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Hearing of the Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies of the House Appropriations Committee - The Department Of Agriculture

Statement

By:
Date:
Location: Washington, DC

Chaired By: Rep. Rosa Delauro (D-CT)

Witnesses: Secretary Of Agriculture Tom Vilsack; Scott Steele, Budget Officer, Department Of Agriculture

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REP. DELAURO: Hearing is called to order -- my apologies for being late.

Good afternoon. Let me welcome everyone, and particularly Secretary Vilsack, who comes before this subcommittee today for a second time.

I want to say thank you to Mr. Glauber for being here and for Mr. Steele as well.

I'm leased to welcome my colleagues and Ranking Member Mr. Kingston, as we begin the hearings on the fiscal year 2010 agricultural appropriations bill.

Let me just say to you, Mr. Secretary -- the second time we've had the opportunity to visit -- today I want to thank you for the earlier session we had with Secretary Sebelius as well and the Food Safety Working Group really beginning its efforts and -- or in the first public session. And in any case, I'm sure you've been working at this.

But I was pleased to be there, pleased to hear your comments, and Secretary Sebelius' on how we should move forward on food safety.

We are glad to have you as a partner on the critical issues that face this subcommittee, and I look forward to working with you closely in the months ahead. And I know you agree that our work is ultimately about people's everyday lives, consumers who want safe food, farmers who rely on fair functioning markets, children who need healthy food to meet their full potential and rural communities that need new opportunities to thrive.

I have said before that the issues that we confront in this subcommittee and with the Department of Agriculture speak to the core responsibilities of the federal government. And I am encouraged by the commitment you and the Obama administration have expressed in meeting these obligations, from improving our food safety system to expanding broadband service to rural areas, from conservation to strengthening child nutrition programs.

With the economic recovery package that we passed this winter, we have already begun to make those investments. I'm proud of the resources that we secured -- $28 billion for the USDA, including almost $20 billion to increase nutrition assistance. This has meant an additional $80 a month for a family of four -- real, tangible relief for families who are in need.

Also, $150 million for the Emergency Food Assistance Program and funding for floodplain easements, direct farm operating loans, and single-family housing loans -- in other words, real relief and real jobs on the ground for some of our most vulnerable communities.

We worked hard to make these funds available. And, Mr. Secretary, I know that you are working to make sure that they reach those who will benefit the most.

Now I believe we have an opportunity to build on that investment and move from recovery to long-term growth. And I applaud you, Mr. Secretary, for putting us in a strong place to do just that with this year's fiscal year 2010 budget. Total discretionary spending proposed in the budget for USDA would be $20.4 billion -- a 10 percent increase above 2009, indeed, a significant increase.

Of course, this is just the first step. You will recall when you came before the committee in March, we discussed the need for serious and long-term reform at the department. The recovery package, and now this budget, represents a powerful down payment on that process.

We cannot let up at any point along the way, and we must remain vigilant and committed to bringing the change the department needs. With that in mind, let me raise a few issues that I imagine you will discuss in your statement and I may ask you to elaborate on when we get to questions.

For example, I want to highlight the department's proposed funding for FSIS, targeting funding to improve the food safety public health infrastructure and to improve the agency's ability to conduct food safety assessment -- much of this in response to the recommendations made in the inspector general's report on risk-based inspections.

I also want to applaud the budget request for a rural development program. For years, the previous administration made grand claims in this area, but failed to put its money where its mouth was. And the 2009 Bush budget had requested elimination -- the elimination of many direct loan and grant programs in the rural development mission area.

I'm glad that this budget request did not carry most of those budgetary cuts. I'm sure my colleagues on this subcommittee feel the same way. And it shows a new commitment to rural development. I'm also happy about the commitment we have made to conservation through the recovery package, already bringing funds to our communities for the rehabilitation of watershed and flood prevention projects, for example.

I must say that, yes, I am concerned about some apparent inconsistencies with respect to conservation within the budget. And while you highlight USDA's work through the Recovery Act to improve water quality, through the watershed and flood prevention operations program, you then note later in your testimony that you eliminate the very same program in your 2010 request.

More troubling is how the budget treats the farm bill conservation programs. The budget proposes very heavy cuts, in my view, to popular and effective programs such as the Wetlands Reserve Program, Wildlife Habitat Incentives Program, the Farm and Ranch Lands Protection Program. And I hope that we have a chance to discuss the reasoning behind those kinds of decisions in the budget.

Also, as you know, this committee has a long history of working to expand broadband access to rural communities. It is also about bringing good jobs to rural America so that its residents do not have to leave their communities to find work. I look forward to discussing the implementation of the Recovery Act funding that we provided.

I want to thank you again for joining us, Secretary Vilsack. I look forward to asking you about these and other efforts within the department.

Ultimately, our appropriations reflect our priorities as a nation. We have big goals, and it is the details -- it's the budget and the basics that we are discussing here today that get us there. And we have a responsibility, and I know you share that responsibility to get it right.

And with that, let me recognize our ranking member, Mr. Kingston, for any opening remarks that he may have.

REP. JACK KINGSTON (R-GA): Thank you, Madame Chair.

And, Mr. Secretary, welcome back to the committee. We certainly appreciate your office being so accessible.

I have some concerns about this budget, and basically it's about a 20 percent increase. And during a time when we're asking American households to cut back and they've lost so much of their own personal savings during this bad economy, but we're asking them to increase Ag spending about 20 percent.

And yet there are some cuts in there and I would like to work with you on these cuts. But, as you know, we've gone down this route before on so many of these things and never done it successfully.

Elimination of RC&D -- the chair just mentioned the previous administration's lack of commitment to rural development. Well, RC&D is a pretty big commitment to the rural areas. It's fairly important to them. Eliminating that -- I'm open to it, actually, to the discussion of it, but I don't see how we get there. It's been talked about before, and it's never happened.

The administration eliminates congressional earmarks, and I can understand that the administration would prefer its own earmarks to the legislative branch. Members of this committee should know that the WIC funding is now about 40 percent of the discretionary limit, which the chair had said is about $20.4 billion -- $7.7 billion is WIC. WIC budget just grows every year. And for members who are concerned about congressional- directed spending, they need to -- we need to be thinking in terms of that. As sensitive as it is to bring anything up about WIC, I think it's something we should be talking about.

The farm limitation amendment -- savings from that -- the Senate has pretty squarely dealt with that right now and rejected that concept on a bipartisan basis. This House has dealt with Crop Insurance Commission issues before. I'm not sure that that's going to last.

But I guess what I want to -- when we get in the Q&A, I want to hear from you is, how committed is the administration to these proposals? Is it real, or is it just kind of the Washington two-step that we do every year, along with veterinarian fees and inspection fees?

Then, part of the increase of things that, you know -- as you know, we, in the stimulus program, increased broadband tremendously, I think from $400 million to almost $2.7 billion, I think -- if my numbers are right. Yet this still has a broadband increase.

You know, they just won the lottery! They didn't just get a 10 percent bump in the stimulus. They, you know, more than quadrupled their budget. I'm not sure what the numbers are -- way past that. And so now we're going to increase them again. That would seem to me like a logical place maybe not to increase.

So there are some issues that -- I'm looking forward to this testimony have great respect for you and your ability, but I want to talk about how do we square this away with the realities that are out there.

So thanks for coming back and I yield back.

REP. DELAURO: Thank you very much, Mr. Kingston.

Mr. Secretary, if you would proceed with testimony. And the full testimony will be in the record and we'll ask you to summarize.

SEC. VILSACK: Thank you, Madame Chair.

Madame Chair and distinguished members of the subcommittee, it is a pleasure to come back before you today to discuss the details of the president's 2010 budget request for the Department of Agriculture.

As the chair has indicated, I'm joined today by Scott Steele, our budget officer, and by Joe Glauber, our chief economist.

In my testimony before this subcommittee in March, I outlined the president's goals for the department and the challenges and opportunities we face in revitalizing rural America and the economy at this crucial time.

Over the first 100 days of this administration, USDA has set out a new course to promote a safe, sustainable, sufficient and nutritious food supply, to ensure that America leads the global fight against climate change and to revitalize rural communities by expanding economic opportunity.

We have moved quickly to respond to these difficult economic times by creating jobs, increasing food aid to those in need and revitalizing rural communities. We have also made civil rights a top priority, with definitive action to improve the department's record and move the USDA to a model employer and premier service provider.

Before I delve into the specifics of the 2010 budget, I would like to provide a brief update on our efforts to implement the Recovery Act. The USDA has taken decisive action to implement provisions of the Recovery Act. We immediately took measures to make available almost $20 billion, or approximately 70 percent of the total funding received under the act, for increasing the monthly benefits of Supplemental Nutrition Assistance Program. We have also allocated $125 million for emergency food assistance.

To assist farmers struggling with tight credit markets, we obligated over 99 percent of the $173 million in the Recovery Act funding for direct farm operating loans, which has provided assistance to 2,636 farmers, of which approximately half were beginning farmers, and 23 percent were socially disadvantaged farmers.

In the area of the environment and the natural resource conservation, we announced a national signup for $145 million in floodplain easements, which will restore and protect an estimated 60,000 acres of flood-prone lands. In addition, $45 million has been provided for the rehabilitation of watersheds, and $85 million dollars for 53 flood prevention projects in 21 states.

Rural communities are also benefiting from our actions. We've made available more than $600 million in funding to provide safe drinking water and improve wastewater treatment systems for rural towns in 34 states.

We have begun the implementation of the act's broadband provisions in concert with the U.S. Department of Commerce and are determining the best-targeted utilization of the $2.5 billion provided for expanding rural broadband into communities that would otherwise not have access.

USDA has also obligated a loan level of $3.4 billion in guaranteed and direct single-family housing loans for over 28,800 loans. I want to assure this subcommittee that the subcabinet, the agencies and the department will be held accountable for not just swift implementation, but also ensuring the funds are being used effectively and efficiently.

The president's 2010 budget, released on May 7th, 2009, proposes over $20.3 billion for discretionary programs under the jurisdiction of this subcommittee, an increase of nearly $2 billion over the 2009 levels provided in the Omnibus Appropriations Act.

This increase is primarily associated with the Special Supplemental Nutrition Program for Women, Infants and Children; international food assistance; rural development and other priority programs.

At this time, I'd like to briefly point out how this budget supports our highest priority programs. The budget fully supports nutrition assistance programs, including full funding for the Special Supplemental Nutrition Program for Women, Infants and Children, to serve all of the estimated monthly average of 9.8 million participants.

In addition, the administration is proposing an increase of $10 billion over 10 years for reauthorization of the child nutrition programs. These increases will be used to improve access to nutritious meals, to encourage children to make healthy food choices, and to enhance services for participants by improving program performance and integrity.

In support of the president's commitment to modernize the food system, the budget requests over $1 billion for the Food Safety and Inspection Service. This is the full amount necessary to meet the demand for meat, poultry and egg products' inspection as well as providing an increased investment in food safety assessments and technology needed to enhance our ability to identify, respond to and reduce food safety risks.

Expanding our access to world markets and delivering long-term trade relationships continue to be vital components of our strategy to improve the vitality of the farm sector and quality of life in rural areas.

Due to the global credit crisis, we have seen significant increases in demand for export credit guarantees provided through the GSM-102 program. To help meet this demand, the budget provides a program level of $5.5 billion, the maximum authorized by the 2008 farm bill for CCC Export Credit Guarantees for 2010. To encourage further export expansion for our products, we need to work hard, both in Washington and in our offices overseas, to ensure continued access to overseas markets.

I appreciate the subcommittee's support in providing additional resources in 2009 for this activity, and our 2010 budget builds on this foundation with a $16.4 million in additional funds to maintain the Foreign Agricultural Services overseas presence and upgrade their information technology infrastructure.

The 2010 budget also supports the administration's commitment to renewing U.S. leadership, in promoting global development and fostering world food security, by doubling the level of discretionary funding for the McGovern-Dole International Food for Education and Child Nutrition Program.

The budget also supports a program level of $1.7 billion for P.L.480 Title II donations, which will reduce our reliance on the need for future emergency supplemental funding.

The budget reflects a new course the administration has set to ensure that America leads the global fight against climate change and to revitalize rural communities by expanding economic opportunity. To this end, the budget increases and includes an increase of $15.8 million to develop markets that reward producers for sequestering carbon and limiting greenhouse gas emissions.

The budget promotes America's rural leadership in developing renewable energy by supporting over $780 million in investments, a net increase of $275 million over 2009. Notably, our discretionary request supports $280 million in guaranteed loans and grants for the Rural Energy for America Program or REAP.

For rural development, the 2010 budget includes funding to support over $21 million -- billion dollars for loans, loan guarantees, and grants for ongoing discretionary programs, an increase of $825 million over 2009. This includes $1.3 million dollars in loans and grants to increase broadband capacity and to improve telecommunications service.

To spur the development of small business and value-added agriculture in rural America, increased funding is sought to support $63 million in loans under the Rural Micro Entrepreneurial Assistance Program and $8 million for value-added producer grants.

The budget also provides funding necessary to finance home ownership opportunities for nearly 59,000 rural residents and fully supports the administration's commitment to protect low-income tenants participating in the Rental Assistance Program -- many of whom are elderly -- and about 248,000 multifamily housing units.

