Order Code RL32904
CRS Report for Congress
Received through the CRS Web
Agriculture and Related Agencies:
FY2006 Appropriations
Updated July 19, 2005
Jim Monke, Coordinator
Analyst in Agricultural Policy
Resources, Science and Industry Division
Congressional Research Service ˜ The Library of Congress
The annual consideration of appropriations bills (regular, continuing, and supplemental) by
Congress is part of a complex set of budget processes that also encompasses the
consideration of budget resolutions, revenue and debt-limit legislation, other spending
measures, and reconciliation bills. In addition, the operation of programs and the spending
of appropriated funds are subject to constraints established in authorizing statutes.
Congressional action on the budget for a fiscal year usually begins following the submission
of the President’s budget at the beginning of the session. Congressional practices governing
the consideration of appropriations and other budgetary measures are rooted in the
Constitution, the standing rules of the House and Senate, and statutes, such as the
Congressional Budget and Impoundment Control Act of 1974.
This report is a guide to one of the regular appropriations bills that Congress considers each
year. It is designed to supplement the information provided by the House and Senate
Appropriations Subcommittees on Agriculture. It summarizes the status of the bill, its
scope, major issues, funding levels, and related congressional activity, and is updated as
events warrant. The report lists the key CRS staff relevant to the issues covered and related
CRS products.
NOTE: A Web version of this document with active links is
available to congressional staff at:
[http://www.crs.gov/products/appropriations/apppage.shtml].
Agriculture and Related Agencies:
FY2006 Appropriations
Summary
The Senate Appropriations Committee reported the FY2006 Agriculture
appropriations bill (H.R. 2744, S.Rept. 109-92) on June 27, 2005. This bill includes
all of USDA (except the Forest Service), plus the Food and Drug Administration and
the Commodity Futures Trading Commission. The $100.2 billion Senate bill
contains $17.348 billion in discretionary spending and $82.81 billion for mandatory
programs. The discretionary amount is $609 million (+3.6%) above the
Administration’s request, and $518 million (+3%) more than the House-passed bill.
The mandatory level concurs with both the House-passed bill and the
Administration’s request, and is $14.4 billion (+17%) above enacted FY2005 levels.
The House of Representatives passed the FY2006 Agriculture appropriations
bill (H.R. 2744, H.Rept. 109-102) on June 8, 2005, by a vote of 408-18. The $99.7
billion bill contains $16.83 billion in discretionary spending, $90 million (+0.5%)
above the Administration’s request, and constant compared with the FY2005 level.
The overall increase above FY2005 is due to larger mandatory spending on farm
commodity programs. About 83% of the total request is for mandatory programs
(primarily the Commodity Credit Corporation, crop insurance, and most food and
nutrition programs). The remaining 17% is for discretionary programs. This is the
category of spending over which appropriators have direct control.
Both the Senate-reported and House-passed versions of H.R. 2744 reject or limit
many of the Administration’s proposed reductions to many conservation and rural
development programs, while concurring with others. Both versions effectively
reject the Administration’s proposal to redirect $300 million in foreign food
assistance funds to purchase food locally in foreign markets rather than buy U.S.
commodities. This has proven controversial with farm groups and private voluntary
organizations that distribute food aid. Neither measure follows the Administration’s
proposal to cut formula funds for the state agricultural experiment stations (under the
Hatch Act) by 50% and to provide a new pool of competitively awarded grants. As
in previous years, appropriators rejected the Administration’s proposal to terminate
a large number of earmarked agricultural research projects. The House bill includes
language prohibiting use of funds to implement country-of-origin labeling (COOL)
for meat or meat products, effectively postponing the start date for COOL. The
Senate-reported bill includes funding to implement COOL.
The conference agreement on the FY2006 budget resolution (H.Con.Res. 95)
includes reconciliation instructions to the agriculture authorizing committees to find
program changes saving $173 million in FY2006 and $3.0 billion over five years.
The Administration proposes greater reductions in mandatory spending on farm
commodity programs, crop insurance, food assistance, rural development, and
conservation. Further action depends on how the House and Senate agriculture
committees (not the appropriations subcommittees) carry out the instructions.
This report will be updated as events warrant.
Key Policy Staff
CRS
Area of Expertise
Name
Division
Telephone
USDA Budget, Commodity Credit Corporation, Jim Monke
RSI
7-9664
Farm Service Agency, and Report Coordinator
Crop Insurance
Ralph M. Chite
RSI
7-7296
Conservation
Jeffrey A. Zinn
RSI
7-0248
Agricultural Trade and Food Aid
Charles E. Hanrahan
RSI
7-7235
Agricultural Research, Extension, & Economics Jean M. Rawson
RSI
7-7283
Animal and Plant Health Inspection
Agricultural Marketing
Geoffrey S. Becker
RSI
7-7287
Grain Inspection, Packers and Stockyards
Food Safety
Rural Development
Tadlock Cowan
RSI
7-7600
Domestic Food Assistance
Joe Richardson
DSP
7-7325
Food and Drug Administration
Donna U. Vogt
DSP
7-7285
Susan J. Thaul
DSP
7-0562
Commodity Futures Trading Commission
Mark Jickling
G&F
7-7784
Division abbreviations: RSI = Resources, Science and Industry; DSP = Domestic Social Policy;
G&F = Government and Finance
Contents
Most Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
USDA Spending at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Mandatory vs. Discretionary Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
FY2006 Agriculture Appropriations Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Commodity Credit Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Administration Legislative Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Crop Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Administration Legislative Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Farm Service Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
FSA Salaries and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
FSA Farm Loan Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Conservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Discretionary Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Mandatory Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Agricultural Trade and Food Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Foreign Agricultural Service (FAS) . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Foreign Food Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Export Credit Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Export Promotion and Export Subsidies . . . . . . . . . . . . . . . . . . . . . . . 15
Agricultural Research, Extension, and Economics . . . . . . . . . . . . . . . . . . . 16
Agricultural Research Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Cooperative State Research, Education, and Extension Service . . . . . 17
Economic Research Service (ERS) and National Agricultural
Statistics Service (NASS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Meat and Poultry Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Horse Slaughter Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Marketing and Regulatory Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Animal and Plant Health Inspection Service (APHIS) . . . . . . . . . . . . 20
Agricultural Marketing Service (AMS) . . . . . . . . . . . . . . . . . . . . . . . . 23
Grain Inspection, Packers, and Stockyards Administration
(GIPSA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Rural Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Rural Community Advancement Program (RCAP) . . . . . . . . . . . . . . . 25
Rural Business-Cooperative Service . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Rural Utilities Service (RUS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Rural Housing Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Domestic Food Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Programs under the Food Stamp Act . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Child Nutrition Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
The WIC Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Commodity Assistance Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Nutrition Program Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Program Initiatives in the FY2006 Budget . . . . . . . . . . . . . . . . . . . . . 33
Food and Drug Administration (FDA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Counterterrorism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Food . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Seafood Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Dietary Supplements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Prescription Drugs and Biologics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Medical Devices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Administrative Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Commodity Futures Trading Commission (CFTC) . . . . . . . . . . . . . . . . . . . . . . . 40
List of Figures
Figure 1. Gross Outlays, U.S. Department of Agriculture, FY2004 . . . . . . . . . . . 2
List of Tables
Table 1. USDA and Related Agencies Appropriations:
FY1998 to FY2006 Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Table 2. Congressional Action on FY2006 Appropriations for the
U.S. Department of Agriculture and Related Agencies . . . . . . . . . . . . . . . . . 5
Table 3. Changes in Mandatory Conservation Programs . . . . . . . . . . . . . . . . . . 13
Table 4. Reductions in Mandatory Rural Development Programs . . . . . . . . . . . 26
Table 5. Directed Spending in the Rural Community Advancement Program
(RCAP) Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Table 6. FDA Counterterrorism Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Table 7. USDA and Related Agencies Appropriations,
FY2006 Action vs. FY2005 Enacted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Agriculture and Related Agencies:
Appropriations for FY2006
Most Recent Developments
On June 27, 2005, the Senate Appropriations Committee reported the FY2006
agriculture appropriations bill (H.R. 2744, S.Rept. 109-92). This bill includes all of
USDA (except the Forest Service), plus the Food and Drug Administration and the
Commodity Futures Trading Commission. The $100.2 billion Senate bill contains
$17.348 billion in discretionary spending and $82.81 billion for mandatory programs.
The discretionary amount is $609 million (+3.6%) above the Administration’s
request, and $518 million (+3%) more than the House-passed bill. The mandatory
level concurs with both the House-passed bill and the Administration’s request, and
is $14.4 billion (+17%) above the enacted FY2005 level.
On June 8, 2005, the House of Representatives passed the FY2006 agriculture
appropriations bill by a vote of 408-18 (H.R. 2744, H.Rept. 109-102). The $99.7
billion bill contains $16.83 billion in discretionary spending and $82.82 billion for
mandatory programs. The discretionary amount is $90 million (+0.5%) above the
Administration’s request, and essentially constant compared with the FY2005 level.
This report discusses provisions in H.R. 2744 and compares them with the
Administration’s request and the enacted FY2005 appropriations levels.
USDA Spending at a Glance
The USDA carries out its widely varied responsibilities through approximately
30 separate internal agencies and offices staffed by some 100,000 employees. USDA
is responsible for many activities outside of the agriculture budget function. Hence,
spending for USDA is not synonymous with spending for farm programs. Similarly,
agriculture appropriations bills are not limited to USDA and include related programs
such as the Food and Drug Administration and the Commodity Futures Trading
Commission, but exclude the Forest Service within USDA.
USDA gross outlays for FY2004 (the most recent fiscal year for which data are
available) were $80.1 billion, including regular and supplemental spending. The
mission area with the largest gross outlays ($45.4 billion, or 57% of spending) was
for food and nutrition programs — primarily the food stamp program (the costliest
single USDA program), various child nutrition programs, and the Supplemental
Nutrition Program for Women, Infants, and Children (WIC).
The second-largest mission area in terms of total spending is for farm and
foreign agricultural services, which totaled $17.9 billion, or 22% of all USDA
CRS-2
spending in FY2003. Within this area are the programs funded through the
Commodity Credit Corporation (e.g., the farm commodity price and income support
programs and certain mandatory conservation and trade programs), crop insurance,
farm loans, and foreign food aid programs (see Figure 1).
Other USDA spending in FY2004 included $8.1 billion (10%) for an array of
natural resource and environment programs, approximately 70% of which was for the
activities of the Forest Service, and the balance for a number of discretionary
conservation programs for farm producers. USDA’s Forest Service is funded
through the Interior appropriations bill; it is the only USDA agency not funded
through the annual agriculture appropriations bill.
The balance of USDA spending was for rural development ($3.3 billion, 4.1%);
research and education ($2.5 billion, 3.1%); marketing and regulatory activities ($1.7
billion, 2.2%); meat and poultry inspection ($763 million, 1.0%); and departmental
administration and miscellaneous activities ($577 million, 0.7%).
Figure 1. Gross Outlays, U.S. Department of Agriculture, FY2004
Dollar s in Billions
($80.113 total)
F ood & Nutr it ion
56.7%
$45.39
F arm & Foreign Ag
Admin. & Misc.
22.3%
0.7%
$17.85
$0.577
Food Safety
1.0%
Resear ch
Natu ral Resour ces
$0.763
3.1%
10.1%
$2.467
Mar ket ing & R egulatory
$8.053
Rur al Develo pment
4.1%
2.2%
Source: CRS, using USDA data
$3.29
$1.723
Mandatory vs. Discretionary Spending
A key distinction between mandatory and discretionary spending involves how
these two categories of spending are treated in the budget process. Congress
generally controls spending on mandatory programs by setting rules for eligibility,
benefit formulas, and other parameters rather than approving specific dollar amounts
CRS-3
for these programs each year. Eligibility for mandatory programs is usually written
into authorizing law, and any individual or entity that meets the eligibility
requirements is entitled to the benefits authorized by the law. Spending for
discretionary programs is controlled by annual appropriations acts. The
subcommittees of the House and Senate Appropriations Committees originate bills
each year that decide how much funding to devote to continuing current activities as
well as any new discretionary programs.
Approximately 80% of total spending within the USDA is classified as
mandatory, which by definition occurs outside of annual appropriations. The vast
majority of USDA’s mandatory spending is for the following programs: the food
stamp program and most child nutrition programs; the farm commodity price and
income support programs (including ongoing programs authorized by the 2002 farm
bill and emergency programs authorized by various appropriations acts); the federal
crop insurance program; and various agricultural conservation and trade programs.
Although these programs have mandatory status, many of these accounts
ultimately receive funds in the annual agriculture appropriations act. For example,
the food stamp and child nutrition programs are funded by an annual appropriation
based on projected spending needs. Supplemental appropriations generally are made
if these estimates fall short of required spending. An annual appropriation also is
made to reimburse the Commodity Credit Corporation for losses in financing the
commodity support programs and the various other programs it finances.
The other 20% of the USDA budget is for discretionary programs, which with
the exception of the Forest Service are funded in the Agriculture appropriations act
(Forest Service programs are funded in the Interior appropriations act). Major
discretionary programs within USDA include Forest Service programs; certain
conservation programs; most rural development programs, research and education
programs; agricultural credit programs; the supplemental nutrition program for
women, infants, and children (WIC); the Public Law (P.L.) 480 international food aid
program; meat and poultry inspection; and food marketing and regulatory programs.
Table 1. USDA and Related Agencies Appropriations:
FY1998 to FY2006 Request
(budget authority in billions of dollars)
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
Request
Discretionary
13.75
13.69
13.95
15.07
16.02
17.88
16.84
16.83
16.74
Mandatory
35.80
42.25
61.95
58.34
56.91
56.70
69.75
68.29
82.82
Total Budget
49.55
55.94
75.90
73.41
72.93
74.58
86.59
85.13
99.56
Authority
Source: CRS, using tables from the House Appropriations Committee.
Note: Includes regular annual appropriations for all of USDA (except the Forest Service), the Food and Drug Administration, and
the Commodity Futures Trading Commission. Excludes all mandatory emergency supplemental appropriations. The FY2003 level
reflects the 0.65% across-the-board rescission applied to all discretionary programs funded in the FY2003 Consolidated
Appropriations Act (P.L. 108-7), except for the WIC program which was specifically exempted. The FY2004 level reflects the 0.59%
across-the-board rescission to all non-defense, discretionary accounts, without exception. The FY2005 level reflects the 0.8% across-
the-board rescission to all discretionary accounts required in the FY2005 omnibus measure (P.L. 108-447).
