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Wednesday, March 11, 1998.








Opening Remarks

    Mr. SKEEN. The committee will come to order.

    We are on the record. Today we have with us the Marketing and Regulatory Programs of the Department of Agriculture.
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    Assistant Secretary Dunn, we want to welcome you and Mr. Figueroa of AMS, Mr. Medley of APHIS, Mr. Baker of GIPSA, and of course, we could not have these hearings and we would not let them go on unless Steve Dewhurst was here from the Budget Office.

    I would like to thank you, Mr. Dunn, for the assistance that the AMS and APHIS provided to me and my staff on a trip that we recently took to Fort Collins, Colorado. That is an amazing institution. We certainly enjoyed the trip and got an awful lot out of it.

    Mr. DUNN. Thank you, Mr. Chairman.

    Mr. SKEEN. Mr. Dunn, I will ask you to present some brief opening remarks. Your written testimony, along with those from the three agencies, will be printed full in the record. It is all yours.

    Mr. DUNN. Thank you, Mr. Chairman and Members of the Committee. I am pleased to be here before you to discuss the activities in the Marketing and Regulatory Programs at the U.S. Department of Agriculture.

    With me today is Steve Dewhurst from OBPA; Jim Baker, Administrator of GIPSA; Enrique Figueroa, Administrator of Agricultural Marketing Service; Terry Medley, Administrator of Animal and Plant Health Inspection Service.

    We do all have written statements that we will submit for the record. I would also, Mr. Chairman, like to take this opportunity to introduce Dr. Siddiqui. Dr. Siddiqui is the new Deputy Assistant Secretary for Marketing and Regulatory Programs.
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    Mr. SKEEN. Glad to have you on board.

    Mr. DUNN. Programs with the Marketing and Regulatory Program mission area contribute to all of the Department's strategic goals. We have activities to enhance economic and trade opportunity, which would significantly expand export market.

    We have activities to ensure healthy, safe, and affordable food supply—management and resources to improve our customer service and program deliveries. We fully support the Secretary's Civil Rights endeavors at the Department of Agriculture. The strategic goals for Marketing and Regulatory Programs are directed at: one, enhancing consumer access to safe, affordable, and quality products, and assuring that producers have access to competitive markets; two, facilitating global marketing of U.S. agricultural products; three, increasing customer awareness of our services; four, providing these services in an efficient, entrepreneurial and cost effective as possible; and five, creating and maintaining a diverse and highly skilled work force.

    Beneficiaries of program services, as well as taxpayers, provide funds needed to operate Marketing and Regulatory Program activities.

    In total, the appropriations and user fee resources are proposed to carry out $804 million of program level activities.

    Beneficiaries for these services pay user fees of over $397 million. Currently, Marketing and Regulatory Programs administers over 50-percent of the Department user fee programs.
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    These programs have been market tested and continue to meet the demanding challenges. In fiscal year 1999, the budget requests, an appropriation of $11.8 million for the Grain Inspection, Packers, and Stockyard Administration; $59.7 million for the Agriculture Marketing Service; and $423 million for the Animal and Plant Health Inspection Services. We will submit legislation to recover an additional $31 million in user fees. The budget assumes that this legislation will be enacted.

    Grain Inspection, Packers, and Stockyards Program goals are: one, to ensure fair, open and competitive markets for livestock, meat, and poultry; and two, protect the integrity of the grain marketing for the benefit of American agriculture.

    The 1997 GIPSA investigated over 1,800 complaints under the Packers and Stockyards Act. They found 515 violations. They resolved 46 formal cases and issued 29 new cases alleging failure to fully pay livestock sellers.

    GIPSA's Federal, State, and private grain inspection agencies provided 2.1 million official certificates on over 225 million metric tons of grain and oil seed.

    They also weighed over 97 million metric tons of grain and issued over 87,000 official weight certificates. We are requesting several critical increases in funding to improve our performance in addressing issues regarding packers and stockyards.

    As you know, the Secretary's Advisory Committee on Agricultural Concentration found an increasing concentration structure, declining marketing performance, and increasing use of complex formula and value-based marketing systems by packers continuing to raise questions about regulatory and policy significance.
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    The Advisory Committee recommended resources be added to monitoring and investigating the anti-competitive implications of structural change and behavioral practices in the meat packing industry.

    These resources would increase GIPSA's capability to support legal action that require complex, economic, and statistical analysis.

    Recent Advisory Committee on Small Farms supported that conclusion. As the result, the 1999 budget proposes an increase of $795,000 for monitoring and analyzing packer competition and industry structure, $750,000 to broaden the size and scope of poultry compliance investigations, and $225,000 to establish electronic filing procedures for annual reports which could save packers costly paper submissions.

    In addition, the budget requests $3 million to reorganize the 11 Packers and Stockyards field offices in order to implement the Office of the Inspector General's recommendations for improving Packers and Stockyards investigative capability.

    Packers and Stockyards would target their resources at three major centers: beef, pork, and poultry production and slaughter. The fiscal year 1999 budget, again, proposes legislation to authorize the collection of license fees to administer all activities under the Packers and Stockyards Act. It will also include a proposal to cover the cost of developing grain standards and methods to improving grain inspection activities.

    The Agricultural Marketing Service Program goals are: one, to facilitate the strategic marketing of agricultural products in domestic and international markets; and two, to ensure fair and competitive marketing.
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    Recently, the Agricultural Marketing Service published a proposed rule to establish national standards for organic production, and a proposed rule to reform the milk marketing orders.

    The National Organic Program addresses the methods, practices, and substance used in producing and handling organic crops, livestock, and processed products. Our goal is to develop a final rule that is acceptable to the organic community and consumers.

    The changes in the Federal Milk Marketing Order Program reforms the 60-year-old program by better reflecting current economic realities. It moves the dairy industry towards greater market orientation, while ensuring a regular, reliable supply of milk across the country.

    The final rule will enable producers to maximize returns, reduce marketing costs, and provide consumers with increased product values.

    Both of these rules have been put on the Internet. On the organic, we have received over 16,000 comments to-date. We are requesting $10.5 million in three efforts to expand the Pesticide Data Program.

    These efforts would provide a basic level of assurance regarding an abundant, available, and safe food supply that would facilitate the marketing of agricultural products.

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    First, we need an additional $2.5 million to restore the funding to the levels of 1996. These funds will maintain statistic reliability by continuing contracts with four of our ten participating states.

    Second, we need $1.7 million to protect American agriculture from unnecessary losses of pesticide registrations. The Food quality Protection Act of 1996 requires EPA to review more than 9,000 tolerances within the next ten years.

    As you know, EPA will conduct their analysis using the maximum allowable usage rates, unless we have actually pesticide residue data.

    In other words, we will lose the availability of minor use pesticides once they lose their registration. Therefore, these funds are needed to enable a rapid response to EPA's request for actually residue data that could save registered use for minor use pesticides.

    Third, we are requesting $6.3 million to begin micro-biological testing of fruits and vegetables as a part of the President's Food Safety Initiative. We will minimize the cost of collecting this information by utilizing PDP's existing sampling infrastructure, state laboratories, and data reporting capabilities.

    The budget includes an increase of $300,000 to expand international market news reporting. Agricultural marketing firms need market surveys conducted by AMS from these areas to take more timely advantage of market opportunities.

    AMS' budget also includes an increase of $500,000 for the National Organic Standards Programs. This request is critical because the proposed rule is ready to be finalized and implemented.
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    We will recover the cost of the program through user fees and deposit it in the Treasury. The Animal and Plant Health Inspection Service has five program goals. They are: one, to safeguard American agriculture from foreign pests and disease; two, minimize production losses and exploiting market disruption from exotic pest disease; three, reduce losses from pest disease and wildlife; four, ensure humane care and treatment of regulated animals; and five, to develop safe and effective treatment of scientific methods to protect the health of American agriculture.

    In 1997, APHIS had major accomplishments in their domestic and international activities. At ports of entry, APHIS inspected 77 million international passengers and intercepted 65,000 pests to protect the domestic producer from exotic pests and disease.

    They resolved unjustified trade barriers in 16 countries. These efforts were worth nearly $7 billion in exports to the U.S. agricultural commodities.

    They are the world leaders on regionalization, which is an effort to increase trade opportunities under GATT and NAFTA by recognizing pest and disease free zones within countries.

    In agriculture, the U.S. is a clear winner when these sanitary and phytosanitary standards are science-based and fair. On the domestic pests disease front, APHIS is down to having only 11 herds remaining under quarantine for brucellosis and expects complete eradication in calendar year 1999.

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    For boll weevil, the new foundation loans of $40 million from the Farmers Loan Operation of the Farm Service Agency has accelerated eradication activity for cotton producers.

    The program provides significant environmental benefits through reducing the farm use of pesticides. These new funding arrangements allow APHIS to focus on what they do best, provide technical assistance.

    The 1999 budget request for APHIS is an example of good government. They are proposing to do more with less. In 1999, APHIS requests $417.8 million for Salaries and Expenses, a $9.9 million decrease below that of 1998.

    Even so, APHIS proposes to spend $13 million more on high priority efforts, such as the $4.6 million increase in National Animal Health Monitoring Systems.

    These efforts will further safeguard American agriculture from foreign pests and disease. It will reduce production loss of an export marketing disruption from exotic pests and disease.

    These changes will help the Department meet its objective of significantly increasing exports, while meeting the World Trade Organization's sanitary and phytosanitary requirements.

    This shift can be accomplished because of past Agency program success, proposals to reinvent select programs, and proposals to encourage beneficiaries to share more in the program cost.
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    I appreciate this opportunity to present the budget for the Marketing and Regulatory Programs mission area. The proposed funding amounts and sources of funding will provide a level of service needed by our customers, farmers, ranchers, agricultural marketing industry, consumers, and also taxpayers who should get a balanced budget for the first time in 30 years.

    I encourage the committee to approve these proposals. We will be happy to answer any questions.

    [CLERK'S NOTE.—Mr. Michael Dunn's written testimony appears on pages 245 through 265. Mr. Terry Medley's written testimony appears on pages 266 through 292. Mr. Enrique Figueroa's written testimony appears on pages 293 through 307. Mr. James Baker's written testimony appears on pages 308 through 332. Biographical Sketches appear on pages 241 through 244. The Animal and Plant Health Inspection Service's budget justification appears on pages 333 through 427. The Agricultural Marketing Service's budget justification appears on pages 428 through 492. The Grain Inspection, Packers and Stockyards Administration's budget justification appears on pages 493 through 528.]


    Mr. SKEEN. Thank you, Mr. Dunn.

    I have to make the observation that once again the President's budget proposes user fees for some of your programs. There is $21.5 million in new user fees for GIPSA and $10 million for various APHIS user fees.
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    In reviewing the USDA budget, it has come to my attention that this is a user-fee laden budget. The budget assumes that these user fees are going to be enacted, so funding increases are provided in WIC, the Food Safety Initiative and other programs.

    Have these user fees for APHIS and GIPSA been proposed in the past?

    Mr. DUNN. Some of them have been proposed in the past, Mr. Chairman. That is correct.

    Mr. SKEEN. Which ones?

    Mr. DUNN. The Packers and Stockyards Program and APHIS.

    Mr. SKEEN. And APHIS as well. How has that program worked for you? What kind of returns were you getting?

    Mr. DUNN. For GIPSA, it never has been approved, as I recall.

    Mr. SKEEN. So, you did not convert them. You just proposed them.

    Mr. DUNN. Our Agency today is about one-third appropriated and two-thirds user fees.

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    Mr. SKEEN. So, you are operating on two-thirds user fees.

    Mr. DUNN. Operating today.

    Mr. SKEEN. Today. How about APHIS?

    Mr. MEDLEY. Under the proposed user fees for APHIS, we are requesting additional authority to collect user fees in 5 programs. Agricultural quarantine inspections, of course, is a major source of funding from existing user fees.

    One program, Animal Welfare, is projecting $3 million user fee collections. We currently collect licensing fees of a little under $900,000. These fees now go to the U.S. Treasury, not to the Agency where the costs are incurred for providing the service.

    Mr. SKEEN. So, you had in the past a system with user fee collections.

    Mr. MEDLEY. Only in the animal welfare program for the 5 areas proposed for new fees in our 1999 budget request.

    Mr. SKEEN. I see. It was rather limited.

    Mr. MEDLEY. Yes.

    Mr. SKEEN. Well, when will the legislation to enact these new user fees be sent up for the authorizing committee's consideration?
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    Mr. DUNN. I will defer to Mr. Dewhurst for that answer, Mr. Chairman.

    Mr. DEWHURST. All of the user fee proposals will be in one piece of legislation. We expect to get it up here, I hope, within two weeks.

    Mr. SKEEN. You had better get it up here, but I also hope that we can get it passed if you are going to rely on it.


    Let us talk about the Agricultural Marketing Services. As you may be aware, Dr. Figueroa, the 1990 Farm Bill authorized the development of nationwide standards for organic certification.

    Last year, AMS testified that the rule was going to be finalized this spring. Finally, last December the proposed rule was published with a 60-day comment period.

    Then last month, on February 6th, Secretary Glickman announced that he had extended the comment period on the proposed rule for another 45 days.

    I realize that we do not want to do anything too hastily here, but what is the map-out now on this? Has AMS completed its review of the comments of the original comment period on the proposed organic certification rule?
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    Mr. FIGUEROA. Mr. Chairman, we have not.

    The comment period will end April 30th.

    Mr. SKEEN. April 30th.

    Mr. FIGUEROA. Yes, of 1998. Secretary Glickman, on December 16th, established a target date of the beginning of 1999 for us to publish a final rule. We have 16,000 comments as of yesterday.

    It is likely that the organic rule will receive comments somewhere in the neighborhood of 25,000 to 30,000. Given that volume, we may be pressed to meet that January 1999 date, but still, that is our target.

    Mr. SKEEN. It is going to take some time to review your comments, I gather, from what you are saying.

    Mr. FIGUEROA. Yes, sir.

    Mr. SKEEN. You have not accumulated all of the data yet.

    Mr. FIGUEROA. No, sir.

    It is also conditional, as Assistant Secretary Dunn said. It is critical that we receive the $500,000 because we will obviously need to have staff and resources to complete this.
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    Mr. SKEEN. But you understand we are dealing with a moving target here. When will we get the final rule on organic standards? When will they be published?

    Mr. FIGUEROA. Our target is the beginning of 1999. That is what we are operating under.

    Mr. SKEEN. 1999.

    Mr. FIGUEROA. January 1999.


    Mr. SKEEN. Mr. Medley, it was a little over a year ago that I went down to Panama to visit with Ambassador Bill Hughes on the transfer of the screwworm project to Panama. Where are we in all of that effort? Have you done the privatization study?

    Mr. MEDLEY. Yes, Mr. Chairman.

    The privatization study was completed and shared with the Ambassador in Panama. With regard to facility construction, we anticipate starting the architectural and engineering part of the contract in 1999. We hope to have the facility completed and occupancy by 2002.

    Mr. SKEEN. Are we getting any co-sharing of funds from some of countries that will benefit from the program?
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    Mr. MEDLEY. Panama has provided some funds for the Panama facility.

    Mr. SKEEN. Yes. They were going to donate a location.

    Mr. MEDLEY. Yes. They have also contributed financially.

    Mr. SKEEN. Financially.

    Mr. MEDLEY. Yes, Panama donated about $10 million for the facility.


    Mr. SKEEN. Very good. User fees finally struck.

    You are proposing to reduce the Wildlife Services budget and change the cost share basis for the States. What are the changes that you are going to make for cost sharing?

    Mr. MEDLEY. Mr. Chairman, we are seeking to go more to a 50/50 cost share in those states that are not currently contributing a minimum of 50-percent.

    We plan to phase-in over three years for States where total Federal/cooperative program costs are less than $1 million and two years for all other States. Our objective is to have a more equitable distribution. We are trying to reduce the federal contribution in certain areas.
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    Mr. SKEEN. Could you get us a copy of the privatization study?

    Mr. MEDLEY. Yes. We will be more than happy to provide that to you.

    [The privatization study follows:]

    [CLERK'S NOTE.—The study is too lengthy to print. A copy will be retained in committee files.]


    Mr. SKEEN. We appreciate that very much.

    You are proposing reintroduction of wolves. Is this an extension of your reintroduction efforts in the Yellowstone area into New Mexico and Arizona? Do they appear to have increased demand on APHIS resources.

    If that is the case, have you had to reduce your activities in other areas to make up for this effort?

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    Mr. MEDLEY. We have not had to reduce our activities at this point.

    Mr. SKEEN. You never actually made any insertions.

    Mr. MEDLEY. In Minnesota, about $250,000 comes directly from our budget. Because of the increased wolf activity, we are fast approaching the point where we are not able to maintain the level of service necessary with our current funding.

    Mr. SKEEN. So, funds have been a restriction as far as enforcement of the program.

    Mr. MEDLEY. They have.

    Mr. SKEEN. Well, we would appreciate having a record of how that program is going.

    Mr. MEDLEY. We will definitely get it to you.

    [The information follows:]


    In Minnesota, eastern timber wolf populations have grown to record levels and are expanding to other parts of the State and into previously wolf free areas of Wisconsin and Michigan as well. Two full-time APHIS biologists are located in Minnesota to handle wolf damage conflicts, but the expanding population is rapidly exceeding their ability to ensure an adequate level of control. APHIS estimates that a total of $350,000 will be required in FY 1999, including $10,000 to begin work in Wisconsin. There are no contributions from the Fish and Wildlife Service or the State of Minnesota towards this effort. The $250,000 which APHIS is currently directed by Congress to spend in Minnesota is the sole source of funding for wolf control efforts in this State.
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    Mr. SKEEN. Ms. Kaptur.


    Ms. KAPTUR. Thank you, Mr. Chairman.

    I want to welcome Secretary Dunn and all of the gentlemen from the USDA who are with us today. We have really had quite a set of hearings here already this month. They are really quite good ones actually.

    I have several questions related to the testimony and some of the back-up information that was submitted to us. The first concerns karnal bunt.

    I am concerned about farmers being compensated for their losses as a result of this. I am curious as to whether your budget submission includes a special account for this purpose, Mr. Medley.

    Mr. MEDLEY. Our pest detection budget for 1998 contains $2 million for management of a karnal bunt national survey.

    The funds for compensation are available through emergency funding from the Commodity Credit Corporation.

    We have about $10.8 million available for compensation for producers and seed companies who suffered losses in value for wheat seed and straw in the 1995–1996 crop season.
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    Ms. KAPTUR. In the CCC?

    Mr. MEDLEY. Yes, it is a carry over account.

    Ms. KAPTUR. Now this is a District interest, but I have been contacted by a small grain dealer in our area, and I am sure other Members have the same situation, who suffered substantial economic hardship because his grain was quarantined for nine months, but then was found not to have karnal bunt.

    Does he qualify for compensation under the current Karnal Bunt Program?

    Mr. MEDLEY. Under the current requirements he would not qualify for compensation. I believe that in this situation, the grain was found to have a spore that was similar to karnal bunt, but it was from rye grass.

    Once tests verified it was not karnal bunt, we were able to release the grain. We never actually placed that grain under the Emergency Declaration, which would be necessary to qualify for the compensation payment.

    Ms. KAPTUR. Now, is the problem that he is having in getting some kind of closure on this, a problem of the legal authority?

    Mr. MEDLEY. Legal authority would be one consideration. The other consideration would be whether the Emergency Action Notice delayed your constituent from selling his grain. When he was able to sell it, the price was lower.
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    He is comparing the price he got to the price that was available months earlier. So, we would have to see, first, if there is authority to make payments. Secondly, whether or not it was the emergency action which caused the losses.

    Ms. KAPTUR. All right. Now, how would he work with USDA on this problem?

    Mr. MEDLEY. You are correct in that we have had a number of other producers that have suffered losses.

    Unfortunately, under our current provisions and statutory authority, we do not have the ability to pay unless losses were sustained under an Emergency Declaration. This gives us the authority to pay indemnity or compensation.

    This is an area where, in the past, the Department has explored to determine if some type of private relief bill would be appropriate. We have also had some producers asking whether or not they can file a claim under our Torts Claim Act.

    Currently, our General Counsel's Office opinion is that these claims did not meet our requirements for payment.

    Ms. KAPTUR. It is my understanding, that was quarantined specifically because of karnal bunt; the concern that it might be.

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    Mr. MEDLEY. Yes.

