Agriculture and Related Agencies: FY2009 Appropriations

Contents

• Most Recent Developments
• Scope of the Agriculture Appropriations Bill
• USDA Activities
• Related Agencies
• Mandatory vs. Discretionary Spending
• Outlays, Budget Authority, and Program Levels
• Action on FY2009 Appropriations
• House Action
• Senate Action
• Continuing Resolution
• Omnibus Appropriations Action
• Supplemental Appropriations
• Funding Levels in the Omnibus
• Limits on Mandatory Program Spending
• Earmarks
• USDA Agencies and Programs
• Agricultural Research, Extension, and Economics
• Agricultural Research Service
• Cooperative State Research, Education, and Extension Service
• Economic Research and Agricultural Statistics
• Marketing and Regulatory Programs
• Animal and Plant Health Inspection Service (APHIS)
• Agricultural Marketing Service (AMS)
• Grain Inspection, Packers, and Stockyards Administration (GIPSA)
• Meat and Poultry Inspection
• Farm Service Agency
• FSA Salaries and Expenses
• FSA Farm Loan Programs
• Commodity Credit Corporation
• Crop Insurance
• Conservation
• Discretionary Programs
• Supplemental Appropriations
• Mandatory Programs
• Rural Development
• Rural Housing Service (RHS)
• Rural Business-Cooperative Service (RBS)
• Rural Utilities Service (RUS)
• Domestic Food Assistance
• Programs under the Food and Nutrition Act (Formerly the Food Stamp Act)
• Child Nutrition Programs
• The WIC Program
• Commodity Assistance Program
• Nutrition Program Administration (and the Congressional Hunger Center)
• Special Program Initiatives
• Agricultural Trade and Food Aid
• Food and Drug Administration (FDA)
• Foods
• Human Drugs
• Biologics
• Animal Drugs and Feeds
• Devices and Radiological Health
• Other Activities
• Commodities Futures Trading Commission (CFTC)

Summary

The Agriculture appropriations bill includes all of the U.S. Department of Agriculture (USDA) except the Forest Service, plus the Food and Drug Administration (FDA). The Commodity Futures Trading Commission (CFTC) appropriation also has been enacted with the Agriculture appropriations bill, even though jurisdiction in the Senate for CFTC funding moved to the Financial Services appropriations subcommittee in FY2008.

An FY2009 Omnibus Appropriations Act, P.L. 111-8, was enacted on March 11, 2009, more than five months after the beginning of the fiscal year. A continuing resolution had funded operations from October 1, 2008, until the omnibus was enacted. In addition, two supplemental appropriations bills for FY2009 have been enacted during the 111^th Congress: P.L. 111-5 in February 2009 (the American Recovery and Reinvestment Act, ARRA) and P.L. 111-32 in June 2009 (the Supplemental Appropriations Act).

The regular Agriculture and Related Agencies appropriation in the FY2009 omnibus totals $108.3 billion, up 19% from FY2008. This total is composed of $87.8 billion in mandatory appropriations (up 21%, mostly because of rising food stamp demand) and $20.4 billion of discretionary appropriations (up 14% from FY2008). Discretionary programs with the most notable increases include rural housing, domestic nutrition assistance, and the Food and Drug Administration. The omnibus reduces three mandatory programs in the 2008 farm bill by $484 million, including two conservation program and one specialty crops program. The omnibus contains 521 congressionally designated earmarks for agriculture and related programs totaling $380 million. These earmarks are 16% fewer in number and 6% fewer in dollars than FY2008, the first year that such disclosure was required.

The ARRA supplemental provided $26.5 billion (about 25% of the amount in a regular appropriation, although outlays may occur over a multi-year period), mostly for domestic food assistance. The second supplemental provided $771 million for international food aid and domestic farm loans.

During the regular appropriations cycle, the Senate Appropriations Committee reported its version of the Agriculture appropriations bill on July 17, 2008 (S. 3289, S.Rept. 110-426). The bill would have provided $97.2 billion in total funding, including $20.4 billion in discretionary appropriations. The Senate bill contained provisions to reduce mandatory spending by $641 million for 18 conservation, bioenergy, specialty crop, research, and rural development programs below the levels authorized in the 2008 farm bill.

The House Appropriations Committee did not report an FY2009 Agriculture appropriations bill. The subcommittee approved a bill on June 19, 2008, but the full committee stopped regular action on FY2009 appropriations bills over procedural difficulties. Thus, no information is publicly available on the contents of the House subcommittee markup.

