process using 
Lean Six Sigma's business process improvement strategy and identified a 
number of areas that could be improved, leading to a more timely, 
predictable and higher quality process. APHIS has improved the overall 
timeline significantly by standardizing and streamlining process steps. 
APHIS will also be soliciting public input on pending petitions earlier 
in the review process, enabling the agency to improve the quality of 
its environmental analyses. By taking these steps, APHIS believes it 
can deliver to its customers and the public a more predictable process 
for considering and acting on product deregulations. Once the agency 
implements all of these business process improvements, a more 
predictable timeframe will enable developers to bring products granted 
nonregulated status to market more quickly and provide growers with 
more choices and access to new technologies sooner, while enabling 
APHIS to maintain its mission to protect U.S. agriculture and the 
environment from plant pests. In calendar year 2011, USDA made 10 
determinations on petitions for nonregulated status for genetically 
engineered crops. That is the most determinations in a single year in 
more than a decade.

           STREAMLINE VETERINARY BIOLOGICS LICENSING PROCESS

    To ensure the best use of resources and work toward meeting the 
demand of the biologics industry, APHIS is conducting a business 
process improvement review of work flow at the agency's Center for 
Veterinary Biologics with the objective of decreasing turnaround times 
for veterinary biologics license submissions, reducing the overall time 
it takes to process a complete license application by about 100 days, a 
savings of 20 percent. Making certain we meet our responsibility of 
ensuring that veterinary biologics are pure, safe and effective has 
always been the strongest consideration during this process. APHIS 
broke the larger licensing process up into smaller, multiple projects 
creating a group of projects that will ultimately speed up overall 
licensing times. Some of the process improvements include the 
electronic workflow of documents and moving from a four-tier labeling 
system to a single-tier labeling system. The four-tier labeling system 
required a significant amount of information to be printed on product 
packages. Rather than have more information on the label, the proposal 
is to require a label statement referring the user to a Web site where 
basic information regarding efficacy and safety for the product may be 
viewed. From this information, the end-user can use personal judgment 
in determining which product to use to meet his/her particular 
circumstances/needs. The user may also compare efficacy results from 
several firms with like products. APHIS projects additional savings 
from reductions in reagent/reference production, laboratory testing, 
and animal use.
    Additional examples of process improvements can be found at USDA's 
Web site on the Blueprint for Stronger Service (www.usda.gov/
strongerservice). A summary of some other APHIS actions is included in 
the fact sheet for Marketing and Regulatory Programs and a blog on 
February 24, 2012, by Administrator Parham.

    Secretary Vilsack. The second strategy is that we have 
taken a look at the pest and diseases that we are currently 
managing and asking the question, Is the strategy that we are 
using with reference to specific diseases and pests the 
appropriate strategy? Do we have an eradication strategy when, 
in fact, a maintenance strategy might be more appropriate and 
probably more feasible? Are there circumstances where good 
practices by producers will be sufficient to protect against a 
reemergence of a particular disease or pest?
    As a result of all of those steps, we feel that we can 
still do the job that we are required to do and should do in 
order to increase and maintain agricultural productivity, even 
though we're faced with, again, some difficult budget 
discussions and decisions.
    The 151 employees, this is basically, we worked our way 
through an attrition program. We have a workforce where 50 
percent is probably within 5 to 10 years of retirement, and in 
many cases, well over the normal retirement age. We're seeing a 
lot of folks beginning to retire. So, we're trying to manage 
this in a way that allows us to do our job, do it well, but 
perhaps do it quicker, more efficiently, and more effectively.
    Senator Kohl. All right. Senator Blunt.

                         BROADBAND PROGRAM RULE

    Senator Blunt. Thank you, Chairman. Mr. Secretary, both 
Senator Moran and Senator Brown talked about broadband. My 
biggest question on broadband continues to be the balance 
between the underserved and the unserved. In fact, Senator 
Brown used the phrase, ``The most underserved,'' which I assume 
the unserved, would be the most underserved.
    Talk to me a little about the new rule, and concerns I 
would have, without knowing a lot about the rule until you 
explain it to me, that we're continuing to encourage 
competition, where people have taken their own money and 
created a network that somebody's decided is underserved, 
because there's no competition, rather than really focusing on 
the 15 percent of Missourians that are unserved.
    Secretary Vilsack. Senator, I want to make sure I 
understand your question. When you talk about the rule, you're 
talking about the FCC rule, or are you talking about the rule 
that we have for the administration of our broadband program?
    Senator Blunt. I'm talking about the new RUS rule.
    Secretary Vilsack. Okay. What we are attempting to do is to 
respond to the concerns that folks have expressed about the 
fact that we are not directing our resources in the appropriate 
way and in the right way. I think what you'll see from us is a 
focus on those unserved.
    Senator Blunt. Unserved is what I want to say.
    Secretary Vilsack. Unserved areas. Having said that, there 
are times when because of the remoteness of it or the 
population of a particular area, it may be difficult to have 
the highest level of broadband capacity, because you may not be 
able to sustain it with a customer base. So, it is, I think, 
important for us to continue to look for ways in which we can 
improve access and connection to telecommunications, without 
necessarily creating a circumstance where we're setting 
somebody up for failure.
    I think the FCC rule does have some play here, because I 
think the FCC is under the belief that if they empower some of 
the larger operators to become more interested in these 
unserved areas, that they'll do a better job than they've done 
in the past of trying to respond to the needs of those unserved 
areas.
    Let me also say that I think that there are new technology 
opportunities that we haven't had a chance to discuss today. I 
should have brought my prop with me today. At USDA, we are 
engaged in experimenting in the State of Hawaii with a 
technology that basically is about as big as this card, and 
it's about that thick, and four or five of these items placed 
on a tall building or on a hill will provide access for miles 
and miles of coverage, without the necessity of tens-of-
thousands of dollars of infrastructure.
    We are operating these units to develop a 4G network in 
Hawaii, using it for public safety purposes, and to provide 
interoperability. So, a month or so ago, I was sitting in my 
office in DC, in the Agriculture building in DC, talking to our 
chief information officer, who was on the big island in Hawaii, 
and we were talking to an ambulance that was driving on another 
island, by virtue of these little square boxes. As I understand 
it, they are several hundred dollars, not several thousand 
dollars, in cost. So, it is conceivable that we are on the cusp 
of new technology that will make it easier to get to those 
remote areas, and still make it financially feasible for them 
to have the technology. It's a combination of our programs, the 
FCC trying to help the Verizons and the AT&Ts of the world be 
more responsive to these needs, and new technology advancements 
that might make it less expensive to do it.
    Senator Blunt. That sounds good. It doesn't surprise me at 
all that the technology is getting smaller and more available, 
and I encourage you to continue to stay focused, as you 
obviously are, on that. It does bother me when we use tax 
dollars to create a competitor to somebody that has created a 
service without tax dollars, particularly, when there are still 
people who have no service of any kind.
    Secretary Vilsack. I agree, and I think that's the reason 
why when we did the Recovery Act we made a real effort to avoid 
that criticism and that concern. So you'll see a lot of where 
we're working on the unserved areas, and in some cases, very 
remote areas.

                         RESEARCH LAB CLOSURES

    Senator Blunt. Right. I appreciate that. On the extramural 
grants, when we close research labs, what's the cost of moving 
that program somewhere else? And did the cost in fiscal year 
2012 meet your expectations for the fiscal year 2012 cost of 
the labs we're currently in the process of closing and moving 
that work somewhere else?
    Secretary Vilsack. We're still in the process of doing 
that, Senator, so it may very well be that a more definitive 
response can be given to you in a couple of months.
    Senator Blunt. Would you do that?
    Secretary Vilsack. Sure.
    Senator Blunt. Go ahead and do what you can today, but I'll 
just ask right now.
    Secretary Vilsack. Absolutely.
    Senator Blunt. When you get more information on that, I'd 
like to see it.
    [The information follows:]

    The fiscal year 2012 agriculture appropriations conference report 
agreed with the ARS proposal to close 12 laboratories. Research 
activities at the 12 laboratories have ceased and were not relocated 
elsewhere. The one-time costs associated with the relocation or 
separation of affected personnel and the disposal of property are 
estimated at $39 million in fiscal year 2012.

    Secretary Vilsack. I have requested from ARS an outline of 
what their plans are. There are certain timelines, certain 
restrictions, certain communication requirements that they are 
going through, and they are going through with each individual 
location. In some cases, it obviously costs a little bit more 
upfront, and the savings occurs down the line.
    I don't know that I've been apprised at this point that any 
of the estimates are totally inaccurate. Sometimes it does 
depend on the relationship and the deal that's made with the 
university, in terms of rehabilitation, in terms of 
environmental cleanup, that type of thing, but I have not been 
advised as of today that there is a significant difference 
between our estimates and what we actually will incur.
    As far as the programming is concerned, let me say that 
what ARS has done, at my request, is they have looked at every 
single facility in our portfolio, more than 100 of these 
locations, and if you can conceptualize in your mind a grid, it 
is basically divided into four quadrants. In this quadrant at 
the top right-hand are those facilities that are in very good 
shape, from a maintenance standpoint, and are also high-
priority research.
    The lower right-hand quadrant are high-priority research, 
but in facilities that are not in particularly good shape. The 
upper left-hand quadrant are low-priority research and 
facilities that are in pretty good shape, and then over here, 
low-priority research and facilities that are in bad, bad 
shape.
    So as we look at this quadrant, we're going to be in a 
position to know, as resources get tight, where the priority 
research is and where the good facilities are, and we have to 
make sure that we do the best job we can to match those up, and 
that's essentially what we're doing.
    If we close a facility, and the research is high priority, 
it gets transferred to another facility. If it's research that 
is of a lower priority, it may have to be assumed by someone 
else. I mean the reality is we're dealing with a different day 
here, a different day, and that day is that we will have and 
have had less money in many of these areas, and that's the 
consequence of having less money. You've got to prioritize. And 
when you prioritize, you basically prioritize, and you draw a 
line where the money runs out, and everything below that line 
has got to go in some way, or shape, or form.
    Senator Hoeven knows about this. Maybe he doesn't, because 
he's always dealt with surpluses, but those of us who are not 
fortunate enough to have been Governor of North Dakota 
understand that. And if you want to take something from the 
bottom of the pile and take it to the top of the pile, and then 
something from the top of the pile has to come down, because 
you've only got so many dollars.
    Senator Blunt. My understanding is the surpluses got a lot 
greater after Senator Hoeven became Governor, so maybe they 
didn't always have them, but they did have them when he left.
    On that regard, as long as I don't have to explain what was 
in every quadrant, I'm okay, but I think I've kind of followed 
the quadrants, as you explained them.
    Do you have any idea how ARS, rather, arrived at the 
decision as to where to make the cuts? It did seem they fell 
very heavily on the research outside of ARS, the extramural, 
the campus-based research, as opposed to research that was more 
inside the department.
    Secretary Vilsack. I think I would have to provide a more 
detailed explanation, but I don't want to misstate something, 
and I'll be happy to provide that to you, but I will tell you 
that given where we see this headed, with various discussions 
and decisions you-all have to make about reducing budgets 
significantly, we want to be prepared to be able to do this in 
a thoughtful and strategic way. As a result of this approach 
that I've just outlined, we're now in a position to do that. 
And I think, if there are criticisms, I'd be happy to visit 
with you about----
    Senator Blunt. Yes. If you can get a little more of that 
information to our staff, that would be great. I would like to 
look at that, because it does seem to me that the campuses, 
particularly, have a lot of resources included, and student 
labor, and other opportunities that aren't available in other 
places. And I think that campus-based research has always been 
pretty cost-effective, but these closures appear to be heavily 
focused on that kind of research versus research that's fully 
funded by the Federal Government.
    Secretary Vilsack. It may be the age of the facilities. It 
really may be the priority of the research itself. It could be 
the fact that it duplicates research that's being done in other 
locations more effectively and more efficiently. I mean it 
could be a combination of all those factors, Senator.
    [The information follows:]

    The temporary budget reductions to ongoing ARS programs in fiscal 
year 2012 are necessary to finance the one-time costs associated with 
the closure of 12 ARS laboratories. ARS sought to balance the impact on 
intramural and extramural programs through an across-the-board 
reduction of intramural research, a hiring freeze, and extramural 
funding reduction. Together, these actions will finance the one-time 
costs to ARS for facility closures without terminating other ARS 
research projects and continuing research with ARS extramural partners.

    Senator Blunt. I want to talk more about that, and we can.
    Thank you, Chairman.
    Senator Kohl. Senator Pryor.

                FARM SERVICE AGENCY OFFICE CONSOLIDATION

    Senator Pryor. Thank you, Mr. Chairman. And I would like to 
follow-up on something Senator Blunt said a few moments ago 
about broadband, and Senator Moran and Senator Brown mentioned 
it as well.
    In terms of closing some of these offices, these FSA 
offices in Arkansas, if you look on a map, where we have the 
least amount of broadband, that's where you tend to be closing 
these offices. It's in the most rural and sometimes most 
challenging parts of the State. And I know a lot of people do 
business online today, but these farmers who are out there in 
these parts of the State, they're not going to be able to go 
online.
    Let me ask about another FSA office in Arkansas, and I'm 
sure this is true in other places. In Lafayette County, it's 
spelled Lafayette, but we pronounce it La-fay-ette in our 
State, there's Lewisville, Arkansas. It is 22.86 Euclidean 
miles away from the closest FSA office, which is in Hope. And 
what I would like to do, if possible, is get an understanding 
from you, because your people say it is only 14.9 Euclidean 
miles away.
    Secretary Vilsack. Senator, if we've made a mistake, we 
obviously have to acknowledge that, and we'd be happy to work 
with you and your staff to make sure that either we're right or 
you're right, and if we're wrong, we'll need to correct that.
    Senator Pryor. Here's a map of it right here. Is it 
possible that I could send one of my staff members over either 
today or tomorrow to sit down with your people and look at your 
software? This software that we have right here, we couldn't 
get from you. We requested several times to give us a copy of 
what you have, and to show us how you're doing it. You wouldn't 
do it. We were going on Google. We were going on MapQuest, 
whatever else. Finally, we figured out that we actually have 
the software that you use at the Geographic Information office 
in Little Rock, so we understand we're using the exact same 
software you are. Could we send a staff person over there to 
sit down with your people and confirm that----
    Secretary Vilsack. Sure.
    Senator Pryor. We're right on our numbers? Thank you.
    In Faulkner County, which is Conway, we have a situation 
where there's 136,000 total reported planted acres in Conway. 
You have what we call a one-stop shop. I think you guys may 
call it a service center, where you have lots of different 
government offices there, where everybody can come in, and it's 
something that I know in recent years USDA and others have 
bragged about, because it makes it very convenient for the 
citizens of the State. This is another example where if we were 
using the road miles versus the Euclidean miles, this one 
wouldn't be closed. Do you take into consideration the 
convenience here that, in effect, what you're doing is you're 
breaking out of this one-stop shop for people? Did you-all take 
that into consideration when you looked at it?
    Secretary Vilsack. We were aware of the fact that some of 
these facilities were collocated, Senator, but to get back to 
the comment that I made earlier, the options are not good. None 
of the options are good. And eventually, the options were 
creating greater inconvenience for a lot more people and a lot 
more offices. I mean, if you furlough people or you lay people 
off, that's going to create more concerns in a lot more 
offices. So, that's what we're faced with.

                     BLUEPRINT FOR STRONGER SERVICE

    These are not easy decisions, trust me. We did not take 
these lightly. Just in the same way that we're not taking 
lightly internally what we're trying to do within USDA to 
figure out how we might be able to provide more efficient 
service, save money, and not have to close offices in the 
future. This administrative services process, I'm not sure how 
familiar you and your staff are with it, but we'd be happy to 
brief you on it. I think you will find that we are looking very 
carefully at our own internal activities, taking a look at 
whether or not we could be better off with regional centers for 
some of the work that we do, figuring out whether or not there 
are centers of excellence or shared service centers that might 
allow us to do a better job of human resources, or civil 
rights, or IT, the things that are common to every mission 
area.
    We are looking at every aspect of this, because we 
recognize you-all have tough decisions to make, you're going to 
make those tough decisions, and we're going to have less money.

                FARM SERVICE AGENCY OFFICE CONSOLIDATION

    Senator Pryor. I mentioned that we have 10 FSA offices in 
Arkansas that closed, and I promise you this will be the last 
one I mention. This is the fourth out of the 10. And we could 
go through all 10, but we won't today.
    In Clarksville, Arkansas, there's one, and it's within the 
20 miles of Paris, Arkansas. But, you also have Paris on the 
closure list. So, that means that there will not be one for the 
folks in Clarksville, in that county, so they're going to have 
to go to Ozark, which is farther than 20 miles. Did you take 
that in consideration when you were doing this? That, to me, 
seems inconsistent with the statute.
    Secretary Vilsack. Let me say that we asked the State folks 
to verify and to weigh in on the decisions that were specific 
to the State of Arkansas.
    Senator Pryor. Right. But there again, this is another map 
of it. That seems inconsistent with the statute, because what 
they're left with is, they're left with traveling farther than 
the 20 miles that's in the statute to get to an FSA office. I 
mean this is more of an interpretative issue, I think, with 
USDA rather than your local people in Arkansas issue.
    Secretary Vilsack. It isn't, though, sir, because of the 
way in which these decisions were developed. They were 
developed primarily from instructions in DC, implemented, if 
you will, at the State level, so the State folks were the ones 
who gave us the recommendations for which offices needed to be 
closed. So, if we've made mistakes, we obviously have to own up 
to those mistakes.
    Senator Pryor. Right.
    Secretary Vilsack. There's no question about that.
    Senator Pryor. But, wouldn't you say that this might be a 
mistake, too?
    Secretary Vilsack. I don't know, because--I mean, I don't 
know this particular situation. The first example that you gave 
me was, I think, a little clearer in my mind, and it may be 
that I need to--I can't see that map, frankly, Senator.
    Senator Pryor. Okay. We certainly can----
    Secretary Vilsack. My eyes aren't that good. I wish they 
were.
    Senator Pryor. In fact, maybe this afternoon or tomorrow, 
when I send my staff person over to meet with your people, they 
can talk about this one, too, because basically the bottom line 
is, these folks in Clarksville, the net effect is they will 
have to drive farther. They will have to drive much farther 
than 20 miles to get to an FSA office.
    Actually, my last question on this line, Mr. Chairman, is, 
I know that you slated 131 of these for closure, and you had 
several public meetings. Did any of these public meetings 
change your mind at all on these 131?
    Secretary Vilsack. Senator, these are tough decisions, and 
obviously, people are going to come and they're going to talk 
very passionately about the need for their individual office. 
And you could basically find a reason to keep every single one 
of them open, but the reality is we don't have the resources or 
the people to do that. That's number one.

                           RURAL DEVELOPMENT

    Number two, my view of this is that we really need, 
perhaps, at USDA to do an even better job than we've done, even 
though we've helped more than 50,000 small businesses in the 
last 3 years, which is a record number. We really need to 
figure out how we can generate a lot of private sector activity 
in these communities so that there are options for jobs and for 
better incomes. Many of these communities rely, to a great 
extent, on publicly supported institutions, and really, we need 
to figure out how to do a better job of creating private 
enterprise, so that folks have more job opportunities than they 
have from trying to keep a post office, or an FSA office, or a 
school open. Those are really important, but we haven't done a 
good enough job, I guess, in getting factories opened there so 
that folks have options.
    Senator Pryor. Thank you, Mr. Chairman. I actually have a 
few more questions. Are we going to have a third round?
    Senator Kohl. Certainly.
    Senator Pryor. Thank you.
    Senator Kohl. Mr. Hoeven.
    Senator Hoeven. Thank you, Mr. Chairman. I can defer, if 
you just have a question or two to finish up, Senator. Are you 
sure? Okay.

                      AGRICULTURE RESEARCH FUNDING

    I actually want to follow-up on a question that Ranking 
Member Senator Blunt asked you, and it's about the agriculture 
research funding, and it's the extramural program funding. At 
North Dakota State University, they're doing a lot of work on 
the U.S. Wheat and Barley Scab Initiative, and also on the Ug99 
barley stem rust research program. Both of those have seen 
administrative reductions of about 30 percent. And at the State 
level we've put a lot of funding into our agriculture research 
greenhouse at North Dakota State University, and so I 
understand that you have to find ways to save, but could you go 
into a little bit of how you're making that analysis?
    And I know that Senator Blunt was asking the same question, 
but through the university system, and in States like ours, 
we're willing to try to design programs to maximize the 
leverage on that research. So, we need to understand how you're 
approaching that, so that we can, I guess, do the best job 
possible of attracting those dollars into programs like these 
two, which are very important to us.
    Secretary Vilsack. Roughly 51 percent of the resources go 
into crop and animal production protection and productivity. 
Roughly 18 percent or so goes into environmental stewardship 
and the importance of maintaining water quality and quantity. A 
percentage goes into some of the other areas that are outside 
of agriculture, specifically in terms of nutrition, food 
safety, and things of that nature. So, it's a broad base of 
responsibilities we have from a research perspective. I get a 
little confused, because when we talk at USDA about external 
and internal, we often refer to the external as the competitive 
grant program.
    Our belief is that we have got to do a better job on two 
fronts. First, we have to do a better job of continuing to 
leverage the resources that we have more effectively. The 
competitive grant process allows us that opportunity to fund 
the best projects possible, and to really force and compel 
people to really think about what research they're doing and 
how they're doing it.
    Second, as great as the university systems are, and they 
are, and I appreciate Senator Blunt's acknowledgement of our 
150th anniversary, and that of the Morrill Act, there is no 
overarching process that establishes the national research 
goals that would allow us to avoid duplication and replication 
of research that's taking place in many land grant universities 
across the country. So it's going to be important, I think, for 
us to have a conversation in a time of limited resources, 
either at the State level or at the Federal level, to do what 
we're doing at the global level.
    We have the Global Research Alliance, where we're dealing 
with 30 different countries on climate issues, and we're saying 
let's not replicate or duplicate research, let's make sure the 
right hand knows what the left hand is doing. I have to feel 
that there's probably some duplication that's taking place 
across the country, and maybe we're not investing our research 
dollars, whether internally or externally, as efficiently as we 
can. So, somewhere there's got to be a process, the competitive 
grant process is one way of compelling collaboration, and which 
is working. We're making grants now to a university, but that 
university may have six or seven different other universities 
that they're partnering with. So, I think there's a lot of work 
in this area.
    The last thing I would say, we don't have the advantage 
that other research areas have, the National Science 
Foundation, the National Institutes of Health. Our funding has 
been flat-lined, for the most part. It hasn't been increased 
dramatically. We don't have outside foundations or resources 
that would allow us to supplement our resources. So, I think 
there's a lot of opportunity in this space for us to do a 
better job.
    Senator Hoeven. I do want to emphasize those two programs 
to you, U.S. Wheat and Barley Scab Initiative, also, the Ug99 
Barley Stem Rust Research Program, because both saw 30-percent 
reduction, administratively applied reduction, which I think is 
significant.
    Secretary Vilsack. Senator, can I ask, when you say 
administrative, so I know what you mean, I think I know what I 
would mean by that, but what do you mean by that?
    Senator Hoeven. Essentially, reduction in this year's 
funding for those programs, for those research programs, in 
terms of what came out to the university to deduct.
    Secretary Vilsack. I think there has been an effort on our 
part to make sure that we're not overfunding the administration 
of grants, as opposed to the actual research. There's a 
difference between how much money goes to the university to 
sort of administer the university versus how much money 
actually goes to the research project itself.
    Senator Hoeven. No. I'm talking about research for those 
specific programs, research dollars for those specific 
programs.
    Secretary Vilsack. But I'm saying, within that grant, 
there's a certain allocation for administration and a certain 
allocation for the actual research, and I'm not sure if that's 
where we're having a communication issue.
    Senator Hoeven. No. When I say administratively reduced, I 
mean USDA actually coming in on a discretionary basis, reducing 
actual research dollars for that research. And this is 
something that I'll be working with Senator Blunt and others 
on, because I mean this is something that, obviously, we're 
very interested in and think that this is critically important.
    The other thing is, in terms of the, and I say this a lot 
of times, I've got one more question. I can certainly defer for 
the third round. I know that's what Mark did. Maybe it's best I 
do that.
    Senator Kohl. Go ahead.