    Ms. KAPTUR. It was not his choice to have it quarantined. He wanted to sell it at that point. I guess I was very surprised to find that the law, you know, that he could not even get any redress of any kind. He suffered loss.

    You hate to go back to hit the NAFTA drum, but I am going to hit it again because this is just like the tomato people down in Florida.

    Here is another situation where one of our farmers, and many of them get hurt around the country, and we just ought to be more able to at least meet with them or figure out a way to redress some of their concerns.

    I would just ask you, Mr. Medley, if you could work with us to be fair to everyone in the country who should get some kind of quick turn around on this, so that they get answers and they can go on with their lives and their businesses.

    Mr. MEDLEY. We would be very pleased to work with these people. We realize that although we were able to save about a $5 billion market, there were losses suffered. We would want to properly address those who suffered losses.

    Ms. KAPTUR. Thank you. Thank you very much.


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    I wanted to ask you about the rule on organics, Dr. Figueroa. Some of our folks have said that the proposed rule is too weak and that in fact, it will disadvantage American producers in international markets. They believe that the rule should better adhere to industry norms and the recommendations of the National Organic Standards Board. How will your recommendation address their concerns?

    Mr. FIGUEROA. Good afternoon. As you know, Congresswoman Kaptur, we are still in the comment period. We are, as I mentioned earlier, we received 16,000 comments. The comment period will end April 30th. Then we will analyze and evaluate all of the comments.

    Secretary Glickman committed himself in his February 6th press release to indicate that we will not release a final rule that could not be embraced by the organic industry nor the American consumer.

    We are taking all of these comments very seriously. I can say that I was in New Jersey last week and I spent ten hours receiving comments. It was clear that the vast majority of the individuals that offered testimony were clearly concerned about the weakness that you have just identified.

    We have also committed ourselves to allow for further public comment after the April 30th deadline. We will embark on that process as well.

    Ms. KAPTUR. You said the final rule will come forward when?

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    Mr. FIGUEROA. Our target date is January 1999.


    Ms. KAPTUR. Thank you. I wanted to ask another question regarding APHIS. I understand that APHIS currently runs a facility related to screwworms in the Chiapas Region of Mexico.

    The proposal is that it be closed in the year 2004. I wonder if you might give us a little more detail about how many people are employed there and why it is proposed for closure?

    On pages 14 and 15 of your budget, it indicates that there have been prior labor disputes at that particular facility. I wonder if you might enlighten us a little bit about what is going on there? Then I have a final question related to this facility.

    Mr. MEDLEY. The projected closure of the Mexico facility and our movement to a Panama facility is consistent with our overall eradication plans and with our maintaining a barrier at the Darien Gap in Panama.

    This is a part of a sequential movement south, as we are successfully eradicating, to provide a permanent barrier against the screwworm reinfestation into the U.S.

    Phase-out of this production facility is scheduled for 2004 to allow for a transition period, once we begin operations, hopefully, in 2002 in Panama. Also, there were some issues having to do with management and the union within the Mexico facility.
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    Those issues have been resolved. We have been able to address the immediate concerns raised and to work out how the facility will be managed as it relates to the foreign nationals and the responsibilities inside of the facility.

    I believe that the joint U.S./Mexico screwworm commission has a little over 650 employees.

    Ms. KAPTUR. So, this is a significant presence in that very tender area of Mexico. I am deeply concerned about the people of Mexico.

    I have plenty to say about their government, but deeply concerned, particularly in the agricultural country side and about any destabilizing force in that area, certainly by the United States, I do not think would be viewed as a good sign.

    I realize the screwworm problem is a separate problem from a political problem, but nonetheless, it is the presence of the United States in that region. Are you coordinating this with the State Department so as to minimize any——

    Mr. MEDLEY. We are working with full concurrence and support of the Mexican Government.

    From a bio-security standpoint, having the facility located where the screwworm has been eradicated could jeopordize free status if there is an accident and this is why the Mexican Government also wants the facility to move south, as we are eradicating screwworm south through Central America.
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    We work very closely with our counter-parts in Mexico. We make these decisions based upon long term program goals, as well as being very sensitive to the factors that you have identified.

    Ms. KAPTUR. What will happen to the people? First of all, what are the people in that facility doing? Are these scientists?

    Mr. MEDLEY. No, they are primarily technicians. There is a lot of work associated with growing the larvae and producing the flies that we released; the billions of flies that we released for this eradication effort.

    The majority of the employees working in the facility are technicians. These people are covered by union contracts. There have been reductions in employees as we have successfully eradicated screwworm and reduced the size of the program.

    Included in the union contract were specific requirements for what they must be paid, for severance pay, et cetera, when positions are eliminated.

    Ms. KAPTUR. When they were employed there, they knew that this would be a job that would not be there.

    Mr. MEDLEY. Yes, that is correct.

    Ms. KAPTUR. You are coordinating with the State Department then to minimize any negative impact in the area.
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    Mr. MEDLEY. Yes, we have our Region VI office in Mexico working with the State Department.

    Ms. KAPTUR. All right. Mr. Chairman, I will hold my remaining questions for the second round. Thank you, Mr. Medley.

    Mr. SKEEN. Thank you, Ms. Kaptur.

    I am delighted with your interest in the screwworm program because the whole map-out for this was done back in the 1950s. I think what the Department has been doing is following that.

    That has been one of the most successful eradication programs I have known. Speaking as a livestock operator, I can tell you this. We used to spend about 60-percent of our time doctoring for screwworms back in the early days of the 1950s.

    Since that time, we have not had a case at all and no reinfestation. It has been very successful. I just had to get that in there.

    Ms. KAPTUR. I remember that from prior hearings, Mr. Chairman. I just did not realize that the facility we were closing was in Chiapas.

    Mr. SKEEN. Well, there is an awful lot of their own political unrest in that area that are creating problems. It has nothing to do with the plant. Mr. Serrano.
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    Mr. SERRANO. Mr. Chairman, there is a senior Gentleman to my right here.

    Mr. SKEEN. I was going to let him collect his thoughts.

    Mr. SERRANO. I. See, I look like a good guy now.

    Mr. SKEEN. Are you going to talk or are you not? The clock is running.

    Mr. SERRANO. Yes, I am, sir.

    Mr. SKEEN. Okay, Mr. Serrano. It is all yours.


    Mr. SERRANO. Thank you, Mr. Chairman.

    Let me first thank all of you for being here today and for the work that you do on behalf of the folks in this country. I thank Mr. Dunn and Mr. Medley for finally allowing Serrano Ham to enter the country; no relation.

    I have a question on that though. I know that, for years the whole issue was tabu, you know, the idea. Then, there was a lot of press on the fact that this famous ham was not allowed into the country.
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    What were the problems and how did you reach a conclusion that it is okay to do it now? As I understand it now, it is not all forms or all products that go under the headline of Serrano Ham, but just some.

    The reason I ask you that question, not really because of the last name, but I know that some people do want to know how those decisions are made; how you reached that point where it was a big no, no, and now it is okay.

    Mr. MEDLEY. The major reason for the change is that we were assured that entry of the product would not present a risk to our domestic livestock population. We were concerned about very serious communicable diseases of swine, primarily African Swine Fever and Classical Swine Fever better known as Hog Cholera.

    We put in place certain protocols against entry of any live animals, but we also have entry protocols for either cured or processed pork products. If they meet our requirements for safety, then they can be imported.

    Mr. SERRANO. But you are painting, I mean, while accepting it into the country, you are still painting kind of a scary picture, with your choice of words. There seems to still be some concern on your part regarding that entire area.

    Mr. MEDLEY. It is, Congressman, because currently the European Union is having a serious outbreak of Hog Cholera in various countries.

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    With product and, perhaps, swine movement among the countries, the outbreak of Hog Cholera has spread to the Netherlands, Germany, and Portugal. We foresee receiving positive tests from Spain and we know the disease is in Italy.

    Because of these outbreaks, we are very concerned, and have very specific entry requirements. These requirements are aimed at allowing, trade under conditions that do not present a risk to our domestic pork industry.

    Mr. SERRANO. I understand. But see, that brings up another question. If for years this product was not acceptable as a product to be sold in this country, and now you are telling me that it is, you still did not tell me if it is all of it or some of it.

    Secondly, if there are no current outbreaks of cholera. Why was it unacceptable before. It is more dangerous now or at least that is how I see it.

    Mr. MEDLEY. There are actually two things that have occurred. One, is the ratification of GATT and the other is the requirement that the 1930 Tariff Act which prohibited us from even allowing entry of meat products from certain countries where they had exotic disease, be amended.

    Under that new procedure, we have regionalization, in which we are able to certify and accept products from free regions within the countries where there are disease problems. This is actually one of the major significant advantages that should work both with importing and exporting meat and poultry products.

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    Similarly, if we have an isolated case or a major disease outbreak in the U.S. occurring in one area of one State, it would not impede commerce in other areas in that state that are free or in other States.

    So, there have been significant international rule changes over the last five years relating to trade and animal products.

    Mr. SERRANO. You bring up an interesting point in terms of outbreaks in this country. We always, of course, get a picture of what we think about everyone else or their products and so on. Do you know of instances where other farming governments have sat around the table, as we are now, concerned that something we are sending them is going to create a problem for them?

    Mr. MEDLEY. Yes, Congressman, it happens all the time. There are various areas, whether we are talking about our negotiations with Australia, Europe, or China where there are various products from the U.S. that are not allowed entry because of concerns about particular diseases present in the U.S.

    Mr. SERRANO. Such as?

    Mr. MEDLEY. For instance, in the area of poultry products, we look at concerns with certain poultry diseases. A year and a half ago, Russia cut off a $700 million export market because of their concern about six different poultry diseases.

    We are trying to gain market access in South Africa, and Australia with pork products. The concern over BlueTongue prevents our export of cattle to certain countries. Other diseases can impact our horse industry exports.
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    There are a number of requirements that are imposed upon the U.S. because of diseases that our products or animals might have. In the animal area, there are 17 major diseases that concern most of the world. Fortunately, we do not have most of those diseases.

    Mr. SERRANO. Just one further concern; you know, this week, I am sure you could not have missed it on any of the major stations.

    There was a major debate on the House Floor about the political future of Puerto Rico. A part of what that debate showed was the lack of information that exists among House Members in terms of the relationship between Puerto Rico and the U.S.

    You always think that because you were born there that everybody knows what you know, but that is not a fact. Many people reacted in terms of dealing with a foreign country, if you will.

    I sounded very much on the Floor like they were talking about a foreign country. Should Puerto Rico be a state, an independent nation, or not?

    Even though we have the same Department of Agriculture covering Puerto Rico, sometimes we act like it is a foreign country, in terms of their tropical fruit coming into the country.

    Now, I am sure that is not in any way related to the relationship. Is it related to the fact that many of Puerto Rico's products are not naturally grown in the State.
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    I mean, do Virginia apples go through the same scrutiny when moving over to Seattle? Although, probably Washington State would not want any Virginia apples; right?

    Do they go through the same scrutiny, say that mangos from my hometown, in Puerto Rico, go through in getting to New York?

    Mr. MEDLEY. In all of the States, territories, and possessions, APHIS applies the same standard across the board for domestic agriculture that we are protecting.

    We are very concerned about cholera in the Dominican Republic and in Haiti and the threat it poses to Puerto Rico. We have intensified inspections in Puerto Rico, as well as in New York, New Jersey, and Miami equally.

    In Puerto Rico, as with Hawaii, because of their tropical climates, there are identified significant quarantine pests that are in the fruits and vegetables that are not in the citrus producing areas on the mainland.

    We have a pre-departure inspection activity as a mechanism for identifying and safeguarding against pests in those areas from entering the U.S. mainland.

    Let me reassure you that our activities are designed to protect all domestic agriculture, which includes all territories, possessions, as well as States.

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    Mr. SERRANO. Well, let me congratulate you, Mr. Medley. I have been asking this question in and out of Congress for a long time. No one has answered it as clearly and direct as you have.

    It is too bad a lot of other people do not get to hear your answer because that would alleviate a lot of concerns about the inspections and the treatment being based on the relationship rather than on the concerns of protecting our crops throughout the country. So, I thank you. I have no further questions, Mr. Chairman.

    Mr. SKEEN. Mr. Serrano. I will vary the format a little bit and ask Mr. Fazio next.


    Mr. FAZIO. Thank you, Mr. Chairman. Welcome everybody. It is good to see you. There are a number of people I am getting to know in the capacity of Marketing and Regulatory Programs here. I appreciate the help I am receiving from those at the table and those on the first row.

    This relates to concerns that some of my growers, fresh fruit and vegetable growers, and some fresh cut product manufacturers have. I would like to ask about the Qualified Through Verification program.

    I understand that up to 60 requests are pending before the Agency for application to and certification from the program. I understand USDA has agreed to use the USDA shield on some of the products that my growers are involved with.
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    There is concern among those whose applications are pending that this represents a competitive advantage to the few companies that are now qualified. I guess everybody wants to be in at the same time.

    So, my questions are, how many applications are pending? At what rate do you process these applications now with your available resources? I suppose, Mr. Dunn, perhaps I could go to you first. Then we will see who else may want to comment.

    Mr. DUNN. What I will do, Mr. Fazio, is fill in a little time while Dr. Figueroa consults with staff on how many are actually on board.

    Mr. FAZIO. He is doing it as you speak.

    Mr. DUNN. This is something that we have worked out with the producers. I was in consultation just the other evening with the Dean of the Agriculture School from U.C. Davis.

    We were talking about this program and how we could work with U.S. Davis to expand this program and be able to provide greater service to other folks. I think Dr. Figueroa now has the answer.

    Mr. FAZIO. That was really very good, Mr. Dunn.

    Mr. DUNN. Dr. Figueroa certainly knows Davis, too, from his experience. He has touched down at Cornell to cover Mr. Walsh as well. So, he is well-settled before this committee.
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    Mr. FIGUEROA. Good afternoon, Mr. Congressman.

    The answer is pending, and I will provide you with the exact number, is somewhere in the neighborhood of between 40 and 60 firms.

    We are moving as expeditiously as possible to get as many of these firms qualified. It is a function of the plans that each of the firms submit to us as to how quickly we can get those firms into the programs.

    The firms that are using the shield are very satisfied with it. That is probably indicative of the number of firms that want to join it.

    [The information follows:]


    There are five firms involving six production facilities that are in the Qualified Through Verification program, or QTV. Another eleven firms have submitted their proposed QTV plans for our review. We expect to have most of these approved and in the program before the end of the summer. In addition, some 30 other firms have expressed interest in the QTV program but have not applied for acceptance.

    Mr. FAZIO. What does this mean to the consumer? I do not want this to sound like just something that is to convenience the industry. Describe for the committee, if you could, what it means to the consumer.
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    Mr. FIGUEROA. The program is not a program where certifying makes the product any safer. What the shield means to the consumer is that the USDA has certified that a firm used a HACCP Program to process the product.

    That during the process of that product, and meeting the HACCP requirements, it was produced in a manner that minimizes exposure to microbial contamination. That, in my judgment, is what the consumer sees in that seal.

    Mr. FAZIO. I understand there is a fairly significant inspection and verification fee involved here. Is this in any way a limitation on who can afford to participate? Does it in some way become an advantage for the larger producer over the smaller? Is there a way to sort that out over time?

    Mr. FIGUEROA. I cannot give you the exact fee, Congressman Fazio, but I will provide that for you. I raised the same issue. As you know, I have been on board for four months.

    On a per package basis, the cost is minimal. As I understand it, it does not have much of an effect in the implementation of the program.

    [The information follows:]

    QTV is a voluntary, fee-for-service program. We have been pleased that firms of widely varying size, from the industry giants to relatively modest-sized regional suppliers, are participating. To recover the costs of the program, we charge about $1,800 for each audit, although that fee may vary slightly depending on the facility's location. Audit frequency is determined by the facility's ability to operate according to its approved HACCP plan.
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    Initially, we conduct one unannounced audit every two weeks. Our experience has been that firms move relatively quickly to a reduced audit rate of once a month or once every two months with attendant reductions in their audit costs. The continuing decision by participating firms of very different sizes to stay with QTV, along with anecdotal evidence from these firms of cost savings from their heightened sensitivity to details of the production process, strongly suggest that QTV is a good value.

    Mr. FAZIO. So, it is kind of first-come, first-served. If you are more aware of the program and aggressive about it, you got in first and perhaps everybody else has had to wait maybe longer than was originally intended because the backlog has grown.

    Mr. FIGUEROA. That is correct.

    Mr. FAZIO. Could you give us a time line as to how quickly you can work that backlog down? For example, if you were in that 40 to 60 applicant line that you outlined a minute ago, how would it be before you get the next 40 done and the next 20 after that?

    Mr. FIGUEROA. Congressman, I cannot give you a precise number. We are indeed working as we speak today with some firms that will be indeed in the program soon.

    As I mentioned earlier, it is a function of the firm's plans, how they submit them, and how complete they are. So, that is a key factor in the relative rate in which we can bring the firms into the program.
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    Mr. FAZIO. So, you are trying to be user friendly, but not everybody is equally prepared when they walk in the door.

    Mr. FIGUEROA. That is correct.

    Mr. FAZIO. I am reading between the lines.

    I hope you are doing everything you can to reach out to people to make sure that they provide you with the data you need and are able to be processed as quickly as possible so that we do not have any disparity in terms of who can more readily access the market.

    Mr. FIGUEROA. I can assure you that we will work as expeditiously as possible with all the applicants.

    Mr. FAZIO. I am interested in the inter-relationship with the FDA on this. Your testimony indicates a memorandum of understanding with them. Since they have regulatory responsibility for the safety of produce, I am wondering how this fits into the inter-relationship between the two departments.

    Mr. FIGUEROA. I want to restate that we are not marketing the program, if you will, as a food safety program. It is a program that minimizes the rate of contamination, if they adhere to the HACCP principles.

    In addition, as of today, the memorandum of understanding that you just referred to has not been signed off by the FDA. So, that is still pending.
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    Mr. FAZIO. When it has been signed it would go into the Federal Register and sit before the public for comment and all the rest. Is that correct?

    Mr. FIGUEROA. The memorandum itself will not, but the program itself will be fully recorded in the Federal Register, yes.

    Mr. FAZIO. Let me talk to you a bit about the Food Quality Protection Act; that bill that we were pleased to put through in the last Congress which did away with the outdated Delaney clause.

    Obviously, many of my growers and commodity groups are concerned about the implementation of it. EPA has been going through some debates, shall we say, with the affected commodity groups and the crops they grow over the risk cup.


    I think we have had minimal success so far in moving some products into the market that we need, but I remain hopeful. I notice you have requested additional funds for the Pesticide Data Program; trying to maintain sampling levels.

    Could you give us an update on how you see this program working, knowing that it is important to your constituent group and at the same time you do not have, obviously, the authority to implement all of it?

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    What issues are rising to the surface? How do you see them getting resolved? Where does the Pesticide Data Program, which has had a checkered history with this committee, I think is fair to say, where does it sit at the moment?

    Mr. FIGUEROA. There are two components to our request. One is for the Pesticide Data Program as we know it. There are $2 million for restoring the funding levels that were in place for 1996.

    The other component is on the rapid response. The first component, obviously, provides statistically reliable information to the EPA and for other agencies within the USDA for them to conduct research to find out what indeed is there. I think importantly it has allowed FAS to be able to negotiate and convey the information to our trading partners to ensure them and at least provide to them statistically reliable information actually on fruits and vegetables at the wholesale level.

    With respect to the rapid response, it is our intent that we can provide information to the EPA to facilitate their process of re-registering some 9,000 new pesticides they are responsible for doing. Our pesticide data program indeed will assist them in doing that in a more expeditious way.

    Mr. FAZIO. I am wondering if you or anyone else would want to comment on how that FQPA implementation is going. You probably would not, but I would like you to, if you would.

    Mr. DUNN. Mr. Fazio, I thought Dr. Figueroa was doing quite well on his own there.
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    Mr. FAZIO. Not to over-test him.

    Mr. DUNN. As you are aware, we contract with ten different states which gives us a very good across the board sampling. What we intend to do is to expand on that infrastructure that we have out there with the PDP Program to get the additional information on the food born illnesses.

    To allow for data to be collected for the first time so that we would have a sampling of what may be out there. We feel the program presently is doing very well.

    I must say it is one of those programs where the majority of the money is a pass through to the states. It is a very good partnership that we have with the various states.

    I had an opportunity to tour the facility in California. I saw the spectrometer that was out there that we had purchased under that particular program and how well that was being utilized.