---

Agriculture and Related Agencies: FY2009 Appropriations

Most Recent Developments

An FY2009 Omnibus Appropriations Act, P.L. 111-8, was enacted on March 11, 2009, more than five months after the beginning of the fiscal year. A continuing resolution had funded operations from October 1, 2008, until the omnibus was enacted.

In addition, two supplemental appropriations bills for FY2009 have been enacted during the 111^th Congress: P.L. 111-5 in February 2009 (the American Recovery and Reinvestment Act, ARRA) and P.L. 111-32 in June 2009 (the Supplemental Appropriations Act).

The regular Agriculture and Related Agencies appropriation in the FY2009 omnibus totals $108.3 billion, up 19% from FY2008. This total is composed of $87.8 billion in mandatory appropriations (up 21%, mostly because of rising food stamp demand), and $20.4 billion of discretionary appropriations (up 14% from FY2008).

The ARRA supplemental provided $26.5 billion (about 25% of the amount in a regular appropriation although outlays may occur over a multi-year period), mostly for domestic food assistance. The second supplemental provided $771 million for international food aid and domestic farm loans.

Scope of the Agriculture Appropriations Bill

The Agriculture appropriations bill—formally known as the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act—covers funding for the following agencies and departments:

• all of the U.S. Department of Agriculture (except the Forest Service, which is funded by the Interior appropriations bill),
• the Food and Drug Administration (FDA) in the Department of Health and Human Services, and
• in the House, the Commodity Futures Trading Commission (CFTC); in the Senate, CFTC appropriations are handled by the Financial Services appropriations subcommittee.

Jurisdiction for the appropriations bill rests with the House and Senate Committees on Appropriations, particularly in each committee's Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies. These committees are separate from the agricultural authorizing committees—the House Committee on Agriculture and the Senate Committee on Agriculture, Nutrition, and Forestry.

USDA Activities

The U.S. Department of Agriculture (USDA) carries out widely varied responsibilities through about 30 separate internal agencies and offices staffed by some 100,000 employees. USDA spending is not synonymous with farm program spending. It also is responsible for many activities outside of the agriculture budget function.

USDA reports that its regular budget authority for FY2009 is $114.6 billion, excluding supplemental appropriations.¹ Food and nutrition programs constitute the largest mission area, with $76 billion, or 66% of the total, to support the food stamp program, the nutrition program for Women, Infants, and Children (WIC), and child nutrition programs (Figure 1).

The second-largest mission area, with $21 billion (18%) in budget authority, is farm and foreign agricultural services. This mission area includes the farm commodity price and income support programs of the Commodity Credit Corporation, certain mandatory conservation and trade programs, crop insurance, farm loans, and foreign food aid programs.

Other USDA activities include natural resource and environmental programs (8% of the total), rural development (3%), research and education programs (2%), marketing and regulatory programs (2%), and food safety (1%). About two-thirds of the budget for natural resources programs (the third-largest slice in Figure 1) goes to the Forest Service (about $7 billion), which is funded through the Interior appropriations bill. The Forest Service is the only USDA agency not funded through the Agriculture appropriations bill; it also accounts for about one-third of USDA's personnel, with nearly 34,000 staff years in FY2009.

Comparing USDA's organization and budget data to the Agriculture appropriations bill in Congress is not always easy. USDA defines its programs using "mission areas" that do not always correspond to categories in the Agriculture appropriations bill. Spending may not match up between USDA summaries and the appropriations bill for other reasons. For example, foreign agricultural assistance programs are a separate title in the appropriations bill (Title V in Figure 2); foreign assistance programs are joined with domestic farm support in USDA's "farm and foreign agriculture" mission area (the second-largest slice in Figure 1). Conversely, USDA has separate mission areas for agricultural research and marketing and regulatory programs (two of the smaller slices in Figure 1), but both are joined with other domestic farm support programs in Title I of the appropriations bill (the second-largest slice in Figure 2). The type of funding (mandatory vs. discretionary) is also important. Conservation in the appropriations bill (Title II) includes only discretionary programs, whereas USDA's natural resources mission area includes both discretionary and mandatory conservation programs in addition to the Forest Service.

Related Agencies

In addition to the USDA agencies mentioned above, the Agriculture appropriations subcommittees have jurisdiction over appropriations for the Food and Drug Administration (FDA) of the Department of Health and Human Services (HHS) and—in the House only—the Commodity Futures Trading Commission (CFTC, an independent financial markets regulatory agency). The combined share of FDA and CFTC funding in the overall Agriculture and Related Agencies appropriations bill is about 2% (see Title VI in Figure 2).

