    [Senate Hearing 115-602]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 115-602

                              NOMINATION HEARING:
                         GLEN SMITH, TO BE A MEMBER OF
                     THE FARM CREDIT ADMINISTRATION BOARD,
                             FARM CREDIT UNION, AND
                         STEPHEN ALEXANDER VADEN, TO BE
                               GENERAL COUNSEL OF
                         THE DEPARTMENT OF AGRICULTURE

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

                                    HEARING

                                   BEFORE THE

                           COMMITTEE ON AGRICULTURE,
                            NUTRITION, AND FORESTRY

                              UNITED STATES SENATE

                         ONE HUNDRED FIFTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                NOVEMBER 9, 2017

                                   __________

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

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

           Available via the World Wide Web: http://www.govinfo.gov/

                                   __________

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               COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

                         PAT ROBERTS, Kansas, Chairman

    THAD COCHRAN, Mississippi            DEBBIE STABENOW, Michigan
    MITCH McCONNELL, Kentucky            PATRICK J. LEAHY, Vermont
    JOHN BOOZMAN, Arkansas               SHERROD BROWN, Ohio
    JOHN HOEVEN, North Dakota            AMY KLOBUCHAR, Minnesota
    JONI ERNST, Iowa                     MICHAEL BENNET, Colorado
    CHARLES GRASSLEY, Iowa               KIRSTEN GILLIBRAND, New York
    JOHN THUNE, South Dakota             JOE DONNELLY, Indiana
    STEVE DAINES, Montana                HEIDI HEITKAMP, North Dakota
    DAVID PERDUE, Georgia                ROBERT P. CASEY, Jr., Pennsylvania
    LUTHER STRANGE, Alabama              CHRIS VAN HOLLEN, Maryland

                 James A. Glueck, Jr., Majority Staff Director

                    DaNita M. Murray, Majority Chief Counsel

                        Jessica L. Williams, Chief Clerk

                   Joseph A. Shultz, Minority Staff Director

                   Mary Beth Schultz, Minority Chief Counsel

                                      (ii)

                                C O N T E N T S

                                  ----------
                                                                       Page

    Hearing(s):

    Nomination Hearing: Glen Smith, to be a Member of the Farm Credit
      Administration Board, Farm Credit Union, and Stephen Alexander
      Vaden, to be General Counsel of the Department of Agriculture..     1

                                  ----------

                           Thursday, November 9, 2017
                        STATEMENTS PRESENTED BY SENATORS

    Boozman, Hon. John, U.S. Senator from the State of Arkansas......     1
    Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan...     2
    Alexander, Hon. Lamar, U.S. Senator from the State of Tennessee..     5
    Corker, Hon. Bob, U.S. Senator from the State of Tennessee.......     6

                                   Witnesses

    Smith, Glen R., of Iowa, to be a Member of the Farm Credit
      Administration Board, Farm Credit Association..................     7
    Vaden, Stephen Alexander, of Tennessee, to be General Counsel of
      the Department of Agriculture..................................     8
                                  ----------

                                    APPENDIX

    Prepared Statements:
        Smith, Glen R................................................    24
        Vaden, Stephen Alexander.....................................    26
    Document(s) Submitted for the Record:
        5-day letter, Committee questionnaire and Office of
          Government Ethics Executive Branch Personnel Public
          Financial Disclosure Report filed by Glen R. Smith......... 30-54
        5-day letter, Committee questionnaire and Office of
          Government Ethics Executive Branch Personnel Public
          Financial Disclosure Report filed by Stephen Alexander
          Vaden...................................................... 55-95
    Question and Answer:
    Smith, Glen R.
        Written response to questions from Hon. Pat Roberts..........    98
        Written response to questions from Hon. Debbie Stabenow......    99
        Written response to questions from Hon. Amy Klobuchar........   102
    Vaden, Stephen Alexander:
        Written response to questions from Hon. Pat Roberts..........   104
        Written response to questions from Hon. Debbie Stabenow......   106
        Written response to questions from Hon. Patrick J. Leahy.....   122
        Written response to questions from Hon. Sherrod Brown........   125
        Written response to questions from Hon. Michael Bennet.......   129
        Written response to questions from Hon. Chris Van Hollen.....   130

                              NOMINATION HEARING:
                         GLEN SMITH, TO BE A MEMBER OF
                     THE FARM CREDIT ADMINISTRATION BOARD,
                             FARM CREDIT UNION, AND
                         STEPHEN ALEXANDER VADEN, TO BE
                              GENERAL COUNSEL OF
                         THE DEPARTMENT OF AGRICULTURE

                                  ----------

                           Thursday, November 9, 2017

                                  United States Senate,
             Committee on Agriculture, Nutrition, and Forestry,
                                                         Washington, DC
        The Committee met, pursuant to notice, at 9:33 a.m., in
    Room 328A, Russell Senate Office Building, Senator John
    Boozman, presiding.
        Present or submitting a statement: Senators Boozman,
    Hoeven, Ernst, Grassley, Thune, Daines, Perdue, Stabenow,
    Brown, Klobuchar, Bennet, Gillibrand, Donnelly, Heitkamp,
    Casey, and Van Hollen.

    STATEMENT OF HON. JOHN BOOZMAN, U.S. SENATOR FROM THE STATE OF
                                ARKANSAS

        Senator Boozman. I call this hearing of the Senate
    Agriculture, Nutrition, and Forestry Committee to order.
    Chairman Roberts has had a--just a routine outpatient procedure
    and as a result of that I am chairing today and offering a
    statement that I am about to present in his stead. He will
    return to the Senate on Monday.
        We are here today to review the nominations of the
    individuals before us today, Glen Smith, to be a Board member
    of the Farm Credit Administration, and Mr. Stephen Vaden for
    the position of General Counsel of the Department of
    Agriculture.
        For the last few months, this Committee has been reviewing
    and approving nominations for the agencies under its
    jurisdiction in order to help provide them with political
    leadership. It is crucial to have decision-makers tending to
    the important mission areas at the Department of Agriculture,
    the CFTC, and the Farm Credit Administration.
        Today we have an opportunity to review the nominations of
    two distinguished individuals, one to head USDA's Office of
    General Counsel, and the other to serve on the Farm Credit
    Administration Board, which is tasked with ensuring the safety
    and soundness of financial institutions comprising the Farm
    Credit System. Legal and financial issues are not only touching
    our stakeholders every day, but the people who benefit from the
    hard work of our farmers and ranchers, the consumers.
        We have talked about the challenging times farmers,
    ranchers, and their families are facing in rural America. Those
    challenges come not only from what Mother Nature throws at them
    but the regulations, the rules, and costly burdens placed upon
    the agriculture and forestry sector, including numerous and
    sometimes frivolous lawsuits. The FCA Board will also be faced
    with potential decisions regarding regulatory tools meant to
    enable the lending system to responsibly support producers
    during times such as these.
        During these uncertain times, we need these nominees to
    prioritize farmers and ranchers as they review legal questions
    or the ins and outs of how our Farm Credit System is
    functioning. We have two very qualified nominees before us
    today, and I am happy that the Committee has the opportunity to
    examine their credentials and experience as we endeavor to get
    them working in their new roles as soon as possible.
        Our first witness today is Mr. Glen Smith, who was
    nominated to serve as a member of the Farm Credit
    Administration. As noted, Mr. Smith is a native of Atlantic,
    Iowa, and a graduate of Iowa State University. He is President
    and Co-Owner of Smith Land Service, a company which specializes
    in farm management, land appraisal, and farm and brokerage
    services. Mr. Smith also owns and serves as President of Smith
    Generation Farms, Inc., a family farm operation that
    encompasses about 2,000 acres in western Iowa.
        Our next witness, Mr. Stephen Vaden, the President's
    nominee to serve as the Department of Agriculture's General
    Counsel, has a B.A. from Vanderbilt University and a J.D. from
    Yale Law School. He served as law clerk for Julia Smith Gibbons
    of the United States Court of Appeals for the Sixth Circuit,
    and for Samuel H. Mays, Jr., of the United States District
    Court for the Western District of Tennessee.
        Prior to his experience at USDA, he has practiced law at
    the law firms of Patton Boggs and Jones Day, where he gained
    significant experience in government regulations law,
    litigation, administrative law, and appellate work. He is
    licensed to practice law in Tennessee and the District of
    Columbia. Stephen has been serving in the Office of General
    Counsel in various way, acting in that capacity for the last
    few months.
        It is the Chairman's hope that the Committee consider and
    approve your nominations as quickly as possible so we can send
    them to the full Senate for consideration.
        I look forward to your testimony and I now turn to my
    colleague, Senator Stabenow, for opening remarks.

    STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR FROM THE STATE
                              OF MICHIGAN

        Senator Stabenow. Well, thank you very much, Mister Acting
    Chairman, and it is always great to work with you. We worked
    together on forestry and paper issues, along with other issues
    that relate to the Agriculture Committee, and I know that
    Senator Roberts will be back in full form next week, so we are
    looking forward to that.
        I am pleased to be here today to consider the final two
    nominees that we currently have pending before our Committee,
    and welcome to our two distinguished colleagues, who I know are
    going to be involved in introductions as well.
        Mr. Vaden and Mr. Smith, congratulations to you and welcome
    to your families today. We are glad to have them here as well.
        Considering presidential nominations is a key
    responsibility of the Senate and one that this Committee takes
    very seriously. This Committee has worked hard to move nine
    USDA and CFTC nominees this year in an efficient and bipartisan
    manner. I am glad to see two more nominees before us today.
        Mr. Vaden, being the top lawyer at one of the largest
    Federal departments is a very important job. If confirmed as
    General Counsel, your work will touch every corner of the USDA,
    from advising the Secretary to enforcing civil rights and
    workplace protections for nearly 100,000 employees across the
    department. You will oversee the implementation of rules that
    protect our farmers and our families. Additionally, it will be
    up to you to ensure that USDA's own rulemaking is fair and
    transparent.
        Mr. Vaden, you have been a senior leader at the USDA since
    Inauguration Day. Today I look forward to learning more about
    the role that you have played in the last 10 months. I also
    have a few questions about your previous work as an associate
    at a law firm, handling voting access cases, which I hope you
    can address today. Overall, I am interested in hearing about
    your experience, qualifications, and vision for this very
    important position.
        Mr. Smith, while we have considered several USDA nominees
    this Congress, you are the first nominee before us for the Farm
    Credit Administration. Throughout this year I have underscored
    the importance of having qualified, dedicated leaders to serve
    our farmers and ranchers across the government and the Farm
    Credit Administration is no exception.
        The Farm Credit System ensures that rural communities and
    agricultural producers of all types and sizes have reliable
    access to credit. This is especially pressing given the recent
    slowdown in the farm economy and devastating natural disasters,
    as you and I have had a chance to talk about.
        We also know that new and beginning farmers face unique
    challenges in accessing capital as they look to start a career
    on the farm. In my home state of Michigan, Greenstone Farm
    Credit provides more than $6 billion in loans to producers,
    including more than 17,000 small, new, or beginning farmers,
    including our veterans. Now more than ever, it is critical that
    our farmers and rural communities have a dependable source of
    credit they can count on.
        I am very proud of how this Committee has worked together
    to consider qualified leaders as quickly as possible. These
    gentlemen are the last nominees pending before our Committee.
    In order for us to continue to fill vacant leadership
    positions, we need the administration to nominate qualified
    candidates to come before us. As of now, we are still waiting
    to receive nominees for almost half of the Senate-confirmed
    positions at the USDA. I urge the Trump Administration to
    nominate experienced and qualified people for these roles as
    soon as possible, so we can ensure the department is running at
    100 percent. Our farmers and ranchers in rural communities
    deserve no less, and I look forward to working with all the
    members in the Committee to make sure that happens.
        Thank you.
        Chairman Boozman. Thank you, Senator. As is our tradition
    at the Agriculture Committee, we like to recognize the family
    and the friends of the nominees who have gathered today. Please
    stand to be recognized.
        Very good.
        [Applause.]
        Senator Boozman. We do appreciate you being here. These
    things are certainly family affairs.
        It is also a privilege to welcome two distinguished members
    of the Tennessee delegation to the Committee, Senator Alexander
    and Representative David Kustoff, and Senator Corker. They are
    here to support their friend and colleague, Stephen Vaden.
    Thank you all for joining us at this important hearing.
        I now turn to Senator Ernst to introduce our first nominee,
    Glen Smith from Iowa.
        Senator Ernst. Thank you, Mr. Chair. It is my pleasure
    today to introduce Glen Smith. Glen Smith is President of Smith
    Land Service, a company he founded in 1982. The company
    specializes in farm management, land appraisal, and farmland
    brokerage services, working in about 30 of Iowa's counties.
    Glen also owns and serves as President of Smith Generation
    Farms, Inc., a family farm operation that encompasses about
    2,000 acres of corn and soybeans in western Iowa.
        Glen was raised on a diversified crop and livestock farm
    near Atlantic, Iowa, which is just down the road from my home
    in Red Oak, so thank you very much, Glen. When he graduated
    from Iowa State University, which is also my alma mater, in
    1979, with a B.S. in agricultural business, he went to work for
    Doane Agricultural Services as state manager of their real
    estate division.
        Glen and his wife Fauzan have four grown children and three
    grandchildren. Welcome to the Committee, Glen. We are glad to
    have you here, and welcome to your family as well. Thank you
    very much.
        Senator Boozman. Senator Grassley.
        Senator Grassley. I associate myself with the remarks of
    Senator Ernst and also add that there are good people coming
    out of Atlantic besides Mr. Smith. I had a press secretary of
    15 years, Beth Pellet, and Nancy Pellet, her mother, had a
    position similar to Mr.--or the same as Mr. Smith's a few years
    ago in a previous Republican administration.
        So I said I associate myself with the comments that are
    made by my colleague. I have known Glen for several years and
    know that he would do an outstanding job for farmers and
    ranchers at the Farm Credit Administration. He has worked in
    agriculture industry his whole career and will bring his
    Atlantic, Iowa, common sense and leadership to this Board. I
    look forward to working with him when he is confirmed, and we
    welcome you to the Committee, and I am going to be very rude
    because I have got to chair the Judiciary Committee in 12
    minutes, so I will be leaving.
        Senator Boozman. Thank you, Senator Grassley.
        Senator Alexander, it is an honor to have you with us
    today. Thank you for taking the time to introduce Mr. Vaden.