    I see it as a tremendous asset and something that works very well. You were not here earlier when I introduced our new Deputy Assistant Secretary, Dr. Siddiqui, whom I am sure you have had opportunities to work with in the past.

    We see this as a continuation of the partnership with the states that we are working with and an opportunity for all of us to collectively provide the information we need to ensure food safety.
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    Mr. FAZIO. I know there has been concern about our bill picking up work that perhaps another bill should for the EPA, but this is really essential agriculture as we struggled to implement the Food Quality Protection Act.

    I appreciated your reference to the trade issues. I wanted to get APHIS involved in this too because I was pleased by their testimony regarding that agency's involvement in resolving some of the sanitary, phytosanitary trade barriers.

    I think you both go into concerns that if we do not provide the proper data, we end up having people, unfortunately, use this sometimes in restraint of trade. I would be interested in the comments from either of the agencies on that score. Mr. Medley, maybe.

    Mr. MEDLEY. Congressman, I concur. With the WTO and implementation of GATT, agri-data becomes very crucial for the ability to certify our plant and animal health status.

    Without the ability to certify, we could have restrictions imposed that may or may not be scientifically justifiable, and we would have no way of countering those restrictions. This is an essential part of how we must operate today.

    It is one of the areas that we have proposed an increase to allow us to collect data and to be able to certify our animal and plant health status through surveillance, which is very necessary to compete in today's global environment.
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    Mr. FAZIO. Dr. Figueroa.

    Mr. FIGUEROA. If I just may add, my staff has indicated to me that FAS has used the data, particularly in Japan and some of the Pacific Basin countries, in indicating to them exactly what we have found.

    In California, for example, the data has certainly facilitated trade and dissuaded purchasers of the notion that there are pesticides in the products that are coming out.

    Mr. FAZIO. Well, we know often this causes a boat load of produce to be undeliverable. It can be an absolute disaster to the grower, the processor, everybody in the chain.

    I just wonder if either of you have any way of estimating how often these are legitimate inquiries that need to be taken seriously for general public health, and the good of the trading relationship over time, versus how many are thrown up as an obvious effort to avoid taking responsibility for receiving a product.

    I see some people shaking their head recognizing that trade-off. Does anybody have any grounds for even a ballpark estimate?

    Mr. FIGUEROA. I am not prepared to offer that number for you, Congressman. I will discuss it with my staff and if a number comes up, then we will provide that for you.
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    Mr. FAZIO. Well, your staff is smiling, smirking, shaking their heads. I wonder how many of them might be able to give you some input while Mr. Medley gives me an estimate?

    Mr. MEDLEY. Congressman, I believe Mr. Figueroa will provide the information to you.

    Mr. FAZIO. Nobody wants to typify what is out there. But it is a problem, I think I could tell from looking around. This does happen on occasion and you are often called in to be the policeman. Whether they will take the authority or not is another question, but at least you are in a position. Could you, for the record, try to quantify? I realize these contexts can be informal to formal.

    Mr. FIGUEROA. To my knowledge, that information is not available.

    Mr. FAZIO. How often are you brought in, in these situations in general? How often do you find them warranted or an obvious effort to use these concerns as a way to avoid living up to the trade agreement?

    Mr. FIGUEROA. I want to be clear. Are you specifically referring to pesticide residue issues or other issues beyond that?

    Mr. FAZIO. What you do certainly and anything else that is relevant that would be in your jurisdiction, and certainly Mr. Medley in his.
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    Mr. FIGUEROA. In the sanitary and phytosanitary arena?

    Mr. FAZIO. Yes.

    Mr. DUNN. Certainly, Mr. Fazio, the sanitary and phytosanitary issues have come to the forefront with the event of GATT and NAFTA; the tearing down of the old tariff barriers. It is imperative that we base our SPS protocols upon sound science.

    That is the basis that we use. That is why it is so important for our budget request in there to ensure that we have a strong APHIS, a strong AMS, a strong GIPSA, for that matter, as well.

    Many times Mr. Baker ends up sending people over to foreign countries to certify the content and quality of grains as it is disputed.

    Mr. FAZIO. Do you want to comment, Mr. Baker on that?

    Mr. BAKER. Yes, I would. When the U.S. sells grain to a foreign country, we seek to ensure that the product is delivered as ordered. If, at the receiving end a discrepancy arises, we try to address it.

    I think that the area that you are leading into is probably more in the phytosanitary area than it is in the grain inspection area. This past year, GIPSA addressed approximately 20 complaints from importers.
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    We went and addressed them primarily on their soil. Our willingness to do that reflects well on the integrity of our system.

    Mr. FAZIO. Well, we have got to build confidence in this trading relationship. I am not just implying that we do not occasionally bear the burden.

    We have people who cut corners. We have unfortunate circumstances that we need to own up to. We spend a lot of time worrying about the failure to have enough money to compete in promotion of trade.

    We find increasingly our trade problems in this category. It is hard for Members of Congress to get a handle on this. One method, I hope, is adequately funding your budget, but the way I expect you to spend the money, of course, is to be aggressive in this area.

    Mr. DUNN. Mr. Medley's statement for the record indicates APHIS assisted involving trade barriers worth nearly $7 billion in exports of U.S. agricul

tural commodities.

    Mr. FAZIO. I saw that.

    Mr. DUNN. That we were able to keep in progress.

    Mr. FAZIO. It was 12-percent of the total agriculture.
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    I noticed that APHIS oversees field testing of genetically-engineered plant varieties.

    Mr. MEDLEY. Yes, APHIS does this work.

    Mr. FAZIO. There has been some concern about proposed EPA regulation in this area. You mentioned the need for education of our trading partners and safety and benefits of these new genetically-enhanced plant products.

    I think we all understand this is a way to put aside some of the pesticide concerns ultimately over time. Would you elaborate on these testing and educational functions? Who do you work with in this regard? What kind of progress are we making? Are there genetically-engineered plans?

    Mr. MEDLEY. For some time, Congressman, we have had a program called International Harmonization, where we have worked through various international regional organizations to promote harmonization in the oversight of these products.

    The oversight is based upon using sound biological principles and compatible scientific evaluation approaches. We coordinate reviews, for example, with one organization, the Organization of Economic Cooperation and Development in Paris.

    The program now includes 29 of the most developed countries of the world. We have also worked in regional forums such as the North American Plant Protection Organization.
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    We have demonstrated, through making our system transparent, that we have addressed the pertinent safety issues concerning these genetically-engineered products.

    The question you have raised about the plant pesticide rule is one issue we face quite often. That is, how do you properly define the scope of what should be included in an oversight system?

    Mr. FAZIO. We are working at that with EPA as we speak, I assume?

    Mr. MEDLEY. Yes, they are involved as well.


    Mr. FAZIO. We will be very interested to know how that comes out. I think we generally would favor responsibility remaining where it is.

    Let me just, Mr. Chairman, ask my last question. I know you and Ms. Kaptur have raised the issues related to organic foods, but there are several losses from 1996 connected with the karnal bunt quarantine that remain pending.

    I have got some examples in Northern California, San Joaquin Valley and some, obviously, in the southern part of the state that was more immediately impacted. There seems to be a very long time here being taken to compensate growers and shippers for the losses they incurred.
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    Of course, they were doing what they had to do making extreme sacrifices in cooperation with state and federal officials for the good of the industry, in general, and certainly our trade posture.

    It seems a little difficult to justify going this long before they got compensation. After all, these are people who are working every day in the business and cannot go with these losses on a perpetual basis.

    Is there a problem of having adequate money? Do we not provide the funds that are available? What is the slowdown?

    Mr. DUNN. The issue really, Congressman, has been that since we first found the tilletia indica spores in March of 1996, the program had 14 different regulatory changes. We have gone from a program design to initially compensate the original producer to including the handler, and the millers.

    It has been a program that has constantly evolved as the size, the biology and things have changed. That has been a part of the problem. A part of the problem has been getting a fixed formula for not only who should be compensated, but on what basis and at what level?

    We have in fact published the compensations for the 1995–1996 crop season and will propose compensation for the 1996–1997 crop season. Some payments have been made. Others are being made. I think that for the most part, we do have a system in place.
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    As Congresswomen Kaptur pointed out, however, there do appear to be individuals who have suffered losses that currently are not being covered in any of these compensation schemes.

    We have committed to working with her office, your office, the Hill to try to address that. Currently, we are constrained because the authorities to pay compensation are limited unless certain factors have occurred.

    Clearly, it is in our best interest, the interest of American agriculture, to have industry producers willing to cooperate with us when we do have a problem, realizing that they will be fairly and fully compensated.

    Mr. FAZIO. Is that the problem; they have not been willing to cooperate with you? Is that why they have not been paid?

    Mr. DUNN. No, that has not been the problem. It has been a matter of determining which would be paid, what would be the amount.

    Mr. FAZIO. We cannot pay anybody until we can determine who everybody is?

    Mr. DUNN. We have made some payments.

    Mr. FAZIO. But there have been a number of people that have waited several years. I guess, they have not fallen into any of the easily-defined categories?
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    Mr. DUNN. The most difficult category, of course, was for the seed and straw compensation. We were easily, in terms of the initial producer. We then went to the millers and the handlers.

    Those were more difficult, but that has been established. It has taken some time. We did publish the final compensation provisions. We have made some payments. The farm service organizations are geared up to make the remainder.

    Mr. FAZIO. So, we are on the verge of solving this problem; is that what you are contending?

    Mr. DUNN. Yes, sir, I am. Those that have fit under any of those conditions.

    Mr. FAZIO. If they have not fit under them, it is time to tell them the truth, that you are not going to get any compensation and not just string them along another year or two.

    Mr. DUNN. We have said that to those individuals. In a number of cases, that has been appealed. We are looking at any way possible to make fair compensation to those that have suffered losses.

    Mr. FAZIO. Well, could you give the committee a report on this? I will be happy to yield to the Chairman, I personally would love to see the committee get an update on this because we do have constituent interest.
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    [The information follows:]

    "The Official Committee record contains additional material here."

    Mr. DUNN. We will provide that.

    Mr. SKEEN. Thank you. Mr. Nethercutt.


    Mr. NETHERCUTT. Thank you, Mr. Chairman. I will stay within the five-minute rule. Gentlemen, thank you for your appearance here today.

    Producers and processors of my District have sustained large losses late last year due to the railroad's inability to deliver product for P480 contracts to Gulf Ports in a timely manner.

    The product was in the control of the railroad for about a month. Title does not transfer, you may know, on these contracts until the product is delivered along side ship.

    So, the processors were dealing with bills for dead freight by USDA between $5,000 and $9,000 per car, I am informed. The railroad did not deliver the goods and the products in a timely manner.
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    My sense is the farmers ought to be held harmless for this problem that is outside of their control. It was not under their control to determine what the railroad's problems might be in terms of getting the product to where it ought to go.

    Due to the merger of railroads, many of the processing plants in my District have access to only one railroad. So, this has not allowed people there to use the value of competition. How are you addressing those problems for farmers and processors in my District, as well as many others around the country?

    The second question, I will ask these and then I have got to run. Reuter's came out with a story just yesterday. This is a quote, ''The APHIS Administrator said he was confident Brazil would soon reopen its market to U.S. milling grade wheat following a key vote last week by a regional plant protection group.

    ''Brazil has had a ban on imports of U.S. wheat since 1995 because of concerns about the presence of TCK Smut, a fungus that is prevalent in some portions of the Pacific Northwest wheat crop.

    ''Last week, COSAVE, a regional plant protection group that includes Uruguay, Paraguay, Brazil, Chile, and Argentina voted the TCK Smut should not be treated as a quarantine-significant test,'' he said.

    I just want to make a point before I have your answer, that this greatly affects the Pacific Northwest relative to China. China has been fighting with us on TCK Smut for years. It means dramatic consequences to us out west, especially with the price of wheat dropping.
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    Maybe you can give us an update as to whether the progress you have made in the other areas would have some benefit to China and also what you might want to be able to do or can do with regard to this railroad problem.

    Mr. DUNN. Mr. Nethercutt, if I may take a shot at the railroad problem. First of all, I believe that is under the PL 480 Program, which would be in Foreign Agriculture Service, which unfortunately maybe I do not have jurisdiction over it, but we do have oversight over the transportation issues.

    I must say that Secretary Glickman has been extremely aggressive on the railroads and holding their feet to the fire. He has had me appear twice before the Service Transportation Board to point out problems, movement of grain; exactly the types of things that you were talking about where producers and grain handlers were the ones that got caught holding the bag.

    We will continue to keep their feet to the fire on that issue. I will let Mr. Medley answer for himself on his remarks.

    Mr. MEDLEY. We have been able to demonstrate to the Brazilian authorities that because of the unique climatic conditions that are necessary for this particular pathogen to survive, and also because of the entry conditions for wheat used for milling or for processing, that it would not present a significant risk to the Brazilian wheat industry.

    This assessment was reaffirmed by a regional plant health organization, which is the COSAVE Group that you referenced. They determined that our wheat did not present a significant risk. I did speak with my counterpart in Brazil this morning and he assured me that the issue had been resolved and they would be publishing very soon, regulations that at least provide the opportunity for the entry of U.S. wheat.
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    I say opportunity because of other issues that we would have to address such as the grain that would be requested, competing with Canada, et cetera. It would allow entry. We should be able to use the same scientific basis for addressing the China issue.

    We should be able to export to China without presenting a significant risk. We will be carrying the same message as we continue these discussions with China. This action should help us and enhance our chances of establishing scientifically based criteria in China as well.

    Mr. NETHERCUTT. Thank you very much for your time. Thank you.

    Mr. SKEEN. Thank you, Mr. Nethercutt. We will have adequate recognition of the rules. You all are doing very well. Mr. Latham.

    Mr. LATHAM. No questions this round.


    Mr. SKEEN. Let us start the second round then.

    Mr. Baker, as you know, this subcommittee has been concerned with the packer concentration in the livestock industry. It has been the focus of inquiry here since at least 1996.

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    I read in your explanatory notes that you initiated an investigation involving the trade practices of major lamb slaughters. Would you tell us what prompted that investigation? Tell us what you found when you were looking into it during your investigation.

    Mr. BAKER. Let me start with the last question on lamb and what prompted it. Probably in the last five years, we have seen concentration have more of an effect on the lamb industry than any other commodity, from the standpoint of closing packing houses in different areas.

    There are presently seven packers that are still involved in major lamb——

    Mr. SKEEN. That would be my next question. Are there seven all together?

    Mr. BAKER. Seven of the major ones. In other words, they are still primarily lamb slaughter. We are looking at what influence procurement practices had on detrimental or unfair practices and contractual arrangements.

    A lot of the lambs are sold under contract arrangements. Ours is an extensive investigation primarily in the West, in California and the Colorado area. We were looking at the seller, plant and farm comparisons.

    In other words, it is an extensive investigation of the lamb market. It should be completed this year. On the concentration issue, we are very concerned about it. A major focus in our agency in the packers and stockyards program area has been concentration.
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    We are reorganizing our Packers of Stockyards program to better address the complex entities that are involved in procuring livestock, meat, and poultry in this country.

    We presently have a major steer and heifer investigation in the Texas panhandle looking at all of the cattle that were marketed in that area. We have a pork investigation going on in the Mid-West looking at 11 major packing houses for pork.

    We are doing a poultry investigation in the southeast. These fact finding studies may show how concentration has affected the industry.

    Mr. SKEEN. The beef industry, as I understand it, has been consolidating for the long period of time that they have been in the business world. You are down to about, what, three to four major packers.

    Mr. BAKER. There are four major packers.

    Mr. SKEEN. Four major packers.

    Mr. BAKER. It is assumed that they control about 80-percent of the steer and heifer kill in this country.

    Mr. SKEEN. How many of these operations also feed their own cattle or have stockyards?

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    Mr. BAKER. None of them have stockyards as such. They have the feed lots. Three of the major four feed their cattle.

    Mr. SKEEN. Three out of the major four feed their own.

    Mr. BAKER. They feed about 4-percent of the cattle they kill; not all of the cattle, only about 4-percent.

    Mr. SKEEN. I was trying to get somebody to engage on just how concentrated this was also; what line of supply that they have and control out of that type of situation. They can play the game back and forth when the futures are up, or whatever. There is a possibility that the market can be manipulated.

    Mr. BAKER. Yes, sir. The work that we are doing is trying to discover if that is happening. That is why we are doing the investigations.

    Mr. SKEEN. Thank you.

    Mr. BAKER. We might talk a little bit about further concentration for just a minute. The feedlot—concentration is a big issue. It is not talked about much, but one percent of the feeders feed about 45-percent of the cattle.

    Mr. SKEEN. One-percent of the feeders feed 45-percent.

    Mr. BAKER. Of the cattle.
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    Mr. SKEEN. That is pretty good monopoly.

    Mr. BAKER. That is a fact. When you hear about concentration, you just hear about it from the packers side.

    Mr. SKEEN. You do not want to identify all of them?

    Mr. BAKER. Well, I could, but I am not going to.

    Mr. SKEEN. I thought we would just walk around the room. I appreciate the response. It has been a real problematic situation. I know that you have been concerned with it.

    Mr. BAKER. We are trying to stay in the middle of it and have a focus in those areas.

    Mr. SKEEN. I thank you. Mr. Bonilla.


    Mr. BONILLA. Thank you, Chairman.

    Gentlemen, I want to start out with the subject that the Chairman brought up earlier, the screwworm situation. I come from the town where the dog was recently discovered with screwworms. I think this reaffirms the need to move the sterile fly lab to Panama.
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    I know the Chairman has brought this up already. Could you tell me more specifically what the current schedule is? What is the current schedule for moving the plant to Panama? What kind of emergency plans do we have in place should we have the repeat of the labor problems this summer?

    Mr. MEDLEY. Congressman, the timetable is to have the plant in Panama operational by 2002, then to have complete transfer from Mexico by 2004. We are hopeful that our response to the current labor unrest by identifying some of the specific problems and correcting those, will prevent a repeat of the labor disruption that occurred.

    Mr. BONILLA. So, are you pretty confident of that, it sounds like.

    Mr. MEDLEY. Congressman, as confident as I can be sitting here in Washington.

    Mr. BONILLA. That sounds good. I have always believed though in having a Plan B, if Plan A does not work.

    Mr. MEDLEY. Yes, one of the things we have constantly looked at is having modules where we could successfully produce the steriles necessary if there was a problem.

    That is something that we have spent considerable time evaluating. Our timetable for the new facility is such that we hope to be able to address the module issue.
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    Mr. BONILLA. We will keep an eye on that hopefully.

    Mr. MEDLEY. Yes, we will.

    Mr. BONILLA. I want to move now to the boll weevil eradication program. In Texas, the total operating costs during fiscal year 1999 are estimated to be $120.6 million.

    With APHIS only proposing $4 million for the program this year, a heavy burden will be placed on producers. The Administration is advocating the use of FSA loans to offset the decrease in funding.

    The Texas Boll Weevil Foundation has estimated that $78.8 million in loans will be needed to conduct the program. Is the Administration prepared to issue the amounts of loans necessary to operate the program?

    If it is perceived that the federal partnership in this program is backing away from the program, do you think there will be a reduction in producer participation?

    Mr. DUNN. We will defer to Mr. Dewhurst as to the availability of the Farm Service Agency funding.

    Mr. DEWHURST. Well, we have budgeted money in the Farm Service Agency for those loans. Frankly, I am not conversant enough in the numbers.
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    We have budgeted about $30 million for new loans in fiscal year 1999. The $78 million figure is higher than what I had heard. The intent here was to provide enough loan money to do the job.


    Mr. BONILLA. Okay. I want to move now to another subject. It is not unique to Texas anymore, but the fire ant situation that we have down there. In fact, how far north, just before I have a specific question about that program, how far north have these guys gone already?

    It used to be that they were not even in South Texas. Now they have surpassed that by a long shot. Do you have information on that?

    Mr. MEDLEY. I will provide a map, Congressman. I know the range has expanded considerably.

    [The information follows:]

    "The Official Committee record contains additional material here."

    Mr. BONILLA. I can remember as a kid this was non-existent, when I was growing up in the late 1950s, early 1960s. Now, you cannot even lay out in the grass and have a picnic or do anything.
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    You have to watch your kids all the time because fire ants are almost demonic in the way they behave, as you are probably well-aware.

    Now, we are talking about damage estimates in the range of $300 million a year just to the Texas economy. Wildlife is not safe anymore. Livestock is affected by this problem. They have even shorted out electrical systems.

