[Senate Hearing 115-693]
[From the U.S. Government Publishing Office]
S. Hrg. 115-693
HEARING ON PENDING NOMINATIONS
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON AGRICULTURE,
NUTRITION, AND FORESTRY
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
JULY 24, 2018
__________
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/
___________
U.S. GOVERNMENT PUBLISHING OFFICE
36-552 PDF WASHINGTON : 2019
COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY
PAT ROBERTS, Kansas, Chairman
MITCH McCONNELL, Kentucky DEBBIE STABENOW, Michigan
JOHN BOOZMAN, Arkansas PATRICK J. LEAHY, Vermont
JOHN HOEVEN, North Dakota SHERROD BROWN, Ohio
JONI ERNST, Iowa AMY KLOBUCHAR, Minnesota
CHARLES E. GRASSLEY, Iowa MICHAEL E. BENNET, Colorado
JOHN THUNE, South Dakota KIRSTEN E. GILLIBRAND, New York
STEVE DAINES, Montana JOE DONNELLY, Indiana
DAVID PERDUE, Georgia HEIDI HEITKAMP, North Dakota
DEB FISCHER, Nebraska ROBERT P. CASEY, Jr., Pennsylvania
CINDY HYDE-SMITH, Mississippi TINA SMITH, Minnesota
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
C O N T E N T S
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Tuesday, July 24, 2018
Page
Hearing(s):
Hearing on Pending Nominations................................... 1
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STATEMENTS PRESENTED BY SENATORS
Roberts, Hon. Pat, U.S. Senator from the State of Kansas,
Chairman, Committee on Agriculture, Nutrition, and Forestry.... 1
Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan... 2
WITNESSES
Berkovitz, M. Dan, Nominee to be Chairman, Commodity Futures
Trading Commission............................................. 5
Hubbard, E. James, Nominee to be Under Secretary for Natural
Resources and Environment, U.S. Department of Agriculture...... 6
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APPENDIX
Prepared Statements:
Berkovitz, M. Dan............................................ 28
Hubbard, E. James............................................ 31
Document(s) Submitted for the Record:
Roberts, Hon. Pat:
Wildlife Group Coalition, letter of support for nominee...... 36
Federal Forest Resource Coalition, letter of support for
nominee.................................................... 38
Rural Voices for Conservation Coalition, letter of support
for nominee................................................ 41
The National Association of State Foresters, letter of
support for nominee........................................ 43
Riley Stegner and Associates, letter of support for nominee.. 44
The Society of American Foresters, letter of support for
nominee.................................................... 45
American Forest Foundation, letter of support for nominee.... 46
Outdoor Recreation Roundtable, letter of support for nominee. 47
Western Governors Association, letter of support for nominee. 49
5-day letter, Committee questionnaire and Office of
Government Ethics Executive Branch Personnel Public
Financial Disclosure Report filed by Dan M. Berkovitz...... 51-87
5-day letter, Committee questionnaire and Office of
Government Ethics Executive Branch Personnel Public
Financial Disclosure Report filed by James E. Hubbard
Question and Answer:
Berkovitz, M. Dan:
Written response to questions from Hon. Pat Roberts.......... 116
Written response to questions from Hon. Debbie Stabenow...... 121
Written response to questions from Hon. John Boozman......... 125
Written response to questions from Hon. Tina Smith........... 126
Hubbard, E. James:
Written response to questions from Hon. Pat Roberts.......... 127
Written response to questions from Hon. Debbie Stabenow...... 128
Written response to questions from Hon. Steve Daines......... 133
Written response to questions from Hon. Patrick Leahy........ 134
Written response to questions from Hon. Michael F. Bennet.... 136
Written response to questions from Hon. Tina Smith........... 139
HEARING ON PENDING NOMINATIONS
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TUESDAY, JULY 24, 2018
United States Senate,
Committee on Agriculture, Nutrition, and Forestry,
Washington, DC.
The Committee met, pursuant to notice, at 10:05 a.m., in
room 328A, Russell Senate office building, Hon. Pat Roberts,
Chairman of the Committee, presiding.
Present: Senators Roberts, Boozman, Hoeven, Ernst, Thune,
Daines, Fischer, Stabenow, Brown, Klobuchar, Bennet,
Gillibrand, Donnelly, Heitkamp, Casey, and Smith.
STATEMENT OF HON. PAT ROBERTS, U.S. SENATOR FROM THE STATE OF
KANSAS, CHAIRMAN, U.S. COMMITTEE ON AGRICULTURE, NUTRITION, AND
FORESTRY
Chairman Roberts. I call this hearing of the Senate
Agriculture, Nutrition, and Forestry Committee to order. I want
to thank my colleagues for joining us in reviewing the
nominations of the individuals that are before us today: Mr.
Dan Berkovitz, of Maryland, for the position of Commissioner,
the U.S. Commodity Futures Trading Commission, and Mr. James
Hubbard, of Colorado, for the position of Under Secretary of
Natural Resources and Environment.
While serving different functions, both the CFTC and the
Department of Agriculture play critically important roles in
supporting our Nation's farmers, ranchers, growers, and
landowners while also ensuring our Federal lands are properly
managed.
The Committee has been reviewing and considering
nominations as quickly as possible. It is crucial to have these
positions filled as both are very important positions at the
CFTC as well as the USDA.
The Committee has received multiple expressions of support
for nominees from organizations all throughout the agriculture,
natural resources, and financial market sectors. I am very
grateful to all of these organizations for voicing their
support for these fine nominees.
Without objection, I am entering the letters of support
into the record.
[The letters can be found on pages 36-50 in the appendix.]
Chairman Roberts. Gentlemen, I also note that you have
family and friends in the audience today. Allow me to welcome
you to the Committee. Would you please stand? Thank you.
[Applause.]
Chairman Roberts. Again, I thank the nominees for being
here today. I look forward to your testimony.
I now recognize my distinguished colleague, Ranking Member
Deborah Stabenow, from the great State of Michigan, for her
opening remarks.
STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR FROM THE STATE
OF MICHIGAN
Senator Stabenow. Well, thank you, Mr. Chairman, and I am
pleased to be back here with yourself and with the Committee,
and I just want to note this is the first time we have been
together since we passed the farm bill. In case folks have not
heard, Mr. Chairman, under your leadership we moved quickly to
pass it through the Senate on a historic bipartisan vote of----
Chairman Roberts. What was that vote?
Senator Stabenow. 86-11.
Chairman Roberts. 86-11.
Senator Stabenow. Two folks were not there that would have
also voted yes, so we count it as 88, actually.
[Laughter.]
Senator Stabenow. I just want to thank you and I want to
thank all the members of the Committee for showing how the
Senate should work. So I appreciate it very much, and I
appreciate your leadership, Mr. Chairman.
Chairman Roberts. Thank you.
Senator Stabenow. Mr. Hubbard and Mr. Berkovitz,
congratulations to both of you, and welcome to your families
who are here today. While the two of you will serve in vastly
different roles within the Government, both of you will serve
in important positions that affect the lives of many people.
Mr. Hubbard, as Under Secretary for Natural Resources and
Environment at USDA, you will oversee the U.S. Forest Service.
You have had a long and distinguished career working on
forestry issues at both the State and the Federal level. As the
Forest Service once again faces a challenging wildfire season,
we need strong leadership at the Department now more than ever.
We have seen how climate change has exacerbated drought and
insect infestations in our forests while more and more people
are building homes in forested areas. There is no silver bullet
to stopping modern-day mega fires, but the agency must do
everything it can to protect lives and property during
wildfires.
Our Committee has taken an active role in this topic. In
the recently passed omnibus, Congress finally fixed the
longstanding issue of the Forest Service's broken budget. The
Senate farm bill's forestry provisions build on the omnibus to
encourage science-based and collaborative restoration of our
national forestlands.
Beyond suppressing wildfires, the Forest Service also
manages land for hunting and fishing, timber harvesting, and
wilderness preservation, among other important things. Our
public forestlands help drive an outdoor recreation industry
that contributes nearly $1 trillion to the economy across the
country and certainly a major role in Michigan. It also creates
thousands of jobs across the country, and, again, jobs in my
home State. Mr. Hubbard, it will be up to you to continue to
foster that growing segment of our economy.
Finally, very importantly right now, we need strong
leadership to reverse the culture of sexual misconduct that has
unfortunately plagued the Forest Service for decades.
Harassment and misconduct are not--not--acceptable. The Forest
Service must do a better job of establishing a culture where
sexual misconduct is not tolerated, where accusations are
investigated thoroughly and properly, and where offenders are
held accountable.
