[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


 
     HEARINGS TO EXAMINE USDA ORGANIZATION AND PROGRAM ADMINISTRATION

=======================================================================

                                HEARINGS

                               BEFORE THE

                        COMMITTEE ON AGRICULTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           MARCH 17, 18, 2016

                               __________

                           Serial No. 114-47
                           
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                           


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                       COMMITTEE ON AGRICULTURE

                  K. MICHAEL CONAWAY, Texas, Chairman

RANDY NEUGEBAUER, Texas,             COLLIN C. PETERSON, Minnesota, 
    Vice Chairman                    Ranking Minority Member
BOB GOODLATTE, Virginia              DAVID SCOTT, Georgia
FRANK D. LUCAS, Oklahoma             JIM COSTA, California
STEVE KING, Iowa                     TIMOTHY J. WALZ, Minnesota
MIKE ROGERS, Alabama                 MARCIA L. FUDGE, Ohio
GLENN THOMPSON, Pennsylvania         JAMES P. McGOVERN, Massachusetts
BOB GIBBS, Ohio                      SUZAN K. DelBENE, Washington
AUSTIN SCOTT, Georgia                FILEMON VELA, Texas
ERIC A. ``RICK'' CRAWFORD, Arkansas  MICHELLE LUJAN GRISHAM, New Mexico
SCOTT DesJARLAIS, Tennessee          ANN M. KUSTER, New Hampshire
CHRISTOPHER P. GIBSON, New York      RICHARD M. NOLAN, Minnesota
VICKY HARTZLER, Missouri             CHERI BUSTOS, Illinois
DAN BENISHEK, Michigan               SEAN PATRICK MALONEY, New York
JEFF DENHAM, California              ANN KIRKPATRICK, Arizona
DOUG LaMALFA, California             PETE AGUILAR, California
RODNEY DAVIS, Illinois               STACEY E. PLASKETT, Virgin Islands
TED S. YOHO, Florida                 ALMA S. ADAMS, North Carolina
JACKIE WALORSKI, Indiana             GWEN GRAHAM, Florida
RICK W. ALLEN, Georgia               BRAD ASHFORD, Nebraska
MIKE BOST, Illinois
DAVID ROUZER, North Carolina
RALPH LEE ABRAHAM, Louisiana
JOHN R. MOOLENAAR, Michigan
DAN NEWHOUSE, Washington
TRENT KELLY, Mississippi

                                 ______

                    Scott C. Graves, Staff Director

                Robert L. Larew, Minority Staff Director

                                  (ii)
                             
                             
                             C O N T E N T S

                              ----------                              
                                                                   Page

                        Thursday, March 17, 2016

Conaway, Hon. K. Michael, a Representative in Congress from 
  Texas, opening statement.......................................     1
    Prepared statement...........................................     2
Peterson, Hon. Collin C., a Representative in Congress from 
  Minnesota, opening statement...................................     2

                               Witnesses

Concannon, Hon. Kevin W., Under Secretary, Food, Nutrition, and 
  Consumer Services, U.S. Department of Agriculture, Washington, 
  D.C.; accompanied by Audrey Rowe, Administrator, Food and 
  Nutrition Service, USDA; Angela Tagtow, M.S., R.D., L.D., 
  Executive Director, Center for Nutrition Policy and Promotion, 
  USDA...........................................................     3
    Prepared statement...........................................     5
    Submitted questions..........................................    81
Almanza, Alfred V., Deputy Under Secretary, Food Safety, U.S. 
  Department of Agriculture, Washington, D.C.; accompanied by 
  Philip S. Derfler, Deputy Administrator, Food Safety and 
  Inspection Service, USDA.......................................    41
    Prepared statement...........................................    42
    Submitted questions..........................................    83
Mensah, Hon. Lisa, Under Secretary, Rural Development, U.S. 
  Department of Agriculture, Washington, D.C.; accompanied by 
  Brandon McBride, Administrator, Rural Utilities Service, USDA; 
  Tony Hernandez, Administrator, Rural Housing Service, USDA; 
  Samuel H. Rikkers, Acting Administrator, Rural Business--
  Cooperative Service, USDA......................................    57
    Prepared statement...........................................    59
    Submitted questions..........................................    84

                         Friday, March 18, 2016

Conaway, Hon. K. Michael, a Representative in Congress from 
  Texas, opening statement.......................................   111

                               Witnesses

Bonnie, Hon. Robert, Under Secretary, Natural Resources and 
  Environment, U.S. Department of Agriculture, Washington, D.C.; 
  accompanied by Mary Wagner, Associate Chief, U.S. Forest 
  Service, USDA; Jason Weller, Chief, Natural Resources 
  Conservation Service, USDA.....................................   112
    Prepared statement...........................................   113
    Submitted questions:
        Bonnie, Hon. Robert......................................   211
        Weller, Jason............................................   216
Taylor, Alexis, Deputy Under Secretary, Farm and Foreign 
  Agricultural Services, U.S. Department of Agriculture, 
  Washington, D.C.; accompanied by Val Dolcini, J.D., 
  Administrator, Farm Service Agency, USDA; Suzanne Palmieri, 
  Associate Administrator and General Sales Manager, Foreign 
  Agricultural Service, USDA; Brandon Willis, Administrator, Risk 
  Management Agency, USDA........................................   142
    Prepared statement...........................................   143
    Submitted questions:
        Taylor, Alexis...........................................   220
        Willis, Brandon..........................................   223
Woteki, Ph.D., Hon. Catherine E., Under Secretary, Research, 
  Education, and Economics, U.S. Department of Agriculture, 
  Washington, D.C.; accompanied by Chavonda Jacobs-Young, Ph.D., 
  Administrator, Agricultural Research Service, USDA; Sonny 
  Ramaswamy, Ph.D., Director, National Institute of Food and 
  Agriculture, USDA; Joseph T. Reilly, Administrator, National 
  Agricultural Statistics Service, USDA; Mary Bohman, Ph.D., 
  Administrator, Economic Research Service, USDA.................   170
    Prepared statement...........................................   171
Avalos, Hon. Edward M., Under Secretary, Marketing and Regulatory 
  Programs, U.S. Department of Agriculture, Washington, D.C.; 
  accompanied by Elanor Starmer, Acting Administrator, 
  Agricultural Marketing Service, USDA; Kevin Shea, 
  Administrator, Animal and Plant Health Inspection Service, 
  USDA; Larry Mitchell, Administrator, Grain Inspection, Packers 
  and Stockyards Administration, USDA............................   190
    Prepared statement...........................................   191
    Submitted questions:
        Avalos, Hon. Edward M....................................   223
        Shea, Kevin..............................................   225


    HEARINGS TO EXAMINE USDA ORGANIZATION AND PROGRAM ADMINISTRATION

                                (Part 1)

                              ----------                              


                        THURSDAY, MARCH 17, 2016

                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Committee met, pursuant to call, at 1:00 p.m., in Room 
1300 of the Longworth House Office Building, Hon. K. Michael 
Conaway [Chairman of the Committee] presiding.
    Members present: Representatives Conaway, Goodlatte, Lucas, 
King, Thompson, Austin Scott of Georgia, Gibson, Hartzler, 
LaMalfa, Davis, Yoho, Walorski, Rouzer, Moolenaar, Newhouse, 
Kelly, Peterson, Walz, McGovern, Lujan Grisham, Kuster, 
Aguilar, Graham, and Ashford.
    Staff present: Bart Fischer, Jadi Chapman, John Goldberg, 
Mary Nowak, Mollie Wilken, Patricia Straughn, Stephanie 
Addison, Lisa Shelton, Liz Friedlander, Mary Knigge, Robert L. 
Larew, Nicole Scott, and Carly Reedholm.

OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE 
                     IN CONGRESS FROM TEXAS

    The Chairman. Part 1 of this hearing of the Committee on 
Agriculture, examining USDA organization and program 
administration, will come to order. Please join me in a brief 
prayer.
    Heavenly Father, we thank You, Lord, for the multitude of 
blessings you have bestowed upon us as a country. Lord, we ask 
Your wisdom and guidance as we make decisions and hear this 
testimony, and understand its impact on the various programs 
that we are responsible for and working with.
    Forgive us, Lord, our failings. We ask this in Jesus's 
name. Amen.
    Today and tomorrow, we have before us most of the Under 
Secretaries of the Department of Agriculture. Each of these 
witnesses is responsible for an important mission area within 
USDA. Accompanying our witnesses are the Administrators who 
manage the agencies and programs within these larger mission 
areas. These folks lead the network of nearly 100,000 USDA 
employees who carry out the laws that this Committee works to 
enact.
    We welcome each of you here today. I know that preparing 
for these hearings can be time consuming for the witnesses who 
already have plenty on their plate. Please know that your 
commitment of time and knowledge does not go unnoticed and 
unappreciated, and we do appreciate you and the work that you 
do.
    The primary purpose behind these hearings is to connect the 
Members of this Committee with the full bench at USDA. It 
provides an opportunity for our Members to see in one setting 
how all of the various pieces of USDA fit together. It is an 
opportunity for our Members to gain an even stronger 
understanding of the policies and issues they focus on by 
getting under the hood to see how all, or at least more, of the 
parts work. It is also an opportunity for our witnesses to gain 
a better understanding of our responsibilities and the issues 
and policies our constituents care about. In short, this is a 
good opportunity for constructive dialogue between Members of 
this Committee and the Department.
    With the implementation of the 2014 Farm Bill largely 
complete and with growing concern in the countryside about a 
sustained drop in commodity prices, it is important that the 
Committee fulfill its vital oversight role to see what is 
working well and what needs improvement. The hearings we will 
hold over the next 2 days are a vital part of that work. They 
build on a similar series we held last fall, and I intend for 
them to become an annual component of our oversight efforts.
    [The prepared statement of Mr. Conaway follows:]

  Prepared Statement of Hon. K. Michael Conaway, a Representative in 
                          Congress from Texas
    Today and tomorrow, we have before us most of the Under Secretaries 
of the Department of Agriculture. Each of these witnesses is 
responsible for an important mission area within USDA. Accompanying our 
witnesses are Administrators who manage agencies and programs within 
these larger mission areas. These folks lead the network of nearly 
100,000 USDA employees who carry out the laws that this Committee works 
to enact.
    We welcome each of you here today. I know that preparing for these 
hearings can be time consuming for witnesses who already have plenty on 
their plate. So, please know that your commitment of time and knowledge 
does not go unnoticed or unappreciated. We do appreciate you and the 
work that you do.
    The primary purpose behind these hearings is to connect the Members 
of this Committee with the full bench at USDA. It provides an 
opportunity for our Members to see--in one setting--how all of the 
various pieces of USDA fit together. It is an opportunity for our 
Members to gain an even stronger understanding of the policies and 
issues they focus on by getting under the hood to see how all, or at 
least more, of the parts work. It is also an opportunity for our 
witnesses to gain a better understanding of our responsibilities and 
the issues and policies our constituents care about. In short, this is 
a good opportunity for constructive dialogue between Members of this 
Committee and the Department.
    With implementation of the 2014 Farm Bill largely complete and with 
growing concern in the countryside about a sustained drop in commodity 
prices, it is important that the Committee fulfill its vital oversight 
role to see what is working well and what might need improvement. The 
hearings we will hold over the next 2 days are a vital part of that 
work. They build on a similar series we held last fall, and I intend 
for them to become an annual component of our oversight efforts.
    With that, I recognize my friend, the Ranking Member, for any 
remarks he may wish to offer.

    The Chairman. With that, I recognize my friend, the Ranking 
Member, for any remarks that he would like to offer.

OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE 
                   IN CONGRESS FROM MINNESOTA

    Mr. Peterson. Thank you, Mr. Chairman.
    This is the second time the Committee has held a 2 day 
hearing to take a deeper look into USDA's organization and 
program administration, and given the fact that we have so many 
new Members, like every Congress, it is probably a good thing 
to have the ability to look through all the different parts of 
the USDA programs. And for a lot of people, on the part of the 
public, have no idea how much stuff there is at USDA and how 
complicated it is.
    So this will give the opportunity for Members to have a 
better understanding. So, with that I look forward to the 
testimony and yield back.
    The Chairman. I thank the gentleman.
    The chair would request that other Members submit their 
opening statements for the record so that the witnesses may 
begin their testimony and to ensure that there is ample time 
for questions.
    The chair would like to remind Members that they will be 
recognized for questioning in order of seniority for Members 
who were here at the start of the hearing. After that, Members 
will be recognized in order of arrival. I appreciate Member's 
understanding.
    I would ask the witnesses to limit your oral presentations 
to 5 minutes. All written statements, of course, will be 
included in the record. Over the course of today's hearing, 
following the testimony of each witness, everyone at the table 
will be available to answer any questions.
    Now after each panel, in order to transition and keep us on 
time, we have allotted about 10 minutes for that. What I would 
like to do is ask that the panel immediately recess over to 
1302 and give us a brief couple of minutes. There may be some 
Members who would like to individually talk to you one-on-one 
about something that is going on. So if you could, while we are 
shuffling around, do that right as we finish, that way we can 
get the other panel and we can start on time while you are 
having those brief or longer meetings that you might want. If 
you all could accommodate us with that, we would appreciate it.
    With that, I would like to welcome our first set of 
panelists. The Honorable Kevin Concannon, who is the Under 
Secretary, Food, Nutrition, and Consumer Services of the USDA. 
Mr. Concannon is accompanied by Ms. Audrey Rowe, the 
Administrator of Food and Nutrition Service, and Angie Tagtow, 
the Executive Director, Center for Nutrition Policy and 
Promotion.
    With that, Under Secretary Concannon, please begin when you 
are ready.

          STATEMENT OF HON. KEVIN W. CONCANNON, UNDER
    SECRETARY, FOOD, NUTRITION, AND CONSUMER SERVICES, U.S. 
  DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.; ACCOMPANIED BY 
 AUDREY ROWE, ADMINISTRATOR, FOOD AND NUTRITION SERVICE, USDA; 
ANGELA TAGTOW, M.S., R.D., L.D., EXECUTIVE DIRECTOR, CENTER FOR 
              NUTRITION POLICY AND PROMOTION, USDA

    Mr. Concannon. Thank you, Mr. Chairman, for the opportunity 
to join you today. I truly appreciate the Committee's ongoing 
support for Federal nutrition programs, and value our 
continuing partnership.
    While the economy improves, we must remember that full 
opportunity still eludes too many Americans, and poverty is a 
reality. SNAP lifts millions out of poverty. Census analysis 
shows that in 2014, SNAP had the largest child poverty 
reduction impact of any safety net program, other than 
refundable tax credits. It also benefits all those involved in 
producing, processing, delivering, and marketing food that 
recipients buy, and nearly \1/4\ of SNAP spending in grocery 
stores and supermarkets reaches American farmers.
    I want to address concerns about the proposal to implement 
the farm bill SNAP retail standards provisions. While it is 
driven by the law, it is a proposed rule, and we will consider 
all comments seriously, detailed comments the most helpful.
    As framers of the farm bill, this provision is intended to 
ensure that every participating retailer truly advances SNAP's 
mission. The rule is a measured but critical response to the 
threats posed by diet-related disease.
    Let me also address a proposal raised by some that would 
significantly erode SNAP's effectiveness, converting it into a 
block grant. This would be a step backwards in the fight 
against hunger. My experience as a State Commissioner showed me 
that block grants cannot respond timely to economic changes, 
natural disasters, and other unforeseen circumstances, as SNAP 
can and does. Block grants limit states when need increases 
they are forced to choose between benefit reductions and 
waiting lists for eligible citizens.
    Some argue for block grants to allow states to tailor SNAP 
to specific needs, but as described at the Committee's recent 
state options hearing, SNAP already strikes a careful balance 
between national consistency and state and local flexibility. 
We should preserve and strengthen this proven structure.
    Though SNAP remains essential, we would all prefer that 
fewer families need to utilize it. The projected 2.3 percent 
participation drop in 2017 is encouraging, but some ask why 
progress is slow. The fact is that employment gains have not 
reached all of our citizens. Low-skilled workers face tough job 
prospects, and some have trouble because of problems in their 
past. SNAP is the only resource for many workers unable to get 
hours and wages that meet their families' food needs.
    Our priority is to reduce the need for SNAP by helping 
participants secure stable, good-paying jobs, while also 
getting benefits to families in need. And let me be clear. SNAP 
has work requirements and has always had some. Furthermore, 
states have access to substantial employment and training 
resources, including 100 percent Federal funding. But too many 
states leave these resources unused for ideological and 
political reasons. It is both cynical and an affront to decency 
to fail to help SNAP recipients find jobs, and then force them 
off the program.
    We actively partner with states to meet their E&T 
responsibilities. USDA recently selected ten states for the 
SNAP to Skills project to improve their SNAP E&T programs by 
drawing on best practices. We are also working to support 
healthy food choices in SNAP with increases in farmers' markets 
accepting SNAP benefits, and the farm bill FINI grants to 
incentivize food and vegetable purchases.
    Let me turn now to the farm bill. We move to implement the 
law promptly with many key changes in effect soon thereafter. 
Rulemaking is now underway. We added funding and 2 year 
spending flexibility for TEFAP in 2015. The multi-agency task 
force now convenes quarterly to improve USDA Foods. The Food 
Distribution Program on Indian Reservations now offers bison 
and blue cornmeal, and we are working to improve more 
traditional local foods.
    The Administration remains committed to improving program 
integrity. SNAP payment error rates are among the lowest in the 
government. We are building on that progress. We recently 
strengthened oversight of quality control, as mentioned in the 
recent OIG report. FNS has already identified many of the 
issues in OIG's report, and initiated actions to effectively 
correct them.
    FNS has zero tolerance for fraud, and has made tremendous 
strides in rooting out violating retailers. In 2015, we issued 
2,693 sanctions against violators, permanently removing 1,900 
store owners. We will continue to improve to maintain the 
public's confidence in Federal stewardship of tax dollars. All 
of these nutrition programs for meal standards, to WIC foods, 
to nutrition promotion in SNAP are grounded in the Dietary 
Guidelines for Americans. They are not only the cornerstone of 
the USDA and HHS nutrition programs, but also inform nutrition 
standards for our nation's military, its veterans, and other 
Federal needs. I am proud of the Center for Nutrition Policy 
and Promotion's work on the recently released Dietary 
Guidelines.
    Thank you again for the opportunity to join you, and I look 
forward to your questions.
    [The prepared statement of Mr. Concannon follows:]

 Prepared Statement of Hon. Kevin W. Concannon, Under Secretary, Food, 
   Nutrition, and Consumer Services, U.S. Department of Agriculture,
                            Washington, D.C.
    Thank you, Mr. Chairman, and Members of the Committee for the 
chance to update you on USDA's Food, Nutrition, and Consumer Services 
(FNCS) accomplishments and priorities. With me today are Audrey Rowe, 
Administrator of the Food and Nutrition Service (FNS), and Angela 
Tagtow, Executive Director of the Center for Nutrition Policy and 
Promotion (CNPP).
    Let me begin by expressing my appreciation to you, Chairman Conaway 
and Ranking Member Peterson, along with other Members of this 
Committee, for your ongoing support for Federal nutrition programs, as 
expressed in the Agricultural Act of 2014. As you know, the history of 
these programs is one of bipartisan leadership from both Congress and 
the Executive Branch. I am proud of the accomplishments of this 
Administration in preserving and strengthening the programs, but I am 
profoundly conscious of the fact that they would not have been possible 
without the steadfast commitment of the Committee to keeping these 
programs available to help those who truly need them to put food on the 
table.
    As we continue to see progress in the economic recovery, we must 
remain mindful that for too many Americans, full opportunity remains 
elusive, and many families still cannot be certain of enough food 
throughout the year for an active, healthy life. Often those Americans 
who are most at risk of food insecurity also face obesity and related 
health conditions, in part because factors that contribute to these 
problems are interrelated--limited access to healthy food sources, 
inconsistent incomes, and other challenges. This is especially 
concerning because the typical American diet falls substantially short 
of nutrition recommendations. The Federal nutrition programs, which 
operate as partnerships with tens of thousands of state and local 
service providers, work together as a nutrition safety net to prevent 
hunger and improve nutrition, while also supporting local economies. 
They touch one in four Americans each year.
    The Supplemental Nutrition Assistance Program, or SNAP, is the 
foundation of this system of programs. I know that SNAP has been a 
focus of the Committee's work in recent months. I appreciate the series 
of hearings you have conducted on SNAP, and their focus on the strong 
evidence of its effectiveness. Studies have shown that participating in 
SNAP is associated with a significant decrease in food insecurity and, 
in turn, helps to address a range of negative health outcomes that are 
associated with food insecurity.
    SNAP also lifts millions of people out of poverty. Recent Census 
data indicate that 4.7 million people, including 2.1 million children, 
were lifted out of poverty due to SNAP benefits in 2014. The impact is 
greatest for the most poor, moving 13 percent of participating 
households from below to above 50 percent of the poverty line as it 
improves their well-being with better access to food resources. The 
Supplemental Poverty Measure shows that SNAP reduced child poverty by 
almost three percentage points in 2014--the largest child poverty 
impact of any safety net program other than refundable tax credits. 
Evidence is clear that food-focused SNAP benefits increase household 
food expenditures more than an equal cash benefit would. But SNAP does 
not just help relieve short-term hardship. SNAP's benefits are 
especially evident and wide-ranging for those who receive food 
assistance as children, including long-run improvements in health, 
educational attainment, and economic self-sufficiency.
    SNAP also benefits local businesses and economies through its 
countercyclical economic impacts. During economic downturns, every $1 
in new SNAP benefits generates up to $1.80 in economic activity. Every 
time a family uses SNAP benefits to put food on the table, it benefits 
the store and the employees where the purchase was made, the truck 
driver who delivered the food, the warehouses that stored it, the plant 
that processed it, and the farmer who produced the food. Nearly \1/4\ 
of all SNAP spending in grocery stores and supermarkets reaches 
American farmers.
    As this Committee continues to review SNAP, I want to speak 
candidly about the proposal raised by some to change SNAP into a block 
grant provided to states; such a change would have significant and 
negative consequences for the SNAP program. A block grant structure 
would significantly erode SNAP's responsiveness to those it serves and 
ultimately be a step backwards in the national fight against hunger. As 
a former Commissioner in three states, I would like to share my 
concerns about converting one of the most effective programs we have 
for addressing hunger, particularly among children, into a block grant:

   Currently, SNAP offers a national nutrition safety net. Its 
        design recognizes that poor and low-income households need help 
        affording food in every region of the country and a national 
        program ensures that no matter what state or community a family 
        lives in, if the family doesn't have enough money, it can get 
        the help it needs to put food on the table.

   Moreover, SNAP responds to changing economic circumstances 
        efficiently, effectively and immediately, expanding when and 
        where the economy is weak with benefits that flow to 
        communities, states, or regions of the country that face rising 
        unemployment or poverty. A block grant would not be able to 
        respond in this way, or even meet the needs of families 
        affected by natural disasters and other unforeseen 
        circumstances. A fixed block of money, even with some mechanism 
        to adjust for changes with need, will never respond without 
        costly delays that leave hard-hit communities without the 
        resources they need to help families afford food. As important, 
        under a block grant sagging local economies would also lose the 
        automatic countercyclical boost that SNAP offers. Evidence from 
        the Great Recession shows just how important the current 
        structure is to ensuring that SNAP benefits go where they are 
        needed during a downturn. The recession was deep and affected 
        every state, but some states saw their economy flounder earlier 
        than others. No formula had to be used and no decision had to 
        be made by the Federal Government to ensure that Texas had the 
        resources necessary to cope with rising SNAP caseloads in March 
        2008 while Massachusetts' caseload did not begin to rise 
        dramatically until January 2009.

   SNAP allows benefits to be redeemed across state lines. 
        National standards for retail store approval and monitoring 
        protect integrity. Block grants could lead to differences in 
        retail store and food eligibility that would limit participant 
        access to food, cause confusion among retailers and clients, be 
        costly to food retailers, and negatively impact local 
        economies.

   Block grants tied to past spending levels leave no room to 
        address low participation rates among eligible working families 
        or elderly. States could not encourage participation among 
        vulnerable groups without cutting benefits for others to 
        accommodate increased caseload.

    Some have argued that block grants are needed to allow states 
flexibility to tailor SNAP to specific needs. These arguments fail to 
consider the significant flexibilities that states already have 
available for this purpose. These SNAP flexibilities, many described 
earlier this month at the Committee's hearing on state options, have 
made the program more efficient, accurate, and effective. States have a 
wide array of options under existing SNAP rules to simplify operations, 
meet special needs, and design locally-responsive employment and 
training programs. By streamlining reporting requirements, adjusting 
certification periods, standardizing deductions for certain living 
expenses, and aligning SNAP with other Federal programs, states can 
target resources and better serve eligible households. Additionally, 
states may choose to uphold, eliminate, or modify the drug felon ban, 
including requiring that persons with drug felony convictions be tested 
for drug use as a condition of eligibility; and they may opt to include 
a photo on the household's EBT card. During my tenure at the 
Department, I have not had one commissioner or governor ask that we 
block grant the program, as they realize the current partnership and 
options work, and work well.
    States may also pursue regulatory waivers that further the purpose 
of the Program, often using creative strategies, while maintaining the 
needed balance between access and integrity. Many of these innovative 
solutions leverage technology and provide good customer service, while 
ensuring that the basic protections and standards required by law are 
maintained. For example, sixteen states have been approved for a waiver 
to provide secure electronic notices to clients who opt to receive them 
that way, rather than on paper. Fourteen states are operating under 
waivers to conduct unscheduled SNAP eligibility interviews, where, 
rather than prescribing a set time that may not work for the client, 
the household is provided with a notice and number to call at their 
convenience to complete the interview. These innovations through the 
waiver process allow us to test improvements that can, if they work, be 
expanded nationwide, but if they do not work, we have an opportunity to 
learn from that and not repeat the same mistake in other communities.
    While flexibility is critical to ensuring that states can meet the 
needs of their residents facing difficult circumstances, Members of 
this Committee have criticized states for how they have used their 
flexibility, and sought to constrain it in certain areas. The most 
notable of these is states use of broad-based categorical eligibility, 
an option by which states extend eligibility to households that receive 
a non-cash benefit funded by TANF. Conversely, there are examples where 
states are not taking options favored by the Committee. The 
Agricultural Act of 2014 codified existing FNS rulemaking that allows 
states the option to withhold issuing replacement cards to households 
with excessive requests, defined as five or more in a year. FNS 
provided states this option as excessive card replacements may be an 
indicator of potential benefit trafficking. To date, only three 
states--Iowa, Massachusetts, and Michigan--have adopted this state 
option. Conversion to a block grant would weaken the ability to ensure 
consistency across states in areas of interest to Congress. SNAP is 
designed to strike the right balance between national standards and 
state and local flexibility. Its national structure, which is 
fundamental to its success, should be preserved and strengthened.
    As vital as the program is to so many, we can all agree that it 
would be better if fewer families needed to utilize SNAP because 
poverty and need were lower. And while the trends are pointing in the 
right direction--we are currently projecting a 2.3 percent decrease in 
participation for Fiscal Year 2017--some ask, why haven't we made more 
progress in reducing the need for SNAP, given the reductions in 
unemployment in recent months?
    While overall unemployment has declined, unemployment rates for 
some workers remain far higher than average. Bureau of Labor Statistics 
data show that unemployment rates for high school graduates are 
substantially higher than for college graduates. Workers without high 
school diplomas are even more likely to be unemployed, and their wages 
are likely to be far lower than those with more education. Furthermore, 
some citizens have trouble entering the labor force because of criminal 
records or other problems from years past. And, many who have jobs do 
not get the hours and wages they need to meet their food needs but may 
not be eligible for many other forms of assistance. SNAP is also 
serving more eligible people because of state and USDA efforts to 
streamline the program to ensure that those who need benefits are able 
to access the program with less hassle and paperwork.
    As a senior Federal official responsible for this program, and as a 
former State Commissioner, I can tell you without reservation that the 
best way to reduce the number of low-income people on SNAP is to 
connect them with better paying jobs and support them with employment 
and training. Our objective is to reduce the need for SNAP by helping 
adults able to work to secure stable, good-paying employment, while at 
the same time ensuring that those who do need help are able to get it.
    One criticism heard repeatedly in some quarters is that SNAP 
discourages work. This claim does not hold up under close scrutiny. 
Work is important not only to household economic success, but also to 
the well-being of families more generally. The claim that SNAP does not 
support work reflects more ideology than evidence:

   In contrast to commonly heard rhetoric, SNAP does have work 
        requirements. In general, those who are able to work must 
        register to do so, accept a job if offered, and not voluntarily 
        quit or reduce work hours in order to get SNAP. This 
        requirement is not waivable. In FY 2015, 13.6 million SNAP 
        participants were registered for work.

   Many of those who receive SNAP and can work, do work--the 
        latest data shows that among SNAP households headed by an adult 
        who is not elderly or disabled, more than \1/2\ work. Studies 
        show that more than \2/3\ of new SNAP participants are in 
        households with earnings. Among SNAP households with at least 
        one working-age, non-disabled adult, more than 75 percent work 
        in the year before or after receiving SNAP.

   SNAP's benefit structure is designed to support and 
        encourage work by mitigating the benefit ``cliff''. When a SNAP 
        participant increases their earnings, their SNAP benefits 
        decline gradually by 24 to 36 for each dollar earned--a 
        strong incentive to work longer hours or prepare and search for 
        higher-paying employment.

   SNAP's Employment and Training (E&T) program helps 
        participants prepare for and secure good paying jobs, serving 
        about 600,000 SNAP participants in FY 2014 and more than one 
        million participants in FY 2015. FNS recently established the 
        Office of Employment and Training to better target E&T 
        resources to the most effective strategies.

   States have considerable flexibility in designing E&T 
        programs. They may target specific populations or geographic 
        areas, operate mandatory or voluntary programs, partner with 
        other state or local agencies to provide services, develop 
        third-party reimbursement models, and decide which services to 
        offer to E&T participants.

   We are also working with ten states to implement the E&T 
        pilot projects authorized by the 2014 Farm Bill. These projects 
        were awarded in March 2015 through a competitive selection, 
        along with a rigorous evaluation to determine their 
        effectiveness in helping participants prepare for and secure 
        good paying jobs. We look forward to encouraging results from 
        these pilots, to help participants improve their prospects for 
        self-sufficiency with good paying jobs and long-term career 
        aspirations to help them achieve and maintain independence.

   And earlier this month, the Department selected ten states--
        Arizona, Arkansas, California, Maryland, Massachusetts, 
        Michigan, Minnesota, Missouri, North Carolina and Tennessee--to 
        take part in the SNAP to Skills project, a peer-to-peer effort 
        to help state agencies improve their SNAP E&T programs by 
        drawing on best practices from other states. This project, 
        which we propose to continue in the FY 2017 budget request, 
        underscores the critical role of Federal oversight and 
        technical assistance in helping states improve their 
        effectiveness.

    In addition, able-bodied adults without dependents (ABAWDs) are 
only eligible for SNAP for 3 months in any 3 year period unless they 
are working or participating in qualifying education and training 
activities. Some have argued that states should end the practice of 
seeking waivers of the ABAWD time limit in areas of high unemployment. 
The law already makes this a state choice. To me, it is unwise to 
impose time limits in places where ABAWDs seeking work are unable to 
obtain jobs because the economic conditions are particularly difficult. 
Moreover, all states should be utilizing their E&T resources to help 
ABAWDs prepare for and find employment so these individuals are able to 
both move toward self-sufficiency and continue receiving SNAP while 
preparing to obtain stable, good-paying jobs. Unfortunately, too many 
states do not take this responsibility seriously and leave substantial 
E&T resources, including 100 percent Federal funding, unused. In FY 
2015, states returned $18 million in 100 percent Federal funding, and 
21 states did not take advantage of any of the Federal matching funds 
that are available to them. It is both cynical and an affront to 
decency to fail to use the tools available to make SNAP effective in 
supporting work.
    USDA is also working to support healthy food choices in SNAP:

   We have made great progress in providing better access to 
        farmers' markets and farm stands, with nearly 6,500 of these 
        outlets now capable of redeeming SNAP benefits. We are working 
        to expand this reach even further. In 2015, FNS equipped 
        approximately 1,770 farmers' markets and farm stands with 
        wireless SNAP EBT equipment. Redemptions at farmers' markets 
        reached $19 million in FY 2015, and we hope to see that number 
        continue to grow.

   We recently published a proposed rule to implement the 2014 
        Farm Bill provision that increases the range and depth of 
        healthful foods that SNAP-authorized stores must offer.

   In 2015, USDA awarded $31 million through the farm bill-
        authorized Food Insecurity Nutrition Initiative (FINI) grants 
        for projects to incentivize fruit and vegetable purchases among 
        SNAP participants; more grants will be awarded very soon.

   And we continue to advance and improve the effectiveness of 
        SNAP's Nutrition Promotion and Obesity Prevention grant 
        program, more commonly known as SNAP-Ed, by working to ensure 
        that funded strategies are based in strong and emerging 
        evidence, and increasing focus on policy, systems, and 
        environmental approaches as endorsed by public health experts.

    The Department has moved energetically to implement the nutrition 
provisions of the 2014 Farm Bill promptly. Non-discretionary provisions 
affecting eligibility and benefits in SNAP and the Commodity 
Supplemental Food Program were implemented immediately upon enactment 
in Spring 2014. Today, rulemaking continues. Many rules will codify 
changes that are already implemented; several dealing with SNAP 
retailer issues are still under development. As I noted, USDA recently 
proposed a rule implementing changes to SNAP retailer requirements 
mandated by the Act. Other farm bill accomplishments include:

   USDA utilized the increased funding provided by the farm 
        bill and added new 2 year spending flexibility for TEFAP in 
        Fiscal Year 2015; the President's Fiscal Year 2017 budget 
        requests additional TEFAP funding.

   The multi-agency Task Force on USDA Foods now convenes 
        quarterly to explore potential improvements in USDA Foods.

   We worked closely with a group of Tribal program operators 
        and nutritionists to select and directly procure traditional 
        and locally-grown foods for the Food Distribution Program on 
        Indian Reservations (FDPIR). The program now offers bison and 
        blue cornmeal, and more traditional local foods are in the 
        process of being approved. The President's budget requests 
        additional funds for this effort.

   The Department has increased the purchase of Kosher and 
        Halal foods, adding Kosher canned salmon to TEFAP options in 
        2014, and Kosher and Halal certified tomato sauce and Kosher 
        peanut butter in 2015. States have ordered over $13 million of 
        these foods to date.

   We have launched most of the pilot projects authorized by 
        the Act, including the SNAP E&T pilots, the pilot to offer all 
        forms of fruits and vegetables in the Fresh Fruit and Vegetable 
        Program, and the pilot to allow schools to procure unprocessed 
        fruits and vegetables with their USDA Foods funds.

   The studies authorized by the Act are complete or nearing 
        completion. A study of the impact of eliminating cash issuance 
        in the Puerto Rico Nutrition Assistance Program is complete, 
        and studies on the feasibility of operating SNAP in the 
        Commonwealth of the [Northern] Mariana Islands, and nutrition 
        assistance administration by Indian Tribal Organizations, will 
        be released in the next several weeks.

    As the Child Nutrition reauthorization process is underway, 
although not under the jurisdiction of this Committee, I know there is 
great interest here, so I would like to provide an update on the school 
meals programs. Schools around the country have made tremendous 
progress in improving the nutritional quality of school meals, working 
hard to effectively implement the meal standards FNS finalized in 2012. 
Today, over 97 percent of schools have met the meal patterns. For those 
few that are still working to reach this goal, USDA is supporting 
implementation with its robust Team Up technical assistance program, 
and providing flexibilities to those schools with specific challenges. 
Following the standards literally pays off for schools, as they receive 
an additional 6 for each meal that meets them--the first non-
inflationary reimbursement rate increase in over 30 years. 
Participation in the school lunch program has returned to levels near 
those before the patterns were implemented, and participation in school 
breakfast has grown robustly. Many schools are sourcing fresh, high-
quality, local ingredients through Farm to School programs, which 
operate in school districts of all types--large and small, rural and 
urban--to connect local farmers with their local schools and help them 
implement the meal improvements--a clear ``win-win.''
    Updated school meals standards were endorsed by over 350 nutrition 
and health organizations as the right thing to do for children's 
health. And we are seeing hard evidence of success: recent studies from 
Harvard and the University of Connecticut are showing positive outcomes 
from these standards, including evidence from a number of schools that 
students are eating more fruits and vegetables and that there has been 
no increase in plate waste.
    Making healthful school meals accessible to low-income families 
continues to be a priority for our agency. The Community Eligibility 
Provision (CEP) is an option that allows school districts in high 
poverty areas to offer free school meals to all of their students. It 
reduces the administrative burden on schools and families associated 
with collecting and processing household applications, but retains the 
sharing of cost between USDA and local and state authorities that is 
central to the traditional certification and reimbursement approach. In 
just its second year of nationwide implementation, CEP is now reaching 
more than eight million students nationwide in about 17,000 schools and 
3,000 school districts.
    Because hunger does not take a vacation during the summer months 
when school meals are unavailable, we have expanded the Summer 
Electronic Benefit Transfer (EBT) for Children demonstration pilots 
over the last 2 years, and the President's FY 2017 Budget proposes to 
stand up a permanent, nationwide program. Rigorous evaluations of 
Summer EBT pilots demonstrate the program effectively reduces food 
insecurity and improves nutrition. In tandem, we have expanded the 
Summer Food Service Program. In total, summer meals sites have served 
over 1.2 billion meals to low-income children since 2009.
    The Child Nutrition reauthorization process also provides an 
opportunity to build on the success of WIC, which uses science-based 
nutrition standards to ensure its food packages contribute effectively 
to meeting the nutrition needs of low-income pregnant and postpartum 
women, infants, and young children. Several studies found the food 
package changes we made may have had positive impacts on early 
childhood obesity and have increased preschoolers' consumption of 
fruits, vegetables, whole grains, and low fat milk. We are making great 
strides in transitioning to EBT, which will improve the shopping 
experience for both participants and vendors.
    Finally--as we have done since the beginning of this 
Administration--we are committed to continually improving the integrity 
of nutrition programs. Good stewardship of tax dollars is one of our 
most important objectives;. USDA has long recognized that the programs 
cannot succeed without strong public confidence. That is why we 
continually strive to improve program oversight and to identify, 
penalize, and exclude those who seek to defraud the programs, in order 
to preserve benefits for the vast majority of participants who play by 
the rules and genuinely need help ensuring their families have access 
to adequate, nutritious food.
    We are proud that SNAP maintains one of the lowest payment error 
rates in the Federal Government and continue to build on our progress 
in this area. FNS works directly with states to offer guidance and 
develop corrective action plans in cases where the payment error rates 
are above six percent. We recently issued new policy to further 
strengthen oversight of the quality control process in light of the 
recent OIG audit. USDA had already identified many of these issues and 
initiated action on our own reviews, which indicates that our controls 
and policies are working as intended. FNS is already implementing 
measures to effectively correct these issues.
    FNS has also made tremendous strides in rooting out bad actors on 
the retail side of SNAP. In Fiscal Year 2015, we issued 2,693 sanctions 
against retailers that had committed violations. Overall traditional 
investigative and analytic investigation outcomes increased by 21 
percent during the same time period. We continue to work to identify 
and eliminate fraud, waste and abuse.
    We are also working aggressively to limit improper payments in the 
child nutrition programs. The latest school meal integrity study found 
applicant misreporting, though sometimes unintentional, to be a 
significant source of payment error, in addition to other sources of 
error that are not related to applicants. Strategies such as direct 
certification and Community Eligibility reduce reliance on household 
applications while also expanding access and reducing administrative 
burden on families and schools. For times when applications are needed, 
we are working to improve the application process in order to minimize 
the chance of errors by applicants and reviewers. Some such efforts 
include the development of a prototype electronic application and the 
implementation of new, tested strategies to improve the process of 
verifying information on applications without discouraging 
participation of eligible children. As required by the Healthy, Hunger-
Free Kids Act, we have developed a uniform accountability system for 
state oversight of school meal programs.
    The American public believes in helping individuals and families in 
need put healthy food on the table--but they want to know it is being 
done in an efficient and wise way. That is why we will continue to 
battle error and abuse in all of our programs to assure these vital 
programs will continue to be there for those who truly need them.
    As I hope I have underlined throughout the testimony today, we are 
making enormous efforts to further a healthier America. It's important 
to note that the nutrition programs--from meal standards, to WIC foods, 
to nutrition promotion in SNAP--are grounded in scientific evidence and 
nutritional recommendations, including the Dietary Guidelines for 
Americans (DGA). Every 5 years since 1980, a new edition of the DGA is 
released in order to promote health and prevent chronic diet-related 
disease for current and future generations. The Dietary Guidelines is 
the nutrition policy backbone for this country. It not only is the 
cornerstone of USDA and U.S. Department of Health and Human Services 
nutrition programs, it also informs nutrition standards for our 
nation's military and other Federal needs. In addition, it is essential 
to the work of nutrition and health practitioners and serves to inspire 
sectors and industries that are all part of what our nation consumes 
daily. The 2015-2020 DGA focuses on the importance of achieving healthy 
eating patterns. The current body of evidence shows that a healthy 
eating pattern as a whole package is more than the sum of its parts and 
may be more predictive of overall health and disease risk than 
individual foods or nutrients. As with previous editions, the latest 
DGA provides information for policymakers and health professionals to 
help everyday Americans make sound decisions. It also notes, 
importantly, that healthy eating patterns are not one-size-fits-all. 
The 2015-2020 DGA embodies the idea that a healthy eating pattern is 
not a rigid prescription, but rather, an adaptable framework in which 
individuals can enjoy foods that meet their personal, cultural, and 
traditional preferences and fit within their budget. As we move into 
implementation, we look forward to improving the nutritional value in 
our various programs to reflect the most current body of science 
pertaining to healthy eating and to doing our part to help the public 
achieve healthy eating patterns.
    Thank you for the opportunity to join you today. I look forward to 
any questions.

    The Chairman. Do you all have opening statements, or are 
you just answering questions?
    Ms. Rowe. Just answering questions.
    The Chairman. Well thank you very much. I appreciate that, 
and I recognize myself for 5 minutes.
    Mr. Concannon, on the retailer proposed rule that has taken 
some 2 years to get to where you are right now, there is a lot 
of concern about the interpretation of the interpretation. I 
met yesterday with some convenience store owners who are 
particularly concerned that you intend to intentionally drive 
them out of the delivery system that, right, wrong, or 
indifferent, rural America has to have in the fight to provide 
food to rural America. Not everybody lives within 3 miles of 
Whole Foods or Harris Teeter or whatever.
    So can you talk to us about the seven different varieties? 
Does ground beef and sliced beef count as one variety or two, 
and how many of each individual items has to be on a shelf for 
that to be a qualifier?
    Mr. Concannon. Yes, Mr. Chairman. I appreciate the 
question, particularly about that proposed rule because it was 
just released within the last 2 weeks, and I want to emphasize, 
as I mentioned in my oral testimony, it is a proposed rule. 
That proposed rule is intended to implement a provision in the 
Agricultural Act of 2014, the farm bill, that directed us and 
the purpose of that, to strengthen the stock in stores, is 
really to provide additional choices for low-income Americans.
    The rule as proposed is just that, proposed. Our goal is to 
make sure that it is a very workable rule for stores. So for 
example, the questions you have raised, can two types of meat 
be counted, or let's say, ground beef versus sliced beef or 
pork chops versus----
    The Chairman. Bacon.
    Mr. Concannon.--bacon, as an example. We want the rule, the 
final rule to be reasonable, to one that reflects the ability 
of stores across the country. I had the occasion this past week 
to meet with store owners from Iowa, the state in which I live. 
I am very familiar with the importance of those stores in rural 
areas. I want to assure the Committee--and another Member here 
today has raised questions with me--that I want to assure the 
Committee that the proposed or the final rule will reflect 
reality and will not inadvertently cost us access to those 
needed stores in rural or even urban areas of the country.
    The Chairman. Okay. Ground beef and sliced beef, one or 
two? Skim milk and whole milk, one or two?
    Mr. Concannon. If left to me on the ground--I am not sure 
about the milk one, but certainly on the beef one I would count 
those as two items.
    The Chairman. As two different varieties, okay.
    Mr. Concannon. Yes.
    The Chairman. What about the volume of items available? I 
am told they have to have like six pieces of whatever, and 
obviously in convenience stores, shelf space is at a premium. 
What is the proposed rule?
    Mr. Concannon. We are going to look at that very carefully. 
There is a requirement that, again, I know the estimated cost 
independently assessing this estimated that it would cost 
stores currently just meeting the minimum to add about $140 in 
stocking costs, but we want to make sure that it is----
    The Chairman. Is that per day, per week?
    Mr. Concannon. No, no, that would be the initial stocking 
to meet it, and then to the extent that that item sells out, it 
would be replaced. But if you are selling it, you would be 
replacing an item that you made a profit on.
    The Chairman. So what is the rule with respect to the 
volume, do you have to have six cans of tomato soup?
    Mr. Concannon. There are individual items, and I am not an 
expert on the actual derivation of the individual items in it.
    The Chairman. Okay.
    Mr. Concannon. I did sit and listen to industry folks and 
ensured them we are very committed to listening carefully.
    The Chairman. Okay. Are you all responsible for the rule, 
are either of your organizations responsible for the proposed 
rule?
    Ms. Rowe. Within the Food and Nutrition Service's 
administration, yes.
    The Chairman. All right. I need you to have your microphone 
on. Chicken noodle soup has multiple ingredients. How would 
that fall into the guidelines?
    Ms. Rowe. Well, right now I can honestly say that as we are 
hearing this information from the various retailers, we are 
looking very carefully to make sure that as we look at products 
that have noodles and chicken in that product, whether that 
should be counted as a single product or different. But it is 
so new, sir, that it is important to us that just as we are 
having this discussion with you today and with other Members 
and others that we hear what the impact of these rules will be.
    The Chairman. Okay. Two real quick ones. Did you have a 
retailer on the team that wrote the rules? Did anybody on your 
team have retail experience? And the other question is, 2 years 
to put the rule----
    Ms. Rowe. No.
    The Chairman. Ma'am?
    Ms. Rowe. No, we did not--I am sorry, sir. We did not 
have----
    The Chairman. So no one on your team had actually ever 
worked at a grocery store or anything like that?
    Ms. Rowe. No, sir.
    The Chairman. Okay. So 2 years in the making, 60 days, you 
don't have to answer this right this second, but I would 
appreciate you considering an extended comment period to maybe 
clear another 60 days, because this is a big deal, and what I 
am hearing from you is proposed. You are flexible. You want to 
hear from everybody and so the idea of giving folks plenty of 
time to make that happen, we would much appreciate it.
    Ms. Rowe. Yes, sir.
    And with that, I will recognize Mr. McGovern, for 5 
minutes.
    Mr. McGovern. Thank you very much. I want to thank all 
three of you for being here, and I want to thank you for the 
work that you do. I appreciate it. Mr. Concannon, you raised 
the issue about block granting of SNAP, and I just want to say 
for the record, I appreciate you not tiptoeing around the 
issue, because I am very, very concerned about this.
    As you know, the Republicans passed their budget in the 
Budget Committee yesterday, and in my opinion, it contains some 
of the most severe budget cuts in modern history to assistance 
that would help Americans of limited means. But it also goes 
one step further. It calls for the block granting of SNAP, 
which is something that has been a regular in a lot of 
Republican budgets.
    I am deeply worried about this because I am worried that 
this is the direction that the majority in this Congress want 
to move in, and that would be a huge, huge mistake. People 
complain that there were a lot of people enrolled in the SNAP 
program during this economic crisis that we are now getting out 
of. Well, that is the way it is supposed to work, right? If we 
were at an all-time high in job numbers in this country, and 
everything was just perfect, we wouldn't expect very many 
people that would need to rely on SNAP. It is when there is an 
economic downturn that we do, and thank God the program is 
there.
    Now I am worried about block grants. I am worried about 
more work requirements, when, in fact, we know this group of 
able-bodied adults without dependents, a number of them are 
going to lose their SNAP benefits because they can't find a job 
and they are in states where they can't get involved in a 
worker training program. And, this budget that is being 
proposed would cut worker training programs.
    So I would welcome the opportunity for you to maybe expand 
a little bit about why block grants are a bad idea, and why 
states have a lot of flexibility, and what are we going to do 
about this able-bodied adult without dependents population. 
Many of them, by the way, are veterans who have served our 
country and have fallen on hard times, and they are going to 
lose their food benefits, which to me is outrageous.
    Mr. Concannon. Thank you very much for the question.
    As some Members of the Committee are aware, I was a State 
Health and Human Services Director in three states over a 30 
year period, so I am very familiar with the history of block 
grants, not just in the Food Stamp Program. Happily, it hasn't 
occurred yet. But in other arenas, one of the principle areas I 
look at is in the TANF, or the Cash Assistance Program. Here we 
have been through the deepest recession in 100 years, and TANF 
was missing in action during that time. Frankly, that is part 
of the reason why we have had growth in the SNAP program, 
because we were the only game in town. We were the only source 
of support for many families. We have a very high percentage of 
SNAP households now who have no other source of support, even 
though by Congress's definition, it is supposed to be 
supplemental, not the only source of support. I would also 
point out, we have the highest percentage of people receiving 
the SNAP benefit right now who are working, who are in the 
workforce in the history of the program, but it is reflective 
of the fact that they are not getting enough hours and they are 
not paid enough on an hourly basis.
    Mr. McGovern. Right.
    Mr. Concannon. So as you note in your question, SNAP, by 
design, is intended to be responsive. We are in the process of 
receiving a request from Louisiana, for example, where they 
have had terrible flooding, for disaster SNAP assistance. That 
is another feature of the program, when we have tornados, 
floods, earthquakes. The snowstorms we have even had in some 
parts of the U.S. The program is responsive. Block grants don't 
provide that option to states, and consequently, people get 
squeezed out and not responded to. It is a very bad idea from 
the point of view of effectiveness. It doesn't save money in 
terms of administration. SNAP is one of the least expensive 
programs administered state or state and county across the U.S. 
So it is a bad idea on that front.
    ABAWDs, you make a very important case. That is why in my 
testimony I took the occasion to remark on the fact that even 
though this Congress and previous Congress sets aside funds 
from Employment & Training to states, based on their SNAP 
rules, we have had states who allow that to lapse, who aren't 
interested in using it as a way of providing training and 
skills to their underemployed, and they can target those ABAWD 
folks if they so choose. But it is a matter of just we are too 
busy or we are not focused on them.
    I had a conversation with a governor yesterday in the 
southern part of the United States. When I pointed out to him 
that in previous years, his state had lapsed funds that could 
have been used to provide training, training for long distance 
truck drivers, training for people in the food service 
industry, training for people in healthcare, because in many 
parts of the U.S. and towns, hospital systems are the largest 
employers in those towns.
    You need to have the full complement. I think SNAP really 
works well. It is very efficient. It is not perfect, but it is 
very efficient, and as noted, it brings people out of poverty 
as well.
    Mr. McGovern. Thank you. Thank you.
    The Chairman. The gentleman's time has expired. One thing, 
Mr. Concannon, the reason why those funds lapse, is that 
because the state failed to match that money?
    Mr. Concannon. No, it was not. Thank you, Mr. Chairman. No, 
there are two parts to the Employment & Training funds. States 
receive collectively across the U.S. about $94 million a year 
in 100 percent Federal funds.
    The Chairman. Okay.
    Mr. Concannon. It goes to the state agency. That is the 
money that was being lapsed.
    The Chairman. Okay, I just wanted to make sure. All right, 
thank you. With that, Mr. Scott, 5 minutes.
    Mr. Austin Scott of Georgia. Thank you, Mr. Chairman.
    You suggested that SNAP lifts people out of poverty. I 
would suggest that maybe a more accurate description would be 
that it reduces the impact of poverty on their lives.
    But one of my primary concerns is that if we look at low-
income people, not just in America, but around the globe, it is 
the rising cost of food that hurts low-income people more than 
anybody else, and yet, we see continued moves by the 
government, mostly in other agencies besides yours, that are 
raising the costs of producing crops in the United States. If 
you look at the attacks, if you will, on new seeds that allow 
us to have improved yields, which means that we have more food 
available to help people, if you look at the attacks on 
fertilizer, on pesticides, and the other things that are coming 
from certain groups and certain agencies inside the United 
States today, my question would be for you, as these attacks 
continue to come on production of agriculture, what do you 
think the impact of the average household's grocery bill is 
going to be?
    Mr. Concannon. Well, I am not an expert in terms of 
forecasting that, but I am very mindful of the fact that the 
current situation in the U.S., we have the least expensive food 
in the world, and that is a product of the production practices 
and the ability of American agriculture to produce these foods. 
I am very mindful of that when I travel around the country.
    Mr. Austin Scott of Georgia. And that is accurate, but 
those production practices today are under attack, in many 
cases, by some of the same people that on one day wear the hat 
for we should be doing more for people to alleviate hunger, and 
the next day they turn around and they wear another hat trying 
to take technology out of seed production and take fertilizers 
and pesticides off the market. And there is a real impact to 
that.
    Mr. Concannon. I know the area in which our mission area 
here is directly engaged in has been promoting; for example, I 
spent time last week out on the West Coast visiting schools. 
This is National Nutrition Month. And we have been promoting 
something broadly referred to as Farm to School efforts across 
the country, ways of better engaging school systems to 
understand that food just isn't magically produced. Somebody 
has to grow it. Somebody has to raise it, and that to the 
extent that we can promote access to agriculture for students 
when they are in the school years, they will have a better 
understanding of where food comes from and the importance of 
looking after the soil, looking at promoting good growing 
practices, and that is one aspect of----
    Mr. Austin Scott of Georgia. And this is where we just have 
a fundamental difference of opinion, in that I trust the people 
at the Tift County school system, which my son is in, which my 
mother taught in for years, which I am very proud that my 
sister was just designated as teacher of the year in, we don't 
need somebody from Washington, D.C. telling us what to feed the 
students in the school system. We, as the parents, the local 
school board, the local teachers and the cafeteria, we can 
handle that without being told from Washington what to do.
    My primary concern for agriculture as a whole is when we 
see the EPA, for example, taking products off the market that 
we need to maintain the current agricultural production 
standards that we have in the United States, the end result of 
that is that we produce less food per acre, and the end result 
of that on the consumer is higher food prices. Most of these 
problems don't come from the USDA. We have, certainly, what I 
would describe respectful differences of agreement. I do 
believe it should be block granted to the states. I do think 
that we have a responsibility to go after the fraud. Whether 
real or not, the perception of the fraud is a problem for the 
program because the American citizens have lost faith in 
Washington being able to stop the abuses of the program. And so 
when we see those abuses, we need to take action on them sooner 
rather than later.
    And with that, Mr. Chairman, I will yield the remainder of 
my time.
    The Chairman. The gentleman yields back. Ms. Graham, for 5 
minutes.
    Ms. Graham. Thank you, Mr. Chairman, and if I could just 
take a moment to congratulate your sister, Congressman Scott. 
That is quite an achievement. Congratulations.
    And thank you all very much for being here today. I 
represent the most rural district in all of the State of 
Florida. We have a lot of challenges that we face with high 
poverty in those rural areas as well. So I commend your goal of 
healthy eating. I myself would like to eat healthier. So I 
commend the goal.
    However, the unique challenges that our rural, high poverty 
areas face, what do you foresee in terms of ways to overcome 
that in the goal of healthy eating?
    Mr. Concannon. I appreciate the question. I was in Florida 
just the week before last, central Florida, and in Orlando, and 
Orlando, is one of the busiest, most visited places in the 
world, apparently. But I was in two areas, one of relatively 
wealthy schools, another deeply impoverished student 
population. We were there to applaud and also promote 
additional access to Farm to School, to local purchasing of 
fruits and vegetables. California and Florida, one might say, 
they both have such diverse agricultural production capacity, 
yet it is important to make sure that schools are doing more 
local purchasing and that students are educated and socialized 
into eating these locally grown foods.
    So fruits and vegetables are part of our focus during our 
visit there as well, but we are also urging, for example, to 
your question about rural poverty. We are wanting to make sure 
that schools are availing themselves of the school meals 
program, not just breakfast, but also the fresh fruits and 
vegetables program, and the emergency suppers. I witnessed that 
at one of the high schools when I was in the Orlando area. 
Available where we have very high percentages of poor children, 
late in the afternoon, these were students that had been part 
of the band or part of basketball practice that their last meal 
may have been at 11 o'clock in the morning. But we're also 
promoting one of our biggest challenges, summer feeding. And 
the President's budget that was heard over in the Budget 
Committee earlier this year, it proposes to provide additional 
resources that would be targeted to rural areas for the summer 
feeding program, to electronic benefits. That is another area 
that, again, we are very mindful of, of oftentimes rural areas 
have structural barriers that aren't there for urban poor 
people, and that we are very keen on connecting schools. 
Schools are among the best sources of connecting. Backpack 
programs, for example, on the weekends, many schools are doing 
that now and they know that these may be the strongest source 
of healthy foods for those students over the course of the 
weekend.
    So states like Florida, the Education Department folks were 
with me, but the Agriculture Department in Florida actually 
oversees school meals, and they are very committed to it. They 
do a really great job from our point of view as a state agency 
in endorsing and engaging these schools for meals.
    Ms. Graham. Yes, I appreciate that, and Commissioner Putnam 
is a friend, so I will relay that to him. Thank you so much.
    As a follow up, I have also heard that there have been some 
grants in rural communities. Could I recommend Florida's second 
Congressional district for one of those grants? I think we 
would certainly be able to benefit from that.
    And I guess my follow up would be: how are these grants 
functioning, and what is the goal of the grant program in the 
rural communities in our state?
    Mr. Concannon. Do you want to comment?
    Ms. Rowe. Well, the purpose of the grants are to help us to 
understand, first of all, the causes, what is creating, what is 
contributing to hunger and food insecurity among children and 
families who live in rural areas. What strategies seem to be 
working? What best practices may be happening in one rural area 
that can be migrated to another rural area? We are also 
planning to bring together many of the rural communities who 
are demonstrating new ways of approaching and addressing hunger 
in their communities to talk about and to share. We need to 
begin to also think about how do we address the silo effect 
that happens in many of the programs. We have something that we 
are working with as part of the Rural Child Poverty Task Force, 
called the Two Generation Program that allows us to work in 
rural communities, recognizing that in some situations it is 
two generations that you need to work with. We are working to 
be more holistic with families in addressing some of the issues 
and needs that they have. That includes Employment & Training, 
as well as the education and access issue.
    So there is a lot going on, both at the Federal level and 
at the state and local level. Rural child poverty is a major 
focus, and it certainly has been in our summer feeding program 
a major focus for the work that we are doing, and we are 
finding new and innovative ways to connect children to sites 
and to introduce to parents opportunities on ways in which they 
can better meet the needs of their children.
    Ms. Graham. Thank you. I know I am way out of time, but I 
appreciate your responses and again, I would appreciate working 
with you.
    Florida was just designated as StrikeForce state, and I 
appreciate that and hope we can work together in ways to better 
serve our rural communities.
    Ms. Rowe. Yes.
    Ms. Graham. Thank you, and I yield back the time I no 
longer have, Mr. Chairman.
    The Chairman. The gentlelady's time has expired. I now 
recognize the greenest tie in the room, Mr. Gibson, for 5 
minutes.
    Mr. Gibson. Thanks, Mr. Chairman, and thank you for your 
leadership in pulling these hearings together. I find them very 
helpful, and likewise, I want to express my gratitude to the 
panelists. Thank you for your leadership.
    I am going to be focusing my remarks on how well we are 
doing in terms of eating healthy, but before I do that, I just 
want to say how important your programs are to my people. I 
represent largely rural areas in upstate New York, and I have 
seen firsthand--I have gone to these programs and the 
afterschool programs that are very robust in many ways, 
learning, assistance, physical fitness, but then also a 
nutrition component that is so critically important, and the 
summer feeding program, which quite candidly, I am not sure 
where our district would be without that. So I want to express 
my gratitude for that, and also the backpack programs. And you 
see my farmers really get heavily involved in this space, and I 
am proud of their work as well.
    Really what I want to do is to follow up on Congresswoman 
Graham's question, and maybe dig a little bit deeper and ask 
with the grants, what are we learning about best practices? Do 
you have a website where you actually post some of this stuff 
so my district can pull that down? And then the other part of 
the question is with regard to the farmers' markets where we 
are certainly endeavoring to eat more healthy.
    In the farm bill I sponsored an amendment that had handheld 
devices to help take the SNAP benefits. How well is that going, 
and from an implementation standpoint, let me just pass it over 
here and then we can maybe have a dialogue.
    Mr. Concannon. Let me start with that last question on 
farmers' markets. We are now up to just about 6,500 farmers' 
markets across the country. One of the best ones in the whole 
country, I have seen a number of them, but was in New York 
State when I was there in the Rochester area, a long-standing 
farmers' market that had tremendous choices, but very 
affordable, generally locally grown from that central part of 
New York State.
    We are promoting that. We are expanding that further. We 
meet with the Farmers' Market Coalition. As I mentioned in my 
written testimony, incentives, financial incentives with many 
farmers' markets, I saw one in California last week, are also 
resulting and have been proven to result in more local 
purchases, fruits and vegetables, dairy products, by households 
attending those markets. And our underlying goal in that is 
two-fold. One, to nudge people in the direction of eating 
healthier, but also to put those dollars back in the local 
community.
    And in New York State, I saw some examples of mobile 
farmers' markets, reconverted small, midsize school buses that 
are purchasing from local farmers in that region of New York 
what I refer to sometimes as imperfect fruits and vegetables, a 
carrot that may not be quite shaped right or a beet or what 
have you, but they are perfectly healthy and they are not quite 
ready for prime time at Wegman's or a food store maybe. But 
they are very healthy and available for families. And I saw 
people streaming out of high rise buildings to avail themselves 
of that. I have mentioned that as an example as I have traveled 
the country that it is a way of also cutting down on food being 
replowed into the ground. It helps the growers, but it helps 
the consumers as well.
    So we are promoting that, spreading those kinds of efforts 
as we work with food pantries, food banks across the country in 
part of our broad effort with growers and farmers.
    Now on the school side, we are absolutely committed to 
healthier eating, and that is working, by the way. Ninety-seven 
percent of schools across the United States, I was in schools 
last week in California, the week before in Florida, earlier 
this week in Virginia--my colleagues here have been out 
visiting schools as well--because that reinforces for us, when 
we see it firsthand. And 31 million kids now are having lunch 
at school, almost 15 million having breakfast at school. I know 
the program is working. So yes, there are a few naysayers out 
there, but they are not the majority by any means. The majority 
of professional pediatricians, dieticians, people are deeply 
committed to the core standards of getting healthier food to 
American children.
    So I am confident that this is going to pay off in 
reduction of future healthcare costs by kids having been 
brought up to eat healthier instead of depending upon calorie-
dense, less nutritious foods.
    Mr. Gibson. Well, I thank you very much for that detailed 
response, and indeed, our state, we use the financial 
incentives as well to complement the Federal program.
    And last, we are not wasting a single apple. We actually 
put them in distilleries, too, and so you have to drink that, 
but we are happy to sell it to you if you want.
    So with that, my time has expired.
    The Chairman. The gentleman's time has expired. Mr. 
Aguilar, 5 minutes.
    Mr. Aguilar. I don't want to take away from Mr. Gibson's 
time talking about distilleries, but Secretary Concannon, I 
appreciate seeing you here. Good to see you again. I was with 
you on the West Coast when you referenced your trips, Farm to 
School Programs. We visited Provision 2 schools as well. You 
made me eat some imperfect vegetables as well that called 
attention to the program.
    You mentioned the Farm to School program, and if you can 
just elaborate on some of the pieces within that program that 
you think we may be able to build off of. If you could give us 
a minute on that?
    Mr. Concannon. Thank you very much.
    We recently updated the survey of schools across the 
country. There are roughly 100,000 public schools in the U.S., 
and some 43 percent of those schools now are actively engaged 
in some aspect of Farm to School, either purchasing locally, 
and now the most recent numbers are $800 million in schools are 
being purchased from local growers, dairies, farmers. So that 
is a good thing. Those are dollars going back in the local 
economy.
    But even more importantly from our point of view, the fact 
that those are locally grown, kids tend to then be willing to 
try them, to eat them, and say well, we grow them here. It is a 
familiar product or it is made familiar to them. So one aspect 
of Farm to School is purchasing locally. We have simplified our 
regulations. We have made it easier for schools to do so. But 
the other aspect of it is on encouraging schools to have 
gardens. Not industrial size gardens, but they can be raised 
beds. They can be a couple of acres. I have seen variations on 
that across the country. But it seems to engage kids, and the 
schools incorporate them into their science programs, into 
their earth science programs so that kids come to know that 
food just doesn't come from a Safeway. Somebody has to produce 
it. Somebody has to grow it, and it has that beneficial impact 
on students as well.
    So that practice is growing across the country. It is a 
very low-cost practice ultimately, but it is one that educators 
have really embraced.
    Mr. Aguilar. Thank you, and we visited with some farmers in 
the region as well who are providing products to the school 
district, and they had great recommendations about the program. 
And the young people that we met with, one of the concerns we 
heard from school district officials was they had signed up for 
2 days of the program and they really could have used all 5. 
They didn't know that they would be willing to use that 
capacity, so they were going to modify that in the next school 
year, which is an encouraging sign.
    So thank you again for coming out to Upland and Fontana, 
California. We greatly appreciate it, and if there are ways we 
can continue to partner on these issues, we are all ears. And 
thank you for your work. I appreciate it.
    Mr. Chairman, I yield back.
    The Chairman. The gentleman yields back. Thanks, Pete. Mrs. 
Walorski, for 5 minutes.
    Mrs. Walorski. Thank you, Mr. Chairman, and thank you all 
for being here today.
    Mr. Concannon, I just want to go back to that issue of the 
retail stores and the convenience stores.
    Mr. Concannon. Yes.
    Mrs. Walorski. So my concern is twofold in this 15 percent 
threshold area of this rule. Because I heard you say yes, you 
are going to address it, yes, you are on it, and we talked 
about it prior to this hearing as well. But the minute I hear 
the word reality, that we are going to do this in reality, not 
out here someplace else with a lot of unintended consequences. 
I cringe when I hear the word reality in Washington, and so I 
am already sending in a letter basically asking for what the 
Chairman did, an extension period by which people can report 
back in, and then second, on this issue of cooked or heated 
onsite, before or after purchase, this 15 percent issue, where 
did the 15 percent come? Was that just an arbitrary number that 
somebody thought sounded good, or what is tied in with this 15 
percent?
    Mr. Concannon. Well first of all, let me say to the 
question about extending the commentary period. We are actively 
considering that, so I have heard that from the Chairman and 
heard that from the floor----
    Mrs. Walorski. Can we just ask you to confirm that today, 
to put all of these stores at ease?
    Mr. Concannon. I can't confirm it today, but there is news 
coming very imminently, but I don't want to get ahead of the 
process here.
    Mrs. Walorski. Okay.
    Mr. Concannon. We are actively considering that.
    Now on the 15 percent side, it is an unfortunate way in 
which that rule or proposed rule was constructed, because the 
intent was really to get at not so much stores like a Casey's 
out in the central part of the country----
    Mrs. Walorski. In my district, right.
    Mr. Concannon.--where they may sell a lot of pizzas or they 
may sell a lot of donuts or other things that that would not in 
any way make them ineligible as a SNAP recipient. The effort 
here was to try to get at stores that are using it as an 
occasion to really, for example, sell products that----
    Mrs. Walorski. Are we talking about that Minnesota pizza 
place where you can pay, like, some extra money and they heat 
it up and you walk out the door and have heated food?
    Mr. Concannon. Exactly.
    Mrs. Walorski. Okay.
    Mr. Concannon. That is the problem with it, yes.
    Mrs. Walorski. Right, and the problem I have with that is a 
little microcosm issue in a gigantic country like this with 
literally thousands and thousands of these retailers being held 
to account by somebody in a state that they have nothing to do 
with.
    My second question about this is though this issue of under 
the same roof or in the same area. If I have a convenience 
store, first of all, two things can happen to them. They can go 
right now and start making all these accommodations for all of 
these hoops that you want them to jump through, and they can 
still get disqualified and not be able to retain SNAP for some 
other little innocuous provision in here that maybe they didn't 
see.
    But if they are in a strip mall and a lot of convenience 
stores and gas stations in the Midwest are certainly 
accompanied now by strip malls and places around them, and they 
happen to be connected to a Subway restaurant, and they are 
going to get penalized under this provision, where did that 
come from?
    Mr. Concannon. Well, they are not going to, I am not quite 
sure where your question is coming from on strip malls----
    Mrs. Walorski. No, there is----
    Mr. Concannon. If somebody has----
    Mrs. Walorski. No, let me read it. So your agency proposes 
to consider two separate entities selling food which operate 
under the same roof to be a single entity for purposes of 
eligibility determinations. If a retailer fulfills all of their 
eligibilities such as depth of stock, why it is relevant that 
the retailer operates under the same roof as the other entity 
which is ineligible for SNAP with regard to the compliant 
retailer's eligibility to participate in SNAP, how does such 
provision promote SNAP's objectives? Gas stations in the 
Midwest have Subway's and McDonald's under their roofs, and 
they are still selling this food. How would these people 
survive that entire clause?
    Mr. Concannon. It is the same ownership, I am advised, is 
the issue at times that----
    Mrs. Walorski. Why does the USDA care who owns these 
places? This is America.
    Mr. Concannon. We are concerned that people may be 
violating----
    Mrs. Walorski. May be making a profit? May be providing 
food to rural areas? This isn't corporate this is small 
business.
    Mr. Concannon. No, we are very committed. We have 195,000 
small stores in this program, so it is some----
    Mrs. Walorski. And how many of those 195,000 stores are 
going to be impacted by these rules? How many? Potentially all 
of them.
    Mr. Concannon. No, not all of them, but there is a 
significant number of----
    Mrs. Walorski. What would the percentage be, because then 
we have to take that percentage and translate it into the jobs 
of the people that are working there in these rural areas where 
there are virtually no jobs.
    Mr. Concannon. About 13 percent of the SNAP benefits in the 
U.S. are redeemed at convenience stores.
    Mrs. Walorski. Are you looking at either rolling that back 
or letting us know what reality means as to why USDA is looking 
at ownership?
    Mr. Concannon. When I use the term reality, what I said was 
we are listening very carefully to the comment period. We are 
inviting comments. We want to hear from people. I underlined in 
my written testimony and oral testimony it was proposed because 
we recognize that there is going to need to be accommodation in 
the proposed final rule.
    We don't want it to have an inadvertent effect on losing 
capacity or losing access across the country, or even making 
chains or a number of either independent or chain stores 
ineligible for the program.
    Mrs. Walorski. I appreciate it.
    Thanks, Mr. Chairman.
    The Chairman. The gentlelady's time has expired. Ms. Lujan 
Grisham, 5 minutes.
    Ms. Lujan Grisham. Thank you, Mr. Chairman.
    Mr. Concannon, in your written testimony and even without 
it, we would be clear about what your priorities are and your 
requirements are, given the area that you serve within USDA, 
but you mentioned specifically for the hearing today that 
making healthful school meals accessible to low-income families 
is a priority for your agency, for many of the reasons that 
have been discussed as you have been answering questions.
    But I see maybe a potential huge pitfall in this effort, 
given your agency's commitment to this priority. But, I am 
skeptical about it, after hearing comments and frankly speaking 
directly with Secretary Vilsack, suggesting that we should 
increase the school meal verification rate up to ten percent. 
Now this significant increase, I believe, will result in 
eligible low-income children being, quite frankly, kicked off 
the lunch program. And as you know, the Senate's Child 
Nutrition Reauthorization bill adopts Secretary Vilsack's 
recommended ten percent verification rate, and while the Senate 
bill exempts schools that are participating in the Community 
Eligibility Provision, and strengthens direct certification, 
and I am sure the intent there was to provide those balances--
but these provisions are not enough to ensure that kids are not 
being denied meals that they are entitled to receive.
    So let's talk about some New Mexico examples, which you and 
I have talked about before, and you are not seeing a dramatic 
increase in making sure that hunger is being productively 
addressed among children in our state, as you know.
    So here are the examples. Several schools are enrolled in 
Title II. And when they do the reimbursement math, there is an 
economic disincentive to switch to community eligibility 
schools, and given, if you have seen our current state budget 
climate, no one is moving or shifting from a budget that they 
can rely on at a high level, even if it produces better results 
for the kids that they are serving, to go to budget at a lower 
level. Related to direct certification, New Mexico's direct 
certification, as I am sure you are aware, and if you are not, 
this is a good time to make sure that you are, is so bad that 
most students are forced to use paper applications. So 
increasing the verification rate will disproportionately impact 
Hispanic children, and poor states like New Mexico, which is 
extremely concerning, since New Mexico already ranks fourth in 
child hunger, and has the highest rate of child poverty in the 
country.
    So did you consult with Secretary Vilsack? Is this your 
recommendation or did he get this recommendation someplace 
else?
    Mr. Concannon. No, we were part of that recommendation, and 
that----
    Ms. Lujan Grisham. Can you tell me how you came to that 
conclusion that that was a good recommendation, given the 
information I just gave you about New Mexico?
    Mr. Concannon. Yes. Yes, we came to that conclusion based 
on the fact that as much as we love the school meals program, 
as it is so urgently needed by children across the country, 
including in New Mexico, one of the largest sources of improper 
payments in the school meals program is to pay for those paper 
applications you referred to.
    Ms. Lujan Grisham. And yet, you know that that is 
occurring. I am over here, sir.
    Mr. Concannon. My office is very concerned about billions 
of dollars----
    Ms. Lujan Grisham. I am here.
    Mr. Concannon.--being spent for households that could 
otherwise share in the cost of that.
    Ms. Lujan Grisham. But these kids--let me----
    Mr. Concannon. That was the compromise in the Senate bill.
    Ms. Lujan Grisham. I am reclaiming my time from the 
witness.
    These kids can't help any of those certification or 
verification problems. They are not responsible for the waste 
and issues that you addressed. So given that, what protections 
are you proposing for the very children you are telling me that 
you are trying to protect in my home state.
    Mr. Concannon. There are a number of provisions in that 
Senate bill, and by the way, I certainly hope that the House 
will----
    Ms. Lujan Grisham. Please list them for me.
    Mr. Concannon.--actively consider the bill----
    Ms. Lujan Grisham. And sir, I am here.
    Mr. Concannon.--because it was negotiated with all the 
parties and it includes not only provisions for direct 
certification, community eligibility. There are ways in which 
that ten percent percentage can be reduced, and that is the 
commitment we have to work with states and school systems----
    Ms. Lujan Grisham. Well, Mr. Concannon, I want to see those 
directly, and I would also expect, quite frankly, given that 
broad statement about what you are doing, that I want to see 
what you are doing for New Mexico and all the other states in 
the current situation where child hunger is significant. I want 
those assurances from you that these schools are going to get 
onsite support, and so are these families to ensure that no 
family, given this standard, is going to be kicked off the 
child nutrition program and be ineligible for that food service 
in the education environment.
    Thank you. I yield back.
    The Chairman. The gentlelady's time has expired. Mr. Trent 
Kelly, 5 minutes.
    Mr. Kelly. Mr. Secretary, I thank the witnesses for being 
here.
    I want to go back. I think sometimes we fail to look at how 
things affect rural communities, and we don't have public 
transit in Mississippi, or if we do, it is very, very costly 
and the people who need it the most can afford it the least, so 
it is not available to them. It is available for different 
purposes. The same thing when you are talking about some of 
these things sharing the same roof, going back to Mrs. 
Walorski's comment. We have truck stops which may have a Subway 
in them or may have a McDonald's in them. The same ownership. 
To certain people, that is the only option they have where I am 
from. We have country stores. We still have those in 
Mississippi in quite a few locations where they may sell a 
certain brand of pizza or something inside of that. I think you 
have to take into account and make sure, that may be the only 
option that the people who need it the most have. It may be the 
only thing within traveling distance.
    So I just ask, to make sure that you look and don't take 
away the only option that some people have to look at what 
might happen or how someone could abuse something. Look at it a 
little more specifically, and I just ask that you pay attention 
to the comments, because there are unintended consequences to 
the rule which you need to be careful and listen to the 
comments and make sure that we don't have second and third 
order effects that were not intended.
    Mr. Concannon. I certainly appreciate that. Oftentimes, as 
you may know, the Federal rulemaking process, there is a 
commentary period and then it may be tweaked somewhat. I think 
in the case of this proposed rule, there may be more than 
tweaking needed to make sure that it is responsive to 
communities like you cite.
    Mr. Kelly. And recently, we have heard of EBT cards with 
exceptionally large balances, some in excess of $10,000. Now 
this doesn't necessarily mean something fraudulent or something 
bad is going on; however, it does raise the question of what 
circumstances have led to such large balances or such large 
account balances. Can you discuss the process a state would 
generally go through if they found accounts with large 
balances? Is there some sort of threshold once met that a state 
agency or administrating authority would be required to 
investigate, and do they have to report that back to FNS?
    Mr. Concannon. Thank you very much for that question.
    We recently looked at that right across the country, and 
states have an option right now on this very issue. If there is 
no activity on the card, in other words, no transaction that 
takes place for at least 6 months, the state may not remove it 
entirely, but remove it from the account and wait for the 
household to make contact with the state before they can use 
any of that benefit.
    In other cases I have seen, for example, the State of Ohio 
will regularly look for balances and then calls households. The 
survey that I saw, one, these large EBT accounts have not been 
associated with fraud or trafficking, so I want to assure you 
that it is not a source of fraudulent behavior. What they tend 
to reflect are folks who are very frugal, people who may be 
working now part-time or work getting some income, and they 
tend to try to sit on this as a protection against later losing 
a job or finding themselves in more dire circumstances.
    So currently, we haven't seen it as, again, a source of 
fraud. We know that states have the ability now for at the end 
of 6 months to, in effect, remove it. There is a proposal, is 
there not, now for----
    Ms. Rowe. Yes, we are moving forward to implement the 
proposal that was in the 2008 Farm Bill that would help us and 
help states to manage this issue. We also know that states can 
expunge an account for inactivity, so if there is no activity, 
the account can be expunged. In many cases, what states will do 
is when they identify high balances, they will contact the 
participant. They will try and understand why. They are 
everything from, as the Under Secretary said, being frugal to 
someone has mental health issues and they have an alternative 
payor, so some of their challenges need to be addressed as the 
state goes forward.
    Mr. Kelly. Thank you, and I thank the witnesses.
    Mr. Chairman, I yield back.
    The Chairman. The gentleman yields back. Ms. Kuster, for 5 
minutes.
    Ms. Kuster. Thank you, Mr. Chairman. Thank you for being 
with us today.
    This Committee has had, we are up to 12 hearings, on trying 
to analyze every aspect of the SNAP program, but rarely do I 
hear a lot of conversation on Capitol Hill about the benefits, 
the demonstrated success of this program. So I just wanted to 
use my time, if I could, in three particular areas. One, if you 
could tell us of testimony or scientific evidence-based long-
term benefits of SNAP, particularly as to the health and well-
being of children and seniors, if there are any health benefits 
that you can explain to us. The second area of inquiry is my 
understanding is that the SNAP caseload is decreasing, and to 
what you might attribute that, and then the third area of 
inquiry is despite the success of all these programs, I do 
continue to have a concern, particularly for children in my 
area. It is a rural community. Weekends and summer programs, 
because I am concerned that we still have children that may not 
have access to food, and it will have a long-term impact on 
health that will be detrimental to them individually and 
expensive to our taxpayers.
    Mr. Concannon. Thank you very much.
    Let me start with the core target of the SNAP program is to 
reduce food insecurity, and it does that very effectively. It 
not only removes food insecurity for, in many, many households, 
but also moves people up from the deepest food insecurity. So 
it mitigates. It doesn't solve the problem, but it mitigates 
some of the impacts of that.
    We also have data that shows that it removes or moves up 
out of poverty some 4.7 million people each year, and there are 
recent studies that have been done that suggest that 
considerably underestimates the impact on moving people out of 
poverty.
    Ms. Kuster. Could I ask you to stop for just 1 second? Mr. 
Chairman, could I ask unanimous consent that these studies be 
entered into the record with this hearing?
    The Chairman. Without objection.
    Ms. Kuster. Thank you.
    Mr. Concannon. So in addition to the impact on poverty, 
there are studies that have shown that the program as well has 
an impact, as you noted, on children, but recent studies show 
that adults who grew up in households in which the Food Stamp 
Program was provided to them, that they have better health as 
adults. So there are some longstanding benefits to it, in 
addition to the here and now, so to speak, in the lives of 
these households.
    To your questions about children, as you know, 
unfortunately, as often say, the time of year in which a child 
in the United States is most likely to go hungry is the 
summertime when school is out. So the Summer Food Service 
Program, last year we had almost 50,000 locations across the 
U.S. and Audrey Rowe here and her staff, we have been searching 
from one end of the country to the other to engage more 
typically not-for-profit, often religious, faith-based 
organizations to sponsor these summer sites. Even with all of 
that----
    Ms. Kuster. Do you happen to have a number of the total 
number of children served----
    Mr. Concannon. The challenge is still that, for example, 
during the school year, 21 million children receive meals free 
and reduced in school. The total number of children served in 
the summer was just under four million.
    Ms. Kuster. Oh, wow.
    Mr. Concannon. So there is a tremendous gap still.
    Ms. Kuster. That is a big gap.
    Mr. Concannon. That is why the President, frankly, in the 
2017 budget proposal proposes to expand the electronic benefit, 
because in rural areas, as we just heard from Congressman 
Kelly, they don't have those bus systems. They don't have 
transportation.
    Ms. Kuster. Sure.
    Mr. Concannon. In the summertime, especially. So the 
piloted states across the country that have had that electronic 
benefit transfer, that has been demonstrated, researched, to 
have an even greater impact on reducing food insecurity.
    So it works. It is very portable. It is not dependent upon 
getting students to a particular site. But also, the budget 
proposal that we entered several weeks ago also increases the 
funding for non-congregate site, because right now, the Summer 
Food Service Program is based on a congregate site model. We 
would continue with that, but in other areas, for example, in 
very hot climates, it may be difficult to expect that children 
are going to stay out in a park when it is 100 or even higher. 
So that is one of the options as well.
    Ms. Kuster. My time is up. I have to cut you off, but I 
just appreciate and hope that our Committee will help to share 
the success of this program with the taxpayers so they will 
understand the benefits. So thank you.
    The Chairman. The gentlelady's time has expired. Mr. Yoho, 
5 minutes.
    Mr. Yoho. Thank you, Mr. Chairman, I appreciate it. Thank 
you for being here.
    I have several questions. One is the block grant. I see a 
nanny state growing as Mr. Scott brought up. People know how to 
feed themselves for the most part, but when I see the schools 
in my state--I come from Florida--they can't cook in their 
cafeterias because it has become so onerous for them to meet 
the Federal standards and the food they don't like, so they 
close down their kitchens and they are bringing that food in 
and contracting that. That is what I see in my district. Yes, 
sir, it is.
    Mr. Concannon. Well----
    Mr. Yoho. And I have been told over and over again they 
have closed their kitchens down because of those regulations, 
and the kids don't like the food.
    Saying that, I want to move on as you brought up ABAWD, and 
in what we have seen with people--with the work requirement, 
they have gone off the rolls have decreased, and you were in 
the State of Maine, correct?
    Mr. Concannon. I was the Director of Maine for a number of 
years.
    Mr. Yoho. All right. We had an individual in here that was 
running that program. With the ABAWD program, they saw an 85 
percent decrease in the people on food stamps or on the SNAP 
program. In my State of Florida, we just checked on this a week 
and a half ago. They implemented the ABAWD program starting 
January 1, and by the end of February of this year, there was 
less than seven percent of the people have re-signed up for 
that program because they put in the mandatory work 
requirements, 20 hours a week, and looking for a job or getting 
educated, work source or things like that, qualified for that 
20 hours a week. And so we saw a huge reduction. Granted, it 
has only been a 2 month window, and I am sure by the end of the 
year you are going to see 30 or 40 percent that have reapplied, 
but the bottom line is that would translate to 60 percent got 
off with those minimum work requirements.
    And you were saying and I know my colleague, Mr. McGovern, 
was saying that is not the case. Do you have a different 
opinion on that?
    Mr. Concannon. Different opinion on what has happened in 
Florida?
    Mr. Yoho. Well, the ABAWD program. Just putting the minimum 
work requirements in there. We have a pilot program right now 
for ten states. We know, really, the results of able bodied 
work requirements, and it is kind of silly not to put that 
across the board, especially the way our country is in the 
economic times that we have.
    Mr. Concannon. Well actually, I think that maybe I 
appreciate the question because there may be a lack of 
understanding. Historically, there is that requirement for 
every 36 months of every individual ABAWDs who are on the 
program, there is a work requirement. It has been. That was 
suspended during the downturn in the economy----
    Mr. Yoho. Right, 2009, 2011.
    Mr. Concannon.--and the majority of states, but a number of 
states, because their economy has gotten better, have 
reintroduced that requirement. And we work very closely with 
states. In my written testimony and in response to a question 
earlier, my concern has been some states have failed to take 
advantage of the opportunities to help some of these folks 
either get the training or connect them to jobs. That is an 
option that we provide under the SNAP Employment and Training 
Program to states.
    Mr. Yoho. Yes, we wanted to make that work requirement to 
reinstitute it after it was waived in 2009 and 2011, with all 
50 states and it got voted down and we could allow it for ten 
states, but we know the results are people will go back to work 
if they have that little impetus. And I know there are people 
out there that are working that do require SNAP, and that is a 
great thing.
    Another question I have is the large EBT balances. I have a 
report here in front of me where there has been an 
exceptionally large balance, some in excess of $10,000, and we 
have seen that in our states. I have seen people come in and I 
have reports of people going in and buying $1,100 wedding cakes 
on EBT cards because there is a balance that is building up. If 
that is so, shouldn't there be a trigger that prevents somebody 
from getting that much of a balance on their EBT cards, because 
if they are accumulating a balance, what it translates to me 
and the people in line behind them is they really don't need 
the money to accumulate like that. What are your feelings on 
that?
    Mr. Concannon. Well first of all, let me say this.
    Mr. Yoho. On putting in a trigger.
    Mr. Concannon. First of all, it is very, very rare that it 
happens, and second, when we have looked at it, the farm bill 
changed the timing for what is referred to as high balance. So 
when states have high balances, the states can say look, if 
there is no activity on that account for 6 months, the states 
can remove access to those funds from the consumer, and then if 
they try to have access to it, the state says you have to come 
in and tell us what is going on here.
    As I mentioned to an earlier question, we have not had 
examples of fraud or trafficking associated with these high 
balances. They tend to be parents with dependent children. They 
tend to be frugal households who are worried about being in 
even worse circumstances in the future, and they tend to build 
up that benefit.
    Mr. Yoho. I appreciate your time. I am out, and I yield 
back. Thank you.
    The Chairman. The gentleman yields back. Mr. Newhouse, 5 
minutes.
    Mr. Newhouse. Thank you, Mr. Chairman, and thank you for 
being here this afternoon.
    I had a question about the Dietary Guidelines, and perhaps 
Ms. Tagtow might be the most appropriate, but I will leave it 
up to you guys.
    The final Guidelines released by USDA and HHS sometimes 
seem to have significant discrepancies from the recommendations 
that were released by the advisory committee, which was 
probably appropriate, given that in some instances they were 
made outside the scope of their committees' expertise. But also 
some of the recommendations seem to operate off of a limited 
range of end volume of peer-reviewed scientific data.
    So Ms. Tagtow, now that the dust has somewhat settled, can 
you tell me what you think are the strengths and weaknesses of 
the current advisory committee process, or are there any 
changes or tweaks that you would recommend to the Committee 
today to ensure that it is more accurately reflects the Dietary 
Guidelines and responsibilities?
    Ms. Tagtow. Sure. Congressman Newhouse, thank you very much 
for the question.
    As you know, the Dietary Guidelines are developed based on 
a variety of information that is provided to USDA and HHS. A 
Dietary Guideline Advisory Committee, an independent body of 
experts that rigorously evaluates the current body of nutrition 
science is one of those best practices that is employed. As an 
independent body outlined by FACA regulation, they provided a 
report to us about a little over a year ago of their 
recommendations back to USDA and HHS. As far as making 
adjustments within the processes right now, the Members of this 
Committee are mindful of the riders that appeared in the Fiscal 
Year 2016 appropriations bill, one of those riders asking USDA 
to have the Institute of Medicine closely examine the process 
of developing the Dietary Guidelines. We have engaged with the 
Institute of Medicine and the National Academies of Medicine, 
and are in the process of launching this new study. We 
anxiously await their recommendations, including 
recommendations on the next processes in developing the 2020 
Dietary Guidelines.
    Mr. Newhouse. So from your perspective, you don't see 
anything that would be helpful in improving the process at this 
point?
    Ms. Tagtow. Well, there are many aspects of developing the 
Dietary Guidelines, one being the formation of this committee 
and receiving recommendations from this committee. The Center 
for Nutrition Policy and Promotion is dedicated to ensuring 
that all of our processes meet the highest scientific 
integrity, are rigorous, as well as transparent. And we do look 
forward to the recommendations from the IOM in order to retain 
the highest scientific integrity of these processes.
    Mr. Newhouse. Okay.
    Ms. Tagtow. Thank you.
    Mr. Newhouse. Mr. Under Secretary, the issue of elderly and 
disabled SNAP accessibility: For many individuals who may be in 
that category, preparing food can be sometimes difficult. 
Oftentimes, there are prepared foods that could be healthier to 
eat than some other easy cook microwave meals, perhaps. Could 
you tell me if FNS has done any research into ways to increase 
access to more nutritious prepared foods for SNAP beneficiaries 
such as these that may have a harder time preparing meals?
    Mr. Concannon. I can't comment specifically on the prepared 
food side. I thought your question might be going in another 
direction, let me first say that we currently serve about 42 
percent of the seniors in the U.S., people 60 years of age and 
older, who are eligible for the program. They are still one of 
the largest categories of persons who are eligible for the 
program who don't receive it. And part of that is awareness of 
it, part of that is it may be a fairly modest benefit, but we 
are also working with states and a proposal that we have in the 
current budget this year for seniors who are on fixed incomes, 
who may be on Social Security or SSI, very limited, doesn't 
change. They are not currently in the workforce. We are 
proposing to extend the period of certification, because right 
now what happens with a number of seniors, they get a notice 
from a state agency once a year saying you have to reapply for 
this. They may not understand the letter. They may set it 
aside. They get a lot of mail, and all of a sudden they lose 
their benefit and it is referred to as churn. It creates a 
problem for them. It creates a problem for the state agency. So 
we are working on that aspect of it, but to your question 
explicitly about prepared foods, I am unaware currently of any 
activity on our part.
    Mr. Newhouse. I appreciate that.
    The Chairman. The gentleman's time has expired. Mr. 
Goodlatte, 5 minutes.
    Mr. Goodlatte. Mr. Chairman, thank you very much. I 
appreciate the witnesses. I don't have any questions, and I 
will defer to the gentleman from Illinois.
    The Chairman. The gentleman yields back. The gentleman from 
Illinois is recognized for 5 minutes.
    Mr. Davis. Thank you to my friend and colleague from 
Virginia, Mr. Goodlatte, and thank you to the witnesses for 
being here today. It is an interesting discussion.
    I want to echo some of the comments that my colleague, Mrs. 
Walorski from Indiana mentioned about concerns regarding the 
rule impacting some of the convenience stores that have 
restaurants attached to them that are all throughout my rural 
district in central and southwestern Illinois.
    Based on the language that she read, she asked my questions 
so I am going to refer back to the language that she read. It 
could impact many of the outlets that we currently have 
throughout much of middle America, much of my district, and 
there are obvious concerns. I am very thankful that you are 
open to considering an additional comment period. That is only 
good, though, if those comments are taken into consideration 
when the final rule is issued. We have a lot of hungry people 
in rural America. I appreciate your comments. I am a big 
supporter of the summer feeding program. But hungry people in 
rural America aren't really looking at the Federal Register to 
make comments. So that is why we have you here today, to 
address some of those concerns for the constituents that we 
represent.
    You mentioned something earlier about only 13 percent of 
the SNAP recipients utilize eligible convenience stores to use 
benefits, right?
    Mr. Concannon. No, what I said was 13 percent of the 
benefits are used in these convenience stores.
    Mr. Davis. Okay, same----
    Mr. Concannon. Not 13 percent of the population. The 13 
percent of value.
    Mr. Davis. Potato, potato. I think I meant the same thing. 
Okay, 13 percent of value?
    Mr. Concannon. Yes.
    Mr. Davis. Okay. What is the percentage of value used in 
urban areas versus rural areas?
    Mr. Concannon. We actually have that, but I don't know it 
off the top of my head, but we will be happy to provide it.
    Mr. Davis. It is substantially higher in urban areas, just 
a guess?
    Mr. Concannon. I can tell you that it is more than 90 
percent of households shop at least at a supermarket once a 
month, and more than 82 percent of benefits are redeemed at 
supermarkets.
    Mr. Davis. More than 82----
    Mr. Concannon. Standard supermarkets tend to be in more 
urban or suburban areas----
    Mr. Davis. Right.
    Mr. Concannon. That is part of it, but we could--I know 
even in rural areas here, 94 percent of rural households redeem 
some benefits at supermarkets or super centers. But we can give 
you the specifics.
    Mr. Davis. That would be great. My concern is exactly Mr. 
Kelly's concern. My colleague from Mississippi and I both have 
areas in towns that we represent that the convenience store 
that may be attached to a restaurant, hence my earlier 
concerns, may be the only place that those hungry kids can go 
use that EBT card you were talking about, wanting to increase 
their eligibility to use even more, right?
    So you talk about the EBT usage. If the new rule excludes 
the only store and the only opportunity they have to go get 
food to use that EBT card, don't you understand our concern 
that there might be a tremendous effect on rural kids and rural 
families the most?
    Mr. Concannon. Clearly I would have a major concern.
    Mr. Davis. Thank you.
    Mr. Concannon. Because that is not the intent of the rule, 
but as I emphasized earlier with Members, it is proposed. We 
are committed, as many ways as I can say it, to both hearing 
and weighing and considering the comments.
    So we urge folks to weigh in on that comment period.
    Mr. Davis. I truly appreciate that, and you know what, the 
USDA has been more than willing to work with my office and with 
us on numerous issues to find that flexibility that we need.
    But forgive us, some of your sister agencies have not been 
nearly as willing to work with us. So forgive us for not 
trusting that all of these issues would be addressed because 
this is a proposed rule. We understand that, but many of your 
colleagues sit at that same witness table with proposed rules 
and don't take our comments into consideration and don't take 
our constituents' comments into consideration.
    I am going to end with the school nutrition issue. Thank 
you for your discussion on school nutrition. I have a lot of 
rural schools that I represent that are having some problems 
implementing some of the standards. I commend the USDA for 
working with them. You mentioned you visited school districts 
like Mr. Aguilar's. I have invited and have asked for somebody 
from USDA to come out and visit some schools in my district 
that are having problems, and I would express that invitation 
again.
    Mr. Concannon. I think our deputy went out to your----
    Mr. Davis. He went and we did a round table. I would like, 
if he is out in the area, to come out and visit one of our 
schools itself and see what type of equipment they have, 
because you are doing some good work working with different 
groups to provide technical assistance, and I appreciate that. 
I want to help spread the word on how we can make that better, 
so the invitation still stands.
    My time has expired. Thank you.
    The Chairman. The gentleman's time has expired. Mr. 
Bradford, for 5 minutes. I am sorry, Ashford. Brad, sorry about 
that. Brad, I have screwed it up all the way around. I skipped 
you and then I messed your name up. Sorry about that, buddy.
    Mr. Ashford. Brad is good enough. Thank you, Mr. Chairman. 
This is an intriguing topic, and you have raised so many issues 
that I am interested in.
    Mr. Under Secretary, the idea of sort of farm to market 
kind of strategies and you have done a lot of work in that 
area, and it is growing and it is good, and many more 
individuals are able to take advantage of that. How do you see, 
looking, envisioning out a little bit with a state like ours, 
Nebraska, heavy ag, obviously, but with a large urban area in 
Omaha with high poverty, what would your vision be in the next 
5 years of how you would see those sorts of interactions 
improving and getting more robust? How can we provide that sort 
of farm interface in our urban areas to get healthier foods and 
to access healthier foods? I know you do a lot of it now, but 
what would be your vision or goal into the future?
    Mr. Concannon. Well, we have set, when we came into office, 
we had just under 800 farmers' markets nationally authorized 
for SNAP. Now we are at 6,400. We have a goal. We have one of 
Ms. Rowe's staff who is committed to me to exceed 7,000 this 
year. We are seeing more and more of those markets connecting 
up to like medical centers, like Omaha, the Omaha area. Big 
medical centers are the ways to incent households to make sure 
they are availing themselves of those fruits and vegetables.
    Our efforts with schools are paying off in the form of more 
expenditures. Earlier today I mentioned schools are now 
purchasing in excess of $800 million a year in locally grown 
foods. We think that is a good thing from the point of view of 
putting the dollars back in those communities, but it is 
typically when we go out to visit schools, we see kids that are 
eating locally grown foods that are purposely more familiar to 
them.
    So I see us expanding. If you were to look out 5 years from 
now, I would say we will see a lot more schools with gardens. 
They are not industrial size, not enough to feed the whole 
school, but enough to use it as an education device both from 
the science associated with it, but also as a way of touching 
kids, engaging them in ways that they are going to eat 
healthier. So first, on more purchasing locally, more school 
gardens, along that line. But also on the farmers' market side, 
more increases that way.
    Back in the year 2000, to give you an idea what is going on 
sort of generally in society, there were only about 2,000 
farmers' markets of record across the U.S. Now there are more 
than 8,000 of them. So it is growing in terms of popularity 
with the general population. We want to make sure that low-
income households are availing themselves of that as well. And 
our SNAP education, our nutrition education program promotes 
that as well, access to healthier foods.
    Mr. Ashford. I think it is great work. I ran the Omaha 
Housing Authority, which is a major urban housing authority. My 
vision then--it wasn't a vision. I thought it would be a good 
idea to create that sort of environment within the housing 
authority, and we did some of it. And I guess what I would like 
to see is some sort of project availability, working together 
with housing authorities to provide some funding to help 
integrate those families with agriculture. They are 5 miles 
away from major agricultural area of the country and I see that 
interface as being critical, because there are thousands of 
kids and thousands of families that are directly impacted by 
this issue who would love to be engaged and it would give 
something for these people to do, these families to do, and 
help with self-sufficiency and all the things we have tried to 
do in housing.
    Last, I am very encouraged by what you are doing. I think 
it is an immense success, an immense success what this 
Administration has done since you have come into office. But I 
wish we could do more and more of that interagency cooperation, 
with housing, for example, and food, SNAP. So thank you very 
much.
    Mr. Concannon. Thank you.
    Mr. Ashford. Thank you, Mr. Chairman.
    The Chairman. The gentleman yields back. Mr. Lucas, 5 
minutes.
    Mr. Lucas. Thank you, Mr. Chairman.
    One of the great joys and privileges of being an old guy on 
the back row of this Committee is that I have lived through 
four farm bills, and have great appreciation for not only the 
good that all sections of the various agricultural Acts can do, 
but also appreciate the challenges of putting together these 
comprehensive bills and persuading a majority of the body, and 
the other body, and whoever happens to be at the White House at 
the time, to sign the final document. And those accountability 
issues are very, very important. I think everyone on this 
Committee wants to make sure that we have the capacity to 
produce food. The crop insurance programs I have researched, 
all sort of things, but also the nutrition titles, making sure 
that none of our fellow citizens are left truly in want. And 
that is just a fundamental statement about this great country.
    A couple of my colleagues addressed the question of the 
rather large balances that occasionally appear on some of the 
EBT cards. I can understand the circumstances where that is 
viewed as a savings account or reserve fund, all that sort of 
thing. But those are the kinds of issues that generate a lot of 
excitement in the popular press. They get us a lot of 
interesting bylines in various stories, so it is important we 
address those kind of things.
    But my focus more here for a moment is let's talk, at one 
of the hearings earlier on this subject the Committee had, 
there were discussions about the ability of states to share 
data among themselves and between programs. Could you expand 
for a moment on what the Department allows and what the nature 
of the restrictions are? Just give us a little background on 
what states can or cannot do.
    Mr. Concannon. Yes, thank you very much for the question. 
Let me say that the broad subject area that you are referencing 
is what we often refer to now as data analytics where we go 
looking into the SNAP electronic data. For example, that is how 
we identify bad actors in the store side, but we have also had 
a pilot project down in the Southeast part of the United 
States, Florida, Alabama, Mississippi--I forget the fourth 
state--where we waived the opportunity for those states to 
share a whole bunch of data in order to eliminate the 
possibility of dual enrollment, in other words, my enrolling in 
Florida, and may be enrolling in a neighboring state. And we 
are analyzing that. We just have the results of that four-state 
pilot effort. We are encouraged by it. Didn't find a large 
percentage of people dual-enrolled, but it did find people who 
were dually enrolled, and so it is a relatively low cost way of 
identifying dual enrollment that we encourage.
    I know when I met with State Commissioners, I have 
encouraged states like up in the Northeast to do data sharing, 
even on a batch basis, not even real time, but do data sharing 
with neighboring states to identify people who may have 
enrolled in a subsequent state.
    Mr. Lucas. Are there any situations, Under Secretary, where 
you are aware of where the Department has told states that they 
cannot share data, that you are aware of?
    Mr. Concannon. Any request that I am aware of that have 
come to us to say we would like to share this, we are very open 
to that. In fact, I have been out talking to them saying I 
encourage you to do more, but I don't think in some parts of 
the country there is enough that is done.
    Mr. Lucas. Last question. Like many of us on this Committee 
who have worked on these issues for a long time, when you 
interact with the retailers who are in a situation where they 
can do a really good analysis of how the benefits are used, 
these monthly trends on how the cards are charged and the 
people who are standing in line somewhere at 1 minute until 
midnight and the card becomes charged and they utilize it. I 
know there has been discussion about perhaps instead of once a 
month, twice a month, those kind of things. Could you discuss 
that for a moment?
    Mr. Concannon. Thank you very much on that. A number of 
states actually right now have developed what I call kind of a 
rolling out process where over the first 10 days of the month, 
instead of issuing all the cards on May 1, they roll them out 
over a 10 or 12 day period. That is an option states have that 
is being done. And we have actually even weighed in another 
place, it is in the discussion stages at this point, but the 
possibility of splitting that benefit into being issued the 
early part of the month, the middle part of the month. The goal 
being, in that regard, to see if it results in the consumer 
being able to purchase and have access to healthier foods.
    Mr. Lucas. Even out the availability of the resources. And 
I would just simply conclude my observations by the struggles 
in funding all Federal programs and nutrition included are only 
going to be more challenging in continuing to a higher level of 
accountability, we can assure the world, the simpler your job 
and mine will be, sir.
    Thank you, Mr. Under Secretary. I yield back, Mr. Chairman.
    The Chairman. The gentleman yields. Mr. Thompson, for 5 
minutes.
    Mr. Thompson. Thank you, Mr. Chairman.
    Mr. Under Secretary, thank you to you and your staff for 
being here and the work that you do each and every day.
    Earlier this week, you published the proposed rule to 
finalize implementation of Section 4018 of the farm bill. Now 
that section prohibits activities designed to persuade 
individuals to sign up for SNAP benefits. Such activities 
include TV, radio, or billboard advertisement, agreements with 
foreign governments, and worker compensations based on the 
number of applications collected.
    How have you been communicating this policy to states and 
organizations that partner with the states to conduct outreach 
activities for SNAP?
    Mr. Concannon. Thank you very much for the question.
    Actually, the proposed rule that was just promulgated is a 
result of the farm bill, and actually when the farm bill was 
passed, as soon as it was passed, we communicated with states 
very clearly in guidance and said the following activities, you 
need to be strict in your adherence to the following 
activities. You can't use resources to persuade people to take 
the benefit, to urge people to take the benefit. The standard 
should be for folks who may be eligible, the standard should be 
you want them to be able to make an informed decision. These 
are the pluses of the program. This is the resource you might 
be eligible for, but you are not to say well, you really should 
do it.
    Mr. Thompson. Right.
    Mr. Concannon. We made that very clear. And this proposed 
rule simply formalizes that.
    Mr. Thompson. Yes, and just to clarify, USDA does not allow 
entities that receive Federal funds to put pressure, persuade 
individuals enrolled in SNAP?
    Mr. Concannon. Correct.
    Mr. Thompson. Correct.
    Mr. Concannon. Exactly.
    Mr. Thompson. And I appreciate your oversight on that 
policy. When do you anticipate the proposed rule to be 
finalized?
    Mr. Concannon. Well, one has to allow public comment, et 
cetera, but I would expect that it would be finalized before 
the end of this calendar year.
    Mr. Thompson. Very good. I appreciate that, and I pay 
attention to this. I think Members of this Committee pay 
attention to this. I did see a ``Dear Colleague'' letter today 
that somehow some of my colleagues were uninformed, and 
ignorance is bliss. That came from Washington, D.C., I guess, 
so I hope they will be informed that the Agriculture Committee 
is providing this leadership and the USDA is implementing this.
    Now would entities still be allowed to provide educational 
material about the programs and provide assistance to seniors, 
once they choose to subscribe, but may need additional 
assistance in filling out an application?
    Mr. Concannon. Yes indeed, they would. And this is often 
done through food banks or religious organizations that may 
operate food pantries, Lutheran Services, Catholic Charities. 
But this proposed rule really reflects the direction, clear and 
unambiguous direction we received from the farm bill in 2014.
    Mr. Thompson. And we appreciate you fulfilling the intent 
of this Committee and of Congress.
    You raised another question from me. How many states have 
resumed the SNAP E&T requirements? Any idea? You mentioned that 
some had, and if you don't have that number, if you could look 
and----
    Mr. Concannon. We can provide it to you, because we are 
very mindful of it that a number of states----
    Mr. Thompson. Then why would they--the question is--which 
is great, I would love to have that in the future here whenever 
you get it available. Why would they suspend those? Now I 
understand that the employment market was difficult, but there 
is a training component of that and in times of high 
unemployment, training becomes more important. So for a state 
to suspend the training side of that, to me, that is like 
banning the use of water in the middle of a fire.
    Mr. Concannon. No, they would not. I should be clear, many 
of the states weren't taking advantage of the training, but 
they were not prohibited from it. They simply paid less 
attention to it.
    Mr. Thompson. Any analysis of why they did that? Because if 
they have citizens within the state, there are constituents too 
who are unemployed, may be waking up in poverty, waking up in 
crisis. They don't need a program. They need a pathway and 
training is to greater opportunity, upward mobility.
    Mr. Concannon. Right. We fully share that opinion with you. 
The Committee, in the farm bill, authorized ten pilot projects 
around the country, and they are underway right now.
    But even beyond that, I often champion what I call the core 
program, the importance of giving opportunities to SNAP 
recipients right across the country.
    Mr. Thompson. Yes, I mean, I disagree with my really good 
friend from Florida who looks at folks like they don't want to 
get a job, and there are some folks out there like that, don't 
get me wrong. But, most people who woke up this morning in 
poverty are looking for a pathway and with the right skills, 
the right qualifications, there is greater opportunity out 
there.
    Mr. Concannon. Yes.
    Mr. Thompson. Thank you.
    The Chairman. The gentleman's time has expired. Mr. 
LaMalfa, for 5 minutes.
    Mr. LaMalfa. Thank you. Thanks to Mr. Concannon and your 
panelists for being here today.
    There is just a little bit on the buy American provision I 
want to talk to you about today.
    Mr. Concannon. Yes.
    Mr. LaMalfa. Which basically requires schools to 
participate in the National School Lunch Program, or that are 
in the program and the school breakfast program to purchase 
domestically grown and processed foods to the maximum extent 
practicable. You may have heard there was an incident in 
northern California in Sacramento in their unified school 
district where they have been purchasing large amounts of 
canned products, peaches, pears, applesauce, from China, okay? 
This is an area that includes a large volume of peaches that 
are grown locally and not a bad representation of pears in that 
Sacramento area, and some apples as well.
    So there doesn't seem to be any transparency requirements 
regarding the schools' purchases, trying to get it cheaper from 
those other places or what have you. And the only reason it 
really came to attention because it ended up in a newspaper 
article. So sir, what can be done to increase accountability 
standards for this provision so that taxpayer dollars are being 
used to purchase high quality, locally American grown products 
instead of stuff from China?
    Mr. Concannon. Thank you very much for the question. We are 
very clear, unambiguous, uncompromising in terms of our 
expectation that schools purchase USA produced goods. In rare 
circumstances, for example, Alaska may at times have trouble 
accessing U.S. produced food items, just as an example. That 
particular case up in Sacramento was not a knowing request of 
the school district. That was the food supplier, the regional 
food supplier that provided those canned goods that were 
produced outside the country, and that was deeply troubling to 
us. Our regional office spoke immediately with the state who in 
turn spoke to the schools. We do management evaluations. That 
is required by the Healthy, Hunger-Free Kids Act of all school 
systems every 3 years. And part of that management evaluation, 
schools must demonstrate that they are purchasing U.S. produced 
foods. So if we see foods that come from elsewhere in a school, 
they are not to be using funds that come from the National 
School Lunch Program to purchase those.
    Mr. LaMalfa. So where would the buck stop on this thing? 
With the supplier to the schools, or ultimately to the schools 
for knowing where their stuff is coming from?
    Mr. Concannon. Well if the school, again, this was 
inadvertent, from my understanding, from the school's point. 
This is not what they requested. This is their supplier that 
incorporated it into a request they had for certain products. 
So what our response is----
    Mr. LaMalfa. Maybe the price----
    Mr. Concannon. Our customer is the schools, not the 
supplier.
    Mr. LaMalfa. Maybe the price would reflect the too good to 
be true pricing scheme, perhaps. Would that be it, if it was--
--
    Mr. Concannon. I don't know if it was the pricing or just a 
substitution on the part of the supplier when they, themselves, 
maybe felt well maybe it isn't that important whether this can 
of mandarin oranges or whatever it was, this product----
    Mr. LaMalfa. We are talking peaches here again, which there 
are thousands of acres grown within miles, and pears.
    Mr. Concannon. Sure.
    Mr. LaMalfa. But so how do we ensure that this doesn't slip 
between misunderstanding or supplier versus a school situation? 
Because bottom line, they were able to buy more cheaper 
product.
    Mr. Concannon. We don't want that to happen absolutely at 
all, ever. So part of the enforcement for that comes from the 
state, in this case, the California Department of Education, 
and then we in turn do management audits of those state 
agencies who are required then to do management evaluations of 
every school system in the State of California at least once 
every 3 years. And if they see examples like this of failure to 
meet the requirements, they can do those management evaluations 
even more frequently, and there are financial penalties if 
schools don't adhere to the state requirements.
    Mr. LaMalfa. Okay. Well all right. I want to know that 
there are protocols to guarantee this in the future, because 
our growers are, again, growing a high quality product in a 
more costly atmosphere to do business with, and our kids would 
want those higher quality products.
    Mr. Concannon. I am very proud of what California is doing. 
I was there last week. Many school systems now in California 
have adopted something called California Thursdays where a 
total meal is provided with foods that are grown or produced in 
the state. I think that is a wonderful set of strategies that 
can be imitated in other parts of the country.
    Mr. LaMalfa. Very nice. Thank you, Mr. Chairman. I will 
yield back.
    The Chairman. The gentleman yields back. Mr. Rouzer, for 5 
minutes.
    Mr. Rouzer. Thank you, Mr. Chairman. Mr. Under Secretary, I 
appreciate you being here today and your willingness to have 
this discourse with us.
    I want to go back to the SNAP retailer eligibility issue. 
All of us, as Members of Congress, we have a lot of convenience 
stores, obviously, in our districts and I represent a more 
rural area in southeastern North Carolina. I am familiar with 
the term food desert, and the consequences of that. And it 
strikes me that our convenience stores, they play a critical 
part for these folks that are very-low-income. And I think 
about the time when gas prices were sky high. I remember 
filling up at a gas station at a convenience store and there 
was a young lady there. I noticed she didn't fill her tank 
completely up, and it occurred to me after talking with her a 
little bit, this was a lady working two and three jobs, and she 
quite frankly didn't have the money to fill her tank completely 
up. So you take people like that, and there are a lot of single 
moms out there that rely on these convenience stores for these 
food items. And given that is the case, I am not sure I 
understand the rationale behind the proposed changes as it 
relates to access to these stores.
    Can you talk a little bit more about that?
    Mr. Concannon. Yes.
    Mr. Rouzer. I know that you have already addressed it 
somewhat, but it is a very important topic.
    Mr. Concannon. The origin of the proposed rule goes back to 
the Farm Bill of 2014, and it directed us the underlying reason 
to expand the food choices is to give additional healthy food 
choices to low-income households, period. That is the 
underlying rule.
    The rule as proposed may be more complicated than it should 
be, and it certainly isn't intended to result in thousands, if 
not even hundreds of stores no longer being eligible for the 
program. So that was the first cut at approaching that 
directive, but we have heard very clearly from Members today, 
but we have also heard from folks who have taken advantage of 
the opportunity to weigh in to say look, here is what we think 
could be workable or here is what isn't workable for us.
    Mr. Rouzer. I want to follow up, too, on a couple of the 
comments that you had made before the House Appropriations 
Subcommittee, and I believe this was on February the 24th. You 
had mentioned that there are more small stores in the SNAP 
program than ``we really need.'' Is that how you still feel? Is 
that really the position of the Department?
    Mr. Concannon. That is certainly my position. I don't know 
if I can speak for the Department. There are 195,000 stores, 
and my comment in that regard was prompted by the fact that 
trafficking fraudulent exchange of benefits happens in the 
majority of cases in these small stores. Never happens in 
supermarkets, never happens in larger stores. It happens in 
smaller stores. And we see in some of those areas where there 
are concentrations of those small stores, and so as a way of 
either earning more profit or earning more revenue, they are 
willing to traffick, and I am very opposed to that. I have 
heard from other Members here. I don't have any tolerance at 
all for fraudulent use of the benefit.
    Mr. Rouzer. Well following up on that a little bit, during 
consideration of the 2014 Farm Bill, I was not here at the 
time, but Congress rejected using crude store size as a 
requirement to get at the fraud issue. Instead, the 2014 Farm 
Bill included language directing the Department to write rules 
setting technology standards to actually prevent fraud. Why 
aren't we focusing on that, given that specifically was 
addressed with the 2014 Farm Bill?
    Mr. Concannon. Well, we actually are pursuing increased use 
of technology, both the requirement universally for stores of 
any size to use electronic processing for the benefit, but in 
trafficking, the way it occurs, I can have an EBT card and if 
you and I conspire, you are the store owner or I am the store 
owner, you can say here is my card and I will give you 50 on 
the dollar for the value of that. That unfortunately happens, 
and I mentioned in my testimony, we took out more stores in the 
past year for trafficking than any year in the history of the 
program, and of the 2,900 stores we sanctioned last year, 1,600 
of them were these small convenience stores. So that is what I 
was referring to in that comment.
    Mr. Rouzer. Well good enforcement is always the best 
deterrent.
    Thank you, Mr. Chairman. My time has expired.
    The Chairman. The gentleman's time has expired. Mr. Scott?
    Mr. Austin Scott of Georgia. Can I ask a follow up on that 
real quick?
    The Chairman. Sure. Austin, we are way over, so real quick.
    Mr. Austin Scott of Georgia. Right. If you have common 
ownership of stores, in other words, if you catch fraud at two 
or three stores, that type of fraud at two or three stores and 
you know that that same person owns three or four more stores, 
are you able to carry that action forward to the other stores 
that they own?
    Mr. Concannon. That is a great question, but unfortunately, 
I believe currently we are able to take out the stores in which 
we found trafficking. If we find evidence that they have 
communicated that to their other store managers, we have the 
opportunity to take all stores out, but we can't just routinely 
say two of your stores were trafficking. We are taking all ten 
of them out. I don't believe we have that----
    Mr. Austin Scott of Georgia. Mr. Chairman, I might suggest 
that might be a good piece of legislation for us to look for. 
If that attitude is there at three of five stores that somebody 
owns, I would be willing to bet that it is there at the other 
two, too.
    The Chairman. I don't disagree. The tone from the top needs 
to make sure that the owners of those stores know the risks 
associated. It is no different than a store owner allowing 
somebody to sell beer to an underage consumer. So this would 
follow the exact same category.
    I can't thank you guys enough. We are way over time from 
what you agreed to, and I appreciate that. You are the faces of 
a large cadre of good, decent men and women who get up every 
single day, go to work, try to administer the programs under 
their care, and we appreciate that. We may disagree from time 
to time on policy, but it has been my experience that you guys 
want to do a good job. You want to do what is best for the 
folks that you have a heart for, and I can't thank you enough 
for that.
    If you all wouldn't mind slipping off quickly to 1302, if 
any of our Members want to talk specifically with you while we 
get our other panel in here, we will stand in recess for about 
5 minutes.
    Thank you.
    [Recess.]
    The Chairman. All right, let's start back up. I appreciate 
the witness' patience. We are a little past when you were 
supposed to start, but thank you for hanging with us.
    It is now my pleasure to introduce Mr. Alfred Almanza, who 
is Deputy Under Secretary for Food Safety here in Washington, 
D.C. And Mr. Almanza is accompanied today by Mr. Phil Derfler, 
who is the Deputy Administrator for the Food Safety and 
Inspection Service.
    Secretary Almanza, the floor is yours for 5 minutes.