CRS-4
FY2006 Agriculture Appropriations Action
On June 27, 2005, the Senate Appropriations Committee reported the FY2006
agriculture appropriations bill (H.R. 2744, S.Rept. 109-92), following full committee
approval on June 23, 2005, and subcommittee approval on June 21, 2005. Floor
action has not yet been scheduled. The bill includes all of USDA (except the Forest
Service), plus the Food and Drug Administration and Commodity Futures Trading
Commission.
The House approved the FY2006 agriculture appropriations bill (H.R. 2744,
H.Rept. 109-102) on June 8 by a vote of 408-18, after adopting 10 amendments and
deleting three provisions on points of order. The House Appropriations Committee
reported the measure on June 2, 2005, following full committee approval on May 25,
2005, and subcommittee approval on May 16, 2005.
The Senate agriculture appropriations subcommittee had a sightly higher 302(b)
allocation for discretionary spending ($17.348 billion), compared with the allocation
in the House ($16.832 billion). The $100.2 billion Senate-reported bill contains
$17.348 billion in discretionary spending and $82.81 billion for mandatory programs.
The discretionary amount is $609 million (+3.6%) above the Administration’s
request, and $518 million (+3%) more than the House-passed bill. The mandatory
level concurs with both the House-passed bill and the Administration’s request.
The $99.7 billion House-passed bill contains $16.83 billion in discretionary
spending and $82.82 billion for mandatory programs. The discretionary amount is
$90 million (+0.5%) above the Administration’s request, and constant compared with
the FY2005 level.
The Administration released its budget request on February 7, 2005. The
Administration’s FY2006 budget request is $99.6 billion for the U.S. Department of
Agriculture and Related Agencies. This amount is up $14.4 billion (+17%) from the
enacted FY2005 level of $85.1 billion, primarily because of the anticipated increase
of $9.2 billion (+56%) in FY2006 to reimburse the Commodity Credit Corporation
for its realized losses.1
Mandatory programs administered by USDA (primarily the CCC, crop
insurance, and most food and nutrition programs) account for about 83% of the total
authorization. Actual spending for these programs is highly variable and is driven
by program participation rates and prevailing economic and weather conditions.
Farm commodity program spending is anticipated to be higher in FY2006 due to
lower commodity prices, which result in higher counter-cyclical and loan deficiency
payments. The remaining 17% of the recommended appropriation is for
discretionary programs. This is the category of spending over which appropriators
have direct control.
1 All FY2005 figures cited in this report (including the table at the end) reflect the 0.8%
across-the-board rescission to all discretionary accounts as required in the FY2005 omnibus
measure (P.L. 108-447).
CRS-5
As in past years, in order to meet the FY2006 allocations for discretionary
programs, yet meet requests for biosecurity, pay costs, and other programs,
appropriators placed limitations on authorized levels of spending in the 2002 farm
bill for various mandatory conservation, rural development, and research programs.
In total, House appropriators recommended reducing authorized FY2006 spending
levels for these programs by $1.4 billion (compared with $1.3 billion in FY2005),
and applied those savings toward meeting the discretionary allocation.
Table 2. Congressional Action on FY2006 Appropriations for
the U.S. Department of Agriculture and Related Agencies
Subcommittee
Committee
Conference Report
Approval
Approval
Confer-
Approval
House
Senate
ence
Public
House
Senate
House
Senate
Passage Passage
Report
House
Senate
Law
H.R.
H.R.
2744
2744
H.Rept.
S.Rept.
Vote of
109-102
109-92
408-18
5/16/05
6/21/05
6/2/05
6/27/05
6/8/05
**
**
**
**
**
** Pending
On April 28, 2005, the House and Senate passed the conference agreement on
the FY2006 budget (H.Con.Res. 95, H.Rept. 109-62). In addition to the discretionary
budget allocations, the budget agreement also provides reconciliation instructions
that the agriculture authorizing committees find program changes to save $173
million in FY2006 and $3.0 billion over FY2006-FY2010. Further action depends
on how the House and Senate agriculture committees (not the appropriations
subcommittees) carry out the instructions.
The following sections of this report review the major recommendations in the
Senate-reported and House-passed version of the FY2005 agriculture appropriations
measure, and compare them with the Administration’s request and the enacted
FY2005 appropriations levels. As the appropriations process continues in Congress,
this report will be updated to compare the measures. Also, see the table at the end
of this report for a tabular summary (Table 7).
For more information on budget reconciliation for agriculture, see CRS Report
RS22086, Agriculture and FY2006 Budget Reconciliation, and CRS Report
RS21999, Farm Commodity Policy: Programs and Issues for Congress.
Commodity Credit Corporation
Most spending for USDA’s mandatory agriculture and conservation programs
was authorized by the 2002 farm bill (P.L. 107-171), and is funded through USDA’s
Commodity Credit Corporation (CCC). The CCC is a wholly owned government
corporation. It has the legal authority to borrow up to $30 billion at any one time
from the U.S. Treasury. These borrowed funds are used to finance spending for
ongoing programs such as farm commodity price and income support activities and
various conservation, trade, and rural development programs. The CCC also has been
CRS-6
the funding source for a large portion of emergency supplemental spending over the
years, particularly for ad hoc farm disaster payments, and direct market loss
payments to growers of various commodities which were provided in response to low
farm commodity prices.
The CCC eventually must repay the funds it borrows from the Treasury.
Because the CCC never earns more than it spends, its losses must be replenished
periodically through a congressional appropriation so that its $30 billion borrowing
authority (debt limit) is not depleted, which would render the corporation unable to
function. Congress generally provides this infusion through the regular annual
USDA appropriation law. Because of the degree of difficulty in estimating its
funding needs, which is complicated by crop and weather conditions and other
uncontrollable variables, the CCC in recent years has received a “current indefinite
appropriation,” which in effect allows the CCC to receive “such sums as are
necessary” during the fiscal year for previous years’ losses and current year’s losses.
Both the Senate-reported bill and the House-passed bill for FY2006 concur with
the Administration’s request for an FY2006 indefinite appropriation (“such sums as
necessary”) to the CCC, estimated at $25.690 billion. Although the recommended
FY2006 appropriation is about $9.2 billion above the estimated FY2005
appropriation of $16.452 billion, the increase is not because CCC spending is being
raised by Congress. Instead, it is tracking changes in the CCC’s net realized losses
expected to be incurred primarily in the preceding fiscal year (FY2005) under the
mandatory authorized provisions of the 2002 farm bill.
Furthermore, the estimated CCC appropriation for FY2006 is not a reflection
of expected outlays. USDA also has estimated the projected net outlays for FY2006,
but such spending initially will be funded through the borrowing authority of the
CCC, and ultimately reimbursed through a future appropriation after FY2006. For
FY2006, the Administration projects that CCC net outlays will be $19.805 billion,
compared with an estimated $24.065 billion in FY2005. Both years are up
considerably from preceding years such as FY2004 when CCC outlays were $10.574
billion.
Administration Legislative Proposals. The Administration’s FY2006
budget request also contains legislative proposals to reduce farm commodity
programs program spending that, if adopted by Congress, would save, according to
the Administration, $587 million in FY2006 and $3.4 billion over five years. The
Congressional Budget Office (CBO) has scored the Administration’s proposal much
differently: with a first-year cost of $266 million in FY2006, and a net reduction of
$6.9 billion over five years. The proposals include (1) a 5% across-the-board cut in
all payments received by farmers under the commodity support programs; (2) a
tightening of payment limits for these programs from the current level of $360,000
per person to $250,000, making the use of commodity certificates and loan forfeiture
subject to the limits, and eliminating the three-entity rule that allows producers to
double the payment limits (CBO says the payment limits proposal was not specified
sufficiently to score); (3) a requirement that marketing loans be based on 85% of
historical crop production rather than 100% of current production; (4) an assessment
that would be paid by sugar processors on all marketed sugar; (5) greater flexibility
for USDA to adjust government purchase prices for surplus dairy products, in order
CRS-7
to minimize government costs of the dairy price support program; and (6) a two-year
extension of the MILC (Milk Income Loss Contract). H.Con.Res. 95 (H.Rept. 109-
62) includes budget reconciliation instructions that the agriculture authorizing
committees find program changes to save $173 million in FY2006 and $3.0 billion
over FY2006-10. Further action depends on how the House and Senate agriculture
committees (not the appropriations subcommittees) carry out the instructions.
For more information, see CRS Report RS21999, Farm Commodity Policy:
Programs and Issues for Congress, and CRS Report RS22086, Agriculture and
FY2006 Budget Reconciliation.
Crop Insurance
The federal crop insurance program is administered by USDA’s Risk
Management Agency (RMA). It offers basically free catastrophic insurance to
producers who grow an insurable crop. Producers who opt for this coverage have the
opportunity to purchase additional insurance coverage at a subsidized rate. Policies
are sold and completely serviced through approved private insurance companies that
have their program losses reinsured by USDA. The annual agriculture appropriations
bill traditionally makes two separate appropriations for the federal crop insurance
program. It provides discretionary funding for the salaries and expenses of the RMA.
It also provides “such sums as are necessary” for the Federal Crop Insurance Fund,
which pays all other expenses of the program, including premium subsidies,
indemnity payments, and reimbursements to the private insurance companies.
The House-passed and Senate-reported FY2006 agriculture appropriations bills
(H.R. 2744) concur with the Administration request for such sums as are necessary
for the mandatory-funded Federal Crop Insurance Fund (Fund), which the
Administration estimates to be $3.159 billion for FY2006, compared with $4.095
billion that was estimated for FY2005 at the time of enactment. Annual spending on
the crop insurance program is difficult to predict in advance and is dependent on
weather and crop growing conditions and farmer participation rates. Hence, both the
FY2005 and FY2006 estimates for the Fund are subject to significant revision over
the course of the year.
For the discretionary component of the crop insurance program, the House-
passed version of H.R. 2744 provides $77.8 million for RMA salaries and expenses,
while the Senate-reported version of the bill contains $73.45 million for RMA. Both
chambers are above the enacted FY2005 level of $71.47 million, but below the
Administration’s FY2006 request of $87.8 million. Included in the House level is
$3.6 million requested by the Administration to support RMA’s ongoing efforts to
reduce waste and abuse within the crop insurance program. For the last several years,
mandatory funds from the Fund have been used for this purpose. However, the
legislative authority to tap these funds expires at the end of FY2005. As in the past
three years, most of the increase requested by the Administration is for various new
information technology (IT) initiatives. Over the past couple of years, appropriators
have not funded this request. Of the $12 million requested increase for various IT
initiatives, the House bill provides $1.5 million, and the Senate version contains $1
million.
CRS-8
The House-passed bill also contains a general provision that prohibits RMA
from using any of its FY2006 funds to implement the premium discount plan (PDP).
The Senate-reported version is silent on this issue. The PDP allows crop insurance
companies that can demonstrate cost savings in their delivery of insurance to sell
policies to their customers at a discount. To date, the PDP has been approved for
only one company, which has reduced its costs by selling its policies directly to
customers online. Independent insurance agents, which sell crop insurance on behalf
of the crop insurance companies, are concerned that the PDP reduces their total
commissions and damages their profitability. Some farm groups contend that the plan
encourages cherry-picking of the best customers and might leave smaller farmers
uninsured.
Administration Legislative Proposals. The Administration’s FY2006
budget request also contains legislative proposals affecting the crop insurance
program that, if adopted by Congress, would save $140 million annually, beginning
in FY2007. These proposals include (1) a requirement that farmers purchase a crop
insurance policy as a prerequisite for receiving farm commodity income support
payments; (2) a two to five percentage point reduction in the portion of the crop
insurance premium that is paid by the government on behalf of a participating farmer,
with the largest percentage reductions made at the lower levels of insurance
coverage; (3) a requirement that producers pay 25% of the premium (up to $5,000)
for catastrophic (CAT) crop insurance coverage, instead of the current requirement
that a producer pay a $100 administrative fee and no premium; (4) a two percentage
point reduction in the reimbursement rate to private crop insurance companies for
their administrative and operating expenses. USDA contends that these proposals
would encourage farmers to buy-up to higher levels of crop insurance coverage, and
possibly preclude the need for ad hoc disaster payments, which have been made
available on a regular basis by Congress over the past 20 years. The Administration
and CBO estimate that these proposals would save more than $500 million over five
years.
Neither the House-passed nor Senate-reported appropriations bill addresses
these modifications to the crop insurance program. However, some legislative
revisions to the program could be considered this year in the context of the pending
budget reconciliation bill. The House and Senate Agriculture Committees are
required to report reconciliation legislation by this September that will reduce
spending by $3 billion over five years on mandatory programs under their
jurisdiction. Although it is unknown at this time how these cuts will be made,
changes to crop insurance could be part of the package. (For more on budget
reconciliation, see CRS Report RS22086, Agriculture and FY2006 Budget
Reconciliation.)
Farm Service Agency
While the Commodity Credit Corporation serves as the funding mechanism for
the farm income support and disaster assistance programs, the administration of these
and other farmer programs is charged to USDA’s Farm Service Agency (FSA). In
addition to the commodity support programs and most of the emergency assistance
provided in recent supplemental spending bills, FSA also administers USDA’s direct
CRS-9
and guaranteed farm loan programs, certain conservation programs and domestic and
international food assistance and international export credit programs.
FSA Salaries and Expenses. This account funds the expenses for program
administration and other functions assigned to the FSA. These funds include
transfers from CCC export credit guarantees, from P.L. 480 loans, and from the
various direct and guaranteed farm loan programs. All administrative funds used by
FSA are consolidated into one account. For FY2006, the Senate-reported bill
recommends a total appropriation of $1.358 billion for all FSA salaries and expenses,
which is $7.3 million below the Administration’s request, but $63 million above the
FY2005 appropriation. The House-passed bill recommends $1.326 billion, $32
million less than the Senate bill and $39 million below the Administration’s request.
The FY2006 House report reiterates concern expressed prior appropriations
reports instructing USDA not to shut down or consolidate any FSA county offices
unless rigorous analysis proves such action to be cost-effective. The National
Agricultural Imagery Program (NAIP) would receive an increase of $2.9 million
under the House-passed bill, and an increase of $2 million under the Senate-reported
bill. The House report mentions a $15 million increase to maintain staffing levels
being funded in FY2005 by carryover balances from supplemental acts to implement
the farm bill. The Senate report recommends $3.3 million to hire additional farm
loan officers.
FSA Farm Loan Programs. Through FSA farm loan programs, USDA
serves as a lender of last resort for family farmers unable to obtain credit from a
commercial lender. USDA provides direct farm loans and also guarantees the timely
repayment of principal and interest on qualified loans to farmers from commercial
lenders. FSA farm loans are used to finance the purchase of farm real estate, help
producers meet their operating expenses, and help farmers financially recover from
natural disasters. Some of the loans are made at a subsidized interest rate. An
appropriation is made to FSA each year to cover the federal cost of making direct and
guaranteed loans, referred to as a loan subsidy. Loan subsidy is directly related to
any interest rate subsidy provided by the government, as well as a projection of
anticipated loan losses caused by farmer non-repayment of the loans. The amount
of loans that can be made, the loan authority, is several times larger.