                             CROP INSURANCE

    Senator Hoeven. Okay. Just in the overall budget, the 
administration's budget, they reduced crop insurance by almost 
$8 billion. I'm on the Agriculture subcommittee as well, and 
that's not the direction we're going. Clearly, we're not going 
to have direct payments. And so, what we're trying to do is 
find ways to enhance crop insurance. I'm on legislation with 
Senator Conrad, Senator Baucus, and others, and there are other 
bills as well. But crop insurance is going to be more 
important, in terms of a cost-effective safety net.
    Just give me your thoughts here, because my sense is you're 
sympathetic to the tremendous importance of crop insurance, 
particularly in the situation of tight dollars. That's going 
the wrong direction. Just your thoughts.
    Secretary Vilsack. It depends. It depends on where the 
money is coming from. I mean clearly, let me state 
unequivocally that crop insurance is the linchpin of the safety 
net. But, there are three components to the crop insurance. 
There's the amount the insurance company gets. There's the 
amount the agent gets. And there's the amount that the farmer 
pays. And all of those are basically supplemented, if you will, 
by Government assistance.
    We've done an analysis of what insurance companies 
currently are getting in terms of the return on investment, and 
how much it would take for those insurance companies to be able 
to maintain the integrity of crop insurance. What we found was 
a 12-percent return on the money would be sufficient to 
maintain the integrity.
    Even in a year that was extraordinary, last year, crop 
insurance companies are still going to net about $1.5 billion, 
I'm told, of profit. So right now, they're getting 14 percent. 
So, the question is: Is there any adjustment in these tight 
times between 14 and 12 that could be made that doesn't 
compromise the process of the crop insurance program at all? 
Number one.
    Number two, I think agents, on average, get somewhere 
around $1,000 per policy for selling a policy, a slight 
adjustment to that, given the fact that 15 years ago when crop 
insurance was sold, it was quite difficult to sell the concept 
to farmers. Today, it's not at all difficult, because most 
farmers want it, and most bankers require it. Can there be a 
slight adjustment there?
    Then the third component of the President's proposal is 
crop insurance is a partnership between the Government and 
farmers. Some commodities, we are actually subsidizing the 
premium by 60 to 65 percent. Maybe a 50-50 partnership is fair. 
So those three areas do not compromise the capacity for us to 
have crop insurance, nor does it compromise our capacity to 
expand the number of products available to cover more crops as 
we've done. So, I don't know that you necessarily equate 
reductions in Government subsidy with not supporting the 
program. It depends on where the money comes from.
    Senator Hoeven. There was $6 billion taken out of crop 
insurance, in terms of what goes to the insurers in the past 
year. And crop insurance is going to have to carry a lot more 
of the load. So, separate and apart from what you're saying, in 
terms of the actual program and how we make sure we have a 
safety net for farmers, we're going to need to emphasize crop 
insurance, which is going to take more funding in that part of 
the program, not less.
    Secretary Vilsack. Not necessarily, Senator, because with 
the money that was taken, insurance companies were generating 
17, in some cases as much as 26-percent return on their money 
annually.
    Senator Hoeven. But, remember, we took $6 billion out of 
the program already.
    Secretary Vilsack. This brought it down to 14--$2 billion 
went back into various programs to help the farmers.
    Senator Hoeven. And now you've got crop insurance picking 
up some of the help that was formerly provided by other parts 
of the program. Crop insurance is going to have to pick that 
up. So, there's a lot more to it than just the one piece you're 
talking about.
    Secretary Vilsack. Unless you amplify crop insurance with 
another program, which a lot of folks are talking about, which 
the President recognized in his budget of providing additional 
resources for ``a disaster program of one kind of another.''
    Senator Hoeven. There'll be some of that, but we're still 
going to need to have to emphasize crop insurance.
    Thank you.
    Senator Kohl. Good. Senator Pryor.

               AGRICULTURAL RESEARCH SERVICE LAB CLOSURES

    Senator Pryor. Thank you, Mr. Chairman. Let me ask about an 
ARS issue, about a 30-percent cut to extramural ARS activities.
    As I understand it, in fiscal year 2012, ARS proposed to 
close 12 laboratories. However, USDA did not submit a budget 
request to the Congress that included all the costs associated 
with closing these facilities, including the closure of labs, 
relocating employees, et cetera. As a result, ARS was $38 
million short for these activities after the appropriation 
bills were signed into law. Is that right? Do I have that 
right?
    Secretary Vilsack. Senator, you may very well be right, and 
that's basically what we have to do is when that happens we've 
got to figure out how to absorb that cost.
    Senator Pryor. And that seems to me to be a budget mistake 
on USDA's part for not budgeting properly last year.
    Secretary Vilsack. I'd like to think that you-all would 
have given us that money, but I'm not sure that's the case, 
given the fact that you've been cutting ARS the last couple of 
years.
    Senator Pryor. My understanding was that it wasn't part of 
your request, that you thought you had adequate funds to do the 
changes.
    Secretary Vilsack. We have to absorb that, Senator.
    Senator Pryor. And that's my point. You're absorbing it at 
our expense. I mean, in effect, we're paying for the mistake. 
Aren't there other ways to find that money to absorb that $38 
million?
    Secretary Vilsack. There are other ways. You could 
appropriate money. I mean a supplemental appropriation. We 
could transfer money, but in which case you'd then be asking me 
why we were transferring resources from another program that 
you like to another program that you like. I mean these are 
tough issues, Senator. These are tough issues, and when the 
Congress is basically telling us, as we have heard repeatedly, 
that we're going to have less money, and when we're talking 
about a $1.5 trillion cut that's forthcoming, these are hard 
decisions. There's no easy answer.
    And I will tell you, I hear a lot of folks talk about 
waste, fraud, and abuse is the answer. Well, there's always 
going to be better ways to do things, but at the end of the 
day, with the kind of cuts we're talking about, and that we've 
dealt with, we're dealing with real difficult decisions. I 
think it's important for people to understand that.
    Senator Pryor. I do have some more questions along those 
lines, but I don't want to try the subcommittee's patience. So, 
let me ask about one more thing.

             AGRICULTURAL RESEARCH SERVICE GRAZING RESEARCH

    It seems like Arkansas got a lot of focus over at the USDA 
when they looked at cutting their budget this year. You've 
decided to close the Dale Bumpers Small Farms Research Center 
in Booneville. In light of the closure of the Brooksville, 
Florida, facility in 2011, and the expected closures of 
Watkinsville, Georgia, and Beaver, West Virginia, by June 1, 
2012, where will the ARS conduct grazing research for the 
Eastern part of the United States?
    Secretary Vilsack. There are three areas that will pick up 
some of the work that was done in Arkansas. They are Nebraska, 
Oklahoma, and Texas.
    Senator Pryor. And they'll be looking at the grazing aspect 
of it.
    Secretary Vilsack. Yes, sir.
    Senator Pryor. Because I know that part of what Booneville 
was doing is they were doing long-term, like a 20-year study on 
watersheds and the impact livestock have on those.
    Secretary Vilsack. The fact is that the priority research 
is going to continue. It may continue in a facility where the 
maintenance costs over time will be less. It may continue at a 
facility that is actually doing this work as well, to avoid 
duplication.
    Senator Pryor. And actually, this Dale Bumpers facility 
actually meets one of the criteria you talked about earlier, 
because it is hard for young people to get into farming. And 
here, they focus on small farms, and startups, and how you can 
get into certain type of farming activities and actually make a 
go of it.

                         AGRICULTURAL RESEARCH

    I think that on this, and maybe some of these other 
facilities that we've talked about today, they focus on long-
term basic research that actually helps farming, helps 
agriculture, and helps that be a core strength in the U.S. 
economy. So, are you-all just going to be getting out of the 
research business? Is that where you're headed?
    Secretary Vilsack. Senator.
    Senator Pryor. I'm asking.
    Secretary Vilsack. We have over 100 facilities that will 
still be operating, and we've asked for additional resources in 
the Agriculture and Food Research Initiative (AFRI) portion of 
the budget, $60 million-plus additional above and beyond what 
was appropriated last year. We've been advocating for more 
research opportunities. It doesn't necessarily mean that we 
have to have more facilities. It means that there is a number 
of different ways in which we can embrace additional research.
    So, it's unfair to suggest that we're trying to get out of 
the research business. But, it is fair to point out that the 
Congress has provided less money in several areas of our 
budget, and we have to deal with that. I'm not going to whine 
about it. I'm not going to complain about it. I'm going to 
manage it. But I have to have the capacity to manage it. I have 
to have the capacity to make choices. And sometimes those 
choices are difficult.
    If it doesn't come from one source, it's got to come from 
another source. That's the reality of less money, and we are in 
that position and circumstance where every single entity, every 
single agency of the Government is going to have to go through 
this.

                     BLUEPRINT FOR STRONGER SERVICE

    Frankly, it's a difficult process, but it's an important 
process, because it really allows you to think carefully and 
very strategically about what we ought to be doing, where we 
ought to be doing it, and how we ought to be doing it. Which is 
why we just didn't focus on office closings, we just didn't do 
what a lot of people do when they're faced with less money, is 
just to do a blanket across-the-board cut in workforce, which 
would have disrupted services in a lot of different areas. We 
took a strategic approach. We said, Less travel, less supplies, 
less conferences. We said, Are there ways in which we can do 
civil rights, IT, budget and finance, human resources, 
security, property management, and procurement more effectively 
and efficiently? Yes--379 different set of recommendations that 
we're now in the process of implementing.
    We looked at a Voluntary Separation Incentive Pay and 
Voluntary Early Retirement Authority (VSIP/VERA) process, so 
that we didn't have to be unfair to the people who had worked 
and dedicated their life to USDA, by giving them an opportunity 
for early retirement or for a buyout, so that we could keep a 
lot of our young people that we have been hiring over the 
course of the last several years, to maintain a good diversity 
in our workforce.
    We looked at office closings. We looked at lab closings. We 
looked at the entire process, which is what you have to do. If 
you could tell me we're not going to be faced with tough budget 
times in the next couple of years, that's great, but everything 
I read suggests that we're going to have to hunker down here. 
That's why I managed the change, rather than be managed by the 
change.

                         AGRICULTURAL RESEARCH

    Senator Pryor. That's why I asked about research, because 
under the Budget Control Act, it's going to be tougher in the 
next few years. And I'm trying to get a sense from you. You say 
you want to spend more in research, but you're going to have to 
be cutting other places. I'm just trying to get a sense of 
where you think the USDA is going over the next several years.
    Secretary Vilsack. The research that we see is the best way 
to use scarce resources, is to do it in a competitive way, that 
compels land grant universities and other universities that are 
engaged in research to collaborate, to avoid duplication, to 
avoid replication of research. That's why we think that the 
AFRI process and National Institute of Food and Agriculture 
(NIFA) is a good way to approach this and get the biggest bang 
and the largest stretch for our dollar.
    There have been those that have suggested that we need to 
complement that with the establishment of a foundation. I'm all 
for that. I think that's great. We don't have that in 
agriculture. We have it in a lot of other areas, and those 
areas have seen significant improvements in research. So, there 
are multiple ways in which we are going to be supportive of 
agricultural research. Make no mistake about that. Make no 
mistake about that. Because there is a direct correlation 
between agricultural productivity and research. The charts are 
very clear.
    Senator Pryor. I agree. I agree. And that's why I was 
asking that. I hope one thing you'll consider is taking these 
old facilities and research you're not using, and not going to 
fund any more, and possibly see if you can turn those over to 
some land grant universities so they can use those for 
research.
    Secretary Vilsack. We are required to do that, in the sense 
that we're required to reach out to our land grant university 
partners and say, ``Are you interested in having this facility? 
And if you are, what would you be willing to do with it, and 
can we enter into an agreement where you would commit it to 
agricultural activities for a period of time?'' We're required 
to do that, and we will follow through with that.
    Senator Pryor. And would there be any funding stream that 
would go along with that for research?
    Secretary Vilsack. That would, I suppose, depend on whether 
or not they'd like to participate in the competitive grant 
process under NIFA and the AFRI program.

                              CIVIL RIGHTS

    Senator Pryor. Mr. Chairman, the last thing I will say, and 
I'm sorry for trying the subcommittee's patience here. I know 
you've made a lot of progress in the last few years on civil 
rights, but there is still one major problem, I think, that 
exists, and that is USDA has no deadline for civil rights 
intake process or responding to civil rights complaints. And we 
have several folks in our State, and I'm sure others do as 
well, that are hanging out there in limbo for sometimes years 
at a time, waiting for responses from USDA.
    Secretary Vilsack. Senator, I don't think that's correct. I 
just don't think that's correct. In fact, I get a quarterly 
report on both internal and external complaints against USDA by 
mission area. We have a response time within 180 days. I will 
get to your staff the list that I get, and it will show you 
that there is no claim that's currently before the USDA that is 
over the time period that the statute of limitations has 
expired since we started this process and started keeping 
track.
    [The information follows:]

    The attached table is the color coded list that USDA uses to track 
the progress of pending complaints that raise claims under the Equal 
Credit Protect Act (ECOA). The table tracks the number of days left 
before the statute of limitations runs on ECOA claims. USDA's civil 
rights managers at every level meet once a week to review progress on 
these claims and take steps to expedite or remove road blocks as 
necessary.
    Most ECOA claims in inventory fall under a 2-year statute of 
limitations. This means that 2 years from the date of the incident 
alleged to be discriminatory, complainants lose the right to pursue the 
claim in court. More recent claims may benefit from the 5-year statute 
of limitations extended by the Dodd-Frank Act. This administration 
inherited a backlog of over 1,000 uncatalogued complaints that did not 
identify ECOA claims or track the date of the applicable statute of 
limitations.
    USDA civil rights staff inventoried the backlog and identified 
complaints raising ECOA claims. Based on that information, USDA created 
the attached table to track processing time against the deadline 
created by the statute of limitations for each complaint. The table 
identifies complainants' names (redacted); the number of days remaining 
until a 2-year statute of limitations would expire; the date on which 
the 2-year statute of limitations would expire; the status of each 
complaint; OASCR staff assigned to process the complaint; and other 
relevant information.
    An ECOA committee representing staff at every stage of complaint 
processing continues to meet regularly to maintain and update the 
table. New complaints raising ECOA claims are immediately added to the 
list. USDA civil rights managers at every level meet once a week to 
review progress on these pending claims and take steps to expedite or 
remove road blocks as necessary.

