[Senate Hearing 112-281]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 112-281

                       FARM BILL ACCOUNTABILITY:
                      THE IMPORTANCE OF MEASURING
                         DUPLICATION AND WASTE



                               before the

                       COMMITTEE ON AGRICULTURE,
                         NUTRITION AND FORESTRY

                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION


                             JUNE 23, 2011


                       Printed for the use of the
            Committee on Agriculture, Nutrition and Forestry

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                 DEBBIE STABENOW, Michigan, Chairwoman

PATRICK J. LEAHY, Vermont            PAT ROBERTS, Kansas
TOM HARKIN, Iowa                     RICHARD G. LUGAR, Indiana
KENT CONRAD, North Dakota            THAD COCHRAN, Mississippi
MAX BAUCUS, Montana                  MITCH McCONNELL, Kentucky
SHERROD BROWN, Ohio                  MIKE JOHANNS, Nebraska
ROBERT P. CASEY, Jr., Pennsylvania   JOHN BOOZMAN, Arkansas
AMY KLOBUCHAR, Minnesota             CHARLES E. GRASSLEY, Iowa
MICHAEL BENNET, Colorado             JOHN THUNE, South Dakota
KIRSTEN GILLIBRAND, New York         JOHN HOEVEN, North Dakota

             Christopher J. Adamo, Majority Staff Director

              Jonathan W. Coppess, Majority Chief Counsel

                    Jessica L. Williams, Chief Clerk

              Michael J. Seyfert, Minority Staff Director

                Anne C. Hazlett, Minority Chief Counsel


                            C O N T E N T S



Farm Bill Accountability: The Importance of Measuring 
  Performance, While Eliminating Duplication and Waste...........     1


                        Thursday, June 23, 2011

Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan, 
  Chairwoman, Committee on Agriculture, Nutrition and Forestry...     1
Roberts, Hon. Pat, U.S. Senator from the State of Kansas.........     2
Conrad, Hon. Kent, U.S. Senator from the State of North Dakota...     4
Grassley, Hon. Charles E., U.S. Senator from the State of Iowa...     3

                                Panel I

Concannon, Hon. Kevin, Under Secretary, Food, Nutrition, and 
  Consumer Services, U.S. Department of Agriculture, Washington, 
  DC.............................................................    11
Leonard, Hon. Joe, Jr., Ph.D., Assistant Secretary for Civil 
  Rights, U.S. Department of Agriculture, Washington, DC.........    12
Scuse, Hon. Michael, Acting Under Secretary, Farm and Foreign 
  Agricultural Services, U.S. Department of Agriculture, 
  Washington, DC.................................................     9
Sherman, Hon. Harris, Under Secretary, Natural Resources and 
  Environment, U.S. Department of Agriculture, Washington, DC....    10
Tonsager, Hon. Dallas, Under Secretary, Rural Development, U.S. 
  Department of Agriculture, Washington, DC......................     8

                                Panel II

Blankenship, Brett, Blankenship Brothers, Washtucna, Washington..    32
Fong, Phyllis, Inspector General, U.S. Department of Agriculture, 
  Washington, DC.................................................    30
Omar, Masouda, Manager of Business Finance Loan Production, 
  Colorado Housing and Finance Authority, Denver, CO.............    34


Prepared Statements:
    Casey, Hon. Robert, Jr.......................................    44
    Chambliss, Hon. Saxby........................................    45
    Thune, Hon. John.............................................    46
    Blankenship, Brett...........................................    49
    Fong, Phyllis................................................    57
    Omar, Masouda................................................    74
Testimony was Submitted Collectively from USDA for the Following 
Hon. Kevin Concannon, Hon. Joe Leonard, Jr., Hon. Michael Scuse, 
  Hon. Harris Sherman, Hon. Dallas Tonsager......................    79
Document(s) Submitted for the Record:
AcMoody Farms, Union City, Michigan,on behalf of the American 
  Fruit and Vegetable Processoers and Growers Coalition, prepared 
  statement......................................................   102
U.S. Government Accountability Office (GAO), prepared statement..   105
Center for Agribusiness Excellence, Tarleton State University, 
  prepared statement.............................................   119
Question and Answer:
Stabenow, Hon. Debbie:
    Written questions to Hon. Kevin Concannon....................   133
    Written questions to Phyllis Fong............................   157
    Written questions to Hon. Joe Leonard........................   162
    Written questions to Hon. Michael Scuse......................   243
    Written questions to Hon. Harris Sherman.....................   259
    Written questions to Hon. Dallas Tonsager....................   278
    Written questions to U.S. Department of Agriculture..........   300
Baucus, Hon. Max:
    Written questions to Masouda Omar............................   241
    Written questions to Hon. Dallas Tonsager....................   288
Brown, Hon. Sherrod:
    Written questions to Brett Blankenship.......................   130
    Written questions to Hon. Kevin Concannon....................   141
    Written questions to Hon. Joe Leonard........................   163
    Written questions to Hon. Michael Scuse......................   251
    Written questions to Hon. Dallas Tonsager....................   290
Casey, Hon. Robert, Jr.:
    Written questions to Hon. Kevin Concannon....................   146
Chambliss, Hon. Saxby:
    Written questions to Hon. Kevin Concannon....................   153
    Written questions to Phyllis Fong............................   160
    Written questions to Hon. Harris Sherman.....................   271
    Written questions to Hon. Dallas Tonsager....................   294
Grassley, Hon. Charles:
    Written questions to Hon. Joe Leonard........................   163
    Written questions to Hon. Michael Scuse......................   256
Klobuchar, Hon. Amy:
    Written questions to Hon. Kevin Concannon....................   147
Lugar, Hon. Richard G.:
    Written questions to Hon. Kevin Concannon....................   150
    Written questions to Hon. Michael Scuse......................   251
Nelson, Hon. E. Benjamin:
    Written questions to U.S. Department of Agriculture..........   301
Thune, Hon. John:
    Written questions to Brett Blankenship.......................   132
    Written questions to Hon. Kevin Concannon....................   155
    Written questions to Phyllis Fong............................   160
    Written questions to Hon. Joe Leonard........................   163
    Written questions to Masouda Omar............................   241
    Written questions to Hon. Michael Scuse......................   257
    Written questions to Hon. Harris Sherman.....................   277
    Written questions to Hon. Dallas Tonsager....................   297
Blankenship, Brett:
    Written response to questions from Hon. Sherrod Brown........   130
    Written response to questions from Hon. John Thune...........   132
Concannon, Hon. Kevin
    Written response to questions from Hon. Debbie Stabenow......   133
    Written response to questions from Hon. Sherrod Brown........   141
    Written response to questions from Hon. Robert Casey, Jr.....   146
    Written response to questions from Hon. Amy Klobuchar........   147
    Written response to questions from Hon. Kirsten Gillibrand...   148
    Written response to questions from Hon. Richard G. Lugar.....   150
    Written response to questions from Hon. Saxby Chambliss......   153
    Written response to questions from Hon. John Thune...........   155
Fong, Phyllis:
    Written response to questions from Hon. Debbie Stabenow......   157
    Written response to questions from Hon. Saxby Chambliss......   160
    Written response to questions from Hon. John Thune...........   160
Leonard, Hon. Joe
    Written response to questions from Hon. Debbie Stabenow (with 
      attachments)...............................................   162
    Written response to questions from Hon. Sherrod Brown........   163
    Written response to questions from Hon. Charles Grassley.....   163
    Written response to questions from Hon. John Thune...........   163
Masouda Omar:
    Written response to questions from Hon. Max Baucus...........   241
    Written response to questions from Hon. John Thune...........   241
Scuse, Hon. Michael
    Written response to questions from Hon. Debbie Stabenow (with 
      attachments)...............................................   243
    Written response to questions from Hon. Sherrod Brown........   251
    Written response to questions from Hon. Richard G. Lugar.....   251
    Written response to questions from Hon. Charles Grassley.....   256
    Written response to questions from Hon. John Thune...........   257
Sherman, Hon. Harris
    Written response to questions from Hon. Debbie Stabenow......   259
    Written response to questions from Hon. Saxby Chambliss......   271
    Written response to questions from Hon. John Thune...........   277
Tonsager, Hon. Dallas
    Written response to questions from Hon. Debbie Stabenow......   278
    Written response to questions from Hon. Max Baucus...........   288
    Written response to questions from Hon. Sherrod Brown........   290
    Written response to questions from Hon. Saxby Chambliss......   294
    Written response to questions from Hon. John Thune...........   297
U.S. Department of Agriculture:
    Written response to questions from Hon. Debbie Stabenow......   300
    Written response to questions from Hon. E. Benjamin Nelson...   301

                       FARM BILL ACCOUNTABILITY:
                      THE IMPORTANCE OF MEASURING
                         DUPLICATION AND WASTE


                        Thursday, June 23, 2011

                              United States Senate,
          Committee on Agriculture, Nutrition and Forestry,
                                                     Washington, DC
    The Committee met, pursuant to notice, at 9:31 a.m., in 
Room G50, Dirksen Senate Office Building, Hon. Debbie Stabenow, 
Chairwoman of the Committee, presiding.
    Present: Senators Stabenow, Conrad, Nelson, Brown, 
Klobuchar, Bennet, Gillibrand, Roberts, Cochran, Chambliss, 
Grassley, and Thune.

                          AND FORESTRY

    Chairwoman Stabenow. The meeting will come to order of the 
Senate Agriculture, Nutrition and Forestry Committee and we 
welcome everyone today. We welcome all of our witnesses. We 
appreciate your efforts and the time to be here.
    We are focused this morning on accountability, making sure 
that taxpayers are getting their money's worth and that we are 
making sure that the USDA services are efficient and effective 
for the farmers, the ranchers, the families that they serve.
    In my state of Michigan with the economy as it has been, 
every dollar is hard-earned, and I am sure my colleagues can 
say the same in their states. Taxpayers have every right to 
expect that their money is being used wisely and effectively. 
We know, because of the recession, there are families who have 
paid taxes all of their lives, who never thought in their 
wildest dreams they would need help putting food on the table, 
who now need food assistance. And that is even more of a reason 
to make sure that we are stopping fraud and abuse and managing 
every dollar as responsibly as possible.
    So as we look at the Farm Bill, I believe we need to ask 
questions like, Are we getting the right results? Are we being 
cost-effective? Are we eliminating waste, fraud, and abuse?
    We have two great panels here today. We have the four Under 
Secretaries of the Department of Agriculture as well as the 
Assistant Secretary for Civil Rights who will make up our first 
panel. We also have USDA's Inspector General and two 
individuals who will talk about their personal experiences 
working with the Department.
    I have asked our panels to be thinking about three things 
today as we look at accountability. The first is measuring 
performance and efficiency. How are we measuring whether 
programs are getting results and being cost- effective? Workers 
in my state get annual performance reviews and they have a 
right to apply the same standard or expect us to apply the same 
standard to our Government.
    We also need to be carefully looking at how we stop fraud 
and abuse. Last week we saw great work of the Inspector General 
cracking down on fraud related to the SNAP program in my home 
state of Michigan.
    As I indicated, so many families in Michigan never imagined 
they would be in a situation where they would need food help, 
and we, with dollars tight, cannot afford to have even one 
dollar go to fraud or even one person abusing the system. We 
put a number of requirements into the last Farm Bill and I am 
eager to see how those are working.
    The second issue is eliminating duplication. In Michigan, 
we have a proud history of making wheels, but we do not need to 
reinvent them. Where do we have programs that are overlapping 
or working at cross-purposes?
    Where do we have people wasting time and money doing work 
that somebody else is already doing? How can we bring that 
together and do it better? We need to be thinking about ways 
that we can streamline services. We are offering to make them 
not only more effective, but also cost- effective for 
    And finally, we need to look at customer service. How well 
is the USDA providing services to our farmers, our ranchers, 
our foresters? I would like for us today to be thinking about 
how we can cut down on the red tape, the paperwork that our 
producers need to worry about and make USDA services more 
accessible and user-friendly for all of our constituents.
    We have two great witnesses today who will talk about their 
personal experiences working with the Department, and I am 
really looking forward to their perspective as well. So again, 
welcome to an important hearing as we begin to discuss and 
debate as we move forward on Farm Bill policy important for our 
country, important for jobs, and we welcome all of your input 
    I would now turn to my colleague and friend, Senator 


    Senator Roberts. Well, thank you, Madam Chairwoman. First 
of all, I want to thank you for these new digs. This is, of 
course, appropriate in regards to the mission and the goals and 
the efforts of the always powerful Senate Agriculture Committee 
and I thank you for this. We are going to have to talk to 
members of the Rules Committee, of which I am one, to make this 
a permanent hearing room.
    Madam Chairwoman, Senator Lugar could not be here today due 
to another commitment. He has asked me to submit comments from 
the American Fruit and Vegetable Processors and Growers 
Coalition in his absence, so I ask unanimous consent that these 
comments may be part of the record at this point.
    Chairwoman Stabenow. Without objection, so ordered.
    [The information can be found on page 102 in the appendix.]
    Senator Roberts. Madam Chairwoman, I know that Senator 
Grassley has an important committee meeting on the Senate 
Judiciary Committee. At this time, I am going to suggest that 
we recognize Senator Grassley and then obviously would move 
over to Senator Conrad. Welcome back, Senator Conrad. And then 
you can recognize me for any sterling words of truth that I may 
have to make.
    Chairwoman Stabenow. We will wait with bated breath for 
that moment. But thank you. And we do want to turn to Senator 
Grassley, who I know cares about these issues and has to leave. 
We welcome your opening statement.

