[Senate Hearing 112-281]
[From the U.S. Government Publishing Office]
S. Hrg. 112-281
FARM BILL ACCOUNTABILITY:
THE IMPORTANCE OF MEASURING
PERFORMANCE, WHILE ELIMINATING
DUPLICATION AND WASTE
=======================================================================
HEARING
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
Available via the World Wide Web: http://www.fdsys.gov/
_____
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COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY
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
E. BENJAMIN NELSON, Nebraska SAXBY CHAMBLISS, Georgia
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
(ii)
C O N T E N T S
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Page
Hearing(s):
Farm Bill Accountability: The Importance of Measuring
Performance, While Eliminating Duplication and Waste........... 1
----------
Thursday, June 23, 2011
STATEMENTS PRESENTED BY SENATORS
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
----------
APPENDIX
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
Witnessess:
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
PERFORMANCE, WHILE ELIMINATING
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.
STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR FROM THE STATE
OF MICHIGAN, CHAIRWOMAN, COMMITTEE ON AGRICULTURE, NUTRITION
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
taxpayers.
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
today.
I would now turn to my colleague and friend, Senator
Roberts.
STATEMENT OF HON. PAT ROBERTS, U.S. SENATOR FROM THE STATE OF
KANSAS
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.
STATEMENT OF HON. CHARLES E. GRASSLEY, U.S. SENATOR FROM THE
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
problems.
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
management.
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.
STATEMENT OF HON. KENT CONRAD, U.S. SENATOR FROM THE STATE OF
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
response.
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
situation.
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
community.
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
Committee?
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.
STATEMENT OF HON. DALLAS TONSAGER, UNDER SECRETARY, RURAL
DEVELOPMENT, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, DC
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
Bill.
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
stakeholders.
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.
STATEMENT OF HON. MICHAEL SCUSE, ACTING UNDER SECRETARY, FARM
AND FOREIGN AGRICULTURAL SERVICES, U.S. DEPARTMENT OF
AGRICULTURE, WASHINGTON, DC
Mr. Scuse. Madam Chairwoman, Ranking Member, members of the
Committee, I want to thank you for the opportunity to testify
today.
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
customers.
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.
STATEMENT OF HON. HARRIS SHERMAN, UNDER SECRETARY, NATURAL
RESOURCES AND ENVIRONMENT, U.S. DEPARTMENT OF AGRICULTURE,
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
resources.
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.
STATEMENT OF HON. KEVIN CONCANNON, UNDER SECRETARY, FOOD,
NUTRITION, AND CONSUMER SERVICES, U.S. DEPARTMENT OF
AGRICULTURE, WASHINGTON, DC
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
prosecution.
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.
STATEMENT OF HON. JOE LEONARD, ASSISTANT SECRETARY FOR CIVIL
RIGHTS, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, DC
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
past.
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
trafficking.
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
announcement.
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
program.
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
process.
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
that.
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
grown.
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
programs.
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
programs.
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
them.
Senator Nelson. Thank you. Yes, and then your colleague
there?
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
Basins.
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
example.
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
line.
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
circumstances.
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
Reservation.
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
experience.
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
Chair.
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-
sufficient.
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
producer.
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
Klobuchar.
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
compatible.
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
phosphorous.
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
battles?
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
projects?
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
days.
[Laughter.]
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.
Welcome.
STATEMENT OF PHYLLIS FONG, INSPECTOR GENERAL, U.S. DEPARTMENT
OF AGRICULTURE, WASHINGTON, DC
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
progress.
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
questions.
[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.
STATEMENT OF BRETT BLANKENSHIP, BLANKENSHIP BROTHERS,
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
mapping.
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
machinery.
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.
STATEMENT OF MASOUDA OMAR, MANAGER OF BUSINESS FINANCE LOAN
PRODUCTION, COLORADO HOUSING AND FINANCE AUTHORITY, DENVER,
COLORADO
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
railroad.
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
communities.
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
programs.
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
questions.
[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,
standardization.
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
program?
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
Roberts.
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
me?
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
treacherous.
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
programs.
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
areas.
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
country.
So thank you very much to everyone. The meeting is
adjourned.
[Whereupon, at 11:55 a.m., the hearing was adjourned.]
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A P P E N D I X
JUNE 23, 2011
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DOCUMENTS SUBMITTED FOR THE RECORD
JUNE 23, 2011
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QUESTIONS AND ANSWERS
JUNE 23, 2011
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