    In some cases, they have kept people from using their own backyards. My question is, what plans does APHIS have to continue eradication efforts on this pest? You have proposed elimination of the $1 million Fire Ant Program.

    You state that APHIS has not received any request for treatment programs, which is interesting considering it is something that is discussed quite a bit in my part of the country.

    You may have heard that it has been a big project on the other side of the Capitol with Senator Phil Gramm who talks about this quite a bit.

    I understand that this money is also used to enforce federal quarantine laws. Do you anticipate providing any support for this activity under another program if the requests do come up?

    Mr. MEDLEY. The problem, Congressman, is that we are unable to identify a suitable tool to allow us to effectively conduct an eradication program of a large scale on agricultural lands. That has been the major problem.
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    What we are doing now is to identify, if we can, biological control agents that might be able to help us. There is some funding identified for research cooperative agreements to identify a potential way by which we could effectively treat the imported fire ant, if asked.

    Currently, we do not have an effective, efficient, and environmentally acceptable methodology for controlling the fire ant.

    Mr. BONILLA. I know they are doing a lot of work, I believe, at Texas A&M on fire ants. I do not know if they are making any progress. It is a serious problem.


    I want to ask now about the Texas Wildlife Services Program. As you know, my Congressional District is a major sheep and goat production area. Funding levels have taken their toll on this program.

    There are several positions in Texas that have gone unfilled due to the lack of funding. I know some Members on the subcommittee have already asked about the funding levels.

    Specifically, I would like to know if this funding level will support filling three vacant supervisory training positions in Texas?
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    Mr. MEDLEY. At the requested funding level, Congressman, it would not support those three positions.

    Mr. BONILLA. Well, this is a great concern that I would have. I hope that even if the money is not there now, maybe we can work together on trying to make this happen because it is very important to a lot of those counties in West Texas. They are large wool and mohair producers.

    Mr. MEDLEY. Yes, we will work with you.

    Mr. BONILLA. Gentlemen, I appreciate your time today. Thank you.

    Mr. SKEEN. Thank you, Mr. Bonilla. Ms. Kaptur.


    Ms. KAPTUR. Thank you, Mr. Chairman.

    I wanted to go back to Mr. Medley, if I might. I wanted to ask in a District like mine of over 600,000 people, a loss of 650 jobs anywhere is a big loss. I can only imagine what it would be like in a very impoverished area of the world.

    This morning, I met with some of the people from the U.N. Development Program. We have AID. We have the Foreign Agricultural Service. We have all kinds of Catholic Relief Services; lots of groups that work around the world.
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    Is USDA making an effort to see if perhaps alternative purposes; alternative uses can be designed. I have been told the building is not in that great a shape, but maybe starting a coop with some of those workers, since Agriculture is at the root of the unrest there. Has USDA tried to work with any other agencies to find out? I know that is not your job.

    Mr. MEDLEY. We would be more than happy, Congresswoman, to explore what can be done. I understand fully the impact on the area.

    Obviously with our budget remaining flat, if not decreasing, moving closer to the current eradication effort considerably reduces the cost overall of the program by not having to transport sterile flies from Chiapas to Panama.

    Mr. DUNN. Ms. Kaptur, I have had considerable conversations with my counterpart in Mexico about reuse of that facility when we do phase out on it. He has since gone on to become the Secretary of Agriculture of Mexico.

    We have talked with Banc De Mexico about possibilities of how we could refurbish that building to use it for other uses. The Mexican Government is very actively involved in looking at what we could do, once we do a phase out.

    Ms. KAPTUR. I am glad to hear that. I understand the Government of Mexico owns the building. Is that correct? They own the building, the Government of Mexico, the property itself?

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    Mr. MEDLEY. The U.S./Mexico screwworm commission owns the facility.

    Ms. KAPTUR. The commission should own the facility.

    Mr. MEDLEY. Yes, it does.

    Ms. KAPTUR. I was just thinking. I mean, I am not an expert in Chiapas. I will tell you this. Our community of Toledo has been trying to figure out a way to be helpful in Chiapas.

    We have not been successful. It is pretty hard to know who to relate to. If our goal is to help the peasants who live there, and I as one Member of this Congress is very interested in being a positive force to help those people survive under very difficult conditions.

    So, if there is some way that our office can be helpful in accessing some of these other resources through the committee's subcommittee, and other subcommittees that I serve on, if agriculture cannot be helpful, my heavens, agriculture is at the root of so much of the unrest there.

    Even though we are closing this facility and phasing it down, and I understand why. I want to take care of the screwworm. I do not want it to come back to Mr. Skeen's property up there in New Mexico.

    While we are there, my gosh, we have got a reason to be there. We have got some experience in the area. Maybe we can help those folks develop a coop in coffee-growing or pineapple or whatever else is raised down there. I have never been there.
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    Mr. DUNN. I am sure that, that is one of the best coffee regions of Mexico. We will take you up on that offer as we continue to explore ways and means in which we do the phase-out in an orderly manner.

    Ms. KAPTUR. I would, Mr. Dunn, recommend to you to speak with the U.N. Development Program, Mr. Gus Spade. They work all over the world, including New Mexico. There are lots of other resources that are outside your jurisdiction that might be able to be helpful.

    Mr. DUNN. I was informed, Congresswoman Kaptur, that we have discussed trying to maybe look at rearing beneficial insects for bio-control organisms as a part of integrated pest management.

    Ms. KAPTUR. So, I think that following up on what Assistant Secretary Dunn said, there are maybe some ways that we could look at other uses. This is extremely helpful because it normally does come down to resources to provide that.

     Again, we offer our help in any way that we can to aid you in your inquiry into this. I wanted to ask Mr. Baker, gosh, did anyone pick on you yet, this afternoon?

    Mr. BAKER. No.


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    Ms. KAPTUR. You are requesting an appropriation of $3 million for one-time costs associated with a soon to be announced reorganization.

    Mr. BAKER. Yes.

    Ms. KAPTUR. Could you tell us a little more about that? What will the $3 million specifically pay for?

    Mr. BAKER. Primarily, the $3 million will pay for relocation costs associated with a reorganization of our Packers and Stockyards Program. We presently have 11 regional offices around the country. Our proposed reorganization would reduce that number to three major offices that will be beefed up with economists, legal personnel, and better resources to investigate the complex industry.

    So, we will have to move people from different parts of the country to these offices. That is what the $3 million is for. It is a one-time cost.

    Ms. KAPTUR. A one-time move. How will the reorganization benefit the concerns of this committee and others in this Congress about the anti-competitive practices?

    Mr. BAKER. It will help us better address concentration and anti-competitiveness. Under our reorganization, we are going to structure our organization so that we can more effectively address competition, trade practices, and financial practices. We are going to gear up with people and resources to do just that.
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    Where we presently have 28-percent of our program staff in Washington, under the reorganization there will be only 20-percent in Washington. We are going to move needed resources to the field.

    We are going to hire economists with Masters and Doctor's degrees to better look at the complex industry issues and structures. In other words, we need to re-tool to help us better address concentration issues.

    Ms. KAPTUR. In other words, you go from 11 offices to 3, as I understand it.

    Mr. BAKER. Yes.

    Ms. KAPTUR. Will there be any reductions in force associated with that?

    Mr. BAKER. No, in fact we have asked for 25 additional slots. We would also implement a resident agent concept for remote areas. People would work out of their homes.

    We feel like we can better serve the industry by doing this. We want to mirror what the industry has done. The industry has concentrated into the beef cattle segment, pork and poultry.

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    We want to get right in those concentrated areas with our major offices so we can better address concentration.

    Ms. KAPTUR. Thank you. Thank you very much.

    Mr. BAKER. We need your help.

    Ms. KAPTUR. I am behind you 1,000 percent.


    I wanted to, again, ask Mr. Medley on a different subject on APHIS pests and diseases. Last year in a report entitled ''Agricultural Inspection: Improvements Needed to Minimize Threat of Foreign Pests and Disease.''

    The GAO examined APHIS' effectiveness in minimizing risks to agriculture from pests and diseases entering the United States. They made several recommendations in that report. Could you summarize for the committee what improvements might have been made to-date as a result of that report and anything additional this committee might help you with in order to achieve the recommendations in that report?

    Mr. MEDLEY. A number of the areas that were identified in that report are addressed under our strategic plans.

    For instance, we had a pilot program to look at how to do more risk-based inspections rather than just a representative sample. We have completed the pilot and put into place the risk-based inspection approach.
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    We have requested an increase in AQI appropriated, which funds inspections of people and agricultural products from Canada and Mexico. In the AQI user fee program, we have added additional detector dog teams.

    We have additional, new types of x-ray equipment. We have established a National Canine Training Center so that we have more teams in service. We consider all of this under our safeguarding concept.

    Under the concept, we are focused on three primary points. First, we have activities abroad; the pre-clearance activities to keep exotic pests and diseases on foreign soil. Our International Services unit has pre-clearance inspectors on six continents.

    Second, we have increased our activities at the first port of arrival, moving to more of a risk-based inspection system using more technology with the x-ray equipment and the detector dogs.

    The third area of our focus is infrastructure, domestic infrastructure. The ability to rapidly detect pests and diseases if they get through our borders so we can quickly contain and then eradicate.

    We have asked for increases to enhance our pest detection; this will help us in Florida deal with citrus canker which is widespread.

    I believe that with the safeguarding concept, we are fully responsive to the areas identified in that report.
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    Ms. KAPTUR. Have you noted as a result of the increasing level of imports, a lot more insects, bacteria, fungi that your labs are having to analyze? If so, could you provide that to the committee in some way that I can understand it; especially past years compared to last year, this year?

    I mean, how does one look at this time horizon and explain to an audience, this is what is happening?

    [The information follows:]

Table 1

    Mr. MEDLEY. We will provide you with that information. I think you will see increases in pest interceptions. Assistant Secretary Dunn reported that in 1997 we inspected 77 million international passengers. There were 65,000 pests intercepted.

    We anticipate that next year, we will have 85 million inspections of passengers, cargo, and conveyances. You can see that our inspections are increasing; the potential for prohibited material entering is also increasing. We can give you that type of information.

    Additional resources are needed to provide additional inspections. We are moving from the current system, which is based upon a percentage of product, to identifying the source of the product and the risk basis for an inspection. This will also help us prevent exotic pests and diseases from entering the country.

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    Ms. KAPTUR. I think some of the samples get sent over to Vix Date over at Davis. I remember one witness telling us a couple of years ago they were so backed up, they could not get through the work really.

    Mr. MEDLEY. That is an excellent point. As we address our year 2000 compliance, we need to use technology for more rapid identification of intercepted pests at the entry points.

    Currently, we may have a situation where, unless it is very obvious, we may have to send it away for analysis. We feel that in using new technology, we have the ability for inspectors on-line to make a positive identification. This is another way to use technology to help us.


    Ms. KAPTUR. All right. My final question will be to Dr. Figueroa, on the pilot HACCP Program that you have been operating for five fresh cut fruits and vegetables in conjunction with the FDA.

    Could you tell us a little bit about how long you have been running that pilot and any key observations that you have made to-date?

    Mr. FIGUEROA. I believe we have been operating that for two years.

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    Ms. KAPTUR. Two years.

    Mr. FIGUEROA. As Congressman Fazio asked me a little earlier, we have a waiting list of about 40 to 60 firms that want to also join the program. The firms that are currently using the program are very content with it. They are satisfied with it.

    That is, I think, the reason why we have these other 40 or 60 firms that are in a queue to join the problem. The program certifies. It is qualified through verification.

    There is a seal that is put on the retail packs. So, the consumer knows that the USDA has qualified this product.

    Ms. KAPTUR. What does that say? I do not know that I have ever seen that.

    Mr. FIGUEROA. The seal says, ''Qualified Through Verification'' in red and blue and it has the USDA shield on it. It is positioned in different areas in the retail packs, depending on what the product is.

    It is not a food safety program. It is a program that minimizes the rate of contamination of the firms that are following the HACCP Program that we verify.

    Ms. KAPTUR. Do you see this program as helping to reduce the incidents of food born illness in this country?

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    Mr. FIGUEROA. That is, as I understand it, the intent of HACCP, to minimize the points at which a product can be contaminated.

    Ms. KAPTUR. All right. I want to thank you gentlemen very much. Thank you, Mr. Chairman.

    Mr. SKEEN. Thank you. Mr. Latham.

    Mr. LATHAM. Thank you very much, Mr. Chairman.


    Mr. Baker, I see in the budget you have got $21.4 million in new user fees and are asking for an additional appropriation of $4 million to setup the user fees. Who are you going to charge? Who is going to pay for that?

    Mr. BAKER. Congressman, it is in two programs. Part of it is in our grain program. It is a shift of our standardization activities and methods development activities which are presently appropriated over to user fees.

    The customers that handle grain will be the ones to pay for that. Ultimately, the producer will pay for it, but the customer who handles the grain will be the one that has to pay.

    Mr. LATHAM. So, you are saying there is going to be an assessment, say, per bushel of corn or something?
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    Mr. BAKER. We are looking at one program right now that would be an assessment per thousand bushels.

    Mr. LATHAM. So, you do not know what it is yet.

    Mr. BAKER. Yes. Between 85 and 90 cents per thousand bushels.

    Mr. LATHAM. To be charged at the point of delivery from the farmer?

    Mr. BAKER. It would be charged at the elevator, yes; the elevator handling grain. The other is our Packers and Stockyards Program, which is presently all appropriated. It would be shifted to licensing fees which would be paid by market operators, dealers, packing houses and people who handle products. The fees will probably range from somewhere in the low of $250 for the small operator to probably as high as $10,000.

    Mr. LATHAM. How can you say how much money you are going to generate if you do not know what you are going to charge yet on either?

    Mr. BAKER. The projection that we have to offset it was 85 to 90 cents per thousand bushels; 87 cents is exactly what we projected. The operators that we charge under the Packers and Stockyards Program, it will depend on the volume that they handle and the size. The small ones would be in the $250 range. The large one would be as high as $10,000.

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    Mr. LATHAM. Is this something you came up with?

    Mr. BAKER. That I came up with, no. I have only been here three years. It has been posed for the last five.

    Mr. LATHAM. Did you propose this in the budget?

    Mr. BAKER. Yes, sir.

    Mr. LATHAM. You did. OMB had nothing to do with it?

    Mr. BAKER. I am a team player. It is an effort of my agency to maximize and try to balance the budget. That is our proposal.

    Mr. LATHAM. God bless you.


    You gave a great team answer to that. I think I have asked everyone who has testified so far, and no one has had a good answer.

    One question I get a lot at home. The Chairman referred to it as far as the packer concentration. I think even more so I get more questions about the price differentials paid from some of the larger producers to the smaller producers.

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    Could you give us an outline of what the criteria is that justifies a difference in price; say, for a pork producer?

    Mr. BAKER. I do not know if there is a criteria or not that justifies it. It is probably based on the fact that if I have a product that is better quality, I should receive a better price. Not all hogs are equal. If I have a leaner hog, I want a better price. That is the way the system ought to operate.

    The person who has the best hog ought to get the best money. I do not want to do anything to the system that changes that. You cannot pay everybody that has a hog the same money.

    It is perceived that the larger operators get the highest money. Our facts show that the ones with the best quality get the best money. That is where I will have to leave it. As far as an agenda, I do not have one.

    Mr. LATHAM. There is no set criteria as far as you are concerned. I know you have heard this a lot.

    Mr. BAKER. Yes.

    Mr. LATHAM. The smaller producers, you know, I have a lot of them in my District, or used to, and it is something you hear everywhere you go. Is there concern at USDA about this?

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    Mr. BAKER. Yes, yes, there is concern. There is perception. However, there are some facts that back that up. If I can start a kill line in the morning at 7:00 a.m. with 2,000 or 3,000 hogs there, chances are there is some premium paid for being able to do that. It is not significant. The significance is on the quality. We have seen hogs where the value of the hog is about $6 higher than another hog.

    Mr. LATHAM. Is it somewhat on uniformity?

    Mr. BAKER. That is part of the quality.

    Mr. LATHAM. Well, I mean, you can or you cannot. You could have uniform bad quality hogs too.

    Mr. BAKER. I have been there. If you have hogs that are over the prescribed weight, they are going to discount you. If they fit right in that prescribed weight, they are going to give you a premium.

    Mr. LATHAM. If you do not have any criteria, how would you put forth a case that there is some unjustified differentials being paid?

    Mr. BAKER. At this time, we have not put forth that case that there are unjustified differentials. We are doing an investigation right now looking at the procurement of 6 million hogs in the mid-west with 11 packers, looking at prices paid, procurement, whether it was on a formal contract, how it was determined, and what effect it would have on the smaller business versus the large one. We will let you know what we find out.
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    Mr. LATHAM. When will that be available? Do you have any idea yet? There was some report, not too long ago, was it not?

    Mr. BAKER. It is a lot more extensive than we first thought when we undertook it. We thought we would have it out last fall. Hopefully, by mid-summer we will complete the first part of it.

    Mr. LATHAM. I really look forward to that because no matter how it comes down, we want to know.

    Mr. BAKER. This will give us the best look that we have had at the pricing.

    Mr. LATHAM. Sure; because it is a huge question.

    Mr. BAKER. That is true.

    Mr. LATHAM. And people should know that either they are being penalized unjustly or the market is working one way or another.

    Mr. BAKER. We hope to complete the first part of the report by mid-summer. We will provide the Committee with a copy when it is completed.

    Mr. LATHAM. That is all I have, Mr. Chairman. Thank you.
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    Mr. SKEEN. I want to thank you. I particularly want to thank you folks for your forbearance and for sharing with us your responsibilities.

    We have responsibilities to you that you be funded. We are going to do our best. This is the way the process works. I think it has proven to be very productive.

    It enhances our perspective of how well-staffed both of our agencies are and the intelligence, the hard work, and the dedication that comes through all of the time. The people that back you all up deserve some recognition and thanks too.

    So, we want to thank you for your presentations. If we can find some other way, other than user fees, maybe we will get you funded pretty soon. Thank you so much.

    Mr. MEDLEY. Thank you, Mr. Chairman. Thank you on behalf of the men and women who make up Marketing and Regulatory Programs. We at USDA are very proud of them.

    We do thank you, Mr. Chairman and Ranking Member, for all of the support and help you have given us in the past.

    Mr. SKEEN. Thank you. We are adjourned.

    [CLERK'S NOTE.—The following questions were submitted to be answered for the record.]
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    "The Official Committee record contains additional material here."

Tuesday, March 17, 1998.










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    Mr. SKEEN [presiding]. The committee will come to order and we're on the record.

    This afternoon we have the final Fiscal Year 1999 budget hearing. Like last year, the Natural Resources Conservation Service has the honor of being the last budget hearing. I don't know whether that's symptomatic or it just happens that way, but we like to save the best for the last.

    We have with us Jim Lyons the Under Secretary for Natural Resources and the Environment and Pearlie Reed, the new Chief of the Natural Resources Conservation Service. We just had Mr. Reed here a couple of weeks ago as the former Acting Assistant Secretary for Departmental Administration. You're a man on the move, if not the moon. [Laughter.]

    Pearlie, good to see you again.

    Mr. Lyons, I would ask you to introduce your team and make a brief opening statement and then we will begin the questions.

Opening Remarks by Under Secretary Lyons

    Mr. LYONS. Thank you very much, Mr. Chairman. In the interest of time, and given the fact this is Chief Pearlie Reed's first opportunity to present his budget to the subcommittee, I will keep my remarks very, very brief, and allow Pearlie to——

    Mr. SKEEN. We both appreciate it. [Laughter.]
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    Mr. LYONS. Thank you very much. I will be very brief, then. Just a couple of quick points and introductions. I also want to introduce a new member of my staff, Craig Cox, who is the acting deputy under secretary for Conservation, who is behind me.

    Mr. SKEEN. We're glad to have you here. Welcome.

    Mr. LYONS. He worked diligently over in NRCS in helping to put together the Geography of HOPE, and other initiatives, under Paul Johnson and Pearlie's leadership. And I also want to introduce Danny Sells who is Pearlie's Associate Chief——

    Mr. SKEEN. Welcome.

    Mr. LYONS [continuing]. Who, of course, worked with you and the committee and other Members in his capacity in heading up the legislative affairs division at NRCS.