                         STATE OF IOWA

    Senator Grassley. I am Ranking Member on the Judiciary 
Committee and so that is why I will not be able to be with you 
for the whole hearing, and I did ask for special exemption to 
make a statement because, number one, to thank the Chairwoman 
because she responded to a request that I asked her to include 
civil rights as an issue, along with other things.
    And I also think it is very important that I be here, being 
a farmer and the start of the Farm Bill. So thank you for your 
consideration. I am going to leave some questions for answer in 
writing, and I would like to have that be accomplished as well.
    The focus of today's hearing is timely as we consider what 
policies to set in the next Farm Bill. We have to make sure 
Farm Bill programs are implemented the way we intended. If they 
are not being properly administered, we need to fix the 
    And I want to thank all the Under Secretaries and Assistant 
Secretaries for being here today. Many farmers are probably 
eager to hear the Department's comments regarding crop 
insurance because crop insurance is very crucial to the 
operations of most farms today. The crop insurance program has 
had a reduction in funds, so it is more important than ever 
that we hear what the Department is doing to guarantee the 
program is effectively accomplishing the goals of risk 
    I am also eager to hear from the Department what they are 
doing to ensure individuals applying for farm program payments 
who are truly, according to the legal language, being actively 
engaged in farming.
    I am also particularly pleased that Secretary Leonard is 
here and that the Chairwoman responded to my request to bring 
up issues of civil rights. I made this request back in March 
and I am very thankful that she is holding this hearing, 
including that issue. I will note, I also made the same request 
to two Chairs of the Agriculture Committee as well in the past, 
so this has been a very important issue for me.
    I am glad that Mr. Leonard is here today, and I want 
everybody to know that I believe that civil rights and 
discrimination issues facing the Department are a big concern 
that this Committee needs to monitor the issue regularly. I do 
hope that you will consider conducting a separate hearing on 
civil rights and discrimination some time.
    As for today's hearing, Mr. Leonard, I hope that you will 
shed some light on how the Department is handling some of the 
problems that I think are still plaguing us over the years, and 
a long time before you were involved. Specifically, I would 
like you to speak on what the Department is doing to address 
complaints made by employees.
    I continue to hear from USDA employees that they have to 
wait a long time to have their complaints heard and processed. 
I have also received reports about retaliatory behavior by 
managers after complaints are made. So that is a very important 
thing, that we address that issue.
    I am not passing judgment on the validity of any of the 
employees' particular claims. My concern is that their claims 
be considered in a timely and appropriate manner because that 
is what they deserve. I hope the Department will provide us 
with some idea on how that is turning out.
    I will leave my questions, Madam Chairwoman, and thank you 
for the privilege of addressing the Committee, even as a less 
senior member of the Committee.
    Chairwoman Stabenow. Well, thank you, Senator Grassley. You 
certainly are not a junior member when it comes to knowledge 
and experience on this Committee and we are very glad that you 
are a member of this Committee and will be part of writing the 
Farm Bill, as you have in the past.
    I should mention to my colleagues, we went down a road here 
of Senator Grassley needing to leave early and allowed him to 
make an opening statement. I believe Senator Conrad is in the 
same position. I am now opening this up, so I would ask the 
discretion from my colleagues. We certainly will not say no if 
someone wants to make a brief opening statement, but we do want 
to get to the witnesses. But I will turn to Senator Conrad who 
also is going to have to leave and is another senior member we 
are so lucky to have on this Committee.

                          NORTH DAKOTA

    Senator Conrad. Thank you, Madam Chairman. Thank you very 
much for holding this hearing. I think it is a critically 
important one in the circumstances we confront. Before I just 
briefly talk, I would like to draw the attention of my 
colleagues to a disaster that is unfolding in my state. In 
Minot, North Dakota, more than 11,000 people have been 
evacuated since yesterday, and we face the worst flood in 
recorded history in my state.
    We are now anticipating a flood that would be eight feet 
higher than the last flood of record in our state, and so, as 
soon as we are done voting here today, I will be going home, 
along with the rest of the delegation, to meet with our 
Governor and the emergency officials in charge of flood 
    Senator Roberts. Would the Senator yield at this point?
    Senator Conrad. Yes, I would be happy to yield.
    Senator Roberts. I want to thank the Senator for his past 
efforts in behalf of his state. When you incur these-- I do not 
know what we have done to Mother Nature, but she sure has not 
been treating us very well. In Kansas, we are burning up in the 
western part of our state, and then we are seeing the first 
surge that you have already experienced.
    I do not know what it was today or this morning. I did not 
get a chance to check. But it is rolling down Iowa and now into 
Kansas at about 160 cubic feet per second. That is about, as 
you take a snapshot right there in time, that is the same 
amount of water as goes over the Niagra Falls. And you got the 
brunt of it starting up from the mountain snow pack and then 
the snow pack you have and then the incredible rain you had on 
top of that.
    I have given you a little bit of static in the past about 
play the lakes and other things, but this is a very serious 
thing. It is the worst flood, I think, the Corps has told me, 
since 1898. And so, I wish you well and all of the states that 
are involved here. At least we had a little bit of advanced 
information, but I do not know what you do with a flood that is 
eight-foot over the last flood. It is going to be an incredible 
    Madam Chairman, we are going to have to do something on 
this Committee in this regard, and for that matter, the 
Congress is as well. But at any rate, I empathize with the 
Senator and thank you.
    Senator Conrad. I thank the Senator very much for his 
comment. This is unprecedented. On Saturday morning, we were 
given reports that looked as though we had dodged the bullet. 
Within 48 hours, they increased the flood forecast in terms of 
the depth of water coming through Minot by 11 feet. And there 
is simply no way to respond.
    And at that point, it was evacuate people, build secondary 
defenses to try to protect critical infrastructure, and prepare 
for a long, slow slog because this is going to be unlike any 
flood in history in our state. The water is not going to come 
and go. The water is going to come and stay.
    The chief flood fighter for the Corps of Engineers told me 
they now anticipate that there will be high water in our state 
through the middle of July. So these are homes that are going 
to be under water for an extended period of time. My own cousin 
has had to move all of their furniture to their attic because 
they are going to have seven feet of water on their main floor. 
And that is a story repeated many times throughout this 
    So I did want to say, Madam Chairman, with respect to this 
hearing, how important I believe it to be, because when we are 
borrowing as a nation 40 cents of every dollar we spend, no 
taxpayer can be wasted and no program can be abused. And I want 
to salute the Inspector General to have identified $256 million 
in potential savings, going after over-payments, going after 
recording errors.
    I look at the Food Stamp Program, the lowest error rate now 
ever. That is a significant accomplishment. When I look at what 
is happening in terms of our exports, exports doubling, a 
dramatic increase there. And I look in program after program. 
USDA has gotten the message. USDA has gotten the message, 
reducing travel, canceling bad loans, renegotiating the basic 
agreement on crop insurance.
    I am not going to go further, just to say, Madam Chair, I 
hope that where these negotiations are being conducted on our 
future budget, that people understand, Yes, Agriculture is 
ready to participate and have more savings, significant savings 
in the billions of dollars.
    But it is also true that there are some who are pushing an 
agenda that would absolutely cripple production agriculture 
which is one of the true bright spots we have in exports for 
the United States, a $28 billion increase over last year. So 
let us not kill the baby in the crib, and that message needs to 
go to the people who are negotiating with the Vice President. 
Let us not kill the baby in the crib.
    You could cripple production agriculture in this country, 
which is one of the real bright spots. I thank the Chair.
    Chairwoman Stabenow. Well, thank you very much. I could not 
agree more with your comments, Senator Conrad, and our whole 
Committee stands ready to help you and your state, as I know 
the Department does, and I know the Secretary does and we wish 
you well today.
    I am going to turn back to our Ranking Member who deferred 
to Senator Grassley and Senator Conrad because they have to 
leave early. Then after that, unless there is a burning desire 
to say something, we are going to move to the witnesses. And 
so, we start down the road of allowing a couple of members to 
give opening comments, but we do want to get to the witnesses, 
and I will turn this back to our Ranking Member.
    Senator Roberts. Thank you, Madam Chairwoman, and I would 
like to associate myself with the remarks by the distinguished 
Senator who is doing everything he can to be of help to his 
state during difficult times. That water will come down to the 
Missouri to the Mississippi and it will be clear into the end 
of August until we are able to see all that take place.
    Our Constitution created a unique relationship between 
Congress and the Administration and I want to thank all of our 
witnesses here for taking valuable time out of your schedule to 
come up and testify before us.
    We in Congress identify issues affecting the daily lives of 
our constituents, and when appropriate, we develop programs 
through legislation to address those issues. And in this 
Committee, much of that work is done in the Farm Bill. We grow 
attached to farm bills here. Perhaps it is because we spend so 
much time working together to find the right balance for a bill 
that is national in scope, and yet responsible to taxpayers.
    More especially it is because of the work that we do in 
this Committee has a direct impact on our constituents' ability 
to produce the food and the food and fiber necessary to keep 
our economy running and our people fed, and that also means a 
troubled and hungry world.
    After the agreements have been made and in the case of the 
last Farm Bill, the vetoes have been overridden, those programs 
we crafted are handed off to the USDA for implementation and 
these are the folks who do it. So today, I look forward to 
hearing how well the Administration is carrying out the laws 
passed by Congress, not only in the Farm Bill, but also in the 
Child Nutrition Bill. Are they delivering the programs 
effectively, efficiently, fairly, and as intended by this 
    Madam Chairwoman, soon I am going to have to leave in order 
to testify before the Homeland Security and Government Affairs 
Committee. I apologize to you for that, but I have introduced a 
bill that codifies the President's Executive Order of January 
18, and they have asked me to walk them through it and I am 
going to do exactly that.
    I would like to tell the Committee and you that the bill 
follows the President's order to require agencies to review 
regulations and hold them up to a cost benefit yardstick just 
like these folks do. It sounds like a very good idea to me.
    If our businesses, large, medium and small, and our farmers 
and ranchers and growers are required to comply with 
regulations, our Government should at least be required to 
fully understand the impact of those regulations before 
imposing them. I am still taking co-sponsors if anybody is 
interested and if anybody would like to raise their hand, I 
would be happy to add them as a co-sponsor.
    I hope to return in time to ask questions, but if not, I 
will submit written questions for the record and I want to 
thank Secretary--well, he could be a Secretary some day, who 
knows--Senator Chambliss for standing in for me while I go to 
the DHS hearings. Thank you very much.
    Chairwoman Stabenow. Thank you very much, Senator Roberts, 
and we will now proceed to the witnesses. Again, I had opened 
it up to a couple of our colleagues, but if there is not a 
burning comment to be made, we are going to proceed to the 
witnesses. All right.
    Let me first introduce and welcome Under Secretary of Rural 
Development, Dallas Tonsager. Mr. Tonsager grew up on a dairy 
farm in South Dakota where he eventually served as USDA State 
Director for Rural Development. Much of his career has been 
focused on economic opportunities for rural communities; worked 
as the team that reinvented the Rural Business Guarantee Loan 
Program in the late '90s. Prior to rejoining USDA, served on 
the Board of Directors for the Farm Credit Administration 
promoting rural investment. Welcome.
    Michael Scuse--I never get your name right, so I want to 
make sure I am doing this right.
    Mr. Scuse. Michael Scuse.
    Chairwoman Stabenow. Scuse. That is what I thought. I 
wanted to make sure I had this right. It is good to see you 
again. By the way, appreciate your efforts as it relates to the 
weather disasters and what has been happening. So Michael Scuse 
is the Acting Under Secretary of Farm and Foreign Agricultural 
Services. He comes from Delaware where he and his brother have 
had a successful grain operation for over 35 years.
    Mr. Scuse knows agriculture from both a local and national 
perspective, having been the Secretary of Agriculture in 
Delaware from 2001 to 2007, and Deputy Under Secretary for FFAS 
for the past two years.
    We also want to welcome Harris Sherman as Under Secretary 
for Natural Resources and Environment, Mission Area, and we 
welcome you. Overseeing both the Forest Service and the Natural 
Resources Conservation Service, Mr. Sherman has dedicated his 
career to protecting our country's natural resources.
    As a practicing lawyer, he specialized in environmental 
law, and more recently, has served as Executive Director of 
Colorado's Department of Natural Resources.
    Under Secretary for Food, Nutrition, and Consumer Services, 
Kevin Concannon, welcome as well. He oversees, among other 
things, the Supplemental Nutrition Assistance Program. Over a 
25-year career in public service, Mr. Concannon has been the 
Director of State Health and Human Services in Maine, Oregon, 
and Iowa.
    And last, but certainly not least, we will hear from Dr. 
Joe Leonard, the Assistant Secretary for Civil Rights at the 
USDA where he oversees USDA's civil rights programs and ensure 
that programs are compliant with applicable Federal civil 
rights laws. Prior to joining USDA, he was the Executive 
Director of the Congressional Black Caucus, and before that, 
Executive Director of the Black Leadership Forum.
    We welcome each of you and we will now turn first to Under 
Secretary Tonsager for your testimony. Welcome.


    Mr. Tonsager. Thank you, Madam Chairman. Please forgive me. 
Thank you, Madam Chairman, and thank you, Ranking Member 
Roberts. Members of the Committee, I am pleased to present you 
Rural Development's accomplishments and activities to ensure 
accountability of resources provided through the 2008 Farm 
    As stewards of more than 40 Farm Bill programs, our mission 
is to help rural America grow and thrive as it captures the 
emerging opportunities of the 21st century. From creating jobs 
to funding facilities and infrastructure, and connecting them 
all through the deployment of new technology, the 2008 Farm 
Bill has equipped us with remarkable tools and maximizing these 
resources, Rural Development continues to review and modify 
goals, objectives, and performance measures.
    We pay close attention to outcomes and results that inspire 
businesses to incubate and grow. Rural Development is also 
engaged in a regulatory review process that is intended to 
streamline program requirements and practices.
    President Obama established a goal to deploy the next 
generation of high speed broadband services. Nearly seven 
million rural residents, 364,000 businesses and 32,000 anchor 
institutions will gain new or improved access to high speed 
Internet through broadband.
    The 2008 Farm Bill recognized that providing loans in both 
unserved and under-served areas may be necessary to bring 
broadband to the under-served. Because of over- building 
concerns that stem from the 2002 Farm Bill, broadband funding 
was limited to areas with three or few service providers.
    The 2008 Farm Bill also featured several energy programs 
designed to advance biomass and biofuel production, which holds 
the potential to create and save jobs and reduce the country's 
consumption of fossil fuels. Program delivery methods have been 
streamlined and revised to provide greater consistency to our 
    For example, an example of refocusing and realigning and 
streamlining is a Comprehensive Loan Program initiative. CLP is 
an automation enhancement which retires legacy accounting 
systems and replaces them with updated accounting systems. We 
also are taking actions that will assist communities to invest 
in local and regional priorities. In rural America, communities 
have realized that working collaboratively creates 
opportunities and growth.
    Looking ahead, we are committed to working with Congress in 
a continued effort to streamline what is practical and to 
provide our customers easier access to our programs. The 2012 
Farm Bill will be a great tool to help complement these efforts 
and we look forward to your questions.
    [The prepared statement of the USDA can be found on page 79 
in the appendix.]
    Chairwoman Stabenow. Thank you very much.
    Mr. Scuse, welcome.