Jurisdiction over CFTC appropriations is assigned differently in the House and Senate. In the House, appropriations jurisdiction for CFTC remains with the Agriculture appropriations subcommittee. In the Senate, jurisdiction moved to the Financial Services appropriations subcommittee with the FY2008 appropriations cycle. Despite the differences in jurisdiction, the Consolidated Appropriations Act for FY2008 still put CFTC appropriations with the Agriculture appropriations bill. In FY2009, the CFTC appropriation was placed in the Financial Services appropriations act.

These agencies are included in the Agriculture appropriations bill because of their historical connection to agricultural markets. However, the number and scope of non-agricultural issues has grown at these agencies in recent decades. Some may argue that these agencies no longer belong in the Agriculture appropriations bill. But despite the growing importance of non-agricultural issues, agriculture and food issues are still an important component of FDA's and CFTC's work. At FDA, medical and drug issues have grown in relative importance, but food safety responsibilities that are shared between USDA and FDA have been in the media during recent years and are the subject of legislation and hearings. At CFTC, the market for financial futures contracts has grown significantly compared with agricultural futures contracts, but volatility in agricultural commodity markets has been a subject of recent scrutiny at CFTC and in Congress.

Mandatory vs. Discretionary Spending

Mandatory and discretionary spending are treated differently in the budget process. Eligibility for mandatory programs (sometimes referred to as entitlement programs) is usually written into authorizing laws, and any individual or entity that meets the eligibility requirements is entitled to the benefits authorized by the law. Congress generally controls spending on mandatory programs by setting rules for eligibility, benefit formulas, and other parameters, not through appropriations. Approximately 80% of the total Agriculture and Related Agencies spending is classified as mandatory, which by definition occurs independently of annual appropriations.

The 2008 farm bill (the Food, Conservation, and Energy Act of 2008, P.L. 110-246) determines most of the parameters for mandatory spending in the Agriculture appropriations bill. The vast majority of USDA's mandatory spending is for the food and nutrition programs (e.g., food stamps), the farm commodity price and income support programs, the federal crop insurance program, and various agricultural conservation and trade programs (nearly all of Figure 1's largest two pie pieces). Some mandatory spending, such as the farm commodity program, is highly variable and driven by program participation rates, economic and price conditions, and weather patterns. But in general, mandatory spending has tended to rise over time, particularly as food stamp participation and benefits have risen (Table 1).

Although these programs have mandatory status, many of these accounts receive funding 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. The Commodity Credit Corporation operates on a line of credit with the Treasury, but receives an annual appropriation to reimburse the Treasury and to maintain its line of credit.

The other 20% of the Agriculture and Related Agencies appropriations bill is for discretionary programs. Spending for discretionary programs is controlled by annual appropriations acts. The subcommittees of the House and Senate Appropriations Committees originate bills each year that provide funding to continue current activities as well as any new discretionary programs.

Major discretionary programs include 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. The discretionary accounts also include FDA and CFTC appropriations.

Both discretionary and total appropriations have increased since 2000, but in inflation-adjusted terms, the level is more nearly constant. (Figure 3 and Figure 4).

Outlays, Budget Authority, and Program Levels

In addition to the difference between mandatory and discretionary spending, three other terms are important to understanding differences in discussions about the federal spending: budget authority, outlays, and program levels.

• 1. Budget authority is how much money Congress allows a federal agency to commit to spend. It represents a limit on funding and is generally what Congress focuses on in making most budgetary decisions. Most of the amounts mentioned in this report are budget authority.
• 2. Outlays are how much money actually flows out of an agency's account. Outlays may differ from appropriations (budget authority) because, for example, payments on a contract may not flow out until a later year. For accounts that require multi-year contracts for construction or delivery of services, budget authority may be committed (contracted) in one fiscal year and outlays may be spread across several fiscal years. But for many accounts, especially those tied to salaries and normal operating expenses, outlays closely track budget authority.
• 3. Program levels reflect the activities supported or undertaken by an agency. An agency's program level may be much higher than its budget authority for several reasons.
• User fees support some activities (e.g., food or border inspection).
• The agency makes loans; for example, a large loan authority (program level) is possible with a small budget authority (loan subsidy) because the loan is expected be repaid. The appropriated loan subsidy make allowances for defaults and interest rate assistance.
• Transfers are available from other agencies or funds are carried forward from a previous fiscal year.

Action on FY2009 Appropriations

The FY2009 Agriculture appropriations bill was marked up in the House subcommittee in June 2008 and reported by the Senate full committee in July 2008 (Table 2). It did not reach the floor as a stand-alone bill in either chamber during the 110^th Congress. Agencies affected by the bill were funded by continuing resolutions until March 11, 2009. An omnibus appropriations bill, P.L. 111-8, was enacted on March 11, 2009, near the beginning of the 111^th Congress.