                                         USDA--OFFICE OF THE ASSISTANT SECRETARY FOR CIVIL RIGHTS--OFFICE OF ADJUDICATION--EQUAL CREDIT OPPORTUNITY ACT CASES STATUTE OF LIMITATION NOT EXPIRED
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                 Days
                                         2 years                                                                                                                                elapsed                 Actual      Initial    Date ECOA
 No.   Days  remaining until 2 years      since     USDA rcvd        Agency          Case #        Status       Investigator   Pending review     Program name      Corresp      (from      Current    incident    incident     letter
            from  incident date         incident      date                                                       adjudicator        OASCR                            date      incident      date        date        date       mailed
                                          date                                                                                                                                   date)
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---1-32------------------------------4/30/2012.--10/1/2010.--FSA..............--11-4279....--Adjudication..--MB, WS........--OASCR.........--Farm Operating-----9/14/2010.--698.......--3/29/2012.--5/1/2010..--5/1/2010..--10/13/2010--
                                                                                                                                              Loan (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   2 55                              5/23/2012.  5/25/2010.  FSA..............  10-3929....  Adjudication..  SF, WH, EP....  OASCR.........  FSA-Guaranteed     5/24/2010.  675.......  3/29/2012.  5/24/2010.  5/24/2010.  ..........
                                                                                                                                              Loan.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   3 58                              5/26/2012.  7/28/2010.  FSA..............  10-4133....  Adjudication..  RC, HR........  OASCR.........  Farm Service       7/22/2010.  672.......  3/29/2012.  5/27/2010.  5/27/2010.  9/23/2010
                                                                                                                                              Agency (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   4 100                             7/7/2012..  7/27/2010.  RD...............  11-4412....  Adjudication..  CB, KC........  Adjudication..  SFH--Rural         7/29/2010.  630.......  3/29/2012.  7/8/2010..  12/21/2010  12/29/2010
                                                                                                                                              Housing Direct
                                                                                                                                              Loans (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   5 155                             8/31/2012.  7/27/2010.  RD...............  11-4338....  Investigation.  SF............  Investigation.  SFH--Rural         9/29/2010.  575.......  3/29/2012.  9/1/2010..  9/1/2010..  12/2/2010
                                                                                                                                              Housing Direct
                                                                                                                                              Loans (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   6 168                             9/13/2012.  10/4/2010.  FSA..............  11-4283....  Adjudication..  HR, RC........  OASCR.........  Direct Operating   9/27/2010.  562.......  3/29/2012.  9/14/2010.  9/14/2010.  11/5/2010
                                                                                                                                              Loan/Guaranteed
                                                                                                                                              Operating Loan
                                                                                                                                              (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   7 188                             10/3/2012.  1/31/2011.  RD...............  11-4704....  Adjudication..  CB, JE........  Adjudication..  SFH--Rural         3/25/2011.  542.......  3/29/2012.  10/4/2010.  10/1/2010.  3/25/2011
                                                                                                                                              Housing Direct
                                                                                                                                              Loans (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   8 213                             10/28/2012  7/27/2010.  RD...............  11-4515....  Adjudication..  KCB, LR.......  OASCR.........  SFH--Rural         10/29/2010  517.......  3/29/2012.  10/29/2010  10/29/2010  12/15/2010
                                                                                                                                              Housing Direct
                                                                                                                                              Loans (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   9 228                             11/12/2012  11/23/2010  FSA..............  11-4443....  Adjudication..  MB, LR........  Adjudication..  Farm Operating     11/13/2010  502.......  3/29/2012.  11/13/2010  11/13/2010  1/12/2011
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  10 265                             12/19/2012  1/10/2011.  FSA..............  11-4609....  Investigation.  MB............  Investigation.  Farm Operating     12/22/2010  465.......  3/29/2012.  12/20/2010  12/20/2010  2/7/2011
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  11 289                             1/12/2013.  1/7/2011..  RD...............  11-4606....  Investigation.  MP............  Investigation.  SFH--Housing       2/24/2011.  441.......  3/29/2012.  1/13/2011.  1/13/2011.  2/24/2011
                                                                                                                                              Repair &
                                                                                                                                              Rehabilitation
                                                                                                                                              Grant/Loan.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  12 303                             1/26/2013.  2/1/2011..  FSA..............  11-4687....  Investigation.  WH............  Investigation.  Farm Operating     3/14/2011.  427.......  3/29/2012.  1/27/2011.  1/27/2011.  3/14/2011
                                                                                                                                              Loan (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  13 330                             2/22/2013.  11/4/2011.  FSA..............  12-5519....  Investigation.  TA............  Investigation.  Farm Operating     10/17/2011  400.......  3/29/2012.  2/23/2011.  2/23/2011.  11/29/2011
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  14 345                             3/9/2013..  9/22/2011.  FSA..............  11-5359....  Investigation.  TA............  Investigation.  Farm Ownership     10/19/2011  385.......  3/29/2012.  3/10/2011.  3/10/2011.  10/19/2011
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  15 352                             3/16/2013.  4/11/2011.  FSA..............  11-4845....  Investigation.  SA............  Investigation.  Farm Operating     4/5/2011..  378.......  3/29/2012.  3/17/2011.  3/17/2011.  6/17/2011
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  16 377                             4/10/2013.  10/1/2010.  FSA..............  11-4280....  Adjudication..  AG............  Adjudication..  Farm Operating     9/29/2010.  353.......  3/29/2012.  4/11/2011.  4/11/2011.  10/15/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  17 377                             4/10/2013.  4/21/2011.  FSA..............  11-4887....  Adjudication..  JE, MP........  Adjudication..  Farm Ownership     4/14/2011.  353.......  3/29/2012.  4/11/2011.  4/11/2011.  5/13/2011
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  18 395                             4/28/2013.  3/2/2011..  RD...............  11-4828....  Investigation.  MB............  Investigation.  SFH--Rural         4/29/2011.  335.......  3/29/2012.  4/29/2011.  ..........  7/18/2011
                                                                                                                                              Housing Loan
                                                                                                                                              (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  19 395                             4/28/2013.  3/25/2011.  FSA..............  11-5093....  Investigation.  EP............  Investigation.  Farm Operating     4/29/2011.  335.......  3/29/2012.  4/29/2011.  4/29/2011.  8/15/2011
                                                                                                                                              Loan (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  20 412                             5/15/2013.  8/19/2011.  RD...............  11-5227....  Investigation.  TA............  Investigation.  SHF-Guaranteed     8/4/2011..  318.......  3/29/2012.  5/16/2011.  5/16/2011.  10/7/2011
                                                                                                                                              Loan.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  21 414                             5/17/2013.  9/20/2011.  FSA..............  11-5348....  Investigation.  AG............  Investigation.  Farm Operating     9/30/2011.  316.......  3/29/2012.  5/18/2011.  5/18/2011.  9/30/2011
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  22 421                             5/24/2013.  9/7/2011..  RD...............  11-5316....  Investigation.  MP............  Investigation.  SFH--Rural         8/25/2011.  309.......  3/29/2012.  5/25/2011.  5/25/2011.  10/27/2011
                                                                                                                                              Housing Direct
                                                                                                                                              Loan (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  23 433                             6/5/2013..  6/20/2011.  FSA..............  11-5046....  Investigation.  CB............  Investigation.  Farm Operating     6/12/2011.  297.......  3/29/2012.  6/6/2011..  6/6/2011..  9/26/2011
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  24 442                             6/14/2013.  5/4/2011..  RD...............  11-4937....  Investigation.  MP............  Investigation.  SFH--Rural         4/25/2011.  288.......  3/29/2012.  6/15/2011.  6/15/2011.  6/23/2011
                                                                                                                                              Housing Direct
                                                                                                                                              Loans (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  25 450                             6/22/2013.  7/5/2011..  RD...............  11-5098....  Adjudication..  SA, LR........  Adjudication..  SFH--Rural         6/28/2011.  280.......  3/29/2012.  6/23/2011.  6/23/2011.  7/28/2011
                                                                                                                                              Housing
                                                                                                                                              Guaranteed Loan
                                                                                                                                              (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  26 456                             6/28/2013.  7/19/2011.  FSA..............  11-5132....  Investigation.  KCB...........  Investigation.  Farm Operating     7/14/2011.  274.......  3/29/2012.  6/29/2011.  6/29/2011.  8/8/2011
                                                                                                                                              Loan (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  27 475                             7/17/2013.  8/15/2011.  FSA..............  11-5215....  Investigation.  LJ............  Investigation.  Farm Operating     7/18/2011.  255.......  3/29/2012.  7/18/2011.  7/18/2011.  11/9/2011
                                                                                                                                              Loan (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  28 500                             8/11/2013.  11/8/2011.  FSA..............  12-5524....  Investigation.  LJ............  Investigation.  Farm Operating     10/19/2011  230.......  3/29/2012.  8/12/2011.  8/12/2011.  11/18/2011
                                                                                                                                              Loan (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  29 500                             8/11/2013.  9/30/2011.  FSA..............  11-5392....  Investigation.  EP............  Investigation.  Farm Operating     9/15/2011.  230.......  3/29/2012.  8/12/2011.  8/12/2011.  10/21/2011
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  30 542                             9/22/2013.  11/8/2011.  RD...............  12-5527....  Investigation.  NA............  Investigation.  SFH--Rural         10/29/2011  188.......  3/29/2012.  9/23/2011.  1/27/2010.  11/22/2011
                                                                                                                                              Housing Direct
                                                                                                                                              Loans (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  31 553                             8/29/2013.  10/24/2011  RD...............  12-5497....  Fact-Finding..  FF............  Fact-Finding..  SFH--Rural         10/24/2012  177.......  2/23/2012.  8/30/2011.  8/30/2011.  2/13/2011
                                                                                                                                              Housing Loan.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  32 580                             10/30/2013  1/9/2011..  FSA..............  12-5699....  Fact-Finding..  FF............  Fact-Finding..  Commodity Def.     12/28/2011  150.......  3/29/2012.  10/31/2011  10/31/2011  3/16/2012
                                                                                                                                              Loan (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  33 609                             11/28/2013  1/18/2012.  RD...............  12-5715....  Fact-Finding..  FF............  Fact-Finding..  SFH--Other         12/20/2011  121.......  3/29/2012.  11/29/2011  11/29/2011  2/28/2012
                                                                                                                                              (Moratorium).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  34 616                             12/5/2013.  1/20/2012.  FSA..............  12-5740....  Fact-Finding..  FF............  Fact-Finding..  Farm Operating     1/10/2012.  114.......  3/29/2012.  12/6/2011.  12/6/2011.  2/28/2012
                                                                                                                                              Loan (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  35 624                             12/13/2013  11/23/2011  RD...............  12-5576....  Fact-Finding..  FF............  Fact-Finding..  SFH--Rural         1/23/2012.  106.......  3/29/2012.  12/14/2011  12/14/2011  1/23/2012
                                                                                                                                              Housing Direct
                                                                                                                                              Loans (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  36 687                             2/14/2014.  3/2/2012..  FSA..............  12-5864....  Fact-Finding..  FF............  Fact-Finding..  Farm Operating     2/21/2012.  43........  3/29/2012.  2/15/2012.  2/15/2012.  3/16/2012
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  37 950                             11/4/2014.  2/26/2010.  RD...............  10-3706....  Adjudication..  FF............  Adjudication..  SFH--Other (RD)..  11/19/209.  875.......  3/29/2012.  11/5/2009.  11/5/2009.  ..........
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  38 1047                            2/9/2015..  8/16/2010.  RD...............  10-4155....  Adjudication..  FF............  OASCR.........  Rural Development  4/25/2010.  778.......  3/29/2012.  2/10/2010.  2/10/2010.  10/1/2010
                                                                                                                                              (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  39 -103                            12/17/2011  5/13/2010.  FSA..............  10-3906....  Adjudication..  OASCR.........  OASCR.........  Farm Operating     5/27/2010.  833.......  3/29/2012.  12/17/2009  7/15/2010.  5/27/2010
                                                                                                                                              Loan (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  40                                 ..........  6/22/2010.  FSA..............  10-4017....  Adjudication..  OASCR.........  OASCR.........  Farm Operating     6/16/2010.  ..........  3/29/2012.  TBD.......  TBD.......  8/24/2011
                                                                                                                                              Loan (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  41 -412                            2/11/2011.  3/4/2009..  FSA..............  09-2297....  Adjudication..  OASCR.........  OASCR NF        Farm Operating     2/11/2009.  1142......  3/29/2012.  2/11/2009.  2/11/2009.  4/16/2010
                                                                                                                              Proposed OGC    Loans (FSA).
                                                                                                                              Not Signed.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  42 0                               1/22/2012.  2/18/2010.  FSA..............  10-3681....  Settlement      ..............  ..............  Farm Operating     2/8/2010..  797.......  3/29/2012.  1/22/2010.  1/22/2010.  9/1/2010
                                                                                              completed                                       Loans (FSA).
                                                                                              with
                                                                                              complainant.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  43 42                              5/10/2012.  5/18/2010.  FSA..............  10-3933....  F 2/29/2012...  ..............  ..............  Farm Operating     5/18/2010.  688.......  3/29/2012.  5/11/2010.  5/11/2010.  6/22/2010
                                                                                                                                              Loan (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  44 218                             11/2/2012.  2/15/2011.  FSA..............  11-4729....  F 2/29/2012...  ..............  ..............  FSA--Farm          4/8/2011..  512.......  3/29/2012.  11/3/2010.  4/8/2011..  ..........
                                                                                                                                              Operating Loan.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  45 93                              6/30/2012.  9/22/2010.  FSA..............  10-4242....  F 2/29/2012...  ..............  ..............  Farm Operating     8/27/2010.  637.......  3/29/2012.  7/1/2010..  7/11/2010.  10/20/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  46 34                              5/2/2012..  6/2/2010..  FSA..............  10-3988....  NF 3/8/2012...  ..............  ..............  Operating Loan     5/25/2010.  696.......  3/29/2012.  5/3/2010..  5/25/2010.  7/7/2010
                                                                                                                                              (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  47 0                               2/22/2012.  3/2/2010..  RD...............  10-3719....  Closure         ..............  ..............  SFH--Rural         2/22/2010.  766.......  3/29/2012.  2/22/2010.  2/22/2010.  9/9/2010
                                                                                              Withdrawn 1/                                    Housing Direct
                                                                                              30/2012.                                        Loans (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  48 0                               8/31/2011.  1/20/2010.  FSA..............  10-3593....  NF 3/8/2012...  ..............  ..............  Farm Operating     12/30/2009  941.......  3/29/2012.  8/31/2009.  5/1/2009..  ..........
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  49 0                               5/13/2012.  6/8/2010..  RD...............  10-3966....  NF 1/12/2012..  ..............  ..............  RD (loan)........  5/24/2010.  685.......  3/29/2012.  5/14/2010.  5/14/2010.  6/25/2010
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  50 0                               8/18/2012.  7/27/2010.  FSA..............  11-4445....  Closure 8/19/   ..............  ..............  Farm Operating     8/22/2010.  588.......  3/29/2012.  8/19/2010.  8/19/2010.  12/15/2010
                                                                                              2011.                                           Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  51 0                               7/11/2013.  7/20/2001.  RD...............  11-5143....  Closure 11/03/  ..............  ..............  SFH--Rural         7/12/2011.  261.......  3/29/2012.  7/12/2011.  7/12/2011.  8/12/2011
                                                                                              2011.                                           Housing
                                                                                                                                              Guaranteed Loan
                                                                                                                                              (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  52 0                               2/8/2012..  3/1/2010..  FSA..............  10-3707....  NF 12/2/2011..  ..............  ..............  Direct Operating   2/24/2010.  780.......  3/29/2012.  2/8/2010..  2/8/2010..  7/19/2010
                                                                                                                                              Loan/Guaranteed
                                                                                                                                              Operating Loan
                                                                                                                                              (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  53 0                               11/9/2011.  4/29/2010.  FSA..............  10-3873....  NF 11/10/2011.  ..............  ..............  Outreach &         4/25/2010.  871.......  3/29/2012.  11/9/2009.  4/7/2010..  4/30/2010
                                                                                                                                              Assistance for
                                                                                                                                              Socially
                                                                                                                                              Disadvantaged
                                                                                                                                              Farmers.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  54 0                               11/9/2011.  4/29/2010.  FSA..............  10-3872....  NF 11/09/2011.  ..............  ..............  Outreach &         4/25/2010.  871.......  3/29/2012.  11/9/2009.  4/7/2010..  11/5/2010
                                                                                                                                              Assistance for
                                                                                                                                              Socially
                                                                                                                                              Disadvantaged
                                                                                                                                              Farmers.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  55 0                               12/2/2011.  3/18/2010.  RD...............  10-3766....  NF 10/24/2011.  ..............  ..............  SFH--Rural         3/8/2010..  848.......  3/29/2012.  12/2/2009.  12/2/2009.  2/11/2011
                                                                                                                                              Housing Direct
                                                                                                                                              Loans (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  56 0                               10/22/2011  9/15/2010.  FSA..............  10-4218....  NF 10/21/2011.  ..............  ..............  Operating Loan     9/7/2010..  889.......  3/29/2012.  10/22/2009  5/3/2010..  ..........
                                                                                                                                              (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  57 0                               11/1/2011.  5/27/2010.  FSA..............  10-3942....  NF 10/24/2011.  ..............  ..............  Farm Operating     5/21/2010.  879.......  3/29/2012.  11/1/2009.  11/1/2009.  Pending
                                                                                                                                              Loan (FSA).                                                                    discussio
                                                                                                                                                                                                                             n
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  58 0                               2/29/2012.  7/28/2010.  RD...............  10-4099....  Closed 10/19/   ..............  ..............  Rural Development  7/20/2010.  759.......  3/29/2012.  3/1/2010..  3/1/2010..  6/1/2010
                                                                                              2011.                                           (502/504 loan
                                                                                                                                              grant).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  59 0                               3/9/2012..  10/28/2010  RD...............  11-4469....  Closed 10/21/   ..............  ..............  SFH--Rural         2/11/2011.  750.......  3/29/2012.  3/10/2010.  3/10/2010.  6/1/2010
                                                                                              2011.                                           Housing Direct
                                                                                                                                              Loans (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  60 0                               5/31/2012.  7/20/2010.  FSA..............  10-4102....  Closed 8/15/    ..............  ..............  Emergency Loan     7/12/2010.  667.......  3/29/2012.  6/1/2010..  ..........  9/27/2010
                                                                                              2011.                                           (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  61 0                               11/14/2012  5/4/2011..  RD...............  11-4941....  Closed 10/5/    ..............  ..............  SFH--Rural         4/12/2011.  500.......  3/29/2012.  11/15/2010  ..........  7/8/2011
                                                                                              2011.                                           Housing Loan
                                                                                                                                              (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  62 0                               10/9/2011.  10/27/2009  FSA..............  10-3304....  NF 9/30/2011..  ..............  ..............  Farm Operating     10/26/2009  902.......  3/29/2012.  10/9/2009.  10/9/2009.  5/5/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  63 0                               11/18/2011  1/26/2010.  FSA..............  10-3633....  NF 9/29/2011..  ..............  ..............  Farm Ownership     1/27/2010.  862.......  3/29/2012.  11/18/2009  11/18/2009  5/18/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  64 0                               2/26/2012.  2/26/2010.  FSA..............  10-3689....  Closed--No      ..............  ..............  Farm Ownership     2/26/2010.  762.......  3/29/2012.  2/26/2010.  2/26/2010.  2/11/2011
                                                                                              Jurisdiction.                                   Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  65 0                               6/30/2012.  8/25/2010.  FSA..............  10-4181....  Adjudication    ..............  ..............  Diaster Loan       8/25/2010.  637.......  3/29/2012.  7/1/2010..  7/1/2010..  10/4/2010
                                                                                              Closed--Filed                                   (FSA).
                                                                                              in Federal
                                                                                              Court.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  66 0                               9/1/2011..  7/20/2010.  FSA..............  10-4083....  NF 8/31/2011..  ..............  ..............  Farm Operating     7/12/2010.  940.......  3/29/2012.  9/1/2009..  9/1/2009..  ..........
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  67 0                               10/14/2011  10/21/2009  FSA..............  10-3312....  NF 8/26/2011..  ..............  ..............  Farm Operating     10/14/2009  897.......  3/29/2012.  10/14/2009  10/14/2009  5/20/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  68 -616                            7/22/2010.  12/15/2008  FSA..............  09-2094....  Investigation   ..............  ..............  Farm Operating     12/9/2008.  1346......  3/29/2012.  7/22/2008.  7/22/2008.  4/15/2010
                                                                                              (Held in                                        Loans (FSA).
                                                                                              Abeyance).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  69 -626                            7/12/2010.  7/31/2008.  FSA..............  8-1642.....  Investigation   ..............  ..............  Farm Operating     7/31/2008.  1356......  3/29/2012.  7/12/2008.  7/12/2008.  4/30/2010
                                                                                              (Held in                                        Loans (FSA).
                                                                                              Abeyance).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  70 0                               7/4/2012..  7/27/2010.  RHS..............  10-4092....  Closure 8/23/   ..............  ..............  Rural Development  7/20/2010.  633.......  3/29/2012.  7/5/2010..  7/5/2010..  8/27/2010
                                                                                              2011.                                           (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  71 0                               12/2/2011.  1/12/2010.  FSA..............  10-3558....  Adjudication    ..............  ..............  Farm Operating     1/4/2010..  848.......  3/29/2012.  12/2/2009.  12/2/2009.  ..........
                                                                                              Not ECOA.                                       Loan (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  72 0                               12/11/2011  12/30/2009  FSA..............  10-3546....  Removed Not     ..............  ..............  Farm Ownership     12/11/2009  839.......  3/29/2012.  12/11/2009  12/11/2009  9/3/2010
                                                                                              ECOA.                                           Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  73 0                               9/1/2011..  4/7/2010..  FSA..............  10-3827....  Closure 8/17/   ..............  ..............  Farm Operating     3/21/2010.  940.......  3/29/2012.  9/1/2009..  9/1/2009..  5/27/2010
                                                                                              2011.                                           Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  74 0                               1/1/2012..  10/6/2010.  RD...............  11-4468....  Closure 8/17/   ..............  ..............  SFH--Rural         2/11/2011.  818.......  3/29/2012.  1/1/2010..  1/1/2010..  5/14/2010
                                                                                              2011.                                           Housing Direct
                                                                                                                                              Loans (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  75 0                               1/14/2012.  4/5/2010..  RD...............  10-3813....  Removed Not     ..............  ..............  Rural Development  3/24/2010.  805.......  3/29/2012.  1/14/2010.  1/14/2010.  5/13/2010
                                                                                              ECOA.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  76 0                               7/24/2011.  9/4/2009..  FSA..............  09-3073....  F 7/25/2011...  ..............  ..............  Farm Operating     8/27/2009.  979.......  3/29/2012.  7/24/2009.  10/1/2009.  ..........
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  77 0                               7/28/2011.  8/14/2009.  RD...............  09-2948....  NF 7/28/2011..  ..............  ..............  SFH--Rural         8/7/2009..  975.......  3/29/2012.  7/28/2009.  7/28/2009.  4/16/2010
                                                                                                                                              Housing
                                                                                                                                              Guaranteed Loan
                                                                                                                                              (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  78 0                               7/29/2011.  1/8/2008..  RD...............  8-0907.....  NF 7/28/2011..  ..............  ..............  SFH--Rural         1/6/2010..  974.......  3/29/2012.  7/29/2009.  7/29/2009.  ..........
                                                                                                                                              Housing Direct
                                                                                                                                              Loans (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  79 0                               10/26/2011  10/26/2009  FSA..............  10-3260....  Removed Not     ..............  ..............  Farm Operating     10/26/2009  885.......  3/29/2012.  10/26/2009  10/26/2009  5/20/2010
                                                                                              ECOA.                                           Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  80 -253                            7/20/2011.  9/11/2009.  FSA..............  09-3087....  Closure/File    ..............  ..............  Farm Operating     7/20/2009.  983.......  3/29/2012.  7/20/2009.  7/20/2009.  ..........
                                                                                              in Federal                                      Loans (FSA).
                                                                                              Court (KCB).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  81 0                               7/21/2011.  11/7/2009.  FSA..............  10-3332....  Closure 7/20/   ..............  ..............  Farm Operating     10/7/2009.  982.......  3/29/2012.  7/21/2009.  7/1/2009..  5/20/2010
                                                                                              2011.                                           Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  82 0                               10/31/2011  10/9/2009.  FSA..............  10-3343....  Closure 6/27/   ..............  ..............  Farm Operating     9/29/2009.  880.......  3/29/2012.  10/31/2009  10/31/2009  7/1/2010
                                                                                              2011.                                           Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  83 0                               2/26/2012.  4/2/2010..  RD...............  10-3810....  Closure 6/24/   ..............  ..............  Denial of Loan     2/26/2010.  762.......  3/29/2012.  2/26/2010.  2/26/2010.  9/3/2010
                                                                                              2011.                                           (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  84 0                               2/23/2012.  7/27/2010.  FSA..............  10-4090....  Closure 6/23/   ..............  ..............  Farm Operating     4/27/2010.  765.......  3/29/2012.  2/23/2010.  2/23/2010.  4/30/2010
                                                                                              2011.                                           Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  85 0                               7/13/2011.  7/30/2009.  FSA..............  09-2919....  NF 7/12/2011..  ..............  ..............  Farm Operating     7/24/2009.  990.......  3/29/2012.  7/13/2009.  7/13/2009.  5/5/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  86 0                               7/8/2011..  3/5/2009..  FSA..............  09-2294....  NF 7/5/2011...  ..............  ..............  Farm Operating     2/25/2009.  995.......  3/29/2012.  7/8/2009..  5/18/2009.  4/16/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  87 0                               7/14/2011.  4/6/2009..  FSA..............  09-2482....  Removed.......  ..............  ..............  Farm Ownership     4/3/2009..  989.......  3/29/2012.  7/14/2009.  7/14/2009.  4/30/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  88 0                               7/6/2011..  7/29/2009.  FSA..............  09-2904....  NF 7/1/2011...  ..............  ..............  Farm Operating     7/9/2009..  997.......  3/29/2012.  7/6/2009..  7/6/2009..  4/16/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  89 0                               6/26/2011.  7/30/2009.  RD...............  09-2899....  NF 6/27/2011..  ..............  ..............  Rural Business     7/28/2000.  1007......  3/29/2012.  6/26/2009.  6/26/2009.  7/19/2010
                                                                                                                                              Enterprise Grant
                                                                                                                                              (loan) (RBS).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  90 0                               6/17/2011.  5/28/2009.  FSA..............  09-2668....  Closure 5/26/   ..............  ..............  Farm Operating     5/18/2009.  1016......  3/29/2012.  6/17/2009.  4/24/2009.  5/20/2010
                                                                                              2011.                                           Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  91 0                               7/17/2011.  8/20/2009.  RD...............  09-3014....  Closure 6/23/   ..............  ..............  SFH--Housing       8/11/2009.  986.......  3/29/2012.  7/17/2009.  7/17/2009.  5/6/2010
                                                                                              2011.                                           Repair &
                                                                                                                                              Rehabilitation
                                                                                                                                              Grant/Loan.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  92 0                               8/1/2011..  10/8/2009.  FSA..............  10-3243....  Closure 6/27/   ..............  ..............  Beginning Farmer   9/28/2009.  971.......  3/29/2012.  8/1/2009..  8/1/2009..  6/15/2010
                                                                                              2011.                                           loan.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  93 0                               8/8/2011..  8/17/2009.  RD...............  09-2946....  Closure 7/5/    ..............  ..............  SFH--Rural         8/8/2009..  964.......  3/29/2012.  8/8/2009..  8/8/2009..  5/5/2010
                                                                                              2011.                                           Housing
                                                                                                                                              Guaranteed Loan
                                                                                                                                              (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  94 0                               8/17/2011.  8/25/2009.  RD...............  09-2999....  Closure 6/23/   ..............  ..............  SFH--Rural         8/17/2009.  955.......  3/29/2012.  8/17/2009.  8/17/2009.  5/20/2010
                                                                                              2011.                                           Housing
                                                                                                                                              Guaranteed Loan
                                                                                                                                              (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  95 0                               2/14/2012.  2/26/2010.  RD...............  10-3716....  Closure 6/23/   ..............  ..............  502 Housing Loan   2/14/2010.  774.......  3/29/2012.  2/14/2010.  2/14/2010.  4/30/2010
                                                                                              2011.                                           (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  96 0                               2/22/2012.  9/8/2010..  FSA..............  10-4260....  Closure 6/23/   ..............  ..............  Farm Operating     8/23/2010.  766.......  3/29/2012.  2/22/2010.  2/22/2010.  8/3/2010
                                                                                              2011.                                           Loan (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  97 0                               6/3/2011..  10/7/2009.  RD...............  10-3337....  Partial         ..............  ..............  SFH--Rural         10/7/2009.  1030......  3/29/2012.  6/3/2009..  6/4/2009..  4/30/2010
                                                                                              Finding 6/03/                                   Housing
                                                                                              2011.                                           Guaranteed Loan
                                                                                                                                              (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  98 0                               5/18/2011.  6/9/2009..  FSA..............  09-2724....  NF 5/18/2011..  ..............  ..............  Farm Operating     5/1/2709..  1046......  3/29/2012.  5/18/2009.  4/14/2009.  ..........
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  99 0                               5/18/2011.  1/20/2010.  FSA..............  10-3593....  NF 5/18/2011..  ..............  ..............  Farm Operating     12/30/2009  1046......  3/29/2012.  5/18/2009.  5/1/2009..  ..........
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 100 0                               5/19/2011.  4/7/2009..  FSA..............  09-2455....  NF 5/19/2011..  ..............  ..............  Farm Operating     4/1/2009..  1045......  3/29/2012.  5/19/2009.  4/2/2009..  4/16/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 101 0                               5/26/2012.  7/15/2010.  FSA..............  10-4089....  Adjudication    ..............  ..............  Farm Operating     7/6/2010..  673.......  3/29/2012.  5/26/2010.  5/26/2010.  8/3/2010
                                                                                              Admin Close.                                    Loan (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 102 0                               5/13/2011.  3/5/2009..  RD...............  09-2311....  NF 5/13/2011..  ..............  ..............  SFH--Rural         2/16/2009.  1051......  3/29/2012.  5/13/2009.  5/13/2009.  4/23/2010
                                                                                                                                              Housing
                                                                                                                                              Guaranteed Loan
                                                                                                                                              (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 103 0                               5/5/2011..  5/27/2009.  FSA..............  09-2646....  NF 5/4/2011...  ..............  ..............  Farm Operating     5/4/2009..  1059......  3/29/2012.  5/5/2009..  5/5/2009..  5/20/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 104 0                               4/30/2011.  6/10/2009.  FSA..............  09-2726....  NF 5/2/2011...  ..............  ..............  Farm Operating     6/5/2009..  1064......  3/29/2012.  4/30/2009.  6/5/2009..  4/16/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 105 0                               5/1/2011..  3/4/2009..  FSA..............  09-2302....  NF 5/2/2011...  ..............  ..............  Farm Operating     7/7/2009..  1063......  3/29/2012.  5/1/2009..  5/1/2009..  ..........
                                                                                                                                              Loan (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 106 0                               4/23/2011.  5/6/2010..  RHS..............  10-3898....  F 4/25/2011...  ..............  ..............  504 Loan Grant/    4/28/2010.  1071......  3/29/2012.  4/23/2009.  4/23/2009.  5/20/2010
                                                                                                                                              Loan (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 107 0                               8/1/2011..  11/17/2009  FSA..............  10-3367....  Admin Closure.  ..............  ..............  Farm Operating     11/12/2009  971.......  3/29/2012.  8/1/2009..  8/1/2009..  5/5/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 108 0                               5/7/2011..  5/27/2009.  RD...............  09-2667....  Admin Closure.  ..............  ..............  SFH--Rural         5/7/2009..  1057......  3/29/2012.  5/7/2009..  5/7/2009..  5/20/2010
                                                                                                                                              Housing
                                                                                                                                              Guaranteed Loan
                                                                                                                                              (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 109 0                               4/1/2011..  6/12/2009.  RD...............  09-2815....  Admin Closure.  ..............  ..............  Rural Housing....  6/24/2009.  1093......  3/29/2012.  4/1/2009..  4/1/2009..  4/23/2010
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 110 0                               4/8/2011..  4/21/2009.  FSA..............  09-2501....  F 4/8/2011....  ..............  ..............  Farm Operating     4/15/2009.  1086......  3/29/2012.  4/8/2009..  4/8/2009..  4/16/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 111 0                               4/9/2011..  5/6/2009..  FSA..............  09-2580....  NF 4/11/2011..  ..............  ..............  Farm Operating     4/30/2009.  1085......  3/29/2012.  4/9/2009..  4/9/2009..  4/16/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 112 0                               6/1/2011..  10/14/2010  FSA..............  11-4379....  Status Change   ..............  ..............  Farm Operating     9/27/2010.  1032......  3/29/2012.  6/1/2009..  6/1/2009..  2/3/2011
                                                                                              No Longer                                       Loans (FSA).
                                                                                              ECoa (RC).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 113 0                               4/17/2011.  4/30/2009.  FSA..............  09-2560....  Admin Closure.  ..............  ..............  Farm Operating     4/17/2009.  1077......  3/29/2012.  4/17/2009.  4/17/2009.  Request to
                                                                                                                                              Loans (FSA).                                                                   withdraw
                                                                                                                                                                                                                             ltr. Was
                                                                                                                                                                                                                             mailed to
                                                                                                                                                                                                                             Comp. on
                                                                                                                                                                                                                             040610
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 114 0                               5/18/2011.  5/27/2009.  FSA..............  09-2651....  Admin Closure.  ..............  ..............  Farm Operating     5/18/2009.  1046......  3/29/2012.  5/18/2009.  5/18/2009.  Need ECOA
                                                                                                                                              Loans (FSA).                                                                   ltr. Gave
                                                                                                                                                                                                                             to TMJ on
                                                                                                                                                                                                                             051910
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 115 0                               4/2/2011..  4/26/2009.  RD...............  09-2568....  NF 4/4/2011...  ..............  ..............  SFH--Rural         4/16/2009.  1092......  3/29/2012.  4/2/2009..  4/2/2009..  4/16/2010
                                                                                                                                              Housing Direct
                                                                                                                                              Loans (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 116 0                               4/15/2011.  4/22/2009.  FSA..............  09-2524....  Admin Closure.  ..............  ..............  Farm Operating     4/14/2009.  1079......  3/29/2012.  4/15/2009.  4/15/2009.  ..........
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 117 0                               3/19/2011.  6/5/2009..  FSA..............  09-2729....  NF 3/21/2011..  ..............  ..............  Farm Operating     5/29/2009.  1106......  3/29/2012.  3/19/2009.  3/19/2009.  6/15/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 118 0                               4/30/2011.  5/13/2009.  RD...............  09-2622....  Admin Closure.  ..............  ..............  SFH--Rural         4/30/2009.  1064......  3/29/2012.  4/30/2009.  4/30/2009.  5/24/2010
                                                                                                                                              Housing Direct
                                                                                                                                              Loans (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 119 0                               3/6/2011..  4/7/2009..  RD...............  09-2438....  Adjudication    ..............  ..............  RD (loan)........  3/25/2009.  1119......  3/29/2012.  3/6/2009..  3/6/2009..  6/15/2010
                                                                                              Admin Closure.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 120 0                               2/4/2011..  6/30/2008.  FSA..............  8-1537.....  Settlement 2/4/ ..............  ..............  Farm Operating     6/30/2008.  1149......  3/29/2012.  2/4/2009..  2/4/2009..  4/15/2010
                                                                                              2011.                                           Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 121 0                               2/5/2011..  2/9/2009..  FSA..............  09-2233....  NF 2/7/2011...  ..............  ..............  Farm Operating     1/15/2009.  1148......  3/29/2012.  2/5/2009..  2/5/2009..  4/16/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 122 0                               1/8/2011..  2/24/2009.  FSA..............  09-2273....  NF 1/10/2011..  ..............  ..............  Farm Operating     1/27/2009.  1176......  3/29/2012.  1/8/2009..  1/8/2009..  4/16/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 123 0                               1/21/2011.  1/6/2009..  RD...............  09-2164....  NF 1/20/2011..  ..............  ..............  SFH--Rural         12/21/2008  1163......  3/29/2012.  1/21/2009.  1/21/2009.  4/16/2010
                                                                                                                                              Housing Direct
                                                                                                                                              Loans (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 124 0                               7/7/2011..  7/22/2009.  RD...............  09-2861....  Adjudication    ..............  ..............  SFH--Housing       7/16/2009.  996.......  3/29/2012.  7/7/2009..  7/7/2009..  4/30/2010
                                                                                              Admin Closure.                                  Repair &
                                                                                                                                              Rehabilitation
                                                                                                                                              Loan (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 125 0                               1/6/2011..  1/29/2009.  FSA..............  09-2210....   NF 1/6/2011..  ..............  ..............  Farm Operating     1/8/2009..  1178......  3/29/2012.  1/6/2009..  1/6/2009..  4/23/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 126 0                               12/21/2010  2/2/2009..  RD...............  09-2226....  NF 12/21/10...  ..............  ..............  RBP--Business &    1/20/2009.  1194......  3/29/2012.  12/21/2008  12/21/2008  4/16/2010
                                                                                                                                              Industry
                                                                                                                                              Guaranteed Loans
                                                                                                                                              (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 127 0                               12/20/2010  11/13/2008  FSA..............  8-1651.....  NF 12/20/10...  ..............  ..............  Farm Operating     11/3/2008.  1195......  3/29/2012.  12/20/2008  12/20/2008  4/23/2010
                                                                                                                                              Loan (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 128 0                               12/20/2010  8/5/2008..  FSA..............  8-1660.....  F 12/20/10....  ..............  ..............  Farm Operating     8/1/2008..  1195......  3/29/2012.  12/20/2008  12/20/2008  4/15/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 129 0                               11/29/2010  1/7/2009..  RD...............  09-2129....  NF 11/26/10...  ..............  ..............  SFH--Rural         12/27/2008  1218......  3/29/2012.  11/27/2008  11/27/2008  4/23/2010
                                                                                                                                              Housing Direct
                                                                                                                                              Loans (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 130 0                               11/13/2010  12/23/2008  RD...............  09-2118....  NF............  ..............  ..............  SFH--Rural         12/4/2008.  1232......  3/29/2012.  11/13/2008  11/13/2008  4/23/2010
                                                                                                                                              Housing Direct
                                                                                                                                              Loans (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 131 0                               11/1/2010.  10/29/2008  FSA..............  09-1973....  NF 10/28/10...  ..............  ..............  Farm Operating     10/18/2008  1244......  3/29/2012.  11/1/2008.  11/1/2008.  4/15/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 132 0                               9/17/2010.  12/15/2008  FSA..............  09-2095....  NF 9/16/10....  ..............  ..............  Beginning Farm     12/5/2008.  1289......  3/29/2012.  9/17/2008.  9/17/2008.  4/23/2010
                                                                                                                                              loan denied
                                                                                                                                              (SOL).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 133 0                               8/13/2010.  8/20/2008.  RD...............  8-1715.....  NF 8/12/10....  ..............  ..............  SFH--Rural         8/14/2008.  1324......  3/29/2012.  8/13/2008.  8/13/2008.  4/23/2010
                                                                                                                                              Housing Direct
                                                                                                                                              Loans (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 134 0                               8/19/2010.  8/27/2008.  FSA..............  8-1744.....  F 8/19/10.....  ..............  ..............  Farm Operating     8/20/2008.  1318......  3/29/2012.  8/19/2008.  8/19/2008.  4/15/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 135 0                               6/14/2010.  6/21/2008.  FSA..............  8-1269.....  NF 6/11/10....  ..............  ..............  Farm Operating     6/9/2008..  1384......  3/29/2012.  6/14/2008.  6/14/2008.  5/27/2010
                                                                                                                                              Loans (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 136 0                               5/16/2010.  5/14/2008.  FSA..............  7-0270.....  F 5/17/10.....  ..............  ..............  Farm Storage       5/16/2008.  1413......  3/29/2012.  5/16/2008.  5/16/2008.  4/27/2010
                                                                                                                                              Facility Loans
                                                                                                                                              (FSA).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 137 0                               5/6/2010..  5/20/2008.  RD...............  8-1416.....  F 5/10/10.....  ..............  ..............  SFH--Rural         5/15/2008.  1423......  3/29/2012.  5/6/2008..  5/6/2008..  4/19/2010
                                                                                                                                              Housing Direct
                                                                                                                                              Loans (RD).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
     Current date: 3/29/2012.
     Priority 1 =<180 days from 2-year incident date.
     Priority 2 =181-365 days from 2-year incident date.
     Priority 3 = >365 days from 2-/5-year incident date.
     Case SOL TBD.
     Case held in abeyance.
     Cases resolved prior to SOL expiration.