          STATEMENT OF ALFRED V. ALMANZA, DEPUTY UNDER
           SECRETARY, FOOD SAFETY, U.S. DEPARTMENT OF
         AGRICULTURE, WASHINGTON, D.C.; ACCOMPANIED BY
         PHILIP S. DERFLER, DEPUTY ADMINISTRATOR, FOOD
              SAFETY AND INSPECTION SERVICE, USDA

    Mr. Almanza. Mr. Chairman, Ranking Member Peterson, and 
Members of the Committee----
    The Chairman. Is your microphone on?
    Mr. Almanza. I am the Deputy Under Secretary for Food 
Safety at the United States Department of Agriculture, and I 
would like to thank you for the opportunity to come before you 
today to discuss our food safety mission.
    To start, I would like to extend the invitation to any of 
you to accompany me on a plant tour. A tour of an FSIS-
regulated establishment is the best way to see what our 
inspectors on the line are doing on a daily basis to protect 
public health.
    Each year, one in six Americans is affected by foodborne 
illness. The highest priority of our agency is to prevent as 
many of those illnesses as we possibly can. The meat on your 
plate is thoroughly inspected by the dedicated men and women of 
FSIS to ensure that you don't get sick. While we are 
modernizing the way we do things, carcass by carcass inspection 
remains the cornerstone of our work. Our system of inspection 
is the most reliable in the world, and I take great pride in 
the work that our inspectors perform each day. I began my own 
career nearly 40 years ago as a line inspector in Dalhart, 
Texas.
    Today, billions of pounds of meat, poultry, and egg 
products are produced, transported, and sold every year. A 
system of this magnitude requires constant vigilance to prevent 
the possibility of foodborne illness. FSIS is required to have 
inspectors present across the country in every plant that 
processes meat, poultry, and egg products. The agency employs 
approximately 9,000 people, and 80 percent of them work in 
establishments. During Fiscal Year 2015, FSIS personnel 
inspected almost 150 million head of livestock, nine billion 
poultry carcasses, and over 3 billion pounds of processed egg 
products. In addition, FSIS conducted nearly seven million food 
safety and defense procedures last year.
    With Congress's support, we have begun to modernize how we 
do inspection. Our modernization efforts will lead to fewer 
illnesses for meat, poultry, and egg products. We recently 
updated the 60 year old poultry safety system by implementing a 
final rule that requires plants to do testing at two points in 
the slaughter line to verify process control. The rule requires 
plants to treat Salmonella and Campylobacter as hazards that 
are reasonably likely to occur. Finally, it makes the new 
poultry inspection system available to all plants throughout 
the country.
    Last month, we finalized the first ever pathogen reduction 
standards for chicken parts: 80 percent of chicken that 
Americans consume is in the form of parts. These new standards, 
along with our new standards for comminuted poultry, could help 
prevent an estimated 50,000 foodborne illnesses.
    As we move forward, our focus on our modernization has us 
looking at ways to modernize pork and beef slaughter. One of 
the most significant changes I have seen in my time with FSIS 
has been the shift from paper to our new Public Health 
Information System, or PHIS, which allows the agency to collect 
inspection data in one central location. We aim to amplify our 
use of data to identify trends, connect the dots, and make 
meaningful improvements in public health. We are also laying 
the groundwork for continued modernization in the years ahead 
as we develop a new 5 year strategic plan building on this 
theme of modernization as we are strengthening our use of 
science. We are seeking to expand our use of whole genome 
sequencing technology which will provide FSIS with a much 
better understanding of what it means when we find pathogens in 
the products we test. With whole genome sequencing and 
improvements in analytics, we will be able to respond more 
quickly and more effectively to foodborne illness outbreaks, 
should they occur.
    As a public health agency committed to achieving 
excellence, FSIS continuously tracks performance, modernizes 
methodology, and applies science-based approaches to the work 
that we do. I know firsthand the hard work that the dedicated 
men and women do each day to ensure that we have the safest 
food supply in the world. Because of this work, millions of 
Americans enjoy safe and wholesome meals each day.
    Thank you for your continued support.
    [The prepared statement of Mr. Almanza follows:]

 Prepared Statement of Alfred V. Almanza, Deputy Under Secretary, Food 
        Safety, U.S. Department of Agriculture, Washington, D.C.
Introduction
    Mr. Chairman, Ranking Member Peterson, and Members of the 
Committee, my name is Al Almanza, Deputy Under Secretary for Food 
Safety at the U.S. Department of Agriculture (USDA). Thank you for the 
opportunity again to come before you today to discuss the Food Safety 
and Inspection Service. I appreciate this chance to highlight our 
mission and our people.
Who We Are
    FSIS is the public health agency in the U.S. Department of 
Agriculture responsible for ensuring that the nation's commercial 
supply of meat, poultry, and processed egg products, whether domestic 
or imported, is safe, wholesome, and correctly labeled and packaged. 
FSIS inspection personnel inspect each and every livestock and poultry 
carcass before it can enter commerce. No meat or poultry product can 
enter commerce unless we can find that it is not adulterated and apply 
our mark of inspection. In addition, FSIS reviews and approves the 
labels of meat, poultry, and processed egg products and ensures that 
they are truthful, not misleading, and contain key information. We also 
take action should misbranded or economically adulterated products 
enter commerce.
    After publication in 1906 of Upton Sinclair's The Jungle, which 
described in detail the unsanitary working conditions in a Chicago 
meatpacking house, Congress passed legislation providing for the 
inspection of meat. Ultimately, this legislation became the Federal 
Meat Inspection Act (FMIA). In addition, Congress passed the Poultry 
Products Inspection Act (PPIA), the Humane Methods of Slaughter Act 
(HMSA), and the Egg Products Inspection Act, all of which the Food 
Safety and Inspection Service (FSIS) enforces.
What We Do
    Our employees work in approximately 6,389 federally inspected 
establishments, three FSIS laboratories, 122 ports-of-entry, and 
150,000 in-commerce facilities nationwide. During FY 2015, FSIS 
Inspection program personnel ensured that public health requirements 
were met in establishments that slaughter or process approximately 145 
million head of livestock and nine billion poultry carcasses. In 
addition, inspection program personnel also conducted nearly seven 
million food safety and food defense procedures to verify whether 
systems at all federally inspected facilities maintained food defense 
procedures to protect against intentional contamination.
    The Agency also is responsible for ensuring that imports of meat, 
poultry, and egg products are safe and wholesome. FSIS does this 
through a three part process. First, FSIS determines whether the 
statutes, regulations, and other documents of any country that wishes 
to export product to the U.S. establish a food safety system that is 
equivalent to that of the U.S. Countries provide this information to 
FSIS by using the Self-Reporting Tool (SRT). Should FSIS find on the 
basis of its review of the documents that the country's system appears 
to be equivalent, FSIS will send auditors to the country to assess its 
system in action. On the basis of the results of the audit and the 
other information that FSIS has collected, the Agency decides whether 
the country is equivalent.
    FSIS evaluates an exporting country's food safety system on an 
ongoing basis. It inspects all eligible products from that country at 
U.S. points-of-entry. Each year, FSIS reviews any changes in the 
foreign country's food safety system that the country identifies 
through resubmission of the SRT. In addition, FSIS also conducts in-
country audits of the system. The audits will be guided, at least in 
part, based on the findings of the SRT reviews and the point of entry 
inspections. Based on these reviews, the Agency decides whether the 
country is maintaining equivalence.
Modernization
    A key theme for FSIS is modernization. Inspection changed from a 
sight, smell, and touch approach to a more science-based method when 
FSIS implemented its Hazard Analysis and Critical Control Points 
(HACCP) regulations between January 1997 and January 2000. Our 
inspection activities include sampling ready-to-eat meat and poultry 
products for Listeria monocytogenes testing, sampling raw product for 
Salmonella and Campylobacter testing, and sampling raw beef product for 
testing certain strains of pathogenic E. coli (including E. coli 
O157:H7).
    In FY 2015, FSIS laid the groundwork for fully enforcing all HACCP 
validation requirements--those related to necessary in-plant data as 
well as those related to scientific support. The Agency informed plants 
that they would need to analyze their validation methods to ensure that 
the scientific support matches their in-plant processes, and that they 
needed to have at least 90 days' worth of data to show that their 
plants met the critical operational parameters in their processes. The 
new validation verification procedures, which we have implemented in 
large plants and will implement in small and very small plants next 
month, will help to ensure that establishments' HACCP plans work as 
intended to address food safety hazards. To assist with this process, 
FSIS has provided plants with training, webinars, and the FSIS 
Compliance Guideline HACCP Systems Validation, a document designed to 
help small and very small meat and poultry plants meet the validation 
requirements.
    We have made other changes in how we do inspection. In FY 2015, 
FSIS adopted a new methodology for conducting Food Safety Assessments 
(FSAs). Under this methodology, an Enforcement, Investigations, and 
Analysis officer conducts a Public Health Risk Evaluation (PHRE) before 
deciding whether a Food Safety Assessment is warranted. Under this new 
methodology, a FSA takes 5 to 7 days instead of approximately 35 days. 
This new methodology allowed us to save an estimated $1.18M and 26,600 
hours within 3 months of its implementation. The new FSA methodology 
allows FSIS to more efficiently use its resources by targeting higher 
risk establishments.
    One key investment that we have been able to make thanks to 
Congressional support is in the Public Health Information System 
(PHIS). PHIS captures data in automated and useful formats. The 
availability of this data provides for more timely and efficient 
analysis of food safety inspection-related trends that drive our 
ability to take actions that enhance our ability to protect the public 
health. In addition, PHIS is allowing us to make better use of the 
Public Health Regulations (PHRs) to focus the inspection activities of 
our in-plant personnel. With PHIS, we now collect data about the 
regulations that inspectors are verifying when they perform inspection. 
Before, we only knew regulation data when inspection tasks found 
noncompliance. Now that we have more complete data, we can better 
assess non-compliance rates of individual regulations. That has allowed 
us to identify regulations for which non-compliance is linked to 
adverse public health outcomes. We instruct our inspectors to conduct 
special focused activities, such as PHREs and FSAs when we spot a 
pattern of noncompliance with these PHRs.
    FSIS coordinates closely with other Federal public health agencies 
such as the Food and Drug Administration (FDA) and the Centers for 
Disease Control and Prevention (CDC). Our collaboration with our 
partner agencies makes FSIS more effective and improves our responses, 
particularly during recalls and outbreaks. In 2011, we created the 
Interagency Food Safety Analytics Collaboration (IFSAC) which brings 
together senior leaders and technical experts on foodborne illness 
source attribution from these agencies. In FY 2015, one of IFSAC's 
major successes was developing harmonized attribution estimates for 
Salmonella, E. coli O157, Listeria monocytogenes, and Campylobacter for 
major food categories and hosting a public meeting with over 300 
participants to share those findings. These improved estimates of 
foodborne illness source attribution have informed efforts to 
prioritize food safety initiatives, interventions, and policies for 
reducing foodborne illnesses.
    One way that the Agency is modernizing food safety is by improving 
the way we inspect. In 2015, we began implementation of the final rule 
on modernization of poultry slaughter inspection. The implementation of 
this final rule requires that all poultry slaughter establishments take 
measures to prevent contamination, rather than addressing contamination 
after it occurs. Poultry facilities are required to perform their own 
microbiological testing in their production process to show that they 
are controlling enteric pathogens (e.g., Salmonella and Campylobacter).
    The Agency established the voluntary New Poultry Inspection System 
(NPIS), in which poultry slaughter establishments sort their own 
product for quality defects before presenting it to FSIS inspectors for 
food safety inspections. As of March 1, 2016, 51 plants have indicated 
that they are interested in operating under or have transitioned to the 
NPIS. The system allows for FSIS inspectors to focus less on routine 
quality assurance tasks that have little relationship to preventing 
pathogens like Salmonella and instead to focus on strategies that are 
proven to strengthen food safety. Our food safety inspectors are now 
better equipped to verify that establishments maintain effective HACCP 
systems, which is a more effective and efficient way to use our 
inspection resources. We are considering a similar approach for hog 
inspection. We have collected a lot of data in these hog plants, and we 
are now in the process of analyzing that data to determine what our 
approach should be.
    One of our greatest accomplishments has been the new food safety 
pathogen reduction performance standards for chicken parts and 
comminuted poultry that are designed to dramatically reduce Salmonella 
and Campylobacter illnesses contracted from chicken and turkey 
products, as well as to reduce the presence of these pathogens in raw 
chicken breasts, legs, and wings. The performance standards are a major 
step in the FSIS' Salmonella Action Plan, which the Agency developed in 
2013. FSIS's science-based risk assessment estimates that 
implementation of these standards could achieve a 30 percent reduction 
in illnesses from Salmonella and 19 percent from Campylobacter, an 
average of 50,000 averted illnesses annually. FSIS chose this 
aggressive goal for addressing Salmonella because it will help achieve 
the Healthy People 2020 national goal of reducing human illness by 25 
percent.
Other FY 2015-FY 2016 Accomplishments
    Additional FY 2015 and early FY 2016 accomplishments for FSIS 
include the establishment of an exploratory sampling program for raw 
pork products and continuous sampling of chicken parts; publication of 
several compliance guidelines to help industry address pathogens in 
their product, including ``Sanitary Dressing and Antimicrobial 
Implementation at Veal Slaughter Establishments: Identified Issues and 
Best Practices'' and ``FSIS Compliance Guidelines for Controlling 
Salmonella and Campylobacter in Raw Poultry;'' issued a best practices 
guideline for retailers to help them to protect public health by 
decreasing the potential for Listeria monocytogenes contamination; 
published a rule that will become effective in May 2016, that will 
require that labels declare that raw beef product has been mechanically 
tenderized and will require validated cooking instructions on labels of 
mechanically tenderized beef products going to household consumers, 
hotels, restaurants, or similar institutions; completed work on the 
FSIS Salmonella Action Plan; and continued collaboration with the 
Agricultural Research Service (ARS) for identification of additional 
analyses for consideration and implementation in the multi-residue 
method for testing.
    As mandated by the Congress, FSIS is responsible for the regulation 
of Siluriformes fish products. We published the final rule in December 
2015, with March 1, 2016 as the effective date of the new inspection 
system. We began inspecting in slaughter plants on March 1. We 
established an 18 month transition period before FSIS begins fully 
enforcing all requirements in the new regulations, in order to allow 
regulated Siluriformes industry time to meet our food safety 
regulations on the first day of full implementation, September 1, 2017. 
During the transitional period, we will inspect processing-only plants 
and re-inspect imported product on a limited basis.
    So far, we have held public educational outreach meetings in 
Washington, D.C. and Stoneville, MS for industry, farmers, foreign 
countries, and other affiliates to learn about the program and to ask 
questions. Our personnel have traveled to several foreign countries to 
provide information. We also held a meeting in Newark, NJ for 
importers. We also plan to hold importer meetings in Los Angeles, CA 
and Houston, TX. In addition, we have provided mandatory training for 
inspectors and will hold additional meetings in our ten district 
offices.
Consumer and Stakeholder Outreach
    To keep the public safe, we conduct outreach and educational 
awareness efforts to small and very small plants and to the millions of 
Americans who consume our products every single day.
    With more than 90 percent of the 6,389 FSIS inspected plants 
considered small or very small operations, FSIS has a Small Plant Help 
Desk that serves to assist plant owners and operators with questions. 
Many of these questions involve technical expertise, information, and 
providing advice on FSIS regulations and policies. During FY 2015, the 
Small Plant Help Desk received and responded to 2,031 inquiries in 
person, over the phone, and via email. In addition, FSIS publishes 
Compliance Guides and hosts webinars that help small plants comply with 
new or modified FSIS regulations.
    Moreover, just as FSIS is focusing on modernizing our inspection 
techniques, we also are modernizing the way we communicate with our 
consumers. For 30 years, the USDA's Meat and Poultry Hotline has 
enabled consumers to ask questions or report incidents of foodborne 
illness. The Hotline receives more than 80,000 calls each year and 
helps prevent foodborne illness by answering questions about the safe 
storage, handling, and preparation of meat, poultry, and processed egg 
products.
    The Food Safety Education Staff (FSES) has had many successes in 
consumer food safety outreach throughout FY 2016. Some of these 
initiatives include: partnering with the Ad Council, partnerships for 
reaching at-risk groups, Hispanic outreach, social media, and our new 
smartphone application, the Foodkeeper App, which has been downloaded 
nearly 100,000 times.
    To remain transparent to the public, we hold monthly public 
meetings with consumer and industry stakeholders on upcoming policy 
developments. We also distribute a weekly newsletter with policy 
updates, export requirements, testing results, and personnel changes, 
called the ``Constituent Update.'' In addition, FSIS has two advisory 
committees, the National Advisory Committee on Meat and Poultry 
Inspection (NACMPI) and the National Committee on Microbiological 
Criteria for Foods (NACMCF). These committees are made up of state, 
consumer, and industry representatives who work to advise the Secretary 
of Agriculture on food safety policies that will contribute to USDA's 
regulatory policy development.
Strategic Planning for Accountability
    Every 5 years, FSIS adopts a new Strategic Plan that sets out the 
Agency's goals and initiatives and is the foundation for both the long 
range and day-to-day operations of the Agency. A main driver of the 
Strategic Plan is the desire for the Agency to continue to be an ever 
more trusted and successful public health agency--an Agency that adapts 
to the changing nature of food safety risks. Outlined in the Agency's 
current strategic plan are three themes and eight goals within those 
themes. The themes are ``Prevent Foodborne Illness,'' ``Understand and 
Influence the Farm-to-Table Continuum,'' and ``Empower People and 
Strengthen Infrastructure.''
    Each year, FSIS also develops an Annual Performance Plan (APP) that 
sets out three or four key results that each of the Agency's ten 
offices intends to accomplish to advance the Strategic Plan. The APP 
provides the American public and FSIS employees with a clear list of 
Agency priorities and a detailed roadmap of the steps we intend to take 
to achieve our goals. It provides an operational plan that we are 
following in order to steer the Agency as we work to prevent foodborne 
illness and protect public health. It is traceable and transparent, so 
that we are accountable to the Congress and the American public. At the 
end of each year, we publish a report that sets out how well we did in 
achieving key results.
    FSIS has begun development of its 2017-2021 Strategic Plan. This 
work will continue through FY 2016. FSIS held both public and 
stakeholder meetings, including meetings with FDA and CDC, to gather 
input on key focus areas, issues, and trends in food safety that the 
Agency should consider in developing the Plan. This critical input from 
industry, consumers, consumer advocacy groups, and Federal 
collaborators has helped shape the Agency's development of desired 
outcomes, specific strategic objectives, and meaningful targets and 
measures to assess results.
Conclusion
    These are some of the ways we are holding ourselves accountable for 
achieving positive results and outcomes on food safety issues. We 
continuously track performance, modernize, and apply science in 
developing our approach to the food safety problems we face. I began my 
career at FSIS as a line inspector, and I know first-hand the hard work 
that the dedicated men and women who make up FSIS's inspection force 
perform every day to ensure that we have the safest food supply in the 
world. It is because of this work that millions of Americans can sit 
down at the table and enjoy safe, wholesome meals each day. Thank you 
for your support for our vital work as a public health agency.

    The Chairman. We thank you, Deputy Under Secretary. I 
recognize myself for 5 minutes.
    I appreciate you being here. Speaking of the new poultry 
inspection system, can you talk to us a little bit further 
about what your data is showing for increased line speeds and 
how the request to increase line speeds is working? And then 
also any evidence you have so far about worker safety with 
respect to these higher line speeds. Has DOL shared with you 
specific data in reference to that program, and can that data 
then be shared with the industry itself if there are things 
that need to be done to protect workers?
    So can you flesh out a little bit more on the poultry 
inspection system?
    Mr. Almanza. The new poultry inspection system has been 
implemented in 35 plants. We have had 56 that have opted in, so 
we are still bringing plants in quarterly. Which we are seeing 
probably a greater interest as the year goes on in the new 
poultry inspection system. It is too early to really have any 
what I would say supportable data to recognize any difference 
in the line speeds between the 20 that we have running at 175 
birds per minute versus the new ones that are only allowed to 
run at 140, but that is something that we are going to continue 
to look at. Right now it would just be a guess as to what the 
differences would be, but again, the worker safety issue is 
something that we take seriously, but it is outside of our 
responsibility as a regulator.
    The Chairman. Has Labor shared with you the kinds of data 
that needs to be collected in order for them to be able to 
evaluate impacts of higher speeds?
    Mr. Almanza. We have been working with OSHA on this issue, 
but no, they have not given us any data that demonstrates----
    The Chairman. Okay, data that--specific points of issue 
that they want to collect on. I know the data would be the 
incidents that have happened, knife cuts or whatever that they 
want to collect, but they are not telling you yet what you need 
to collect in order for them to evaluate higher line speed 
safety?
    Mr. Almanza. So one of the things that we have agreed to do 
in those establishments is we have safety committees that meet 
in these establishments that look at just accidents in general, 
and so if we see trends, we will advise the Department of Labor 
of what we are seeing.
    The Chairman. Okay. I know certainly on the line speed, but 
there is no food safety concerns, red flags yet of any kind?
    Mr. Almanza. No, sir. I mean, we haven't had any food 
safety concerns with the ones that are running 175 for the last 
14 years either.
    The Chairman. I got you. All right. With that, I will now 
recognize Mr. Newhouse, 5 minutes.
    Mr. Newhouse. Thank you, Mr. Chairman, and thank you both 
for being here this afternoon. I appreciate your willingness to 
sit before the Committee and answer a few questions, and I 
appreciate your work on a daily basis as well, you and 
everybody that works with you.
    On the issue of food safety and research, given the more 
stringent pathogen reduction standards that have been adopted 
by FSIS, can you tell me what the agency has seen to date in 
terms of reduction in overall levels of foodborne illnesses? It 
would be a very appropriate recap or report, if you have seen 
any improvements or changes.
    Mr. Almanza. Right now, it is still early, a bit early to 
tell, sir, but the thing that we are seeing is a fewer number 
of positives in the testing that we are doing, which 
ultimately, we hope that that data demonstrates that there are 
fewer illnesses associated with the products that we are 
testing.
    Mr. Newhouse. Hopefully that is true.
    As you know, many potential foodborne pathogens, such as 
Salmonella, are naturally occurring. Has FSIS requested any 
research to be conducted by either USDA or any other research 
agencies on foodborne pathogens and how to better reduce their 
presence, and could research be done on better food preparation 
methods to reduce the presence of these organisms?
    Mr. Almanza. So we continue to work with ARS within USDA 
and there are research grants, and they do a really good job at 
working both independently to try to gather the data on 
Salmonella, and also work with us on effective methods for our 
testing. But the industry themselves also have developed a 
large number of interventions that help either reduce or 
eliminate Salmonella in the products that they produce.
    Mr. Newhouse. I appreciate again you being here this 
afternoon, and Mr. Chairman, thank you, and I will yield back 
the balance of my time.
    Mr. Almanza. Thank you.
    The Chairman. The gentleman yields back. Mr. Yoho, 5 
minutes. Sorry about that. A little quick. Mr. Ashford has 
returned. Mr. Ashford, 5 minutes. No questions? No questions?
    Mr. Ashford. No.
    The Chairman. All right, the gentleman yields back. Mr. 
Yoho, 5 minutes.
    Mr. Yoho. Thank you, sir.
    Under Secretary Almanza, I appreciate your being here, and 
I appreciate the work you guys do, and I do feel our food in 
this country is the safest anywhere in the world. And I just 
came back from a CODEL over in Latin America, and there was a 
country that didn't want our food in there because they didn't 
feel it was safe and didn't meet the standards, and I thought 
it was kind of comical. It was on the phytosanitary, and I 
can't think of anybody that does that better than us.
    Saying that, could you please walk me through the role your 
agency has on the trade front, and are all countries eligible 
to bring meat and poultry products into the U.S., and could you 
share the process a country must do to gain safety equivalence, 
and the follow up that your agency performs after access to our 
market? And I have a follow up question after that.
    Mr. Almanza. Okay, sure. So countries that are wishing to 
become eligible to export to the United States meat, poultry, 
or egg products, they usually make a formal request by a letter 
to us, and then the letters must come from the foreign 
government or their central competent authority for the 
inspection of meat, poultry, and egg products. Then what we do 
is we look at the meat, poultry, and egg products that are 
exported from another nation to make sure that they meet all 
the safety standards that are applied to food produced 
domestically in the United States. And then we make a 
determination of equivalence by evaluating whether the foreign 
food regulatory systems attain the appropriate level of 
protection provided by our own domestic system. Then we also 
evaluate their food regulatory systems for equivalence through 
document reviews, onsite audits, and port of entry reinspection 
of products at the time that when we import those products.
    Mr. Yoho. So we feel good once it gets here that it has 
gone through the proper channels, and that brings up my second 
question.
    I have concerns about egg product being imported from the 
Netherlands to the U.S. Some have raised the concern that the 
inspection process used by the Netherlands may not be a full 
and continuous inspection. If the inspection is not full and 
continuous, does such a process comply with Federal law?
    Mr. Almanza. Okay, so that is one of the things that we 
look at when we go over and audit their food safety system. 
They don't necessarily have to be exactly like ours, but they 
have to be equivalent to ours. And by that, I mean that they 
have to have Federal inspection, same as we have here, through 
the entire process of production.
    Mr. Yoho. Is our process here on the eggs, is that a 
continuous process?
    Mr. Almanza. For processed eggs, yes, sir.
    Mr. Yoho. Okay, so if it is continuous here but not over 
there, is that equivalent, and what is the difference between 
equivalent there versus here?
    Mr. Almanza. Yes, I will have to----
    Mr. Yoho. The extrapolation process.
    Mr. Almanza. I would have to look at the Netherlands 
specifically, but I can provide that to you.
    Mr. Yoho. If you could, that would be great if you would 
submit that. And if not, because the concern is if it does not 
comply with the Federal law, as I believe it won't, does that 
mean the FSIS would consider the product lacking proper 
inspection to be ineligible for the import into the U.S. and/or 
adulterated product?
    And so those are the things I am getting from my producers 
that we want to make sure, and Congressman King, it was a 
question he had also that we want to make sure that if we are 
making that requirement of our producers, that products coming 
in have to meet that same requirement or it puts us at a 
disadvantage.
    Mr. Almanza. Yes, sir. No, I totally agree with you. But my 
understanding is it is continuous, but I will provide to you 
the findings of our audit so that you can----
    Mr. Yoho. I appreciate it, and I remember speaking to you 
before when we both started off in a packinghouse.
    Thank you. I yield back.
    Mr. Almanza. Yes, sir. Thank you.
    The Chairman. The gentleman yields back. Mr. Rouzer, 5 
minutes.
    Mr. Rouzer. Thank you, Mr. Chairman. Deputy Under 
Secretary, quick question for you here. In January the agency 
released new Salmonella performance standards that poultry 
producers will have to meet. What training and support is the 
agency providing to assist industry in achieving those very 
aggressive reductions? And then quick follow up to that, if you 
will, how is this being addressed in the small plants that 
operate under the inspection exemption?
    Mr. Almanza. So one of the things that we do specifically 
to issues like this, that are going to have an impact on the 
industry, is we issue guidance documents. So it gives them a 
road map of what our expectations are through the process, and 
it applies to all establishments that are producing under, for 
example, the new performance standards.
    We don't see that it is going to have any greater impact on 
the small plants than it does on the larger plants, just 
because of performance standards, and how they are set out. We 
believe it won't have any greater impact on them.
    Mr. Rouzer. Another question for you, and this is a 
softball for you. This is a very critically important agency, 
in terms of confidence among our trading partners, our good, 
safe, affordable food supplies. Very critical not only to all 
of us here in the United States, but it is also very critical 
in terms of exports. What is your greatest challenge, and how 
can we, as a Committee, be helpful to you?
    Mr. Almanza. Well, you are right, that is a softball 
question. I will tell you this, I mean, we have had great 
support from Congress in our budget in the things that you all 
allow us to do. The thing that I look at, we have between 33 to 
35 countries that are eligible to export to the United States. 
That is a high bar. That is not a whole lot of countries that 
are eligible to export meat, poultry, or processed eggs to us. 
And so we just have to stay vigilant, maintaining the standards 
that we have, and make sure that we are able to audit the 
countries that do export to us meat, poultry, and processed egg 
products, and make sure that their equivalency standards are 
maintained. But, to me, that is what we should pay attention 
to.
    Mr. Rouzer. Thank you, Mr. Chairman. I yield back my time.
    The Chairman. The gentleman yields back. Mr. Lucas, 5 
minutes.
    Mr. Lucas. Thank you, Mr. Chairman. Mr. Secretary, as the 
final catfish inspection regulation is being implemented, can 
you provide an update on the status of the economic compliance, 
and the process of determining the equivalency of countries 
wishing to export to the United States?
    Mr. Almanza. Yes, sir. That is proving to be a bit of a 
challenge for us. There are currently five countries that have 
expressed an interest in exporting to the United States. Right 
off the top of my head, I believe it is China, Myanmar, 
Vietnam, and I will get you the other two. Nonetheless, there 
are only five. And so that is taking up quite a bit of my time, 
going to these countries and explaining to them what our 
equivalency process is, because that is something that, as I 
said earlier, we take very seriously in what our expectations 
will be for them to meet our standards.
    I do believe that they are taking us seriously in the 
countries that I have been to so far, which I have been to 
Myanmar, Beijing, China, and to Vietnam, and had meetings with 
their government officials to get them to understand what our 
equivalency process is. Domestically, it is providing--we are 
looking at working with the states, trying to find all the 
producers of catfish products, both slaughter plants, and that 
seems kind of odd, a slaughter of a catfish, but nonetheless, 
you have places that they may fillet catfish 2 or 3 days a 
week, or they may do it 5 days a week. And so in trying to 
identify all those, we are just in the process of getting to 
all of those locations, and making sure that they understand 
what our expectations are going to be as we start to regulate 
them.
    Mr. Lucas. So it sounds like you are making progress in 
moving forward and accomplishing the goals, and it is just a 
matter of time before a regime will be in place, and the 
standards will apply. Fair assessment, Under Secretary?
    Mr. Almanza. Yes, sir.
    Mr. Lucas. Very good. I yield back, Mr. Chairman.
    The Chairman. The gentleman yields back. Mr. Kelly, 5 
minutes.
    Mr. Kelly. Mr. Chairman, I yield back. He just asked my 
question about catfish. Although I would just like to say that 
is very important to my catfish producers in Mississippi, that 
we have an inspection process that is taken care of in other 
countries like it is here. And the longer we wait to do that, 
the more at risk you put our catfish producers, who are doing 
the things here, but it needs to be an equal playing field. 
Otherwise, when they go out of business, it is too late to say, 
well, they are complying now, but you are out of business. So 
just make sure there is a sense of urgency there. And I yield 
back, Mr. Chairman.
    The Chairman. The gentleman yields back. Mr. Thompson, 5 
minutes. Yes, that would be Glenn Thompson from Pennsylvania.
    Mr. Thompson. Okay, Mr. Chairman. Thank you.
    The Chairman. Thank you, Glenn Thompson.
    Mr. Thompson. I guess I am the only Thompson here, all 
right. Well, Secretary, thank you very much. I appreciate you 
being here. I appreciate your work. And I apologize if I am 
kind of re-plowing a field. I don't think I am, though. What 
role do consumers play in ensuring food safety?
    Mr. Almanza. Well, as consumers, you have to be vigilant of 
cross-contamination in your kitchen, handling of raw products 
versus cooked products. A surefire way, at the end, is to make 
sure you cook your meat, poultry products thoroughly to 
eliminate any possibility of foodborne illness.
    Mr. Thompson. Obviously, being a Member of the Agriculture 
Committee, I spend a lot of time with everyone in the food 
chain, so my producers in particular, who have felt really 
overwhelmed with the amount of pages of regulations for food 
safety, and none of them, obviously, will deny the importance 
of food safety.
    One creative thing that came up, does the Department work 
in any way in partnership with our extension services that we 
have through our land-grant universities to me, that is just a 
tremendous resource. Extension has always done all kinds of 
very important things on the ground, and certainly in all 67 
counties in Pennsylvania. But there seems to be, today, just 
coping with all of the minuti# of regulations when it comes to 
food safety, which, again, and food safety is important, any 
formal relationship there with the agriculture extension 
services?
    Mr. Almanza. Yes, sir, we do. We do a lot of work with 
agricultural extension services, with a lot of colleges and 
universities as well, because sometimes they have information 
that is relevant to our mission that they are able to get out 
in other ways that we are not able to get. So yes, we do work 
with them.
    Mr. Thompson. Okay, great. And I am hearing more and more, 
as I talk with our extension folks, about how they are trying 
to find people with that specific expertise to put on the 
ground to help producers to be successful. Because if they are 
not able to produce it, and to be compliant, we are not going 
to have access to affordable, high quality, and safe food. So I 
appreciate your efforts, and I appreciate the efforts of our 
land-grant universities, and our extension services.
    Given the more stringent pathogen reduction standards 
adopted by FSIS, what has the agency seen to date in terms of 
the reduction of overall levels of foodborne illness?
    Mr. Almanza. As I said, with the new standards, and the 
performance standards, it is still a little early in the game, 
but it is designed to achieve a 30 percent reduction in 
illnesses from Salmonella, and about 19 percent reduction in 
Campylobacter. Again, it is a little bit early in the game, but 
what we are seeing is a lesser number of positives in the 
testing that we are doing, and so hopefully that data will 
result in fewer illnesses after we have had time to accumulate 
enough data to see what the results are.
    Mr. Thompson. Yes. In some of my meetings with different 
stakeholders in the agricultural industry, actually, this was 
producers, a large group of producers, kind of concerned about 
the national security threats that may be out there. Potential 
food security threats from a terrorism perspective, in terms of 
trying to cause harm on the American people, and the American 
economy as well. And so I assume that is something that is out 
there that you all at least talk about, and kind of measure 
risk, and----
    Mr. Almanza. Yes, sir. We do more than talk about it. We 
have tabletop exercises with other agencies, with CDC, with 
FDA, to make sure that we are all on the same page in dealing 
with those types of threats to the public of the United States.
    Mr. Thompson. Well, thanks for what you do. Mr. Chairman, I 
yield back.
    Mr. Almanza. Yes, sir.
    The Chairman. The gentleman yields back. Mrs. Hartzler, 5 
minutes.
    Mrs. Hartzler. Thank you, Mr. Chairman. Thank you, Mr. 
Secretary. I was just wondering, how many employees are in your 
division?
    Mr. Almanza. About 9,000.
    Mrs. Hartzler. All right. How many are based here in D.C. 
versus out in the field?
    Mr. Almanza. Here in D.C., I would say somewhere in the 
neighborhood of 380.
    Mrs. Hartzler. Okay. And if you have already done this, let 
me know. I have a phone call, sorry about that. But how is your 
agency organized? Do you have field offices? And kind of 
explain how it is organized.
    Mr. Almanza. No, that hasn't been asked before, but----
    Mrs. Hartzler. Okay.
    Mr. Almanza.--I am very familiar with how we are 
structured. So we have headquarters, and then we have ten 
district offices from the East Coast to West Coast. And I can 
certainly provide you the locations for that for the record, if 
you would like me to do that. And then we also have three labs, 
one in Athens, Georgia, one in St. Louis, and one in Alameda, 
California that we are in the process of moving, but it is 
still in California. And then we also have some offices for our 
investigative and enforcement type of jobs that we do, but most 
of those are co-located with our current district offices in 
the same places.
    And then from there we just have our inspection personnel 
that work in the----
    Mrs. Hartzler. Plants?
    Mr. Almanza.--in the plants. Yes, ma'am.
    Mrs. Hartzler. Yes, very good. What is the overall budget 
for your agency?
    Mr. Almanza. It is a little over a billion dollars.
    Mrs. Hartzler. Okay. If you had a pie graph, what would be 
the most expensive, give me the top three areas of what you do 
that are large expenditures.
    Mr. Almanza. Our payroll is----
    Mrs. Hartzler. Personnel would be first?
    Mr. Almanza. Close to----
    Mrs. Hartzler. What, 50 percent?
    Mr. Almanza. No, it is closer to 80 percent.
    Mrs. Hartzler. Okay. You need to cut salaries. No, just 
kidding. No, go ahead. Then what is next, after personnel?
    Mr. Almanza. Excuse me? I didn't----
    Mrs. Hartzler. So personnel is 80 percent, and then what 
would be next? I am just----
    Mr. Almanza. State programs is next, and then our internal 
travel would be the third.
    Mrs. Hartzler. Okay. What are the top food pathogens that 
you are facing right now? If you are the top five.
    Mr. Almanza. Top five would obviously be E. coli, 0157:H7, 
and Listeria monocytogenes, and then Salmonella. 
Campylobacter----
    Mrs. Hartzler. Okay. So you have this scare with Chipotle, 
which is my daughter's favorite restaurant, but this was 
concerning, have you found out anything? Tell me how your 
agency deals with that.
    Mr. Almanza. Yes. Unfortunately, with Chipotle, we weren't 
ever able to determine that any of the products that we 
regulate were responsible for that. But when we have an 
outbreak like that, typically we are tipped off by CDC, or the 
state, that they are seeing some type of illnesses that are 
associated with the products that are being produced in a 
specific restaurant, or an area.
    And so what happens is, as we start getting enough data, we 
will start an investigation, an internal investigation, and 
start looking at the possible products that may be affected, 
and then trying to figure out the traceback to the specific 
producer. And then looking at possible venues of the 
introduction of the product that were causing the illnesses.
    Mrs. Hartzler. Now, it seems like there has been an uptick 
in charges of where actual vegetables are coming down with some 
of these things, potentially from runoff. Can you tell me about 
that? I was surprised when that happened, rather than there is 
an animal facility nearby. Can waste be transmitted through a 
plant, like spinach?
    Mr. Almanza. Well, it certainly can. I, unfortunately, only 
regulate meat, poultry, and processed eggs, but I can tell you 
that there was an outbreak that was caused by, like, feral hogs 
walking through spinach, and then causing some foodborne 
illnesses from those types of cross-contamination vehicles, 
livestock and things of that nature.
    Mrs. Hartzler. Well, you have a tough job, but a very, very 
important job, so we appreciate what you do. Thank you very 
much. I yield back.
    The Chairman. The gentlelady yields back. Mr. Moolenaar, 5 
minutes.
    Mr. Moolenaar. Thank you, Mr. Chairman. Just following up 
on this discussion about Chipotle, can you describe for me the 
process when you have E. coli problems, and where does it 
start? Where are the processes where it could be identified? 
What should families be thinking about when they go into a 
restaurant? Those kinds of things.
    Mr. Almanza. What do I think about when I go into a 
restaurant?
    Mr. Moolenaar. Yes.
    Mr. Almanza. Well, I have been doing this for close to 40 
years, so I would say I probably pay very close attention to 
what the people are doing behind the counter. Just, for 
example, if they are using gloves, if they are touching money, 
and then they are touching the products that you are eating. 
And then just looking. I look at the practices that the 
employees are engaging in. If they are back there cooking, are 
they handling raw product while they are handling cooked 
product? That is, for me, that is just an easy, maybe I 
shouldn't be eating here if that is what they are doing.
    Now, what I would say is, for us, as a regulator, we would 
love to be able to track somebody that is making somebody sick 
as quickly as possible, and we do that as quickly as possible. 
But sometimes what gets lost in the mix is we don't know that 
products are making people ill until there is an incubation 
period, and then people start going to the hospital, and then 
they are reported to CDC, and then CDC starts tracking that. 
And as they start tracking the multiple illnesses, well, then 
they start to track it, and we are tracking that with them as 
well. FDA is notified as well, because most of the time it is 
not just a meat product, or it is not a vegetable. And so they 
keep us all in the same loop until it starts trending one way 
or another, and doctors and hospitals are doing these 
checklists with the patients.
    And so once we are in tune with that, what we do is we will 
go and interview patients. Sometimes the states have done that 
before we get there, but they give us that information to be 
able to tell us in what direction we need to go in. And, 
unfortunately, sometimes we are just not able to have 
conclusive evidence with a case patient in a hospital, and 
running the PFG pattern for that illness to the product that is 
assumed to have caused the illness.
    Mr. Moolenaar. And are there best practices in the field, 
or in transportation, that prevent these kinds of things that 
are common knowledge for people involved in the business? Or is 
that something where it just varies depending on the country-
of-origin, what are your thoughts on that?
    Mr. Almanza. Well, one of the things that is going to make 
it easier for us is this new requirement they are going to have 
for grinding logs. And it has nothing to do with grinding 
trees. We are going to have these establishments, what they are 
going to do is they are going to have to track everybody that 
supplies them, and the times and the dates that they are using 
their specific product to grind hamburger meat, ground beef. 
And so that will make it easier for us, when we go and do an 
investigation, to make sure that they have accurate records 
that demonstrate to us, okay, they were grinding product from 
Establishment X on a certain date, and then we can traceback 
from the patient to when that product that was ground there was 
consumed. So, we think that that is going to make a significant 
improvement to our ability to use our investigators to get that 
type of information.
    Mr. Moolenaar. Yes. Okay. So that would handle the grinding 
aspect. Are there other areas that need to be addressed as 
well?
    Mr. Almanza. The other situation that we are dealing with 
on the other thing is the mechanically tenderized products as 
well, that we are going to have labeling that is going to be 
required for those type of products. Mechanically tenderized 
products, basically, are products that are tenderized with 
needles and/or some type of blade tenderization. We believe 
that the risk is a little bit higher because any contamination 
you may have on the surface gets driven in, into the muscle, 
and so therefore, cooking those products thoroughly, the 
consumers will be able to have a label that tells them these 
products have been tenderized, and make sure you cook them to 
140 internal temperature for a minimum of 3 minutes.
    Mr. Moolenaar. Thank you very much. Thank you, Mr. 
Chairman.
    The Chairman. The gentleman's time has expired. Now for a 
second round. Mr. Yoho, did you want to ask something else?
    Mr. Yoho. Yes, sir, Mr. Chairman. Again, I appreciate you 
being here. Let me ask you about the small custom meat packers. 
We have had some concerns with some of the small meat packers 
that they are doing it custom for people that raise their own 
animals, or slaughter--not slaughter, but, shot a deer or 
something like that, and they bring it in. They forego the 
inspection process because it is their own meat. What if they 
were to sell that meat, or donate it to a food bank? Does that 
violate that, and are they held accountable for that?
    Mr. Almanza. So for beef, or for cattle, if they bring in 
their own----
    Mr. Yoho. Like a club steer that somebody raises for a 
fair.
    Mr. Almanza. If they bring that in for custom slaughter, 
basically, it has to be consumed by them, by the family that 
owns it. And it cannot be sold.
    Mr. Yoho. What about if they donate it to a food pantry, 
like ground beef, or something like that? That would violate 
that and they are not supposed to do that?
    Mr. Almanza. Yes, sir.
    Mr. Yoho. All right. I just wanted that for clarification, 
so we can pass that on. The other thing is, on CSAs, the 
Community Supported Shared Agricultural Operations, they are 
starting to pop up more and more. And I have heard of some that 
are selling their produce at farmers' markets, or they are 
selling them to restaurants. Do they fall under the Food Safety 
Inspection Act if they are doing that versus me contracting 
with you to grow carrots and vegetables like that? Does that 
disqualify them in that process not to be inspected, or follow 
the FSIS protocols?
    Mr. Almanza. So we work with FDA in the food inspection 
process. We don't have any involvement with the vegetables, and 
things of that nature. But the FSIA, obviously, will have an 
impact on what you are----
    Mr. Yoho. Well, how about if they are growing organic eggs 
and selling those at a farmers' market? Does that fall under 
the inspection process, or are they in violation if they don't?
    Mr. Almanza. Not ours, sir. We only do processed eggs, 
which are powdered eggs, liquid eggs, things----
    Mr. Yoho. Okay. And then, on the catfish, I remember when 
we were discussing the farm bill here, back in 2014. It was my 
first year here. The question came up with catfish from Asia, 
the Asian markets, and how few were inspected for antibiotic 
residues. It was, like, .01 percent, which is virtually none, 
but yet there was meat showing up that had chloramphenicol, and 
nitrofurans in it, and other type of substances that, number 
one, is carcinogenic. The other one is detrimental to the bone 
marrow. How much of that is being tested, and how reliable is 
that? As far as if you have 1,000 pounds of catfish fillets, 
how much of that is being inspected and sampled?
    Mr. Almanza. Yes. So we just started sampling the beginning 
of March, which is what started our regulatory authority over 
imported catfish. It is a little bit early to tell right now, 
but we believe that, as we start testing, and have more testing 
of the products that are coming in from the countries that are 
exporting to us, we should be able to have more data for you. I 
would say in a few months.
    Mr. Yoho. Okay. What I would like to see, the percentage 
that you are testing on those fillets coming in, is that 
comparable to what is being tested here? Or is 100 percent of 
the catfish here being tested?
    Mr. Almanza. It is 100 percent of the catfish that is being 
produced here is not being tested. We don't have the capacity 
to test 100 percent.
    Mr. Yoho. Okay. All right. Mr. Chairman, I yield back, and 
thank you for the second round. Thank you.
    The Chairman. Does anyone else on the Committee have 
another question? Well, since we have a couple of minutes, Al, 
would you walk us through a primer on how a country who 
currently is not exporting to the United States would go about 
the process of getting the equivalency standard, or whatever? 
You talked a little bit about that, but walk the Committee 
through how a new country would be admitted.
    Mr. Almanza. Sure. So, like, what typically happens is 
countries will see an opportunity, in fact, right now, like I 
say, we have 32 countries that are currently eligible to export 
to the United States. We also have 24 countries that are 
pending an initial equivalence determination. So what happens 
is these countries, or their central competent authority, which 
is basically their FSIS for another country, will write a 
letter to us and say, we are interested in an equivalency 
standard for our country. And we request them to fill out what 
we call an SRT, a Self-Reporting Tool, which is basically 
somewhere between 130, 140 questions that basically outline 
what it is that they do to meet our equivalency standards in 
the United States.
    What we do from that is we glean the information from the 
SRT, looking at their central competent authority, and how they 
regulate down. In other words, how do we know that the 
inspectors in the field are doing the expectations of their 
central competent authority, and their organizational 
structure? We look at that. We also look at their methodologies 
for testing for E. coli 0157:H7, if they are going to export 
beef productions. If they are going to export poultry products, 
they are testing for Salmonella and Campylobacter.
    And so it is pretty extensive, and so we go back and forth 
with them until they satisfy basically what our audit team will 
be looking at when we send them over there. And normally an 
audit team can be over there, depending on the number of plants 
that they put forward that will be exported to the United 
States, we can be over there anywhere from 2 weeks to a month, 
sometimes a little bit longer than that. And what we do while 
we are over there is we go into the establishments, look at 
their establishments, make sure that what they have identified 
in their self-reporting tool reflects what they have reported 
to us. And then we ask the inspectors, and the veterinarians 
that work in the plants, different questions about how they 
report deficiencies, and things of that nature, basically just 
looking for what it is that they do that makes them believe 
that their standards are equivalent to ours.
    The Chairman. And then, on an ongoing basis, do you have 
surprise or follow-up annual, biannual, every 3 years, some 
sort of system to go back and make sure they are still doing 
what they told us they would do to begin with?
    Mr. Almanza. Yes, sir. Usually the first year that they get 
approved, we will go back, for the first 3 years, annually, but 
we will always be reviewing either the self-reporting tool, and 
the data that they are putting in there. We review that all the 
time, but at least----
    The Chairman. So they file that self-reporting thing 
annually?
    Mr. Almanza. No, they have to keep it updated.
    The Chairman. Okay. So there is a system if they were to 
make a change to their process, they have a duty to tell you 
they have changed it?
    Mr. Almanza. Yes, sir.
    The Chairman. Okay. And then, without telling who, have you 
ever turned anybody down?
    Mr. Almanza. Have we?
    The Chairman. Turned a country down.
    Mr. Almanza. What we have done is not approve them, and 
they keep in the system to keep trying to get equivalency.
    The Chairman. Okay. Anybody else? Well, as I told the 
previous panel, you guys are the two pretty faces of the 
organizations you represent. Might have brought better faces. 
No, I am just kidding. I am confident that your team goes to 
work every day, good people, decent people, trying to do the 
exact best job they can to prevent illnesses, and do all the 
things that they are charged with doing. And so thank you for 
their efforts, on behalf of the Committee, and thank you both 
for getting ready to go.
    Mr. Derfler, it looked like you were ready to answer 
something over there, but thank you for coming in this 
afternoon as well. And we will be in recess for 10 minutes 
while we swap out panels.
    Mr. Almanza. Thank you, sir.
    The Chairman. Thank you gentlemen. I appreciate that.
    [Recess.]
    The Chairman. All right. I welcome our third panel for the 
afternoon. We have with us this afternoon the Under Secretary 
for Rural Development, Ms. Mitch. Did I--Mitch?
    Ms. Mensah. Mensah.
    The Chairman. Mensah.
    Ms. Mensah. Yes.
    The Chairman. There you go. Sorry about that. Joining her 
today is Brandon McBride, Administrator of Rural Utilities 
Service, Mr. Tony Hernandez, Rural Housing Service, and Mr. Sam 
Rikkers, who is Administrator for Rural Business--Cooperative 
Service. Under Secretary Mensah, 5 minutes.