House Action

The Agriculture Subcommittee of the House Committee on Appropriations marked up the FY2009 Agriculture appropriations bill on June 19, 2008, by voice vote. The bill's contents, though, were never released because the full committee never voted on or reported the bill.

The full appropriations committee was to consider both the Agriculture and Labor-HHS bills on June 26, 2008. But proceedings were halted that day before the Agriculture bill was considered. While the Labor-HHS bill was under consideration, an amendment by the ranking minority member was offered to substitute the Interior appropriations bill for the text of the Labor-HHS bill. The amendment was part of an attempt to raise an offshore oil drilling proposal by the minority party. After a short discussion, the full committee voted to adjourn, 35-27, and appropriations action on individual bills stopped in the House for the remainder of the session.

Senate Action

The Senate Appropriations Committee reported its version of the Agriculture appropriations bill (S. 3289, S.Rept. 110-426) on July 17, 2008, by a vote of 29-0. The full committee bypassed subcommittee action by "polling" the bill, a procedure that permits a bill to advance if subcommittee members independently agree to move it along. This committee procedure, uncommon for the Agriculture appropriations bill, has more commonly been used for the Legislative Branch appropriations bill and the former District of Columbia appropriations bill. Although the bill was reported, it did not reach the Senate floor.

Continuing Resolution

The Agriculture appropriations bill was not completed before the beginning of FY2009. Consequently, a nearly 5½ -month continuing resolution (P.L. 110-329, Division A) was enacted on September 30, 2008, to fund the government until March 6, 2009. A second continuing resolution (CR) was needed until the omnibus appropriations bill was enacted on March 11, 2009. The continuing resolutions covered the Agriculture appropriations bill, along with eight other regular appropriations bills. Only three of the regular 12 appropriations bills were enacted before the beginning of the fiscal year, and those were enacted as a "mini" consolidated appropriations bill together with the first continuing resolution.

The continuing resolutions generally funded agencies at their FY2008 levels. Exceptions for Agriculture and Related Agencies programs in the continuing resolution included:

• allowing a higher base allocation for FDA under the continuing resolution by including in FY2009 funding the $150 million of supplemental emergency funding that was provided in FY2008 in addition to the regular FY2008 appropriation;
• allowing mandatory spending increases for programs in the Food and Nutrition Act of 2008 to maintain program levels (an unspecified increase, likely in the billions of dollars);
• increasing the discretionary funding for the Women, Infants, and Children (WIC) nutrition program to an annual rate of $6.658 billion (up from $6.02 billion in FY2008);
• increasing funding for the Food and Nutrition Service's Commodity Assistance Program to $234 million (up from $210 million in FY2008); and
• increasing the rural housing rental assistance program to $997 million (up from $479 million in FY2008 and equivalent to the Administration's request).

Although the continuing resolution sustained existing programs and allows new mandatory farm bill programs to begin, it generally ordered a conservative funding approach. Under the CR, the Office of Management and Budget (OMB) apportioned funds to agencies by limiting the amount available at certain times of the fiscal year.² Sometimes the apportionment even limited or delayed mandatory programs that Congress was considering trimming in the appropriations bill. The CR continued any limitations on funding or programs that were included in the FY2008 appropriations act and did not continue FY2008 earmarks.

Omnibus Appropriations Action

The 110^th Congress ended its work in 2008 under the continuing resolution. The 111^th Congress in 2009, after first completing work on an economic stimulus package (P.L. 111-5, below), took up an omnibus appropriations bill to complete the regular appropriations action for FY2009. A conference report was printed in the Congressional Record on February 23, 2009. The House passed the H.R. 1105 on February 25, 2009, by a vote of 245-178. The Senate passed the same bill without amendment on March 10, 2009, by voice vote, after invoking cloture (to shut off debate) by a vote of 62-35. President Obama signed the Omnibus Appropriations Act of 2009 (P.L. 111-8) on March 11, 2009. This appropriation funded the regular Agriculture and Related Agencies appropriations bill for the remainder of FY2009.

Supplemental Appropriations

Before completing the regular FY2009 Omnibus Appropriations Act, the 111^th Congress first turned its attention to an economic stimulus package. On February 17, 2009, President Obama signed into law H.R. 1, the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5). The ARRA boosts government spending on various infrastructure programs and government benefits programs, and offers individual and business tax benefits. The appropriations portion is essentially a wide-ranging supplemental appropriation intended to stimulate economic activity in response to the depth of the economic recession facing the United States (and the rest of the world) at the beginning of 2009.