----------------------------------------------------------------------------------------------------------------
                                 Name                                          Title               Initial
----------------------------------------------------------------------------------------------------------------
Tonya Ahmed..........................................................  Investigator........  TA
Sterling August......................................................  Investigator........  SA
Karen Bascombe-Cleaver...............................................  Investigator........  KBC
Moses Brown..........................................................  Investigator........  MB
Cinnamon Butler......................................................  Investigator........  CB
Roberto Contreras....................................................  Investigator........  RC
Michele Ferreira.....................................................  Investigator........  MF
Shawntey Fox.........................................................  Investigator........  SF
Alpha Griffin........................................................  Investigator........  AG
William Henry........................................................  Investigator........  WH
Loretha Johnson......................................................  Investigator........  LJ
Minh Pham............................................................  Investigator........  MP
Edward Profit........................................................  Investigator........  EP
Carletta Watkins.....................................................  Investigator........  CW
Kristine Yen.........................................................  Investigator........  CY
Barrett Caine........................................................  Adjudicator.........  BC
Leila Levi...........................................................  Adjudicator.........  LL
Carla Quincy.........................................................  Adjudicator.........  CQ
William Reid Strong..................................................  Adjudicator.........  RS
Pilar Velasquez......................................................  Adjudicator.........  PV
Millie West-Wigins...................................................  Adjudicator.........  MWW
Tysan Williams.......................................................  Adjudicator.........  TW
Keyo & Judy..........................................................  Adjudicator.........  K&J
Heather..............................................................  Adjudicator.........  H&N
Lawrence Rudden......................................................  Adjudicator.........  LR
Neema G..............................................................  Adjudicator.........  NG
----------------------------------------------------------------------------------------------------------------


                                               UPDATE STATUS CODES
----------------------------------------------------------------------------------------------------------------
                                                                                                Codes
----------------------------------------------------------------------------------------------------------------
Program Intake Div................................................................  PI
Program Investigations Div........................................................  PID
Program Adjudications Div.........................................................  PAD
Fact Finding......................................................................  FF
Transfer..........................................................................  T
Admin Closure.....................................................................  AC
Actual Incident Date Change.......................................................  AIDC
Finding...........................................................................  F
No Finding........................................................................  NF
 ECOA Complaint Addition..........................................................  ECA
Assignment........................................................................  ASMT
Pending...........................................................................  P
Status Change.....................................................................  SC
Closure...........................................................................  C
----------------------------------------------------------------------------------------------------------------

    Secretary Vilsack. We are now in a process of knowing. 
We've got a red, green, yellow system, and if it's a red, it 
tells us that within a certain period of time we've got to get 
a response, otherwise their claim expires. We have not let that 
happen.
    Senator Pryor. That's great. I know you have been improving 
this, but I met with a fairly large group in Arkansas, 3 or 4 
months ago, I don't remember exactly when it was, and that was 
one of the concerns that pretty much everybody in the group 
had.
    Secretary Vilsack. They don't know what the system is, 
Senator. I mean that's just not accurate.
    Senator Pryor. Okay. We have one claim, apparently, that's 
2 years old, that they haven't gotten a response from you guys 
yet. I'll tell you what. We'll sit down after this. I'll send 
my folks over, or you can send your folks over. We can talk 
about it.
    Secretary Vilsack. I'm happy to talk to you about it, but 
sometimes it turns out that there's more to the story than 
either you or I are getting, and if we have a claim that's more 
than 2 years old, I'm happy to personally get that rectified. 
But, I will tell you that we are very focused on this, because 
we are not interested in giving rise to the tens-of-thousands 
of lawsuits and claims that I've been working on for the last 
couple of years to get resolved.
    [The information follows:]

    In 2009, USDA discovered more than 14,000 documents that had been 
classified as civil rights program complaints filed against the 
Department between 2001 and 2008 that had barely been looked into. Many 
of these documents in fact turned out to be complaints, alleging 
discrimination under a variety of laws, including title VI, section 504 
of the Rehabilitation Act, the Food Stamp Act, and the Equal Credit 
Opportunity Act (ECOA). The delayed and minimal processing of 
complaints during the previous Administration was particularly 
troubling for those cases that fell under the ECOA. The ECOA, which 
prohibits discrimination in lending, is distinct from other civil 
rights laws because under the ECOA, the Government can be held liable 
by a court for compensatory damages. In addition, the USDA has the 
authority to provide monetary relief to resolve an administrative 
complaint of lending discrimination against the Department provided the 
complainant could still go to court on that claim (e.g., the statute of 
limitations is not expired). For incidents of discrimination that 
occurred before July 21, 2009, the statute of limitations for ECOA 
claims is 2 years.\1\
---------------------------------------------------------------------------
    \1\ The Dodd Frank Financial Reform Act extended the statute of 
limitations to 5 years, but the extension was not retroactive.
---------------------------------------------------------------------------
    The administration proposed $40 million in the fiscal year 2013 
President's budget request for the purpose of settling written claims 
filed under the ECOA from July 1, 1997, to October 31, 2009. This 
funding would be subject to authorization by Congress to allow USDA to 
waive the statute of limitations to settle these claims.
    A farmer or other customer with an ECOA claim does not have to file 
a complaint with USDA; they have the right to proceed directly to 
court. However, litigation can be a costly alternative to the 
administrative process. When the backlog was discovered, the typical 
processing time for a civil rights complaint was 4 years, with many 
cases taking much longer, which meant that by the time a decision was 
rendered on a complaint, no monetary relief could be provided by USDA 
where discrimination and resulting economic harm was found. To ensure 
that a backlog like the one encountered did not occur again, the 
Department set a policy to resolve all ECOA complaints either in formal 
closure and/or a settlement before the expiration of the statute of 
limitations. To achieve this goal, the Office of Civil Rights doubled 
the number of investigators and adjudicators working on program 
complaint processing, and instituted a Lean Six Sigma process 
improvement initiative to streamline the complaint process and reduce 
processing time. Since the new complaint staff have been recruited and 
trained, every ECOA complaint filed with the USDA has been resolved 
before the expiration of the statute of limitations. The typical 
processing time for new civil rights program complaints has been 
reduced from 4 years to 18 months. Processing time for one component of 
the complaint process, complaint intake, has been reduced from an 
average of 90 days to an average of 28 days to determine jurisdiction 
and intake a complaint in 2012. Despite the extension of the ECOA 
statute of limitations to 5 years in the Dodd Frank Financial Reform 
Act, the Office of Civil Rights is pressing forward to further reduce 
processing time for complaints. Just this year, the Office of Civil 
Rights debuted a single, USDA-wide form that USDA customers and program 
participants can use to file a civil rights complaint. By capturing all 
of the information needed to accept a complaint, the form will reduce 
the time it takes to process complaints. The form helps to simplify and 
expedite the process for those who believe they have been discriminated 
against. The Department knows how important it can be to customers to 
receive a decision on their civil rights case and is committed to 
making that happen as quickly as a fair, thorough, and just decision 
can be reached.

    Senator Pryor. Like I said, I think you deserve a lot of 
credit for the progress you've made in that area, because it's 
been something that's been neglected for a long time.
    Thank you.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Kohl. Thank you very much, Senator Pryor, and we 
thank you-all for being here today, particularly Secretary 
Vilsack, for your very strong testimony.
    We'll keep the record open for 1 week.
    Secretary Vilsack. Thank you.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing.]
                Questions Submitted by Senator Herb Kohl

                         FIELD OFFICE CLOSINGS

    Question. What is the current status of the Farm Service Agency 
(FSA), Natural Resources Conservation Service (NRCS), and Rural 
Development office closings that were recently announced?
    Answer. As of March 29, 2012, Rural Development (RD) closed 20 of 
the 43 offices with plans to close the remaining office by the end of 
fiscal year 2012 and NRCS plans to close or consolidate 24 offices by 
the end of fiscal year 2012. At this time none of the NRCS offices have 
been closed or consolidated. The 2008 farm bill (Public Law 110-246) 
requires that FSA take no action toward final approval of the office 
consolidation proposal until at least 90 days after the Secretary of 
Agriculture notified Members of Congress of his proposal. This 
notification occurred on February 27, 2012.
    [Clerk's note: Subsequently, on May 29, FSA announced its decision 
to consolidate 125 of the 131 offices originally proposed for 
consolidation with other USDA Service Centers, consistent with 
provisions of the 2008 farm bill.]
    Question. What will be the total costs of closing offices in fiscal 
year 2012?
    Answer. The total estimated costs for the Department in fiscal year 
2012 will be approximately $44.5 million.
    Question. What do you estimate to be the total savings of these 
closings in fiscal year 2013?
    Answer. Total annual savings for all closures is approximately 
$58.7 million, already reflected in the budget.

                   FOOD SAFETY AND INSPECTION SERVICE

    Question. The Food Safety and Inspection Service (FSIS) is 
responsible for ensuring that the Nation's commercial supply of meat, 
poultry, and processed egg products is safe, wholesome, and correctly 
labeled and packaged. This is accomplished through inspection and 
regulation of the products by agency personnel. The budget calls for a 
$13 million cut in funding associated with implementing new methods of 
poultry inspection and reducing staff by 500 employees.
    Have you begun negotiations with your unions on implementation of 
the new inspection process?
    Answer. We are currently conducting pre-decisional involvement 
(PDI) sessions with the union that should be completed by June 2012. In 
PDI, we work with representatives of the union by sharing information 
about the proposed poultry slaughter process and asking the union to 
identify its concerns. We have tried to find solutions to the union's 
concerns to limit the scope of bargaining should we decide to go 
forward with the final rule. PDI is essentially pre-negotiations.
    Question. The $13 million in fiscal year 2013 savings assumes 
implementation of the new inspection method by October. Is it realistic 
to think you can obtain industry buy-in, successfully complete union 
negotiations, and implement new procedures in such a short time?
    Answer. Our timeline is very ambitious, and there are of course 
some things beyond our control. However, FSIS is committed to 
implementing on schedule. We understand that most large and small 
plants favor the proposed change, so industry will likely seek to 
participate shortly after a final rule is published. As stated above, 
we are conducting pre-decisional involvement sessions with the union. 
We are hopeful that these sessions will limit the scope of any 
necessary bargaining, assuming that the agency decides to finalize the 
proposal. When the agency makes a final decision on how to proceed, we 
hope to conduct any negotiations with the union, possibly in late 
summer. Our experience with the Hazard Analysis and Critical Control 
Point (HACCP)-based Inspection Models Project gives us some 
understanding of the implementation tasks we face and will help us 
manage the conversion should we decide to adopt the rule. Finally, our 
estimate was based on spreading implementation over about 9 months, so 
FSIS does not expect to have to convert a large number of plants 
immediately in order to achieve our estimated savings.
    We are currently conducting PDI sessions with the union. In PDI, we 
work with representatives of the union by sharing information about the 
proposed poultry slaughter process and asking the union to identify its 
concerns. We have tried to find solutions to the union's concerns to 
limit the scope of bargaining should we decide to go forward with the 
final rule. PDI is essentially pre-negotiations.
    Question. How do you plan to purge 500 employees from your roles 
next year?
    Answer. FSIS' goal is to ensure that every employee affected by 
this proposed change is given an opportunity to remain with the agency. 
We plan to accomplish most of the reductions through attrition and 
reassignment to vacancies in other parts of the agency.

                                NON-O157

    Question. In September 2011, FSIS published a ``Final 
Determination'' that six additional strains of E. coli would be deemed 
adulterants in certain beef products.
    Please detail the process and scientific evidence on which this 
determination was made.
    Answer. FSIS developed a risk profile to examine the risk of non-
O157 Shiga toxin-producing Escherichia coli (STEC) as an emerging food 
safety hazard associated with beef consumption in the United States. 
This risk profile provides an in-depth review of the relevant science 
to assess public health risk. The conclusions reached in the risk 
profile include that raw non-intact beef products and raw components of 
those products may harbor non-O157 STEC; that pathogenic non-O157 STECs 
are injurious to human health; that ordinary cooking practices, which 
include rare cooking, may be insufficient to destroy all cells of the 
pathogen in beef; and that a low dose of a non-O157 STEC can induce 
illness. In fact, the Centers for Disease Control and Prevention 
estimate that each year, non-O157 STEC serotypes cause nearly 113,000 
foodborne illnesses in the United States. Moreover, while more than 100 
STEC serotypes have been associated with human illness, these six 
serogroups cause between 70 and 83 percent of the confirmed non-O157 
STEC illnesses. Thus, combating these six serogroups can have a 
significant beneficial public health impact.
    For these reasons, FSIS announced a final determination that raw, 
non-intact beef products, or raw, intact beef products that are 
intended for use in raw, non-intact product, that are contaminated with 
STEC O26, O45, O103, O111, O121, and O145, are adulterated, per 21 
U.S.C. 601(m)(1) and (m)(3).
    Question. What are the implications on the industry and on our 
international beef trading partners of this determination?
    Answer. FSIS will launch its non-O157 E. coli testing program on 
June 4, 2012, which will allow establishments time to validate their 
test methods. FSIS will initially test raw beef manufacturing trimmings 
(the major component of ground beef), and then expand testing to other 
raw ground beef product components. FSIS will apply the new tests to 
samples already being tested for other pathogens, so this policy will 
ensure a safer, more reliable food supply with minimal additional cost 
to the agency or to industry.
    Foreign countries that export FSIS-regulated products to the United 
States must maintain a food safety system equivalent to that of the 
United States. Therefore, in February 2012, FSIS contacted foreign 
governments already approved for the export of raw beef to the United 
States and informed them that FSIS would make a limited amount of 
reagents used in the FSIS laboratory method for non-O157 STEC 
serogroups available to a foreign government if that government wanted 
to conduct a comparative analysis of its methods with test kits 
assessed by FSIS.

                     AGRICULTURAL RESEARCH SERVICE

2013 Budget Resource Reallocation
    Question. The Agricultural Research Service (ARS) is the flagship 
in-house research agency of the Department.
    This budget proposes to redirect over $70 million in resources from 
``lower priority programs'' to higher priority research activities. 
Please explain your process to determine the priority of research 
initiatives, and how decisions were made to reallocate resources.
    Answer. Focusing on the need to reallocate limited resources to 
address high-priority initiatives, all research programs were 
systematically evaluated based on relevance, quality, impact and cost 
effectiveness. The fiscal year 2013 budget recommends selected high-
priority initiatives which address the administration's science and 
technology priorities and the Department's strategic goals. The 
reallocation of these resources would allow Congress to fund higher 
priority agriculture research identified in the fiscal year 2013 
budget.
    Question. Is the redirection of $70 million in resources in 1 year 
normal for your research portfolio or is this unusually high?
    Answer. The reduction of $70 million is not unusually high. In 
fiscal years 2009 through 2012, the President's budget for ARS proposed 
reductions and/or terminations of research activities ranging from $39 
million to $146 million to help offset proposed initiatives.
Agricultural Research Service Lab Closures
    Question. This budget proposes to close five laboratories within 
existing facilities, and to close one facility entirely. Please explain 
how these decisions were made.
    Answer. Decisions regarding which programs to propose for 
termination or closure are always difficult but necessary, given the 
ongoing budget constraints and changing priorities of research 
endeavors. These research laboratories proposed for closure met one or 
more of the following criteria:
  --Considered by the administration to be of lower priority;
  --Mature where the research objectives have been mainly accomplished;
  --Duplicative or can be accomplished more effectively elsewhere in 
        ARS;
  --Marginal or below threshold funding for program viability or 
        sustainability;
  --Conducted in substandard or inadequate infrastructure and future 
        costs are prohibitive;
  --Lacking a critical mass of scientists/support personnel for an 
        effective program; or
  --Are carried out by other research institutions.
    Question. What will happen to the employees at these locations?
    Answer. USDA will strive to place all impacted permanent Federal 
employees in suitable jobs where ARS position vacancies exist and for 
which the employee is qualified. While every effort will be made to 
identify a position for all impacted employees, USDA cannot guarantee 
that all employees will be placed. In the event that a placement cannot 
be identified for an impacted employee, the Department will ensure that 
the individual is provided all the entitlements and protections 
available under prescribed personnel procedures and programs.
    Question. How much will it cost to close these labs in 2013?
    Answer. The estimated cost to accommodate the impacted employees 
and dispose of the real property ranges from $10 million to $12 
million. These costs may be spread over 2 fiscal years, depending on 
how quickly the real property assets can be disposed.
    Question. When do you expect to begin realizing savings from these 
closures?
    Answer. Beginning in fiscal year 2013, the $17 million associated 
with the research activities at the six laboratories will be 
reallocated to high-priority research in other ARS laboratories. After 
all costs have been expensed, the closure of these laboratories will 
allow ARS to achieve significant cost avoidance in the capital 
improvement and repair/maintenance of these facilities beginning in 
2014.