Consistent with President Obama's desire to invest in the full diversity of agricultural production, the budget requests an additional $6 million for assisting the organic sector, establishing market agreements that will involve quality factors affecting food safety for leafy greens or other fruits and vegetables and supporting independent livestock producers.

For research, the budget also includes funding to support our highest priorities. This includes a $70 million increase for competitive research grants that will enhance Rural Research and Extension Programs and provide incentives for teachers to pursue professional development.

The budget also requests an additional $10.8 million to develop tools and strategies for mitigating and adapting to climate change. We are requesting an additional $11 million to conduct research on new varieties of bioenergy feedstocks, as well as developing technologies that will result in sustainable, efficient and economic production practices for biofuels.

In order to promote the healthier eating habits and lifestyles, the budget also includes an increase of $13 million to determine the barriers to individuals in following healthy eating and physical activity recommendations and to develop new healthier foods.

In my last appearance before the subcommittee, we discussed the administration's proposal to improve fiscal responsibility while supporting a robust safety net for producers that provide protection for market disruptions, weather disasters, pests and disease that threaten the viability of American agriculture.

I want to reassure you that the president's budget does indeed maintain the three-legged stool of farm payments, crop insurance and disaster assistance. However, in keeping with the president's pledge to target farm payments to those who need them the most, the budget proposes a hard cap on all programs of $250,000 and reduced crop insurance subsidies to producers and companies in the delivery of crop insurance.

While the budget includes a proposal to phase out direct payments to the largest producers, the department is prepared to work with Congress and stakeholders as these proposals are considered.

For 2010, the budget requests an increase of $67.3 million to continue the activities necessary to modernize the information technology we rely on to deliver farm program benefits. I certainly appreciate the subcommittee's interest in this effort and the $50 million provided in the Recovery Act, which is allowing us to make progress in this area.

Although this combined level of funding will allow us to continue to make progress, additional funding will be required in subsequent years to complete the stabilization and modernization efforts.

The 2010 budget fully supports partnering with landowners to conserve land, protect wetlands and improve wildlife habitat through vital farm bill conservation programs. For the 2010 budget, the budget includes nearly $4.7 billion in mandatory funding for conservation programs authorized in the 2008 farm bill. It also includes $907 million in discretionary funding for ongoing conservation work that provides high-quality technical assistance to farmers and ranchers and addresses the most serious natural resource concerns.

Ensuring equitable treatment of all of our employees and clients is a top priority for me. By holding each USDA employee accountable for their actions and through the implementation of my recently- announced civil rights plan, we are striving to make the department a model agency for respecting civil rights.

In support of these efforts, the 2010 budget includes funding to address program and employment complaints of discrimination and to increase the participation of small, beginning and socially disadvantaged producers in USDA programs.

Another key initiative is the expansion of outreach to unserved and underserved constituents. The 2010 budget includes funding to support the establishment of the Office of Advocacy and Outreach authorized in the 2008 farm bill, also provides funding necessary to support enhanced government-to-government relations and improve tribal consultation activities.

We're seeking an increase of $45.8 million to ensure that USDA can reliably deliver its broad portfolio of programs in a secure IT environment. Instituting a department-wide cyber security initiative will eliminate critical vulnerabilities that threaten the integrity of the USDA network and the security and privacy of departmental systems and information.

And we share the president's vision of a strong economy; therefore, like other agencies, we have begun making difficult but important budget decisions, which include eliminating wasteful and inefficient spending.

The 2010 budget reflects the elimination of earmarks and funding for programs that are not as high a priority as others I have mentioned, or to provide services that can be supported by other means. This includes billions of dollars in mandatory savings and discretionary savings for the determination of the Resource Conservation and Development Program, the Watershed and Flood Prevention Operations Program, the EZEC grants program, the high energy costs grants and grants for public broadcasting digital conversion.

We've begun the process of making tough decisions about where our priorities lie and have made some tough choices about where to spend our resources. These choices reflect the new direction that we are moving in and provide the foundation and diverse opportunities for farmers and ranchers to succeed and rural America to thrive.

Madame Chair, that includes -- concludes my statement. I'll be glad to answer questions.

REP. DELAURO: Thank you very much, Mr. Secretary.

It would appear that we have started a process for three votes, so we'll start to move to questions. And we'll strictly adhere here to five minutes -- and that includes myself -- so we can get this (committee meeting ?) off the ground.

Let me just address the WIC program. The budget requests a $917 million for the WIC program. That brings the program level, as you stated, to $7.8 billion. Six-hundred-twenty-five million (dollars) is requested to support an average monthly participation of approximately 9.8 million women, infants and children.

The question that I have is about what appears to be a lack of justification included in the budget for the proposed increase of $162 million for WIC reauthorization and program improvements.

The budget says the administration will use these funds to implement program improvements, which could include expanding types of education and counseling services, developing additional state infrastructure, enhancing program efficiency.

It's a large increase with a little justification. Can you give us a concrete plan of what program improvements you are proposing with this $162 million increase?

Let me just deal with a follow-up on the contingency fund, so that you can answer both together: There is a request for $100 million for WIC contingency. There's already an estimated $650 million in the WIC contingency fund for fiscal year 2010 from carryover provided in the Recovery Act.

The contingency fund has historically been funded at $125 million to $150 million each fiscal year. Why do you think $750 million is needed in the contingency fund for 2010?

SEC. VILSACK: Madame Chair, with reference to the additional resources for WIC on program improvements, what we're interested in doing is making sure that we expand our efforts to educate expectant moms and young moms on the breastfeeding opportunities and other nutritional opportunities that they must know about in order to be able to start their children's lives in a nutritious and effective way.

So first and foremost, this is about expanding educational opportunities and making sure that nutrition is part of the process of making sure, as people sign up for WIC, that they are well aware of the various programs that are available and the nutritional opportunities that are available.

I can also suggest to you that we are working with states to make sure that we continue to identify those who qualify for the program. We're looking at creative and innovative ways to get the message out.

We're partnering with local farmers' markets, for example, to make sure that folks are at the local farmers markets, encouraging people to sign up; developing discount opportunities and ways in which we can encourage fresh fruits and vegetables to be part of the steady diets of women, infants and children. So this is education, expanded access and a greater emphasis on nutrition.

As it relates to the contingent fund, I think what we're attempting to do is to make sure that we don't do what we have done in the past, which is to come back repeatedly when the economy -- we expect and anticipate the economy to improve at some point in time, but it is fairly clear that most projections have unemployment rising.

If unemployment rises, there is always a significant need for a number of services, including this one. We just want to simply be in a position where we're not coming back to Congress repeatedly asking for more resources when we've underestimated the number of people who are in need of assistance now.

REP. DELAURO: Just a quick follow-up on that. The highest contingency level previously needed to keep the WIC program running was about $387 million. That was 2008. Do you think the economic situation in 2010 is going to be twice as bad as 2008?

SEC. VILSACK: Well, I think there's a -- you know, there are a number of factors. We obviously are hoping that by the end of this year we see a significant improvement in the economy.

Employment may not necessarily completely parallel that growth and that recovery. and so there may be continued need in 2010. We also, I think, have to realize that we're changing the make up of the food packages for WIC and we're changing the combinations of what we're essentially providing.

There may be impacts and effects that we have not totally calculated or for -- which is what Joe's giving me in a note here -- food price volatility -- that's always a concern --

REP. DELAURO: Sure. That's always the case. Yes.

SEC. VILSACK: So it's a combination of not knowing precisely when the recovered economy will reflect in ordinary people's lives, combined with food costs that could create problems where we are coming back to you repeatedly for assistance and help. We are trying to do as best we can estimating what our needs are.

REP. DELAURO: Okay. I would ask you just to keep in touch with us on this $162 million increase and what this outreach, this expanded access and education is about. I think the subcommittee would be interested in those efforts.

With that -- Mr. Kingston.

REP. KINGSTON: Mr. Secretary, I wanted to try to find out where the administration is on these proposed cuts. I am interested in them. Anything that to reduce this budget I think is important. But I wanted to find out how many of them are real and how many of them are just the annual proposals. For example, we have mandatory user fees for Food Safety Inspection Service and APHIS and the grain inspection as well.

And so what I'd like you to do is, maybe on a scale of one-to-10, tell me what the intensity level is of the administration in terms of using political capital and fighting it.

The reason why I say that is the president made a big deal about "send me a bill with earmarks and I'm going to reject it," and then we sent him the omnibus bill that had, I don't know how many -- lots of earmarks. And he signed it, and did something real unusual for this administration, they blamed it on George Bush -- so not to inject partisan politics here.

But here's my question to you. Okay, cotton storage got a lot -- broad bipartisan support on that. Are -- is this, like on a scale of one-to-10, is this a 10 in intensity or?

SEC. VILSACK: Congressman, here's why this was purposed, and so that you can -- you can tell from our response that this is a serious proposal. This has been -- the only other product that has this kind of support is peanuts. And the peanut support is very contained and very limited, and only under limited circumstances is it triggered.

So this essentially creates the potential for distorting the market, because you may end up having cotton stored far longer than it would otherwise be stored, because essentially the government's paying for it.

So as we look at this program, it does provide a unique benefit to one commodity. And so we felt that it was appropriate and necessary to put this on the table.

Obviously, we recognize your role in this. We appreciate you're not just going to simply pass the president's budget. You're going to examine it. You're going to look at it. You're going to put your stamp on it and we want to work with you. But there is a reason behind this proposal, and I think it's a legitimate one.

REP. KINGSTON: The sugar program, for example, is sort of always ignored, and a lot of that comes through Commerce because there's a tariff. But you know, Americans pay a higher price per pound for sugar because of a USDA program. Even though it doesn't -- it's not a tax mechanism directly, it does cost them more.

So I wouldn't say cotton is the only commodity, or one of the few commodities.

SEC. VILSACK: I want to make sure I'm clear about this: I'm not suggesting that there aren't other programs, but I am saying, for this kind of storage situation, cotton and peanuts are unique.

REP. KINGSTON: All right. Payment limitations: A lot of debate. The Senate's kind of rejected that. Do you think that's going to survive?

SEC. VILSACK: We're willing to work with Congress on this. I think, again, that when we looked at -- in an effort to try to be cognizant of deficits and the concern that you all legitimately have about deficits, we look at the fact that 3 percent of America's farmers were at the threshold that we proposed.

There has been a lot of conversation about whether or not it ought to be adjusted in terms of adjusted gross income as opposed to gross sales. We're certainly happy to look at that. We're also certainly happy to look at the hard cap that the president did campaign on of $250,000 by essentially limiting the loan programs to $145,000. That's a per entity cap. So that does provide a strong part of the safety net.

In addition to that, you've got the new disaster programs that will be implemented. In addition to that, you have crop insurance, which has expanded now to 350 different products and substantial subsidies involved with that.

So we see a strong safety net. And we simply ask the question whether or not there are ways in which that safety net can still do its job and at the same time be fiscally responsible.

REP. KINGSTON: What about RC&D -- elimination of that? That actually had been proposed by the Bush administration and did not go very far.

SEC. VILSACK: These are very hardworking folks around the country that are providing a service and have been doing that since the late 1940s. When it was first established, the idea was that this would be a transition program, eventually transitioning to local and state financing.

The principal beneficiaries of this program, now, are in fact, local economic developmental efforts and state economic development efforts. We think there are ways for state and local economic development resources to be used to continue this important responsibility, perhaps truer to the initial intent of the program. That's why it's been proposed.

And, again, I think there is a legitimate reason for at least bringing this before you.

REP. KINGSTON: I think in the 15 seconds I have left, the earmark elimination -- how do you think that's going to fare -- just handicapping it?

SEC. VILSACK: (Laughs.)

KINGSTON: And I will say this: I believe that Congress has reformed earmarks substantially in the last two years.

SEC. VILSACK: Let me respond this way: We have significant research needs in this country. And what I think is needed is perhaps a better dialogue and better level of communication between an administration and a Congress, not necessarily this administration and this Congress, but just generally speaking.

Because when each body sets their own separate priorities, it creates conflict. And I think what the president's trying to suggest is a process by which we work together and communicate together and establish joint priorities, which I think at the end of the day reduces conflict and perhaps provides better utilization --

REP. KINGSTON: Well, I know I'm over time. And I'm looking forward to working with you on these. And I appreciate it.

REP. DELAURO: I'm going to call the -- a recess for the committee. We have three votes. And I ask people to get back here as quickly as possible. (Sounds gavel.)

SEC. VILSACK: You take your time, Madame Chair. (Recess.)

REP. DELAURO: The hearing will resume.

Thank you. It got a little longer than three votes. Thank you very much for your patience.

Let me now recognize Mr. Alexander.

REP. RODNEY ALEXANDER (R-LA): Thank you, Madame Chairman.

Mr. Secretary, good to see you.

My question is: A little earlier in your presentation, you said something about an increased amount of money for food inspection. Let's talk about that a little bit.

I signed a letter with others not too long ago relating to the subject of catfish or fish importing. What assurances do we have when you say food inspection -- catfish or other fish coming from other countries -- how well do we inspect those facilities? And do we inspect all of them?

SEC. VILSACK: I wasn't sure whether you were finished.