Agriculture programs—including nutrition assistance, rural development, farmer assistance, and conservation—received $26.47 billion in the ARRA. This is about 25% of the amount in the regular FY2009 Agriculture Appropriations Act, although stimulus outlays may be spent over two or more years.

Of the $26.47 billion, nutrition assistance programs received the largest share at $20.74 billion. Monthly food stamp benefits for families rise 20% on average from current levels. Second, rural development received $4.36 billion (160% of the regular FY2009 amount), focused primarily on broadband infrastructure, but also rural water and waste disposal infrastructure, community facilities, and rural housing. In particular, the rural broadband program receives $2.50 billion, allowing outlays through FY2015 that are 20-30 times more than recent annual appropriations. Third, assistance for farmers totaled $744 million, primarily for crop insurance/disaster programs, but also for the farm loan program that was facing higher demand during the financial crisis. Fourth, conservation programs received $348 million for watershed flood prevention infrastructure. Finally, USDA received $250 million for its own facilities maintenance and computer infrastructure.

A second FY2009 supplemental appropriation was enacted on June 24, 2009 (P.L. 111-32). For accounts under the Agriculture appropriations subcommittees, P.L. 111-32 provides $700 million for P.L. 480 international food aid and $71 million to support $810 million of farm program loans. It also allows past appropriations for emergency conservation program to be used (reprogrammed) for more recent disasters.

The supplemental appropriations throughout FY2008-09 are identified for comparison in Table 4, but are not added to the regular annual appropriations columns since the focus of this report is the regular annual appropriation. The supplemental amounts in P.L. 111-5 are described greater detail in CRS Report R40160, Agriculture, Nutrition, and Rural Provisions in the American Recovery and Reinvestment Act (ARRA) of 2009, coordinated by [author name scrubbed].

Funding Levels in the Omnibus

The enacted FY2009 Agriculture appropriation, before adjustments, is $107.7, including $21.1 billion in "allowed" discretionary appropriations and $86.6 billion in mandatory funds (Table 3). The "allowed" discretionary amount reflects the amount provided to the agencies in the regular text of the appropriations bill, before scorekeeping adjustments that limit certain mandatory programs and recognize other amounts. The allowed discretionary amount is 8% greater than FY2008 (+$1.6 billion).

After scorekeeping adjustments, the total rises to $108.3 billion (Table 3). The "official" discretionary appropriation, which is used for official budget accounting, is about $600 million less than the "allowed" discretionary amount, and grew 14% from FY2008 to $20.5 billion (up from $18.0 billion in FY2008). Mandatory funding after scorekeeping adjustments rises about $1.2 billion compared to the amount before adjustments because Section 32 funds are added in the adjustments. The final mandatory amount for the bill rises about 21% (+$15 billion) over FY2008, not because of farm programs which actually declined, but because of nutrition programs which increased by over $15 billion (+28%).

See Table 4 for more details on the amounts for specific agencies, as well as the agency-by-agency discussion later in this report. Supplemental appropriations throughout FY2008-09 are identified for comparison in Table 4, but are not added to the regular annual appropriations columns since the focus of this report is the regular annual appropriation.

Limits on Mandatory Program Spending

In recent years, appropriators have placed limitations on mandatory spending authorized in the farm bill. Mandatory programs usually are not part of the annual appropriations process since the authorizing committees set the eligibility rules and payment formulas in multi-year authorizing legislation (such as the 2008 farm bill). Funding for mandatory programs usually is assumed to be available based on the authorization without appropriations action.

Passage of a new farm bill in 2008 made more mandatory funds available for programs that appropriators or the Administration may want to reduce, either because of policy preferences or jurisdictional issues between authorizers and appropriators.

Historically, decisions over government expenditures are assumed to rest with the appropriations committees. The current tension over who should fund certain agriculture programs—appropriators or authorizers—has roots dating to the 1930s and the creation of the farm commodity programs. Outlays for the farm commodity programs were highly variable, difficult to predict and appropriate, and based on multi-year programs that resembled entitlements. Thus, a mandatory funding system—the Commodity Credit Corporation (CCC)—was created to remove the unpredictable funding issue from the appropriations committee. This separation worked for many decades. But the dynamic changed particularly in the late 1990s and the 2002 farm bill when authorizers began writing farm bills using mandatory funds for programs that typically were discretionary. Appropriators had not funded some of these programs as much as authorizers had desired, and agriculture authorizing committees wrote legislation with the mandatory funding at their discretion. Thus, tension arose over who should fund these typically discretionary activities: authorizers with mandatory funding sources at their disposal, or appropriators having standard appropriating authority. Does creation of the CCC in the 1930s for the hard-to-predict farm commodity programs justify modern mandatory spending on programs that are not highly variable and typically considered discretionary?³

Appropriator-placed limits on mandatory programs have affected conservation, rural development, bioenergy, and research programs. It has not affected the farm commodity programs or the nutrition programs such as food stamps.