Mr. Hubbard, if confirmed, you would lead the effort to
right the ship at the Forest Service on sexual misconduct
matters. I look forward to hearing how you will oversee the
agency and demand accountability on these very important
issues.
Mr. Berkovitz, you have been nominated as well for a very
important position. Farmers, manufacturers, and consumers all
rely on our futures and swaps markets to provide stability and
certainty, and the CFTC plays a critical role to ensure these
markets are free of fraud and abusive practices.
Mr. Berkovitz, you have a tremendous amount of experience
and a deep understanding of agricultural concerns. As General
Counsel at the CFTC, you helped implement many reforms after
the devastating financial crisis. More recently, while in the
private sector, you have seen how market participants have
applied those rules. It is critical that we never return to the
risky behaviors that caused the Great Recession. Millions of
hardworking Americans faced job losses and financial ruin
through no fault of their own. The CFTC must continue to
progress to complete the rulemakings under the Dodd-Frank Act.
For instance, we need movement on the long-delayed position
limits rule so that market participants have the clarity they
need. The CFTC also must be thoughtful in how it considers
changes to its existing rules so that customers remain
protected and our markets remain strong.
Thank you again to both of you for being here and for being
willing to serve. If confirmed, your work and leadership will
have a significant impact on our forests, our markets, and our
people.
Thank you, Mr. Chairman.
Chairman Roberts. Thank you for your opening remarks,
Senator Stabenow.
I now welcome our panel of nominees this morning.
Our first witness today is Mr. Dan Berkovitz, who was
nominated by President Trump to serve as a Commissioner on the
U.S. Commodity Futures Trading Commission. Mr. Berkovitz most
recently was a partner at the law firm Wilmer Cutler Pickering
Hale and Dorr, where he was co-chair of the firm's futures and
derivatives practice. During this time he served as an adjunct
professor of law at Georgetown University. Prior to joining
Wilmer Hale, Mr. Berkovitz served as General Counsel for the
CFTC from 2009 to 2013. Before joining the CFTC, Mr. Berkovitz
served as counsel to the Senate Permanent Subcommittee on
Investigations, leading several investigations into what impact
speculators have on commodity markets. Mr. Berkovitz receive
his A.B. in physics from Princeton University in 1978 and his
J.D. from the University of California, Hasting College of Law,
in 1983.
Mr. Berkovitz, welcome. I look forward to your testimony.
For our next nominee, I will turn to Senator Bennett for
the introduction, but before I do, I want to mention Mr. James
Hubbard, who grew up in Neodesha, Kansas, and attended Kansas
State University before transferring for some reason to
Colorado State to study forest management. Senator Bennet may
think otherwise, but we just might need to further examine Mr.
Hubbard's decision to transfer from Kansas State at some point.
[Laughter.]
Chairman Roberts. I now turn to Senator Bennet for
introductions.
Senator Bennet. Thank you, Mr. Chairman, and thank you,
Ranking Member Stabenow, as well, for holding this hearing. It
is my pleasure to introduce a fellow Coloradan, Jim Hubbard, as
our nominee to serve as Under Secretary for Natural Resources
and Environment at the USDA.
Mr. Hubbard arrives with over 40 years of forestry
experience. He served at the U.S. Forest Service for 11 years.
As the Deputy Chief for State and Private Forestry there, he
promoted a collaborative cross-boundary approach to forest
management. Before that, Mr. Hubbard served as Director of the
Office of Wildfire Coordination at the Department of Interior
where he oversaw the implementation of the National Fire Plan
and coordinated across the five land management bureaus. Prior
to his Federal service, Mr. Hubbard worked for the Colorado
State Forest Service for over 34 years, including 20 years as
our State forester from 1984 to 2004. His tenure included the
largest wildfire in Colorado history, the Hayman Fire.
Mr. Hubbard is also no stranger to this Committee, Mr.
Chairman. In 2013 he testified before our Forestry and
Conservation Subcommittee about the growing risk of wildfire
and the need to end fire bombing. Now that we have finally
ended fire bombing in the 2018 omnibus, I am delighted to
welcome Mr. Hubbard back, and I look forward to working with
him as new resources become available to safeguard the health
of our watersheds. These investments are critical to Colorado.
Going forward, we know that the challenges of wildfire will
continue to grow in a changing climate, and the conservation of
our public lands will be as important as ever with the rapid
population growth in Colorado. These trends make it all the
more important that we have leaders at USDA like Mr. Hubbard,
leaders with decades of experience, with an appreciation for
the importance of national forests to our economy, leaders who
are focused on solving problems, working collaboratively and
thinking creatively. We are fortunate to have such a qualified
nominee for that position.
I want to close by thanking Mr. Hubbard for coming out of
retirement and offering to serve once more.
Thank you, Mr. Chairman.
Chairman Roberts. As is the tradition and custom of the
Committee before nominees and witnesses are to provide
testimony, we need to administer the oath. If both of you 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. Berkovitz. I do.
Mr. Hubbard. I do.
Chairman Roberts. Second, do you agree that, if confirmed,
you will appear before any duly constituted committee of
Congress if asked to appear?
Mr. Berkovitz. I do.
Mr. Hubbard. I do.
Chairman Roberts. Thank you. We look forward to your
testimony Mr. Berkovitz.
STATEMENT OF DAN M. BERKOVITZ, OF MARYLAND, NOMINATED TO BE A
COMMISSIONER, COMMODITY FUTURES TRADING COMMISSION
Mr. Berkovitz. Chairman Roberts, Ranking Member Stabenow,
and Members of the Committee, thank you for the opportunity to
appear before you. It is an honor to be here today.
I would like to thank President Trump for nominating me,
Minority Leader Schumer for recommending me, and others who
have supported me throughout this process. I also would like to
thank the staff for the consideration they have afforded me.
My wife, Michelle, daughter, Zoe, son, Eli, and niece,
Elizabeth, are with me here today and I thank them for their
steadfast support. My mother is watching this on the webcast
back home in Indiana--hi, Mom--and I thank you very much.
The U.S. commodity markets are the strongest----
Chairman Roberts. What is your mother's name?
Mr. Berkovitz. Anna.
Chairman Roberts. Anna, welcome to the all-powerful Senate
Agriculture Committee.
[Laughter.]
Chairman Roberts. Your son's very lucid and pertinent
comments.
Mr. Hubbard. Thank you. The U.S. commodity markets are the
strongest and most liquid commodity markets in the world. These
markets are essential to our Nation's economy and to the well-
being of millions of Americans. A robust regulatory program is
a cornerstone for the strength of these markets.
The basic purpose of these commodity markets is to enable
American businesses--including farmers, ranchers, producers,
manufacturers, and consumers--to manage the price risks in
their business. The regulatory system must prevent and
prosecute fraud and manipulation, ensure the safeguarding of
customer funds, provide a fair and transparent manner for price
discovery, protect customers, and enable innovation. I have had
the privilege of working with this Committee on several
previous occasions. As Senate staff under the leadership of
Senator Carl Levin, I worked with the members and staff of this
Committee, on both sides of the aisle, on the legislation in
the 2008 farm bill to regulate energy swaps.
At the CFTC, I had the privilege of leading the legislative
assistance and drafting team, which provided nonpartisan
technical assistance to the Congress--including this
Committee--during its consideration of the Dodd-Frank Act. I
look forward, if confirmed, to continuing to work with the
members of this Committee.
The Dodd-Frank Act, the CFTC's regulatory program to
implement the act, and the industry's implementation of those
regulations have substantially reduced systemic risks,
strengthened market integrity, enhanced transparency, and
improved public confidence in these markets.
The CFTC's work to implement the act is not yet complete,
however. If confirmed, I will work with my fellow Commissioners
to complete the outstanding rulemakings to limit speculative
positions, establish capital requirements for swap dealers, and
permanently set the de minimis threshold for swap dealer
registration in a timely manner.
My work in private practice has given me an appreciation of
how the CFTC's regulatory program affects end users and market
participants. I am aware of the importance to market
participants that the CFTC's regulations be clear and applied
in a consistent way. I understand the potential impacts of new
regulations on businesses. It is critical that the CFTC
consider these impacts when enacting new regulations,
consistent with the governing statutes.
The CFTC must carefully monitor the commodity markets to
evaluate and respond to new information and market conditions.
The emerging markets for cryptocurrencies are just the latest
example of new market conditions the CFTC must address. The
CFTC also must continue to examine its existing regulations to
ensure that they serve their intended function and
congressional directives in the most efficient and effective
manner.