We are in the process, as you know, of making a determination as to precisely what the definition of catfish will be for purposes of inspection. That has not yet been finalized, and we understand and appreciate that there's some interest in that definition, how broad or narrow it is.

I think our responsibility is to ensure American consumers that the food that they consume is safe. And so part of that means that you have to have adequate people and adequate numbers of people to do the job adequately.

It also means, as the chairwoman discussed briefly earlier, a review -- which is undertaking right now at the direction of the president in a Food Safety Working Group -- where the Department of Health and Human Services and USDA are working together to try to improve food inspections generally and our safety system generally.

We are not pleased, and I suspect you aren't either, with the number of people that have food-borne illness incidences each year, the number of those who are hospitalized, and the number who die.

And so, how do we know whether we're doing a good job? I suppose one way to measure it would be if we saw an increase or decrease in those numbers, it would suggest that we were either -- had more work to do, or we were on the right track.

REP. ALEXANDER: Well, when we say inspection, do we actually send people out to locations where these fish might be raised in the fishponds, so to speak?

SEC. VILSACK: The law requires inspection not only to cover the slaughtering, processing of the catfish, but also to take into account the conditions under which the catfish are raised and the conditions in which they are transported to a processing establishment.

So this is a relatively broad authority. It's broader than we have for other products that are under our jurisdiction. So we are -- we're in the process of working through how that's going to be done.

REP. ALEXANDER: Okay, sir.

Thank you, Madame.

REP. DELAURO: Thank you, Mr. Alexander.

Ms. Emerson.

REP. JO ANN EMERSON (R-MO): Thank you, Madame Chairman.

I'd like to just momentarily refer back to the remarks when you and the secretary were discussing the WIC program and point out to the two of you that in one of my counties, Wayne County, Missouri, our health department -- our public health department that actually works with our WIC recipients in that county -- has done a cooperative program with the University of Missouri extension to teach all of our WIC recipients how to do their own garden, grow their own garden, preserve, can, freeze vegetables and other, you know, smaller fruits, so that they're able to supplement their WIC -- their WIC diet.

And it's turned out to be just remarkable and a very positive thing, because not only are they learning a new skill, but they're also able to then have good, wholesome vegetables.

And it's just something that I think that we should talk about promoting beyond that. Out of my 28 counties, it's the only county that does this, but I talk about it everywhere, because I just think it's a great idea.

So, I just bring that up for --

REP. DELAURO: It's a great model, and we ought to talk some more about it.

REP. EMERSON: And it doesn't cost any -- there's no taxpayer money involved, which is even better. But it is something that's really important. And the skills that our extension people bring to this service for WIC recipients is just -- it's remarkable.

So anyway, thanks. I just wanted to mention that while it was in my mind.

Secretary Vilsack, last year when we were -- when your predecessor was here, we asked him some very pointed questions regarding cooperative agreements and the animal identification program. And the data that was provided by the department, it was interesting.

And just, for example, in Missouri, it showed that USDA had spent roughly $120 for each premise enrolled in the program, whereas in Montana it was $1,200 per premise. And the reason I'm asking this issue or raising it is while these numbers are troubling, I don't think they should be that all -- all that surprising.

And I think you've probably heard when you were in my district yesterday, there does remain a significant concern and even a fear among many livestock producers as to what type of animal identification system Washington might produce.

And obviously, it's hard to blame our producers for their hesitancy in enrolling their premises. I think all of us would probably be pretty hesitant to sign up for a government program when we don't know what the government program's going to look like.

And so -- and even when FSA rolls out a new program, or when we're implementing the new farm bill, we don't really enroll until we have the program, we have the regulations, our county -- our county directors understand how it works. But we are asking producers with the NAIS to sign up kind of on a wing and a prayer, if you will.

So I am thrilled that you're holding listening sessions, and I hope that you'll take to heart the -- what you're hearing and the fear, and certainly the uncertainty that many producers in Missouri have.

But I know that you all have requested $14.6 million for the NAF -- NAIF program this year, which is level funding. Will you describe to us what this funding will be used for? And specifically if it'll be used to continue providing funds for our state agriculture departments to drive premises enrollment?

SEC. VILSACK: Well, thank you for your question.

And it was very enlightening listening session that I had in the state of Colorado this week, which was the second of a number of listening sessions that we are going to undertake. And it does, indeed, point out the complexity of this particular program.

I think that there is a good level of dissatisfaction with the program at very many levels -- either a lack of understanding as to what the purpose and intent is, the fact that there are distinctions between types of livestock in terms of compliance, the distinctions that sometimes can take place within certain types of livestock in terms of do you graze on public land, do you graze on private land? And so there is a need for a detailed understanding of the complexities.

What we are proposing here is for the current budget year relatively status quo, because we're in the process of trying to determine what, if any, changes need to take place so that we have greater compliance with the system?

I will tell you that I don't know the answer to that yet and would not know it, because I haven't completed the listening sessions, but would say this: My concern are twofold. First and foremost is animal health. We want to make sure that whatever system we set up is focused on animal health.

And secondly, we want to make sure that we maintain the integrity of the market. I think we have seen most recently with a number of products and the H1N1, that markets can be devastated and impacted by problems.

So what I'm looking at is making sure that we've got a system that preserves, as best we can, animal health and make sure that we preserve the integrity of the market. And how that system's going to look, I'll know more after I finish the listening sessions.

But it has been very interesting, and I've learned a lot. And I think we'll look for creative and innovative ways to improve this program.

REP. EMERSON: Well, I just appreciate that, because a lot of times people undertake listening tours having already made up their minds. And I can tell that you haven't. So I appreciate that very much.

REP. DELAURO: Mr. Bishop.

REP. SANFORD BISHOP (D-GA): Thank you very much.

And again, welcome, Mr. Secretary. Delighted that you're back with us, and we do have a budget that we can talk about this time.

I have a number of concerns and issues with respect to the budget for 2010, particularly relative to the Cooperative State Research, Education, and Extension Service funding cuts.

I'm sort of disappointed in the approach and the methodology which has been used in really proposing near-draconian reductions in some programs that are really vital to my district and to others here on the panel.

That Cooperative State Research, Education and Extension Service reduction is about 22 percent for all of the programs.

The special research grants have been effectively eliminated for most of the ongoing research activities, as well as the proposed research projects in my area -- including projects for cotton insect research, blueberry production enhancement, water use and water quality and the National Peanut Laboratory's activities with regard to water research efficiency. Can you explain why this program has taken such a tremendous hit?

And the second part of my question has to do with funding for the 1890 colleges and universities and Tuskegee University, which remains flat at $46 million, yet the funding for the other higher education programs increases by a total of 70 percent to $80 million.

Why the disparity in the two, given the disparity in funding that exists and has existed historically between the 1890s and the other land grant universities, particularly over the last eight years?

SEC. VILSACK: Sir, the answer to the question that you posed is somewhat akin to what we earlier discussed, as it relates to earmarks and the capacity and determination of what priorities are in terms of research.

The $168 million of reductions in the research funding was essentially a reduction of earmarked funding, replaced by $139 million in increases in what we perceived to be priority research and additional pay. So the bottom line is a $29 million reduction.

We are focusing additional resources in other areas of research. That would explain why we're limiting this research to be able to fund research on renewable fuels, climate change, some rural revitalization, some education, some obesity prevention. This is a way of which we set out priorities.

Now, I will be the first to admit that we did this budget in a relatively short period of time, as I know you appreciate. And we, just yesterday, I believe, got the undersecretary for research confirmed by the Senate. And I really want to give that individual an opportunity to look at all of the programs in a more extensive way, which is one of the reasons why we don't have additional resources for buildings and facilities.

REP. BISHOP: Who is that individual?

SEC. VILSACK: Dr. Shah. Dr. Shah comes to us from the Gates Foundation. He's a medical doctor, and I think you will find him someone that you can work with and someone who understands the importance of research.

REP. BISHOP: So the child nutrition and obesity research is increased, ongoing, reduced?

SEC. VILSACK: We are --

REP. BISHOP: It's my understanding that it's reduced.

SEC. VILSACK: It's increased.

REP. BISHOP: Okay.

SEC. VILSACK: It's increased.

As it relates to the 1890 colleges and universities, my understanding -- and I could be wrong about this, and would ask Scott -- the $70 million that we're proposing as an increase is in a lot of different areas, which would include potentially additional resources --

MR. STEELE: Minority-serving institutions.

SEC. VILSACK: -- for minority-serving institutions. So that $70 million has yet to be completely allocated.

REP. BISHOP: Okay. I thought it was a 70 percent -- was it 70 million (dollars)?

MR. STEELE: Seventy million (dollars).

SEC. VILSACK: Seventy million (dollars).

REP. BISHOP: Okay.

SEC. VILSACK: As you know, the Congress established the National Institute of Food and Agriculture that sort of rolls all of these programs into a new institute for a new focus.

And we provided an additional $70 million designed to try to put resources into those rural -- into a number of different areas, including grants for educate -- science educators, additional resources for the 1890 colleges and universities, as well as I think the --

REP. BISHOP: My time is about up, so in the next round I'm going to come back and talk about -- ask you to talk about the Office of Civil Rights and the Small and Disadvantaged Farmer Programs.

But thank you, Mr. Secretary. I'll do that next round.

REP. DELAURO: Mr. Latham?

REP. TOM LATHAM (R-IA): Thank you, Madame Chairman.

And welcome. I always want to call you governor, yet, but it's secretary.

I guess I'm a little bit confused. I know there's a lot of talk about legislation as far as climate change and environment. And I'm very concerned about the effect that things like that will have on agriculture.

And I, you know, look at the budget proposal and in conservation programs, some pretty major cuts as far as the Wetlands Reserve Program, a cut of $280 million; the EQUIP Program, $250 million cut; Ag Management Assistance, $5 million; Wildlife Habitat Incentives program, $43 million; Healthy Forest Reserve Program is $5 million; Farmland Protection Program; $30 million; Watershed Rehabilitation Program's $30 million. There's another $267 million out of NRCS, as far as direct Appropriations.

I just don't understand the cuts in programs that are very beneficial as far as soil and conservation. How we can justify that, and where the money's going, I guess, what I would ask?

SEC. VILSACK: I appreciate that question. And allow me an opportunity to respond to your question and to the concerns that the chair expressed as well.

First of all, I think it's important to point out that our budget does propose an increase in the total number of acres that will be enrolled in various programs that would fall within the rubric of conservation -- whether it's CRP, whether it's EQUIP or the other programs that you mentioned.

In the past in 2009, we anticipated 178.5 million acres in EQUIP. Our budget would propose increasing that to 195.3 million acres. In CRP, as you know, we've got a slight decrease in all other conservation programs. We're going to see it increase from 41.3 million acres to 55.4 million acres.

And you say to yourself, well how can you increase the acres and reduce the money? Well, the reality is, the monies that were being appropriated were not always expended because of demand.

For example, let's take the Wetlands Program: We're proposing 155,000 acres in that program. Well, we haven't topped 150,000 acres for all of the years, even though financing was provided for more than that.

So essentially, what we're trying to do is we're trying to match the budget with reality in the field and trying to match the budget with the number of acres that we actually will see enrolled.

And I think, hopefully, you'll find some solace in the fact that overall the number of acres that enroll will be 280 million acres total, and we will spend $4.8 billion in compensation benefits and conservation benefits.

REP. LATHAM: Well, what's the authorized level of acres in CRP?

SEC. VILSACK: Thirty-two --

MR. : Thirty-six point five acres.

SEC. VILSACK: No. It's 32 -- it's 32 million acres.

REP. LATHAM: Okay. And how do you get to 55?

SEC. VILSACK: No, no. The acreage for CRP is, on this chart I'm looking at, is 30.4. It's actually going to be closer to 32 million acres. We actually just extended --

REP. LATHAM: I thought you just said it was 55.

SEC. VILSACK: No. Fifty-five (million acres) is all the other programs. You have all the other programs, you've got CRP, and you've got EQUIP. Total of those three categories: 280 million acres, which is an increase of about 20 -- 36 million acres -- additional acres.

REP. LATHAM: And how do you do that again with less money?

SEC. VILSACK: Well, because it isn't that we have less money. It's that we're going to be spending -- you've authorized money, but not all of it was spent, because we couldn't get enough interest in some of these programs.

So what we're trying to do is align the programs with the amount of money that actually will be spent and the number of acres that we realistically think will be enrolled. So we realistically think the wetlands program, 155,000 acres would be a good goal, since we haven't topped 150,000 acres in all but one year in the last five years. So that's the reason.

REP. LATHAM: Okay. Good luck.

One question that I -- and I know the authorizing chairman brought up the issue last week, I think, in a hearing with the EPA and charging indirect land use into the account for ethanol production, as far as carbon credits and all those things. What do you -- what's your position on that?

And also, I may also ask, on ethanol, if you see the EPA changing their standard.

SEC. VILSACK: Congressman, again, thank you for that question.

I think the most important announcement relative to indirect land use was the fact that the EPA also simultaneously indicated they were going to have a peer, independent review of their formulation and calculation, which I think was very, very important, and something that we urged from USDA -- and others within the administration urged -- to make sure.

Because we're plowing new ground here, as you know, and we want to make sure that as these calculations are formulated, that we really are doing them correctly, properly, and that we don't do them in a way that will, at the end of the day, damage this -- this industry irreparably.