For FY2006, the Senate-reported bill recommends an appropriation of $150.8
million to subsidize the cost of making $3.743 billion in direct and guaranteed FSA
loans. This is $0.5 million less in loan subsidy (-0.3%) and $75 million less in loan
authority (-2%) than the House-passed bill, which recommends an appropriation of
$151.4 million to make $3.818 billion of loans.
The House-passed bill concurs with the Administration’s FY2006 request for
the main direct and guaranteed programs, but does not fund the Administration’s
request for $25 million in emergency loan authority ($2.7 million in loan subsidy),
nor does it grant the Administration’s request to reduce the boll weevil eradication
loan program by 40%. The Senate-reported bill generally follows the House bill, but
the Senate bill basically maintains farm ownership loans and farm operating loans
(both subsidized and unsubsidized) at FY2005 levels. Thus the Senate bill
recommends a higher amount for farm ownership and subsidized farm operating
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loans compared to the House bill, and a lower amount for unsubsidized farm
operating loans.
Comparing both bills to the Administration’s request, the overall loan authority
can rise while the loan subsidy falls because both the House-passed and Senate-
reported bills restore the boll weevil account and deny the request for emergency
loans. Comparing the Administration’s request (and the concurring elements of the
House bill) to FY2005 levels, the overall loan authority rises while the loan subsidy
falls because the guaranteed loan program grows and the direct loan program
contracts. The Senate bill does not redirect as much funding from direct to
guaranteed loans.
Most of the House’s recommended rise in loan authority over FY2005 levels is
a $109 million increase in unsubsidized guaranteed farm ownership loans (an
increase of about 10%, to $1.2 billion in FY2006). These unsubsidized guaranteed
loans can be made with relatively little increase in appropriated funds compared to
changes in subsidized or direct loans.
The House bill concurs with the Administration proposal to reduce loan
authority for the direct farm ownership program by $8.3 million (-4%) and the
subsidized guaranteed operating loan program by $16.5 million (-6%). The Senate
bill does not follow this request. The Administration asserts that low interest rates
and the strong farm economy make this reduction possible. However, in recent years,
the subsidized guaranteed operating loan program has not been able to meet demand,
and qualified farmers have been placed on waiting lists when funds are depleted.
For more information about agricultural credit in general, see CRS Report
RS21977, Agricultural Credit: Institutions and Issues.
Conservation
The Senate-reported bill provides more funds for discretionary programs
($964.0 million) than the House-passed bill ($939.8 million). Both bills provide less
than the FY2005 appropriation ($991.9 million) but more than the FY2006 request
($814.4 million). Both bills reject or limit many of the Administration’s proposed
reductions from FY2005 funding. Each bill provides some reductions to selected
mandatory programs, as shown below in Table 3. Even with the reductions in both
bills, mandatory funding would rise slightly from $3.897 billion in FY2005 if either
of them were enacted in their current form. The House bill identified many of the
same priorities as the Administration request, such as helping producers comply with
environmental regulations, while the Senate bill does not mention these priorities.
Discretionary Programs. For the discretionary programs, all administered
by the Natural Resources Conservation Service, the Senate-reported bill provides
$964.0 million, while the House-passed bill provides $939.8 million; both amounts
are substantially greater than the Administration’s request for $814.4 million. For
Conservation Operations (the largest discretionary program), the Senate bill provides
$819.5 million while the House provides $773.6 million. Both amounts are less than
the FY2005 estimate of $830.7 million, but more than the Administration request for
$767.8 million. The reduction requested by the Administration in its proposal was
CRS-11
based on a decision not to fund earmarks, which totaled more than $122 million in
FY2005 and would have saved an estimated $114.3 million in FY2006. However,
both bills reject this proposal and committee reports in both chambers identify
numerous earmarks. Both reports state that earmarks should be treated as additions
to allocations to states rather than as part of those allocations. The House bill also
requires the Chief of NRCS to report on all FY2005 and FY2006 Conservation
Operations allocations, by state, within 45 days of enactment. The House bill
provides an increase of $14.3 million to assist producers in meeting regulatory
requirements, which is about 38% of the Administration request for an additional
$37.5 million for this purpose, while the Senate bill does not specify this use of
funds. The amount in the House bill also reflects an amendment, adopted on the
floor, transferring $20 million from this account to the Small Dam Rehabilitation
Program.
Among the other discretionary programs, both bills provides $60 million for
Watershed and Flood Prevention Operations (a reduction from $15.0 million in
FY2005, but $60 million more than the Administration had requested). The bills
differ for each of the other programs. The Senate provides $27.3 million for the
Watershed Rehabilitation Program (nearly identical to FY2005), while the House
provides (after a floor amendment was adopted) $47.0 million; the Administration
had requested $15.1 million. For the Watershed Surveys and Planning Program, the
Senate provides $5.1 million (the same amount as the Administration requested),
while the House provides $7.0 million (the same amount that was provided in
FY2005). Both bills provide almost level funding from FY2005 for the Resource
Conservation and Development Program (RC&D) ($51.2 million in the Senate and
$51.4 million in the House); these amounts are substantially more than the
Administration request of $25.6 million. In addition, the Senate bill would fund an
additional program for the first time by providing $5 million to implement the Heathy
Forest Reserve.
In one major change from the Administration’s request, both bills include
numerous priority projects using funds from the Watershed and Flood Prevention
Operations account, but do not earmark specific amounts. The Administration had
asserted that elimination of Watershed and Flood Prevention Operations would allow
resources to be redirected to other priority “regulatory challenges.” In a second major
change from the request, both bills reject the Administration’s proposed reduction to
the RC&D account that would have been based on a change in policy to phase out
federal support to participating councils after they had received federal funds for 20
years. Of the 375 participating councils, 189 (50%) would lose funding under this
proposal. The House committee report states that changes in funding policy for this
program should be based on “effectiveness and performance” rather than of the age
of councils, and directs NRCS to develop ways to measure the effectiveness of
councils. Finally, no funding was sought or is being provided for the two emergency
conservation programs. Typically, those programs are funded in supplemental
appropriations legislation in response to specific natural disasters.
Mandatory Programs. Funding for the suite of mandatory conservation
programs administered by NRCS would increase slightly over FY2005. However,
both bills also limit funding for some of these programs to levels below the
authorized amounts; these programs and levels are listed in Table 3. During full
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House consideration of the bill, an amendment was adopted that shifted funds among
the mandatory conservation accounts, but did not change the overall funding level for
this group of programs.
Neither bill places funding or enrollment limits on the Conservation Reserve
Program, which is the only mandatory conservation program not administered by
NRCS (it is administered by the Farm Service Agency). This action concurs with the
Administration request, and, as a result, program spending is estimated to increase
by $79 million to $2.021 billion in FY2006.
All the mandatory programs have authorized dollar or acreage limits either
annually or for the life of the authorization, so changes in funding should be
compared with these limits, which change from year to year, as well as with funding
the preceding year. The largest reductions from FY2005 include the Grasslands
Reserve Program (the reduction from $128 million to $0 in the Administration
proposal and both bills reflects the allocation of the entire $254 million authorized
in the FY2002 farm bill by the end of FY2005) and the Farm and Ranch Lands
Protection Program, reduced by $36 million in the House bill (to $74 million).
When compared to authorized levels, the largest reduction in mandatory
programs is the Environmental Quality Incentives Program, authorized at $1.2 billion
but receiving $1.017 billion in FY2005, which would receive the same funding in
FY2006 in the Senate bill and $1.052 billion in the House bill. When other proposed
reductions are viewed this way, the Farm and Ranch Lands Protection Program
received $13 million less than its authorized level of $125 million in FY2005 and
would receive $36 million less than its FY2006 authorized level of $100 million,
while the Wetland Reserve would be limited to enrolling about 100,000 acres less
than the 250,000 authorized under both bills as well as the Administration request.
Among the largest increases from FY2005 are the Conservation Reserve
Program (up $79 million) and the Conservation Security Program (up $129 million
to $331 million in the Senate bill, up $43 million to $245 million in the House bill
and up $72 million to $274 million in the Administration request). While the
Conservation Security Program would increase under the request, CBO estimated in
its January 2005 baseline that it would grow by $254 million in FY2006, rather than
the $72 million in the Administration’s request.
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Table 3. Changes in Mandatory Conservation Programs
FY2005
FY2006
FY2006
FY2006
Program
Enacted
Authorization
House bill:
Senate bill:
(P.L. 108-447):
under 2002
Allowed
Allowed level
Allowed Level
Farm Bill*
Level
Environmental
$1.017 billion $1.200 billion $1.052 billion $1.017 billion
Quality Incentives
Program
Conservation
$202.4 million
$331 million
$245 million
$331 million
Security Program
Wildlife Habitat
$47 million
$85 million
$43 million
$47 million
Incentives Program
Wetlands Reserve
154,500 acres
250,000 acres
154,500 acres
150,000 acres
Program
Farm and Ranch
$112 million
$100 million
$73.5 million
$100 million
Lands Protection
Program
Ground and Surface
$51 million
$60 million
$51 million
$51 million
Water
Small Watershed
$0
$210 million
$0
$0
Rehab. Program
Ag. Management
$0
$20 million
$6 million**
$20 million
Assistance
* Figures in the FY2006 authorized column represent how much would be available under current law,
including the carryover of unobligated balances from prior years, had no restrictions been placed.
** Under this program, $14 million of the total goes to NRCS, and that would not be funded; the
remaining $6 million, which goes to RMA and AMS, would be fully funded.
Agricultural Trade and Food Aid
The House-passed bill provides $1.441 billion in budget authority for
discretionary international activities which include primarily foreign food aid
programs under the Agricultural Trade Development and Assistance Act of 1954
(P.L. 83-480) and the salaries and expenses of the Foreign Agricultural Service. The
Senate committee recommends budget authority of $1.488 billion, with most of the
difference accounted for by the Senate committee’s larger appropriation for P.L. 480
food aid.
Both measures reject the President’s proposal to purchase commodities in
markets near to countries in need rather than from U.S. producers by shifting funds
from P.L. 480 to a U.S. Agency for International Development (USAID) disaster and
famine assistance fund.
USDA’s international activities also include those funded through the borrowing
authority of the Commodity Credit Corporation (CCC). Included in this category are
some additional food aid programs, export credit guarantees, market development
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programs, and export subsidies. USDA estimates that the total program value of
discretionary and CCC-funded international activities for FY2006 would be more
than $6 billion.
Foreign Agricultural Service (FAS). The House bill recommends an
appropriation of $148.2 million for the Foreign Agricultural Service (FAS) which
administers USDA’s international programs with the exception of P.L. 480 Title II
commodity donations, which are administered by USAID. The Senate committee
measure provides for $148.2 million. These amounts are about $11 million more
than enacted in FY2005, but close to the President’s budget recommendation.
Foreign Food Assistance. For P.L. 480 foreign food assistance, the House
bill recommends budget authority of $1.187 billion. The recommended budget
authority includes $77 million for P.L. 480 Title I (long-term, low-interest loans to
food deficit countries for the purchase of U.S. food commodities) and $1.107 billion
for P.L. 480 Title II (humanitarian donations for emergency relief and non-emergency
development projects). The P.L. 480 Title II request is $222.1 million more than
requested in the President’s budget. The Senate committee measure also provides
$77 million for P.L. 480 Title I and, for Title II, $1.159 billion, which is $274 million
more than the President requested.
The President’s budget contained a proposal to shift about $300 million from
P.L. 480 Title II to USAID’s International Disaster and Famine Assistance account,
which would be administered separately from Title II and used to purchase food for
emergency relief in markets closer to their final destinations rather than in the United
States as required under P.L. 480. This proposal, effectively rejected by both
measures, proved controversial with farm groups, agribusinesses and the maritime
industry who supply and ship commodities for Title II and with private voluntary
organizations who rely on food aid to carry out development projects in poor
countries. During House committee deliberations, amendments offered by
Representative Jesse Jackson Jr., to augment P.L. 480 Title II emergency food aid
by $393 million and $78 million, respectively, were defeated.
For the McGovern-Dole International Food for Education and Child Nutrition
Program, the House bill and the Senate committee measure both include an
appropriation of $100 million. The McGovern-Dole program provides U.S.
commodities, funds, and technical assistance to food for education and child nutrition
activities carried out by U.S. private voluntary organizations and the United Nations
World Food Program (WFP) in poor countries. This level of budget authority is
$13.2 million more than appropriated in FY2005.
Other food aid activities, largely funded by CCC-borrowing, include the Food
for Progress Program (FFP), Section 416(b) commodity donations, and the Bill
Emerson Humanitarian Trust (BEHT). The President’s budget estimates that $137
million of CCC funds would go to the Food for Progress (FFP) program, which
provides food aid to developing countries and emerging democracies that are
introducing and expanding free enterprise in their agricultural economies. Additional
FFP monies would be available from the funds appropriated to P.L. 480 Title I. The
budget anticipates that $151 million of CCC-owned nonfat dry milk, about 75,000
metric tons, would be available for food aid programming under Section 416(b) of
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the Agricultural Act of 1949. Section 725 of Title VII (General Provisions) in the
House bill directs the Secretary of Agriculture to make available, “to the extent
practicable,” $25 million of commodities provided under Section 416(b) to assist in
mitigating the effects of HIV AIDS. No program level is indicated in the President’s
budget for the BEHT, a reserve of commodities and cash that can be tapped in the
event of unanticipated need for emergency food aid. The BEHT currently holds 1.4
million metric tons of wheat and $107 million in cash. Section 738 of Title VII
(General Provisions) of the House bill limits to $20 million the amount of FY2005
P.L. 480 appropriations that may be used to reimburse the CCC for the release of
commodities from the BEHT.
U.S. food aid programs are under discussion in the Doha Round of multilateral
trade negotiations, being carried out under the auspices of the World Trade
Organization (WTO). Negotiations could result in food aid programs being subject
to more stringent regulations as WTO member countries have agreed to eliminate
food aid that displaces commercial sales. Furthermore, negotiators are examining the
question of providing food aid fully in grant form as well as the role of international
organizations vis-a-vis WTO member countries’ bilateral food aid programs.