               ANIMAL AND PLANT HEALTH INSPECTION SERVICE

Budget Reductions
    Question. The Animal and Plant Health Inspection Service (APHIS) 
promotes the health of animal and plant resources to facilitate their 
movement in international markets, and works to ensure abundant 
agricultural products for U.S. consumers. These responsibilities 
include monitoring plant and animal health, working to eliminate or 
control invasive pests, facilitating safely bringing benefits of 
genetic research into the market place, providing diagnostic laboratory 
activities, assisting developing countries improve their safeguarding 
systems, and protecting and promoting animal welfare. However, the 
budget proposes a 7-percent funding reduction, and elimination of 151 
employees.
    How do you plan to meet these responsibilities with such severe 
cuts in funding and staffing?
    Answer. The 2013 budget identified several ways for APHIS to 
operate more efficiently, allowing APHIS to maximize its resources to 
carry out its mission. APHIS has implemented a variety of changes in 
its operations that will result in cost-savings for fiscal year 2013, 
including the consolidation of information technology customer service 
support and switching telecommunications technology. In addition, APHIS 
has identified other areas where a shift in methodology can allow 
savings and still achieve the agency's goals. For example, APHIS has 
developed several statistical and epidemiological methods to increase 
the efficiency of animal health surveillance while continuing to meet 
international standards, saving $9 million. APHIS also is implementing 
business process improvements that will result in savings in areas such 
as licensing of veterinary biologics products, import and export 
reviews, and reviews of petitions to determine the regulatory status of 
genetically engineered crops. The agency's budget request reflects the 
implementation of the identified efficiencies and changes in strategies 
without compromising our mission and services.
    APHIS is also proposing further reductions in the agency's 
contributions towards domestic and international efforts to allow those 
who benefit from our services to contribute, or to scale back the 
Federal role when a pest or disease is simply too widespread. We will 
continue to place high priority on protecting the health and value of 
American agriculture by focusing on those pests or diseases that pose 
the greatest risk and facilitating safe agricultural trade.
    Question. The Animal and Plant Health Inspection Service promotes 
the health of animal and plant resources to facilitate their movement 
in international markets, and works to ensure abundant agricultural 
products for U.S. consumers. These responsibilities include monitoring 
plant and animal health, working to eliminate or control invasive 
pests, facilitating safely bringing benefits of genetic research into 
the market place, providing diagnostic laboratory activities, assisting 
developing countries improve their safeguarding systems, and protecting 
and promoting animal welfare. However, the budget proposes a 7-percent 
funding reduction, and elimination of 151 employees.
    Can you provide assurances that existing safeguards protecting 
against intrusion of new invasive pests into the United States will not 
be weakened?
    Answer. APHIS uses a comprehensive set of measures to safeguard the 
United States against the introduction of foreign pests and diseases. 
These measures include assessing and reducing threats overseas through 
information collection and collaborating with foreign governments, and 
implementing regulatory import policies designed to facilitate trade 
while excluding high-risk products. The agency also works with the 
Department of Homeland Security's Customs and Border Protection to 
enforce these regulations, monitoring for introductions of high-risk 
pests and diseases in the United States and maintaining emergency 
response capabilities to respond when outbreaks occur.
    In developing its fiscal year 2013 budget proposal, APHIS carefully 
examined its programs and operations to determine where we could gain 
efficiencies while maintaining focus on the areas that pose the highest 
risks. For example, APHIS has proposed decreases related to changes in 
epidemiological methods for swine and cattle disease surveillance. 
These changes will allow the agency to realize savings while still 
meeting international standards. In other cases, APHIS identified 
efficiencies that could be gained in telecommunications and information 
technology that will have little or no effect on program operations and 
reduce overall costs. Other reductions target programs for pests and 
diseases that are already established in the United States, such as 
emerald ash borer (EAB), and focus resources on those programs where 
they could make a difference. Despite intensive efforts by APHIS and 
cooperating States to address this pest, we lack the tools needed to 
control it. APHIS will continue to work on tools to manage EAB over the 
long term and protect U.S. forests and urban landscapes. The overall 
proposed reduction is the result of our efforts to identify targeted 
changes and reduce costs while focusing on the highest risk areas.
    Question. The Animal and Plant Health Inspection Service promotes 
the health of animal and plant resources to facilitate their movement 
in international markets, and works to ensure abundant agricultural 
products for U.S. consumers. These responsibilities include monitoring 
plant and animal health, working to eliminate or control invasive 
pests, facilitating safely bringing benefits of genetic research into 
the market place, providing diagnostic laboratory activities, assisting 
developing countries improve their safeguarding systems, and protecting 
and promoting animal welfare. However, the budget proposes a 7-percent 
funding reduction, and elimination of 151 employees.
    Much of this savings assumes State-cooperating agencies accept 
higher costs. Have you discussed with your State partners their 
willingness to take on these higher costs? What are the implications of 
States being unable to pay more for these activities? Do you have a 
back-up plan?
    Answer. Most of APHIS' plant and animal health programs are 
cooperative efforts with State and local partners, and we understand 
that our budget proposal affects them. In developing the agency's 
budget request, we had to make difficult choices to enable us to best 
protect the health of American agriculture while balancing the 
President's priority of reducing the deficit. Under the reality of 
current resource limitations, it is reasonable to share with 
cooperators the costs of programs for which they will receive a 
benefit.
    When addressing pests and diseases of national concern, the Federal 
Government's role traditionally is to coordinate and manage program 
efforts, and ensure that we apply program methods and technologies 
consistently in all affected States and areas. Since these pests and 
diseases have a direct impact on State and local conditions and since 
States and localities are beneficiaries of the actions, it is expected 
that all parties will devote available resources to the effort. While 
there may not have been agreement to the level of contributions for 
each pest and disease program, it is reasonable to expect all parties 
to contribute some level of resources towards these cooperative 
programs that, in most cases, have been in place for several years. 
These decreases will result in a more appropriate allocation of funding 
responsibility given the budget realities we face, and a transparent 
level of Federal contribution will allow cooperators to plan for future 
needs. The agency's budget request is presented more than 6 months in 
advance of when it will become effective, which allows time for program 
partners to develop their spending plans in the coming year. The agency 
will continue to conduct pest and disease programs based on the total 
available resources while considering the highest priorities for the 
program. We will continue to work cooperatively with our State partners 
on these programs and use available resources as effectively as 
possible.

                             ANIMAL WELFARE

    Question. Animal Welfare has been a high priority of this 
administration. In past years the Department transferred funds from 
other accounts to supplement these activities. However, this budget 
cuts Animal Welfare funding by over 11 percent (larger than the overall 
reduction to the agency). What has caused this change in the 
administration's priority toward Animal Welfare responsibilities?
    Answer. Animal Welfare still remains a high priority of the 
administration. APHIS recognizes that we need to do our part in helping 
to reduce Federal spending. As such, we are scaling back operations as 
a cost-savings measure, including our priority areas such as animal 
welfare inspection and enforcement. Even with the proposed budget in 
2013, the Animal Welfare program remains a priority and will be 
comparable to the adjusted fiscal year 2011 funding level, including 
the reprogramming of $2.5 million in funding.
    Additionally, APHIS will continue its focus on the most egregious 
violators of the Animal Welfare Act (AWA) while seeking ways to operate 
more efficiently in fiscal year 2013. The agency has implemented 
measures to enhance its animal welfare inspection and enforcement 
efforts in recent years. These measures include identifying potential 
regulation changes related to commercial dog breeders and dealers, re-
evaluating the current methodology for calculating the frequency of 
inspection, and developing and sponsoring meetings and trainings aimed 
at increasing compliance with the AWA. APHIS also conducted a business 
process improvement analysis of its enforcement activities, including 
animal welfare enforcement. After identifying more than 80 
recommendations for streamlining its processes and improving 
timeliness, the agency pilot tested several recommendations with 
considerable success. These business process improvement efforts will 
allow quicker and more effective actions that require fewer resources.

                               LACEY ACT

    Question. One of the rare increases in this budget is for 
implementation of Lacey Act responsibilities. In fact, the budget seeks 
to double Lacey Act spending by 50 percent, to $1.5 million. Please 
describe what the Department is doing this year regarding its Lacey Act 
responsibilities. In your view, do you think this USDA effort is 
successful? What do you plan to do with the 50-percent increase? Could 
these responsibilities be more efficiently handled outside the 
Department?
    Answer. As amended in the 2008 farm bill, the Lacey Act prohibits 
the importation of any plant, with limited exceptions, taken or traded 
in violation of domestic or international laws. The amendments were 
designed to address illegal logging in other countries. Illegal logging 
is environmentally destructive and undermines markets for wood products 
produced in the United States, affecting businesses and jobs. Among 
other things, the Lacey Act requires a declaration for imported 
shipments of regulated products. This declaration must contain the 
scientific name of the plant, the importation value, the quantity of 
the plant, and name of the country where the plant was taken.
    APHIS began phased-in enforcement of the Lacey Act in May 2009 and 
currently receives about 10,000 declarations per week. Approximately 10 
percent of these are submitted on paper forms that require significant 
resources to analyze and store. Currently, electronic declarations can 
only be made through licensed Customs brokers. In 2012, APHIS has 
$775,000 available for activities conducted under the amendments to the 
Lacey Act. The agency is using these funds for a dedicated staff, 
secure document storage, and outreach activities to inform the various 
industries and importers affected by the Lacey Act amendments. The 
program selects 1 percent of the declarations at random for a cursory 
review and stores the remaining documents. The Department of Homeland 
Security's Customs and Border Protection collects the electronic 
declarations and sends them to APHIS on a weekly basis. For 2013, the 
agency is requesting an additional $725,000 for a total funding level 
of $1.5 million. With these additional funds, the program would work 
toward providing an easier electronic means for collecting and 
maintaining declarations to help eliminate the need for paper-based 
declarations. This will provide another alternative to importers for 
filing declarations (as importers currently must go through a licensed 
customs broker or fill out a paper declaration) and allow APHIS to be 
more responsive to importers' needs. In addition, APHIS would utilize 
additional staff to assist with Lacey Act activities and expand 
outreach efforts to affected industries so they better understand the 
act's requirements. With the requested increase in 2013, the program 
anticipates selecting an increased share of the declarations for a 
review.
    APHIS is working within an interagency group representing the U.S. 
Forest Service, U.S. Department of Homeland Security's Customs and 
Border Protection (CBP), U.S. Trade Representative, U.S. Department of 
Justice, U.S. Department of State, U.S. Fish and Wildlife Service, the 
Council on Environmental Quality, and the U.S. Department of Commerce, 
to implement the Lacey Act provisions and review the program. The 
interagency group represents a broad range of viewpoints on how to 
implement the act. Because of APHIS' regulatory role and interaction 
with the importing community as well as its ongoing joint efforts with 
CBP through the Agriculture Quarantine Inspection program, the agency 
is well positioned to implement the act. APHIS will continue working 
with its partners to administer the Lacey Act in the most efficient 
manner possible given the volume of declarations and products covered.

                   BIOTECHNOLOGY REGULATORY SERVICES

    Question. In the past, this subcommittee has provided increased 
funding for Biotechnology Regulatory Services to support an effective 
biotechnology compliance program for genetically engineered organisms. 
Private sector demands on these services continue to expand. Currently, 
the agency currently faces litigation due to its inability meet its 
regulatory responsibilities in a timely manner. However, this budget 
reduces this funding by 8 percent. How do you plan to improve this 
unfortunate situation with a large funding cut?
    Answer. I appreciate the subcommittee's support for APHIS' 
Biotechnology Regulatory Services (BRS) program. BRS is integral to the 
process of ensuring that genetically engineered (GE) crops under 
development can be safely tested and brought to market. After a careful 
evaluation of the nonregulated status petition review process, APHIS 
has identified several process improvements that are expected to 
achieve the goal of reducing the overall length and variability of the 
time it takes for the petition process. Once complete, this effort is 
expected to reduce review time by more than 50 percent (average review 
times will decrease from about 3 years to just over 1 year). For 
instance, APHIS has eliminated unnecessary steps, clarified and 
simplified responsibilities, and put into place time frames for 
completion of individual steps while maintaining appropriate 
safeguards. Additionally, a portion of the program's $5 million 
increase in fiscal year 2012 will be used for one-time legal fees 
related to litigation over GE alfalfa. The remaining portion will be 
used to hire additional staff and enter into contracts for 
environmental analysis to support the improvements to the petition 
review process. While we are proposing a small decrease in fiscal year 
2013, biotechnology remains a priority for the agency. Even with the 
proposed reduction, the BRS funding level would increase more than 25 
percent from the fiscal year 2010 level of $13.3 million to the fiscal 
year 2013 request of about $16.8 million.

                     AGRICULTURAL MARKETING SERVICE

Microbiological Data Program
    Question. The fiscal year 2012 House report did not include funding 
for the Microbiological Data Program. The conference report included 
the following statement:

    ``The statement of the managers remains silent on provisions that 
were in both House Report and Senate Report that remain unchanged by 
this conference agreement, except as noted in this statement of the 
managers.''.

    Please explain why this program was zeroed out in the budget even 
though no funding was provided in fiscal year 2012.
    Answer. The Microbiological Data Program (MDP) was continued in 
2012 because the funding reduction in the Consolidated and Further 
Continuing Appropriations Act, 2012 for Marketing Services (which 
includes MDP) could not be positively identified. While the House 
provided $77,500,000 for Marketing Services, accompanied by 
Appropriations Committee report language that denied funding for MDP, 
the Senate and final Appropriations Act provided $82,211,000. Both the 
Senate committee and conference reports were silent on the matter. The 
program was zeroed out in the fiscal year 2013 proposed budget due to 
budget constraints. In developing the fiscal year 2013 budget, we took 
a hard look at activities which support AMS' core mission. The fiscal 
year 2013 budget eliminates funding for MDP, which saves about $4.3 
million. This reduces discretionary funding while focusing Marketing 
Services resources on AMS' core mission. AMS is not a food safety 
agency and MDP is not closely aligned with AMS's core mission to 
facilitate the competitive and efficient marketing of U.S. agricultural 
products.

                    PESTICIDE RECORDKEEPING PROGRAM

    Question. The budget proposes to terminate the Pesticide 
Recordkeeping Program. Currently, 27 States and 2 territories are 
reimbursed to conduct federally recognized State pesticide 
recordkeeping requirements. This program has been in place since 1992.
    Please explain the rationale for terminating this program in light 
of ever-shrinking State budgets.
    Answer. We continue to take practical steps to control expenditures 
and optimize organizational structure to more effectively manage 
current and future resources. In making budget determinations we are 
focusing on AMS' core mission to facilitate competitive and efficient 
marketing of U.S. agricultural products.
    Question. Since this program has been operating for 20 years, why 
does AMS now believe it is no longer central to its core mission?
    Answer. We took a hard look at activities that support AMS' 
marketing-based mission and Pesticide Recordkeeping is not as closely 
aligned with marketing as other AMS activities such as Market News or 
Transportation and Market Development. Although Federal monitoring and 
advisory services will be discontinued, applicators of restricted use 
pesticides will still be required to retain their records and provide 
access upon request to Federal and State agency representatives. Since 
the Federal program has been operating for 20 years, we have had the 
opportunity to educate a large number of private applicators of 
federally restricted use pesticides. More than 100,000 pesticide 
recordkeeping manuals, brochures and other outreach materials have been 
distributed each year by the program to producers.

                              CONSERVATION

    Question. The budget proposes a decrease of $2.5 million and 142 
staff years for conservation technical assistance.
    How does NRCS plan to provide important technical assistance with 
fewer funds and fewer staff?
    Answer. NRCS will continue to provide important technical 
assistance to landowners in addressing their resource issues and 
concerns. This will be accomplished through the use of improved 
delivery and streamlining processes such as the Conservation Delivery 
Streamlining Initiative (CDSI), expanding the role of Technical Service 
Providers (TSPs), and continuing to build strong conservation 
partnerships with local, State, and Federal entities as well as with 
the private sector.
    Question. Please describe what organizational improvements NRCS 
plans to implement.
    Answer. In coordination with the USDA Blueprint for Stronger 
Service, NRCS is taking a holistic look at our entire organization to 
ensure we are well prepared to meet our mission now and in the years to 
come. NRCS currently has teams working on 17 major efforts that will 
result in a streamlined, efficient organization to transform NRCS into 
a 21st century, multi-billion dollar agency that can adapt to change 
while delivering exceptional conservation assistance to private 
landowners. The information is provided below.
    The efforts are organized into five categories:
  --Conservation Delivery Streamlining Initiative (CDSI).--This effort 
        will result in new and innovative technology that will support 
        conservation assistance process online, streamline service 
        delivery, and will give landowners 24/7 access to their 
        conservation information. It will allow conservationists to 
        spend more time in the field while enabling administrative 
        experts to handle the administrative tasks of programs and 
        applications.
    In fiscal year 2012 through fiscal year 2013, CDSI will implement a 
        national strategy to realign field positions through the 
        establishment of program support specialist position. This 
        position will reduce the administrative burden on the technical 
        field employees and enable a more streamlined and efficient 
        approach to the delivery of conservation support.
  --Science Efforts.--NRCS launched efforts to gain agency-wide 
        efficiencies by sharing resources, reducing duplication of 
        effort, and enhancing our role as a leader in conservation 
        science while addressing decreased operating budgets. Efforts 
        include:
    --Consolidate Soil Survey offices and provide shared services 
            across larger geographic regions;
    --Reduce duplication of effort and streamline our system of 
            developing and maintaining conservation practice standards 
            and associated guidance;
    --Improve our capacity to support complex engineering needs across 
            the country; and
    --Create more effective and efficient systems for conservation 
            technology acquisition, development, and support to the 
            field.
    In fiscal year 2012 and fiscal year 2013, NRCS will implement the 
        consolidation of the Soil Survey offices, beginning with the 24 
        office closures identified by Secretary Vilsack.
  --State Efforts.--NRCS is also working on State level improvement 
        efforts to coordinate, centralize, and streamline State 
        processes and needs.
    --States are charged with finding ways to increase direct technical 
            service and increase resource sharing across State 
            boundaries. Selected States in each region will test models 
            where they reduce duplication by sharing services such as 
            contract management and technical expertise;
    --NRCS is also evaluating the benefits of centralizing support for 
            quality assurance, equitable relief, and legal appeals at 
            national headquarters to reduce burdens on State and field 
            staff.
    In fiscal year 2012, NRCS kicked off the multi-State servicing 
        pilot that is testing a comprehensive approach to identifying 
        areas for State-sharing, analyzing the option, and implementing 
        long-term strategies for sharing resources.
  --Administrative Efforts.--NRCS is taking a comprehensive approach to 
        analyze administrative efforts; specifically NRCS is focusing 
        on four key administrative functions or areas:
    --Budget and financial management;
    --Human resources;
    --Procurement; and
    --Property functions within NRCS.
    NRCS is determining short-term solutions to position NRCS to best 
        integrate the USDA Administrative Solutions Project and deliver 
        the best support to the field.
    In fiscal year 2012, NRCS will be moving forward with the 
        development of a new administrative operating model that will 
        focus on streamlining processes, developing virtual teams, and 
        enhancing standardization. NRCS will develop and implement the 
        new operating model throughout fiscal year 2013 and this will 
        result in increased capacity for administrative services and 
        will position NRCS for improved performance.
  --Modernization Efforts.--Modernization efforts across NRCS will look 
        at IT, Public Affairs, and Outreach to identify ways to improve 
        the delivery of communications and information services to our 
        internal and external customers.
    In fiscal year 2012, NRCS began the modernization of the public 
        affairs and IT organizations. Public Affairs implemented the 
        redesign of the external Web site and engaged with GovDelivery 
        for modernization of communications delivery. Public Affairs is 
        also underway with a comprehensive redesign that is currently 
        in the baseline assessment stage and will result in fiscal year 
        2013 with additional improvements to the Public Affairs 
        function at NRCS. The IT assessment is currently underway as 
        well; an organization redesign is expected in fiscal year 2013. 
        This effort will help to improve IT delivery, enhance 
        oversight, and enable increased service delivery across NRCS.

                           RURAL DEVELOPMENT

Broadband
    Question. This subcommittee has provided substantial support for 
expanding high-speed broadband service to remote rural areas. The 
Federal Communications Commission (FCC) is now engaged in revising 
access to the Universal Service Fund, on which the bulk of Rural 
Development broadband loans rely for a portion of their income. 
Reducing Universal Service Fund payments to rural providers will place 
Rural Development's loan portfolio in severe jeopardy.
    Please discuss how USDA is working with the FCC to ensure that 
rural broadband providers are not treated unfairly under the new FCC 
requirements.
    Answer. Throughout the years, Rural Development and FCC have worked 
closely to uphold the universal service provisions in the 1996 
Telecommunications Act as Congress had intended. Those provisions 
ensure that rural America has access to advanced telecommunications 
services at rates and at levels of service that are comparable to those 
offered in urban America. Prior to implementing the new Universal 
Service Fund (USF) Reform Order, Rural Development consulted with FCC 
on numerous occasions to help ensure that this important statutory 
objective was fulfilled. Rural Development has provided briefings and 
data to the FCC on its portfolio and on the impacts of revenue 
reductions to RD's borrowers. The USDA also worked with the FCC in 
developing a national broadband strategy published in 2009, as required 
by the 2008 farm bill.
    Question. What is USDA doing in the short run to protect existing 
broadband borrowers and their rural customers?
    Answer. In the short run, Rural Development is analyzing its 
portfolio to determine the impacts of reduced USF and intercarrier 
compensation revenues on rural telecommunications providers serving 
rural high-cost communities. Rural Development has conducted a series 
of listening sessions with borrowers, financial experts, and other 
segments of the rural infrastructure sector to fully comprehend the 
impact on rural America. Rural Development is keenly focused on making 
sure that rural America continues to receive affordable, high-speed 
broadband service required for economic development and job creation.
    Question. Is the Department experiencing reduced loan demand due to 
the uncertainty of looming changes to FCC requirements? If so, does 
that affect the Department's broadband loan request for fiscal year 
2013?
    Answer. The Rural Utilities Service (RUS) and the 
telecommunications industry continue to evaluate the impact of the FCC 
revisions in USF, ICC, and local rates. While the level of uncertainty 
caused by the order may delay project consideration, the agency fully 
supports the proposed funding levels for fiscal year 2013. The 
broadband infrastructure needs across rural America were demonstrated 
by the tremendous response to the Recovery Act's Broadband Initiatives 
Program (BIP). There were many valuable projects which simply could not 
be funded. We are hopeful that some BIP applicants will apply for 
regular RUS loan programs to further extend existing broadband networks 
to rural areas. We are also hopeful the FCC will consider the needs of 
RUS borrowers who are actively investing in rural broadband networks 
made possible through the Recovery Act by reestablishing the regulatory 
and financial certainty that is needed for rural telecommunications 
investment to continue.
    Question. When the FCC announced plans to reform the Universal 
Service Fund, what changes did the Department make to its broadband 
loan underwriting criteria to reflect this new uncertainty?
    Answer. Even before FCC published it proposed USF Reform Order, 
Rural Development revised its underwriting criteria in both our 
infrastructure and broadband programs to determine reliance on USF and 
the impact of reduced revenues. Only loans which meet more rigid 
underwriting standards advance through this process to loan approval. 
The agency further enhanced its underwriting criteria after the first 
USF order was published and will continue to make changes to ensure any 
taxpayer investments are secured.