When the appropriators limit mandatory spending, they do not change the authorizing law. Rather, appropriators have put limits on mandatory programs by using appropriations language such as: "None of the funds appropriated or otherwise made available by this or any other Act shall be used to pay the salaries and expenses of personnel to carry out section [ ... ] of Public Law [ ... ] in excess of $[ ... ]." These provisions usually have appeared in Title VII, General Provisions, of the Agriculture appropriations bill.

The savings achieved by limiting mandatory programs in this way are counted as "scorekeeping adjustments." The effect is to score budget savings that can be used to fund discretionary programs at a higher level than allowed by the discretionary spending cap (the 302(b) allocation). This is how the "allowed" discretionary amount in Table 3 can be higher than the "official" discretionary amount.

For FY2009, the enacted appropriations act contains $484 million in reductions from three mandatory programs (including $435 million from two conservation programs, and $49 million from one specialty crops program; Table 5). This is a smaller reduction in mandatory programs than proposed in the Senate-reported bill, which would have reduced 18 mandatory programs by $641 million. The Bush Administration initially had proposed $314 million in mandatory reductions from three programs, all in conservation,⁴ but requested additional reductions in a supplemental budget request after the 2008 farm bill was enacted.⁵

The enacted FY2009 appropriation reduces the Environmental Quality Incentives Program (EQIP) by 20%, trimming $270 million from its $1.337 billion farm bill authorization. Also in conservation, mandatory funding for the watershed rehabilitation program is eliminated, including the full $100 million FY2009 authorization and $65 million of carry-over funds from FY2007. A new nutrition program to use fresh fruit and vegetables in schools is reduced by 75%, trimming $49 million from a $65 million farm bill authorization.

Limits on mandatory programs in the FY2009 appropriation are larger than in FY2008 ($335 million from two programs)⁶ and proposed for FY2007,⁷ but not as large as those during the height of the 2002 farm bill period ($1.5 billion in FY2006). Since appropriators had garnered a reputation for limiting various mandatory programs in the 2002 farm bill, authorizers in the agriculture committees chose to reduce or eliminate those programs when savings needed to be scored during budget reconciliation in 2005. Thus, as the 2002 farm bill ended by the FY2008 appropriations cycle, relatively little authorization was left among the mandatory programs that the appropriators had limited from FY2003 to FY2006. Therefore, passage of the 2008 farm bill—with a host of new and reauthorized mandatory conservation, research, rural development and bioenergy programs—creates new possibilities for appropriators to limit mandatory programs.

Earmarks

Both the House and Senate adopted earmark disclosure rules in 2007 that require enacted appropriations acts, in the report language, to disclose "earmarks and congressionally directed spending items" by agency, project, amount, and requesting Member(s). This list of earmarks is self-identified by Congress and thus is no longer subjective to agency or analyst definitions as to what constitutes an earmark.

Earmarks specified in a conference report generally are not considered to have the same force of law as if they were in the text of the law itself. But in the past, executive branch agencies usually have followed such directives since, when they testify before Congress, they do not wish to explain why congressional directives were not followed. The FY2008 Consolidated Appropriations Act varied in its treatment of earmarks in the bill text—some were mentioned in the text of the law, some were incorporated by specific reference to the report language, and others were printed in the report language without reference in the act. For the agriculture earmarks, only three out of 623 were in the text of the bill; the rest were in report language without being referenced in the statute. In January 2008, President Bush issued Executive Order 13457 instructing agencies not to honor earmarks unless they are in the text of the law beginning in FY2009. Appropriators responded to the executive order by incorporating by reference in the statute the earmarks in the report language.⁸

For FY2009, Congress disclosed 521 earmarks for Agriculture and Related Agencies, down nearly 102 from FY2008 (-16%). The total amount of these earmarks was $379.6 million, down 6% (Table 6). Three USDA agencies—CSREES, ARS, and NRCS—account for nearly 90% of the earmarks for Agriculture and Related Agencies.