Export Credit Guarantees. CCC Export Credit Guarantee Programs
guarantee payment of commercial financing of U.S. agricultural export sales. The
President’s budget estimates a program level for export credit guarantees of $4.4
billion, none of which would receive a discretionary appropriation. Most guarantees
— $3.4 billion — are for commercial credits with short-term repayment terms (up
to three years). Another $1 billion would be guarantees for supplier credits where
short-term financing is extended directly to importers for the purchase of U.S.
agricultural products. The CCC repays commercial lenders when foreign borrowers
default on loans.
Export credit guarantees are also on the agenda of the current Doha Round of
multilateral trade negotiations. The United States has agreed to eliminate trade-
distorting aspects of such programs in exchange for the elimination of all agricultural
export subsidies by the European Union. In addition, an appeals panel in the recently
decided U.S.-Brazil cotton dispute has ruled that U.S. export credit guarantees are
effectively export subsidies, making them subject to previously notified export
subsidy reduction commitments. To bring its export credit guarantee programs into
conformity with the WTO ruling, USDA has announced changes in the program to
make it more risk-based. USDA also announced the termination of intermediate
credit guarantees (three to seven years).
Export Promotion and Export Subsidies. USDA’s export promotion
programs include the Market Access Program (MAP), which primarily promotes
sales of high value products, and the Foreign Market Development Program (FMDP),
which mainly promotes bulk commodities. The President’s budget provides CCC
funding of $125 million for MAP, $15 million less than the FY2005 level and $75
million less than authorized in the 2002 farm bill. A Chabot amendment to prohibit
funds from being used to carry out MAP activities failed by a recorded vote of 66 to
356. For FMDP, the budget allocates $34.5 million, the same as in FY2005.
CRS-16
For export subsidy programs, the budget allocates $28 million to the Export
Enhancement Program (EEP) and $52 million to the Dairy Export Incentive Program
(DEIP). EEP has been little used in recent years and, in FY2005, EEP subsidies were
zero. DEIP subsidies would exceed their FY2005 level by $46 million. The
President’s request also includes $90 million for Trade Adjustment Assistance to
Farmers, the maximum amount allowed in the authorizing statute, the 2002 Trade
Act. Under this program, USDA makes payments to farmers when the current year’s
price of an agricultural commodity is less than 80 percent of the five-year national
average and imports have contributed importantly to the decline in price.
(For additional information, see CRS Issue Brief IB98006, Agricultural Export
and Food Aid Programs, updated regularly. For information on the status of WTO
negotiations on agricultural export subsidies, export credit guarantees, and food aid,
see CRS Report RS21905, Agriculture in the WTO Doha Round: The Framework
Agreement and Next Steps.)
Agricultural Research, Extension, and Economics
Four agencies carry out USDA’s research, education, and economics (REE)
function. The Department’s intramural science agency is the Agricultural Research
Service (ARS), which performs research in support of USDA’s action and regulatory
agencies, and conducts long term, high risk, basic and applied research on subjects
of national and regional importance. The Cooperative State Research, Education,
and Extension Service (CSREES) is the agency through which USDA distributes
federal funds to the land grant Colleges of Agriculture to provide partial support for
state-level research, education and extension programs. The Economic Research
Service (ERS) provides economic analysis of agriculture issues using its databases
as well as data collected by the National Agricultural Statistics Service (NASS).
The USDA research, education, and extension budget, when adjusted for
inflation, remained essentially flat in the period from FY1972 through FY1991.
From FY1992 through FY2000, the mission area experienced a 25% increase (in
deflated dollars) over the previous two decades. Annual increases have since
moderated, and supplemental funds appropriated specifically for anti-terrorism
activities, not basic programs, accounted for most of the 10% increase in FY2001.
Although the states are required to provide 100% matching funds for federal funds
for research and extension, most states have regularly appropriated two to three times
that amount. Fluctuations in state-level appropriations can have significant effects
on state program levels, even when federal funding remains stable. Cuts at either the
state or federal level can result in program cuts felt as far down as the county level.
In 1998 and 2002 legislation authorizing agricultural research programs, the
House and Senate Agriculture Committees tapped sources of available funds from
the mandatory side of USDA’s budget and elsewhere (e.g., the U.S. Treasury) to find
new money to boost the availability of competitive grants in the REE mission area.
From FY1999 through FY2003, however, annual agriculture appropriations acts
prohibited the use of those mandatory funds for the purposes the Agriculture
Committees intended. Instead, from FY1999 through FY2002, and in FY2004 and
FY2005, appropriations conferees provided more funding for ongoing REE programs
than was contained in either the House- or Senate-reported versions of the bills.
CRS-17
Nonetheless, once adjusted for inflation, these increases do not translate into
significant growth in spending for agricultural research. Agricultural scientists,
stakeholders, and partners express concern for funding over the long term in light of
high budget deficit levels and lower tax revenues.
The Senate-reported version of H.R. 2744 contains a total of $2.67 billion for
USDA’s research, extension, and economics mission area for FY2006. This amount
is $200 million higher than the House-passed version of the bill, and almost level
with the current fiscal year appropriation of $2.65 billion.
Agricultural Research Service. The Senate-reported measure provides
$1.27 billion in total for ARS ($1.29 billion in FY2005), compared to $1.12 billion
provided in the House-passed version. Of the $1.27 billion, $1.1 billion would
support ARS’s research programs (the House allowance is $1.0 billion). As in past
years, Senate appropriators concurred with the House in rejecting the
Administration’s proposal to terminate a large number of earmarked ARS research
projects. The Senate measure contains $160.6 million to support the modernization
and construction of ARS laboratory facilities (compared to $87.3 million in the
House-passed measure). In FY2005, $186.3 million is available for facility
construction.
The $160.6 million for ARS facility construction in the Senate-reported version
would cover 21 building projects, compared to eight in the House-passed version.
Both measures would provide the full funding that the Administration proposed
($58.8 million) for continued construction of the National Centers for Animal Health
(formerly known as the National Animal Disease Center) in Ames, Iowa.
Cooperative State Research, Education, and Extension Service. The
Senate-reported measure contains $1.17 billion total in FY2006 for CSREES,
compared to $1.13 billion in the House-passed version. The current appropriation
is $1.16 billion. Of the $1.17 billion total, the Senate committee would allocate
$652.2 million to support state-level research and academic programs ($662.5 million
in the House version, and $655.5 million in FY2005); $453.4 million for Extension
programs ($444.9 million in the House version and $445.6 million in FY2005); and
$55.8 million for integrated programs that have both research and extension
components ($15.5 million in the House measure, and $55 million in FY2005).
Senate appropriators concurred with the House in rejecting the Administration
proposal to cut formula funds for the state agricultural experiment stations (under the
Hatch Act) by 50% and to provide a new pool of $75 million for distribution through
competitively awarded grants, plus an additional $70 million ($250 million total) for
the National Research Initiative (NRI), the primary existing competitive grants
program in agriculture. Experiment station directors traditionally have used formula
funds (a form of block grant), which are relatively stable from year to year, to support
the core, ongoing agricultural research programs in each state. Both the Senate
committee and the House also turned back an Administration proposal to shift half
of the formula funds for cooperative forestry research to competitive grants, and to
eliminate formula funds to states for animal health and disease research, also with the
aim of supporting such research in the future with competitive grants.
CRS-18
Viewed as a whole, the Administration proposal reflected a policy change that
has been under discussion among agricultural scientists, administrators, and
policymakers for quite some time. In a 1989 report, and subsequent reports, the
National Academy of Science has recommended that a greater proportion of USDA
research money be distributed competitively rather than by formula or by direct
appropriation (as ARS is funded). The House and Senate Agriculture Committees
have raised authorized funding levels for competitive grants in past farm bills and
other related legislation, and tapped new sources of mandatory money for
competitive grants. These changes would allow the funds allocated to competitive
grants to grow in relation to direct appropriations for research. The FY2006 budget
request marks the first time that an Administration has directly proposed a budget
reflecting a shift in funding mechanisms toward more competitive grants.
Historically, however, annual appropriation acts have maintained the customary
proportion between competitive and non-competitive mechanisms for distributing
federal agricultural research dollars (roughly 10/90).
Both the Senate-reported measure and the House-passed bill maintain level
funding with FY2005 for Hatch Act formula funds ($178.7 million), and level
funding for forestry and animal health research ($22.2 million and $5.06 million,
respectively, in FY2005). The Senate version contains $190 million for the NRI
competitive grants program, and the House measure contains $214.6 million. Senate
appropriators, like their House counterparts, also rejected the Administration’s
request to significantly scale back special (earmarked) research and extension
projects. The Senate-reported version contains $171 million in earmarked project
funds, and the House would provide $147.8 million ($167.7 million in FY2005).
The Senate-reported measure agrees with the House measure in providing a $1
million increase above FY2005 in funding for research at the 1890, historically black,
land grant Colleges of Agriculture ($37.7 million); level funding ($12.3 million) for
1890s research capacity building; roughly an $800,000 increase in funds for 1890
extension programs ($33.6 million in the Senate measure, $33.9 million in the
House); and level funding ($17 million) for grants to improve extension facilities at
1890 schools. Both measures would provide $12 million for the endowment fund for
Native American post-secondary institutions, as in FY2005, and they are very close
in their allocations for research and extension at the tribal institutions ($1.1 million
and $3.2 million, respectively in the Senate version; and $1 million and $3.3 million,
respectively, in the House version). Both measures would provide level funding
($276 million) for formula-funded extension programs at the 1862 land grant
universities.
CSREES administers two competitive grant programs that are authorized to be
funded by mandatory transfers of unobligated government funds. The largest of these
is the Initiative for Future Agriculture and Food Systems (IFAFS), which is
authorized to receive $160 million in FY2006. Starting in FY2002, annual
appropriations acts have blocked CSREES from operating the IFAFS program. In
FY2004 and FY2005, appropriations conference report language allowed the
Secretary to award up to 20% of the appropriation for the NRI competitive grants
program using IFAFS program criteria (approximately $35 million in FY2005; $30
million in FY2004). Both measures block IFAFS funding except to administer and
oversee previously-awarded grants (section 719), and would continue the practice of
CRS-19
allocating a percentage of NRI competitive grant funds for IFAFS purposes (20% in
the Senate version, 22% in the House). The goal of both IFAFS and the NRI is to
support fundamental research on subjects of national, regional, or multistate
importance to agriculture, natural resources, human nutrition, and food safety, among
other things.
The second CSREES grant program authorized to use mandatory funds supports
research and extension programs on organic agriculture. The 2002 farm act
authorizes $3 million annually through FY2007 for this program. Neither the Senate
nor the House measure contains language that would change program funding in
FY2006.
Economic Research Service (ERS) and National Agricultural
Statistics Service (NASS). The Senate-reported version of H.R. 2744 provides
$78.5 million for USDA’s Economic Research Service. This amount is slightly
higher than the House-passed bill ($75.9 million), slightly less than the
Administration’s request ($80.7 million), and $4.3 million more than the current
fiscal year appropriation ($74.2 million). Committee language requires ERS to
continue the initiative to gather production and market data for the organic
agriculture industry, and requests the agency to study the economic effects of
agricultural cooperatives on rural communities and residents.
Senate appropriators provide $145.2 million for the National Agricultural
Statistics Service, an amount almost $17 million higher than FY2005 funding, $7
million more than contained in the House-passed version, and level with the
Administration’s request.
Meat and Poultry Inspection
USDA’s Food Safety and Inspection Service (FSIS) conducts mandatory
inspection of meat, poultry, and processed egg products to insure their safety and
proper labeling. The House-passed bill appropriates $837.3 million for FSIS in
FY2006, below the President’s request for $849.7 million for FSIS but $20.1 million
above the FY2005 enacted level of $817.2 million. The Senate-reported bill provides
$836.8 million. The President’s budget proposed that new user fees cover $139
million of the $849.7 million FSIS request. However, neither the House-passed nor
Senate-reported version endorses such fees.
When it released its FY2006 budget proposal, the Administration said that it
would offer draft legislation to collect the fees to cover inspection costs beyond a
plant’s single primary approved shift. The Administration has included the expanded
user fee proposal in the past three years’ budget requests, and previous
administrations have proposed that more inspection activities be funded through user
fees. Administration officials have asserted that the fees are needed to achieve
budgetary savings without compromising food safety oversight, and that producer
and consumer price impacts would be “significantly less than one cent per pound of
meat, poultry, and egg products.” Congress has never agreed with these proposals,
responding that assuring the safety of the food supply is an appropriate function of
taxpayer-funded federal government. The appropriations committees also have
reminded the Administration that user fee proposals are within the purview of the
CRS-20
authorizing committees, not theirs. FSIS has been authorized since 1919 to charge
user fees for holiday and overtime inspections. Income from existing user fees (plus
trust funds) will add approximately $123 million to the FSIS program level (beyond
appropriated levels) in FY2006, according to USDA.
Within the House-passed bill’s $837.3 million for FSIS is an increase of $6.7
million for food defense activities, including $2.8 million for agency participation in
the Food Emergency Response Network, $2.5 million to upgrade laboratory
capabilities to evaluate a broader range of threat agents, $1 million for related
training, and $417,000 for biosurveillance, according to the House report. Also
within the total is an increase of $2.2 million to enable FSIS to hire 22 additional
Consumer Safety Inspectors to help free veterinary-trained inspectors for more
critical food safety responsibilities, as proposed by the Administration. The House
report requests periodic updates on the performance of the initiative, including its
effect on public health.
Within the Senate-reported bill’s FSIS appropriation are the following increases
for activities related to food defense: $209,000 for biosurveillance, $1.25 million for
enhanced laboratory capabilities, and $504,000 for biosecurity training. The Senate
committee report directs that no less than $2 million be used for baseline
microbiological studies of raw meats and poultry, targeting the prevalence of
pathogens and microorganisms as indicators of process control. The Senate total also
includes an increase of more than $2.2 million for front-line inspection costs, and
provides $5 million for FSIS to complete incorporation of the Humane Activities
Tracking system into all U.S. slaughter plants. The Senate committee report states
that its appropriation provides the requested amount to maintain the 63 positions
related to enforcement of the Humane Methods of Slaughter Act.
Horse Slaughter Amendment. During the June 8, 2005, floor debate on the
appropriation, the House approved, 269 to 158, an amendment by Representative
Sweeney to prohibit funds to pay for the inspection of horses. Currently, three
foreign-owned plants in two states (Texas and Illinois) slaughter a total of
approximately 66,000 horses annually for human food. The meat is exported
primarily for consumption in parts of Europe and Japan. A number of horse
protection groups have been seeking a ban on such slaughter for several years; a
Sweeney bill (H.R. 503) with the same objective has been introduced in the 109th
Congress. (For more information, see CRS Report RS21842, Horse Slaughter
Prevention Bills and Issues.)