I strongly believe in transparency and openness to public
comment. If confirmed, I am committed to close consultation
with stakeholders, Members of Congress, and other interested
persons.
The CFTC also should continue to consult and coordinate
with other Federal regulators to better inform its regulatory
decisions and avoid conflicting or duplicative regulations.
Harmonization internationally is important to reduce
systemic risk globally, avoid market fragmentation, and prevent
regulatory arbitrage. The CFTC should continue to be a global
leader in this area.
I am enthusiastic about returning to public service. If
confirmed, I pledge to work with each of the members of this
Committee to ensure the CFTC's regulatory program serves the
public and protects the farmers, ranchers, producers, and
customers that rely on the futures and swaps markets.
Thank you for your time and consideration. I look forward
to answering any questions you may have.
[The prepared statement of Mr. Berkovitz can be found on
page 28 in the appendix.]
Chairman Roberts. Thank you, Mr. Berkovitz.
STATEMENT OF JAMES HUBBARD, OF COLORADO, NOMINATED TO BE UNDER
SECRETARY FOR NATURAL RESOURCES AND ENVIRONMENT, U.S.
DEPARTMENT OF AGRICULTURE
Mr. Hubbard. Chairman Roberts, Ranking Member Stabenow, and
members of the Committee, I thank you for your time and
consideration today for my nomination as Under Secretary for
Natural Resources and the Environment at the U.S. Department of
Agriculture. I would like to thank President Trump for the
nomination and Secretary Perdue for his support.
I was raised in Kansas, and it was a good upbringing, sir.
It was with the working people close to the land. My
commitments run deep. I did marry my wife, Cindy, 53 years ago,
and she is with me here today. Three daughters and seven
grandchildren are not, but they, too, are watching.
My professional career was 48 years of public service in
Oregon and mostly in Colorado, with 20 of those years as the
State forester. The Hayman Fire, as was mentioned, that became
a dominant issue in the State. It showed us that we did not
have room for those large fires where we had people and
development along the front range of Colorado anymore, and we
needed to do something about it. The ``something about it''
necessarily meant crossing boundaries. It was not one
ownership. It was multiple ownerships, and you had to do it at
a scale that would make a difference.
Out of that working across those boundaries came the Good
Neighbor Agreement. The Good Neighbor Agreement allowed the
State and the Federal agencies to coordinate on implementing
high-priority projects. That was a pilot in Colorado. It proved
useful enough that it became permanent and national.
I continued national policy work with the National
Association of State Foresters. I served as their legislative
chair for 10 years, and that is the 50 State foresters dealing
with a bipartisan agenda, and in 1990 I was president of that
association, and in 1990 we were part of passing the first
Forestry Title in the farm bill, as were some of you. I thank
you for that.
I moved to D.C. full-time to work on fire issues with the
Department of Interior and with the Forest Service. I retired a
little over a year ago, but for some reason I still feel the
need to serve. In that regard, I would like to turn to three
priorities that I would deal with, if confirmed.
No. 1 would be provide a safe, inclusive work force,
workplace.
No. 2 would be increase sustainable active land management.
More work needs to be done. That work needs to be a shared
priority with the States. It needs to be across those
boundaries and at scale.
Third, I would pay attention still to this issue of fire
and fire protection across jurisdictions. We need agreements.
We have agreements, but we need further agreement on fire
response, on risk mitigation and hazard reduction, and on
community protection.
Specifically to the first priority, Secretary Perdue speaks
of doing right by everyone. I subscribe to that, and I would
personally provide the leadership to ensure everyone is free of
harassment. All instances would be quickly identified; and
accountable actions would be taken. The Financial Stability
Oversight Council has already taken some steps, but it would be
my first briefing to find out where they are. It would be to
reinforce their actions and strengthen as needed. Harassment
has no place anywhere.
To conclude, I would like to thank Congress for addressing
the fire financing issue and the forest management provisions
provided in the omnibus bill. This is a big step toward
improving the health of our Nation's forests. I pledge that
these forests and grasslands have a sustainable future. We have
a unique asset in our natural resources, and I would want to
see that continued.
I am honored to be with you today. I thank you, and I look
forward to your questions.
[The prepared statement of Mr. Hubbard can be found on page
31 in the appendix.]
Chairman Roberts. We thank you, sir.
Mr. Berkovitz, in your opinion, what is a hedge? That
sounds pretty simplistic, but I want to get into what
flexibility should be provided regarding what is considered a
bona fide hedge. How will you ensure hedging is reflective of
the risk management needs of farmers and ranchers and growers
and those who purchase from them, especially in these uncertain
times with regards to our country's trade policy and so much
retaliation that we are experiencing?
Mr. Berkovitz. Thank you, Senator. A hedge is really when a
farmer, for example, wants to ensure that they have a
predictable price for the crop that they anticipate coming to
harvest, that they can go on the futures market and purchase or
sell a futures contract. If they are growing a crop, they would
sell the futures contract to ensure that they would have a
definite price for the sale of that crop in the future, and
that way there is price stability and predictability and the
farmer is protected against future volatility and price swings.
A fundamental purpose of the futures markets is indeed to
enable farmers, ranchers, producers, manufacturers, and users
to obtain such price protection, to protect them against price
risks and ensure that stability.
In the Commodity Exchange Act, Congress has directed the
CFTC to protect hedgers and end users in a number of aspects.
For example, under the position limits regime, speculative
positions are limited, but hedging positions are not limited.
So the CFTC needs to be cognizant of those needs in that
community in numerous areas that it regulates.
Chairman Roberts. I appreciate that. Crop insurance has
become an increasingly critical risk management tool for
farmers, ranchers, and growers. It is a longstanding priority
for me and our distinguished Ranking Member. Given the direct
relationship between futures markets and crop insurance,
specifically as a pricing benchmark at planting and harvest and
a volatility indicator, what is your opinion on the role of
speculative investment through managed funds, index funds, and
similar instruments? What impact have they had on volatility
and convergence in commodity contracts and ultimately impact
the effectiveness of the crop insurance program? I might add
when the distinguished Ranking Member and I were conducting
hearings all across the country, crop insurance was the No. 1
issue, and it is especially important today with some of the
extreme weather that we have experienced, not to mention, and I
will say it again, a big question mark with our trade policy.
Mr. Berkovitz. This is, I think, one of the fundamental
purposes and the reasons why, if confirmed at the Commission, I
would work with my fellow colleagues to establish a position
limits rule on speculative positions to ensure that speculative
positions do not have any undue impact or effect on commodity
prices. That is one of the purposes of those regulations, and
CFTC has some additional work to do to complete the rulemakings
that Congress laid out in the Dodd-Frank Act. I think those
rulemakings and those speculative position limits are important
to achieve those goals.
Chairman Roberts. Mr. Hubbard, how do you view the role of
proactive forest management as a tool to prevent, mitigate, and
address wildfire? If confirmed, how will you lead the Forest
Service to promote more forest management on the national
forest system? Senator Daines--we had a wonderful meeting up in
his State, Montana, and then Secretary Perdue, one of the best
meetings that I have had with regards to sitting down with
folks and on the wagon talking, asking them questions. Then we
went up to Glacier National Park, and as you go down into Lake
McDonald up there, still that forest fire of 2003 is still
gray, some green coming up. There is what they advertise as a
``senior walk'' through the forest. The people who were in
charge of that determined that that would be the appropriate
walk that my wife and I should take. I insisted that was not
the case but agreed. But even in that, just about half a mile
up the road on the Going-to-the-Sun Highway, you go in there,
and I was stunned with all the old forest growth. All it takes
is one lightning strike or some incident.
I think last year Montana had 27 fires. If Senator Bennet
were here, he could name the number right off with regards to
Colorado. This has become just a top priority for you, and I
know you mentioned that in your comment. Please respond.
Mr. Hubbard. Thank you, Senator. I think that we should
recognize that our Western forests are in a condition that are
going to continue to be a problem, and it is vast acreages. A
lot of that forest was created by disturbance, and it is at the
point in its life cycle where it is ready to be regenerated by
disturbance--fire, insect, disease. So that will be with us.
More active management does help, and you just have to pick
the right places to make your investment. The Forest Service
has good analytics to determine those choices, but I do not
think it can be just the Forest Service alone. I do believe in
cross-boundary work, and I do believe in sharing the priority
decisions based with the States. My approach, if confirmed,
would be to sit down with the States and determine where we can
do the most good and where we should make our investment.