    Mr. Scuse. Madam Chairwoman, Ranking Member, members of the 
Committee, I want to thank you for the opportunity to testify 
    At the Farm and Foreign Agricultural Services, we are 
streamlining our programs, processes, and procedures to make 
them more accountable and more efficient and more effective. 
The Farm Service Agency continues to move forward with business 
and technology modernization initiatives that provide critical 
services to our nation's farmers and ranchers, while at the 
same time achieving cost efficiencies, improving security and 
accountability, and further reducing unnecessary burdens on our 
    FSA has implemented new systems to incorporate adjust gross 
income qualifications, program payment limitations, and direct 
attribution, and has incorporated actively engaged policy into 
program administration. FSA has launched the Midas Initiative 
to modernize price support, conservation, production 
assistance, and emergency assistance programs.
    Midas will improve the delivery of farm programs to our 
customers by modernizing information technology systems and 
business practices. Since its launch, Midas has already 
improved service delivery and reduced error rates. FSA mission 
area will further reduce burdens on program participants 
through the consolidation of required participant information.
    For an example, a developing pilot program called the 
Average Crop Reporting Streamlining Initiative will allow 
producers to report common information at their first point of 
contact with USDA, whether it is at the FSA service center or 
with an improved insurance provider, or even online at home. 
This effort will allow for common data to be reported on time, 
thereby reducing burdens on producers and ensuring data 
consistency across all of our USDA programs.
    USDA Foreign Agricultural Service annually assesses and 
aligns overseas offices to be serve agricultural export 
interests and minimize cost. FAS's presence in regions and 
countries with high operating costs have been reduced and 
allocated to countries where growing middle classes and trade 
agreements present the very best opportunities.
    Our leaner FAS overseas presence remains as effective as 
ever, contributing to a record level of agricultural exports in 
the calendar year 2010 of $115.8 billion. FAS also improved the 
performance and efficiency of its foreign market development 
programs by implementing a 21st century Web-based system that 
simplifies the application process, reduces grant award time, 
and enhances program evaluation.
    Madam Chairwoman, members of the Committee, I look forward 
to answering your questions. Thank you very much.
    Chairman Stabenow. Thank you.
    Mr. Sherman, welcome.

                         WASHINGTON, DC

    Mr. Sherman. Thank you, Madam Chairwoman, and members of 
the Committee. I am pleased to give you a brief snapshot of a 
few of the recent NRCS and Forest Service efforts to improve 
program effectiveness and to eliminate duplication and waste. 
Our goal is to position both of these agencies as leaders in 
21st century conservation and management.
    First, how are we improving delivery of our conservation 
programs? Our conservation programs cannot work without a 
strong partnership with farmers, ranchers, and private forestry 
owners, so we need to make participation in USDA's conservation 
programs easier and less complex.
    To that end, NRCS recently initiated a five-year 
Conservation Delivery Streamlining Initiative. We call it CDSI. 
This initiative will integrate our scientific and business 
tools to significantly reduce the amount of time our technical 
experts are spending in the office, and increase the time that 
they are spending in the field. This will be accomplished by 
deploying nimble and mobile wireless 21st century technology to 
support our work with producers.
    We estimate that full implementation of CDSI will allow our 
field technical staff to spend as much as 75 percent of their 
time in the field working directly with clients, compared to 
the 20 to 40 percent that is currently taking place. And 
perhaps most importantly, CDSI will revolutionize the way our 
customers interact with us and participate in our programs.
    NRCS and our clients will finalize in the field 
conservation planning, document the expected environmental 
benefits, and accelerate payments to the producers, and allow 
24/7 access so that customers can check their plans and 
contracts at their convenience.
    Second, it is important that we measure our performance and 
we improve efficiency. Conservation programs, like all other 
Federal programs, are facing significant budget constraints, so 
we must better focus our conservation investments and clearly 
demonstrate the resulting benefits.
    One of our key tools to accomplish this is the Conservation 
Effects Assessment Projects, CEAPs, which are designed to 
estimate the effects of conservation practices on the 
landscape. The CEAP crop assessment combines comprehensive 
surveys and detailed soil information with edge of field and 
in-stream modeling to produce scientifically-based estimates of 
the effects that conservation is having on crop land.
    The first two of 14 regional CEAP crop land reports for the 
Upper Mississippi River Basin and the Chesapeake Bay have 
reported on great progress farmers are making in reducing 
sediment and nutrient losses. While at the same time it has 
revealed the need for a more comprehensive nutrient management 
program and continued targeting of our financial and technical 
    The Forest Service is also involved in a variety of ways to 
prioritize resources and work with states and local governments 
to improve the health of our nation's forests. I would be happy 
to answer any questions you might have about these and other 
ongoing efforts. Thank you, Madam Chairman.
    Chairwoman Stabenow. Thank you very much.
    Mr. Concannon, we welcome you as well.


    Mr. Concannon. Thank you very much, Madam Chairwoman and 
Ranking Member, Senator Roberts, and members of the Committee 
for this opportunity for me to testify before you today.
    May I begin by expressing my appreciation to all of you for 
the bipartisan approach this Committee has taken over the years 
in working with USDA and, specifically, with the Food and 
Nutrition Service to address program integrity. And as members 
are undoubtedly are aware, we are living through a period of 
time in this country where these nutrition programs have never 
been as urgently needed as they are today.
    Americans deserve excellence from their Government, and we 
understand that at USDA, when it comes to accountability. We 
know that the mission of the Nutrition Assistance Programs, 
which serve millions of Americans, is inseparable from the 
responsible stewardship of Federal funds. Waste and abuse draw 
away resources from the low-income children, individuals and 
families who need them the most. And our ability to continue to 
serve these families requires public confidence that benefits 
are used appropriately and go only to those who qualify.
    Most notably, last week Secretary Vilsack announced that 
SNAP's national payment error rate fell to 3.81 percent in the 
fiscal year 2010. This is the fourth consecutive year of record 
low error rates and the continuation of a decade-long 
improvement trend. And this is a success story for which all of 
us, Congress, the USDA, our state partners which administer 
SNAP, share both the responsibility and the credit.
    But beyond payment accuracy, accountability also entails a 
commitment to ensure that benefits are used properly. The sale, 
purchase, or exchange of SNAP benefits for cash, what we refer 
to as trafficking, is illegal and punishable by criminal 
    Over the last 15 years, FNS has aggressively sought to 
reduce trafficking in SNAP from what extended over a period of 
years during the era of paper coupons, roughly 4 percent 
trafficking was typical during that period of time, to its 
current level of 1 percent of the SNAP Program.
    But we have not rested on the success of this reduction. 
All available resources, from state of the art data mining 
technology, to undercover investigations, to criminal 
prosecutions are used to ensure that recipients and retailers 
alike, who misuse benefits, are held accountable.
    In conclusion, we recognize that effective accountability 
in the Nutrition Assistance Programs takes long-term sustained 
effort working closely with our program partners. My team and I 
are seeking every opportunity to build on our success with new 
strategies to tackle the challenges that remain before us.
    I believe we can improve performance and accountability 
without compromising service to those in need. I look forward 
to working with you in this regard. Thank you again for the 
opportunity to be here today.
    Chairwoman Stabenow. Thank you very much.
    Dr. Leonard, welcome.