    STATEMENT OF HON. LAMAR ALEXANDER, U.S. SENATOR FROM THE STATE
                              OF TENNESSEE

        Senator Alexander. Thank you, Mr. Chairman, and thanks for
    allowing me to come. First, I want to thank the Committee for
    supporting the Tennessee Wilderness Act this morning. Senator
    Corker and I have introduced that in five separate Congresses.
    This is the fifth one. I see Senator Stabenow smiling. She has
    helped us with that before. The legislation would preserve
    20,000 acres of Cherokee National Forest as wilderness. We hear
    about it from many, many Tennesseans.
        I wish to submit a statement on this legislation for the
    Committee record and express my hope that the Congress can
    enact on it while Senator Corker is still a member of the
    United State Senate, which means this year.
        Senator Alexander. Second, attending these always reminds
    me of the time, several years ago, when I came before a
    confirmation hearing and the Senator from Ohio's turn came and
    he looked at me and said, ``Governor Alexander, I have heard
    some very disturbing things about you, but I do not think I
    will bring them up now.'' Senator Kassebaum from Kansas looked
    over and said, ``Well, Howard, I think you just did.''
        I do not think any of that will happen to the two of you
    today because of your distinguished records, and I know the
    members of the Committee well.
        I am here to introduce Stephen Vaden. I am proud to do
    that. You mentioned his background, Mr. Chairman, so I will not
    go into extensive detail. He grew up on a family farm in Union
    City, Tennessee. His father was a farmer so he has hands-on
    experience for this job. He attended Vanderbilt University and
    Yale Law School, so he has some academic credentials for the
    job of legal counsel, which are strong. He has had two strong
    mentors, Julia Gibbons, a Sixth Circuit Court of Appeals member
    who was once my counsel when I was governor of Tennessee, and
    Hardy Mays of U.S. District Court for the Western District of
    Tennessee, and he has practiced law with two distinguished
    firms in Washington.
        So based on his hands-on experience, his strong academic
    credentials, his mentorships, his practice of law, and the time
    he has had here the last few months, he is very well qualified.
    Also, he is strongly supported by his Congressman, David
    Kustoff of West Tennessee, who is here today, and we are
    delighted to have him. The Tennessee Farm Bureau President says
    that Stephen ``has a passion for agriculture that cannot be
    taught but that is necessary in the role of General Counsel.''
        Congressman Kustoff said this year, ``I have had the
    pleasure of working with Stephen. I cannot think of anyone
    better equipped to champion our agriculture industries in West
    Tennessee and across the country.'' Secretary Perdue said,
    ``Stephen has a firm grasp of the legal issues facing American
    agriculture and, more importantly, understands the breadth and
    complexity of the regulatory burden placed upon our
    producers.'' He finished by saying, ``Farmers, ranchers,
    foresters, and producers will be well served by his counsel.''
        So I am delighted to strongly recommend Stephen to this
    Committee. I urge the Committee members to support his
    nomination. I hope he can be quickly considered by the full
    Senate.
        Thank you for your time.
        Senator Boozman. Thank you, Senator Alexander, and thank
    you, Congressman Kustoff, for being here to show your support.
    We are also honored to have Senator Corker here.

     STATEMENT OF HON. BOB CORKER, U.S. SENATOR FROM THE STATE OF
                               TENNESSEE

        Senator Corker. Mr. Chairman and Ranking Member Stabenow,
    thank you so much for letting me be here with Lamar, my good
    friend, and David Kustoff, my friend, to support this
    outstanding nominee. I want to also thank you for considering
    the Wilderness Bill this morning. It is something that I think
    matters greatly to our country, and we thank you for that.
        I want to also thank you. I have never been before the Ag
    Committee. I have been here 10 years and 10 months, and so my
    Senate bucket list is now narrowing, so thank you so much.
        [Laughter.]
        Senator Boozman. We are going to have you back.
        Senator Corker. Yes, thanks. I am pleased to be here with
    you today to introduce Stephen Vaden, who has been nominated to
    serve as General Counsel to the Department of Agriculture. I
    would like to extend a warm welcome to Stephen and those here
    supporting him, and I am sure he will introduce them shortly.
        He is a native of West Tennessee. Stephen attended
    Vanderbilt University as an undergraduate and obtained his law
    degree from Yale University. After serving as a clerk on the
    U.S. District Court of the Western District of Tennessee and
    the U.S. Court of Appeals for the Sixth Circuit, Stephen went
    on to practice law at Patton Boggs, most recently at Jones Day.
    At both firms, his practice centered on litigation, election
    law, and administrative law.
        This is pretty amazing. When not in Washington, Stephen
    returns home to Union City, Tennessee--it is very difficult to
    get to Union City, Tennessee--where his family-owned farm has
    operated for generations. Growing up and working on that farm
    has given him profound insight into the issues facing the
    agriculture community. I am confident Stephen understands the
    needs of farmers and will be an important asset as we work to
    help rural America prosper and grow, and I thank this Committee
    for focusing on that so much.
        I wholeheartedly support his nomination. I thank the
    Committee for holding this hearing, and encourage my colleagues
    to support his nomination. Again, thank you so much for the
    courtesy. It is great to be with all of you.
        Senator Boozman. Thank you, Senator Corker, for being here,
    very much.
        Senator Stabenow. Mr. Chairman, Senator Klobuchar had
    suggested that if we counted the two Senators that were at the
    end of the table, from Tennessee, as honorary members, we could
    actually vote out the bill. Just a thought.
        Senator Boozman. Whatever it takes.
        [Laughter.]
        Senator Boozman. Seeing a quorum is present now, this
    hearing stands in recess.
        [Whereupon, at 9:50 a.m., the Committee recessed and moved
    to executive session, and reconvened at 9:53 a.m.]
        Senator Boozman. I now reconvene the Nominations Hearing,
    and thank you both--thank all of you for your patience and
    thank you for your patience, particularly our witnesses.
        In following the tradition and custom of the Committee,
    before nominee witnesses are to provide testimony, I need to
    administer the oath. If you both could please stand and raise
    your right hands.
        First, do you swear that the testimony you are about to
    present is the truth, the whole truth, and nothing but the
    truth, so help you God?
        Mr. Smith. I do.
        Mr. Vaden. I do.
        Senator Boozman. Do you agree that if confirmed you will
    appear before any duly constituted committee of Congress if
    asked to appear?
        Mr. Smith. I do.
        Mr. Vaden. I do.
        Senator Boozman. Thank you. We look forward to your
    testimony.
        Mr. Smith.

    TESTIMONY OF GLEN R. SMITH, OF IOWA, TO BE A MEMBER OF THE FARM
         CREDIT ADMINISTRATION BOARD, FARM CREDIT ASSOCIATION.