Chairman Roberts. I appreciate that.
Senator Stabenow?
Senator Stabenow. Thank you, Mr. Chairman.
Just to follow up on the improvements that we made, the
tools that we made available in the omnibus and how we move
forward in managing that, the package that we passed Secretary
Perdue called ``meaningful reforms and forest management
tools.'' However, Chief Christiansen indicated little work has
been done yet on the new tools, and so my question is
acceleration. How do you intend to really accelerate the use of
the new authorities that we gave earlier in the year,
particularly with the threats to the forests?
Mr. Hubbard. Thank you, Senator. I do strongly believe in
sharing that space with the States, so that would be my first
step, is to sit down. What are our priorities? Where should we
do our work? It is good that we have the range of tools because
we are going to find we need different things in different
places. That is helpful in making that happen.
The acceleration is going to come from the leadership of
the Forest Service, and it is going to come from meeting with
those regional foresters and having those regional foresters be
a part of that discussion with the State. Then I would intend
to publicly announce what our intentions are and go to work.
Senator Stabenow. We have also added some new budget
flexibility, and so looking longer term, do you at this point
have thoughts on how you would use that flexibility?
Mr. Hubbard. I do. The Forest Service is an agency, I
believe, that wants to meet expectations. They just need to
know what those clear expectations are and what their focus is.
I would suggest that we focus on more active management,
applying those tools with the State, and then pay attention to
where we need to do hazard reduction for fire protection,
especially around communities.
Senator Stabenow. Thank you. Then speak a little bit more
about what has happened in terms of the culture of the Forest
Service. Last week USDA provided the Committee with data
showing that over the past 2 years alone--we know this has been
going on, unfortunately, for a long time, but during the last 2
years, the Forest Service had 183 reports alleging sexual
harassment. Of the 128 cases that they have closed so far, they
found 77 confirmed cases of misconduct. These are high numbers,
really, for an agency.
How would you personally address this coming in and
providing new leadership? Also, I want to make sure that the
people bringing these complaints do not face retaliation. So
how do you intend to approach that as well?
Mr. Hubbard. Those are good points, Senator. Thank you. I
really would, if confirmed, make my first briefing from the
agency what are they doing here and bring me up to speed on
what is happening and help me explain it better and especially
help me understand what actions they are taking. This idea that
it is safe to come forward is essential, and I would stress
that, the idea that we quickly followup and that we do take
action and that we send that signal to everybody, because I
firmly believe, regardless of the number--even if it is just
one--harassment has no place.
Senator Stabenow. Thank you. We will be working with you
closely. This is an area that really needs your leadership.
Mr. Berkovitz, given the considerable progress that the
CFTC has made during the passage of Dodd-Frank and the
implementation of the Commission over the last number of years,
what is your philosophy on how the agency should proceed in
terms of the years to come?
Mr. Berkovitz. Thank you, Senator. As I said and as you
have noted, I think the agency has made substantial progress in
implementing Dodd-Frank. Dodd-Frank has substantially improved
the resilience of our financial markets, and reduced systemic
risks. That does not mean our work is complete. You cannot just
address the last crisis. You have to be vigilant to examine
evolving market conditions and try to get ahead of the curve.
Financial crises never appear in the exact same way. New risks
are continuously emerging. We are seeing cryptocurrencies and
various other things, new products come onto the market.
So one of the things that I would do, if confirmed, is try
to get ahead of the curve on these. Use the data that the
agency is getting, ensure it is good-quality data, that the
agency can use the data, and have our market experts look at
the data and inform the Commission of emerging risks. I think
it is very important to be proactive in these markets.
Senator Stabenow. I agree with you, and I am wondering what
do you think the most important thing is that the CFTC can do
to better ensure that we do not return to the excessive risks
that caused the Great Recession.
Mr. Berkovitz. Well, I think we need to continuously watch
these markets and we need to get better data. The agency is
getting a lot of data. It has to improve the quality and
consistency of that data, and it has to ensure that it is
properly interpreting that data to stay ahead of the market
conditions. So I would put significant effort in that regard.
Senator Stabenow. Thank you.
Thank you, Mr. Chairman.
Chairman Roberts. Senator Boozman.
Senator Boozman. Thank you, Mr. Chairman. Thank you all for
being here, and thank you very much for your willingness to
serve.
Mr. Hubbard, I am pleased that you talked about forest
management. You talked about it, Senator Roberts talked about
it. I think it is important to many of us on the Committee. It
is important in the sense of for all kinds of reasons: habitat,
water quality, erosion, and the list goes on and on. I do not
want to go further than that, just to say that we do appreciate
your efforts in that regard.
You have been around for a long time in the public and
private sector, and you have lots of experience. You have seen
all kinds of different projects through the years. Some have
worked well, some have not worked so well in the Forest Service
and others.
Can you talk about some projects that you feel like that
maybe we need to invest more in? Then also maybe talk about
some projects that are not working as well.
Mr. Hubbard. Certainly. Thank you, Senator. The projects
that work well that I have found is where we are working
together, and that is what brought me from the Good Neighbor
Agreement in Colorado following fires to try to reduce the
wildfire risk across those boundaries. The Hayman Fire
essentially missed the edge of Denver mostly because of a
prescribed burn that the Forest Service had done, a
controversial prescribed burn because it occurred over a 2-week
period and it put a lot of smoke in the air. People did not
like that. In the end it is what saved southwest Denver from
that fire. It was not just on national forest. I crossed that
boundary.
So this idea of working together to decide what our
priorities are and the idea of implementing those priorities
across that boundary at a large enough scale to make a
difference becomes very important in trying to deal with those
issues.
Further than that, the kind of assistance that you have
seen provided for landowners is critical. Landowners are good
stewards. They want to make the right kind of decision. When
they have the help in making that kind of decision and they
have the kind of collaboration and coordination across the
boundary, they will produce a healthy forest.
Senator Boozman. Very good.
Mr. Berkovitz, we had a good meeting yesterday--I enjoyed
that--and had a good discussion. We talked about the importance
of and understanding of agriculture. The CFTC really initially
was for that, for hedging for our farmers and things like that.
Now it is much more than that. It has gotten very, very
complicated.
Can you talk a little bit about, if you are confirmed, how
you are going to engage in those involved in agriculture to
better understand and then also for them to better understand,
you know, exactly what goes on with the Commission?
Mr. Berkovitz. Thank you, Senator. I very much look forward
to continuing to work with the agricultural community and
groups. When I was on the Senate staff on the Senate Permanent
Subcommittee on Investigations, we were examining various
commodity markets. That is when I first became acquainted with
the agricultural markets and their rich history and really the
unique history of each of the markets. We talk about the
agriculture markets, but for each of the crops how the futures
markets work--they can be very different. Each agricultural
crop has unique market characteristics, and I have always
enjoyed learning about those and working with the various
groups. I would look forward continuing to work with those
groups to be educated on how the CFTC's regulatory program
affects each of the agricultural commodities. I intend to have
a very open, transparent office, and I invite folks to come in
and meet with me if there are concerns, if they need further
information about what the CFTC is doing. I am also very
willing to go out and meet, to go and visit folks in their
communities and in the various States. So I am very much
looking forward to continuing to work with agricultural groups.
Senator Boozman. Very good. Thank you. I do not have time
to ask the question, but I do want to express to you, Mr.
Berkovitz, we talked yesterday about the EU's proposal to
expand their regulatory and supervisory authority to require
all foreign central counterparties to register with the EU. I
am very, very concerned that this could require the U.S. CCPs
to implement additional EU law above and beyond our U.S. laws.
So to maintain our sovereignty and thus maintain our markets I
think is very, very important.
Thank you, Mr. Chairman.
Chairman Roberts. I would encourage the Senator to submit
that question for the record.
Senator Klobuchar?
Senator Klobuchar. Thank you very much, Mr. Chairman.
Congratulations to both of you.
I think I will start there with Mr. Berkovitz on the
renewable fuels and the standard and the RINs. In March the
CFTC entered into a Memorandum of Understanding with the EPA
related to the RINs market, and those are the renewable
identification numbers. This included the EPA sharing the RIN
data and information so that the CFTC could better advise about
ways to minimize fraud.
What advice would you provide to the EPA regarding the RINs
market as a Commissioner? As you know, Senator Grassley and I
have led a number of letters, and others on this Committee have
been involved. The issue is that the EPA has been granting a
bunch of waivers--now the Secretary is gone, so we hope that
stops--to oil refineries, and we believe the best way to get
out of this is just by blending fuels and moving ahead. I
wanted you to talk about what could happen with this RINs
market and what we have to watch out for given what we have
been seeing.