    Mr. Leonard. Thank you, Madam Chair. Chairwoman Stabenow, 
Ranking Member Roberts, and members of the Committee, thank you 
for the opportunity to bring testimony today on the progress of 
civil rights activities at the Department of Agriculture. Let 
me state that since my confirmation in April 2009 as Assistant 
Secretary for Civil Rights, the Office of the Assistant 
Secretary for Civil Rights has made progress in creating a new 
era of civil rights at USDA.
    I entered the Department on the heels of the 2008 GAO 
report and the 2008 Farm Bill report, and used them both as a 
blueprint on how the office should function in order to 
succeed. GAO has historically audited the civil rights 
functions within USDA. In 2010, after responding to an informal 
GAO audit, our office was not listed on the high risk list and 
our implementation efforts were rated as in progress by GAO.
    As you may be aware, the Office of the Assistant Secretary 
of Civil Rights was reorganized in 2009 to streamline its 
operations and to conform to the 2008 Farm Bill. That 
reorganization allows us to focus on our mission, to provide 
leadership and direction for the fair and equitable treatment 
of all USDA employees and customers while ensuring the delivery 
of quality programs and enforcement of civil rights laws.
    We have been consistently processing complaints with a 
focus on not letting the statute of limitations expire for 
program discrimination complaints.
    To address recommendations of the GAO report, we have 
increased our staffing in the program investigation and 
adjudication to levels not seen in over a decade, and our 
program investigators are now conducting on-site investigations 
versus the telephonic interviews that were standard in the 
    From 2001 to 2008, there was only one program complaint 
finding of discrimination issued by the Office of the Assistant 
Secretary of Civil Rights. In 2010, there were three findings, 
and to date, in 2011, there are five. Our employment numbers 
are something the Secretary can be proud of. The number of EEO 
complaints filed by USDA employees has dropped significantly 
since 2007, and the number of merit findings of discrimination 
has increased.
    The efforts of the Office of the Assistant Secretary of 
Civil Rights to ensure USDA employees are aware of their rights 
is evidenced in these numbers.
    In fiscal year 7, there were 562 complaints that were filed 
and there were three findings of discrimination. In fiscal year 
0, there were 461 complaints that were filed with 22 findings 
of discrimination. And for fiscal year 1, as of yesterday, 
there are 343 complaints that have been filed to date and we 
project there will be between 450 and 475 for the year, and we 
have 17 findings of discrimination and project there will be 
between 25 and 30.
    This is a short synopsis regarding the essential functions 
of the Office of the Assistant Secretary of Civil Rights. Thank 
you for the opportunity to come before you and describe how 
this Administration is addressing USDA civil rights progress 
and the importance of it measuring performance while 
eliminating duplication and waste.
    Chairwoman Stabenow. Thank you very much to each of you.
    Let me start the questioning with Under Secretary 
Concannon. We, again, appreciate your being here, and as was 
indicated last week, the Inspector General's office announced 
it had successfully pursued 80 convictions in the SNAP fraud 
cases and returned about $8 million of taxpayer money in the 
last six months.
    Going forward, could you talk about what more we need to do 
in terms of looking at the next Farm Bill and the ratio of 
dollars we have invested in terms of enforcement and money 
back? And then the final thing I would ask is, could you speak 
about what the Administration is doing to encourage states to 
be more active in pursuing fraud, especially discussing some of 
the authorities that the states have as well to be able to 
crack down?
    Mr. Concannon. Thank you very much, Madam Chair, for that 
question. First of all, I should thank the Committee for the 
enhanced authorities that the Agriculture Committee granted 
through the 2008 Farm Bill to the USDA and the Food and 
Nutrition Service for imposing penalties for traffickers, and 
we are in the midst of internally working on proposals in that 
very regard.
    I want to mention that as I stated in my opening remarks, 
we are very encouraged by the fact that we now have record low 
numbers of improper payments. That incorporates either over 
payment or under payments to recipients. But I think the 
Chairwoman's question focuses more on the issues of 
    Since we have moved to the electronic benefit cards, or 
plastic cards, happily, I can speak to my state experience in 
this regard. It has had a dramatic effect on reducing 
trafficking. But nonetheless--and that number now runs about 1 
percent, but even that 1 percent concerns me greatly because it 
is 1 percent of a larger number now.
    The numbers of persons in the United States depending on 
the SNAP program now are in excess of 44.5 million Americans, 
reflecting largely, by intent, what is going on in the American 
economy. So we need to be particularly vigilant on making sure 
that we are doing all we can to both identify trafficking, but 
also to pursue traffickers.
    When I was in the state of Ohio earlier this week, there 
was a report that appeared in one of the newspapers of again a 
network of traffickers in one area of the state. I should point 
out that what we are doing, in terms of trafficking, is we are 
particularly deploying not only undercover investigators--last 
year, the Food and Nutrition Service was involved in 5,000 
undercover investigations across the country.
    There are now 233,000 licensed vendors in the SNAP program. 
Again, that number has increased tremendously. About 85 percent 
of the benefits go through supermarkets, and about 15 percent 
of the benefits go through smaller stores. And invariably, when 
trafficking occurs, it is the rarest occurrence that may 
involve a supermarket. It is much more typically a small store.
    What we are using, both post-2007 GAO report, that directed 
or urged FNS to take more aggressive steps around trafficking, 
we have enhanced our electronic data mining and we now have 
daily streamed information to us. When people process benefits, 
whether it is in Mississippi or in Miami or up in the state of 
Maine, we have electronic monitors that are tracking for 
trends. We also have high at-risk identified areas where there 
have been historic problems.
    And we are working closely not only with the Office of the 
Inspector General, but with state law enforcement agencies 
across the country as well as FNS itself. I am very troubled 
when it occurs because I know it is an improper use of a 
benefit that has been stated earlier by the Chair. Taxpayers 
have worked hard to provide these benefits to us. I believe 
that represents the greatest threat to this program in terms of 
public confidence when the public experiences or learns of a 
trafficking issue.
    So we are deploying our resources that way, but also, in 
response to the Chair's question, just as recently as this 
week, I sent a letter to every state commissioner of health and 
human services, something I did myself for many years, urging 
them to pay particular attention to this issue of trafficking.
    The Food and Nutrition Service, the Federal Government, we 
particularly track redemptions processed through vendors across 
the country. That is the monitoring side we are responsible 
for. State agencies across the country are more directly 
responsible for the individual consumers in their respective 
states. And I urged, in that letter, based on again these 
recent stories first out in the state of Washington and then 
more recently in several other locations, that states need to 
redirect their attention to issues of trafficking.
    As I mentioned right at the outset of this response, we are 
examining the opportunities that the 2008 Farm Bill gave to us 
as to what we can do to strengthen the penalties that are 
involved for vendors, because for trafficking, you cannot do it 
solely. You have got to have somebody conspiring with you.
    Chairwoman Stabenow. And we look forward to working with 
you on that. In the interest of time, I am going to have to 
move to my colleagues, but we are very anxious to follow up 
with you as it relates to the issues around penalties and so 
on, as well as what can we be doing and what you are doing in 
terms of states' ability to address individuals and so on.
    Mr. Concannon. Thank you.
    Chairwoman Stabenow. So we thank you very much. I have a 
lot of other questions, but in the interest of time, I am going 
to turn now to Senator Chambliss.
    Senator Chambliss. Thanks very much, Madam Chair.
    Under Secretary Tonsager, you recently announced that Rural 
Development will use REAP funds to install blender pumps at gas 
stations, and I have got a couple of concerns about the 
    First, as you might recall, this proposal was considered 
during the 2008 Farm Bill process and was rejected during our 
conference with the House. The REAP program was not designed 
for this purpose and is already over-subscribed. So what we are 
doing now is adding a new competitor to an already over-
strapped, over-subscribed program.
    My second concern is that the Department of Energy is 
already using the Clean Cities Program to fund ethanol 
infrastructure including E85 fueling stations. In fact, the 
Stimulus Act provided several projects to agricultural 
associations for that very same purpose.
    Did USDA understand that REAP would be duplicative of 
existing U.S. Government programs for funding ethanol 
infrastructure and if so, why did we proceed with the final 
rule on REAP knowing that other programs are already delivering 
funds for blended pumps, and how will the agency ensure that 
other important goals and purposes of the REAP program are not 
crowded out by grants for blended pumps?
    Mr. Tonsager. We did closely review to make sure that it 
was an eligible purpose, and we have a clear understanding from 
our general counsel that it is an eligible purpose to be using 
REAP for that purpose. REAP has proven to be extraordinarily of 
interest to people. It has been used for a number of energy-
related products and has been done so successfully.
    We stepped forward with this because we believe that it is 
enormously important, as the evolution of the ethanol industry 
and the biofuels industry goes forward, to make sure that there 
is the opportunity for consumers to use biofuels in as many 
places as possible.
    So we have reached out not just on biofuels, but also to 
make sure the program is used widely across America. In recent 
years, it has been generally concentrated in the northern 
plains in the Midwest, so we are trying to move the program 
very broadly.
    We do understand that there was other agencies that have 
the funds that could be used for biofuels projects, but there 
was only recently a clarification by the Department of Energy 
to the states regarding the use of that program. That only 
occurred a few months ago when the opportunity was expressed 
clearly to the state energy offices that they could use the 
program. And we also encouraged the groups that we have worked 
with to seek out those funds as well.
    There has, unfortunately, been a limited number of E85 
pumps made available across the country. There has been some 
demonstrations by states. My home state of South Dakota, for 
example, has committed some resources to the use of E85 pumps, 
and we focused on that a good bit as a model about how we might 
help expand the availability of those pumps.
    So in short, sir, we believe it is an eligible purpose. We 
think that it is important. We made a decision to go forward 
with the use of the program for that purpose.
    Senator Chambliss. Well, I would simply respond to your 
answer by saying that if there is a market for E85, the private 
sector ought to be where the funding comes from to meet that 
demand because that is where the profits are going to go. And 
it does concern me greatly that we are going to be crowding out 
some other very worthwhile programs in REAP to spend money on 
something that the private sector should take care of.
    Next, Mr. Tonsager again, in 2005, USDA's Inspector General 
completed its first review of the Broadband Loan program and 
generally found USDA was awarding grants and loans even though 
applications were incomplete, applicants had previously 
defaulted on government loans, and that grant funds were being 
used for inappropriate purposes.
    Specifically, the IG found USDA had not maintained a focus 
on rural communities lacking pre-existing service. For example, 
IG found that out of $485 million in grants and loans, $103 
million to 64 communities near large cities. The IG also found 
that USDA was using a significant portion of the program to 
support competitive service in areas with pre-existing 
broadband access, rather than expanding service to areas 
without service.
    The IG also found that 159 of the 240 communities 
associated with the loans already had service. In 2009, IG 
revisited the broadband programs and found that USDA had not 
taken corrective action on eight of its 14 recommendations. 
From 2005 to 2009, USDA continued to make loans to providers 
near very large cities or in areas with pre-existing service.
    I understand that USDA has recently released an interim 
final rule that will address some of these problems. Why, 
almost ten years after these problems were identified and 
millions of dollars had been spent, in such a reckless manner? 
If USDA cannot address waste within their own agency, how can 
the taxpayers have faith in President Obama's newly created 
Rural Council chaired by the Secretary of Agriculture?
    In regards to the President's Rural Council, how does USDA 
plan to implement, coordinate, and involve stakeholders in the 
decision-making process? So I am very concerned about this and 
I would appreciate your comments.
    Mr. Tonsager. We agree there were significant problems with 
this and we have aggressively pursued addressing those 
problems. We believe the new rule will help significantly with 
that. During the period of the Recovery Act when we were 
implementing the broadband process, we used that as an 
opportunity to learn from the shortcomings of the previous 
    We do believe that the Recovery Act money, while 
contentious, we believe we have made significant progress there 
and we took those lessons to learn them. There will be and are 
plans for a significant outreach to stakeholders. I believe 
there is a stakeholders meeting scheduled soon to begin that 
    The Rural Council, which we are extremely excited about, 
bringing a new focus on rural America and the programs that 
USDA helps provide, particularly the programs that I have the 
opportunity to oversee. I think there is great opportunity in 
    We believe we have acted to address most of the issues 
associated with the standing program and we believe the rule 
will help respond to that.
    Senator Chambliss. Well, this has been a very controversial 
program, particularly as we went through the last Farm Bill, 
and I am sure, as we come to next year, it is going to continue 
to be in the public eye. And while I look forward to the next 
IG report, I hope that that report comes forward with 
significant improvements being made and the people in rural 
areas who need broadband, just like people in more populated 
areas, are getting the kind of service that the Farm Bill 
intended for them to get. So we will look forward to that.
    Mr. Tonsager. Yes, thank you.
    Chairwoman Stabenow. Thank you very much. Senator Brown.
    Senator Brown. Thank you, Madam Chair. A couple of 
comments. Secretary Concannon, thank you for your testimony and 
for your recent visit, I think, this week to Columbus and to 
the Mid-Ohio Food Bank. You pointed out rightly that demands 
for all kinds of food assistance, from food banks to emergency 
funding for food, or SNAP, are unprecedented and the demand has 
    You understand, of course, as your testimony and as your 
visit there, the difference between making ends meet and coming 
up short and why the work that all of you do at USDA, but you 
particularly, why that work matters so much. I want to 
emphasize what you had said about the national error rate 
reported for SNAP. Combining states' over- payments and under-
payments to program participants has declined some 56 percent 
in the last 10 years from 9-plus to 4-plus percent.
    I also appreciate what you said about trafficking being the 
biggest threat to this program. You mentioned an article from 
an Ohio newspaper, the Dayton Daily News, pointed out a variety 
of things that are of concern. We also know there are 
newspapers, as there was today, the Wall Street Journal, 
newspapers have never much liked the whole idea of food stamps 
and helping citizens who have less privilege than the people 
that sit on that editorial board have, and may or may not have 
grown up with, but have now.
    We expect those kind of criticisms, but as you pointed out, 
trafficking is, in fact, the biggest threat to this program and 
it is so important that you double-down, if you will.
    I want to move on to Mr. Tonsager because I have a couple 
specific questions for him, but I just would like to outline 
some questions to you that you could impart, in response to 
Chairwoman Stabenow, get to us in writing about what you are 
doing, how the USDA is keeping track of how it counts and how 
it keeps track of fraud and abuse, what you are doing to ensure 
program integrity, what can be done to further improve 
management and administration of these programs, how do these 
EBT cards work.
    If I have your card, can I use it and what are the 
penalties if I--what are the steps of how that would happen, 
how often are they replaced, do they have to be decertified, do 
you have tools, do you have sufficient tools to track and 
prosecute fraud? If we are going to have the number of 
inspectors, have a relatively low number of inspectors, as I 
think the Wall Street Journal editorial today pointed out, I 
believe that is where I read it, is that enough to go after the 
fraud in this program? So I know you understand all that, but I 
would like to see some specific answers.
    Mr. Tonsager, my questions for you, USDA Rural Development 
is so, so important, but I frequently hear two things in 
criticism. In Washington, I hear how USDA rural development 
programs are duplicative or inefficient or not that different 
from what EDA and HUD do.
    In Ohio, I hear that the application process can be so 
cumbersome that far too many people and too many entities in 
rural Ohio have just given up on using existing loan and grant 
programs under USDA that USDA RD administers.
    So my question, and I am a strong supporter and want to 
continue to be of these rural development programs, discuss 
what you are doing to reduce that duplication, to answer those 
questions that I hear in this town, and what you are doing to 
make the system more modern, efficient, and accessible for 
people in Ohio and Michigan and Nebraska and Mississippi and 
Georgia and South Dakota when groups or individuals are 
applying to be part of this.
    Mr. Tonsager. Sure. Thank you, Senator, and we do 
appreciate your support. I would just like to offer a few 
general thoughts to try and offer our perspective. The USDA 
Rural Development really was created to be a mini version of 
the entire Federal Government in a lot of ways, specifically 
for rural America.
    We have a very broad tool set, some 40 programs to do that, 
and the reason I think it exists this way is because we have 
that focus on rural. You know, 80 percent of the landmass, of 
course, United States is rural, and it takes, I think, the 
access for people to get to that program by having this special 
rural emphasis on it.
    We do recognize that many of our programs are very similar 
to other programs throughout the Federal Government, and we try 
very specifically to work with them. We have an agreement with 
SBA, for example. We believe their tool for business lending 
works better than ours, in many cases in rural areas, so we 
emphasize that to people. Quite often, our loan guarantee 
program works well for larger loans, maybe not so much for the 
smaller kinds of loans.
    But I would also like to say that in an efficiency context, 
we have a $150 billion loan portfolio at this time with less 
than a 2 percent delinquency rate overall on that, and we think 
that is important. Our proposed budget by the Administration 
was $2.4 billion this year. We make that into $36 billion.
    Our largest programs are at zero budget cost. So we have to 
work very hard with people in making sure projects work well. 
And that is a success story for everybody when you do that. It 
takes a lot of work and sometimes it becomes complex, 
especially on larger loan projects.
    So we think that having our rural field structure is 
important. We recognize that there are people that are 
challenged by our process and we have some work to do. We 
believe our new consolidated loan program, over the long term, 
is going to really make that much more efficient because it 
will make the forms less duplication so you do not fill out the 
same thing three or four times as we go forward.
    So I believe we can continue to address some of the 
challenging parts of our process, and we know that those 
challenges exist. But we believe we are efficient and effective 
because it is a very large amount of leveraging we are doing, 
and we think we have to keep the performance of those programs 
in a very high quality state in order to come to you all to ask 
for the money and the authorities to do it.
    But we will continue to look very hard at those processes 
and we do believe we are making some steps to address those. 
And we take it as our goal, when we look at every other Federal 
program, if we cannot do it, we will go after their money to 
get it into rural areas. So we do recognize there is some 
duplication. We think the field structure we have to help get 
access is important. And we take it as our responsibility, if 
we cannot figure out how to do it, we are going to go after 
somebody else to help try and figure out how to do a project.
    Chairwoman Stabenow. Thank you very much. Senator Cochran.
    Senator Cochran. Madam Chairman, let me join you and the 
other members of the Committee in welcoming this distinguished 
panel to our Committee. We appreciate the work you do to 
administer the agriculture programs, not only those designed to 
help improve conservation programs, to safeguard natural 
resources, and the production of food and fiber in our country.
    My observation is, over the years, that we have made 
substantial progress in a lot of areas that have long been 
concerns of the general public and taxpayers as well. There 
have also been a lot of attention focused on integrity of the 
programs, the honesty and integrity of those who apply for and 
receive benefits of one kind or another, farm payments, program 
payments, crop insurance back when the Government basically ran 
the crop insurance, and food and nutrition assistance programs.
    I think a lot of progress has been made in all of these 
areas. I was particularly impressed with Mr. Concannon's 
comments about the challenges that his office has faced and how 
they are going about identifying fraud and abuse and 
eliminating it. I sensed an attitude of ``can-do.'' It is not 
something to apologize for, but to do something about it. I 
think that is what I hear from the testimony that we have heard 
this morning, and that is encouraging.
    I do not have any particular specific complaints just to 
cite in my questions of you, but I think the Chairwoman ought 
to be commended, too, for the oversight of the Department. This 
hearing is a good example of that and I think we can all 
benefit from it.
    The Food Stamp program has been under a close inspection 
process for a long time, but some of the other programs in 
nutrition areas I wonder about. I know there are a lot of 
mistakes made, probably some of them innocent mistakes, but 
there are school lunch program activities which have been found 
to have been abusive and errors made, intentional or not. I do 
not know.
    But I wonder if there is a program at the Department to 
ensure that payments are going to eligible participants in 
those programs, whether at schools, other organizations that 
dispense a lot of benefits to program participants. Citing 
eligibility is one question.
    I know Under Secretary Michael Scuse may be the person to 
answer that. In your area of responsibility, what programs are 
there underway and what are the steps taken by the leadership 
at the Department to see that they are producing benefits in 
recapturing wrongfully paid or mistaken paid benefits to those 
who are not entitled to them?
    Mr. Scuse. Well, thank you, Senator. I appreciate the 
opportunity to answer that question because as you are well- 
aware, there has been criticism over the years about some of 
the Farm Service Agency and Risk Management Agency programs and 
payment eligibility. We take it quite seriously at the Farm 
Service Agency and USDA to make sure that program participants 
that are entitled to money actually receive that funding.
    There are several things that we do at the Farm Service 
Agency. All of our producers who are receiving payments must 
fill out a form to give the IRS permission to view their tax 
returns to make sure that they are within the adjusted gross 
income levels for participation in the Farm Service Agency 
    There is another form, CCC Form 902, that our producers 
also have to sign to be active to verify that they are actively 
engaged in agriculture and in production through management, 
through providing land, equipment, capital, and some other 
areas as well. And that form is reviewed by the accounting 
committee and if there are discrepancies, it is elevated to the 
state and to the Federal level.
    Through the Risk Management Agency, the CIMS project, the 
Comprehensive Information Management System, we have been doing 
data mining to make sure that the program is being run 
properly, that those producers that should be receiving 
payments, crop insurance payments, actually do.
    In the last ten years, Senator, we have been able to have a 
cost avoidance of $840 million. So we have put things into 
place to make sure that there are no improper payments. One 
improper payment is one too many, and we will continue to do 
the very best job that we can to make sure that we take care of 
any improper payments being made.
    Senator Cochran. Thank you. I appreciate your response to 
that question. One specific program was brought to my attention 
in farm payment programs. There had been an inordinate number 
of people paid who had died, and there were no records to 
reflect that at the Department of Agriculture.
    The information that I was given said that from 1999 
through 2005, USDA paid $1.1 billion in farm payments in the 
names of 172,801 deceased individuals. Of this total, 40 
percent went to those who had been dead for three or more 
years; 19 percent to those who had been dead for seven or more 
years. That is kind of shocking.
    What is the response that you could make to that to let us 
know what is being done to ensure that we are not making 
payments to deceased individuals?
    Chairwoman Stabenow. And I am going to ask that you do that 
quickly at this point, because we have a time limit. But please 
answer that important question.
    Mr. Scuse. Yes, Madam Chair. We have an agreement with the 
Social Security Administration. The Farm Service Agency does 
quarterly re-review those deceased individuals to make sure 
that they are, in fact, entitled to payments. If you sign up 
and participate in a program and you pass away during the 
course of that year, Senator, you still or your estate is still 
entitled to that program. But we are looking to make sure that 
yes, in fact, those people are entitled to that payment.
    Senator Cochran. Thank you very much.
    Chairwoman Stabenow. Thank you very much, Senator. Senator 
Bennet was next, but I do not see him here and so we will turn 
to Senator Nelson.
    Senator Nelson. Thank you, Madam Chairman, and again, as my 
colleagues have congratulated you, I want to congratulate you 
on setting this hearing on extremely important issues and 
giving us the opportunity to meet with Department officials on 
accountability on program delivery. We spend an awful lot of 
time talking about what programs we would like to have. 
Probably not nearly enough time on accountability. So this 
gives us a chance to do that.
    It gives us a chance to focus on performance, management 
programs, and to get a better sense of how real the impact of 
improper payments, fraud, and abuse of programs can be.
    Certainly everybody agrees that better accountability 
should be sought for in every Government program, and I hope 