Marketing and Regulatory Programs
Animal and Plant Health Inspection Service (APHIS). The largest
appropriation for USDA marketing and regulatory programs goes to APHIS, the
agency responsible for protecting U.S. agriculture from domestic and foreign pests
and diseases, responding to domestic animal and plant health problems, and
facilitating agricultural trade through science-based standards. The House bill
provides a total of $847.5 million for APHIS in FY2006, below the Administration’s
FY2006 request of $860.2 million, and above the FY2005 enacted level of $813
million. The Senate-reported version provides $812.8 million, slightly below the
FY2005 level.
CRS-21
Within APHIS activities related to protecting U.S. food and agriculture from
both intentional and unintentional threats, the Senate-reported appropriation generally
(but not completely) tracks the amounts for individual programs that were provided
for FY2005 — rather than the increases (and for a few programs, the decreases)
recommended by the Administration for FY2006.
More specifically, the Senate version reduces funding for boll weevil
management from $45.6 million in FY2005 to $39.9 million in FY2006. However,
the Administration had requested just $14.3 million for the boll weevil program, and
the House-passed version contains $38.6 million. For Johne’s disease, the Senate-
reported measure includes $18.6 million in FY2006, nearly identical to the FY2005
level but well above the Administration’s FY2006 request of $3.2 million. The
House-passed bill contains $7.8 million for Johne’s disease in FY2006.
The House-passed measure at least partially funds a variety of APHIS increases
in pest and disease activities that were requested by the Administration, including
expanded funding for plant pest detection, and for animal health threat monitoring,
surveillance, and response activities. These and other “food defense” increases
would be partly offset by proposed reductions in several more traditional APHIS pest
and disease programs (see above).
House floor debate on the measure reflected several Members’ concerns
regarding the adequacy of funding to address a number of emerging plant pests. The
House Appropriations Committee had budgeted approximately $100.1 million for
APHIS’s emerging plant pests program. However, several Members argued that
more was needed to deal with such growing problems as the emerald ash borer in
Michigan, Ohio, and Indiana; the Asian long-horned beetle in states like New York
and New Jersey; and sudden oak death in the West and elsewhere. Approved, 226
to 201, was a floor amendment by Representative Weiner to add $18.9 million to
APHIS’s emerging plant pest program budget in FY2006. To offset this increase, the
amendment reduces spending for USDA’s Common Computing Environment by $21
million.
The House also approved by voice vote another floor amendment, by
Representative Schwarz, expressing the sense of Congress that USDA should use its
standing authority under the Plant Protection Act (7 U.S.C. 7772) to transfer funds
from the Commodity Credit Corporation (CCC) to implement APHIS’s strategic plan
for eradicating the emerald ash borer. Although transfers from the CCC to APHIS
to deal with pests and diseases have been common, particularly in recent fiscal years,
the Office of Management and Budget (OMB) reportedly has shown increasing
reluctance to approve them. The Senate Appropriations Committee’s report also
encourages the Secretary to continue using CCC funds to respond to plant and animal
health threats, including the payment of compensation to certain producers for related
losses when necessary. (See CRS Report RL32504, Funding Plant and Animal
Health Emergencies: Transfers from the Commodity Credit Corporation.)
Neither the House nor Senate bill includes the Administration’s proposal for
new user fees for animal welfare inspection, totaling nearly $11 million in FY2006,
to replace an equivalent amount of appropriated funds. The Administration’s
proposal appears to be similar to past proposals offered in FY2003, FY2004, and
CRS-22
FY2005, to apply such user fees directly to APHIS accounts (rather than to Treasury).
Congress has not acted on the requests in the past.
BSE. Most of USDA’s BSE-directed funding is through APHIS, one of several
USDA and non-USDA agencies involved in protecting the U.S. cattle herd and
consumers from the introduction or spread of the disease (BSE stands for bovine
spongiform encephalopathy, or “mad cow disease”).
According to the House report, $17.2 million is being provided for APHIS’s
BSE activities (primarily testing and surveillance), the full amount requested. The
Senate report also notes that $17.2 million is being provided to continue BSE
surveillance, plus another $1 million for the Comprehensive Surveillance Program.
The agency had said it expected to test 40,000 animals for BSE during FY2006,
although the report in June 2005 of a U.S.-born cow with BSE — which had been
declared negative for the disease seven months earlier — may have created
uncertainty about next year’s surveillance plans. Under a special 12-18-month BSE
surveillance program launched in June 2004, APHIS has tested 395,000 cattle
(through June 23, 2005). This special program was due to end in FY2005. (Other
agencies within the Department are earmarking additional funds for BSE-related
research, such as on improved diagnostic tests for prions in animal tissue and feeds;
on transmissibility of prions among livestock and wildlife species; on differentiating
BSE strains; and on determination of the pathobiology of disease infection.)
Both the House-passed and Senate-reported bills also designate approximately
$33 million of the APHIS appropriation for the agency’s continued development of
a National Animal Identification System (NAIS), as requested. The House
committee said that it expects APHIS to submit quarterly progress reports that cover
data usage, confidentiality, and cost issues; the Senate committee report expects
APHIS to consult with private industry and to include industry components in a
national ID program, among other things. Shortly after the BSE-positive cow was
discovered in December 2003 in Washington state, USDA had promised to accelerate
work on such a national system, so that in case of an animal disease outbreak of any
type, suspect animals’ whereabouts could be traced within 48 hours. The House also
directs that no less than $2 million be provided for a cooperative agreement with the
Wisconsin Livestock Identification Consortium, and no less than $600,000 for the
Farm Animal Identification and Records program, both to work in support of a
national system. The Senate-reported version earmarks some funds for these
programs as well. USDA since 2004 has funded a variety of state and tribal agencies
to conduct pilot projects and data in preparation for a national system. (See CRS
Report RL32012, Animal Identification and Meat Traceability.)
Other non-USDA agencies also have BSE-related responsibilities. For example,
the Food and Drug Administration (FDA) at the Department of Health and Human
Services (HHS) regulates the safety of all human foods other than meat and poultry,
human drugs, and animal feed ingredients. Both the House-passed and Senate-
reported versions provide, within the total available for FDA, the full $29.6 million
requested by the Administration for the agency’s BSE activities in FY2006, and the
same level as in FY2005. Most of the funding is for enforcement of FDA’s animal
feeding restrictions (imposed in 1997 to ensure that potentially BSE-infective
materials are not introduced). FDA currently is considering whether to tighten
CRS-23
further the existing feed restrictions; it also wants to use FY2006 funds to continue
to identify risky materials and to conduct research to decontaminate and deactivate
BSE prions. (See CRS Issue Brief IB10127, Mad Cow Disease: Agricultural Issues
for Congress.)
Agricultural Marketing Service (AMS). AMS is responsible for promoting
the marketing and distribution of U.S. agricultural products in domestic and
international markets. The House recommends a total of $95.4 million for AMS
programs, which includes $79.3 million in direct budget authority plus a $16.1
million transfer from USDA’s Section 32 account, which AMS administers.2 The
Senate-reported version contains $96.5 million. The Administration requested new
spending of $101.5 million for the agency in FY2006; the FY2005 enacted level is
$94.7 million.
Within the AMS total, the Administration requested and the House approved
$1.3 million for payments for state marketing activities, compared with the FY2005
enacted level of $3.8 million. The difference reflects a specialty markets grant made
in FY2005 to the Wisconsin Department of Agriculture as well as a grant to the
Florida Department of Citrus. The Senate-reported version contains $3.8 million,
and continues the Wisconsin project.
Approved during House committee markup, as part of a package of amendments
by the Chairman, was a new appropriation of $1 million for AMS specifically for the
Farmers Market Promotion Program. Authorized by Section 10605 of the 2002 farm
bill (7 U.S.C. 3005) but not previously funded, the program requires USDA to
provide grants for establishing, improving, and promoting farmers’ markets and other
direct marketing activities. (See CRS Report RS21652, Farmers’ Markets: The
USDA Role.)
Neither the House nor Senate measure recommends the Administration’s
proposed plan for new AMS user fees, to replace nearly $3 million in appropriated
funding for the development of commodity grade standards. The Administration has
argued that users of commodity grading, who already pay user fees for such services,
should also be charged for the development of the grades themselves, because they
are the direct beneficiaries. However, the committee said it will consider such fees
if they achieve authorization. New fees would be in addition to the estimated $204
million in existing user fees paid by industry for various AMS activities, which are
not included in the above AMS budget authority totals.
Country-of-Origin Labeling (COOL). AMS asked for an increase of $3.1
million specifically to implement oversight of the mandatory country of origin
labeling program that currently is scheduled to take effect in 2006 for many retailers
2 Section 32 funding comes from a permanent appropriation equivalent to 30% of annual
U.S. Customs receipts. AMS uses these additional Section 32 monies (also not reflected in
the above totals) to pay for a variety of programs and activities, notably child nutrition, and
government purchases of surplus farm commodities not supported by ongoing farm price
support programs. For an explanation of this account, see CRS Report RS20235, Farm and
Food Support Under USDA’s Section 32 Program.
CRS-24
of fresh meats, fruits, vegetables, and peanuts. This amount is specifically included
in the Senate report accompanying its bill. On the House side, neither the bill nor the
accompanying report explicitly mentions this increase. Rather, the measure includes
language (Section 769) prohibiting use of funds to implement COOL for meat or
meat products. According to observers, the language is intended to postpone
implementation of the meat COOL. Pending in the House Agriculture Committee
is legislation (H.R. 2068) introduced by its chairman that would replace the
mandatory program for meats with a voluntary program. (See CRS Report 97-508,
Country of Origin Labeling for Foods.)
A House floor amendment by Representative Rehberg to delete the language in
Section 769 and essentially proceed with mandatory COOL implementation was
defeated by a vote of 187 to 240. Whether the issue will arise on the Senate floor
during debate on the FY2006 appropriation is unclear at this time. In the 108th
Congress, the Senate was viewed as more supportive of retaining a mandatory COOL
program than the House.
Grain Inspection, Packers, and Stockyards Administration (GIPSA).
One branch of this agency establishes the official U.S. standards, inspection and
grading for grain and other commodities. Another branch ensures fair-trading
practices in livestock and meat products. The latter branch has been working to
improve its understanding and oversight of livestock markets, where increasing
concentration and other changes in business relationships (such as contractual
relationships between producers and processors) have raised concerns among some
producers about the impacts of these developments on farm-level prices.
The House-passed bill provides $38.4 million for GIPSA in FY2006; the
Senate-reported version contains a similar amount. This appropriation would be
below the Administration’s proposed program level of $40.4 million, but higher than
the approximately $37 million appropriated for FY2005. Neither bill recommends
replacing an estimated $24.7 million of GIPSA’s appropriation with user fees, as
proposed by the Administration. USDA said in its budget materials that new
legislation is being proposed to permit collection of fees for grain standardization and
Packers and Stockyards licensing activities. For FY2005, the Administration
similarly had proposed, but Congress did not adopt, new user fees of more than $29.4
million.
The House report reiterates its interest in GIPSA’s ongoing study of livestock
marketing practices, which began with a $4.5 million appropriation in F2003 and is
now expected to be completed in mid-2006. The committee directs GIPSA to report
regularly on the study’s progress. The committee expresses concern about the
confidentiality, use, and costs of the data collected and asks that GIPSA’s reports
address these issues.
Rural Development
Three agencies are responsible for USDA’s rural development mission area: the
Rural Housing Service (RHS), the Rural Business-Cooperative Service (RBS), and
the Rural Utilities Service (RUS). An Office of Community Development provides
community development support through Rural Development’s field offices. The
CRS-25
mission area also administers the rural portion of the Empowerment Zones and
Enterprise Communities Initiative and the National Rural Development Partnership.
The Senate and House bills recommend $2.534 billion and $2.471 billion,
respectively, for USDA’s discretionary rural development programs. The Senate
measure is $120.7 million more than enacted for FY2005, $76.3 million more than
requested, and $63.5 million more than the House bill. The recommendation would
support $11.732 billion in direct and guaranteed loans ($1.384 billion more than
FY2005), as well as numerous grant and technical assistance programs, and salaries
and expenses. This recommended loan authorization level is $3.158 billion more
than requested. Separately, as was the case in FY2005, both the Senate and House
bills recommend cancelling mandatory funding for various rural development
programs authorized in the 2002 farm bill (see Table 4, below). Several of these
programs, however, are recommended for funding through discretionary
appropriations, although at lesser amounts than the mandatory authorization.
Like the House bill, the Senate measure does not recommend the
Administration’s proposal that several rural development programs be consolidated
with other economic development programs into a new community development
program administered by the U.S. Department of Commerce (the Strengthening
America’s Communities Initiative).
The House bill encourages the RBS to implement a loan guarantee fee for
Business and Industry guaranteed loans. The measure also directs the USDA to
promulgate final rules for implementing the Household Water Well System Grant
Program and recommends funding a pilot program to train and certify inspectors in
well construction and maintenance. The Senate measure does not make these
recommendations. The Senate bill recommends $1.5 million for the Denali
Commission to address deficiencies in solid waste disposal sites. The House bill did
not make a similar recommendation.
Rural Community Advancement Program (RCAP). RCAP, authorized
by the 1996 farm bill (P.L.104-127), consolidates funding for 12 rural development
loan and grant programs into three funding streams. The Senate-reported bill
recommends $705.1 million for RCAP, $5.2 less than enacted for FY2005 and
$183.4 more than requested. The House bill recommends about $47 million less
($657.4 million) than the Senate measure. Virtually all of the difference between
House and Senate measures is accounted for by the Senate recommendation of $86.7
million for the community facilities account versus $38.0 million recommended for
that account in the House measure. The Senate measure is approximately $3 million
less than enacted for the community facilities account for FY2005 ($89.2 million).
The Senate bill recommends approximately the same as the House measure for the
rural utilities account ($528.1 million and $531.2 million, respectively) and for the
business development account ($90.2 million and $88.2 million, respectively).
FY2005 funding enacted for the utilities account and the business development
account was $552.7 and $74.2, respectively.
As in past years, the Senate bill makes directed spending recommendations
within the RCAP accounts. The level of this recommended directed funding from
the various RCAP accounts is not significantly different from similar
CRS-26
recommendations enacted for FY2005 or from the House recommendations, but is
appreciably higher than requested by the Administration (see Table 5, below).