                                HOUSING

    Question. This budget calls for a 27-percent reduction in your 
flagship direct single family housing loan program.
    Is demand for this program going down?
    Answer. The USDA budget proposal reflects the efforts of this 
administration to do more with less and to make tough decisions where 
necessary. Historically, the direct single family housing program has 
helped low- and very-low-income borrowers to obtain homeownership. Our 
budget proposal will refocus the direct single family housing program 
to serve low- and very-low-income borrowers, and will target a portion 
of the funding to help attract a new generation of bright, young 
teachers to our rural schools.
    Over the past decade, Rural Development has increasingly relied 
upon guaranteed loans to cost effectively provide for the credit needs 
of rural America. In fact, during this administration alone, funding 
for the guaranteed single family housing program (excluding Recovery 
Act funding) has quadrupled from about $6.2 billion to $24 billion in 
2011. This funding has helped to fill a critical need for credit in 
rural America, and importantly, this level of assistance is being 
provided at no subsidy cost to taxpayers.
    Question. What is the current backlog of applications and pre-
applications for these loans?
    Answer. As of March 29, 2012, the total number of Section 502 
Direct Loan applications on a waitlist pending processing due to the 
lack of available funds is 11,398.
    Question. Is there any other Federal direct loan program that 
provides home-ownership assistance for low- and very-low-income rural 
residents?
    Answer. There is no other Federal direct loan program similar to 
the Section 502 Direct Loan program. The Section 502 Direct Loan 
program provides mortgage financing for low- and very-low-income rural 
Americans unable to get credit from other sources. The program includes 
a payment assistance feature to reduce the borrower's housing cost for 
principal, interest, taxes, and insurance to approximately 24 percent 
of income. The other fundamental difference in program administration 
between USDA and other Federal housing programs such as Housing and 
Urban Development (HUD) programs is USDA's field staff, which allows 
USDA to maintain a local presence in the rural communities it serves.
    Question. Why are you seeking such a drastic cut in the program?
    Answer. Some of the same rural residents with low- and very-low-
incomes who qualify for loans under the single family housing direct 
loan program can also qualify for the single family housing guaranteed 
loan program. The primary difference between the two programs is that 
the direct loans are made and serviced by USDA and in some instances 
contain an interest subsidy. The guaranteed loans are made and serviced 
by a bank or other commercial lender at the current market interest 
rate and guaranteed by the Federal Government. Unlike the direct 
program, the guaranteed program is provided at no subsidy cost to 
taxpayers.
    Question. Please discuss the requested set-asides for rural 
teachers and self-help housing program participants. Why did you 
elevate the priority of those applicants above others, including 
healthcare workers, police and fire workers, daycare workers, etc?
    Answer. The budget proposes to set aside a small portion of the 
direct single family housing program funding for teachers and 
beneficiaries of the Mutual and Self-Help Grant Program for a portion 
of the fiscal year, after which the funds will be available for all 
applicants.
    The decision to set aside funding for the Mutual and Self-Help 
Grant Program ensures that adequate loan funds are available to support 
the grant funding provided by Congress. Without sufficient loan funding 
we would be unable to fulfill the intent of Congress with respect to 
self-help housing.
    Rural Development remains committed to the support of all low- and 
very-low-income families, regardless of their profession. Set aside 
funding for teachers, however, would help address the shortage of 
teachers willing to work in rural areas that lack affordable housing. 
Teachers are a key factor in creating sustainable rural communities. By 
targeting a portion of this assistance to teachers, we hope to 
encourage many bright, young, and enthusiastic college graduates to 
consider returning to rural America to begin their professions as 
teachers.
    Question. This budget seeks to eliminate the multi-family housing 
direct loan program (section 515). The stated justification for this 
elimination is that the guaranteed multi-family housing loan program 
(section 538) also provides construction financing and more funds are 
needed in the multi-housing revitalization program to maintain existing 
projects.
    How effective is the guaranteed loan program in promoting 
construction in small towns and not just in larger communities?
    Answer. The Multi-Family Housing (MFH) Guaranteed Rural Rental 
Housing Program (section 538) is very effective in promoting 
construction and preservation in rural areas. Like the MFH direct loan 
program (section 515), the section 538 program is restricted to areas 
of no more than 20,000 in population, unless eligible under a statutory 
exception. Approximately 50 percent of the loans guaranteed under 
section 538 preserve existing affordable properties in rural areas, 
most notably section 515 properties. For new construction, financial 
tools, including section 515 and section 538 loans, are more efficient 
for properties with more units of affordable housing, so nearly all of 
the new construction activity is in rural areas with populations 
between 10,000 and 20,000.
    Question. How effective is the guaranteed program in offering 
affordable rents for very-low-income households?
    Answer. The MFH Guaranteed Rural Rental Housing Program is very 
effective in offering affordable rents to very-low-income seniors, 
families, and individuals. The vast majority of tenants are under 80 
percent of the area median income. More than 70 percent of all 
properties financed in the past several years using the section 538 
program also have low-income housing tax credits (LIHTC), which impose 
lower income thresholds for tenants to qualify under the LIHTC program. 
Under the LIHTC program tenants must be very-low-income (50 percent of 
area median income) or low-income (less than 80 percent of area median 
income) families. In the last 3 years alone, the MFH Guaranteed Rural 
Rental Housing Program provided financing to build or preserve 
approximately 200 apartment buildings with 11,100 apartments, of which 
more than 9,400 are rented to very-low-income or low-income seniors, 
families or individuals.
    Question. What is the total funding needed for the revitalization 
program?
    Answer. We believe the budget request provides adequate funding for 
the Revitalization Program.

                          COMMUNITY FACILITIES

    Question. This budget requests a $2 billion Community Facilities 
Direct Loan Program (CF) level, up from $1.3 billion in fiscal year 
2012.
    Is there demand for a $2 billion annual loan program?
    Answer. As a result of the credit crisis, one of the biggest issues 
facing rural communities today is the lack of access to capital. In 
recent years, the agency has seen an increase in funding requests for 
projects that are larger in nature, scope, and complexity. Accordingly, 
we believe the proposed program level reflects the sizable demand that 
exists for infrastructure financing in rural areas.
    Question. What is the current backlog of applications and pre-
applications?
    Answer. As of May 2, 2012, the Community Facilities Program has a 
total backlog of about $1.8 billion. This includes approximately 635 
direct loan applications for $1.6 billion, over 900 grant applications 
for $51 million, and 27 guaranteed loan applications for $131 million.
    Question. Why is the guaranteed loan program eliminated?
    Answer. The guaranteed loan program originated as an inexpensive 
alternative to the direct loan program and was designed to stimulate 
additional assistance to moderate income communities in rural areas. 
The default rate for the program, however, has been much higher than 
originally projected; in effect, this has made it more expensive than 
the direct loan program. The proposed increase in the direct loan 
program will more than offset the effects of the guaranteed loan 
program termination.

                         RURAL JOBS ACCELERATOR

    Question. We have recently become aware of a new initiative, the 
Rural Jobs Accelerator, which apparently will be a joint effort among 
USDA, the Economic Development Administration, the Delta Regional 
Commission, and the Appalachian Regional Commission.
    Please explain the purpose of this initiative and how it is 
designed to work?
    Answer. The programmatic guidelines and goals of the Rural Jobs and 
Innovation Challenge (RJA) are very similar to those of the regular 
RCDI; RJA merely emphasizes building regional capacity. To be eligible 
for RJA, applicants must be eligible for the regular RCDI program.
    RJA is a coordinated interagency funding opportunity designed to 
promote accelerated job creation and community and economic development 
in rural regions through regional collaboration. The RJA will provide 
resources to support economic development in the areas of renewable 
energy, food production, rural tourism, natural resources, and advanced 
manufacturing. The RJA will also assist distressed rural communities in 
accelerating job creation by leveraging local assets, building stronger 
economies, and creating regional linkages. The Funding Partners include 
USDA, the Department of Commerce's Economic Development Administration 
(EDA), the Appalachian Regional Commission (ARC), and the Delta 
Regional Authority (DRA). This coordinated, integrated, interagency 
initiative offers applicants the opportunity to submit a single project 
narrative to access multiple funding sources that collaboratively 
support regional development in rural communities.
    Question. What are the performance measures you will use to gauge 
the initiative's success?
    Answer. Applications will be evaluated based on their ability to 
satisfy core evaluation criteria. This includes building community and 
regional capacity, linking to regional clusters and opportunities, 
integrating and building regional partners, and utilizing multiple 
resources to meet project objectives and promote substantive economic 
growth in the region and rural communities. Grant recipients will 
identify project milestones and submit reports throughout the project 
period, along with a final project performance report. Success will be 
gauged by the degree to which grant recipients achieve their project 
milestones.
    Question. What administrative and programmatic resources have you 
committed in fiscal year 2012, and what resources do you hope to use in 
fiscal year 2013, to support the initiative?
    Answer. The Rural Jobs Accelerator will be administered using 
existing USDA staff for fiscal years 2012 and 2013. Approximately half 
($2.49 million) of the funding available for use in fiscal year 2011 
and half ($1.81 million) of the funding available for use in fiscal 
year 2012 for the Rural Community Development Initiative (RCDI) will be 
used to support this initiative. The remaining $4.33 million in RCDI 
funding was announced under a separate notice of funding availability 
on March 21, 2012.
    Question. Will USDA's support in fiscal year 2012 require a 
transfer or reprogramming of funds?
    Answer. No. USDA is using existing authorities and a portion of the 
existing appropriations for the Rural Community Development Initiative 
(RCDI) to fund our portion of the Rural Jobs Accelerator. The projects 
funded by USDA must meet all existing RCDI funding criteria and would 
be eligible for RCDI assistance regardless of their participation in 
the Rural Jobs Accelerator. However, by employing a ``whole-of-
government'' approach through the Rural Jobs Accelerator we can 
significantly enhance the prospects for job growth in the selected 
regions.

                               NUTRITION

Equipment Grants
    Question. In 2009, this subcommittee provided $100 million through 
ARRA for grants to allow schools to purchase and renovate their food 
service equipment. The fiscal year 2013 budget for Child Nutrition 
Programs includes $35 million for this same activity. In February 2012, 
USDA's Office of Inspector General (OIG) issued a report criticizing 
FNS' management of these ARRA funds. According to the OIG report, FNS 
``did not create adequate, proactive controls to ensure that grants 
were awarded based on Recovery Act criteria and accurate data.''
    If funding is provided in fiscal year 2013, what assurances can FNS 
provide to this subcommittee that funds will be managed appropriately?
    Answer. USDA believes that the ARRA grant award process in its 
totality was highly effective and met the goals set forth by the 
Recovery Act to effectively and timely distribute funds to low-income 
schools that clearly demonstrated need. The OIG audit did not identify 
any instances of improper use of the ARRA funds, but it did identify 
some areas for process improvement, and FNS will address these issues 
where needed. FNS' oversight of the State agencies which operate the 
school meals program will focus on ensuring that the processes used to 
distribute grant funds meet all appropriate requirements and ensure 
that funds are used for their intended purpose. As the audit report 
notes, OIG has accepted FNS' plan to implement additional internal 
controls within its standard competitive grant award processes, 
identifying areas that can be strengthened for future grant awards. I 
am confident that FNS would appropriately manage another round of 
school equipment funding.
    Moreover, it is critically important to recognize that there 
remains significant unmet funding need for schools to replace out-dated 
equipment and help schools meet our new, updated standards for school 
meals. These standards represent the first update to school meals in 
over 15 years, emphasizing fruits, vegetables, and whole grains. 
Schools need modern, appropriate equipment to help them serve healthy 
meals. Only about 22 percent of the school districts who requested ARRA 
funds received them. So, the present $35 million request for the School 
Meals Equipment Grants is critical to providing support to help fund 
equipment purchases for school districts that did not receive Recovery 
Act funding.
    Question. How do you envision these grants being allocated?
    Answer. FNS would award equipment assistance funding to State 
agencies using a competitive process, and the State agencies would then 
build on the Recovery Act of 2009 criteria, which targeted low-income 
districts with the greatest need. When developing the specific 
competitive grant process that States would use when awarding these 
grants to school districts, FNS would also consider how to best meet 
the needs of school districts as per the requirements associated with 
the $35 million school meals equipment grant funding request.
    Question. What changes to your grant process will be made in 
response to OIG's recommendations and concerns?
    Answer. FNS will use management evaluations and/or targeted reviews 
to determine State agency compliance with the grant application and 
award processes. As part of these reviews, if FNS reviewers determine 
that (1) exceptions to the grant application were made during grant 
execution; and (2) potential grant awards to the State are pending, FNS 
will develop appropriate corrective action plans which could include 
submission of documentation for selected future grant awards to FNS for 
review and approval prior to implementation. This documentation may 
include applications (RFAs) and grant award evaluation processes prior 
to the States releasing the applications to potential subgrantees.

                              CIVIL RIGHTS

    Question. Can you explain to the subcommittee the status of the 
women farmers discrimination litigation against USDA, along with the 
status of the USDA's plans for a Women and Hispanic Farmers Claims 
Process?
    Answer. I will provide an update of the civil rights discrimination 
litigation as well as USDA's plans for a Women and Hispanic Farmers 
Claims Process.
    [The information follows:]
    In 2006, the D.C. Circuit affirmed the district court's denial of 
class certification of plaintiffs' ECOA claims. Love v. Vilsack, 439 
F.3d 723 (D.C. Cir. 2006). In 2009, the D.C. Circuit affirmed the 
district court's dismissal of the claims plaintiffs brought under the 
Administrative Procedure Act (APA), 5 U.S.C. sections 701-706, by 
female farmers in Love v. Vilsack, and remanded the cases to the 
district court on the named plaintiffs' individual claims under ECOA. 
Garcia v. Vilsack, 563 F.3d 519 (D.C. Cir. 2009). In January 2010, the 
Supreme Court denied plaintiffs' petitions for certiorari on the APA 
claims in Love and Garcia. 130 S. Ct. 1138 (Mem.) (2010). All appeals 
related to class certification have been decided in favor of USDA and 
the Love case is now limited to individual claims of credit 
discrimination. Love has been stayed while the voluntary Alternative 
Dispute Resolution claims process is being finalized by USDA.
    In order to offer relief to female and Hispanic farmers who allege 
credit discrimination during the relevant statutory period, USDA 
developed an entirely voluntary ADR program to settle those claims 
without litigating them individually in court. This non-adversarial 
process will be administered by a third-party neutral, who will make 
individualized determinations based on the evidence presented by each 
claimant. Successful claimants will receive up to $50,000 or $250,000 
each depending on the tier of relief chosen by the claimant, plus tax 
relief on their award and possible debt cancellation for certain 
outstanding farm loans. Whether any individual chooses to participate 
in the program is entirely up to the individual. Those farmers who wish 
to ignore the ADR process are free to do so.
    The claims process has not yet started. On January 25, 2012, after 
hearing from members of Congress, community organizations, and farmers, 
the Department announced changes to the claims process framework. In 
May, USDA selected an independent Administrator/Adjudicator who is now 
preparing to implement the claims process. Claimants will not need to 
pay any filing fees to participate in the claims process.
    Question. What is the USDA's outreach plan to spread the word to 
women farmers nationwide about the availability of the claims process? 
Who will conduct the outreach, what forms of outreach will be used, and 
how much money does the agency plan to spend on outreach? Is the Agency 
involving women's and farmers' groups in the development of the 
outreach plan?
    Answer. USDA has engaged in outreach activities to inform potential 
claimants, including women farmers who have alleged past 
discrimination, about the claims process. As part of the outreach 
process, USDA has held numerous meetings and webinars with farmers and 
community organizations, including women's organizations. USDA will 
expend up to $75,000 for outreach inclusive of staff travel and meeting 
space incidentals. In addition, USDA announced the claims process 
(including recent changes) through press releases and media interviews; 
and created a dedicated Web site with informational documents about the 
process such as a fact sheet and summary notice. USDA currently 
operates a toll-free call center to register individuals interested in 
participating in the process, allowing them to request a claims 
package.
    USDA plans to continue to notify women and Hispanic farmers who 
allege past discrimination against USDA about the claims process 
requirements and the date on which the claims period will commence. 
Ongoing outreach to potential claimants will be conducted in a number 
of ways. USDA will use media to contact as many women and Hispanic 
farmers as possible about the claims process, including social media, 
press releases, Web sites, and posters, and USDA will hold additional 
webinars summarizing the program to stakeholders. USDA also plans to 
mail postcards directly to over 500,000 women and Hispanic farmers 
listed in USDA customer information systems about the claims process, 
plans to continue to hold meetings with farmers to notify them about 
the program, and plans to work with third-party organizations to reach 
out to potential claimants. Finally, USDA plans to enter into 
cooperative agreements with third-party organizations to educate 
potential claimants about the process.
    Question. What, if any, specific program reforms is USDA 
implementing to prevent future discrimination against women farmers in 
particular?
    Answer. To prevent future discrimination against women farmers, 
USDA has strengthened training, outreach, and policy efforts. At my 
direction, every political appointee in the Department has attended 
civil rights trainings and USDA has offered civil rights training to 
Farm Service Agency, Natural Resources Conservation Service, and Rural 
Development leadership and staff at State offices in more than a dozen 
select States that have a history of problems in this area. The States 
included Oklahoma and Arkansas, two of the States with the highest 
concentrations of female producers. The States selected for civil 
rights training for the Farm Service Agency State leadership accounted 
for a total of 40 percent of FSA program complaints in fiscal year 
2008, and the States selected for Rural Development trainings 
represented 42 percent of RD program complaints in the same period.
    We commissioned an independent assessment of civil rights in USDA's 
program delivery. We are working to implement the recommendations of 
this Cultural Transformation Assessment to help USDA improve field-
based service delivery to minority and women farmers and ranchers, and 
communities that have historically not participated in USDA programs. 
The recommendations for the Farm Service Agency in the assessment 
included steps to provide better representation of women and minority 
farmers on county committees, to take prompt action to hold employees 
accountable for discrimination, and to institute outreach as a core 
mission of the Agency. To improve USDA programs' ability to serve all 
farmers, we analyzed the potential for new policies, rules and 
decisions to impact civil rights. Over 3 years the Office of Civil 
Rights recommended important changes on about 20 percent of all 
policies they reviewed. We also more than doubled the number of 
internal compliance reviews of USDA agencies to evaluate their civil 
rights policies, procedures and practices.
    USDA is committed to reaching out to women farmers and involving 
new generations of female farmers in local and State USDA committees. 
The Farm Service Agency also recently designed a customer's guide to 
improve all producers' knowledge of farm loan programs.
    In 2010 and again in 2011, USDA's FSA recorded the fewest number of 
customer civil rights complaints since the Department began keeping 
track, 37 complaints were filed in 2010 and 37 in 2011. We have also 
made changes to improve the processing of the complaints we do receive. 
Adding staff and conducting Lean Six Sigma process improvement have 
reduced the typical processing time for new civil rights program 
complaints from 4 years to 18 months.
                                 ______
                                 
                Questions Submitted by Senator Roy Blunt

                  DIVERSITY OF RURAL ELECTRIC PROGRAMS

    Question. The budget request for the Rural Utilities Service 
electric loan program provides specific set-asides for renewable energy 
plants and fossil fuel powered facilities that include carbon emissions 
reduction. As a result, the budget request puts traditional power 
plants sourced by fossil fuels, such as natural gas and coal, at a 
disadvantage in participating in the program.
    While I appreciate the importance of renewable energy and carbon 
sequestration, Americans in rural areas rely on cheap, accessible 
electricity that demands a diversification of energy sources for 
affordable customer rates. Energy policy should have a balanced 
approach and not focus on one particular source.
    Does USDA know the potential long-term economic effects if rural 
electric cooperatives are unable to utilize the loan program to 
construct natural gas and coal-fired power plants or to provide basic 
facility upgrades that do not specifically reduce emissions?
    Answer. USDA has not calculated the long-term economic effects of 
limiting future investment in fossil fuel-fired power plants. However, 
by virtue of being located in rural America, the rural electric 
cooperatives are ideally situated to invest in many renewable energy 
technologies such as solar and wind power. By targeting future 
assistance to renewable fuel technologies the rural electric 
cooperatives have the opportunity to play a central role in this 
administration's ``all-of-the-above'' approach to energy independence.
    Question. How will the recent EPA announcement on greenhouse gas 
emission limits affect participation in the electric loan program?
    Answer. The Rural Utilities Service (RUS) is expecting an increase 
in demand for RUS loan funds as borrowers work to comply with the EPA 
greenhouse gas emissions limits. At this point in time, RUS does not 
know the amount needed for borrowers to comply with EPA. However, the 
estimates for environmental upgrades range from $1 billion this fiscal 
year and reaching approximately $3.5 billion by 2016 according to the 
Electric Program application pipeline and the National Rural Electric 
Cooperative Association's 10-year projections.
    Question. Because the average natural gas powered electric plant 
has a CO2 emissions level below the recently announced EPA 
guidelines, what is the reasoning for prohibiting their access to two-
thirds of the funding in the rural electric program unless they include 
carbon capture sequestration systems?
    Answer. This limitation is one of many ways to achieve energy 
independence and improve the environmental health of the Nation. The 
proposal does not preclude the ability of rural electric cooperatives 
from seeking other sources of financing to build or upgrade fossil 
fuel-fired power plants. Rather, it provides an opportunity for the 
rural electric cooperatives to be at the forefront of implementing 
renewable energy strategies that will power a greener tomorrow.

             FREE TRADE AGREEMENTS WITH COLOMBIA AND PANAMA

    Question. Last year, Congress approved the trade agreements with 
South Korea, Colombia, and Panama. Implementation of all three of the 
trade agreements will increase U.S. farm exports by an additional $2.3 
billion--supporting nearly 20,000 American jobs.
    The agreement with South Korea came into force earlier this month 
(March 15). However, the agreements with Colombia and Panama have not 
been fully implemented. Full implementation of these two agreements 
would increase farm exports by $400 million and support approximately 
4,000 jobs. It is important that these agreements are implemented 
expeditiously to open up these markets for our agriculture producers.
    What is the current status of the free trade agreements with 
Colombia and Panama?
    Answer. The United States-Colombia Trade Promotion Agreement will 
enter into force on May 15, 2012. The Department of Agriculture's 
Foreign Agricultural Service (FAS) worked closely with the Office of 
the U.S. Trade Representative (USTR) and stakeholders to establish 
effective mechanisms for ensuring market access under the terms of the 
agreement, particularly for tariff-rate quotas (TRQs). A range of 
issues will be resolved prior to implementation, including barriers to 
U.S. poultry and rice. Almost 70 percent U.S. exports to Colombia will 
become duty-free upon implementation, and most other tariffs will be 
reduced and eliminated over 5 to 10 years, with all Colombian tariffs 
on agricultural products duty-free in 19 years.
    With respect to the United States-Panama Trade Promotion Agreement, 
discussions with Panama are currently focused on changes required in 
their laws and regulations in order to implement the agreement. FAS is 
working closely with USTR to ensure the mechanisms Panama will use to 
implement its agricultural TRQs will be ready when the agreement enters 
into force. Panama will be adapting its current auction system for some 
TRQs and establishing new licensing and first-come, first-served 
systems for others. FAS and USTR are working to ensure that these 
systems will be implemented in a way that is consistent with the 
provisions of the agreement and that will enable U.S. exporters to take 
full advantage of new opportunities.
     Question. Is there an estimated date for implementation of these 
agreements?
     Answer. The United States-Colombia Trade Promotion Agreement will 
enter into force on May 15, 2012. An implementation date for the United 
States-Panama Trade Promotion Agreement will be set once agreement has 
been reached on all of the implementation mechanisms. FAS is working 
with USTR to ensure the new market access opportunities established in 
the agreement will be available as soon as the agreement enters into 
force. In an effort to ensure the implementation of the agreement moves 
forward expeditiously, a team of FAS, USTR, and Customs officials will 
travel to Panama in the first week of May to assist the Panamanian 
Government as it develops its TRQ regulations.

               AGRICULTURAL RESEARCH SERVICE LAB CLOSURES

    Question. Consistent with the budget request, the fiscal year 2012 
agriculture bill closed 12 Agricultural Research Service (ARS) labs. 
However, the budget request did not adequately budget for the expense 
of closing these labs, which turned out to be far more significant than 
either USDA or the subcommittee imagined.
    How much do you estimate it will ultimately cost ARS to relocate 
staff and close all 12 labs in fiscal year 2012?
    Answer. The termination of research activities at the 12 ARS 
laboratories affected 233 permanent ARS employees. The one-time costs 
associated with the relocation or separation of affected personnel and 
the disposal of property are estimated at $39 million in fiscal year 
2012.

                          EXTRAMURAL RESEARCH

    Question. I understand ARS plans to reduce existing extramural 
research funding by 30 percent this year to find the additional funds 
necessary to close the labs.
    How did ARS arrive at the decision to reduce extramural funding as 
opposed to other activities within ARS?
    Answer. The temporary budget reductions to remaining ARS programs 
in fiscal year 2012 are necessary to finance the one-time costs 
associated with the closure of 12 ARS laboratories. The 30-percent 
reduction to extramural research supported by ARS resources is one of 
several measures necessary to finance the one-time costs. These 
measures also include restricted hiring and assessing all remaining ARS 
management units. As a result of these actions, only about half of the 
one-time costs to close the 12 laboratories will be financed by 
reductions to extramural supported research. Although ARS' mission is 
to conduct primarily intramural research, ARS along with other USDA 
agencies, such as the National Institute of Food and Agriculture 
(NIFA), will continue to support high-priority extramural research.