this hearing will highlight the positive studies and strides 
that have been made by the departments with the agencies with 
those reforms put in place with the 2008 Farm Bill and 
highlight areas were additional accountability and efficiency 
can be found to help reduce costs and ensure producers can 
count on an adequate safety net for the current and the future 
    I have one question. I know my colleague from North Dakota 
has been in and discussed, to some degree, the flooding in the 
Midwest, and it is with that in mind that I want to ask the 
panel about the coordination between agencies. And among the 
agencies, with the flooding ongoing in Nebraska and all along 
the Missouri waterway, I wanted to focus on the coordination 
between the various agencies providing relief to Nebraska 
farmers and producers impacted by flooding with both the 
Missouri and the Platte Rivers in Nebraska.
    I have to say I was very pleased with Secretary Vilsack's 
visit to Nebraska with me a week ago to meet with those that 
were impacted by the flood firsthand, and assure USDA's support 
to those impacted by the devastation. I am hopeful that the 
Under Secretaries could discuss their individual efforts in 
coordinating their resources between agencies and ensuring that 
Nebraska farmers and those living in rural communities impacted 
by the floods can count on timely and efficient assistance 
throughout the flooding, and perhaps more importantly, 
rebuilding their livelihood after the flood waters recede.
    We asked the other day Director Fugate, Administrator 
Fugate of FEMA, will the flood be over and will we know when it 
is over? Because we are talking about sustained high water for 
a long period of time. Perhaps we could start with you, Mr. 
Tonsager, to what you are looking to do. Yours is a part of 
making certain that the quality of life issues and structural 
economic development issues are being addressed out there. 
Maybe we could start with you.
    Mr. Tonsager. Thank you, Senator. Mr. Scuse and I did 
recently make a trip through the flood areas of the South, 
through Louisiana, Arkansas, Alabama, and Mississippi. To be 
concise, my agency has a clear process to follow up with FEMA. 
We generally do not serve in the lead role, but we want to fill 
in the gaps behind FEMA. And so, we are very studious about 
following their process as they are the lead agency.
    But we do get into financing homes, dealing with water and 
sewer systems that have been inundated and trying to assist 
those. We do work with businesses who have been through the 
inundation to try and help refinance in those cases. So we do 
have some tool sets that help us manage those communities that 
have been inundated and we try and want to be helpful with 
    Senator Nelson. Thank you. Yes, and then your colleague 
    Mr. Scuse. Thank you, Senator. We have been having meetings 
throughout the Mississippi River area now for several months. 
The Farm Service Agency, the Risk Management Agency has been 
working very closely together to make sure that our producers 
are getting the assistance that they, in fact, need.
    During the course of these meetings, we encourage them to 
visit the Farm Service Agency as quickly as possible to look at 
the emergency loan program and emergency conservation program. 
We have also been encouraging our producers to visit with their 
crop insurance agent to make sure that they can start that 
process as quickly as possible.
    We have been touring the areas. Acting Deputy Under 
Secretary Karis Gutter is in Missouri yesterday and today 
looking at some of the flooded areas. We have been providing 
fact sheets to all of our farmers and ranchers to let them know 
what programs are available, and we will be continuing working 
together with the Army Corps of Engineers as well as Under 
Secretary Honsaker and NRCS as well.
    Senator Nelson. Mr. Sherman, and then we can wrap that up.
    Mr. Sherman. Yes. Let me just briefly supplement what has 
been said. NRCS has an Emergency Watershed Protection program, 
so part of what we do is to provide immediate emergency relief, 
and we have provided, I believe, something like $600,000 to 11 
different states that have been affected by this, and we have 
additional resources that can be allocated.
    But let me just say that part of our work is to assess 
flood damage. Part of our work is to remove obstructions to 
watersheds. Part of it is to ensure the stability of certain 
structures. And we have a very active SNOTEL program that 
monitors the amount of snow pack in the mountains which 
ultimately can get to the Mississippi and the Missouri River 
    So all of these programs are important. We work carefully 
with the Corps, with the Bureau of Reclamation, with EPA, and 
other Federal agencies.
    Senator Nelson. We appreciate the fact that you do work 
together. I was taken by that sitting with Secretary Vilsack 
who made it clear that internally within the agency, a lot of 
effort was being made to coordinate and make certain that there 
was no underlay or overlap of effort, but that everything was 
being done that could reasonably be done.
    Given the fact that this high waters are going to go on for 
another six weeks or longer, I hope that fatigue does not set 
in within your agency. Certainly it is being felt by an awful 
lot of those who are directed affected, but I hope you will 
avoid fatigue within your agency. It is not going to be easy. 
It is not a typical flood. Thank you very much. Thank you, 
Madam Chair.
    Chairwoman Stabenow. Thank you very much. Senator Thune.
    Senator Thune. Thank you, Madam Chairwoman and Senator 
Roberts. I want to thank you both for holding today's hearing. 
I think this is an important subject given the current fiscal 
and budget and deficit crisis the nation is facing, and 
obviously reducing and eliminating waste, fraud, and 
duplication of services and abuse, not only at USDA, but across 
the entire Federal Government would make a significant dent in 
reducing Federal spending.
    I want to say, Madam Chairwoman, that as we focus today on 
measuring performance in eliminating duplication and waste, I 
believe the Federal Government needs to take a close look at 
our nation's agricultural producers as examples of efficient, 
effective, and streamlined operations and learn how they 
conduct their businesses and operations and follow their 
    When faced with rising operating input costs, farmers began 
utilizing equipment and modifying their operations to make 
certain seeds are planted at consistent depths and distances to 
maximize their growth potential. Today's equipment can also 
place fertilizer, chemicals, and other inputs precisely where 
they need to be without overlap.
    I would just say, Madam Chairwoman, that our farmers have 
learned how to make every seed and every drop of fuel, 
chemicals, fertilizer provide the maximum benefit possible, and 
that is certainly something that the Federal Government must 
likewise do, and that is increase its efficiencies and cost-
effectiveness of its operations as well. So I think our farmers 
are a great example to us about how we need to be going about 
the process of becoming more efficient.
    I have a question for Mr. Tonsager I would like to ask in 
particular dealing with an issue in my state. And if we have 
time, a couple other questions I would like to ask for the 
record. But, Mr. Tonsager, as you know, there is a project in 
South Dakota called Mni Waste which is a water system that 
received a nearly $10 million grant and a $3.6 million loan 
from USDA Rural Development to build a new raw water intake 
    This is the first phase of what would be a three-phase 
project to complete a new water treatment plan and a water line 
on the Cheyenne River Reservation. Despite the dire need for 
water on the Reservation, USDA Rural Development has indicated 
that only small amounts of funding are going to be possible for 
this project going forward.
    Allowing this project to languish not only means increased 
cost for the Federal Government to finance this project as 
construction costs rise and existing parts of the system fall 
into disrepair before they are even put into use, but there 
also will be increased health care costs through the Indian 
Health Service and there will be increased payouts in 
unemployment insurance, food stamps, and other safety net 
programs as housing projects, livestock taps, and other 
economic development projects are put on hold.
    Could you just explain how giving these small amounts of 
funding to this project which helped provide water to the 
poorest county in the nation is, over the long term, a fiscally 
prudent move?
    Mr. Tonsager. It, of course, is a challenging area that is 
faced with a desperate problem that has a long history and that 
we have explored carefully. Of course, as you well know, the 
restraints on our resources are a major challenge for us and we 
face challenges like this in several of the high poverty areas 
across the country, including places like the Navajo 
Reservation or other reservations across the country where you 
have very widely-dispersed groups of people.
    It saddens us that we cannot proceed more quickly with the 
project. I think the near term solutions would be to work with 
the other Federal agencies, and we do get into the discussion 
about duplications that we have. But we will look closely at 
the other Federal funding sources and see if we can bring 
stronger encouragement with them to participate with us in the 
continued funding of this project. And hopefully, we can then 
possibly make some more faster progress with them under those 
    Senator Thune. I hope you can do that. As you know, it is 
an area of dire need and the consequences of waiting are going 
to be, as I mentioned, pretty profound for the people on the 
    Let me just ask you, in terms of the hurdles that you 
encounter. If you look at trying to become more efficient and 
do away with duplication, what would you say are the biggest 
hurdles that Rural Development has had to overcome in 
administering, for example, the 2008 Farm Bill programs that 
are assigned to your portfolio at Rural Development?
    Mr. Tonsager. Probably the sheer volume of the number of 
new programs, and we, of course, see those as opportunities, 
but we have an enormous number of regulations to get through. 
We took biofuels, for example, or the associated 9000 Series 
programs. We put out NOFAS immediately with those in order to 
implement them fairly quickly, then tried to learn from that 
    So I think the challenges were to follow the appropriate 
process, to get input, so we did want to get them going 
quickly. We did notices in order to get funds out the door 
quickly, tried to learn from that, and then do the programs. We 
believe we have pretty much fully implemented all of the Farm 
Bill authorities. Did not go as fast as we would like, but boy, 
there was a lot of ground to cover.
    Senator Thune. How is NEPA compliance affected RD's program 
administration delivery?
    Mr. Tonsager. It has taken work certainly. We, of course, 
have an obligation to not only build and finance, but to try to 
make sure it is a quality of life process. So we have 
environmental processes associated with every one of our 
programs. Typically NEPA comes into place when we come with 
very large programs that have very significant impacts. So it 
becomes more of a step to make sure that the compliance is 
there, and we accept NEPA and work closely with it because we 
do want to assure that qualitative component.
    Senator Thune. Thank you. My time is expired. Thanks, Madam 
    Chairwoman Stabenow. Thank you very much. Our distinguished 
Ranking Member has returned and I will turn to Senator Roberts.
    Senator Roberts. Thank you very much, Madam Chairwoman.
    Mr. Concannon, the SNAP program conducts employment 
training to help in the job search for SNAP participants who 
may be out of work. The U.S. Department of Labor's Work Force 
Investment Act programs also provide employment and training to 
over 1.6 million participants. Temporary Assistance to Needy 
Families, TANF, program spends $2.4 billion in work activities 
which include education and training.
    GAO recently reported that there are 47--47 Federal 
employment and training programs at an annual cost of $18 
billion. In an effort to avoid duplicity in Government 
programs, can you tell me, is there any reason why SNAP should 
continue to have its own employment and training program? Is 
there any way you could merge some of your efforts in regards 
to the 47 other programs?
    Mr. Concannon. Thank you very much, Senator. Well, if I 
might mention right at the outset, work is a very integral part 
of the SNAP program and has been going back to 1970 or '71. All 
53 SNAP programs across the country, all the states and the 
territories, operate employment and training programs. It is 
part of the effort of the program to make people more self-
    I can say from my state experience, we work very closely 
with Department of Labor, or one-stop shopping centers, as they 
are referred to, one-stop centers at the state level. The 
advantage on the employment and training program focus to the 
SNAP program is it is particularly-- that person comes through 
the front door applying for assistance.
    We know that they are in a compromised income situation by 
virtue of that. So the program is very tailored at that 
particular population, but we certainly would be happy to work 
on ways to make it even more integrated into the other range of 
labor programs.
    Senator Roberts. Thank you, sir. Mr. Sherman, are we 
creating programs such as CSP that are too complicated for the 
agency to implement? I am concerned about the level of improper 
payments. If producers are providing incorrect information, 
that is one thing. But if agency staff is having difficulty 
implementing the programs we create, is this an accountability 
problem with the agency or complexity in the design of the 
program? Is this our fault up here?
    What changes have been made in the Conservation Stewardship 
Program from the 2008 Farm Bill?
    Mr. Sherman. Thank you for the question, Senator. I think 
we have made some very positive progress concerning the 
Conservation Stewardship Program. As you know, we did have a 
variety of issues and problems with the Conservation Security 
Program, and I think Congress wisely decided to phase out that 
program by 2012 and to bring into focus the Conservation 
Stewardship Program.
    The Conservation Stewardship Program, I believe, is working 
well. NRCS is actively involved in verifying all aspects of 
their program, as opposed to a self-verification system that we 
previously had. So the improper payments that occurred under 
the Conservation Security Program have stopped.
    We are recovering monies that we lost in that program. And 
I think under the Conservation Stewardship Program, it is being 
handled very effectively.
    Senator Roberts. Thank you, sir. Mr. Scuse, we have heard a 
lot of frustration from our producers about ACRE and SURE. 
Specifically we hear complaints that the programs do not allow 
for the timely delivery of assistance, that they use a 
multitude of data points, they are generally confusing for the 
    The ACRE payment calculation alone requires a producer to 
go through 23 steps. That is about 22 more than necessary. And 
the testimony that Mr. Blankenship will state, he spends 25 
percent of his management time trying to work through the 
requirements for these various Government programs.
    So here you have a very successful producer who is going to 
indicate that one-fourth of his time is simply plowing through 
all of the programs requirements. Have you had similar 
frustrations in implementing the programs that our farmers have 
had using them, short of just going back to the drawing board, 
which some of us might like to do? Short of that, are there 
things you think the USDA or Congress can do to make these 
programs more streamlined, efficient, and user-friendly?
    Mr. Scuse. Thank you, Senator. I think the last Farm Bill 
took a giant step forward in helping our farmers and ranchers 
across the United States with the livestock programs that were 
put into place for losses, and ACRE and SURE are taking another 
step to enhance coverage that they may have on crop insurance 
and provide that additional protection.
    These three programs, they are complex, there is no doubt 
about it. There have been issues from the agricultural 
community about SURE. SURE pays you that payment one year after 
the loss. And that has been an issue that I have heard as I 
have traveled around the United States. But again, that was a 
program designed by Congress that we have implemented.
    ACRE is a complex program, no doubt about it. As you are 
well-aware, technology is an issue for the Farm Service Agency 
when you are dealing with systems that date back to the 1980s. 
So the technology issue has been one that has affected some of 
the program implementation. Some of these complicated programs, 
with SURE for an example, we have had to do manual calculations 
because of the lack of technology.
    So if there is one thing that I believe that we need going 
forward, it is to continue down that path to better technology 
to help our office staff.
    Senator Roberts. As a follow-up--and my time has expired, 
Madam Chairwoman--but you are basically saying you need better 
technology across the board to keep up with this and that that 
would help a bunch, as opposed to a program that has 23 steps 
for a farmer to comply. If you have any suggestions on how we 
can streamline these programs, change these programs, it would 
be extremely helpful.
    You just heard the testimony here from a lot of members 
here about the flood, the historic flood we are going through, 
and the SURE program and--I mean, there are times when you have 
bad situations almost every year up in the northern states. And 
then you go to the SURE program and you do not get paid until a 
year later. That really is a problem.
    Now, you focused on the technology to help you get through 
this, but is there anything from the ability of us to take a 
hard look at the structure of the program that could better 
streamline it?
    Mr. Scuse. Senator----
    Senator Roberts. And if you have those suggestions, you do 
not have to go into them now, but you could certainly submit 
them for the record.
    Mr. Scuse. Madam Chair?
    Chairwoman Stabenow. If you are brief. Yes, thank you. We 
definitely want to go into this more extensively with you.
    Mr. Scuse. Yes, Senator. We here in Washington at USDA, as 
well as all over county offices across the United States, would 
welcome simplified programs, programs that are easier to 
understand and easier to manage, simpler programs, as well as 
the technology. We would be more than willing to work with you 
in coming up with programs that can be easily managed. We 
welcome that opportunity, Senator.
    Chairwoman Stabenow. Thank you very much. Senator 
    Senator Klobuchar. Well, thank you very much, Madam 
Chairman, and thank you for holding this important hearing. As 
a former prosecutor, I saw time and again how good meaning 
programs can sometimes be abused if the wrong people get a hold 
of money, so I appreciate all the work that you are doing with 
the oversight, as well as the leadership of Secretary Vilsack 
and all of you to work on this accountability issue.
    One of the things that I was most curious about is just 
what kind of programs do you think lend themselves most--I 
guess I would ask this of you, Mr. Scuse. What are the factors 
that make programs more open to abuse? What additional 
oversight rules should we consider as we look at any 
programmatic changes to the Farm Bill?
    Mr. Scuse. Well, thank you. The sheer complexity and size 
of the programs. Again, I think it goes back to the previous 
question. Programs that are easily understood and easily 
administered are the ones that we would have the best ability 
to do oversight on.
    And again, the technology is a major factor for our offices 
in the field. We need to have the proper tools that will allow 
us to do reviews at the local level. So I think, Senator, those 
two things would be a big help for us going forward.
    Senator Klobuchar. Well, in speaking of technology, the 
Farm Service Agency and the Risk Management Agency require 
farmers to provide data at different times using different 
definitions for the same land. As you work to harmonize the 
data requirements from these two agencies, how are you ensuring 
that the newest GPS field data can be seamlessly incorporated 
into this new system?
    Mr. Scuse. Thank you, Senator. We have started a project 
just ten months ago--it is still in its infancy-- that we hope 
to have a pilot project going in 2012, with full implementation 
in 2013 whereby we are using common information, common data, 
and common terminology, for one of the first times at USDA, 
between NRCS, FSA, RMA, and NAS to make sure that the 
technology is all compatible, as well as our terminology is 
    We right now are looking at bringing together the dates 
where we do our certification between RMA and the Farm Service 
Agency, to bring those dates as closely possible together, and 
in some cases, make them one and the same to eliminate some of 
the confusion to our producers out there on when they need to 
certify their crops. So we are taking those steps.
    Senator Klobuchar. Thank you. Mr. Sherman, the conservation 
program, the CSP program, has been especially important in my 
state. However, I know, even though we have had great anecdotal 
in our state, it is sometimes hard to accurately estimate the 
positive impacts of these efforts. How do you know if the 
significant investments that I believe we should make and are 
making, how do you know that the investments in voluntary 
conservation are actually working?
    Mr. Sherman. I had mentioned in my opening statement the 
ongoing Conservation Assessment Effects Program that we have, 
the so-called CAEPs, where we are taking a very careful look at 
the efficacy of these programs. And we are going out into the 
fields, we are doing modeling to see what the benefits are.
    And we are seeing really quite remarkable benefits. For 
example, the no till or reduced till efforts in the Chesapeake 
and the Upper Mississippi, approximately 85 to 90 percent of 
the crop lands there are now engaged in these practices, and we 
are seeing significant reductions in sediment contributions to 
streams and rivers, reductions in nitrogen, reductions in 
    So we are documenting this very carefully, and as we 
document it, we are becoming more skillful in learning how we 
change practices to focus on this. So, for example, when we 
target areas where the most significant problems are and we 
come in and we focus on those areas, that is where we get the 
greatest benefits.
    And where we apply a suite of conservation practices, as 
opposed to an individual conservation practice, we get greater 
and greater benefits. So we are constantly evaluating this, 
amending how we apply conservation practices, and I think we 
are seeing some very strong and good results.
    Senator Klobuchar. Very good. My last question. Mr. 
Sherman, you also discussed the efforts within the Forest 
Service to improve the integrity of environmental reviews and 
reducing the cost of litigation that the Government faces. How 
do you believe that this initiative will work to help focus 
resources on conservation goals and not courtroom legal 
    Mr. Sherman. We are very focused with the Forest Service on 
working with our partners in the field, that is with 
communities, with stakeholders, and so forth through 
collaborative efforts. So hopefully, we can arrive at a 
consensus on what is the best way to do restoration.
    We are also very focused on improving the ways in which we 
conduct our need for reviews. We have projects now with the 
Council on Environmental Quality to explore how could we do 
more focused NEPA work, how can we have shorter environmental 
assessments, how can we take programmatic EISs and apply them 
in a way that we can work efficiently on forest restoration 
    All of these things are helpful and our hope is that we can 
take money that we are spending on environmental reviews and on 
litigation and shift that over to on-the-ground successful work 
in the forests.
    Senator Klobuchar. On the trees and not the legal fees?
    Mr. Sherman. Exactly. Well said.
    Senator Klobuchar. A little rhyme for you. I thought you 
would like that.
    Mr. Sherman. Thank you.
    Senator Klobuchar. Well, anyway, give my greetings to 
Secretary Vilsack, tell him we have been working very hard to 
try to work out this biofuels issue. It is incredibly important 
to the Midwest and also to the deficit reduction, because if we 
can work it out, it could be a win-win to everyone. I am going 
to tell him you guys did not get the memo about seersucker suit 
    Chairwoman Stabenow. Thank you very much, Senator 
Klobuchar, and thank you for your leadership, and I share your 
desire to be able to work this out in a way that makes sense 
for rural America and for jobs.
    As we close this panel, there are many more questions that 
we have that we are going to be submitting to each of you, 
questions regarding areas of where we can consolidate programs. 
We have very important programs that meet very important needs 
for farmers, for communities, for families.
    But, for instance, we have some 20 different conservation 
programs. Do we need 20? Can we create efficiencies? Can we do 
things better in terms of streamlining? And I know that is 
something that you are focused on, but we want to know more 
about that.
    Rural development, 40 different programs. Do we need 40? 
Can we bring them together? Can we create more efficiencies? I 
would suggest that we can, and yet meet some things that are 
incredibly important. Every community outside the major cities 
of Michigan is impacted and needs an effective rural 
development program.
    But we will be following up with you in each of these areas 
as we look at what is being done to combine the acreage 
reporting and data. We know that as you are working on making 
sure that farmers only have to report once, what else can we 
do, as you have talked about, Mr. Scuse, so that--those are the 
kinds of things that we are going to be deeply involved in with 
each of you and, of course, Mr. Concannon, we will continue to 
work with you on that, and Dr. Leonard as well.
    We have very specific questions that we will be asking you 
to respond to. In this time of stretching every dollar, being 
as efficient as possible, cutting out the paperwork, making 
things work, we will look forward as we move forward on the 
Farm Bill and as we explore each area, you will be back, of 
course, with us, which we appreciate as we go in- depth into 
each of the areas you are involved in.
    But this is important work and I want to commend the 
Department in the areas of improvement we have seen based on 
your work and based on the reforms in the 2008 Farm Bill and 
the Secretary's leadership, and we very much appreciate the 
direction in which we are going.
    We think we can do more and we are looking forward to 
working with you as we do, in fact, continue to push ahead on 
ways that we can streamline and create more efficiencies and 
effectiveness in the programs. So thank you very much for being 
with us.
    We will ask our next panel to come forward.
    Well, good morning and thank you very much for your 
patience and for joining us today. Senator Roberts will be 
coming back to join us, as I believe other colleagues will as 
well. So let me introduce our three distinguished members of 
the panel.
    I am pleased to introduce today first Phyllis Fong who is 
the Inspector General at the U.S. Department of Agriculture 
where she promotes USDA efficiency and effectiveness and 
tackles waste, fraud, and abuse, and we appreciate your 
leadership in this important area.
    Prior to her post at USDA, she served as Inspector General 
for the U.S. Small Business Administration and was also elected 
the first Chair of the Council of Inspectors General on 
Integrity and Efficiency.
    Brett Blankenship, welcome. Farms over 10,000 acres of 
spring and winter wheat in Washington. He is the President of 
the Washington Association of Wheat Growers and was a former 
President of the Washington Grain Alliance. And we are so 
pleased to have you here today.
    And Ms. Masouda--I am going to make sure I am doing this 
right--Masouda--am I correct? Masouda Omar?
    Ms. Omar. That is correct.
    Chairwoman Stabenow. Okay, thank you. Is the Manager of 
Business Finance Loan Production at the Colorado Housing and 
Finance Authority in Denver. She works with small businesses on 
a daily basis underwriting loan requests and marketing business 
finance products to a wide variety of partners statewide, and 
we very much appreciate your expertise and experience in being 
here today with us as well. We will start with Ms. Fong. 