FY2009 earmarks for Agriculture and Related Agencies range from $9.5 million for an Agricultural Research Service dietary research project to $36,000 for an Animal and Plant Health Inspection Service disease project. The median earmarked project size was $376,000. University and extension service-based earmarks remained fairly constant into FY2009, declining 5% by number and 9% by amount from FY2008. Although the number of in-house USDA Agricultural Research Service earmarks decreased by 47%, the amount of ARS earmarks increased 10%. Conservation earmarks decreased 16% by number and 23% by amount.

USDA Agencies and Programs

The Agriculture and Related Agencies appropriations bill covers all of USDA except for the Forest Service. This amounts to about 94% of USDA's total appropriation. The Forest Service is funded through the Interior appropriations bill. The order of the following sections reflects the order that the agencies are listed in the Agriculture appropriations bill. See Table 4 for more details on the amounts for specific agencies.

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 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) 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 omnibus enacted bill contains $2.64 billion in discretionary funds for research, extension, and education programs. This was $260 million more than requested by the Administration and slightly less than the $2.59 billion appropriated for FY2008.

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 over the previous two decades, as a federal budget surplus allowed greater spending for all non-defense research and development. From FY2001 through FY2003, supplemental funds appropriated specifically for anti-terrorism activities, not basic programs, accounted for most of the increases in the USDA research budget. Funding levels since have trended downward to historic levels (Figure 5). ARS and CSREES account for most of the research mission area's budget and their appropriations generally have tracked each other (Figure 6).

Although the states are required to provide 100% matching 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 down to the county level.

In an effort to find new money to boost the availability of competitive grants in the REE mission area, the House and Senate Agriculture Committees have tapped sources of available funds from the mandatory side of USDA's budget and elsewhere (e.g., the U.S. Treasury) twice since 1997. However, in every year except FY1999, the annual Agriculture appropriations act prohibited the use of those mandatory funds for the purposes the agriculture committees intended. On the other hand, in many years during the FY1999-FY2006 period, appropriations conferees provided more discretionary funds for ongoing REE programs than were contained in either the House- or Senate-passed versions of the bills. Nonetheless, once adjusted for inflation, these increases are not viewed by some as significant growth in spending for agricultural research. Agricultural scientists, stakeholders, and partners express concern for funding over the long term.

The 2008 farm bill institutes significant changes in the structure of the REE mission area, but retains and extends the existing authorities for REE programs. This is intended to maintain traditional program activities while the new structure is being implemented. On October 1, 2009, a new National Institute of Food and Agriculture (NIFA) will take the place of CSREES, and there will be one program planning staff (called the Research, Extension, and Education Office (REEO)) to coordinate the activities of ARS, ERS, NASS, and NIFA. Future budget requests for this mission area are to be in the form of a single line item. The new farm bill also provides mandatory funds for an expanded number of competitive grant programs, although it repeals the mandatory-funded Initiative for Future Agriculture and Food Systems (established in 1998 legislation).

Agricultural Research Service

The omnibus enacted bill provides a total of $1.19 billion for USDA's in-house science agency, the Agricultural Research Service, with $1.14 billion for research and $47 million to support 24 laboratory modernization projects. Research funding includes $112.6 million in congressionally-directed projects at USDA national research centers and laboratories. The House and Senate bills recommended $1.15 billion and $1.17 billion respectively. The Administration requested a total of $1.05 billion for ARS research (the FY2008 appropriation was $1.17 billion).

The omnibus identified a wheat stem rust known as Ug99 as a particularly urgent research area and provided $1.5 million for developing Ug99 resistant varieties. The bill also provided an increase of $800,000 for intensified research on honeybee colony collapse disorder (CCD) as the Administration had requested. The omnibus did not include the $10.4 million for pollinator research recommended in the Senate bill.

Cooperative State Research, Education, and Extension Service

The omnibus bill provides $1.22 billion for the Cooperative State Research, Education, and Extension Service (CSREES), a 3.1% increase from FY2008. The Senate bill provided $1.15 billion, a 2.9% reduction in discretionary funding from FY2008. The House bill recommended $1.2 billion. The Administration had requested $994.1 million, a 16% decrease from the FY2008 appropriation. CSREES is the agency that sends federal funds to land grant colleges of agriculture.