So that is a concern. So the peer review, I think, is an appropriate step, and I appreciate EPA willing to do that.

We also have advocated and encouraged EPA to take a look at the blend rate. And we're encouraged by the action taken recently in asking for comments on raising the rate anywhere from 11 percent to 15 percent. And we're hopeful that in a relatively short period of time -- based on Washington's standards -- that we see some positive steps from EPA in respect to that blend rate. That's an important consideration.

And we also appreciate the president's commitment in establishing the interworking agency -- interagency working group that will allow us to look at ways in which we can grow this market and support this market from farmer to gas tank and beyond.

REP. LATHAM: Okay.

Thank you, Madame Chairman.

REP. DELAURO: Thank you.

Mr. Hinchey.

REP. MAURICE HINCHEY (D-NY): Thank you, Madame Chairman.

Mr. Secretary, thank you very much.

I think that -- well, I know, frankly, that this particular committee, especially under the leadership of this chairman, has been focused on a number of things, including food safety. And I think that that's something that the president is also focused on. I'm sure it's something that you're focused on.

You established the Food Safety Working Group initially, and I'm wondering if you could tell us what kind of progress is being made, what are the intentions, what ways in which that Food Safety Working Group is going to move forward to try to bring about serious food safety in the country?

SEC. VILSACK: Well, first of all, let me thank the chair and this committee for the work that you all have done in continuing to press this issue. And I think it's -- the fact that there is legislation pending on both the House and Senate side and it's bipartisan, I think is an important first step.

And the president, acknowledging that, established this working group. And before the secretary of health and human services was confirmed, we began a process of staff working jointly through USDA and the Department of Health and Human Services. I think it was an important signal that we were going to coordinate our efforts in an effort to try to establish principles.

Today we had our first listening consultation session with industry leaders, congressional leaders, experts in this field, asking for their input on a number of principles.

Let me briefly touch on the principles: I think there is a growing belief and understanding that we need to focus on prevention as sort of the core of whatever food safety system we establish, which means more research standards both at the local level and also international standards that are followed.

We need to strengthen surveillance and risk analysis. That means we have to focus on good data. And that's important in terms of collecting data, analyzing it and then utilizing it; quality monitoring as a result of that data and constant and consistent surveillance.

And an expanded risk-based inspection and enforcement procedure that provides for an array of potential enforcement mechanisms that are consistently applied and that focuses on pathogens. I mean, the reality is that sometimes the science has been ahead of us. And these pathogens, as the chair indicated earlier today, are way ahead of us and we need to play some catch-up.

And a rapid response to outbreaks and a facilitation of recovery of whatever industry is negatively impacted by an outbreak -- which means quick ID, rapid response, reviewing for mistakes made, making sure that we coordinate our response, and that we are consistently and constantly communicating within departments.

And then, finally, recognizing that resources are not unlimited. We want to make sure that those resources are adequate, but also targeted.

And so, I think what you're going to see is a set of recommendations to the president consistent with the legislation that you all are considering that's centered on those principles.

REP. HINCHEY: Well, thanks very much.

The issue of food safety is becoming increasingly important across the country because of the fact that it's being so destructive. The fact that food safety has down-slided so much that a great many people are dying as a result, some of the states now are moving forward on trying to set up regulations.

Do you think that the USDA will be in a position to set up a system of regulations across the state that will satisfy states generally?

SEC. VILSACK: Well, I think the first step in that process, Representative, is to make sure that we coordinate our efforts initially at the outset with state and local communities.

And I think that USDA is in a particularly unique opportunity to do that, because we are already in so many of these communities and in all states in a variety of ways on the ground. And we actually have a relationship with a number of states where we're essentially providing resources for inspection.

So I think we have a good relationship. Obviously, it can always be improved. And I hope with this new approach and this coordinated approach with Health and Human Services that it will improve.

REP. HINCHEY: Well, we hope so, too. And it sounds like it will be, and that's a major step forward.

I just want to ask you in the few seconds I have left one specific question with regard to that particular issue. It has to do with the animals that are raised in these large farms -- the factory farms of various kinds -- how they're jammed up close together and in very, very, you know, nasty circumstances.

And part of that is the results that occur with these animals and the huge amount of disease that is flowing across that occurs out of that.

Now, do you think that there is a process now of advocating that these factory farms reform the way in which they operate, stop allowing these animals to come so close together?

What they're doing is they're using antibiotics on factory farms in order to bring about antimicrobial circumstances for these animals. And that, in and of itself, is causing some substantial health problems in many places. Is anything -- any focus on this right now?

SEC. VILSACK: Yes, there is.

We are working with the Food and Drug Administration to make sure that we focus on a science-based system. We're working closely with the FDA on both animal and public health. And I would say that we are working to make sure that sound animal management practices are the standard.

And I would say, in fairness, I think the vast, vast, vast majority of farmers who are raising livestock are very sensitive to this. And they're sensitive for a number of reasons.

First and foremost, they're concerned about the safety of their consumers. Without consumers, they don't have a market. Without a market, they don't make money. And so I think that the vast majority of folks are sensitive to this. And I think you're beginning to see greater sensitivity.

I met, for example -- this is a little bit far afield from your question -- but I met recently with the egg producers. And they're in the process now of voluntarily taking a look at ambient air quality around in facilities. So -- they weren't required to do this. They're doing it on their own, because they are sensitive to the concerns that you've raised.

So I think you are seeing an increased sensitivity by the industry. And I think the vast majority of people in the industry are sensitive to this and are working hard.

And I think that the government is -- I think we have a new spirit of cooperation between USDA and HHS and FDA, and I think that new spirit of cooperation will ensure that we are doing what we need to do to protect folks.

REP. HINCHEY: Mr. Secretary, thank you very much.

REP. DELAURO: Mr. Davis.

REP. LINCOLN DAVIS (R-TN): Mr. Chairman, thank you.

The rural America that I grew up in doesn't exist today. The rural America I grew up in was void, in many cases, of rural housing opportunities for folks who worked off the farm but still did some farming. The rural America I grew up in, 60 years ago, didn't have rural water lines. The rural America I grew up in, in many cases, didn't have the resources or research available to them that we have today.

I believe that USDA and that Agriculture has been -- and what we spend on agriculture has been a blessing to the American consumer -- cheap food, good quality and generally safe.

When you look at some of the rural areas where small towns are located, generally each of those have a housing authority or agency that would provide to folks who basically live inside town -- but in many cases rural families, in the last several years, have been void of an agency called Farmers Home Administration, which in many cases had helped with 502 housing loans through interest credit as low as 1 percent to 515 housing -- rural rental housing loans that are available.

So one of the first questions I want to ask, and then I want to get to food -- as we -- as I look at this budget, I don't see what I believe is adequate funding to provide some direct loans to families at, say, just the interest credit -- the 1 percent loan. I know now we give subsidies up to 20 percent, 24 percent, based upon the income.

But I believe that the program needs to be expanded. Do you see an expansion of the 502 program, which could provide individual housing for families that don't have a source today to be able to obtain funding for a loan?

SEC. VILSACK: We were certainly appreciative of the additional resources that this committee and the Congress provided in the Recovery Act. And we put those resources to work immediately, because there was a backlog.

So to your point, there was a backlog, obviously, because we weren't adequately funding the program. But fortunately, because of the resources that were provided, we were able to put them to work, and we created 28,000 home ownership opportunities that might not otherwise have taken place, or certainly wouldn't have taken place as quickly as they are.

With the budget that we're proposing this year, we're looking at $1.1 billion in direct assistance and $6.2 billion in guaranteed single-family loans. This is the same level as was provided in 2009, and will, in our view, provide 59,000 housing opportunities within the country.

We're hopeful that we can work with private lenders and encourage them to get back, so to speak, in the market. Having traveled recently to a number of states, I know that there are some real concerns about whether or not those private lenders are going to get back in the game. We hope with this level of funding that they will. Fifty-nine-thousand home ownership opportunities I think are -- is fairly significant.

REP. DAVIS: The guaranteed program, obviously, was -- has basically been what -- has been the driving focus for individual housing in rural America through local banks. I do believe that we need to set down and have a more serious talk about direct loans for individuals who may not be able to -- who just drop below that level where they cannot obtaining housing.

I see through my district, as I travel, many dilapidated homes that are not adequate living conditions, and a lot of those are rental units. I just hope that we can talk about that, and I'd love to engage with you. My time is running short.

Second thing I want to ask about: As we look throughout the world today, we see a lot of hunger. And I'm extremely pleased when I see a cargo plane being unloaded and it says USAID or USA. In essence, we're shipping food to places throughout the world where folks are hungry. Today, probably in Pakistan, those 300-some-odd- thousand refugees will be getting food grown by some farmer in America.

We have, what, a $13 billion surplus? Probably the only part of America's economy that has a surplus in trade.

And so, I want to ask you about are we doing enough in our role in international food securities, such as the McGovern-Dole Food for Education Program? Otherwise, to be sure that -- do we need to enhance those programs? Are we spending adequately?

Because I think that's an area where the national security can be greater for us and where that we become probably more embraced by people throughout the world, if they see us helping.

SEC. VILSACK: Well, I appreciate you asking that question. And I would, again, compliment this committee in particular for I think what is a steadfast support for those kinds of programs.

You all saw the appropriateness of providing additional money this year for McGovern-Dole, which we put to good use in specifically helping out four African nations and children within those African nations, and expanded the program by several hundred thousand children.

We are proposing an increase this year to -- of almost $200 million -- a total amount of $200 million for that program, which will assist 4.5 million mothers and children around the world to receive assistance over a three-year period.

And we're pleased to note that a number of countries which we began to assist have seen the wisdom of this program and have adopted their own programs and have become self-sufficient enough to be able to take over that responsibility: Vietnam, Lebanon, two examples, for example.

I attended the G-8 Ag ministers' conference on food security -- the first time the Ag ministers from the G-8 had ever met, and the conference was focused on food security. And we essentially established -- and if I can just have a minute of time -- essentially established three components to the U.S. position on food security.

First and foremost, it is about making sure that food is available, and there are three basic components to that. One component is the capacity of a country to grow their own, which is important; the capacity of that country to actually engage in trade to supplement what they can't grow; and then, emergency aid and assistance, which is what we're talking about here, is the third component.

But even if you have available food, it may not be enough unless you have access to that food, which means that it's important for us to continue work on investing on the infrastructure and the economy that will allow people to purchase food or be able to get food to where it's needed.

And even if you have access to food, and even if it's available, if you don't know how to utilize it properly, if you don't have the nutritional information how to prepare food properly and alike, you can still have food insecurity issues.

So the G-8 ministers, along with a number of other countries that were at this meeting, have suggested that we make a major international effort in those three areas.

And I'm pleased that this administration -- the president in particular -- have voiced -- have given voice to this, and this committee's given voice to this. This is extremely, extremely important for our national security -- not just food security, but also national security.

REP. DELAURO: Just to let the committee know, I want to make sure that everybody has participated in the first round, so I'm going to recognize Mr. Farr. I know you haven't -- Mr. Farr, and then we'll go back and forth.

Thank you.

REP. SAM FARR (D-CA): Thank you very much, Madame Chairman.

I'm sorry I haven't been here. I've been running across the floor to Veterans, where General Shinseki is -- Secretary Shinseki is, so -- secretary's day here today.

Thank you for being here. I'm really pleased that you accepted this responsibility and I think as a governor, you really understand how the rubber meets the road, and that's really essential in this job today.

One of the things I wanted to ask you about is I represent the Salinas Valley, which is, I think Monterey -- Salinas Valley is all inside one country, Monterey County. And we do $3.8 billion in sales of 85 different crops. I don't think there's a county in the world that does that many different varieties of crops. And most of them are all row -- they're all row crops and leafy green vegetables.

When the E. coli breakout came, it was obvious that we needed to create some protocols in the growing practices that would assure that pathogens wouldn't enter the food chain.

And the growers, to their credit, came up with a leafy green marketing order, which essentially now has a process in which U.S.- certified inspectors, auditors, go in and inspect the process. And at the end, if you abide to all these protocols, you get a certified California Department of Agriculture.

What's happening, sort of happened before and during this now, is that buyers have started a vicious spiral of one-upsmanship, using private third-party auditors that are not necessarily certified by the or trained by the USDA.

They require even greater levels of assurances, by essentially telling folks, well, you got to build fences around your fields. You've got to kill every single animal that's out there.

The growers are coming back and saying, look, our hawk population, our owls -- these are our predators that have been very beneficial and beneficial insects as well, because a lot of them grow sustainable viticultures and things like that by using integrated pest management.

So these private buyers are essentially changing, not based on science, not based on any good Ag practices, but based on sort of a corporate kneejerk idea that we're going to make our growers go through tougher standards. And they have to do that or they won't buy their field.

And I'm wondering two things about this: What can -- what is the department doing to help create a national leafy green marketing program? And what can we do to get the buyers back into essentially following federal protocols, rather than creating their own, because it's running into conflicts with all of the, you know, the best management practices, habitat management that's -- riparian management.

I mean what I've learned from both the cattlemen and the growers is that you make the most money in agriculture when nature can be your partner. We have spent an awful lot of time and years in American trying to fight nature, wipe out everything that's living, make the fields clean, sterilize them essentially, and start over again.