    Ms. Fong. Thank you, Madam Chairwoman and members of the 
Committee. We appreciate the opportunity to be here today to 
testify about our oversight work to help the effectiveness and 
delivery of USDA programs. You have my full written statement 
so I will just offer some brief comments on our work as it 
relates to the subject of the hearing.
    And very briefly, we believe that our audits and 
investigations help USDA, first of all, strengthen 
communication and coordination in its programs; secondly, 
address improper payments; and third, increase program control 
and integrity.
    As you all know, the IG's mission is to help USDA deliver 
its programs as effectively as possible, and the way we do this 
is by performing audits to determine if a program is 
functioning as intended, if payments are reaching the right 
people, and if funds are achieving their intended purpose. We 
also conduct investigations of people who may be abusing the 
programs, and these investigations can result in fines, 
imprisonment, or agency administrative actions.
    So let me spend a moment on communication and coordination 
and the need for stronger coordination between USDA programs. 
Several agencies within the Department provide payments to 
producers for programs that may have interlocking or 
complementary missions, for example, insurance payments for 
crop losses and disaster assistance payments as well.
    And we believe in our work that it is critical that RMA, 
FSA, and RCS work together to create a cohesive integrated 
system of program administration and data. This type of 
coordination is equally important in areas where USDA must work 
with other Federal, state, and local agencies, and with foreign 
countries, for example, in the areas of food safety inspection 
and global trade export programs. My statement gives examples 
of this in the areas of suspension and debarment, the Food 
Emergency Response Network, and the Invasive Species Program.
    Turning to the topic of improper payments, our work in this 
area is intended to save taxpayers money by ensuring that 
programs deliver the correct benefits in the right amounts to 
the right people. We have released a number of reports this 
past year that talk about different aspects of these issues.
    We have looked at FNS's report on improper payment rates in 
the SNAP program. We have also looked at NRCS's Conservation 
Security Program and RD's Single Family Housing Guarantee 
Program. And in all of those programs, we found that the 
Department had made progress, but could also make further 
    And finally, our investigations of fraud in USDA programs 
had identified many instances where individuals improperly 
received payments to which they are not entitled, and my 
testimony gives examples of that in the SNAP, Child and Adult 
Food Care, and WIC programs.
    So finally, let me say a few words about program control 
and integrity. Our work in this area is designed to help USDA 
managers strengthen program administration. Examples of this 
kind of work include our review of the BCAP program. We did an 
audit of loan collateral in FSA's Direct Loan Program, and we 
currently have work ongoing in the Civil Rights Program.
    Our investigations in this area can address issues of 
employee integrity and also cases involving false claims made 
by those doing business with USDA.
    So in conclusion, our office remains committed to helping 
USDA provide and deliver programs as effectively as
    possible. We look forward to working with this Committee on 
areas of mutual interest, particularly as you start to develop 
a new Farm Bill, and we would be very pleased to provide you 
with any assistance that we can based on our audit and 
investigative work. So thank you, and we welcome your 
    [The prepared statement of Ms. Fong can be found on page 57 
in the appendix.]
    Chairwoman Stabenow. Thank you very much. Mr. Blankenship, 
welcome again.