    Mr. Chairman, the budget we present to you today, I think, is a complete and comprehensive effort to try and implement the conservation programs of the 1996 farm bill, to continue the progress we made in the conservation arena over the years and, I think, to fill out the commitments that we've made to the American people to help promote good land stewardship and conservation across the private landscape. We're making tremendous gains in the conservation arena, both with regard to our work on crop lands, as well as our work with the grazing community through things like the Grazing Lands Conservation Initiative, and other initiatives that you're very well aware of.
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    Last year, in our discussions with the committee, a number of issues and questions were raised about certain programs and activities. In this previous year, we've attempted to respond to questions specifically related to programs like the Urban Resource Partnership Program, our efforts to work to protect salmon habitat, as well as the administration's initiative under American Heritage Rivers. And I hope those questions were answered to your satisfaction.

    In addition, I know a number of questions were raised with regard to operations of the RC&D program. And, in fact, we had a letter from you, dated January 23, in which you sought additional information concerning how we were going to operate the RC&D program.

    What I'd like to do, Mr. Chairman, is provide that letter to you today, in response to the inquiry, and I understand that some discussions have already occurred with staff.

    Mr. SKEEN. We'll have that put in the record.

    [The information follows:]

    "The Official Committee record contains additional material here."

    Mr. LYONS. Very good, and I also have a copy for ranking member Marcy Kaptur.

    In addition, I just want to make note, Mr. Chairman, that today, looking ahead with the RC&D program, Secretary Glickman is announcing 25 new RC&Ds—a very successful part of the conservation portfolio administered by NRCS—and a number of those RC&Ds are in States of your colleagues and, of course, we've gone ahead and notified them of this recent announcement. Pearlie can get into greater detail with regard to that.
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    Let me just say, in summary, Mr. Chairman, that I think it's an exciting time in the conservation arena. We are working very closely with others in the Department, others within the Administration, to further our conservation efforts. Most recently, Bob Perciasepe, who is the assistant administrator for water at EPA, and I co-chaired the President's Clean Water Initiative and put together a plan for addressing clean water concerns nationwide that I think puts renewed focus on the value of good land stewardship and voluntary approaches to addressing non-point-source pollution problems nationwide. And if we have not done so, we will be glad to, at some point in time, brief you and the staff with regard to the critical role that NRCS will play in the context of that overall strategy.

    We are making great strides, and I think we have a budget that helps, in many respects, in some ways we probably need your help to further our efforts, and I'm sure we'll get a chance to talk about that in greater detail.

    I'm personally excited to have Pearlie Reed back to the Agency. Pearlie was, of course, Paul Johnson's right-hand man and did a tremendous job in helping move forward with the progress that's been made in moving from the Soil Conservation Service to NRCS, and we look forward to his return and his continued outstanding leadership as chief of NRCS. And with that, I'll turn things over to Pearlie.

Opening Remarks by Mr. Reed

    Mr. REED. Thank you, Jim. Mr. Chairman.

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    Mr. SKEEN. You're a man of many talents. We're eagerly awaiting to hear from you.

    Mr. REED. Okay. I will, too, be equally brief.

    Mr. SKEEN. We'll be equally pleased. [Laughter.]

    Mr. REED. Okay, Mr. Chairman. It is good to be back home in the NRCS. You have my prepared statement and supporting budget materials. As you know, I have spent the past 15 months or so working as the Assistant Secretary for Administration for Secretary Glickman.

    One of the many things that I learned from Mr. Glickman is the importance of the Congress. The Secretary would remind us quite frequently—those of us who worked directly for him—that we needed to do a better job working with the Congress. In fact, he frequently reminded us that Article 1, Section 1, of the Constitution of the United States starts with, ''all legislative powers herein granted shall be vested in the Congress of the United States.''

    Clearly, I see one of my jobs, and a personal priority for me, is to be responsive to the Congress in general, but to this Committee and you, in particular. My priorities are yet to be fully established, but I can assure you that my priorities collectively will focus on getting things done.

    As an example, many great conservationists have preceded me in this job. I plan to take the best their administrations brought to the NRCS and use it to make the conservation program more efficient, more effective, more accountable. This means that our science, our technology, our management instruments, must be deployed in such a way that we relieve our customers and employees of the many bureaucratic burdens that provide no utility.
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    With that, Mr. Chairman, I'd like to stop and throw it back to Mr. Lyons and we would be happy to take any questions you might have.

    [CLERK'S NOTE.—Mr. James Lyon's written testimony appears on pages 723 through 754. Mr. Pearlie Reed's written testimony appears on pages 755 through 760 Biographical sketches appear on pages 719 through 722. The Natural Resources Conservation Service's budget justification appears on pages 761 through 884.]

    Mr. SKEEN. Thank you, Pearlie.

    Do you have any other statements?

    Mr. LYONS. No, sir. I was just going to make sure that, for the record, I had a chance to introduce Larry Clark with NRCS; of course, Steve Dewhurst with the Department, who will answer all your questions.

    Mr. SKEEN. He has for some time.

    Mr. LYONS. I know; he takes care of mine.

    And Anne Dubey with our budget shop at NRCS.


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    Mr. SKEEN. Welcome to both, and Steve, it's always good to see you. I believe there's always an everlasting person who knows it all, hears it all, and says very little. [Laughter.]

    Mr. DEWHURST. Thank you.

    Mr. SKEEN. Secretary Lyons, this subcommittee has expressed to you, I think both publicly and through last year's bill and report, that our concern about the accountability of the funds appropriated to the NRCS. Specifically, in last year's report we directed that NRCS enhance its accountability by tracking the activities and conservation operations funds, how they're being spent, and presenting a more detailed budget justification when it submits its Fiscal Year 1999 request. What have you done to improve that record of accountability?

    Mr. LYONS. Mr. Chairman, a number of things are underway in trying to improve accountability at NRCS and, if I could, I will describe some of the current efforts that we have underway. We have a team that's about 3 months away from providing the NRCS leadership with options for installing a CTA workload measurement system to look at how we track conservation technical assistance.

    Mr. SKEEN. How long has this been in existence, the group?

    Mr. LYONS. I don't know. How long has it been? Okay. Since last November.

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    Mr. SKEEN. Last November.

    Mr. LYONS. Yes, sir.

    Mr. SKEEN. Please excuse the interruption.

    Mr. LYONS. Yes, sir. That team is looking at mechanisms for measuring time and costs of core processes or activities, the things we do on the ground, to develop a statistically-reliable mechanism of nationally measuring our performance in providing conservation technical assistance, a sampling framework together, dated to monitor our activities, and using that information to improve management of programs and the allocation of funds, so that overall we can do a better job of tracking where moneys are allocated in the technical assistance work that we do.

    Similarly, we are working in collecting actual time costs for the role we play in CCC-funded programs, and we will analyze program costs and measure trends in those costs, particularly as they relate to administrative overhead and activities that are reimbursable under existing program authorities.

    So I think we are moving forward in a number of ways so we can demonstrate accountability and also do a better job of monitoring our real-time investments so we can report back to you and, of course, the American taxpayers with regard to how we're spending all our money.

    Mr. SKEEN. Have you made a report on this?
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    Mr. LYONS. Larry, do you want—I think a few months away from a complete report.

    Mr. SKEEN. Give us some idea of time frame, if you would.

    Mr. CLARK. Mr. Chairman, hopefully by the end of the Fiscal Year we'll be in a position to send up to the Committee a full report on what the team has established.

    Mr. SKEEN. Have you found any abuse or misuse of the funds in your report?

    Mr. CLARK. No. One of the items that we've looked at, for example, in the area of the cost of the Commodity Credit Corporation programs that we administer, those programs are running, in terms of their costs, somewhat higher than we have estimated. We have our field office staff maintaining daily logs with times, so we're getting a pretty accurate indication of what those programs are really costing us.

    That didn't surprise us a whole lot, though, that the real-cost figures would be higher than what we had estimated because we knew we were being conservative.

    Mr. SKEEN. You haven't found any barnburners?

    Mr. CLARK. No, sir.
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    Mr. SKEEN. Let's go the American Heritage Rivers Initiative, the homepage in that particular initiative was mentioned in the USDA and there are several examples of what a Heritage River designation could mean to a community and the benefits that would be available. In particular, NRCS is mentioned in every example as an agency that would be able to provide services to an area when it receives a Heritage designation. Does this mean that existing NRCS programs are not adequately serving the public and could only offer their services upon a river's designation?

    Mr. LYONS. No, sir, it's not intended to mean that at all. The American Heritage Rivers Initiative is really an attempt to bring focus to a valuable resource and better facilitate the application of NRCS and other Federal programs to the needs of the community that nominates a river for Heritage designation.

    I think there's a lot of misunderstanding about what the American Heritage Rivers program is about. Really, it is an effort to better serve the American public and for those communities that seek to nominate rivers or river segments for consideration in American Heritage Rivers, we believe we can more efficiently, through better coordination and collaboration, deliver the services that we deliver, and, hopefully, help the community realize their goals and their expectations for the river systems that are included in the Heritage program.

    Mr. SKEEN. There's been a lot of conversation about this particular program, and a lot of disinformation, I think, as well as the responses to it have been kind of lukewarm. If a river is designated under this initiative, does that mean NRCS funding would be reprogrammed to serve the Heritage area, and, if so, under what authority would this occur?
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    Mr. LYONS. We believe we can operate under existing legislative authorities.

    Mr. SKEEN. You don't have a line item, then, or anything of that kind as far as fees or appropriations?

    Mr. LYONS. I don't believe that's anticipated. In 1997, for example, Mr. Chairman, we provided about $94,000 of staff time assisting with design of the initiative and then 60 percent of that came from Conservation Operations, 40 percent from the Watershed Surveys and Planning account. We didn't anticipate a specific line item.

    Mr. SKEEN. So you just handle it out of existing funds?

    Mr. LYONS. That's correct. And, again, in 1998, we project about $225,000 would be allocated to the initiative.


    Mr. SKEEN. Let's talk about user fees. Under the USDA's budget, it assumes the enactment of several user fees, and NRCS has proposed $10 million in user fees. Unfortunately, I could not identify whom exactly you would charge a fee to, or what exactly you would charge a fee for, since you devoted all of one sentence in your testimony to the user fee proposal.

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    Mr. LYONS. Mr. Chairman, I'm going to let Mr. Dewhurst, who has become an expert on user fees——

    Mr. SKEEN. We're all becoming experts on user fees. It seems to be the answer for it: If you don't have the money, we're going to set up user fees. But, I don't know. Steve, go ahead. [Laughter.]

    Mr. DEWHURST. I think we've had this discussion.

    Mr. SKEEN. I believe so, but let's hear it one more time.

    Mr. DEWHURST. Okay, sir.

    Mr. SKEEN. Maybe tune the fiddle a little better. [Laughter.]

    Mr. DEWHURST. The first thing you usually ask me is when you're going to get the legislation, and my answer is: It has not yet been submitted to the Congress but will be in the very near future.

    We have in the budget, as you said, a series of user fee proposals, and two of those proposals affect the Farm Service Agency and the Natural Resources Conservation Service. Each of those proposals anticipates about $10 million in user fees. Each of those proposals anticipates that those agencies would charge for some services they provide which are beyond what they would normally do for the public at-large, places where there is a specific beneficiary who is going to use the information, we develop, for a profit, or for some developmental activity that's not a direct part of our program. So, our intention is not necessarily to charge farmers for services, but we will charge developers, we will charge insurance companies, we will charge others who use our data for their own purposes.
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    Mr. SKEEN. What about municipalities?

    Mr. DEWHURST. That's possible.

    Mr. SKEEN. Or other political entities?

    Mr. DEWHURST. That's possible to the extent they're using our services and our information for a project of their own that is not of a particular national interest.

    Mr. SKEEN. Have you got a definition for those types of services?

    Mr. DEWHURST. Some are where you have a development. You're building a shopping center——

    Mr. SKEEN. It depends on the location or whatever is going to go on in that particular area, would it not?

    Mr. DEWHURST. Yes, sir.

    Mr. SKEEN. But the results are municipalities or subdivisions, a political subdivision, could be assessed user fees?

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    Mr. DEWHURST. Yes, sir.

    Mr. SKEEN. Now I'm assuming that it would depend on what they're paying for, as well. Or what kind of program each one of these Heritage river situations that occur, could be vastly different from one to another.

    Mr. DEWHURST. Yes.

    Mr. SKEEN. Depending on the location.

    Mr. DEWHURST. It depends on the location and the nature of the project that's being carried out.

    Mr. SKEEN. Because that's one thing that bothers us in the western parts of the United States, the water situation is a very sensitive one, and we think we've got a Heritage river just because it flows, and not often. [Laughter.]

    Mr. DEWHURST. It's true.

    Mr. SKEEN. A wash. A ''wash'' they call it.

    Are you about ready, Ms. Kaptur?

    Mr. Fazio, why don't you take off first.

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    Mr. FAZIO. Thank you, Mr. Chairman. Thank you, Ms. Kaptur. I'll ask a couple and then I'll hold for the second round, if need be.

    First of all, welcome, everybody. It's good to see you.

    The Conservation Reserve Program is something, you know, Mr. Walsh and I have taken an interest in, hopefully in concert with the Department, to try to re-orient, shall I say, some of the priorities that have traditionally been funded, to talk about the opportunity to increase State participation in the program, a number of State officials are now in the process of developing initial Conservation Reserve Enhancement Program proposals. I wonder if you could give us an update as to how we're doing in that regard, how many states have submitted them, whether we have sufficient acreage left in the existing CRP program to accommodate requests? And I might have a couple of specific questions about certain States, but I'd just like to get an overview and I'd be happy to yield to whoever can help me with this.

    Mr. LYONS. Congressman, what I'd like to do is yield to Larry Clark to give you the details, but let me just say that from the standpoint of the CRP program and the direction we've been headed, I think overall the environmental benefits associated with the program have been enhanced considerably with some of the policy changes and program changes that have been put in place in recent years. The use of an environmental benefits index which incorporates concern for soil erosion, water quality, and wildlife habitat, as a basis for evaluating bids, I think has been highly successful.

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    In addition, we've used CRP to initiate a Buffer Initiative which is going to be critically important whether there's water in the stream or not, in protecting riparians and water quality throughout the United States with a goal of enrolling two million miles in this buffer initiative by the year 2002.

    And then through the enhancement program, the so-called CREP program, we have been able, similarly, to assist States who have been able to provide matching funds to further enhance the use of the program to achieve specific goals.

    We announced, for example, the first program in Maryland which is going to be critically important to the State's ability to deal with water quality concerns as they relate to issues such as pfisteria, which had a tremendous impact on the State.

    We have announced other programs and have programs pending in the Northwest, in Oregon and Washington, to deal with concerns for water quality, and watershed health that they have in that part of the country. But let me have Larry offer you the states and give you an idea of specifically where we are.

    Mr. CLARK. Mr. Fazio, the Maryland CREP, as you know, is one that was endorsed some time ago. The others that we have on-line are New York—New York State is working on one, primarily in the New York City watershed area—the States of Washington, Oregon and Illinois.

    In terms of the acres that are available, we have worked with the Farm Service Agency and set-aside sufficient acres in the Conservation Reserve Program to accommodate the additional enrollment that would occur as a result of bringing in new CREPs.
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    Mr. FAZIO. But we have five, I guess, at the moment, you mentioned four plus the Maryland which has been highly publicized, of course, back here. How many other States do you think are likely to get their programs in order and submitted to you? And what would happen to them—is there any deadline in the process here that we ought to put the State officials on notice about, in terms of missing the boat for this year or for the next sign-up or however you want to analyze it?

    Mr. CLARK. As long as there are, annually, acres coming in and out of the Conservation Reserve Program, we should be able to manage the program in such a way that we can accommodate the new proposals coming on-line. I would also add that there is CREP in the State of Minnesota that I omitted from the list.

    Mr. FAZIO. And most of these attempt to do what? How would you typify what the State CREPs are really focusing on? Are they going in the direction of the buffer strip in addition to what you're trying to do nationally? And how does that interrelate? Do you double-count this? I mean, do you count this as part of your how-many-mile initiative or is it in addition to what the States are doing?

    Mr. DEWHURST. Yes, there may be some double-counting in that we do take a credit for a buffer, for instance, if it's part of a CREP. The Maryland proposal, for example, included a tremendous amount of buffer effort. The ones that we're seeing coming out of the Northwest, Oregon and Washington, also focus a great deal on salmon habitat and working there with riparian vegetation, as well.

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    They do compliment the ongoing CRP. The great advantage to them, of course, is the fact that they allow us to partner with State investments to extend the conservation investment at the local level.

    Mr. FAZIO. Do we find most of these States putting some money up as well? I mean, is there a tax break or a payment for partial-taking of use or reduction in development rights or something? I mean, could you describe how these typically interact?

    Mr. LYONS. Well, the CREP proposals, I believe, require that the State put up a certain amount of money as the basis to accept a proposal and, in fact, with Maryland and Minnesota, those funds have been provided, I believe the Washington legislature is looking at a proposal that would support their application. So, as Larry says, it affords us an opportunity to partner, it also affords us an opportunity to tailor a reserve program to meet the specific needs of the State.

    Maryland being the example I'm most familiar with, living there, and that is primarily focused on water quality concerns in the Chesapeake Bay. So it clearly is an enhancement. The New York City watershed would be another good example; there we've worked for years with dairy operators, primarily, in the Catskills and other regions in New York State. And in this proposal, we'll enhance our ability to put buffers in place and reduce the impacts of their operations on water quality.

    Mr. FAZIO. Do you look at the State applications in any detail or do you just basically accept them as a step in the right direction? Do you try to make distinctions about the quality of what they're proposing?
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    Mr. LYONS. Well, I'm going to preface this, Congressman, by first of all acknowledging that technically, FSA administers, of course, the CRP program, so they are most directly involved. Park Shackleford, my colleague and a former colleague from here on the Hill, is responsible for that review. We work cooperatively with them, but there's lots of give-and-take and discussion to make sure that only authorized activities are going to be paid for and to ensure that the CREP proposal enhances ongoing conservation activities in that particular State.


    Mr. FAZIO. You know, we've had some discussions about rental rates and how that affects one part of the country to another. Do you have sufficient flexibility under your program to deal with those kinds of issues?

    Mr. LYONS. Well, not focusing, myself, in on the administration of the program, I'm going to pass, if I could, Congressman. I would be glad to provide you with additional information. Perhaps, Steve—his broad overview—could give you some sense of how that's handled.

    Mr. DEWHURST. Well, I don't know that I know a lot of the detail. I know that we set some standards, we are trying to get rates that are below local rental rates, and there's flexibility to adjust those rates on an area by area basis. But the FSA, the Farm Service Agency, runs the program and makes all those decisions. And I think that's about the level of detail I can go in to.
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    Mr. FAZIO. I guess we probably shouldn't ask you any more questions about this because Shackleford has to answer them.

    Mr. LYONS. That's always better, when Parks has to answer his own questions.

    Mr. FAZIO. Right, right. Dewhurst has the courage to tell us, we've gone about as far as we can go. [Laughter.]

    And the well is dry. [Laughter.]

    I had one other similar question, but I think I'll let Mr. Bonilla go, and then hang on for Ms. Kaptur's questions, and then I'll get back to you.

    Thank you, Mr. Chairman.

    Mr. SKEEN. Thank you, sir. Mr. Bonilla.


    Mr. BONILLA. Thank you, chairman. Mr. Lyons, I'd like to start out by thanking you for the news today about the RC&D Pecos Valley announcement. I appreciate you not only making that announcement here at this hearing, but I appreciate you letting me know earlier today about that. That's good news because that's something I also brought up when Secretary Glickman was here, not too long ago. So, thanks for that announcement.
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    I want to start my first question, Mr. Lyons, to tie into what Mr. Skeen was asking about earlier on the American Heritage Rivers Initiative. That's been the subject of so many hearings back in Texas, and so much controversy. I know when I brought this up with the Secretary, he pointed out that, in his view, there was a lot of support out there for this initiative. But, to start from Ground Zero on this, Mr. Lyons, where did this idea develop in the first place? Was there an outcry in the heartland for this? Did it come from the agriculture community? What has caused the administration to move forward so aggressively on this program in the first place?

    Mr. LYONS. Well, I know that, of course, there's the issue of clean water always resonates with the American public and it has been a concern of all Americans. The notion of a focus program on rivers, though, I think was highlighted in the President's State of the Union Address a year ago in which he indicated that he desired to be able to announce 10 rivers for inclusion in the system.