        Mr. Smith. Mr. Chairman, Ranking Member Stabenow, and
    members of the Committee. My name is Glen R. Smith of Atlantic,
    Iowa. This past September, President Trump nominated me to
    serve on the Board of the Farm Credit Administration. I am
    truly humbled by the honor of this nomination, but also quite
    sobered by the huge responsibility, if confirmed, of having a
    role of ensuring that American agriculture continues to have a
    source for reliable, secure credit, which happens to be the
    mission of Farm Credit. I felt it was important for most of my
    family to be here to witness and experience the magnitude of
    that responsibility, and I thank you for the acknowledgment and
    the introduction. I might add that two of these, my son and my
    son-in-law, left a combine idle in the field back in Iowa, and
    if anybody is familiar with this time of year, I assured them
    that we would get them through just as soon as possible--not
    that I have anything to do with that, right?
        Anyway, as an active farmer, ag-businessman, and even
    dating back to my Ag-Finance days at Iowa State University, I
    have understood the important role of the Farm Credit
    Administration in setting policy, examining and regulating our
    nation's largest long-term agricultural lender, the Farm Credit
    System. I also understand that the health of American
    agriculture is critically dependent upon a healthy, viable Farm
    Credit System. Credit is truly the lifeblood of agriculture.
        What I would hope to bring to the Board is a keen sense of
    agricultural cycles throughout modern history, economic booms
    and busts, many of which I have lived through, the challenges
    those cycles place on dependable, safe source of credit. I
    lived through the boom '70s, my wife and I struggled to survive
    and raise a family in the mid '80s, only to prosper the last
    20-plus years, exponentially, in a good agricultural economy.
    We cannot afford to lose a generation of agriculturalists like
    we did in the '80s. Farm Credit can play a key role in
    supporting young farmers like my son behind me, who is 27, my
    son-in-law and daughter, in their early 30s, that are just
    entering their risk-prone susceptible stage in their
    agricultural production careers.
        As a life-long agriculturalist, I have always considered
    myself to be an optimist. As a farmer, you take on the weather,
    you take on pests, you take on the markets, and you have to be
    an optimist to survive. However, I do have to confess that I am
    very concerned about the current agricultural outlook,
    particular with younger, risk-prone producers. Land is
    typically the dominant asset on a farmer's balance sheet. In
    the Midwest alone, we have seen a 15 to 20 percent erosion in
    land values over the last several years, and I think it is very
    possible we could see another 15 to 20 percent erosion in
    values, which I feel would throw a lot of those financial
    ratios into a danger category.
        The economic prosperity that was enjoyed, roughly in 2006
    through 2013, has contributed to some spending habits that may
    not be sustainable or no longer supportable, and I truly
    believe that low interest rates have camouflaged the difficulty
    in paying back principle with after-tax dollars on high-priced
    machinery, land, and breeding livestock.
        Given the highly capitalized nature of agriculture, an
    uptick of only a few percentage points would significantly and
    negatively affect farm net operating income, and I believe we
    are a long ways away from crisis management, as experienced in
    the '80s. However, out of love for this wonderful industry, I
    would be a strong advocate for caution in the Farm Credit
    System.
        Being selected as a Board member would represent one of the
    greatest challenges of my life but also potentially the most
    rewarding. I feel I would be a reliable, honest representation
    of American agriculture and have a vision for its future that
    defined my own life. It will not be an easy transition, moving
    away from the land and community that has defined our life's
    work and love. Hopefully our positive contribution to public
    service can offset that severance.
        Again, thank you very much for this honor, and I look
    forward to your questions.
        [The prepared statement of Mr. Smith can be found on page
    24 in the appendix.]
        Senator Boozman. Thank you, Mr. Smith. Mr. Vaden.