                     WASHTUCNA, WASHINGTON

    Mr. Blankenship. Thank you, Madam Chairwoman. I will also 
honor Ranking Member Roberts who is here in spirit, and members 
of the Committee as well. Thank you.
    As you introduced me, my name is Brett Blankenship. I am a 
farmer from Washtucna, Washington where I produce soft white 
winter wheat and dark northern spring and spring barley in a 
partnership with my brother, our wives, and my sister.
    As a matter of perspective, this places me in the center of 
the winter wheat growing region of the state of Washington, and 
the gateway to the famous Palous Region, which boasts of the 
highest dryland wheat yields in the world.
    As a state, we are averaging roughly six to five bushels 
per acre on approximately 2.3 million acres of wheat, and this 
places our state approximately fourth in wheat production in 
the United States. As we move forward toward serious 
consideration of the next Farm Bill, there are two other major 
components that are often left out of discussions like this.
    Yes, I am an American farmer, and I rely on the safety net 
aspects of the Farm Bill to produce crops. But I am also an 
American taxpayer and I also shop for groceries just like 
everyone else. So I commend you, Madam Chairwoman, for looking 
at the top of efficiency, just as we do on our farms.
    I will focus the remaining comments on my interactions with 
USDA, and perhaps offer some ideas that might help improve 
those. As background, my partnership operates in two counties, 
and I seem to be fortunate. We manage our interactions with 
USDA through one field office in the county seat of where I 
reside, and it has always been that way.
    I have had other growers complain that multiple counties 
offer them a lot of difficulty, but on my farm, we have been 
able to consolidate in one office and it has worked very well 
for us. I also interact with the NRCS office locally and, of 
course, our crop insurance provider.
    I am a participant in the ACRE program, Conservation 
Reserve Program, Conservation Security Program, and, of course, 
I carry CRC crop insurance. I was also able to participate in 
the SURE Program in 2008 and before--ancient history--
participated in the DCP program as well.
    As Senator Roberts alluded to, the management time taken to 
coordinate all this often takes 25 percent of our time--not our 
time, but our management time. And I participate in various 
government and quasi-government programs and it is frustrating 
to have so many rules and procedures to comply with, but to 
complicate matters further, often these agencies seem to have 
trouble talking to each other or coordinating with each even 
when they are closer together in some of the buildings, as I am 
to the panel right now.
    My most common interaction is with FSA, and it is the 
easiest office to deal with and the personnel seems to be 
incredibly well-trained and familiar with the actual impact of 
changes to program eligibility, payment limit compliance, and 
they have been very helpful. They seem to have a culture of 
Congress has appropriated these programs, authorized these 
programs. It is our job to provide the service to deliver them 
to you in the best efficient manner possible.
    We also work with NRCS where staff seems to have a 
different culture or not as well trained on payment questions 
or eligibility requirements, and certainly not familiar with 
FSA programs. NRCS has had a different focus in the past 
delivering conservation on the ground. FSA has had their focus 
on administration of the programs. But with different program 
work and different time frames, this has the tendency to create 
some problems.
    I do not have much direct interaction with RMA, but our 
agents do and they often seem confused with changes in 
insurance programs. There also seems to be confusion in the 
proper way to report acreage and yields in a format that 
transfers easily to SURE eligibility.
    We also, of course, work with bankers who largely do not 
have a good understanding of farm programs, other than the 
knowledge that those programs cover their risks as they loan us 
operating money. And to me, that is an important point in the 
Farm Bill debate, is the safety net programs help us secure 
operating capital to minimize our risks.
    All in all, I would say we make ten separate trips of 
several hours each to our FSA office for sign-ups, 
certification of acreage, CRP status checks, SURE eligibility 
questions, and returning paperwork once it is properly 
collected. As an aside, I will also add that that does not 
count if I am called in for an audit, as Ms. Fong alluded to.
    We often have so-called random audits, and unfortunately, I 
seem to get in a random audit almost every year. I do not know 
how it can be random if my name comes up. But that has been one 
of my frustrations. Even the county executive will say, Were 
you not just in here? So it has been an unusual situation.
    So it is no surprise in a rapidly changing agricultural 
economy that we adopt the new technology out in the field quite 
readily. We have adopted computers, data sheets, and readily 
adhere to GPS systems to increase our accuracy, and field 
    And it would be wonderful to be able to coordinate that 
better with the agencies that we interact with, rather than 
adding things manually. But my FSA office has eliminated a 
large amount of frustration, declaring planted acreage and 
compliance issues because of the GPS maps that they have 
implemented in Washington, and that has increased our accuracy 
and we are able to use that with ACRE, CRP, CSPN crop 
insurance. However, it took several seasons to work out some of 
the kinks.
    One of the frustrations that can often be traced to the 
SURE program, but it is very difficult to explain why those 
numbers do not seem to line up and why they cannot be 
corrected, because if someone somewhere along the way does not 
fill a form out properly, it throws a wrench into the 
    The two major conservation programs which we participate in 
are the Conservation Reserve and the CSP handled by the 
different USDA agencies with dramatically different 
administration experience. Personally, I appreciate the way CRP 
is administered because the agency with the strength in 
administration, Farm Service Agency, relies on the agency with 
their expertise in conservation, NRCS for technical advice and 
compliance, but it is administered with FSA. That has worked 
very well for us.
    Since the implementation of ACRE and SURE, there have been 
several comments about overlap or duplication. I have not found 
that to be the case, not on our farm, because we depend on the 
three different facets of the farm safety net for different 
areas of risk. But often, the interactions and paperwork can 
create the frustration.
    But finally, I would like to just say generally, it would 
be my personal opinion that rules for all Federal programs in 
this nature ought to be the same, and if the program is there 
to support my business's activity, then no matter what agency 
is administering it, the rules ought to apply the same.
    So you can see that the business of being in agriculture 
anymore is not just about cultivating or tending or harvesting 
a crop. It is also protecting the enormous risk and we depend 
on the programs you help us implement to do that. So thank you 
for the opportunity to address you.
    [The prepared statement of Mr. Blankenship can be found on 
page 49 in the appendix.]
    Chairwoman Stabenow. Thank you very much. We appreciate it. 
Ms. Omar, welcome.