And that's too expensive. And what you end up with is soils that are not productive and not that sort of beneficial work. And so those that work with nature -- and that essentially is the modern agricultural practices -- a very green style of understanding how to work with nature.

And now, we have these protocols that are killing everything that we've tried to establish in modern best management practices. And I think it needs real leadership to step in and say to the private growers -- buyers out there, the big, you know, they're buying -- McDonald's is competing against Taco Bell. And all these companies are trying to say, you buy our stuff and we've made sure that our growers grow to some kind of sterile process. It just doesn't make any sense.

SEC. VILSACK: This has been an issue that we've been grappling with, as you know, for a couple of years. AMS published a advanced notice of rulemaking in October of 2007 and we received 3,500 comments to it.

We began the process of trying to formulate a workable plan. We've asked for, in this budget, an increase of $2.3 million to work with the industry to indeed complete the work in developing and establishing and operating a federal marketing agreement system that will involve quality factors, but will also make it within reason.

We've been asked to do this by the producers and handlers, and we are in the process of working on this. And at this point in time, we don't have a specific agreement, but we have -- we are committed to working with the industry to get that agreement.

REP. FARR: How much is -- how much is it carrot and how much is it stick? The industry is trying to get other states to adopt the California method or something similar.

SEC. VILSACK: You know, Representative, that's a question I -- I'm going to have to ask for additional time to answer, because I don't know the answer to that question. But I -- I will -- I will follow up. Our staff will follow up with you.

REP. FARR: Okay. Thank you.

REP. DELAURO: Mr. Kingston?

REP. KINGSTON: Thank you.

Mr. Secretary, I just wanted to get back to the question on saving. On the broadband increase, the stimulus package had I think it was $2.3 billion, and then you're asking for another increase. And I was wondering why, when I am sure that the money is being -- has not even been spent?

SEC. VILSACK: There is a significant need for this country to accelerate in a very meaningful way its implementation and acceptance process --

REP. KINGSTON: Well let me -- I mean, you know, philosophically, we're not arguing. We need to -- I mean, give me the dollar and cents -- the buyer's decision here.

SEC. VILSACK: Well, we are on track with both the Department of Commerce and the USDA to begin the process of investing the resources that you have provided in the Recovery and Reinvestment Act, and we hope to have some kind of framework by June and resources beginning to hit communities in the fall of this year.

So we have a very aggressive timetable in terms of making grants and loans under the Recovery and Reinvestment Act.

REP. KINGSTON: So let me make sure I understand: What you're saying is by October, we will have spent a -- no, you're not saying that I guess. But what you're saying is that within the next year, we'll spend 4.3 billion (dollars), which would be stimulus plus what you're asking for.

SEC. VILSACK: That's correct.

REP. KINGSTON: And in addition to that, Commerce will spend about $3 billion.

SEC. VILSACK: And this will come as no surprise to you that there will still be a substantial need for additional resources because we're so far behind.

REP. KINGSTON: Does this administration see any role for the private sector and have any fear that this is corporate welfare, or that there can be an overlap with corporate welfare?

SEC. VILSACK: Well, I think what we're looking at is actually partnerships. If you look at the way in which we're going to structure these grants and loans, we will be working in concert with the industry.

We're trying to figure out ways to work with them, not against them. We're trying to figure out ways in which we can entice and incent these monies to be leveraged to --

REP. KINGSTON: Well, I would imagine it'd be pretty easy. Some they were paying for themselves, now the federal government's going to kick in 50 percent, or whatever the percentage is.

SEC. VILSACK: With due respect, I'm not quite sure it's that simple. You've got a number of unserved areas where it may be difficult initially to make the business case, but the need is still there. And it is particularly important for rural America.

It's important for the following reasons: One, because producers need access to technology so that they have just-in-time information to be able to make informed decisions.

Two, if we're going to focus on microenterprise opportunities and small business development in rural areas, they have got to be connected, not just to their market locally, but to a worldwide market. To do that, you have to have access to technology.

And three, we are way behind, as you know, our foreign competitors in terms of implementation of high-speed broadband. And we cannot afford to be behind in this day and age.

So I think there's a need. I think we are cognizant of the fact that we have not done as good a job as we should have in the past in investing these resources and we are certainly hopeful of correcting those mistakes.

REP. KINGSTON: How are you keeping from unjustly enriching the -- this committee has actually had some discussion about the retired Wall Street broker who's living on a mountain top and wants to pull out his laptop to check his stock portfolio. Why should we supplement his broadband?

SEC. VILSACK: Because he's living next to a small entrepreneur who's getting a small business started and needs access to a worldwide market.

REP. KINGSTON: Well, that's corporate welfare. If he's a small entrepreneur, why should we be running to him to go help him make money?

SEC. VILSACK: We're providing -- it's in the same way that we back in the '30s, we provided rural electrification to farm families, because it is a technology that you will need in order to succeed. And we have a long term -- a return on investment that will be significant and substantial, if we do this right.

REP. KINGSTON: Do you have -- I'd be interested in how this $9 billion got broken down, and why, for example, it didn't go to the USDA. If we're in a hurry to get it out, why do we create a new program in Commerce when USDA already had the governmental infrastructure to do the grants?

SEC. VILSACK: I think what you're going to find is that we're working in concert with the Commerce Department, and you're going to see a unified application process. You're going to see a streamlined process. You're going to see a process that reflects the complexity of this.

There's --

REP. KINGSTON: But it should be unified, and it should be streamlined. In fact, it should be just one agency doing it, and --

SEC. VILSACK: Well, the problem is that -- the problem is that USDA focuses on rural areas. The Commerce Department -- there's unmet needs in urban centers, in inner city America, in the same way that there's need in rural America. So I think the reason why you've divided the money is so that both areas could be served, and both areas could have access.

REP. BISHOP: Could the gentleman yield?

REP. KINGSTON: Yes, I'd be happy to.

REP. BISHOP: I don't know if you remember the debate during the stimulus package, but that was a really a knockdown drag out over who was going to control these broadband monies, whether it's going to be Commerce or whether it was going to be Agriculture.

And those of us who represented -- who represent the rural communities, actually, we threw down and drew the line that there had to be some control by USDA through Rural Development and the Rural Utility Service. Otherwise, these underserved communities in rural areas wouldn't get the benefits.

And so, that's why there was that demarcation, so that USDA would have it --

REP. KINGSTON: I think the USDA should have gotten all of it, just because it was an un-existing infrastructure --

REP. DELAURO: Can --

REP. BISHOP: Politics wouldn't allow it.

REP. KINGSTON: But --

REP. EMERSON: Will the gentleman yield?

REP. DELAURO: I think we all agree with the ranking member that USDA should have gotten all the money.

SEC. VILSACK: Let me suggest that --

REP. KINGSTON: Let me yield to Ms. Emerson one minute, and then --

REP. EMERSON: Here's one thing: I'm thrilled -- I would rather give all the money to RUS, too, having 28 very rural counties.

However, the thing that is a little troubling and -- and kind of confusing to me -- is I know that you -- RUS is getting a larger piece, I guess, than the NTIA at Commerce. Is that correct or is it about equal or is it flipped the other way?

REP. : It's about equal.

REP. EMERSON: It's flipped the other way.

However, the Federal Communications Commission has actually been tasked with providing a plan for broadband deployment, if you will, throughout the rest of the country and creating a map for the places we need it, but it's not due for a whole year from now.

And that's why I'm confused, because I know that you all are going to use this money, and believe me we have the need, and I have lots of people who have applied for these grants through RUS.

But I'm just confused why the FCC, then, is layered over on top of both NTIA and USDA to create this map, when perhaps we should have created that map in advance.

I know we have one already in Missouri, so I'm not sure it's that hard, but still.

SEC. VILSACK: Yes, I think you're going to find that a substantial number of maps exist in states that will make it easier for us to identify where the unserved and underserved areas are. And easier for the FCC, after we do our work and after we do our investments, to figure out where we haven't been able to meet the need or the demand.

And I would say, in fairness, we have a responsibility to do this job better than we've done it in the past. And that's a challenge that we've laid out to RUS. And I think with the system and the process and the conversations taking place between us and Commerce -- I think we're going to do a better job.

REP. KINGSTON: And, Mr. Secretary, are you in your heart of hearts convinced that there's no corporate welfare here? Or do you have fear that it could creep into some corporate welfare?

SEC. VILSACK: I honestly -- I don't see it that way. I truly don't. What I see is the difficulty with small populated areas, where the need is significant and great, being able to -- without government assistance, be able to make the business case today for the infrastructure investment.

Once the infrastructure investment's made, then the business case is -- is created, I think, to figure out ways in which you can market and utilize that service. I just think it's very difficult.

It's a much easier business decision to make to put it someplace where it's less expensive to install and less -- and -- and where the rates are more competitive and more profitable.

REP. KINGSTON: I know I'm out of time, but I can't resist saying, so broadband is now an entitlement and a right, is that what I'm hearing?

SEC. VILSACK: No, no. (Laughter.)

I would say, with due respect, it is --

REP. KINGSTON: You know, that's the problem with a five-minute rule. You can't get into the philosophical discussions.

SEC. VILSACK: You can, if you've got ten minutes, because they --

KINGSTON: I've been yielding generously. (Laughter.)

SEC. VILSACK: They didn't -- they didn't start your clock right away.

REP. KINGSTON: No, that's good. No, no we'll continue the discussion later.

SEC. VILSACK: I'd only say that there's a national need. It's not an entitlement, it's a national need.

REP. KINGSTON: (Off mike.)

SEC. VILSACK: Those are your words, sir, not mine. (Laughter.)

REP. KINGSTON: (Off mike.) I don't mind it. (Laughter.)

REP. DELAURO: Mr. Secretary, I may -- just a -- one very short comment on that.

Our concern on this committee -- and it's on both sides of the aisle, as you can tell -- is that we have a lot of faith in USDA through RUS delivering on these loans and getting to where there is the greatest needs.

And you're not going to have to answer this, what I'm just saying is that we want -- we don't want this held up. We've got a stimulus package that's there that's supposed to be moved. We figured that in fighting for that money that we could get that money out much more quickly because of a developed program than we -- than with going through Commerce.

So that's why we're watching as carefully as we can, because that's what it was about. That was what -- just -- we were in danger of losing this money, and as you know -- I mean we fought like hell, excuse me, to make sure it was there because we believed that USDA had a better mechanism to do this than Commerce.

So that's what we're just watching. And we're going to be vigilant. And we want to -- we want to make sure that ultimately the, you know, the loan money gets out fast and quickly you know under the -- and the stimulus money is out there, you know, to do the job it was intended to do. SEC. VILSACK: And I think your confidence is well placed, because I think we have had an impact on the system, and I think you're going to see those resources on both the Commerce and the USDA out as quickly as predicted.

REP. DELAURO: Okay. Well, obviously you can tell we're going to be looking at it, and we'll be talking to you about it.

Let me ask -- let me go back to the National Animal Identification System issue.

Dr. John Clifford, APHIS' chief veterinarian, said before a recent a House Ag Committee that animal ID oversight hearing, I quote, "The system we have has not worked. The system has to be effective, and this is not effective.

"

Several questions: Why should we continue -- and I would beg the indulgence of the other side of the aisle, why should we continue the Bush animal ID system?

If you want us to keep the system on life support in the 2010 budget, we need to know where you are taking the program, when we will have an indication from USDA as to how it will deliver an effective animal ID program.

Let me add to this configuration, April, 2009, cost-benefit analysis report -- interesting findings. I'm not going to go through them all. But the study found that an effective animal ID system would be a valuable tool for protecting U.S. market share for beef exports.

The study concludes that countries that fail to provide an effective traceability system will lose export market access. Researchers estimate that a loss of 25 percent of market share, a loss similar to the South Korean market, prior to the 2003 BSE discovery in the U.S., would result in producer revenue dropping by $18.25 per head sold.

Anyway, the economic benefits that are pointed out in this study are -- we didn't do the study. They are -- they came out of people who know this area and who have come to some recommendations and conclusion -- there are positive economic benefits from an effective animal ID system.

You also have public/private partnership. If we have a mandatory system, you cut down on the cost, because we're not dealing with marketing everywhere in this place. We're also going to get the private sector to pick up some of the cost of these -- of this effort as well.

What are the greatest impediments to delivering such a system? Since the voluntary approach for five years has failed, doesn't the study further make a case for a mandatory identification system?

SEC. VILSACK: There are a number of issues within animal identification, and I'll just touch on a few of them.

You asked, what are the barriers? There is a serious reservation and concern on the part of a number of producers as to precisely how this information will be collected, who will collect it, where it will be stored, how secure it will be and what uses beyond animal identification could potentially be used -- and whether or not information that is collected is subject to any kind of public disclosure. That's one issue.

There is the issue of cost. There is significant difference between the cost of an animal identification system for poultry, for sheep, for hogs and for cattle. I think it's fair to say -- and I could be corrected on this -- but I think it's fair to say that the cost to the cattle industry is significantly higher than it is to the other industries.

And the question then becomes, who bears that cost and who should bear it, and what cost is it? And I've seen some estimates as high as $5 to $6 a head, which is a fairly significant cost to the producers.