     STATEMENT OF HON. LISA MENSAH, UNDER SECRETARY, RURAL 
                DEVELOPMENT, U.S. DEPARTMENT OF
         AGRICULTURE, WASHINGTON, D.C.; ACCOMPANIED BY
BRANDON McBRIDE, ADMINISTRATOR, RURAL UTILITIES SERVICE, USDA; 
  TONY HERNANDEZ, ADMINISTRATOR, RURAL HOUSING SERVICE, USDA; 
                       SAMUEL H. RIKKERS,
             ACTING ADMINISTRATOR, RURAL BUSINESS--
                   COOPERATIVE SERVICE, USDA

    Ms. Mensah. Thank you, Chairman Conaway, and Ranking 
Member----
    The Chairman. I will need you to use your microphone.
    Ms. Mensah. There it is. Thank you, Chairman Conaway, 
Ranking Member Peterson, and Members of the Committee. Thank 
you for the opportunity to be here this afternoon, and to 
discuss the Department of Agriculture's Rural Development 
mission area. And as you have already introduced, I am 
accompanied this morning by Rural Development Administrators 
Brandon McBride, Sam Rikkers, and Tony Hernandez.
    Rural Development, or RD, as we are known in our 
communities, we manage a loan portfolio of more than $212 
billion. We are organized into three agencies, Rural Utilities 
Service, Rural Business and Cooperative Service, and Rural 
Housing and Community Facilities. Our fundamental mission is to 
increase economic opportunity, and improve the quality of life 
for all rural citizens. Our investments support rural residents 
looking for affordable and safe housing, municipalities seeking 
water infrastructure in community facilities, and small rural 
businesses, co-ops, and ag producers who are looking to expand 
to new markets.
    RD investment capital spurs economic development, and the 
jobs that come with it. I appreciate the authorities and the 
resources that are provided to us by Congress to allow us to 
continue our work on behalf of rural America. Since becoming 
Under Secretary, I have visited many projects to see how rural 
America benefits from our investments. I have also met many of 
our dedicated field staff, who engage directly with local 
lenders and community partners to solve problems and explore 
options for economic development.
    RD continues to make investments in water, in electric, and 
broadband because they continue to be necessary for rural 
America to be competitive. Last summer, RD announced a loan and 
grant to the City of Baird, Texas to replace its wastewater 
treatment plant. This was just one of 39 projects in Texas, 
totaling over $161 million to build and improve water and 
wastewater infrastructure in rural communities across Texas 
last year. RD dollars have also assisted with families affected 
by the drought. Recently I had the pleasure of traveling with 
Representative Costa, where we visited with a Madeira, 
California family that had received a loan to drill a new well.
    RD contributes to economic growth. Since 2009 we created or 
saved more than 450,000 jobs, and helped 112,000 rural small 
businesses. There is tremendous opportunity to spur economic 
development in rural communities through renewable 
technologies. In Redwood Falls, Minnesota, farming implements 
dealer Welch Equipment received a Rural Energy for America 
Program, or REAP, grant to install a solar array that will 
provide nearly 88 percent of operational energy for that rural 
small business, saving them nearly $11,000 in annual energy 
costs. In Kerkhoven, Minnesota a local producer received a REAP 
grant for renewable energy at their pasture-raised livestock 
farm. This farm uses drug-free feed, and small family-owned 
processors, to raise and process its livestock in order to 
provide products from the pasture to the plate at local 
restaurants. Since 2009 RD has helped more than a million rural 
families to buy, repair, or refinance a home. In Fiscal Year 
2015, we did not leave $1 unspent in our program to provide 
direct mortgages to low- and very-low-income Americans. We 
understand the unique needs of rural residents, and we remain 
committed to serving them.
    Additionally, RD works with communities to improve the 
quality of life for rural residents. One example of this 
collaboration was in Georgia, where a Community Facilities 
grant provided equipment to help school districts in five rural 
counties promote STEM education. And this kind of investment 
linked universities to rural K-12 public schools to enhance 
opportunities for rural students. RD plays a key role in USDA's 
place-based efforts to ensure that our loan and grant programs 
are available and accessible, even in persistently poor areas. 
Our proactive approach identified and assisted areas of 
greatest needs in rural America, and I am committed to 
providing increased opportunities to allow everyone to share in 
the prosperity of a growing economy.
    I want to end today on our people. Every day nearly 5,000 
Rural Development professionals work to grow businesses, 
provide affordable rural housing, maintain and upgrade 
infrastructure and investments, and our staff live, and work, 
and raise their families in the communities they serve. They 
are smart, they are dedicated, and resourceful. And because 
Congress has supported this field-based delivery system, we 
have staff in every state, singularly focused on making rural 
communities stronger and more vibrant. Yet in recent years 
fewer personnel had to do more work, and we need to continue to 
invest in our people to ensure that they can provide quality 
services.
    Congress has provided significant resources to make a real 
impact in rural places, and I assure you that we are not only 
careful, we are always working to stretch the dollars. So thank 
you for your continued interest, and I am looking forward to 
the opportunity to testify before the Committee, and happy to 
answer your questions.
    [The prepared statement of Ms. Mensah follows:]

    Prepared Statement of Hon. Lisa Mensah, Under Secretary, Rural 
     Development, U.S. Department of Agriculture, Washington, D.C.
    Chairman Conaway, Ranking Member Peterson, and Members of the 
Committee, thank you for the opportunity to discuss the programs, 
successes and challenges of the Department of Agriculture's Rural 
Development mission area. I am accompanied this afternoon by Mr. 
Brandon McBride, Mr. Sam Rikkers, and Mr. Tony Hernandez, 
Administrators for Rural Development's Utilities, Business and 
Cooperative, and Housing Services, respectively.
    Rural Development's fundamental mission is to increase economic 
opportunity and improve the quality of life for all rural citizens. Our 
investments contribute to rural growth and support the needs of the 46 
million American citizens that provide the food, fiber, fuel, and 
durable goods the rest of the nation, and the world, depend upon.
    Since 2009, Rural Development has provided grants and loans to help 
grow the economy, create jobs and provide housing and opportunity for 
home ownership. Rural Development has helped approximately 112,000 
rural small businesses grow, creating or saving an estimated 450,000 
jobs; invested in more than 6,600 critical community projects including 
hospitals, libraries, schools, and public safety facilities; supported 
more than 3,000 multi-family housing developments; and helped more than 
1.1 million rural families buy, repair or refinance a home helping more 
than 141,000 rural Americans become homeowners in FY 2015 alone.
    Rural Development has also invested a total of $13.3 billion since 
FY 2009 in new or improved infrastructure in rural areas through 10,623 
water projects. These improvements helped nearly 18 million rural 
residents gain access to clean drinking water and better waste-water 
disposal. Rural Development staff provided grants and loans for water 
and waste-water projects to help safeguard the health of approximately 
15.7 million rural residents. Modernized electric service was delivered 
to more than 5.5 million subscribers and over 180,000 miles of electric 
lines were funded. We invested in new and improved broadband service to 
nearly 1.5 million rural residents, which expands access to state-of-
the-art health care, educational and cultural resources, and provides 
the opportunity for local businesses to compete in the global economy; 
helped modernize rural electric infrastructure for about 5.5 million 
rural residents and businesses.
    As this Committee well knows, the economic well-being of all 
Americans is inexorably tied to rural growth. We are proud to serve the 
needs of rural people and places to ensure that rural America continues 
to thrive and to drive the economy. I have had the benefit of visiting 
a number of projects throughout the country and am excited by the 
innovation and cutting edge technology in use and growing the rural 
economy.
    Our dedicated field staff in nearly 400 offices live in the areas 
they serve closely collaborating with those communities to engage 
directly with local lenders and partners to solve problems and explore 
options for sustainable economic development. Our work is designed to 
maximize taxpayer dollars, leveraging private-sector financing or 
providing a guarantee to private banks. Small businesses looking to 
expand into new markets and create jobs, municipalities seeking to 
lower energy and water costs and improve efficiency, and rural 
residents looking for safe, affordable housing are all well served by 
Rural Development.
    We are able to conduct this important work strengthening rural 
America through the authorities provided to USDA by Congress and the 
work of this Committee. The 2014 Farm Bill renewed our authority to 
strengthen our efforts on our core programs for rural America. I want 
to thank the Members of the Committee for your continued commitment to 
the well-being of rural America and for your support of Rural 
Development investments in towns and communities across the country.
The Rural Utilities Service--Investing in Infrastructure for a Modern 
        Rural America
    The Rural Utilities Service (RUS) has an 80 year history of funding 
basic infrastructure, providing the critical financial support for 
electric infrastructure, clean, safe water and wastewater services, and 
finally, bridge the digital divide with broadband service to help 
healthy rural communities grow and prosper. During 2015, RUS has 
provided over 5.5 million rural consumers with improved electric 
service, over 2.8 million rural households, businesses and community 
institutions with better access to telecommunications services, and 
over 18 million rural residents with improved water and wastewater 
services.
    For example, Rural Development provided over $22 million to assist 
the communities of Cameron, Maysville, and Stewartsville in northwest 
Missouri. Over the last 10 years these towns have struggled to provide 
their residents with water due to drought and aging water treatment 
facilities. These funds will be used to construct a 36 mile water line 
and related storage and pumping facilities. The system improvements 
will bring safe, clean, and abundant water to about 4,370 rural 
households and businesses.
    Overcoming geographic and demographic challenges to offer access to 
robust broadband service is difficult and among the reasons that less 
than 40 percent of those living in rural communities have high speed 
Internet service. In 2015, RUS awarded $280 million to improve 
telecommunications services--including broadband delivery, distance 
learning and telemedicine systems, expansion of rural 911 systems, and 
other telecommunications infrastructure--for 2.8 million rural 
customers. Since 2009, USDA has awarded $6.7 billion for nearly 550 
projects to improve telecommunications infrastructure in rural 
communities.
    In September 2015 the White House released a report submitted by 
USDA and the Department of Commerce on ways to continue to bring 
broadband to unserved areas. Work continues on those next steps of 
getting robust broadband service available to all who live in rural 
areas. As part of those efforts, many RD programs can be an important 
resource in this effort.
    Efforts such as the Community Connect grant program, provide 
broadband grants to better target last-mile funds to rural communities 
that are least likely to have broadband infrastructure needed for 
economic development. Rural Development also invests in Distance 
Learning and Telemedicine Programs (DLT) to provide innovative 
breakthroughs and increased medical care access for rural citizens.
Rural Business and Cooperative Services--A Force for Rural Jobs and 
        Revitalization
    USDA's Rural Business and Cooperative Service (RBS) continues to 
bring investments and jobs to rural areas that improve lives of rural 
Americans. In FY 2015, RBS helped more than 12,500 rural businesses 
through $1.5 billion in loans, loan guarantees, and grants. Since 2009, 
USDA has helped over 112,000 rural businesses start or expand 
operations with nearly $11 billion in investments.
    The Rural Economic Development Loan and Grant Program has made over 
600 awards totaling over $365 million assisting nearly 1,100 businesses 
and helping create or save over 31,000 jobs since 2009. In FY 2015, RBS 
made under this program 38 loans, totaling $38.6 million, and 33 
grants, totaling approximately $9.2 million. One example is a $2 
million loan to East Mississippi Electric Power Association to provide 
a loan to Winston Plywood & Veneer, LLC to purchase machinery and 
equipment needed for an $85 million plywood and veneer manufacturing 
facility to be located in Winston County, Mississippi, a consistent 
poverty/StrikeForce county. The project is expected to create 300 new 
jobs.
    The Rural Energy for America Program (REAP) has significantly 
contributed to doubling the number of farms using renewable energy 
production in the last 5 years. Since 2009, RBS renewable energy 
programs have made 11,649 awards to provide over $720 million in 
funding to agricultural producers and rural small businesses to 
strengthen rural economies. REAP is bringing down energy costs for 
rural small businesses and agriculture producers and making them more 
competitive in the global marketplace.
    In 2015, RBS awarded Wellons Farm, LLC, in Johnson County, North 
Carolina, a $4.3 million REAP loan guarantee to provide financing to 
install a 6.5 megawatt photo-voltaic solar array on the farm. Once the 
system is up and running, the solar panel system will generate enough 
energy to power 1,000 average sized homes per year.
    During FY 2015, RBS provided approximately $59 million in 
Cooperative Program grants to support over 4,000 projects in business, 
agriculture and health care sectors. Since 2009, RBS has helped more 
than 15,000 farmers, ranchers and businesses through approximately $224 
million in funding.
    Today, we are using lessons learned from our lengthy experience in 
rural America to help communities capitalize on emerging opportunities 
in the 21st Century economy. Consider our work in the rapidly expanding 
area of local and regional food systems. In FY 2015, RBS provided $88 
million to assist over 1,400 producers and businesses for local and 
regional food systems.
    One example is Buffalo Creek Beef, LLC of Lexington, VA, which 
received a $200,000 working capital Value-Added Producer Grant (VAPG) 
in FY 2015 to produce high-value beef utilizing a unique processing and 
finishing method that results in a hand-raised, all natural product. 
This family-owned operation concentrates on local markets and will use 
grant funds to diversify their product line to include a wider variety 
of raw and ready-to-eat products.
Rural Housing Services--Anchoring Communities with Homes and Essential 
        Facilities
    A special point of pride for Rural Development is our housing 
programs. The Rural Housing Service and Community Facilities (RHS and 
CF) make critical loans and grants to support rural residents and the 
communities in which they live. Congress has defined for us a 
tremendous set of housing and community development programs to ensure 
that rural families have access to safe, affordable homes and thriving 
communities.
    Since 2009, Rural Development has helped more than 1.1 million 
rural families buy, refinance and maintain homes with $137.5 billion in 
RHS investments. During FY 2015, our Rural Development housing programs 
provided $19.5 billion to help more than 141,300 families with modest 
incomes buy, finance, or repair their homes. These programs mean that 
low and moderate income borrowers are now on the journey to 
homeownership, which will help build wealth and security for rural 
families. We offer one of the best home mortgages in the United States 
and boast a low default rate. Additionally, we left no dollar unused in 
our [section] 502 direct mortgage program and we plan to do this again 
in 2016. We understand how vital this core program is to rural America.
    Another significant part of our housing program provides rental 
assistance to low-income people who live in USDA-financed multi-family 
housing. During FY 2015, RHS helped 10,840 families build or renovate 
about 450 multi-family housing rural apartment complexes through $277.2 
million in funding.
    We have worked hard to address recent challenges of providing 
sustainable rental assistance to those who rely on this program, and I 
am optimistic that these efforts and the FY 2017 investment build a 
stronger program to better serve rural residents.
    RHS continues to make tremendous gains to its systems and 
processes--and recently took on a decade of needed upgrades. As of this 
spring, our guaranteed Single Family Housing loan program is now 
paperless. Not only are we saving 37,500 reams of paper every year, 
we've lowered postage costs, saved printer ink, and are moving loan 
guarantees out the door more efficiently, making our programs easier 
for our customers to use.
    USDA Rural Development, through its Community Facilities programs, 
has taken a leadership role in facilitating and strengthening public 
private partnerships to ensure that rural residents have the 
opportunity for a brighter future with good schools, quality health 
care and other critical community infrastructure needs. Since 2009, 
this program has improved the quality of life for rural residents by 
investing $9.6 billion in more than 9,000 community infrastructure 
projects.
    School districts in rural Clay, Colquitt, Quitman, Randolph, and 
Sumter counties are partnering with the Georgia Tech Research Institute 
(GTRI) to build STEM distance learning infrastructure for STEM 
education and outreach. USDA Rural Development provided a $99,900 
Community Facilities grant in 2015 to help purchase teleconferencing 
and online access equipment to facilitate STEM program outreach. Since 
2013, USDA Rural Development has provided ten grants totaling almost 
$502,000 to educational institutions to support STEM education in rural 
Georgia and give local students a competitive edge in the job market.
Addressing the Challenge of Rural Poverty
    Under Secretary Vilsack's leadership, there has been a push to 
transform rural America from a primarily agri-based economy to one that 
makes, creates and innovates. A focus on taking advantage of the 
emerging bioeconomy, including biomanufacturing and advanced biofuels, 
local and regional food systems, broadband, and telemedicine has not 
only supported the most productive agricultural sector in the world, 
but also assisted rural communities to be places where all businesses 
have prospered and created jobs. I am committed to continue this work 
of providing increased opportunities to allow everyone to share in the 
prosperity of the growing economy.
    Rural Development plays a key role in USDA's place-based efforts 
making sure that the programs that help alleviate the impact of poverty 
are available and accessible even in the poorest and persistently poor 
rural communities. Over the course of the last several years, we have 
been proactive in identifying and assisting areas of greatest need in 
rural America. Earlier this year, the StrikeForce Initiative added four 
additional states to include a total of 970 counties, parishes, 
boroughs, and census areas in 25 states and Puerto Rico. We know that 
place-based efforts work and we have seen StrikeForce bring economic 
opportunity directly to rural Americans where they live and help rural 
communities leverage their assets. In 2015, in StrikeForce target 
areas, USDA partnered with more than 1,000 organizations to support 
56,600 investments that directed more than $7.5 billion to create jobs, 
build homes, feed kids, assist farmers and conserve natural resources 
in some of the nation's most economically challenged areas. Since the 
initiative was launched in 2010, USDA has invested more than $23 
billion in high-poverty areas, providing a pathway to success and 
expanding the middle class.
    Across the country poverty rates are in decline. Still, in 2014, 
roughly 2.5 million children in rural areas were poor and approximately 
1.2 million children lived in rural families with cash incomes below 
\1/2\ of the poverty line. Rural and tribal communities face distinct 
challenges to combating rural poverty, including limited access to 
critical services, fewer job prospects, and in some places, relative 
lack of institutional capacity. The budget requests $20 million in 
grants to rural communities to implement two-generation strategies that 
seek to intentionally align high-quality workforce development programs 
with high-quality child-focused programs. In addition, the budget 
requests $5 million to support data systems alignment across several 
USDA and HHS programs to gain efficiencies and maximize impact of 
existing programs.
    Throughout my travels to rural communities, it is clear that 
addressing the challenge of outmigration and giving our next generation 
of rural Americans opportunities to stay and use their skills to earn a 
living in their communities was extremely important to local community 
leaders, family members and businesses. I know this can be done.
Investing in the People to Make Rural Development Investments Possible
    All that Rural Development does is possible because of the people 
who do this work. Every day, 5,000 Rural Development professionals work 
to help rural business, provide affordable rural housing, and maintain 
and upgrade infrastructure investments. Because Congress has supported 
our field based delivery structure, Rural Development has staff in 
every state to make and service the loans and grants that help our 
rural communities become stronger and more vibrant.
    Over the course of my career, in both the philanthropic foundations 
and the private-sector financial industry, I have had the opportunity 
to work with great people. In my 14 months in this position, I could 
not be more impressed with the men and women of USDA Rural Development. 
They are smart, dedicated and resourceful. Fewer personnel have done 
more work. Our field based staff works, lives and raises their families 
in the communities they serve. They deserve our praise and support for 
the work they do.
    This work modernizes rural America; it connects citizens to 
broadband; it builds a cleaner future through renewable power and 
energy efficiency; it reduces child poverty by investing in businesses; 
it helps manage the growing healthcare needs of an aging population; it 
builds rural places where young people want to stay, start families, 
build businesses and create futures.
    I will focus on increasing investments in our people to continue to 
provide quality service in both our national office and in the field, 
where staff are part of our rural communities. There is a need for new 
employees to fill mission-critical skill shortages, particularly 
important since Rural Development's loan portfolio has grown to more 
than $212 billion.
    Congress has provided significant resources to make a real impact 
in rural places. Yet the opportunities and the challenges of rural 
America make it clear to all of us that taxpayer dollars will continue 
to deliver stronger economies in rural communities. There is something 
extraordinary about rural America's ability to survive and thrive. It 
is a place where values count and where stewardship is a meaningful 
obligation.
    Thank you for your continued interest and support of Rural 
Development programs. Together, we can coordinate and leverage our 
resources to invest in our country's future and turn Rural 
Development's transactional work into transformational work.
    I appreciate the opportunity to testify before this House 
Agriculture Committee. At this time, I am happy to answer your 
questions. Thank you.

    The Chairman. Thank you, ma'am. I appreciate you and your 
team being here today. I will recognize myself for 5 minutes.
    On your Community Facilities grants versus direct lending 
programs, you zeroed out again this year the loan guarantees 
versus fully funding the direct lending. Does that tell me, as 
a former banker, that there is less credit risk in a direct 
loan than there is in a guaranteed loan?
    Ms. Mensah. There is less----
    The Chairman. And why is that?
    Ms. Mensah.--and we have a lower subsidy rate.
    The Chairman. Why wouldn't the banks make those direct 
loans instead of the government?
    Ms. Mensah. Well, the subsidy rate is composed of many 
things, but right now it is a difference in how we charge for 
those loans. And this direct portfolio--you have given us such 
an authority that we feel we have huge ability to use that 
portfolio, and we are using it very, very well.
    I want to bring on our Administrator too, Tony Hernandez, 
to just say a word about the differences in the guaranteed and 
the direct.
    Mr. Hernandez. Thank you very much. Mr. Chairman, the 
direct program is a very outstanding program. It is $2.2 
billion that handles both public facilities, which is health 
care, which is about 45 percent. But most every loan that we do 
with--is shared interest and shared lending, so we don't do the 
whole project. Somebody else is doing part of the lending.
    The Chairman. Do you generate the loan, and they will 
participate with the local banker, or does the local banker 
come to you for the participations?
    Mr. Hernandez. Both. We generate the--loan, so we have a 
direct loan that we do, but usually there is other type of 
financing. Most of the time it is tax credits or some bonds 
that are coming into the financing as well. But we do direct 
lending.
    The Chairman. Okay, you said you participate, but you don't 
participate directly. With the way that term is traditionally 
used in banking you don't participate with other banks?
    Ms. Mensah. We don't farm it out, and share----
    Mr. Hernandez. We do not farm it out.
    Ms. Mensah.--no.
    Mr. Hernandez. We have a guarantee program that we have 
zeroed out, but in the past we have used guaranteed lending.
    The Chairman. Okay. I am still walking myself through this. 
The bad news is, I have had some experience in this area, so I 
am having a hard time understanding why direct loans are less 
credit risky than guaranteed loans. Why would you guarantee 
something to somebody else? In the guaranteed lending, does the 
person you guarantee, do they bear all of the risk?
    Mr. Hernandez. No. When we work with other lenders, lenders 
who want to do the short-term financing. We tend to do long-
term financing, financing up to 40 years. So what we are trying 
to do is to reduce the cost to access the capital, work with 
other type of financing mechanisms, which is usually a bond or 
tax credits, do market tax credits, other ways that other 
financial institutions are participating. But we do a direct 
lending that makes the deal possible.
    The Chairman. So I really shouldn't compare these 
portfolios because they really aren't comparable lending 
portfolios? The guarantee is for shorter-term----
    Mr. Hernandez. Shorter-term.
    The Chairman.--and then your direct lending is for longer-
term. What is the default rate on your direct lending?
    Mr. Hernandez. We are under two percent, sir.
    The Chairman. And how much--two percent of $2.5 billion?
    Mr. Hernandez. About two percent.
    The Chairman. Is that annually?
    Mr. Hernandez. That is annually.
    The Chairman. All right. How does that show up on approps?
    Mr. Hernandez. On our appropriations?
    The Chairman. Yes.
    Mr. Hernandez. It is----
    The Chairman. Well, I mean, how does that get scored so to 
speak?
    Ms. Mensah. Yes. You know, what, we should----
    The Chairman. Excuse me a second. Mr. Rouzer, could you 
move one way or the other, buddy? There we go. Thank you.
    Ms. Mensah. This is a very big room.
    The Chairman. You have Tony and I----
    Mr. Rouzer. What is it with you and Rodney Davis?
    The Chairman. Well, thank you, buddy.
    Ms. Mensah. I think what we should do is have a more 
precise discussion, or maybe we can give you a longer briefing. 
What I reflected was the negative subsidy rate, which is 
causing our direct program to be such a lower--it was incorrect 
of me to say that it has lower risk. I think the portfolios are 
comparable, but with a negative subsidy rate, which is driven 
by a variety of things. Loss experience is one of them, but it 
is not the only portion of that----
    The Chairman. All right. Negative subsidy rate.
    Ms. Mensah. Yes, correct.
    The Chairman. That would be income earned----
    Ms. Mensah. Negative rate.
    The Chairman.--on the portfolio?
    Ms. Mensah. Excuse me?
    The Chairman. I don't have a clue what that means, but is 
that income earned on the portfolio?
    Ms. Mensah. I know. As a former banker, this was the first 
time I have heard of this too, coming into this job. But the 
way we price our loans is really with this subsidy rate, and 
when it is negative like this, that is a combination of 
wonderful performance on the loans, and also the income we make 
on those loans.
    The Chairman. Got it. So, real quick, $10,000 loan, you are 
going to charge me six percent interest rate, 3 year 
amortization. What is a negative subsidy?
    Ms. Mensah. It just means that, for the government's books, 
we know that when we make that loan, we are actually going to 
make more money on it. We don't cost budget authority to make 
that loan. So when we are back on that loan----
    The Chairman. All right. Is that the same thing as 
borrowing money at three percent, and I am loaning it to you at 
six?
    Ms. Mensah. I think that might be a way to say--I have to 
think about that. If you are borrowing at six----
    The Chairman. No, I am lending at six. I am borrowing----
    Ms. Mensah. Lending at six and borrowing at three. Meaning 
there is a three percent spread?
    The Chairman. Right. Is that the negative subsidy?
    Ms. Mensah. That is the----
    The Chairman. I am not trying to be argumentative. I just 
don't----
    Ms. Mensah. No, I know. The best way I have learned the 
subsidy rate, and I have my budget team behind me, and I am 
happy to speak longer, it is really the cost for us to make the 
loan. And when it is negative, it means we can do so much more, 
which is why we have really leaned into this program, and 
have----
    The Chairman. Okay. So if it is negative, you can do an 
infinite amount?
    Ms. Mensah. Well----
    The Chairman. No, never mind. Thank you, we will get back 
with you on that.
    Ms. Mensah. No, it is a great program.
    The Chairman. My vaunted team will explain the term.
    Ms. Mensah. Thank you. And I am happy to----
    The Chairman. With that, I now recognize, Mr. Kelly, 5 
minutes.
    Mr. Kelly. Thank you, Mr. Chairman, and thank you, Under 
Secretary and Administrators, for being here. My first question 
is to Mr. McBride, and it deals with rural broadband. 
Administrator McBride, I understand there is about $10 million 
available in the Community Connect Grant Program with no 
backlog. There is about $50 million available in the broadband 
loan program, but it currently has nine applications awaiting 
action, which total about $80 million. The President's Fiscal 
Year 2017 budget proposed nearly quadrupling the Community 
Connect Grant Program from $10.3 million to $40 million, saying 
the program is oversubscribed, while proposing zero dollars for 
the Broadband Loan Program, saying in rural areas it is often 
difficult to make business case to support loan funding, and 
therefore granting assistance more appropriate.
    When considering the various technologies that are 
interested in receiving our U.S. financing and Universal 
Service Fund support to provide mobile and fiber-based 
broadband in rural areas, how should we balance the need for 
competition in providing solutions for the costs of rural 
deployment with the Communications Act standard of reasonably 
comparable networks in urban and rural areas?
    Mr. McBride. Thank you for the question, Congressman. 
Actually, all of our telecom programs tend to be 
oversubscribed. Last year, with the $10 million we had in 
Community Connect, we were able to fund I believe five or six 
projects. We had more than 60 applications. With the budget 
request, considering the difficult budget environment that we 
know that we are in, we put the--we chose to direct the funding 
towards the Community Connect Program, which is targeted to 
communities that do not have service.
    The farm bill loan program which you referenced, that we 
are processing applications right now, that is a great program, 
and we are proud of the work that it does there. But in this 
environment, we chose to recommend putting the resources that 
we do have towards unserved communities.
    Mr. Kelly. And my next question is to Administrator 
Hernandez. And--Mr. Newhouse of Washington was here earlier, 
and I don't know if he is going to be back, so he asked me to 
ask you this question. It is on the Farm Housing Program. As 
you are aware, the Section 514 Loan Program provides financing 
to buy, build, improve, or repair housing for farm laborers. 
The range of eligible tenants was expanded in the 2008 Farm 
Bill, but legally admitted temporary laborers, such as H-2A 
workers, remain ineligible for Section 514. Obviously, for 
farmers, it would be helpful if they could focus more on 
farming, and less on housing tenant criteria for their farm 
workers. Can you tell me, do you believe the USDA currently has 
the authority to alter the terms of tenant eligibility, or do 
you think that would require legislative activity?
    Mr. Hernandez. Thank you for the question, Congressman 
Kelly. Congress has given us only statutory authority to 
provide housing for farm workers, but not H-2A residents. We 
cannot do that.
    Mr. Kelly. And, Mr. Chairman, I yield back.
    The Chairman. The gentleman yields back. Mr. Yoho, 5 
minutes.
    Mr. Yoho. Thank you, Mr. Chairman. Secretary Mensah--is 
that right?
    Ms. Mensah. You got it.
    Mr. Yoho. All right. You said your portfolio was $2.2 
billion, and you had a failure rate of less than two percent on 
the direct loans. What about the overall lending of the $2.2 
billion----
    Ms. Mensah. That two percent is an overall.
    Mr. Yoho. That is the overall? And then----
    Ms. Mensah. That is an overall.
    Mr. Yoho.--direct loans are comparable to two percent?
    Ms. Mensah. Yes.
    Mr. Yoho. Or less than two percent? And I want to kind of 
clarify that negative subsidy, because I too am confused about 
that. Tell me if this is right. A negative subsidy implies the 
performance of the loan returns more than the expense or cost 
of the subsidies, therefore it is positive, right? The 
government is making money off----
    Ms. Mensah. The government is making----
    Mr. Yoho. All right. That is good.
    Ms. Mensah. Yes. I am sorry.
    Mr. Yoho. We have that cleared out.
    Ms. Mensah. Yes.
    Mr. Yoho. Administer McBride, at the Ag Appropriations 
hearing on Tuesday, you said the demand for the Broadband Loan 
Program was double the program level. Why would you zero out 
this program, and nearly quadruple the Community Connect grant 
program instead?
    Mr. McBride. Thank you for the question. Again, 
understanding the budget environment, and looking at what we 
wanted to propose for Fiscal Year 2017, we chose to recommend 
directing the funding that we thought might be available to 
communities that do not have service at this time, and 
Community Connect serves communities that do not have broadband 
service currently.
    Mr. Yoho. Okay. Let us see. A follow-up question: In a loan 
situation, the government is paid back, with interest, correct? 
That is not the case with the grants. In this time of budgetary 
constraints, do the grants really do the most good, in your 
opinions?
    Mr. McBride. I think that there is a lot of need for rural 
broadband expansion, so we were just looking at the various 
tools that we have. We are proud of all the programs that we 
are fortunate to administer, and, again, we were looking at 
targeting resources to communities that do not have service.
    Mr. Yoho. And I appreciate the help you have given us, 
because we have sat in our office and gone over trying to get 
rural broadband out to an area that talked about wanting it 
more than they wanted to put the effort behind. But we will be 
back with you on that.
    Mr. McBride. We are happy to help whenever they are ready.
    Mr. Yoho. I know you are, and it was funny, because you 
heard people complaining about it. Then, when you sit at the 
table, they are like, well we really don't want it that bad.
    Mr. Hernandez, again, I wanted to ask you, the cost of 
administering the direct loans that you do versus the 
guaranteed loans, the guaranteed loans are going through 
another lending entity that you are guaranteeing that. And the 
question I asked before is, would it not be--or the cost of 
administering in the USDA--they would have to have their own 
banking system, collecting the funds, and doing all the 
accounting. And as most business entities, the cost of the 
labor is the most expensive part. We had a hearing today where 
80 percent of a billion dollar budget went to the employees. In 
your situation, what is the cost of administering a loan for 
through the USDA for the U.S. Government?
    Mr. Hernandez. What is the cost for processing--this is a 
single----
    Mr. Yoho. Well, just to run the direct loan program, as far 
as labor, how many people do you have, and expense of that. 
Because where I am going is, would it be better to have you 
guarantee the direct loans, and stand behind them as the USDA, 
and let a private entity do them, and be the bank----
    Mr. Hernandez. That is a great question, Congressman. As 
you and I were talking before, the reason we do the guaranteed 
loan is that lenders are willing to participate. We actually 
welcome and encourage the private-sector to provide single 
family loans. For some of our customers, lenders will not lend 
to those folks, even though they are creditworthy, because they 
are more challenging customers. And so that is why, in the 
wisdom of Congress, you set up what we call our retail process, 
so we have offices in every state, so a citizen can come and 
get a loan that would not be approved by a private-sector 
lender.
    Mr. Yoho. I realize that, and I appreciate the compliment 
of the wisdom of Congress. I appreciate that. But, again, if 
the government is going to stand behind a direct loan, could 
you not stand behind that in a private entity if it were to 
fail, that you are going to pick up that loan with the same 
guarantee, and move the overhead of the cost of that program of 
administering it in the USDA, and let the private-sector take 
it?
    Mr. Hernandez. That is a good question. We have worked with 
the private-sector, and they have told us they will not do 
certain loans. That is why we do about 140,000 loans that the 
private-sector does that we guarantee, and we only do about 
7,000 loans that we do, so it is a very small amount. But 
lenders have told us they will not do those loans, and so this 
is a nice partnership between the government and the private-
sector to increase home ownership jointly. And that is the role 
of government, to go places where the private-sector does not 
go, and that is what we are doing.
    Mr. Yoho. I appreciate you clarifying that, bringing that 
out. Thank you. I yield back.
    The Chairman. The gentleman yields back. Mr. Scott, 5 
minutes.
    Mr. Austin Scott of Georgia. Thank you, Mr. Chairman. Ms. 
Mensah, first of all, think you for coming to Tifton, and Worth 
County, and the other counties that we got to go to together in 
October. I appreciate the opportunity to speak with you. And, 
as I mentioned when you were there, one of the challenges we 
have in rural Georgia is that many times we only have one or 
two major employers, and many times they are family owned, or 
ag related, and certain tax issues that can have a tremendous 
impact on the whole community. Federal and state tax is an 
example, is one that I appreciate the opportunity to discuss 
with you, and the impact that that has in those areas where you 
have only one privately held business.
    But one of the things that I would like to ask you about is 
the public-private partnerships, and how the USDA is supporting 
working in partnership with the private-sector regarding rural 
infrastructure, and projects that get back to kind of the basic 
necessities, whether it be water, sewer, or other 
infrastructure needs?
    Ms. Mensah. Thank you, Congressman Scott. I had a wonderful 
visit in Georgia. And what you have put your finger on is a key 
interest of this agency, of this Secretary, and of this 
President. We understand, as the Administrator just spoke to, 
that we can't do all the lending. All the infrastructure needs 
exceed even the powerful resources, and this powerful book of 
business, that I have the pleasure to lead. And so we have been 
very interested in expanding our portfolio with private 
partners. One way we do that is in our guarantee programs. Even 
sometimes when we are making a direct investment in our 
Community Facilities, as Administrator Hernandez spoke, private 
investors are the initial construction financier.
    But as you speak to infrastructure, we know that the needs 
exceed our authorities, and even our specific ways we can work. 
You have authorized us in water, for instance, to work only in 
communities up to 10,000 people. And we know that there are 
other needs. So this Administration seeks to partner. We have 
had an initiative looking at ways we can increase the 
partnership. There was a conference where partners, such as 
CoBank, made a commitment to increase lending to co-lend with 
us where possible. So we have been proud of that work. We will 
continue to look for partnerships, and we thank you for the 
authorities to work that way.
    Mr. Austin Scott of Georgia. One of the concerns that I 
have is that the President's budget, whenever he submits it, it 
certainly appears, if you look at the numbers, that he seems to 
prefer the direct lending model to the guaranteed lending 
model. Certainly, it seems to me that the guaranteed lending 
model is more efficient, allows us to use our resources more 
efficiently. Is there a reason that we continue to see the 
press from the President, where does the bias for the direct 
versus the guaranteed lending come from, I guess is my 
question.
    Ms. Mensah. Well, I would say it is wonderful to have both 
tools, and during this Administration the expansion of the 
guaranteed program, particularly in our housing, has been 
tremendous. The current authority we are asking for, $24 
billion in guaranteed lending, it dominates our portfolio, but 
we do have a preference to be in both tools. And in part it is 
exactly as the Administrator spoke to, we can't reach the 
markets just with our guarantee, so there is a preference to 
hold on hard to our ability to directly lend. You won't see the 
kind of vibrant rural America if we step aside and only do it 
through a guarantee.
    I think one thing that is missed often is the tenor of our 
loans. A 40 year exposure is rare in the marketplace, and we 
have that privilege. We make those choices well, and we have 
something else that, as banking has compressed, we have an 
ability to work close to our local partners, close to 
communities.
    Mr. Austin Scott of Georgia. Ma'am, I apologize, I am down 
to about 30 seconds----
    Ms. Mensah. Sorry.
    Mr. Austin Scott of Georgia.--but you mentioned the total 
volume of the loans. What is the Department doing to monitor 
those loans, and to make sure that they are in good standing, 
and ensure that the taxpayers don't take losses on them?
    Ms. Mensah. Yes. Every piece of our agency owns its own 
risk. We have extensive risk monitoring. We have extensive 
review of loans. And that is why I believe we keep a very low 
default rate overall in our portfolio. The taxpayer would be 
proud.
    Mr. Austin Scott of Georgia. Thank you, Mr. Chairman. I 
yield the 2 seconds back.
    The Chairman. The gentleman yields back. Mr. Goodlatte.
    Mr. Goodlatte. Mr. Chairman, thank you very much. I 
appreciate this panel, and their contribution, but I don't have 
any questions.
    The Chairman. The gentleman yields back. Mr. Thompson, 5 
minutes.
    Mr. Thompson. Madam Secretary, thank you. I am over here. 
Thank you----
    Ms. Mensah. Sorry.
    Mr. Thompson. That is all right. Now, thank you so much for 
being here, for your leadership, and thank you for your staff. 
A few months back I hosted, for lack of a better name--it was a 
Rural Development town hall, and one of your very dedicated, 
and very competent, staff, Gary Reed, came in, and between the 
two of us we had invited in--and we had township supervisors, 
and we had people who work in health care, and when you have a 
cross-section of the rural communities within that part of the 
quarter of Pennsylvania I represent. Kind of one stop shopping 
for information.
    Ms. Mensah. Yes.
    Mr. Thompson. And it was very, very helpful, and I would 
certainly commend that the--or suggest that to my colleagues. A 
lot of folks there who just didn't know what was available, and 
I thought it was also a very efficient way to get information 
out to them. And, in fact, it would--it all came about in the--
in my introducing Mr. Reed, and sharing my perspective and 
experiences with Rural Development. I talked about how my staff 
had been working with a mental health provider. Significant 
need in all of America, but certainly in rural America as well, 
where our access issues are compounded by distance.
    And in this particular organization, they were--this 
nonprofit was--wanted to--knew they needed to do something. But 
I will--honestly, they went to the website, and they looked at 
the application process, and--kind of scared them away. And, 
thankfully, we convinced them to sit down with the local Rural 
Development person. And after 60 minutes at the end of the--end 
of that meeting, they came away with a ribbon cutting date. 
Yes. It was----
    Ms. Mensah. Wonderful.
    Mr. Thompson.--pretty impressive, and it was obvious to 
myself, my staff, at that point where we needed to work with 
you to get those connections made. A couple real quick 
questions. One is just under biofuels. Are any of the 
refineries that are funded through USDA energy programs 
producing advanced biofuels, I guess what I would call second 
generation biofuels, on a commercial scale, and what other 
products are they producing?
    Ms. Mensah. Thank you for your question, and I am going to 
pull in Administrator Rikkers on this. We are excited by the 
expanded authorities of the 2014 Farm Bill on advanced 
biofuels, and we are seeing some of our first applications, and 
our first--and are moving toward an expanded portfolio. But I 
will ask Sam Rikkers to say a few words about the current 
portfolio.
    Mr. Rikkers. Thank you, Congressman. Our current portfolio 
has--of the section 9003 program--let me just, at the very 
outset, thank this Committee for its investment in the 2014 
Farm Bill in that program, but also in its direction to expand 
the program beyond just advanced biofuels. It is now expanded, 
as of last year, to the renewable chemicals and biobased 
product manufacturing facilities. And so we see great promise 
in that. We have seen incredible interest from new applicants. 
We have already started--these are complex projects, but it 
will be better for the larger bioeconomy and rural communities.
    With respect to your question about the biofuel--the 
advanced biofuel facilities that the program has already 
funded, we have two projects. INEOS is one, and Sapphire, which 
is another, which are producing advanced biofuels. And we look 
forward, with the new direction that Congress gave, that we 
have followed up on, for that to increase, going forward.
    Mr. Thompson. Thank you. Mr. McBride, I just want to see--
the Administration's Clean Power Plan that is currently been 
stayed by the courts, but I have significant concerns, should 
they go forward, looking at the portfolio that our electricity 
providers use, and relying on a diverse portfolio, and 
certainly a lot of fossil fuels for the base load. I really 
think it is a misguided rule, if it were to go into effect. How 
would this impact the electric loan portfolio, given the 
significant dependence on fossil fuels for the base load at 
this point?
    Mr. McBride. If the Clean Power Plan does go forward, there 
is still some things to be worked out between the states and 
EPA, if it is implemented. With regard to your question about 
our loan portfolio, we have about $7 billion tied to coal 
assets in our portfolio. We talk to our borrowers constantly, 
and believe that we have authority and the ability to work with 
them if they need to come into compliance with the Clean Power 
Plan.
    Mr. Thompson. Well, let me just close here--I want to say, 
I have more confidence with those folks' ability to work with 
you than I do the EPA. Thank you.
    The Chairman. The gentleman yields back. Mr. LaMalfa, 5 
minutes.
    Mr. LaMalfa. Thank you, Mr. Chairman. First of all, to 
Under Secretary Mensah, we wanted to say thank you for your 
help in a rural loan program that helped a hospital up in 
northeastern California, Mayers Memorial, to secure a loan that 
was very, very important for them. Long time coming, and helped 
them get over the line, especially with California's very 
burdensome earthquake mandates that are still in place, even in 
areas where there are no earthquakes. So that was a Godsend for 
them, so we appreciate the help on making that----
    Ms. Mensah. Good.
    Mr. LaMalfa.--getting that over the line for those folks up 
there. So thank you. Just following up a little more on the 
broadband, I am sorry I didn't get to hear the whole--for the 
whole Committee, with everything going on here today, but rural 
broadband, is very important for folks like Mayers, and 
telemedicine, and a lot of the other technology to keep rural 
America hooked up.
    We want to make sure that the advanced broadband networks 
that are coming into place that can be--at an affordable price 
are accessible to rural areas, as well as urban. Again, the 
technology is leaps and bounds for, as I mentioned, 
telemedicine, others. USDA has done a lot to invest in this, 
and I appreciate that too. You mentioned in written testimony 
the different ways you are addressing it, since the last few 
years--$6.7 billion in awards to improve the technology in 
rural communities, and about $280 million last year.
    Now, you still have gaps where there are many rural 
residents who have zero broadband access, as opposed to, well, 
juxtaposing that there are other areas that have some that are 
being upgraded. So my question is, are our U.S. folks seeing 
their dollars on those areas who don't have any options at this 
moment, rather than working to speed up Internet, what might be 
seen as duplicative efforts on areas that are already 
oversubscribed? How are we working to fill in that zero gap, or 
upgrading areas that are oversubscribed?
    Ms. Mensah. Right. Congressman, you ask a very important 
question, and I can say assertively that we do prioritize 
unserved areas. One of the reasons why we asked for an increase 
in grant funds is to reach those areas in greatest need. When I 
was in California, the home of Silicon Valley, I was surprised 
to hear even in California we have big stretches without 
adequate high speed broadband, and those remain our priorities.
    Congress provided us great direction in the farm bill to 
ensure that our resources go to unserved areas, and so we 
follow that language in the farm bill, and you will see we have 
to require that our applicants have 15 percent of the 
population that is unserved. So you will see that as our 
priority, and that remains our priority.
    Mr. LaMalfa. Okay. And I know there can't be a one-size-
fits-all due to the geography involved in everything, but I 
appreciate that pledge and effort to fill in all the gaps. What 
more can we do to ensure that the recipients of that would have 
all the necessary tools in order to realize the full 
capability? Is there more we can be doing in that area so that 
those that get that can actually take advantage of it too?
    Ms. Mensah. I think one of the things that makes RD special 
is the people that are on the ground. Congressman Thompson 
commended us for being able to work people-to-people, hand-in-
hand. We have engineers, we have field staff, who can work 
right with the communities. And that is one way that we are 
advantaged as an agency, so it is one of the reasons I have 
such belief in our people. That is how we operate this program.
    Mr. LaMalfa. Okay. Well, again, I appreciate your gracious 
efforts on this, and for being here today to help with these, 
and anything we can do in the future to make sure it is indeed 
a broad broadband.
    Ms. Mensah. We may have to borrow that line.
    Mr. LaMalfa. Well----
    Ms. Mensah. Thank you.
    Mr. LaMalfa. Okay. Well, thank you. Mr. Chairman, I will 
yield back.
    The Chairman. The gentleman yields back. Mrs. Hartzler, 5 
minutes.
    Mrs. Hartzler. Thank you, Mr. Chairman. I wanted to follow 
up on the same line of questioning as my colleague here, as we 
are all very supportive of rural broadband. Just a couple 
things I am not sure have been touched on yet, is that--my 
constituents have expressed support for the FCC standard for 
broadband, and my constituents believe they shouldn't settle 
for slower download/upload speeds as compared to what is 
available in metropolitan areas. So how is the USDA working 
with the FCC to address broadband and rural communications 
issues?
    Ms. Mensah. Thank you, Congresswoman. That is a constant 
effort of ours, to harmonize efforts, but I will ask 
Administrator Rikkers to say a little more detail on the speed 
question that you----
    Mrs. Hartzler. Okay.
    Ms. Mensah.--that you posed. I am sorry, not Mr. Rikkers. I 
am going to make--he would be surprised. Mr. McBride.
    Mrs. Hartzler. Yes.
    Mr. McBride. Thank you for the question. With regard to the 
speed, in the 2014 Farm Bill Congress provided us with some 
direction to provide at least 4.1 speed. That is the minimum. 
Most of the applications that we received for the farm bill 
loan program exceed that. So most of the projects that we 
consider will have a higher speed. It may not be the 25.3 that 
the FCC has put forward, but it will be higher than the 4.1.
    With regard to your other question, about working with the 
FCC, certainly we have communication with them. The bigger 
effort from this Administration has been the Broadband 
Opportunity Council, which was a directive from President Obama 
for all of the agencies to look at their current authorities 
and resources to see how we could partner together to leverage 
each other's programs and resources to expand access.
    Mrs. Hartzler. Great. Representative LaMalfa mentioned 
telemedicine, and I wanted to follow up on that too, because 
that is very exciting in my district as well. I have 24 
counties, and visit--try to visit every hospital, and many of 
them are seeing the potential of that, as well as--I was at my 
VA in Columbia earlier, and we were--last week, and we were 
also talking about that, so it is of growing interest. But 
broadband is the linchpin, being able to do that. So how is the 
USDA working with the health care industry to advance 
telemedicine?
    Ms. Mensah. Well, I am so proud of our current budget, 
which really expands our distance learning and telemedicine 
grants. And those are grants, so it is rare, precious dollars 
that are used by rural communities to expand equipment, and 
that becomes one of our huge programs. We have great demand in 
that program. So you have seen us ask for more support in that 
arena. I saw my first demonstration of that. It is powerful. 
When rural communities can be served by a provider not only for 
things like an ear exam, but also for things like mental 
health, that you can see mental health provision through this 
vehicle. So we are proud to be in this.
    Mrs. Hartzler. Yes.
    Ms. Mensah. It is our job to bring the grants to the local 
health care clinics.
    Mrs. Hartzler. Yes, absolutely. One of my hospitals is 
doing stroke detection.
    Ms. Mensah. Yes.
    Mrs. Hartzler. That is amazing they can do that. And then 
some of my VAs are doing, actually, PTSD counseling----
    Ms. Mensah. Exactly. From----
    Mrs. Hartzler.--over it, and talked about how successful 
that is. So it is amazing, and it has a lot of potential, so I 
am glad to hear that.
    I wanted to follow up on your earlier comments too about 
the REAP Grants, and the renewable solar. I believe we were 
talking about an example up in Minnesota or something. Can you 
explain, how does that work? So if you are a business, I think 
that was the farm equipment business, but a business who wants 
to use this, how does that work?
    Ms. Mensah. Great. Well, we have two programs, both a REAP 
loan, and a REAP grant program.
    Mrs. Hartzler. Okay.
    Ms. Mensah. The REAP grant program is smaller, very 
competitive. REAP loans, we have a large program, and we just 
implemented that in the 2014 Farm Bill. But I spoke to a REAP 
grant, we find almost all of these businesses locally, with our 
local staff. So, once again, they are able to compete for this.
    I will bring Administrator Rikkers in to say a little bit 
about the competition for REAP grants, and how we identify 
businesses locally.
    Mr. Rikkers. Congresswoman Hartzler, the REAP grants, it 
is, in many ways, government at its best. They are only 25 
percent of a project cost, and so if the government is coming 
in with that seed money of 25 percent, the business comes up 
with the other 75 percent. And so it is really acting as an 
incentive for a business to make those investments in renewable 
energy systems, or energy efficiency and prudence. And at the 
end of the day, what that energy savings does is cuts against 
that business's bottom line. That business has a larger profit, 
and, through that, has more money to expand their business, and 
hire more people.
    So we have seen an incredible oversubscription in the 
grants. We had $80 million available in 2015 because 2 years 
were together. And in that year we had $50 million, nearly 
1,000 eligible applications, that were good applications we 
couldn't fund because we ran out of money. And this year we are 
back down to $40 million in grants, and it is so very 
competitive, but making a really big impact in rural America.
    Mrs. Hartzler. Mr. Chairman, could you indulge me for 2 
more minutes, follow up? Thank you. So there was a local 
business who was in--featured in the paper, and they installed 
solar panels on the top, but they were talking about how--
basically it didn't cost them anything, with tax credits and 
stuff. So can you bring in the whole picture, not just your 
Department? What else is available so that a local business 
could have--basically cost free?
    Mr. Rikkers. Sure. States will have different tax credits. 
In those states there might be other grant programs through 
Department of Energy, or other parts in the government. I was 
in the State of Oregon about 2 weeks ago--and what is 
interesting is it is difficult for us to go out to every little 
small mom and pop business. There was a vendor, a local 
electric company, that had a small solar division, and they are 
the ones that reached out and connected us with a small little 
hardware store in Arlington, Oregon. And it is in a town that 
you wouldn't think, ``Gosh, I need to put solar panels on my 
roof.'' But they got a small grant, it was at just under 
$20,000, and they invested some of their own money, and now 
have--are going to cut significant energy costs. But, again, it 
is not always directly through us, but by working through some 
of the vendors that are seeing the synergies they can have by 
the opportunities that our grants offer.
    Mrs. Hartzler. I should probably make a little editorial 
comment. Yes, it is great for the businesses that are able to 
apply. My only concern, as a watchdog for the taxpayer, is how 
come some businesses are able to get this almost free, at 
taxpayer expense? So they are not only getting the solar panels 
free, but then their energy costs are almost nothing, and the 
business next door doesn't able--isn't able to access that. So 
something about that kind of concerns me, but, anyway, thank 
you. I yield back.
    The Chairman. The gentlelady yields back. I have a couple 
of follow-ups. While we are on that subject, Mr. Rikkers, you 
said a $20,000 grant, so the company came up with $60,000.
    Mr. Rikkers. The----
    The Chairman. Okay.
    Mr. Rikkers. The REAP grant will only cover 25 percent of a 
project cost.
    The Chairman. Okay. So the amount of it coming out of other 
taxpayers'----
    Mr. Rikkers. Typically it is----
    The Chairman.--Federal taxpayers'----
    Mr. Rikkers.--there are those cases where there certainly 
are some tax credits in certain states, but oftentimes there is 
such an incentive by that business to even put in their own 
investment, because they are seeing that money paid back within 
years--within just a handful of years because of the energy 
savings they are reaping through the program.
    The Chairman. Got you. Mr. Hernandez, do we make direct 
rural home mortgage loans?
    Mr. Hernandez. We do, sir. We have a single family direct 
program.
    The Chairman. All right. Are you subject to the same 
onerous processes that our community bankers are subject to 
that is driving them out of that business, that the CFPB has 
put in place? Do you have to do the same documentation, the 
same vetting, everything?
    Mr. Hernandez. We follow all of the regulations that are 
passed by Congress, and----
    The Chairman. No, those weren't passed by Congress. These 
are rules from the CFPB.
    Mr. Hernandez. Okay.
    The Chairman. They are driving community banks out of that 
business. Do you have to do everything they do?
    Mr. Hernandez. On our guarantee program, the lenders do the 
lending. On the direct, we do the same type of process.
    The Chairman. Okay. How much have your costs gone up?
    Mr. Hernandez. Actually, I don't think our costs have gone 
up, sir, and actually, our processes are getting better all the 
time. And that is why we are doing more loans.
    The Chairman. Okay, Tony. You are saying that you are 
better than every community banker out there?
    Mr. Hernandez. No, I am not saying that, sir. I am saying--
--
    The Chairman. Well, every one of those guys are telling me 
it is costing them a lot more in compliance costs to book home 
mortgage loans that they keep on their books. It is costing 
them more money, and yet you just told me that it costs you 
less money to paper a loan today than it did before the CFPB 
was created?
    Mr. Hernandez. Chairman, the cost for us doing business is 
less because we are using government funds.
    The Chairman. We know. Put your business hat on, Tony.
    Mr. Hernandez. Okay.
    The Chairman. All right. You spend money for a loan 
officer, and a documents person, and all those things. Those 
are your costs. Even though the taxpayer may be paying those, 
you are incurring those costs. So none of that has changed? You 
are using the exact same number of compliance officers that you 
did before?
    Mr. Hernandez. No, we don't have as many compliance 
officers as the private-sector.
    The Chairman. And why is that?
    Mr. Hernandez. That is because Congress doesn't fund us to 
have as many compliance officers.
    The Chairman. Then how could you make more loans? Or how 
could you----
    Mr. Hernandez. No, we don't make more loans, sir. We did 
146,000 loans last year. The private-sector does many, many----
    The Chairman. I know that, but I have community bankers all 
over west Texas telling me they can't compete for home 
mortgages. Not with you necessarily, but they can't compete, 
given the new onerous rules. And you are telling me something 
that is really inconsistent with that. I am not trying to be 
argumentative.
    Mr. Hernandez. No.
    The Chairman. Just trying to understand how you could do 
something that folks who do it for a living, and try to make 
money at----
    Mr. Hernandez. Well, let me find out more from your Texas 
experience, but our experience, the lenders love our guaranteed 
program.
    The Chairman. No, I am talking about your direct loans. 
Don't switch topics on me. That is----
    Mr. Hernandez. No, I am to the guaranteed loan, which is--
the lenders were used. So your community bankers use our 
guaranteed product.
    The Chairman. I know, but your direct loans--I am asking 
about your direct loans.
    Mr. Hernandez. Yes, our direct loans.
    The Chairman. You are not finding the new rules from the 
CFPB particularly onerous?
    Mr. Hernandez. I will do some checking to make sure if we 
have that Mr. Chairman.
    The Chairman. All right. Has your demand for direct loans 
gone up as a result of community bankers in small communities 
getting out of that business? Is your demand up?
    Mr. Hernandez. The demand we have for direct is very high. 
We only have----
    The Chairman. Is it up over the last 3 years, since Dodd-
Frank kicked in, and the CFPB's putting them out of business?
    Mr. Hernandez. No, I don't think it is affected our demand 
that way at all, sir. Actually, the demand for our housing 
programs is growing all the time.
    The Chairman. All right. Tony, I want you to think about 
that. It doesn't ring accurate with me, I am not trying to be 
argumentative, but given that almost every single community 
banker I represent has complained about the increased costs, 
and the compliance folks that have to be in fact, they have 
gotten out of this business altogether because they can't loan 
money at an interest rate that fades the cost of putting the 
loan on the books.
    Mr. Hernandez. Well, let me do some checking for you.
    The Chairman. Okay.
    Mr. Hernandez. Let me get some research done, and get back 
to you on that information.
    The Chairman. All right. That would be great. Mr. McBride, 
you mentioned, a while ago, that if your power plants come into 
compliance with the Clean Power Plan, you would be under any 
kind of an obligation to loan them money to upgrade their 
facilities beyond what they could pay back?
    Mr. McBride. We would consider whatever project and loan 
application that they submitted. But, as far as an obligation--
--
    The Chairman. Could you take more risks with them to try to 
get into compliance with those rules than, say, a standard 
lender would?
    Mr. McBride. We will have to make sure that the loan that 
we make to them can be repaid.
    The Chairman. Okay. And then, Mr. Rikkers--are you 
broadband? Who is broadband?
    Mr. McBride. That is me.
    The Chairman. Sorry about that. My recollection is, out of 
the stimulus bill, there was $300 million hardwired to map the 
United States to tell us where broadband is and isn't. My 
recollection is that all of that $8 billion of broadband money 
had to be committed before that study was done. The question, 
though, I am assuming the study got done. How do you use that 
study, in terms of deciding where that should go and shouldn't 
go? Is it a tool that you use, or just a book on a shelf?
    Mr. McBride. The study was done by the FCC. And, actually, 
in the 2014 Farm Bill, as a part of our farm bill loan program, 
Congress directed us to share information that we had with our 
loan applications with the FCC to make sure that the maps were 
as up to date as possible. With regard----
    The Chairman. But you don't take their map----
    Mr. McBride. I am sorry?
    The Chairman. I understand that you are helping them fill 
in their map, but their map doesn't drive what you do?
    Mr. McBride. Well, certainly we are aware of their map, but 
we consider the applications that are sent in to us.
    The Chairman. Okay.
    Mr. McBride. And with regard to existing service providers, 
we also post those applications online, so people can see if 
there is an existing service provider in that territory.
    The Chairman. Okay. I guess the bottom line was do we get 
any value of the $300 million that we spent on that map?
    Mr. McBride. Yes. The mapping is helpful. Yes, sir.
    The Chairman. But it is only after the fact that you 
consult the map, after you have already made your loan, and you 
tell the FCC about it, right?
    Mr. McBride. Well, we can check when we get an application, 
and it helps us to see what is available----
    The Chairman. Right. I hope the answer is that----
    Mr. McBride. Yes.
    The Chairman. At least bluff me into thinking that you look 
at the $300 million of money that was spent. Ms. Mensah, you 
and your team are terrific. You have a question? All right.
    Mr. McBride. Yes, sir.
    Ms. Mensah. Mr. Yoho.
    Mr. Yoho. You almost were out of here.
    Ms. Mensah. That is okay. We are happy to be here. We are 
happy----
    Mr. Yoho. Just real quickly, Mr. Hernandez, I wanted to 
follow up on that. Are you saying, on the direct loan portion 
that the USDA does, they have to be in--compliant with Dodd-
Frank, just like a regular bank?
    Mr. Hernandez. We have to follow the mortgage industry 
guidelines. So the compliance----
    Mr. Yoho. I know that the department that funds, or works 
with the GSEs, like Farm Credit, that agency has their own set 
of guidelines that is separate from Dodd-Frank. And I assume 
you would be like that entity, right?
    Mr. Hernandez. We are, but the industry creates standard 
forms and documents that we all tend to use, so there is some 
uniformity in the mortgage industry. So we use similar types of 
forms----
    Mr. Yoho. On the regulatory side?
    Mr. Hernandez. On the regulatory side. But, the advantage 
of the compliance is that it actually helps improve the 
performance of our loans. So our performance for the loans on 
direct are very low. In fact, it is about two----
    Mr. Yoho. Well, that is what I wanted to talk to all of 
you.
    The Chairman. Would the gentleman yield for a second while 
we are on that subject? Tony----
    Mr. Yoho. Yes, sir.
    The Chairman.--what I asked you was not the industry 
standards. I was asking you about the rules put forth by CFPB.
    Mr. Hernandez. Right.
    The Chairman. I don't care about the industry, the stuff 
they developed themselves. I am concerned about the 
requirements to follow all those rules that the CFPB put out 
referencing home mortgage lending.
    Mr. Hernandez. Let me do more research for you, sir, and I 
will come back and tell you exactly what we do so you have a 
better understanding. I would appreciate that, thank you.
    The Chairman. All right.
    Mr. Yoho. You guys, the USDA, we are all proud of the work 
you guys do. It is a--the USDA has over 100,000 employees, and 
if you compare it to a farmer ratio, it is, I read, anywhere 
from one USDA employee to 17 farmers, or 30 farmers. It is a 
huge agency, and you guys know the state of the economy. You 
know the state of our country right now.
    We are arguing--we are discussing--I don't want to say 
arguing. We are discussing a budget for this country, and there 
is a gap of $30 billion. And, Under Secretary Mensah, you were 
saying that you have a two percent failure rate, which is 
great. I would love to have that in my veterinary practice when 
we had that, as far as uncollectables. But I have dealt with 
other agencies, like OPIC, and MCC, and other agencies that 
claim to have a 0.1 percent failure rate.
    And if we look at a two percent failure rate on $212 
billion, it is $4.2 billion. Given the financial situation that 
we are facing today, with Social Security, Medicare, Medicaid, 
and the mandatory spending consuming 68 percent of our income 
that the government brings in, can I implore you guys to go to 
one percent? That would save $2 billion. And, again, we are 
discussing, and trying to come to terms over $30 billion. And I 
know you guys do a great job, but I am going to implore all of 
you to do what we can to save more money so that we can get our 
financial house in order. Because, if not, 6 years from now 
these won't be discussions we are having in this House about 
what we are doing, and the good job we are doing, and we want 
to continue that. And I yield back, and I thank the Chairman 
for indulging me.
    The Chairman. I thank the gentleman. Ms. Mensah, thank you 
and your team. My takeaway is that you are really aggressive at 
trying to prosper rural America, and I can't thank you enough 
for that.
    Ms. Mensah. That is exactly our mission.
    The Chairman. We may have some differences from here to 
there, but I just really sense a real heart for rural America 
coming from you and your team. And that is commendable. I got 
at you a little bit on some stuff, but please don't interpret 
that as----
    Ms. Mensah. That is okay. We are serious about it too. I--
--
    The Chairman.--because that is all I represent is rural 
America. I have three big towns, and the rest of my district is 
rural. And if we don't have a strong production agriculture 
industry, we don't have a strong rural America, and vice versa. 
So thank you for what you do. We appreciate it. Obviously we 
try to make sure that the private-sector can compete, or 
deliver the services first. But, if they don't, then that is 
where you guys step in, under the farm bill. I appreciate the 
aggressiveness with which I sense you get after your job to 
help prosper rural America, so thank you very much. With that, 
we are adjourned until in the morning. Thanks, everybody.
    Ms. Mensah. Thank you.
    [Whereupon, at 4:41 p.m., the Committee was adjourned.]
    [Material submitted for inclusion in the record follows:]
                          Submitted Questions
Response from Hon. Kevin W. Concannon, Under Secretary, Food, Nutrition 
        and Consumer Services, U.S. Department of Agriculture
Questions Submitted by Hon. Collin C. Peterson, a Representative in 
        Congress from Minnesota
    Question 1. On February 17, the U.S. Department of Agriculture's 
Food and Nutrition Service (FNS) published a Proposed Rule altering 
eligibility requirements for retailers participating in SNAP.
    Members of this Committee communicated extensively with FNS during 
negotiations for the 2014 Farm Bill. At no point during those 
discussions did FNS indicate that it was interested in altering the 
definition of ``staple foods'' by removing multiple ingredient items or 
expanding the accessory food category.
    Why has FNS chosen to take this approach in its Proposed Rule? Why 
did FNS not seek Congressional input on this approach during the 2014 
Farm Bill negotiations?
    Answer. The USDA, Food and Nutrition Service (FNS) is committed to 
improving access to nutritious foods for low-income Americans and 
supporting healthy lifestyle choices by SNAP participants. This 
proposed rule is intended to ensure that the over 260,000 outlets that 
accept SNAP benefits offer a variety of products to support healthy 
choices for SNAP participants.
    The provisions in the proposed rule related to staple foods are 
well within the bounds of FNS authority set out in existing statute, 
which directs FNS to authorize retail food stores that further the 
purposes of the Program, and are consistent with statutory definitions. 
FNS chose to revise these definitions because we know that a small 
portion of SNAP retailers are meeting the current retailer standards 
with the barest of food choices for SNAP participants. Note that from a 
legal perspective, standards that are set in regulation can be revised 
through a rulemaking process.
    FNS has been fully transparent in its desire and intent to ensure 
that SNAP participants have access to retailers who are offering a 
basic supply of healthy foods, rather than meeting current eligibility 
criteria with chips, cookies and other snack foods that today can meet 
the ``staple foods'' definition, and retailers that are really 
restaurants that have been able to thwart Congressional intent to 
exclude most restaurants from SNAP by selling food cold and heating it 
after the sale. FNS sought public input on these proposed provisions in 
advance of this rulemaking and is carefully reviewing comments received 
on the proposal in order to craft requirements that ensure SNAP 
participants have access to healthy food choices, legitimate retailers 
have workable rules, and healthy food choices remain available to SNAP 
participants who live in areas with limited retailer options.
    Our interest in seeking broad stakeholder input began with the 
Request for Information (RFI) published in the Federal Register on 
August 20, 2013, titled, ``Request for Information: Supplemental 
Nutrition Assistance Program (SNAP) Enhancing Retail Food Store 
Eligibility'' at 78 FR 51136. The RFI, which included 14 specific 
questions, focused on ways to enhance the definitions of retail food 
store and staple foods, as well as overall retailer eligibility 
requirements to participate in SNAP, in order to improve access to 
healthy foods and ensure that only retailers that effectuate the 
purposes of SNAP are authorized to accept benefits. In addition to the 
RFI, five listening sessions were held across the country to garner 
feedback from interested parties. FNS received a total of 211 comments 
from a diverse set of stakeholders, including trade associations, 
individual retailers, academics, policy advocates, professional 
associations, government entities, and the general public. Stakeholder 
input was considered in drafting the February 17, 2016, proposed rule. 
A copy of the comment summary can be viewed at: http://
www.fns.usda.gov/rfi-retailer-enhancement [Attachment 1].
    As explained in the preamble to FNS' proposed rule published at 81 
FR 8015, FNS is using authorities in Sections 3 and 9 of the Food and 
Nutrition Act of 2008 to propose the discretionary regulatory changes, 
which are based on stakeholder feedback and are proposed to encourage 
the participation of firms that further the purposes of the Program by 
offering a healthy variety of foods in sufficient quantity to satisfy 
the needs of SNAP households.
    Finally, the rule is proposed and provided for public comment. 
Based on inquiries and requests, FNS extended the public comment period 
in order to ensure stakeholders had ample opportunity to weigh in so 
that FNS may fully understand the implications of any provisions in the 
rule on authorized or applicant retailers, SNAP participants, and other 
interested parties.

    Question 2. Do you intend for small format retailers, like 
convenience stores, to continue to play a role in SNAP? Do you think 
they will continue to be able to participate if your proposed rule is 
finalized? Have you conducted an analysis exploring how many current 
retailers would exit the program and the impact this could have on 
access for beneficiaries?
    Answer. As explained in the RFI and the preamble to the proposed 
rule, FNS' objectives are to improve the availability of healthful 
foods without compromising access to food for SNAP participants, or 
unnecessarily burdening the retailers that redeem SNAP benefits. FNS 
intends for any store that makes a business decision to meet the SNAP 
eligibility criteria, including reasonable requirements to offer a 
variety of healthy foods, to continue to play a role in SNAP. A 
comprehensive regulatory flexibility analysis (RFA) was completed 
specifically to consider the impact of this proposed rule on small 
entities. As the Regulatory Flexibility Analysis to the proposed rule 
noted, we estimate that most small grocery stores, convenience stores 
and combination stores can meet the new standards with modest additions 
or changes to the foods that they stock. We are reviewing the comments 
submitted to ensure that the final rule will expand access to healthy 
foods for participants while ensuring access to retailers who 
participate in SNAP
    The comprehensive RFA is posted as a supporting document alongside 
the proposed rule at: https://www.regulations.gov/
#!documentDetail;D=FNS-2016-0018-0007 [Attachment 2].

    Question 3. Many convenience stores are run by companies that 
maintain both a convenience store and franchise restaurants at the same 
location. Often times the same company owns and operates both 
establishments. As currently drafted, the Proposed Rule appears to 
exclude these businesses from the SNAP program even if they otherwise 
comply with eligibility requirements. Was this FNS's intent? If so, why 
does FNS feel that these stores do not further the purpose of the SNAP 
program?
    Answer. To be eligible to accept SNAP benefits, under Section 
3(o)(1) of the Act, a retailer must ``sell food for home preparation 
and consumption'' as well as meet other criteria in the Act and SNAP 
regulations. Section 3(k)(1) of the Act defines ``food'' to include 
``any food or food product for home consumption except . . . hot foods 
or hot food products ready for immediate consumption . . . .'' Congress 
did not intend for restaurants to participate in SNAP, except under 
limited circumstances to serve the elderly, disabled, and homeless, as 
set forth in Section 3(k) of the Act and as referenced in Section 
7(f)(2) of the Act. This proposed rulemaking is intended to ensure that 
SNAP retailer policy is aligned with this statutory intent.
    As explained in the proposed rule, over the years, a growing number 
of firms operating primarily as restaurants have become authorized to 
participate in the Program as retail food stores. Nothing in the 
current regulations specifically prohibits items sold for SNAP benefits 
that are cold at the point-of-sale from being heated or cooked in the 
store after purchase. Further, current rules allow foods to be 
classified as staple or non-staple by their first ingredient; therefore 
some pizza restaurants, for example, have been deemed eligible with 
pizza as a qualifying staple food based on the primary ingredient 
(bread). After selling a cold pizza to SNAP customers, these firms 
subsequently heat the pizza and then have ultimately sold hot food from 
their pizza-restaurant location.
    Our goal in the proposed rule was to ensure that SNAP retailers 
were selling food for home consumption and offering a variety of 
healthy food choices. We specifically asked for comment on whether the 
proposed standard that at least 85 percent of an entity's total food 
sales be for items that are not cooked or heated on-site before or 
after purchase. We received a variety of comments in response to this 
aspect of the proposed rule. These include: concerns about 
establishments that sell a significant amount of healthy food for home 
consumption in addition to food that is eaten on the premises; concerns 
that food that is bought and then heated on the premises may be more 
expensive than food that is made at home for home consumption, which 
means that SNAP benefits don't go as far; and concerns that foods that 
can be heated on premises may assist SNAP recipients without kitchens.
    We are carefully reviewing all of these comments along with the 
statutory requirements for SNAP participation and will carefully 
consider how the rule, as currently drafted, would affect this type of 
retailer model as the Agency moves forward in the rulemaking process.

    Question 4. The Proposed Rule contains a provision that would allow 
stores that are unable to meet the depth of stock requirements to file 
for an exemption if losing SNAP eligibility would harm food access in 
the surrounding area.
    What will the process look like for this waiver process?
    Answer. FNS has proposed that it would determine whether SNAP 
participant hardship exists by considering factors such as whether 
there are other SNAP-authorized stores serving the area and 
transportation options to other SNAP authorized retailer locations. In 
the proposed rule, FNS sought comments from the public regarding 
refining the language in this provision and how to implement it.

    Question 4a. How long does FNS anticipate it will take for a waiver 
petition to be approved or rejected?
    Answer. The proposed rule seeks comments from the public on 
refining the language and how to implement this provision. Therefore, 
it is difficult to provide an estimate how long the process for a 
``waiver petition'' will take. However, the proposed rule did propose 
that all participating stores would have 1 year to meet the new 
eligibility criteria.

    Question 4b. Will FNS consider the expense associated with the 
application process when reviewing such petitions?
    Answer. There is no fee associated with SNAP retailer 
authorization. All of the processes associated with SNAP authorization 
are completed by FNS at no cost to the retailer.
Response from Alfred V. Almanza, Deputy Under Secretary, Food Safety, 
        U.S. Department of Agriculture
Questions Submitted by Hon. Collin C. Peterson, a Representative in 
        Congress from Minnesota
    Question 1. Mr. Almanza, there have been some reports of processed 
egg products that may have been entering the United States though 
incorrect tariff lines. Is this truly an issue? If not, could you tell 
us how FSIS deals with similar situations and how you respond? If so, 
could you tell us how you plan on correcting this situation?
    Answer. FSIS has seen a recent increase in egg products imported 
into the United States from ineligible countries, including imported 
egg products labeled with incorrect product names. Currently, there are 
only two countries eligible to export egg products to the United 
States: Canada and The Netherlands.
    To address these issues, FSIS is coordinating with the U.S. Customs 
and Border Protection to identify misbranded or ineligible product at 
U.S. ports of entry and then notifying the importer of record that the 
ineligible or misbranded product has been refused entry into the United 
States, according to 21 U.S.C. 1046 and 9 CFR 590.910. The importer 
must then ensure that the product is destroyed or re-exported within 30 
days of notification from FSIS.
    To facilitate compliance, FSIS has provided guidance to importers/
brokers and foreign governments on egg products under FSIS 
jurisdiction, misbranded egg products, foreign country eligibility, the 
import process, and enforcement provisions for ineligible or misbranded 
egg products that arrive at the borders of the United States or enter 
U.S. commerce without being presented to FSIS for reinspection, as 
required. The guidance can be found at http://www.fsis.usda.gov/wps/
portal/fsis/topics/international-affairs/importing-products/importing-
egg-products-and-shell-eggs [Attachment 3].

    Question 2. I have heard concerns about egg products being imported 
from the Netherlands to the U.S. Some have raised concerns that the 
inspection process used by the Netherlands may not be a full continuous 
inspection. If the inspection is not continuous, does that comply with 
the Federal law? And, if it does not comply, does that mean FSIS would 
consider this product lacking proper inspection to be adulterated and 
ineligible for import into the U.S.?
    Answer. The Food Safety and Inspection Service (FSIS) conducted an 
equivalence verification audit of The Netherlands' processed egg 
inspection systems from June 2-26, 2014, to determine The Netherlands' 
eligibility to resume export of egg products to the United States and 
to verify that the egg products inspection system is equivalent to that 
of the U.S. with the ability to produce products that are safe, 
wholesome, and properly labeled. As the audit found, The Netherlands' 
egg products inspection system includes requirements to ensure that 
establishment construction, facilities, and equipment are adequate; 
provides for continuous inspection; and provides for periodic 
supervisory review of official establishments.
    FSIS' evaluation of all the data collected before, during, and 
after the on-site audit supports that The Netherlands' egg products 
regulatory system achieves the level of protection required by the 
United States. Therefore, FSIS reinstated The Netherlands' equivalence 
and allow resumption of egg products export to the United States.

    Question 3. Are there additional countries seeking approval for 
importing egg product into the U.S.? If so how long does that process 
take and can you tell me which countries those are?
    Answer. Yes, there are additional countries seeking to export egg 
products to the United States, which are Argentina, Denmark, Germany, 
Italy, Lithuania, Mexico, Poland, Romania, Bulgaria, and Greece. 
Countries wishing to become eligible to export meat, poultry, or egg 
products to the U.S. must make a formal request by a letter that must 
come from the foreign government's Central Competent Authority (CCA) 
for the inspection of meat, poultry or egg products. While there is an 
established process for equivalency, the length of the process varies. 
Timing will depend on the effectiveness to which countries provide 
documentation to FSIS, if requested, during the document review 
process, as well as if translation of documents is needed.
    To elaborate, the evaluation of a country's inspection system to 
determine eligibility involves document review and an on-site review. 
The document review is an evaluation of the country's laws, 
regulations, and other written information that focuses on six risk 
areas: Government Oversight, Statutory Authority and Food Safety 
Regulations, Sanitation, Food Safety Systems, Chemical Residues, and 
Microbiological Testing Programs. Technical experts evaluate the 
information to assure that critical points in the six risk areas are 
addressed satisfactorily with respect to standards, activities, and 
resource allocations. If the document review process shows the 
country's system to be satisfactory, a technical team will visit the 
country for an on-site review to evaluate the six risk areas as well as 
other aspects of the inspection system, including plant facilities and 
equipment, laboratories, training programs, and in-plant inspection 
operations. When both the document review and on-site review steps have 
been satisfactorily completed, FSIS develops a proposed rule to be 
published in the Federal Register that proposes to add the country to 
its list of countries in the Code of Federal Regulations (CFR) that are 
eligible to export product, in this case processed eggs, to the U.S. 
Upon receipt of public comments, FSIS makes a final decision about the 
country's equivalence based upon all available information. If FSIS 
determines that the country maintains an equivalent inspection system, 
FSIS publishes a final rule in the Federal Register adding the country 
to the list of countries in the CFR that are eligible to export.
Response from Hon. Lisa Mensah, Under Secretary, Rural Development, 
        U.S. Department of Agriculture
Questions Submitted by Hon. K. Michael Conaway, a Representative in 
        Congress from Texas
    Question 1. Following our conversation regarding USDA's budget 
request where the Department zeroed out the guaranteed loan program 
under the Community Facilities program, I have some questions. During 
our exchange, you said, ``. . . when we work with other lenders, 
lenders want to do the short-term financing. We tend to do long-term 
financing, financing up to 40 years.'' Can you clarify if the 
portfolios for the Community Facilities direct loan program and the 
Community Facilities guaranteed loan program are comparable, or are the 
direct loans for longer-term financing and the guaranteed loans are for 
shorter-term financing?
    Answer. Typically, the loan term varies between 30 and 40 years 
under the CF direct loan program and under the guaranteed loan program, 
the term is determined by the lender of record. The average loan term 
for CF Guaranteed loans currently in the RD portfolio is approximately 
23 years.

    Question 2. Under the Community Facilities programs, are the direct 
loans more or less credit risky than the guaranteed loans? If the 
direct loans are less credit risky, why is the government making these 
loans? Shouldn't the private-sector be servicing those loans?
    Answer. The direct loans are generally less risky than the 
guaranteed loans when evaluated on an historic loss basis. However, 
some of the major losses in the guaranteed loan program occurred on 
projects that were recreational in nature, and such projects were made 
ineligible in FY 2013. Often rural America does not have access to 
affordable and long term capital for rural infrastructure projects 
unless they are investment grade credits. So, there is a strong need 
for long term, fixed rate, and low cost capital. We think the Agency 
has a fiduciary responsibility to service these loans and ensure 
compliance with all regulatory and statutory requirements.

    Question 3. The negative subsidy rate was mentioned several times 
during the hearing. Administrator Mensah mentioned that the subsidy 
rate, ``. . . is driven by a variety of things. Loss experience is one 
of them.'' Please provide the Committee with a breakdown of how the 
subsidy rate is calculated and how the negative subsidy rate might be 
impacted by future changes in the economy and interest rates.
    Answer. The subsidy rate represents the estimated life-time cost of 
the program to the government. Rural Development's (RD) Budget Division 
(BD) calculates the subsidy rate by determining the present value of 
all future program cash flows per the Federal Credit Reform Act of 
1990. BD uses contractual and performance assumptions to estimate 
future cash flows. The main contractual assumptions include repayment 
periods, frequency of payments, and borrower interest rates (BIR). The 
main performance assumptions include estimates of borrower prepayments, 
delinquency, and default, as well as the government's recoveries on 
defaults. Contractual and performance assumptions are based on the 
historical performance of the program. Table 1 and Table 2 show how 
increases in both contractual and performance assumptions typically 
affect the subsidy rate.

                    Table 1: Contractual Assumptions
------------------------------------------------------------------------
             Assumptions                       Impact to Subsidy
------------------------------------------------------------------------
Loan Term                              Dependent on interest rates and
                                        performance assumptions
Borrower Interest Rate                 As interest rate increases,
                                        subsidy decreases
------------------------------------------------------------------------


                    Table 2: Performance Assumptions
------------------------------------------------------------------------
             Assumptions                       Impact to Subsidy
------------------------------------------------------------------------
Prepayment Rate                        Dependent on the difference
                                        between Treasury rates (RD's
                                        cost of borrowing) and the BIR
Delinquency Rate                       As the delinquency rate
                                        increases, subsidy decreases
Default Rate                           As the default rate increases,
                                        subsidy increases
Recovery Rate                          As the recovery rate increases,
                                        subsidy decreases
------------------------------------------------------------------------

    Changes in the economy are indirectly captured in the model through 
changes in borrower behavior. For example, if the unemployment rate 
increases, this may lead to more borrower defaults. An increase in 
defaults would increase the default rate assumption and therefore the 
subsidy rate, assuming all other assumptions remain the same.
Questions Submitted by Hon. Collin C. Peterson, a Representative in 
        Congress from Minnesota
    Question 1. The USDA 9002 BioPreferredTM Program 
continues to be a market facing program which is internationally 
renowned, but it does not provide exact procurement numbers from the 
Federal Government and its contractors for both renewable chemicals and 
biobased products. Despite the fact that President Obama's Executive 
Order (EO) 13693, Planning for Federal Sustainability in the Next 
Decade, calls for the reporting of biobased product procurement yearly, 
there is still sometimes resistance toward buying and reporting 
biobased products procured by the Federal Government and its 
contractors. The purchase of renewable chemicals and biobased products 
by the Federal Government for FY13 was $5 million, however, that number 
was recorded when the SAM.gov portal was wide open for any vendor to 
report. In FY14, OFPP/GSA changed the portal to limit which contracts 
could report. The number of contracts that could report went from 370K 
being able to report to 5K contracts able to report. Basically, the 
FY13 numbers and the FY14 numbers are comparing apples to oranges. Will 
there be work done to remove filters which are preventing the correct 
reporting of renewable chemicals and biobased product procurements?
    Answer. The Office of Management and Budget's (OMB) Office of 
Federal Procurement Policy (OFPP) provides overall direction for 
government-wide procurement systems, policies, and regulations. The 
System for Award Management (SAM) is the main contractor database for 
the Federal Government. The General Services Administration (GSA) 
maintains the SAM database.
    USDA's Office of Procurement and Property Management is currently 
part of the Biobased-Targets Working Group under the interagency 
Sustainable Acquisition and Materials Management Practices Workgroup 
(SAMM) which is set up to implement EO 13693. Recommendations from the 
working group are currently under discussion and formulation. Specific 
work changes to the SAM regarding correct reporting of renewable 
chemicals and biobased product procurements are under the direction of 
OFPP and GSA.

    Question 1a. Will there be a public disclosure of the contract used 
by Federal agency contractors to report their purchases and a Notice of 
Proposed Rulemaking (NPR) for public comments to ensure transparency in 
reporting the acquisition of renewable chemicals and biobased products?
    Answer. The Office of Management and Budget's (OMB) Office of 
Federal Procurement Policy (OFPP provides overall direction for 
government-wide procurement systems, policies, and regulations, 
including the issuance of Notices of Proposed Rulemaking. USDA's Office 
of Procurement and Property Management is currently part of the 
Biobased-Targets Working Group under the interagency Sustainable 
Acquisition and Materials Management Practices Workgroup (SAMM) which 
is set up to implement EO 13693. Recommendations from the working group 
are currently under discussion and formulation.

    Question 1b. Will categories be created for renewable chemicals 
mirroring that which was created for biobased products?
    Answer. As directed by the Agricultural Act of 2014, the USDA 
BioPreferred Program has begun the regulatory development process 
leading to the designation of categories of intermediate ingredients, 
including renewable chemicals, which are used in the production of 
biobased finished products. The designation process for intermediate 
ingredient product categories will mirror the process used to designate 
the 97 categories of finished products that are currently subject to 
the Federal procurement preference.

    Question 1c. Congress redefined ``biobased products'' in the 2014 
Farm Bill, which now consists of mature products such as innovative 
wood products, yet the acquisition of biobased products continues to be 
low. Will the Federal Government contracts describe what categories of 
the biobased products as delineated in the USDA BioPreferred Program 
are purchased annually for public disclosure?
    Answer. Section 9002 of the Farm Security and Rural Investment Act 
of 2002 (the 2002 Farm Bill), as amended by the Food, Conservation and 
Energy Act of 2008 (the 2008 Farm Bill), requires the Office of Federal 
Procurement Policy (OFPP) to report to Congress every 2 years the 
number and dollar value of contracts entered into during the year that 
include the direct procurement of biobased products; the types and 
dollar value of biobased products actually used by contractors; the 
number of service and construction contracts that include language on 
the use of biobased products; and other data requirements. The Office 
of Management and Budget's (OMB) Office of Federal Procurement Policy 
(OFPP) provides leadership on final requirements for Federal Government 
contracts and descriptions included in them for categories of biobased 
products. We anticipate OFPP to use the revised definition published on 
June 15, 2015 in a final rule amending 7 CFR 3201.2 to reflect the 
definition in the 2014 Farm Bill.

    Question 1d. Will there be annual reports available on the USDA 
BioPreferred website showing the category of procurements?
    Answer. Under Executive Order 13693, all Federal agencies must set 
biobased purchasing targets and achieve 95% compliance. Federal 
agencies are also required to report on biobased purchasing 
accomplishments. A Federal Government workgroup has been established to 
help agencies set biobased purchasing targets and achieve their goals. 
USDA is a key part of that group. OMB and the White House Council on 
Environmental Quality (CEQ) will be reviewing those recommendations and 
directing all agencies on data reporting and time frames. The law and 
the Federal Acquisition Regulation stipulate that all Federal agencies 
and contractors must purchase biobased products in ``designated 
categories'' and report on how they are doing. The USDA BioPreferred 
Program has designated 97 product categories for Federal purchase 
representing over 14,000 products and serves an important role in our 
continuing promotion of these innovative products. As an agency, USDA 
will continue to use the power of Federal purchasing to support the 
biobased product industry.

    Question 2. As exemplified by the Biogas Opportunities Roadmap, the 
deployment of Anaerobic Digesters is a priority of the USDA. However, 
the cost of obtaining a feasibility study, which is a requirement for 
the grant application has proven far too costly for smaller farms and 
has stopped many of these smaller projects from moving forward with a 
grant application. We have heard the Secretary's remarks about building 
the on-farm bioeconomy and assume that smaller farms also have a role 
to play in environmental sustainability, energy generation and 
biofuels. Can you please address the significant burden being placed on 
smaller farms by the cost of the feasibility study?
    Answer. USDA has made significant progress over the last decade in 
deploying anaerobic digesters. Farms using anaerobic digesters 
typically are dairies with large animal numbers and their primary 
concern is addressing nutrient management and environmental concerns. 
The Rural Energy for American Program (REAP) can fund anaerobic 
digesters. In order to qualify for REAP, the project must be a 
renewable energy project, which requires the biogas being created by 
the anaerobic digester to be used in the operation to offset energy 
needs of the farm or sold as a natural gas, or be used to generate 
electricity used on the farm or sold to the grid. The amount of biogas 
produced from small anaerobic digesters generally is not in sufficient 
quantities to economically generate electricity because of the high 
cost of necessary equipment. The biogas could be used to offset farm 
energy needs such as fuel for heating water.
    The larger and more complex the project is, the greater the risk 
associated with this technology is, both on the technical side as well 
as the economical side. Therefore with smaller anaerobic digesters 
there is potentially less risk, which matches the agency policy on when 
feasibility studies are required. The Value-Added Producer Grants may 
provide planning grants for up to $100,000 toward eligible anaerobic 
digester projects. When a feasibility study is not required, the 
applicant must demonstrate in the application for these projects that 
the technology is commercially available and that the system will work 
for the proposed purpose, such as providing gas to boiler to supply the 
farm's hot water needs. .
    It is important to evaluate feasibility of a project, and a proper 
evaluation requires expert analysis to determine if a digester is 
appropriate. Factors that influence the feasibility of a project 
include the composition of the manure, the method of manure collection, 
the digester design, how the biogas will be used and required equipment 
and infrastructure, grid interconnection compatibility, and the 
managerial capacity of the owner to operate the digester and related 
equipment. The USDA Rural Development through the Rural Business--
Cooperative Service can assist farmers with feasibility study costs by 
providing up to 50 percent planning costs up to $75,000 through the 
Value-Added Producer Grant Program.

    Question 3. Finally, EQIP and REAP can be used in parallel on the 
same digester project. However, some state USDA offices do not seem to 
understand this? Can you please explain why this ability to use both 
programs has not been made more clear to state USDA offices?
    Answer. Rural Development (RD) conducted training with NRCS field 
staff in May of 2015, after the REAP rule was published. This training 
included explaining how REAP and EQIP can be utilized together to fund 
a project. RD's Rural Business--Cooperative Service (RBS), Natural 
Resources and Conservation Service (NRCS), and Farm Service Agency 
(FSA) are currently conducting additional training to USDA state and 
field office staff, starting with states with areas of high poverty and 
under-served populations and moving to all other states, with the 
anticipation all States will have received the training by the end of 
this fiscal year. The training includes providing information and 
resources to cross-promote programmatic services, refer clients to 
appropriate programs, provide a framework for expanding energy outreach 
efforts, and outline how projects can be funded utilizing multiple 
programs offered by USDA. The programs included in the training are the 
NRCS EQIP, the RBS REAP, and FSA's Farm Storage Facility Loan, Farm 
Ownership and Operating loans and the Microloan Programs.