Mr. Berkovitz. Well, Senator, thank you for the question. I
would very much look forward to implementing that Memorandum of
Understanding and continuing to provide that technical
assistance. The CFTC has a lot of experience and I think it can
offer to the EPA much in the area of that experience and
assistance in helping EPA meet it's responsibilities with
respect to that market. I certainly would support the CFTC
providing whatever technical assistance they need.
Senator Klobuchar. Do you think that there is current
information on trading data? Do you think that that would
increase transparency if they had that just based on your
experience with other markets?
Mr. Berkovitz. I would have to look more deeply into that
when I am over at the agency, but I would definitely look into
that and do that when I am over there. Thank you.
Senator Klobuchar. I appreciate it. Your mother will be
proud if you do that, so thank you.
With you, Mr. Hubbard, I am going to turn to some of the
issues on forestry and fires. The Forest Plans for the Superior
and Chippewa National Forests in Minnesota for the management
of both young and old growth habitats are in place. Grasslands,
pastures with shrubs, young forests, known collectively as
``early successional habitat,'' can have significant benefits
for game species and forest health, but their development
requires an active and sustainable timber program.
How will you ensure that the national forests in my State
and other places meet Forest Plan goals for these types of
early successional habitats?
Mr. Hubbard. Thank you, Senator. When I spoke of the Forest
Service needing some focus, that is part of it, that more work
on the ground for sure needs to be done. We need to find ways
of focusing on that work and getting it done.
I believe even with the national forests that they operate
within a landscape that is a larger scale, so I think the idea
that we collaborate on the actions to be taken and that then we
publicly declare ourselves accountable is a step. The work
needs to be done for sure, and we are not doing enough.
Senator Klobuchar. Right. We have worked, of course, to
expand the Good Neighbor Authority, and in the 2018 bipartisan
budget agreement, in this farm bill, as noted and you noted
there are some provisions. Senator Daines and I have a
provision in there to improve coordination across Federal and
private boundaries. I think there is good work and
acknowledgment on a bipartisan basis, but we are still having
these fires, and I think there are still huge management issues
of the forests. So if you could just in the last minute just
walk through how you would actually implement some of these
plans.
Mr. Hubbard. Certainly. Thank you. I would begin by
approaching the State and deciding priorities, that if we
cannot cover everything, what is most important? Where do we
want to focus our work?
I would then go to those regional foresters and say: We
have got a lot of assets. How do we want to apply those assets?
Because right now a priority would be to get more active
management on the land, especially where that active management
reduces wildfire risk and protects communities.
So the Forest Service can come up with those plans, but I
want to do the comparison with the State to decide where it is
most important to implement those plans and get those projects
underway.
Senator Klobuchar. Thank you.
Chairman Roberts. Senator Fischer.
Senator Fischer. Thank you, Chairman Roberts and Ranking
Member Stabenow, for having today's hearing.
Agriculture is the backbone of Nebraska's economy, and it
is a big part of my own life. As a rancher, I know that
agriculture can be a very risky business. Ag producers often
seek to hedge their products using commodity derivatives. The
Commodity Futures Trading Commission plays a crucial role in
ensuring that there is a stable, liquid, and transparent
market.
Mr. Berkovitz, if confirmed, you will be taking a
leadership role in an agency during a critical time, and you
will be forced to address many difficult challenges, and I look
forward to learning more about your background and
qualifications for this role, which is so important to my
constituents and all Americans.
Mr. Berkovitz, in your testimony you say that the American
commodity markets are the most liquid in the world. I do not
need to tell you that our farmers and ranchers rely on these
markets to hedge the price of the products before harvest. When
markets become not as liquid, it is harder for them to hedge or
effectively ensure their crops. It also may raise the cost of
these hedges. So can you, broadly speaking, identify what you
see as the biggest threats to this liquidity?
Mr. Berkovitz. There are a number of issues that I think
the agency has to be on the watch for in this respect with
various products. It really depends on the various particular
products, the evolving cash markets for some of these products,
evolution for certain of the products themselves, different
risk management tools can change liquidity characteristics, the
availability of bank loans, and the nature of the participants
in these markets. In some of our markets we have seen a
withdrawal of participants. There are fewer participants. That
has made it more difficult to obtain hedges for products
further in the future. That has been a concern in a number of
markets.
So I think we have to look at how certain markets are
evolving, the impacts of various economic conditions and
regulations on participants in the markets, and be vigilant in
terms of how that is affecting the liquidity in the markets.
Senator Fischer. As you know, when markets are not as
liquid, the price goes up, and it goes up for farmers. When I
am home in Nebraska, I speak to community bankers who tell me
of the difficulty of offering such products for fear of running
afoul of the Volcker Rule. I also speak to farmers who cannot
get these products. You alluded to that in your previous
answer.
These farmers and these community banks are not the Wall
Street traders that the Volcker Rule was meant to regulate.
These farmers and bankers did not cause the financial crisis.
Farming is a risky business, but they are now required to take
on even more risk.
Can you comment about the recent moves by the Federal
Reserve to change the Volcker Rule?
Mr. Berkovitz. The Federal Reserve and the CFTC have
proposed rules to amend the Volcker Rule, and one of the things
in that proposal was to establish various tiers of compliance
and lesser degrees of compliance depending on---lesser
requirements depending upon the size of the bank. So that is
something that the Federal Reserve has proposed and the other
financial regulatory agencies, including the CFTC, have
proposed to lessen the obligations upon banks with lesser
assets.
The public comment period for that is out, and if I am
confirmed, I very much look forward to reviewing the comments
on that proposal to looking at those comments, consulting with
the Federal Reserve and the other prudential regulations, my
fellow Commissioners, and making a decision on that proposal.
Senator Fischer. If I can follow up with that, we did pass
bipartisan legislation that was authored by Senator Crapo from
Idaho, the Banking Committee Chair, and the goal of this bill
was to provide targeted relief to community banks. The bill has
a provision exempting banks under certain asset thresholds from
the Volcker Rule. Again, you mentioned that in your answer. Can
you get a little more in the weeds possibly about your vision
for implementing this along with these new proposals that are
coming forth?
Mr. Berkovitz. Well, obviously, to the extent that Congress
has specified the particular exemptions, obviously it is the
obligation of the CFTC to do that. Where there is discretionary
authority, I think the CFTC has to be very cognizant of those
concerns that have been expressed, consider the costs and
benefits of the various proposals, the impacts on liquidity in
the markets and the compliance obligations, at the same time
ensuring that there is compliance. So I would look very
carefully at those.
Senator Fischer. Would you agree that the legislation that
was recently passed, though, is obviously beneficial, not just
to community banks but to people in agriculture as well?
Mr. Berkovitz. Absolutely, absolutely.
Senator Fischer. When you look at that threshold we have
for the assets.
Mr. Berkovitz. Absolutely. Yes, Senator.
Senator Fischer. Okay. Thank you.
Thank you, Mr. Chairman.
Chairman Roberts. Senator Heitkamp.
Senator Heitkamp. I am the proud co-author of Senate bill
2155, and we certainly think that community banks have, in
fact, received the kind of relief that allows them to overcome
the challenges of Volcker. We encourage additional discussion--
or at least I do. I should not say ``we.'' So I look forward to
hearing your concern.
One of the questions that I have as we look at the
commodity markets and as we look at the futures markets,
obviously we are in a difficult time for a lot of commodities
today as we look at what is happening with soybeans, what is
happening with corn, whether it is disruption, as Amy pointed
out, in the E15 rules or in allowing basically small refiners
to get exemptions, therefore giving the volumes out the back
door. This all has an effect on the corn markets. I think as we
look at disruption in trade, that is going to now raise some
concerns about how the futures markets are responding.
I would just like to hear any comment that you have, Mr.
Berkovitz, regarding how this trade war could, in fact, impact
the work of this agency.
Mr. Berkovitz. Thank you, Senator. I am aware that due to a
variety of factors there have been significant declines in
prices for a number of commodities. Weather and the trade
issues have been reported as factors. I have not had the
opportunity yet to look closely into this. I am basically
reading--my knowledge is limited right now to what I am reading
in the press. Certainly, if confirmed over at the agency, I
would very much look into the markets. There is a Market
Surveillance Unit at the CFTC which follows these, and I would
get together with the experts at the CFTC and get on top of
exactly what is happening in our commodity markets, why we are
seeing these price declines in certain of these markets at this
time.