There are serious issues about how detailed the identification must be, and whether or not, when you talk about traceability, whether or not you're talking about movements from one field to another or are you talking about movements from where cattle are raised to where they're slaughtered? Precisely what are you talking about?

So there are a number of issues that at least I have learned in the two listening sessions that lead me to believe that we need to be more innovative and more creative about this process.

Now, it's not to say that I will at some point in time not agree with your observation. I'm just -- I'm interested in learning as much as I can, because my goal is to have as much participation as possible.

Now, you may say, well, a mandatory system will guarantee participation -- maybe yes, maybe no. If you have serious resistance to a system, you could potentially get yourself in a situation where there -- where you don't have as much participation as you need. And it's fairly clear that you need 70 percent to 80 percent participation, or a system's not going to work.

So we're conducting these listening sessions. We don't expect -- Madame Chair, we don't expect to drag this out for an extended period of time.

REP. DELAURO: How long?

SEC. VILSACK: That's not our interest. That's not our desire. We do want to give all parts of the country an opportunity to participate and to provide input.

We've already, in two listening sessions, had 57 presentations. And I think we have a half a dozen more of these listening sessions scheduled over the course of the next couple of months.

So our expectation is to get something concluded here relatively soon. It is important. You've identified the fact that there's huge market risk here if we don't do it right.

REP. DELAURO: Huge.

SEC. VILSACK: Huge. And, of course, there's an issue of animal -- animal disease and the capacity to contain it, if it happens.

REP. DELAURO: I'm going to make a final comment, because my -- I'm out of time. And this is information that I received yesterday, which is -- which would -- I mean, I would like to have further conversations with you.

The Canadians, 2001, launched the system -- fully compliant by 2002. There are about 10 to 12 companies out there that deal with this issue.

Of 40 Wisconsin -- 60,000 Wisconsin livestock farms registered annually since 2004, $12 per farm to run the program. That comes from the Wisconsin -- I don't make that up -- Wisconsin livestock ID association.

Forty million head of Canadian cattle tracked since 2001, 20 cents per head to run the program. We've got to get -- the data is there. And we've got to come to some decision here and look at what the accuracies are of the costs involved over the years. They have been overstated to a fare-thee-well. We are now at $142 million, and there's another $14.6 million. And it is hard to justify for the outcome.

And when my colleagues look at outcomes, believe me, if this were some social program somewhere and we had this rate of failure, I suggest to you it would be on the list of programs that are going to be terminated. And you would have concurrence by 435 members of this body, given this age of looking at cost and what we're spending here.

I just leave it at that. I would like to have more conversations with you privately about data and information, about costs that are involved.

Mr. Latham.

Oh, I'm sorry -- Ms. Emerson. I apologize.

REP. EMERSON: I'll ditto on the computers, too? Yes? (Laughter.) Okay.

Mr. Secretary, last week a report from Feeding America helped lay out a cold fact of life in America, that more than 12 million children in the U.S. are food insecure. And in Missouri, probably one in five of -- one out of every five child under the age of five is food insecure.

And while those numbers are from 2005 to 2007, I have to believe -- based on a lot of anecdotes that I have had from folks in my district with rising unemployment -- that that number's rising as well.

And so, given our knowledge of the facts, I really believe strongly that now is the time for Congress and the administration to do everything we can to ensure every effort to maximize resources, leverage funds and ensure that we do not overlook any opportunity to reduce the number of hungry.

This is an area where I believe the $5 million request for Hunger-Free Community Grants will be beneficial. And these -- as you may know, these grants would support communities and efforts to organize local strategies for hunger prevention, especially among children.

And I hope -- hoping that these grants will be funded and help find their way to organize and leverage other local efforts.

Mr. Secretary, however, I do believe that we also need to ensure that we're doing all we can on a national level as well. In your short time on the job, would you say that you have come across anything resembling a comprehensive government-wide strategy to combat hunger in America?

SEC. VILSACK: I think there are elements of a comprehensive strategy. I think the capacity to expand the school nutrition programs, the school lunch programs, working with a countless number of local organizations to fill in the gaps on weekends and on summer -- during summer vacation.

I don't know that we necessarily have found the silver bullet, but I think there are a lot of innovative and creative ideas out there, and we hope to be able to foster more of those ideas, particularly in those areas -- those gap areas.

I will tell you that the recent school closures with the H1N1 have given us an opportunity to think about what happens if there is an extended period of time when schools are shut down, and we began to talk about what our response and what our responsibility would be.

And I think what I learned from that was that in that circumstance, if we have an extended school closure, we've got work to do.

So I think there are elements of a comprehensive plan, but I wouldn't tell you today that we -- that here's what the -- here's what the plan is.

REP. EMERSON: Well, you know, just like Secretary Clinton is trying to marshal all of the government resources -- and, you know, you've been definitely a part of that on the international hunger front. We had that meeting. Rosa was there, and I was there. Was that a couple of weeks ago? Who knows. But somewhere in the last couple of weeks.

And I was very excited about that, because I thought she had a great handle on that. Would it be your ability -- would it be in your ability to be able to call -- do the same kind of multipronged strategy and pull everybody together in the room on the domestic front?

Is that something that you'd support or that you'd be interested in doing?

SEC. VILSACK: Well -- and I think to a certain extent, not -- not that I've called this or I've been personally involved in it -- but to the extent that there's been a fairly broad group of folks working on the reauthorization proposal, I think we have the workings or the beginnings of that process.

And I have had a series of meetings, individual meetings, with a number of groups on this issue of what do you do on weekends and what do you do on summer vacation? I'm concerned about that.

I think we have had a real good-faith effort to try to get food to children. We just haven't figured out how to make sure that all of our children are actually, in fact, fed.

REP. EMERSON: Yes. And the fact that we still have 12 million who we know are food insecure is pretty scary. And considering how rich our country is, even the poorest among the poor, as compared to, you know, say other countries in Latin America, Central America. But it's just mind-boggling, because, you know, some people don't want to go to the food pantries and of course half of the time our food pantries now are -- just don't have anything.

And the school lunch program is great, but not all kids go to school. And so you've still got all the little ones who, if they're not in Head Start and getting a square meal there, they're left out in the cold.

SEC. VILSACK: That's why WIC is important. That's why the daycare programs are important. That's why the school lunch and school breakfast programs are important.

But I would point out, we have another issue that we have to deal with, and that is, depending upon how those programs are implemented at the local level, it creates the potential for stigma, which discourages youngsters from utilizing the program.

I -- just today, I had a story --

REP. EMERSON: I know.

SEC. VILSACK: -- of a computer program where you basically put your thumbprint on the computer to verify you're the person who's supposed to get the lunch. And then in big huge bold letters, it says, "Free and reduced lunch student," you know.

So your kids are going through the line, you're putting your finger up there, and it tags you a free and reduced lunch kid. And, you know, so what happens is, youngsters say, "I don't even want to be part of it. I'll just skip lunch."

REP. EMERSON: Right. And that is absolutely critical.

SEC. VILSACK: That's a problem.

REP. EMERSON: But it would be wonderful if we could encourage you to try to put a more formal organization together so we could collectively work on this issue.

There are so many resources and so many private organizations, nongovernmental organizations, out there working on this issue, and I just feel like if we collectively do it and we have a national campaign, if you will --

SEC. VILSACK: Can I just have an amendment to that? I would -- if we were going to do this, I think we ought to do both sides of the equation here. We have an issue with hunger, but we also have an issue with obesity. And it would be helpful, I think, to have a conversation about both.

REP. EMERSON: I think it definitely does fit together, because in our more rural areas --

SEC. VILSACK: Not to get personal -- I wasn't looking at you. (Laughter.)

REP. EMERSON: As we're sitting here eating Virginia peanuts with how many grams of fat?

REP. DELAURO: Just one side of the aisle is eating Virginia peanuts. Gotcha!

REP. EMERSON: Ninety calories -- 140 calories --

MR. : (Off mike.) REP. EMERSON: Oh, no!

Okay. Thank you so much. But we would like very much -- and I would personally like very much to work with you on this issue.

REP. DELAURO: Mr. Bishop.

REP. BISHOP: Thank you very much.

I had said that I wanted to go back and revisit the issue of the Office of Civil Rights budget.

Our proposed 2010 budget for the Office of Civil Rights totals $28 million, an increase of about 7.6 percent, including funding for an additional two full-time employees, bringing the total number in that office to 115.

Given the tremendous backlog and the complaints which have yet to be adjudicated -- not to mention the cases that are currently being filed -- in addition to the ramp up of the second phase of the PICSA (ph) case, and the administrative burdens that that will present, won't the Office of Civil Rights need a significant increase in resources above what's being proposed?

And as an addendum to that, could you share with us how many cases or complaints are currently pending? And of those pending, how many are internal complaints and how many are external complaints -- for example, those submitted by minority farmers or producers?

SEC. VILSACK: Sir, I don't know that I have a breakdown of the specific number of complaints in terms of internal or external. I can tell you that there -- that we are reviewing the previous eight or nine years' worth of complaints.

It stands in my memory that there are somewhere in the neighborhood of 13,000, but I could be wrong about that number. And the reason we're reviewing them is that a relatively small -- and I mean a relatively small number of those complaints were found to be valid complaints or properly filed. So we wanted to make sure that whatever decisions were made were made in the proper fashion.

We have or are in the process of securing the services of some folks who are going to help us go through that process, who, because of their previous experience, will be able to do a fairly good and relatively quick job, because they know what to look for in reviewing those files. And I believe we're doing that within the existing budget -- this year's budget.

We have requested additional money. We've requested additional money for additional employees and for a record management system. We're hopeful that with this additional money, that we can also aggressively pursue our congressional mandate to establish a meaningful Office of Advocacy and Outreach in order to prevent future problems.

So our hope is that we've got adequate resources to do the job. And if we don't, then we will have to figure out a way to make do. We are very committed to this. And I think we have a -- (inaudible). I think we have the people to be able to get it done.

REP. BISHOP: Let me ask you, the Office of Civil Rights, the director of that office, does he report directly to you or does he report to the undersecretary for administration or what is the chain of command there?

SEC. VILSACK: you know, I don't have the flow chart in my mind right now.

I will tell you that what we are suggesting is that the assistant secretary of administration be elevated to an undersecretary so that he can be on the same level as all of the other undersecretaries, so when he asks for assistance in promoting civil rights in terms of hiring and promotion and activities within each department, he is at the same level as his counterparts.

REP. BISHOP: He'd also oversee the other --

SEC. VILSACK: That's correct.

REP. BISHOP: -- subagencies with regard to administration matters?

SEC. VILSACK: That's correct. That's correct.

BISHOP: Okay.

Do you need legislation to elevate that, or will you be able to do it administratively?

SEC. VILSACK: I don't think I can do that administratively. I think that's something that you have the power to do. I don't.

I'm just suggesting that it is difficult, if you're trying to tell an undersecretary of Natural Resources and Environment to, you know, do a better job of minority hiring or to ask questions as to why promotions aren't, you know, equitable -- just hypothetically speaking -- it's difficult to do that when you're here, and you're talking to someone who is in a sense a superior -- at a superior level.

REP. BISHOP: Thank you, Mr. Secretary.

I yield back the balance of my time, and I do have some.

REP. DELAURO: I appreciate that, Mr. Bishop.

Mr. Latham?

REP. LATHAM: Thank you very much, Madame Chairman.

Mr. Secretary, as you're well aware with the H1N1 outbreak -- and unfortunately it was called the swine flu and had a, I guess, number one, it really highlights the need for the animal surveillance program and strong animal disease research, but also just the economic hardship that it's placed on our pork producers.

And, you know, I've got some people talking about, you know, the bankers saying don't, you know -- asking them if they want to sell their land or they want to sell their sows and things like that.

Is there anything that we can do? I mean, I've had people suggest some kind of, you know, school lunch or a government buyout or something, to try and help them. Are there any actions we can take?

SEC. VILSACK: We are in the process of taking a look at what our options are. To a certain extent, the flexibilities that this department has had in the past have been a -- I don't know what the right word is, curtailed is the only word I can think of -- curtailed by specific directions from Congress in terms of the allocation of resources that could have been in the past available.

So our options are limited. But we are looking at what limited help and assistance. I know that we've received a request to purchase $50 million worth of pork. I candidly am not sure that we have that kind of flexibility left in the budget, but we are looking for opportunities to help this industry out.

And first and foremost is to preserve the market that exists today by making sure that people characterize this as -- as a virus that is not basically a food-borne virus.

REP. LATHAM: Is there, as far as trade, it's affected that quite dramatically, anything that we can do on that front?

SEC. VILSACK: Well, we are -- there are several things we have done and we're going to continue to do. And some of them have been successful, and we still have more work to do.

Last week, I met with ambassadors from 20 countries, basically laying out precisely what our process is, laying out what the nature of the virus is, the fact it was not food borne, that you can't get it by eating pork, that there's no scientific reason or international trade reason for banning pork or pork products.

We've been requested to provide letters to these countries and we're in the process of doing that. We've seen a good response from Central American countries. They've reopened their markets. We've seen a very strong and positive statement from some of our trading partners like Japan.

We still have work to do in several of our trading partners, including China and Russia.