       TESTIMONY OF STEPHEN ALEXANDER VADEN, OF TENNESSEE, TO BE
            GENERAL COUNSEL OF THE DEPARTMENT OF AGRICULTURE

        Mr. Vaden. Thank you, Mr. Chairman, Ranking Member
    Stabenow, and members of this Committee. It is an honor to come
    before you today as the President's nominee to serve as General
    Counsel for the United States Department of Agriculture. I
    would like to thank Senator Alexander and Senator Corker for
    the very kind words they said about me in introduction,
    particularly Senator Corker's remark about getting to Union
    City. He is correct. Every Friday evening, I catch the last
    fight out of Reagan to Memphis, and then I have a two-hour
    drive north to Union City, which gets me home about 1:00 on
    Saturday morning, and I take the last flight out Sunday night
    to return to Washington, DC, and my work at the Agriculture
    Department.
        I would also like to thank Congressman Kustoff for being a
    supporter of mine since day one, as my hometown Congressman.
        Before I respond to your questions I wish to spend a few
    moments to tell you about my background and why the President's
    nomination, as well as Secretary Perdue's unwavering
    confidence, are so personally meaningful to me.
        I come from a farming family. My father, John Marshall
    Vaden, was born on a farm in rural Obion County, Tennessee, in
    April 1918, and engaged in farming his entire life. Following
    his death two years ago, my brother and I learned that one of
    the family farms that we have inherited has been in the family
    since the early 1800s, as it appears in exactly its current
    dimensions on the original map of Fulton County, Kentucky, with
    the name of my ancestor handwritten across the plat.
        It was the profits my father reaped that paved the way for
    me to come before you here today. Those profits, wisely
    invested over time, helped to pay for the exorbitant tuition
    charged by Vanderbilt University and Yale Law School.
        They made it possible for me to delay entering the private
    sector so that I could clerk for two of our nation's finest
    Federal judges, Judge Julia Smith Gibbons of the United States
    Court of Appeals for the Sixth Circuit, and Judge Samuel H.
    Mays, Jr., of the United States District Court for the Western
    District of Tennessee.
        They supported my move to the much more expensive
    Washington, DC, area, where I entered the private practice of
    law, first at the firm of Patton Boggs and later at the firm of
    Jones Day. I therefore understand why low commodity prices can
    be so harmful to the futures of those who come from rural
    communities, such as myself.
        As I am nominated for the role of General Counsel, it is
    important for me to spend a few moments reviewing my legal
    experience. My practice has focused primarily on three main
    areas: litigation, particularly appellate litigation;
    administrative law; and regulatory compliance. These happen to
    be three of the principal areas of concern for any department's
    general counsel.
        The briefs I have drafted and the cases I have argued have
    covered areas of law as diverse as the procedural requirements
    of the Administrative Procedure Act, the confines of the First
    Amendment's protections, the transparency requirements imposed
    upon Federal agencies by the Freedom of Information Act, the
    fiduciary duties of corporate officers, and the procedural
    protections provided to union members to safeguard their
    elections, to name just a few.
        My practice, thus, has focused on making certain the
    government and others in positions of power follow the legal
    guidelines meant to guarantee due process of law. Having been
    on the other side of the ``v'' from the government in
    litigation, I can understand the trepidation citizens feel when
    they must challenge the government's decision. It is the job of
    the General Counsel to keep the government to its word by
    requiring the Department to follow its constitutional,
    statutory, and regulatory responsibilities. I believe that a
    general counsel can be considered to have done well if
    producers can say that while they did not always agree with the
    Department's decisions, they felt their concerns were heard,
    and the Department treated them fairly. If confirmed, this is
    the goal I aim to meet.
        I would be remiss if I did not mention, for the past 11
    months, I have served in the Office of General Counsel, first
    as a senior advisor, and since the 17th of March, as the
    Principal Deputy General Counsel.
        Every day I have the high honor of working with 203 of the
    finest lawyers in America to perform the legal work necessary
    to allow rural America to thrive. We are joined by 54 support
    staff, without whom none of us attorneys could get anything
    done. As the members of this Committee know all too well, the
    men and women of the Office of the General Counsel are
    committed to providing legal advice in a timely and
    professional manner.
        Equally as important, the office provides that advice with
    the accumulated knowledge of the challenges that our producers
    face to grow the food and fiber that powers America. It is a
    charge that each and every member of that office takes
    seriously, including myself.
        As I mentioned in my opening remarks, my father was a
    farmer. Throughout his life he was a grocer, an investor, and a
    real estate developer. But it was the title of ``farmer'' of
    which he was most proud. I know this because he placed that
    title--``Farmer''--below his name on every check I ever saw him
    sign. The last three checks he ever signed hang on my wall,
    framed, as a reminder of the responsibilities I bear as
    Principal Deputy General Counsel, to ensure that America's
    producers are treated fairly, equitably, and in accordance with
    the law. Should the Senate confirm me to the position of
    General Counsel, I commit to you today to carry out the
    responsibilities of that office with the same very personal
    commitment represented by those checks.
        Thank you once again for the opportunity to come before you
    here today, and I look forward to answering your questions.
        [The prepared statement of Mr. Vaden can be found on page
    26 in the appendix.]
        Senator Boozman. Thank you, Mr. Vaden and Mr. Smith, very
    much, for your testimony.
        Mr. Smith, when we met prior to your confirmation hearing
    we discussed young and beginning farmers and the difficulties
    that they face. I hear often from Arkansans about the high
    barriers to enter into production agriculture, and this, as we
    all know, is a very serious issue. Like you noted in your
    testimony, with the average age of the American farmer now
    around 60 years of age, we must have the next generation ready
    to produce enough food and fiber to sustain an expected world
    population of 9 billion by 2050.
        The year 2050 is only 32 harvests away. Could you expand on
    what you see the Farm Credit System's role is in supporting and
    providing opportunities for these younger, riskier farmers and
    ranchers?
        Mr. Smith. Thank you, Senator. As I mentioned in my opening
    remarks, my concern over the advanced age of the American
    farmer, I am 61 and I think the average age of farmers in Iowa
    is 62. Sometimes we are still referred to as the young farmers
    in the neighborhood, after 35 years. But I think it is an acute
    problem and I think it is something that Farm Credit can
    address.
        As a lender you always have that balance between risk, and
    generally younger producers are riskier. There are programs
    within FSA that help mitigate that risk and also help eliminate
    those hurdles of capital investment up front, and I certainly
    would encourage partnerships with Farm Credit and FSA and the
    programs that would help beginning farmers get a start.
        In Iowa, I am quite proud that we do have some good
    programs that offer tax advantage to landlords that choose to
    rent their farms to beginning farmers through state tax
    credits, and I think it could serve as a good model for other
    states around the country. I think we've done some good jobs.
    There's also financing for land for livestock, for machinery
    also available through the state, to their beginning farmer.
        I think in my role with Farm Credit, I do plan to travel
    considerably, and I think we could share those ideas. Hopefully
    maybe Farm Credit could be a little bit of a clearing house.
    What my intention is not is to just have a nice, shiny brochure
    on the coffee table saying that we have a beginning farmer
    program. I think part of those travels would be to ask some
    very specific questions about numbers and about risk
    orientation, and success stories along with failure stories,
    because risk doesn't go without failure.
        Senator Boozman. Great. Very good. Thank you.
        Mr. Vaden, there is a longstanding history of USDA,
    generally, and specifically the Office of General Counsel,
    providing technical assistance to the Committee as we write the
    farm bill. This assistance ensures the workability of the
    legislation. Will you commit to continuing to provide OGC
    resources towards technical assistance for the upcoming farm
    bill, for other legislation that helps to ensure the
    workability of these programs so the USDA is better able to
    defend itself against potential lawsuits?
        Mr. Vaden. Absolutely, Mr. Chairman. Thank you for the
    question. As I remarked to you during our meeting in your
    office, regardless of whether or not the Department may support
    a particular bill, it can, of course, always become law. So
    it's important that bill be written well, because we are going
    to be the ones who are asked to interpret it once it is passed
    into law. So we will absolutely continue to provide the
    Committee, of both houses of Congress, with technical
    assistance when requested.
        Senator Boozman. Thank you very much. Senator Stabenow.
        Senator Stabenow. Thank very much, Mr. Chairman. First, Mr.
    Smith, just a follow-up on Senator Boozman's question on new
    and beginning farmers. You and I talked about that as well, and
    I know you share the commitment, as you have just spoken about.
    I wanted to remind the Committee that in the last farm bill we
    included veterans in that category, as you and I talked about,
    and there is an extra opportunity for support and assistance
    for both new and beginning farmers, but also for those who have
    served our country, in other ways that are incredibly