Table 4. Reductions in Mandatory Rural Development Programs
($ million)
FY2005
FY2006
Difference
Enacted
FY2006
FY2006
Authorized
from
(P.L. 108-
House
Senate
Level under
FY2006
Program
447):
Bill
Bill
2002 Farm
Authorized
Allowed
H.R. 2744 H.R. 2744
Bill
Level
Level
Enhancement of
$0
$50
$0
$0
- $50
Rural Access to
Broadband
(§ 6103)
Rural Business
$11
$100
$0 $0
-
$89
Investment
Program
(§ 6029)
Rural Strategic
$0
$100
$0
$0
$100
Investment
Program
(§ 6030)
Value-added
$15.5*
$120
$55.5*
$15.5*
- $120
Product Market
Development
Grants
(§ 6401)
Rural Firefighters
$0
$40
$0
$0
- $40
(§ 6405)
Renewable Energy
$23*
$23
$23*
$23*
- $23
Systems
(§ 9006)
Bioenergy Program
$36
$150
Not to
Not to
- $90
(§9010)
exceed
exceed
$60
$60
Biomass R&D
$14
$14
Not to
Not to
- $2
(§9008)
exceed
exceed
$12
$12
Source: Congressional Budget Office
* Funding provided in the bill is discretionary, not mandatory as authorized.
CRS-27
Table 5. Directed Spending in the Rural Community
Advancement Program (RCAP) Accounts
($ million)
FY2006
FY2006
FY2006
FY2005
Program
Budget
House Bill
Senate Bill
Enacted
Request
H.R. 2477
H.R. 2477
Water and waste disposal
$25.0
$9.0
$24.0
$26.0
loans and grants for Native
Americans
Water and waste disposal
$25.0
$11.8
$25.0
$25.0
loans and grants for Colonias
Economic Impact Initiative
$20.7
$0
$0
$20.0
Grants
Rural Community
$6.3
$0
$6.2
$6.5
Development Initiative
Grants
High Energy Costs Grants
$27.7
$0
$0
$28.0
Water and waste disposal
$26.0
$11.8
$0
$26.0
loans and grants to Alaska
Native Communities
Water and waste water
$18.2
$16.2
$17.5
$18.2
technical assistance
Well systems
$0.992
$0
$0
$0.992
Circuit Rider Program
$13.5
$9.5
$14.0
$13.5
Rural Business Enterprise
$40
$0*
$40.0
$40.0
Grants
Rural Business Opportunity
$3.0
$0*
$3.0
$3.0
Grants
Business and Industry
$29.4
$44.2
$44.2
$44.2
Guaranteed Loans (subsidies)
Empower Zones/Enterprise
$22.2
$13.4*
$0
$0
Communities and REAP
Delta Regional Authority
$1.0
$0
$0
$3.0
* The Administration has requested that these programs be consolidated into the Strengthening
America’s Communities Initiative.
Rural Business-Cooperative Service. For FY2006, the Senate and House
bills recommend an appropriation of $86.7 million and $135.3 million, respectively,
for RBS loan subsidies and grants. The Senate recommendation includes $25.0
million for Rural Cooperative Development Grants, $39.0 million less than the
House bill recommendation. Both the House and Senate bills recommend $59.2
million in loan authorization levels, nearly the same as enacted for FY2005 and the
CRS-28
same as requested. Total recommended budget authority in the Senate measure,
however, is $29.4 more than requested.
As noted in Table 4, above, the House and Senate bills also support the
Administration’s request and recommend prohibiting the use of authorized
mandatory funds for the $40.0 million Value-Added Agricultural Product
Development grants in FY2006, as in FY2005. The House bill recommends $55.5
million in discretionary funding, an increase of $40.0 million over the amount
enacted for FY2005 and requested. The Senate bill, however, recommends $15.5
million in discretionary funding for the program. As in FY2005, both the House and
Senate measures also recommend prohibiting the use of the $23.0 million in
authorized mandatory funds for the Renewable Energy Grants program, and request
$23.0 million in discretionary funds instead. This is the same as enacted for FY2005
and $13.0 million more than requested. Consistent with the Administration’s
request, both the House and Senate bills again recommend that $100.0 million for the
Rural Strategic Investment Fund be cancelled for FY2006.
For the Empowerment Zone/Enterprise Community Program, the Senate
measure recommends $12.4 million, the same as enacted for FY2005 and $12.4
million more than the $0 requested. The House measure recommends $10.0 million
for the program. Neither the House nor Senate bills recommends directed spending
for the EZ/EC programs through the RCAP accounts (Table 5). Thus, the House and
Senate are funding the EZ/EC program directly rather than replacing funds as the
Administration requested, or supplementing funds as in previous years, by directing
spending from the RCAP account.
Rural Utilities Service (RUS). The Senate and House bills recommend
budget authority of $105.6 and $92.5 million, respectively, for RUS (compared with
$102.2 million enacted in FY2005). The Senate measure would support an estimated
FY2006 loan level of $6.745 billion, and the House measure $5.508 billion
(compared with $5.606 billion estimated for FY2005).3 The House recommended
loan authority is $1.959 billion more than requested and the Senate level is $3.158
billion more. Both the Senate and House measures recommend $6.2 million in loan
subsidies for the rural electrification program. This would support a loan
authorization level of $4.300 billion under the House recommendation and $5.500
billion under the Senate measure. The Senate measure includes a higher loan
authorization level than the House bill for Federal Financing Bank loans. For
telecommunications loans, the Senate and House bills recommend approximately the
same loan authorization levels for the telecommunications loans. This program level
is about $176.0 million more than enacted for FY2005 and $25.0 million more than
requested.
Both the House and Senate bills again recommend cancelling $20.0 million in
mandatory funding for the Enhancement of Access to Broadband Service authorized
in the 2002 farm bill. For the broadband loan program, the Senate measure
recommends $11.8 million in subsidies, about $1.8 million more than the House bill
3 These figures do not include water and waste water loans and grants also administered by
RUS. Water and waste disposal loans and grant are included under the RCAP appropriation.
CRS-29
and the requested amount. The Senate recommended loan subsidy level supports a
program level of $550.0 million. This program level is $86.1 million more than the
House bill and $191.0 million more than requested. The Senate measure
recommends $10.0 million for broadband grants, $1.0 million more than the House
recommendation and nearly the same as the enacted FY2005 level. The
Administration requested no funding for the grants program. For the distance
learning and telemedicine program, the Senate and House bills recommend $35.0 and
$25.0 million, respectively, in grants, nearly the same as enacted for FY2005. The
House measure also recommends $50.0 million in direct loan authorization for the
telemedicine and distance learning program, the same amount enacted for FY2005,
while the Senate measure requested no loan authorization. The Administration
requested no loan authorization for the program for FY2006.
Rural Housing Service. To support a total of $4.928 billion in rural housing
loan authority, the Senate bill recommends an FY2006 appropriation of $1.471
billion, approximately $25.0 million more than recommended by the House measure
and about $102.0 million more than enacted for FY2005. The Administration had
requested $1.626 billion. Total recommended loan authorization in the Senate bill
is $244.3 more than enacted for FY2005 and $38.0 million less than requested.
The Senate measure recommends $1.000 billion in direct loan authorization for
the Section 502 single family housing program, supported by a requested
appropriation of $113.9 million. The House bill recommends $140.0 million more
in loan authorization and approximately $17 million more in budget authority. For
Section 502 guaranteed housing loans, both the Senate and House bills recommend
$40.9 million in subsidies, approximately $7.6 million more than enacted for
FY2005, to support a program level of $3.681 billion. For Section 515 rental
housing loan subsidies, the House bill recommends requests $45.9 million,
approximately the same as enacted for FY2005 and $4.5 million more than the House
measure. For Section 504 housing repair grants, the Senate and House bills
recommend approximately $10 million, nearly the same as enacted for FY2005 and
as requested. Rental assistance payments for Section 521 housing would increase to
$644.1 million under both the House and Senate bill recommendation, up from
$581.4 million enacted for FY2005. Senate recommended budget authority for farm
labor housing loan subsidies (Section 514) and farm housing grants (Section 516)
would decrease by $4.2 million over the FY2005 enacted amount to $29.6 million.
For more information on USDA rural development programs, see CRS Report
RL31837, An Overview of USDA Rural Development Programs.
Domestic Food Assistance
Funding for domestic food assistance represents the majority of USDA’s budget.
The House-passed and Senate-reported bills for FY2006 recommend a total of $58.70
billion, and generally conform to the Administration’s request for $58.96 billion.
The main reason for the lower House/Senate amount is a reduced appropriation for
the Special Supplemental Nutrition Program for Women, Infants, and Children (the
WIC program) based on newer estimates from the Administration.
CRS-30
The Administration’s FY2006 appropriations (new budget authority) request
for domestic food aid programs administered through the USDA represents $6.5
billion increase over the FY2005 amount ($52.488 billion).4 However, the
Administration’s budget anticipates that actual spending (obligations) will increase
to a lesser degree — about $4.4 billion, from $52.068 billion in FY2005 to $56.423
billion in FY2006.5 The net difference between the appropriation and spending
amounts is accounted for by additional “contingency” appropriations (e.g., $3 billion
for food stamps), offset by spending financed from money available from prior fiscal
years and other USDA accounts (e.g., permanent appropriations and commodity
purchases).
The domestic food aid budget request generally is derived from Administration
projections of program caseloads and inflation-indexed benefit levels; most are
“entitlement,” not “discretionary,” programs. The budget, and the House-passed and
Senate-reported bills, effectively propose to “fully fund” all but one domestic food
assistance effort based on Administration estimates as to the need for aid; the
Commodity Supplemental Food program would serve fewer people than in FY2005.
However, linked to its budget, the Administration also has put forward a number of
new program initiatives that would affect spending — e.g., constraining the number
of participants in the Food Stamp program and the WIC program using revised
eligibility rules, ending special bison meat purchases.
Programs under the Food Stamp Act. Appropriations under the Food
Stamp Act provide funding for (1) the regular Food Stamp program, (2) a Nutrition
Assistance Block Grant for Puerto Rico (in lieu of food stamps), (3) commodities and
administrative expense aid through the Food Distribution Program on Indian
Reservations (FDPIR), an alternative to food stamps for living on or near Indian
reservations, (4) small nutrition assistance grant programs in American Samoa and
the Commonwealth of Northern Mariana Islands, (5) commodities for The
Emergency Food Assistance Program (TEFAP), and (6) the Community Food
Project.
For Food Stamp Act programs, the House-passed bill provides the
Administration-requested appropriation, effectively adopting the Administration’s
spending projections (discussed below). The FY2006 budget asks for a total
appropriation of $40.711 billion, an increase of $5.5 billion over the FY2005 figure
4 Not included in these figures are permanent appropriations, the value of commodities
required to be purchased (under “Section 32” authority) for child nutrition programs, and
the value of “bonus” commodities acquired for agriculture support reasons and donated to
various food assistance programs. These items are recognized in, but generally not include
as part of, the regular appropriations process; they totaled to $901 million in FY2005 and
are expected to add up to $918 million in FY2006.
5 Not included in these spending totals are purchases of “bonus” commodities acquired for
farm-support reasons, obligations made to replenish the contingency fund for the Special
Supplemental Nutrition Program for Women, Infants, and Children (the WIC program), and
spending on food stamp benefits made from funds provided by states. These items total to
over $500 million in FY2005 and FY2006.
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of $35.155 billion. This includes $3 billion for a “contingency reserve” in case
current estimates of need prove too low.
The Administration’s Food Stamp Act spending estimate for FY2006 is $37.739
billion, a $3.5 billion increase over the FY2005 level. Spending for the regular Food
Stamp program is expected to rise by $3.5 billion, to $36.001 billion in FY2006.
Puerto Rico’s nutrition assistance grant will go to $1.516 billion, up $21 million from
FY2005. Overall spending for the FDPIR is anticipated to decline from $82 to $78
million.6 Costs for the American Samoa and Northern Mariana Islands programs are
effectively unchanged (at $14 million in total). And the FY2006 budgeted amounts
for TEFAP commodities and the Community Food Project are the same as for
FY2005 — $140 million and $5 million respectively.7
As with the House-passed bill, the Senate-reported version would appropriate
the Administration’s request ($40.711 billion). But, unlike the House bill, it
earmarks $4 million of this amount for a special bison meat purchase program for the
FDPIR, increasing spending on the FDPIR to $82 million in FY2006.
Child Nutrition Programs. Child nutrition programs would be appropriated
$12.416 billion for FY2006 under the Administration’s budget, up $634 million from
$11.782 billion in FY2005. These activities include the School Lunch and Breakfast
programs, the Child and Adult Care Food program, the Summer Food Service
program, after-school and outside-of-school nutrition programs, the Special Milk
program, food commodities required to be bought for schools and other providers,
assistance to states with their child-nutrition-related administrative costs, and
nutrition education (e.g., “Team Nutrition”), food safety, and program integrity
initiatives.
The House-passed and Senate-reported bills both provide a slightly smaller-
than-requested appropriation — $12.412 billion. Although this amount eliminates
$4 million for a proposed program integrity study of the Child and Adult Care Food
program, it effectively adopts the rest of the Administration’s spending projections.
In addition, the Senate-reported bill includes several special child nutrition program
initiatives (see “Program Initiatives in the FY2006 Budget,” below).
Under the House/Senate scenario, the spending estimate for FY2006 (including
funding sources other than regular appropriations such as the value of commodities
purchased from different USDA budget accounts, permanent appropriations, and
carryover funds from previous years) is $12.909 billion ($4 million below the
Administration’s spending estimate). This is an increase of $541 million over
6 Under the Administration’s budget and the House-passed bill, FY2006 money for the
FDPIR is scheduled for a decrease because of the proposed elimination of a special bison
meat purchase project and the availability of commodity inventory carryover from FY2005
that can be used for the FY2006 program. Actual participation is expected to increase.
7 An additional $50 million a year for TEFAP distribution/administrative costs is available
from the Commodity Assistance budget account (the same as FY2005), and the House-
passed and Senate-reported bills allow up to $10 million of the $140 million appropriated
for TEFAP commodities to be used for distribution/administrative expenses.
CRS-32
FY2005 estimates and includes money ($38 million) for initiatives that received
permanent appropriations under the 2004 Child Nutrition and WIC Reauthorization
Act (P.L. 108-265) — the Food Service Management Institute, an information
clearinghouse, a fresh fruit and vegetable program for selected schools, various
demonstration projects, and efforts to increase integrity in child nutrition programs.
It does not include money for an integrity project related to the Child and Adult Care
Food program; nor does it include specific funding for an authorized pilot expanding
eligibility for free school meals (although House report language “encourages” the
USDA to carry out the project).
The WIC Program. The Special Supplemental Nutrition Program for
Women, Infants, and Children (the WIC program) would have received an FY2006
appropriation of $5.510 billion under the Administration’s original budget request,
a $275 million increase over FY2005. However, as noted in the House and Senate
reports on the FY2006 appropriation, the Administration has revised its projection
of WIC participation and food costs downward. As a result, the House-passed and
Senate-reported bills appropriate $5.257 billion, a $22 million increase from FY2005.