    Question 4. As stated previously, the USDA has highlighted the 
importance of the Digester Industry by its publication of the Biogas 
Opportunities Roadmap. One of the most significant ways that the USDA 
can foster greater deployment of digesters is by ensuring that liquid 
digestate from an anaerobic digester that utilizes food waste as its 
feedstock can be stabilized and still qualify for certification under 
the National Organics Program. This would allow digestate produced from 
food waste to be sold as an organic fertilizer and bring significant 
economic value to the projects. The USDA has worked with the fish 
processing industry to resolve this same issue. What would be required 
to enable the same treatment for stabilized digestate?
    Answer. To add stabilized digestate to the list of materials 
approved for use in organic agriculture, the industry would need to 
submit a petition to the USDA National Organic Program for the National 
Organic Standards Board (NOSB). Under the USDA organic regulations, 
materials used in organic crop production must be nonsynthetic 
(natural) or included on the National List of Allowed and Prohibited 
Substances (National List). Food waste is natural; however, any 
synthetic materials used to stabilize anaerobic digestate must appear 
on the National List. Synthetic materials may be petitioned to the 
National List for review by the NOSB. The NOSB is a 15 member Federal 
advisory committee that is authorized under the Organic Foods 
Production Act to make recommendations to USDA on which materials 
should be allowed in organic production and handling. The NOSB has 
previously recommended the allowance of liquid fish products that have 
been pH adjusted with sulfuric, citric, or phosphoric acid. A similar 
petition could be submitted by industry to consider the use of 
anaerobic digestate that is pH adjusted with acids. A previous petition 
for anaerobically digested food waste stabilized with acids was 
submitted on January 6, 2015, but was withdrawn by the petitioner on 
October 19, 2015. Petition procedures are available on the National 
Organic Program website at ``How to File a Petition'': https://
www.ams.usda.gov/rules-regulations/organic/national-list/filing-
petition [Attachment 4].
                             [attachment 1]
High-Level Summary of Public Comments on the U.S. Department of 
        Agriculture (USDA) Food and Nutrition Service (FNS) Request for 
        Information on Enhancing Retail Food Store Eligibility under 
        the Supplemental Nutrition Assistance Program (SNAP)
Docket No. FNS-2013-0033

    FNS published a request for information on August 20, 2013 asking 
for comments on issues related to retail food store eligibility 
requirements for the agency's Supplemental Nutrition Assistance Program 
(SNAP).\1\ Through December 17, 2013, FNS has received a total of 211 
public comments on the request for information.\2\ Our analysis of 
these comment letters has identified a total of 99 unique submissions, 
104 form letters, and eight non-germane or duplicate submissions. 
Nearly all of the form letters were from a single campaign associated 
with convenience stores. Of the 99 unique letters, a total of 91 were 
deemed to be substantive.
---------------------------------------------------------------------------
    \1\ 78 FR 51130 (August 20, 2013).
    \2\ The total number of submissions received includes 204 
submissions, five public transcripts, and seven (7) form letter copies 
that were submitted under one submission.
---------------------------------------------------------------------------
    Today's high-level summary focuses primarily on common suggestions 
and statements contained within these 91 substantive submissions. In 
addition, we have included some quantitative data in the form of 
tallies of the submissions that addressed certain coding structure 
categories to further demonstrate trends in support or opposition of 
specific issues. The counts included in the summary bullets below and 
in the table that follows reflect the approximate total number of 
submissions (including both unique letters and form letter copies) that 
weighed in on certain issues. Please note that these tallies may change 
as we continue to perform a quality control review of our coding prior 
to delivery of ICF's final reports in January 2014. In addition, 
references to certain commenter types and footnotes citing specific 
commenters within the summary bullets are intended to be illustrative 
and should not be considered exhaustive of the commenters that have 
expressed a particular position.
General Support and Opposition to Changing Existing Program Eligibility 
        Requirements

   Five commenters, including several private citizens \3\ and 
        a state agency,\4\ expressed general support for the 
        strengthening of program eligibility requirements. In 
        expressing general support, some of these comments noted that 
        SNAP retailers should be providing healthy food options and 
        that items with little nutritional value (e.g., energy drinks, 
        snack items) should be ineligible for purchase with SNAP 
        resources.
---------------------------------------------------------------------------
    \3\ Anne Shanahan, Lucinda Keller.
    \4\ Virginia Department of Social Services.

   One food retailer \5\ expressed concern that strengthening 
        program eligibility requirements will have adverse consequences 
        on a substantial number of SNAP beneficiaries and retailers. 
        The retailer argued that increasing standards for retailers 
        will result in the closure of current SNAP authorized dealers, 
        a resulting decrease in jobs, and a decrease in opportunities 
        for SNAP participants to redeem their benefits.
---------------------------------------------------------------------------
    \5\ 7-Eleven, Inc.
---------------------------------------------------------------------------
Question No. 1: Reasonableness of Ensuring Provision of Healthy Food 
        Options as SNAP Store Eligibility Criterion

   Over 30 commenters agreed that ensuring healthy food options 
        is a reasonable SNAP eligibility criterion; all commenter types 
        were represented in these expressions of support. Only one 
        commenter, a large food retailer,\6\ argued that current SNAP 
        retail eligibility requirements are sufficient and that FNS 
        should not limit the eligibility requirements further by adding 
        such a criterion.
---------------------------------------------------------------------------
    \6\ 7-Eleven, Inc.

   Many of the supporters argued that improving participants' 
        access to healthy food supports one of SNAP's program goals of 
---------------------------------------------------------------------------
        improving nutrition in low-income individuals and families.

   Governmental entities, academics, and advocacy groups in 
        support of FNS' focus on healthy food options referenced 
        published works (e.g., law review articles, scientific journal 
        articles) to support their claims (e.g., that healthier food 
        options are linked to combatting food insecurity,\7\ that 
        provision of healthier food options is within FNS' scope of 
        authority and is possible to obtain \8\).
---------------------------------------------------------------------------
    \7\ Rudd Center for Food Policy and Obesity.
    \8\ City of Chicago, Department of Public Health.

   Several commenters, including a trade association, advocacy 
        group, and governmental entity, acknowledged that no uniform 
        definition for ``healthy food'' exists to use as a basis for 
        considering this question. Comment views varied regarding 
        whether the term should or should not be defined, and 
        commenters noted that providing such a definition could prove 
        difficult.\9\
---------------------------------------------------------------------------
    \9\ Mid-Ohio Valley Health Department, United Council on Welfare 
Fraud, American Beverage Association.
---------------------------------------------------------------------------
Question No. 2: Existence of Store Types that Should Always Be Eligible 
        for SNAP Participation
   A few dozen comments were received from commenters, such as 
        private citizens, academics, governmental entities, trade 
        associations, and professional associations, in favor of 
        allowing some store types to always be eligible for SNAP 
        participation. A total of 11 commenters, including food banks, 
        governmental entities, trade associations, and private 
        citizens, opposed allowing some store types to always be 
        eligible for SNAP participation.

   Store types identified by commenters as examples of entities 
        which should always be eligible for SNAP participation include: 
        grocery stores, supermarkets, food cooperatives, farmers['] 
        markets, and produce stores. Approximately 25 commenters argued 
        the merits of always allowing farmers['] markets to be eligible 
        for SNAP participation. A few commenters in support of allowing 
        certain types of stores to always be eligible stated that the 
        businesses should still meet SNAP program goals and any other 
        business requirements to participate.\10\
---------------------------------------------------------------------------
    \10\ University of California SNAP-Ed Program, Sandra Salcedo.

   Commenters opposed to allowing some store types to always be 
        eligible for participation argued that all stores should be 
        examined on their merits and periodically reviewed for 
        compliance with SNAP requirements.\11\ The USDA Office of 
        Inspector General stated that no store types can be said to 
        ``clearly meet all of the Program goals'' and that the only 
        store type in which it has not seen SNAP trafficking was 
        ``larger retail stores.'' \12\
---------------------------------------------------------------------------
    \11\ Mitchell Klein, Mass Farmers Markets, Center for Disease 
Control.
    \12\ USDA, Office of Inspector General.
---------------------------------------------------------------------------
Question No. 3: Existence of Store Types That Should Always Be 
        Ineligible for SNAP Participation
   Roughly ten commenters, including certain academics, 
        professional associations, governmental entities, and 
        farmers['] markets, argued in favor of designating store types 
        that should never be allowed to participate in SNAP, while 
        approximately 20 commenters, mostly food retailers, argued 
        against such a proposition.

   Store types cited by commenters as examples of entities 
        which should never be eligible for SNAP participation include: 
        convenience stores, liquor stores, gas stations, and 
        ``combination'' businesses.\13\
---------------------------------------------------------------------------
    \13\ Mississippi Department of Human Services, Rudd Center for Food 
Policy and Obesity, Michigan Department of Human Services.

   Several commenters, including food retailers, governmental 
        entities, and farmers['] markets, argued that no types of 
        retailers should universally be denied participation in SNAP. 
        Some of these commenters warned that the effect would be to 
        further limit food accessibility to SNAP participants. Many 
        food retailers, specifically convenience store owners, 
        addressed why their specific store should not be categorically 
        excluded from SNAP participation (e.g., located in food desert, 
        store's provision of healthy food options).\14\
---------------------------------------------------------------------------
    \14\ Land O'Sun Management Corporation, American Natural, Darlene 
Conner, Tom Thumb Food Stores, Inc., Aloha Petroleum, Ltd.
---------------------------------------------------------------------------
Question No. 4: Redefinition of ``Staple Foods''
   About 30 commenters, including private citizens, policy 
        advocates, governmental entities, academics, and trade 
        associations, supported changing the current definition of 
        ``staple foods'' while fewer than ten commenters, all 
        representing certain trade associations, argued in opposition.

   Although some commenters argued, generally, for enhanced 
        standards for ``staple foods,'' many commenters suggested 
        specific changes to the current definition. Many commenters who 
        supported changing the definition requested that FNS align 
        ``staple foods'' with the five food group categories specified 
        by the Dietary Guidelines for Americans (DGA): breads and 
        cereals, vegetables, fruits, protein, and dairy.\15\ Other 
        specific examples for how commenters proposed to change the 
        definition include:
---------------------------------------------------------------------------
    \15\ University of California SNAP-Ed Program, United Fresh Produce 
Association, Association of SNAP-Ed Nutrition Networks and Other 
Implementing Agencies, ChangeLab Solutions, CraigMoscetti, Society for 
Nutrition Education and Behavior, Academy of Nutrition and Dietetics.

     Alignment with DGA [G]uidelines for specific 
            categories of `prepared food,' `snacks,' `bakery,' and 
            `beverage' categories; \16\
---------------------------------------------------------------------------
    \16\ Kevin Kehmna.

     Additional requirements for each food category (e.g., 
            Dairy category must include at least one low- or non-fat 
            item, Bread or cereal category must include at least one 
            whole grain item); \17\ and
---------------------------------------------------------------------------
    \17\ Philadelphia Department of Public Health, Johns Hopkins Center 
for a Liveable Future, State of California Health and Human Services 
Agency Department of Social Services.

     Numeric requirements designated within the food 
            categories (e.g., Bread or cereal category would have no 
            more than 10 grams of added sugar, Fruits category would 
            require four varieties of fresh fruit as well as four 
            varieties of canned or frozen juice, with no sugar 
            added).\18\
---------------------------------------------------------------------------
    \18\ University of California SNAP-Ed Program. ASNNA also suggested 
these types of numeric requirements, but generally suggested higher 
value requirements than University of California SNAP-Ed Program.

   The commenters who argued that the current definition for 
        ``staple foods'' is sufficient offered the following arguments 
---------------------------------------------------------------------------
        to explain why no change is needed:

     The current definition meets best practices of 
            established nutrition guidelines; \19\
---------------------------------------------------------------------------
    \19\ The Grocers Manufacturing Association.

     Modifying the definition could open the door to future 
            limitations on SNAP consumer choice; \20\
---------------------------------------------------------------------------
    \20\ Donna Garen, 7-Eleven, Inc.

     Altering the definition in a way that increases 
            grocery store stocking requirements could further cut into 
            small profit margins and force some food retailers out of 
            business; \21\ and
---------------------------------------------------------------------------
    \21\ Ohio Grocers Association.

     Lack of consensus on what is ``healthful'' and the 
            possible danger associated with deviating from the current 
            ``total diet approach.'' \22\
---------------------------------------------------------------------------
    \22\ Lee Sanders.

   Commenters were split regarding whether FNS should exclude 
        items high in sugar, sodium, and saturated fats from ``staple 
        foods,'' with several commenters (governmental entity, 
        farmers['] market, private citizen) in favor and others (food 
---------------------------------------------------------------------------
        retailer and trade associations) opposed.

     One private citizen specifically argued for the 
            exclusion of sugary beverages from ``staple food'' 
            consideration.\23\
---------------------------------------------------------------------------
    \23\ Sandra Salcedo.

     Trade associations voiced strong opposition to 
            excluding these foods based on what they deem to be an 
            arbitrary determination and a considerable burden to FNS in 
            assessing all of the products.\24\
---------------------------------------------------------------------------
    \24\ National Grocers Association, Grocery Manufacturers 
Association.

     A food retailer argued that FNS should not only look 
            at the fat, sugar, and sodium content, but also the 
            underlying nutritional value of a product as well before 
            excluding an item from the ``staple foods'' 
            consideration.\25\
---------------------------------------------------------------------------
    \25\ Little Caesars Enterprises, Inc.

   A few commenters argued that any change to the ``staple 
        foods'' definition and requirements should be grounded in 
        research or come from USDA's nutritional staff.\26\
---------------------------------------------------------------------------
    \26\ Mitchell Klein, The Food Trust.
---------------------------------------------------------------------------
Question No. 5: Applicability of ``Staple Foods'' Categories to 
        Prepared Foods With Multiple Ingredients
   Approximately 20 submissions discussed multi-ingredient 
        prepared foods as ``staple foods.'' About \1/2\ of these 
        commenters, including trade associations and other entities, 
        preferred to maintain the current treatment of counting such 
        foods in up to one ``staple food'' category. The other \1/2\, 
        ranging from private citizens to professional associations and 
        governmental entities, argued for a change in classification.

   Commenters in favor of maintaining current treatment of 
        these prepared foods noted the benefits of such products (e.g., 
        nutrient-dense, calorie- and portion-controlled, cost-
        effective) and argued that no change is needed in their 
        treatment.\27\
---------------------------------------------------------------------------
    \27\ Donna Garen, National Grocers Association, Grocery 
Manufacturers Association.

   Several commenters, including private citizens and 
        farmers['] markets, argued that ``staple foods'' categories 
        should only be comprised of single-ingredient foods or foods 
        that are minimally or unprocessed.\28\ A few of these 
        commenters noted that these foods tend to be high in sodium, 
        saturated fats, and sugar--the same ingredients being 
        considered for exclusion from ``staple foods'' 
        consideration.\29\ One governmental entity suggested placing 
        numeric limitations on the amount of particular types of 
        ingredients (e.g., x# of mg of sugar or sodium) to monitor 
        which multiple ingredient foods are allowed to be considered as 
        ``staple foods.'' \30\
---------------------------------------------------------------------------
    \28\ Mitchell Klein, Sandra Saleco, Mass. Farmers Markets.
    \29\ Sandra Saleco, OTDA.
    \30\ OTDA.
---------------------------------------------------------------------------
Question No. 6: Adequacy of the Twelve Applicable Item Minimum Under 
        Criterion A
   Over a dozen commenters, including professional 
        associations, an academic, and governmental entities, expressed 
        support for an increase in the minimum applicable item 
        requirements under Criterion A \31\ while only two commenters, 
        including a food retailer,\32\ asserted that the current 12 
        item minimum is sufficient.
---------------------------------------------------------------------------
    \31\ Association of SNAP-Ed Nutrition Networks and Other 
Implementing Agencies, University of California SNAP-Ed Program, Texas 
Retailers Association, Center for Disease Control, United Council on 
Welfare Fraud.
    \31\ 7-Eleven, Inc.

   Reasons provided by commenters that the 12 item minimum was 
        insufficient \33\ included the following:
---------------------------------------------------------------------------
    \33\ United States Conferences of Mayors Food Policy Task Force, 
Mitchell Klein.

     Insufficient variety of foods offered in each food 
            category (e.g., suggested increase to six items required 
            per food category); \34\
---------------------------------------------------------------------------
    \34\ New York City Department of Health and Mental Hygiene, 
Association of SNAP-Ed Nutrition Networks and Other Implementing 
Agencies.

     The creation of an additional food category to list 
            fruits and vegetables separately; \35\
---------------------------------------------------------------------------
    \35\ Texas Retailers Association, Academy of Nutrition and 
Dietetics, Center for Disease Control.

     A professional association suggested altering 
            categorization by including subcategories and aligning 
            categorization more closely with Dietary Guidelines for 
            Americans; \36\
---------------------------------------------------------------------------
    \36\ Society for Nutrition Education and Behavior.

     Requirement to stock perishable foods in additional 
            food categories.\37\
---------------------------------------------------------------------------
    \37\ Rudd Center for Food Policy and Obesity, California Food 
Policy Advocates.

   The food retailer opposed to an alteration of the 12 item 
        minimum argued that the current standards are sufficient in 
        meeting SNAP program goals.
Question No. 7: Possible Change From Criterion A Requirement To Stock 
        Perishable Items in Two Categories
   Nearly 20 commenters, including state government agencies, 
        professional associations, and policy advocacy organizations, 
        expressed support for requiring perishable items in more than 
        two categories.

     Several commenters stated that FNS should expand the 
            perishable food requirement to all staple food 
            categories.\38\ Some of these commenters stated that fresh 
            items, distinct from refrigerated and frozen, also should 
            be required.
---------------------------------------------------------------------------
    \38\ California Food Policy Advocates (CFPA), University of 
California SNAP-Ed Program, ASNNA: Association of SNAP-Ed Nutrition 
Networks and Other Implementing Agencies, OTDA, United Council on 
Welfare Fraud, Commonwealth of Virginia Department of Social Services.

     Several commenters stated that perishable foods should 
            be required in three categories (fruits, vegetables, and 
            dairy) or four categories (fruits, vegetables, and two 
            other groups).\39\
---------------------------------------------------------------------------
    \39\ United Fresh Produce Association, Johns Hopkins Center for a 
Livable Future.

   Multiple commenters supported an increase in the number of 
---------------------------------------------------------------------------
        required perishable items with exceptions.

     A state agency argued that there should be an 
            exception for certain types of retailers that sell multiple 
            fresh fruit and vegetable varieties but may not be able, or 
            may find it cost prohibitive, to sell perishable items in 
            more than two categories (e.g., a farmers['] market 
            retailer).\40\
---------------------------------------------------------------------------
    \40\ The Philadelphia Department of Public Health.

     A trade association said FNS should ensure that stores 
            are able to stock perishable items based on consumer 
            demand.\41\
---------------------------------------------------------------------------
    \41\ The National Grocers Association.

     Another trade association said FNS should provide 
            flexibility for stores that may face periodic challenges 
            stocking perishable items.\42\
---------------------------------------------------------------------------
    \42\ Food Marketing Institute.

   A few commenters stated that perishable items should not be 
---------------------------------------------------------------------------
        required in more than two categories.

     A state agency noted that quality fruits and 
            vegetables can come in multiple varieties, such as frozen 
            and canned, and are often less expensive and last longer 
            than perishable goods.\43\
---------------------------------------------------------------------------
    \43\ State of California, Health and Human Services Agency 
Department of Social Services.

     One commenter stated that the requirement would be too 
            difficult for small retailers in under-served 
            communities.\44\
---------------------------------------------------------------------------
    \44\ The Food Trust.

     A private citizen suggested than an increased 
            perishable food requirement may exclude specialty stores 
            that offer healthy foods (e.g., butcher shops, fish 
            mongers).
Question No. 8: Adequacy of Criterion B 50% Sales Requirement of 
        ``Staple Foods'' in Meeting SNAP's Purpose
   While a few commenters on this question supported the 
        current 50% requirement,\45\ many more stated that the 
        requirement is not sufficient.
---------------------------------------------------------------------------
    \45\ 7-Eleven, Inc., The Food Trust, Ohio Grocers Association.

     A food retailer suggested that the current application 
            of Criterion B denies SNAP participants the opportunity to 
            purchase healthy food items for home preparation at 
            establishments that specialize in sales of food items.\46\
---------------------------------------------------------------------------
    \46\ Little Caesars Inc.

     A professional association encouraged FNS to revise 
            the current Criterion B to focus on specialty retailers 
            that offer fresh healthy foods but may not stock the full 
            variety of staple foods required by Criterion A (e.g., 
            farmers' markets, produce markets, and meat markets).\47\
---------------------------------------------------------------------------
    \47\ Society for Nutrition Education and Behavior.

     A policy organization stated that, due to the size of 
            some stores, a 50% criterion may not be reached even though 
            thousands of food products may be available.\48\
---------------------------------------------------------------------------
    \48\ Food Marketing Institute.

   Several commenters asserted that the criterion would be 
        sufficient if the definition of ``staple foods'' is changed to 
        exclude items high in added sugar, sodium, or solid fats.\49\ 
        However, other commenters were opposed to amending the 
        definition to exclude these items because the process of 
        determining whether a staple food contains excess sugar, sodium 
        or solid fats would be burdensome and would lead to 
        confusion.\50\ One of these commenters stated that an easy way 
        to influence food choices would be to prohibit the purchase of 
        food items with more than five ingredients using SNAP 
        funds.\51\
---------------------------------------------------------------------------
    \49\ Mass. Farmers Markets.
    \50\ National Grocers Association, Food Marketing Institute, United 
Council on Welfare Fraud, Commonwealth of Virginia Department of Social 
Services.
    \51\ Commonwealth of Virginia Department of Social Services.

   Several commenters stated that the 50% criterion would be 
        sufficient if FNS revised the definition of ``staple food'' 
        according to their comments on the other questions posed in the 
        RFI.\52\
---------------------------------------------------------------------------
    \52\ California Food Policy Advocates (CFPA), University of 
California SNAP-Ed Program, State of California, Health and Human 
Services Agency Department of Social Services, OTDA, Rudd Center for 
Food Policy and Obesity.

   A few commenters suggested that the ``accessory foods'' 
        category could be expanded to include other foods with minimal 
        nutritional value where fat and sugar are the principal 
        ingredients by weight. These commenters also suggested that 
        ``accessory foods'' should continue to be excluded from total 
        receipts with definitions updated and expanded for more 
        nutrient-specific criteria.\53\
---------------------------------------------------------------------------
    \53\ The University of California SNAP-Ed Program, The Association 
of SNAP-Ed Nutrition Networks and Other Implementing Agencies.
---------------------------------------------------------------------------
Question No. 9: Eligibility of Stores Whose Primary Business Is Not 
        Food Sales
   Most of the commenters who responded to this question 
        supported eligibility of stores whose primary business is not 
        food sales, but a few commenters \54\ opposed their 
        eligibility.
---------------------------------------------------------------------------
    \54\ Texas Retailers Association, United Council on Welfare Fraud, 
Commonwealth of Virginia Department of Social Services.

   Commenters provided several reasons for their support of 
---------------------------------------------------------------------------
        these stores.

     A few commenters, including food retailers, advocacy 
            organizations, and state and local agencies, stated that 
            broadly eliminating SNAP acceptance based solely on venue 
            would restrict food access in food deserts.\55\
---------------------------------------------------------------------------
    \55\ Aloha Petroleum, Ltd., The Food Trust, National Grocers 
Association, Chicago Department of Public Health, Rudd Center for Food 
Policy and Obesity.

     Two trade associations stated that retailers' non-SNAP 
            sales are irrelevant to whether they should be able to 
            redeem SNAP benefits.\56\
---------------------------------------------------------------------------
    \56\ National Association of Convenience Stores (NACS) and Society 
of Independent Gasoline Marketers of American (SIGMA).

     A policy organization stated that, due to the format 
            of some stores, the primary source of inventory may not be 
            food even though thousands of food products may be 
            available.\57\
---------------------------------------------------------------------------
    \57\ Food Marketing Institute.

     A food retailer stated that analysis of items sold by 
            stores in determining retailer eligibility would not be an 
            appropriate use of scarce agency resources.\58\
---------------------------------------------------------------------------
    \58\ 7-Eleven Inc.

   Some commenters offered proposed standards for contingent 
        support for eligibility of stores whose primary business is not 
---------------------------------------------------------------------------
        food sales.

     A few government agencies and a policy advocacy 
            organization stated that, as long as the retailer meets the 
            minimum eligibility requirements of SNAP, that retailer 
            should be allowed to participate.\59\
---------------------------------------------------------------------------
    \59\ California Food Policy Advocates, Philadelphia Department of 
Public Health, State of California, Health and Human Services Agency 
Department of Social Services, CDC.

     The University of California SNAP-Ed Program and 
            another commenter argued that such stores should be 
            eligible to participate only if they meet more stringent 
            stocking requirements and there are no other stores 
            authorized to accept SNAP within a specific geographic 
            area.\60\
---------------------------------------------------------------------------
    \60\ University of California SNAP-Ed Program, the Association of 
SNAP-Ed Nutrition Networks and Other Implementing Agencies.
---------------------------------------------------------------------------
Question No. 10: Eligibility of Retailers That Primarily Sell Food for 
        Immediate Consumption, But Also Sell Products Cold and Heat 
        Them for SNAP Recipients After Purchase
   The response to this question was fairly evenly divided 
        between support for and opposition to the eligibility of stores 
        that primarily sell food for immediate consumption, but also 
        sell products cold and heat them for SNAP recipients after 
        purchase.

   A few commenters, including trade associations, an advocacy 
        organization, and a professional association, opposed the 
        general eligibility of these types of retailers, but stated 
        that there are certain circumstances (e.g., natural disasters, 
        food deserts) when hot food should be available.\61\
---------------------------------------------------------------------------
    \61\ Texas Retailers Association, National Grocers Association, 
Rudd Center for Food Policy and Obesity, United Council on Welfare 
Fraud.

   A food retailer stated that sound policy reasons exist for 
        permitting SNAP vendors to heat foods purchased with SNAP 
        benefits post-sale for home consumption (e.g., SNAP 
        beneficiaries may not have access to adequate or safe cooking 
        facilities at home, foods sold cold are almost always less 
        expensive than purchasing prepared foods).\62\ Similarly, an 
        advocacy organization referenced low-income communities and 
        stated that food insecurity experts would prove valuable to 
        informing eligibility for prepared food retailers.\63\
---------------------------------------------------------------------------
    \62\ 7-Eleven Inc.
    \63\ The Food Trust.
---------------------------------------------------------------------------
Question No. 11: Granting Authorization To All Eligible Retail Stores 
        (Regardless of Whether Sufficient Store Access Is a Concern)
   Nearly all commenters on this topic agreed that all eligible 
        retailers should be granted authorization to participate in 
        SNAP.

   A state government agency stated that if a store meets the 
        criteria and there is concern that there is not sufficient 
        store access, the store should not be authorized.\64\
---------------------------------------------------------------------------
    \64\ Michigan Department of Human Services.
---------------------------------------------------------------------------
Question No. 12: Granting SNAP Authorization When No Store Meets Basic 
        Eligibility Criteria In An Area
   The responses to this question were split between support 
        for and opposition to granting SNAP authorization when no store 
        meets basic eligibility criteria in an area. Some commenters 
        agreed that evaluation would be useful when no store meets 
        basic eligibility criteria in an area,\65\ but others stated 
        that the current modest regulations are sufficient to ensure 
        access in most cases.\66\
---------------------------------------------------------------------------
    \65\ Iowa Food Bank Association, SNAP Outreach Workers, and Feeding 
America Food Banks in Iowa, The Food Trust, Texas Retailers 
Association, California Food Policy Advocates.
    \66\ 7-Eleven Inc., State of California, Health and Human Services 
Agency Department of Social Services, National Association of 
Convenience Stores (NACS) and Society of Independent Gasoline Marketers 
of American (SIGMA), Mississippi Department of Human Services, 
Commonwealth of Virginia Department of Social Services.

   Some commenters stated that evaluation and scoring systems, 
        including but not limited to CX3 and NEMS, have already been 
        recognized by authorities and could serve as a starting point 
        or be pilot tested for SNAP.\67\
---------------------------------------------------------------------------
    \67\ The Food Trust, Rudd Center for Food Policy and Obesity, 
Academy of Nutrition and Dietetics, ASNNA: Association of SNAP-Ed 
Nutrition Networks and Other Implementing Agencies.

   Multiple commenters, including state government agencies and 
        professional associations, recommended probationary 
        authorization and/or a phase-in for retailers that have trouble 
        meeting updated requirements.\68\ A Federal agency suggested an 
        approach used by USDA for other efforts (e.g., National School 
        Lunch Program and the School Breakfast Program), in which 
        short-term waivers are used if a retailer in a ``no access'' 
        area cannot comply by the initiation date of the new 
        criteria.\69\
---------------------------------------------------------------------------
    \68\ Academy of Nutrition and Dietetics, ASNNA: Association of 
SNAP-Ed Nutrition Networks and Other Implementing Agencies, Michigan 
Department of Human Services, OTDA.
    \69\ CDC.

   A trade association and a few policy advocacy organizations 
        said FNS should pose this question to a focus group or advisory 
        committee to identify solutions.\70\
---------------------------------------------------------------------------
    \70\ Texas Retailers Association, Community Health Councils, Food 
Marketing Institute.
---------------------------------------------------------------------------
Question No. 13: Balancing Integrity and Management Priorities Against 
        Healthy Food Choice Criteria
   Approximately 30 commenters provided various recommendations 
        and elements for balancing integrity and management priorities, 
        including the following:

     Assess fines to retailers that are repeat offenders; 
            \71\
---------------------------------------------------------------------------
    \71\ Iowa Food Bank Association, SNAP Outreach Workers, and Feeding 
America Food Banks in Iowa.

     Focus investigative efforts on targeting high-risk 
            retailers; \72\
---------------------------------------------------------------------------
    \72\ New York City Department of Health and Mental Hygiene, United 
Council on Welfare Fraud.

     Review current EBT reports to identify red flags for 
            fraud; \73\
---------------------------------------------------------------------------
    \73\ Commonwealth of Virginia Department of Social Services.

     Publish FNS retailer enforcement work, make it 
            accessible to the public, and combine this information with 
            the FNS Watch List; \74\
---------------------------------------------------------------------------
    \74\ New York City Department of Health and Mental Hygiene.

     Develop a recognition program for retailers who 
            embrace the goals of the Program, provide leadership in the 
            retail community, and find ways to encourage adoption of 
            healthy shopping habits; \75\
---------------------------------------------------------------------------
    \75\ ASNNA: Association of SNAP-Ed Nutrition Networks and Other 
Implementing Agencies, OTDA.

     Share data amongst all government agencies involved in 
            regulating food retailers; \76\
---------------------------------------------------------------------------
    \76\ Rudd Center for Food Policy and Obesity, PHI.

     Include input from all stakeholders (e.g., convene a 
            working group); \77\
---------------------------------------------------------------------------
    \77\ Texas Retailers Association.

     Require stores to utilize EBT or POS systems; \78\
---------------------------------------------------------------------------
    \78\ National Association of Convenience Stores (NACS) and Society 
of Independent Gasoline Marketers of American (SIGMA), United Council 
on Welfare Fraud, Commonwealth of Virginia Department of Social 
Services.

     Review current ALERT process for potential 
            enhancements to identify suspect transactions; \79\
---------------------------------------------------------------------------
    \79\ United Council on Welfare Fraud.

     Mandatory store visits; \80\
---------------------------------------------------------------------------
    \80\ United Council on Welfare Fraud.

     Monitor retailer eligibility in areas of limited 
            access (e.g., by mapping eligible retailers against food 
            desert data available in USDA's Food Environment Atlas); 
            \81\
---------------------------------------------------------------------------
    \81\ Academy of Nutrition and Dietetics.

     Seek additional legislative authority as necessary to 
            reduce fraud and utilize financial penalties; \82\
---------------------------------------------------------------------------
    \82\ Academy of Nutrition and Dietetics.

     Use the WIC model to limit the amount of subsidized 
            unhealthy food items; \83\
---------------------------------------------------------------------------
    \83\ Michigan Department of Human Services.

     Partner with interested state and local government 
            entities, and conduct investigations through the expanded 
            use of the State Law Enforcement Bureau (SLEB) program; 
            \84\ and
---------------------------------------------------------------------------
    \84\ New York City Department of Health and Mental Hygiene.

     Test strategies using technology-based measures to 
            assess retailers' compliance.\85\
---------------------------------------------------------------------------
    \85\ PHI.

   Two trade associations stated that the RFI fallaciously 
        conflates SNAP fraud and SNAP beneficiary purchasing 
        decisions.\86\ Similarly, a food retailer stated that USDA 
        should not accept the apparent premise that ``fraud'' and 
        ``healthful food offerings'' are somehow intrinsically 
        linked.\87\
---------------------------------------------------------------------------
    \86\ National Association of Convenience Stores (NACS) and Society 
of Independent Gasoline Marketers of American (SIGMA).
    \87\ Cumberland Farms, Inc.

   The Office of Inspector General (OIG) stated that its recent 
        work demonstrated that FNS does not have clear procedures and 
        guidance to carry out key oversight and enforcement activities 
        to address SNAP retailer fraud, or adequate authority to 
        prevent multiple instances of fraud. According to the OIG, this 
        occurred because FNS had not yet comprehensively updated its 
        regulations and guidance to reflect the changed fraud risks 
        that accompanied the transition from a stamp-based benefit 
        system to the EBT system. OIG asserted that this has led to a 
        retailer authorization process without clear roles and 
        responsibilities for different FNS divisions, inadequate 
        supervisory reviews, and fragmented access to important 
        documents. Finally, OIG stated that FNS does not require 
---------------------------------------------------------------------------
        retailers to undergo self-initiated criminal background checks.

   OIG also stated that prior audit results found that FNS has 
        not established processes to identify or estimate the total 
        amount of SNAP fraud occurring nationwide by retailers. As a 
        result, OIG concluded that FNS does not have tools to 
        effectively measure a total SNAP fraud rate over time, and the 
        actual extent of trafficking could be over or underestimated. 
        OIG also reiterated its recommendations to FNS regarding the 
        use of suspension and debarment.
Question No. 14: Additional Ways in Which Eligibility Criteria Should 
        Be Changed
   Approximately two dozen commenters noted the value of 
        farmers['] markets in the healthy food retail landscape and the 
        barriers that fa[r]mers['] markets face when applying for 
        authorization to be a SNAP retailer. These commenters provided 
        the following ways in which FNS could improve SNAP with regard 
        to farmers['] markets: \88\
---------------------------------------------------------------------------
    \88\ Some of the commenters that provided these recommendations 
include: Michigan Farmers Market Association, Fair Food Network, Johns 
Hopkins Center for a Livable Future, Farmers Market Coalition, NSAC, 
Washington State Farmers Market Association.

     Create a separate application for farmers['] markets 
            or remove the structural barriers of the retailer 
---------------------------------------------------------------------------
            application and additional processing fees;

     Allow farmers['] markets to select a Type of Ownership 
            that more closely reflects their organizational structure;

     Allow farmers['] markets to provide an Employer 
            Identification Number, instead of an individual's Social 
            Security [N]umber;

     Authorize one managing organization for multiple 
            market locations;

     Provide an exemption for farmers['] markets that do 
            not have a business license;

     Exempt farmers['] markets from providing sales data;

     Permit partnering organizations to apply for the 
            market's authorization status with written permission from 
            the decision-making body of the farmers['] market; and

     Require states to include in future contracts a 
            provision that provides the same service to retailers using 
            wireless service as to those using traditional, hardwired 
            machines.

   Approximately a dozen commenters provided suggestions for 
        requirements related to marketing, promotion, and education 
        efforts that encourage SNAP participants to purchase health 
        foods. Some of the suggestions include the following:

     Limit or discourage in-store SNAP marketing on 
            ineligible or non-staple products and on food and beverage 
            signage; \89\
---------------------------------------------------------------------------
    \89\ California Food Policy Advocates, University of California 
SNAP-Ed Program, ASNNA: Association of SNAP-Ed Nutrition Networks and 
Other Implementing Agencies, ChangeLab Solutions, Society for Nutrition 
Education and Behavior, Leadership for Healthy Communities, OTDA, Trust 
for America's Health.

     Require that SNAP staple foods be visible from the 
            store entrance; \90\
---------------------------------------------------------------------------
    \90\ University of California SNAP-Ed Program, ASNNA: Association 
of SNAP-Ed Nutrition Networks and Other Implementing Agencies.

     Encourage cross-promotion between WIC-allowed and SNAP 
            ``staple foods''; \91\
---------------------------------------------------------------------------
    \91\ University of California SNAP-Ed Program, ASNNA: Association 
of SNAP-Ed Nutrition Networks and Other Implementing Agencies, Academy 
of Nutrition and Dietetics.

     Post clear labels for unit pricing of all foods and 
            beverages; \92\
---------------------------------------------------------------------------
    \92\ ASNNA: Association of SNAP-Ed Nutrition Networks and Other 
Implementing Agencies.

     Allow retailers to offer discounts and bonus values 
            for ``staple foods'' to SNAP customers; \93\ and
---------------------------------------------------------------------------
    \93\ University of California SNAP-Ed Program, ASNNA: Association 
of SNAP-Ed Nutrition Networks and Other Implementing Agencies.

     Restrict or limit the amount of tobacco product 
            displays or marketing in SNAP eligible stores.\94\
---------------------------------------------------------------------------
    \94\ UNC Gillings School of Global Public Health.

   Some commenters provided other suggestions for ways in which 
        the eligibility criteria should be changed, including the 
---------------------------------------------------------------------------
        following:

     Consider beverage provisions and placement options as 
            additional criteria for retailer eligibility.\95\
---------------------------------------------------------------------------
    \95\ New York City Department of Health and Mental Hygiene.

     Consider a separate application for smaller retailers 
            to deter trafficking.\96\
---------------------------------------------------------------------------
    \96\ State of California, Health and Human Services Agency 
Department of Social Services.

     Use WIC model to require training for SNAP retailers; 
            coordinate store audits with the WIC program; and develop a 
            unified database for tracking WIC and SNAP authorization 
            information.\97\
---------------------------------------------------------------------------
    \97\ Rudd Center for Food Policy and Obesity.

     Consider a probation period during which random 
            inspections will be conducted.\98\
---------------------------------------------------------------------------
    \98\ United Council on Welfare Fraud.
---------------------------------------------------------------------------
Suggestions for Implementation Support (e.g., Pilot Studies, Technical 
        Assistance, and Education Programs)
   Several commenters, including local governments, state 
        governments, and policy advocacy organizations, generally urged 
        FNS to provide implementation support, including pilot studies, 
        technical assistance, and education programs to SNAP 
        beneficiaries.\99\
---------------------------------------------------------------------------
    \99\ National WIC Association, ChangeLab Solutions, Leadership for 
Healthy Communities, Society for Nutrition Education and Behavior, New 
York City Department of Health and Mental Hygiene, The Food Trust, 
United States Conference of Mayors Food Policy Task Force, Academy of 
Nutrition and Dietetics.

   A policy advocacy organization and professional association 
        said USDA should encourage collaboration between the SNAP 
        retailer program and the SNAP nutrition education program 
        (SNAP-Ed).\100\
---------------------------------------------------------------------------
    \100\ PHI, Academy of Nutrition and Dietetics.

   A professional association said FNS should consider working 
        with the Small Business Administration or other Federal 
        entities to offer assistance with issues such as budgeting, 
        sourcing, product selection and handling, and technology.\101\
---------------------------------------------------------------------------
    \101\ Academy of Nutrition and Dietetics.
---------------------------------------------------------------------------
Comments About the Public Listening Sessions
   A policy advocacy organization encouraged FNS to review the 
        comments at the Baltimore listening session provided by 
        Maryland Hunger Solutions.
Other Comments
   Several policy advocacy organizations recommended that FNS 
        use its existing waiver authority to test and evaluate any 
        proposed changes.\102\
---------------------------------------------------------------------------
    \102\ The Society for Nutrition Education and Behavior, the 
National WIC Association, PHI.

   An educational institution encouraged FNS to develop SNAP 
        standards that are in line with WIC requirements.\103\
---------------------------------------------------------------------------
    \103\ Johns Hopkins Center for a Livable Future.

   A few commenters, including a trade association, a state 
        government agency, and a professional association said state-
        supplied EBT POS equipment should be eliminated, and that 
        retailers should be required to purchase their own POS wireless 
        devices as a cost of doing business (except for farmers['] 
        markets).\104\
---------------------------------------------------------------------------
    \104\ Texas Retailers Association, United Council on Welfare Fraud, 
Commonwealth of Virginia Department of Social Services.

   A food retailer said the Health Incentives Pilot and similar 
        incentive-based programs are the best method to increase 
        healthy choices among SNAP participants.\105\
---------------------------------------------------------------------------
    \105\ Cumberland Farms, Inc.

   A trade association stated that the imposition of government 
        restrictions on SNAP recipients' food decisions would 
        significantly expand Federal bureaucracy, increase burdens on 
        small business and retailers, and play no role in lowering 
        obesity rates.\106\
---------------------------------------------------------------------------
    \106\ American Beverage Association.

   A professional association stated that more data is needed 
        to analyze the ability of SNAP recipients to access SNAP-
        eligible retailers, and to determine whether enhanced 
        eligibility requirements would negatively impact that 
        access.\107\
---------------------------------------------------------------------------
    \107\ Academy of Nutrition and Dietetics.
---------------------------------------------------------------------------
Tallies of Submissions by Coding Structure Category
    The table below indicates how many comment submissions addressed 
each coding structure category. The first set of counts indicates how 
many unique submissions (including one representative or ``master'' 
version of each form letter variety) addressed a category, while the 
second count includes all letters analyzed (including form letter 
copies). Counts listed for a ``parent'' issue reflect comments that 
addressed the parent issue generally but that could not be assigned 
into a more specific sub-issue (i.e., counts do not ``roll up'' to the 
parent issues).

------------------------------------------------------------------------
                                       Count of Unique
   Coding                                Submissions      Count of All
  Structure       Category Title       (including one      Submissions
  Category                              copy of each     (including form
   Number                               form letter)     letter copies)
------------------------------------------------------------------------
          1   General feedback on                    0                 0
               the RFI
        1.1   General support for                    5                 5
               making changes to
               existing program
               eligibility
               requirements (w/o
               substantive
               rationale)
        1.2   General opposition to                  1                 1
               making changes to
               existing program
               eligibility
               requirements (w/o
               substantive
               rationale)
        1.3   Other general comments                 1                 1
          2   Responses to Questions                 0                 0
               Posed by FNS
        2.1   Question No. 1:                        0                 0
               Reasonableness of
               ensuring provision of
               healthy food options
               as SNAP store
               eligibility criterion
      2.1.1   Agreement that                        34                34
               provision of healthy
               food options is a
               reasonable
               eligibility
               requirement
      2.1.2   Disagreement that                      1                 1
               provision of healthy
               food options is a
               reasonable
               eligibility
               requirement
      2.1.3   Other comments on                      6                 6
               reasonableness of
               healthy food
               provision eligibility
               requirement
        2.2   Question No. 2:                        0                 0
               Existence of store
               types that should
               always be eligible
               for SNAP
               participation
      2.2.1   General support for                    6                 6
               eligibility of
               particular store
               types
      2.2.2   General opposition to                 11                11
               eligibility of
               particular store
               types
      2.2.3   Suggestions for store                  1                 1
               types that should
               always be eligible
               for participation
    2.2.3.1   Grocery stores                         9                 9
    2.2.3.2   Supermarkets                           8                 8
    2.2.3.3   Farmers['] Markets                    25                26
    2.2.3.4   Food cooperatives                      1                 1
    2.2.3.5   Others                                 3                 3
      2.2.4   Other comments on                     12                12
               whether some store
               types should always
               be eligible for SNAP
               participation
        2.3   Question No. 3:                        0                 0
               Existence of store
               types that should
               always be ineligible
               for SNAP
               participation
      2.3.1   General support for                    4                 4
               ineligibility of
               particular store
               types
      2.3.2   General opposition to                 10                10
               ineligibility of
               particular store
               types
      2.3.3   Suggestions for store                  0                 0
               types that should
               always be ineligible
               for participation
    2.3.3.1   Convenience stores                     7                 7
    2.3.3.2   Gas stations                           3                 3
    2.3.3.3   Liquor store                           4                 4
    2.3.3.4   Pharmacies                             1                 1
    2.3.3.5   Dollar stores                          0                 0
    2.3.3.6   Others                                 2                 2
      2.3.4   Other comments on                     27               123
               whether some store
               types should never be
               eligible for SNAP
               participation
        2.4   Question No. 4:                        0                 0
               Redefinition of
               ``staple foods''
      2.4.1   A different definition                 1                 1
               of ``staple foods''
               would help ensure
               more healthy food
               choices
    2.4.1.1   Proposed changes to                   24                24
               definition
    2.4.1.2   Support/references for                 1                 1
               need to change
               definition
    2.4.1.3   Other comments in                      7                 7
               support of a new
               definition for
               ``staple foods''
      2.4.2   Redefining ``staple                    0                 0
               foods'' would not
               ensure more healthy
               food choices
    2.4.2.1   Current definition is                  6                 6
               sufficient
    2.4.2.2   FNS should only focus                  0                 0
               on trafficking/
               redefining staple
               foods will not impact
               trafficking
    2.4.2.3   Other comments in                      6                 6
               opposition to a new
               definition for
               ``staple foods''
      2.4.3   Treatment of foods                     0                 0
               high in added sugar,
               sodium, or solid fats
    2.4.3.1   Support for exclusion                  2                 2
               of these items as
               ``staple foods''
    2.4.3.2   Opposition to                          3                 3
               exclusion of these
               items as ``staple
               foods''
    2.4.3.3   Other comments                         3                 3
               regarding treatment
               of foods high in
               added sugar, sodium,
               or solid fats
      2.4.4   Other comments on                      4                 4
               redefining ``staple
               foods''
        2.5   Question No. 5:                        0                 0
               Applicability of
               ``staple foods''
               categories to
               prepared foods with
               multiple ingredients
      2.5.1   Support for                            8                 8
               maintaining current
               treatment of multiple
               ingredient foods
               (i.e., to be
               considered in one
               ``staple food''
               category as long as
               it has one ingredient
               that meets ``staple
               foods'' definition).
      2.5.2   Support for changing                   6                 6
               treatment of multiple
               ingredient foods
               (e.g., only
               considering single
               ingredient foods as
               staple foods)
      2.5.3   Other comments on                     16                16
               multiple ingredient
               foods as ``staple
               foods''
        2.6   Question No. 6:                        0                 0
               Adequacy of the
               twelve applicable
               item minimum under
               Criterion A
      2.6.1   Support for                            3                 3
               maintaining current
               twelve applicable
               item minimum for
               eligibility
      2.6.2   Support for changing                   0                 0
               applicable item
               minimum eligibility
               requirements
    2.6.2.1   Support for increase                  15                15
               in minimum applicable
               item requirements
    2.6.2.2   Support for increased                  2                 2
               flexibility in
               categorization
    2.6.2.3   Other comments on                      9                 9
               proposed changes for
               applicable item
               minimum eligibility
               requirements
      2.6.3   Other comments on the                  3                 3
               potential increase of
               the Criterion A
               twelve applicable
               item minimum
        2.7   Question No. 7:                        0                 0
               Possible change from
               Criterion A
               requirement to stock
               perishable items in
               two categories
      2.7.1   Support for requiring                 20                20
               perishable items to
               be stocked in more
               than two categories
      2.7.2   Opposition to                          1                 1
               requiring perishable
               items to be stocked
               in more than two
               categories
    2.7.2.1   Current program is                     2                 2
               sufficient in meeting
               program goals
    2.7.2.2   Increasing the                         1                 1
               required number of
               categories of
               perishable items
               would be too
               difficult
    2.7.2.3   Other comments                         4                 4
               opposing the
               requirement of
               perishable items in
               more than two
               categories
      2.7.3   Other comments on                      3                 3
               changing the required
               number of categories
               of perishable items
        2.8   Question No. 8:                        0                 0
               Adequacy of Criterion
               B 50% sales
               requirement of
               ``staple foods'' in
               meeting SNAP's
               purpose
      2.8.1   Current requirement                    3                 3
               for 50% sales of
               staple foods is
               sufficient
      2.8.2   Requirement for 50%                    6                 6
               sales of staple foods
               is not sufficient
      2.8.3   Sufficiency of                         7                 7
               Criterion B 50% sales
               requirement if
               ``staple foods''
               definition is changed
               to exclude items high
               in added sugar,
               sodium, or solid fats
      2.8.4   Comments on the                        2                 2
               treatment of
               ``accessory foods''
      2.8.5   Other comments on                     15                15
               Criterion B
               percentage sales
               requirement
        2.9   Question No. 9:                        0                 0
               Eligibility of stores
               whose primary
               business is not food
               sales
      2.9.1   Support for allowing                   1                 1
               these stores to be
               eligible
    2.9.1.1   Food deserts                          11                11
    2.9.1.2   Contingent support                     0                 0
  2.9.1.2.1   Access to other SNAP                   0                 0
               providers in the area
               (e.g., food deserts)
  2.9.1.2.2   Proposed standards for                 7                 7
               contingent support
  2.9.1.2.3   Other comments on                      0                 0
               contingent support
               for eligibility
    2.9.1.3   Other comments in                      6                 6
               support of allowing
               these retailers to be
               eligible
      2.9.2   Opposition to allowing                 5                 5
               these stores to be
               eligible
      2.9.3   Other comments on                      2                 2
               eligibility of stores
               whose primary
               business is not food
               sale
       2.10   Question No. 10:                       0                 0
               Eligibility of
               retailers who
               primarily sell food
               for immediate
               consumption, but also
               sell products cold
               and heat them for
               SNAP recipients after
               purchase
     2.10.1   Support for continuing                 7                 7
               eligibility for these
               stores
     2.10.2   Opposition for                         7                 7
               continuing
               eligibility for these
               stores
     2.10.3   Other comments on                      8                 8
               eligibility of these
               stores
       2.11   Question No. 11:                       0                 0
               Granting
               authorization to all
               eligible retail
               stores (regardless of
               whether sufficient
               store access is a
               concern)
     2.11.1   Support for granting                  27                27
               authorization to all
               eligible retail
               stores
     2.11.2   Opposition to granting                 2                 2
               authorization to all
               eligible stores
     2.11.3   Other comments                         3                 3
               regarding grating
               authorization to all
               eligible stores
               (e.g., request for
               definition of
               ``sufficient store
               access'')
       2.12   Question No. 12:                       0                 0
               Granting SNAP
               authorization when no
               store meets basic
               eligibility criteria
               in an area
     2.12.1   Evaluation and scoring                 0                 0
               system applied
   2.12.1.1   Criteria used in                       7                 7
               evaluation and
               scoring system
     2.12.2   Other comments on                     23                23
               granting SNAP
               authorization when no
               stores meet basic
               eligibility criteria
       2.13   Question No. 13:                       0                 0
               Balancing of
               integrity and
               management priorities
               against healthy food
               choice criteria
     2.13.1   Suggestions regarding                 25                25
               balancing integrity
               and management
               priorities against
               healthy food choice
               criteria
     2.13.2   Suggested elements to                  4                 4
               be used to assess
               integrity risks
     2.13.3   Suggestions regarding                  6                 6
               application of
               integrity risk
               elements
       2.14   Question No. 14:                       0                 0
               Additional ways in
               which eligibility
               criteria should be
               changed
     2.14.1   Separate application                  22                23
               criteria for
               farmers['] markets
     2.14.2   Suggestions for                       12                12
               requirements related
               to marketing,
               promotion, and
               education efforts
               that encourage SNAP
               participants to
               purchase healthy
               foods and beverages
     2.14.3   Other comments                        11                11
               regarding ways to
               change eligibility
               criteria
          3   Other comments on the                  0                 0
               RFI
        3.1   Suggestions for                       16                16
               implementation
               support (e.g., pilot
               studies, technical
               assistance, and
               education programs)
        3.2   Comments on public                     1                 1
               listening sessions
        3.3   Other comments on RFI                 16                16
          4   Comments Outside the                   3                 3
               Scope of the RFI
               (e.g., labeling
               requirements, GMOs)
------------------------------------------------------------------------

                             [attachment 2]
Initial Regulatory Flexibility Analysis_Proposed Rule
Enhancing Retailer Standards in SNAP: Changes to Depth of Stock and 
        Stocking Requirements Using New Farm Bill Definition
    Agency: Food and Nutrition Service, USDA.
    Background: The Regulatory Flexibility Act (RFA) requires agencies 
to consider the impact of their rules on small entities and to evaluate 
alternatives that would accomplish the same objectives without undue 
burden when the rules impose a significant economic impact on a 
substantial number of small entities. Inherent in the RFA is the desire 
to remove barriers to competition and encourage consideration of ways 
to tailor regulations to the size of the regulated entities.
    The RFA does not require that agencies necessarily minimize a 
rule's impact on small entities if there are significant legal, policy, 
factual, or other reasons for the rule's impacts. The RFA requires only 
that agencies determine, to the extent feasible, the rule's economic 
impact on small entities, explore regulatory alternatives for reducing 
any significant economic impact on a substantial number of such 
entities, and explain the reasons for their regulatory choices.
Reasons That Action Is Being Considered
    The Food and Nutrition Service is proposing a rule that would 
revise minimum inventory requirements for stores eligible to redeem 
SNAP benefits. Several changes in the proposed rule will affect 
retailer stocking requirements. First, retailers may need to add 
varieties within four staple food groups (meat, poultry, or fish; bread 
or cereal; vegetables or fruits; dairy products). Under previous 
requirements, most retailers were eligible to redeem SNAP using the 
criteria that they offered for sale, on a continuous basis, at least 
three varieties of qualifying foods in each of four staple food groups, 
with perishable foods in at least two of the food groups. The 2014 Farm 
Bill modified those criteria by requiring that retailers stock at least 
seven varieties of qualifying foods in each of four staple food groups, 
with perishable foods in at least three of the food groups.
    As part of this rule FNS has also proposed that retailers now must 
stock at least six stocking units of each variety of food in each food 
group. Current regulations do not specify a minimum depth of stock. 
Finally, FNS is also proposing that multi-ingredient foods and `snack' 
foods be classified as accessory foods, which cannot be used to meet 
either the variety or depth of stock requirements.
    This action is being considered by FNS in part due to Section 4002 
of the Agricultural Act of 2014 (2014 Farm Bill), which revises 
eligibility for SNAP retail food stores by increasing the required 
number of varieties and number of perishable items. Additional changes 
to depth of stock and to the classification of accessory foods are 
being proposed to ensure that retailers are maintaining sufficient food 
stock for sale to SNAP recipients at all times, and to ensure that 
retailers are stocking foods that could contribute to a nutritious 
diet.
    Under current law, a store could stock as few as 12 food items (3 
varieties  4 staple food groups  1 stocking unit) and be eligible to 
redeem SNAP benefits. The impact of these changes results in a new 
minimum inventory requirement of 168 items (7 varieties  4 staple food 
groups  6 stocking units). While this change in stocking requirements 
appears substantial, for the vast majority of stores, the changes 
needed would be much smaller because they already stock many of the 
required items in appropriate amounts.
Objectives of, and Legal Basis for, the Proposed Rule
    As stated above, the legal basis for the proposed rule are the 
relevant sections of the 2014 Farm Bill and existing legal authority 
under the Food and Nutrition Act. The objectives of this rule are to 
establish new parameters for inventory requirements for retailers that 
are certified to accept SNAP.
Number of Small Entities to Which the Proposed Rule Will Apply
    This proposed rule directly regulates all retailers that accept 
SNAP benefits pursuant to agreements with USDA's Food and Nutrition 
Service. However, many of these stores already stock a sufficient 
quantity and variety of foods to meet the eligibility criteria in the 
proposed rule. Certain stores, however, primarily combination stores, 
convenience stores, and small grocery stores, may need to make changes 
to their inventory in order to remain eligible to redeem SNAP benefits. 
Of the 68,338 combination stores, 112,066 convenience stores, and 
15,060 small grocery stores certified to accept SNAP benefits in 2014, 
almost all of them (194,834 total stores, or 99.7%) would fall under 
the SBA gross sales threshold to qualify as a small business for 
Federal Government programs.\1\
---------------------------------------------------------------------------
    \1\ Based on the North American Industry Classification System 
(NAICS code) categories for Convenience Stores (NAICS code 445120, 
standard of $29.5 million) and Supermarkets and Other Grocery Stores 
(NAICS code 445110, standard of $32.5 million).
---------------------------------------------------------------------------
Projected Reporting, record-keeping and Other Compliance Requirements
    All retailers attest to proper stocking requirements at 
authorization, and all retailers would be subject to periodic store 
reviews that evaluate whether the currently displayed stock and number 
of units are appropriate to maintain certification to redeem SNAP 
benefits. FNS knows of no reporting or record-keeping requirements that 
would impact small entities. However, most small stores would be 
required to make changes to their inventory in order to comply with 
this rule.
    FNS thinks that the rule does not present a significant economic 
impact to a substantial number of small businesses. Although the number 
of stores impacted is large, we estimate that the cost to those small 
businesses for stocking additional inventory would be nominal, on 
average about $140. However, FNS has prepared this Initial Regulatory 
Flexibility Analysis to provide the opportunity for comment and input 
from the public. FNS invites comments on all aspects of the analysis 
that follow.
    This analysis uses data from a sample of 1,392 small stores to 
examine the average number of varieties that retailers may need to add 
in the staple groups as well as the number of stocking units the 
average retailer may need to add in order to be in compliance with the 
new rules. Available data come from the Authorized Store Checklist. 
This checklist is used by FNS during store visits to determine how many 
varieties in a staple food group a retailer is currently stocking as 
well as how many individual stocking units are in the store at the time 
of the visit. It is important to note that this checklist groups 
certain foods together and that these groupings may combine foods from 
more than one `variety' as defined by the proposed rule. For example, 
with regard to cheese, the checklist groups hard and soft cheeses 
together, but these would be considered different varieties for 
purposes of meeting the new variety requirement. For this analysis, 
this means that for some staple food groups we are likely undercounting 
the actual number of varieties a store already stocks. This is 
especially true for the Dairy category--the checklist only contains six 
product groupings, so no store in the data set could be classified as 
having seven different varieties of Dairy. In this case, six dairy 
varieties were used in the analysis.
Farm Bill Changes to Variety and Perishable Criteria
    Based on analysis of this data, FNS estimates that 88.6% of small 
stores would not meet the variety criteria. Most need to add one or two 
items per staple food category:

   92.8% of the stores in this subgroup would not meet the 
        Dairy variety criteria (based on six dairy categories 
        analyzed).

     Median = five items (out of seven) for non-qualifiers.

   6.9% would not meet the Fruit & Vegetable criteria.

     Median = five items for non-qualifiers.

   21.7% would not meet the Bread variety criteria.

     Median = six items for non-qualifiers.

   66.5% would not meet the Meat variety criteria.

     Median = five items for non-qualifiers.

1.5% of stores would no longer meet the perishable criteria.

   All stores that would no longer meet perishable criteria 
        also no longer meet the variety criteria.

    In sum, most currently authorized small stores (88.6%) would not 
immediately meet the inventory requirements mandated in the 2014 Farm 
Bill. However, conformance typically requires adding two varieties for 
each of two or three categories.
Proposed Changes to Definition of Accessory Foods
    Under the proposed rule the definition of accessory foods will 
change to include snacks such as chips or ice cream and multi-
ingredient foods such as pizza. This change may potentially increase 
the number of varieties a store might need to add in order to remain 
compliant, as those items are separate `groupings' on the Store 
Checklist. In the Dairy category, ice cream, which is its own category 
on the checklist, will be removed as a variety. The analysis of the 
impact of the 2014 Farm Bill changes, which concluded that the median 
store would need to add two varieties in the Dairy group, counted ice 
cream as a variety. When ice cream is removed, we estimate that all 
retailers in the data set would need to add one additional variety of 
dairy in order to be compliant, bringing the median number of dairy 
varieties needed to three.
    Similarly, in the Breads and Cereals staple foods category, some 
snacks and cakes will be redefined as accessory foods. For purposes of 
this analysis, we removed those items from each store's total count of 
``varieties.'' With those items removed, nearly 20% of retailers were 
still stocking seven varieties of Breads and Cereals and would remain 
eligible under the new requirements. An additional 68% of retailers 
would only need to add between one and three varieties in order to 
remain eligible in the Breads and Cereals staple food category. For 
purposes of this analysis, we assume that the median store would need 
to add two varieties of Breads and Cereals to meet the new 
requirements.
Proposed Changes to Depth of Stock
    FNS also did further analysis to estimate the number of additional 
stocking units in each staple food category retailers might need to add 
in order to be compliant with the proposed provision that retailers 
carry at least six stocking units of each variety.

   Dairy: As noted above, FNS estimates that the average store 
        would need to add three varieties of products to the Dairy 
        category to meet the variety requirement and the new definition 
        of accessory foods. For these varieties, we estimate that the 
        average store would need to add 18 stocking units. When looking 
        only at those varieties stores already have in this category, 
        most stores already have six or more stocking units in three 
        (of their current four) varieties. Therefore, FNS estimates 
        that the average store would need to add up to six additional 
        stocking units to meet the new depth-of-stock requirement. In 
        total, we estimate that the average store would need to add 24 
        stocking units in the Dairy staple food group in order to meet 
        the combined requirements of this proposed rule (see Table 1).

   Fruits and Vegetables: As noted above, the vast majority of 
        retailers already meet or exceed the new variety requirement, 
        and changes in the definition of accessory foods are not 
        expected to impact this. When looking only at those varieties 
        stores already have in this category, most stores already have 
        six or more stocking units in each variety. Therefore, FNS 
        estimates that the average store would not need to add any 
        stocking units in the Fruits and Vegetables staple food group 
        in order to remain compliant with new requirements.

   Breads and Cereals: As noted above, most stores currently 
        have five or more varieties of Breads and Cereals, after 
        removing foods that would now be classified as accessory foods. 
        FNS estimates that the average store would need to add two 
        varieties of products to the Breads and Cereals category to 
        meet the variety requirement and the new definition of 
        accessory foods. For these varieties, we estimate that the 
        average store would need to add 12 stocking units. When looking 
        only at those varieties stores already have in this category, 
        most stores already have six or more stocking units within 
        these varieties. Therefore, the depth-of-stock requirement does 
        not add additional inventory changes beyond what is a needed to 
        meet the variety requirement and the new definition of 
        accessory foods. FNS estimates that the average store would 
        need to add about 12 total stocking units within this staple 
        food category to meet the combined requirements of this 
        proposed rule.

   Meat/Poultry/Fish: As noted above, most stores currently 
        stock five varieties of Meat, Poultry, or Fish. FNS estimates 
        that the average store would need to add two varieties of 
        products to the Meat, Poultry, or Fish category to meet the 
        variety requirement and the new definition of accessory foods. 
        For these varieties, we estimate that the average store would 
        need to add 12 stocking units. When looking only at those 
        varieties stores already have in this category, most stores 
        already have six or more stocking units within these five 
        varieties. However, because the categories on the checklist do 
        not align perfectly with planned implementation of the variety 
        definition for this staple food group, FNS estimates that the 
        average store may need to add up to six stocking units within 
        this food group to meet the depth-of-stock requirement. In 
        total, FNS estimates that the average store may need to add 
        about 18 stocking units in this staple food category to meet 
        the combined requirements of this proposed rule.

    Stores that do need to make adjustments should be able to do so at 
a relatively low total cost. Based on a review of 2015 wholesale prices 
for specific items in each staple food group, FNS estimates that a 
retailer who needed to purchase six stocking units of all seven 
varieties of food in all four staple food groups could obtain these 
items at a cost of approximately $310 (see attached Table 2). Adding an 
inventory carrying cost of 25%,\2\ to account for storage costs and 
potential spoilage, the total cost of stocking all 168 items would be 
approximately $400.\3\ The average cost per variety and cost per unit 
(based on these wholesale prices) for each staple food group is as 
follows:
---------------------------------------------------------------------------
    \2\ Inventory carrying costs average 20-30% of the value of the 
stock. Source: http://www.opsrules.com/supply-chain-optimization-blog/
bid/314279/Do-You-Know-Your-Inventory-Carrying-Costs.
    \3\ In addition to the cost of adding specific stocking units or 
varieties, a small number of stores may need to add additional storage 
for perishable items. FNS estimates that the cost of purchasing an 
additional cold case would be approximately $750, bringing the maximum 
total possible cost of compliance to approximately $1,140. However, FNS 
estimates that 98.5% of stores would currently meet the requirement for 
stocking perishable items, so it is unlikely that stores would need to 
add cold storage in order to remain compliant, nor is it likely that 
the ability to store perishable foods would be a barrier to remaining 
eligible. Cost of a Glass merchandise: $749 new through http://
www.webstaurantstore.com/26249/1-section-glass-door-merchandising-
refrigerators.html.

---------------------------------------------------------------------------
   Breads and Cereals:

     Average cost of adding six stocking units of one 
            variety: $10.06.

     Cost of adding each unit: $1.68.

   Dairy:

     Average cost of adding six stocking units of one 
            variety: $11.83.

     Cost of adding each unit: $1.97.

   Meat/Poultry/Fish:

     Average cost of adding six stocking units one variety: 
            $15.57.

     Cost of adding each unit: $2.60.

   Fruits and Vegetables:

     Average cost of adding six stocking units of one 
            variety: $6.96.

     Cost of adding each unit: $1.16.

    However, as noted above, most stores would need to add far fewer 
items--approximately 54 stocking units for the median store, at an 
estimated cost of about $114, or about $142 when factoring in the 
inventory carrying cost of 25%. In most stores, this could be 
accomplished by swapping out certain items for others in order to meet 
the new requirements. In any case, the initial cost of adding new items 
to inventory would be recouped when a retailer sells those items. In 
the event of spoilage, the inventory carrying cost accounts for the 
need to replace items.
    Table 1 below outlines the additional stocking units needed, by 
staple food category, for the average small store for each change to 
inventory requirements in the proposed rule. Specific wholesale food 
costs, used to estimate the cost per staple food group, are detailed in 
a table at the end of this document.

                                                                                             Table 1
                                                                Additional Stocking Units Needed for Average Small SNAP Retailer
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                           Additional Varieties Needed           Impact from Definition Change      Additional Units                                     Total
                    ------------------------------------------------------------------------------   Needed to Meet  ---------------------------------------------------------------------------
                                                                                                     Depth of Stock
                           Number          Stocking Units        Varieties        Stocking Units  -------------------     Varieties        Stocking Units     Average Price     Cost per Staple
                                                                                                     Stocking Units                                                                  Group
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
           Dairy                    2                  12                   1                  6                  6                  3                 24              $1.97             $47.28
              FV                    0                   0                                                         0                  0                  0              $1.16                $--
           Bread                    0                   0                   2                 12                  0                  2                 12              $1.68             $20.16
            Meat                    2                  12                                                         6                  2                 18              $2.60             $46.80
                    ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  Total............                 4                  24                   3                 18                 12                  7                 54              $7.41            $114.24
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Economic Opportunity Costs for Small Retailers
    Another approach to estimate potential costs for small retailers is 
to examine the economic opportunity costs for those retailers. To do 
this, FNS examined SNAP redemption patterns at these smaller stores. 
Stores that redeem a very small amount of SNAP benefits may find that 
even small changes to inventory requirements would not be cost 
effective, given the overall contribution that SNAP has to their 
monthly revenue. Alternatively, some smaller stores may determine that 
they redeem enough SNAP benefits to justify these minor stock changes.
    Combination stores, Convenience stores, and Small Grocery Stores 
are most likely to require changes to their depth of stock in order to 
remain eligible to redeem SNAP benefits. FNS looked at the number of 
these stores that are certified, the total amount of SNAP benefits that 
are redeemed in these stores, and the average amount of SNAP benefits 
redeemed per store on an annual and monthly basis. While these stores 
make up a substantial percentage (73%) of all authorized retailers, 
their share of SNAP redemptions is much smaller (13%).

   Combination Stores:

     26% of all authorized stores in 2014.

     6.8% of total SNAP benefits redeemed.

     $70,125 annual SNAP benefits redeemed on average per 
            store.

     $5,844 monthly SNAP benefits redeemed, on average per 
            store.

     $9.6 million in annual gross sales, on average per 
            store.

   Convenience Stores:

     41% of all authorized stores in 2014.

     4.96% of total SNAP benefits redeemed.

     $32,770 annual SNAP benefits redeemed on average per 
            store.

     $2,731 monthly SNAP benefits redeemed, on average per 
            store.

     $2.1 million in annual gross sales, on average per 
            store.

   Small Grocery Stores:

     5.3% of all authorized stores in 2014.

     1.16% of total SNAP benefits redeemed.

     $58,427 annual SNAP benefits redeemed on average per 
            store.

     $4,869 monthly SNAP benefits redeemed, on average per 
            store.

     $193,000 in annual gross sales, on average per store.

    For the average small retailer, the cost of adding the additional 
inventory represents a negligible share of their SNAP redemptions and 
of total gross sales.
    Retailers that redeem the least amount of SNAP benefits may be most 
likely to make a business decision to leave the program because they 
find the changes needed to comply with the new inventory requirements 
to be more costly than the profit from SNAP participation. An analysis 
of the lowest 10%, 20%, and 30% of SNAP redemptions by retailer type 
indicates that many of these stores do not generate a significant 
portion of their revenue from SNAP. According to FNS retailer data, in 
2014 average annual redemptions for the stores (among these three store 
types) that redeemed the least amount of SNAP benefits were as follows:

   Combination stores (20,500 in the bottom 30th percentile):

     10th percentile--$2,830 in SNAP redemptions, 0.05% of 
            Total Gross Sales.

     20th percentile--$7,050 in SNAP redemptions, 0.15% of 
            Total Gross Sales.

     30th percentile--$11,720 in SNAP redemptions, 0.20% of 
            Total Gross Sales.

   Convenience stores (33,600 in the bottom 30th percentile):

     10th percentile--$2,130 in SNAP redemptions, 0.08% of 
            Total Gross Sales.

     20th percentile--$5,530 in SNAP redemptions, 0.12% of 
            Total Gross Sales.

     30th percentile--$8,750 in SNAP redemptions, 0.37% of 
            Total Gross Sales.

   Small Grocery Stores (4,500 in the bottom 30th 
        percentile)[:]

     10th percentile--$1,990 in SNAP redemptions, 1.4% of 
            Total Gross Sales.

     20th percentile--$6,300 in SNAP redemptions, 4.0% of 
            Total Gross Sales.

     30th percentile--$11,650 in SNAP redemptions, 6.7% of 
            Total Gross Sales.

    Depending on the amount of inventory these retailers need to add, 
some may be unwilling to make inventory improvements in order to comply 
with the new regulations. In these cases, since their total annual 
redemptions are relatively small, stores may make the economic choice 
to opt out of SNAP. However, FNS anticipates that only those stores 
whose current SNAP redemptions are extremely low may make that choice. 
For those stores, their `cost' of opting out of SNAP would be no more 
than the amount of foregone SNAP redemptions, generally a few hundred 
dollars or less per year for stores with the lowest redemptions.

                                 Table 2
    Wholesale Costs for Specific Food Items in Each Staple Food Group
------------------------------------------------------------------------
                                                                     Per
  Staple Food      Price       Quantity      Total      Price Per   Unit
     Group                                               Variety    Cost
------------------------------------------------------------------------
Meat
  Canned              $1.50            6        $9.00
   Chicken
  Sardines            $1.46            6        $8.76
  Tuna                $1.35            6        $8.10
  Beef Franks/        $8.98            2       $17.96
   3 pack
  Canned              $4.18            6       $25.08
   Salmon
  Turkey Lunch        $7.34            3       $22.02
   Meat/2 pack
  Eggs/7.5           $18.08            1       $18.08
   dozen
               ---------------------------------------------------------
                                              $109.00       $15.57  $2.6
                                                                     0
               ---------------------------------------------------------
Breads and
 Cereals
  Cornmeal            $1.64            6        $9.84
  Pasta/6 pack        $6.48            1        $6.48
  Quick Oats          $2.60            6       $15.60
  Cheerios/6          $7.42            1        $7.42
   pack
  Rice                $1.35            6        $8.10
  Bread/packs         $3.98            3       $11.94
   of 2 loaves
  Flour               $1.84            6       $11.04
               ---------------------------------------------------------
                                               $70.42       $10.06  $1.6
                                                                     8
               ---------------------------------------------------------
Fruit and
 Vegetables
  Fruit               $1.38            6        $8.28
   Cocktail
  Canned              $1.24            6        $7.44
   Pineapple
  Pinto Beans         $1.05            6        $6.30
  Canned Mixed        $1.05            6        $6.30
   Vegetables
  Canned              $0.99            6        $5.94
   Sliced
   Carrots
  Canned Peas         $0.99            6        $5.94
  Canned              $1.42            6        $8.52
   Tomato
   Sauce
               ---------------------------------------------------------
                                               $48.72        $6.96  $1.1
                                                                     6
               ---------------------------------------------------------
D[ai]ry
  Cheese--hard        $6.48            2       $12.96
   (cheddar)/3
   pack
  Cheese--soft        $6.98            1        $6.98
   (cream
   cheese)/6
   pack
  Soy Milk/6          $8.58            1        $8.58
   pack
  Milk                $2.63            6       $15.78
  Yogurt/18           $7.98            1        $7.98
   pack
  Butter/4           $10.98            2       $21.96
   pack
  Sour Cream/3        $4.28            2        $8.56
   pack
               ---------------------------------------------------------
                                               $82.80       $11.83  $1.9
                                                                     7
               ---------------------------------------------------------
    Total All                                $ 310.94       $44.42  $7.4
     Groups                                                          0
               =========================================================
      Total                                  $ 388.68
       with
       Invento
       ry
       Stockin
       g Fee
------------------------------------------------------------------------

Federal Rules That May Duplicate, Overlap or Conflict with the Proposed 
        Rule
    FNS is unaware of any such Federal rules or laws.
Significant Alternatives
    Prior to the passage of the farm bill, in 2013, FNS released a 
Request for Information and held five listening sessions across the 
country to gather feedback from interested stakeholders relative to 
alternatives for enhancing this area. These comments were considered 
when developing the current proposal. However, most of the changes to 
inventory requirements in this proposed rule are directed by statute. 
FNS has outlined the ability to waive these requirements for a retailer 
if access to certified SNAP retailers would be limited by the 
elimination of a small store. However, FNS does not anticipate that 
many small stores will make the decision to opt out of SNAP based on 
the new requirements. FNS anticipates potential access issues 
necessitating a waiver of requirements only in remote or rural areas 
such as rural Alaska. FNS annual fiscal year data indicates that over 
80% of benefits are spent in supermarkets and superstores which make up 
just under 15% (37,536 of the 261,150 SNAP authorized stores in Fiscal 
Year 2014) \4\ of all authorized stores. As well, 96 percent of 
households visit a supermarket or superstore at least once each month; 
the four percent of all households that never shopped in a supermarket 
tended to receive relatively small benefits.\5\ Finally, the number of 
SNAP authorized stores has increased steadily over the last 12 fiscal 
years from 145,312 in Fiscal Year 2003 to 261,150 in Fiscal Year 2014 
(56% increase); even at its low point in 2003, FNS was not made aware 
of client or advocate concerns regarding access.\6\
---------------------------------------------------------------------------
    \4\ http://www.fns.usda.gov/sites/default/files/snap/2014-SNAP-
Retailer-Management-Annual-Report.pdf.
    \5\ http://www.fns.usda.gov/benefit-redemption-patterns-
supplemental-nutrition-assistance-program.
    \6\ FNS Retailer Management Annual Reports 2003 and 2014.
---------------------------------------------------------------------------
                            [attachment 3 *]
---------------------------------------------------------------------------
    * Editor's note: Attachments 3 and 4 are ``snapshots'' of the 
referenced websites. The ``snapshots'' contain the text and hyperlinks 
that are on each page.
---------------------------------------------------------------------------
    [https://www.ams.usda.gov/rules-regulations/organic/national-list/
filing-petition]
Importing Egg Products and Shell Eggs
    FSIS regulates the importation of egg products (http://www.gpo.gov/
fdsys/pkg/CFR-2015-title9-vol2/xml/CFR-2015-title9-vol2-chapIII-
subchapI.xml), which must originate from countries and plants (http://
www.fsis.usda.gov/wps/portal/fsis/topics/international-affairs/
importing-products/eligible-countries-products-foreign-establishments/
eligible-foreign-establishments) eligible to export to the United 
States. Currently, Canada and The Netherlands are the only countries 
where plants are eligible to export egg products to the United States. 
Animal disease restrictions may be applied to some egg products by the 
Animal and Plant Health Inspection Service (APHIS).

   Letter to Importers/Brokers on Ineligible and Misbranded Egg 
        Products (http://www.fsis.usda.gov/wps/wcm/connect/915de780-
        e589-40cc-af91-8ec93ac849db/Importer-Broker-
        Egg_Products.pdf?MOD=AJPERES) (Apr. 4, 2016)

   Letter to Countries on Ineligible and Misbranded Egg 
        Products (http://www.fsis.usda.gov/wps/wcm/connect/9ff6e7f5-
        44a1-4d0f-bf0e-b0b54357cff8/Egg-Products-Country-
        letter.pdf?MOD=AJPERES) (Apr. 4, 2016)

    For Q&As about importing egg products into the United States, see 
Importing Shell Eggs and Egg Products into the United States (http://
www.fsis.usda.gov/wps/portal/fsis/topics/international-affairs/
importing-products/importing-egg-products-and-shell-eggs/faq-importing-
shell-eggs).
    Please visit the Agricultural Marketing Service (http://
www.ams.usda.gov/services/imports-exports/breaking-stock) Website for 
information about importing shell eggs for breaking into the United 
States.
    For information regarding foreign sources of eggs and egg products, 
see the Fact Sheet--Sourcing Egg Products and Shell Eggs from Foreign 
Countries (http://www.fsis.usda.gov/wps/portal/fsis/topics/
international-affairs/importing-products/importing-egg-products-and-
shell-eggs/!ut/p/a1/04_Sj9CPykssy0xPLMnMz0v 
MAfGjzOINAg3MDC2dDbwMDIHQ08842MTDy8_YwMwEqCASWYG_paEbUEFY oL-
3s7OBhZ8xkfpxAEcDQvq9iLDAqMjX2TddP6ogsSRDNzMvLV8_IjO3IL-oJDMvX begKD-
lNLmkGFksNR0hrpuYl6JbnJGakwMSLtYP14_Ca6W_CboCLGECUYDb 
0wW5oRFVPh4GmZ6OigCtT8d_/?1dmy&current=true&urile=wcm%3apath%3a%2 
Ffsis-content%2Finternet%2Fmain%2Ftopics%2Ffood-safety-education%2Fget-
an swers%2Ffood-safety-fact-sheets%2Fproduction-and-
inspection%2Fsourcing-egg-products-shell-eggs%2Fsourcing- egg-products-
shell-eggs).

          Last Modified Apr. 07, 2016.
                             [attachment 4]
    [https://www.ams.usda.gov/rules-regulations/organic/national-list/
filing-petition]
How to File a Petition \1\
---------------------------------------------------------------------------
    \1\ http://www.ams.usda.gov/rules-regulations/organic/national-
list/filing-petition.
---------------------------------------------------------------------------
    The National List of Allowed and Prohibited Substances identifies 
synthetic substances that may be used and the nonsynthetic (natural) 
substances that may not be used in organic crop and livestock 
production. It also lists the non-organic substances that may be used 
in or on processed organic products. Any individual or organization may 
submit a petition to add, remove, or amend the listing of a substance.
Role of the NOSB
    The National Organic Standards Board (NOSB), a Federal Advisory 
Committee, reviews petitions based on specific criteria in the Organic 
Foods Production Act of 1990. Depending on the proposed use of the 
substance, the petition will be reviewed by an NOSB sub-committee: 
crops, livestock, or handling.
Role of the NOP
    The National Organic Program (NOP) accepts petitions, solicits 
public comments, and manages all communication with petitioners.
Petition Process
    The petition process is summarized below:

   Individual or organization develops & submits petition. A 
        complete petition for a single substance * must be submitted to 
        the NOP as described in the guidelines for petition submission 
        (NOP 3011: National List Petition Guidelines.\2\ View notice in 
        the Federal Register b.\3\
---------------------------------------------------------------------------
    \2\ http://www.ams.usda.gov/sites/default/files/media/
NOP%203011%20Petition%20Procedures.pdf.
    \3\ https://www.federalregister.gov/articles/2016/03/10/2016-05399/
national-organic-program-notice-of-availability-of-national-list-
petition-guidelines.

   E-mail submission. Petitions may be submitted as a single 
        PDF file via e-mail ([email protected]).\4\
---------------------------------------------------------------------------
    \4\ mailto:[email protected]?subject=National%20List%20Petition.

   Mail submission. Petitions may be sent electronically (i.e., 
---------------------------------------------------------------------------
        CD) or hard copy via mail:

  National List Manager,
  USDA/AMS/NOP, Standards Division,
  1400 Independence Ave. SW,
  Room 2648-So., Ag Stop 0268,
  Washington, DC 20250-0268

      Note: Electronic submission (by disk or e-mail) is preferred to 
        facilitate posting of petitions on the NOP website.

   NOP determines if substance is eligible for petition. If the 
        substance is eligible for petition and the petition meets the 
        guidelines referenced above, it is forwarded to the appropriate 
        NOSB sub-committee (crops, livestock, or handling). If the 
        petition is insufficient or if additional information is 
        needed, NOP contacts the petitioner to request additional 
        information. Eligible petitions are posted on the NOP website 
        for public viewing, with the exception of Confidential Business 
        Information.

   NOSB sub-committee determines if additional information is 
        needed. If the sub-committee finds the petition insufficient, 
        NOP will contact the petitioner to obtain additional 
        information. If the petition is deemed sufficient, the sub-
        committee may request a technical report. These reports are 
        done by a third-party contractor and posted on the NOP website.

   NOSB sub-committee reviews petition and publishes a proposal 
        with request for public comments. While reviewing substances, 
        the NOSB uses these criteria: \5\ The NOSB sub-committee's 
        proposal outlines their reasoning and proposed response to the 
        petition. The proposal will include background information, 
        discussion, and the sub-committee's votes to: (1) Classify the 
        substance (2) Crops and livestock: synthetic or non-synthetic 
        (3) Handling: agricultural or non-agricultural (4) Add, remove, 
        or amend the listing of the petitioned substance.
---------------------------------------------------------------------------
    \5\ http://1.usa.gov/NationalListCriteria.

   NOP publishes the public meeting agenda and solicits public 
---------------------------------------------------------------------------
        comments on NOSB's behalf.

   NOSB analyzes comments & votes on petition. The NOSB sub-
        committee makes necessary edits based on written and in-person 
        public comments and presents the amended proposal to the full 
        NOSB. The full NOSB discusses and votes on the petition in a 
        public forum.

   NOSB submits final recommendation to NOP. After the meeting, 
        the NOSB finalizes its recommendation to reflect the final vote 
        and submits it to the NOP.

   NOP reviews recommendation and initiates rulemaking, if 
        appropriate. The NOP reviews all NOSB recommendations and 
        publishes its response on the NOP website. The NOP may decide 
        not to add a recommended substance to the National List, but 
        may not add a substance without the NOSB's recommendation. 
        Learn about the rulemaking process b.\6\
---------------------------------------------------------------------------
    \6\ https://www.ams.usda.gov/rules-regulations/rulemaking.

          * If the substance you wish to petition is an inert 
        ingredient for use in a pesticide formulation, please also 
        review this memo.\7\
---------------------------------------------------------------------------
    \7\ https://www.ams.usda.gov/sites/default/files/media/NOP-Notice-
11-6.pdf.
---------------------------------------------------------------------------
Questions?
    Please contact the National List Manager

[email protected]. \8\
---------------------------------------------------------------------------
    \8\ mailto:[email protected].
---------------------------------------------------------------------------
Rules & Regulations:
Organic Regulations \9\
---------------------------------------------------------------------------
    \9\ http://www.ams.usda.gov/rules-regulations-terms/organic-
regulations.
---------------------------------------------------------------------------
      


 
    HEARINGS TO EXAMINE USDA ORGANIZATION AND PROGRAM ADMINISTRATION

                                (Part 2)

                              ----------                              


                         FRIDAY, MARCH 18, 2016

                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Committee met, pursuant to call, at 9:00 a.m., in Room 
1300, Longworth House Office Building, Hon. K. Michael Conaway 
[Chairman of the Committee] presiding.
    Members present: Representatives Conaway, Lucas, Thompson, 
Benishek, LaMalfa, Yoho, Rouzer, Moolenaar, Kelly, and Lujan 
Grisham.
    Staff present: Bart Fischer, Caleb Crosswhite, John 
Goldberg, Josh Maxwell, Mary Nowak, Matt Schertz, Patricia 
Straughn, Scott C. Graves, Skylar Sowder, Stephanie Addison, 
Faisal Siddiqui, Anne Simmons, Evan Jurkovich, Keith Jones, 
Mary Knigge, Matthew MacKenzie, Mike Stranz, Nicole Scott, and 
Carly Reedholm.

OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE 
                     IN CONGRESS FROM TEXAS

    The Chairman. Well, good morning. This part two of the 
hearing of the Committee on Agriculture concerning USDA 
organization and program administration, will come to order.
    I will now ask Trent to offer a quick opening prayer.
    Trent.
    Mr. Kelly. Bow your heads.
    Dear, Heavenly Father, we just ask that you bless this 
great nation, that you continue to bless our farms and our 
farmers. We ask that you continue to bless us with rich 
resources and water. Dear Lord, we just ask that you bless all 
of us in government to help us carry out your will. In Jesus' 
name, I pray. Amen.
    The Chairman. Thank you.
    Well, good morning. The chair would remind Members that 
they will be recognized for questioning in order of seniority, 
for Members who were here at the start of the hearing. After 
that, Members will be recognized in order of arrival. I think 
everybody was here in order.
    Witnesses are reminded to limit their oral comments to 5 
minutes. All your written statements, of course, will be 
included in the record. And over the course of today's hearing, 
following the testimony of each witness, everyone at the table 
will be available for questions.
    After each panel, we will have a 10 minute break. We will 
see how this goes. If Members want to come visit with you, we 
have 1302 reserved. If you guys slip over there real quick, and 
then we can come say hi, then we will get the other panel in, 
and that way that will work.
    First panel this morning, I would like to welcome, the 
Honorable Robert Bonnie, Under Secretary of Natural Resources 
and Environment with USDA. He is accompanied this morning by 
Ms. Mary Wagner, who is the Associate Chief of the Forest 
Service, and Mr. Jason Weller, who is Chief, Natural Resources 
Conservation Service.
    Mr. Bonnie, the floor is yours, sir.