    important. We want to make sure we're providing them the same
    opportunities. So I appreciate your efforts on that front.
        Mr. Vaden, you talked a lot about areas of the law where
    you have argued cases, but I think it is important for me to
    indicate that there is one area of your past work that you did
    not talk about, and that was defending recent state efforts to
    restrict voting access for African Americans and other
    minorities. This is very troubling. Ensuring that citizens have
    access to the right to vote is a bedrock principle of our
    democracy. In fact, our democracy thrives when more citizens
    participate, and we should be in the business of increasing
    voter participation.
        If you are confirmed, I would expect you to ensure that
    USDA operates in a manner that is consistent with our laws, our
    values, our principles, and that all USDA customers and
    employees would be treated with dignity and respect.
        Let me further go into, just in the interest of time, what
    Senator Boozman talked about in terms of providing information
    to the Committee, because technical assistance, obviously, is
    very important. But it is also very important that we see the
    same prompt and full information, provided to myself as Ranking
    Member, on the minority side of the Committee, as well as the
    majority side.
        Earlier this year there was some question about whether or
    not that would happen, if there would be responses as we have
    always had to my questions as well as the Chairman's. Senator
    Roberts and I sent a joint letter, and talked with Secretary
    Perdue about this issue. He certainly indicated that he would
    work with us on that issue.
        But just for the record, will you commit to allowing and
    directing USDA officials, including yourself, to respond fully
    and promptly to information and requests from me and from all
    other members of the Committee, both sides of the aisle, and
    commit to providing us with the information that is requested?
        Mr. Vaden. Thank you very much for the question, Senator,
    and I enjoyed addressing this with you when we spoke in your
    office earlier this season.
        Yes, Senator, the Secretary has a very simple policy. When
    we receive a letter from a Member of Congress we respond.
        Senator Stabenow. Great. Thank you very much. Will you
    commit to providing the public with transparency about agency
    activity to the maximum extent permitted by law?
        Mr. Vaden. Senator, as I mentioned in my opening remarks,
    one of my past legal experiences has been suing the government
    for failing to follow the guidelines of the Freedom of
    Information Act, which guarantees citizens access to
    information for any reason whatsoever. So having worked on this
    issue in the private sector and having seen the frustration
    that clients have when they cannot get access to information, I
    feel very strongly that citizens should have access to
    information to which the law entitles them.
        Senator Stabenow. Then, finally, will you also commit to
    providing the public with a meaningful opportunity to comment
    on proposed agency actions, such as reorganization, and to
    considering these comments before making a final decision?
        Mr. Vaden. Well, Senator, as you are aware and as we
    discussed in your office, for each of the Secretary's moves
    that he has made regarding reorganization he has sought and
    accepted public comment, and as I think you have seen with the
    letters that he has sent to this Committee, as well as the
    House Committee, notifying them of the changes that he wants to
    make and then following up on that, he does take comments into
    account and changes have resulted as a result of comments
    received.
        Senator Stabenow. Thank you. Then, finally, one other
    question. This is a topic you and I have talked about
    extensively but it is important to raise because both Senator
    Roberts and I feel it is important that it be addressed before
    the next farm bill, to be able to help us successfully write a
    farm bill and address all the needs of all of our farmers and
    ranches in rural communities. In the 2014 Farm Bill, Congress
    provided authority to the Federal Crop Insurance Corporation
    Board to make decisions related to new insurance products and
    improvements to existing products.
        We know our dairy farmers are operating without an
    effective safety net. It is the one area where I feel we missed
    the mark, in terms of the last farm bill, and it needs to be
    corrected. There is a corrective mechanism. There is the
    authority within the USDA to independently make that decision.
    I know that there is ongoing consultation with OMB, but USDA
    has the capacity and responsibility to act on behalf of our
    dairy farmers.
        So I ask you, for the record, will you work to move this
    forward so that the issue can come before the next FCIC Board
    meeting for decision at the end of the month, so that we can
    actually make sure this is part of next year's baseline, as we
    go into the farm bill?
        Mr. Vaden. Senator, once again I thank you for the
    question. As we discussed, just before the hearing, as a matter
    of fact----
        Senator Stabenow. Right.
        Mr. Vaden. --on this very important issue to you, we have
    been working this issue, both internally and with the Office of
    Management and Budget, and we will continue to do so and make
    our points plain to them about what we feel that the law
    requires us to do.
        Senator Stabenow. Thank you. Just for the record, this is
    not only, as you know, of interest to dairy farmers but really
    does relate to our capacity to address all of the farm safety
    net issues that we need to within the farm bill. So I look
    forward to working with you on this. I think it is very
    important to our success with the next farm bill.
        Thank you, Mr. Chairman.
        Senator Boozman. No, thank you, Senator Stabenow, and I
    know that Senator Roberts and the entire Committee agree with
    you wholeheartedly regarding request and transparency, which is
    so, so very important.
        Senator Hoeven.
        Senator Hoeven. Thank you, Mr. Chairman, Madam Vice
    Chairman.
        Welcome to both of you. Mr. Smith, how can Farm Credit
    Service help our producers in this time of low commodity
    prices?
        Mr. Smith. I think the role of a lender maybe is a little
    similar to the role of a parent. Sometimes saying yes all the
    time is not correct. I think close analysis and projection and
    models, if we should continue with these low commodity prices,
    is essential in looking at new loans or expanding existing
    loans with existing customers.
        I mean it when I say we need to be cautious. We do not have
    the trifecta we did in the '80s with low prices, super-inflated
    interest rates, and the third factor would be price supports
    that were not relative to the market.
        Today, I believe due to crop insurance, we have got a good
    safety net there, and I think, particularly with the last farm
    bill, this Committee should be commended for that, and I think
    a lender should work very closely with the borrower on that
    safety net. We do not have high interest rates. That is not
    saying 5 or 10 years from now we will not.
        Senator Hoeven. So I have got legislation that would raise
    the direct loan--the FSA direct loan from $300,000 to $600,000,
    and the guarantee from $1.3 to $2.5 million. What is your sense
    of that? Is that a good idea, or not, and how would you respond
    to that?
        Mr. Smith. Well, it is a symptom of the times in that land,
    at least in the Midwest, has about tripled in value in the last
    12, 13 years. So we have had to stick some added zeroes to add
    relevancy to that. But it is debt, and it is debt that has to
    be paid back.
        Senator Hoeven. Do you think we need the higher limits or
    not?
        Mr. Smith. Yes, I do, because of the relevancy----
        Senator Hoeven. Because of the cost of----
        Mr. Smith. Yes.
        Senator Hoeven. --production agriculture----
        Mr. Smith. The cost of production agriculture.
        Senator Hoeven. --has gone up so much. Good.
        The average age of the--or the average farmer age now is 60
    years old. How do we help get the younger producers in there?
        Mr. Smith. Partnerships with lender and existing farmers I
    think is one way. Subsidized interest rates through FSA. I know
    our firm, we have tried to be a clearinghouse for information
    on beginning farmer loans through FSA that partners with local
    banks, that can partner with Farm Credit. It is surprising.
    There are some good programs out there but it does not seem
    like the word gets out a lot of times to the consumers.
        Senator Hoeven. But you would agree we need to find ways to
    bring--to help younger farmers get involved in production
    agriculture.
        Mr. Smith. Absolutely. I have got two sitting behind me,
    Senator.
        Senator Hoeven. Well, that is good.
        Mr. Smith. Yep.
        Senator Hoeven. Of course, the capital constraints, when
    you look at land and equipment, inputs, everything else, that
    is part of the challenge, is it not?
        Mr. Smith. It is, and I had the question raised earlier in
    the week, what difference we see between going into an
    uncertain economic time and now. The thing that is most
    concerning to me, where in 1981, average land values in our
    area was around $2,000. It sunk down to around $685, $700 an
    acre. Today we are $7,500, $8,000 an acre.
        Senator Hoeven. Right. Exactly.
        Mr. Smith. So it is the high cost of capitalization today
    that really does worry me.
        Senator Hoeven. Right. Right. So you have an important role
    to play.
        Mr. Vaden, regulatory burdens is an issue for our farmers
    now. I mean, it's an issue for all small businesses, so we have
    to find ways to reduce the regulatory burden on all small
    business. Talk about that in terms of farmers, and then, in
    particular, in my state of North Dakota we have a section line
    issue where we have had disputes with Forest Service on section
    lines, which is very important for our products that we are
    able to have those section lines for access. So I want you to
    talk about, one, would you be willing to work with me on the
    section line issue, and, two, in general, are you willing to
    reduce the regulatory burden on our producers, farmers and
    ranchers?
        Mr. Vaden. Absolutely, Senator. As you have correctly
    noted, the burden of regulations on all industries, and in