    I think that announcement triggered a lot of activity within the administration to work to make sure we could put together a program that would be responsive to local interests and concerns, that would be voluntary in nature, but that would use existing resources in the most efficient way possible so as to help communities that saw value in that designation realize their goals.

    Mr. BONILLA. So it didn't originate at all at USDA, even though quite a bit of the function is now falling under your jurisdiction. Chairman Skeen asked earlier about something I also asked the Secretary, about. Some of the money for American Heritage Rivers is coming out of the Watershed Survey and Planning account while, on one hand, USDA is saying this is an area we need to get more funding toward and, on the other hand, we're spending money on the American Heritage Rivers Initiative that was not designated in the first place.
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    I realize you all have some latitude in how you spend dollars and I know this is not a lot of money Mr. Lyons. I know that the agency has to carry a lot of water for initiatives that start outside your jurisdiction, but this was not an initiative that was an idea that came from the agriculture community, was it? In the first place? It was started with a speech, is that accurate?

    Mr. LYONS. Well, it certainly reflects a lot of dialogue that has occurred in the hinterlands of an interest in this kind of program, but it was not an NRCS or USDA initiative, no. It was an initiative that, I think, began with the President's State of the Union Address.

    Mr. BONILLA. One of the reasons I ask that is because it has become such a lightning rod out there. There are already so many Federal initiatives that have not, by any means, that fall under your jurisdiction out there that exists, to help clean up our water supplies and systems and rivers and beachfront. I'm curious to know with all the Federal, regional, State, and local initiatives that exist already, because everyone cares about having clean water, that's not in dispute at all, why there was yet another initiative that was undertaken. That's my curiosity.

    Mr. LYONS. Well, I guess my view of the program, Congressman, is that it's a mechanism that would allow us to experiment with ways of using existing programs and existing resources to better deliver services. We have programs and authorities to deal with a wide range of resource concerns, but oftentimes we'll put together an initiative to try and test a new way of delivering those services or to try and experiment with ways in which we can work more closely with communities. Certainly one of our goals is to do just that and one of the driving forces for this has been the community interest, actually across the country, in rivers from the Hudson to portions of the Columbia. That interest doesn't exist everywhere and certainly, the program isn't large enough to provide that benefit.
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    But, you know, a good example, perhaps a corollary to a program like this, we had a very strong, I think, conservation program focused on range lands for a number of years and I think a very effective one, I know the chairman is very familiar with the work we've been doing on range lands, but just a few years ago we announced the Grazing Lands Conservation Initiative, which we developed in partnership with the grazing community. Some might look at that as a new initiative, on the other hand, it was a way to bring together community interests, the ranching community, our technical assistance, and range conservationists, to develop partnerships to identify new ways to forward conservation efforts while promoting production agriculture. In much the same vein, the Heritage River Program is an initiative but hopefully a way that will actually help to further a community effort—not just a government effort, but a public-private partnership and help these communities realize their goals.

    And in some places, that's meant a big difference in terms of economic development, rejuvenating waterfronts in downtown areas where river segments can benefit. I can think of a city where I live, Baltimore, which used resources, I don't know they were Federal resources, but used resources to rejuvenate their downtown and it's made a big difference in terms of the economic vitality of that part of the city. The same might, in fact, occur through efficient use of the Heritage River Program. Again, provided communities have that interest. If they don't have that interest, then we would not impose anything of that nature on them.

    Mr. BONILLA. Well, I appreciate that because, as you pointed out and alluded to, the desires for this initiative vary greatly, depending on what part of the country you come from. The example you point out, of Baltimore, is a good one. I'd point out the one in my hometown of San Antonio, as well.
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    Mr. LYONS. Probably a better one.

    Mr. BONILLA. The River Walk is a magnificent example of how to properly take care of a wonderful river and turn it into a huge, national tourist attraction. But, again, it ties into my earlier point, all that was done before there was any American Heritage Rivers Initiative and I wonder why people can't look at examples of Baltimore, San Antonio and other communities to see we don't really need to undertake anything new like this. Let me almost speak in the words of my farmers and ranchers back home who are highly suspicious of a new Federal initiative.

    The Endangered Species Act started out as a look-good, feel-good, sound-good, warm and fuzzy idea many years ago, and it was. But then those who are not really interested in saving species use it to impose power on communities.

    The same can be used for the Americans with Disabilities Act which is a great idea and we still think it has a lot of potential but then you get the attorneys involved in this. There are horror stories out there that attorneys from one community go into another one, they're not even from, they start measuring doorways and they just see it as an opportunity to cash in.

    So, Federal initiatives, regardless of whether they fall in the agriculture community or not, cause a lot of farmers and ranchers out there to be highly suspect of any new initiative that might impact them. Your intentions, I'm sure, are very pure and the administration's may be pure, as well, on what the outcome AHRI would be, but based on the historic problems that some of my constituents have had with Federal initiatives, they're highly suspect of what it might wind up being.
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    There could be language in there, when it covers watersheds, that might wind up spreading hundreds of miles beyond the river affected. And then next thing you know, you have people coming out to rope off their property and say that you can't do something on your land here because it might feed into a river that's part of this program. So, they're just gun shy about having anything like this develop and I know that you can appreciate that. What are you hearing from farmers and ranchers out there about this program, overall?

    Mr. LYONS. I think, as you know Congressman, there's surely been a mixed reaction. I think we've tried to allay people's fears by indicating that there are no new regulatory components to this program, unlike some of the programs you cited. You know, I think this is a program that once we have some examples on the ground, I think others will be able to judge.

    And I've talked to communities who are excited about the opportunity to have an American Heritage Rivers designated. They see that as an opportunity to bring a highlight to their waterway or their community, perhaps to bring in new commerce. The San Antonio experience is an excellent example, developed in a little different light.

    I wouldn't claim that all good ideas come from government; quite the opposite. I think maybe we're capitalizing on a good idea here that existed in the private sector—and the San Antonio situation was, again, a private-public partnership, I believe—and just trying to further that along. And if communities desire it, we want to be there. We want to be helpful as we need to be in serving all communities and all interests. And if not, then obviously we would move forward.
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    You know, all I can do is answer people's questions with regard to the program, and express our intent. I'm sure it's going to be a trust-but-verify situation.

    Mr. BONILLA. I appreciate, so far, the signs we're getting that the program will allow local communities to opt out if they really don't want to be part of it and if someone in another part of the country wants to welcome it in their neighborhood, they can have a great time with it, if they like.


    I only have one other question, it's on the EQIP program. I want to finish out with. This question on the changes that were made to the ranking formula in Texas last year, just 3 days before the end of the program which caused concerns among large land owners.

    This was especially troubling to many of my constituents because out in west Texas you've got to have quite a few acres to make a living. When the formula was adjusted, this was done at the direction of the regional office and calculations for cost-per-acre were taken out of the formula.

    My question is, what kind of role does the regional office play in this decision, and was your office consulted before the final change was made? Without cost-per-acre calculations, what other considerations are made to ensure that we're getting the most conservation benefits for the dollars spent with this program?

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    Mr. LYONS. I'd like Mr. Clark to address that, if you could, Congressman.

    Mr. CLARK. Mr. Congressman, the ranking criterion that's used at the State to rank their priority proposals is a State determination. The reason our office provides some oversight is to make sure that those ranking criteria are consistent with the regional strategic plan.

    One of the things that we do to ensure that those decisions aren't too far out of line with the program objective is that we do conduct oversight reviews of those State-level decisions. That is one of the functions of the regional office. We have conducted one oversight review, thus far, of the program, and we plan to do a Phase 2 review of the program this year to make sure that it's running properly.

    Mr. BONILLA. Okay. We may have some more follow-up questions for the record. I'd appreciate a prompt response, if you would. And I appreciate you all being here today, very much. Thank you, gentlemen. Thank you, chairman.

    Mr. SKEEN. Ms. Kaptur.


    Ms. KAPTUR. Thank you, Mr. Chairman. I apologize for being delayed in arriving at the hearing today. We have medical nutrition nurses from my region, so I had to meet with them first. And I have read your testimony, Mr. Lyons, Mr. Reed. Ms. Dubey, welcome. Mr. Clark, glad to have you here today. And, always, Mr. Dewhurst, who is the 436th member of the House at this point, based on the number of hours he's spent here. [Laughter.]
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    I would like to begin by saying that I appreciate your testimony and some of the supplementary materials, including this backyard conservation issue that was brought. Could you give us a sense—I see your comments on grazing land, and their quality. I think that I, as a Member, appreciate kind of a global view, as far as North America is concerned, and your view on how well are we doing at conserving our soil quality as a country. You have some statements in your testimony that over half of the grazing land in non-Federal hands is essentially in fair or poor condition, but I'm not only interested in the grazing land, I'm interested in our soils in general.

    How are we doing in terms of conservation and resource management as a country compared to 20 years ago? You read a lot in the newspapers that we're over-utilizing our soils, that because of chemical applications and so forth, that we have reached a point with water quality, for example, in many of our rural areas, that we have reason to be concerned that America can't continue to be this engine of soils that keeps producing, that at some point the piper is going to call his due. How do you put this perspective beyond this budget proposal? How would you explain to the American people, how are we doing as a country with proper soil management for today and tomorrow?

    Mr. LYONS. Well, Congresswoman, I appreciate that question. Let me suggest that, I think we're doing very well on a path that requires continued progress. You know, it all boils down to soils. There the basis for producing food and fiber that supports all of us. And, you know, critical to clean water, wildlife habitat, all the other needs and interests we have. I think, my perspective, probably should go back to the 1985 Farm Bill which is the first time I really got actively involved in conservation initiatives in a different role as a member of the Agriculture Committee staff, actually, the tail-end of that farm bill. And, since 1985, I think, we've realized tremendous gains in curbing soil erosion. Erosion rates are down by about 42 percent since 1985.
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    Ms. KAPTUR. Is that because of—excuse me—no till and our contour plowing, and drainage. What accounts for the greatest share of the progress, you feel, that has been made?

    Mr. LYONS. Well, I think, it's a number of things. Certainly, the Conservation Reserve Program has contributed a great deal by taking highly erodible lands out of production. The Sodbuster Program, which was a part of the 1985 Farm Bill, helped to address tillage practices that were having a negative impact. In 1990, we expanded the scope of our programs and instituted new programs, like the Water Quality Incentive Program, the Wetland Reserve Program, and the like. And, then in 1996, enhanced, again, the conservation tool kit by converting WQIP to the EQIP Program adding the Wildlife Habitat Improvement Program, expanding authorities—reauthorizing and expanding authorities to the CRP Program and the like.

    All of that has provided steady progress. And, I think what's most significant is the growing recognition that good land stewardship, good conservation is the key to much of the environmental quality that we seek to achieve. By that, I mean better land stewardship is critical to reducing non-point-source pollution, which is going to be critical to improving water quality nationwide.

    The President's most recent For Clean Water Action Plan focuses squarely on public and private lands stewardship as a key to improving water quality. I think that's a significant shift in focus and understanding because for many years we focused on what came at the end of a pipe as opposed to what ran off farm and ranch land and urban, and suburban areas.

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    I think the progress continues with this budget. And, I think where we're making investments, they will help us reduce soil erosion further, will help us make gains in improving soil quality, will help us improve wildlife habitat.

    I think we're making a lot of progress, and that's not to say additional investment wouldn't help more. And, I think, within the constraints of the budget we're operating under, we're doing very well and, hopefully, we'll continue to do well.

    But, you know, I should let Pearlie answer this question. He has the perspective of having been a State Conservationist in a number of places across the country and, of course, most recently, was Paul Johnson's Associate Chief. So, he might offer some good perspective.

    Ms. KAPTUR. I'm very interested, for instance, in our prime lands a classification A or 1, whatever classification you give them. Do we have more or less organics in those soils today than we did 25 years ago?

    Mr. REED. I would intuitively say less.


    Ms. KAPTUR. And do we have more or less Prime 1 soils left in this country than 25 years ago?

    Mr. REED. Land is continually diminishing in terms of prime farm land. But, I'd like to pick up on what Mr. Lyons said about what Paul Johnson would refer to as ''the health of the land.'' I think the health of the land is good. I think it could be a lot better. I think the programs that have been provided to us through the Farm Bill will help us get to where we need to be. I think the partnership that we enjoy with conservation districts, state conservation agencies, and others, collectively, with the Federal Program will help us write the prescription so that we can do everything that is needed to protect our great land resource.
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    One thing that I would like to pick up on as a part of some of the things that Paul Johnson started was trying to establish within the NRCS, and within the Department of Agriculture, a way of assessing the health of the land so that we can give better answers to questions that you asked.


    Ms. KAPTUR. You have your biggest supporter here in that. And, I know that in Ohio, which has more urban areas than any other state in the Union, we constantly have this struggle between urbanization and farm land—productive farm land. And, I have a terrible sinking feeling at the depths of my stomach that we have lost very productive prime one land. I asked Mr. Johnson, one time, you know, couldn't we restore it. If we lost it here, can we restore it there. Well, no you can't turn sand into loam. You can't really—pretty hard to do that, and, based on the characteristics just in my area. So, as just one American who happens to hold office, I would encourage you in those efforts and I would hope that in future submissions of testimony that there might be maps, or statistics that are provided so we can share this information with our communities, with the press, with those that sit in these hearings.

    We know that 75 percent of what we consume as a country is produced within areas that are urbanizing and it's very hard to—that's why they were settled in the first place, because people could produce food to eat. And, it seems that we have a responsibility, if I heard you correctly, that we now have very, highly-productive soils that have fewer organics in them than they did 25 years ago, and that we, as a country, for whatever reason, are systematically diminishing our top soils in a world that will add 85 million people a year in the next century. That doesn't seem to make much sense unless we're all going to produce hydroponics out of the Pacific Ocean and the Atlantic, and the Gulf. Maybe somebody here has figured out how to do that. But, if the land is going to be more important in the next century, then we ought to be more thoughtful about what we do with it. And, this is not to take away from all the efforts you're making on nongrazing land, and grazing land, in trying to work with landowners, but it seems that we need a mental picture and a visual picture. And, I think, this is helpful to focus individual property owners, but I think we also need a national photograph in our minds to encourage better behavior, whatever that is, in respect for these soils. So, I wanted to ask that initially, because, particularly, when this agency comes up and testifies, it is sometimes hard to get your hands around what it is stewardship means long-term. And, you know, I see all the different budget items and I vote for all these things, but it would be more helpful to keep us focused on what the goals are. I mean, when the NASA people come up here, they give us the goals real clearly. Sometimes we don't agree, but they're more able to quantify it than I've seen NRCS do in your presentations to us.
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    On the issue of the $40 million in the emergency supplemental request for the Watershed and Flood Prevention Operations, the fact is that we have some Members of Congress who would like to see offsets to pay for those funds. And, I'm just wondering if there are any programs in your jurisdiction that you've talked about internally within the Department that could be cut at this point of the year to fully offset the $40 million request?

    Mr. LYONS. I'd like to say no. But, I should probably refer to Mr. Dewhurst in terms of the overall USDA budget. You know, I would just offer, Congresswoman, 2 points. As I said, we're making continued progress in addressing the concerns that you raised, but we are taxed in many respects with regard to having the resources to do the conservation technical assistance and other activities.

    The conservation work comes down to 1-on-1 communication between landowner, whether urban, or suburban, or rural, and the person that has the expertise. So, the more we whittle away, the more difficult it is to ensure we can deliver those services. I don't know if Steve—within the Department, there has been a dialogue about offsets, but I know we haven't been a part of that as of yet.

    Mr. DEWHURST. We had a dialogue when we were putting the supplementals together, both within the department and the OMB. The total supplemental for the department is about $150 million, including the $40 million that you referenced in the NRCS. We, in the end, did not propose offsets for that. You know, the department's discretionary budget breaks down into some basic components rural development, conservation, research, Woman, Infants and Children in our salary and expenses money. And, we were not able to find any easy place to go to save $150 million without consequences in one of those areas that were not acceptable from a policy point of view. Though in the end—and, of course governmentwide, offsets were not proposed for the emergency supplementals.
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    Ms. KAPTUR. What would happen to programs like EQIP and your Wetland Reserves Program and the Farmland Protection Program if that $40 million was spread across those programs.

    Mr. LYONS. Well, I'll just offer one example of the Farmland Protection Program. You will see in the legislative package that we're forwarding to the Congress a request for an increased authority in farmland protection up to $70 million. We've exhausted, or will exhaust the authority, as we have exhausted the authority that currently exists in the Farm Bill. We need more there. I mean, you pointed to one of the critical issues in the loss of prime farmland. We're losing about 1.5 million acres a year, and half of that is prime land.

    I, too, grew up in an urban part of the county in northern New Jersey, and that land supports not corn fields any more, but condominiums. And, it's a tremendous loss. It will never be regained. Ohio faces a similar difficulty. So——

    Ms. KAPTUR. There's probably no hotter issue in Ohio than that issue in the rural countryside and I just polled in my district—we've gotten over 10,000 answers back, and I've been shocked at the support of the people in the urban community and their sensitivity to farmland protection. I really—I mean, I believe it, but I was shocked at the weight of opinion on one side of the equation on this one.

    Ms. KAPTUR. Well, I know that's true in California, as well, and Washington. I just met with a group of leadership from New Jersey, the Garden State, and Governor Christine Todd Whitman made that her number 1 priority in her state address, open space protection and preservation. I think that says something about critical concern that the country is coming to recognize and the need to protect prime farmland and open space.
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    Ms. KAPTUR. Are you saying to me, if this $40 million were to spread across EQIP, Wetlands, Reserve and Farmland Protection, what would happen to those?

    Mr. LYONS. It would hurt.

    Ms. KAPTUR. How much?

    Mr. LYONS. How much? A lot. [Laughter.]


    Ms. KAPTUR. On user fees, I wanted to ask a question. Your 1999 request is a proposal to offset costs under the America's Private Land Conservation Program with the collection of $10 million in user fees and the budget justification materials indicate that these user fees will cover technical assistance for a variety of items including services and I quote ''for which there is little public good from the Government's total service.''

    Could you tell us what types of services you are now providing which offer little public good?

    Mr. LYONS. I hate to do this to Steve again, but I tell you what, I will read you the list that's been identified as user-fee candidates, if that would help? And, this guidance we've received, in large measure, from OMB; conservation plans exceeding 16 hours work; foundation seed initial supply; foundation plants; testing for animal-waste storage lagoons; testing for dams; water supply forecasts; climate data; snow-tell data; soil survey publications; wetland delineations; irrigation systems are potential candidates for user fees.
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    Ms. KAPTUR. And your budget says that you worked with impacted constituent groups in developing these user fees—user fee activities. Could you submit, for the record, which groups you've been working with and what has been their reaction to this user-fee proposal.

    Mr. LYONS. I actually think that's prospective, Ms. Kaptur. The intent is if we proceed along this route to have that dialogue, I think to a large measure, at this point in time, there's not been a great deal of dialogue with those potential impacted groups, unless I'm mistaken.

    Ms. KAPTUR. This user fee proposal would require authorizing legislation. Has that, yet, been sent to the appropriate legislative committee?

    Mr. DEWHURST. No ma'am, it has not. I was told this morning we're awaiting some clearances, but we expect to have those by the end of this week. So, that legislation will be on the hill very shortly.

    Ms. KAPTUR. How shortly is shortly Mr. Dewhurst?

    Mr. DEWHURST. Within a few days.

    Ms. KAPTUR. Thank you, Mr. Chairman. I have second round, but I will withhold at this point.

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    Mr. SKEEN. Thank you, Ms. Kaptur.

    Mr. Nethercutt.

    Mr. NETHERCUTT. Mr. Chairman, I yield to Mr. Fazio—were you here earlier, were you ahead of me?

    Mr. FAZIO. I had a question in the first round.


    Mr. NETHERCUTT. Okay. Thank you. Welcome Mr. Lyons and ladies and gentlemen.

    I want to talk with you about CRP. I've had my problems with it the last year or so, regarding the 15th signup. And, what I'm hearing from our farmers this year is that, while we're delighted with the 16th signup results, there's concern about the cover planting requirements. The native grass the department, apparently, expects to be planted, doesn't seem to be available commercially for some of those species in Washington State. And the department is asking the farmer to spray a large amount of established CRP in order for these new department-approved seed plugs.

    So, I'm wondering if there is some flexibility, or some thought being given to the fact that we are spraying out large amounts of herbicide to remove established wildlife habitat that has taken several years to establish. And, I'm wondering why we're doing that and insisting upon new species of grass and cover to be planted. Is there an explanation for that?
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    Mr. LYONS. Congressman, if I could, I'm going to ask Mr. Clark to address that.