They also (1) include money to replenish a $125 million “contingency reserve” (in
case current cost projections are too low), (2) contemplate carrying a small amount
of unused funding into FY2007, (3) rescind $32 million in unobligated carryover
funds from FY2005, (4) earmark $14 million for breastfeeding support initiatives,
and (5) in the Senate-reported version, earmark $20 million for state management
information systems.
Commodity Assistance Programs. The commodity assistance budget
account covers four program areas: (1) the Commodity Supplemental Food Program
(CSFP), (2) funding for TEFAP distribution/administrative costs (in addition to
commodities provided through money under the Food Stamp Act account and
“bonus” commodities acquired for farm-support purposes), (3) two farmers market
programs for WIC participants and seniors, and (4) food donation programs for
disaster assistance, aid to certain Pacific Islands affected by nuclear testing, and
commodities supplied to Older Americans Act grantees operating the Nutrition
Services Incentive program for the elderly.
For FY2006, the Administration proposes a total appropriation of $178 million
for this account, up only slightly from the $177 million available in FY2005. Under
this budget account, the actual spending level for FY2006 is anticipated to total just
over $195 million (incorporating funding supported by other budget accounts). This
is roughly the same spending level as FY2005 and includes $107 million for the
CSFP,8 $50 million for TEFAP distribution/administrative costs, $35 million for the
two farmers market nutrition programs ($20 million for the WIC component and $15
million for the seniors component), and $4 million for other food donation activities.
8 Total spending to support the CSFP (including funds and commodities carried over from
FY2005) is projected to rise by $2 million to $113 million in FY2006. However, despite
this increase, the FY2006 CSFP budget effectively dictates a significant caseload reduction
of at least 45,000 persons because of rising food and administrative costs.
CRS-33
Both the House-passed and Senate-reported bills provide a small increase over
the Administration’s request. The House includes $179 million, and the Senate
appropriates $180 million. In both cases the additional dollars ($1 million and $2
million) are to be available for the CSFP.9
Nutrition Program Administration. This budget account covers money
for federal administrative expenses related to domestic food assistance programs and
special projects. For FY2006, the Administration has asked for an appropriation (and
spending) of $141 million, up $1.9 million from FY2005. The House-passed and
Senate-reported bills provide the amount asked for by the Administration.
In addition, this account includes money for the Congressional Hunger Center;
$2.5 million was appropriated for FY2005. The Administration’s FY2006 budget
does not request funding for the center. However, in Title VII of the House-passed
and Senate-reported bills, $2.5 million is appropriated.
Program Initiatives in the FY2006 Budget. In addition to ending funding
for the Congressional Hunger Center (noted above), the Administration has proposed
several initiatives that would create budget savings, change the terms under which
domestic food aid programs operate (potentially affecting participation), or add new
funding. These proposals include (1) constraining food stamp spending by ending
eligibility for some households that would not meet regular food stamp tests but
receive other public assistance benefits (estimated to save $57 million in FY2006 and
just over $100 million a year in later years and affect some 300,000 persons yearly),
(2) authorizing state agencies that administer the Food Stamp program to access the
National Database of New Hires to help verify food stamp eligibility (estimated to
save $2 million a year), (3) continuing current food stamp rules that do not count
special military pay for those deployed to combat zones (estimated to cost $1 million
in FY2006), (4) ending a special bison meat purchase program for the FDPIR
(estimated to save $4 million in FY2006), (5) capping the proportion of state WIC
grants that can be spent on nutrition services and administration at 25%, (6) imposing
an income limit (250% of the federal poverty guidelines) on those who can get WIC
services/benefits automatically because of their participation in the Medicaid
program, (7) continuing a rule barring approval of any new retailers in the WIC
program whose major source of revenue is derived from the WIC program (so-called
“WIC-only” stores), and (8) appropriating $3 million for a WIC performance
measurement project.
The House-passed bill adopts the food stamp military pay proposal, ending the
special bison meat purchase project, imposing an income limit on WIC/Medicaid
recipients, and a continuation of the bar on new WIC-only stores. The Senate-
reported bill incorporates the military pay proposal and continuing the bar against
WIC-only stores. Other items on the Administration’s agenda may be taken up by
the appropriate authorizing committees (e.g., ending automatic food stamp eligibility
for some public assistance recipients) to the extent that they require a change in law
rather than an appropriation.
9 These increases would not reverse the expected caseload reduction noted in the preceding
footnote.
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In addition to the provisions noted above, several special provisions were added
to the Senate-reported bill. These (1) make seven more states eligible for so-called
“Lugar” status in the Summer Food Service program (i.e., allowing reduced
documentation requirements for summer project sponsors), (2) provide $2 million to
expand the program providing fruits and vegetables in selected schools to two
additional states, (3) continue to allow the reallocation of unused audit funds in the
Child and Adult Care Food program, and (4) make federal money supporting
development of local school “wellness” policies available in October 2005 (rather
than July 2006).
Food and Drug Administration (FDA)
The Food and Drug Administration (FDA), an agency of the Department of
Health and Human Services (HHS), is responsible for regulating the safety of foods,
and the safety and effectiveness of drugs, biologics (e.g., vaccines), and medical
devices. For FY2006, the House passed a program level of $1.868 billion, slightly
below the President’s request of $1.882 billion, but a $67 million (3.7%) increase
over the enacted FY2005 level of $1.801 billion. The Senate committee reported out
a level of $1.874 billion, $7.8 million below the budget request but $73 million
(4.1%) over the FY2005 level. These totals represent a combination of congressional
appropriations under two categories: (1) salaries and expenses, and (2) buildings and
facilities and various user fee authorizations.
In FDA’s annual appropriation, Congress sets both the total amount of
appropriated funds and the level of user fees to be collected that year. For
appropriated funds for salaries and expenses, the House agreed to $1.481 billion for
FY2006, $11.7 million (0.8%) less than the President’s budget request of $1.493
billion but $30.9 million (2.1%) more than the FY2005 appropriation of $1.450
billion. The Senate committee agreed to $1.485 billion, $7.7 million (0.5%) less than
the President’s request but a $34.9 million (2.4%) increase over the FY2005
appropriation. For user fees, both the House and Senate authorized FDA to collect
$381.8 million, an increase of $31.3 million (8.9%). User fees in three major
programs that cover prescription drugs, medical devices, and animal drugs would
account for $357 million of the FY2006 total (equal to the President’s request), with
the remaining $24.8 million coming from mammography clinics certification and
export and color certification fees.
The House recommends a $5 million appropriation for the maintenance of
buildings and facilities in FY2006, but the Senate committee reports a $7 million
appropriation, the same as the President’s request. The FY2005 appropriation,
differing from earlier years’ appropriations, did not include maintenance funding.
FDA, therefore, absorbed the FY2005 costs of maintaining its facilities within its
program funds. In addition to recommending funding for buildings and facilities, the
Senate committee in the general provisions has prohibited funds to be used to close
or relocate FDA’s Division of Pharmaceutical Analysis in St. Louis, Missouri. The
committee also gives the Secretary of Health and Human Services authority to
relinquish all or part of the lands and properties of the National Center for
Toxicological Research and the Arkansas Regional Laboratory.
CRS-35
Counterterrorism
The House’s recommendation for counterterrorism for FY2006 is $257.5
million, $13.4 million (5.5%) more than the President’s request of $244.1 million,
and a 20.3% increase over the $214 million enacted for FY2005 (see Table 6). This
funding is part of each program center’s request and is included in the total
appropriation request for FDA.
Table 6. FDA Counterterrorism Funding
($ thousand)
FY2006
FY2006
FY2004
FY2005
FY2006
Program
House-
Senate-
Enacted
Enacted
Request
passed
reported
Food Safety and Defensea
$115,660
$149,952
$180,026
$192,466
$196,602
Drugs
19,061
21,884
21,884
21,884
21,884
Biologics
25,544
25,340
25,340
25,340
25,340
Device & Radiological Health
5,731
5,685
5,685
5,685
5,685
Toxicological Research
3,173
3,148
3,148
3,148
3,148
Other Activities
1,409
1,398
1,398
1,398
1,398
Rent 6,660
6,607
6,607
6,607
6,607
Total $177,238
$214,014
$244,088
$256,528
$260,664
Source: FDA’s Office of Budget and Budget Formulation, July 5, 2005.
a. Food Safety and Defense category includes funding for the National Center for Toxicological Research (NCTR).
Most of the funding (75%) for counterterrorism activities is for food defense.
The request for food defense is $180 million, $30 million (20%) more than the
FY2005 appropriation of $150 million. The House agreed to $192.5 million, a 28%
increase, while the Senate committee was more generous, recommending $196.6
million, a 31% increase over FY2005. The House report directs the agency to give
priority to maintaining existing personnel and operations critical to ensuring the
safety of domestic and imported food rather than funding new functions, grants, or
agreements. The Senate committee report also wants the agency to use funds
provided to support current activities and staff levels before engaging in new
activities. The additional funds for food defense will be used for the Food
Emergency Response Network (FERN), a nationwide FDA-FSIS network of federal
and state laboratories capable of testing thousands of food samples within days for
certain biological, radiological, and chemical threat agents. The increase also will
fund research on food testing methods and related areas, will conduct about 60,000
food import field inspections, of which 38,000 are risk-based inspections of
potentially high-risk food import entries. The increase also will be used in
augmenting FDA’s crisis management capability by boosting FDA’s rapid and
coordinated response to food threats and food-associated crises, and by creating a
central hub to relay all emergency information to FDA and interested stakeholders.
(For more information, see CRS Report RL31853, Food Safety Issues in the 109th
Congress.)
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The increase in funding for medical countermeasures will be spread over the
various categories in Table 5. Some of these medical countermeasure activities also
will be funded under Project BioShield, a program designed to help ensure that
medical products for use in the event of war or catastrophic events are reviewed and
approved quickly for safety and effectiveness. Some funding will be used to assist
companies in developing new countermeasures. Also, some will allow FDA to
implement regulations to provide for “emergency use authorization” when the
countermeasure is still in a developmental stage.
Food
The House included $444.1 million for the foods program of the Center for
Food Safety and Applied Nutrition (CFSAN) and the center’s field activities, while
the Senate recommended $450.2 million. These amounts are down from the
President’s request of $461 million, but the House’s is $8.6 million (2%) more than
the enacted FY2005 budget of $435.5 million while the Senate committee
recommendation is $14.7 million (3.4%) more. In addition, the House and the Senate
committee decided to keep the same resources ($29.6 million) as the President’s
request for programs related to prevention of bovine spongiform encephalopathy
(BSE), or “mad cow” disease. The Senate committee, however, added several details
in its report concerning yearly inspections of all renderers and feed mills and urged
the agency to validate test methods for BSE-related proteins in feed, and to continue
research on transmissible spongiform encephalopathies in FDA’s centers.
The House noted that the agency was developing with FSIS regulations on the
use of sausage casings/small intestines of cattle and is concerned about the
availability of this material, which is not a BSE-related specified risk material. It
wants a report within 30 days of enactment on the regulation’s status and on the
guidance being developed for field offices. The Senate committee is interested in the
naturally occurring as well as industrial contaminant “perchlorate” found in produce,
milk, and bottled water, and wants a report on the agency surveys of this
contaminant. The committee also is aware of the dramatic increase in milk protein
imports and wants to see further enforcement of the standards of identity of these
products to prevent potential illegal use of milk protein concentrate in standardized
cheese.
Both the House and the Senate committee support the National Antibiotic
Resistance Monitoring System (NARMS) as being critical to public health
surveillance. The House and the Senate committee encourage FDA to contribute
similar funding for each part of the program, including animal surveillance, as the
agency does for human surveillance, and want a report by March 1, 2006, on this
funding. The Senate in particular directs the agency to review all components of
NARMS to ensure that the program remains scientifically sound and relevant to
public health.
Both the House and the Senate committee direct FDA to continue supporting
the National Center for Food Safety and Technology in Summit-Argo, Illinois, with
$3 million and continue support for the development of rapid test methods of fresh
fruits and vegetable for microbiological pathogens at the New Mexico State
University laboratories. Both the House and the Senate committee want another
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report by February 1, 2006, that summarizes the results of the agency’s nutrition facts
label monitoring, the types of violations discovered, and the mitigating activities the
agency took to address the violations. The Senate committee also provides $1
million to create at the University of California at Davis a center for research on food
defense, particularly research into risks found in food imports, and encourages the
agency to work with USDA and CDC on the Partnership for Food Safety Education.
Seafood Safety. Seafood safety is again a priority for both the House and the
Senate. The House and the Senate committee direct $250,000 to continue support
for the Interstate Shellfish Sanitation Commission (ISSC) to promote research and
education about shellfish safety and Vibrio vulnificus. Both also expect FDA to
require all states to conform to the National Shellfish Sanitation Program
implemented by the ISSC and ask FDA to devote not less than $200,000 to that
work. The House and the Senate committee are concerned about “chloramphenicol,”
an antibiotic, in farm-raised shrimp imports, and recommend that FDA continue
testing imported shrimp at 0.3 parts per billion. In fact, the Senate committee
provides an increase of $500,000 for the agency to develop, in cooperation with the
states, a program for increased testing. By March 1, 2006, the House expects a report
on the number of shrimp samples tested for antibiotics and the number of positive
tests for chloramphenicol found in FY2004, in FY2005, and to date in FY2006.
The Senate committee wants FDA to continue to monitor additives and dyes
used in farmed salmon; to understand Hawaii’s history and practical experience in
approving HACCP plans for seafood processing plants; to address the potential
public health problems with the consumption of raw shellfish; and to continue
support for food contract inspections in Alaska.
Dietary Supplements. The Senate committee report states that $5.56 million
is to go to the food center’s Adverse Events Reporting System (CAERS), of which
$1.7 million is for dietary supplements. This amount is over the $1.1 million in the
budget request, and with this money the committee wants, within 90 days of
enactment, a report on the cost of such a system. The committee also wants the
agency to enforce provisions of the Dietary Supplement Health and Education Act
of 1994 (DSHEA) against violative products and to issue final dietary supplement
Current Good Manufacturing Practice regulations. It gave an increase of $500,000
for the review of botanicals in dietary supplements, work being conducted for the
agency by the National Center for Natural Products Research in Oxford, Mississippi.
Prescription Drugs and Biologics
The House gave FDA’s human drug program $519.8 million, $5.9 million
(1.1%) more than the Administration’s request of $513.9 million and $23.5 million
(4.7%) over the final FY2005 level of $496.3 million. The Senate committee
recommends $723.2 million for the human drugs and biologics programs, including
$417.8 million in appropriations and $305.3 million in user fees.