    particular, agriculture, is a very important issue to the
    current administration. I know you mentioned an issue regarding
    the Forest Service. As you know, we have a new Chief of the
    Forest Service, Chief Tooke. I have met with Chief Tooke and he
    is--one of the first things that he is engaging in is a look at
    how the Forest Service can use its regulatory authority, both
    more effectively but use it to reduce the burdens on producers.
        Regarding your question about working with you, as I said
    earlier in response to questions from both the Chairman and the
    Ranking Member, we absolutely will work on you--will work with
    you, rather, to help you craft whatever legislation you may
    need in order to fix the issue that you see.
        Senator Hoeven. Thanks to both of you. I appreciate it and
    look forward to working with you.
        Senator Boozman. The Chair recognizes Senator Brown for
    questions, and also wishes him a big happy birthday.
        Senator Brown. Thank you, Mr. Chairman.
        Senator Boozman. Show them your birthday cake.
        Senator Brown. This is from Senator Klobuchar, who claims
    to have made this.
        [Laughter.]
        Senator Brown. What is interesting is there are 35 others
    that look just like it out in the main room.
        Senator Stabenow. They are all for you.
        Senator Brown. I signed up for Medicare today, too, Mr.
    Chairman.
        Senator Boozman. Yes, let us cut the cake.
        Senator Brown. This is not off my time, is it? Thank you.
        Thanks, Mr. Chairman. Mr. Smith, thank you for joining. Mr.
    Vaden, thank you, and it was nice to meet you before the
    hearing, accompanied by your two Senators.
        Mr. Vaden, as you know, USDA's budget--annual budget is
    some $125 billion. Its mission is, of course, broad. You can
    imagine this Committee's concern that your legal experience, as
    listed on your resume, is in election law, Federal campaign
    finance law, and the Foreign Agents Registration Act. As far as
    I know, the USDA General Counsel does not deal with any of
    these matters.
        I am also concerned with your lack of managerial
    experience, and my question is this. In your testimony, you
    noted that the General Counsel's office employs about 250,
    including some 200 lawyers. You worked at law firms for six
    years prior to this job. What is the largest number of
    individuals you ever managed?
        Mr. Vaden. Thank you for the question, Senator. As I noted
    in response to questions from your staff, when you allowed me
    the opportunity to meet with them earlier, it varied by case.
    There were some cases where I was the sole attorney responsible
    for everything that was going on. There were other cases that
    involved litigators that could involve a dozen or more
    attorneys.
        Senator Brown. So this would be an office of 250, including
    200 lawyers, and I guess you are saying in the cases when you
    had a big management role it was maybe a dozen. Okay.
        Mr. Vaden. Senator, I think it is also important to point
    out that for the past 11 months, and beginning March 17th, I
    have served as Principal Deputy General Counsel, as the General
    Counsel's chair is currently vacant. I have had managerial
    responsibility for those 203 attorneys, as well as those 54
    support staff. I would respectfully submit to you, sir, that I
    think one of the reasons why the first time you heard my name
    was when the President announced my nomination is because I
    have spent the past 11 months in my office at the Department of
    Agriculture, competently carrying out the functions of my job,
    both its managerial and legal responsibilities.
        Senator Brown. Okay. Let me talk about something you have
    done in your practice. Last year you were part of two briefs
    that supported efforts by the states of Ohio and North Carolina
    to deprive citizens of their right to vote. Senator Stabenow,
    the Ranking Member, mentioned this and did not have time to ask
    a question. I would like to.
        In the North Carolina case, the court found the State
    Legislature targeted ``African Americans with almost surgical
    precision'' in its efforts to deny the right to vote. In the
    Ohio case, the lower court found Ohio's actions also targeted
    minorities.
        Mr. Vaden, I am deeply concerned you have been involved
    with efforts to deny minorities the right to vote and reduce
    access to the polls for everyone. I am concerned about what
    this might signal for USDA's approach to these issues. What can
    you tell me--what can you tell the Committee--I mean, that is
    fact, that you were part of that. I would like you to answer,
    what can you tell the Committee about your client? Your client
    is the Judicial Education Network, your client in both these
    cases. What can you tell us about the Judicial Education
    Network?
        Mr. Vaden. Well, Senator, as you are aware, as an attorney
    I am covered by Rule 1.6 of the Rules of Professional Conduct,
    which require me to guard client confidences, both of current
    clients and former clients. With regard to your question about
    the Judicial Education Project, the information on the public
    record that was required to be submitted to the Court of
    Appeals for the Fourth Circuit, as well as the Court of Appeals
    to the Sixth Circuit, in the two cases that you note, list the
    information about the background and membership of that
    organization. That is a matter----
        Senator Brown. But what can you tell----
        Mr. Vaden. --of public record.
        Senator Brown. --this Committee. Is the Judicial Education
    Network a nonprofit?
        Mr. Vaden. Senator, I do not have the information in front
    of me.
        Senator Brown. You do not know? They funded your actions
    and you do not know if they are a nonprofit?
        Mr. Vaden. Senator, while----
        Senator Brown. You, a moment ago, Mr. Vaden, illustrated--I
    was about to say bragged--but illustrated that you were a
    competent manager for the last number of months, and you do not
    know if the group that funded you is a nonprofit? Do you know
    who funds the organization? Do you not know any of those
    things?
        Mr. Vaden. Senator, as an associate at a law firm it was my
    job to do the legal work that was assigned to me. It was not
    the job of an associate at a law firm to take care of billing
    practices.
        Senator Brown. Well, I understand. You have such narrow
    intellectual curiosity that you were involved in a case that
    the court said--that targeted African Americans with surgical
    precision, affecting their right to vote, in Ohio the same kind
    of--the same kind of--roughly the same kind of language was
    used about targeting minorities--and you did not care enough or
    know enough. You are a smart guy. You are well educated. You
    are obviously a good lawyer. You did not have the--any of--you
    did not have any interest in knowing who was funding this and
    whether they were a not-for-profit?
        Mr. Vaden. Senator, first, thank you for the compliments.
    Second of all, as it refers to the Judicial Education Project,
    as you know, in both of those cases, its sole function was to
    file one amicus brief in each case, and I would note for the
    record that in the Ohio case the Sixth Circuit Court of Appeals
    disagreed with your characterization of the record----
        Senator Brown. Oh, I understand----
        Senator Brown. --the Sixth Circuit Court of Appeals. There
    is, coming out of the Federalist Society and others, a real
    effort to restrict the right to vote in this country. I know
    that. It is part of a political movement. I know that. I was
    Secretary of State of Ohio in the '80s, and I know how we
    expanded the right to vote, and we encouraged people to
    register to vote. I know we are in a different time period now,
    after the Shelby case, and I know what a lot of young lawyers
    are trained to do about targeting right to vote.
        But you, again, did--is--who funded this group? I mean, do
    you now--do you honestly not know who funds the Judicial
    Education Network? Do you honestly not know whether they are a
    not-for-profit?
        Mr. Vaden. Senator, I would have to refer you to the
    information that was filed with the court which explains, on
    the public record, who was providing funding for the lawsuit.
        Senator Brown. You cannot say to this Committee, yes, it is
    a not-for-profit, or no, it is not a not-for-profit? You cannot
    say--you cannot give me any indication in this hearing today
    who actually funds the Judicial Education Network?
        Mr. Vaden. Senator, I have not seen their organizational
    paperwork and I would not want to mislead you by speculating.
        Senator Brown. It is pretty troubling that you are--you
    seem so blissfully unaware of who funded that lawsuit that
    clearly was targeted to take people's right to vote away. I am
    just stunned by that.
        Thanks, Mr. Chairman.
        Senator Boozman. Thank you. Senator Ernst.
        Senator Ernst. Thank you, Mr. Chair. Thank you, gentlemen,
    for being here today.
        As both of you know, the ag economy is going through a bit
    of a slump, rivaled only by the farm crisis that we had in the
    1980s. While we know that, on average, farm balance sheets are
    stronger than they were in the '80s, decreasing land prices can
    change that in a hurry.
        I am especially concerned for some of the younger and
    smaller farmers who got their start in the past decade,
    veterans and other beginning farmers who have only known those
    good times of high commodity prices and they have not had a
    chance to pay off debt and build equity. I hear that all the
    time when I am out on my 99-county tour, as you would know, Mr.
    Smith.
        So I would like to start with you, Mr. Smith. If you are
    confirmed to the FCA Board, what do you believe must be done to
    ensure that young and beginning farmers are receiving the
    support they need to avoid going under?
        Mr. Smith. It is a frequent question that I have gotten in
    just about every Senate office that we have visited is how do
    we get young farmers involved, and as a lender, how do we stay
    secure and reliable and help mitigate that risk.
        One of the things I referred to a little earlier, and would
    refer to again, is partnerships with entities that are
    encouraging beginning farmers, FSA, for instance, that minimize
    capital requirements, that have lower interest rates, are ways
    of possibly Farm Credit partnering with other entities to make
    those loans and try to mitigate the risk at the same time.