   STATEMENT OF HON. ROBERT BONNIE, UNDER SECRETARY, NATURAL 
                RESOURCES AND ENVIRONMENT, U.S.
          DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.;
   ACCOMPANIED BY MARY WAGNER, ASSOCIATE CHIEF, U.S. FOREST 
     SERVICE, USDA; JASON WELLER, CHIEF, NATURAL RESOURCES 
                   CONSERVATION SERVICE, USDA

    Mr. Bonnie. Thank you very much, Mr. Chairman.
    Mr. Chairman, distinguished Members of the Committee, I 
want to thank you for the opportunity to appear before you 
today to discuss the work of the Natural Resources Conservation 
Service and the Forest Service. I will focus much of my remarks 
on implementation of the 2014 Farm Bill, and in addition, I 
will address the impacts of wildland fire on the Forest Service 
budget.
    NRCS is demonstrating that voluntary conservation backed by 
strong science, done in concert with a variety of partners, can 
solve critical natural resource challenges for America's 
farmers, ranchers, and forestland owners.
    I reported to this Committee last September that the agency 
has completed interim final rules for the Environmental Quality 
Incentives Program, the Conservation Stewardship Program, and 
the new Agricultural Conservation Easement Program. This past 
week, we published the final rule on CSP, and EQIP and ACEP are 
nearing final stages of review and will be published this 
spring.
    The new Regional Conservation Partnership Program continues 
to be extremely popular. In February, Secretary Vilsack 
announced that USDA and partners across the nation together 
will direct up to $720 million towards 84 conservation projects 
that will help communities improve water quality, combat 
drought, enhance soil health, support wildlife habit, and 
protect agricultural viability. And the request for proposals 
for the third round of RCPP, set to be awarded at the end of 
2016, was just announced last week.
    Beyond this program, NRCS is spearheading a series of 
initiatives to address drought, water quality, wildlife 
habitat, and other issues. NRCS is demonstrating through its 
Working Lands for Wildlife program that farmers, ranchers, and 
forestland owners can voluntarily restore habitat for rare 
wildlife so species no longer need the protection of the 
Endangered Species Act.
    Just last week, the Department of the Interior de-listed 
the Louisiana Black Bear, which was possible in no small part 
thanks to the significant engagement of NRCS with private 
landowners through the Wetlands Reserve Program.
    Let me now turn to the Forest Service. Increasing the pace 
and scale of forest restoration and management across the 
National Forest remains the top priority for the agency. The 
agency continues to invest in collaborative landscape-scale 
projects and has increased acres treated over the last several 
years. Timber sales have increased by 20 percent since 2008.
    The Forest Service has successfully implemented all the 
relevant provisions of the 2014 Farm Bill. I reported last fall 
that 20 projects were moving forward under the new insect and 
disease provisions of the farm bill. Currently, 34 projects are 
now moving forward, with 28 of those using categorical 
exclusions under NEPA. The Forest Service now has good neighbor 
authority agreements with nine states, up from the three I 
reported last fall, and we have more agreements on the way.
    The biggest obstacle to increasing forest restoration and 
management is the wildfire budget. Last year was a very 
difficult year with more than 10 million acres impacted, many 
lives lost, including 13 firefighters, and hundreds of homes 
burned. The agency was forced to transfer $700 million from 
non-fire programs to cover suppression costs.
    The Forest Service spent more than 60 percent of its budget 
on fire-related activities last year, up from 16 percent 2 
decades ago. Longer fire seasons, increased fuel loads, and 
development into our wildlands are all significantly increasing 
the cost of firefighting. All agency activities are suffering, 
including recreation, research, range management, and, yes, 
forest management.
    The current budget system, which requires us to shift 
additional resources to fire every year, is cannibalizing the 
very programs that can help us reduce the threat of 
catastrophic wildfire. Many of you are keenly aware of the fire 
budget challenge, and I appreciate the hard work that you have 
invested on this issue. It was disappointing to be so close to 
a comprehensive fix last year and not see it realized.
    We will continue to push hard for a comprehensive fix. The 
urgency to solve this problem has not lessened. The trends are 
not good. Forest Service scientists expect catastrophic fire to 
get worse. A comprehensive fire fix, one that stops fire 
transfers and provides the additional capacity the agency needs 
to increase forest management, will over the long-term save 
lives, property, natural resources, and taxpayer dollars.
    Thank you very much.
    [The prepared statement of Mr. Bonnie follows:]

   Prepared Statement of Hon. Robert Bonnie, Under Secretary, Natural
Resources and Environment, U.S. Department of Agriculture, Washington, 
                                  D.C.
    Mr. Chairman, Ranking Member, and distinguished Members of the 
Committee, thank you for the opportunity to appear before you today to 
discuss the role of the Natural Resources Conservation Service (NRCS) 
and the Forest Service at the U.S. Department of Agriculture. My 
testimony today will focus on farm bill implementation; wildfire 
response; and strengthening rural communities through voluntary 
conservation, resilient landscapes and recreational opportunities.
Farm Bill Implementation
    Implementation of the 2014 Farm Bill is a priority across USDA. The 
new farm bill delivered a strong conservation title that makes robust 
investments to conserve and support America's working lands and 
consolidates and streamlines programs to improve efficiency and 
encourage participation. For the Forest Service, the farm bill expanded 
current authorities and provided several new authorities including Good 
Neighbor Agreements, expanded insect and disease designations under the 
Healthy Forest Restoration Act, and permanently reauthorized 
stewardship contracting. NRCS is focusing on implementation of the 
Environmental Quality Incentives Program (EQIP), Conservation 
Stewardship Program (CSP), Agricultural Conservation Easement Program 
(ACEP), Regional Conservation Partnership Program (RCPP), and Voluntary 
Public Access and Habitat Incentive Program (VPA-HIP).
Expanded Insect and Disease Designations
    The 2014 Farm Bill added authority to the Healthy Forest 
Restoration Act to authorize designation of insect and disease 
treatment areas and provide a categorical exclusion (CE) for insect and 
disease projects on areas as large as 3,000 acres. The Forest Service 
has designated approximately 52 million acres in 37 states under the 
authority. Currently, 36 projects have been proposed under the 
provision; the Forest Service intends to use the CE for 30 of the 
projects. The Forest Service is preparing Environmental Assessments for 
five projects, and an Environmental Impact Analysis Statement for the 
remaining project.
Good Neighbor Agreement Authority
    The Forest Service completed the requirements under the Paperwork 
Reduction Act to approve the new Good Neighbor Agreement templates that 
will be used to carry out projects with the states. The Forest Service 
worked closely with the states to collaboratively develop the new 
templates, which were approved by the Office of Management and Budget 
on June 24, 2015. Since then, the agency has entered into agreements 
with the states of Wisconsin, Pennsylvania, Utah, Michigan, Texas, New 
Hampshire, California, Alabama, Minnesota, Wyoming and Colorado to 
implement projects to carry out timber sale, hazardous fuels, habitat 
improvement and other restoration projects in those states.
Stewardship Contracting
    The permanent authority for stewardship contracting provided by the 
farm bill is fundamentally the same as the stewardship contracting 
authority the FS and BLM have implemented for more than 10 years. The 
final rule to implement the permanent authority was published on 
January 22, 2016.
    Traditional timber sale contracts will continue to be a vital tool 
for the Forest Service in accomplishing management of the National 
Forests. At the same time, stewardship contracting is helping the 
Forest Service achieve land and natural resource management goals by 
funding forest health and restoration projects, stream restoration, 
hazardous fuel removal, and recreation improvements. In many areas, 
stewardship contracting will allow the agency to build larger projects, 
treating more acres, with broader public support. Key accomplishments 
in FY 2015 utilizing Stewardship Contracting include:

   6,569 acres of forest vegetation established,

   13,968 acres of wildland-urban interface (WUI) hazardous 
        fuels treated,

   24,276 acres of non-WUI hazardous fuels treated, and

   40,726 acres of terrestrial habitat enhanced.

    Additionally, the farm bill required the agency develop a fire 
liability provision that is available for use in all stewardship 
contracts and agreements within 90 days of enactment. The fire 
liability provision required by the farm bill will limit a contractor's 
liability from as a result of a non-negligent fire. The fire liability 
clause was published in the Federal Register on May 22, 2014 as an 
interim final rule, making it immediately available for use. The final 
fire liability clause was published in the Federal Register on February 
12, 2016 and was effective beginning March 14, 2016.
Conservation Stewardship Program
    Since CSP was authorized by the 2008 Farm Bill, the program has 
become a major force for agricultural conservation, and it continues to 
inspire action to enhance America's natural resources. Private or 
Tribal agricultural land and non-industrial private forestland is 
eligible, unless it is enrolled in the Conservation Reserve Program 
(CRP), ACEP-Wetlands Reserve Easements, or the Conservation Security 
Program. With the FY 2015 sign up enrollment of about 7 million acres, 
the total acreage of lands now enrolled in CSP exceeds 67 million 
acres, about the size of Iowa and Indiana, combined. In FY 2015, 55 
percent of the 2010 contracts were renewed for another 5 year term 
building on the conservation benefits gained from the initial 
contracts.
    The CSP Final Rule was published last week, reflecting statutory 
changes to the acreage enrollment cap, stewardship levels, contract 
modifications, and CRP and certain easement land eligibility. NRCS 
received nearly 500 individual comments; most related to small 
operations having access to the program, minimum payments, contract 
rates, and stewardship thresholds.
Environmental Quality Incentives Program
    Through EQIP, producers addressed their conservation needs on 
nearly 10 million acres in FY 2015. EQIP provides financial and 
technical assistance to agricultural producers to help plan and 
implement conservation practices that address natural resource 
concerns. Conservation practices are designed to improve soil, water, 
plant, animal, air and related resources on private and Tribal 
agricultural land, and non-industrial forestland In FY 2015, over $861 
million was obligated in nearly 33,000 contracts to support this 
conservation work. EQIP has been instrumental in helping communities 
respond to drought as well, including $20 million in 2015 for 
addressing drought related resource concerns across the West.
    The EQIP Interim Rule was published in December 2014, reflecting 
statutory changes to incorporate the purposes of the former Wildlife 
Habitat Incentive Program and address the payment limitation and 
irrigation history waiver authority, advance payments for historically 
under-served producers, and preferences to certain veteran farmers and 
ranchers. NRCS received over 330 individual comments; most related to 
the irrigation history, confined animal feeding operations, EQIP plan 
of operations, program administration, payment rates and limitations, 
application selection, and funding levels for wildlife practices. The 
final rule is targeted for publication in Spring 2016.
Conservation Innovation Grants
    Conservation Innovation Grants (CIG) are a component of the EQIP. 
These grants stimulate the development and adoption of innovative 
conservation approaches and technologies, while leveraging the Federal 
investment in environmental enhancement and protection in conjunction 
with agricultural production. CIG is used to apply or demonstrate 
previously proven technology in order to increase adoption with an 
emphasis on opportunities to scale proven, emerging conservation 
strategies. CIG funds projects targeting innovative on-the-ground 
conservation, including pilot projects and field demonstrations. In 
2015, NRCS invested $20.5 million in 45 Conservation Innovation Grants 
(CIG), leveraging over $20 million in non-Federal matching funds. Many 
of these projects use a systems approach to solving water quality 
problems such as reducing nitrogen and phosphorus in Western Lake Erie 
Basin and the Mississippi River Basin. Last week, NRCS announced the 
availability of $20 million in CIG funding for 2016, with up to $2 
million set aside for projects targeted to historically under-served 
and veteran farmers and ranchers, beginning farmers and ranchers, and 
those with limited resources.
Agricultural Conservation Easement Program
    Landowners participating in the Agricultural Conservation Easement 
Program (ACEP) enrolled an estimated 116,596 acres of farmland, 
grasslands, and wetlands through 490 new ACEP easements (138 
Agricultural Land Easements parcels, 68,895 acres and 209 Wetlands 
Reserve Easement , 46,338 acres) with the $332 million in FY 2015 
funding.
    The ACEP Interim Rule was published in February 2015, reflecting 
statutory changes to consolidate the purposes of Farm and Ranch Lands 
Protection Program, Grassland Reserve Program (easement component 
only), and Wetlands Reserve Program and address the certification 
process for ACEP-Agricultural Land Easements; authority to subordinate, 
modify, or terminate an easement; grasslands of special environmental 
significance; and the agricultural land easement plan. NRCS is 
currently evaluating public comments and finalizing development of 
recommendations for the final rule before it proceeds in the regulatory 
review process. We expect to publish the final rule this Spring.
Regional Conservation Partnership Program
    The RCPP created a new platform for engaging partners and 
leveraging the Federal conservation investment. RCPP promotes 
coordination between NRCS and partners to deliver conservation 
assistance to producers and landowners. NRCS provides assistance to 
producers through partnership agreements and through program contracts 
or easement agreements. Now in its second year, RCPP has demonstrated 
high demand, with over 2,000 partners leading nearly 200 projects 
nationwide. All told, in the first 2 years of the program, NRCS will 
have invested about $500 million while another $900 million is being 
brought in by partners to address locally defined, nationally 
significant natural resource issues. NRCS recently announced 
availability for the 2016 round of RCPP funding.
Voluntary Public Access and Habitat Incentives Program
    The VPA-HIP assists states and Tribes to increase public access to 
private lands for wildlife-dependent recreation, such as hunting, 
fishing and hiking. In FY 2014, NRCS made $20 million available for 
VPA-HIP awards and was able to fund ten of the 30 proposals received. 
In February 2015, NRCS announced the availability of another $20 
million for VPA-HIP projects. Project selections were announced on 
August 17 and funding was used to award grants to projects in 15 
states.
Mitigation Banking Program
    The Mitigation Banking program provision will be implemented 
directly through an announcement of program funding. On January 28th, 
NRCS announced up to $9 million in funding. Applicants (states, non-
governmental organization, for-profits companies, Tribes) have 60 days, 
through March 28th, to submit proposals to develop and operate wetland 
mitigation banks, or to modify existing banks to better serve 
agricultural producers.
    In addition to the major rule changes discussed above, minor 
statutory changes to Technical Service Providers; State Technical 
Committees; Healthy Forests Reserve Program; Small Watershed Program; 
Regional Equity; VPA-HIP, and Agricultural Management Assistance were 
published in a consolidated Interim Final Rule in August 2014. The few 
public comments received were addressed in the final rule published in 
April 2015.
Managing Wildland Fires
    Increasingly severe fire seasons are one of the greatest challenges 
facing the nation's forests. Last year, a total of 68,151 fires burned 
over 10.1 million acres across all ownerships in the United States. We 
spent 24 days at National Preparedness Level 5--the highest level--
meaning all available ground and air assets were committed to priority 
work. The Forest Service, in coordination with our fire response 
partners, mobilized thousands of firefighters along with numerous 
airtankers, helicopters, fire engines and other assets through our 
integrated, interagency suppression efforts. Every state and Puerto 
Rico, along with the military and international support, provided 
people and equipment last season to respond to the severe fire 
activity. Last year's fires destroyed over 4,600 structures; however, 
the greatest losses involved the fatalities of 13 wildland firefighters 
who made the ultimate sacrifice to protect the lives of others. The 
Forest Service will continue to collaborate with its Federal, state, 
local, and Tribal governments, partners, and stakeholders on the 
implementation of the National Cohesive Wildland Fire Management 
Strategy.
    The Forest Service has one of the most effective fire organizations 
in the world and continues to keep almost 98 percent of the wildfires 
we fight very small. However, the few fires that do escape initial 
response tend to grow much larger far more quickly than ever before. As 
documented in the 2015 Rising Cost of Fire report,\1\ the cost of fire 
suppression has soared in the past 20 years and is having a 
debilitating impact on the Forest Service budget and non-suppression 
activities of the Forest Service.
---------------------------------------------------------------------------
    \1\ http://www.fs.fed.us/about-agency/budget-performance/cost-fire-
operations.
---------------------------------------------------------------------------
    As noted in our report last year, the growth of fire from 16% of 
the agency's budget to more than 52%, before transfer, in FY 2015 is 
putting the agency in an untenable position. Major shifts in financial 
resources and in staff capacity, with non-fire staff down 39% as a 
result of the increasing costs of fire suppression, are having a real 
impact on our ability to fulfill our mission of caring for the land and 
serving people. It impacts the acres we can restore, the timber 
projects we can plan, the trails we can maintain, the communities we 
can protect, and so much more. The fire suppression cap adjustment 
proposal in our budget request would prevent fire transfers and 
maintain capacity for other programs.
Restoring Fire-Adapted Ecosystems
    Fire plays a beneficial role in maintaining the ecological 
stability of many landscapes, and the Forest Service is working with 
partners to restore healthy, resilient, fire-adapted ecosystems. Our 
goal, especially near homes and communities, is to prepare forests and 
grasslands to resist stresses such as drought and recover from 
disturbances, including wildfires. Our large-scale restoration projects 
are designed in part to restore fire-adapted forest types across large 
landscapes, including the reintroduction of periodic wildland fire 
where safe and effective.
    Developing new markets for the low-value woody materials we remove 
during restoration and hazardous fuels treatments will help offset the 
costs of these activities while providing new revenue streams for 
private landowners and remains a top priority for the Forest Service. 
We will continue to provide grants and other forms of assistance for 
wood-to-energy initiatives, and to help projects compete for other 
sources of funding. We will also provide technical assistance to help 
facilities that convert wood to energy become or remain financially 
viable.
Strengthening Rural Communities through Voluntary Conservation, 
        Resilient Landscapes and Recreational Opportunities
    Our National Forest System presents a range of recreational 
opportunities to connect people with nature in an unmatched variety of 
settings and through a plethora of activities. Spending by visitors 
engaging in recreation activities, including skiing, hiking, hunting, 
and fishing, supports more jobs and economic output than any other 
activities on the National Forest System. In 2012, outdoor recreation 
on the National Forest System supported around 190,000 jobs and 
contributed about $13 billion to the nation's gross domestic product.
    Through work on the 193 million acres of National Forest System 
lands, the timber and forest products industries, livestock producers, 
and minerals/energy production collectively support about 118,000 jobs. 
Each year, these industries contribute about $11.5 billion to America's 
gross domestic product. In rural areas in particular, these uses 
deliver sustained social and economic benefits to communities.
    The Forest Service works to build thriving communities across the 
nation by providing communities with the many economic benefits that 
result from sustainable multiple-use management of the National Forests 
and Grasslands, helping urban communities reconnect with the outdoors, 
and expanding the benefits that both rural and urban residents get from 
outdoor recreation. Jobs and economic benefits stem from our 
administration of the National Forest System, including its multiple 
uses, as well as from investments in the activities, access, and 
infrastructure needed to deliver essential public services such as 
clean water, electrical power, and outdoor recreational experiences.
    NRCS is helping producers improve their natural resources and 
strengthen their communities. The right conservation practices put in 
the right places are an effective means to achieve cleaner more 
abundant water for farmers, ranchers, communities, and wildlife. Using 
farm bill programs through the Mississippi River Basin Initiative 
(MRBI), NRCS has invested significantly in high-priority water quality 
projects in the Basin delivering on the ground benefits. For example, 
as a result of MRBI conservation efforts, Arkansas was able to remove 
two stream segments from the State's Clean Water Act 303(d) impairment 
designation. Working with partners and using farm bill tools, farmers, 
ranchers and other landowners have helped remove nine more streams from 
Oklahoma's 303(d) list of impaired streams in 2014. Oklahoma ranks 
second in the nation for Environmental Protection Agency-recognized 
water quality success stories. In the region overlying the Ogallala 
Aquifer in the Central Plains, farm bill programs have allowed NRCS to 
partner with farmers to install water conservation practices that 
conserved an estimated 1.5 million acre-feet of groundwater over 4 
years, or enough water to provide annual water needs for about 3.3 
million households.
    If the widespread drought has shown us anything, it is the value of 
crop resilience through good soil health management systems. Using farm 
bill programs, NRCS has been accelerating adoption of soil health 
practices and helping producers build resilience in their production 
systems. Soil health management systems help increase organic matter, 
reduce soil compaction, improve nutrient storage and cycle and increase 
water infiltration and water availability to plants. These benefits 
lead to greater resiliency to adverse conditions but also boost yields. 
For example, a national survey of farmers documented an increase in 
yields of nine percent for corn following cover crops and ten percent 
for soybeans after cover crops.
    The StrikeForce for Rural Growth and Opportunity initiative targets 
farm bill programs in persistent poverty communities to assist farmers 
and ranchers in achieving economic and environmental objectives. Since 
2010, NRCS and other USDA agencies have focused assistance and outreach 
in over 970 counties, parishes, boroughs, and census areas, and in 
Indian reservations in 26 states. In FY 2015 alone, NRCS invested $318 
million in partnership with producers in high-poverty communities to 
help their operations be more economically successful and 
environmentally sustainable. For example, NRCS in partnership with 
Tuskegee University has invested about $1 million to help nearly 40 
producers in Alabama StrikeForce counties to incorporate innovative 
practices on their farming operations, including retro-fits for current 
irrigation systems, new wells, solar powered wells, and drip irrigation 
systems that will make their operations more productive and 
sustainable.
Conclusion
    We are now facing some of the greatest ecological challenges in our 
history: invasive species, climate change effects, regional drought and 
watershed degradation, fuel buildups and severe wildfires, habitat 
fragmentation and loss of open space, and devastating outbreaks of 
insects and disease. In response, we are working with our public and 
private partners to increase the pace and scale of ecological 
restoration and promote voluntary conservation that is creating 
healthy, resilient landscapes capable of sustaining and delivering 
clean air and water, habitat for wildlife, opportunities for outdoor 
recreation, and providing food and fiber for the world. The Forest 
Service and NRCS provide the programs and services that help strengthen 
agriculture, the environment, and rural economies.

    The Chairman. Secretary Bonnie, thank you very much. I 
appreciate it. Good concerns, all. Thanks, all three of you, 
for being here this morning.
    Given the Members here, we may have more than one round of 
questions. I will recognize myself for 5 minutes.
    Chief Weller, I am getting concerns back home. Everything 
is local, as we say. I have folks that are complaining that on 
certain EQIP contracts that the ranchers are being required as 
a part of that to take up certain grazing practices that are 
not vetted through the local decision-making process. They are 
telling me that it is a top-down decision, that they no longer 
have any kind of real say in what is going on with respect to 
that. As a result, the number of contracts are down because 
they don't want to marry up those grazing practices with what 
they are trying to get done.
    Can you talk to us about what has changed with respect to 
your decision-making processes at the agency?
    Mr. Weller. Our decision-making processes have not changed, 
and we really value the local approach. I had a chance to visit 
with the State Conservationist, Sal Salinas, yesterday about 
this issue, and what he has then shared with me is he makes it 
a requirement that at a minimum every field office has at least 
one local worker meeting a year.
    Most field offices have several what we call local work 
group meetings with a chance to meet with local district staff, 
local farm groups, individual farmers themselves, and really 
understand what their priorities are for that local area, that 
field office; which, in turn then, informs how that field 
office in that area of Texas is then going to prioritize 
assistance, whether it is for forestry, for grazing, for water 
quality, water quantity issues.
    With respect to the specific concerns on grazing, this is 
more about a bigger picture approach that NRCS is trying to 
take, and it is really trying to offer producers, both ranchers 
and farmers, a systems approach to conservation.
    And so my understanding in this specific case, the concerns 
are a producer may sign up for what we call a facilitating 
practice, like brush management, prescribed fire, fencing, 
pasture replanting. And what we are offering then is part--and 
it is not mandatory--but we are offering a part then as a suite 
of assistance that then, including doing a planting or brush 
management, you then have to offer the incentive to do proper 
management of that range or pasture area.
    So we would offer then a prescribed grazing plan, which 
would be then, if the taxpayers are paying money to put in new 
vegetation, let's help the producer then better manage that so 
that you are not going to get the weeds, the brush coming back 
in.
    The Chairman. So the grazing practice is not mandatory, it 
is voluntary?
    Mr. Weller. It is voluntary, yes, sir.
    The Chairman. Okay. Why do our guys think it is mandatory?
    Mr. Weller. We will have to follow up with Sal and his team 
to understand, to maybe help clarify this is not a mandatory 
requirement.
    The Chairman. Okay. Because they think it is either-or, you 
either take the top-down suite of offers. So I appreciate that.
    Mr. Weller. Okay.
    The Chairman. Also, while I have you on the hook--again, 
everything is local--the allocation for EQIP for Texas has 
generally been in the range of $75 million to $90 million. This 
year it is $66 million. Can you talk to us about where the 
money went and what was the decision there?
    Mr. Weller. Yes. Over the last several years the average, 
as you pointed out, has been about $78 million, $79 million. It 
has fluctuated a little around that. But the average is around 
$78 million, $79 million. So the initial allocation to Texas 
for EQIP financial assistance is $66 million, but this is just 
the initial allocation. So those other averages are the final 
allocation, what Texas ended up with at the end of the year.
    Over the course of the year, what we do is we allocate 
money and then we are constantly reallocating between states. 
As demand fluctuates between states, there could be severe 
drought, we would then reallocate from other regions of the 
country where they don't have as much demand or need for EQIP.
    For example, we are going to be allocating to Texas--well, 
we already have an advisory allocation to Texas, an additional 
$6 million. Right now they are going to now have $72 million. I 
suspect by the end of the year they are going to be well above 
their average.
    The Chairman. Okay. So what these guys were looking at was 
the average of what happened the whole year versus what started 
the year----
    Mr. Weller. They are comparing final versus the initial.
    The Chairman. I got that. Thank you.
    Mr. Bonnie, on the issue with respect to DUNS numbers and 
SAM database, a lot of dustup there. We have folks that are 
getting pretty staggering bills. Can you talk to us? Is that 
getting fixed? Are the producers being protected from errors or 
omissions that they really weren't at fault on?
    Mr. Bonnie. Yes, I think the Chief can talk to this as 
well, but we have put a lot of NRCS staff to work through this. 
This problem came to light last summer.
    The Chairman. Right.
    Mr. Bonnie. And we put additional staff to try and work 
through as quickly as we can. And so we are, you can imagine, 
paying very close attention to this.
    The Chairman. Okay. So at the end of the day, though, is 
there a way to improve this deal where we don't have this 
happen again inadvertently? Is there some way to improve both 
those systems? Do we need them both? Because a Dun & Bradstreet 
number, your internal database number----
    Mr. Bonnie. Yes. I might turn to the Chief on this one.
    The Chairman. Okay. Chief, what do you have?
    Mr. Weller. We are taking this very seriously, and I am 
personally concerned because it is honestly hurting the brand 
of NRCS.
    The Chairman. Right.
    Mr. Weller. It is very concerning.
    What this is is a requirement that was put in place. It was 
the Federal Financial Management Transparency and 
Accountability Act of 2006----
    The Chairman. Right, right, right.
    Mr. Weller.--requires a producer, an entity. If someone 
files their taxes as an entity they must get both a DUNS number 
and a System for Award Management number, a SAM number. The 
DUNS number is a once-and-done. You get your DUNS, you don't 
have to reregister again.
    The SAMs, the way that GSA has set this up, is they have to 
renew annually. So what happened is some folks get their DUNS, 
they don't get their SAM, or they don't realize they have to 
re-up every year.
    We are required to have entities provide these numbers. 
This is for all entities dealing with the government. We did a 
review. We found a lot of producers, there was a hitch where 
they either didn't get their SAM or it had expired. It is 
officially, under Federal accounting rules, it is an improper 
payment.
    We are working really hard. We are not going to go after 
the money. I am using my equitable relief authorities this 
Committee provides me. I have already waived over 5,000 cases 
that have been brought to me.
    The Chairman. Okay.
    Mr. Weller. You can rest assured, we are taking it really 
seriously, dedicating staff, as the Under Secretary said. We 
are going to fix this.
    Going forward, we are going to try and figure out a way 
this is less onerous for producers. But at the end of the day, 
it is still a Federal requirement that producers have to 
register these numbers.
    The Chairman. Yes. None of us want improper payments if 
there is a way to get at that. So if there is something you 
need legislatively to smooth this out, still get what we all 
want, and that is nobody getting the money they shouldn't get.
    Mr. Weller. Thank you.
    The Chairman. Thank you for the aggressive attitude on 
using equitable relief.
    Mr. Lucas, 5 minutes.
    Mr. Lucas. Thank you, Mr. Chairman.
    Chief, I suspect you might have a clue as to I would like 
to discuss. I know my colleague, the Ranking Member, Mr. 
Peterson, brought this issue up, discussing the watershed 
funding programs in this year's budget proposal. And I would 
like to echo his sentiments from your prior appearance before 
the Committee.
    The watershed programs are important, and I, like Collin, 
was very disappointed to see the suggested funding level in the 
President's budget for these programs. Could you comment on 
that one more time, please?
    Mr. Weller. There is no smaller, bigger, whatever the 
saying is, supporter for this program, sir, than NRCS and 
myself. As you know, I also was really proud in part to 
recognize your leadership of the Watershed Rehabilitation 
Program in Oklahoma. And, yes, the P.L. 83-566 program has been 
historically an excellent program. It has delivered huge 
results for both rural and urban America across the country.
    Yes, in the 2016 budget, the President did request $200 
million for the P.L. 83-566 program. In the end, as part of the 
Administration's budget formulation, ultimately the 2017 
budget, I wasn't part of those final decisions, but my 
understanding is really the Administration took a look, and in 
the 2016 budget they asked for $200 million. In the end, 
Congress did not provide any funding. But it did as part of the 
President's budget CHIMP or cut mandatory funding for 
conservation programs that this Committee authorizes out of the 
2016 budget.
    In the 2017 budget, there is a decision where to put those 
resources. In the end, they did not request money for P.L. 83-
566. But historically, the President did not request a dollar 
of cuts from any of the Title II conservation programs in the 
farm bill, which is a really bill deal.
    It was, ultimately, from a budgeting standpoint, is where 
is that marginal dollar better invested. And in this case, 
because of all the priorities for NRCS, USDA, and the 
Administration, that marginal dollar was better invested in the 
Title II programs.
    Mr. Lucas. We would agree, both you and I, from our 
experiences, P.L. 83-566 is an important long-term investment 
in preserving the resources of this country. And ultimately, 
whether it is future efforts of the Administration or future 
efforts in the budget process here, we have to get back on 
track and continue to make those investments.
    Sticking with that point, I hear lots of good things about 
the Regional Conservation Partnership Program that was in the 
House-passed conservation title, about how it is being 
implemented and all that. One of the programs allowed, of 
course, as a part of that, it authorizes the use of some of 
these resources in P.L. 83-566.
    So tell me, in the 2016 round of RCPP projects, only two 
projects were funded that use these authorities. And my concern 
is that this innovative approach is not being fully utilized 
and the potential there is not being realized.
    And let's visit for a moment about, is the application 
process too complicated for small communities? Do the folks who 
would potentially use this not understand the program? Is there 
something going on at USDA? Expand for me, if you would, and if 
there is something that needs to be corrected, let's talk about 
that for future legislative corrections.
    Mr. Weller. Well, thank you for the recommendation for 
RCPP. I am personally really excited about it, and ultimately 
it is achieving the vision of this Committee's leadership on 
it. It has brought in thousands of new partners across the 
country into the conservation arena and the conservation 
mission. And so we have awarded funds to 199 projects. We, 
ourselves, at NRCS, we have put in $590 million, but that in 
turn has leveraged over $900 million in non-Federal 
contributions, which is just monumental.
    On P.L. 83-566 specifically, it is important to not just 
look individually but look across multiple years and see what 
is going on. In the first round, we did fund multiple P.L. 83-
566 projects. If you look at the whole suite of P.L. 83-566 
projects that are now authorized, whether in Gunnison River, in 
Oregon, in Washington State, in Minnesota, North Dakota, South 
Dakota, in Missouri, in Arkansas, we have examples of P.L. 83-
566 projects that have been successful.
    It is a very competitive program. For every dollar that 
NRCS has had to invest, we had demand for seven. It is a highly 
competitive program.
    At NRCS, though, it is not sufficient for us to sit back 
and wait to see what comes in. I expect, and the strong 
expectation I have for our state leaders, is to reach out to 
their local partners and really offer mentoring or an 
opportunity to sit down and really talk about how RCPP can 
better fit in their state or in their region, and that includes 
P.L. 83-566.
    I agree with you, this is a huge opportunity to show the 
power and the value of our P.L. 83-566 program across the 
country, and how you can take a watershed approach, you can 
address water management issues, whether it is flood, too 
little water, too much water, water quality, municipal water 
supply, ag water supply. It is a very flexible program, very 
powerful. And believe me, I want to see it be successful and 
work.
    We are going to be sitting down with partners to help 
provide training, outreach, lessons learned from successful 
applicants. But also for those folks who were not successful, 
sit down with them, talk about their applications and how they 
can beef them up and be more competitive in round three.
    Mr. Lucas. Thank you, Chief.
    Thank you, Mr. Chairman. I yield back.
    The Chairman. Thank you.
    Mr. Thompson, 5 minutes.
    Mr. Thompson. Thank you, Mr. Chairman.
    Thanks to all the folks on the panel here. It is good to 
see everybody. I appreciate your work. I appreciate your 
leadership.
    Yesterday, I had, at the end of one of my meetings, at the 
end of the day, it was really about a number of things, but 
voluntary conservation, which we all take a lot of pride in 
with the success we have had. I had folks, somebody from Travel 
Unlimited and somebody there, one of the district managers from 
our conservation districts.
    Erica Tomlinson, who is a district manager up in Tioga 
County, Pennsylvania, was talking about how she regularly takes 
school kids out to these streams to show them what the need is. 
And they have a particular place they like to go to because, 
quite frankly, nothing lives there.
    And so she was talking about how the last time her agenda 
got blown up because when the kids showed up they came back to 
her and said, ``What do you mean nothing lives in there?'' 
because there are all kinds of bugs and aquatic life. And so 
the kids discovered the outcome before we did. But it was a 
result of voluntary conservation. And I have to say that I 
don't think Erica was disappointed. She was thrilled actually.
    But our voluntary conservation programs, there are some out 
there that like to attack those. The EPA attacks voluntary 
conservation. It claims that they are not effective. Some 
extreme environmental groups appear to be increasingly 
skeptical of the ability of voluntary conservation programs to 
help meet nutrient and sediment reduction goals.
    And I believe we need to continue programs which provide 
farmers with the resources they need, obviously, to work with 
their states on water quality problems and natural resource 
concerns. And the President's budget was very supportive of 
USDA voluntary conservation programs.
    Just kind of a confirmation, I guess. Do you agree the 
voluntary programs are an important and an effective way to 
help reduce nutrient and sediment runoff?
    Mr. Bonnie. Absolutely.
    Mr. Thompson. Yes. I couldn't agree more.
    Actually, I want to ask a question on behalf of my Ranking 
Member of the Subcommittee, who was hoping to be here, and 
maybe she still will be, but she wanted to make sure this 
question is asked. And I support her question as well. And this 
is to Under Secretary Bonnie and Associate Chief Wagner.
    There is a lot of talk about building off of the farm bill 
insect and disease categorical exclusions. Where does the 
implementation of those stand? And can you tell us how many 
acres have been proposed for CE and how many acres have been 
granted CE to this point?
    Mr. Bonnie. I can tell you the number of projects. It is 34 
projects. I said in my statement and I want to say 26 use CEs. 
I can't give you the acreage, but I am happy to follow up and 
give you the acreage.
    And there is a lot more interest in using those CEs moving 
forward. As I told you last September, our expectation is it 
will continue to ramp up over time.
    Mr. Thompson. Thank you.
    Chief Weller, good to see you again. Thank you so much for 
the hearing we did a couple weeks ago. You did a great job. I 
appreciate your passion and your professionalism in the role 
that you are in.
    I want to ask about easements quickly. As NRCS develops the 
final rule for the Agricultural Conservation Easement Program 
for Agricultural Land Easements, the ALE program, what is NRCS 
doing to ensure that well-established state programs for 
farmland protection are able to be certified under the Federal 
program?
    Of course, in Pennsylvania, we take that pretty serious. 
They are our number one industry. It is a treasure. 
Pennsylvania has a long history for farmland protection, 
actually longer than the Federal program. But, unfortunately, 
it was not certified last year because of some onerous 
requirements established from NRCS.
    Mr. Weller. The ACEP generally, the Ag Conservation 
Easement Program, is generally very popular. The ag land 
easement component is even more popular. For every dollar that 
NRCS had, there was $4 demanded. We only competitively, 
nationally, we are only able to get to about \1/4\ of those 
projects that were submitted to us.
    But to your point, we can also do better. And rest assured, 
I really take seriously, and particularly Pennsylvania, a lot 
of the northeastern states, they have long, storied histories 
and very successful programs, either state programs or land 
trusts. We have been meeting with both departments of 
agriculture and other state agencies that have land trust 
responsibilities in their states, but also with land trusts 
themselves, and we are really trying to understand what their 
concerns are.
    In the end, there are some requirements that we have that 
we just have to ensure the integrity of the program, but I 
still think there is a way to ensure integrity but still allow 
for flexibility.
    In the case of Pennsylvania, our staff, both the state 
staff and our national staff, we had our national team go up to 
Pennsylvania and really sit down with the state agency and just 
figure out how to make the program work in the Commonwealth of 
Pennsylvania to make Pennsylvania comfortable and feel assured 
that this program will work, but then also to ensure at the end 
of the day we can ensure the integrity of the program, meet the 
purposes that this Committee requires.
    We negotiated with the Commonwealth of Pennsylvania the 
deed terms that was the hitch, the hangup. In the end we got to 
a good place. And this includes allowing for energy 
development, appropriate mineral rights recognition for 
Pennsylvania, which is also very important, but still allow for 
protection of the lands in the farmer viability aspects of the 
program.
    Nationally, we would like this to be streamlined, so we 
offer it as a template. If land trusts or partners come in and 
they are willing to use a template, they have a very quick path 
to go, and they don't need any more work with us. They just 
take the template with the deed terms and they can run with it.
    If those national template deed terms don't work for them, 
we absolutely will sit down and work with the partners to make 
sure we can get deed terms that work for that state entity or 
that local land trust partner, but that, they have to 
recognize, will take a little more time, because we only have 
so much bandwidth. But we are committed to making the program 
work for all partners.
    Mr. Thompson. Thank you.
    The Chairman. Mr. Kelly, 5 minutes.
    Mr. Kelly. Thank you, Mr. Chairman.
    I thank all the witnesses for being here.
    Under Secretary Bonnie, on endangered species, how does 
NRCS and the Forest Service work with Fish and Wildlife 
Services to prevent species from being listed as either 
threatened or endangered? And then how do the agencies also 
work with FWS once a species is listed?
    Mr. Bonnie. We are in constant contact with the Fish and 
Wildlife Service both at the local level, but also our 
leadership teams are talking.
    On the private land side, NRCS is doing a lot of proactive 
work through Working Lands for Wildlife to work to keep species 
off the list, in many cases. Sage-grouse is a good example of 
that. There are other examples of that as well. I mentioned the 
Louisiana Black Bear coming off the list.
    Wetlands Reserve Program and the support from this 
Committee deserve a lot of recognition for that. But there are 
other species that similarly have come off the list or we have 
kept off the list, the New England cottontail, the fluvial 
Arctic grayling in Montana.
    So there are a bunch of good stories there. And Fish and 
Wildlife Service has recognized that NRCS is a real resource on 
this.
    One of the things we need to do in addition to providing 
financial incentives is to provide regulatory assurances that 
if landowners do right by the species, that they will have 
certainty that they will continue to be able to farm and ranch 
or practice forestry. So that is one of the pieces that is 
really, really important.
    On the Forest Service side, it involves our planning, our 
forest planning, to ensure that we take care of species so we 
can keep them off the list. And then obviously taking steps to 
take care of species if they are on the list.
    There are places where we have challenges like catastrophic 
wildfire, where we have to be able to manage in order not only 
to be able to reduce the threat of fire, but also ultimately to 
be able to take care of those species as well. And there we 
really have to work with the Fish and Wildlife Service closely 
to ensure we can do both those things.
    Mr. Kelly. Thank you.
    And this is to Ms. Wagner. Clearly, the Forest Service and 
state forestry agencies do not directly implement the farm 
bill's conservation programs, but you do play an important role 
in providing basic landowner education, outreach, and technical 
assistance to help landowners implement conservation practices.
    In your opinion, where are there areas for improvement, and 
where can NRCS work better with the Forest Service and state 
forestry agencies to implement these programs, especially in 
light of the fact that forestry is still only a small component 
of many of the conservation programs?
    Ms. Wagner. Thank you for the question.
    The chiefs of the NRCS and the Forest Service have for the 
last 3 years been investing in something called the joint 
chiefs projects, where private landowners and National Forests 
are collaborating across boundaries and developing projects and 
implementing projects that protect water quality, reduce fire 
risk, improve wildlife habitat. So that is one way that we are 
working together.
    Also, to the farm bill, we have the good neighbor authority 
where we are working closely with states. Robert mentioned the 
number of agreements that we have on deck and more pending. And 
that is giving us the ability to not only do work on National 
Forests, but have our state partners, who have expertise and 
skills, to be able to deliver more work on National Forests as 
well through agreements.
    Mr. Kelly. And then finally, I just have a comment. Under 
Secretary Bonnie, going back to the voluntary conservation, I 
also think that is very important that we have the voluntary 
conservation. It works, and we need to work together and let us 
know how we can help to keep EPA and some of these groups from 
preventing us from doing the right thing.
    Because I have found in life, when we do things voluntarily 
because we want to and it makes us feel better, we all wind up 
with a better product than when we are forced to do something, 
especially if what we are forced to do doesn't make sense. So 
thank you for your help in this matter.
    Mr. Bonnie. Well, thank you. Thanks to this Committee. You 
all have provided resources and direction that has been 
incredibly important.
    There is a conservation ethic in this country amongst 
landowners that is very, very strong. And the farm bill 
programs allow us to take advantage of that. And we have made 
enormous progress. Wildlife, or think of the de-listing of 
streams in places like Oklahoma where voluntary conservation 
has improved water quality to an extent where we can take those 
streams off the section 303(d) list under the Clean Water Act.
    So there are a lot of examples out there. Part of our job 
is to talk about that, to show those examples and to show where 
endangered species have come back or we have kept species off 
the list. And so we are going to continue to call those 
examples out and would look for opportunities with all of you 
to do that.
    Mr. Kelly. And, Mr. Chairman, I yield back.
    The Chairman. The gentleman yields back.
    Mr. Benishek, 5 minutes.
    Mr. Benishek. Thank you, Mr. Chairman.
    Thanks to all of you for coming here this morning. Chief 
Wagner and Under Secretary Bonnie, thanks for your efforts 
after the last hearing. You have done a good job following up 
on some of the questions that I had about timber contracts in 
my district, and I appreciate that.
    I still want to talk about some of these issues. In my 
district, the Forest Service usually comes out with two issues: 
harvesting the forest and access to the forest for multiple 
use. We have made some good progress in Michigan with the good 
neighbor authority. I was able to talk to the State Forester, 
and I know they are going to be starting to do some cutting 
under that authority this summer in the Ottawa. And, hopefully, 
you can maybe give me your side of that. He had nothing but 
good things to say about it.
    I also want to talk about this accessing road issue. We 
spent a lot of time with several constituents about access to 
the forest on certain roads, and we have had some progress in 
that regard, but we have had to spend quite a bit of time doing 
it in my office, myself, my staff.
    So I want to talk a little bit about the process of 
interaction with the local community a little bit. How can we 
change the process so that local input is a regular part of the 
forest management? And what are the policies that the Forest 
Service does to encourage that? I mean, do you have local 
government weigh in when you change the travel plan? Do you 
require public meetings? I was hoping you could touch on those 
two things that I just mentioned.
    Go ahead, whoever wants to take that.
    Mr. Bonnie. I will start and then hand it to Mary.
    We have tried to build in collaboration with local groups, 
governments, stakeholders, conservation groups, industry 
groups, others, into everything we do, whether it is putting 
together forest projects, forest plans, or travel management. 
So that is a key effort of what we do.
    As you know, there are a lot of issues on the National 
Forest that have been polarizing for a long time. But I would 
say, we are making great progress, particularly on the forest 
management and restoration side and having forest industry and 
environmentalists and others work together.
    And as you point out, there are similar challenges on the 
access side, and we continue to promote collaborative effort. 
Mary can probably get into a little bit more detail, 
particularly on the travel management side.
    Mr. Benishek. Go ahead, Chief Wagner.
    Ms. Wagner. Thank you.
    The management of transportation on National Forests is of 
keen interest to constituents. It is of keen interest to the 
Forest Service because we think public access is absolutely 
vital to hunting, to fishing, to recreating, for the uses and 
production of minerals and energy and forest products and 
forage. So access is a really important issue.
    We have provisions that have required us to identify a 
system of designated roads, trails, and areas for motor vehicle 
access, and over 93 percent of all National Forests have 
completed that.
    In addition, we have a provision that requires us to look 
at the minimum transportation system necessary. We have a lot 
of roads. We want to maintain access for all of those reasons 
that I talked to, but we also want to minimize the number of 
roads that we have to be right-sized with the investment and 
our ability to maintain those.
    So local decision-making, local involvement in that 
decision-making is absolutely vital. You mentioned things like 
public meetings, public notice, engaging in citizens and having 
them look at maps with us. That is absolutely expected.
    Mr. Benishek. Well, I know. But sometimes it seems people 
complain to me that they go somewhere and the road is closed 
and this is the first time they heard of it. So I am just 
wondering as to what degree that actually occurs. I mean, do 
you have a hearing before any road is changed, or what is the 
actual practice? How can it be improved, frankly?
    Ms. Wagner. It is not our intention to ever surprise 
somebody by having them expect to have access. We produce a map 
on an annual basis that shows the roads, trails, and areas that 
are open for public use. There are times when occasionally we 
will have an emergency situation, perhaps a road culvert was 
washed out and a road will be closed. But those always come 
with provisions to notify the public, and those always come, if 
we have a need to close a road, we always expect the public 
involvement process, transparent decision-making, participation 
by citizens in that.
    So I will take your comments and share those back with the 
regional forester so she can talk with the forest supervisors. 
Our expectation would be to do it just as you are saying.
    Mr. Benishek. That 5 minutes sure goes fast.
    The Chairman. It does. Thanks, Dan.
    Ms. Lujan Grisham, 5 minutes.
    Ms. Lujan Grisham. Thank you, Mr. Chairman.
    Under Secretary Bonnie, I know that you are well aware, and 
so is the whole Committee, that Congress, unfortunately, is a 
bit gridlocked on the Forest Service wildfire budget situation. 
And last year's fire season, frankly, as expected, was one of 
the worst in recent memory, and that has caused, again, 
disruption in the Forest Service's operations.
    And then regardless of where the fires occur, states and 
communities all over the countries, we feel the pain when there 
is a transfer of funds from the non-fire programs to support 
the immediate emergency needs of fire suppression.
    During the last fire season in the Southwest region, which 
includes New Mexico and Arizona, I understand that we lost more 
than $15 million to fire borrowing, and as a result, several 
projects in my state were put on hold that, quite frankly--and 
I know I am preaching to the choir--could have been and should 
be preventing at least the extreme nature of the fires and the 
fire danger situation that we have in the state.
    So it is clear to me that under the current funding 
structure that you can't really carry out your Congressional-
mandated mission. And we need to fix the wildfire budget first 
before we can really analyze and discuss what management 
practices are actually going to work in order to promote 
healthy and productive forests.
    I know also that you are supportive of the Wildfire 
Disaster Funding Act, which many on this Committee have signed 
on to. And I want to thank the Administration for continuing to 
push on that. And I want to thank the Chairman and the 
Committee for really working through this issue to the highest 
degree possible.
    So given that long scenario and story, which everyone is 
well aware of--I appreciate your patience with me--last year, 
Secretary Vilsack sent a letter to Capitol Hill saying he would 
not authorize any Forest Service wildfire budget transfers this 
year. And I know that the wildfire budget is bigger this year, 
but how did this decision come about, and what happens to the 
Southwest and the West as fire season approaches us and we have 
a terrible fire, God forbid, and the wildfire budget is 
exhausted?
    Mr. Bonnie. So thank you for the question. To the specific 
question, this was a decision of the Secretary. As you all 
know, he is frustrated with the current system. Last year, we 
transferred $700 million out of non-fire programs into fire 
suppression. And the Secretary and all of us recognize that we 
need to treat wildfires as the disasters that they are. And so 
it was his decision.
    And as you alluded to, the budget last year put $600 
million additional into the fire suppression account. We hope 
that we don't have to run to the place where you are alluding 
to. And the Secretary would say, as would I, that we came very 
close last year to solving this problem. This Committee did a 
lot of really good work on it and is very much appreciated.
    There are two problems here we have to solve. One is the 
one you point out, which is the transfer problem, which is we 
get in a bad year and we have to transfer non-fire dollars to 
fire dollars. Those transfers affect everything. But one of the 
things they affect as well is forest restoration and 
management, as you point out.
    The second problem is the long-term problem, which is the 
creep of the budget increasingly towards fire. I mentioned in 
my opening remarks, 2 decades ago we spent 16 percent of our 
budget on fire. If you take fire suppression preparedness, 
hazardous fuels, and a few other smaller areas on fire, last 
year we spent well north of 60 percent of our budget on fire. 
And that is just unsustainable if we are going to do all the 
things we need to do, forest management, research, access, 
roads. There are places where we want to keep roads open----
    Ms. Lujan Grisham. So what can we be doing? What are the 
key compromises here? What is your advice for this Committee? 
And I appreciate your response. I don't know what the answer 
is, because if there is a terrible situation, I need to know 
that the Secretary is going to be a bit more flexible and make 
sure that we are not going to lose lives as a result of USDA 
deciding not another dollar goes towards fighting a wildfire. 
That seems ludicrous to me.
    Mr. Bonnie. So, in terms of what we can do, we came very 
close last December. We had a compromise that had forest 
management provisions in it that this Committee helped work on, 
and we had some compromise on the budget side as well. Our hope 
was we can start where we left off in December and move that 
compromise forward. I think we are very close to that. There 
was broad agreement in the House, and we came close in the 
Senate, and our hope is that we could move this forward this 
Congress.
    Ms. Lujan Grisham. Mr. Chairman, I yield. Thank you.
    The Chairman. The gentlewoman yields back.
    Mr. Yoho, 5 minutes.
    Mr. Yoho. Thank you, Mr. Chairman.
    And I appreciate all of you being here when Congress is in 
recess so that we can continue to do the people's work.
    You guys, as we go through this hearing today, what I would 
like for you to do is just kind of look at ways we can become 
more efficient at everything we do in our departments, because 
of the state of the economy. And right now there is a 
discussion going on over the budget. There is a $30 billion 
difference. It is a big deal. And if we can cut a little bit 
out of each program and save that money for the budget, it 
would be awesome.
    Secretary Bonnie, you were talking about the increase in 
fire budget of 16 percent. Was that a decade ago or 20 years 
ago?
    Mr. Bonnie. Two decades ago.
    Mr. Yoho. All right. Two decades ago and now it is 60 
percent of the budget. What is the difference? Why did it go up 
so much? Is it a lack of fire suppression or the way you are 
doing it or more National Forest owned by the government?
    Mr. Bonnie. There is no question that past management has 
had an impact. Last time you asked about prescribed fire. We 
have taken fire out of these ecosystems for a long time, fuel 
loads have built up, and we have to go back in and deal with 
that.
    There are two other issues, though, that are really 
important. One is our fire seasons are longer. They are 78 days 
longer than they used to be and we are seeing more extremes and 
that is causing more catastrophic and extreme fires.
    The other piece that is important is we have had a lot of 
development into the wildland-urban interface. That makes 
fighting fires more difficult, because instead of being able to 
sit back and draw a line where we want to, we have to go do 
point production, that means more people and more assets.
    Mr. Yoho. Okay. Let me ask you this. What do you need as 
far as authorization or funding to do more prescribed burnings? 
I come from the Southeast, and we have the longleaf pines. And 
they do controlled burns all the time, and they keep the 
underbrush burned out. And I know out West it is a little bit 
different. You have higher winds and velocities.
    Can they do more controlled burnings more frequently in 
smaller areas and maybe make bigger fire zones around those 
areas? What are your recommendations so we could do that so we 
can save the money and not have to transfer?
    Mr. Bonnie. So as you point out, if we invest in this on 
the front end, we will spend less money on the back end. And 
one piece is this fire funding fix is actually important for us 
to have the boots-on-the-ground to be able to get fire done.
    The other thing I would point to is we are actually having 
good conversations with EPA right now about ways to square the 
Clean Air Act to make sure we have enough burning days to 
invest in prescribed fire. And that is another piece that will 
be important.
    Mr. Yoho. Is that something we need to talk to the EPA and 
just say, this is more important than what your mandate may be, 
this is more serious? Because if we don't do this, we are going 
to have a bigger problem.
    Mr. Bonnie. That is exactly right. We are having, as I 
said, very good conversations both at the national level and 
local level with EPA. The last couple of rules they have done 
have reflected this. I think we are making a lot of progress.
    Mr. Yoho. Chief Weller, I have a comment and a question for 
you. I just want to compliment one of your employees in the 
Gainesville area, Russell Morgan. He came by, and he does a 
great job in our district. The district people really love him, 
and actually all over the state. He is out there and just 
really promoting what you guys do.
    With the million of acres moving into conservation 
easement, at what point do we get to where we move from the 
private tax revenue supporting local and regional governments 
and state governments to where we get into a situation where we 
go into the PILT payment systems like they do in a lot of the 
western states: The way I understand it, some of those states, 
80 to 90 percent of the land is owned by the Federal 
Government, so their tax revenue is down.
    Is there a formula that you go by, say, like, for the State 
of Florida? We have real estate all over the state, but about 
\1/2\ of the state is in forest products or forest or range 
land. At what point do you get to where you say we can't afford 
to take anymore from this state, because if we do, it is going 
to start costing the Federal Government more than they bring in 
in tax and the government will have to pay that?
    Mr. Weller. Well, with the easements, they still are 
taxable, it is just at an adjusted rate that reflects the new 
rights that landowner still retains. So they are still 
privately owned lands, just to be really clear.
    We don't necessarily, as part of our formula, take into 
account the impacts on local tax base or on what is the 
saturation or expansiveness of easements in a given county or 
area. Ultimately, it is a demand-driven approach, and it is at 
the request of private landowners and what they want to do with 
their lands. So it is a shared investment with that private 
landowner.
    Mr. Yoho. And then I visited south Florida in the Homestead 
area, and they used to have a lot of cattle grazing on the 
western part of the state. There was roughly 12,000 acres. And 
when the Everglades restoration project came through there, the 
cattle were told they had to leave and they tore down the 
fencing. And now they have an overgrowth of the kind of grass 
that grows down there, your Johnson grass, maiden grass, and 
all that.
    And now they need to have it mowed, but they can't find 
anybody to mow it, and they are asking if people would want to 
run cattle back on there. And my cattle producer says, if we 
can fence it, we will. And they were told they couldn't fence 
it.
    How do we prevent programs like that?
    And I am out of time. I will have to get back with you. I 
will yield back.
    The Chairman. Mr. Rouzer, 5 minutes.
    Mr. Rouzer. Thank you, Mr. Chairman.
    I have just a couple questions, just for my own educational 
benefit here.
    One topic I am very interested in is endangered species. I 
can't think of really anything that probably affects what you 
can and can't do more than those species that are listed and 
how it impacts, whether it is beech tree nourishment or 
dredging of inlets and waterways or what you can do in 
California as it relates to the water, et cetera.
    My question is, how does NRCS and the Forest Service work 
with the Fish and Wildlife Service to prevent species from 
being listed as either threatened or endangered?
    Mr. Bonnie. So as I noted before, the NRCS has a Working 
Lands for Wildlife program where we are working both for 
species that are listed, to try and get them off, and species 
that are potentially headed to the list.
    One of the things that is important about endangered 
species is that most of endangered species have most of their 
habitat on private lands. And these species are declining 
because they don't have enough habitat. The Endangered Species 
Act doesn't compel any landowner to restore, and that gets to 
the notion of the importance of voluntary conservation.
    If we are going to get that habitat back, we have to 
incentivize restoration, and so voluntary conservation becomes 
very, very important. And so that requires providing assistance 
to landowners so that they can understand how to square 
endangered species conservation with the things they want to 
do: agriculture, ranching, forestry. It requires financial 
assistance, because sometimes those things are expensive. 
Restoration can cost money, and so we need to help.
    And then the third thing I would say is, which I alluded to 
earlier, is regulatory assurances. Landowners need to know that 
if they do right by endangered species, that the Fish and 
Wildlife Service or a state agency or anybody else isn't going 
to come later and ask them for more.
    And if you can give them that assurance, landowners have 
shown across the country that they are willing to step up in a 
major way. And we can look at examples across the country where 
we have additional endangered species habitat or where we are 
keeping species off the list because of the voluntary 
activities of landowners.
    Mr. Rouzer. Another question I have for you deals with 
litigation. I grew up in the shadow of the Cold War as a kid, 
and I always thought Armageddon was going to be nuclear weapons 
and missiles, et cetera. I have come to believe it is going to 
be every individual is suing every other individual.
    I am just curious, how has litigation affected the Forest 
Service's active forest management?
    Mr. Bonnie. I will start and then Mary may follow up.
    Forest management on the National Forest System has not 
been without controversy. We know that. But if you look back 20 
or 30 years, I would argue today we are in a much better place 
than we were. We have examples all over the country where 
environmentalists, timber industry, local communities are 
sitting down developing plans to restore forest--both, whether 
it is for catastrophic fire, wildlife--to address a variety of 
threats.
    And I would argue, and our numbers prove it that the amount 
of litigation we are seeing is going down, and in large part 
because the investment in collaboration. We get people to the 
table.
    Now, there are still groups out there that are going to 
litigate. But when you have industry and a portion of the 
conservation community and local communities standing together, 
not only is the litigation risk lower, but we tend to win more. 
And I would argue we are actually winning more.
    So it is not to say that there is a silver bullet. My 
argument would be, by investing in collaboration--which you all 
did as part of the farm bill when you did the insect and 
disease language, that requires collaboration--that type of 
approach, over the long-term, will win.
    Mr. Rouzer. Thank you, Mr. Chairman. I yield back.
    The Chairman. Mr. Moolenaar, 5 minutes.
    Mr. Moolenaar. Thank you, Mr. Chairman.
    And I also want to thank our witnesses today.
    I am from Michigan's Fourth Congressional District, and we 
have used the Regional Conservation Partnership Program. And in 
2015, the NRCS selected the Saginaw Bay Watershed Conservation 
Partnership for funding, and the project is focused 
specifically on water quality challenges, including loss of 
habitat, excessive nutrients, and algae blooms.
    By 2019, the project aims to treat 55,000 acres with 
conservation practices through the Environmental Quality 
Incentives Program and restore 400 acres of wetlands through 
the Agricultural Conservation Easement Program.
    And Chief Weller, I know you have spent some time in 
Michigan and I appreciate you being here. You just announced 
final projects for the second round of the RCPP. I am just 
wondering if you could share with the Committee what lessons 
you have learned from the first and second rounds, and have you 
seen success with the Saginaw Bay Watershed Conservation 
Program?
    Mr. Weller. We are learning and the partners are learning 
too. If you look at the differences between the first round of 
the project applications we received versus the second round, 
the quality, both in terms of the focus and the definition of 
what they want to achieve, the solutions those partners are 
going to bring, the expansiveness of the partners, and the 
contributions the partners are bringing, both cash and in-kind 
assistance, have all increased significantly.
    The first round, we had about a one-to-one match for 
projects that we awarded. We had about 115 projects we were 
able to fund had a one-to-one match. Second round we were able 
to fund about 82 projects, and it was almost a one-to-two match 
in terms of for every Federal dollar we are getting $2 of both 
in-kind and cash contributions. The partners have expanded, and 
they have been much more creative in bringing new groups into 
the fold.
    We also saw that folks, including in Michigan, the Traverse 
City area had a project, as an example, but there were projects 
around the country that were not successful first round. It is 
very competitive. And there were some folks that were 
frustrated.
    But they didn't let up. And they came back. They sat down, 
in this case with our state leadership in Michigan, but also 
with the team here in Washington, D.C., and they went after it. 
And they buffed up their proposals. The proposals came back 
really strong. And they are now among one of the top-ranked in 
the country. And so they were successful, like in Michigan and 
others around the country, where they didn't give up, they came 
back.
    We have the third round open. I am expecting it to be even 
more competitive. But, again, with the quality increasing, the 
creativity and the expansiveness in the partnerships is also 
increasing.
    With respect to Saginaw Bay, Mr. Benishek, also last year 
we had highlighted it, and one of the witnesses was from the 
Saginaw Bay project and highlighted some of the concerns that 
the partners have there. As I said at the outset, this is a 
learning experience both for partners and for NRCS.
    It is my expectation that when NRCS enters into this 
agreement, it is really an agreement, a partnership agreement 
between our agency and these partners. We sit down as coequals, 
and there is a learning opportunity on both sides. I want to 
have partners be able to really prove out their approach. A lot 
of times those approaches just slip right in with what NRCS 
does. Sometimes they are challenging us to look outside our box 
and think a little bit creatively.
    And my understanding is, with the Saginaw Bay, there has 
been some additional, I will say, a little friction, maybe 
misunderstandings on both sides. They are working that out. 
They are starting to get work done on the ground. We may have a 
little work yet to do on our side in that specific project.
    But ultimately, I expect it to be successful and to really 
prove out, again, how voluntary approaches for conservation, 
whether in Saginaw Bay or elsewhere in the Great Lakes region, 
can show that farmers cannot only produce food and fiber, but 
also can protect water quality.
    Mr. Moolenaar. Okay. Thank you.
    And then are there any changes that Congress should make to 
this program?
    Mr. Weller. We are still, I would say, in the learning 
phase, so at this point I won't have any technical advice or 
legislative changes. But, after three rounds of this the agency 
will be able to come back, and if the Committee is interested, 
will be able to provide some technical assistance on tweaks 
that may or may not be needed within the statute.
    Mr. Moolenaar. The other question I had is, are there any 
emerging technologies or technologies on the horizon that would 
help with nutrient recovery kind of at the individual farm 
level?
    Mr. Weller. There are two sides of the nutrient equation. 
It is being really precise in optimizing what you put on the 
ground. And so the farmer doesn't want to waste his money and 
his farm inputs, his fertilizer costs, and he wants to ensure 
his yield is maxed out.
    But then also, in the event that there is a rain event or 
maybe they overplow one part of the field or they have some 
soils where there is a lot of leaching potential, whatever the 
issue may be, you try and capture those nutrients before they 
leave the farm field as it leaves the farm field.
    And so there are new practices. For example, we have put in 
place things that are called bioreactors, which are essentially 
underground tanks where you put in wood chips. They serve as a 
substrate for the microbes. So you can install this, for 
example, on a tile line.
    So as the tile water runs through this bioreactor, the 
microbes on the wood chips actually oxidize and they munch and 
they eat all the nitrates and they can remove up to 80 percent 
of the nitrates from the water supply. By the time that water 
leaves the bioreactor and is at the end of the tile line and 
enters the ditch, that water is a lot cleaner, a lot less 
phosphorous and nitrogen in the water.
    There are new practices like that that the NRCS has 
incorporated and we are offering to producers a broader array 
of tools so they can address water quality.
    Mr. Moolenaar. Thank you very much.
    Thank you, Mr. Chairman.
    The Chairman. All right.
    Mr. LaMalfa, 5 minutes.
    Mr. LaMalfa. Thank you, Mr. Chairman.
    I appreciate the panel for being here today.
    I heard some comments a few minutes ago about a couple 
issues. One, that most endangered species are found on private 
land. Did you care to reiterate that?
    Mr. Bonnie. Yes. So if you look at where endangered species 
are found across the United States, most of the habitat is on 
private lands, and it puts a----
    Mr. LaMalfa. Have you looked at the map of the western half 
of the country here being mostly in Federal hands?
    Mr. Bonnie. Yes. There is no question there are endangered 
species issues in the West, and in your district, obviously, as 
well.
    Mr. LaMalfa. And every time you turn around they want to 
make another monument, another wilderness land, another set-
aside of some type or another that is supposedly going to 
preserve something from something. Yet, my people are still 
hassled to death by the Federal Government on their lands for 
150 year practices of ranching, of trying to maybe convert an 
open field into an orchard or something like that. And they get 
six-digit fines upon them, they get their land taken away from 
them, they get dragged into court, they are under stress.
    How is that a success, especially if the Federal Government 
is supposed to be preserving all this land for us?
    Mr. Bonnie. Well, from our standpoint, obviously, through 
the NRCS programs, we are trying to work cooperatively to deal 
with all types of challenges.
    Mr. LaMalfa. You know how uncooperative it feels to my 
people in my district? You know that we had a fire in western 
Siskiyou County in the fall of 2014 that they are just now 
putting bids out? And maybe they can get into the forest on May 
of 2016 to try and salvage a skinny four percent of the forest. 
The other 96 will just be left to turn back into snags and grow 
into brush and become the next tinderbox for the next round of 
fire because the government can't manage its land and refuses 
to do so.
    How is that a success?
    Mr. Bonnie. Well, we are both, as I mentioned earlier, 
putting a very high priority on increasing the amount of work 
we do before the fire. We have also done a lot of work to----
    Mr. LaMalfa. Four percent is not going to get it done, sir.
    Mr. Bonnie. I would agree with you----
    Mr. LaMalfa. You talk about having partnerships with the 
environmental groups that sue all the time. They are still 
suing away. They are still preventing decent salvage operations 
from happening. This happens in my backyard. My constituents 
get to breathe this all summer every summer because the Forest 
Service can't manage its land and refuses to put out the fire.
    Even our locals trying to put out the fire, CAL FIRE, we 
get up to that line, the Forest Service says: Oh, no, let it 
burn. Then when it is time to come back and do the salvage 
operations: Well, we are going to have to litigate, we might 
get sued. Is this a success?
    Mr. Bonnie. We work closely with CAL FIRE. I think we have 
a good relationship there. On the salvage side, we did a 300 
million board foot sale post-Rim Fire. One of our big problems 
with salvage is the markets to actually move the material.
    Mr. LaMalfa. Thankfully, you were able to get that done, 
because it took every bit of resources of Forest Service from 
the entire State of California, it seems, to go down there and 
work only on that salvage. Meanwhile, all the green work that 
needs to be done ongoing during the year was left wanting 
because everybody focused just on that.
    We have been working legislatively trying to keep the 
Forest Service focused on its green work in the meantime and 
getting timber harvest permits out legislatively. Haven't 
gotten there yet.
    But this is a giant success for doing nothing, because we 
are still, despite the water conditions in California are going 
to be susceptible to drought, we have over 12 million and 
counting dead trees in California that haven't had any kind of 
salvage done up around them. They are going to be the next bug 
infestation. They are going to be the next tinderbox for 
following years.
    And I don't see nearly the speed of things needing to 
happen on our forestry that is going to not have us be 
vulnerable for gigantic catastrophic fires every single year 
until something dramatic is done and we finally quit saying 
``yes'' to environmentalists stopping everything. You guys are 
going to have to start upping your budget for litigation to 
fight back on them because we are suffering out here in the 
West.
    Mr. Bonnie. Well, I would say, as I said earlier, we are 
committed to getting more work done, both on the, as you point 
out, the need to do work and advance on the green side, but as 
well on the salvage side.
    Our biggest challenge right now is capacity, and that is 
directly linked to the fire budget. And if we solve that, our 
ability to be able expand the amount of work we have done will 
increase.
    Mr. LaMalfa. Please emphasize what you mean by capacity.
    Mr. Bonnie. So we have 39 percent fewer staff on the non-
fire side of the Forest Service than we had in the late 1990s, 
and that is a direct result of the increasing amount of our 
budget that is taken up by fire.
    Mr. LaMalfa. Well, we will help to remedy that, but it is 
frustrating to hear around here all we need is more money and 
more staff, because when we look at that or we look at the VA, 
we look at a lot of things around here that don't get better 
when you give them more money.
    Mr. Chairman, I will yield back.
    The Chairman. The gentleman yields back.
    We have asked the panel to stay until 10:15. And who all 
wants a second round? Okay. We will take 3 minutes apiece.
    And we may also at the end, if we run out of time, read 
your question into the record and ask for you guys to respond. 
That way, we will have the question in the record. We just 
won't get the answer until they come back in writing.
    So, Chief Weller, Bighorn sheep and grazing rights for 
domestic sheep, ARS is doing a lot of research on what is the 
vector between, if there is in fact one, between Bighorn sheep 
and domestic sheep. Grazing allotments are being trimmed 
dramatically for domestic sheep under the guise that somehow 
they are killing off the Bighorn sheep, but ARS science doesn't 
support that.
    Can you visit with us quickly about how you guys are using 
the science from your sister organization to make decisions 
with respect to grazing sheep in the West?
    Mr. Weller. We do work closely with Agricultural Research 
Service and their experts, for example, on range management 
research, on what is the right management techniques, whether 
it is stocking rates, different brush management techniques, 
trying to do ecological site descriptions to enhance our 
ability to run whether it is sheep or cattle in a way that 
sustains grazing over the long period.
    But in terms of disease risks between wildlife and 
domesticated cattle or sheep, that is really outside of our 
expertise and our bandwidth.
    The Chairman. Exactly. So that is what ARS is for. And they 
are showing that there is, so far, no direct link between 
domestic sheep and respiratory diseases in Bighorn sheep. In 
fact, they have had significant die-offs in the Bighorn sheep 
when there is not even domestic sheep near them.
    So can you at least commit to talking more with ARS and 
looking at the science that they are developing with respect to 
these issues when you then, on the other hand, decide on 
grazing allotments for sheep? If you decide you can't do that, 
can you begin to present alternatives to these long-held 
grazing allotments that these sheep guys have had for a long, 
long time, give them something that is an alternative to just 
saying no?
    Mr. Weller. I absolutely will commit to having us work with 
ARS. But, to be clear, we are not responsible for grazing 
allotments. We only work with producers to put in place 
conservation systems, whether on their private lands or on 
grazing allotments. But we are not involved with managing the 
permittees.
    The Chairman. Who is?
    Mr. Weller. That would either be the Forest Service or the 
Bureau of Land Management.
    The Chairman. Oh, okay. Sorry about that.
    Yes?
    Mr. Bonnie. This is an important issue on the Forest 
Service side and our trying to work in a collaborative way to 
work with sheep producers to identify where there are 
challenges but then also look for allotments where we may be 
able to provide some flexibility in terms of grazing.
    The Chairman. All right. The ARS does really good research, 
and so if the decision is based on science, fine, but if it is 
just an arbitrary no----
    Mr. Bonnie. Absolutely.
    The Chairman. Well, let me read one into the record real 
quick. Our colleague Kristi Noem has asked: There is a 
significant backlog in wetland determinations over the Prairie 
Pothole Region. Can you talk to us about the latest numbers on 
that backlog as well as what you are going to do to address the 
backlog to get these determinations made quicker?
    And, Chief Weller, I will give you a written question that 
she has asked for her, if you wouldn't mind getting back to 
that.
    So who was next? G.T., 3 minutes.
    Mr. Thompson. Thanks, Mr. Chairman.
    Well, first of all, this one is just a request for 
consideration. I don't need a response. For Chief Wagner, if 
you could take it back to Chief Tidwell. I know that regional 
foresters are looking at creating whether it is called an 
assistant forest supervisor or a deputy forest supervisor on 
the Allegheny National Forest. That is greatly appreciated, 
given the diversity of hardwoods.
    Here is my request for consideration. I don't need a 
response from you. I just really would like serious 
consideration. The uniqueness of those hardwoods--I would 
really like to see a track that whoever fills that position has 
experience managing a diverse hardwood forest. The 
considerations, and I would be glad to talk to you and the 
Chief offline about that more. And I have certainly made that 
request to the regional forester who was in to see me. And I 
appreciate it.
    We recognize in terms of wildfires the issues that are out 
there. We need more foresters, period, because of the 
retirements, attrition. You have to have those professionals.
    I appreciate your comments about forest roads. I mean, we 
have decreased the access, especially under President Clinton, 
dramatically in our National Forests. And that is not good for 
our citizens for access, but it is not good for managing the 
forests either. That is an access issue. I think the 
Subcommittee is going to do a hearing on that.
    Expanding CEs, we have talked about that. Expanding 
collaborative work, which are all good things, and we are going 
to continue to work on them.
    I want to zero in, in what little bit of time I have, on 
litigation and litigation costs and try to quantify it, if 
possible. And if we don't have the numbers, if this is 
something you could look at for me. Litigation threats do have 
a cost. Just the whole delay of the implementation of the 
forest plans is a big cause of this wildfire problem. And it is 
not the Forest Service; it is those extreme environmental 
groups that put a bullseye on your backs.
    Do we know what the cost of defending those, let's just 
take a 10 year period. Do we know what the cost of defending 
that litigation has been to the Forest Service?
    Mr. Bonnie. I don't know the answer to that. We can 
certainly look into it for you and----
    Mr. Thompson. Yes. We talk about litigation in 
generalities. You have to get to the specifics until we can 
solve this problem. So that is a number I would like.
    I would like to know in just 10 years, we will be 
conservative with it, what the loss of forest health has been 
when our forest management plans have been tied up in 
litigation and not able to be implemented. Do we have any 
estimate of the loss of forest health, that asset?
    Mr. Bonnie. We can certainly work on that for you too.
    Mr. Thompson. Okay.
    And then the final one is: What is the loss of the asset 
value, specifically the timber value, either of what has been 
burned--that is probably a little easier to figure out, how 
much has been burned up--but also how much has been aged out?
    I mean, my hardwood cherry, which is the best in the world 
in the Allegheny National Forest, if you don't cut it at a 
particular span, every year that goes on the value of that 
decreases dramatically. That is a disservice to the American 
taxpayers, who should benefit from the asset. And I would love 
to get my arms wrapped around what the loss of that asset value 
is, as well.
    And then I am out of time, but I would love to hear from 
each of you, Under Secretary, you in the past have made 
comments that you don't support this. And we can talk about 
this, maybe, afterwards. Do you support the provisions limiting 
litigation within the expanded collaborative provisions of the 
Resilient Federal Forest Act?
    Because, these three costs are going to be outrageous when 
we find those. And so, as long as we welcome people to the 
table in a collaborative way, and we know collaboration works. 
All the successes we are celebrating are based on collaborative 
work. If they are welcome to the table, we need to, if they are 
not going to join the table, restricting their litigation 
abilities in some way is not a bad thing.
    The Chairman. The gentleman's time has----
    Mr. Bonnie. I do have an answer to your earlier question. 
Nineteen thousand acres. You asked how much insect and disease.
    I am sorry to interrupt, Mr. Chairman.
    The Chairman. That is all right.
    Mr. Bonnie. Nineteen thousand acres, both in the EA and the 
CE side of the insect and disease. So thanks.
    The Chairman. All right.
    Ms. Lujan Grisham, 3 minutes.
    Ms. Lujan Grisham. Oh, come on.
    The Chairman. Three minutes.
    Ms. Lujan Grisham. Yes, sir.
    Under Secretary, I know that my dear friend and colleague 
Mr. Thompson talked about the categorical exclusions and the 
delay in getting it started, so I don't want to rehash that.
    My understanding is that we have 26 projects. My concern is 
that if we are going to have a best practice standard and we 
are going to be able to provide advice and support out in the 
field about such practices, then we need to speed up what we 
are doing and we need to get information certainly back to the 
Members of this Committee and/or stakeholders so that they have 
a sense.
    Can you commit today that you are going to work on that and 
make sure that we are getting the data that we need?
    Mr. Bonnie. Absolutely.
    Ms. Lujan Grisham. Okay.
    Mr. Bonnie. And one of the issues is we will have to do 
learning within the Forest Service to learn how these are 
working on the ground. And that is part of the role. I am happy 
to work with the Committee and sharing what we are learning and 
seeing out on the ground and have a conversation with you all, 
as well.
    Ms. Lujan Grisham. That would be great. And even we might 
have our office reach out to you so that the projects that are 
in the Southwest, in particular, for us to be more inclined and 
aligned to work with you on the information that you have. We 
could maybe make some of those visits. My staff are here in 
this committee room. That would be valuable to us. And 
hopefully that partnership would also put you in the best 
possible position to do more in this area. And I appreciate 
that you will move it up to a priority list.
    Mr. Bonnie. Thank you. Absolutely.
    Ms. Lujan Grisham. Thank you.
    The Chairman. Ted?
    Mr. Yoho. Thank you, Mr. Chairman.
    And what we see here is a common element. We talk about the 
16 percent, the budget on fire suppression, was 20 years ago 
and it is 60 percent now. And as my colleague Mr. LaMalfa 
brought in the struggle they are having up there. And you were 
saying that the fight over the fire suppression, you are having 
a harder time.
    What I am going to ask you to do is, if there is an agency 
that is blocking you, like the EPA, that is preventing you from 
doing that, instead of you being the bad guy, come to this 
Committee or come to Mr. Thompson's Committee and say we need 
relief on this. Because if we don't do that, we are going to be 
struggling with this much more down the road, and that usable 
wood is not going to be used.
    The other thing Mr. Thompson brought up, one of my main 
questions was the cost of litigation. And I know you are going 
to get that number back to him. What groups are doing these? 
Are they environmental groups? Are they NGOs? And if they are 
NGOs, are they getting Federal money or public money to sue the 
Federal Government?
    Mr. Bonnie. As I said, the amount of litigation we are 
seeing has dropped. We do have some areas, particularly in 
Region 1, Montana, northern Idaho, where we see it.
    The bulk of the litigation, not always, is from 
environmental NGOs. And they are able to get back some of their 
costs through the courts for that litigation.
    Mr. Yoho. Is that through the sue and settle?
    Mr. Bonnie. No. It is through Access to Justice Act.
    Mr. Yoho. Would you recommend that any group suing the 
Federal Government should not be getting Federal funds to do 
so?
    Mr. Bonnie. I wouldn't recommend that. I think there are 
some very good reasons for that law. It is something that the 
Administration I don't think would support. But a broader 
conversation with you all about the litigation challenge and 
how we address that, we would welcome that.
    Mr. Yoho. I yield back, Mr. Chairman. Thank you.
    The Chairman. Anybody else?
    Dan, 3 minutes.
    Mr. Benishek. Well, thanks.
    I hope that I can get a little further comment about this 
Good Neighbor Authority. I know it started in Michigan. The 
Michigan Forestry said that they think they can get a harvest 
done by September. Is that legitimate, and would that happen?
    And how is it going around the country? These pilot 
programs, are you going to do more, or is it all happening now? 
Just go into that a little more.
    Ms. Wagner. Well, actually, since the testimony was 
approved, we have actually increased the number of states who 
either have a master agreement or a specific project agreement 
under the Good Neighbor Authority. So 12 states, 16 different 
agreements, four more states in the queue. In the Northeast, 
there are four states that plan some level of timber harvest 
this year under the Good Neighbor Authority.
    In the Northeast part of the nation, the region has 
increased its timber sale volume over 48 million board feet 
since 2014----
    Mr. Benishek. So they are doing that through the Good 
Neighbor----
    Ms. Wagner. We are working to find efficiencies across a 
number of----
    Mr. Benishek. I want to talk about the Good Neighbor 
Authority, not the general cutting.
    Ms. Wagner. No.
    Mr. Benishek. This is all--so the Good Neighbor----
    Ms. Wagner. Good Neighbor is quite fresh, so there is----
    Mr. Benishek. Right, right. Is there an opportunity for 
Tribal Governments to participate in this?
    I had a Tribe asking me about this yesterday.
    Ms. Wagner. Yes. Under something called the Tribal Forest 
Protection Act, we would be able to work with Tribes across 
boundaries. So that would be worth exploring with you.
    Mr. Benishek. Okay. All right. I will yield back. Thank you 
very much.
    The Chairman. Well, thank you.
    Secretary Bonnie and Chief Weller, Chief Wagner, thank you 
for coming in this morning. I appreciate that. I know a whole 
lot more time went into prepping for this hour and 15 minutes 
than it lasted. And I suspect you guys prepped answers to a lot 
of questions we didn't ask. That is the beauty of this thing. 
We keep the questions secret and make you guys go through an 
awful lot of work.
    You lead agencies of vital importance to the system. You 
are the face of all those thousands of folks out there who get 
up every day, go to work, try to do their job, run the agencies 
they do to take on the responsibility they have, and we 
appreciate that.
    We may have some difference of opinion from time to time, 
but please don't let that morph into some sense that we don't 
appreciate fully what you do. Everywhere I go, I try to avoid 
telling people who I am with, particularly when I am on 
vacation in the forests and other places, just to watch you 
guys work, and I am rarely disappointed in what I see going on, 
which, to me, means it is just everyday folks. It is not some 
show you put on because a Member of Congress showed up.
    So thank you for what you do. We will get the band back 
together next year in a similar kind of circumstance, but maybe 
a different band on that side of the table. But I want to thank 
everybody.
    So we will adjourn for 10 minutes. And if the Members want 
to speak directly to any of the panelists, they will go to 
1302, and that way, we will get the other folks in. So if you 
want to speak to them directly one on one, why don't you take 
that advantage and do that now.
    With that, we will stand in recess for 10 minutes. Thank 
you all.
    [Recess.]
    The Chairman. All right. We will go ahead and start with 
our second panel this morning.
    I would like to welcome to our witness table Ms. Alexis 
Taylor, who is the Deputy Under Secretary for Farm and Foreign 
Agricultural Services at USDA.
    She is accompanied this morning by Mr. Val Dolcini, 
Administrator of the Farm Service Agency; Suzanne Palmieri, 
Associate Administrator, Foreign Agricultural Service; and 
Brandon Willis, Administrator for the Risk Management Agency.
    Welcome this morning. I appreciate you being here.
    Ms. Taylor, the floor is yours for 5 minutes.