Senator Heitkamp. Well, I can tell you with some certainty
we are seeing a price decline because we are losing markets.
When local grain elevators in North Dakota will not take
soybeans, that tells you something about what is happening with
commodity prices. So I think it is important that we not find--
I think people who would take advantage of this trade war into
speculation beyond liquidity, I mean, there is a fine line
between liquidity and speculation. We are always looking for
it. It depends on--you know, if you look at the cattle markets,
obviously I think the cattle markets are one of those markets
you have been talking about, which is we see fewer entrants,
and it is becoming more and more difficult to find liquidity in
the cattle markets. Obviously we have had the Chairman out, who
spent a lot of time, and I think he can brief you very well on
what the concerns are of North Dakota cattlemen as it relates
to the futures market.
I want to turn to you, Mr. Hubbard, and thank you again,
both of you, for your willingness to advance your careers,
provide us with great public service. Mr. Hubbard, there are
two issues that I want to address beyond all the regular ones.
We spend a lot of time with the Forest Service by an anomaly of
history. You have grasslands in my State, and that means the
grazing associations are constantly running up against
unnecessary and, I think, onerous kinds of regulations. One of
the great problems they have right now is prairie dogs. I do
not think we always feel like we have gotten the right kind of
response from the Forest Service. I want you to take a look at
the prairie dog issue. It literally will destroy your
grasslands if we do not get out ahead of this. There are a lot
of people who have, I do not know, some kind of attachment to
prairie dogs. There is no rancher in North Dakota who has an
attachment to prairie dogs. I will tell you that.
The other question that I want to raise, and I raised this
with your predecessor, and that is a case that I was involved
in when I was Attorney General in North Dakota. It is a case
involving section lines. The grasslands were reacquired in
North Dakota. We argued, and I think with a great deal of
persuasive legal reasoning, that when the Forest Service
reacquired those, they reacquired those lands with the
impediment or with the easements embedded into those lands. By
a fluke of the Department of Justice arguing that we were not
timely--and I can get into a whole discussion, but I do not
have a lot of time, and I know the Chairman is going to beat me
up here pretty quick. I would ask that you look at that case
that was decided in the North Dakota District Court, that you
try and do right by the State of North Dakota, that tried to do
right by the Forest Service and the Federal Government, and it
feels like they got burned by being patient. So if you could
look at that section line case, and obviously we need to get
out ahead of the concerns that our ranchers and our grazing
associations have regarding prairie dogs.
Thank you. Thank you both.
Chairman Roberts. Thank you, Senator.
Senator Hoeven?
Senator Hoeven. Thank you, Mr. Chairman and Ranking Member,
and thanks for having this hearing today. I also appreciate the
witnesses being here.
Mr. Hubbard, I want to start with you, and I would like to
invite you--if Senator Heitkamp did not already do it, I want
to invite you to North Dakota, and I hope you will come out and
check out our grasslands.
Mr. Hubbard. I would be happy to, Senator.
Senator Hoeven. All right. Good. We look forward to that,
and you will love it. You will love to meet our ranchers. It is
a great group. They will have some good questions for you and
some good suggestions for you on the grasslands.
We have multiple uses on the grasslands, obviously, and so
both our grazing associations and our grazers do a great job. I
really do think you need to be out there on the ground and get
a good understanding of the grasslands and meet with them and
listen to them. You know, I am serious about you coming, and I
guess my first question is: Will you commit to working with us
to maintain and strengthen the relationship between the Forest
Service and our grazers, our energy industry, and the other
multiple uses on the grasslands?
Mr. Hubbard. Thank you, Senator. Yes, I will commit to
doing that. I think any of that public ownership has to be a
good neighbor to everybody else, and I believe that comes face
to face.
Senator Hoeven. Good. I agree. I think you learn a lot by
being there, and the other thing is you will build some
relationships that will be helpful. There is no question about
it.
The next thing, prairie dogs is a good example. I do not
know if you have been out there, but the prairie dogs are
overrunning the place, and we need some help. So give me your
thoughts on that.
Mr. Hubbard. It comes back to being that good neighbor. We
cannot ignore the impacts that those lands have on the
neighbors and the community, the ranching community. So I am
not familiar with specifically what is going on in North
Dakota, but I would, if confirmed, be glad to come find out.
Senator Hoeven. Well, see, these Montana prairie dogs come
over.
[Laughter.]
Senator Hoeven. They are taking over the place, so we
either need to do something, or if you can get them to go back
to Montana, you follow me? I am teasing there a little bit.
The same thing on infrastructure, we have a lot of energy
development, so does eastern Montana. We have a great neighbor
in Montana. We appreciate them. We are working on a lot of the
same issues, so with prairie dogs, and another is energy
development, and we need to build the infrastructure so you
reduce and mitigate impacts, we capture natural--but to do
that, we have got to get permitted. So talk to me about that,
how you are approaching that issue.
Mr. Hubbard. I would have to become more familiar with that
issue, but I do know that that kind of process comes with
Federal land and it sometimes is burdensome and slow, and
streamlining it would be a priority.
Senator Hoeven. Boy, you hit the right word there,
``streamlining.'' I mean, you nailed it there. It is slow. It
is to everyone's benefit to streamline the process and get it
done.
Another is section lines. We have section lines--we have a
section line law there that gives us access on the section
line, which our farmers and the areas we farm, but our ranchers
need as well to get access. So would you commit to working with
us on the section line issue?
Mr. Hubbard. Absolutely, I would.
Senator Hoeven. All right. Then also on controlled burns.
There you have just got to work with the locals. That is a
commonsense thing. We need a real commitment that you are
willing to work with the locals.
Mr. Hubbard. Have to. Thank you, Senator, because there
should not be no prescribed fire that all the neighbors are not
aware of and accept.
Senator Hoeven. Thank you. I appreciate it, Mr. Hubbard.
Mr. Berkovitz, how do we make sure that CFTC works in a way
for our--I mean, I think the big guys always find a way to make
it work. How do we make sure that that end user, that farmer,
that rancher, you know, the smaller ag companies who are trying
to hedge their business practices, how do we make sure CFTC
works for them, that it is transparent, that the costs are
reasonable, and that they can do what they are trying to do,
which is hedge their business?
Mr. Berkovitz. Thank you, Senator. Absolutely, those are
the fundamental objectives and the purpose of our commodity
markets, indeed, as you have laid out, for the farmers and
ranchers to be able to hedge in those markets. The CFTC needs
to be and must remain vigilant and cognizant of those effects
in everything it does. I pledge, if confirmed, I certainly will
be receptive and open to agricultural producers and farmers and
ranchers to their concerns, to meeting with them, to go
visiting with them, to discuss their concerns. I will have an
open-door policy and be receptive and open to that.
Senator Hoeven. How do you make sure the credibility is
there so, again, for that small end user that is just trying to
manage business risk, he does not feel like these big hedge
funds, these big firms, derivatives, and all these different
things are manipulating or distorting markets? How do you make
sure, A, they do not and that people can have confidence that
they are not, that that is not happening?
Mr. Berkovitz. Well, certainly there are a number of
aspects to gain that confidence. Certainly being open and
receptive to public comment is one of them, but also the
enforcement program, when somebody violates the law,
manipulates the market or there is fraud, to vigorously
prosecute, regardless of size, and to enforce the law equally
and fairly across all market participants.
Senator Hoeven. Good. Thank you. I appreciate it.
Chairman Roberts. Senator Donnelly.
Senator Donnelly. Thank you, Mr. Chairman, and I want to
thank the witnesses for being here.
Mr. Hubbard, when people think of Indiana agriculture,
conventionally everybody thinks about corn and soybeans. Among
our most valuable industries in the State is hardwood
production. We are home to the Hoosier National Forest, which
is a source of great pride to our State. Our forests face a
little bit different challenge than those facing the national
forests out West. Climate change is bringing new pests and
making management more difficult. Our hardwood production is
also done primarily on private and State lands, but the Forest
Service's expertise and policies are really impactful.
Can you commit to me that protecting the Hoosier National
Forest and making sure that the Forest Service is responsive to
the unique needs of Indiana's forests is an important part of
the mission that you will be taking on?
Mr. Hubbard. Thank you, Senator. Without a doubt, I can
commit to that. I spent too much time as a State forester not
to appreciate that, and with the Forest Service, too. So I
think I understand both worlds.
Senator Donnelly. Well, when you do have a chance--I know
you will be busy getting started, but when you do have a
chance, we would love to have you come out and go for a hike
with us.
Mr. Hubbard. I would be pleased to.