    Ms. Omar. Thank you, Chairwoman Stabenow and members of the 
Committee, thank you for the opportunity to speak with you 
today. It is a privilege to come before you to discuss several 
of rural development programs authorized in the Farm Bill, and 
how Colorado Housing and Finance Authority has utilized these 
programs to support economic development in our state.
    Colorado Housing and Finance Authority, also known as CHFA, 
is a quasi-governmental entity created by the Colorado General 
Assembly in 1973 to increase the availability of affordable 
housing in the state.
    In 1982, the Colorado General Assembly expanded CHFA's 
mission to include business finance for the purpose of 
providing access to capital for economic development across 
Colorado. So it is CHFA's economic development mission that I 
will direct my comments to today.
    CHFA works in partnership with local and regional economic 
development agencies as well as large and small lenders in the 
state to finance business activities. We primarily support real 
estate and equipment purchases for existing businesses to 
expand or improve their operations, and we do this by offering 
fully-amortized, fixed-rate mortgages with lower down payments 
requirements to allow that business to preserve cash and grow 
their operations.
    Since 1982, CHFA's business finance efforts have provided 
nearly $900 million in capital to over 2,200 businesses 
supporting over 37,000 jobs. Historically, over 50 percent of 
our small business loan production has occurred in rural areas 
of Colorado.
    So among CHFA's partners is the USDA Office of Rural 
Development. CHFA has utilized Rural Development programs to 
support our work in Colorado's non-metro areas. During this 
time, we have financed a number of small businesses and non-
profit organizations using Rural Development's Business and 
Industry Loan Guarantee, and the Community Facilities Loan 
Guarantee, and the Intermediary Re-Lending Program.
    As part of CHFA's partnership with Rural Development, we 
rely heavily on the expertise of their regional offices. There 
are seven regional offices in Colorado, six of which are 
located in rural communities. These offices provide an 
essential service by acting as an intermediary between CHFA and 
the local businesses.
    They are also instrumental in ensuring smooth delivery of 
RD's programs statewide. Our work with the regional office 
really starts from the initial stages of structuring that 
financing, and even after that loan has closed, to help 
maintain a strong relationship with the borrower as we service 
these loans.
    In CHFA's experience, we have found that establishing trust 
with the rural customers is critical to ensuring a successful 
outcome. Rural communities take pride in conducting business 
with someone from the area who is known and reliable, and even 
though CHFA is a local entity with offices in Denver and Grand 
Junction, the day-to-day relationship that Rural Development 
regional offices provide is invaluable to us.
    Rural Development local offices serve as a one-stop shop 
that connect rural communities with resources that generate 
economic opportunities. They take on the responsibility of 
being familiar with other resources, ensuring that they serve 
as a conduit for the business to access help, even if it means 
going outside of RD's programs.
    CHFA's first experience in using Rural Development programs 
was through the Business and Industry Guaranteed Loan. The 
Business and Industry Guaranteed Loan allows CHFA to directly 
originate loans for small businesses. Similar to the SBA 
program, the Business and Industry is a loan guarantee.
    However, it is distinct from SBA in that it allows non- 
traditional lenders such as CHFA to participate. It is also a 
larger loan size than SBA's programs. An example of how CHFA 
was able to use this unique feature of the Business and 
Industry program, is the Durango and Silverton narrow gauge 
    Using the Business and Industry program, CHFA was able to 
provide the railroad with a $16.5 million loan and long- term 
financing to replace short-term variable rate debt that was 
coming due. The $16.5 million loan would have exceeded SBA's 
maximum loan size. However, CHFA's ability to assist the 
railroad was an important economic development opportunity for 
our state.
    The railroad is a popular tourist attraction in southwest 
Colorado, attracting over 200,000 visitors to the Four Corners 
area. It provides jobs to over 200 people and is responsible 
for nearly $100 million in economic impact to the area. Small 
businesses such as the Durango and Silverton are the backbone 
of Colorado's economy. Tourism accounts for 25 percent of the 
economy in the Four Corners area, and the railroad is estimated 
to impact 16 percent of the total employment in those two 
    Another program that I will briefly mention is the 
Community Facilities Guarantee which, as you are aware, is 
similar to the Business and Industry Guarantee program, but it 
is used to finance non-profit organizations. To our knowledge, 
USDA is the only agency that guarantees loans to non-profits, 
which is critical to ensuring that these organizations have 
access to capital.
    Oftentimes, non-profits, due to a higher risk profile, have 
difficulties getting financing through traditional outlets, 
which is why the support through the Communities Facilities 
Program offers solutions to help lenders extend credit.
    Young Tracks Preschool and Child Care Center is an example 
of a project that CHFA financed using the Community Facility 
guarantee. This non-profit is located in Steamboat Springs, 
Colorado, a community of less than 10,000 people whose primary 
industry is tourism.
    Young Tracks was referred to CHFA by a local bank who was 
unable to provide the financing, so CHFA partnered with USDA 
who not only provided a community facility's loan guarantee, 
but also funded a direct loan together which provided the 
necessary dollars to build this new facility.
    Once the permanent financing was arranged, the local bank 
was also able to come in and reach a greater level of comfort 
and provided the borrower with an interim loan to fund the 
construction costs. And this facility has greatly enhanced 
Young Tracks' ability to serve the community. It has allowed 
them to add a new infant care program that was previously not 
available, as well as expanded classroom capacity for their 
    And still today, they are the only infant/toddler care 
program open to the public for a 27-mile radius. There are 
nearly 100 children enrolled there in their services and their 
clients are primarily low and moderate income households.
    In the interest of time, I am not going to go into some of 
the other remarks. You do have a written copy of my testimony, 
but the other program that I will briefly mention is the 
Intermediary Re-Lending Program, or the IRP program, that also 
benefits rural communities where lenders such as CHFA can 
borrow funds from USDA at a low interest rate and turn around 
and re-lend it to very remote areas of Colorado.
    And we have used these funds to provide low-interest rate 
loans to communities with greatest need based on their level of 
out migration, unemployment, and poverty rates.
    So as you can see, Rural Development programs are valuable 
to Colorado; as such, ensuring their ongoing and efficient 
delivery is critical.
    So thank you again, Chairwoman Stabenow and members of the 
Committee for allowing me to speak with you today. I applaud 
your leadership as you continue your work to support our 
nation's rural communities, and I look forward to answering any 
    [The prepared statement of Ms. Omar can be found on page 74 
in the appendix.]
    Chairwoman Stabenow. Thank you very much, and thank you to 
all of you.
    Mr. Blankenship, let me ask first, again talking about 
paperwork, I think paperwork is always a very significant 
frustration for farmers who have a lot of work to do and do not 
need to be spending all their time, as you talked about, 
filling out a lot of forms.
    So when you look at the greatest need for streamlining and 
really cleaning up the bureaucracy and the red tape and dealing 
with USDA agencies, you spoke about a number of things, but 
what do you think is the most important area for us to focus on 
from your perspective?
    Mr. Blankenship. I would like to see some kind of 
standardization of the information that is needed that could be 
used in the various different portals among the agencies. It is 
the duplication, and, unfortunately, the culture we have 
created in enforcement or trying to make sure that the right 
folks are getting the right payments, rather than delivering 
the service.
    Sometimes employees have viewed themselves as the great 
defenders of the Federal treasury, and somehow we need to find 
that sweet spot of delivering the service and being responsible 
and accountable as well.
    Chairwoman Stabenow. What is your experience in dealing 
with the technological capabilities of the Department? We have 
heard a lot today on our first panel about improvements in a 
number of areas because of technology. Do you see that, in your 
end? What is the interaction in terms of the use of technology, 
or what could be done better as including technology?
    Mr. Blankenship. My experience is things have gotten a lot 
better. I remember going through programs sign-up before, as a 
much younger person, and we would have to haul out all the maps 
and count all the acres of the fields and measure them 
manually. And it literally took all day.
    And we have recently added the GPS maps at the local 
office, and now that that is reasonably standardized, we know 
how many acres are out there now, as long as no changes have 
happened. It would be nicer to be able to submit a lot of that 
electronically. That would be, of course, the next step. 
Without going into greater detail, that would be a good start, 
    Chairwoman Stabenow. Great. Thank you very much. This is an 
area of great interest, I think, to us.
    Ms. Fong, last week your office issued a report detailing 
its fraud prevention efforts in programs under your 
jurisdiction, including the food assistance programs, and there 
were some impressive numbers in terms of what has happened in 
the last six months.
    We have heard 516 arrests for $47.8 million given back to 
taxpayers. And, in fact, in Michigan, I want to congratulate 
you, the OIG, working with the Lansing Police Department, just 
identified a major fraud case at a storefront, J&K General 
Store, and thanks to the record- keeping technology and the 
data analysis, you were able to work in a way to recover half a 
million dollars.
    And so, we appreciate that. I have now seen that up close, 
what you are doing, and how effective it is. But I am 
wondering, as we look at what was given to you in the 2008 Farm 
Bill in terms of new authorities and investments and so on, if 
you could talk a little bit more about what has happened in 
terms of improving efforts to combat fraud and abuse, and what 
we can continue to do to keep a good record going.
    Ms. Fong. Well, thank you, Madam Chairwoman, for your 
comments and we appreciate your support on all of the work that 
we are doing across the board, especially in the SNAP program. 
And as you pointed out, we work very closely with FNS and with 
the state and local jurisdictions to find instances where there 
are problems and to go after them.
    We believe that that relationship is so essential, to have 
very close working relationships with the Department of 
Justice, state and local enforcement, and FNS as well, because 
we all approach these issues from our own perspectives, and 
they tend to reinforce each other.
    And to address your question about the Farm Bill of '08, we 
have been working with FNS. There are a number of provisions in 
there to strengthen the SNAP program. We realize that they have 
just issued a proposed rulemaking that will change some of the 
definitions of trafficking and will give us the ability to 
really pursue some of the instances that involve retailers as 
well as individual recipients. So we think those provisions are 
very helpful.
    Chairwoman Stabenow. And just as a quick follow-up and a 
clarification and a comment in your testimony. If an individual 
is caught trafficking SNAP benefits, what happens to their 
ability to get future benefits from any Federal Government 
    Ms. Fong. Well, that is a very good question. Generally, 
when an individual is found to have improperly trafficked or 
improperly used their benefits, they would be subject to 
prosecution by state and local authorities, and if they are 
convicted, then their eligibility, I think, would be very much 
impaired, shall we say.
    Chairwoman Stabenow. True, in my experience, at least in 
situations we have been involved with, they would just be 
eliminated from eligibility. Is that your understanding?
    Ms. Fong. That is my understanding, that a conviction of 
criminal conduct would make them ineligible.
    Chairwoman Stabenow. Okay. I would certainly hope so.
    Ms. Fong. Yes, exactly.
    Chairwoman Stabenow. If there is a concern there, please 
let us know. But that is my understanding. Please follow up and 
make sure, because that is my understanding, and I am assuming 
unless otherwise if that is the case, if you could let us know.
    I would like to turn now to our Ranking Member, Senator 
    Senator Roberts. Thank you, Madam Chairwoman. Mr. 
Blankenship, there is an awful lot of information out there on 
the Web. My staff is in a continual re-education effort to try 
to get me up to speed. I know it is out there. I just cannot 
find it.
    Are you able to find a lot of the forms, the information 
that you need online? It may be online, but are you able to get 
in a situation where you think you can rapidly find these 
things? Are you simply utilizing the online forms and resources 
that people talk about that are available. Are they available?
    Mr. Blankenship. They may be available, Senator, if you can 
wade through the pages to get to them. But we have found it 
just as easy, since my business partner lives not too far from 
the service agency office, we have just found it easier just to 
go in and then you have the same one there looking for----
    Senator Roberts. So basically you ask Mabel, Will you help 
    Mr. Blankenship. That seems to work the best for us.
    Senator Roberts. I see. I wish you could do it online, but 
I empathize with your situation. I just have another question 
here. You note in your testimony that Farm Bill programs help 
producers obtain their operating capital from the banking 
community. That is an obvious statement.
    Are there specific programs that are more important to 
banks than other programs, in your view? Do banks ask you what 
level of crop insurance you purchase or how much you will 
receive in direct payments. Something that has been discussed a 
lot around here. Do they ask you if you have signed up for 
ACRE? What do they ask you?
    Mr. Blankenship. When I submit my financing budget and my 
plan for the year, they know what line to look for, for either 
the direct payment or the ACRE payment, as the case may be. I 
am in ACRE, so they are looking for that line, and it is very 
important to them.
    The next question is, since they know I am a policy guy, 
they ask me, Where do you think the next Farm Bill is going? 
And then the third question is, Do you have CRC?
    Senator Roberts. I think you are right. The next Farm Bill 
is going. That was very clever of you to turn that right back 
on us, and I wish we knew. Both the Chairwoman and I, we have 
no other higher priority than to try to do the best we can to 
preserve that safety net that that bank asks you. Otherwise, 
you are not going to get your loan that you depend on. What 
about crop insurance? You did not mention that one.
    Mr. Blankenship. I am a participant in CRC. They certainly 
want me to participate in that, to preserve their exposure, and 
my assumptions in financial receipts, CRC does help me cover 
that risk.
    Senator Roberts. So you have got some crop insurance and 
direct payments and ACRE?
    Mr. Blankenship. Yes.
    Senator Roberts. Those are the big three?
    Mr. Blankenship. Yes.
    Senator Roberts. I appreciate that. Thank you.
    Chairwoman Stabenow. Thank you very much. Senator Bennet.
    Senator Bennet. Madam Chair, thank you for holding this 
important hearing, and also thank you for having two Coloradans 
testify and three Coloradans visit. Harris Sherman, who 
testified on the first panel, who used to be our Director of 
Natural Resources in Colorado and has been dedicated to our 
natural resources in particular, fighting the Bark Beetle 
infestation that we have had. It has been very, very important 
to the state.
    And Masouda Omar and Steve Johnson, who are here, the 
Colorado Housing and Finance Authority who have done such great 
work at the local level, and I appreciate your recognition of 
the quality of folks in Colorado by having everybody here.
    Ms. Omar, not the purpose of this testimony, but you 
mentioned the Durango-Silverton Railroad, and I drive by that 
regularly. And I often think, Madam Chair, about the people 
that built that railroad and the people that built the road 
next to that railroad. I blew two tires out on the minivan the 
last time I was on it because of a rock slide. Still very 
    But the cooperation between the private sector and the 
Federal Government that made those things possible, that 
allowed one generation to build something that even now is 
making a huge economic contribution to our state, I think their 
memory is something that we would do well to think about as we 
have the debates that we are having here and trying to drive 
this country forward and build for the next generation.
    But to come to the purpose of today's hearing, I wanted to 
ask Ms. Omar a couple of questions. Thanks for coming all the 
way out here. There was discussion earlier today in reference 
to a GAO study that identified significant duplications in 
Federal economic development programs. I wondered whether, from 
your vantage point, you see duplication? And also, if you could 
talk a little bit more about your interactions with the SBA 
versus USDA and how we should think about that?
    Ms. Omar. Thank you, Senator Bennet. Yes, my experiences 
with USDA is primarily with the Community Facilities, the 
Business and Industry, and then the IRP program. And I can tell 
you that those programs are very distinct and serve very 
different purposes than the SBA program.
    The Community Facility program is the only--to my 
knowledge, it is the only loan guarantee for non-profits, and 
when you have a local non-profit in a rural community, access 
to capital is very difficult. And so these programs serve a 
very important purpose.
    If anything, in terms of improvements to programs, we would 
like to be able to see Federal programs working together, 
greater collaboration, and one program that I will briefly 
mention is the New Markets Tax Credit Program, which is a tax 
credit program that was designed back in 2000.
    And we have some tax credits available in rural areas, and 
it would be nice to be able to combine a USDA guarantee or a 
loan through the New Market Tax Credit structure to be able to 
finance projects in rural communities and very high distressed 
communities within rural areas of our state.
    Senator Bennet. Thank you. I also wanted to follow up on 
the Ranking Member's questions about paperwork with you. You 
have been working for years with Rural Development programs, 
and I know you are familiar with the paperwork. I have heard 
from Coloradans, more than I could possibly represent well 
today, who are so frustrated with the paperwork process for 
everything, from water to business programs.
    I wanted to ask you, if you were going through the USDA RD 
avocation process for the first time, would it be self- 
explanatory to you, do you think?
    Ms. Omar. You know, that is a great question. Yes. We have 
worked with--we have done a number of transactions with, as you 
know, with USDA, and obviously the first time, when you are 
working on a new program or working trying to put together a 
guarantee program, we do look to work closely with the local 
office and help guide us through the process, and they have 
been very helpful.
    The programs or the projects that we have financed, they 
tend to be larger transactions that do require additional due 
diligence. So the way I communicate those expectations to my 
borrowers is that oftentimes, when you are buying that piece of 
real estate, it is the largest investment that company is 
making in their business. And so, we do want to do a little bit 
of additional due diligence, make sure that that asset is a 
quality asset that is being put on their balance sheet.
    But again, in our experience, the USDA staff has been 
available to walk us through the process, answer any questions 
that we might have. Like I said, this is typical with other 
programs that we work with. There is just a little bit more due 
diligence involved.
    Senator Bennet. I would like to see how we might be able to 
streamline some of that because there is a recurrent theme that 
we hear. But I will be after you for your ideas about that. 
Thank you. Thank you, Madam Chair.
    Chairwoman Stabenow. Thank you very much, Senator Bennet. 
This is exactly why we wanted to hold the hearing today, is to 
be able to begin to have that discussion about how we can 
streamline and consolidate and do effectively what needs to be 
done, and there are very important things done through the 
Department of Agriculture for communities, for farmers, for 
families, for ranchers, foresters.
    But there are a lot of ways in which we can streamline and 
do a better job. So that is the reason for the hearing and we 
very much appreciate it. As we come to the close, let me just 
indicate again that we have held the hearing today to make sure 
that there is accountability in the administration of Farm Bill 
    We need to be confident that we are sound stewards of 
limited taxpayer dollars and that we are cracking down on any 
fraud and abuse that is in these important programs. So we are 
going to be asking a lot of questions as we go forward, and to 
each of our witnesses today, we are going to be asking you to 
continue to be involved with us as we focus on all of these 
    Have we provided the right tools and invested in an effort 
to catch those who would abuse the systems and, in fact, are we 
catching them? How can we continue to do that? Are we cutting 
down on inefficiencies and waste that lead to mistakes or cause 
frustration by those who use the programs? What can we do to 
consolidate? What can we do to be more effective and efficient?
    I think today it is important to note that the hearing has 
demonstrated that fraud and abuse are not rampant or out of 
control, but we also know that we need to stay focused and that 
we need to look for continual improvement, and that is really 
the job of this Committee.
    We have provided the tools to catch those who would commit 
fraud, and small investments appear to be having major benefits 
as we look to address those issues, all of which are saving 
taxpayer dollars.
    I think it would also serve as an important reminder to 
those who are focused on cutting budgets and spending, that 
misguided cuts can lead to more waste, fraud, and abuse and 
damage the agencies' ability to crackdown on those who abuse 
the programs, and bring them to justice.
    In other words, unwise cuts can lead to more wasteful 
spending. And so, I think we need to be very smart about how we 
are doing things going forward, and that is something we take 
very seriously.
    And finally, I think we have areas where we clearly can 
work to cut down on duplication and unnecessary complexity in a 
whole range of areas so that programs are easier to understand, 
administer, and use, while also improving our ability to ensure 
better accountability. I think it would be our Ranking Member's 
and mine goal, some day to see one form. Our farmers would have 
to fill out one form to be able to know what they qualify for 
and what their options are and so on. We will work towards that 
goal, certainly.
    So we look forward to working with the Department and with 
all of our colleagues, with all of you. We appreciate, Ms. 
Fong, your efforts, and I continue to applaud and encourage you 
in your very important efforts.
    Mr. Blankenship, we hope that we are going to be able to 
address some of those issues that you have raised that are 
frustration to you as you work to be successful for your family 
on your family farm, and we congratulate you for being here.
    Ms. Omar, the same for you. What is done with Rural 
Development programs is incredibly important and we want to see 
what we can do to more effectively give you the tools, or at 
least streamline the process for you to be able to meet the 
needs of communities, both in Colorado, but all over the 
    So thank you very much to everyone. The meeting is 
    [Whereupon, at 11:55 a.m., the hearing was adjourned.]

                            A P P E N D I X

                             JUNE 23, 2011




                             JUNE 23, 2011



                         QUESTIONS AND ANSWERS

                             JUNE 23, 2011