 STATEMENT OF ALEXIS TAYLOR, DEPUTY UNDER SECRETARY, FARM AND 
              FOREIGN AGRICULTURAL SERVICES, U.S.
          DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.;
 ACCOMPANIED BY VAL DOLCINI, J.D., ADMINISTRATOR, FARM SERVICE 
                AGENCY, USDA; SUZANNE PALMIERI,
           ASSOCIATE ADMINISTRATOR AND GENERAL SALES
          MANAGER, FOREIGN AGRICULTURAL SERVICE, USDA;
  BRANDON WILLIS, ADMINISTRATOR, RISK MANAGEMENT AGENCY, USDA

    Ms. Taylor. Thank you, Mr. Chairman, Members of the 
Committee. It is our pleasure to be here again to provide 
information on the programs and accomplishments of the Farm and 
Foreign Agricultural Services.
    Mr. Chairman, you introduced my colleagues who are with me 
today. Thank you for the opportunity to be here.
    The past 2 years have been an increasingly difficult time 
for U.S. agriculture. Due to the decline in commodity prices, 
net farm income has dropped by 27 percent in 2014, by 38 
percent in 2015, and it is forecast to drop by three percent 
this year. USDA's commodity and crop insurance programs are 
providing a safety net to producers and stabilizing farm income 
during this market downturn.
    The 2014 Farm Bill introduced two new farm safety net 
programs through FSA: the Agriculture Risk Coverage Program, 
known as ARC, and the Price Loss Coverage Program, known as 
PLC. We undertook an unprecedented educational and outreach 
effort, resulting in over 1.7 million producers electing into 
these new programs. For both 2014 and 2015, the Margin 
Protection Program for dairy enrolled over \1/2\ of all U.S. 
dairy operations.
    FSA also provides loans to producers who are temporarily 
unable to obtain other credit. In 2015, FSA provided nearly 
38,000 loans, valued at a record $5.7 billion, to producers 
unable to obtain commercial financing. Over 20,000 loans went 
to beginning farmers in 2015, 40 percent more than in 2009. 
Over 9,000 loans went to minority and women producers over that 
same period, a 65 percent increase.
    Since 2009, over $64 billion in crop insurance payments 
have helped farmers and ranchers through these difficult times, 
including $17 billion paid during the historic drought in 2012.
    RMA has also been expanding its reach. For example, the 
Pasture, Rangeland, and Forage Program is available in the 
continental United States. Whole-farm revenue protection is 
available in every county in the nation. This is a first for 
the crop insurance program. And RMA now offers organic price 
elections on 56 different crops, up from just four in 2011.
    In addition, incentives provided in the 2014 Farm Bill made 
crop insurance more affordable to beginning farmers and 
ranchers due to a ten percent premium discount and a waiver of 
fees. Over 13,000 producers have used these incentives and 
saved over $14.5 million.
    The efforts of FAS, in collaboration with the agricultural 
community, have contributed to the strongest 7 years in history 
for U.S. agricultural exports. These agricultural exports 
support about one million jobs here at home.
    Trade Promotion Authority boosted our ability to complete 
the negotiations of the Trans-Pacific Partnership, or TPP, 
which is a landmark agreement. When implemented, TPP, which 
includes 11 Pacific Rim countries representing nearly 40 
percent of the global economy, will lower tariffs and eliminate 
other barriers, helping farmers, ranchers, agribusinesses, and 
food companies compete in the region. Today, roughly 20 percent 
of farm income comes from agricultural exports. Agreements such 
as TPP hold the promise of increasing exports and, in turn, 
farm incomes over the long-term.
    FSA trade negotiators are also advocating on behalf of U.S. 
agriculture in the Transatlantic Trade and Investment 
Partnership, or T-TIP, negotiations. Exports to the European 
Union, currently our fourth-largest agricultural export market, 
were valued at $12.3 billion in Fiscal Year 2015. However, 
European barriers have created a deficit in our agricultural 
trade. T-TIP is an opportunity to address not only the market 
access commitments but non-tariff barriers that we are 
experiencing today.
    Over numerous farm bills, Congress has refined our market 
development programs. The largest is the Market Access Program, 
or MAP, which benefits a wide range of U.S. commodities. The 
Foreign Market Development Program, like MAP, involves work 
with our cooperator partners. These programs are highly 
effective. They have been found to provide $35 in economic 
benefit for every $1 we spend.
    Also, FAS leads USDA's efforts to help developing 
countries. For example, the McGovern-Dole Program provides 
technical assistance and commodities for school feeding and 
child nutrition projects. It is projected that 3.4 million 
women and children will be helped in 2017.
    Further, we are implementing the Local and Regional 
Procurement Program. We know from USDA's farm-to-school efforts 
that bringing locally grown foods into schools has multiple 
benefits, including added nutrition and increased incomes for 
local growers. We want to expand that success internationally.
    Mr. Chairman, Members of the Committee, we thank you for 
the opportunity to be here today and look forward to any 
questions you may have.
    [The prepared statement of Ms. Taylor follows:]

 Prepared Statement of Alexis Taylor, Deputy Under Secretary, Farm and 
     Foreign Agricultural Services, U.S. Department of Agriculture,
                            Washington, D.C.
    Mr. Chairman and Members of the Committee, I appreciate this 
opportunity to provide information on the programs and accomplishments 
of the Farm and Foreign Agricultural Services (FFAS) mission area of 
the U.S. Department of Agriculture. The FFAS mission area is composed 
of the Farm Service Agency, the Risk Management Agency, and the Foreign 
Agricultural Service. Much of our work in the past several years has 
focused on implementing the Agricultural Act of 2014 (the 2014 Farm 
Bill) in record time.
The Farm Service Agency (FSA)
    FSA programs encompass five of the twelve titles of the 2014 Farm 
Bill. The agency's primary focus is on Title I--Commodities, Title II--
Conservation, and Title V--Credit.
Commodity Programs
    The 2014 Farm Bill significantly changed FSA's safety net programs. 
It repealed the Direct and Counter-Cyclical Program and the Average 
Crop Revenue Election program, and introduced the new Price Loss 
Coverage (PLC) and Agriculture Risk Coverage (ARC) programs. In total, 
approximately $5.2 billion in ARC and PLC payments were made for 2014-
crop revenue and/or yield losses to over 900,000 farms, with over 70 
percent of these payments for ARC-County on corn. Producers of long 
grain rice, wheat, peanuts, and soybeans were also major recipients of 
ARC/PLC payments.
    FSA implemented these complex programs in record time--which 
included working with farmers to reallocate base acres and update 
yields, plus processing program elections for over 1.7 million farms--
required an ``all hands on deck'' approach to reach producers, and 
involved the hard work of dedicated FSA staff plus close collaboration 
with our land-grant university and state and county extension partners. 
FSA's university partners at Texas A&M, the Food and Agricultural 
Policy Research Institute, the University of Illinois, and others, 
developed web-based decision tools so farmers could input their own 
farm data and explore multi-year scenarios associated with adopting ARC 
or PLC for the length of the farm bill, as well as the intersection of 
these programs with our crop insurance offerings.
    Further, FSA worked with extension specialists in virtually every 
state on an extensive ARC/PLC education and outreach effort. In 2014 
and 2015, over 400,000 attendees participated in approximately 5,000 
ARC/PLC events that provided producers with valuable information on how 
to best manage risk through their ARC and PLC choices. The ARC/PLC web 
tools were demonstrated at over 2,500 of these events and the tool 
developers hosted ``hotlines'' for producers who needed additional 
assistance. In addition, FSA mailed over five million postcards to 
producers and landowners to inform them of upcoming deadlines for 
important decisions, and worked closely with media partners, who 
produced over 1,000 news stories on ARC/PLC.
    For 2016, the timing of yield and price data postings and ARC/PLC 
payments will be similar to 2015. In early March, FSA started posting 
yield data that, when paired with season average price projections, 
allows producers to calculate their 2015 crop ARC guarantees. Both ARC 
and PLC payments depend on the 12 month market year average price, and 
payment amounts for ARC-County depend on calculations for 100,000 crop/
county/practice (irrigated vs. non-irrigated) combinations. By statute, 
ARC and PLC payments cannot be made until October of any given year. In 
October 2016, 2015 crop year ARC/PLC payments will begin and will 
continue throughout the fall and early winter, as market year average 
price data for additional commodities become available.
    For both calendar years 2014 and 2015, the new Margin Protection 
Program for Dairy (MPP-Dairy) enrolled approximately 25,000 producers--
over \1/2\ of all U.S. dairy operations, and covers 166.3 million 
pounds of milk production for calendar year 2016. MPP-Dairy offers: (1) 
catastrophic coverage for an annual $100 administrative fee, and (2) 
optional buy-up coverage. Catastrophic coverage provides payments when 
the national dairy margin (the difference between milk prices and feed 
costs) is less than $4 per hundredweight (cwt). Producers may purchase 
buy-up coverage, for a premium, that provides payments when margins are 
between $4 and $8 per cwt.
    With relatively calm dairy markets in 2015, margins were near 
historical averages and payments were made only at the highest buy-up 
coverage level, with 261 dairy operations receiving modest payments. 
However, if we apply 2015 MPP-Dairy enrollment and payment rules to 
2009-2014 milk prices and feed costs, a time of greater margin 
variability, the program would have paid out considerably more. 
Specifically, if MPP-Dairy had been in place in 2009-2014, producers 
would have received $2.5 billion in payments in return for the $500 
million in premiums and fees that they would have paid to enroll.
    Although the marketing assistance loan program was largely 
unchanged by the 2014 Farm Bill, the Consolidated Appropriations Act of 
2016 re-authorized commodity certificates retroactive to the 2015 crop, 
which provides an additional loan repayment option for producers. FSA 
implemented these certificates within 2 months of their enactment, 
including retroactive provisions that benefit cotton producers back to 
August 1, 2015, the start of the cotton marketing year. Producers can 
purchase commodity certificates when the loan rate for a given crop 
exceeds the exchange rate (i.e., the Adjusted World Price, National 
Posted Price, or Posted County Price). Eligible crops include wheat, 
rice, upland cotton, peanuts, feed grains, soybeans, designated minor 
oilseeds, pulse crops (lentils, dry peas, large and small chickpeas), 
and wool.
Disaster Assistance Programs
    Immediately after 2014 Farm Bill passage, FSA focused on 
implementing the livestock and tree disaster assistance programs--
including the Livestock Forage Disaster Program (LFP); the Livestock 
Indemnity Program (LIP); the Emergency Assistance for Livestock, Honey 
Bees, and Farm-Raised Fish (ELAP); and the Tree Assistance Program 
(TAP).
    Over 650,000 producers so far received more than $5.8 billion in 
assistance for 2011-15 losses through LFP, providing feed assistance to 
producers who suffered from long-term drought. In addition, more than 
15,000 producers to date have received payments for 2011-15 losses 
under LIP, which provides financial assistance to producers who incur 
livestock deaths caused by blizzards and other natural disasters. ELAP 
payments are capped by the 2014 Farm Bill at $20 million annually. 
Hundreds of beekeepers lose hives each year many due to colony collapse 
disorder, and represent more than \1/2\ of ELAP recipients. ELAP 
payments have been factored to recipients in two of the three fiscal 
years since FY 2012 because of the cap; the FY 2015 payment factor will 
soon be available.
    TAP provides assistance to orchardists and nursery tree growers to 
help them replant or rehabilitate eligible trees, bushes, and vines 
lost by natural disaster. Since the enactment of the 2014 Farm Bill, 
approximately 650 Florida producers, the majority of whom were affected 
by citrus greening, received TAP assistance totaling approximately $7.8 
million. Citrus greening drops the average productive lifespan of the 
tree from 50 or more years to 15 or less.
    In addition, more than 25,000 producers each year benefit from the 
Noninsured Crop Disaster Assistance Program (NAP), which covers 55,000 
crops. This program was expanded in the 2014 Farm Bill to include 
protection at higher coverage levels, similar to provisions offered 
under the Federal crop insurance program. NAP continues to offer 
coverage at the catastrophic level based on 50 percent of expected 
production at 55 percent of the average market price for the crop. 
However, producers can now obtain additional coverage levels ranging 
from 50 to 65 percent of expected production, in five percent 
increments, at 100 percent of the average market price for the 2014-18 
crops years. In 2015, producers elected these higher levels of coverage 
for over 4,000 crops. Beginning, limited resource, and other 
traditionally under-served farmers are eligible for a waiver of the NAP 
service fee and a 50 percent reduction in premium for additional levels 
of coverage.
Conservation Reserve Program
    The Conservation Reserve Program (CRP) has a 30 year track record 
of providing tremendous conservation and environmental benefits. CRP 
allows USDA to contract with landowners so that environmentally 
sensitive land is not farmed or ranched, but instead used for 
conservation benefits. In return, FSA provides participants with annual 
rental payments, incentive payments, and cost-share assistance. 
Contract duration is between 10 and 15 years. CRP improves water 
quality, reduces soil erosion, and restores habitat for ducks, 
pheasants, turkey, quail, deer, pollinators, and other wildlife. In 
doing so, CRP spurs hunting, fishing, recreation, tourism, and other 
economic development across rural America.
    As of February, 23.7 million acres were enrolled in CRP contracts, 
13.1 million acres below peak enrollment in 2007. This enrollment 
figure includes 16.9 million acres under general sign-up enrollment 
authority and 6.8 million acres under continuous sign-up enrollment 
authority. CRP general sign-up is a competitive process conducted on a 
periodic basis, while CRP continuous sign-up occurs on an on-going 
basis throughout the year. CRP contracts on 1.66 million acres 
(combined general and continuous) are set to expire on September 30, 
2016; program payments total approximately $1.8 billion annually.
    Because CRP is currently near the farm bill imposed 24 million acre 
cap, any new enrollments will be limited to the number of acres 
expiring each year. These limited enrollment opportunities make it 
imperative that FSA enroll the most environmentally sensitive acreage 
to maximize environmental benefits on a per-acre basis. We are pursuing 
continuous signup options to achieve this targeting, and in FY 2015, 
continuous signup enrollment reached 837,000 acres, the largest 
enrollment ever.
    In lieu of a general signup in FY 2015, a 1 year contract extension 
was offered for general signup contracts that were not over 14 years in 
length, and were set to expire on September 30, 2015. About 500,000 
acres received this 1 year extension (about 58 percent of eligible 
acres).
    FY 2016 activities include a general signup period, plus continuous 
and grasslands signups. The FY 2016 general enrollment period began on 
December 1, 2015, and ended on February 26, 2016. In addition, sign-up 
in CRP Grasslands--a new 2014 Farm Bill program--is on-going. The 24 
million acre statutory cap is making competition under both general and 
grasslands sign-up especially fierce.
    We are proud of the impact that CRP has had on the rural landscape. 
Since its inception in 1985, we estimate that CRP has prevented more 
than 8 billion tons of soil from eroding and reduced nitrogen and 
phosphorous runoff into rivers and streams by 95 percent and 85 
percent, respectively, relative to similar lands that are cropped. On 
average over the past 5 years, CRP has protected more than 175,000 
stream miles with riparian forest and grass buffers, enough to go 
around the world seven times, and since 1996, has created about 2.7 
million acres of restored wetlands.
    CRP also provides greenhouse gas benefits. Over the past 5 years, 
CRP has sequestered an average of 46 million metric tons of 
CO2 equivalent per year. This is equal to removing about 
nine million cars from the road annually, and the CO2 
equivalent reduction is worth $2 billion per year.
Energy
    USDA recognizes that the bioeconomy has the potential to create 
unprecedented growth in the rural economy, by creating opportunities 
for the production, distribution and sale of biobased products and 
fuels. Therefore, FSA made available $100 million in grants under the 
Biofuel Infrastructure Partnership (BIP), nearly doubling the number of 
fueling pumps nationwide that supply renewable fuels to American 
motorists, such as E15 and E85. Twenty-one states are participating in 
the BIP, with matching funds from state and private partners, providing 
$210 million to strengthen the rural economy and increase the demand 
for corn and agricultural commodities used in the production of 
biofuels. We are also proud of our effort to partner with the 
Department of Energy and Navy to create advanced drop-in biofuels that 
will power both the Department of Defense and private sector 
transportation throughout America. Each partner has committed over $160 
million to this effort.
Farm Credit Programs
    Access to credit remains a critical issue for producers, in 
particular for new and beginning farmers and ranchers. In 2015, FSA 
provided nearly 38,000 loans, valued at a record $5.7 billion, to over 
27,500 farmers and ranchers who were temporarily unable to obtain 
commercial financing. Over 20,000 loans went to beginning farmers and 
ranchers in 2015, 40 percent more than in 2009. These included more 
than 4,000 farm ownership loans, which enabled beginning farmers to 
purchase farmland, construct or repair buildings, and make farm 
infrastructure improvements. FSA also increased its assistance to 
minority and women farmers and ranchers, providing these groups with 
over 9,000 loans--65 percent higher than in 2009.
    FSA's microloan program, which provides direct operating loans of 
up to $50,000 to pay for startup expenses such as land rent, essential 
tools, livestock and farm equipment, and annual expenses such as seed, 
fertilizer, utilities, marketing, and distribution expenses, has 
greatly improved FSA's ability to provide credit to beginning farmers 
and ranchers. Since its inception in January 2013, FSA has issued over 
17,000 microloans, and nearly 70 percent have gone to beginning farmers 
and ranchers. And, as of January 2016, microloans are now available to 
help with farm land, building purchases, and soil and water 
conservation improvements.
    Building on the success of collaborative efforts in 2014 and 2015 
that helped producers with their ARC/PLC and MPP-Dairy decisions, FSA 
is developing additional partnerships. In 2015, FSA announced the 
availability of $2.5 million in cooperative agreement funding for 
nonprofits and universities to facilitate program outreach to under-
served communities, including veterans, beginning farmers and ranchers, 
minority producers, and organic/specialty crop producers. The first 
round of proposals was submitted in late November, 2015 and awardees 
will soon be announced. These 1 year cooperative agreements are focused 
on increasing access to FSA programs and improving technical assistance 
outreach and financial education.
The Risk Management Agency (RMA)
    The Federal Crop Insurance Program is a vital risk-mitigation tool 
available to our nation's agricultural producers. It provides risk 
management solutions that are market driven and reflect the diversity 
of the agricultural sector, including specialty crops, organic 
agriculture, forage and rangeland, as well as staple row crops.
    Over its history, the value of the Federal Crop Insurance Program 
to American agriculture has grown. In 2015, the crop insurance program 
provided coverage on more than 298 million acres of farm and ranch land 
and protected over $102 billion of agricultural production. As of 
February 25, 2016, indemnity payments to producers on their 2015 crops 
total just over $5.6 billion on a premium volume of just under $10 
billion. Our current projection for the 2016 crop year shows the value 
of protection will be slightly less than $100 billion.
Program Expansion
    In addition to maintaining and building upon existing programs, RMA 
has also made great progress in implementing the 2014 Farm Bill. The 
Supplemental Coverage Option (SCO) is now available for 58 crops and 
the Actual Production History Yield Exclusion is available for 50 
crops. Expansion will continue as more data becomes available. The 
Stacked Income Protection Plan for Producers of Upland Cotton (STAX) is 
currently available for every county that has a crop insurance policy 
for cotton, and producers now have the ability to request coverage even 
if it is not available in their county. Peanut Revenue Protection is 
available in every county with peanut coverage, and Margin Protection 
Insurance is available for wheat, corn, rice, and soybeans in select 
counties. Coverage Level by Practice is now available for 52 crops. 
Enterprise Unit by Practice is now available for 16 crops. RMA now 
offers organic price elections on 56 different crops, up from four in 
2011. In addition, in 2016 RMA will offer Whole Farm Revenue Protection 
insurance in every county in the nation--a first for the crop insurance 
program. All of these options provide producers more ways to tailor 
crop insurance for their specific needs.
    To further expand crop insurance options for all growers, Pasture, 
Rangeland, and Forage is now available in every state in the 
continental United States. RMA continues to engage with ranchers to 
improve this policy.
    In an effort to ensure that producers continue to receive premium 
subsidies, RMA worked with the Natural Resources Conservation Service, 
the Farm Service Agency, private partners, and commodity groups to 
inform farmers and ranchers about new conservation compliance 
requirements. Any farmer or rancher that was potentially out of 
compliance received three letters and at least one phone call. As a 
result, over 98 percent of crop insurance customers complied with the 
provisions. Most of the remaining two percent are likely retired, 
deceased, or operating under a different entity. RMA has implemented 
several exemptions to ensure beginning farmers and ranchers, and those 
who are new to USDA programs, as well as those who have formed new 
entities, do not lose premium subsidy. To date, over 1,000 exemptions 
have been granted.
    Incentives authorized in the 2014 Farm Bill make crop insurance 
more affordable for beginning farmers and ranchers by providing a ten 
percent premium discount, as well as a waiver of the catastrophic and 
additional coverage administrative fees. Over 13,500 producers have 
taken advantage of these incentives. Beginning farmers and ranchers 
have saved over $14.5 million in premiums and administrative fees 
because of this program.
    The farm bill included several reforms to the Federal Crop 
Insurance Program; however, there remain further opportunities for 
improvements and efficiencies. The President's 2017 budget includes two 
proposals to reform crop insurance, which are expected to save $18 
billion over 10 years. This includes reducing subsidies for revenue 
insurance that insure the price at the time of harvest by ten 
percentage points and reforming prevented planting coverage. These 
reforms will make the program less costly to the taxpayer while still 
maintaining a quality safety net for farmers.
Program Integrity
    RMA has also been working on a process to reduce improper payments. 
RMA has developed and received approval from the Office of Management 
and Budget for a new sampling and review methodology for measuring 
improper payments. Throughout the development process, RMA worked 
closely with the Office of the Inspector General to address concerns 
the oversight agency had with the previous methodology. The 
collaborative effort has resulted in significant improvements to the 
improper payment sampling methodology and review process. The new 
methodology will allow RMA to more accurately estimate an improper 
payment rate for the crop insurance program and identify root causes of 
the improper payments. I am proud to report that the improper payment 
rate for Fiscal Year 2015 is 2.2 percent, down from 5.5 percent in FY 
2014. Beginning in Fiscal Year (FY) 2017, RMA will determine an 
improper payment rate for each approved insurance provider in addition 
to the overall program rate.
The Foreign Agricultural Service (FAS)
    The Foreign Agricultural Service (FAS) is USDA's lead international 
agency, linking U.S. agriculture to markets around the world to enhance 
export opportunities and global food security.
    The efforts of FAS employees, both in Washington and around the 
globe, combined with market promotion programs authorized in the 2014 
Farm Bill, and collaboration with the U.S. agricultural community, have 
contributed to the strongest 7 year stretch in history for U.S. 
agricultural trade. From fiscal years 2009 to 2015, U.S. agricultural 
exports climbed more than 45 percent in value, totaling over $911 
billion. In FY 2015, American agricultural producers achieved $139.7 
billion in exports, the third highest year on record. In addition, 
agricultural exports have increased in volume, demonstrating an 
increasing global appetite for American-grown products. In 2014, U.S. 
agricultural exports supported more than one million American jobs. 
Credit for these accomplishments belongs to America's hardworking farm 
and ranch families.
    FAS supports U.S. producers through a network of agricultural 
economists, marketing experts, negotiators, and trade specialists in 
Washington, D.C. and 93 international offices covering 170 countries. 
We are proud that our role in opening and maintaining markets has 
resulted in billions of dollars of additional U.S. agricultural 
exports. FAS also contributes to the Department's goal of enhancing 
global food security. The food assistance programs, technical 
assistance, and capacity building activities administered by FAS have 
provided assistance that has helped millions of people worldwide. Trade 
policy, trade promotion, and capacity building are the core functions 
at the heart of the programs and services that FAS provides to U.S. 
agriculture.
Trade Policy
    FAS expands and maintains access to foreign markets for U.S. 
agricultural products by removing trade barriers and enforcing U.S. 
rights under existing trade agreements. Working with our sister agency, 
the Animal and Plant Health Inspection Service (APHIS), we are 
instrumental in resolving sanitary, phytosanitary, and technical 
barriers to trade. FAS also works with foreign governments, 
international organizations, and the Office of the U.S. Trade 
Representative (USTR) to establish international standards and rules to 
improve accountability and predictability for agricultural trade.
    Congressional passage of the bipartisan Trade Promotion Authority 
(TPA) bill last summer boosted the Administration's ability to complete 
negotiations of the landmark Trans-Pacific Partnership (TPP) agreement. 
When implemented, the TPP agreement, with eleven Pacific Rim countries 
representing nearly 40 percent of global GDP, will provide new market 
access for America's farmers and ranchers by lowering tariffs and 
eliminating other barriers. Rural America needs the good deal laid out 
in the TPP agreement. The Administration is committed to working 
closely with Congress to obtain support for this historic deal so that 
our businesses can sell more rural-grown and rural-made goods around 
the world.
    FAS trade negotiators are also advocating on behalf of U.S. 
agriculture in the Transatlantic Trade and Investment Partnership (T-
TIP) negotiations. Our exports to the European Union (EU), which 
currently is our fourth largest agricultural export market, were valued 
at $12.3 billion in FY 2015; however, European barriers to U.S. exports 
help create a deficit in our agricultural trade to that region. FAS 
experts are an integral part of the T-TIP negotiating team and USDA's 
economic analysis underpins the negotiating strategy on agriculture. 
Our negotiators seek the elimination of all agricultural tariffs and 
remain resolute in pushing back on the EU's requests for geographical 
indications that do not comport with the U.S. intellectual property 
system. The T-TIP is an opportunity to address not only market access 
commitments, but non-tariff, sanitary and phytosanitary and technical 
barrier to trade issues that impede U.S. agricultural exports.
    Closer to home, another important market for U.S. agriculture is 
Cuba. USDA is proposing to establish an in-country presence in Cuba to 
cultivate key relationships, gain firsthand knowledge of the country's 
agricultural challenges and opportunities, and develop programs for the 
mutual benefit of both countries. Since Congress authorized 
agricultural exports to Cuba in 2000, the United States has shipped 
nearly $5 billion in agricultural and food products to Cuba. Cuba's 
geographical proximity and demand for U.S. products makes it a natural 
market, but as Secretary Vilsack has said ``We are now stymied by an 
embargo that has certainly outlived its purpose.'' A more open and 
normalized trade relationship with Cuba will benefit both countries and 
help address the competitive disadvantages that U.S. agricultural 
products currently face in this market. USDA's Economic Research 
Service (ERS) analysis suggests that greater liberalization could lead 
to higher and more diversified sales to Cuba, similar to what the 
United States exports to the Dominican Republic, a country with similar 
population and per capita income. U.S. agricultural exports to the 
Dominican Republic averaged $1.1 billion a year between 2012 and 2014, 
compared to $365 million to Cuba. Moreover, the United States exports a 
broad range of agricultural products--beef, turkey, breakfast cereals, 
and fresh apples--to the Dominican Republic that Cuba does not 
currently import in sizable amounts.
Trade Promotion
    Over numerous farm bills, Congress has authorized and refined an 
effective combination of agricultural market development and export 
credit guarantee programs. These programs that are designed to develop 
markets, facilitate financing of overseas sales, and resolve market 
access barriers dovetail with the FAS mission. We must open, expand, 
and maintain access to foreign markets, where 95 percent of the world's 
consumers live. FAS partners with a broad spectrum of cooperator groups 
representing the U.S. food and agricultural industry and manages a 
toolkit of market development programs to help U.S. exporters develop 
and maintain markets for hundreds of products.
    The largest market development program operated by FAS is the 
Market Access Program (MAP). Through MAP, FAS partners with nonprofit 
U.S. agricultural trade organizations, U.S. agricultural cooperatives, 
nonprofit State Regional Trade Groups, and small-scale U.S. commercial 
entities to share the costs of overseas marketing and promotional 
activities, such as consumer promotions, market research, and trade 
show participation. The 2014 Farm Bill makes available $200 million of 
CCC funds annually for MAP. That amount is matched with industry 
contributions to aid in the creation, expansion, and maintenance of 
foreign markets for hundreds of U.S. agricultural products. A range of 
U.S. commodities from Texas beef and cotton, to Minnesota pork and 
soybeans, to California grapes and almonds, and apples and pears from 
the Pacific Northwest, all benefit from MAP. In FY 2016, MAP is 
providing funding to 62 U.S. agricultural trade associations, state 
regional trade groups, and agricultural cooperatives.
    The Foreign Market Development Program (FMD) is another FAS-
administered market development program reauthorized by Congress in the 
2014 Farm Bill. FMD is a cost-share program that aids in the creation, 
expansion, and maintenance of long-term export markets for U.S. 
agricultural products. The 2014 Farm Bill makes available $34.5 million 
of CCC funds annually for FMD. The program fosters a market development 
partnership between FAS and U.S. agricultural producers and processors 
who are represented by nonprofit commodity or trade associations known 
as Cooperators. Under this partnership, FAS and each Cooperator pool 
their technical and financial resources to conduct overseas market 
development activities. FMD-funded projects generally address long-term 
opportunities to reduce foreign import constraints or expand export 
growth opportunities. For example, FMD-supported projects include 
efforts to reduce infrastructural or historical market impediments, 
improve processing capabilities, modify codes and standards, or 
identify new markets or new uses for the agricultural commodity or 
product. In FY 2016, FMD is providing funding to 23 U.S. agricultural 
trade associations.
    Working with our agricultural cooperator partners, our MAP and FMD 
programs have been shown to be highly effective. An independent study 
released in 2010 by IHS Global Insight, Inc. found that trade promotion 
programs like MAP and FMD provide $35 in economic benefits for every 
dollar spent by government and industry on market development. FAS 
contracted with an independent company to update the cost-benefit 
analysis of these programs. Results of this study are expected in the 
spring of 2016.
Building Capacity and Food Security
    FAS leads USDA's efforts to help developing countries increase food 
security, improve their agricultural systems, and build their trade 
capacity. FAS's non-emergency food aid programs help meet recipients' 
nutritional needs and also support agricultural development and 
education.
    The McGovern-Dole International Food for Education and Child 
Nutrition Program (McGovern-Dole) provides agricultural commodities and 
technical assistance for school feeding and maternal and child 
nutrition projects in low-income, food-deficit countries committed to 
universal education. The program is projected to assist 3.4 million 
women and children worldwide in 2017.
    Congress identified fostering local self-sufficiency and ensuring 
the longevity of programs in recipient countries as one of the 
priorities for awarding McGovern-Dole grants. FAS and its partner 
organizations work to ensure that the communities served by McGovern-
Dole can ultimately continue the sponsored activities on their own or 
with support from other sources such as the host government or local 
community. By procuring local foods such as fruits and vegetables, FAS 
will be able to offer more nutritionally rich meals and boost local 
farmer incomes, which will in turn build community support for our 
McGovern-Dole programs.
    Building community support enhances long-term success and increases 
the probability that local governments take over school feeding 
programs. For example, in Bangladesh, FAS is witnessing success in 
obtaining local support and sustainability. The Government of 
Bangladesh pledged that from 2015 onward it will spend $49 million 
annually for school feeding programs in poor areas. By 2017, the 
Government of Bangladesh will manage school feeding in 50 percent of 
the schools currently receiving food under McGovern-Dole.
    Since Congress established the Food for Progress (FFPr) program in 
1985, it has been a cornerstone of USDA's efforts to support 
sustainable agricultural production in developing nations that are 
committed to free enterprise in the agriculture sector. Under FFPr, 
proceeds from the sale of donated U.S. agricultural commodities are 
used to fund projects that improve agricultural market systems and 
trade capacity. More than 263,000 metric tons of U.S.-produced 
commodities will be donated this fiscal year. In FY 2015, FAS awarded 
nine agreements that covered six countries in Latin America, Sub-
Saharan Africa, and the Middle East. The recipients involve six 
private, voluntary organizations and three government (Mali, Honduras 
and Jordan), and range in activities from building governments' 
capacity to improving agriculture productivity, and increasing rural 
communities' access to credit. In FY 2016, USDA selected Angola, 
Bangladesh, Burkina Faso, Guatemala, Haiti, Malawi, Mozambique, 
Pakistan, the region of Liberia and Cote d'Ivoire, and the region of 
Senegal, The Gambia, and Guinea Bissau as priority countries and 
regions. Currently, FAS oversees $814.6 million in programming in 57 
countries that were funded in 2011-2015.
    We also have the ability to respond to requests by governments with 
FFPr. Last May, Secretary Vilsack traveled to Jordan for the signing of 
a Food for Progress agreement to provide 100,000 metric tons of U.S. 
wheat, valued at approximately $25 million, to the Government of 
Jordan. As one of our most steadfast partners in the Middle East, the 
Government of Jordan will be able to access the expertise of USDA to 
improve its agricultural productivity and therefore relieve some of the 
economic burden that it is currently facing. Proceeds from the sale of 
the commodities will improve the country's agricultural productivity 
and security through water conservation (over 20 percent of Jordanians 
are water insecure).
    As authorized in the 2014 Farm Bill, we are continuing to implement 
the Local and Regional Procurement (LRP) program. We are working to 
finalize a new LRP rule and begin FY 2016 programming. We know from 
USDA's ``Farm to School'' efforts that bringing locally grown foods 
into the schools has multiple benefits--including added nutrition, 
improved science skills, and increased incomes for local growers. We 
want to expand this success to our international school feeding 
programs. The FY 2017 LRP program will focus on improving supply chains 
and procuring supplementary food for school meals in McGovern-Dole 
programs.

    The Chairman. Well, I thank you, Ms. Taylor. I appreciate 
that.
    I will start, 5 minutes.
    Mr. Willis, let me brag on you a bit or let you brag on 
yourself. Improper payments at your agency have dropped from 
5.58 percent in 2014 to 2.2 percent in 2015. Thank you for 
that.
    Can you talk to us about the steps you have taken at the 
agency to make that positive improvement, I guess that is 
redundant, that improvement happen?
    Mr. Willis. Certainly.
    First, I want to acknowledge the Committee. And the last 
farm bill provided some focus and resources to help us make 
some of these improvements, and I want to acknowledge that 
first and foremost.
    Crop insurance is----
    The Chairman. I don't know if I would do that because Mr. 
Lucas is with us this morning and his head gets----
    Mr. Willis. Thank you.
    The Crop Insurance Program is a well-run program, and the 
improper payment rate that is \1/2\ the national average 
demonstrates that. We started a few years ago, actually, 
focusing on this, trying to look at ways to more accurately 
measure improper payments, and then find ways over the long run 
to see a reduction.
    We are, I would say, just part of the way through. We are 
continuing to take more steps in the future to continue to 
demonstrate this program is something that both farmers and 
taxpayers can defend and feel good about.
    The Chairman. All right.
    Well, let me go the other way and talk to you about 
enterprise units and the struggle we have there. Can you update 
us, update the Committee?
    We thought the farm bill allowed producers to elect 
enterprise units at their choice. That doesn't seem to be how 
you guys implemented it. Can you walk me through some of that, 
where we currently stand?
    Mr. Willis. Yes. That issue, obviously, is a little 
difficult issue. From the beginning when we have implemented 
the farm bill, we have made a sincere effort to try to 
implement it in a way that used common sense, used an approach 
that farmers would appreciate and understand. I had a farmer 
from the State of Texas in earlier this week, a peanut 
producer, and that producer specifically brought up this issue 
and asked about it.
    For us, it goes back to the fact that we do believe we 
implemented the statute based upon the language within it. We 
did look at the report language for guidance. We are at the 
point where we don't know what else to do at this point in 
time, but we do understand there are some people who wish we 
had done that differently.
    The Chairman. Okay.
    And then let me ask about the ARC county payments. We have 
this anomaly throughout the system where folks on one side of a 
county line get a full payment, folks in the other country next 
to it get nothing.
    Can you walk us through how that is working and talk to the 
Committee about what we can do in the next farm bill to address 
some of those things? I don't think that was an intended 
consequence.
    Ms. Taylor. Mr. Chairman, if I could take that question.
    The Chairman. Sure.
    Ms. Taylor. First and foremost, the ARC County Program or 
just the new PLC and ARC Programs are fundamentally different 
than direct payments from the last farm bill. So, part of it is 
a mentality shift. It certainly was in Congress but also for 
farmers out there in the countryside.
    We developed producer-provided solid data sets in a cascade 
to ensure that the data that we use, first, protected producer 
information but then also, second, ensured that we had solid 
data sets, whether it was NASS county or RMA county. These were 
provided by the farmers.
    It is a county-based program, so one of the things that we 
are seeing was intentional or part of how Congress structured 
this, that counties are going to vary. There are different 
variabilities in those counties on producer yields, it is a big 
impact in our county.
    So I would say we have signed up 1.7 million producers, and 
for the 2014 crop year, we paid $5.2 billion in safety net to 
those producers. I think that is a strong safety net. I think 
it is working. But inherently in the way a county program is 
structured means counties are going to have different payment 
factors in them.
    The Chairman. All right. Well, thank you.
    Ms. Taylor, let me ask about this. One of the arguments on 
food aid is that high commodity prices have reduced the amount 
of food that was able to be bought. Commodity prices now have 
dropped considerably. Have we seen an incremental increase in 
the amount that you have been able to buy with food aid, given 
those lower commodity prices? What is happening?
    Ms. Taylor. Yes, Mr. Chairman. Certainly there is a 
correlation there.
    The Chairman. But it works both ways, right? When prices 
are high, you are buying less. But now that prices are low, are 
you demonstrating that you are buying more?
    Ms. Taylor. Yes, Mr. Chairman. As you said, there is a 
correlation between commodity prices and the amount of tons 
that we could ship of various foods. We do expect to see this 
year an uptick on some of the tonnage of commodities that we 
can buy due to lower commodity prices.
    The Chairman. All right.
    Mr. Lucas, 5 minutes.
    Mr. Lucas. Thank you, Mr. Chairman.
    Administrator Dolcini, there is currently a push by 
commercial lending institutions to increase the authorized loan 
level for FSA-guaranteed loans to $2.5 million. Are you 
familiar with this proposal? And if so, do you have a position 
or any observations on such an idea?
    Mr. Dolcini. Well, my observations are these, sir. There is 
certainly more demand today for our farm loan products at the 
Farm Service Agency all across the country as we are seeing a 
softening in the farm economy and in the decline in commodity 
prices, certainly in your district in west Texas. Elsewhere in 
the nation we are seeing that.
    We have been in touch and have had meetings with the Farm 
Credit Council, with the American Bankers Association, and 
other interested members of industry who are wanting to talk a 
little bit about what it would mean for us to increase our loan 
limits.
    The guaranteed program has annual increases of incremental 
amounts. The direct loan program does not have those. Those 
require statutory changes. We would be happy to work with 
Members of this Committee or your teams to develop some 
thoughts around technical issues associated with that.
    But one potential ramification of increasing the loan 
limits is that we will make fewer and larger loans, thereby, 
the pool won't be available to as many American farmers and 
ranchers as it is today.
    Mr. Lucas. Do you have any idea off the top of your head 
how many of these guarantees we are talking about now that are 
in place?
    Mr. Dolcini. I am going to have to get back to you, sir. I 
don't want to give you incorrect information.
    Mr. Lucas. That is just fine, Administrator.
    To shift subjects on you for just a moment, I want to thank 
you and your staff for the work on helping U.S. peanut 
producers who were impacted by the Clint Williams Company 
bankruptcy last year, something that essentially had not 
happened in that fashion before, put a huge number of producers 
in a terrible stress, and now has been resolved to the best 
that the Department can do. I am very much appreciative.
    I just kind of would like to note for the record and to my 
colleagues that there has been the impression somehow in some 
places that, by addressing the producers at the $355 per ton-
loan rate, that that basically has made producers totally 
whole. Just for the benefit of my colleagues here, many of 
those producers had contracts at $625 a ton.
    Mr. Dolcini. That is right.
    Mr. Lucas. So while USDA fulfilled its obligations 100 
percent, through a very complicated fashion--and I very much 
appreciate that, and they do too--it is just worth noting that 
those producers weren't made totally whole, because they had 
contracts for $625 and they are taking a $270 a ton haircut. 
Just an observation for everyone.
    That said, though, thank you for the Department's moving so 
swiftly. Because there were a number of good people who had 
been very good managers for sometimes generations who were 
caught in a horrible bind, who were on the verge of being torn 
limb from limb. So just to note that.
    And if there is anything in the future that we can do to 
help address your ability to meet those kind of challenges, 
certainly we will need to talk about that before the 2018 Farm 
Bill.
    Mr. Willis. Well, we certainly appreciate those 
compliments, Congressman Lucas, and I will make sure to pass 
them along to those that were involved. It was a creative 
approach taken by the Department, and by the agency. And we 
worked closely with industry and growers, Congress and others 
to make sure that folks had an opportunity to provide input to 
the process. I think that it worked reasonably well.
    Mr. Lucas. You bet. And that $355 a ton was critically 
important to producers matching the loan rate. But in the eyes 
of some of our media friends, that wasn't making everybody 
whole. That was doing everything we could to help them, 
appropriately, within the law, but they still took a big 
economic haircut over what happened at that company with that 
company's bankruptcy that impacted them.
    And, with that, Mr. Chairman, I yield back.
    The Chairman. Mr. Thompson, 5 minutes.
    Mr. Thompson. Thank you, Mr. Chairman.
    Thanks to all of you for your leadership and your service. 
It is greatly appreciated.
    Administrator ``Dolcini''?
    Mr. Dolcini. ``Dolcini.''
    Mr. Thompson. ``Dolcini.'' Sorry about that. I hate messing 
people's names up. It is the only thing we come in and out of 
this world with, is our name.
    Mr. Dolcini. I am used to it, sir. It happens all the time.
    Mr. Thompson. I want to zero in on energy. And the intent 
of the Biomass Crop Assistance Program, BCAP, is to provide 
financial assistance to producers to establish dedicated energy 
crops. To date, how many acres of dedicated energy crops have 
been created from the program? And how much has been spent 
through the BCAP to date?
    Mr. Dolcini. Sir, I am sorry, I don't have those at my 
fingertips, but I can certainly provide them later this 
morning, in fact, to you and the Committee.
    Mr. Thompson. Okay.
    Mr. Dolcini. It has been a successful program thus far, and 
USDA has invested in both project areas which encouraged the 
cultivation of energy crops as well as in parts of the western 
U.S., for example, where forest residue, ag residue/other 
materials are removed from the forest and brought to biomass 
conversion facilities.
    Mr. Thompson. Yes. It is part of the solution. We were just 
previously talking about forest health with the Deputy of the 
Forest Service and the Under Secretary and creating that market 
demand. Excellent.
    I want to talk a little bit about trade. Specifically, can 
you speak to expected outcomes for American agriculture in the 
TPP negotiations? I know some ag groups are very strongly in 
favor of TPP, but others, such as tobacco and rice, have 
lingering concerns and outright opposition. Is there anything 
that can be done by USDA to help address those in agriculture 
who wanted more out of what is being proposed at this point?
    Ms. Taylor. Congressman, I appreciate that question. As you 
mentioned, we have strong support across almost all of the 
agriculture community around TPP. It is a game changer as far 
as trade agreements go for U.S. agriculture. The Farm Bureau 
recently came out with a study and found that it will boost net 
farm income by $4.4 billion. That number, to me, shows that 
U.S. agriculture can't wait for this agreement to be passed and 
to start being implemented.
    We are seeing our competitors, with the strength of the 
U.S. dollar, we are seeing them gain market share today in some 
of our key markets, Japan, Vietnam, and really outcompete 
because of whether preferential trade agreements or their 
currency is weaker. And so TPP is vital to leveling that 
playing field and making sure U.S. products are competitive.
    One tool that we have at USDA and we use quite effectively 
with the private-sector is our market development programs, 
thanks in large part to Congress, to this Committee, for their 
strong support. Those are highly effective dollars that we 
leverage. As I mentioned in my opening statement, what we find 
is for every $1 that industry puts in or the U.S. Government 
puts in, we are seeing a $35 return on investment, meaning we 
are selling $35 worth of U.S. agricultural products in those 
markets.
    And so we are working to partner with our various 
stakeholders on ensuring those dollars are leveraged in a 
diversity of marketplaces. But, also, a lot of them are looking 
for the coming years, when TPP will be implemented, on how they 
can effectively target those marketplaces and ensure we are in 
there and promoting U.S. goods and ensuring that those 
customers in Vietnam, Malaysia, some of these markets are 
developing a taste for U.S. products.
    Mr. Thompson. There is a lot of antitrade rhetoric right 
now in politics, which I find most of it under- or uninformed 
about the value of trade and about how much that we make here 
or grow here and we sell there, sell overseas, and what that 
means.
    And my understanding is, I want to get your opinion on 
this, in the recession we went through, which was pretty 
significant, that, of all the industries, the agriculture 
industry was somewhat resilient to that downturn, that economic 
downturn that cost so many jobs, devastated so many industries. 
And my understanding, a part of that was just how robust our 
trade has been.
    Now, maybe other areas of trade have not been negotiated 
well in the past, and we are doing a better job of setting the 
rules, and Congress driving that. Your opinion in terms of was 
trade helpful in providing resiliency in the agriculture 
industry in the most recent recession?
    Ms. Taylor. Absolutely, Congressman. What we find is about 
20 percent of farm income is directly tied to U.S. agricultural 
exports. So opening new markets is key to keeping the ag 
economy strong.
    We also find it is not just about the benefit to farmers 
and ranchers. What we have also found is, for every $1 of 
exports, it stimulates another $1.27 in business activity. And 
I am sure you all represent rural districts, you see this. If a 
farmer has a dollar, they are looking to upgrade their 
facilities, invest in better technology. And that is what we 
see. The numbers support that.
    Mr. Thompson. Yes, farmers aren't going to save the money; 
they will spend it.
    Ms. Taylor. I grew up on a farm, Congressman. I saw this 
firsthand from my dad.
    Mr. Thompson. Okay.
    Thank you, Mr. Chairman.
    The Chairman. Mr. Kelly, 5 minutes.
    Mr. Kelly. Ms. Palmieri, just to follow up kind of on Mr. 
Thompson's question, what are your expected outcomes from T-
TIP?
    Ms. Taylor. Congressman, if I could actually take that?
    I think there is a lot of opportunity here in T-TIP. As you 
look at the U.S. and the EU, it makes a lot of sense. There are 
a lot of geopolitical reasons why we decided to negotiate this, 
but there are also a lot of economic reasons, that together we 
represent about 50 percent of the world's economy, and it kind 
of makes people scratch their heads to think about why we 
haven't had one. Even without a trade agreement, they are still 
our fourth-largest trading partner.
    But there are a lot of challenges. We have some different 
philosophies on how we regulate. We have a risk-based, science-
based, internationally recognized kind of rules of the road on 
how we regulate for various food safety or non-tariff barriers 
and measures. And so there is a lot of opportunity here, but it 
is not without challenges as well.
    Mr. Kelly. Thank you.
    And, Administrator Dolcini, what kind of concerns are you 
hearing from FSA offices in the Cotton Belt?
    Mr. Dolcini. Well, we are hearing quite a number. I don't 
know if the Deputy Under Secretary wants to provide a broader 
cotton answer, sir, but I can tell you that the offices that I 
oversee in the Cotton Belt are working with farmers today on 
restructuring loans, servicing loans, providing additional 
financial assistance where it is appropriate.
    We are also in conversation with the industry here in 
Washington, and perhaps the Deputy Under Secretary can provide 
a little bit more detail there.
    Mr. Kelly. Please.
    Ms. Taylor. Yes. Thank you for that opportunity, 
Congressman.
    I actually had a couple cotton farmers from Texas in my 
office just on Wednesday talking about what they are seeing and 
what the impacts of the current market conditions around cotton 
are, how they are affecting them. There was a new and young 
farmer there, as well, and he talked about what the impact, 
what he is seeing on a cash flow side and really the strain of 
how the current market conditions are impacting them.
    We are certainly in close contact. I know the Secretary was 
up here talking about the assistance that we are looking at 
providing. We have had active conversations in the government 
but then also within the cotton industry. And we will certainly 
keep this Committee apprised as those go forward on what a 
program that could assist cotton farmers may look like.
    Mr. Kelly. And just for the panel, anything you can do to 
help our cotton. Once that infrastructure goes away, more than 
any other crop, it goes away and it is difficult to rebuild, 
and we lose cotton for a long time, or it is much more 
expensive to get back in.
    And the second thing is never underestimate its impact on 
other crops, because when cotton is not profitable, they start 
growing another crop, which depresses the prices there.
    So I would just ask that you keep that in mind with all 
your solutions and understand that urgency is key here to make 
sure that we do whatever we need to do quickly.
    And kind of as a follow-up on credit, and this is for Mr. 
Dolcini on this one, but what can be done to educate young and 
beginning producers in order for them to better understand the 
credit opportunities available to them? Because, as you know, 
we have an aging farm population who are farming, and we need 
to get new and younger farmers engaged for the long-term.
    Mr. Dolcini. Well, that is a great question, sir. And we 
have done a lot of work throughout the Department but really at 
the Farm Service Agency, as we are the Department's primary 
lender, to educate new and beginning farmers, returning 
veterans, women farmers, farmers of color, disadvantaged 
farmers, others that have not been able to avail themselves of 
FSA credit in the past.
    And what we are seeing just this year is that there is a 20 
percent greater increase on our loan tools around the country 
and a 40 percent increase year over year on our microloan, 
which has been the best tool for new and beginning farmers. We 
have made 18,000 of these microloans since the program started 
in 2013, 70 percent of which went to new and beginning farmers, 
50 percent of which went to first-time FSA customers.
    So we are able to bring new folks into the offices through 
greater outreach in all of our field offices. We have nearly 
2,200 offices around the nation, and they are all really 
selling the idea of working more closely with beginning farmers 
and ranchers.
    We have a great new service called Bridges to Opportunity, 
which will allow FSA offices to act as information gateways not 
only for our credit programs, not only for our farm programs, 
but for programs that other agencies, whether it is RMA or NRCS 
or Rural Development, offers.
    So we are really trying to offer a full suite of services 
to new and beginning farmers around the country, and I think 
that the metrics bear that out. We have had a lot of success so 
far. We are going to keep at it.
    Mr. Kelly. Thank you.
    And that was my next question. But, overall, how are the 
microloans performing?
    Mr. Dolcini. It is the workhorse of our farm loan 
portfolio. It is really one of the best things we have done at 
the Farm Service Agency in the last few years.
    Mr. Kelly. Thank you, Mr. Chairman. I yield back.
    The Chairman. The gentleman yields back.
    Mr. Benishek.
    Mr. Benishek. Thank you, Mr. Chairman.
    Thank you all for being here this morning.
    Could you weigh in on this U.S.-Canada Softwood Lumber 
Trade Agreement?
    Apparently, there is a trade agreement with Canada that has 
expired concerning soft lumber. The Canadians subsidize their 
timber industry much more than we do, and it has affected 
prices in my district and around the country.
    So is there any movement on renegotiating that? Or is a 
deal in the works? Or what is happening with that?
    Ms. Taylor. Congressman, I am going to have to--I don't 
know the latest. So if I could go back, consult with my 
colleagues, also consult with the U.S. Trade Representative's 
office, we can follow up with you on that.
    Mr. Benishek. Yes, well, it is an important issue across 
the country. The timber producers always complain about the 
Canadians bringing in a lot of timber. So I would appreciate a 
brisk, early followup.
    And the other question that I have concerns this T-TIP 
stuff too. It seems to me there have been some difficulties 
dealing with this. And you mentioned a little bit about the 
non-tariff issues. And apparently there is some kind of a 
pesticide issue in the EU that is different from the way the 
rest of the world deals with, and is this an impediment to our 
shipping commodities into Europe?
    Ms. Taylor. At the end of last year, we were coming up to 
an issue with a lot of the tree nuts and some specialty crops 
on the level of a certain pesticide that we use and the 
tolerance level. We actually worked on the tree-nut side quite 
closely with the European counterparts to kind of extend a 
temporary MRL until they could----
    Mr. Benishek. What is an MRL?
    Ms. Taylor. Minimum residue level. Sorry, sir. To extend 
that temporary minimum residue level of the certain pesticide 
for another year----
    Mr. Benishek. So is this a part of the T-TIP thing, then, 
or what?
    Ms. Taylor. It is on the margins of T-TIP. We are each 
working on various issues. They are not part of the actual 
negotiating itself. But, we need to continue to build momentum 
on both on sides on priority issues for both us and Europe.
    Mr. Benishek. Well, there is some question in my mind about 
the coordination of these international deals here. The 
Agricultural Marketing Service, that is something different 
than you, then, right? So, then, are you guys coordinating in 
what you are doing in these negotiations? I don't understand 
how this works. Are you both doing the same thing? Or how does 
that work exactly? Is there communication?
    Ms. Taylor. Congressman, we actually work quite closely as 
an interagency. The Foreign Agriculture Service oversees and 
coordinates the entire department's international activities. 
So that means on food safety we work quite closely with the 
Food Safety Inspection Service, with APHIS, with the 
Agricultural Marketing Service.
    And so not just within trade agreements but bilateral when 
a trade issue comes up, we are constantly pulling the team 
together and ensuring that what we do and agree to, that all 
the agencies within USDA, that it will work for them.
    Mr. Benishek. So there are how many different agencies are 
working on this all together? How many people do they have to 
pull together to make something actually happen?
    Ms. Taylor. It depends on the issue, honestly, Congressman. 
It is an export issue for, say, meat, it would be FAS and FSIS, 
the Food Safety Inspection Service, work quite closely. On 
high-path avian influenza, we work quite closely with our 
colleagues in APHIS. And so it depends on the issue.
    Mr. Benishek. All right.
    Thank you, Mr. Chairman. I will yield back.
    The Chairman. The gentleman yields back.
    Mr. Yoho, 5 minutes.
    Mr. Yoho. Thank you, Mr. Chairman.
    Thank you all for being here.
    Secretary Taylor, you were talking about TPP. And were we 
negotiating with, like, Japan, like Australia did with their 
beef? Because with Australia, their beef exports went up eight 
percent, and ours decreased three percent. Are we waiting on 
this comprehensive TPP instead of just negotiating a bilateral 
agreement like Australia did?
    Ms. Taylor. We have long had a target on Japan as a market. 
They are a priority market, they are one of our top markets, 
even with very high tariffs. But we did negotiate an agreement 
in a multilateral sense with----
    Mr. Yoho. So we are waiting on TPP instead of just----
    Ms. Taylor. We don't have bilateral negotiations because 
of----
    Mr. Yoho. Is there a reason we didn't do that? Because 
Australia was ahead of the curve, and they did a good thing for 
their country, and we went down.
    Ms. Taylor. Well, TPP really gave us more leverage in 
getting better market access packages. We are getting the beef 
tariff to single digits. That is the first time Japan has ever 
done that. Japan did not agree to that in a bilateral sense 
with Australia.
    Mr. Yoho. Right.
    Ms. Taylor. And so we had better leverage within TPP than 
we would in a bilateral sense.
    Mr. Yoho. Let me ask you about, along with TPP, neonics is 
the pesticide I would assume you are talking in the EU that 
they are kind of putting their minimum standards on the levels. 
Is that based on science, or is that driven by populism and the 
environmentalists?
    Because if you look at Canada, they have over 50 million 
acres that are sprayed on their canola fields with neonics, and 
they haven't seen a decline in their bee colonies or the honey 
production. In fact, they have gone up. And I just want to hear 
your opinion on that.
    Ms. Taylor. Congressman, actually, the specific pesticide 
was Fosetyl-Al that I was taking about. I will say this: On the 
driven-by-science side, they have a food safety commission or 
committee that reviews all the science of these. And what we 
find oftentimes is that our scientific body and theirs actually 
find the same outcome; theirs maybe takes longer. They also 
have an additional political layer oftentimes on approval of 
some of these pesticide residues or if it is certain food 
safety washes that we use in the United States. So the food 
safety part of it, we often come to the same result.
    Mr. Yoho. Okay. Thank you.
    Mr. Dolcini, let's see here. What kind of concerns are you 
hearing from the FSA offices in the Cotton Belt with the price 
of cotton right now?
    Mr. Dolcini. Well, we are hearing quite a few concerns, as 
I expressed to Mr. Kelly. Our offices throughout the Cotton 
Belt, from Texas all the way over to Florida, are very busy 
working with cotton growers to help them restructure their 
loans and identify other sources of credit that might be 
applicable to their operations.
    Mr. Yoho. Are you using the microloan program for that, or 
maybe you need a macroloan?
    Mr. Dolcini. The microloan program may be a little small 
for that, sir. Right, the loan sizes need to be a bit larger. 
But we are really pulling out an all-of-the-above strategy when 
it comes to providing credit to our growers.
    Mr. Yoho. Okay.
    Have people expressed a concern about an oilseed program 
for cotton? And if so, is that something you can implement?
    Mr. Dolcini. Well, no, sir, I don't believe that we can. 
The Secretary was up here several weeks and made clear what the 
limits of the USDA authorities were with regard to oilseed. 
That said, we are working quite closely with the industry, and 
the Secretary has directed his whole team to work to try and 
identify a path forward within our legal authorities.
    Mr. Yoho. The way we understood it or I understood it up 
here is that they are authorized to go ahead and do an oilseed 
program because it says other oilseeds and doesn't specifically 
say one over the other. So if there is something extra you need 
on that, it would sure help our peanut producers out and cotton 
producers. If you could get back with us on that.
    Mr. Dolcini. Thank you, sir.
    Mr. Yoho. Let's see. I need my glasses. There is currently 
a push for the commercial lending institutions to increase the 
authorized loan level of the FSA guaranteed loans to $2.5 
million. Is that a high enough increase in the loan value? I 
think they are, what, at $\1/2\ million now?
    Mr. Dolcini. Yes, the guaranteed limits are at $1.3 
million.
    Mr. Yoho. Okay.
    Mr. Dolcini. An increase in the limit is a conversation 
that we have been having with industry and the Farm Credit 
Council and the American Bankers Association. Other grower 
groups, commodity organizations have come to the agency to say 
maybe it is time that Congress look at increasing the limits 
there. And we are happy to come back up to the Committee and 
speak with staff and economists and others about our 
experience.
    There is an incremental increase that the guaranteed 
program sees year over year. Sometimes, though, it doesn't 
really make that dramatic a difference. But there would be a 
statutory change needed to----
    Mr. Yoho. Okay. You need a statutory change. That is what I 
am getting at. And if so, we can look at that, and I am sure 
the Chairman will.
    I am out of time, and I will yield back. Thank you for your 
time.
    Mr. Dolcini. Thank you.
    The Chairman. The gentleman yields back.
    Mr. Rouzer, 5 minutes.
    Mr. Rouzer. Thank you, Mr. Chairman.
    I want to touch on tobacco and TPP. I just can't help 
myself on this since it came up a little bit earlier, and 
everybody knows how I feel about this. And I am just going to 
make a comment, and then I am going to go to a very different 
question.
    Tobacco would be very, very supportive of TPP if one simple 
thing happened, and that was it was no longer excluded from the 
investor-state dispute settlement. Every other legitimate and 
legal product is protected by law except for tobacco. And when 
you take away legal protections for one product, you are 
basically opening up the door for discriminatory action against 
another product at a future point in time, future trade 
agreement.
    So, anyhow, enough said on that. I said it for the record, 
and everybody knows where I am.
    I have a question for RMA Administrator Willis. I am 
curious about the recently released reports as it relates to 
poultry, particularly as it relates to disease, catastrophic 
disease. I am curious what your reports are showing.
    Mr. Willis. The farm bill had a handful of requests for 
requirements to do some studies, mostly for sectors of 
agriculture where crop insurance is currently not available. 
The studies were to evaluate the effectiveness of crop 
insurance in that sector.
    What we do with those usually is we contract with the 
private-sector, with individuals who have experience in crop 
insurance and understand how Federal crop insurance works. What 
they do is they meet with people in the field, growers, 
experts, et cetera, and come back with a report.
    That specific report, the common theme with that report and 
a few others indicates there are some hurdles, to be very 
frank, to overcome to offer these types of crop insurance for 
those types of situations. Some of the hurdles are a lot of the 
growers in the poultry and swine, as well, industries are 
contract growers, and they oftentimes do not have an insurable 
interest. Obviously, they raise them, but they don't actually 
own the livestock. The Crop Insurance Act, as it stands today, 
requires them to have insurable interest.
    There is another issue with natural causes. Sometimes 
poultry business interruptions is not a natural cause. That 
would also be a hurdle as far as the Crop Insurance Act is 
concerned. There is also a current cap within the Crop 
Insurance Act of $20 million for livestock.
    All this the report said it might not be feasible at this 
point in time. That doesn't mean conversations cannot continue. 
That doesn't mean that at some point in time it might not be 
possible. But it did point out there are some real hurdles 
before we have a viable program.
    Mr. Rouzer. Well, thank you very much for that. And that 
definitely is something we have to continue to think about and 
work on. I appreciate the update.
    I yield back my time, Mr. Chairman.
    The Chairman. The gentleman yields back.
    Let me claim a little bit of that time.
    Brandon, those contract growers, is there a business 
interruption concept that would be appropriate for those guys? 
It is a little different model than what you are used to 
putting in place, but that is basically what they have done, is 
they have interrupted their business.
    Mr. Willis. Yes, for a business interruption for 
catastrophic loss or for a business interruption----
    The Chairman. No, for pork and chicken guys who are just 
intermediaries, don't have an insurable interest, they do an 
insurable interest in their business.
    Mr. Willis. Yes, that is one area, and the report did 
allude to that specific issue. I think that is one where some 
detailed conversations probably need to take place on that. And 
I also think part of that conversation needs to be talking 
about the cap that currently exists. Because one would hate to 
have a very useful product that would actually work and then 
you hit the cap every time you try to operate it.
    The Chairman. All right. Thank you.
    Mr. Moolenaar, 5 minutes.
    Mr. Moolenaar. Thank you, Mr. Chairman.
    And thank you for your testimony today.
    I want to ask you about a few different things, and whoever 
is the best person can feel free to talk about it.
    I want to the start with Cuba. There has been a lot of 
discussion about Cuba. What currently can agriculture do to 
sell into Cuba, and what can it not do right now?
    Ms. Taylor. Well, I will talk a little bit what USDA cannot 
do. What we cannot do, and it is because of the embargo, we 
cannot use any of our market development funds that I was 
talking about a little bit earlier to promote U.S. product 
there in Cuba.
    U.S. agriculture can sell products and foodstuffs to Cuba. 
They have been able to for quite some time. However, there are 
restrictions around financing and how they can extend terms of 
credit. So they can sell, but it is much more difficult than it 
is selling to any other market in the world.
    Mr. Moolenaar. And are there any other countries where we 
can only sell--it is only cash to Cuba. Are there any other 
countries like that?
    Ms. Taylor. I am not sure if there are any other countries 
with those same restrictions. There are different restrictions 
for some other markets that we have various embargoes or 
restrictions on. But the restrictions around Cuba are unique to 
Cuba.
    Mr. Moolenaar. Okay.
    And then if, let's say, someone were to sell beans in Cuba 
and it was opened up to a credit basis or whatever and the 
terms were not met in Cuba, that they did not fulfill the 
contract, who would be in charge of enforcing that?
    Ms. Taylor. I believe it would be based in Cuba and their 
rule of law, the way it would be anywhere else, if someone is 
selling beans into Japan and there was an issue on them getting 
payment or not. But if I could follow up on that exactly for 
you, Congressman, for the record, I would appreciate that.
    Mr. Moolenaar. Okay. Because, yes, there are concerns about 
the rule of law in Cuba, and that is one of the questions I 
have for you.
    I wanted to also shift gears a little bit to the 
International Year of the Pulse. Are there any projects or any 
initiatives you have going on around the world with respect to 
pulse crops?
    Ms. Palmieri. Thank you for that question. I was honored to 
be able to attend the U.S. North American launch of the 
International Year of Pulses in New York City with a lot of 
farmers from the western part of the country. And the efforts 
around these kinds of activities is highlighting the 
nutritional value, the uses of pulses. And it is an education 
campaign in general.
    The U.S. and in FAS in particular, we are working with our 
commodity buys and particularly in our McGovern-Dole Program 
for using that education effort to increase our ability to have 
pulses be a part of the program.
    I can't give you exactly what that is going to look like 
after this year, but we know that it has been helpful. The 
research is really strong. I saw the presentations in New York. 
And I am a believer that we need to be pushing these kinds of 
nutritional products for----
    Mr. Moolenaar. And is that something you could share with 
my office or even the Committee, some of the information that 
you have on that and what you are doing in that regard?
    Ms. Palmieri. Clearly. And, also, our sister agency, NIFA, 
Sonny Ramaswamy was there with me. So we know that there is 
activity in connection----
    Mr. Moolenaar. And what is that? NIFA?
    Ms. Palmieri. The National Institute of Food and 
Agriculture.
    Mr. Moolenaar. Okay.
    Ms. Palmieri. They will be here this afternoon, I believe.
    Mr. Moolenaar. Okay. All right. Thank you.
    With that, Mr. Chairman, I yield back.
    The Chairman. The gentleman yields back.
    Mr. LaMalfa, 5 minutes.
    Mr. LaMalfa. Thank you, Mr. Chairman, and for panelists for 
appearing with us here today.
    Coming back to the TPP, some of my colleagues expressed 
some concern or even a little dismay at how that has gone with 
some of other crops, as well. And we have a very major rice-
growing industry in northern California that is very 
disappointed with the outcome, as well. Rice and a few other 
crops feel like they are always the tail end of the dog being 
wagged here, that are the afterthoughts in trade negotiations, 
and feels that way to them this time as well.
    When in a 21st-century trade agreement we see that new 
access for rice is less than one percent of existing numbers, 
that is quite an under-performance there in negotiations. USA 
rice creates more than an eighth of a million jobs, $34 billion 
in our national economy. We could have done a little better in 
securing a bit stronger market share for that industry, 
especially with how much we get dumped upon us in this country 
here from those areas.
    So what can I go tell my growers in this, that we can say 
that the USDA will be doing to help address these shortfalls to 
make a more palatable deal should it come to that for the 
industry?
    Ms. Taylor. Thank you for that question, Congressman.
    First, I would like to say rice was not treated as an 
afterthought in the negotiations. They were a priority for the 
U.S. Government in negotiating. Rice is a highly sensitive 
issue in many of these markets. When you look at Japan 
specifically, they have actually excluded rice in every FTA 
they have ever done. So TPP is the first time that they have 
ever opened market access for rice.
    And I would say it is actually meaningful, valued, we 
estimate, somewhere between $43 million and $60 million in 
additional sales at the current prices. So there is that 
immediate benefit to our rice industry today once TPP is 
passed.
    But then there are also benefits in the future that will 
come as other countries, and there has already been a whole 
list of other countries already kind of knocking at the TPP 
door, as I would like to say, that have said that they want to 
come in. And the U.S. being in TPP gives us even more influence 
and leverage to say: You want to join TPP? We need serious 
access for all agriculture products----
    Mr. LaMalfa. Well, let me cut in there a little bit. They 
may say it is a sensitive issue to them in Japan, but the stuff 
they sell us may be a sensitive issue as well. I mean, their 
consumers would like to buy this product. The barriers are put 
up by their government and lobbying. And so it is sensitive to 
our growers as well. So, at some point, they need to be held 
accountable for a tiny amount of new access that, if I remember 
the amount of tons that would be newly accessible, five large 
growers could meet that need, okay? Five large rice--or maybe 
six in California could meet the new access amount that was 
actually negotiated.
    And I know there is some talk out in the ether of maybe 
allowing some more in the future, but, when you go to your 
banker, you have to be able to put your finger on being able to 
actually produce. And with the price of rice going down as much 
as it is, whether they felt like an afterthought or not, at the 
end of the day, the growers don't feel like the TPP did hardly 
anything to help them.
    So, again, I want you to take that thought back with you, 
that the additional access was something that could be done 
inside one county of northern California's growing area.
    Ms. Taylor. I appreciate your comments, Congressman. So 
there is the market access piece. As I was saying, there are 
future countries who are going to be coming in who we will have 
more leverage to ensure that that market access continues to 
grow. But, specifically, in Japan, the access in TPP was 
starting at 50,000 tons, growing to 70,000. As I said, that is 
worth $60 million to producers. I think that is not nothing. I 
think that is meaningful, particularly today, in today's farm 
economy.
    But also we were able to secure many improvements to how 
Japan operates their tariff rate quota to make it more 
streamlined so we are able to sell more directly to the 
consumers, as you said, in Japan, who have a desire for the 
quality product that our producers produce here in the United 
States.
    Mr. LaMalfa. Just for perspective, you said 50,000 tons. My 
farm can grow 10,000 tons, okay?
    The Chairman. The gentleman yields back.
    We will do a second round, so I will recognize myself for 5 
minutes.
    Ms. Taylor, on the food aid shipping costs, studies are 
showing that the international freights are down, costs are 
down from 29 percent to 23 percent, yet internal costs have 
gone from five to 25 percent. Can you talk to us, a couple 
things, about what has happened that it costs so much more to 
move the food around once it is in country? And what are you 
doing with respect to these lower commodity prices to perhaps 
preposition things that would allow better use of the money?
    Ms. Palmieri. I will take that question.
    The Chairman. Okay.
    Ms. Palmieri. Thank you. Some of this I will need to get 
information from our colleagues at USAID to give you precise 
numbers. But what I know from their operations, we were working 
with them last year on wheat shipments to South Sudan, and the 
ability for them to get food into the remote areas around some 
pretty insecure barriers was very, very expensive. So USAID is 
dealing with a lot of these types of situations and crises, 
which has put their internal transportation costs at a very 
high level.
    For our own programming in McGovern-Dole and for Food for 
Progress, we are seeing less of those increases. So I would 
like to work with our colleagues at USAID to get you some 
precise numbers.
    The Chairman. Okay. I appreciate that. We have this ongoing 
conversation about what those levels ought to be, and I am just 
trying to make sure we understand those programs.
    I don't know who to address this question to, but I have 
had a long-running gentleman's disagreement with Secretary 
Mabus, Secretary of the Navy. He is a great guy, a gentleman. I 
respect his work a great deal. We just have a disagreement 
about algae-based jet fuel.
    My understanding is that he worked with somebody at USDA to 
create a fund that would fund a refinery to do biofuels, and we 
are doing an investigation on that. We want to make sure we 
understand who we need to address our questions to because I 
wear two hats. Obviously, biofuel would be beneficial to 
production of agriculture, but by the same token, we have 
tremendous stresses on the operation and maintenance side of 
the Department of Defense, and they are being used to develop 
things that are really better left up to the Department of 
Energy and/or something else.
    In the NDAA we passed for this year, there is a restriction 
on the Navy to not buy unconventional fuels at a price that 
exceeds what you could buy the equivalent gallon of 
conventional jet fuel for, as an example. I want to make sure 
that USDA is not backside funding this effort to draw down the 
price per gallon of this fuel in contravention of the NDAA.
    So, Ms. Taylor, does that fall under your area?
    Ms. Taylor. Congressman, this does not fall under the FFAS 
mission area, but I have been told that you have sent a letter, 
an oversight letter, and questions for the record. We are 
working quite quickly to get you a response to those.
    The Chairman. Okay. That does it. I just want to make sure 
it does not get lost in a shuffle, because this is important to 
me. I have conflicting interests because on the ag side, 
obviously, it helps producers who are on this business; but by 
the same token, we have incredible strains on the Department of 
Defense budget. As big as it is, it doesn't make a lot of sense 
to buy jet fuel for $25 a gallon or $15 a gallon when the 
market is $3 or $4 a gallon. And that is just a gentleman's 
disagreement, because I do have a great deal of respect for 
Secretary Mabus.
    With that, we will go to, Mr. Lucas?
    Anybody else want a second round?
    Mr. Thompson, 5 minutes.
    Mr. Thompson. Just a real quick follow-up on the trade. And 
one of the criticisms I have heard, that we hear about, about 
MAP and FMD funding is that it goes to large companies. Any 
idea how many corporations receive MAP and FMD funding? What is 
the distribution of folks that are benefiting, growers that are 
benefiting from this?
    Ms. Taylor. Congressman, we actually are quite public on 
who our cooperators are. We put lists on our website. There are 
about 80, and the range is quite diversified. As agriculture 
has evolved over the years and has become diversified, so have 
our cooperator partners.
    I was just at the Gulf Food Show in Dubai, in the UAE, and 
the Intertribal Ag Council had several Native American 
businesses there. I have talked to folks from our Organic Trade 
Association who have been a cooperator and looking at using 
these funds to get into more trade shows and more export 
markets.
    So I would say our cooperators and the size and the scale 
are as diverse as U.S. agriculture is.
    Mr. Thompson. Very good. Thank you.
    Mr. Chairman, I yield back.
    The Chairman. The gentleman yields back.
    Mr. Yoho.
    Mr. Yoho. Ms. Palmieri, the annual International Food 
Assistance Report, a joint product of the USDA and USAID, is 
due April of each year, April 1. And to my knowledge, we have 
yet to receive the IFAR report. That was due almost 12 months 
ago. Why is it so late, and when can we expect it?
    Ms. Palmieri. Thank you for that question.
    Mr. Yoho. Are you sure?
    Ms. Palmieri. We do some things really well at FAS, and we 
are not as good at selling our successes. And this is one of 
those reports that is crucial to report in on all that we have 
been able to accomplish. I checked on it this morning. It is in 
the last stages of clearance, and I hope to have it to you as 
soon as possible.
    Mr. Yoho. This is from a year ago, right?
    Ms. Palmieri. This is the 2014. The 2015 is in draft. So I 
know we are going to be working to get that here on time this 
year. It is important to me.
    Mr. Yoho. And you said we can expect that when?
    Ms. Palmieri. On time is what I am hoping for.
    Mr. Yoho. So that will be last year and this year's, 2014 
and 2015?
    Ms. Palmieri. Yes, both of them are in the works.
    Mr. Yoho. All right. And you understand the reason, because 
we can't do accountability if we don't get those reports. And 
again, with the budget crunches that we have, it is imperative 
that we get it. So I would implore you to do that.
    And, again, I want to kind of talk about the European Union 
and the process of implementing pesticides, that it seems to be 
out of step with the science-based regulatory approach followed 
by the U.S. and nearly every other country in the world.
    What is the Administration doing to ensure that the new EU 
policy does not become a barrier to the U.S. ag exports? And 
again, it was kind of what I had asked about before. I have 
read several reports on the neonics and the EU that they are 
banning them not based on science, but based on political 
pressure.
    Ms. Taylor. I appreciate that question, Congressman. As I 
said before, I do think they have a scientific committee that 
oftentimes finds the exact same outcome as our regulators find 
on the safety of a product or the appropriate levels to use 
products at or similar.
    But sometimes they have this additional political layer. It 
is something we spend, I personally spend a lot of time on 
talking to my European counterparts. Secretary Vilsack does as 
well. And it is certainly a priority.
    So on specific issues as they arise, we are working on them 
outside of kind of alongside T-TIP, but not really as part of 
it. But we are working on regulatory coherence between our two 
governments as part of T-TIP as well.
    Mr. Yoho. Okay. I was asking Ms. Palmieri too. I would like 
to get her to weigh in on that. Do you differ from that?
    Ms. Palmieri. No, sir, I do not.
    Mr. Yoho. Mr. Wills, on crop insurance, as the ARC programs 
increase and increase coverage to different crops, it will cost 
more to fund these crops at the Federal level. What do you 
anticipate as far as meeting those extra expenditures as far as 
the cost of the crop insurance? Will that go down on the 
Federal side? Will the farmers be more responsible for paying 
more of the crop insurance? Or do we need to raise taxes or 
fund the program more from a Federal level, the anticipated 
growth in the program?
    Mr. Willis. Can I just make sure I understand the exact 
question?
    Mr. Yoho. Sure.
    Mr. Willis. Is the question the impact upon crop insurance 
with ARC, or is the question more the impact of ARC upon the 
Federal budget? I just want to make sure so----
    Mr. Yoho. Well, they kind of tie in together, because as we 
increase more coverage to different crops, the specialty crops, 
like blueberries in my state, when it first came out it covered 
five counties. But we grow it in a lot of the other counties, 
and now most of the other counties are covered. So it was an 
increase in coverage. The farmers are paying a percent and the 
Federal Government is paying a higher percentage of the 
coverage.
    So as that grows, there is going to be funding shortfalls. 
So what do you anticipate 5 years down the road in the 
increased coverage, and where do you recommend that funding 
comes from?
    Mr. Willis. Well, if we look at history, what we see is, 
while the cost of crop insurance may increase slightly, we see 
that there is not a need for other, more costly forms of 
assistance, such as ad hoc disaster, et cetera.
    So in the long run, we have over the last 30 years really, 
we have seen a slow and a steady growth of crop insurance. But 
since 2007, I believe, we haven't seen the ad hocs, which were 
a very costly form of disaster assistance. We also see farmers 
staying on the farm.
    One of the things we often forget is we don't read stories 
about farmers after 2012 who are leaving the farm. A lot of 
that was because of crop insurance and the impacts that we 
don't talk about because they didn't happen. And that is a good 
story in and of itself.
    Mr. Yoho. It is, and I agree.
    Ms. Taylor. If I could just add one thing to that, 
Congressman Yoho.
    Mr. Yoho. Yes, ma'am.
    Ms. Taylor. The way Congress really worked on the new ARC 
and PLC programs, they were done in a way to complement the 
crop insurance programs and not supplement crop insurance, per 
se. And so that is what we are seeing, is ARC and PLC are part 
of the safety net, but so is crop insurance. And we haven't 
seen a shift from producers buying less crop insurance because 
of ARC repeal.
    Mr. Yoho. All right. Thank you. I am out of time.
    Thank you, Mr. Chairman.
    The Chairman. Mr. Benishek.
    Mr. Benishek. Thank you, Mr. Chairman.
    I just have a couple quick follow-up questions and one that 
Mr. Yoho brought up. How is it that you are able to get the 
2015 USAID report done on time but the 2014 report is a year 
late? Now, is there a particular problem with that? Are there 
two parallel teams working on it? Just tell me briefly why the 
situation is.
    Ms. Palmieri. Well, some of what happened during the Fiscal 
Year 2014 reporting was there were some new laws that were 
implemented, and the way those were dealt with in the report 
took a little bit more time.
    We are working with our colleagues at USAID because this is 
the International Food Aid Report, so there are back and forths 
with the teams in both agencies pulling this together. We have 
a system now that works more smoothly, and that is what I am 
counting on to get----
    Mr. Benishek. And then I just wanted to follow up a little 
further about this Canadian-American Softwood Agreement. Who in 
your Department would know about that? I just want to make sure 
that we get this follow-up. Who would know about that?
    Ms. Palmieri. We have a softwood team back at FAS, and I 
will check in with them as soon as we get back.
    Mr. Benishek. But you don't know a person?
    Ms. Palmieri. I don't have that name on the top of my head, 
no, sir.
    Mr. Benishek. Okay. All right. I will yield back, Mr. 
Chairman.
    The Chairman. Thank you.
    Mr. Rouzer.
    Mr. Rouzer. Thank you, Mr. Chairman.
    One item I want to bring up, and it is critically important 
but doesn't always have the political urgency behind it, and 
that is research. Tell me where we are with our research 
programs, any highlights that we have. I know the funding has 
stayed relatively stagnant, probably in the past 10, 20 years 
or so, and I just want to see if you had any highlights on 
that.
    Ms. Taylor. Congressman, I believe my colleagues from the 
REE mission area are testifying later today, and they would be 
the appropriate mission area that oversees all of the various 
research efforts going on at USDA.
    Mr. Rouzer. Follow-up unrelated to research. T-TIP. You 
mentioned it earlier. What is our timeline on that? What 
exactly are we expecting to get out of that? What are our major 
challenges going to be?
    Ms. Taylor. Well, on timing, we are committed to allowing 
substance driving the timeline. And one thing I believe, that a 
strong agriculture package in TPP and a strong vote in TPP from 
the agricultural community and agricultural members will help 
drive a strong, comprehensive agricultural package.
    The Secretary has often said that agriculture on its own 
might not be able to pass an agreement, but it certainly can 
prevent one from passing Congress. And that correlation is 
going to be important. But I won't speak to the timeline. We 
are obviously committed in making this a priority for this 
year, but really we need the substance across the economy to be 
there and certainly agriculture is part of that.
    Mr. Rouzer. Thank you, Mr. Chairman.
    The Chairman. Anyone else?
    Mr. LaMalfa.
    Mr. LaMalfa. Thank you. I will be brief on that.
    Just so I can take this back home and clarify on the TPP 
and market access there for rice. California's rice production, 
more or less, on acres is about 2 million tons a year. What 
they had sought was 100,000 tons of new access there and came 
away with a figure that shows about one percent of new access. 
And so you want me to report that home as a win, right?
    Ms. Taylor. Well, Congressman, we walked away with 70,000 
tons of new access into just the Japan market, with the ability 
to grow further as others, like South Korea----
    Mr. LaMalfa. How long will it take to get to the 70,000 
figure?
    Ms. Taylor. I don't know the exact, I can't recall the 
exact tariff phasing schedule, but I can certainly get that to 
you.
    Mr. LaMalfa. Please. Because my understanding is it comes 
in at 50,000 and all the rest is pixie dust.
    Ms. Taylor. It grows over time over certain years to get to 
that 70,000. I don't know the exact time to grow there.
    Mr. LaMalfa. All right. Well, I will be looking at my ``USA 
made'' label rules real carefully over time as well. So thank 
you.
    The Chairman. The gentleman yields.
    I want to thank the panel. We are going to let you off a 
little early. We said you need to be here an hour and 15 
minutes. As I told the previous panel, I am sure you prepared a 
lot of answers for questions that we didn't ask this morning.
    I want to particularly thank you, this panel, because with 
Mr. Dolcini's FSA group and Brandon's RMA group, you probably 
have the most customer contact with production agriculture, 
broadly speaking, of anybody in USDA. And your team does a 
great job across the board helping implement new farm bills, 
all those new provisions, working year in and year out with the 
producers that rely on your programs. And your team gets up 
every day and does a great job, and I want to just thank you 
for that. Please express that to them.
    As I told the other panel, if we have disagreements, it is 
about policies. Don't let that morph into thinking that we 
don't appreciate what you do and how well you do it. So I want 
to thank everybody on the panel and let you off, get out early. 
So thank you all very much for being here.
    We have lunch available in 1302, and so we will take about 
a--I don't know if the other panel is ready yet. We are a 
little bit ahead of schedule. So lunch is in 1302. We will be 
back here at--what time are we supposed to start the next 
panel? 11:45?
    Okay. Let's be back in here at 11:50.
    [Recess.]
    The Chairman. Good morning still, I guess, for a couple 
minutes. Let me gather our team back up. We were having a quick 
bite. And there is food in 1302. When you all transition out, 
there are a lot of sandwiches and stuff. You are welcome to 
them as they come in.
    I will briefly start our introductions. So this third panel 
will be led by the Honorable Catherine Woteki, who is the Under 
Secretary for Research, Education, and Economics at the USDA. 
She is joined by Chavonda Jacobs-Young, the Administrator for 
Agricultural Research Service; Sonny Ramaswamy, who is the 
Director of the National Institute of Food and Agriculture; Mr. 
Joseph Reilly, the Administrator of the National Agricultural 
Statistics Service; and Ms. Mary Bohman, who is the 
Administrator for the Economic Research Service.
    So thank you all very much for being here this afternoon.
    And, Dr. Woteki, you have the floor.