The House bill would give the Office of Drug Safety $22.9 million, with an
additional $5 million for the program to use on “the highest priority drug safety
needs.” Within 30 days of enactment, the House directs FDA to provide a detailed
spending plan for these additional funds and other Office of Drug Safety funds. The
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House also expects quarterly reports giving FDA’s planned changes at least for drug
safety including review processes or reprogramming, plans for external review, new
initiatives including education efforts or labeling changes, and the results of the
Institute of Medicine study on drug safety issues. The Senate committee also
specified increasing drug safety activities by $5 million, requesting a report on FDA’s
efforts, including those related to orphan products. The Senate committee provided
$750,000 to support collaborative research (with the C-Path Institute and the
University of Utah) on “cardiovascular biomarkers predictive of safety and clinical
outcomes.” (For further information see CRS Report RL32797, Drug Safety and
Effectiveness: Issues and Action Options After FDA Approval.)
Saying that the Generic Drugs Program is part of the solution to high quality and
affordable health care, the House expresses concern that its potential is not being
met. It therefore requires that the program’s base funding not be less than $56.2
million. The Senate committee encourages FDA to protect the incentives in current
law. The House is also interested in which, if any, drugs, specifically abuse-resistant
formulations of schedule II painkillers, have been given priority status because they
have less potential for abuse. The House wants caregivers to get all relevant
information concerning the abuse-resistant qualities of safer drugs. Also, the House
directs that $15 million, and the Senate committee recommends that $14.4 million,
be available for grants and contracts awarded under the Orphan Drug Act. The
Senate committee asks the FDA to report on its activities regarding a monitoring
system for follow-on, off-patent biologics.
The House also provides an increase of $884,000 for the review of
direct-to-consumer drug advertisements because the numbers of ads have increased
considerably while staff levels remained flat. (For further information, see CRS
Report RL32853, Direct-to-Consumer Advertising of Prescription Drugs.)
Concerned with the medically and ethically appropriate use of HIV vaccines in
children, the House and the Senate committee request that the FDA Commissioner
in consultation with other public and private entities consider the logistical,
regulatory, medical and ethical issues presented by pediatric testing of these vaccines.
They want FDA to issue guidance within six months on what minimum requirements
companies must meet to obtain approval to test an HIV vaccine in children and to
receive FDA approval for a pediatric indication.
Import monitoring and inspections have taken on a more prominent role as
steadily increasing amounts of drug products are being imported under FDA’s
“personal use” import policy. While discussing the appropriations, the House passed
an amendment prohibiting FDA from using funds to enforce the current statute that
bans importation of prescription drugs by parties other than drug companies. (For
more on this issue, see CRS Report RL32511, Importing Prescription Drugs:
Objectives, Options, and Outlook.)
The Senate committee encourages FDA to sufficiently fund its Office of
Women’s Health, for which the President’s request includes “not less than $4
million.” The committee also suggests several improvements to clinical trial design
and the use of FDA advisory committees, including exploration of potential surrogate
endpoints and other approaches to make available drugs for serious and
CRS-39
life-threatening orphan diseases that have no other treatments. It also encourages
FDA to continue its work with potential manufacturers regarding development of a
vaccine against pandemic influenza.
Regarding FDA efforts to control drug counterfeiting, the Senate committee
encourages FDA to issue draft guidance on the use of authentication technologies and
to report on its efforts to learn from the experience of private companies. The Senate
committee provides $750,000 for an FDA pilot program with the United States
Pharmacopeia to prepare monographs on compounded drug preparations. Following
up on FDA’s report that it would be infeasible to develop a monograph system for
older prescription drugs, the Senate committee directs the FDA to develop an
alternative approach to provide for their “uniform and transparent regulation” and to
prioritize enforcement resources “to address safety and effectiveness concerns.” The
Senate committee also urges FDA to develop guidance regarding evaluating benefits
of acne medication before adopting the Global Evaluation Scale that some members
of the public have criticized, and to report on its citizen petition process improvement
efforts.
Medical Devices
The Senate committee recommends $263.1 million in budget authority for the
medical and radiologic device program, including appropriations of $222.8 million
and user fees of $40.3 million. This includes $7.8 million for increased medical
device review, $1.8 million above the President’s request, paired with requests for
biweekly updates on planned changes to MDUFMA and a report on device review
performance and spending (both user fees and appropriated funds).
Regarding diabetes treatments, the Senate committee urges FDA to support a
workshop on how to expeditiously review promising technologies for continuous
glucose monitoring, and to develop guidance and otherwise evaluate additional
biomarkers and surrogate endpoints and related product development and validation
regarding clinical outcomes. To protect the health of contact lens wearers, the Senate
committee includes a provision, effectively codifying consent decrees that 32 state
attorneys general reached, to stop, by barring the use of certain funds, a contact lens
industry practice to limit distribution to eye care providers.
Administrative Issues
The House withheld nearly $6 million (17%) out of a $36.3 million budget from
the Office of the Commissioner until there is a public House hearing on the FY2006
budget request with the head of FDA, an appearance that acting FDA Commissioner
Lester Crawford has declined, according to news accounts, under administration
orders. The matter is complicated by Dr. Crawford’s being the President’s nominee
to be Commissioner; according to news reports, an HHS spokesperson noted that
Senate protocol dictates that Dr. Crawford is serving at the pleasure of the Senate
HELP Committee and therefore could not come before any other house of Congress
until confirmed.
CRS-40
In a floor vote, the House approved an amendment sponsored by Representative
Hinchey that would prohibit FDA’s using funds in this bill to waive financial
conflict-of-interest rules for individuals serving on FDA advisory panels or
committees. Supporters claim that, by freeing the advisory system of industry
influence, this amendment will restore public confidence in the recommendations
these scientists make to the agency. Others feel that FDA should not cut off help
from groups of experts and that FDA already has stringent rules regarding conflicts
of interest that make a prohibition unnecessary.
Commodity Futures Trading Commission (CFTC)
The Commodity Futures Trading Commission (CFTC) is the independent
regulatory agency charged with oversight of derivatives markets. The CFTC’s
functions include oversight of trading on the futures exchanges, registration and
supervision of futures industry personnel, prevention of fraud and price manipulation,
and investor protection. Although most futures trading is now related to financial
variables (interest rates, currency prices, and stock indexes), Congressional oversight
is vested in the Agricultural Committees because of the market’s historical origins
as an adjunct to agricultural trade.
For FY2006, the Administration requested $99.4 million for the CFTC, an
increase of $5.8 million, or 6.2%, over FY2005. The House-passed bill provides an
appropriation of $98.4 million, an increase of $4.8 million, or 5.1%, over FY2005.
The Senate committee recommends the same figure as the House, $98.4 million.
CRS-41
Table 7. USDA and Related Agencies Appropriations,
FY2006 Action vs. FY2005 Enacted
(budget authority, in millions of $)
FY2006
FY2005
FY2006
FY2006
FY2006
Admini-
Agency or Major Program
Enacted
House
Senate
Confer-
stration
(1)
Bill
Bill
ence
Request
Title I — Agricultural Programs
Agric. Research Service (ARS)
1,288.3
1,060.9
1,122.8
1,270.6
**
Coop. State Research Education and
1,161.7
1,018.2
1,130.7
1,167.3
**
Extension Service (CSREES)
Economic Research Service (ERS)
74.2
80.7
75.9
78.5
**
National Agric. Statistics Service
128.4
145.2
136.2
145.2
**
(NASS)
Animal and Plant Health Inspection
813.0
860.2
847.5
812.8
**
Service (APHIS)
Agric. Marketing Service (AMS)
94.7
101.5
95.4
96.5
**
Grain Inspection , Packers and
37.0
15.7
38.4
38.4
**
Stockyards Admin. (GIPSA)
Food Safety & Inspection Serv.
817.2
710.7
837.3
836.8
**
(FSIS)
Farm Service Agency (FSA) -
1,294.9
1,365.1
1,325.9
1,357.7
**
Total Salaries and Expenses
FSA Farm Loans - Subsidy Level
156.5
154.1
151.4
150.8
**
*Farm Loan Authorization
3,717.8
3,803.3
3,818.3
3,743.0
**
Risk Management Agency (RMA)
71.5
87.8
77.8
73.4
**
Salaries and Expenses
Federal Crop Insurance Corp. (2)
4,095.1
3,159.4
3,159.4
3,159.4
**
Commodity Credit Corp. (CCC) (2)
16,452.4
25,690.0
25,690.0
25,690.0
**
Other Agencies and Programs
556.5
632.0
507.2
583.5
**
Total, Agricultural Programs
27,041.5
35,081.5
35,196.0
35,461.2
**
Title II — Conservation Programs
Conservation Operations
830.7
767.8
773.6
819.6
**
Watershed Surveys and Planning
7.0
5.1
7.0
5.1
**
Watershed & Flood Prevention
75.0
0.0
60.0
60.0
**
Watershed Rehabilitation Program
27.3
15.1
47.0
27.3
**
Resource Conservation &
51.2
25.6
51.4
51.2
**
Development
NRCS Under Secretary
0.7
0.7
0.7
0.7
**
Total, Conservation
991.9
814.4
939.8
964.0
**
CRS-42
FY2006
FY2005
FY2006
FY2006
FY2006
Admini-
Agency or Major Program
Enacted
House
Senate
Confer-
stration
(1)
Bill
Bill
ence
Request
Title III — Rural Development
Rural Community Advancement
710.3
521.7
657.4
705.1
**
Program (RCAP)
Salaries and Expenses
147.3
167.8
152.6
164.8
**
Rural Housing Service (RHS)
1,369.7
1,626.9
1,446.4
1,471.6
**
* RHS Loan Authority
4,683.3
4,965.6
5,079.3
4,927.6
**
Rural Business-Cooperative Service
83.7
57.4
121.4
86.8
**
* RBCS Loan Authority
58.7
59.2
59.2
59.2
**
Rural Utilities Service (RUS)
102.2
83.6
92.5
105.6
**
* RUS Loan Authority
5,606.0
3,548.9
5,507.9
6,745.0
**
Rural Development Under Sec.
0.6
0.6
0.6
0.6
**
Total, Rural Development
2,413.8
2,458.1
2,471.0
2,534.5
**
* Rural Development, Total Loan
10,348.0
8,573.7 10,646.4
11,731.8
**
Authority
Title IV — Domestic Food Programs
Child Nutrition Programs
11,782.0
12,416.0
12,412.0
12,412.0
**
WIC Program
5,235.0
5,510.0
5,257.0
5,257.0
**
Food Stamp Program
35,154.6
40,711.4
40,711.4
40,711.4
**
Commodity Assistance Program
177.4
177.9
178.8
179.9
**
Nutrition Programs Admin.
138.8
140.8
140.8
140.8
**
Office of Under Secretary
0.6
0.6
0.6
0.6
**
Total, Food Programs
52,488.4
58,956.7
58,700.6
58,701.7
**
Title V — Foreign Assistance
Foreign Agric. Service (FAS)
136.7
148.8
148.2
147.9
**
Public Law (P.L.) 480
1,293.0
965.4
1,187.5
1,230.4
**
McGovern- Dole International Food
86.8
100.0
100.0
100.0
**
for Education
CCC Export Loan Salaries
4.4
5.3
5.3
5.3
**
Total, Foreign Assistance
1,520.9
1,219.4
1,441.0
1,483.5
**
Title VI — FDA & Related Agencies
Food and Drug Administration
1,450.1
1,499.7
1,486.0
1,492.0
**
Commodity Futures Trading
93.6
99.4
98.4
98.4
**
Commission (CFTC)
Total, FDA & CFTC
1,543.7
1,599.1
1,584.4
1,590.4
**
CRS-43
FY2006
FY2005
FY2006
FY2006
FY2006
Admini-
Agency or Major Program
Enacted
House
Senate
Confer-
stration
(1)
Bill
Bill
ence
Request
Title VII — General Provisions
(409.8)
3.6
(11.0)
(17.3)
**
(3)
RECAPITULATION
I: Agricultural Programs
27,041.5
35,081.5
35,196.0
35,461.2
**
II: Conservation Programs
991.9
814.4
939.8
964.0
**
III: Rural Development
2,413.8
2,458.1
2,471.0
2,534.5
**
IV: Domestic Food Programs
52,488.4
58,956.7
58,700.6
58,701.7
**
V: Foreign Assistance
1,520.9
1,219.4
1,441.0
1,483.5
**
VI: FDA & Related Agencies
1,543.7
1,599.1
1,584.4
1,590.4
**
VII: General Provisions
(409.8)
3.6
(11.0)
(17.3)
**
Total, before adjustments
85,590.4
100,133
100,322
100,718
**
Scorekeeping Adjustments (4)
(464.0)
(571.5)
(669.9)
(560)
**
Grand Total, Including CBO
Scorekeeping Adjustments,
85,126.4
99,561.4
99,651.7
100,158
**
Excluding Emergency
Appropriations
Mandatory programs
68,294.0
82,822.0
82,822.0
82,810.0
**
Discretionary programs
16,832.5
16,739.4
16,829.8
17,348.0
**
Budget allocation (302(b))
n/a
n/a
16,832.0
17,348.0
**
Emergency Appropriations (5)
3,849.0
0
0
0
**
Source: CRS, using tables from the House and Senate Appropriations Committees.
An item with a double asterisk (**) indicates that FY2006 bills or amounts are pending.
An item with a single asterisk (*) represents the total amount of direct and guaranteed loans that can be
made with the loan subsidy level. Only the subsidy level is included in the total appropriation.
(1) FY2005 enacted levels include appropriations in the Consolidated Appropriations Act, 2005 (P.L. 108-
447), adjusted for the 0.8% across-the-board rescission to all discretionary accounts.
(2) Under current law, the Commodity Credit Corporation and the Federal Crop Insurance Fund each
receive annually an indefinite appropriation (“such sums, as may be necessary”). The amounts shown are
USDA estimates of the necessary appropriations, which are subject to change.
(3) General provisions in Title VII affect programs administered under various other titles.
(4) Scorekeeping adjustments reflect the savings or cost of provisions that affect mandatory programs (as
estimated by the Congressional Budget Office (CBO)), plus the permanent annual appropriation made to
USDA’s Section 32 program. Adjustments for the FY2005 appropriation exclude emergency appropriations.
Adjustments for the FY2006 request are Administration estimates and do not reflect an official CBO score.
(5) The Hurricane Disaster Act of 2005 (P.L.108-324) contained $2.9 billion in emergency assistance for
producers and $575 million in other emergency funds for conservation and rural development programs.
The Emergency Supplemental Appropriations of 2005 (P.L. 109-13) contained $344 million in P.L. 480
food assistance grants and conservation watershed programs.