Senator Donnelly. That would be great. We will bring the
water.
Mr. Berkovitz, I have been advocating for a long, long time
that position limits are an incredibly important tool in the
toolbox of CFTC to be able to prevent market manipulation. We
are now approaching a decade after the financial crisis. CFTC
has yet to finalize a position limits rule as required by
Congress. Will you commit to working on finalizing a good
position limits rule in a timely fashion?
Mr. Berkovitz. Absolutely, Senator. I agree that it is
essential that the CFTC complete that rulemaking in a timely
manner, and if confirmed, you have my commitment to work with
my fellow Commissioners toward that goal.
Senator Donnelly. Great. What other issues do you consider
priorities for the CFTC to address in the near future?
Mr. Berkovitz. I think in the near future there are several
additional rulemakings that have been proposed. There is the
rulemaking on the de minimis threshold, how large somebody is
before they have to register as a swap dealer. The public
comment period closes on that next week, I believe, and I
believe it is important for the CFTC to complete that
rulemaking in a timely manner.
I believe it is important for CFTC to be ahead of the curve
on the cryptocurrency issue. There are significant regulatory
issues, market integrity issues associated with cryptocurrency,
and I think it is important that the CFTC be vigilant in that
area as well.
Senator Donnelly. Thank you to both of the witnesses. Thank
you to your families for your willingness to serve our country.
Thanks.
Mr. Chairman, thank you.
Chairman Roberts. Thank you, Senator.
We now have the distinguished Chairman of the Conservation,
Forestry, and Natural Resources Subcommittee, whose strong
interest and contribution with regards to forest management is
welcome by all members of the Committee. Senator Daines.
Senator Daines. Thank you, Chairman Roberts, Ranking Member
Stabenow, and again, I appreciate your leadership on this
Committee, the strong vote for the farm bill that got out of
here, as well as translating to a strong vote on the Senate
floor. That is not easy, and it is the steady hand of
leadership, the two of you working together----
Chairman Roberts. That vote again, Senator?
Senator Daines. What is that?
Chairman Roberts. What was that vote again?
Senator Donnelly. Mr. Chairman, I think it was 86 in favor
on the floor, and we had--86 in favor, yes.
Chairman Roberts. Two were out that would have voted for
it.
[Laughter.]
Senator Daines. In Montana high school basketball, they
declared the mercy rule and called the game early in that
situation, so that is a good score.
Senator Donnelly. Well, I think if your record is 86 and
11, you are in first place in baseball, too.
Chairman Roberts. All right.
Senator Daines. Second, before I speak with the witnesses,
I want to thank you for your comments earlier regarding forest
management. Your visit to Montana, seeing it firsthand, Mr.
Chairman, was greatly appreciated. We have got a lot of work to
do there, and I appreciate the support we have had in this
Committee, the Agriculture, Nutrition, and Forestry Committee.
Thank you.
Mr. Berkovitz and Mr. Hubbard, congratulations on your
nominations, and thank you for your willingness to serve,
truly.
Mr. Hubbard, I very much enjoyed our recent visit regarding
your nomination to be the USDA Under Secretary for Natural
Resources and Environment. This is really important for
Montana. This position oversees the management of approximately
17 million acres. With all due respect to the Senator from
North Dakota, we tell North Dakota jokes, and they tell Montana
jokes. I think that is bigger than North Dakota, but I am not
sure. That is probably not true.
Anyway, unfortunately, chronic litigation, insects,
disease, wildfire, and other management issues continue to
impede the Forest Service from fully carrying out its true
multiple-use mission. As we speak, the fire season is just
getting started in Montana, with significant wildfire potential
expected for the remainder of the summer, despite higher than
average snowpack, good spring rains. That just generates more
grass and fuel, and we are going to probably have a tough fire
season, it looks like, in the northern Rockies, particularly
Montana.
I am fighting for three buckets of reform, Mr. Hubbard:
reducing red tape, combating fringe litigation, and increasing
the partnership between the Forest Service and State foresters
in our national forests. While recent legislation included some
good reforms, I want to say very clearly that Congress should
do and must do much, much more.
Mr. Hubbard, the Forest Service indicates it takes an
average of 3 to 4 years to prepare an EIS for a major Federal
action that significantly affects the environment. Those are in
quotes, ``major Federal,'' ``significantly affects.'' Further,
it takes an average of 2 years to prepare an environment
assessment for less impactful decisions. One rough estimate
from the Forest Service indicated the agency spends nearly $1
million every day to carry out the agency's environmental
analysis.
Do these timeframes seem reasonable to you? Do you support
efforts to streamline the environmental review process while at
the same time retaining very important public input?
Mr. Hubbard. Thank you, Senator, for all of that. The
public input is critical, and the western movement toward more
collaboratives in helping to resolve that has proven useful.
Those timelines are frustrating. Those timelines to people who
put that much work in coming to a compromise agreement is--it
is just not right. So, no, I do not consider those timelines
acceptable, and, yes, I think some streamlining would be
necessary, still protecting that public involvement.
Senator Daines. I want to shift gears and talk about the
cottonwood new information requirement. The Ninth Circuit has a
disastrous cottonwood decision ruling that triggers plan-level
consultation requirements when ``new information is made
available,'' which occurs constantly. This results in more red
tape and makes the Forest Service vulnerable in the courtroom
all for a negligible conservation benefit. In fact, since
January 2016, there have been at least six lawsuits involving
ESA new information claims. In the same time period, the Forest
Service received at least ten other notices of intent to sue,
raising ESA new information as an issue in land management
decisions. Unfortunately, the recent legislation that we passed
did nothing to address this component of the cottonwood
problem.
Mr. Hubbard, would you work with me to address this new
information loophole?
Mr. Hubbard. Thank you, Senator. Yes, sir, I would work
with you, if confirmed, because you have made some progress,
but there is still some work to be done.
Senator Daines. Keep in mind with this cottonwood decision,
in the last Congress we had the Obama Administration on board,
we had bipartisan support. The problem is we have got a little
bit of a moving target here as well on cottonwood. Thank you
for your willingness to move there.
Mr. Chairman, could I ask another question? I am over my
time, but----
Chairman Roberts. Certainly.
Senator Daines. Okay. Thank you. I want to talk about pilot
arbitration. In Montana there are currently 29 timber projects
involving 230 million board feet of lumber, timber. I grew up
in the housing business. That is a lot of houses. They are now
currently impacted by lawsuits. In addition, there are 24
forced restoration projects in Montana which have been halted
by injunctions. An arbitration pilot would ensure that we get
swifter resolution to these legal challenges, not to stop the
legal challenge but just try to get it done more quickly and
more cost-effectively.
Mr. Hubbard, do you support establishing a pilot program, a
test program, to resolve disputes regarding forest management
projects through arbitration rather than the courtroom?
Mr. Hubbard. Senator, I, if confirmed, would want to work
on that issue. I need to know more about it, and I need to
figure out what all the aspects are. That is part of one way of
streamlining some process that gets work done, and, yes, I
would be interested in----
Senator Daines. Thank you. Well, as I wrap up, Mr. Hubbard,
you have been a champion of the Good Neighbor Authority. Thank
you. You have been a champion since its inception. You have
been a strong supporter facilitating efforts to cross ownership
boundaries. In States like Montana, it is important when we
share a fence line, Good Neighbor is very important so our
national forests are better managed. I very much look forward
to your much-needed leadership, as it were, to achieve all
three buckets of reforms that I have mentioned. The resiliency
of our national forests and the future of our wood products
work force in places like Montana are at stake.
Thank you.
Chairman Roberts. Senator Smith.
Senator Smith. Just in time. Thank you very much, Chair
Roberts and Ranking Member Stabenow. Thanks to both of you for
being here today and for your willingness to serve. I very much
appreciated you taking the time to come by my office in the
last week so we had a chance to visit a little bit in person.
Mr. Hubbard, I would like to ask a question related to the
National Environmental Policy Act. In the omnibus spending bill
passed in March, the Forest Service granted a new categorical
exclusion from the National Environmental Policy Act for
projects that removed high-risk vegetation from areas to
mitigate wildfire. Just a few months later, the White House
Council on Environmental Quality announced that they were
looking to revise NEPA in its entirety with the goal of
streamlining and speeding up the review process.
So, Mr. Hubbard, is it your view that part of your mission
as Under Secretary for Natural Resources and Environment would
be to promote conservation and sustainability in our Federal
forests?
Mr. Hubbard. Thank you, Senator. Of course it is, and----
Senator Smith. You and I talked about this. I appreciate
that.