      STATEMENT OF HON. CATHERINE E. WOTEKI, Ph.D., UNDER
SECRETARY, RESEARCH, EDUCATION, AND ECONOMICS, U.S. DEPARTMENT 
               OF AGRICULTURE, WASHINGTON, D.C.;
          ACCOMPANIED BY CHAVONDA JACOBS-YOUNG, Ph.D.,
   ADMINISTRATOR, AGRICULTURAL RESEARCH SERVICE, USDA; SONNY 
              RAMASWAMY, Ph.D., DIRECTOR, NATIONAL
  INSTITUTE OF FOOD AND AGRICULTURE, USDA; JOSEPH T. REILLY, 
              ADMINISTRATOR, NATIONAL AGRICULTURAL
         STATISTICS SERVICE, USDA; MARY BOHMAN, Ph.D.,
         ADMINISTRATOR, ECONOMIC RESEARCH SERVICE, USDA

    Dr. Woteki. Well, thank you very much, Chairman Conaway. 
And good morning, distinguished Members of the House 
Agriculture Committee. My colleagues and I are very pleased to 
appear before you today and provide an overview of the work 
that we do in research, education, and economics. I am going to 
briefly summarize our written testimony and request that that 
be entered into the record, the full testimony.
    The Chairman. Yes, ma'am.
    Dr. Woteki. We in the United States, as well as actually 
around the world, are facing some critical problems and 
opportunities as they relate to the productivity of 
agriculture. Investments in research are an important factor in 
surmounting these challenges and also creating new 
opportunities for farmers and ranchers here in the U.S.
    Our work is based on the premise that the Federal 
Government has a role in advancing scientific knowledge to 
promote our nation's social and economic well-being, and the 
agencies in the mission area do that by investing in areas in 
which the for-profit industry does not invest.
    This is research our country needs to keep our food supply 
safe, secure, and abundant; to ensure the profitability of 
farmers and ranchers; to improve nutrition and food safety for 
lifelong health; to reduce pollution and improve the 
environment through climate-friendly agricultural practices; to 
safeguard the sustainable use of our natural resources, 
including an abundant and safe water supply; and to address our 
nation's energy needs. Under-investment in the food and 
agricultural sciences depletes the foundational knowledge base 
and affects our nation's global preeminence and economic well-
being.
    I would like to provide a few brief examples that are the 
results of our research programs, starting with the 
Agricultural Research Service.
    Since 2009, ARS scientists have received 391 patents for 
their research and were also responsible for over 31,000 
scientific publications. Last year, ARS scientists developed 
and transferred to industry an effective vaccine against the 
highly pathogenic avian influenza strain that killed more than 
45 million chickens and turkeys in the U.S. last year.
    NIFA measures its success through the impacts that its 
grants have on the public good. And scientific advances 
resulting from NIFA-funded research, education, and extension 
activities contributed more than $9.5 billion over the years 
2009 to 2015.
    One example of this is the coordinated agricultural 
projects that focused on improving wheat and barley for 
changing environments that yielded more than 100 different 
commercial varieties with over $1.8 billion in production 
value. These grants also trained more than 100 students, 
preparing them to fill some of the very important high-tech 
jobs that are available in the agricultural industries.
    Despite their relatively small size, the remaining two REE 
agencies, the National Agricultural Statistics Service and the 
Economic Research Service, have an outsize impact. They provide 
an essential service to policymakers, regulators, markets, as 
well as to the academic community every day.
    As principal Federal statistical agencies, NASS and ERS 
provide data that is relevant to policy issues as well as 
program decisions that USDA agencies make every day. And in 
doing this, NASS and ERS must maintain credibility among data 
users, maintain the trust and the confidentiality of data 
providers, maintain independence from political and other 
external influence.
    NASS' mission is to provide timely, accurate, and useful 
official statistics and service to U.S. agriculture, and with 
the 2014 Farm Bill implementation, the Farm Service Agency 
relies on NASS' county estimates to enable administration of 
the Agriculture Risk Coverage Program as well as the Price Loss 
Coverage Program.
    And ERS studies are widely recognized in the research 
community for their credibility, timeliness, and use of 
cutting-edge data, models, and methods. And some of ERS' recent 
research has been focusing on trade agreements and examining 
the potential impact that these agreements have on producers 
and also showing the implications long-term for the health of 
U.S. agriculture.
    So we have made some very significant strides, we believe, 
but in research there is always more to be done. Moving 
forward, we really are looking to having a sufficient continued 
investment in developing our scientific talent as well as 
funding research that is going to be addressing those 
challenges facing producers across the country.
    We thank you very much for the opportunity to testify 
today, and my colleagues and I look forward to answering your 
questions.
    [The prepared statement of Dr. Woteki follows:]

Prepared Statement of Hon. Catherine E. Woteki, Ph.D., Under Secretary,
  Research, Education, and Economics, U.S. Department of Agriculture, 
                            Washington, D.C.
    Chairman Conaway, Ranking Member Peterson, and distinguished 
Members of the House Agriculture Committee, I am pleased to appear 
before you to provide an overview of the activities of the Research, 
Education, and Economics (REE) mission area of the United States 
Department of Agriculture (USDA), highlight some of our recent success, 
and share some insight on the priorities for the coming years.
    I am accompanied by the leaders of our four agencies: Dr. Chavonda 
Jacobs-Young, Administrator of the Agricultural Research Service (ARS), 
Dr. Mary Bohman, Administrator of the Economic Research Service (ERS), 
Mr. Joseph Reilly, Administrator of the National Agricultural 
Statistics Service (NASS), and Dr. Sonny Ramaswamy, Director of the 
National Institute of Food and Agriculture (NIFA).
    The United States and the world are facing critical problems and 
opportunities. Global population is expected to reach nine billion 
people by 2050, an increase of almost two billion people in about 34 
years. At the same time we are seeing the impacts of climate change, 
impacts that will only get worse. Investments in research are a 
critical factor in meeting these and other challenges and 
opportunities. REE's work is based on the premise that the Federal 
Government has a role in advancing scientific knowledge to promote our 
nation's social and economic well-being, and the agencies do so by 
investing in areas in which for-profit industry does not invest. The 
REE mission area agencies support the critical research our country 
needs to keep our food supply safe, secure, and abundant, ensure farm 
profitability, improve nutrition and food safety for lifelong health, 
reduce pollution and improve the environment through climate friendly 
practices, safeguard sustainable use of natural resources, including an 
abundant and safe water supply, and address our nation's energy needs. 
Under-investment or the absence of investments in food and agricultural 
sciences diminishes the needed foundational knowledge-base and impacts 
our nation's global preeminence and economic well-being, and may put us 
at a competitive disadvantage with other nations, such as China, which 
is making significant increases in their investment in public sector 
research. While the private-sector's commitment to agricultural 
research in the United States remains strong, many of the most 
important agricultural research companies are large international 
corporations that invest and outsource significant research dollars 
overseas, and China, India, and Brazil have begun making large public 
investments in agricultural research. Although private industry will 
play an important role, many of the challenges are in the public 
domain, and the waning public investment in agricultural research in 
the United States contributes significantly to the risk of losing its 
international leadership in agriculture.
    The following are examples of the results of USDA research. Take 
for example the efforts of ARS, which conducts research to develop and 
transfer solutions to agricultural problems of high national priority 
to ensure high-quality, safe food, and other agricultural products; 
assess the nutritional needs of Americans; sustain a competitive 
agricultural economy; enhance the natural resource base and the 
environment; and provide economic opportunities for rural citizens, 
communities, and society as a whole.
    Since FY 2009, ARS scientists have had 391 patents issued and were 
responsible for over 31,224 scientific publications. Furthermore ARS 
scientists developed and transferred to industry an effective vaccine 
against the highly pathogenic avian influenza (HPAI) virus strains that 
killed more than 45 million chickens and turkeys in the United States 
during 2015. ARS scientists also developed and licensed the world's 
first molecular foot-and-mouth disease (FMD) vaccine for cattle, the 
most significant scientific accomplishment in FMD vaccine development 
in the past 50 years and the first FMD vaccine that can be manufactured 
in the United States. On the plan side, ARS scientists significantly 
advanced methods to detect and control the Huanglongbing (citrus 
greening) disease by increasing reliability of the standard assay 
tests, training dogs to detect greening and canker (currently the only 
detection method that is effective prior to symptom development), and 
evaluated promising bactericidal compounds that reduce the level of 
disease and improve tree vigor in field trials. Crop and animal 
protection is a key research investment in ARS totaling $287.6 million 
in Fiscal Year 2016.
    ARS maintains one of the world's oldest and largest plant genetic 
resource collections at 19 locations situated around the United States. 
These gene banks, which hold materials from both cultivated plants and 
their wild relatives, presently safeguard 218 plant families, 2,378 
genera, 14,851 species, and more than 569,000 accessions. During the 
last 5 years, the ARS gene banks distributed more than one million 
samples to researchers and breeders, most of who lived in the United 
States. In addition, in 2014, ARS plant breeders and researchers 
developed and released 398 new plant varieties and enhanced germplasm 
lines that are part of an effort to help create new markets and enhance 
economic opportunities for rural America.
    An example of the use of such a treasure is seen in the battle 
against wheat stem rust strain Ug99, which threatens wheat production 
worldwide. ARS scientists used a gene derived from a wild wheatgrass 
species to develop a new line highly effective at resisting Ug99 wheat 
stem rust that will help wheat breeders throughout the world develop 
more durable varieties for production. ARS invested $51.2 million in 
preserving plant and animal genetic resources in Fiscal Year 2016.
    Salmonella and Camplyobacter are the most commonly reported 
bacterial pathogens causing foodborne illness in the United States. ARS 
scientists developed a novel probiotic method targeting these bacteria 
in poultry which has been licensed and developed by a start-up company, 
now marketed in 16 countries and dosing approximately 300 million 
birds. On the nutrition side, ARS scientists discovered that flour made 
from chardonnay grape seeds (a waste byproduct from wine making) 
prevented increases in weight gain in hamsters fed a high-fat diet. ARS 
invested $198.7 million in food safety and nutrition research in Fiscal 
Year 2016.
    In the same vein, NIFA measures its success through the impacts of 
its grants on the public good. Through the integration of research, 
education, and extension, NIFA ensures innovative solutions to problems 
in agriculture, food, the environment, and communities go beyond the 
laboratory, into the classroom, and to people who can put the knowledge 
into practice. Scientific advances resulting from NIFA-funded research, 
education, and extension--more than $9.5 billion from Fiscal Year 2009 
through 2015--enhance the competitiveness of American agriculture, 
ensure the safety of the nation's food supply, improve the nutrition 
and health of the populace, sustain the environment and natural 
resources, and bolster the U.S. economy.
    For example, through NIFA funding, the Triticieae coordinated 
agricultural project (T-CAP), and its predecessor Wheat and Barley 
CAPs, focused on improving wheat and barley for changing environments. 
Like many of NIFA's CAPs, the T-CAP bridges the gap across the academic 
research, industry, and farming communities in order to produce higher 
yielding crops and support sustainable farming. The more than 100 
commercial varieties developed through the T-CAP and its predecessor 
CAPs have a $1.8 billion production value. The Wheat, Barley, and T-
CAPs have trained more than 100 students, preparing them to fill some 
of the projected annual openings of 57,900 jobs in agriculture-related 
fields between 2015 and 2020. The T-CAP also has had a positive impact 
in fostering international collaborations.
    Peanuts are the 12th most valuable cash crop in the U.S., and 
allergies to peanuts are among the most severe of all food allergies, 
affecting some 2.8 million people in the U.S., including 400,000 
school-aged children. Under an Agriculture and Food Research Initiative 
NIFA grant, North Carolina Agricultural and Technical State University 
(NC A&T) scientists discovered a way to remove up to 98 percent of the 
allergens. The process does not affect flavor, and treated peanuts can 
be eaten whole, in pieces, or as flour in various products. NC A&T 
officials expect hypoallergenic peanut products to be available 
commercially soon. Finally, as part of NIFA's commitment to local and 
global food supply and security, the University of Georgia 
horticulturists received NIFA grants to develop several varieties of 
blueberries that are specialized as early- and late-season crops, as 
well as larger berries at a higher yield. As a result, blueberry 
production has increased from 3,500 acres to more than 20,000 acres in 
recent years.
    These are just a few examples of results from two of the largest 
REE mission area agencies. Despite their relatively smaller size, the 
remaining two REE agencies--NASS and ERS--provide an essential service 
that policymakers, regulators, markets, and academics rely on every 
day. As principal Federal statistical agencies both NASS and ERS 
provide data relevant to policy issues, maintain credibility among data 
users, maintain the trust and confidentiality of data providers, and 
maintain independence from political and other external influence.
    NASS's mission is to provide timely, accurate, and useful official 
statistics in service to U.S. agriculture. NASS achieves this through 
two separate appropriated program areas: the Agricultural Estimates 
program and the Census of Agriculture and its follow-on studies. The 
Agriculture Estimates program issues over 400 reports annually, of 
which 46 are Principal Federal Economic Indicators, providing U.S., 
regional, and state estimates on a wide range of crop and livestock 
commodities, in addition to estimates of environmental issues, 
economics, and demographics. With the implementation of The 
Agricultural Act of 2014, the Farm Service Agency relies on the NASS 
County Estimates to enable administration of the Agriculture Risk 
Coverage (ARC) Program and the Price Loss Coverage (PLC) Program. 
During calendar year 2016, NASS published special reports on Organics, 
and the Census of Horticulture and Tenure Ownership and Transition of 
Agricultural Land (TOTAL). As the only source of detailed information 
on agricultural land ownership characteristics and economic data, TOTAL 
provided important statistics to government, academia, the farming 
industry, and others regarding agricultural land ownership for 
planning, policymaking, research, and market analysis. Results from the 
2014 TOTAL Survey showed that 91.5 million acres are expected to change 
ownership in the next 5 years.
    The Economic Research Service also reaches far beyond the borders 
of USDA. The mission of ERS is to inform and enhance public and private 
decision making on economic and policy issues related to agriculture, 
food, the environment, and rural development. Although ERS research 
programs are aimed at the information needs of policymakers, its 
information and analysis are also used by the food and agricultural 
sector, academic researchers, trade associations, public interest 
groups, the media, and the general public. ERS studies are widely 
recognized in the research community for their credibility, timeliness, 
and use of cutting edge data, models, and methods.
    For example, ERS carefully tracks and projects the state of the 
farm economy to better understand the financial condition of 
agriculture. ERS data show how resilient American farmers have been and 
how well they managed their savings and expenses during the recession. 
These core statistical indicators can guide policymakers, lenders, 
commodity organizations, farmers, and others interested in the 
financial status of farms. ERS also has determined the location and 
derived the characteristics of areas with low food access--places where 
grocery stores do not exist or are not easy to reach--and these ERS 
research tools help national, state, and local governments target food 
access investments so that Americans with low access will have better 
choices and better health in the future. ERS's research on trade 
agreements examines the potential impacts of these agreements on food 
and agricultural production and trade and shows the implications for 
the health of U.S. agriculture. Finally, ERS research demonstrates the 
benefits of agricultural research and the importance of public 
agriculture research spending for continued productivity growth. ERS 
research finds that every dollar invested in public agricultural 
research generates at least ten times that amount in benefits to 
society.
    Mr. Chairman, I would like to round out my discussion with a word 
on current initiatives and a look forward at agricultural science in 
the coming years. The REE agencies continue to meet head on the 
existing and emerging challenges of the agricultural community in 
innovative ways through consolidations and partnerships that increase 
flexibility and maintain critical mass needed for research on pressing 
problems. Here are three such examples.
    In the last few years, the issue of antimicrobial resistance (AMR) 
has emerged as a serious health threat to both animals and humans. The 
action plan for combating AMR takes a voluntary, comprehensive, systems 
approach to surveillance, research and development, and outreach 
activities. In implementing this action plan, USDA intends to provide 
researchers, producers, and consumers science-based, quantitative 
information about drug use and resistance in food animals and their 
relationship to livestock management practices.
    Over the next decade we face diverse challenges stemming from a 
changing climate. In order to maintain the viability of their farms and 
ranches and respond to the growing demand for food around the world, 
U.S. producers have to prepare for, and mitigate and adapt to the 
impacts of climate change and the severe weather. REE continues to 
develop innovative climate solutions and tools that can be applied on 
the farm. ARS researchers will: (1) identify and evaluate management 
practices that maximize the genetic potential to achieve optimal yield 
and quality with climate change; (2) advance the understating of 
climate change effects on pests and beneficial insects; (3) develop the 
means to reduce vulnerability to water variability; and (4) determine 
the relative degree of production sensitivity among different animal 
and cropping systems to projected changes of climate.. By working with 
our network of regional Climate Hubs, our research can be disseminated 
to meet regional conditions and help producers implement climate-
informed management practices.
    The Pollinator Health Initiative will focus on the decline of honey 
bees and other pollinators. The continued loss of commercial honey bee 
colonies stands to have profound implications throughout the food and 
agriculture enterprise. In collaboration with the U.S. Environmental 
Protection Agency, university scientists, and private-sector partners, 
the Pollinator Health Initiative will make advances in our 
understanding of the complex factors contributing to the decline--
factors like poor bee nutrition, loss of forage lands, parasites, 
pathogens, and exposure to pesticides--and provide a path forward to 
arrest continued pollinator losses.
    Of course all of us are aware of the increase in demands on our 
water resources and areas that have and continue to experience 
droughts. REE is meeting the challenge of providing a sufficient level 
of safe water for agricultural purposes through investments in both ARS 
and NIFA, including additional funding in ARS for the CA area drought, 
for the Great Basin and for the use of non-traditional water.
    REE also has led the charge to better coordinate global 
agricultural research efforts. In 2012, REE advocated for, and was 
instrumental in forming, the establishment of the G20 Meeting of 
Agricultural Chief Scientists (MACS). Thus far, we have met three 
times. MACS seeks to promote collaboration among the major public 
funders of agricultural research. The MACS forum also has proven 
instrumental in identifying key global challenges, like the development 
of animal disease vaccines, which have a significant impact on global 
food security and would benefit from collective solutions. Identifying 
key global challenges can be particularly helpful to the developing 
world as key research is pursued among the G20.
    Finally, I want to highlight the critical importance of competitive 
peer-reviewed research. REE is proposing to double the funding for the 
Department's flagship Agriculture Food and Research Initiative (AFRI) 
to the authorized level of $700 million. While a portion ($25 million) 
of the increase is included in the discretionary request that we have 
submitted, the remainder will be proposed through authorizing 
legislation.
    Mr. Chairman although REE has made significant strides, there is 
still much to be accomplished. Our storied legacy of discovery, 
innovation, and international leadership in agricultural research, 
education and economics was achieved through a steadfast approach to 
our overall goals. Moving forward, sufficient investments in man-power 
and funding will be a challenge we must all rise to meet. I look 
forward to redoubling our efforts together in the coming year. Thank 
you.

    The Chairman. Well, thank you, ma'am.
    And in an exercise of the Chairman's prerogative, I am 
going to reverse the order and start with Mr. LaMalfa for 5 
minutes.
    All right. Then Mr. Moolenaar. Nope.
    How about Mr. Rouzer?
    Mr. Rouzer. Thank you, Mr. Chairman.
    I got ahead of myself at the last panel asking about 
research, so I am eager to see you. Research is one of those 
areas that is so critically important but oftentimes doesn't 
have the political urgency. I know funding has been relatively, 
I am trying to think of the right word here, flat; maybe 
stagnant might be an adjective as well.
    Talk to me about the needs that we face, any exciting 
advancements. Obviously, we have a growing world population, 
less and less farmland all the time. We have to be able to 
produce more on less. And this is a great opportunity to share 
with the Committee and get it on the record exactly what the 
needs are and how we could be helpful, moving forward.
    Dr. Woteki. Well, Mr. Rouzer, you are very much on target 
to describe our funding situation as flat. In fact, if you look 
at the buying power currently of the appropriations to these 
four agencies, and adjusting for inflation, the current level 
of support is less than it was in 2010.
    And in addressing that, we have certainly been looking to 
reduce any opportunities for duplication of effort and actually 
have been reporting, as required in the 2014 Farm Bill, 
annually about our efforts to reduce those duplications where 
they do exist. And, in fact, at this point we believe there is 
very little that is going on within our agencies with respect 
to duplication. Quite the contrary, the programs are very 
complementary, and also complementary with those that are 
conducted in the private-sector.
    We have also been looking for ways to increase the use of 
our information, and one of those steps has been to make our 
research publications, as well as the data underlying them, 
open and accessible in machine-readable form. So the agencies, 
for example, the research agencies are committed to that. And, 
for example, some of the genetics and genomics databases that 
ARS is a major developer of are enormously helpful to plant 
breeders in academia as well as in private companies.
    So we are pursuing a variety of different ways to make the 
best use of the funds that are made available to us.
    Mr. Rouzer. What areas in particular do you think we need a 
real shot in the arm? Is there a specific area of research in 
terms of priorities and prioritizing funding where you think we 
really need to focus?
    Dr. Woteki. Well, I can start off by just naming two, and I 
am sure that Dr. Jacobs-Young and Dr. Ramaswamy will have some 
additions that they would like to add.
    But one of the areas that has been of top priority for us 
has been to increase the amount of competitive grants funding 
that the National Institute of Food and Agriculture has. The 
flagship grants program is called, for short, AFRI the 
Agriculture and Food Research Initiative. And we are requesting 
in the 2017 President's budget request essentially to double 
the appropriation to AFRI, to the fully authorized amount of 
$700 million.
    So that would be one area that I would flag, increasing the 
funding that goes to universities, because that has actually a 
double benefit. It produces new knowledge and it also trains 
students, undergraduate and graduate students, to move out into 
the workforce.
    The second area that I might highlight is also in this 
year's budget request, and it relates to antimicrobial 
resistance. This is a problem that affects animal health, and 
it also affects public health, and for which the agencies in 
REE play really a key role in the development of alternatives 
to the use of antibiotics in livestock feeding operations.
    So we feel that this is an area that really we need to be 
investing more in and are requesting an increase of $22 million 
in the Agricultural Research Service 2017 request for that 
purpose of examining and developing alternatives to the use of 
antibiotics.
    Mr. Rouzer. Thank you, Mr. Chairman. My time has expired.
    The Chairman. The gentleman yields back.
    Mr. Yoho, for 5 minutes.
    Mr. Yoho. Thank you, Mr. Chairman, and I appreciate it.
    And since we are on the topic about antibiotic resistance, 
the research I have read--I am a veterinarian by trade, and I 
have practiced for 30 years, food animal production 
specifically. And for the last 35 years, the research I see 
when I talk to people like Dee Griffin, the veterinarian that 
works with a lot of feedlots, we talk about how much antibiotic 
residuals are in meat carcasses that they test, and it is less 
than 0.001 percent, which is 1/
1,000 percent, which is 
virtually none, or \1/100\ of a percent, which is virtually 
none.
    And we have seen other countries and done studies in the 
European countries where they have taken preconditioning 
antibiotics, like Aureomycin, and those out of the 
preconditioning, and they have seen their production yield 
decrease. They have seen their sickness in the animals 
increase. The overall production costs go up. Yet, there has 
been no change in the antibiotic resistance. In fact, they 
still see it.
    So the correlation I don't see tied to the science that I 
would like to see to go on with the VFD, the veterinary feed 
directive that just came out. And we are getting a lot of 
producers saying it is an onerous rule. And I would like to 
hear your comments on that.
    Dr. Woteki. Well, we agree that the industry has been 
terrifically successful at reducing the amount of antibiotics 
that are being used and that the residue levels in meat are 
actually very low. The issue is, though, that by continuing to 
feed antibiotics there is the development of resistance to 
those antibiotics in the gut microflora that can be 
transmitted.
    Mr. Yoho. I understand. I understand all that. I really do. 
I have a great background on that. But, again, without the use 
of those, your production costs go up, and we have not seen the 
correlation of the antibiotic resistance. We are talking about 
tetracycline that has other benefits too. It does stimulate the 
immune system, is one of the benefits of that.
    In conjunction with a good backgrounding program of 
vaccinations for the respiratory diseases and the 
clostridiales, it is an imperative tool in the arsenal of the 
producers. And what we are seeing, in my opinion, is it is an 
overreach of the Federal Government regulation that is solving 
a problem that is not really at the root of the problem.
    I go to the human doctor so many times, and they will want 
to put me on a Z-Pak, which is one of the most powerful 
antibiotics you can get, without doing sensitivity and culture 
and all that and the blood work ahead of time. Whereas in 
veterinarian medicine, we are doing that. And you said you have 
done a good job at reducing the antibiotic levels. When you are 
down to 1/1,000 
percent or zero percent, it is virtually no residue. And if you 
look at hormone levels, like estrogen, cows will have more 
estrogen just from grazing green grass than they do from the 
supposedly implants that we see.
    And so sometimes this gets hyped up in the media and it is 
not based on science. And we are spending a lot of money on 
research in the ag sector, and we need to have a real strong 
program of educating the public on these things, and I would 
like to see more effort in that.
    Dr. Woteki. Well, we certainly agree on the need for 
educating the public. And we also, from the research agency's 
perspective, our role is to be providing that information base 
that is going to inform good public policies.
    It is also our responsibility to be looking to develop 
alternatives to the use of antibiotics. And there are a lot of 
very promising research directions, prebiotics, probiotics, to 
improve the immune system of animals, improve vaccines, wider 
spectrum of vaccines being available, bacteriocins, lytic 
enzymes, a whole range of different approaches. So that is the 
direction to support our livestock industry that we see our 
research going in.
    Mr. Yoho. And I appreciate the research you are doing.
    And I don't want to steal Chairman Lucas' thunder on citrus 
greening, but coming from Florida, we thank you very much for 
that. And if we have a second round of questions, I will ask 
something on that.
    And I will yield back, Mr. Chairman.
    The Chairman. The gentleman yields back.
    Mr. Kelly.
    Mr. Kelly. Ms. Secretary, how does REE guarantee or guard 
against duplication of research?
    Dr. Woteki. Well, we have a variety of different approaches 
that we take in planning our research programs that are our 
primary way of assuring that the research that we undertake is 
unique and important and is going to be addressing the needs of 
agricultural producers.
    In all of the agencies that are represented here, they have 
a cycle of planning that goes in the Agricultural Research 
Service to the program and project level, within the National 
Institute of Food and Agriculture they take what they call a 
portfolio approach, and in ERS and NASS planning cycles also, 
all four agencies, involving stakeholder input.
    So as part of these planning cycles, they consult with the 
scientific community as well as with commodity organizations, 
the scientific societies, to identify what the needs are, the 
unmet needs, the big questions. Those are also then taken into 
account in developing a plan of work that goes through further 
discussion and refinement.
    The project proposals then are developed within the 
intramural agencies by the specific investigators in line with 
the priorities that have been identified. And at the end of 
each of these cycles of planning, the entire program that was 
conducted under that is reviewed with that broader stakeholder 
input. So all of it is very much informed by consultation with 
the external community.
    Internally, we make sure through a variety of consultations 
that there is coordination that is going on among the agencies. 
And we have also, in response to a directive from Congress in 
the farm bill, in 2008 developed an overall roadmap for 
agricultural research and an action plan that guides the 
overall priorities of all of the agencies. And we report on 
what we have conducted under that each year. So that action 
plan gives kind of an umbrella to the work that all of the 
agencies undertake.
    Mr. Kelly. And, Administrator Reilly, what is the 
fundamental difference between Agricultural Estimates and the 
Census of Agriculture programs?
    Mr. Reilly. Well, the Agricultural Estimates is our annual 
program measuring basically acreage production and yield of the 
different commodities across the country, which is done by a 
series of probability-based samples of producers and farmers.
    The Census of Agriculture is an enumeration of the entire 
farm population, the 2.1 million farms out there, which is used 
more as a complete baseline that we adjust in our samples and 
design our 5 year program based on the results of the Census.
    Mr. Kelly. And why do some farmers feel that NASS contacts 
them so frequently and asks personal questions, are personal-
in-nature questions: Why do they feel like these? And I know 
that we had oversight on that. And we just have to be very 
cautious that the questions that we ask are agricultural based 
in getting the answer. Can you comment on that, please?
    Mr. Reilly. Well, we go through, in any survey that we do, 
as Dr. Woteki talked about, we engage stakeholders across the 
country, both within government and on the public side, of what 
data is needed. So we try and we do every effort we can to make 
sure whatever questions we ask have a legitimate need for some 
type of policy discussion.
    Why we contact farmers and they perceive that we are 
contacting them repeatedly is that there is a growing need for 
agriculture information, and some of the farm operations are, 
through consolidation, are so large and so impactful that if 
you are trying to produce reliable estimates or whatever data 
down to a local level, you have to sometimes go back to those 
same large producers in many of our programs. Regrettably, that 
is just the nature of the game.
    Mr. Kelly. Mr. Chairman, my time has expired.
    The Chairman. The gentleman yields back.
    Mr. Thompson, 5 minutes.
    Mr. Thompson. Thank you, Mr. Chairman.
    Thanks to all of you once again for your leadership and 
your service and for being here today.
    I want to start out asking about the Specialty Crop 
Research Initiative. It is an important issue, obviously, in 
U.S. agriculture, and we broke some new ground here.
    So, Dr. Ramaswamy, one of the provisions in the 2014 Farm 
Bill included greater input from the specialty crop industry 
when awarding projects and allocating funds in the competitive 
grant programs, including AFRI and the Specialty Crop Research 
Initiative.
    Can you tell us how NIFA has been implementing this 
provision and ensuring that the money being spent through AFRI 
and SCRI is going towards industry-supported research.
    Dr. Ramaswamy. Good morning, and thank you very much, Mr. 
Thompson, for that question.
    And yes, sir, we now are through the third round of 
undertaking the two-step review process. The first step is an 
industry relevancy evaluation that is undertaken by 
representatives of the industry. And they make a 
recommendation. They also provide us a rank order of the ones 
that should be going forward to the next round, which is the 
scientific merit review, and they also provide a rank order.
    And that information, along with the comments that have 
been made, is provided verbatim to the scientific review panel. 
We also try to bring in some members from the industry 
relevancy panel on to the scientific review panel itself as 
well. The chair of the industry review panel also serves as the 
chair of the scientific review panel, at least in the last 
year, and this year, again, we are going to be proposing to do 
that.
    And so that information is utilized. And then there is a 
full-fledged scientific review process that is undertaken, and 
that group will incorporate the information from the first 
review as well, and then make recommendations on what projects 
are going to be funded.
    And the NAREEE Board has a subcommittee that actually looks 
at whether we are or are not doing the right things, and they 
give us some feedback as well. So based on that sort of a 
feedback over the last now, as I said, the third round, we have 
iteratively improved the whole process.
    Mr. Thompson. That is very much appreciated, procedural 
leadership in that area.
    Dr. Ramaswamy. Thank you.
    Mr. Thompson. We are under more and more pressure, and 
appropriately so, from constituents and the citizens wanting to 
know what our outcomes are, our effectiveness, and making sure 
we are doing the right things based on sound data. And so that 
has grown in importance.
    So, Administrator Reilly, and I don't think this helps, the 
fact that in inflation-adjusted terms the NASS budget has 
really been flat over the last 10 years despite the fact that, 
from a citizen perspective, there is more accountability. They 
are actually paying attention now, which is really a good 
thing. I think the founders would be pleased.
    And yet, we are not adjusting to provide increased support 
for getting the data. And we have seen several examples where 
NASS will drop important reports, such as the July Cattle 
report was canceled. How has the number of surveys and reports 
administrated by NASS changed over time?
    And I recognize the need for better resourcing, but with 
the resources you have being flat for 10 years, which is really 
a decline with the increasing need, what mechanism do you use 
to prioritize what you get done?
    Mr. Reilly. That is a very good question, because we are 
always looking to prioritize. And what we tried to do is look 
at what data is needed for whatever policy decision and are 
there other sources of it, or in lieu of eliminating a report 
completely, we look at how often we have to release that 
information and how often we could provide it.
    So, for example, for the July Cattle report, we realize 
that that was kind of something that we didn't have the funds 
to do. But in looking around, we realized that we do a very 
extensive January Cattle report, we do ongoing monthly cattle 
on feed information, and then we work with the Food Safety and 
Inspection Service and publish all the slaughter information on 
a regular basis.
    So for the cattle industry specific, we made sure, yes, it 
was another important data point, but it wasn't void of 
eliminating something completely. And that is what we attempt 
to do as much as possible.
    Mr. Thompson. Thank you.
    Thank you, Mr. Chairman.
    Dr. Woteki. If I might just add a little bit. NASS has also 
taken a number of steps to reduce the cost of the data 
collection and processing, automating the interviewing process, 
centralizing their telephone interviewing. And that has enabled 
them to maintain as many of the surveys as they have been able 
to do.
    Mr. Thompson. Any idea what, and I don't know if you can 
capture that somehow, but that increase in efficiency, like 
over 10 years ago, how you would quantity that? Because I 
assume it has probably been leaps and bounds given the 
technology that is available.
    Mr. Reilly. Well, one of the key measures, as I look just 
at our overall staffing level, we are down about 15 percent 
staffing level just of where we were a couple years ago and we 
were able to do that by standardizing our processes, 
introducing more automated steps, and eliminating and 
centralizing some of our functions to do it more efficiently.
    We opened up a new operating center out in St. Louis, 
Missouri, and we do a lot of our extensive telephone data 
collection out of there. And all of our forms that are filled 
out by the respondents come back there for sort of a 
centralized data capture operation, which we could do much more 
efficiently, rather than through a distributed fashion.
    Mr. Thompson. Thank you for your efforts.
    The Chairman. Mr. Lucas, 5 minutes.
    Mr. Lucas. Thank you, Mr. Chairman.
    One of the issues that caught my attention, of course, as 
Mr. Yoho noted, is very important to a lot of the Members of 
this Committee, the wonders of this thing called citrus 
greening. And, Dr. Ramaswamy, earlier this year, the NIFA 
awarded several projects for Citrus Disease Research and 
Extension Program through that. Do you feel like the selected 
projects can effectively address the threat posed by citrus 
greening?
    Dr. Ramaswamy. Congressman Lucas, thank you very much for 
that question. Good to see you again, sir.
    Yes, sir, I believe that the projects that were selected by 
NIFA are going to have very significant impacts. NIFA projects 
tend to have a longer timeline in looking at the return on 
investment, but I will give you a couple of examples of 
something that is happening right now.
    One of those is the University of Central Florida received 
funding to develop nanopesticides, it is a zinc compound, it is 
called zinc oxide, and that has demonstrated phenomenal 
efficacy against the pathogen and the insect itself as well, 
both. And so it is undergoing tests, and we hope that will be 
undergoing field tests and deployed here in the near future.
    A second example is the development of tools, pesticidal 
tools, against the genetic mechanisms of the insect itself, and 
it is called RNAi. You are interfering with the inheritability 
process. And that has some really outstanding possibilities as 
well.
    So those are a couple of examples of things that are 
happening that we believe will in the longer-term provide us 
that sort of a return on investment.
    Mr. Lucas. Not having any citrus in my district in Oklahoma 
until we got into this process a few years ago, I didn't 
appreciate potentially how devastating an issue could be and 
literally could bring an industry entirely to an end in this 
country. So it got the attention of the Committee and we worked 
very diligently.
    One last question, though. The industry has prioritized 
funding projects related to trees genetically engineered to 
resist the citrus greening. And some observers have indicated 
that funding was denied because of a concern related to how the 
consumers might potentially accept the final result. Why has 
your agency not funded this project?
    Dr. Ramaswamy. So the answer is actually yes and no. 
Funding is being provided for looking at genetic engineering 
approaches to deal with this devastating pest, as you said. 
Over 75 percent of the Florida citrus industry has now been 
impacted, and it is found in California and Texas as well. So 
we are providing funding for genetic engineering.
    But, again, it is peers that come together that are 
providing the input in reviewing these projects as well. And, 
in fact, the Agricultural Research Service has some really cool 
stuff that is going on in regards to genetic engineering, and I 
am going to let Dr. Chavonda Jacobs-Young refer to that.
    Mr. Lucas. Please.
    Dr. Jacobs-Young. Yes. So I will tell you that we are 
undergoing the research on the genetically engineered tree 
there in Fort Pierce, Florida. And in 2014, we released seven 
new rootstocks that are tolerant to HLB. And we are working 
cooperatively with the State of Florida, the University of 
Florida, and we are running field trials right now and we are 
seeing some excellent results.
    We have shown that other therapies, like thermal therapy, 
is important to put some of the trees into remission. But the 
key is early detection. And early detection is where we can 
have our best options for saving the trees. And believe it or 
not, the dogs have been very important in helping us be able to 
detect the disease early enough to come in with some sort of 
antimicrobial or thermal treatment.
    Mr. Lucas. Thank you both.
    I yield back, Mr. Chairman.
    The Chairman. Thank you.
    I now recognize myself.
    This is a two-part question. And one is that earlier I 
questioned the Forest Service and others about use of, Dr. 
Jacobs-Young, your agency's studies on Bighorn Sheep and 
domestic sheep and the impacts that has had, and the great work 
you are doing trying to figure out what is happening. And yet, 
it doesn't appear the agency uses that information in making 
some of the decisions.
    And then broadly, how do we do a better job, NASA bragged 
on Teflon as a way to say that here is how these research 
dollars, in addition to putting a man on the Moon, helped 
everyday Americans.
    So how can we do a better job, all of us, in communicating 
the successes that you are having and the actual pocketbook, 
day-to-day impact on consumers, as an example, and then your 
own sister agencies or other agencies within the government 
taking advantage of the science that you are coming up with and 
the answers you are coming up with, and then that factors into 
the other policymaking things that go on?
    It is a broad-based question, and anybody that wants to 
weigh in, I would appreciate it.
    Dr. Jacobs-Young. So could I start with just the Forest 
Service question in terms of the grazing allotments? And in 
Dubois, Idaho, we are still allowed access for the Forest 
Service allotments for our grazing. And so we have been working 
with them. They are doing an environmental assessment for us. 
And so we are in constant communication with the Forest 
Service.
    We do have some new research findings. And when I saw your 
question earlier today, I reached out to my scientist to ensure 
that we touch base with the Forest Service on our new findings 
in terms of this interaction between the Bighorn and the 
domestic sheep in terms of immune systems and deficits in 
immune systems. And so there are some research findings that we 
want to make sure that we want to keep on the front burner for 
our service agencies.
    Well, we have been working with NOAA and NASA around 
climate change and soil moisture and global measurements to 
help us make better decisions. And you are right, we don't do a 
great job telling the stories of the impacts that we have had. 
We think about cotton, just the outcome of some of the work we 
have done in cotton. Permanent press cotton, for those of us 
who travel a lot, are very thankful for that discovery. That 
originated out of agriculture.
    The avian influenza pandemic, is what I like to call it, it 
could have been much worse had it not been for science, being 
able to come in and being able to diagnosis the situation, 
being able to help mitigate the situation. In fact, now that we 
have seen another case of it, we have been quickly able to 
isolate and we don't have what we experienced in the past.
    And so you are right, we need to do a better job of really 
telling people the impact that science has on just the everyday 
way of life.
    So I am going to let my Under Secretary have it.
    Dr. Ramaswamy. I will let her, and then I will respond as 
well.
    Dr. Woteki. Each agency has a different approach taken from 
the fact that they are all quite different in their missions 
and their constituencies.
    But on the broader level, we are blogging, we are tweeting, 
we are putting out podcasts from ERS and the other agencies. We 
are using the new media.
    And at the same time, we are continuing to put out into the 
scientific literature, which is the main way that we have of 
communicating, literally tens of thousands of peer-reviewed 
scientific articles that are the result of the research 
investment in the intramural agencies and in the university 
scientists and students that are funded by NIFA.
    And last, we have the enormous advantage of having the 
partnership with Cooperative Extension in the land-grant 
universities that is a way of providing the research-based 
solutions directly to the people. So that partnership is very 
strong and is one key way that we continue to get the science-
based solutions out to the users.
    Dr. Ramaswamy. If I might pick up on Dr. Woteki's response 
here. Indeed, extension, as you know, is in every one of our 
4,143 counties, boroughs, and parishes in America, and there is 
a way to get knowledge and information in there.
    And all the tweets and all the Facebook postings and all 
the social media and things like that really are part of this 
overall approach to conveying what is happening on the ground, 
as Chavonda just said. There are impactful things that are 
happening.
    If you look at wheat production in America, products that 
have been funded by NIFA have resulted, if you look at America, 
about 15 percent of the wheat acreage is based on the varieties 
developed by funding that we provided across multiple 
universities. That translates into about $1.8 billion of added 
income to farmers, and that translates into about 15,000 jobs 
as well on the ground.
    And so what we are doing is working through multiple media 
to get that information out. I like to say that we need to 
remove the shroud of secrecy that surrounds this amazing 
enterprise that we have in the world of agriculture.
    Dr. Bohman. One of the things we do at ERS is to measure 
the impact of technologies on farmers, consumers, and U.S. 
agriculture as a whole. And we annually produce measures of 
agricultural productivity, which show on average about three 
percent growth. And this is all from technology and better 
management by farmers. It is not from added inputs.
    So this allows us to show how land resources have been 
saved, how there are fewer chemicals being added because of new 
technologies. And that is something we continue to invest in 
and have a scientific review of the methods to make sure that 
the public has confidence in what we are finding.
    We also do sector studies. We published a report on 
structural change in the dairy industry a few weeks ago which 
shows--and I can't remember the time period--over recent years 
that there has been a 19 percent decrease in the average cost 
of production in the dairy industry. So this leads to lower 
consumer prices and benefits all Americans.
    And we plan to continue to invest in these studies. And 
they rely heavily on the information we get from our sister 
agencies ARS and NIFA on science and the data and statistics 
from NASS. So it really is an integrated effort to do this.
    The Chairman. Well, we will do our second round here in a 
second. I appreciate that. But we all need to do a better job 
of trumpeting your successes in a tangible way that in 2018 
will help us get another farm bill done, because I am a little 
self-serving here, but we are going to need all the help we can 
get to get that done.
    And the more consumers can understand where their food 
comes from and how it gets there and the successes that are 
there, which always translates into less food costs that they 
are enjoying. And they don't understand all the great work that 
you do. They don't understand how that translates through the 
extension service that Dr. Ramaswamy talked about. All of that 
just happens seamlessly, and we do it really, really well, but 
we don't brag on it enough.
    And you have a great story to brag on. There is nothing 
wrong with helping consumers understand that, whether it is 
permanent press clothes or whatever it might be, that that is 
coming about as a great work that--in partnership between your 
agencies, your sister agencies, as well as production 
agriculture and all the kind of reciprocal folks that are doing 
research and everything else that is going on.
    So you have a terrific story to tell. We just, all of us, 
need to do a better job telling it, and by 2018 we need to 
really do a good job.
    Dr. Ramaswamy?
    Dr. Ramaswamy. Yes, I just wanted to add, one of the things 
that I have been pushing with the grantees, the people that we 
give the money to, to make sure that they make the connection 
between the public investments and the public good that is 
derived as well. They do a lousy job of making that connection.
    The Federal Government, the state government, and the local 
governments are also investing in these things. They have to 
remember to make sure that they are making that connection as 
well, in the press releases that they do, the radio and 
television interviews they do, the tweets that they do as well. 
Once we start making that, the public gets it as well.
    The Chairman. Amen. I agree.
    Who wants a second round?
    Mr. Benishek. Well----
    The Chairman. Oh, I am sorry.
    Mr. Benishek. Mr. Chairman?
    The Chairman. Mr. Benishek, 5 minutes.
    Mr. Benishek. I didn't have a first round, so I just wanted 
to make sure that I have my 5 minutes in before you started 
again.
    The Chairman. Sorry about that.
    Mr. Benishek. That is okay.
    I just want to ask a couple brief questions on the Economic 
Research Service. And apparently there are people in the 
Department that specialize in regions around the world that are 
important for agricultural trade. And what is the focus of that 
research?
    Dr. Bohman. So we cover developments in international 
markets in two dimensions.
    One is through our contributions to USDA's World 
Agricultural Outlook Board and the monthly interagency 
commodity estimates. And ERS has experts who go to those 
meetings and, with the Foreign Ag Service and our other USDA 
colleagues, assess the impacts of developments. And you see 
those in the numbers that come out every month. So we are 
behind those numbers with our international assessment.
    We put out every year a 10 year baseline in conjunction 
with the Office of the Chief Economist, but we have the models 
that do the heavy lifting in that. And that looks forward in 
terms of taking assumptions about macroeconomic developments, 
population growth, and puts together a set of forecasts that 
help industry and agriculture look forward.
    We also do special studies that is more motivated by this 
work. And we identify these issues through our work with the 
World Agricultural Outlook Board, where are the big 
uncertainties, where are the issues. We also consult regularly 
with stakeholders to bring in topics, and we welcome input from 
your staff on issues you think are important.
    Recent examples include work we did last year on China's 
cotton policies and the impacts of their accumulation of stocks 
on global markets, impacts for the U.S. We looked at potential 
implications of trade with Cuba. As Under Secretary Woteki 
mentioned, we published work on the bigger trade agreements, on 
TPP implications and T-TIP.
    So this two-pronged approach is really necessary because 
the U.S. exports between 20 and 30 percent of our production 
depending on who measures it, so we are highly integrated and 
dependent on world markets.
    Mr. Benishek. Thank you. I appreciate that answer.
    I just want to ask Dr. Ramaswamy a question, and I am 
hoping to touch on it in the next panel too.
    We have this bovine TB issue in Michigan. I know you worked 
at Michigan State at one point, and I know that they are 
implementing kind of a new program for dealing with these 
infected herds. But since you are talking about research, I 
talk to these farmers that were involved, and they have been 
apparently doing everything that they are supposed to do to 
prevent this TB, and they still get the TB.
    So I know it has been around for a long time, but can you 
tell me do you know the vectors? I mean, people think it is 
just wild animals and everything. Can you go into that a little 
bit?
    Mr. Ramawsamy. I am actually going to defer to Dr. Jacobs-
Young because the Agricultural Research Service actually has 
significant work going on in that area.
    Mr. Benishek. Well, good. Tell me about it.
    Dr. Jacobs-Young. Absolutely.
    We have determined that it is being transmitted by wild 
deer to the cattle. And so we have identified the transmission 
mechanism. And we have actually worked to develop an assay to 
help us detect infected animals. And so this assay, in addition 
to the human skin test for TB, we have been able to enhance our 
ability to determine if the deer are in fact, and our cows are 
in fact, infected.
    Now, in terms of vaccines, we are actually using a human TB 
vaccine to start with. And so we are going to be developing a 
more robust animal vaccine from that point, but we are using a 
human vaccine to actually vaccinate the wild deer and not the 
cattle. So we are working from the point of----
    Mr. Benishek. How are you going to get a hold of a wild 
deer and vaccinate it?
    Ms. Jacobs-Young. I have not personally been involved in--
--
    Mr. Benishek. Let me tell you, that doesn't seem like an 
easy thing to do.
    Dr. Jacobs-Young. Very carefully is what my colleagues say.
    So we are working with the vector. And so we would be happy 
to follow up with you with some----
    Mr. Benishek. Well, I would appreciate that, because I have 
had a couple of visits to farms within the last year that have 
had pretty agonizing situations occur. And I understand that it 
is not only in Michigan, but Texas also has this problem too. 
So it would be good to work with you because these problems 
seem like they are ongoing, and----
    Dr. Jacobs-Young. Yes, they are.
    Mr. Benishek.--I want to put a stop to it.
    Dr. Jacobs-Young. And as soon as we solve one issue, there 
is something else.
    But this is an example of where human science and animal 
science have to be in communication, right? So we have learned 
a lot from human TB in order to be able to manage this.
    Mr. Benishek. Okay. Thank you.
    The Chairman. Well, Dan, since I skipped you, would you 
like to start the second round? Dan? Benishek? Since I skipped 
you, would you like to start the second round?
    Mr. Benishek. No, that is okay. Go ahead, Mr. Chairman.
    The Chairman. All right.
    Mr. Benishek. I will wait my turn. I just want to be----
    The Chairman. You are just going to sit over there and 
pout. Is that what you are going to do? You are going to sit 
over there and pout?
    Mr. Benishek. Well, no. I am good with these folks. I will 
hopefully start the next time.
    The Chairman. Okay.
    Who would like a second round with this panel?
    G.T., 5 minutes.
    Mr. Thompson. Thank you, Chairman.
    Once again, thanks.
    And I am not really looking for an answer on this now, but 
it has to do with research. When we did the farm bill, we had 
what I would call milk wars in terms of the dairy program of 
what we were going to do. And we wound up doing something I 
supported, the margin insurance.
    And so I am assuming, I guess you never assume, but I am 
hoping that something that we will be able to look at the 
effectiveness of that. Because we need to know how we have 
done, whether it is good or bad news. And that is one in 
particular because of how our dairy farmers struggle.
    So it is pretty early, so I don't know if there is any 
preliminarily data on the outcome of that, or is that something 
you are tracking?
    Dr. Bohman. So yes and yes.
    So I mentioned the report we published a couple weeks ago 
looking at structural changes in the dairy industry. That 
concludes with a preliminary look on the MPP-Dairy program.
    Mr. Thompson. Okay.
    Dr. Bohman. And we have research underway doing just what 
you asked for. And we expect to have results coming out over 
the next couple years and in time for people to use in thinking 
about the next farm bill.
    Mr. Thompson. Excellent. And I would love to look at it 
just as kind of a cross-section of how well we are doing, I 
appreciate it.
    I really appreciate the land-grant universities were 
mentioned. I bleed blue and white. I am a Penn Stater. I am a 
product of Penn State. And I love our extension agent services 
that we have, 67 counties in Pennsylvania. Some of those are 
closing right now. And it is not our fault, it is not your 
fault, we have a governor, and it is our number-one industry in 
Pennsylvania, but we just have a governor that is holding that 
hostage. And these are Federal dollars that we have 
appropriated back in the end of June last year, and he just 
refuses to release those.
    The question I have, and I don't know whether you know the 
legal answer to this question. Because it is federally 
appropriated, and most of it is not matched by state dollars, I 
don't think he has a legal leg to stand on for withholding that 
funding, which is hurting our people and hardworking men and 
women that are working today that benefit from that technical 
expertise in so many different ways. And they are actually 
looking to discontinue our 4-H and FFA programs. That is our 
next generation of farmers.
    And so I don't know if you have any insight into whether 
that money can legally be held up and held hostage, but I would 
just love to get your opinion on it.
    Mr. Ramawsamy. Yes. Congressman Thompson, yes, sir. In 
fact, the folks from Penn State, the President and the dean----
    Mr. Thompson. Dr. Barron.
    Mr. Ramawsamy. Yes, sir.
    Mr. Thompson. Good guy.
    Mr. Ramawsamy.--Barron and Rick Roush, the dean as well, 
they have been in touch with us over the last several months, 
as a matter of fact, since last summer, when this whole thing 
got started. And, indeed, I have also heard from various farm 
groups and others within the Commonwealth of Pennsylvania, as 
well, about the significant challenges. Just last week, I was 
talking to folks that do mushrooms in that state. Again, they 
were asking me about this situation.
    And, yes, there is a legal requirement on the match. But, 
for every dollar that we provide, there has to be a state 
dollar on it. And, as I understand it, within the legislature 
and between the Governor and the legislature, there is some 
movement on coming to some sort of an agreement, and we are 
waiting to see how that comes about. But we are going to be 
following up on that, as well, in regards to making sure that 
the match is being met by the state.
    Mr. Thompson. Yes. Well, I can tell you it passed the House 
and the Senate, I believe, yesterday, but the Governor has 
threatened to once again veto it. And he has a line-item veto. 
I don't understand that.
    I yield back.
    The Chairman. Anyone else, Ted, 5 minutes.
    Mr. Yoho. Thank you, Mr. Chairman.
    And, again, I want to thank you for the work you guys have 
all done on citrus greening in our state. We went from about 
400 million to 450 million boxes down to under 100 million 
boxes. And it is just devastating in Florida without oranges. 
It is like Wal without mart. They just kind of go hand-in-hand.
    And the research you are doing on that, especially with the 
GMOs and the bactericides that you had mentioned if you catch 
it early, those are great, but if we can't market, it is for 
naught. And that is what we saw in Florida with the ringspot 
virus on the papayas, that the GMOs were created at the 
University of Florida, IFAS, approximately 12 years ago. The 
EPA approved them, the FDA, the USDA. But it is just now coming 
to where it is coming to market.
    Is there a way to enhance that marketing aspect of that as 
you are doing the research and start letting people on a public 
education level know, maybe it is documentaries, how you 
produce this product and the outcome of that? What are your 
thoughts on that?
    Dr. Ramaswamy. Well, I will take a shot at it, and then Dr. 
Bohman there, from an economist's perspective, might be able to 
provide some insights as well.
    So, yes, indeed. In America, we have a situation where in 
the marketplace there is a significant reluctance to consume, 
genetically modified crops and papayas and things like that. 
Never mind all the science points to the fact that there is 
nothing wrong, there is no difference between a GM crop and a 
non-GM crop. And, to your point, IFAS, the Institute of Food 
and Agriculture at University of Florida, is indeed trying to 
figure out how to change the mindset of the consumer and the 
public.
    And so we are in a situation where we are trying to react 
to the situation that we have. And so a number of land-grant 
universities that we have provided funding to are undertaking 
research on how to get consumer behavior to change as well, 
going back to the question that the Chairman asked, as well, 
about the impacts of things like that. So we are working with 
IFAS and other institutions to figure out the best path forward 
on enhancing knowledge in the consumer, and, therefore, that 
they are able to go ahead and purchase and consume.
    Last, the genetic modification that is going on has now 
gone beyond the transfer of genes from unrelated species to 
manipulating the genetics inside of the same organism itself. 
And we have to do a really better job of explaining to the 
consumer that that sort of changes that are taking place is not 
unlike the selection and breeding that we have done over the 
millennia as humanity.
    Mr. Yoho. When you say we, are you talking about the USDA? 
And do you have a marketing campaign or budgeted for a 
marketing campaign to utilize the research that you are funding 
so that the public does know about this so we dispel a lot of 
the misinformation out there?
    Dr. Woteki. We do not have something like what you have 
just described for the research and education agencies.
    Mr. Yoho. Okay.
    Dr. Woteki. The primary way that we have for communicating 
with the public would be through NIFA programs, cooperative 
extension, which has over the years had good science-based 
information about genetic engineering, its applications in 
agriculture, and what this means. NIFA has programs for 
curriculum development, grants programs that Dr. Ramaswamy 
administers, that also can be used for development of 
curriculum for high schools as well as at the university and 
the graduate level.
    So that is the primary way by which we would be 
communicating about this science, what it means for the 
consumer, what it means for safety. But we don't have 
authorization or marketing----
    Mr. Yoho. Would you need authorization from us, or is that 
something you can do internally?
    Because if you look at, Dr. Borlaug with genetically 
modified wheat back in the sixties, that accounted for a 
billion people being saved, and India, they have a statute of 
him over there. Those kind of documentaries, I don't know if it 
is best through you or through the big ag farm companies or a 
correlation between you two, to get that word out there. 
Because there is just so much misinformation and confusion on 
that, and we need to promote the benefits of these products if 
we are, and we are growing to nine billion people on this 
planet and we need to be able to utilize these products.
    I yield back. Thank you.
    The Chairman. The gentleman yields back.
    Anybody else would like another round? Any comments for 
this particular panel?
    Well, Dr. Woteki and the rest of the panel, thank you all 
very much. Your agencies do great work. You typically labor in 
anonymity, for the most part. And we thank you for all of the 
work you do.
    And, as we said, all of us, including yourselves, need to 
do a better job of bragging on your successes. The way we can 
best do that is convert what you do into the pocketbook impacts 
on consumers and that kind of thing. If there is a way we can 
start talking better about that, because they, as we all say 
often, enjoy the most affordable food supply in the world, and 
it is driven by a lot of moving parts, including what you and 
your agencies do and the men and women who get up every day and 
try to make this world a better place to live in. So thank you 
for what you do. We appreciate that.
    We will take a brief 15 minute break while we get the other 
panel here. We were a little early, but I want to thank you all 
for very much for the preparation done. And thank your 
backbenchers back there for all the questions that they 
prepared you to answer that we didn't ask. So thank you all 
very much.
    Dr. Woteki. Thank you, Mr. Chairman. We appreciate your 
support.
    The Chairman. Yes, ma'am.
    [Recess.]
    The Chairman. All right. Let's go ahead and start back up.
    It is now my pleasure to welcome our fourth panel to the 
witness table today, led by the Honorable Ed Avalos, who is the 
Under Secretary for Marketing and Regulatory Programs at USDA. 
Today, Mr. Avalos is accompanied by Elanor Starmer, who is the 
Acting Administrator for Agricultural Marketing Service; Kevin 
Shea, the Administrator for Animal and Plant Health Inspection 
Service; and Larry Mitchell. He is the Administrator for the 
Grain Inspection, Packers and Stockyards Administration, a 
proud Charleston State grad and, I understand they bragged on 
you at the Charleston academic forum this past fall as being 
one of their better graduates. So we are glad you are here with 
us this morning, Mr. Mitchell.
    With that, Mr. Avalos, 5 minutes.

           STATEMENT OF HON. EDWARD M. AVALOS, UNDER
 SECRETARY, MARKETING AND REGULATORY PROGRAMS, U.S. DEPARTMENT 
    OF AGRICULTURE, WASHINGTON, D.C.; ACCOMPANIED BY ELANOR 
                        STARMER, ACTING
  ADMINISTRATOR, AGRICULTURAL MARKETING SERVICE, USDA; KEVIN 
    SHEA, ADMINISTRATOR, ANIMAL AND PLANT HEALTH INSPECTION 
SERVICE, USDA; LARRY MITCHELL, ADMINISTRATOR, GRAIN INSPECTION, 
          PACKERS AND STOCKYARDS ADMINISTRATION, USDA

    Mr. Avalos. Mr. Chairman, Members of this Committee, I am 
pleased to have an opportunity to discuss activities of USDA's 
Marketing and Regulatory Programs' mission area, including 
APHIS, GIPSA, and AMS.
    American agriculture directly and indirectly supports over 
16 million jobs. At USDA, we have some very dedicated, very 
hardworking and talented people. I applaud their work that they 
do for farmers and ranchers in our rural communities.
    The MRP agencies must cultivate strong relationships and 
partnerships with industry groups, state agencies, sister 
Federal agencies, and foreign governments. Expanding and 
maintaining agricultural trade is a priority for the 
Administration and so important to our farmers, our ranchers, 
our shippers, our packers, our feeders, and so many, many, many 
more stakeholders.
    The MRP mission area plays a vital role in developing and 
facilitating the exports of livestock, meat, poultry, and 
agricultural products throughout the world. APHIS addresses 
animal and plant health issues that many times are used to 
restrict trade. GIPSA inspects and certifies almost all grain 
that is exported. AMS issues export certificates to verify and 
certify that products meet specific export requirements for 
countries around the world. So much of the market access and 
market share that we enjoy today is due to the work of this 
mission area.
    Mr. Chairman, Members of the Committee, thank you so much 
for the opportunity to be here with you today. This is my last 
year as Under Secretary. After my service here in D.C., I plan 
to return home to New Mexico, to Las Cruces, to the Mesilla 
Valley. It has been an honor to serve our nation's farmers and 
ranchers and our many, many rural communities. I enjoyed 
working with the Committee, Mr. Chairman, and I thank all of 
you for your hard work in supporting and protecting American 
agriculture.
    So now my team and I are ready to answer any questions you 
might have.
    [The prepared statement of Mr. Avalos follows:]

Prepared Statement of Hon. Edward M. Avalos, Under Secretary, Marketing 
 and Regulatory Programs, U.S. Department of Agriculture, Washington, 
                                  D.C.
    Mr. Chairman and distinguished Members of this Committee, I am 
pleased to appear before you to discuss the activities of the U.S. 
Department of Agriculture (USDA) Marketing and Regulatory Programs 
(MRP) mission area, including the Agricultural Marketing Service (AMS), 
the Animal and Plant Health Inspection Service (APHIS), and the Grain 
Inspection, Packers and Stockyards Administration (GIPSA).
    With me today are: Mr. Kevin Shea, Administrator of APHIS; Ms. 
Elanor Starmer, Administrator of AMS; and Mr. Larry Mitchell, 
Administrator of GIPSA. They will answer questions regarding specific 
agency activities.
    Agriculture is an engine of growth and prosperity, directly or 
indirectly supporting 16 million jobs. MRP programs have contributed 
significantly to the success as well as the development of domestic 
markets in a variety of ways. For example, both AMS and GIPSA certify 
the quality of agricultural commodities and provide industry with a 
competitive edge earned by the USDA seal of approval for grading and 
inspection. AMS also facilitates marketing by reporting essential 
market data, upholding strong organic standards, and supporting the 
ongoing growth of local and regional food systems. GIPSA also works to 
help ensure that livestock, meat, and poultry producers have a fair and 
competitive market environment. APHIS also protects the health of 
plants and animals, enhancing the competitiveness of U.S. producers by 
keeping production and marketing costs low. All three agencies help 
resolve international issues to maintain and open markets around the 
world for U.S. products, thus supporting American families.
    As you can see, each of our agencies has unique responsibilities, 
and today my colleagues and I are here to and discuss the important 
work our agencies are engaged in and how each contribute to the success 
of American agriculture.
APHIS
    APHIS' primary mission is to safeguard the health and value of U.S. 
agricultural and other plant and animal resources. The Agency's 
programs directly protect livestock, poultry, and crops worth an 
estimated $193 billion in 2015 (based on data collected by USDA's 
National Agricultural Statistics Service) and the well-being of 2.5 
million animals under the Animal Welfare Act. APHIS employees come to 
work, every day, across the country and around the world, to serve a 
diverse array of customers and stakeholders and respond to challenges 
and threats as they arise--as they have with their response to the 
outbreak of Highly Pathogenic Avian Influenza (HPAI). The customers 
APHIS serves include ranchers, farmers, poultry producers, citrus 
producers, licensed animal dealers, importers and exporters, and 
ultimately the general public.
    Several core beliefs form the foundation of APHIS' mission. First, 
healthy and profitable agriculture is good for America; it provides 
food and clothing for countless people worldwide and is a key pillar to 
a thriving economy. Second, as a Federal agency, APHIS' role is to take 
actions that no one state or individual entity has the capacity to take 
on their own. Last, APHIS has a special role to carry out in caring for 
vulnerable animals. APHIS accomplishments over the last year 
demonstrate our commitment to these principles, our mission, and to our 
customers. I'm pleased to share a few of the Agency's most notable 
accomplishments with you now.
Highly Pathogenic Avian Influenza
    In FY 2015, 21 states had positive cases of notifiable avian 
influenza, affecting 232 premises (211 commercial, 21 backyard) and 
more than 48 million birds. At its largest point, APHIS' response team 
included 3,200 individuals, including Federal employees, state 
employees, and contractors. The response team worked diligently to 
contain and eradicate the disease, safely dispose of infected 
materials, and ensure the virus was eliminated so affected farms could 
safely return to production. Throughout the experience, APHIS 
continuously improved its response capabilities to provide the most 
effective and efficient services possible. All affected premises from 
those outbreaks have resumed operation.
    Based on conversations with states and industry groups and the 
lessons APHIS identified from the FY 2015 response, the Agency prepared 
a comprehensive and updated emergency response plan for a potential 
return of notifiable avian influenza. APHIS also learned that it needs 
to rebuild response capabilities for large-scale events such as this 
one, and developed a plan to move in that direction including the 
development of multiple level coordination groups in APHIS and USDA.
    Therefore, when HPAI was detected in Indiana in January 2016, APHIS 
took immediate action to identify the disease and launch response 
activities per the Agency's updated HPAI emergency response plan. APHIS 
depopulated the infected flock as well as other flocks at premises in 
close contact with the affected flock. It appears that this was an 
isolated incident where a low pathogenic virus mutated into the highly 
pathogenic form--a different strain from the one that caused the 2015 
outbreak--and it does not necessarily indicate the beginning of a 
larger outbreak.
    All told, USDA has received nearly $1 billion in Commodity Credit 
Corporation (CCC) funding to address these outbreaks. This has allowed 
it to help producers recover from the outbreak, with over $190 million 
directly compensating them for the loss of the poultry and related 
equipment. It has funded the depopulation and disposal of infected 
poultry, as well as cleaning and disinfection of premises. Funding also 
has allowed the Agency to increase staffing to address the outbreak, 
conduct planning activities and to do extensive surveillance so there 
is early warning of where the virus may strike.
    APHIS is prepared for any return of the disease and its 
preparedness and quick response to the Indiana outbreak likely helped 
prevent further spread of HPAI in the region. APHIS will continue to 
work with its state and industry partners to identify and address any 
additional outbreaks should they occur.
Biotechnology
    APHIS continues to make significant progress with its biotechnology 
petition review process. In recent years, this process was taking more 
than 3 years, adding to a growing backlog of petitions. To address this 
situation, APHIS undertook a business process improvement review and 
for petitions received in 2015, is now meeting its goal of 13 to 15 
months to review petitions that do not require an environmental impact 
statement (EIS). When the process began, APHIS had a backlog of 23 
petitions. The Agency has reviewed 22 of those with just one still 
pending.
    Most recently, APHIS announced that it is developing a draft EIS to 
evaluate a range of alternatives the Agency can take as it works to 
update its biotechnology regulations. APHIS is considering amending its 
biotechnology regulations to reflect lessons learned from regulating 
biotechnology products since 1987, reflect advances in biotechnology 
and address comments and suggestions raised by stakeholders. This 
update to the regulations would increase the efficiency and precision 
of our regulations. As we do so, we will continue to ensure that our 
business process improvements to the regulatory process will continue 
as well.
    The proposed revisions APHIS is considering could align the range 
of risks that may be considered under APHIS' biotechnology regulations 
with both the plant pest and noxious weed authorities of the Plant 
Protection Act, to ensure a high level of plant health protection, 
improve regulatory processes so that they are more transparent to 
stakeholders and the public, and provide regulatory relief so that 
unnecessary regulatory burdens are eliminated.
Feral Swine
    In FY 2014, APHIS requested and received funding from Congress to 
initiate the National Feral Swine Damage Management program. These 
animals cause damage estimated at $1.5 billion annually and pose risks 
to agriculture, natural resources, property, animal health, and human 
health and safety. APHIS' goal is to reduce damage by suppressing 
populations in states where feral swine populations are large and 
widely distributed. In states where feral swine are emerging or 
populations are low, APHIS will cooperate with Federal, state, Tribal, 
and local entities to eliminate them. The Agency will also target feral 
swine emerging in urban areas where they pose a danger to people and 
property, and the Agency will also conduct research to develop and 
evaluate new and emerging tools to further reduce damage inflicted by 
feral swine.
Plant Protection Issues
    USDA appreciates Congress' support of the Huanglongbing (HLB) 
Multi-Agency Coordination group (MAC). The MAC is working diligently 
with the citrus industry to find near-term practical tools and 
solutions for the industry to use in combating HLB. It has brought 
unprecedented coordination and cooperation across Federal and state 
agencies and industry in an effort to speed progress on methods to 
fight this disease. With support from Congress, the HLB MAC has been 
able to approve $20 million in more than 30 HLB-related projects to put 
practical tools to work in the field now while longer term solutions 
are developed. Some of the tools being developed include delivering 
thermal therapy to citrus trees (to kill the bacteria that causes HLB) 
on a grove-size scale, increasing production of biological control 
agents to manage Asian citrus psyllid populations (which spreads HLB), 
and training detector dogs to find trees infected with HLB. We would 
also note significant progress in field trials for the use of 
antimicrobials that attack the disease and stop its spread. In 
addition, in FY 2016, with Congress' support, APHIS was able to commit 
more than $48.8 million to Citrus Health Response Program activities 
with an emphasis on HLB and Asian citrus psyllid.
    APHIS also has made significant progress in addressing a variety of 
plant pests, including our very successful work with the State of 
California and industry to keep the European grapevine moth (EGVM) from 
establishing a foothold. APHIS detected more than 100,000 of these 
moths in FY 2009, the first year of the program. In FY 2015, APHIS and 
its partners did not detect a single moth, and it may be able to remove 
all EGVM quarantines by the end of this fiscal year.
    APHIS has also used the funding provided by the Agricultural Act of 
2014 (2014 Farm Bill) to continue to enhance plant health through two 
important programs, Plant Pest and Disease Management and Disaster 
Prevention and the National Clean Plant Network (NCPN). Since 2009, 
APHIS has funded more than 2,600 projects in 50 states and two U.S. 
territories, strengthening the Agency's abilities to protect U.S. 
agriculture and natural resources from foreign pest threats. 
Cooperators across the country put innovative ideas into action with 
farm bill funds. APHIS just announced its $58.25 million FY 2016 
funding plan, which will support 412 projects suggested by states, 
universities and other partners. Projects include $890,000 for old 
world bollworm survey and response activities; and $157,000 for bark 
beetle and other wood boring beetles that affect important forests in 
Oregon. Farm bill funding has also allowed APHIS to commit $3.4 million 
to eradicate gypsy moth infestations in Washington and Oregon; over 
$2.2 million to support eradication of the giant African snail in 
Florida; $1.6 million for coconut rhinoceros beetle in Hawaii and Guam; 
and over $1.6 million to address spotted lanternfly in Pennsylvania. In 
support of the NCPN, which provides reliable sources of pathogen-free 
planting stock of high-value specialty crops, APHIS and cooperators 
have also provided funding and other support to 22 clean plant centers 
and associated programs in 17 states representing specialty crops 
including fruit trees, grapes, citrus, berries, sweet potatoes, roses 
and hops.
Assisting and Expanding Exports
    The ability to export is key to the growth, profitability, and 
continued success of U.S. farmers and ranchers and related agricultural 
businesses, and is an important contributor to our balance-of-payments. 
For some crops, 50 percent or more of our production is exported, 
including 80 percent of U.S. cotton, 70 percent of tree nuts, and 50 
percent of wheat and rice. According to USDA's Economic Research 
Service, the value of U.S. agricultural exports has nearly tripled in 
value. U.S. agricultural exports totaled about $140 billion in FY 2015. 
The strong showing demonstrates continuing world-wide demand for high-
quality U.S. grown products.
    APHIS plays a significant role in continuing to help U.S. farmers 
and ranchers access new markets. In January 2015, APHIS reached a 
historic agreement with China to allow all U.S. grown apples into the 
Chinese market. These efforts result in high quality, fresh U.S. apples 
being available for consumers in China and a significant boost in sales 
for American apple producers. Exports of U.S. apples to China through 
November 2015 were valued at nearly $22 million. Last year, APHIS, in 
cooperation with other agencies, successfully negotiated and resolved 
171 sanitary and phytosanitary (SPS) trade-related issues involving 
U.S. agricultural exports, with an estimated market value of more than 
$2.5 billion. This includes continuing our efforts to eliminate all 
remaining bovine spongiform encephalopathy (BSE)-related restrictions 
on U.S. cattle and beef. Based on our efforts, 14 countries removed all 
BSE restrictions on U.S. beef and beef products in FY 2015. Together 
these markets have a potential value of $180 million for our exporters. 
We were able to retain important markets for U.S. poultry like the 
European Union (worth $111 million) by providing scientifically sound 
information on our efforts to contain the outbreak of highly pathogenic 
avian influenza. APHIS also successfully intervened in 293 situations 
where U.S. cargo was held up at foreign ports-of-entry, which prevented 
the rejection of shipments worth more than $25 million.
Animal Welfare
    APHIS' Animal Care program carries out activities designed to 
ensure the humane care and treatment of animals covered under the 
Animal Welfare Act (AWA) through inspections, enforcement, and 
education. The program ensures that proper care is provided for certain 
animals that are: exhibited to the public; bred for commercial sale; 
used in medical research; or transported commercially. Facilities using 
regulated animals for regulated purposes must provide their animals 
with adequate housing, sanitation, nutrition, water and veterinary 
care, and must protect their animals from extreme weather and 
temperatures.
AMS
    AMS's mission is to facilitate the strategic marketing of 
agricultural products in domestic and international markets, while 
ensuring fair trading practices and promoting a competitive and 
efficient marketplace to benefit producers, traders, and consumers of 
U.S. food and fiber products. AMS also provides the agriculture 
industry with valuable services to ensure the quality and availability 
of wholesome food for consumers across the country.
    AMS carries out a wide range of programs under the authorization of 
the Agricultural Marketing Act of 1946, as well as over 50 other 
statutes. More than \1/2\ of the funds needed to finance AMS activities 
(excluding commodity purchase program funds) are derived from voluntary 
user fees. AMS also provides services for private industry and state/
Federal agencies on a reimbursable basis. In addition, AMS conducts 
several appropriated program activities through cooperative 
arrangements with State Departments of Agriculture and other agencies.
    AMS employees work every day to support the country's diverse 
agricultural operations. The Agency's workforce includes marketing 
specialists, commodity graders, economists, Market News reporters, 
scientists, and analysts who support the marketing of American 
agricultural products and work in industry-specific processing plants, 
terminal and shipping point markets, production facilities, and office 
environments. AMS provides services and awards millions of dollars in 
annual grant investments that create opportunities by supporting 
economic development in small towns and rural communities across 
America.
    Much of the agency's support for agriculture is provided through 
commodity-specific efforts, such as its Dairy; Fruit and Vegetable; 
Livestock, Poultry and Seed; and Cotton and Tobacco Programs. AMS also 
oversees the National Organic Program; Science and Technology Program; 
and the Transportation and Marketing Program. Further, AMS provides 
oversight for over 20 research and promotion programs, also known as 
checkoffs, which are responsible for well-known advertising campaigns 
such as ``Got Milk'' and ``Beef: It's what's for dinner.'' In addition, 
AMS enforces other Federal regulations such as the Perishable 
Agricultural Commodities Act (PACA) and the Federal Seed Act.
    Within five of the twelve titles of the 2014 Farm Bill, there were 
nearly 30 provisions related to AMS. The agency has made great strides 
toward implementation including the timely awarding of grants, 
providing several reports to Congress, establishing the Unprocessed 
Fruit and Vegetable Pilot in eight states, and moving to a hearing on a 
proposed California Federal Milk Marketing Order.
Market News
    One of our most widely used programs is Market News. Last year 
marked the 100 year anniversary of AMS' Market News which provides 
agricultural stakeholders with the information they need to evaluate 
market conditions and trends, make purchasing decisions, and assess 
movement of products across the nation and the globe. Market News 
covers approximately 700 products on a daily basis and issues more than 
250,000 unbiased reports per year, attracting more than 53 million 
views from stakeholders. The reports increase market transparency and 
help farmers and ranchers identify opportunities by ensuring that all 
farmers, traders, and agribusinesses have equal access to information.
    Market News is constantly evaluating the evolving needs of the 
agriculture industry to better serve our stakeholders. For example, AMS 
has increased the reporting of pricing data relevant to small and mid-
sized fruit and vegetable producers and participants in emerging 
sectors such as grass-fed, organic, and local foods.
Commodity Procurement
    Another key AMS activity is commodity procurement. AMS purchases a 
variety of domestically produced and processed foods, providing an 
outlet for surplus products, supporting American agriculture, and 
providing food to Federal nutrition programs administered by the Food 
and Nutrition Service (FNS). Annually, AMS purchases about 2 billion 
pounds of domestic foods with funding from Section 32 and FNS funds 
appropriated for the Federal nutrition programs, through legislation 
such as The National School Lunch Act and The Emergency Food Assistance 
Act of 1983. These purchases are an important outlet for surplus 
products and provide the National School Lunch Program with food for 31 
million school children daily, in addition to making available 930 
million pounds of food for food banks, disaster relief, and soup 
kitchens.
    In 2015, AMS conducted significant outreach to small business 
entities, in particular minority-owned, service-disabled veteran owned, 
and women-owned small businesses, as well as those operating in 
historically underutilized business zones, to inform them about 
opportunities to sell to USDA. AMS approved 20 new vendor applications, 
and the program attained a small business contracting rate of more than 
38 percent, for over $1 billion in purchases.
Grants
    AMS grant programs also play an important role in facilitating 
marketing. The Federal-State Marketing Improvement Program (FSMIP) 
provides matching funds to states to assist in exploring new market 
opportunities for U.S. food and agricultural products, both locally and 
internationally. Recent FSMIP projects have supported efforts to 
bolster local and regional food systems through farmers markets and 
community supported agriculture operations, while other projects have 
focused on building international markets for pine lumber, pork, and 
more.
    With the Specialty Crop Block Grant Program, AMS helps states 
strengthen markets for their specialty crops, such as fruits, 
vegetables, tree nuts, horticulture and nursery crops. In FY 2015, AMS 
awarded $63 million to 755 Specialty Crop Block Grant Program projects 
nation-wide. AMS expects to award approximately $62 million in FY 2016. 
These grants address issues ranging from food safety to research needs 
to increased access to fruits and vegetables, all benefiting specialty 
crop producers and consumers across the country. With additional 
funding from the 2014 Farm Bill, we are able to do even more to help 
specialty crop growers increase profitability and sustainability.
    Farmers' Market and Local Food Promotion Program grants are 
available annually to support local and regional food systems through 
two competitive programs: the Farmers Market Promotion Program (FMPP) 
and the Local Food Promotion Program (LFPP). FMPP grants fund farmer-
to-consumer direct marketing projects such as farmers markets, 
community-supported agriculture programs, roadside stands, and 
agritourism. LFPP grants fund local and regional food business 
enterprises that serve as intermediaries to process, distribute, 
aggregate, and store locally or regionally produced food products. 
Projects also provide technical assistance and outreach, including 
planning grants for local food businesses. In Fiscal Year 2015, AMS 
awarded approximately $25 million in competitive grants to expand 
marketing through these two programs. A similar amount will be 
available in Fiscal Year 2016.
Local
    As demand for and sales of local food continue to grow--topping 
$11.7 billion in 2014 according to industry estimates--AMS plays a key 
role in helping stakeholders throughout the supply chain tap into 
growing consumer demand for locally-grown food. Secretary Vilsack has 
identified strengthening local and regional food systems as one of the 
four pillars of USDA's work to help revitalize the rural economy and 
create jobs.
    In 2015, AMS created three new online local food directories that 
provide public listings of food hubs, on-farm markets, and community 
supported agriculture (CSA) operations. Similar to the National 
Farmers' Market Directory, which now includes about 8,500 market 
locations, each new directory provides vital information about listed 
enterprises, including a mapped location, operating hours, months of 
operation, the types of products available, the number of producers at 
each market, and the accepted forms of payment. These directories allow 
household shoppers and wholesale food buyers to quickly identify nearby 
suppliers of local foods, while producers and distributors of local 
foods are able to take advantage of emerging opportunities in direct-
to-consumer and wholesale markets.
Organics
    AMS' National Organic Program (NOP) facilitates market access for 
organic agricultural products and conducts compliance and enforcement 
activities that protect the integrity of the organic label to ensure 
consumer confidence. NOP establishes national organic regulations and 
accredits 79 third-party organic certifying agents worldwide. Those 
certifiers oversee an organic industry that experienced 11% growth in 
the U.S. in 2015, with 21,666 certified organic operations (up from 
19,474) and 24% growth around the world, with 31,020 operations (up 
from 25,008).
    To facilitate the international trade of organic products, AMS 
works with the Foreign Agricultural Service and Office of the United 
States Trade Representative to establish equivalency arrangements. Over 
the last 5 years, AMS has established five (Canada, European Union, 
Japan, South Korea, Switzerland) such arrangements that make it easier 
for U.S. organic businesses to access a $65 billion global organic 
market.
    Another achievement worth noting is AMS' launch of the first 
release of the Organic INTEGRITY database at the end of 2015. Developed 
with funding from the 2014 Farm Bill, this database is a major upgrade 
that provides more current information on certified operations, deters 
fraud, increases market and supply chain connections, and supports the 
development of new markets.
GIPSA
    The core mission of GIPSA is to facilitate the marketing of 
livestock, poultry, meat, cereals, oilseeds, and related agricultural 
products, and promote fair and competitive trading practices for the 
overall benefit of consumers and American agriculture. GIPSA plays an 
integral role in ensuring the economic viability of America's farmers 
and livestock producers, and in turn, of rural America. GIPSA 
administers two programs that are very import to American agriculture: 
the Packers and Stockyards Program (P&SP) and the Federal Grain 
Inspection Service (FGIS).
Packers and Stockyards Program
    Under the Packers and Stockyards Act (P&S Act), GIPSA's P&SP 
regulates businesses that market livestock, poultry, and meat. Congress 
passed the P&S Act in 1921 to address serious concerns of unfair and 
deceptive practices in the meatpacking industry. Over the years, 
Congress has amended and supplemented the P&S Act to keep the Act 
relevant to the changing livestock, poultry and meat industries. For 
instance, in 1976, Congress added authority for the Secretary to assess 
civil penalties for violations. In 1987, Congress added financial 
protection for poultry producers, and as recently as 2008, Congress 
added the right of producers growing poultry or swine under contract to 
decline arbitration clauses in the contracts and established the forum 
for resolving disputes.
    Today, the P&S Act promotes fair and competitive marketing in 
livestock, poultry, and wholesale meat for the benefit of American 
agriculture and consumers. By fostering fair competition, the P&SP 
helps assure that meat and meat products are available to consumers at 
fair prices. Fair competition, payment protection, and prohibitions 
against deceptive and fraudulent trade practices in livestock markets 
assure producers that they will receive competitive prices and timely 
payment for livestock.
    By protecting fair-trade practices, financial integrity, and 
competitive markets, GIPSA promotes marketplace fairness for livestock 
producers, buyers, sellers, swine contract growers, and poultry growers 
for the benefit of all market participants and American consumers.
Federal Grain Inspection Service
    FGIS facilitates the marketing of U.S. grain, oilseeds, and related 
agricultural products by providing official U.S. grading standards, as 
well as methods to assess product quality; maintaining the integrity of 
the marketing system by enforcing the United States Grain Standards Act 
(USGSA) and the Agricultural Marketing Act of 1946 (AMA); and 
administration and oversight of America's national grain inspection 
system, a network of third-party Federal, state, and private 
laboratories that provide impartial, user-fee funded official 
inspection and weighing services under the USGSA and the AMA. Grain 
standards established under the USGSA and AMA and maintained by FGIS 
are used to facilitate the marketing of approximately 309 million 
metric tons of grain, rice, and pulses, in domestic and export markets. 
Of the total tonnage volume, approximately 133 million tons were 
exported by way of ships, trucks, rail, and containers, worth 
approximately $41 billion. This amounted to approximately one out of 
every eight rows of corn raised in the United States, one out of every 
two rows of soybeans and two out of every five truckloads of wheat. In 
2015, there were more than 3.4 million inspections by the national 
grain inspection system.
    FGIS is recognized worldwide as the gold standard for grain 
inspection. In FY 2015, FGIS grain inspection accuracy was 96.5 percent 
based on a review of 5,258 samples covering a total of 8,962 quality 
factors. Inspection accuracy is determined by a quality assurance 
review of the original grain inspection and factors that are grain 
characteristics that have been determined to be important to the 
commercial value of the grain. During the first 4 months of Fiscal Year 
2016, FGIS grain inspection accuracy was 97.1% based on a review of 
1,510 samples covering a total of 3,109 factors.
    FGIS facilitates foreign trade by assisting countries with the 
development of standards that are consistent with U.S. grain standards. 
FGIS personnel frequently meet with delegations visiting from other 
countries to brief them on the U.S. grain marketing system and the role 
of FGIS, our national inspection and weighing system, U.S. grain 
standards, the various services offered to our customers under the 
USGSA and AMA, explain the importance of using the same inspection 
methods and procedures at destination, importance of maintaining 
equipment accuracy, and FGIS quality control programs.
    During FY 2015, GIPSA personnel met with 74 teams from 43 nations. 
Additionally, in FY 2015, FGIS inspectors traveled to China and closely 
worked with the Chinese Government on U.S. grain moving into China, as 
well as Columbia and Algeria to conduct workshops on U.S. inspection 
methods for corn, soybeans and wheat. These activities foster better 
understanding of the entire U.S. grain marketing system and enhance 
purchasers' confidence in U.S. grain. In 2015, China purchased 1.85 
billion bushels of soybeans representing 58.3% of all U.S. soybeans 
which shows the importance of maintaining these critical relationships 
with our trading partners.
Conclusion
    In closing, MRP strongly supports the Department of Agriculture's 
key role in growing the rural economy and supporting producers and 
consumers across the nation. As Federal agencies tasked with regulating 
and facilitating the agricultural industry, MRP agencies must perform 
this work at the speed of commerce. To do this, AMS, APHIS, and GIPSA 
must have strong relationships and partnerships with state agencies, 
industry groups, universities, and other Federal agencies, among 
others. Further, we are constantly seeking new opportunities to 
leverage the capabilities of other USDA mission areas to meet the needs 
of producers and consumers.
    Mr. Chairman and Members of this Committee, this concludes my 
statement. Thank you for the opportunity today and I look forward to 
continuing to work with you. At this time, my colleagues and I will be 
glad to answer any questions you may have regarding the MRP mission 
area.