REP. LATHAM: Well, I hope when you met you served ham sandwiches or something in that --

SEC. VILSACK: Well, I'm all -- I've been doing my personal part, I can tell you that. (Laughter.

)

REP. FARR: We eat a lot of pork here, too.

REP. LATHAM: Thanks, Sam. (Laughter.)

Just, some -- I guess about the crop insurance. I know you've got a proposal that the government net book quota shared a 20 percent versus the current 5 percent.

In that proposal also, as far as your explanation of your proposed legislation decreasing premium subsidies by 5 percent, the increase in the book quota, decreasing the premiums on the CAT coverage by 25 percent.

I mean, do you know which -- will the department do some kind of analysis? Number one, has this been proposed; is there any legislative language? Number two, have you done any kind of study as to which companies are going to survive, if the government takes over more and more of the business?

I know, you are obviously very aware in Iowa what a huge impact that has.

SEC. VILSACK: I appreciate the question about this. And I think it's important to sort of understand the history.

When crop insurance was first issued, it was not something that was -- it was something that had to be marketed. It was something that had to be incented. It was something that where producers had to be encouraged to participate.

Today, that is not the case. Many banks are now making it a condition of loans. Obviously, when you establish the disaster programs, you basically provide it as a condition of obtaining disaster relief that you have crop insurance. So there's now more of a mandate than just simply having to market.

Therefore, the companies don't -- they've seen a huge increase in their market, but they haven't actually increased coverage and so forth. So there's no -- they've been making a tremendous amount of money -- billions of dollars. We just think that this needs to be a fairer deal to taxpayers.

Now, do we have legislation that's proposed? Not yet. It's been drafted. And we will obviously get that to you.

Do we -- have we done an analysis of how individual companies will be impacted? That might be difficult to do without knowing precisely what companies are selling what products this year.

I will tell you that we are anxiously awaiting the GAO report on crop insurance to determine whether or not that leads us in a different direction or supports what we're doing. And we expect to see that very soon.

REP. LATHAM: If I could just indulge just for one kind of follow up.

I mean, there's great skepticism out there about the federal government getting -- controlling all the banks, controlling the car companies, expanding role in another area here where the government is actually in competition with the private sector in expanding that. And forcing, basically, a bunch of companies out of business, I think is -- would -- we'd get a lot of pushback, I would have to say.

SEC. VILSACK: Well, I don't want to get into a disagreement with you, Congressman.

REP. LATHAM: Oh, come on!

SEC. VILSACK: There's a -- (laughs.)

There's a tremendous amount of profit being generated from this line of work. And essentially, it was created --

REP. LATHAM: There's also a tremendous amount of risk, too.

SEC. VILSACK: There is. And the government's willing to share in the risk. If it's 20 percent of the gain, it's also 20 percent of the loss. So it is a sharing of that risk and a sharing of the gain. And we think a fairer sharing of the gain, because the gain has dramatically increased. And as time goes on, the capacity to more accurately determine what your losses are going to be gets better, and so you increase the profit margin.

So this is about recalibrating the deal, and I think that's a -- it's a fair request.

REP. LATHAM: I respectfully disagree.

But thank you very much.

SEC. VILSACK: I expect that. (Laughter.)

REP. DELAURO: Mr. Davis.

REP. DAVIS: 1862 and 1890, legislation was passed creating land grant colleges. And as a result of that, the Agriculture and Food Research Initiative, which provides competitive grants for some of these universities to do research and maybe to find better ways for nutrition, food safety, agriculture production, and even conservation problems.

Do you think it's adequately funded today? And, if not, would you support increasing funding for AFRI?

SEC. VILSACK: You know, that -- that's an interesting way of phrasing a question.

We're here to talk about the budget we've proposed and submitted. I will tell you that we -- that I'm looking forward to the opportunity to spend a full year understanding the intricacies of this budget, because when we do have that full year, I think we'll make perhaps even better decisions than we've made in a relatively short period of time.

I am interested in making sure that the research that's done by USDA is A, coordinated; B, works with our land grant universities; C, is as competitive as can possibly be; and D, addresses the critical issues confronting agriculture.

I can't tell you today, because I frankly have not had the time to delve into this whether or not that's the system we have today. We may very have that system.

But I wanted the opportunity for the undersecretary of research to be able to look at this and give recommendations to me in terms of whether we've got the best system and the most adequately funded system, or whether we need to put more additional resources.

My suspicion is that he'll come back and say more resources are needed.

REP. DAVIS: Madame Chairman, there's a letter that each of us probably have. I'd like to ask, if we could, for that to be put into the record of today's hearing, if that's possible -- unless it's already a part of it.

It's signed by 50-some -- 59 vice presidents and 11 presidents of the land grant colleges, with your permission.

REP. DELAURO: (Off mike.)

REP. DAVIS: Sorry. My second comment I want to make --

REP. DELAURO: Without objection. I got the -- (inaudible) -- nomenclature.

REP. DAVIS: My second comment: As we talk about broadband, I envision for a rural Tennessee and rural 4th Congressional District and rural counties all across America can use broadband as a way to basically have a magnet school for small school systems that would be impossible for them to be able to educate the best and brightest.

Maybe a college professor at the University of Tennessee or Iowa will be instructing students from the fourth grade all the way up through the 12th grade.

My wife, a teacher, says that for the first three years of school, we teach a child to read and after that, the child reads to learn.

And so I think that we're failing in this country and not challenging the best and brightest. We did a wonderful job with special education to bring folks into our economy, into the workforce, through the '70s, and from then we've actually helped folks be able to be a part of our society.

But I think broadband is where we could really make a tremendous difference in many areas, education being one of those. When the interstate systems were built, they didn't stop in Nashville, Memphis, Chattanooga, Knoxville. They went all across rural America. Broadband needs to do the same thing.

And so, my hope is, as you start promulgating the rules so that my communication cooperatives in the district --whether it's Twin Lakes Telephone or whatever it may be -- can apply for the grants to be able to make available and accessible to the rural public school systems -- an opportunity to better fund education at a much less cost.

So at what level are we today in being able to have the rules ready, so that we can start seeing some of the dollars be expended?

SEC. VILSACK: Representative, first of all, you're absolutely correct that there are multiple uses for broadband. You've mentioned one that's very important.

The other is health care -- the opportunity to link health care clinics with imaging resources, x-rays and so forth, to save health care costs and make it more easy for people in rural communities to get adequate health care. There are many reasons -- or uses for it.

We expect and anticipate by June that we will have the rules and the framework in place. We expect, as it relates to the recovery and reinvestment resources, that we will probably see three separate distributions of resources.

Why, you say, not all at one time? Because we want to learn from what kind of applications we get from the first tranche of resources, and we expect that those resources will first be invested in the fall of this year. So we are -- and that's both the Commerce Department and the USDA.

REP. DAVIS: My home in Pall Mall still has dial-up -- when you dial it up. So do we talk about the need for actually extending telecommunications and others to rural areas, that's important.

I hear folks talking about this being a waste of money. The farm-to-market roads go to a state highway. The state highway goes to intrastate system. The intrastate roads go to the interstate to connect. And as a result of that, food, labor, America's future, because of rural America, because of looking at rural America and helping developed it, has made America's future better. I think broadband can be a part of that.

SEC. VILSACK: I agree.

REP. DAVIS: My time's up.

REP. DELAURO: Mr. Farr.

REP. FARR: Thank you much.

I have one question about the MAP program, and then I want to get into nutritional issues.

The administration's -- OMB's justification for reducing funding for the MAP program cite a 10-year-old GAO study, but did not mention a more recent global insight commissioned by the Department of Agriculture -- the study called, "A Cost-Benefit Analysis of USDA's International Marketing Development Programs."

That was a program done in 2006. It showed that increased program funding provided by the 2000 farm bill for MAP and for Foreign Market Development program, the FMD, successfully increased U.S. agricultural exports by $3.8 billion and helped increase the annual farm net cash income by $460 million.

Why was this favorable study not taken into account by the administration?

SEC. VILSACK: Well, I'm not sure that it wasn't taken into account. I think there is, obviously, a support for export assistance. It's a question of what kind of export assistance we provide.

I think what we're suggesting is the way in which we were providing these resources essentially were funding for-profit enterprises that -- for activities and events that would that would have occurred anyway, and, in fact, are occurring.

So it's not a question of not being supportive of MAP. It's a question of whether the resources we were spending were for services that would have been provided anyway, and we believe probably were -- would have been and will be provided anyway.

REP. FARR: Okay. I'm sure we're going to have quite a struggle in Congress, as we always do, on MAP funding.

But, let me switch to something that's dear to my heart, and I think dear to your heart, and certain dear to the president and first lady's heart, which is the school nutrition.

I've been pointing out that I think we have a morass of administrative problems in the facts of the feeding program. It's first borne -- one of it's by all the different programs we've created. But what is interesting, and we get these reports here from your department on what we've spent on buying food.

And I'm just looking at this chart here of the food that was purchased. This is the Food and Nutrition Service Child Nutrition Program. There isn't one -- the only fresh thing I could find on here were pears.

Do you know what we spent the most amount of money on last year?

MR. : (Off mike.)

REP. FARR: Most money?

REP. DELAURO: Mozzarella cheese.

REP. FARR: You're right, Madame Chair.

We spent -- and there's nothing even in the -- that comes close to $90 million -- $148 million -- $870 million -- $987 million dollars on mozzarella cheese.

That's just mozzarella. We also bought all kinds of cheddar cheeses and other shredded cheeses, reduced cheeses, pasteurized bulk, sliced cheeses, yellow cheeses, whatever.

So the problem is that, you know, we're telling the world that you've got to eat healthy in order to stay healthy, and yet what we buy and distribute to the school lunch program is just -- is all the things that we're not supposed to be eating, at least in that kind of quantity. So we've got to shift what we're providing the school lunches.

Now, let me get into the programs. We have in the schools we have a school lunch-breakfast program, we have a school breakfast program, we have a summer food service program, we have a special milk program, we have a snack program. And then we get into -- oh, we have commodity procurements and that was with part of it.

What I would hope you would do is really start streamlining. We ought to have one -- we ought to have just two feeding programs in America. We ought to have a community feeding program, where the WIC and food stamps and all those are just the things that we do outside of the schools in the broader community. And the other one area we ought to have is that all of it ought to be the school nutrition program.

And I hope that you'll work on consolidating these programs. I'm working with the reauthorization, which isn't in this committee. It's not even in the Ag Committees.

It's in the Labor and Education Committee, working with George Miller's staff to show them. And they've never really gone back in to look at why all these programs were built differently, require different -- we hear from some -- from the school nutritionists that they think that up to 60 percent to 70 percent of the programs are consumed in administrative costs, because each one of these programs has to be audited and so on.

And I mean, I think we ought to be block granting these to the schools. We ought to be consolidating the programs into one kind of multi-school program that the -- you ought to be streamlining the way we qualify using the data that we use for other federal programs, such as the food stamp program, or the Medicare program.

They're much more accurate, the computer data, then these forms that have to go out to parents to prove that they're poor. And the parents don't even speak the language that's on the forms.

So I hope that you will seriously tackle this in this year when they have to reauthorize it to essentially rebuild it.

SEC. VILSACK: Well, we are --

REP. FARR: Or refinance it to buy things that are nutritional.

REP. DELAURO: Go ahead and answer, Mr. Secretary, because I want to try to get as many questions in to meet your schedule and to meet a vote schedule that's coming up.

SEC. VILSACK: We are proposing additional investments in fruits and vegetables in addition to the $11 billion that we are currently purchasing in those areas. And so that -- we are very cognizant of the need to focus on more nutrition.

We want to make sure that the programs are consistent -- more consistent with the dietary guidelines, and we want to make sure that those dietary guidelines are well informed and well structured on a nutritious diet.

Your issue about consolidation is a good one, and I will certainly give that consideration.

REP. DELAURO: And --

REP. FARR: We ought to have a salad bar in every school? That'd be a great question for you to ask, and we don't need an answer here, but we'd be interested in why we can't do that.

REP. DELAURO: Mr. Kingston.

REP. KINGSTON: Ms. Secretary, I may need to leave some of these for the record, but one of them is on the broadband grant eligibility.

We have heard from some small suppliers that the bigger companies are influencing the grant process and to make sure that they kind of will get more than their fair share.

So we can submit a letter to you on that. But that's something that I'm sure we're all sensitive about, and probably on the same page on.

Another thing is I was interested in your CRP explanation to Mr. Latham, about actual usage of it as compared to the allocation of it.

SEC. VILSACK: Well, not CRP. Some of the other programs. The wetlands --

REP. KINGSTON: Okay. The wetlands was one.

And I was wondering, do you still -- do you apply that same ruler to SNAP and to WIC? Because it would appear to me that there would be a similar number of enrollment, and -- for example, food stamps has, as you know, an automatic trigger for enrollees and for food inflation and it was adjusted in October.

And yet in the stimulus program, there was another $19 billion put on it, and now we have another increase. And I'm just wondering if that same ruler applies?

SEC. VILSACK: Well, I think it's a slightly different circumstance, because you're seeing an increased utilization of those programs as opposed to an underutilization.

REP. KINGSTON: Is the increase based on the market trigger that's adjusted in June?