    Mr. CLARK. Mr. Congressman, the CRP Program, as you know, is one that's now designed to generate more environmental benefits for the dollars invested. So, we find around the country when we look at old plantings of CRP that there are cover types that would yield greater environmental benefits and those cover types are established locally in the Field Office Tech Guide. Most of them are based on the establishment of native species.

    So what we do is we do expect to attain those environmental benefits that produces wood, reestablish higher quality native species. We do make provisions for them to do that over a period of time. We, in fact, just released this week some additional guidance, giving state's additional flexibility to do that.

    So, we are concerned, as you are, about the availability of native seeds commercially and are trying to work with the states to ensure that they do have the seeds to establish these new planting cover types, as well as meet the mandates of the law.

    Mr. NETHERCUTT. Have you done any cost-benefit analysis in the department relative to these new seed species requirements—planting requirements.

    Mr. CLARK. I do know that there was a programmatic cost-benefit analysis done, but I can't speak directly to your question.

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    Mr. NETHERCUTT. In the Eastern Washington, it's by and large dry soils, and ash content is there and in many cases—in fact, most cases that I can know of, there's established cover and established wildlife habitat protection that seems to be working. To the farmer in the field, it seems counterproductive to spend, you know, $300-per-acre-plus on a new requirement when the old requirement seems to working just great.

    I would appreciate it if someone, in your office, Mr. Lyons, could advise us as to what, if any, consideration is being given to that fact, in the east side of the State of Washington, considering those unique soil conditions.

    I want to ask about soil surveys, as well. They were critical as the new CRP rules were being administered and we understand that the soil surveys that were used to make the decisions regarding CRP eligibility were done prior to the Mt. Saint Helens' eruption in 1980. Is there a pattern or a system under which USDA does new local soil surveys, and if so, do things like volcanic eruptions impact the need to do a new soil survey?

    Mr. REED. Mr. Nethercutt, we would like to ask our Deputy Chief of Soil Survey, Carol Jett, to respond to that question.


    Mr. NETHERCUTT. Great.

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    Ms. JETT. We do have provisions, sir, for the technical section, and there is a——

    Mr. SKEEN. Would you suspend and try to take the chair on the end, right there, and use that mike, please.

    Ms. JETT. Thank you, sir.

    Mr. SKEEN. Would you begin again?

    Ms. JETT. There are provisions to have an exception when we have event like Mt. Saint Helens. We're aware of the concerns regarding the P&K factors there in Washington State. And, we do have on the table, I believe, a proposal to do a soil survey update for the whole area affected by that. And, that's pending.

    Mr. NETHERCUTT. Do you know when the last one was done?

    Ms. JETT. No, sir. I don't.

    Mr. NETHERCUTT. Okay. Is it possible it was done before 1980?

    Ms. JETT. Yes.

    Mr. NETHERCUTT. Is there a regular procedure for updating soil surveys as a matter of policy in the department?
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    Ms. JETT. We are attempting to finalize the once-over soil survey for the whole country and after that occurs in an area, if the local people are interested in updating, we will cooperate with them, and attempt to achieve that.

    Mr. NETHERCUTT. Thank you, Mr. Chairman. Thank you all.


    Mr. SKEEN. Thank you, Mr. Nethercutt. The budgets you are proposing also have a proposal to merge the conservation operations and the watershed planning accounts. What is the rationale for merging these accounts?

    Mr. LYONS. I don't know. So, I need to——


    Mr. SKEEN. That's a very honest answer. Pearlie?


    Mr. LYONS. I think from a staff standpoint, Larry, if you want to respond, that's fine.

    Mr. CLARK. I'll try, Mr. Chairman.
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    Mr. SKEEN. Thank you.

    Mr. CLARK. The rationale for merging those two accounts stems from the fact that much of the programmatic investment that supports the watershed activity, now, is in the form of technical assistance. And, the belief is that, if we put those, the technical assistance staff from the watershed staff, put those people with the conservation operations people, we'd have more flexibility in terms of managing programs.

    Mr. SKEEN. Would this have any adverse affect on the capacity to deal with emergencies and/or technical activities? At one time, as I recall, they were together to begin with.

    Mr. CLARK. Not with conservation operations. We had the pilot—yes.

    Mr. SKEEN. In the early days.

    Mr. CLARK. Right. Yes, sir.

    Mr. SKEEN Yes, sir. Excuse me, go ahead.

    Mr. CLARK. Over time there is likely to be some diminished capacity to deal with the emergencies, because as those employees do more and more field level face-to-face work with farmers, there may be some diminished capacity to do the heavy engineering that's involved in carrying out emergency work. So, there could be, over the long haul, some impact in our ability to respond to emergencies.
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    Mr. SKEEN. So, it expands the area of coverage to try to use either management or technical advice.

    Mr. CLARK. Yes, sir.

    Mr. SKEEN. That was the old concept to begin with, I believe. We're going back to it.

    Mr. CLARK. Yes, sir.


    Mr. SKEEN. Let's go back to the Clean Water situation. I notice that you also have $20 million set aside in support of, yet another, clean water initiative. Do you anticipate any regulatory changes as a result of initiating this effort?

    Mr. LYONS. No, Mr. Chairman. What we would anticipate to do with that $20 million is provide the seed funding, if you will, for community-based watershed initiatives to try to encourage that kind of collaboration at the ground level.

    Mr. SKEEN. Participation at the local level?

    Mr. LYONS. Yes, sir, and we believe we can do that under existing authority. It would operate so much similar to the way the RC&D program has worked and that way would use some base funding. Of course in RC&D we provide people. In this instance, the funds would be to support local efforts where watershed coordinators, or existing RC&D, or conservation districts want to take it upon themselves to help to pull together watershed-based strategy for conservation.
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    Mr. SKEEN. Does that expertise have to come out of your Department?

    Mr. LYONS. Well, we would work, cooperatively, with those watershed counsels or——

    Mr. SKEEN Coordinators?

    Mr. LYONS. [continuing] Or coordinators, and try to help them, you know, further their goals. We provide the technical assistance. Their role would be to provide the coordination.

    Mr. SKEEN. But these would be non-Federal coordinators?

    Mr. LYONS. Yes. That's correct.

    Mr. SKEEN So, they use private sector people, or whoever is available? Who selects these folks?

    Mr. LYONS. Well, these would be self-selected within a community within the watershed. That's correct.

    Mr. SKEEN. Sort of a honorary condition?

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    Mr. LYONS. Well, I think it would be not unlike the way conservation districts operate or the way RC&Ds identify individuals who coordinate.

    Mr. SKEEN. So establishing a municipal RC&D, or watershed RC&D?

    Mr. LYONS. Well, it would be a watershed structure similar to way—the best analogy I can offer is the RC&D program the way it does work. I think it has proven its effectiveness in pulling the community together to help develop a focused conservation effort and we think that the similar approach in watersheds would help further efforts there.

    There are similar models. The State of Oregon is actually in the process of trying to set a program that would encourage that kind of watershed coordination.

    Mr. SKEEN. Let's have Mr. Serrano, and we'll back up here. Mr. Serrano.

    Mr. SERRANO. I'm not ready right now, Mr. Chairman.

    Mr. SKEEN All right. Mr. Fazio—if it's all right with Ms. Kaptur.


    Mr. FAZIO. Thank you, Mr. Chairman. I wanted to follow up on—I want to go back to the Conservation Reserve Program. And I agree with Ms. Kaptur when she talked about the real popular support for land conservation out there. You say in your budget that the foremost tool you really have to bring about to advance in this area is true technical assistance and yet, when we go through the proposal, we not only have the $10 million in user fees, which we talked about, we have a lot of earmarking of special activities, and we have a 10-percent limit in the EQIP Program on technical assistance. All of which seems to make it very hard to really get a lot of money out there to people who really need it and who could use it. Obviously, this is a budget driven exercise and I'm sure OMB has a lot more to do with it than you.
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    But, what do you think about, perhaps, doubling the EQIP percentage? Do you think it would really make this more operational? I see some people shaking their heads? That's not on record because—[laughter]—the lady over here.

    Mr. LYONS. Let the record show I didn't shake my head, Okay? [Laughter.]

    I just nodded.

    Well, I think, the committee understands the difficult circumstances we face there and, certainly, some of the reductions in staffing are associated with that issue. Candidly, Congressman, as you know, you've been at this much longer than I, we need all the people we can on the ground working with landowners to get good conservation in place.


    Mr. FAZIO. It seems to me in your response earlier to some of the questions about the rents and the value of irrigated versus dry land, that there really is a conflict between your desire to run this program for environmental enhancing. I don't mean to say, you know, anything personal, but an inherent conflict between the Farm Services Agency and its price support programs.

    And, so, when we throw some of these questions to Shackelford or others, it seems to me that maybe we don't get the right mix of authority in terms of how we run this program. I realize this is a little blue sky and it would allow you to do a little rating on some colleague's program, but these are important questions and they go directly to whose eligible and how the program functions. And yet, they're not really in your purview.
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    Mr. LYONS. Well, let me just say that a lot of progress has been made in furthering collaboration between NRCS and FSA on the CRP Program. We are involved in developing policies for CRP. While we don't administer the program, we certainly have a hand in setting standards and then developing things like the EBI, the Environmental Benefit Index, and the like.

    You know, there's a change in the landscape with regard to farm programs and philosophy which was reflected in the 1996 farm bill with farm program payments declining over time. In many respects, I guess, I would argue that, you know, what we're paying for more is conservation rather than price supports and supply controls. And, I think, to a lot of people maybe that resonates more. People can understand the value of investing in conservation and the benefits that come of clean water and improved wildlife habitat and the like. And, I think FSA, with Park's leadership has sought to move their programs in that direction. You know, we're a family at USDA, sometimes dysfunctional, but a family—


    Mr. FAZIO. I'm glad you said that.

    Mr. LYONS [continuing]. And I think we work fairly closely in trying to achieve those goals. And, certainly, there's always opportunities to improve that working relationship.

    Mr. FAZIO. But you can't spread the program around the country until you've solved some of these kinds of issues on the ground. And, I just want to add my support, obviously, to fighting through to solution on some of these things.
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    I know that we've had some requests sent up by the Department and, I think, there may be some others emanating from the Congress to deal with the El Nino effect this year. And, I thought I'd ask Pearlie Reed if he would indicate what you anticipate coming as a result of the storms of this winter. The burdens on your agency are increasing. Certainly, in my area.

    Mr. REED. Well, I think, some of the burden is reflected in the Supplemental for Emergency Watershed Protection work and I probably ought to go on the record by saying that that is the reflection of a snapshot that was taken at some point in time, a few weeks ago, and we fully anticipate the burden to increase as we further assess the damage of the existing storms and other natural disasters. And, of course, only God knows what's yet to come.

    Mr. FAZIO. Yes. What kind of things are you being asked to do in the response? What's the program doing that's relevant to the farmers out there?

    Mr. REED. Well, basically, we do everything from the basic restoration and watersheds, going back trying to restore things to pre-disaster conditions, to working with our sister agency, FSA, in emergency conservation work. And, the list goes on, and on, and on. And, I should add that it's much, much broader than working on individual farms. It's working in individual communities and we have a lot of projects that we engage in on some of the public lands, like Forest Service lands.

    Mr. FAZIO. I think you've done quite a bit of levee restoration in certain parts of the country where we don't have a Corps of Engineers project levee, for example, but important to the safety of the community or to preservation of lands.
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    Mr. REED. That is correct.


    Mr. FAZIO. And, I certainly appreciate that.

    The last question, Jim, I know this isn't directly in this committee's purview, but I'm very interested in the issue of timber receipts on forest service lands. I noticed you have some provision in your budget this year that tracks some legislation I've introduced. It really reflects the fact the boom-and-bust cycle, it has been bust lately, in timber harvesting have really devastated the amount of money that's gone to schools and county Governments for infrastructure, et cetera.

    I wonder if you could comment on that and indicate whether or not you think legislation is forthcoming to try to implement some of the suggestions that would even out the flow of funds and make it possible for local Governments to budget more effectively.

    Mr. LYONS. Well, I'd be pleased to address that Congressman.

    What we've proposed to do is, in essence, stabilize the payments to counties for roads and schools that are normally associated with timber receipts. Under the existing formula, the counties receive 25 percent of the payments that are associated with timber sales and other revenue-generating activities on the national forest. Of course, those payments have varied with timber sale levels. And those timber sale levels are varied with lots of things, not the least of which has been litigation and other concerns.
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    We experimented with this in the Pacific Northwest. As a result of the presence of the Northwest Forest Plan, we knew there would be a substantial decline in program funding, so the Congress legislated a more stable payment that would actually decline over time.

    What we've proposed to do in our 1999 budget is actually to freeze at the Fiscal Year 1997 levels payment to counties. And, that would be true across the country. It actually results in a slight increase in outlays for this next Fiscal Year. But, the most important thing is it provides stability. So, counties and their communities know how much they're going to have next year, and the year after, and the year after for roads and schools so they can go about the business of planning their own economic development, and we can go about business of managing forest to maintain—supply the goods and services those communities depend on.

    And, as far as, your interest and your leadership, we'd certainly like to work with you to try and put that in place. We think it's critical to those counties that have been impacted across rural America.

    Mr. FAZIO. Well take a look at H.R. 2844 and see if you find that acceptable, and you might be interested to know that GAO is about to embark on a study on this very issue that, hopefully, in the next couple of months will give us a lot more information that might lead to convince others that this is a reasonable response to a real situation that faces a lot of these impacted communities.

    Thank you, Mr. Chairman.

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    Mr. SKEEN. Mr. Walsh.

    Mr. WALSH. Thank you, Mr. Chairman.

    I'm going to disappoint a lot of people because I'm not going to ask any questions. I'm not going to make any speeches. Maybe I won't disappoint anybody.

    Mr. SKEEN. You made the whole day. [Laughter.]

    Mr. WALSH. Vic asked a lot of good questions, some which I was going to ask. I have a bad cold. I got to husband my resources, if you will. So, I'm going to keep quiet and thank you for your testimony. And, if I have questions, I'll submit them for the record.

    Thank you.

    Mr. SKEEN. Mr. Serrano.

    Mr. SERRANO. Thank you, Mr. Chairman. And, Mr. Walsh, I am very disappointed. [Laughter.]

    I'm not going to let you forget this.

    Mr. WALSH. You don't look disappointed.

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    Mr. SERRANO. Let me first thank you folks for being here with us today, and for all the fine work that you do on behalf of the folks in this country. I understand that before I came in, Mr. Chairman, there were some comments about the American Heritage Rivers Program. And I want to say that in the Bronx, New York, we have a river. And, my next question will speak to the same topic of the Bronx River which runs right through the County of the Bronx, the burough of the Bronx. And, the idea of the possibility of being designated under this program has, interestingly enough, brought together so many different groups in the community like you have never seen before. I've never seen an issue that has brought the schools and the clergy, and everybody together. It has become in that sense, by itself a very positive situation in the Bronx, not to mention what the program itself will do.

    So, I'm a strong supporter of the American Heritage Rivers Program and if folks don't want it in their district, I'll certainly take it in mine and take it all, if you will.

    And, with that in mind, Mr. Lyons, I just want to take this opportunity to, once again, comment on my strong support for the Urban Resources Partnership. A program that you were instrumental in organizing and that has been very successful in my Congressional District.

    And, I'd like to know what you feel the plans are in this Fiscal Year, for this program, and also how the cooperative aspects of the partnership with HUD and Interior, and EPA is working. Now let me tell you that it's one of the sites in my community that I get to visit on a regular basis. And, the whole idea—one of the problems that I have, and I've discussed this with Ms. Kaptur, being a member of this committee, is that the minute someone from the inner city becomes a part of—a member of a committee that has the word ''agriculture'' in it, right away the jokes start. And, I've said—you know, it's more than teaching us that meat doesn't grow in freezers and supermarkets, you know. [Laughter.]
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    When I learned that, that was quite a shock to me, but it takes time to do that. And, one of my challenges here is to find out how the work that I do on this committee, and how this subcommittee itself can play a larger role in the inner city—if nothing else, then certainly educational. But, here you have a program, URP, that's done more than that. It has put together—members of the community and put together their children. They're working on the Bronx River. They've been doing it. And, I remember when I was in the State assembly that work started and never got off the ground until we got involved in it at this level, this level of Government.

    And, I invite anyone to come down and see the excitement in the community about that river and the children, and the park benches, and the whole thing along the side, and the events that they have, and how it's become something you don't expect to find in the poorest congressional district in the Nation. You expect to hear other stories, but not that story.

    So, I'm in support of the Urban Resources Partnership program. I hope you can tell me that it's going to continue to grow and that collaborative efforts between the different agencies is growing also.

    Mr. LYONS. Well, Congressman, I appreciate your kind words about the urban partnership. I also had a chance to visit with Ms. Kaptur at an Urban Conservation meeting we attended together in Ohio a little while ago about the program efforts. The program will continue. Our plans aren't to grow it in particular. We're operating now in 13 cities, and it's a program that's kind of customized to the needs of particular cities. The intent is to allow the communities to guide, in close coordination and cooperation with the Federal partners, the kinds of conservation activities that ought to occur there. In fact, I think our people learn more from the communities than they learn from us about partnerships and working relationships.
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    I've had a chance to work on the Bronx River Restoration Project and met with some of the school kids in your district, and I've been back several times. It's exciting to see the enthusiasm. For us, it's an opportunity to help kids and adults in communities, who may have misperceptions about agriculture, understand the role that we play, and, actually, as dangerous as it might sound, understand the government can be helpful in learning how to do things—in this case, whether it's cleaning up the river, the waterfront, the plantings we've done there, and the like.

    And the partnership includes a broad array of Federal agencies. The intent really was to try to take the agencies operating in urban areas with limited resources—we only invest a little over $2 million a year in our urban program—and try to multiply the benefits through that coordination and collaboration. So we're working with Forest Service and NRCS and Extension and Park Service and Fish and Wildlife Service and Interior and the Environmental Protection Agency and HUD, and I think we've got a very good working relationship. I hope that relationship continues.

    I should note—and this will come up, I hope, in the Interior Appropriations Subcommittee meeting I have later this week—that the Park Service has proposed $3 million for their urban efforts this year, as part of this collaboration. So they want to be larger contributors to the larger cooperative venture we call this Urban Resources Partnership. It's an experiment in community-led conservation from communities who have no reason to even know anything about conservation, but they do, and they get it, and they make a difference. Some of the best days I've had in this job—and I've had some good days and some bad days—some of the best days I've had in this job have been working in those communities and watching the enthusiasm on the part of those kids cleaning up the Bronx River. I think they're learning a little something. It's fascinating to see them react to the Natural Resources Conservation Service and the Forest Service. They don't even know those things exist. They do now, and it's exciting. I hope we're going to actually generate a few future conservation leaders through that effort, because we need more of them.
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    Mr. SERRANO. Yes, I hope we do. Let me just, in closing, mention two other things which are extremely important as a result of this program. They're both subjects that are sometimes a little delicate to touch, but it's important to touch them, especially when it's a positive situation that you find yourselves in.

    One is that in my community, unfortunately, sometimes when you build something, you have to keep an eye on it, that some misguided vandal won't touch it. For some reason, the whole community knows about the work along the river, and nobody's climbing over any fence to mess it up. On the contrary, it belongs to everybody, and it's a little oasis in the middle of the Bronx.

    And, secondly, my district is 98 percent minority, Hispanic, mostly Puerto Rican and African American. Unfortunately, sometimes the chances of those children to see somebody else of another group are very limited. This program has brought people together, people who come and spend their weekends, their summers, their week, with the children, and those children in that program are getting an experience, a life experience, that they wouldn't get anywhere else.

    Now I know we're not supposed to be doing what the school system was supposed to do, but inner-city school systems can become segregated in so many ways. And I just can't stop telling you just how excited I am about this program, and I hope that no one decides to kill it.

    Thank you.

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    Mr. LYONS. I appreciate that. Thank you.

    Mr. SKEEN. Ms. Kaptur.


    Ms. KAPTUR. Thank you, Mr. Chairman.

    Mr. Reed, if I were to ask you whether or not USDA could provide this committee with a map of the best soils in the world, does such a map exist? In other words, we could display it, and it would show some sections of the United States, some sections of Europe? If we were to look at both agricultural land and grazing lands—have you ever seen such a map?