                  CAPITAL ASSET AND CONSTRUCTION PLAN

    Question. The fiscal year 2013 budget includes a proposal to close 
six more labs.
    Last year, the subcommittee requested a capital assets and 
construction plan from ARS. We have not received the capital asset 
plan. Without the benefit of this plan, how did USDA determine which 
labs would be closed?
    Answer. ARS has completed a capital investment strategy for 
recapitalization and new research facilities based on facility 
condition, needs, and research program priorities. The report 
establishes criteria and processes for determining and recommending the 
appropriate level of new investments needed for USDA research 
facilities. The report's recommendations and overall strategy will 
inform and support the development of administration budget requests 
for research facilities in the out years.
    During the process of evaluating all ARS research programs, and in 
conjunction with developing the capital investment strategy, ARS also 
developed a conceptual framework to determine its capital investment 
needs based on the relation between the condition of a facility to the 
priority level of a program. This methodology allowed ARS to determine, 
on a scale, which facilities are in the poorest conditions and housed 
the lowest priority programs. The six laboratories recommended for 
closure were identified after all evaluations were completed. The 2013 
budget proposes reallocating these funds to facilities/programs that 
support higher priority initiatives.

                 CLOSING COSTS OF RESEARCH LABORATORIES

    Question. Should the subcommittee agree with ARS's plan to close 
the labs, does the budget request adequately account for the cost of 
closing these labs?
    Answer. The estimated cost to accommodate the potentially impacted 
employees and dispose of the real property ranges from $10-12 million. 
If the fiscal year 2013 proposed budget reallocations are approved, ARS 
would be able to utilize the associated program funds to offset the 
facility closure costs.

               BUDGET IMPACT OF SCHOOL MEALS REGULATIONS

    Question. I have received a number of inquiries from schools across 
Missouri regarding the Department's new school meal regulations. I am 
deeply concerned about the unintended costs on public schools as a 
result of the Department's regulations.
    With the price of food commodities rising, it looks like the impact 
of the regulations will result in an unfunded Federal mandate on 
Missouri schools. My constituents have said that the fruit, vegetable, 
and whole grain requirements will increase the cost of a school lunch 
by as much as $0.28 per meal. The increase in funding provided in the 
reauthorization is set at $0.06 per lunch, significantly less than the 
estimated actual cost of implementation.
    These cost increases will be borne by local school districts, which 
will likely be forced to increase prices on paid lunches, resulting in 
a reduction in overall participation rates.
    How does the Department plan to deal with rising food commodity 
costs?
    Answer. Beginning October 2012, school food authorities that meet 
the new meal patterns will receive a $0.06 lunch reimbursement rate 
increase authorized by the Healthy, Hunger-Free Kids Act of 2010 
(HHFKA). Furthermore, the HHFKA requires that schools set an adequate 
price for paid lunches so that schools receive as much revenue from 
paid lunches as the Federal program provides for free lunches. The 
HHFKA also requires that schools set competitive prices for foods sold 
outside of the reimbursable meal so that revenues received from the 
sale of nonprogram foods equal the cost of obtaining them. When taken 
together, the additional Federal reimbursement provided for improved 
meals and the non-Federal revenue generated by the aforementioned 
provisions will, on average, make sufficient resources available for 
schools to meet the new meal requirements. Also, it is important to 
note that over 3,000 schools receiving the HealthierUS School Challenge 
(HUSSC) awards report they have been able to achieve similar standards 
without significant cost increases. To date, 61 Missouri schools have 
been recognized as HUSSC award winners, including 12 schools that were 
recognized at the Silver level.
    In addition, one key way that USDA helps schools provide cost-
effective, nutritious meals is by providing agricultural commodities in 
the form of USDA Foods. The USDA Foods program helps schools stretch 
limited food budgets by providing high-quality fruits, vegetables, 
meat, fish, poultry, dairy, and grains. School commodities, which 
represent approximately 15-20 percent of the food on the cafeteria 
serving line, now include more fruits and vegetables, more whole 
grains, and more food that is lower in sugar, salt, and fat than ever 
before. For example, USDA purchased nearly $300 million in canned, 
fresh, frozen, and dried fruits and vegetables for schools through the 
USDA Foods program and the Department of Defense (DOD) Fresh Fruit and 
Vegetable Program in fiscal year 2011. The USDA Foods program is well 
positioned to help schools meet the new meal requirements and we are 
confident that most of the schools will continue to benefit from this 
program.
    Question. Does the Department have a plan for dealing with 
increased costs and the burdens these costs will place on public 
schools?
    Answer. Careful consideration of cost and logistical issues were an 
important part of developing the updated nutrition standards for the 
school meals programs. USDA is committed to ensuring that any such 
standards are practical and accompanied by extensive guidance and 
implementation assistance for our school partners. As part of the 
Healthy, Hunger-Free Kids Act of 2010, USDA built the new rule around 
recommendations from an Institute of Medicine expert panel, updated 
with key changes from the 2010 Dietary Guidelines for Americans. 
Getting the science right is critical to better nutrition and health 
for our children.
    We received unprecedented public participation and input on the 
proposed standards, and made modifications to the proposed rule where 
appropriate. As a result, the final standards are much less costly than 
the proposed standards, provide additional time for implementation of 
some key changes, and better accommodate the administrative constraints 
facing schools and States. These responsible reforms do what is right 
for children's health in a way that is practical and achievable in 
schools across the Nation. USDA's estimate shows implementation of the 
new nutrition standards for school lunches and breakfasts will cost 
$3.2 billion over the next 5 years. This is less than half of the 
proposed standards' originally estimated cost of $6.8 billion.
    In addition, we believe the $0.06 lunch reimbursement rate increase 
authorized by the Healthy, Hunger-Free Kids Act of 2010 along with the 
revenue support provisions noted in the previous response such as the 
non-Federal revenue generated by schools setting an adequate price for 
paid lunches so that schools receive as much revenue from paid lunches 
as the Federal program provides for free lunches and the requirement 
that schools set competitive prices for foods sold outside of the 
reimbursable meal so that revenues received from the sale of nonprogram 
foods equal the cost of obtaining them, will make sufficient resources 
available for schools to meet the new meal requirements. Finally, we 
are working on technical assistance and menu planning materials to help 
schools plan and prepare nutritious meals in a cost-effective manner, 
and will make those materials available as soon as they are complete.

              BUDGET IMPACT OF COMPETITIVE STANDARDS RULE

    Question. It's clear from speaking to many of the schools in 
Missouri that they depend on revenue from foods sold outside of the 
National School Lunch & Breakfast Programs to give them greater ability 
to purchase healthier options for school meals.
    There is a lot of anxiety in the school foodservice community over 
how new competitive foods' standards will impact this revenue stream, 
particularly at a time when school cafeterias are being asked to cut 
their budgets.
    I understand that the Department believes schools should expect 
increased revenue from competitive foods lines as a result of the new 
standards.
    What data you are basing this assumption on?
    Answer. The Department projected increased revenue from competitive 
foods as a result of regulations implementing section 206 of the 
Healthy, Hunger-Free Kids Act of 2010 (HHFKA). The rule, published in 
the Federal Register on June 17, 2011 (76 FR 35301), requires school 
food authorities (SFAs) to set prices for nonprogram foods purchased 
with SFA funds, a subset of competitive foods, at a level sufficient to 
generate revenue proportionate to their share of SFA food costs. The 
Department estimated that HHFKA section 206 would generate $7.3 billion 
in additional SFA revenue over 5 years. The primary source for that 
estimate was USDA's school year 2005-2006 School Lunch and Breakfast 
Cost Study. That study found that nonprogram foods generated revenue 
for SFAs equal to just 71.3 percent of their reported costs of 
production. Counter to common perception, on average, the revenue 
generated by program meals subsidizes the production of other SFA foods 
when labor and overhead costs are properly allocated to all foods 
prepared with SFA funds.
    Elimination of that subsidy is the source of the revenue generated 
by HHFKA section 206--not nutrition standards for competitive foods, 
which are still under development. Whatever the ultimate impact of 
those nutrition standards on competitive food sales, section 206 
ensures that competitive foods will not divert revenue from the 
production of reimbursable meals. Reforming SFA accounts in this manner 
frees up program revenue for the investments necessary to meet new meal 
standards.
    Question. Do you plan to perform any sort of assessment on impact 
of the competitive foods standards on school cafeteria budgets?
    Answer. Yes. The Department will begin data collection in school 
year 2014-2015 for a ``School Nutrition and Meal Cost Study''. That 
study will examine both the school nutrition environment and school 
foodservice operations. The study will assess the impact of nutrition 
standards on the content of reimbursable meals and competitive foods, 
and will compare the revenues generated by each of these to their 
allocated share of SFA costs.
                                 ______
                                 
                Question Submitted by Senator Tom Harkin

                       LEAN FINELY TEXTURED BEEF

    Question. In the light of the large amount of press attention 
recently given to a product called lean finely textured beef (LFTB), I 
would like to clarify for the record some aspects of the situation. As 
I understand it, the Department of Agriculture was informed and 
reviewed the process and technology involved in producing lean finely 
textured beef and did not raise problems with the process, nor did the 
Department indicate a problem with including it in what is sold as 
``ground beef'' without any special labeling. It is also my 
understanding that the Food and Drug Administration allows the use of 
ammonia in food under a designation of ``generally recognized as 
safe.'' The factual circumstances seem to show that the company that 
developed the process felt it was applying an innovative technology and 
addressing food safety risks in doing so, again, with the knowledge of 
and effectively an OK from the Department of Agriculture. Now the 
company has suspended operations at several plants and jobs of hundreds 
of workers are in doubt.
    My question is simply, does lean finely textured beef meet the 
applicable food safety standards and criteria of the Department of 
Agriculture?
    Answer. Yes, lean finely textured beef (LFTB) products meet Federal 
food safety standards. The process used to produce LFTB is safe, and 
adding LFTB to ground beef does not make that ground beef any less safe 
to consume.
                                 ______
                                 
            Questions Submitted by Senator Susan M. Collins

                              FOOD SAFETY

    Question. I understand that the Department of Agriculture (the 
Department) has announced that it is preparing to propose new 
regulations for the grinding of raw beef that would require additional 
recordkeeping to help the Department trace outbreaks back to their 
source. It has been reported that these new regulations, which have not 
yet been published, would require retail stores to keep detailed 
records identifying the supplier and the quantities of all source 
materials used in raw ground beef products. The Department has long 
encouraged retail stores to keep such detailed records, but has not 
required them to do so. The Department has indicated that it considers 
the use of beef trimmings without detailed recordkeeping as a ``high-
risk'' practice.
    What additional actions is the Department taking or proposing to 
take to improve its ability to prevent foods containing dangerous 
pathogens from ever leaving the slaughterhouse, processing facility, or 
entering the retail chain?
    Answer. FSIS announced and asked for comment on a new ``test and 
hold'' requirement for the meat and poultry industry that, once 
implemented, will significantly reduce consumer exposure to unsafe 
food. When the policy is finalized, industry will be required to hold 
products that FSIS has sampled for microbiological testing until the 
test results are received. The product will be released if the results 
show that it is safe to move in commerce. This approach could have 
prevented 22 recalls during fiscal year 2009 and fiscal year 2010. 
Under this policy, FSIS expects fewer recalls by industry, fewer 
illnesses, and increased consumer confidence in the safety of the food 
supply. The agency is also announcing new procedures for tracing 
product that is positive for E. coli O157 to its supplier as well as 
actions that will strengthen its implementation of HACCP.
    Question. What steps is the Department taking to educate consumers 
about the risks of food-borne illness, the dangers and avoidance of 
cross contamination, and the need to handle and cook meat properly to 
ensure it is safe for consumption?
    Answer. On June 28, 2011, FSIS launched a joint national multimedia 
campaign with the U.S. Department of Health and Human Services to help 
families prevent food poisoning: The Food Safe Families--Check Your 
Steps campaign. The campaign urges consumers to remember four key steps 
to food safety: Clean (surfaces, utensils, and hands), separate (raw 
meat and poultry from other foods), cook (to a safe temperature), and 
chill (raw and prepared food). We have reached millions, in English and 
Spanish, using a variety of donated media, including television, radio, 
print media, social media tools, and the Internet.
    On May 5, 2011, FSIS launched the Mobile Ask Karen application 
(m.AskKaren.gov on your phone's mobile browser), a Web-based smartphone 
application that gives consumers another way to access the only U.S. 
Government-sponsored food safety virtual-representative. Consumers can 
search by topic and products, send e-mails, or use the chat feature, 
all via their mobile devices. Thus, users can get answers to their food 
safety questions anywhere: At the grocery store, barbecue grill, and 
kitchen stovetop.
    During fiscal year 2011, the USDA Food Safety Discovery Zone, a new 
and improved USDA Food Safety Mobile, visited grocery stores, schools, 
and local community events to educate consumers about food safety and 
to promote the Food Safe Families Campaign. The Discovery Zone improves 
consumers' awareness of the risks associated with mishandling food and 
provides in-depth, hands-on demonstrations of the steps they can take 
to reduce their risk of contracting a foodborne illness.

                     NATIONAL SCHOOL LUNCH PROGRAM

    Question. Recently the Department purchased for use in the National 
School Lunch Program a product that is commonly referred to as ``pink 
slime,'' known in the industry as ``boneless lean beef trimmings'' or 
``lean finely textured beef,'' as an additive in ground beef. This 
product is reportedly treated with ammonium hydroxide gas, suggesting 
that decontamination is necessary to ensure the product is safe to eat. 
What analysis has the Department done to determine whether this product 
is safe for consumption?
    Answer. Ammonium hydroxide is used in the production of lean finely 
textured beef (LFTB) as a pH control agent to help reduce harmful 
bacteria. Ammonium hydroxide, produced by mixing anhydrous ammonia 
(ammonia gas) with the natural moisture in LFTB, was determined to be 
Generally Recognized as Safe (GRAS) by the Food and Drug Administration 
(FDA) in 1974, after extensive review and a rulemaking process (21 CFR 
184.1139). USDA, after consultation with FDA, determined that ammonium 
hydroxide is safe and suitable for use in the production of meat and 
poultry products (FSIS Directive 7,120.1).
    Question. Have there been incidents of food-borne contamination in 
products containing pink slime?
    Answer. Some ammoniated beef has been shown to be contaminated with 
E. coli O157:H7, and such product has been excluded or removed from 
commerce under the same procedures FSIS employs for any product it 
regulates.
    Question. Parents in Maine have contacted school districts to 
inquire about the safety and wholesomeness of products containing this 
additive. Are there any health implications, particularly for school-
age children, associated with consuming foods that have been treated 
with ammonium hydroxide?
    Answer. No. Ammonium hydroxide is accepted as GRAS for this use.
    Question. Does the Department plan to undertake any additional 
studies or actions to ensure that these products are safe for 
consumption by the public and by our Nation's school children?
    Answer. No. No evidence has been presented or cited that would 
raise a question about the GRAS status of this use of ammonium 
hydroxide. However, based on requests from school districts across the 
country, USDA announced on March 15 that it would offer more choices in 
the National School Lunch Program in terms of purchases of ground beef 
products.

                       LEAN FINELY TEXTURED BEEF

    Question. I understand that the Department has recently announced 
it will give schools the choice of using products that do not contain 
pink slime.
    What will the Department do with unwanted product that contains 
this additive that, in some cases, has already been delivered to school 
districts?
    Answer. On March 30, a policy memo was sent to State distributing 
agencies (SDAs) and school food authorities (SFAs) that not only 
reaffirmed the safety of lean finely textured beef (LFTB) but also 
outlined the options available for the treatment of their current 
inventories if recipients chose not to utilize the product as intended. 
USDA does strongly encourage all SDAs and SFAs that have ordered 
donated beef products to use them as intended but understands the 
desires of certain recipient Agencies not to do so. However, USDA 
cannot provide entitlement credit or reimbursement for any processing-
related fees or replacement product. If the SFA does not wish to use 
donated beef products that contain LFTB, the SDA must determine if the 
donated products can be reallocated to another SFA that is willing to 
use them. If donated beef products in SDA inventories cannot be 
reallocated to another SFA, the SDA must determine if they can be 
transferred to another SDA for distribution to SFAs in the National 
School Lunch Program, or if such foods can be transferred for use in 
the Emergency Food Assistance Program (TEFAP), or another eligible 
charitable institution. SDAs will be responsible for any transportation 
costs, and there will be no compensation to an SDA or SFA for lost 
entitlements.
    USDA continues to affirm the safety of LFTB products. However, the 
Department was overwhelmed with inquiries from schools and parents who 
did not want it to be allowed as a component in the ground beef that 
USDA purchases. The schools are our customers and they were demanding 
choices. The decision was driven by customer demand.
    Question. What is the estimated cost to the Department and to 
schools of choosing not to use products containing this additive?
    Answer. AMS estimates that the cost of beef products that do not 
allow for the inclusion of LFTB could run 3 percent higher than the 
comparable LFTB-allowing beef product specifications. Depending on 
whether a school food authority is ordering donated products or using 
non-entitlement funds, selecting this option could either result in 
them receiving a smaller volume of products or a higher cost. USDA does 
not expect there to be any increased direct costs to the Department 
from providing the option.

           AGRICULTURAL RESEARCH SERVICE PROGRAM REALLOCATION

    Question. In fiscal year 2012, and in the 10 previous fiscal years, 
ARS and the potato industry, through a potato research initiative, have 
cooperated to identify research projects that have scientific merit and 
address potato industry priorities. ARS researchers serve as the lead 
investigators on all projects and collaborate with land grant 
universities and other private entities to conduct this research.
    The President's fiscal year 2013 budget request proposes to 
reallocate $4.6 million to improve the control of diseases attacking 
small fruits, nursery crops, potatoes, and other crops, through the 
development of resistant varieties and disease management strategies. 
Preventing the damaging effects of pests and diseases requires the 
consistent application of sound pest management strategies, including 
the development of disease- and pest-resistant crop varieties. These 
strategies are the result of years of collaborative efforts among ARS, 
research institutions, private industry, and local producers that have 
resulted in better pest management, reduced environmental impact, 
improved quality, and increased yield. Can you explain how the 
Department's proposed reallocation will affect these partnerships? Is 
USDA committed to providing adequate funding for pest and disease 
management programs, including the development of pest and disease-
resistant varieties through ARS that address the potato industry's 
identified research priorities?
    How does the Department intend to fund and administer these 
programs, and what resources will USDA commit to these programs to 
ensure they are able to address evolving pest and disease management 
challenges facing producers?
    Answer. USDA will maintain its strong partnerships with its 
cooperators, customers, and stakeholders, including agricultural 
producers and universities. These close working relationships are an 
integral part of plant breeding and pathology research programs 
nationwide, and the Department will use its dedicated resources to 
continue these partnerships that address producer priorities in plant 
production and protection.
    Public plant breeding programs are crucial in meeting needs 
identified by the potato and other industries. Development of improved 
germplasm and varieties, as needed, with enhanced disease and pest 
protection is a high-priority research initiative within the 
Department.
    USDA research will continue to address producer needs for plant 
health and sustainability. Research priorities will continue to be 
established through a continuing dialogue with customers and 
stakeholders.

   NATIONAL INSTITUTE OF FOOD AND AGRICULTURE CROP PROTECTION PROGRAM

    Question. The President's fiscal year 2013 budget proposes to 
consolidate several pest management programs into a single ``Crop 
Protection'' program and to provide $29.1 million for that program in 
the next fiscal year. Integrated Pest Management (IPM) programs allow 
research universities to partner with State, local, and regional 
producers to conduct critical field work and research, perform field 
inspections, and provide producer notifications. These steps are 
critical to converting laboratory research into improved pest and 
disease management strategies that can be applied in the field to 
reduce pesticide application and improve crop quality and yield.
    Please describe how the Department intends to administer these 
important programs should such a consolidation occur. How would the 
proposed consolidation affect ongoing partnerships with States and 
research universities to transfer laboratory research to the field? How 
much of the $29.1 million that is requested would go to fund IPM 
programs, and specifically, potato IPM programs? How much of the 
requested funding under this proposed consolidation would go to Minor 
Crop Pest Management (IR-4) program efforts?
    Answer. USDA is currently soliciting broad stakeholder input on the 
appropriate design of the Crop Protection Program in anticipation of 
funding in fiscal year 2013. Our goal is to improve the efficiency of 
the program and enhance NIFA's ability to support research, education, 
and extension activities needed to assist in global food security and 
respond to other major societal challenges.
    [Additional information is provided below.]
    The President's budget for fiscal year 2013 proposed the 
consolidation of six pest management budget lines into the Crop 
Protection Program. The budget proposal identifies five priority areas 
that will be supported by the new program:
  --The development of crop protection tactics and tools;
  --The development of diversified IPM systems;
  --Enhancing agricultural biosecurity;
  --Developing IPM for a sustainable society; and
  --Developing the next generation of IPM scientists.
    These priority areas encompass core research, extension and service 
activities supported by the six budget lines that will be consolidated. 
As we implement the new program, we will try to minimize disruption to 
ongoing efforts that are currently supported by the six budget lines, 
which includes the IR-4 program. We value the partnerships that have 
developed as a result of the Department's involvement with these pest 
management efforts over the past 50 years, and we remain committed to 
supporting critical research, extension and service efforts in fiscal 
year 2013 and beyond. We believe that the proposed budget consolidation 
and creation of the Crop Protection Program will strengthen these 
partnerships, and will result in the most effective and efficient use 
of Federal funding appropriated to the National Institute of Food and 
Agriculture for pest management efforts. Funding allocations for this 
competitive program will be determined when 2013 funding is provided.