Mr. Hubbard. Sustainability is essential, so all of our
decisionmaking has to be based on that premise. Can we do
better at that? I would be happy to explore ways.
Senator Smith. Do you think--what is your view--is there
evidence that would suggest that there is a need for further
exemption from environmental protections for projects in
Federal forests? Is there a need for that, do you think?
Mr. Hubbard. I believe that the need is in critical areas
where projects need to proceed, such as wildfire risk reduction
around a community, and when the community is taking action and
the private lands are taking action and the Federal land is
holding it up, so situations like that. That is why I believe
it is important for the Forest Service to be talking to the
State about what those priorities are and where the action is
most important to be taken and then finding ways to do that.
Senator Smith. I really appreciate that sentiment. You and
I talked about this in my office, the importance of having good
consultation and good communications and a strong, robust
public comment period. So I will look forward to working with
you on that. I appreciate that very much.
Related to that, a few of us on this Committee have the
privilege of also sitting on the Indian Affairs Committee,
including Indian Affairs Chair Hoeven, who maybe you had a
chance to talk with as well. When we met last week in my
office, we talked about how important it is that the Federal
Government conduct the proper Government-to-Government tribal
consultation. It is just such an important responsibility.
Could you just tell us a little, talk a little bit more
about that and how you see that consultation process?
Mr. Hubbard. Thank you, Senator. The tribes feel strongly
about that, as you well know, and so do I. It is Government-to-
Government. It is a sovereign situation that needs to be
respected, and so I fully subscribe to the consultation
process.
I also subscribe to the collaboration that can be done with
the tribes because they do a good job of managing their lands.
Senator Smith. I thank you for that. Of course, the Senate
farm bill has many good provisions related to the Forest
Service-tribal relationships and protecting that, including the
Good Neighbor Authority for tribes. So I appreciate that very
much.
The last thing I would just like to touch on, and we also
spoke about this in my office. As you know, nearly half of the
Chippewa National Forest in my State of Minnesota is within the
Leech Lake Band of Ojibwe Reservation, and I have introduced a
bill to authorize a land transfer that would return ownership
of about 11,700 acres of that land in the Chippewa National
Forest back to Leech Lake. It was wrongly in error committed--
you know, done incorrectly. We want to fix this through some
special secretarial transfer process. We talked a little bit
about this bill, and I wanted to just see if--you probably have
not had a chance to look at it yet, but I very much look
forward to working with you on that one if you have any
thoughts on that.
Mr. Hubbard. If confirmed, I would be happy to work with
you on that.
Senator Smith. Thank you very much. That is very important
to us, and I appreciate your partnership on that.
Thank you very much, Mr. Chair. I yield back my time.
Chairman Roberts. Thank you. Senator.
Well, Coop, you are up.
[Laughter.]
Senator Thune. Thank you, Mr. Chairman. It is not even high
noon yet, so we are here early. I appreciate you and Ranking
Member Stabenow holding this hearing. I want to thank our
nominees for their willingness to serve and the families that
support that service. Thank you all for being here as well.
Mr. Hubbard, we have approximately 80 million acres of
trees that are projected to be at risk of widespread mortality
because of insects and disease, and despite recognition of the
dire need to increase on-the-ground forest management
activities, increases of timber sold through timber sales and
stewardship projects to address these concerns have been slight
and at current pace will take hundreds of years to treat those
already identified at-risk areas.
So the question is: What types of changes are needed to
fully treat at-risk acres and to restore our national forests?
Mr. Hubbard. Thank you, Senator. I will come back to the
notion that the Forest Service knows where their treatment
needs are and where the legal authorities to allow that kind of
a treatment. So we are not looking at wilderness areas. We are
looking at areas that need that active management. I could not
agree more that we are behind and need to accelerate that pace
and get more work done.
I also believe that that can be done, that if the Forest
Service provides the focus to the field leadership, they will
respond. They need that kind of direction.
Are there obstacles? Of course, there are, but where I
would start is the conversation with the State to discuss the
priorities. Where should we make our investments? Where is it
most important? Where does it mean different things--wildfire
protection, economy, sustainability, resilience, all of those
issues? The Federal agencies have their view. The States have
their view. I want to compare those views and decide where we
should get that work done and then use the tools available to
us to go after it.
Senator Thune. Good. Well, and on that point, collaborative
processes in the Black Hills of South Dakota and Wyoming have
been productive and resulted in numerous success stories in the
battle against the mountain pine beetle, as a case in point.
Those collaborative efforts continue with a new strategy for
resilient forests across all ownerships in the Black Hills and
have helped inform a new Black Hills National Forest timber
management project.
However, as is seen in too many other planning efforts,
objections have been filed by outside parties, and the Forest
Service may face litigation on the project in the near future.
What can the Forest Service do to move more projects
forward more quickly? How can we in Congress help that?
Mr. Hubbard. Thank you, Senator. First of all, I think the
Forest Service has to respect the processes that it has under
law, and they will, of course. I think sharing that decision
space, bringing in the stakeholders through the collaborative
process and agreeing on what needs to move forward, having that
kind of sit-down comparison with the State to decide what their
priorities are, and, of course, in all those considerations can
we get this project done would be a factor. I think we need to
decide where we can get those projects done and under what
authority we can get those done and focus our efforts there.
Senator Thune. Well, thanks, and I hope that is, as you
approach this, sort of the plan going forward, because I just
think that when you get that kind of collaboration that we have
seen in the Black Hills, for example, where you have State
authorities and Federal and private sector all sort of working
together to address some of these big problems, you want to
encourage that, not discourage it. Obviously, it is inevitably
the case you are going to end up in litigation. My hope would
be that we can see more of that, not less, and that as you
approach your work, that you will encourage more of that.
Mr. Berkovitz, we have heard complaints, especially from
our livestock producers, that the Chicago Mercantile Exchange,
or CME, is not performing as it should, which they say is
negatively impacting cattle prices. Could you just kind of talk
generally about your thoughts on that subject?
Mr. Berkovtiz. Thank you, Senator. I think that contract is
one contract that the CME, as you have noted, has been working
on and certainly, if confirmed in this position at the CFTC, I
would look into that and work with the CFTC to work with the
CME to make sure that that contract performs correctly and that
it can be used for hedging appropriately.
Senator Thune. With your future potential oversight of CME
at CFTC and based on what you now know, are there any CME
activities that concern you regarding lack of transparency or
price manipulation?
Mr. Berkovitz. Thank you, Senator. That is something that I
would have to look into if confirmed at the agency. In terms of
issues like that, I think it would be appropriate to look for
it when I am over at the agency.
Senator Thune. Okay. Well, and when you get there--and we
expect that you hopefully soon will--I hope that you will
address those concerns. Obviously, to have confidence in
markets, there has got to be optimum levels of transparency,
and anything that undermines that I think is very harmful to
the overall markets and to the people's belief that they have
got a fair marketplace.
Mr. Berkovitz. Thank you.
Senator Thune. So my time has expired, Mr. Chairman. I will
submit a couple of questions for the record. Thank you.
Chairman Roberts. I thank the Senator.
That is going to conclude our hearing today. I thank the
nominees for taking time to address this Committee and to
answer the Committee's questions. It is clear, at least to the
Chairman--Mr. Berkovitz, how old is Eli?
Mr. Berkovitz. Eli is 17, Senator.
Chairman Roberts. Well, it just appeared to me that--since
I am Chairman, obviously I paid attention to each and every
word of the Senators who have asked you questions and to your
responses, and I noticed that Eli was paying very close
attention as well.
[Laughter.]
Mr. Berkovitz. Thank you, Eli.
Chairman Roberts. That is rather unique in the
circumstances. I think Eli and myself are the only two that can
say that.
[Laughter.]
Senator Thune. We always pay attention when you are
talking, Mr. Chairman.
Chairman Roberts. It is very clear you have all exhibited
you are qualified to join the administration in the roles you
have been nominated to at the CFTC and the Department of
Agriculture. We learned a great deal today from the nominees.
Your testimony provided us significant information and a solid
basis upon which to report you out of Committee.
Per our rules, we cannot do so today but I assure you we
will endeavor to do so in the very near future.
To that end, I would request my fellow members, if they
have any additional questions for the record, that they be
submitted to the Committee clerk by 12 noon tomorrow, July
25th. We look forward to receiving your responses and to
further taking action on your nominations. We need to get you
both on board.
The Committee is adjourned.
[Whereupon, at 11:30 a.m., the Committee was adjourned.]
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