    Mr. REED. Yes and no, but, to answer your question, if it doesn't exist, within two weeks it will. [Laughter.]

    And we would like to follow up with you or some of your staff people to get some input, to make sure that what we have or what we need to produce reflects your thoughts and ideas.

    Ms. KAPTUR. I think it ought to be on a website over there at USDA. I think we ought——

    Ms. JETT. It is.

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    Ms. KAPTUR. It is? It exists? You're sure it exists? For the world or just for the United States?

    Ms. JETT. The United States.

    Ms. KAPTUR. Okay, I'm interested in global soils. I'm interested in comparison data, and I'm also interested in time series data, just like we measure fish in Lake Erie, the ebbs and flows of fish production there. I'd be very interested in the soils. So I'm just challenging you—I don't expect you to have it in two weeks, but to the extent you can produce that kind of material or refer me to where I could get it, that would be a most interesting piece of information to look at. Then we can get into productivity and some of the other measures later, but it's a finite resource, I think, as far as I know, unless we're going to do something up there on the moon or make the waters more productive, but that would be most appreciated.

    I also wanted to ask you—I have heard a rumor that, though you stated—I think it was Mr. Lyons stated there is 1.5 million acres of prime farm land annually—I think I heard that correctly—that in this country is diminished or replaced with some other type of use?

    Mr. LYONS. It's converted to some other use.


    Ms. KAPTUR. Converted to another use. Is there the possibility that the Conservation Reserve Program is operating to enroll certain soils that are not fragile in nature, but essentially are productive soils? Could that be happening, even though there's quite a bit of money been put in that program, and more will be put in that program? Is there a possibility that CRP is actually enrolling productive soils that are not being used today?
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    Mr. LYONS. I'm not sure how to address that. I'm going to let Pearlie take that on. I know, obviously, we have focused in on highly erodible soils. As the program is expanded to try to achieve other environmental benefits, perhaps other soils become part of the program and enrolled.

    Pearlie, why don't you deal with that?

    Mr. REED. Ms. Kaptur, our Chief Soil Scientist here really wants to respond to that.

    Ms. KAPTUR. All right. All right, I see her on the edge of her chair. [Laughter.]

    Ms. JETT. I would say that, for the most part, the Conservation Reserve Program looks for the best environmental benefit per dollar spent. There are some cases where, in fact, we would take productive soils, such as buffer strips, and put them to a higher use for filtering out runoff and that kind of thing. So to say that we don't take productive soils out in CRP wouldn't be technically correct, because in some cases the best use of that is for a buffer.

    Ms. KAPTUR. All right, but it is closely monitored?

    Ms. JETT. Absolutely.

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    Ms. KAPTUR. Thank you.

    I wanted to ask, Mr. Lyons, the Fiscal Year 1998 RC&D budget included a $5 million increase to $34.7 million, and this year's budget—the proposal for next year—continues that at a flat level. I understand you will soon be authorizing new RC&D areas for participation in this year's program. Can you assure this committee that new RC&D areas will be equally distributed across the Nation, or is there a regional bias?

    Mr. LYONS. Well, hopefully, there's no regional bias. You may have missed this one when the committee first started. In fact, I think I said this before you joined us, but actually the Secretary announced 25 new areas just today, and they include areas, just to give you an example, in the States of California, Florida, Georgia, Idaho, Illinois, Iowa, Kentucky, Montana, Nebraska, Nevada, New Hampshire, New York, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Washington, and expansion of RC&Ds in California, Georgia, Pennsylvania, Texas. That's the list. I can provide you with specific details on them.

    Ms. KAPTUR. Does that include the acreage?

    Mr. LYONS. No, I don't think I have that noted. We've identified the specific counties that are affected, are involved in the program. I'd have to give you information on the acreage that would be affected.

    Ms. KAPTUR. Okay, if you could separate that out by your regional area designations, it would be appreciated——
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    Mr. LYONS. Very good.

    Ms. KAPTUR [continuing]. For the record.

    [The information follows:]

    "The Official Committee record contains additional material here."


    Ms. KAPTUR. On the EQIP program, the $100 million increase, could you tell us a little bit more about how that $100 million increase will be used, if enacted?

    Mr. LYONS. Yes. That actually is a part of the initiative that the President announced just a few weeks ago to focus in on clean water, and I can provide the committee with copies of the report and recommendations. The intent is to use these additional funds above the base program, which is authorized at its current level, to focus in on priority watersheds and priority nonpoint-source pollution concerns through a process that would be locally driven and would capitalize on the expertise that currently exists, and with the State technical committees that do assist the State conservationists in setting those priorities.

    So we would see it as added resources to focus in on high-priority watershed concerns across the United States to get a jump, if you will, on the nonpoint-source pollution concerns that I think are the remaining challenge that we face in addressing clean water.
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    Ms. KAPTUR. Do you largely see that happening in rural areas, not necessarily where urban areas and rural areas come together, and you may have flooding problems across an urban area related to the inability of the rural countryside to contain its own runoff? You're largely working in a rural area?

    Mr. LYONS. Not necessarily. Not necessarily, Ms. Kaptur. Those decisions would have to be made on a local basis. I think one of the challenges we face—I'm sure you're familiar with the fact that EPA is in the process of implementing its TMDL program, total maximum daily load program, which is a program that requires states to identify impaired water bodies or stretches of rivers or streams. As they go through that process, I think it's becoming apparent that we can't tackle the issues of impaired water quality streamage by streamage. We need to look throughout the entire watershed. Really, the intent of the EQIP dollars and other resources provided in this program is to be able to tackle those issues from the headwaters of a given watershed or water system all the way down through urban and suburban areas, to put the resources where they will be most effective. In many instances, that will be upstream.

    In the West, for example, New Mexico being, I think, an excellent example, a lot of work needs to be done on Federal lands, which are the headwaters for the river systems that flow throughout the State. So a coordinated effort between those upstream areas and downstream areas would be the most effective way to address these remaining pollution concerns.

    So it does not presume a focus on rural areas or urban areas. To the contrary, it presumes a focus on those areas that, through a local watershed assessment process, are determined to be the areas where the investments would generate the greatest return on water quality.
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    Ms. KAPTUR. I would just give this insight, and take it for what it's worth: Many years ago, in our region of the country, where we have less than a 2 percent slope, I received a call from a farmer all the way to Washington here, and he goes, ''Congresswoman, I need your help. I want to build a dike.''

    And I said, ''Sir, what do you want to build a dike for out there?''

    And he said, ''Because the water's coming at me, and all my plants are getting drenched.'' And he eventually spent his own money to build a diking system around his property to pump the water out. Now, mind you, this is adjacent to a metropolitan area.

    We went to the USDA to try to get help under the Small Watershed Program at that time, and basically, it didn't work out because our area—the problem is much larger than that farmer's property. So what we have now done is we have gone to the Army Corps of Engineers because our problem is lower Michigan drains into us. I honestly can't tell you how far west the watershed goes into Indiana from our part of northwestern Ohio, but basically, the city of Toledo, which I represent, ends up being a bowl that gets—and it's sort of a slanted bowl like this that goes out to the lake, and the flooding problems within the city are very, very significant—worse and worse every year.

    Now we're working with EPA. EPA's answer is to build these big containment facilities under the heart of the city, these large 90-inch pipes with huge containing basins underneath the city, but we have a major problem with runoff that starts with the farmland north, west, and south of us, and basically drains where the rivers become—so what the Corps has done over the years is spent millions of our tax dollars in trying to keep the rivers flowing, but the problem really starts in the agricultural hairline. And I have to be honest with you and say that USDA was really not very much help in being a partner in these discussions years back, and we went to the Corps simply because it had the jurisdiction interstate and regionally, where they could convene various parties that have to be a part of the solution, whether it's going to be reservoir containment out in the more rural areas.
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    But I would hope that the EQIP program and some of the new ways that you're functioning you might find a way to be a better partner at the local level and assume more of a leadership role, since so much of this really is water coming across the land, and with inadequate drainage and holding facilities in the rural communities. So that's just one experience we had in our area.

    Mr. LYONS. Well, I'd like to do a little homework to see what the problem was in the past and make sure we're better partners in the future.


    Ms. KAPTUR. Okay, I thank you for that. My final question regards the possibility of merging the NRCS with the Farm Service Agency, and I understand that the Economic Research Service has been doing some work on that. Could you give us the current status of that study, and also, would you care to comment, either you or Mr. Reed, on your views on what that might—how you might receive that, were it to happen? What would its impact be?

    Mr. LYONS. Pearlie can tell you about the ERS study and offer his own comments. I just would suggest that I think NRCS is the lead conservation agency in the Department of Agriculture and does a stellar job. I think a merger would be a very bad idea.

    Mr. REED. Okay, About the only thing that we can tell you about the study is that it is underway. I haven't—well, I've been briefed on it once, but I would like to offer to come up and give you a briefing sometime in the next two or three weeks on where we are with that particular study. But my own views on this merger thing are, No. 1, I fully support the Secretary's position, and I think he's gone on record in saying that he doesn't think it's a good idea; he doesn't want to do it.
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    But, No. 2, I don't think people are looking at this thing the right way. The real question is whether or not we need a good, solid conservation organization in this country in the Department of Agriculture that's devoted to the conservation of natural resources. Once I think that question is answered, this administrative stuff associated with efficiency and effectiveness, and where there may be some overlap in terms of responsibility, can be addressed. But I would hate to see a major public policy decision being made trying to answer the wrong question. And the question should be—should not be, in my opinion, should they be combined? The question first should be asked, what we need in this country in terms of conservation?

    Ms. KAPTUR. Thank you very much for your testimony today and answering our questions, and for your service to our country, and really in view of the amount we export to the world.

    Mr. SKEEN. Thank you, Ms. Kaptur.

    As a comment and follow-on, if I might take the liberty of doing it, and being a conservation engineer, what I was trained to do and did for the Department of the Interior and Indians, the worse mistake we ever made in this country is when we took the field technicians out of the fields that were the conservationists and the agronomists and some of the rest, because we had some of the best response, I think, on the conservation area. When we removed those folks—and I know that there was a scarcity of a lot of those people. It was far more attractive to be an engineer with Hughes Aircraft or somebody else rather than a conservation engineer.

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    This country I think has a tremendous reserve, tremendous potential, compared to any other country in the world, but we've got to do the job of conserving it. We're preaching to the choir, but we've made those mistakes, and we're going to rectify them now.

    Mr. Latham.

    Mr. LATHAM. Thank you very much, Mr. Chairman. I want to welcome the panel here.

    I'm a little bit out of breath from running over here.

    Mr. SKEEN. Keep in shape.


    Mr. LATHAM. Yes, I can keep in shape, that's for sure.

    As you know from my questions and statements last year, we have a real environmental problem in Iowa with agricultural drainage wells, and we're working very hard to close those wells and to provide alternative drainage for the farmers. Unfortunately, we've got a ridiculous system where we've got four different agencies that have jurisdiction over wetlands and mitigation, as you're well aware, with you folks, and EPA and the Corps of Engineers and the Fish and Wildlife. It's been very difficult to get a resolution to the problem, which is going to be an environmental disaster very soon.

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    I guess my question here to you today, is it the official policy or is there a regulation that you have that mitigation for wetlands can only come from within the same county as the loss?

    Mr. LYONS. I think the goal, Congressman, is the same local watershed, is to work within the existing watershed.

    Mr. LATHAM. So county line has no bearing at all as far as your official——

    Mr. LYONS. I believe that's correct.

    Mr. LATHAM. Could you——

    Mr. LYONS. Yes.

    Mr. LATHAM [continuing]. Clarify that for me in writing?

    Mr. LYONS. I would be glad to. I would tell you, it wouldn't make any sense to limit it to geopolitical lines because, of course, watersheds don't know those lines.

    [The information follows:]

    "The Official Committee record contains additional material here."
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    Mr. LATHAM. Well, that wouldn't be a first, though, that things haven't made much sense.

    Mr. LYONS. I hope we've made a little bit of progress over time. But I'll look into that.


    Mr. LATHAM. And I'm just—for clarification, I think, for the people at home, that there's some question as to what the official policy is. I think maybe you hit somewhat on this before, but a little different subject: As part of the administration's clean water and watershed restoration initiative, I see in your budget you're requesting $20 million in competitive grant money for local entities. What is a local entity for the purposes of the grant?

    Mr. LYONS. Congressman, we are actually in the process of implementing what we can implement with the resources we have in designing the remainder of the program. Our intent is to work with the states, to work with the National Governors Association and WGA and others, to design the program. That's a long way of saying we want to support local entities in a way that's going to ensure the dollars get to the ground and we get good conservation in place. Local entities may be governmental units; they could be watershed councils; they could be RC&Ds or conservation districts. We have not specified at this point, and I think that's part of what we're going to explore.

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    Mr. LATHAM. Would a potential entity be something like Pheasants Forever or the Sierra Club or anything like that?

    Mr. LYONS. The intent is to try and identify entities that can pull together the community, pull together private and public interests in a watershed in a constructive way to make things happen. Theoretically, a nonprofit could be an entity, but our goal in designing this is to provide seed money to get positive action in improving watersheds. So if I were to infer from your question that we might be funding organizations that would be more divisive than constructive, we wouldn't want to do that, obviously.

    Mr. LATHAM. But are you going to have in the regulations, then, in your definition of an entity language that would eliminate that type of concern for us?

    Mr. LYONS. Eliminate that kind of concern? I think we've made clear that our intent was to develop a collaborative approach and a productive approach. I couldn't specify what entities would or wouldn't qualify at this point because we're not to that point yet. But I want to make clear here that our goal here is to capitalize on the experiences we've had in the past that have been constructive, where conservation districts, for example, have pulled communities together, working within the community to make for improvements in water quality.

    Mr. LATHAM. I would just caution you, I think you could lose a great deal of support here and elsewhere if you embarked on what some people maybe would consider a political agenda rather than what would go into conservation.

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    Mr. LYONS. I understand that, Congressman. I want to assure you that our goal is good conservation, and there's no politics associated with that.


    Mr. LATHAM. That's very nice. Do you think watershed managers and coordinators and environmentalists don't know that old and aging systems might need repair and reconstruction after a while? I guess the reason I ask is why do we need to spend a million dollars on educational assistance to watershed sponsors when we already are spending a great deal of money to support them? You don't think they're aware that some of the systems get old?

    Mr. CLARK. Yes, sir.

    Mr. LATHAM. Somebody?

    Mr. CLARK. The thing that we're trying to accomplish by educating sponsors and others about these projects is that many of them have lived toward the end of their useful life, and the people who were involved in decisions that funded and participated as sponsors in those projects when they were started and constructed have passed on literally. So in many cases in the communities people don't know that these projects exist; they don't know that they have responsibility for operations and maintenance of them. So this is an effort to sort of re-educate the community about their responsibility regarding these local projects.

    Mr. LATHAM. And you're going to do it with a million dollars?

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    Mr. CLARK. Well, we're going to start with a million, hopefully.


    Mr. LATHAM. Okay. As you're well aware, as part of the administration's clean water initiative, the EPA is going to more closely regulate animal feeding operations. In your opinion, which agency is best positioned or has the best specific expertise in regulating these agricultural operations, EPA, NRCS?

    Mr. LYONS. Congressman, I would tell you that on the issue of Confined Animal Feeding Operations, as you're aware, EPA recently laid out a proposal for consideration. We are working within the Department with EPA, and we'll engage in discussion about what might be a reasonable approach, the most effective approach to achieve the water quality objectives we have. There's also been an interest in pulling together a high-level discussion among the various entities within the livestock community to work with us to talk about ways in which we can address this issue.

    As you're aware, the Pork Producers engaged in such a dialog and actually put together some guidelines which they presented to the Environmental Protection Agency to help regulate, if you will, the pork industry and their impacts on water quality, and I think they did an outstanding job and should be commended for the leadership that they showed.

    We hope we can go through a similar process in determining the best way to address this concern. I don't see that there is an easy way to get there, but I think it's important that all parties be a part of the dialog before we determine who assumes which responsibilities or which agencies are going to be responsible for which approaches here.
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    Mr. LATHAM. I commend the Pork Producers also for initiating the dialog. As you're well aware, it did not include a lot of the interested parties who walked away from the table, and I'm not sure how that's all going to come down. But I will tell you that if you don't find somebody who is responsible, then we're going to have the same mess that we have with wetlands today, jurisdictional fights, turf battles, regulatory overlap, and you can't get an answer from anybody. I would have real concerns about not having one entity in charge as far as enforcement of the regulations.

    I've had proposals from people at home saying that, because of the concern that a lot of people have with local control at the county level, zoning, and the State's preemption of county initiatives, and then you have the Federal Government come in—that there is, obviously, real concern as to who's going to be in charge or which agency, again, with the experience we have with wetlands and mitigation there, when you have four agencies that fight over turf all the time, fight over wetlands; it's not turf. But it's a real concern.

    I have proposals of people saying that it should go through the NRCS because you have people there who are at the local level on the ground, the local commissioners; you have some State jurisdiction, but you also have the Federal role also. What would you think of that? Because it combines—you have local input with the current board sitting there; you have some State jurisdiction, and you also have the Federal regulations for enforcement.

    Mr. LYONS. Well, to be honest, Congressman, it's premature for me to answer that because we're in the stages in the Department of thinking through the best options and also trying to look at the products, the pork dialog, obviously, the debate up here that's beginning with different proposals that are pending.
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    Mr. LATHAM. Have you thought about that option?

    Mr. LYONS. That particular option?

    Mr. LATHAM. Yes.

    Mr. LYONS. I can't say that I have sat down and discussed it with anybody yet. Certainly it's one to consider, as well as others.

    Mr. LATHAM. But are you aware of the debate as far as the local control and the State preemption and——

    Mr. LYONS. Very much so.

    Mr. LATHAM. Wouldn't that—I'm thinking outloud here. I'd like to hear your input. But it did seem to address some of the concerns because you do have local input. You have people on the ground, farmers that understand the topography, understand the watersheds at the local level. You have a State influence. I don't know, I'm sure you have trouble getting EPA to give up jurisdiction.

    Mr. LYONS. I think Pearlie would like to offer some comments on that.

    Mr. REED. Mr. Latham, of course, I've been on the job now approximately three weeks, but I've spent a considerable amount of my time, since I've been back at the NRCS——
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    Mr. LATHAM. Do you just move around every year, so that there are new people——

    Mr. REED. I hope to see you again next year. [Laughter.]

    But I've been working with Jim's office, namely, Craig Cox, on the very issue that you raise, and we're in the process right now of pulling together the appropriate staff work, so that we can develop options to take us in the direction that the Secretary might want to go as it relates to this animal waste issue. So I would say within the next few weeks, if not a couple of months, we'll be in a much better position to respond.


    Mr. LATHAM. Okay, it might be something to consider. I just want to re-emphasize—and I guess it hits very close to home because I live on a farm, and we have a well, and my family drinks out of that, the aquifer that has the ag drainage wells going into it, and express the total frustration I have with four agencies having jurisdiction over the wetlands situation, not being able to get an answer. We have the State money available. We have EQIP money available. We have the total cooperation of the local drainage districts, the local farmers, and the problem that's hanging everything up is the turf war going on here in Washington. We are going to have an environmental and ecological disaster in north central Iowa because a bunch of bureaucrats here are fighting over turf and jurisdiction, and it is outrageous, and I just tell you, you're threatening the whole aquifer. I'm preaching to the choir here because you folks have really bent over backwards, and I want to compliment you. But it is extraordinarily frustrating, and we tried to resolve this in the Clean Water Act in 1995, so that we finally had one entity here that had responsibility for agricultural wetlands, that you could finally go one place and get an answer.
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    We're still fighting this thing, and we're going to have a disaster out here that's going to pollute the Oligagla aquifer because we've got a bunch of bureaucrats here in Washington fighting over turf. And it is outrageous, and someone eventually who fought the changes is going to be held responsible for it.

    That's all, Mr. Chairman.

    Mr. SKEEN. Mr. Serrano? Ms. Kaptur? Everybody's just delightfully happy. [Laughter.]

    I want to thank you for your presentation, and we appreciate the work that you do, the problems that exist, and we appreciate your being here today. We'll get your budget back to you.

    Mr. LYONS. Thank you, Mr. Chairman.

    Mr. SKEEN. So, with that, we'll adjourn.

    [CLERK'S NOTE.—The following questions were submitted to be answered for the record.]

    "The Official Committee record contains additional material here."