                NORTHEAST REGIONAL AGRICULTURAL RESEARCH

    Question. One of the major strengths of American agriculture is the 
wide variety of crops grown, and the ability of different geographic 
regions to produce high-quality, often unique, agricultural products. 
USDA research activities through the ARS play a key role in leveraging 
departmental resources, academic expertise, and the input of regional 
producers to improve quality and expand production of many crops. The 
President's fiscal year 2013 budget proposes to close several ARS 
laboratories, including the New England Plant, Soil, and Water Research 
Center--the only ARS lab in the six-State New England Region that 
conducts crop, soil, water, environmental, and economic research.
    The closing of ARS labs represents a significant loss not only for 
regional producers, but also for affiliated research universities that 
will lose critical staff and resources. These losses can jeopardize the 
ability of universities and industry to apply prior research and 
develop better pest and disease management strategies. Moreover, the 
closure of the only plant, soil, and water ARS laboratory in New 
England hardens the impression that the Department does not view the 
Northeast's agricultural sector as worthy of growth, improvement, or 
investment. Does the Department believe it is important to maintain an 
ARS laboratory research footprint in New England and other regions of 
the country? Has the Department analyzed the potential economic impacts 
of closing these labs on regional producers who may directly benefit 
from the applied research that these labs can generate?
    Answer. ARS is a national research institution; although many ARS 
research laboratories address the needs of local producers, these 
laboratories also often serve as model systems. Thus, research 
conducted at many ARS locations yields benefits to producers in Maine 
and elsewhere. USDA believes that there are significant benefits to 
maintaining research facilities across the range of climatic, soil, and 
cropping systems represented in the United States. Though the Orono 
facility is proposed for closure, ARS is maintaining a comprehensive 
set of research laboratories in New York, Pennsylvania, Maryland, and 
West Virginia that continue to address the needs of producers in the 
northeast. Agriculture in the United States is seldom extremely 
location-specific. Although crops usually are particularly productive 
in certain combinations of soils and climate, those conditions can 
often be found at multiple locations. Taking advantage of the 
differences across the country contributes to the important 
characteristic of resilience leading to increased food security.
    The Department has not undertaken a comprehensive economic analysis 
of the impacts on regional producers from the proposed closures. Aside 
from Orono, ARS conducts many research projects around the concept of 
Agricultural Systems Competitiveness and Sustainability at research 
locations in several States. In most instances, these projects address 
complete cropping systems relevant to various production areas across 
the country. For example, many research findings in sustainable potato 
production systems in Washington and Oregon benefit producers in the 
northeast. Although the research in those locations is by necessity 
conducted on local crops and soils, the principles that are developed 
are beneficial in a broad range of crops, soils, and climates.
                                 ______
                                 
               Questions Submitted by Senator Jerry Moran

                         COMPETITIVE FOOD RULE

    Question. Changes to the National School Lunch and Breakfast 
Programs have imposed new challenges and costs on schools in Kansas and 
across the country. While I am glad the implementation cost of the 
final meal pattern rule is lower than what was initially proposed, I am 
concerned about what the cost may be of the competitive foods rule USDA 
is currently working on. What assurances can you give me and school 
nutritionists in Kansas who are already having difficulty planning 
menus for next year that the forthcoming rule on competitive foods will 
not impose costs and compliance hurdles similar to those that were 
proposed in the initial meal pattern rule?
    Answer. As you are aware, the Healthy, Hunger-Free Kids Act (HHFKA) 
requires that the USDA develop nutrition standards for foods sold in 
schools outside the National School Lunch Program (NSLP) and the School 
Breakfast Program (SBP). It also requires they be consistent with the 
most recent Dietary Guidelines for Americans and take a number of 
important issues into consideration, including the practical 
application of the nutrition standards in schools. A proposed rule to 
establish such standards is currently under development.
    We are aware that school districts have concerns regarding the 
potential financial and logistical impacts associated with the 
implementation of these standards and have received extensive input 
from a variety of stakeholders on how to best address those concerns. 
As we continue our work to develop the proposed rule, a great deal of 
time has been spent analyzing current scientific information and school 
practices as well as voluntary standards for food sold outside of the 
NSLP and SBP that have been recommended by a number of nongovernmental 
organizations. We have also considered the costs associated with 
implementation of such standards for all foods sold to students in 
school. I am committed to ensuring that any such standards are 
practical and accompanied by extensive guidance and assistance for our 
school partners as implementation moves forward. In addition, I 
understand the need to aim for consistency with the NSLP meal pattern 
regulation in areas in which the regulations may overlap, particularly 
as a means to ensure the regulations do not place undue burden or 
complexity on school staff who operate food service under both 
standards. We look forward to receiving public comments once the 
proposal is published and want to assure you that such comments will be 
most carefully considered as we develop the final rule.
    Question. Last year, in the Consolidated and Further Continuing 
Appropriations Act (Public Law 112-55), Congress expressed concern 
about sodium reduction targets specified in the proposed meal pattern 
rule. Is the Department taking these concerns about aggressive sodium 
reduction targets into account as it finalizes its proposed rule for 
competitive foods?
    Answer. We understand the complexity of balancing ambitious 
approaches to improving the food intake of children with the needs of 
program operators and look forward to receiving public comments once 
the competitive foods proposal is published. I want to assure you that 
such comments will be carefully considered as we develop the final 
rule. We continue to be committed to ensuring a careful review of 
current science and technologies before implementing the ambitious, but 
important, sodium reduction targets included in the school meal 
patterns final rule and will apply these considerations to our work on 
competitive foods.
                                 ______
                                 
               Questions Submitted by Senator Tim Johnson

                            OFFICE CLOSURES

    Question. Let me first thank you for your February 13, 2012, 
response to the letter I sent with Senator Thune and Representative 
Noem concerning your January 9, 2012, announcement to close 259 USDA 
offices, facilities, and laboratories across the country, including 
four FSA offices in my home State of South Dakota. At the same time, I 
was disappointed that several of our questions were not addressed in 
your response. I recognize, as you have stated publicly multiple times, 
that the Department has been faced with difficult choices given reduced 
budgets, and that you faced a choice of either closing offices or 
instituting furloughs. The situation in which you find yourself is 
certainly unfortunate; the rush to cut Federal spending by some in 
Congress without regard for the impact has begun to show the 
consequences.
    Recognizing these difficult circumstances, I would like to get a 
better idea of how you identified offices for closure. The 2008 farm 
bill directed you to use a specific set of criteria. Specifically, my 
constituents would appreciate a better understanding of why the 
Department utilized ``as the crow flies'' rather than driving miles for 
determining the mileage between offices; this has been of significant 
concern for my constituents, because in multiple cases, the distance 
between offices in question is actually greater than 20 miles. As we 
stated in our letter, the Department utilizes miles driven when 
determining mileage for official Government travel with motor vehicles; 
particularly given the unique geographical characteristics of some of 
the affected offices, why did the Department utilize the ``as the crow 
flies'' standard?
    Answer. USDA selected Euclidian miles because it represents a 
precise distance between two points which is not subject to 
interpretation.
    Question. Additionally, some of the offices slated for closure, 
though minimally staffed at the time the decisions were made, have 
still had a significant workload. As we stated in our letter, using the 
actual number of employees in the office at any given time is an 
unreliable and inconsistent staffing measure as this number can vary 
greatly due to retirements and transfers. Why did the Department use 
the actual number of employees for determining whether county offices 
met this statutory guideline?
    Answer. USDA used the number of staff currently employed in each 
office in order to strictly adhere to the criteria laid out in the 2008 
farm bill.

                        HOUSE BUDGET RESOLUTION

    Question. Can you outline what the impact will be of the budget 
resolution recently passed in the House of Representatives, if enacted 
on your ability to operate in the future, and in particular, the degree 
to which you may need to consider additional office closures?
    Answer. The President's budget request was fiscally responsible and 
included reductions in many discretionary programs. For any further 
reductions beyond the President's budget we would need to further 
review our priorities and make appropriate adjustments.

                       COUNTRY OF ORIGIN LABELING

    Question. Thank you for your continued efforts in defending our 
country-of-origin labeling (COOL) program. As you know, I've worked on 
this issue for many years, and I am pleased that USDA, under your 
leadership, has finally implemented the program. Additionally, I am 
very pleased that the administration will be appealing the World Trade 
Organization Dispute Settlement Panel's decision concerning our COOL 
program. Can you provide a general timeframe for the appeals process 
moving forward and the role that USDA will play in the process?
    Answer. The parties to the dispute have already filed all their 
submissions in the appeal. The WTO Appellate Body will hold the hearing 
in this appeal on May 2-3, 2012. A final decision is expected sometime 
during the summer of 2012. USDA's COOL team of regulators, economists, 
trade policy experts and lawyers has been working closely with United 
States Trade Representative's litigation team throughout this dispute, 
both at the Panel stage and at the appellate stage.

                          SUN GRANT INITIATIVE

    Question. As you know, the Sun Grant Initiative is an important 
university research and education program that addresses national 
priorities to develop bioenergy and bioproducts at regional and local 
levels. The initiative broadens the role of land-grant universities to 
conduct research and educational programs that emphasize renewable 
energy systems based on agriculture and renewable resources. 
Particularly given the administration's emphasis on the importance of 
the development of renewable energy, why does the administration's 
budget propose zero funding for this nationally authorized program?
    Answer. A decrease is proposed so funding can be redirected to 
support higher priority activities, and is consistent with the 
administration's policy to redirect available resources, as 
appropriate, and consistent with the agency mission, from lower 
priority areas to other science and technology activities. Alternative 
funding from the Agriculture and Food Research Initiative and/or 
formula funding may be used to support aspects of the program deemed to 
be of priority at State and/or local levels. For example, the 2013 
budget proposes reallocating funding within AFRI towards bio-based 
energy technologies, increasing funding towards this initiative by $30 
million.
                                 ______
                                 
              Questions Submitted by Senator Mark L. Pryor

         AGRICULTURAL RESEARCH SERVICE FISCAL YEAR 2012 FUNDING

    Question. It's my understanding that USDA's fiscal year 2012 budget 
request for Agricultural Research Service (ARS) underestimated the 
funding needed to close the 12 ARS laboratories that were proposed for 
closure in fiscal year 2012. As a result I see that ARS has taken 
action to find the needed $38 million elsewhere in the budget. I note 
three things happened to make up this shortfall:
  --All ARS programs were cut an estimated 0.7 percent;
  --ARS has frozen all vacancies; and
  --ARS has proposed to reduce all extramural activities by 30 percent.
    Do these three rounds of cuts fully make up for the budgeting 
error?
    Answer. I do not believe this was a budgeting error. ARS' fiscal 
year 2012 enacted level was $43 million below what was proposed in the 
fiscal year 2012 President's budget and $38 million below the fiscal 
year 2011 enacted. This permanent reduction eliminated ARS' ability to 
offset the costs of the closures with program funds associated with 
each of the 12 laboratories. The one-time costs associated with the 
relocation or separation of affected personnel and the disposal of 
property are estimated at $39 million in fiscal year 2012. These one-
time costs are being financed by temporary reductions to remaining ARS 
research programs. The resources accumulated from the temporary 
assessments will cover the one-time costs in fiscal year 2012.
    Question. Why do these cuts, to make up for an ARS budgetary 
mistake, target extramural activities?
    Answer. I do not believe this was a budgetary mistake. The 
permanent reduction of $38 million from fiscal year 2011 levels 
required that all ARS research, not just sponsored extramural research, 
needed to be reduced to pay for the closures. USDA sought to balance 
the impact on intramural and extramural programs through an across-the-
board reduction of intramural research, a hiring freeze, and extramural 
funding reduction. Together, these actions will finance the one-time 
costs to ARS for the facility closures without closing other ARS 
research projects and let ARS partners continue ARS extramural research 
with 70 percent of the funding. USDA will also continue to support 
high-priority extramural research through other USDA agencies, such as 
the National Institute of Food and Agriculture (NIFA).
    Question. Why is the cut not across the board like the earlier 0.7-
percent across-the-board cut and the freeze on all ARS vacancies?
    Answer. The approach to financing the one-time costs seeks to 
minimize the impact to USDA personnel. Additional temporary reductions 
to in-house research supported by ARS personnel would potentially 
impact additional ARS employees and require significant reductions in 
ARS intramural research.
    Question. Was there a measured approach used to evaluate 
productivity or performance?
    Answer. To fund the one-time costs associated with closing the 12 
laboratories, all of ARS research was reduced through an across-the-
board reduction of intramural research, a hiring freeze, and an 
extramural funding reduction. This balanced approach to reductions did 
not evaluate productivity or performance.
    Question. Who made this decision to cut extramural facilities on 
their expected fiscal year 2012 funds to cover the closure costs?
    Answer. I made the decision to assess the funding for extramural-
supported research, as well as ongoing in-house programs, based on 
recommendations from ARS and other staff.
    Question. Is there an appeal process?
    Answer. USDA has not established a process to appeal the temporary 
reductions necessary to finance the one-time costs associated with 
closing the 12 laboratories.
    Question. What other sources of funding were under discussion to 
help cover the unit closure budget shortfall?
    Answer. The Department's ability to finance the one-time costs is 
limited to the resources appropriated to conduct the agency's research 
programs. All funds appropriated to ARS are used to support the 
salaries of ARS personnel and other necessary expenses to conduct 
research, including cooperative agreements with our extramural research 
partners that contribute to specific ARS program objectives. Since 
2010, the ARS Salaries and Expenses budget has been reduced by over 7 
percent, while the need to invest in research continues to grow. Shared 
sacrifice has to be made given limited resources.

                DALE BUMPERS SMALL FARMS RESEARCH CENTER

    Question. The fiscal year 2013 budget request includes a proposal 
to effectively close the Dale Bumpers Small Farms Research Center in 
Booneville, Arkansas, by redirecting all its funding elsewhere. I 
obviously do not support this proposal. In light of the closure of 
Brooksville, Florida, in 2011, and the expected closures of 
Watkinsville, Georgia, and Beaver, West Virginia, by June 1, 2012, 
where will ARS conduct grazing research for the benefit of the eastern 
United States if it closes Booneville, too?
    Answer. Grazing research for the Eastern United States is conducted 
at ARS locations in University Park, Pennsylvania (Pasture Systems and 
Watershed Management Research Unit); Lexington, Kentucky (Forage Animal 
Production Research Unit); Madison, Wisconsin (U.S. Dairy Forage 
Research Center); Morris, Minnesota (North Central Soil Conservation 
Research Laboratory); Mandan, North Dakota (North Great Plains Research 
Laboratory); Tifton, Georgia (Southeast Watershed Research Unit); and 
El Reno, Oklahoma (Grazinglands Research Laboratory). The research at 
these units is done in cooperation with university and industry 
partners.
    Question. Booneville is the home of unique long-term water quality 
research including a 20-year grazing study that began in 2003 using 15 
small watersheds in Booneville, and a 10-year study on the effects of 
poultry litter application method on nutrient runoff to watersheds. 
Both of these studies promise answers to critical issues plaguing the 
entire region. What are your plans to continue this highly valuable 
research if Booneville is abandoned?
    Answer. ARS maintains a nationwide network of research watersheds 
at 22 locations. Similar research is being conducted in watersheds at 
University Park, Pennsylvania; Beltsville, Maryland; Florence, South 
Carolina; Madison, Wisconsin; Tifton, Georgia; Fayetteville, Arkansas; 
Bushland, Texas; St. Paul, Minnesota; Mississippi State, Mississippi; 
Bowling Green; Kentucky; and Clay Center, Nebraska. The research is 
addressing animal production systems for cattle beef and dairy, swine, 
and poultry. The mitigation of poultry litter impacts is specifically 
addressed by research at University Park, Fayetteville, Mississippi 
State, and Tifton.
    Question. Additionally, Booneville is home to the only dedicated 
ARS sheep and goat research program. Sheep and goats are an ideal 
enterprise for small farms for the production of meat, wool, or milk, 
and there is an exploding demand for these products in the United 
States. What are your plans for conducting research in this area if you 
abandon Booneville?
    Answer. In addition to Booneville, ARS conducts research in sheep 
production at other locations--Clay Center, Nebraska (U.S. Meat Animal 
Research Center); Dubois, Idaho (U.S. Sheep Experiment Station); and El 
Reno, Oklahoma (Grazinglands Research Laboratory). Research at these 
locations is focused on the development of genetic resources for the 
sheep industry including an ``easy care'' genetic composite for small 
flock producers in the Midwestern and Eastern United States, and 
maternal and terminal lines adapted for large Western and Southwestern 
range flock production systems. This research program is also 
coordinated with the rangeland programs to examine the interaction 
between sheep and rangeland ecosystem services with specific focus on 
grazing and fire remediation, invasive weeds, and rangeland ecology. 
Additional research at the Grazinglands Research Laboratory is focused 
on grazing system forage using pastures and winter annual forages to 
reduce production costs and environmental impacts associated with 
grazing for both small and large animal ruminants. ARS is planning to 
initiate grazing goat research at El Reno in cooperation with the 
Langston University Goat Research Center. ARS is providing leadership 
for an international consortium which is developing a project to 
sequence the goat genome. This project is being developed by ARS 
scientists in Beltsville, Maryland, at the Beltsville Agriculture 
Research Center.
    Question. In your fiscal year 2012 budget proposal, this same 
Center was proposed to be one of the sites for a major increase in 
funding as part of an ARS biofuels feedstock initiative. Now this year 
ARS is apparently targeting for elimination grazing research and 
research that benefits small producers. I understand the budget 
realities the agency faces, but the on-again, off-again, chaotic nature 
of selecting funding priorities is out of line with the normal 
activities of a research agency focused on long-term, basic research. 
Can you explain the rationale behind the changes in ARS priorities from 
year-to-year?
    Answer. A portion of a President's budget request for $10 million 
in 2010, and $6 million in 2011 to the USDA Regional Biomass Research 
Centers was designated for Booneville, but these funds were not 
appropriated. The Booneville location now has only three scientist 
positions. Because of the loss of critical mass of scientists, and 
adequate funding to support priority biomass research at Booneville, 
small ruminant research will be addressed at other ARS locations 
including applications to small scale producers for goats at El Reno, 
Oklahoma, and coordination of regional biomass research at Temple, 
Texas.

                     DELTA OBESITY PREVENTION UNIT

    Question. USDA's fiscal year 2013 budget request proposes to 
eliminate funding for the Delta Obesity Prevention Research Unit in 
Little Rock, Arkansas. I am opposed to this proposed elimination. In 
previous years, ARS has proposed changing priorities for the Delta 
Obesity Prevention Research Unit. It was suggested by ARS that funding 
redirected from this unit would be used at AR Children's Nutrition 
Center, Tufts, and Houston to augment basic nutrition research that 
could be targeted to the Delta region. What happened to that proposal? 
This year's budget proposal simply proposes to terminate this funding 
and redirect ``to more critical needs.''
    Answer. The President's budget for fiscal year 2012 proposed 
redirection of funds from the Delta Obesity Prevention Research Unit 
(DOPRU) to a study that would evaluate factors affecting adherence to 
the Dietary Guidelines for Americans. The funds for that study were to 
be reallocated to Beltsville, Maryland, but all six of the ARS Human 
Nutrition Research Centers were to participate in the research and 
would have received a share of those funds distributed from Beltsville. 
This proposed reallocation was never implemented since Congress, in the 
2012 conference report, directed that the funds continue to support 
DOPRU. The proposed closure of DOPRU is part of the ARS proposed 
termination of several predominantly extramural research projects.

                           CATFISH INSPECTION

    Question. With passage of the Food, Conservation and Energy Act of 
2008 Congress shifted inspection and regulation of catfish from the 
Food and Drug Administration (FDA) to the United States Department of 
Agriculture (USDA) Food Safety and Inspection Service (FSIS). Since 
that time, USDA has undertaken a thorough process to implement this new 
responsibility, including issuing a proposed rule and completing the 
comment period on June 24, 2011. It has been almost 4 years since this 
responsibility was given to USDA-FSIS. When will the final rule be 
implemented?
    Answer. Because there are many factors that influence rulemaking, 
it is difficult to estimate when the final rule is published, but FSIS 
will do so as soon as possible.
    Question. What are the challenges with completing this rule?
    Answer. As you know, the law provided that USDA define ``catfish,'' 
which is not as simple as it may seem. In the taxonomy of fish, 
Siluriformes (the common name of which is ``catfish'') consist of 36 
different families, among which are Ictaluridae (North American channel 
and blue catfish) and Pangasiidae (which are common to Asia). While 
some Siluriformes imported from Asia include those in the family 
Ictaluridae, much of the product is in the family Pangasiidae. Thus, 
there is a great deal of controversy surrounding the question of 
whether ``catfish'' should be defined narrowly or broadly.
    Question. Will you commit to issuing this final rule this year?
    Answer. FSIS will publish a final rule as soon as possible.

                  FARM SERVICE AGENCY OFFICE CLOSURES
 
   Question. Do you foresee any need to take further action beyond the 
``Blueprint for Stronger Service'' initiative to further reduce the 
number of Farm Service Agency (FSA) county offices?
    Answer. There is currently no plan or proposal to close more than 
the 131 FSA county offices identified on January 9, 2012.
    Over the last 2 years, FSA's salaries and expenses appropriation 
has been reduced by more than 5 percent. These reductions have 
necessitated significant reductions in administrative spending, a 
reduction in permanent staffing by 12.5 percent, and the proposed 
consolidation of 131 offices in 32 States. These actions were designed 
to bring the Agency's operating budget in line with the current and 
expected future funding levels. USDA will continue to do its best to 
serve America's farmers and ranchers within the funding level set by 
Congress.
    Question. How could the process used to consider USDA field office 
consolidations be improved to involve stakeholders in the process 
before these proposals are officially announced?
    Answer. USDA adheres to congressional notification requirements in 
the annual appropriations acts. For FSA, additional guidelines are laid 
out in the 2008 farm bill.
    The proposal to close 131 FSA county offices remains the Agency's 
only proposal to close FSA offices. This proposal was announced on 
January 9, 2012. Over the following month, FSA held public meetings in 
each affected county and notified Congress of the proposed office 
closures on February 27, 2012. The public meetings enabled stakeholders 
to share their concerns with senior FSA leadership. FSA communicated 
about the circumstances that led to proposed county office closures--
the need to manage the Agency under significantly reduced operational 
spending, 12.5 percent fewer permanent staff, and an ever-increasing 
workload, while continuing to deliver the best possible service to 
farmers and ranchers. FSA's approach to consultation adhered to 
statutory requirements, and provided a transparent and inclusive means 
to communicate with affected parties.
    Question. With 2,800 NRCS offices and only 2,100 FSA offices 
remaining open across the country, how is USDA insuring that producers 
are being adequately serviced in locations without both agencies 
present?
    Answer. We strongly believe that co-location is a great benefit to 
producers, and we will continue to offer these arrangements wherever 
possible. However, it is important to note that even before the 
proposed closures were announced, not all FSA offices had an NRCS 
presence. Further, we do not believe the proposed closures 
significantly undermine our efforts to co-locate FSA and NRCS offices.
    FSA is modernizing IT and improving its business processes so that 
farmers will be able to do more of their business with FSA without 
having to visit an office. If the proposed consolidations occur, FSA 
will concentrate staff in its 2,113 remaining offices in order to 
provide consistent service in fully staffed, fully functioning offices.
    If the proposed consolidations take place, producers may choose any 
county office that is convenient for them to conduct their FSA 
business.
    Question. Recently there has been a lot of emphasis on reorganizing 
the field office structure of the Farm Service Agency in an attempt to 
provide better more timely service to the producers they serve. Most 
private businesses do not cut or make reductions at the customer level 
until a complete review of their structure has been completed above the 
field level. As I look at USDA's Blue Print for Success, it appears to 
me that you have not made any attempts to review FSA's structure above 
the field level to find needed savings. When does USDA plan on 
reviewing and reorganizing USDA/FSA above the field level? Does USDA 
have any plans to reduce the number of State offices?
    Answer. FSA reviewed its operations at all levels to identify 
administrative efficiencies that resulted in significant savings. FSA 
also achieved needed savings by reducing staff levels in national, 
State, and county offices by 12.5 percent. There is currently no plan 
or proposal to close any offices other than the 131 FSA county offices 
identified on January 9, 2012.
    Question. Under USDA's Blueprint for Success, a number of county 
offices met the criteria of two or fewer permanent full-time employees 
after VERA (voluntary early retirement program) and VSIP (voluntary 
incentive payment retirement program) programs in 2011. Some of these 
offices have the workload to support four or more employees and 
employed four or more FTEs when calendar year 2011 began. Because of 
VERA and VSIP, some of these offices were quickly reduced to two FTEs. 
When you looked at the number of employees for each office, did you 
take into account the previous workload of each office?
    Answer. The VERA and VSIP opportunities were implemented in order 
to reduce staffing necessary to live within current and expected future 
budget realities. To identify FSA offices for consolidation, USDA 
followed criteria provided by Congress in section 14212 of the 2008 
farm bill, which required, for any office closures, that the Secretary 
``first close any offices of the Farm Service Agency that--(a) are 
located less than 20 miles from another office of the Farm Service 
Agency; and (b) have two or fewer permanent full-time employees.'' In 
addition, FSA proposed for closure all offices with zero full-time, 
permanent employees regardless of the distance to another FSA office.
    Question. Office closure language included in the 2008 farm bill 
called for offices located closer than 20 miles apart would be the 
first offices considered for closure/consolidation. Under USDA's 
Blueprint for Success, there are a number of cases where the navigable 
miles between the proposed office to be closed and the proposed 
receiving office is significantly more than 20 miles. You mentioned in 
a previous letter that USDA used Euclidian miles in order to be more 
objective. Why was it determined that 20 Euclidian miles were more 
objective than 20 navigable road miles when developing the list of 
offices proposed to be closed/consolidated?
    Answer. USDA measured using Euclidian miles because Euclidean miles 
offer no advantages to any particular county. Euclidean miles are the 
most uniform and equitable unit of measurement for distance, regardless 
of geography or terrain.
    Question. Since 1996, USDA has prided itself in using the Service 
Center for customers utilizing programs and services provided by any 
agency in USDA. Repeatedly, USDA has stated the importance of having 
all USDA agencies in a single location to provide maximum customer 
service. Knowing 131 of the 259 USDA offices being proposed for closure 
are FSA county offices, this will certainly cause the Service Center 
concept to be abandoned in many areas. How can USDA maximize customer 
service while abandoning the Service Center, causing USDA customers to 
visit separate locations to transact business?
    Answer. It is important to note that even before the proposed 
closures were announced, not all FSA offices were Service Center 
locations. Further, we do not believe the proposed closures undermine 
the Service Center concept. However, we strongly believe the Service 
Center concept is a great benefit to producers, and we will continue to 
offer these arrangements wherever possible. We understand the concerns 
of producers who will have to travel to another location to conduct 
business with FSA once consolidations take effect. However, over the 
past 3 years, FSA has had to make tough decisions to be able to 
continue to operate within significantly reduced budgets.
    FSA is modernizing IT and improving its business processes so that 
farmers will be able to do more of their business with FSA without 
having to visit an FSA office. FSA will concentrate staff in its 
remaining offices in order to provide consistent service in fully 
staffed, fully functioning offices. Producers affected by an office 
closure will be able to choose any county office that is convenient for 
them to conduct their FSA business.

                          SUBCOMMITTEE RECESS

    Senator Kohl. And this hearing is recessed.
    [Whereupon, at 3:53 p.m., Thursday, March 29, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]
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