        As you know, Iowa has been a very--has got some very good
    programs for beginning farmers, offering subsidies to owners
    that cooperate with renting land to beginning farmers, and also
    selling land to beginning farmers, if it is sold on a contract,
    anyway.
        So I think from the standpoint of Farm Credit, I think my
    role would be encouraging using additional programs to help
    mitigate risk, to help that risk with lower interest rates. But
    one thing, Senator Ernst, that does scare me--and again, not to
    be repetitive, but it is the high cost of capital--the land,
    the breeding livestock, the machinery, that does worry me, that
    we did not have in the '80s. You know, $30,000 financed, really
    my beginning machinery package to farm 500 acres. Today, you
    can ask my son because that is his department, but I think it
    barely financed our GPS equipment.
        Senator Ernst. Right.
        Mr. Smith. So a huge disparity in the amount of capital
    that is required today, and those beginning--just because you
    say yes to that loan does not mean it might be good for that
    young borrower. Diversification--and we talked in Senator
    Stabenow's office a lot about this--is diversification, small
    loans, getting people started in a small way I think should be
    encouraged, maybe is one answer to help mitigate that risk.
    Making $10,000 loans, 20, $15,000 loans, and getting people
    started maybe is better than that big loan that may be more
    efficient, but again, is it really serving the needs of those
    young farmers?
        Senator Ernst. That is a really great point, and in your
    testimony, you mentioned the economic prosperity of farming
    communities in 2006 to 2013, that time frame, and the spending
    habits it led to that may no longer be supportable. How
    concerned are you that too many farmers are over-leveraged if
    interest rates continue to rise?
        Mr. Smith. Very concerned. Very concerned. Even a minimal
    two-point rise in interest rates would significantly impact
    operating budgets, again, getting back to the high cost of
    capital that we are working with today.
        Again, getting back to the diversification part, back in my
    parents' generation, pigs, cattle, chickens--that was diversity
    on farms even I grew up with. Today I say an intelligent,
    working wife is the best diversification, hopefully with
    insurance benefits, right?
        But the point being--and you can ask Fauzan and I, and I
    know you have, because we lived with that, is taking care of
    those family living expenses and not having to serve those in
    addition to paying your loan obligations.
        So a lot of counseling. I think the opportunity in Farm
    Credit with beginning farmers would be a lot of counseling on
    different ideas to survive, not just making the loan.
        Senator Ernst. I appreciate that, and I do think that is
    essential, the counseling aspect of that. We were laughing
    about having a spouse that maybe works outside of the home, but
    that is truly how many of our farm families are able to
    survive, especially with the crisis that we are seeing with
    health insurance right now, especially in Iowa.
        Mr. Smith. Yes.
        Senator Ernst. So thank you, Mr. Smith, so much, for your
    time. Thank you, Mr. Vaden, for being here as well.
        Thank you, Mr. Chair.
        Senator Boozman. Thank you, and next is a former House
    colleague of mine, Senator Van Hollen.
        Senator Van Hollen. Thank you. Thank you, Mr. Chairman.
    Thank you and the Ranking Member, and welcome, Mr. Smith and
    Mr. Vaden.
        Mr. Vaden, I do want to follow up on some of the concerns
    that have been raised by Senator Stabenow and Senator Brown
    regarding your representation in some of these voting rights
    cases, because I think compared to many of your predecessors in
    this position, as General Counsel, who had experience in the
    agricultural law or natural resources area, you have not had
    that experience in that area. You have had, and done a lot of
    work in these voting rights cases.
        So my first question is, when it came to the North Carolina
    case, I know the Judicial Education Project was a party. Did
    they pay Jones Day in full for that, or was it taken on in part
    as a part--a discounted rate? Do you know whether or not they
    paid the firm in full?
        Mr. Vaden. Senator, as I mentioned in response to my
    question--to the question from Senator Brown, as an associate I
    did not have access, nor did I participate in the billing
    function of the firm. So that was solely with partners, so I do
    not know the rate they were charged and I do not know their
    payment status and am unable to comment.
        Senator Van Hollen. Okay. Now, so, you and I share the
    experience of having been associates in a law firm. Jones Day,
    of course, is a big law firm. It was my experience that in a
    case like these, that if an associate indicated that they did
    not want to participate, the firm would certainly defer to
    those associate wishes. Did you express any concern or--about
    participating in these cases to your partners at Jones Day?
        Mr. Vaden. Senator, my ethical responsibility as a lawyer
    is to represent every client with ethical propriety and
    zealousness.
        Senator Van Hollen. That was--Mr. Vaden, that is not my
    question. The firm--these were clients of the firm. The first
    has--like Jones Day has hundreds of associates. It happens that
    you were involved in cases on behalf of the Judicial Education
    Project in North Carolina, Ohio, and Virginia. Is that correct?
        Mr. Vaden. That is correct, Senator.
        Senator Van Hollen. So you, at no time, expressed to the
    partners the fact that you did not want to participate in these
    cases, I assume. Right?
        Mr. Vaden. I did not, just as I did not, Senator, express
    displeasure about representing multiple labor union to protect
    the rights of their members or any of the other cases for which
    I was----
        Senator Van Hollen. Are you familiar with the Judicial
    Crisis Project?
        Mr. Vaden. I am aware of the name but I cannot claim to be
    familiar with it.
        Senator Van Hollen. Okay. So you have had no kind of
    affiliation or participation in any way with that group.
        Mr. Vaden. The Judicial Crisis Project?
        Senator Van Hollen. Yes.
        Mr. Vaden. No, sir. I do not believe I have.
        Senator Van Hollen. So in the North Carolina case--and you
    mentioned a number of cases where you had, for example,
    defended clients' due process rights against the government--
        Mr. Vaden. Yes.
        Senator Van Hollen. --and I think that is a worthy thing.
    Now, of course, in the case of North Carolina, you were on the
    opposite side, right? You were defending the State of North
    Carolina and the Education Project as an amicus--amicus
    filing--against claims from the defendants that their due
    process rights had been violated. Right?
        Mr. Vaden. The job of an amicus is to make a legal point.
        Senator Van Hollen. I know. I know what the job of amicus
    is. I have got your amicus brief here. The North Carolina--the
    U.S. Court of Appeals in this case, in North Carolina, found,
    and I quote, ``The General Assembly enacted legislation that
    restricted voting and registration in five ways, all of which
    disproportionately affected African Americans.'' They went on
    to say, ``We can only conclude that the North Carolina General
    Assembly enacted the challenge provisions of the law with
    discriminatory intent.''
        You all wrote in your brief that ``North Carolina allows
    all its citizens to vote, although members of minority races
    may disproportionately choose, for socioeconomic or other
    reasons, not to take advantage of this equal opportunity. North
    Carolina's practices are not the proximate cause of this
    phenomenon.''
        Now clearly the court, both the District Court and the
    Court of Appeals concluded very differently. My question to you
    is, now, stepping back, given the full scope of this case,
    having now heard all the arguments and seen the decisions from
    the Circuit Court, do you agree with the finding of the Court
    of Appeals, that, in fact, the North Carolina law was
    discriminatory?
        Mr. Vaden. Senator, the ruling of the court is the final
    decision of the court, and that is what the law--that is what
    they----
        Senator Van Hollen. Mr. Vaden, I understand what the law
    is. The law of the land is citizens united. I disagree with the
    decision. I am asking you whether, in the full light of being
    able to look back, whether you agree with the finding of the
    Circuit Court, that the North Carolina law was discriminatory?
        Mr. Vaden. I respect the ruling of the court.
        Senator Van Hollen. So you choose not to answer that direct
    question.
        Mr. Vaden. Senator, I have a duty of fidelity to former
    clients, under Rule of Professional Conduct 1.6. I also have a
    duty to respect the final ruling of each and every court in
    which I am involved in litigation. I take both responsibilities
    very seriously.
        Senator Van Hollen. Thank you. Thank you, Mr. Chairman.
        Senator Boozman. Thank you, Senator. Our Senator from
    Michigan.
        Senator Stabenow. Thank you, Mr. Chairman. I welcome our
    guests again and I have completed my questions. Thank you.
        Senator Boozman. Thank you so much. That will conclude our
    hearing today. I thank the nominees for their thoughtful
    comments and their engagement with the members of this
    Committee. I also thank all of you for your willingness to
    advocate for American farmers and ranchers as USDA and Farm
    Credit.
        The answers you provide today will be considered as we move
    to approve your nominations in the near future. To that end, I
    would request that if my fellow members have any additional
    questions for the record that they may be submitted to the
    Committee Clerk by 2:00 p.m. Monday, November 13th. We look
    forward to receiving your responses in a timely fashion and to
    further consider your nominations.
        The Committee will be adjourned.
        [Whereupon, at 10:41 a.m., the Committee was adjourned.]

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                                A P P E N D I X

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                       DOCUMENTS SUBMITTED FOR THE RECORD

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                             QUESTIONS AND ANSWERS

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