    The Chairman. Well, I thank you, Ed. I appreciate that, and 
I appreciate your service and all those years.
    We will reverse the order, and Mr. LaMalfa would be first.
    Mr. LaMalfa. Thank you again, Mr. Chairman, and, Mr. 
Avalos, Under Secretary, for your appearance here today. And 
congratulations on your decision to go back to beautiful New 
Mexico, where living is good. So I hope you enjoyed your time 
and your service in a difficult place.
    I will just home in on it here with a major issue that 
affects a lot in California as well as consumers across the 
country. Earlier this year, CBS had a 60 Minutes report about 
the pervasiveness of the olive oil and the fraud that is found 
within the olive oil in its labeling, its designation, whether 
it is extra-virgin or even actually 100 percent oil in those 
containers.
    Experts stated that U.S. annual imports of tainted and 
adulterated and fraudulent olive oil is significantly high, 
including blending small quantities of extra-virgin oil with 
large quantities of either old, low-quality oil or other types, 
such as sunflower, and getting away with a label of extra-
virgin for all of that in order to keep the price up for extra-
virgin oil values.
    Of course, it is a major issue for customers, who so many 
of them don't even know what really good oil is like. And it 
has become a pretty strong industry in California now with the 
wonderful oils that are being produced there under an extra-
virgin label. So, obviously, with this mislabeling or 
inaccurate labeling, it hurts our domestic industry and 
producers and also consumers, who might be overpaying for 
fraudulent products when they could be buying good product at 
maybe similar prices.
    California, again, produces about 99 percent of the olive 
oil that is produced in this country and represents less than 
one percent of the total global consumption. So they need a 
little help and a little protection from USDA, who my 
understanding is they have expanded their quality monitoring 
program to include extra-virgin olive oil, but there is still 
no Federal requirement or standard.
    So, as you are aware, the manager's amendment in the farm 
bill directed USDA, among other agencies, to work to remove 
obstacles that are preventing the domestic oil industry from 
reaching its potential. What do you see lately that USDA has 
been doing to a help achieve a solution to protect our domestic 
producers as well as consumers, who would like to believe what 
it is on the label?
    Mr. Avalos. Well, Congressman, I am familiar with the issue 
that you brought up. And I am really glad you brought it up in 
this hearing because I have had growers in California come in 
to see me about this very issue, very concerned about the 
imports that come in and that are maybe misrepresented.
    So, anyway, at USDA it is not all our issue; it is also an 
FDA issue. But we are continuing to have the conversation with 
the California growers. We have had discussion with them about 
a possible marketing order. So, at this time, the discussions 
are ongoing and have nothing else to report as to progress 
made. But we will continue to work on this, because I know how 
important it is to those folks in California.
    Mr. LaMalfa. Do you see a stronger enforcement mechanism 
over fraud on the oil that is imported under false pretense?
    Mr. Avalos. Congressman, to be honest with you, I don't 
know if we have that jurisdiction or not. But if there is 
anything we can do that is within our realm, we will.
    Mr. LaMalfa. All right. Well, please keep my office and 
this Committee abreast of how those conversations are going and 
what we can do to help ensure that olive oil is as it is 
labeled. If people want choices, they want lower-quality 
blends, that is fine, but they need to be able to see what is 
in there. And, well, I think we all recognize that. So thank 
you.
    Mr. Avalos. We will. Yes, sir.
    Mr. LaMalfa. And congratulations, and enjoy New Mexico, 
sir.
    Mr. Avalos. Thank you.
    The Chairman. The gentleman yields back.
    Mr. Rouzer, for 5 minutes.
    Mr. Rouzer. Thank you, Mr. Chairman.
    I want to get some clarification and explore a little more 
on this issue related to the pork trademark. And it is perhaps 
an understatement to say that there has been a little commotion 
about all this. Just last week, the pork industry voted 
unanimously in opposition to USDA's actions related to the pork 
trademark.
    And so I have several questions here to try to get at the 
bottom of this. Explain to me exactly who is conducting the 
review. Is it AMS?
    Mr. Avalos. Congressman, I am going to ask my Administrator 
at AMS to address your questions because she has been working 
on this almost on a daily basis.
    Mr. Rouzer. Very well.
    Ms. Starmer. Thank you, Congressman. Do you want to ask all 
of your questions and then I can respond, or do you want me to 
respond to each?
    Mr. Rouzer. I would like for you to respond to the first 
one first.
    Ms. Starmer. Sure.
    The independent evaluation is being conducted by an 
external entity that was recommended to us. We did consult with 
the National Pork Board in selecting that independent 
evaluator. And they are going to be conducting the valuation of 
the trademarked phrase.
    And then they will supply that information to our office, 
at which point information that has been provided by NPPC as 
well as by the Humane Society will be packaged up with the 
independent evaluation and sent on to the Secretary for a 
decision.
    Mr. Rouzer. So who is paying for that review? Is that AMS?
    Ms. Starmer. The National Pork Board, sir.
    Mr. Rouzer. Was the National Pork Board consulted in terms 
of seeking that outside consultant?
    Ms. Starmer. We did bring the recommendations to the 
National Pork Board and worked closely with them in determining 
which to select, yes.
    Mr. Rouzer. Did they approve that outside consultant?
    Ms. Starmer. They were ultimately responsible for the 
selection of the independent evaluator.
    Mr. Rouzer. So did they vote on that?
    Ms. Starmer. I don't know, sir.
    Mr. Rouzer. What authority would the Pork Board have to end 
the review?
    Ms. Starmer. I know that we have some more detailed 
information coming to you on that, but I do not believe that 
they have authority to end the review.
    The case is between the Humane Society of the United States 
and independent pork producers, brought against USDA for our 
determination to allow the sale of the trademarked phrase to go 
forward. So, under our jurisdiction to oversee financial 
transactions by the board, the claim that was brought by the 
Humane Society was that we erred in our allowing that sale to 
go forward.
    So the industry is not a party to the suit, and, therefore, 
they don't have standing. But USDA has been--we agreed to have 
the independent evaluation conducted. We sought information 
from NPPC and from HSUS, and we will come out with the 
recommendation. The litigation has been stayed pending that 
independent evaluation.
    Mr. Rouzer. Is the contract legal or not legal?
    Ms. Starmer. Which contract are you----
    Mr. Rouzer. The contract between the two entities in terms 
of transferral of the trademark.
    Ms. Starmer. Well, I believe that is the subject of the 
suit that was brought. So that is pending litigation.
    Mr. Rouzer. So they are alleging that it is not legal.
    Ms. Starmer. We can certainly get you details on the 
specific allegations. But they alleged that we should not have 
approved the sale and that the value of the trademark that it 
was overvalued. And so that is why we have agreed to conduct 
this independent evaluation that will provide both USDA and the 
industry with a current-day value for that trademarked phrase.
    Mr. Rouzer. So who is going to make the decision whether to 
breach the contract or maintain the contract? Will that be AMS, 
or will that be the Pork Board?
    Ms. Starmer. Once we get the independent evaluation back, 
we will be issuing a decision that will come through the Office 
of the Secretary. And that decision we have committed to 
issuing that by May 2. And that is going to be informed by our 
independent judgment and the evaluation and the submissions 
that we receive from the industry and from HSUS.
    The litigation itself has been stayed until we come out 
with that recommendation. So, depending on what that 
recommendation says, we will see what happens with the 
litigation process.
    Mr. Rouzer. Thank you, Mr. Chairman.
    The Chairman. The gentleman yields back.
    Mr. Yoho, 5 minutes.
    Mr. Yoho. Me?
    The Chairman. Yep.
    Mr. Yoho. Sorry.
    I have been following that case, and it just, to me, it is 
crazy. If I were to buy a house from Mr. Rouzer and we agree on 
a price and I agree with it and I pay it and then a third party 
comes along and says, ``You paid too much for that,'' and then 
they get a lawsuit that goes into that, it just seems like it 
is meddling in an affair that they have no standing in.
    And do you see this as a frivolous lawsuit that shouldn't 
even be litigated?
    Ms. Starmer. Well, sir, the lawsuit was brought against 
USDA related to our authority and our responsibility under the 
law to approve financial transactions of the National Pork 
Board. And so the suit alleges that we erred in our approval of 
that financial transaction.
    So that is our responsibility. And I believe that after we 
complete the independent evaluation we will be in a good 
position to be able to provide all parties with information on 
the current value of that.
    Mr. Yoho. Any idea what the cost of that litigation is and 
all this before you get a settlement, that it is costing the 
USDA?
    Ms. Starmer. I do not know that, sir.
    Mr. Yoho. In the millions?
    Ms. Starmer. I couldn't say, sir.
    Mr. Yoho. Okay.
    Let's move on to something else that is probably not less 
controversial. It is biotech labeling. We passed that bill here 
in the House, went over to the Senate, and, the way I 
understand, the Senate is going to send it back to us.
    Correct me if I am wrong. With the biotech labeling bill 
that we sent over there, it would be like setting standards 
kind of like they set for gallons of gas or pounds, weights for 
doing commerce. Is that pretty much what we sent and decided 
here, a certain standard at the Federal level that would allow 
each state to designate voluntarily how they wanted to label 
products?
    Secretary Avalos?
    Mr. Avalos. Well, Congressman, first, I just want to 
acknowledge that the House and the Senate have put a 
considerable amount of effort into this topic.
    Mr. Yoho. We sure did.
    Mr. Avalos. I know. And I know it is a very, very important 
issue. And at USDA, in this mission area, we are still ready to 
continue to provide any technical support you might need.
    Now, to try to answer your question, I am going to answer 
it with a statement that Secretary Vilsack has said many, many 
times. He has made it very clear that a patchwork of rules is 
not functional and would not work. So it is an important issue 
that we hope Congress will continue to address.
    Mr. Yoho. Well, again, we were talking about this in the 
last Committee hearing we had, just right before you guys, 
about the marketing strategy. And I made Secretary Vilsack's 
blood pressure go up the last time he was here, not 
intentionally. But we spend all this money in research that we 
fund through the land-grants, and we come up with a product, 
and then it seems like it gets stuck in the marketing chain.
    And there is a lot of misinformation out there. And we were 
talking about is there a marketing program or is there 
authorization for a marketing program that we can tell how a 
GMO is created and how it goes to market and show the peer 
research behind it to answer these questions so that we can 
utilize the research that we have done. And USDA does a 
phenomenal job on this.
    But, with the GMO, when we passed this bill here, we were 
getting hammered in our districts that: How dare you pass 
something like this? And we were trying to set a standard on 
the Federal level so that each state could voluntarily decide 
what to label a GMO.
    Do we have a program that you are aware of, or do you need 
authorization to do a different marketing program? I don't want 
to say you are not doing a marketing program, but a different 
marketing program.
    Mr. Avalos. Congressman, I am going to ask our 
Administrator, Elanor, to respond.
    Ms. Starmer. Thank you, Congressman.
    So, without express authority from Congress, EMS cannot set 
a standard for GMO or non-GMO labels. We can, however, through 
our Process Verified Program, use government auditors to assure 
that a company is meeting its own standard.
    We have done that for one company for a non-GMO claim. And 
so the way that that program works is the company develops its 
own standard, we post that to the website so it is transparent, 
and then we have auditors to ensure that that standard is 
adhered to.
    Mr. Yoho. All right. I appreciate it.
    And before I go, I just wanted to give a shout-out to 
Administrator Shea for all the help you have given us on the 
PAST Act (H.R. 3268, Prevent All Soring Tactics Act of 2015) 
and the clarification and the guidance you have given us, and I 
thank you.
    I yield back.
    The Chairman. The gentleman yields back.
    Mr. Benishek, 5 minutes.
    Mr. Benishek. Thank you, Mr. Chairman.
    Mr. Shea, I have a question that I kind of brought up in 
the last panel. And I appreciate you all being here today. But 
my district has an issue with bovine TB. Some of the producers 
have had positive herds this year, and their experience has 
been difficult. The indemnity fund was overwhelmed with this 
avian flu thing.
    And, apparently, there is a new way of dealing with TB so 
that states are going to be more involved with this. And I am 
happy that states are more involved, but I just have a few 
questions about it.
    There is a concern among the farmers that there is not 
going to be a clear way of negotiating the bureaucracy with 
states, and the Feds, to get the help they need when they have 
to depopulate. Can you kind of go into that a little bit?
    Mr. Shea. Congressman, we are looking at new rules for 
tuberculosis and brucellosis as well to bring the program more 
into modern times. And one of the things we want to do is make 
sure that we are not overpenalizing states when they do have a 
few positive herds.
    Mr. Benishek. Right, right.
    Mr. Shea. In terms of your State of Michigan, in the case 
that happened last year, let me just say right up-front I do 
apologize, and I regret that it took too long to get the 
depopulation funding back to that owner. As you mentioned, we 
simply were overwhelmed last year with too many tuberculosis 
herds between Texas and Michigan, and it took us some time to 
find all the money we needed. And then there was some 
negotiation about the actual price.
    But we will do better the next time. We hope there aren't a 
lot of next times, but we will certainly do better. And we have 
a good relationship with the state. As you know, in Michigan, 
we have a specific problem with TB in wildlife, and 
particularly in that part of Michigan.
    Mr. Benishek. TB what?
    Mr. Shea. TB in wildlife.
    Mr. Benishek. Right, right, right, yes. Well, that was the 
question I had for the last panel, is how are they going to fix 
that. I am not sure of every case, but I know I talked to one 
farmer, in particular, where they weren't sure, their dairy was 
separate from the wildlife, or they kept them inside, and they 
weren't sure of the vector. You know what I mean? And making 
sure of the vector is kind of important for solving the 
problem. And if it is the wildlife, great. But I am not sure 
what the proof is, if they had the same exact strain of TB that 
was found. I don't know exactly the proof situation.
    But I have had two separate herds now in my district that 
had to be depopulated, and it is pretty traumatic for the whole 
family, the whole area. Everybody gets nervous. You know what I 
mean? They don't know what the situation is. So I just want the 
process to be smooth and really worked on to solve this 
problem.
    Please give me your comments for the time I have left.
    Mr. Shea. Well, we will certainly do everything we can to 
make that process smoother, going forward. We will work very 
closely with any affected herds to reach a common agreement on 
the value of a heard before we depopulate it so it doesn't 
stretch out too long.
    But you are right. As long as the disease is in wildlife, 
there is a problem. And, of course, there doesn't necessarily 
have to be direct contact between the wildlife and those dairy 
cows for them to get infected.
    Mr. Benishek. Right, right.
    Mr. Shea. Someone or something could come in contact with 
the deer and spread it into the dairy farm, just as we saw 
avian influenza spread by things and people even though 
initially it came in through wildlife.
    Mr. Benishek. Right. Okay. Well, I appreciate your interest 
in this because it is pretty dramatic when it happens, and 
there is a lot of angst over the whole situation. I just want 
the new process, the new rules to make sure that everything 
works smoothly, because there is a little bit of fear about how 
that is going to work in the future. So I appreciate your 
comments.
    Mr. Shea. Thank you.
    The Chairman. The gentleman yields back.
    Mr. Kelly, 5 minutes.
    Mr. Kelly. I am going to start, and I am going to ask the 
Acting Administrator here, Ms. Starmer? I can't see from here. 
My eyes are not what they used to be.
    Ms. Starmer. Starmer.
    Mr. Kelly. Okay. Thank you, ma'am.
    I am going back to Congressman Yoho from Florida about the 
GMOs. Each state can determine what a GMO is, a genetically 
modified organism. However, it gets a bad rap by the use of 
that name, and if each state can determine the labeling on 
that, how far back do we go?
    I know my grandfather was a farmer, and he would have Angus 
cows, and he would have Hereford cows, and if he bred those 
together, that would be a genetically modified organism, right? 
Because you have two different subspecies which we just called 
them whiteface, where I was from. But you modified that cow.
    You go back to horses. You have recreational K9s that 
people have that are different breeds, like a Labradoodle or 
those type of names. All those things, the grafting of an 
orange plant with some root system which will more naturally 
hold up and keep the root system so it can grow longer and 
sustain the growth. Vegetables, how far back do we allow--it is 
your duty at some point, number one, to market what a GMO is or 
to name it something that applies.
    And number two is to say how far back. Because I doubt that 
there are very many original species left from when this world 
was created. And so anytime that we modify anything, or any 
cross-pollination. Do you understand what I am saying?
    There are a lot of things that a state can say, ``I don't 
want a cow from Mississippi, so I know that in the past they 
have bred Herefords and Angus together and that is a GMO, so we 
are not going to take any beef from Mississippi.'' Or they bred 
Longhorns from Texas with some other breed of cattle, so that 
is a GMO, and so we are no longer going to take beef from the 
State of Texas.
    I think we have to be very careful. And that is part of our 
marketing and your duty to define what a genetically modified 
organism is rather than just using the term where it can apply 
in states. Can you comment to that, please?
    Ms. Starmer. Sure. Thank you, Congressman.
    As I did mention earlier, without statutory authority 
provided by Congress, we can't define GMO or non-GMO through a 
standard. But if Congress provides us with that authority, as 
they did, for example, with the National Organic Program to 
define what organic means, then we would engage in the 
rulemaking process to define that term. And that would go 
through public comments. Then it would fall on FDA and FSIS to 
determine truth in labeling as to how those products were 
labeled to ensure that they conform to the standard.
    So there are a number of different players engaged in this, 
but with statutory authority provided by Congress, we would 
develop a standard through the rulemaking process.
    Mr. Kelly. I understand that. But on a very basic level, 
would you not agree that there are certain things--I don't know 
that we have any pure species anymore in this world, anywhere 
in his world in any type of thing, because nature does that in 
and of itself. And there is a huge perception out there that we 
have scientists that, for the most part, in all these things 
that are being called GMO, are doing these things outside of 
the realm of natural science, that they don't understand it is 
the same things that we did in the 1930s and the 1940s and the 
1950s and the 1880s.
    And is there any way or anything you can do, even if it is 
not defining what a GMO is, just to say what is not a GMO? Or 
is there any timeframe which you can do? Because, otherwise, I 
do think, if a state wanted to, they could actually not allow 
anything or any produce into their state other than what they 
grow in their state.
    Ms. Starmer. At this point, we are limited to auditing 
companies' own standards through our Process Verified Program, 
as I mentioned. With statutory authority, we could define the 
term. And you have touched on the fact that that would be a 
very complicated process that would obviously require and, I am 
sure, elicit a lot of public comment. At this point, though, it 
is FDA and FSIS that are looking at the truth-in-labeling 
question when they look at claims on the labels.
    Mr. Kelly. And just very briefly, how do you ensure the MRP 
is coordinating appropriately with other Federal agencies such 
as FDA and EPA?
    Ms. Starmer. On the GMO issue specifically?
    Mr. Kelly. On any issue.
    Ms. Starmer. Do you want to speak to that, sir?
    Mr. Avalos. At USDA and this mission area, whether it be 
APHIS or AMS, we routinely, regularly coordinate with other 
sister Federal agencies, like FDA, EPA, FSIS within USDA. This 
is ongoing and is part of our responsibility because our work 
overlaps and complements each other.
    Mr. Kelly. Thank you.
    And I yield back, Mr. Chairman.
    The Chairman. The gentleman yields back.
    Mr. Thompson, 5 minutes.
    Mr. Thompson. Thank you, Chairman.
    Under Secretary Avalos, congratulations on your upcoming 
retirement.
    And I wanted to follow through on the biotech labeling 
issue, as well, from the standpoint of the FDA has stated that 
the only reason a label would be mandated is if a new variety, 
the language they use, materially different, is materially 
different from a conventional counterpart.
    Do all applications of genetic engineering technology 
result in material differences and new plant varieties which 
would necessitate a government-mandated warning label?
    Mr. Avalos. Congressman, I don't have an answer for you, 
but I am going to turn to Kevin Shea to help me out a little 
bit.
    Mr. Thompson. Okay. Sure.
    Mr. Shea. Congressman, of course, we in APHIS regulate 
plant biotechnology----
    Mr. Thompson. Right. And that is what I am talking about.
    Mr. Shea. And, well, I think you are getting at a good 
point here. Biotechnology has evolved quite a bit over the last 
30 years, which makes our current regulatory scheme a little 
archaic, frankly. So we are working with FDA and EPA, who are 
our partners in the consolidated framework, to make some 
changes. And we recently published a notice of intent to do an 
environmental impact statement that would make some changes.
    But to your very specific question, certainly there are 
many applications of biotechnology now that don't turn 
something from one species into another. And maybe some of the 
questioning here gets to that point----
    Mr. Thompson. And, yes, you got where I am zeroing in on. 
It is the language where it says that it should only be 
mandated if it is a new variety materially different from a 
conventional counterpart.
    Mr. Shea. That is right. I think that often there is not a 
material difference anymore.
    Mr. Thompson. And I agree with you. And if not, then why 
would USDA propose a government-mandated warning label on all 
new plant varieties derived through biotechnology or genetic 
engineering or whatever you want to call it?
    Mr. Shea. Well, Congressman, if I could say, I don't think 
that anyone at USDA has any intention of proposing a mandatory 
label of any kind. In fact, our role in regulating 
biotechnology is simply to say whether or not a new event, as 
they call it in that world, would indeed cause any plant pest 
or disease. And once we pass that threshold, we are finished. 
We don't think there is any need to have a label to point to 
that.
    Mr. Thompson. Well, I would agree with you, but your boss' 
boss actually has come out with a statement in favor of a 
mandated labeling program. And so maybe it is a 
miscommunication. I hope it is, because I agree with your 
perspective and not what Secretary Vilsack has commented on and 
released.
    So maybe that is something we could go back and get a 
clarification on. Hopefully there is some miscommunication at a 
higher level, because I certainly agree with your perspective 
on that.
    Mr. Shea. Well, maybe I am parsing words a little bit here. 
You used the term warning label. I don't think that Secretary 
Vilsack has ever used the term warning for a label. There is 
obviously some good-faith dispute about whether or not there 
should be a label for consumer awareness purposes, but I don't 
think that is the same as a warning label.
    Mr. Thompson. Well, mandatory labels, what other purpose 
would they be for? I mean, it is a warning label.
    I think that is just something, if you could go back and 
get some clarification, I would appreciate it. Because, like I 
said, I actually respect and agree with your perspective on 
that.
    Administrator Starmer, in the biotech labeling area, is 
participation in the National Organic Program voluntary?
    Ms. Starmer. Absolutely.
    Mr. Thompson. All right. Do food producers and processors 
use the National Organic Program Certification to distinguish 
their product in the marketplace and only take advantage of 
those marketing opportunities?
    Ms. Starmer. They do. Certainly, we have a number of 
entities from the farm to the processor that use the organic 
seal and are certified to be in compliance with the standard.
    Mr. Thompson. Great. I would love to have your perspective 
on this, because we just dealt with the country-of-origin 
labeling, which a lot of people were just confused across the 
country and thought it was a safety issue, when COOL was really 
a marketing issue. And we had to take some measures, obviously, 
after we were found out of compliance by the World Trade 
Organization a couple times.
    Is the organic labeling a safety program, or is it a 
marketing program?
    Ms. Starmer. It is a marketing program, sir. And it is used 
to verify compliance with a standard, with a set of practices 
that organic farmers and supply-chain entities comply with.
    Mr. Thompson. Absolutely. And it has been great for some of 
my farmers. It is a niche. They are able to get a premium for 
folks who want to pay a little more for that brand, which is 
good for farmers and good for consumers who are looking for 
that.
    Thank you so much to all of you.
    Ms. Starmer. Thank you.
    The Chairman. Thank you.
    A couple weeks ago, maybe all of you or some of you 
testified in front of the Agriculture Appropriations hearing 
and were asked about upcoming regulations under the Packers and 
Stockyards Program. And at least the comment that was conveyed 
to us is that you all were not aware of anything coming forward 
yet. Just this last week, Secretary Vilsack had mentioned that 
in a matter of weeks there will be poultry regulations coming 
out.
    Did you all get double-crossed, or how do you square the 
answers to the question within such a short timeframe?
    Mr. Avalos. Mr. Chairman, this process on the GIPSA rule, 
it is ongoing. And right now at USDA, internally, we don't have 
a commitment as to what these rules are going to look like.
    I have been here since 2009, and I remember in 2010 we 
initiated this rulemaking on the GIPSA rule. Then we were 
prohibited from working on certain parts of the GIPSA rule. And 
now this prohibition has been lifted.
    So the Secretary, he asked us to look at the GIPSA rule, 
look at possible modifications, look at possible changes that 
we could do that would be appropriate, still taking into 
perspective the concerns that have been expressed in the past.
    So, Mr. Chairman, right now, we are in the preliminary 
stages, and we are going to do our job because we are required 
to do our job, and we are going to continue some internal 
discussions. We are going to look at all the comments that we 
have received in the past, and we are going to take a very 
well-balanced approach. And at the end of the day, we are going 
to come out with something that hopefully will be acceptable, 
and we are going to try to do our job correctly.
    The Chairman. Okay. Well, I guess what was communicated or 
what was heard was that final rules would be much more quickly 
coming than that. What you have laid out is the right way to 
get at it, deliberatively, taking into consideration all the 
folks that are having conversations. But what was heard from 
the Secretary's comments is that you were a lot further down 
the road than that and that you were prepared to release that 
rule much sooner and in a much more complete fashion that what 
I hear you saying.
    What I just heard you say is the process isn't that far 
along yet and you are still gathering it up. Am I parsing 
things out here, Ed? Am I missing something?
    Mr. Avalos. Mr. Chairman, like I said, we are just working 
on internal discussions. We don't have work plans yet.
    The Chairman. Okay.
    Mr. Avalos. And, we will be working on these.
    Now, it is important to note that, once we get a work plan 
and once we get a rule put together, we still have to go 
through OMB, and that is 90 days or longer.
    And so the earliest that I see having anything for the 
public to look at and comment on will be summer, early fall.
    The Chairman. Okay. So the answer, then, to the Agriculture 
Appropriations guys, was it reflective of--did something happen 
after your testimony there and to where we are now that is 
different? Or were you in that same frame of just we are 
processing this through, and you didn't anticipate anything 
coming to the public's--I am just trying to get squared away 
here. I don't know what the deal was.
    Mr. Avalos. Mr. Chairman, that is correct. We had just 
initiated internal discussions.
    The Chairman. Okay.
    Mr. Avalos. So I couldn't really say, yes, we can move 
forward with this rule. Because at that time when I testified, 
we weren't ready to go forward with the rule.
    The Chairman. Okay. I gotcha.
    I probably should have asked this of the panel before. Is 
there any shred, any scintilla of evidence that biotechnology 
is endangering health in our food system? Anybody aware of any?
    Mr. Shea. We are certainly not aware of any in APHIS, 
although I would say that that is really FDA's purview to 
determine whether any kind of biotechnology application would 
be a human health problem.
    The Chairman. Yes.
    Mr. Shea. But certainly we are not aware of any, and we 
think that biotechnology has been good for everyone.
    The Chairman. Does anybody on the panel see a way forward 
to feed an additional three billion people over the next 35 
years with the same land mass we have in place under production 
without using sound science?
    Mr. Shea. Well, the Secretary has been pretty consistent in 
saying that we need all kinds of agriculture: conventional, 
organic, and biotech, going forward.
    The Chairman. Gotcha. All right.
    Anyone else want a second round?
    Mr. Rouzer.
    Mr. Rouzer. Yes, Mr. Chairman. Mr. Chairman, thank you very 
much. I want to follow up on the GIPSA line of questioning 
there for a second, because I am a little unclear.
    This rule, will it be a proposed rule or will it be a final 
rule? Or do you know?
    Mr. Avalos. Congressman, at this time, like I was 
mentioning earlier, we are just in the preliminary stages. We 
are just having internal discussions. So I can't tell you if we 
are going with a proposed rule, a final rule, because we 
haven't gotten that far down the road yet.
    Mr. Rouzer. Okay. I just wanted clarification on that. I 
would suggest it would be significantly unfair to issue a final 
rule, if you are going to go that route, on that.
    Mr. Avalos. Congressman, I need to point out that this has 
been an ongoing discussion since 2010, and we have many, many, 
many comments that have been made, from both sides, okay? We 
have a lot of comments. And in our internal discussions, we are 
going to look at those comments, and they will dictate how we 
move forward. Because that is part of the process, and that is 
what the stakeholders are asking for, and that is why they 
comment. And that is why the comment period on any rule, 
whether it be a proposed or final, is so critical.
    Mr. Rouzer. Well, you seem to be tipping your hand that you 
would lean towards a final rule. I think that would be a 
mistake.
    Would the changes be based on the 2008 Farm Bill language, 
given there was no mention of this, to my knowledge, in the 
2014 Farm Bill?
    Mr. Avalos. Any modifications or changes that we do 
incorporate are going to take all comments that come in into 
consideration. They are going to take in consideration concerns 
that were expressed by not only Congress but by other 
individuals. It is a very thorough internal evaluation.
    Mr. Rouzer. Moving back to my original question as it 
related to the pork trademark, I am a little confounded by 
this. So the National Pork Board has no standing, yet they are 
being required to pay for it. Does that seem fair to you?
    Ms. Starmer. Well, sir, the National Pork Board is a quasi-
government entity, and the Supreme Court has ruled that their 
speech is government speech. So they administer the check-off 
program. Under our legal authority, we regulate, oversee, and 
approve all of their funding expenditures.
    And as part of the process of determining the transfer of 
the trademarked phrase, they are paying for the independent 
evaluation so that we can find an outcome to this issue.
    Mr. Rouzer. You are trying to have it both ways here. Now 
you are saying that it is a quasi-government, so why don't they 
have standing?
    Ms. Starmer. Well, we will get you and the Committee 
specific responses to these that will be informed by our 
lawyers. And I am not a lawyer. But, the Pork Board is 
represented by the Office of General Counsel at USDA, and so 
they have representation. And OGC has been engaged in the 
ongoing litigation process as well as the current process now 
with the evaluation.
    Mr. Rouzer. The fact of the matter is they either have 
standing or they don't have standing, and if they don't have 
standing, they shouldn't have to pay for it. By gosh, this is 
not the Soviet Union, or I hope that we are not becoming the 
Soviet Union.
    This is why people are outraged all across this country. 
This is a microcosm of why the politics in this country is on 
fire right now. So, anyhow, that is just my comment.
    Mr. Chairman, I yield back my time.
    The Chairman. G.T., any comments?
    Well, thanks to this panel for showing up today. I 
appreciate it. I know you probably didn't have a choice, but I 
appreciate it. I appreciate all the preparation you did in 
advance.
    Ed, congratulations on being able to move back to the 
Mesilla Valley, get direct, immediate access to fresh chiles, 
at least 2 or 3 days fresher than what you get here.
    Mr. Shea, thank you for the hard work you and your team did 
over the last year-plus on your response to the high-path avian 
influenza deal. And we are blessed to not have to repeat that. 
I watched and saw you put in place best practices and future-
looking things to how to be better responsive and how to be 
more adaptive to the process. The folks in Indiana were swamped 
with folks last month when they looked like they might have a 
case. So you guys and your team did good work, and I appreciate 
that.
    All of you represent goodhearted men and women, decent 
people who get up every day, as I have told every panel. You 
just happen to be the ones I get to talk to. And so please 
express our appreciation to them for the work they do day in 
and day out. We may disagree from time to time on some of the 
things that are going on, but please don't ever let that morph 
into something that says that we don't appreciate what you do, 
and that production agriculture is better as a result of your 
team and the folks that you all lead.
    So thank you very much for being here.
    With that, under the rules of the Committee, the record of 
today's hearing will remain open for 10 calendar days to 
receive additional material or supplementary written responses 
from the witnesses to any question posed by a Member.
    This hearing of the Committee on Agriculture is adjourned. 
Thank you.
    [Whereupon, at 1:50 p.m., the Committee was adjourned.]
    [Material submitted for inclusion in the record follows:]
                          Submitted Questions
Response from Hon. Robert Bonnie, Under Secretary, Natural Resources 
        and Environment, U.S. Department of Agriculture
Questions Submitted by Hon. K. Michael Conaway, a Representative in 
        Congress from Texas
    Question 1. Last September, the EPA published Interim 
Recommendations for environmental standards and ecolabels for use in 
Federal procurement. EPA's recommendation for lumber excludes several 
credible standards that are widely used in the United States, including 
the Sustainable Forestry Initiative (SFI) and American Tree Farm System 
(ATFS) standards. Across the United States, more than 82 million acres 
of forestland are certified to either the Sustainable Forestry 
Initiative (SFI) or the American Tree Farm System (ATFS). This 
represents more than 70 percent of all certified forests in the United 
States. These forests provide a renewable timber resource, clean water, 
wildlife habitats, and numerous other public benefits. They also 
support thousands of jobs. I was disappointed to learn that this 
recommendation, along with a prior lumber determination by the 
Department of Energy, was made without consultation with the USDA. USDA 
not only has expertise in forest management and forest products, but 
has publicly stated that SFI and ATFS standards can be used to verify 
sustainability of forest products. I am hopeful that USDA will engage 
with DOE and EPA and work with them to change their current programs to 
recognize all three credible forest certification standards. Hasn't 
USDA, and in particular, the U.S. Forest Service, as the Federal 
experts of sustainable forests, already made a determination regarding 
systems for demonstrating sustainability of forests through the USDA 
BioPreferred program as well as your green building policy? Doesn't 
this policy recognize ATFS, SFI, FSC as well as other approaches that 
meet the ASTM 7612-10? Do you recommend EPA and DOE use this approach?
    Answer. The U.S. Department of Agriculture's (USDA) Natural 
Resources and Environment Office has met with EPA's Office of Chemical 
Safety and Pollution Prevention to discuss the interim recommendations. 
EPA's Standards Executive plans to reach out to the Sustainable 
Forestry Initiative (SFI), the American Tree Farm System (ATFS) and 
other forestry stakeholders to gather additional relevant input to 
inform subsequent revisions of the Recommendations of Specifications, 
Standards and Ecolabels. USDA also plans to provide relevant, existing 
analysis to inform EPA's determination for the lumber/wood category, 
going forward.

    Question 2. Please provide the Committee with the number and status 
of Good Neighbor Master Agreements that have been signed. Please 
include the number of agreements that have been signed since Feb. 2014; 
the number of acres that have been managed under GNA; and the projected 
timber outputs from acres under GNA agreements in 2016.
    Answer. The agency has entered into 23 Good Neighbor Agreements 
with 18 States including Alabama, Arizona, California, Colorado, Idaho, 
Indiana, Michigan, Minnesota, Montana, Tennessee, Texas, New Hampshire, 
Oregon, Pennsylvania, Utah, Vermont, Wisconsin, and Wyoming. Thirteen 
of the 23 agreements are master agreements that establish a framework 
for future project agreements, while ten are project agreements.
    Implementation is just beginning, but more than 14,000 acres of 
management activities are identified to be completed in project 
agreements, including timber harvest and regeneration, insect and 
disease treatment, post-wildfire tree planting, range vegetation 
improvement, prescribed fire, and wildlife habitat improvement. Other 
activities and coordination of personnel resources are included in Good 
Neighbor agreements that are not captured as acres of management.
    Timber harvest projects are currently being implemented by 
Wisconsin Department of Natural Resources (DNR) on the Chequamegon-
Nicolet National Forest and by Minnesota DNR on the Chippewa and 
Superior National Forests. To date, Wisconsin DNR has sold 
approximately 8.2 million board feet (mmbf) of 25 mmbf planned for 
2016. Minnesota DNR is preparing to sell approximately 1 mmbf in 2016.

    Question 3. How many projects have been completed using the 
Categorical Exclusions? How many acres are covered by these projects? 
If you are not doing 3,000 acre projects, can you explain to the 
Committee what prevents you from maximizing the benefits of this 
program?
    Answer. Approximately twelve project decisions have been approved 
utilizing the Categorical Exclusion provisions in the 2014 Agricultural 
Act (Farm Bill). Almost 17,000 acres of pesticide treatment, commercial 
and noncommercial timber sales, and prescribe burns are covered in the 
twelve decisions. There are many factors that determine the size of a 
project. Each project is designed to achieve specific results for the 
objectives and conditions in the area. Through our collaborative 
processes it may be determined that a small project is appropriate and 
sometimes a larger project is appropriate. In many instances a 3,000 
acre project would be considered large and the capability of shrinking 
staff to plan implement projects is often a limiting factor.

    Question 4. How many projects are being done under the 
Environmental Analysis authority that enables the Forest Service to 
analyze action and no action alternatives? How many acres do these 
projects cover?
    Answer. There are eight projects utilizing the environmental 
assessment process under the HFRA, as amended by the farm bill. These 
eight environmental assessments propose approximately 11,000 acres of 
commercial and 1,400 acres of noncommercial timber sales, 4,100 acres 
of prescribe burn, and 150 miles of road work.

    Question 5. Does the Forest Service tend to drop acres from 
management whenever there is a sensitive resource? Does this sometimes 
hinder getting needed management on the forests?
    Answer. Sensitive resources are considered before project 
development begins and in many instances are addressed at the Forest 
Plan level. Projects may be adjusted during development to protect or 
enhance sensitive resources. Conversely projects are also designed to 
avoid and/or minimize effects to sensitive resources. Considering 
sensitive resources in the planning of projects is part of sound 
natural resources management and helps facilitate effective treatments 
on the ground.

    Question 6. Section 8303 of the farm bill allowed the Forest 
Service to expand the use of designation by description and 
prescription. Can you update us on the use of this authority? Has 
guidance been provided to field? Please provide any examples of how it 
has been used.
    Answer. Guidance has been provided to the field on the use and 
application of designation by description (DxD) and designation by 
prescription (DxP). An initial letter of direction was issued to the 
Regional Foresters by the Director of Forest Management. The letter 
signed by the Director of Forest Management and dated May 20, 2015, 
specified how to use and apply the authority and included contract 
provisions for the use of DxD and DxP.
    The National Forests of Texas use DxD and specifically, DxSpacing 
as appropriate and have a long history of use for designating or 
describing timber to be cut and removed by purchasers from National 
Forest System lands in East Texas.
    While DxD has been used for many years in the National Forests of 
Texas, the following examples nationally apply the 2015 direction. The 
Siuslaw National Forest is using DxP to move plantation stands towards 
late successional reserves within Northwest Forest Plan area. DxP is 
used on the Siuslaw NF to develop the skips (clumps) and gaps (small 
openings) in an otherwise uniformly spaced plantation that will allow 
the stand to trend toward late successional reserve structural 
conditions. These desired conditions include large old trees with 
character, variable spacing, and several canopy layers. Because the 
selection of individual trees is less critical than the end result, DxP 
is utilized to somewhat randomize the selection and utilize existing 
structure where it exists more effectively, and for less cost than 
individual tree marking. Four sales have been sold and two more are 
planned for this year using DxP on the Siuslaw National Forest.
    The Okanogan-Wenatchee National Forest in Washington is preparing 
approximately 5,000 acres of thinning with DxD (Swauk Pine project) and 
1,000 acres with DxP (South Summit 2 Project) to create fire-resilient 
stand conditions by removing individual trees, clumps of trees, and 
creating openings (all trees removed). In addition, approximately \1/2\ 
of the acres being annually prepared in the Four Forests Restoration 
Initiative (4FRI) Stewardship Contract in Arizona are using DxD and DxP 
provisions.

    Question 7. Do you anticipate meeting the 3.2 billion board foot 
timber sale goal in 2016 without using personal use firewood in your 
accomplishment totals?
    Answer. The Agency is on a trajectory to meet the 3.2 billion board 
feet timber sold target for 2016. The 3.2 billion board feet includes 
the personal use firewood, which has always been included in the 
Agency's annual accomplishment target.

    Question 8. Please provide the Committee with how you allocated 
funding and volume targets among FS regions.
    Answer.

------------------------------------------------------------------------
                            Forest Products FY
                               2016 Funding        FY 2016 Timber Volume
         Region           Allocation (dollars in   Target (million board
                                thousands)              feet-MMBF)
------------------------------------------------------------------------
                2                   $24,969                     286
                5                   $28,720                     385
                6                   $46,791                     610
                8                   $29,169                     592
                9                   $35,916                     499
               10                   $14,490                      62
------------------------------------------------------------------------


------------------------------------------------------------------------
                           IRR Pilot Regions FY
                               2016 Funding        FY 2016 Timber Volume
         Region              Allocation (NFRR)     Target (million board
                          (dollars in thousands)        feet-MMBF)
------------------------------------------------------------------------
                1                 * $57,986                     360
                3                 * $41,461                     217
                4                 * $47,758                     150
                         -----------------------------------------------
  Total.................         * $147,205                     727
------------------------------------------------------------------------


------------------------------------------------------------------------
                            All Regions FY 2016
                            Funding Allocation     FY 2016 Timber Volume
                                (dollars in        Target (million board
                                thousands)              feet-MMBF)
------------------------------------------------------------------------
             NFTM                  $180,055                   2,434
             NFTM                  $180,055                   2,434
             NFRR                * $147,205                     727
------------------------------------------------------------------------
Note: The Integrated Resource Restoration (IRR) pilot regions--1, 3, and
  4--are allocated funding in the Integrated Resource Restoration (NFRR)
  budget line item. This includes $65,560 in Forest Products funding
  (NFTM) transferred to the NFRR budget line item, as well as Vegetation
  and Watershed Management funding, Wildlife and Fisheries Habitat
  Management funding, and a portion of Legacy Roads and Trails and
  Hazardous Fuels funding. The NFRR budget line item funds a wide
  portfolio of restoration work producing many outputs and outcomes
  including, but not limited to, timber volume.


    Question 9. How much volume do you anticipate will come from the 
Four Forest Restoration Initiative (4FRI)? Are you confident that the 
contractor there will be able to increase acres treated rather than 
just acres awarded?
    Answer. Implementation of the Four Forest Restoration Initiative 
(4FRI) continues to accelerate, with the planned timber sale and 
stewardship offerings in FY16 accounting for approximately 275,000 CCF 
(33,000 acres). Most of these offerings (approximately 70%) will be 
outside of the Phase I Contract to existing timber industry in Northern 
Arizona. 4FRI consists of a wide variety of work across the ponderosa 
pine forests of Northern Arizona, the Phase I Contract held by Good 
Earth Power (GEP) is one just facet of the restoration work being 
accomplished. GEP continues to accelerate its work, and the Agency is 
cautiously optimistic that the ramp-up in restoration capacity 
projected by GEP in the coming year will materialize. By diversifying 
contracting opportunities, the Agency is positioning itself to be 
successful in the implementation of 4FRI regardless of the performance 
of GEP.

    Question 10. On page 13 of the budget justification, the Forest 
Service notes they have treated an average of over 4.8 million acres 
annually to make them ``more resilient to a variety of threats, and 
more capable of delivering benefits to the American people.'' Please 
provide a breakdown for the last 5 years of how many acres:
    Were treated using prescribed fire.

    Answer.

----------------------------------------------------------------------------------------------------------------
           Calendar Year                2011         2012         2013         2014         2015        Total
----------------------------------------------------------------------------------------------------------------
Acres treated using t Fire            1,108,415    1,177,789    1,279,290    1,367,588    1,060,622    5,993,704
----------------------------------------------------------------------------------------------------------------

    Question 10a. Were treated using mechanical thinning.
    Answer.

----------------------------------------------------------------------------------------------------------------
           Calendar Year                2011         2012         2013         2014         2015        Total
----------------------------------------------------------------------------------------------------------------
Acres treated using Mechanical          400,008      279,659      263,786      310,851      235,425    1,489,729
 Thinning
----------------------------------------------------------------------------------------------------------------


    Question 10b. When treated, produced merchantable timber.
    Answer.

----------------------------------------------------------------------------------------------------------------
           Calendar Year                2011         2012         2013         2014         2015        Total
----------------------------------------------------------------------------------------------------------------
Acres treated producing                 195,217      207,912      206,924      192,562      204,420    1,007,035
 merchantable timber
----------------------------------------------------------------------------------------------------------------


    Question 10c. Were treated using prescribed fire during fire 
suppression operations (i.e., backfires, burning of jackpot fuels 
within the fire perimeter, etc.).
    Answer. During suppression operations, use of prescribed fire for 
burnouts, backfires, or other tactical activities is not measured. The 
purpose of using fire during suppression activities is to reduce 
potential fire behavior, by limiting burnable material. The wildland 
fire agencies do not track acres treated by prescribed fire during 
suppression activities.

    Question 10d. Were treated by allowing wildfires to burn within 
prescription or to accomplish resource objectives.
    Answer. The Forest Services does not track this statistic. The USFS 
recognizes that every wildfire, regardless of management strategy or 
objective, has the potential to have burned areas that both enhance and 
diminish resource values, dependent upon burning conditions. The 2009 
Implementation Guidance for Federal Fire Policy provides managers with 
an adaptive policy that allows for every wildfire to be assessed on its 
potential to create positive or negative outcomes.
    Acres burned by wildfires resulting in desirable conditions as 
defined by the Land and Resource Management Plan for a particular 
Forest or Grassland are reported as ``Fire Use'' acres. At present the 
USFS only tracks this for naturally occurring wildfires (lightning), 
and not for human caused fires. The total reported ``Fire Use'' acres 
for the last 5 years is found in the table below.

----------------------------------------------------------------------------------------------------------------
           Calendar Year                2011         2012         2013         2014         2015        Total
----------------------------------------------------------------------------------------------------------------
Wildfire Acres that Met Objectives      418,528      222,272      397,166      276,148      489,207    1,803,322
----------------------------------------------------------------------------------------------------------------


    Question 11. Did any wildfires which were allowed to burn within 
prescription or to accomplish resource objectives in FY2015 
subsequently escape and require additional suppression resources?
    Answer. The Forest Service does not collect information on 
wildfires that would allow us to answer this question. As of 2009, the 
Forest Service manages all wildfires by first establishing a protection 
strategy for those values immediately at risk. The strategies used to 
manage a fire can change as the fire spreads across the landscape, 
weather conditions change, and often vary on a single fire.

    Question 12. The Knutsen-Vandenberg (K-V) Act of June 9, 1930 
allowed the Forest Service to utilize revenue generated from timber 
sales to conduct resource restoration. In the FY 2006 Interior 
Appropriations Bill (P.L. 109-54), Congress amended the K-V Act to 
allow the Forest Service to use K-V to pay for ``watershed restoration, 
wildlife habitat improvement, control of insects, disease and noxious 
weeds, community protection activities, and the maintenance of forest 
roads, within the Forest Service region in which the timber sale 
occurred,'' removing a prior restriction which required that the funds 
be used within the sale boundary. This gave the Forest Service the 
means to expand and expedite its restoration efforts in connection with 
forest management projects utilizing traditional timber sale contracts.
    For each region, how much of the revenue generated from timber 
sales in 2014 and 2015 was available to carry out work under the K-V 
Act?
    Answer.

------------------------------------------------------------------------
                             Fiscal Year 2014        Fiscal Year 2015
         Region                Revenues ($)            Revenues ($)
------------------------------------------------------------------------
    R-1, Northern                 4,056,395               6,138,319
R-2, Rocky Mountain               3,780,760               4,249,664
R-3, Southwestern                   188,616                 283,436
R-4, Intermountain                  419,183                 206,807
R-5, Pacific Southwest            4,752,236               2,767,369
R-6, Pacific Northwest           13,804,251              14,504,640
R-8, Southeastern                15,964,402              20,773,186
     R-9, Eastern                 9,947,601              12,565,697
     R-10, Alaska                    51,325                   8,691
                         -----------------------------------------------
  Total.................         52,964,769              61,497,809
------------------------------------------------------------------------


    Question 12a. How much of this revenue was actually collected and 
used to fund K-V projects?
    Answer. $23,683,398 and $21,416,473 was used to fund CW KV projects 
within the sale area boundary during FY 2014 and FY 2015, respectively.

    Question 12b. How much of the revenue collected was used to fund K-
V projects outside the sale area boundary as authorized by P.L. 109-54?
    Answer. $322,912 and $478,266 was used to fund Regional Projects 
(CWK2) outside the sale area, during FY 2014 and FY 2015, respectively. 
Within the region, the money was collected as authorized by P.L. 109-
54.

    Question 13. Within USDA, the Agriculture Research Service (ARS), 
USDA's intramural science agency, is heavily involved in research to 
identify the causes and vectors of Bighorn diseases. It seems the 
Forest Service has chosen to ignore sound science provided by ARS. For 
instance, there is evidence that there is no single, identifiable 
pathogen responsible for the most common respiratory diseases in 
Bighorn sheep that can clearly be tied to contact with domestic sheep 
on open range. In fact, there are documented Bighorn die-offs in areas 
far removed from any domestic sheep. The recent development of genetic 
markers and isolation of the CD14 genetic marker will allow for marker-
assisted selection for reduced transmission to Bighorn sheep as well as 
highlight very important biological and immunological differences 
between domestic and Bighorn sheep. Yet, the Forest Service continues 
to ignore this evidence and research. To the degree that you continue 
down the path of allotment termination, please tell me how you can make 
land management decisions based on assumptions of disease transmission 
that are not backed up by the science developed by your sister agency, 
the ARS? Why do you choose to ignore that science? Is the Forest 
Service planning further reductions or nonrenewal of grazing allotments 
for domestic sheep? If so, is the Forest Service prepared to offer 
comparable alternative allotments for domestic sheep grazing?
    Answer. The Forest Service acknowledges that the Agriculture 
Research Service (ARS) continues to conduct valuable research on 
diseases affecting domestic livestock and wildlife, specifically 
domestic sheep (DS) and bighorn sheep (BHS), which can inform our 
management and policy decisions. The Forest Service will continue our 
partnership with ARS, and the Animal and Plant Health Inspection 
Service (APHIS) to work together to better understand the evolving 
science and its relevant applications. Numerous peer-reviewed 
scientific publications spanning more than 30 years indicate that BHS 
are highly susceptible to several highly pathogenic disease causing 
agents carried by DS which includes Mycoplasma ovipneumoniae and 
multiple strains of bacteria within the Pasteurella family.\1\ These 
organisms often co-infect both BHS and DS to produce a `poly-microbial 
pneumonia complex'. Although DS carry (and are infected with) these 
pathogenic agents without significant disease manifestation, similar 
infections in BHS often have lethal consequences. There have been 
instances where BHS die-offs have occurred away from domestic sheep 
either related to or unrelated to infectious disease events. However, 
there remains significant published scientific evidence documenting 
that direct contact between the BHS and DS can be profoundly lethal to 
BHS.\2\ The Forest Service will continue to consider all reasonable 
management options available, in partnership with ARS and APHIS who 
provide their expertise in disease transmission, prevention, 
management, and control especially at the livestock-wildlife interface.
---------------------------------------------------------------------------
    \1\ Callan, R.J., T.D. Bunch, G.W. Workman, and R.E. Mock. 1991. 
Development of pneumonia in desert bighorn sheep after exposure to a 
flock of exotic wild and domestic sheep. Journal of the American 
Veterinary Medical Association 198: 1052-1056.
    Cassirer, E.F., L.E. Oldenburg, V.L. Coggins, P. Fowler, K. 
Rudolph, D.L. Hunter, W.J. Foreyt. 1996. Overview and preliminary 
analysis of a bighorn sheep dieoff, Hells Canyon 1995-96. Pages 78-86 
in Proceedings of the Tenth Biennial Symposium Northern Wild Sheep and 
Goat Council.
    Dubay, S., H. Schwantje, J. DeVos, T. McKinney. 2002. Bighorn sheep 
(Ovis canadensis) diseases: a brief literature review and risk 
assessment for translocation. Proceedings of the Biennial Symposium of 
the Northern Wild Sheep and Goat Council 13: 134-152.
    Foreyt, W.J. 1989. Fatal Pasteurella haemolytica pneumonia in 
bighorn sheep after direct contact with clinically normal domestic 
sheep. American Journal of Veterinary Research 50: 341-344.
    Foreyt, W.J., and D.A. Jessup. 1982. Fatal pneumonia of bighorn 
sheep following association with domestic sheep. Journal of Wildlife 
Diseases 18: 163-168.
    Garde, E., S. Kutz, H. Schwantje, A. Veitch, E. Jenkins, and B. 
Elkin. 2005. Examining the risk of disease transmission between wild 
Dall's sheep and mountain goats, and introduced domestic sheep, goats, 
and llamas in the Northwest Territories. The Northwest Territories 
Agricultural Policy Framework and Environment and Natural Resources, 
Government of the Northwest Territories, Canada. 139 pp.
    Goodson, N. J. 1982. Effects of domestic sheep grazing on bighorn 
sheep populations: a review. Proceedings of the Biennial Symposium of 
the Northern Wild Sheep and Goat Council 3: 287-313.
    \2\ [Supra] fn. 1.
---------------------------------------------------------------------------
    As new scientific information becomes available, such as `CD-14' or 
other `genetic markers', the US Forest Service will work closely with 
ARS and APHIS to interpret the relevance and potential application of 
this information. The recent publication describing `CD-14 markers' 
refers to surface markers on white blood cells (WBC) that indicate 
differences in host immune responses to infectious agents.\3\ This 
recent study demonstrated that BHS have a greater number of `CD-14 
markers' on their WBC, compared to DS, causing a severe, lethal immune 
(inflammatory) response to the ``poly-microbial pneumonia complex'' 
pathogens in BHS but causing only a mild response in DS to the same 
infection. This supports the pre-existing published evidence that BHS 
are highly susceptible with fatal consequences to this shared disease 
while DS remain infected but are asymptomatic. The Forest Service 
appreciates these scientific advancements in disease immunology (e.g., 
CD-14 markers) to help inform management decisions.
---------------------------------------------------------------------------
    \3\ Highland, H.A., D.A. Schneider, S.N. White, S.A. Madsen-
Bouterse, D.P. Knowles, and W.C. Davis. 2016. Differences in leukocyte 
differentiation molecule abundances on domestic sheep (Ovis aries) and 
bighorn sheep (Ovis Canadensis) neutorphils identified by flow 
cytometry. Comparative Immunology, Microbiology and Infectious Diseases 
46: 40-46.
---------------------------------------------------------------------------
    The Forest Service will continue to gather the necessary data and 
information that will help to inform our decisions on the potential for 
disease transmission between the BHS and DS species. We will be 
developing and implementing management actions as part of the National 
Environmental Policy Act (NEPA) process for sheep allotment management 
planning and Forest Plan revisions. Where allotments or portions of 
allotments have been identified with unacceptable risk, the Forest 
Service will use best efforts to identify and implement best management 
practices to help mitigate the potential for high-risk of disease 
transmission; or where possible, relocate domestic sheep to other 
allotments, with minimal disruption and displacement of permittees. We 
will continue to use the best scientific information available as it 
relates to disease prevention and control including vaccines, 
inoculations, and genetics that will assist us in the management of 
this issue. Finally, the Forest Service will continue to consult with 
interested stakeholders, including the permittees, prior to decisions 
being made that may adjust management actions on domestic sheep 
allotments.
Question Submitted by Hon. Collin C. Peterson, a Representative in 
        Congress from Minnesota
    Question. In November the President issued a Presidential 
Memorandum on mitigation policy calling for agencies to ``share and 
adopt a common set of their best practices to mitigate for harmful 
impacts to natural resources.'' Do you know why this Memorandum was 
issued and does it change what USDA is already doing? Also, does the 
Memorandum apply to anything beyond conservation and natural resource 
programs?
    Answer. The Presidential Memorandum was developed and issued by the 
White House. USDA understands that the Council on Environmental Quality 
identified an opportunity to increase cooperation and efficiency across 
and among the Federal land management agencies in their permitting of 
infrastructure projects. The Memorandum specifically calls for the 
Forest Service to develop a national mitigation policy and all natural 
resource trustees, which includes the Secretary of Agriculture for 
National Forest System lands to develop guidance for the use of 
mitigation banking as a component of Natural Resource Damage Assessment 
settlements. The Secretary of Agriculture has delegated the trustee 
responsibility to the Chief of the Forest Service. The Forest Service 
had begun to evaluate its mitigation authorities and existing policies 
in response to the Presidential Memorandum. The Forest Service has been 
using mitigation to limit the impacts from its activities and those 
that it authorizes for decades. The Forest Service views the Memorandum 
as providing an opportunity to clarify the Agency's approach to 
mitigation and improve transparency, efficiency and effectiveness.
    USDA interprets the specific requirements of the Memorandum to 
apply to the Forest Service. However, the Memorandum sets expectations 
for all USDA agencies to appropriately mitigate ``harmful effects to 
land, water, wildlife, and other ecological resources (natural 
resources) caused by land- or water-disturbing activities, and the 
ensure that any remaining harmful effects are effectively addressed, 
consistent with existing mission and legal authorities.''
Response from Jason Weller, Chief, Natural Resources Conservation 
        Service, U.S. Department of Agriculture
Questions Submitted by Hon. K. Michael Conaway, a Representative in 
        Congress from Texas
    Question 1. Please provide the Committee with the latest numbers on 
the backlog for wetland determinations for each state in the Prairie 
Pothole region.
    Answer. Certified Wetland Determination Request Backlog (As of Apr. 
1, 2016 for the Prairie Pothole Region of each State):

 
 
 
Iowa.......................................................        598
Minnesota..................................................        240
North Dakota...............................................        737
South Dakota...............................................      1,372
                                                            ------------
  Total....................................................      2,947
 

    Significant progress has been made in reducing the backlog:

   The net backlog of requests that exceeded 11,000 in the 
        spring of 2012 is less than 3,000 today.

   From October 1, 2015 to March 1, 2016 the four states have 
        reduced the backlog by over 1,000.

   NRCS has been using revised State Offsite Methods to 
        complete wetland determinations since July 1, 2015. This is a 
        more efficient method of completing preliminary determinations.

    Question 2. As you may know, many in the Prairie Pothole Region 
have concerns with the off-site wetland determination process. In what 
other ways is NRCS speeding up the process to address the backlog? 
Would NRCS be interested in working with the Committee to better 
leverage third party expertise to help with the backlog?
    Answer. The backlog is being reduced in a more expedient manner 
through:

   Increased efficiencies in the wetland determination process 
        facilitated by the states commitment in establishing dedicated 
        leadership positions for conservation compliance and the use of 
        more efficient systems to track workload.

   Continued dedicated funding to hire temporary staff and 
        redirection of existing resources to service producer requests.

   Continued training efforts to increase and maintain 
        effectiveness and efficiency of staff conducting 
        determinations.

   The procurement or creation of enhanced remote resources 
        including LiDAR and Ecological Site Descriptions tied to hydric 
        soil map units.

    As a result, NRCS has completed over 55,000 determinations (over 
92% of those requested) in the last 5 years resulting in fewer 
producers not having a determination. In addition, we have seen fewer 
requests for determinations as commodity prices and land values have 
fallen in the last 2 years.
    The potential for the use of third parties is affected by the 
provision added in The Farm Security and Rural Investment Act of 2002, 
which stipulated that the authority to determine compliance could not 
be delegated to any private person or entity (16 U.S.C. 3821(e)). So 
while NRCS accepts data provided by third parties, this data must be 
independently evaluated by NRCS in making determinations.

    Question 3. What is the average time in the past couple years for a 
producer to get a final determination in South Dakota, for example, 
including any time spent in the appeals process? Is NRCS required to 
turn over the notes and documents used to make the determination to the 
producer if the producer requests it?
    Answer. The average time for a producer to get a final 
determination has been decreasing, however it is difficult to assess 
due to the different appeal options available to producers and the 
differing extent and complexity of individual determinations. In 2014 
and 2015 the average time for a producer to get a preliminary 
determination conducted in South Dakota is approximately 5 to 9 months. 
If a determination is appealed, then a reconsideration site visit must 
be conducted and the time requirement for this varies greatly based on 
the number of and complexity of sites that need to be inspected and 
discussed. There are further appeal options and ``levels'' available to 
producers including appeals to the Farm Service Agency County 
Committee, which requires another field visit by regulation, or the 
National Appeals Division (NAD). The final option in the administrative 
process is a request for a NAD Director review, which generally takes 
over 1 year. The most current data indicates that the appeal rate in 
South Dakota is approximately five percent. This means that 95 percent 
of the time, producers should have a final determination within 5 to 9 
months.
    When the NRCS transmits a preliminary or final wetland 
determination to the producer, the factual basis is always provided as 
required by the appeals regulation. There may be additional documents 
and field notes in the NRCS case file that are not provided by default, 
but are always available to a producer upon request.

    Question 4. As you know, farmland protection, grassland reserve, 
and the wetland reserve were consolidated into the Agricultural 
Conservation Easement Program during the 2014 Farm Bill. However, the 
Agricultural Land Easement (ALE) component is currently receiving only 
29 percent of the funding and far fewer dollars than under the former 
program. What steps are being taken to ensure a fair and equitable 
allocation of funding between agricultural land easements and wetlands 
reserve easements?
    Answer. The Agricultural Conservation Easement Program (ACEP) 
allocation between the program components is based upon demand. NRCS 
works diligently to allocate program funds to states for the ACEP 
program components to respond to established demand. Over the course of 
the 2008 Farm Bill, the predecessor easement programs (the Farm and 
Ranch Lands Protection Program (FRPP), the Grassland Reserve Program 
(GRP), and the Wetlands Reserve Program (WRP)) received an average of 
$780 million annually, of which approximately 73 percent went to WRP 
and 27 percent went to GRP and FRPP. The current average annual funding 
available under ACEP is approximately $368 million annually, about 47 
percent of the amount available under the predecessor programs. As a 
result, NRCS is able to fund approximately 30 percent of the total ACEP 
applications received each year.
    In FY 2014 and FY 2015, the demand under ACEP, in number of 
applications and dollars requested, was approximately 65-70 percent for 
the Wetlands Reserve Easement (WRE) component and 30-35 percent for the 
Agricultural Land Easement (ALE) component. In FY 2014 and FY 2015, an 
average of 130,000 acres were enrolled in ACEP each year. This includes 
80,000 acres annually of farm and ranch lands protected through new 
ACEP-ALE enrollments, and 50,000 acres annually of wetlands restored 
and protected through new ACEP-WRE enrollments, a split of 61 percent 
ACEP-ALE acres and 39 percent ACEP-WRE acres. The associated funding 
split has averaged approximately 39 percent ACEP-ALE and 61 percent 
ACEP-WRE.
    While the reduced ACEP funding results in reduced enrollments 
across the entire program compared to prior years, the reduction in 
ACEP-WRE enrollments have been disproportionately larger than ACEP-ALE. 
ACEP-ALE has been allocated funds to enroll 60 percent of the historic 
average acres under FRPP/GRP, from 132,000 acres annually under FRPP/
GRP to 80,000 acres under ACEP-ALE; ACEP-WRE has been allocated funds 
to enroll 28 percent of the historic average acres under WRP, from 
177,000 acres per year under WRP to 50,000 acres per year under ACEP-
WRE. Similarly, in FY 2014 and FY 2015, ACEP-ALE received a larger 
relative proportion of funds than historically received under the 
predecessor programs. NRCS will continue to work to balance demand, 
resource needs, and maximizing the benefits of Federal funds invested.

    Question 5. Under the Agricultural Conservation Easement Program 
(ACEP), the two components of the Agricultural Lands Easement (ALE) and 
Wetland Reserve Easements (WRE) are quite different--ALE protects 
working lands while WRE largely retires wetland areas. Unfortunately, 
USDA is prohibiting any Conservation Reserve Program (CRP) contracts, 
including conservation buffers along rivers, lakes and streams, if the 
working land is covered by an agricultural land easement. This is 
creating an unfair situation between farmers with an easement and those 
without an easement. Why is this being done, and how can USDA fix this 
problem?
    Answer. NRCS encourages the implementation of conservation 
practices recommended for resource concerns identified in the 
Agricultural Land Easement Plan. The NRCS ACEP manual provides specific 
policy guidance and identifies CRP, the Environmental Quality 
Incentives Program (EQIP), the Conservation Stewardship Program (CSP), 
the Agricultural Management Assistance (AMA) Program, and the Regional 
Conservation Partnership Program (RCPP) as possible sources of 
financial assistance for implementation of the conservation practices 
identified in the Agricultural Land Easement plan. ACEP does not 
prohibit the use of those conservation programs but the availability of 
the programs are subject to the eligibility requirements, policies, and 
procedures of those programs. NRCS is committed to allowing full 
participation in any available program as consistent with the purposes 
of the ACEP easements. NRCS and FSA have worked cooperatively to update 
and revise to Conservation Reserve Enhancement Program (CREP) policy to 
allow for ALE participation in efforts to provide needed buffers along 
rivers, lakes and streams in important areas.

    Question 6. In the Agricultural Conservation Easement Program 
created in the 2014 Farm Bill, Congress directed that an Agricultural 
Land Easement (ALE) Plan be developed. However, Congress did not say 
that the responsibility be handed over to the partnering entity. For 
most entities, developing the plan would be an area they have little 
expertise in while NRCS does. This could very well be NRCS's 
responsibility. What is NRCS doing to engage their own conservation 
planning expertise to address the need for an ALE plan?
    Answer. The eligible entity has the option under the terms of the 
Agricultural Conservation Easement Program--Agricultural Land Easement 
(ACEP-ALE) cooperative agreement to develop the ALE plan itself or to 
allow NRCS to develop the ALE Plan at NRCS cost. This choice provides 
the full use of the NRCS conservation planning expertise and allows the 
eligible entity to provide input in the development of the ALE plan on 
the easement. For eligible entities who opt to develop the ALE plan on 
their own, NRCS does review those plans and works with the eligible 
entity to ensure the plan addresses program purposes and the resource 
concerns for which the easement is being acquired. Under ACEP-ALE 
policy, the eligible entity, the landowner, and NRCS all approve the 
ALE plan.

    Question 7. The Federal right of enforcement was intended as a 
backstop for the slight risk of an entity failing to enforce a 
conservation easement. The interim rule left an open ended liability 
for entities to repay any and all costs of any Federal enforcement. 
Entities are being forced to sign commitments to have these open ended 
liabilities even if the state or local program correctly enforces 
easement requirements. What is being done to avoid this problem?
    Answer. The ACEP regulation and the easement deed outline the 
circumstances under which the Federal right of enforcement may be 
exercised. This enforcement right is triggered when the entity violates 
its agreed-to responsibilities to enforce the terms of the easement. 
The Federal right of enforcement is not triggered if an entity enforces 
easement requirements.
    All NRCS program participants are required to meet the terms of the 
program requirements. If a participant fails to meet the required terms 
of a program, NRCS has the ability and fiduciary responsibility to 
recover costs. However, unlike the 30 day timeframe given to producers 
and landowners participating in NRCS financial assistance programs, 
ACEP-ALE entities are given 180 days to correct any deficiencies prior 
to a determination by NRCS to take its own action with respect to 
violations. Provided the entity keeps NRCS apprised of the actions the 
entity is taking to resolve any enforcement situation, the Federal 
right of enforcement would not trigger.
    The Federal right of enforcement is a backstop that safeguards the 
Federal investment and protects the natural resources. NRCS must ensure 
that any limitation on the Federal Government's ability to recovery 
costs is consistent with principles of fiduciary responsibility. The 
recovery of costs is authorized specifically by the ACEP-ALE statute 
and ensures that the entity maintains its role as primary title holder 
of the easement under the terms of the ALE agreement.
    NRCS received 17 comments related to the Federal right of 
enforcement during the public comment period associated with the 
February 2015 publication of the Agricultural Conservation Easement 
Program (ACEP) interim rule. Of these comments, a few respondents 
recommended that NRCS modify the right of enforcement language to limit 
or eliminate NRCS' ability to recover any funds in the event that the 
entity breaches its responsibilities under the terms of the ACEP 
Agricultural Land Easement (ALE). NRCS is sensitive to the concern 
expressed by entities concerning potential open-ended liabilities, and 
is reviewing these comments in the development of its ACEP final rule. 
In the meantime, NRCS will continue to work with entities, such as 
State partners, that have specific statutory concerns with respect to 
the right of enforcement language.
Questions Submitted by Hon. Collin C. Peterson, a Representative in 
        Congress from Minnesota
    Question 1. Mr. Bonnie or Chief Weller--Can you explain how the 
NRCS Conservation Client Gateway interacts with FSA and RMA? Is the 
basic data that producers enter, like farm nos., accessible by FSA and 
RMA as well or can a producer pull what they need from their FSA data 
to your portal? How many producers are utilizing this on-line option?
    Answer. The NRCS Conservation Client Gateway (CCG) is a secure, 
web-based application that is designed to be used by NRCS clients to 
request technical assistance, apply for financial assistance 
conservation programs, manage their conservation plans and farm bill 
contracts, and track their conservation payments for completed and 
certified conservation practices from the convenience of their home or 
office.
    As currently implemented, NRCS, FSA, and RMA share a common client 
database, called the Service Center Information Management System 
(SCIMS), which is populated from FSA's Business Partners application. 
In a prior analysis, it was estimated that about 70 percent of the 
active clients contained within SCIMS are common between NRCS and FSA. 
For a given client record, NRCS and FSA share common business entity 
types (e.g., individual, limited liability corporation), demographic 
classifications, and other client information. Although NRCS's CCG uses 
common client data, it does not interact directly with FSA nor RMA 
software applications.
    Secure access to CCG by authorized clients is provided through a 
valid SCIMS client record and a secure login and password provided by 
an eAuthentication Level 2 record. An account with Level 2 access 
allows the client to enter CCG with a higher level of security to 
protect client information.
    Land delineation data are similar, but not identical between NRCS 
and FSA. FSA uses common land units (CLUs), containing farm, tract, and 
field numbers within Farm+ to delineate client land areas mainly for 
the purpose of determining crop acreage for commodity programs. NRCS 
uses planning land units (PLUs), containing farm, tract, and PLU 
numbers within CCG to delineate client planning areas for purpose of 
identifying an area for conservation planning for conservation 
programs. A PLU may be larger than a CLU because PLUs often need to 
contain field borders and corners that are not in crop production. 
While very similar in most instances, they are designed for different 
programmatic purposes.
    FSA clients cannot view their FSA acreage information through the 
NRCS CCG. Clients can import CLUs of their land into CCG through the 
Import/Export Coverage function, which can then be used to delineate 
areas for requests for assistance by NRCS.
    As of April 22, 2016, nearly 1,000 clients are using the NRCS CCG 
to conduct some portion of their business with NRCS. The majority of 
the use is to report completed conservation practices and to request 
certification and payment of farm bill program contract items for these 
completed practices, as well as to upload documents to support 
conservation planning and contract efforts.

    Question 2. Chief Weller--Under the cooperative agreements you have 
with groups like Pheasants Forever, Ducks Unlimited and others, are 
these TA providers given direction on how they're to provide technical 
assistance and act on behalf of NRCS? Are they directed not to advocate 
on anything that may benefit their primary employing organization?
    Answer. When a partner signs a cooperative agreement with NRCS to 
perform technical assistance, the Cooperator/Grantee signs a mandatory 
Assurance form SF-424b (non-construction) or SF-424c (construction). 
The forms contain standard language stating that the partner will 
``establish safeguards to prohibit employees from using their positions 
for a purpose that constitutes or presents the appearance of personal 
or organizational conflict of interest, or personal gain.''
Response from Alexis Taylor, Deputy Under Secretary, Farm and Foreign 
        Agricultural Services, U.S. Department of Agriculture
Questions Submitted by Hon. K. Michael Conaway, a Representative in 
        Congress from Texas
    Question 1. We are hearing from a number of farmers about 
variability of ARC payments on corn between counties. FSA has made it 
clear that they started with NASS data when setting ARC guarantees. 
But, it seems that RMA has the most complete data set for the purpose 
of providing payments to farmers, since it is based on all insured 
acres rather than a survey of acres. Can you explain why USDA did not 
use RMA data as the primary data source in determining ARC payments?
    Answer. Under current policy, the yield for ARC-CO is based on data 
from the National Agricultural Statistics Service (NASS) for the 
county, if available. NASS yield data is based on long-standing 
statistical procedures that best approximate yield for the geographic 
area in question. To publish county or district data, NASS requires a 
minimum of 30 producer respondent reports (with both harvested acreage 
and yield) or that the harvested acres from producer reports with 
positive yields account for a minimum of 25 percent of the current 
year's harvested acreage estimate for that county or crop reporting 
district. NASS's statistical procedures ensure that the resulting data 
published are objective, unbiased, and protect producer information.
    In addition to NASS being the only regularly published county-level 
yield information, it is available several months before comparable RMA 
yields. Given the time it takes to collect and collate information 
through the agents and insurance companies, RMA's data is not available 
until several months after the NASS data This additional time would 
have in turn delayed the availability of the information for the 
university-based producer education tools that were used as a reference 
even for some of the early program-related decisions like whether or 
not to reallocate base acres.

    Question 2. The intent of the Biomass Crop Assistance Program 
(BCAP) is to provide financial assistance to producers to establish 
dedicated energy crops. To date, how many acres of dedicated energy 
crops have been created from the program? How much has been spent 
through BCAP to date?
    Answer. Over 49,000 acres across 74 counties in 11 different 
project areas are currently enrolled, helping over 800 producers with 
the production and establishment of seven different dedicated energy 
crops, including fast growing trees, energy grasses, and oilseed crops.
    Under the Notice of Funding Availability (NOFA) of 2009, with an 
apportioned budget of $535 million, BCAP matching payments totaled a 
delivery in FY 2009 and FY 2010 of 5.9 million dry tons of 
predominantly forestry waste from private forestlands and manufacturing 
wood waste.The BCAP costs include the following below.

 
 
 
BCAP Rental Payments.......................................     $15.67 M
BCAP Cost-Share Payments...................................     $22.43 M
BCAP Matching Payments.....................................    $277.96 M
BCAP Technical Assistance..................................     $162,000
Matching Payments date ranges cover 6 years................           **
 
* Note: obligations for these payments were made in 2011, 2012, and
  2015.
** October 2009 through December 2012; and January 2014-April 2015.
  Project Area payments are 2011 through 2015.

Questions Submitted by Hon. Collin C. Peterson, a Representative in 
        Congress from Minnesota
    Question 1. We've heard a little bit about double ditch 
conservation practices that are very beneficial for runoff and water 
quality. However, this practice takes up significantly more land than 
just single ditch practices, causing farmers to take more land out of 
production. One incentive for some farmers would be to use CRP here, 
but we are hearing that the double ditch practices are not meeting CRP 
standards. Can you explain why this isn't qualifying and are you 
looking into this at all?
    Answer. The double ditch, or two-stage ditch conservation practices 
are not currently an approved practice for CRP. While it may be 
effective in certain applications, the effectiveness has not been 
studied in as much detail as other CRP practices. As the technical 
service provider for CRP, the Natural Resources Conservation Service 
studies the effectiveness of the practices and adopts a national 
standard for the practice. CRP only recognizes new practices that have 
completed this review and approval.

    Question 2. Ms. Taylor--NRCS introduced a web portal that allows 
producers to enter data on their operations. Where do things stand with 
FSA's option to allow on-line web access to producers to enter 
information for their operations and check on other items?
    Answer. FSA currently allows producers who through FSAfarm+ Eauth 
level 2 to electronically access their farm and personal information. 
This includes information such as farmland and cropland information; 
ARC/PLC bases and yield information; CRP and other conservation program 
acreage; HELC and WC (Wetland) status information; field boundaries 
(common land unit); farm imagery; name and address details; membership 
interest and share information; and contact information.
    FSAfarm+ also allows producers to search for and print their farm 
and tract maps; view and print farm details; and view and export their 
common land unit (field boundaries).
    FSA is exploring ways to expand this opportunity to allow on-line 
web access to producers through FSAfarm+ including the NRCS portal that 
is mentioned, along with other customer self-service avenues.

    Question 3. Ms. Taylor or Mr. Dolcini--How many instances did you 
have under the ARC and PLC program where a producer did not complete 
their sign-up by coming back into their local offices a second time? 
What have budget cuts meant for the ability of county offices to keep 
producers up to speed on sign-up deadlines and other reporting 
requirements? Are they still allowed to mail newsletters?
    Answer. Approximately 1.78 million producers signed up for ARC or 
PLC in crop year 2014. Some producers with bases do not enroll in ARC-
PLC for various reasons, including ineligibility such as AGI, or having 
bases that are 10 acres or less. FSA engaged in significant outreach 
and educational efforts with producers by: partnering with universities 
and other stakeholder partners to develop decision tools; participating 
in more than 5,000 events discussing base reallocation, yield updates, 
and the ARC-PLC programs; and mailing over five million postcards and 
other reminders in newsletters or via e-mail through GovDelivery to 
producers informing them of the deadlines for completing work relative 
to the base reallocation, yield update, and the ARC-PLC election.
    Similar to any other program, if producers did not meet the sign up 
deadline due to misaction, misinformation or miscommunication from an 
FSA employee they can contact their county office to seek equitable 
relief. Under this long-standing process, these relief requests then 
can be sent forward by the state FSA office to FSA headquarters for 
review and a decision.

    Question 4. Mr. Dolcini--Do you have wildlife biologists on staff 
who determine cover crop mixes for the CRP? Or do you rely on NRCS? I'm 
hearing concerns that in some states, the recommended seeding rates may 
not be enough to ensure that a successful cover gets established.
    Answer. FSA does not have wildlife biologists on staff to provide 
technical advice. FSA establishes the broad eligibility requirements 
for earning cost share such as requiring a minimum number of species in 
a seeding mix based on the overall goals of the conservation practice. 
By statute, NRCS provides the technical services that support 
implementation of CRP including the specific species to include in the 
seed mixes. The specific seed mixes are established locally within each 
state with the advice of the State Technical Committee, which is 
chaired by NRCS and has various stakeholders as members.

    Question 5. Ms. Taylor and Mr. Dolcini--As you may be aware, we've 
had concerns in several counties in Minnesota where groups of producers 
did not make their third and final trip back to their local FSA offices 
to sign their ARC or PLC contract for the 2014 and 2015 year crops. Do 
FSA computers have the ability to flag when a producer has unsigned 
paperwork or forms that are yet unfilled and alert the county office 
staff when a producer visits the office? As an example, I'm wondering 
why some of the producers in my impacted counties weren't reminded that 
they hadn't signed up for the 2014-2015 program while they were in 
providing their acreage reports.
    Answer. Approximately 1.78 million producers signed up for ARC or 
PLC in crop year 2014. Some producers with bases do not enroll in ARC-
PLC for various reasons, including ineligibility such as AGI, or having 
bases that are 10 acres or less. FSA engaged in significant outreach 
and educational efforts with producers by: partnering with universities 
and other stakeholder partners to develop decision tools; participating 
in more than 5,000 events discussing base reallocation, yield updates, 
and the ARC-PLC programs; and mailing over five million postcards and 
other reminders in newsletters or via e-mail through GovDelivery to 
producers informing them of the deadlines for completing work relative 
to the base reallocation, yield update, and the ARC-PLC election. While 
county offices can track enrollment progress and are encouraged to make 
personal contact such as reminder phone calls when time and resources 
allow, it is important to remember that it is the producer's 
responsibility to enroll in the program.
    The vast majority of farmers completed the process successfully and 
participation was similar to the predecessor direct payment program. 
With that said, having such a complicated and large program there were 
some producers that either decided not to enroll or missed the 
deadline. Similar to any other program, if producers did not meet the 
sign up deadline due to misaction, misinformation or miscommunication 
from an FSA employee they can contact their county office to seek 
equitable relief. Under this long-standing process, these relief 
requests then can be sent forward by the state FSA office to FSA 
headquarters for review and a decision. FSA will take into account the 
pattern of relief requests when considering the cases and pay 
particular attention if there is a cluster in a particular county.
Questions Submitted by Hon. Randy Neugebauer, a Representative in 
        Congress from Texas
    Question 1. Can you tell me how many acres were in the Conservation 
Reserve Program (CRP) in FY 2015, how many acres are currently in the 
program and how many acres you expect to be in the program after this 
year's general sign-up? Additionally, can you explain to me why you 
used your discretion to hold a general sign-up for FY 2017 but not hold 
a general sign-up for FY 2016?
    I have heard from several landowners who feel that, through no 
fault of their own, they are being penalized by the Federal Government 
for having CRP land expire at the end of FY 2015 rather than FY 2016. 
They have shown me examples of seemingly similar land where one piece 
of land is allowed to sign up for CRP while the other is not. Under the 
current CRP general sign-up, how does USDA treat acres that expired in 
the previous year when no general sign-up was available? Are these 
acres evaluated equally with current re-enrollments that may have a 
similar EBI? If not, how does USDA justify treating similar acres 
differently?
    Answer. At the end of FY 2015, there were 24.2 million acres under 
contract, and as of March 2016, enrollment was 23.8 million acres. 
After October 1, 2016, enrollment is not allowed to exceed 24 million 
acres. A general sign-up was held from December 1, 2015, through 
February 26, 2016. The statutory ramp-down of the acreage enrollment 
cap meant there were insufficient acres to conduct a general sign-up in 
both FY 2015 and FY 2016.
    Since there was no general sign-up in FY 2015, a 1 year contract 
extension was offered if the existing contract was less than 15 years. 
By statute, contracts cannot exceed 15 years. Many contracts are only 
10 years and these producers could take advantage of the extension. For 
contracts that were not eligible for the extension, landowners could 
apply for the recent general sign-up or in some cases they could have 
applied to enroll the land in a new Continuous CRP practice if the land 
was eligible or they were willing to improve the habitat.

    Question 2. Last spring and early summer, many producers and ag 
lenders in my area contacted my office with their concerns that the 
time it took to process loan applications through FSA was too long. As 
cotton prices continue to strain many producers' cash flow in my 
district, they are understandably looking more and more at utilizing 
financing offered through FSA. While this increase in workload for FSA 
might have been unexpected last year, going into this year, where 
conditions have not markedly improved, it is my hope that FSA has 
looked ahead in an attempt mitigate these long turnaround times. Can 
you tell me what actions FSA has proactively taken to reduce these 
delays and address the increased workload that is expected in Lubbock 
and the surrounding counties? Last year we faced a situation where many 
producers did not get answers until planting deadlines had passed and I 
hope we can work together to keep this from happening in the coming 
months.
    Answer. The FSA Texas State office, with National Office support, 
has taken a variety of actions to address farm loan delivery issues in 
the Lubbock area. Steps have been taken to address resource 
challenges--several key positions have been filled which includes the 
hiring of a new District Director with extensive farm loan experience. 
In addition, several new loan officers have been hired including three 
in the South Plains area. The Texas State Office also has plans to make 
additional hires consistent with available resources, including a 
District Director-at-Large, to focus on farm loan program operations in 
the region.
    FSA is committed to timely high quality service, and is using a 
multi-pronged approach to improve service in the Lubbock area and 
across the entire state of Texas. Overtime has been made available for 
staff to help cope with the increased workload. The National Office is 
working to provide additional staff resources from other states to help 
in Texas. As of date, the Lubbock and surrounding FSA offices 
(Littlefield, Lamesa and Seminole) have seen a 5.5 day reduction in 
average processing time for loan requests so far in FY 2016.
    FSA National Office will continue to monitor the situation in the 
Lubbock area and work closely with the Texas State Executive Director 
in managing available resources to address the issues in the Lubbock 
region.
Response from Brandon Willis, Administrator, Risk Management Agency, 
        U.S. Department of Agriculture
Question Submitted by Hon. Collin C. Peterson, a Representative in 
        Congress from Minnesota
    Question. Are you looking at any benefit programs for producers who 
are employing certain conservation and soil health practices that are 
making them less risk-adverse to poor yields? Some conservation and 
soil health practices such as cover crops and crop rotations help crops 
perform better in poor weather years and I'm wondering if RMA is taking 
this into account at all. It seems like this could be a place to 
provide some incentives to farmers.
    Answer. For the most yield and revenue insurance plans, producers 
that have above-average yields are charged a lower premium rate, and 
vice-versa. To the extent that a conservation practice improves a 
producer's yield, the current premium rating structure already 
recognizes this in the form of a lower premium rate.
Response from Hon. Edward M. Avalos, Under Secretary, Marketing and 
        Regulatory Programs, U.S. Department of Agriculture
Questions Submitted by Hon. David Rouzer, a Representative in Congress 
        from North Carolina
    Question 1. USDA has recently indicated recently plans to revisit 
proposed GIPSA regulations that for years have been repeatedly 
prohibited by Congress. The Committee remains deeply concerned about 
the scope of these regulations and is troubled by the recent 
announcement they would be revisited.
    What is the anticipated scope of the proposed changes?
    Answer. Appropriations riders restricted USDA from acting on 
multiple sections of GIPSA's proposed rule entitled ``Implementation of 
Regulations Required under Title XI of the Food, Conservation and 
Energy Act of 2008; Conduct in Violation of the Act'' (75 Fed. Reg. 
35,388 (June 22, 2010)). Specifically, the appropriations provisions 
restricted USDA' activity in five substantive areas including: whether 
a finding of harm or likely harm to competition is necessary to 
establish a violation of section 202(a) or (b) of the Packers and 
Stockyards Act; practices or devices that would be considered unfair, 
unjustly discriminatory or deceptive in violation of the Act; criteria 
that the Secretary would consider in determining if undue or 
unreasonable prejudice or disadvantage has occurred in violation of the 
Act; a requirement that packers, swine contractors, and live poultry 
dealers submit a sample copy of each unique marketing arrangement or 
poultry growing arrangement; and a requirement that live poultry 
dealers paying growers pursuant to a tournament system pay all growers 
raising the same type and kind of poultry the same base pay and to rank 
growers in settlement groups with like house types. As of December 18, 
2015, these restrictions no longer apply. GIPSA is working on rules 
covering these areas except the regulation to require sample copies of 
each unique marketing arrangement or poultry growing arrangement.

    Question 2. Does GIPSA intend to issue a new proposed rule 
outlining its changes?
    If the agency contemplates moving forward as final or interim final 
all or part of previous proposals without first re-proposing those 
rules for public comment, does the agency intend to conduct a new 
economic impact assessment of the proposals? Will the agency allow for 
public review and comment a current economic impact assessment prior to 
issuing final regulations, or will the public be denied the opportunity 
to comment on the implications of proposals that have not been publicly 
reviewed as they relate to today's livestock markets?
    Answer. GIPSA will comply with all requirements of the 
Administrative Procedures Act, as well as other applicable statutes and 
Executive Orders 12866 and 13563. The cost and benefits will be 
assessed of any proposed or final rules.

    Question 3. Does GIPSA intend to provide a reasonable comment 
period, with reasonable extensions as appropriate to allow all parties 
to submit meaningful comments? How does the agency define 
``reasonable'' in this context?
    Answer. The Agency intends to provide for public comment as 
appropriate.

    Question 4. GIPSA has issued letters to some poultry integrators 
listing a large number of items that GIPSA believes must be disclosed 
in arbitration provisions in poultry growing contracts. Please identify 
in the regulations as published exactly what items must be disclosed. 
Has or does GIPSA intend to take enforcement action based on contracts 
that meet the terms of the regulation but don't satisfy the expansive 
guidance?
    Answer. Section 210 of the Packers and Stockyards Act requires that 
any livestock or poultry contract that contains a provision requiring 
the use of arbitration contain terms that conspicuously disclose the 
right of the contract producer or grower, prior to entering the 
contract, to decline the requirement to use arbitration to resolve any 
controversy that may arise under the livestock or poultry contract.
    The regulations prescribe the language that must appear on the 
signature page of the contract and establish criteria that may be 
considered to determine whether the grower has sufficient opportunity 
to participate in the arbitration process and to make an informed 
decision regarding whether to accept or decline the mandatory 
arbitration in the contract (9 CFR 201.218). The regulation became 
effective February 7, 2012.
    GIPSA's review of contracts after the regulation became effective 
revealed that many contracts that require arbitration still lack 
sufficient information to enable growers to make an informed decision 
regarding whether to accept or decline the arbitration provision in the 
contract. Rather than issue Notices of Violation to live poultry 
dealers and swine contractors regarding the arbitration provision in 
numerous contracts, the Agency determined that the better course would 
be to provide all known production contractors with further guidance 
regarding the appropriate disclosure.
    The regulatory criteria includes: ``Whether the contract discloses 
sufficient information in bold, conspicuous print describing all the 
costs of arbitration to be paid by the poultry grower, swine production 
contract grower, or livestock producer, and the arbitration process and 
any limitations on legal rights and remedies in such a manner as to 
allow the poultry grower, livestock producer or swine contract 
production grower to make an informed decision on whether to elect 
arbitration for dispute resolution.'' The Agency provided contractors 
with further guidance in the referenced letters as to what information 
GIPSA believes provides sufficient notice to enable the grower to make 
an informed decision about whether to accept or decline the arbitration 
provision in the contract.
    GIPSA has worked with individual companies and with the National 
Chicken Council to resolve questions and concerns about the additional 
guidance and to identify contract language that the Agency believes 
provides sufficient notice to the poultry grower or swine contract 
grower.
    GIPSA's goal is to assure that growers have the information 
necessary to make an informed decision regarding whether to accept or 
decline the arbitration provision in growing contracts. GIPSA is 
working with the industry to bring contracts into compliance rather 
than focusing on enforcement. However, if a packer, swine contractor, 
or live poultry dealer does not work with GIPSA to modify its contracts 
to comply with the statute and regulation, GIPSA will consider 
initiation of enforcement proceedings.

    Question 5. Secretary Vilsack recently suggested that the GIPSA 
rules were being revisited partly out of concern about payments to 
contract growers who suffered losses due to last year's Highly 
Pathogenic Avian Influenza outbreak.
    APHIS already issued an interim final rule in February of this year 
addressing those payments. The rule took effect immediately and changed 
the way indemnity payments were handled. Under the rule, indemnity 
payments for birds lost to HPAI will now be split between the 
integrator and the contract farmer, with the contract farmer being paid 
directly by USDA. In its rulemaking, APHIS explained that the change 
would ``ensure that all contractors are compensated appropriately.'' If 
the indemnification rule fixes any potential inequities in the 
distribution of indemnification payments, why does USDA think that a 
GIPSA regulation is also required?
    Answer. GIPSA does not have a role in providing indemnity payments 
to owners or growers whose birds are destroyed to prevent the spread of 
highly pathogenic avian influenza. Secretary Vilsack commented that the 
Department's experience with avian influenza reminded the Department of 
the importance of the relationship between poultry growers and poultry 
integrators. The Secretary did not intend to imply that GIPSA would be 
involved in the APHIS indemnity program.

    Question 6. The proposed GIPSA rule did not address indemnification 
payments, and GIPSA does not oversee the HPAI indemnification program. 
Why does the Department believe that GIPSA is the appropriate agency to 
address indemnification payments?
    Answer. Please refer to the response to Question 5.

    Question 7. How does GIPSA interpret the Packers and Stockyards Act 
as providing GIPSA the authority to oversee APHIS' indemnification 
payments?
    Answer. Please refer to the response to Question 5.

    Question 8. How would the GIPSA changes interact with the APHIS 
indemnification rule?
    Answer. Please refer to the response to Question 5.
Response from Kevin Shea, Administrator, Animal and Plant Health 
        Inspection Service, U.S. Department of Agriculture
Questions Submitted by Hon. Collin C. Peterson, a Representative in 
        Congress from Minnesota
    Question 1. Many countries have bilateral agreements with the U.S. 
regarding how we will address disease reporting issues as well as how 
those countries will react should a disease outbreak happen. Have you 
had any success, specifically with HPAI, but with other diseases as 
well in getting countries to agree to modernizing how they treat an 
outbreak for example through regional ban? Furthermore, how can we in 
Congress help you move these bilateral agreements along--it seems 
countries move a little faster through this process than through OIE's 
system.
    Answer. APHIS, consistent with international obligations, has long 
promoted the concept of regionalization with our trading partners so 
that we can limit the number of producers affected by trade 
restrictions and to help us reopen international markets to U.S. 
products as soon as possible after a disease outbreak. We have had some 
success with this approach. With HPAI, for example, the Agency's 
previous legwork in emphasizing the importance of a regionalized 
approach paid off. When the outbreak began, while some countries 
curtailed all imports of U.S. poultry, most of our trading partners 
(those who accounted for about 70 percent of the total value of poultry 
exports in 2014) limited trading bans to affected states or counties, 
preserving export markets for the majority of the country. After the 
outbreak, the Secretary and other USDA and APHIS officials spoke 
regularly with trading partners, emphasizing the continued importance 
of regionalization and urging them to re-open markets as quickly as 
possible. We remain in regular communication with our trading partners 
to try to reopen any remaining markets and to encourage them to 
regionalize in the event of future HPAI or other animal disease 
outbreaks. We have also modeled this approach for other countries; when 
they have had disease outbreaks, we have looked to regionalize our 
response to encourage our trading partners to do the same should 
disease strike here. We appreciate Congress' support of our efforts.

    Question 2. One of the most important missions that APHIS has is to 
protect U.S. agriculture from invasive pests and diseases. Some of my 
farmers have expressed concerns about a proposed rule that would 
expedite access to our market for Polish apples. A full pest and 
disease risk assessment has never been conducted on Poland as is 
routine with such requests. This concerns me as I fear granting access 
without the necessary risk assessment could result in the introduction 
of foreign pests or diseases. We have seen the devastating impact of 
the brown marmorated stink bug, Asian long horned beetle and emerald 
ash borer to name a few. What makes this even more perplexing for my 
constituents is that the EU has virtually shut out our industry from 
exporting to their markets due to Maximum Residue Limit (MRL) standards 
that seem to follow the precautionary principal rather than sound 
science. Can you please explain the reasoning behind this approach?
    Answer. APHIS has rigorous systems in place, codified through the 
Code of Federal Regulations, based on sound science and implemented by 
experts in risk management to protect U.S. agriculture from invasive 
pests and diseases. We only make decisions to allow imports when the 
risk assessment process determines that there are sufficient protective 
safeguards in place.
    APHIS performs pest risk assessments for all commodities requiring 
market access into the United States. The first step in this process is 
to develop a list of potential pests that pose a risk to agriculture 
and that could be transferred with the commodity. If the pests 
identified during this stage of the pest risk assessment are well known 
and ones for which we have mitigations in place, APHIS does not prepare 
a Pest Risk Analysis (PRA) document. APHIS uses PRAs in cases where the 
Agency needs to inform the exporting country of requirements for market 
access due to new pests or mitigations which are not already in 
practice in that country.
    On September 29, 2014, the European Commission asked that Poland be 
included in a market access request for apples and pears, along with 
several other EU countries. Our decision to include Poland in this risk 
assessment was based on our evaluation of the technical information 
they submitted, risk of the potential pathways for pests, and risk 
reducing mitigations. In response to their request for access, we 
developed a pest list identifying all of the pests of concerns for the 
countries wishing to export, and also prepared and published a risk 
management document to determine what phytosanitary measures should be 
applied to each of these pest risks.
    When APHIS added Poland to the EU market access request, APHIS 
determined that Poland did not add new pests or mitigations beyond 
those of the other EU countries. Therefore, the Agency can develop a 
risk management document using existing information from the pest risk 
assessment without producing a full Pest Risk Analysis document.
    As APHIS has developed the rule to allow market access, we have 
sought public input on the process. We published the pest list for 
comment on two separate occasions--from August 2014 to October 2014, 
and again from December 2014 to January 2015--after Poland asked to be 
included in the market access request. APHIS sent the pest list to over 
78,000 stakeholders.
    We published a proposed rule in the Federal Register on January 20, 
2016, with a 60 day comment period. We extended the comment period an 
additional 45 days at the request of stakeholders. The proposed rule is 
based on a systems approach, which is a concept that employs multiple 
mitigation steps and layers of protection to ensure that the exports 
can be shipped safely. APHIS will not publish a final rule unless the 
Agency is comfortable that imports of apples from Poland and the other 
EU countries can be done so safely, based upon the best available 
science.


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