SEC. VILSACK: I think --

REP. KINGSTON: Or is it a speculative amount?

SEC. VILSACK: No. I think the increase is based on recognized demand and a weakening economy.

REP. KINGSTON: Let's take a look at that. And I can send that -- a letter to you with a better explanation, because it seems to me it's a little more speculation than -- because it was just adjusted in October. But we'll see.

The other thing is, I want to encourage you -- you had testified previously that $49 million was overpaid to ineligible participants in farm programs because the recipients' income was too high. I want to encourage you on that as a potential saving.

And if you may remember the dialogue that you and I had at that time was that there was also, in terms of the food stamp program, overpayments of $1.29 billion.

So a lot of money there that if we can do our jobs better that we can get. And of course the point of both of these is you want farm payments to go to eligible farmers only and you want food stamps to go to the eligible people also.

SEC. VILSACK: That's true. I think there has been progress made on the SNAP program. You know, I don't use that term, food stamp, because it's, you know, I think it's a mischaracterization of the program. It's a supplemental nutrition program, and I think that's where the focus needs to be.

Having said that, there has been, literally a halving of the error rate in that program over the course of the last several years. Now, that doesn't mean that there isn't more work to be done. There does. And there also needs to be more work done on the school lunch and school breakfast programs. Same kind of issue and we're -- we're certainly sensitive to that.

REP. KINGSTON: Okay, good. Because I'm just saying, you know, on -- at the end of this process -- which I'm looking forward to working with you on savings -- getting after overpayments and inefficiencies may be one thing that really unites some philosophies in here.

SEC. VILSACK: I could use your help in helping some of you colleagues understand that, because we -- some people are concerned about the fact that we're actually teaming up with the Internal Revenue Service to make sure that we have a system to check and make sure people who are getting farm payments are the ones who are entitled to them.

And some of the colleagues, particularly on your --

REP. KINGSTON: No. I absolutely agree with you. That money should go to those who are eligible. And I might not like all the programs, but they still should go to the people who are eligible for them.

The other thing is, will the president sign the bill if it has a liberalization of trade with Cuba, if that gets -- if it gets amended in the process?

SEC. VILSACK: (Laughs.) I haven't talked to the president about that issue, so I don't -- I don't want to speak to --

REP. KINGSTON: What a smart answer. (Laughter.

) I yield back.

MR. : (Off mike.)

REP. KINGSTON: I was just wondering -- Just wondering. Now I'm --

SEC. VILSACK: Well, we're fortunate to have the opportunity to do agricultural trade with Cuba. And we appreciate, you know, that's been a good thing for Cuba; it's a good thing for the farmers.

REP. DELAURO: It's a good way to increase, you know, additional markets here for our farming communities. This committee is supportive of this issue, pretty much so.

In any case, I don't know -- is that true, Jack?

REP. KINGSTON: What was the question?

REP. DELAURO: That you're -- you're for liberalizing trade with Cuba, aren't you?

REP. KINGSTON: I am so devoted to my loyal opposition position that I don't know that I would go along with the chair on that particular question, but I'd certainly --

REP. DELAURO: Except if we could sell chicken to Cuba.

Anyway, let's move on. I'm trying to get as many -- let me just some rapid fire stuff:

On the undersecretary for Food Safety, Mr. Secretary, is there a candidate currently being vetted to be nominated for this position?

SEC. VILSACK: Yes.

REP. DELAURO: What's our timeline here?

SEC. VILSACK: Madame Chair, the complexity has to do with the arrangements that are necessary in order to allow this person to do the job. And we're in the process of working through that process -- short-term.

REP. DELAURO: I think it's imperative. I think you agree.

SEC. VILSACK: Don't disagree.

REP. DELAURO: Right.

Food safety assessment schedule -- you know, I -- the concern here is because we went through this risk-based effort that we're now complying with what the I.G. said with regard to their recommendations on risk-based.

Why do you propose to do the food safety assessments only once every four years?

SEC. VILSACK: You know, I don't know the answer to that question.

REP. DELAURO: Okay. So can you get back?

MR. : (Off mike.)

SEC. VILSACK: Oh. Well, I've been -- I've been reminded that we're asking for an increase in the assessment so that we can increase the number and the frequency.

REP. DELAURO: So we may increase the number and the frequency. Okay.

Anyway, we'll talk further about that. I may have additional questions on that, so because the frequency I think is I think is critically important.

Agriculture Credit Insurance Fund -- let me just make a point on this. Supplemental is $71 million for ACIF. This was after 20 million (dollars) in the Recovery Act. Congress was never notified that the programs were going to run out of the funding midyear, leaving farmers without a source of credit.

Really would love a commitment from you that the department will keep a better watch over these programs, notify the Congress when the program is seeing unprecedented demand and when we're going to run out of funds midyear. Look, you know and I know, these are programs that are the only source of credit for some people right now who are struggling. And so, let me just ask you: 2010 budget request, sufficient to cover this surge demand that the farm ownership and operating loan programs have been experiencing?

MR. STEELE: (Off mike.)

SEC. VILSACK: We are proposing an increase. Scott reminded me that we're forecasting a year in advance. It's the best estimate that we have.

I will reassure the chair that we are in the process right now of having meetings with a number of our budget aspect -- budget folks to make sure that they are within budget.

We're going to keep -- pay close attention to this -- to all budgets, not just this one.

REP. DELAURO: Okay.

I just want to point out that -- my last question with regard to the food safety assessment schedule. The proposal to do the assessments once every four years was made by Bush FSIS in its response to the OIG report.

I'm looking to a new administration with a stronger commitment to funding public health initiatives. So I want you to look at why you're continuing to look at a four-year proposal. And if it is with regard to -- and I want to really know if it's increased funding to get this -- (inaudible) -- because this is from a time past, in my view.

SEC. VILSACK: (Off mike.)

REP. DELAURO: Okay. Let me just -- on the conservation of funding, I've got a couple of questions here.

And you spoke to -- is it Mr. -- maybe it was Mr. Latham. And you said you were going to try to match the existing funding with the increase in the enrollment, et cetera.

Is there a question here, is that -- that the really -- that there is a problem in the field? In other words, that we do not have -- that the issue becomes the delivery side of USDA and a field force that is able to do the job of enrolling and, you know, of utilizing those funds at the rapid rate that the Congress has talked about these efforts.

SEC. VILSACK: I'm going to draw on my experience as a governor to answer that question.

We tried to institute buffer strips into the state of Iowa, and what I learned from that experience was that oftentimes when government comes to a farmer and says, "We've got a program that's great for you. We want you to participate," oftentimes, there's a little skepticism and cynicism about it.

And so what we tried to do was to get a better marketing effort with farmer talking to farmer. So it may very well be field, but it could also be just general skepticism or a lack of -- a lack of appreciation for precisely what the programs provide. I don't know.

We do have a broad array of options for farmers. And one of the things can also be that crop prices, commodity prices increase, and you have a bumper year and all of a sudden, you're maybe thinking maybe you should take land out of conservation reserve and put it into crop production. Or maybe you need that additional acreage, and maybe conservation is not as profitable as growing a crop. It could be of a wide variety of explanations.

REP. DELAURO: Well, I think we've, you know, obviously I think that's a big issue for everyone on this committee is these programs. So we'll continue to have that conversation.

SEC. VILSACK: I think you all have made tremendous progress when you look at the number of acres that are enrolled in these programs.

REP. DELAURO: Yes. There's also an issue for me, but I'll get that on the record of what -- in the last administration, the issue of what are the programs that are most cost effective. And Mr. Ray was here and so forth, we had some of that language.

I'd like to get that to you to get your take on what he thought was most cost effective in terms of some of the conservation programs like CSP. In any case, I'll get that -- get that to you.

REP. KINGSTON: Rosa, will you share that answer? That would be very interesting for the committee.

REP. DELAURO: Oh, sure. Yeah, yeah. Be happy to do that.

Mr. Bishop, do you have any further questions?

REP. BISHOP: (Off mike.)

REP. DELAURO: Okay.

Mr. Kingston?

Let me just -- I think, because I know you want to do what you need to do, and we're going to have to vote, as I said, shortly.

This has to do with the direct payments which have already been addressed. But this is something I wanted to ask from the last hearing, and I never got to do it. This is about farm subsidy payments to polluters.

This is a Tulsa World article, November, 2008, on questionable subsidy payments to polluters: "The federal government has awarded millions of dollars in subsidies to Oklahoma animal farms that have been fined for violating state and federal environmental laws."

There's about 56 farms penalized by environmental regulators for excessive pollution collected more than $2.5 million in subsidies in recent years. Some farms have been fined and collected subsidies in the same year. Others were repeat offenders, if you will, and they collect subsidies.

The paper said a dairy was subject of two Oklahoma Department of Agriculture fines, 17 now closed U.S. EPA enforcement cases, and at least one ongoing EPA case since 2001. For these violations, the dairy was fined at least $350,000 for failing to comply with environmental laws. The dairy has received more than $880,000 in USDA farm subsidies since the mid-1990s.

And if we've got farms that are violating state and federal environmental quality laws, we're -- the taxpayer is being charged twice. Illegally polluting, and then they receive a farm support payment.

In a response, again in a prior time, the notion was, well, these are two separate things. You know, you can -- the pollution is one issue. The farm subsidy payment is another. Fines and farm subsidies fall under two distinct programs offered by two distinct agencies.

Do you agree that fines for polluting and subsidies should not affect one another? Should we be looking at this issue?

SEC. VILSACK: As you were explaining the circumstance, I thought of all the ways in which you could potentially get yourself crosswise with environmental laws running an agricultural production facility, and some of them can be relatively innocent.

I mean they can be just circumstances -- somebody just didn't do their job on a particular day, and you have a manure spill or whatever. And some can be quite, you know, quite intentional and quite egregious.

I think you would have a very slippery slope if you start down that track, because I'm not quite sure where you stop. So what if you -- what if you owe -- what if you haven't filed a proper tax return, you haven't reported all of your income. Does that disqualify you?

What if you violate other -- other laws, other criminal laws? Does that disqualify you?

I mean, I'm not quite sure. I think it is appropriate to keep them separate. And if there's a problem with repeat violations, then there are ways in which you can substantially charge that operation, and you can, in some cases, shut it down.

REP. DELAURO: Well, but USDA protects wetlands and highly erodible soil by limiting subsidy payments to violators already.

SEC. VILSACK: There a direct connection potentially there, because you're essentially -- you're essentially providing resources for conservation and water quality, and you've got somebody who's basically contaminating the water. There's -- I think there's a greater nexus in that circumstance.

I'm all for holding people accountable. I'm all for making sure that environmental laws are strongly and strictly enforced. I'm just not sure that that's the right penalty.

REP. DELAURO: Well, we are going to look at -- and I know there's a difference of opinion, but we are looking at direct payments, at which we're going to try to do something about. And the presumption there -- and look, I've been a supporter in that effort. I'm also a supporter of dealing with the IRS data in which you can deal with this.

But so this is -- but there's been no violation in that kind potentially. This is a -- these are repeat offenders.

SEC. VILSACK: But just to give you a sense of this, I mean, you have -- some of these operations have multiple locations. And some of them have multiple business arrangements. In other words, there may be a partnership here, and there may be a limited liability corporation over here, a family farm corporation over here.

That is extraordinarily complex, because you're -- each one of those entities may be receiving payments, and there may be one person who is common to both of them, and that one person has a violation. Do you stop payments on both operations or just the operation that was directly responsible for the violation? I mean -- what?

REP. DELAURO: Let me -- because I think that this merits a greater discussion and conversation. If we can agree to look this issue of people who are -- and I -- this is -- it comes out of a newspaper account, if you will.

And, you know, again, as I say, it was repeat offenders. Somebody can make a mistake and you, you know, it's not one size fits all or cookie cutter. But, if you continue to make the same mistakes, and, you know, the outcome is the same, you still -- there's no real, you know, penalty.

What I'd like to do is have you try to take a look at this issue, if you would and we will as well -- and I will as well -- to see if there's, you know, something here that makes it clear to people that if you are going to violate the law here and do it repeatedly, well then, you can't just, you know, collect on the other side of this.

SEC. VILSACK: Well, I know in Iowa when we had habitual violator laws, we basically could shut the operation down. That seems to me it'd be the more appropriate --

REP. DELAURO: Well, it may be. And that's why I'm feeling we need to talk about it. But that's -- that's not happening. It's not happening. Nothing is. I mean, the only thing that's happening is more subsidies are going -- are going out. That's the result, not shutting it down so.

What I will do, Mr. Secretary, is -- I think I have more questions, but I will, you know -- I'm sorry. Thank you -- that what we will do is to submit them for the record and, you know, have to do with COOL and, you know, some other areas. And I know some is -- the GIPSA stuff, just a couple of questions in that, but I understand the nature of that for the stockyards.

So I think with that, any of my colleagues -- anything else? Okay.

Thank you very, very much, Mr. Secretary.

And I wanted to go back to my original comments. I think this is a budget for this effort that we're very excited about. I want to stipulate that. And look forward to really working with you on a number of these efforts.

I think, you know, the budget reinforces the priorities of this portfolio in a way that I think we can build on and meet the needs and the challenges of the people who are out there.

So thank you very much.

SEC. VILSACK: Thank you.


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