Of the $1.22 billion in the omnibus enacted bill, $691 million in discretionary spending will fund CSREES's research and education grant programs. This represented a $22.7 million increase from FY2008 and $155.8 million more than requested by the Administration. Of this research and education spending, the omnibus provides $207 million for Hatch funding to land-grant universities and agricultural experiment stations. For Special Research Grants, the bill provides $84.5 million, including funding for integrated Pest Management and Minor Crop Pest Management. The bill also provides $1.1 million for the Food and Agriculture Policy Institute and $14.4 million for Sustainable Agriculture. In addition to this discretionary funding, the farm bill also provides mandatory spending for the Organic Research and Extension Initiative ($18 million), the beginning farmer and rancher research program ($18 million); and $15 for the Outreach for Socially Disadvantaged Farmers program ($15 million), which CSREES administers. The omnibus bill did not limit any of the authorized mandatory spending.

The omnibus provides increased funding for cooperative extension programs in the states: $474.3 million ($453.2 million in FY2008). It also provides level funding for integrated research and extension programs: $55.9 million. The Administration had requested a $37 million reduction in the integrated research and extension programs.

The 2008 farm bill eliminated the Initiative for Future Agriculture and Food Systems (IFAFS), but combined the purpose of that program (with its emphasis on more applied research) with the National Research Initiative (NRI) competitive grants program (whose emphasis is more on fundamental, or basic, research). The farm bill authorizes appropriations of $700 million annually for the new combined competitive grant program, called the Agriculture and Food Research Initiative (AFRI). The omnibus bill provides $201 million for the AFRI, a $9 million increase from the NRI funding for FY2008.

Economic Research and Agricultural Statistics

The omnibus enacted bill provides $79.5 million for USDA's Economic Research Service (ERS, $77.4 in FY2008), $151.6 million for the National Agricultural Statistics Service (NASS, $162.2 million in FY2008). The Administration had requested $82.1 million for ERS and $153.5 million for the NASS.

Marketing and Regulatory Programs

Three agencies carry out USDA's marketing and regulatory programs mission area: the Animal and Plant Health Inspection Service (APHIS), the Agricultural Marketing Service (AMS), and the Grain Inspection, Packers, and Stockyards Administration (GIPSA).

Animal and Plant Health Inspection Service (APHIS)

APHIS is 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. APHIS has key responsibilities for dealing with such prominent concerns as avian influenza (AI), bovine spongiform encephalopathy (BSE or "mad cow disease"), bovine tuberculosis, a growing number of invasive plant pests—such as the Emerald Ash Borer, the Asian Long-horned Beetle, and the Glassy-winged Sharpshooter—and a national animal identification (ID) program for animal disease tracking and control, among other things. APHIS is also the USDA agency charged with administering the Animal Welfare Act (AWA), which seeks to protect pets and other animals used for research and entertainment.

The enacted omnibus bill provided an $876.7 million appropriation for APHIS, or $42.5 million below the President's FY2009 budget request of $919.1 million, but $9.0 million above the FY2008 level of $867.6 million. (An additional $4.7 million was appropriated for APHIS buildings and facilities, for which the Administration had sought $7.4 million in FY2009.) The budget estimated the collection of $241 million in existing user fees and trust funds in FY2009 in addition to the appropriated monies. The Administration again proposed new user fees of $9 million to pay for some of the agency's animal welfare activities, plus $11 million to pay for biotechnology regulatory services and veterinary biologics activities, to begin in the following fiscal year. The enacted omnibus bill did not make note of these proposed fees, which would have required authorizing legislation.

Within the APHIS appropriation, the committee report designated that $160.0 million be devoted to foreign pest and disease exclusion programs, compared with the Administration request for $170.5 million. Also within the total APHIS appropriation, the report designated $255.7 million for plant and animal health monitoring and surveillance activities; the Administration had requested $282.3 million. The report further included, within the APHIS total, $345.0 million for pest and disease management, which was above the Administration's proposed $329.9 million allocation. Other APHIS allocations noted in the committee report were $22.0 million for animal welfare regulation and $94.0 million in funding for scientific and technical services and management initiatives.

Foot and Mouth Disease

During markup of the reported Senate committee bill, appropriators approved an amendment to prohibit APHIS from allowing imports of any swine, ruminants, or their meat products from any region of Argentina, unless the Secretary certifies to Congress that that entire country is free of Foot and Mouth Disease (FMD). FMD is one of the most contagious animal diseases of pigs, sheep, goats, cattle, and other ruminants and has caused huge production and economic losses in affected areas. The United States has not had a reported outbreak since 1929, and it bans the import of these animals and of fresh (frozen and chilled) meats from them, if they are from areas with FMD, including much of South America. APHIS reportedly is working on a proposed rule to permit meat imports from FMD-free regions of Argentina, which has not reported any recent outbreaks. The enacted omnibus bill also provided $4.0 million in funding for APHIS foreign animal diseases and FMD activities.

Other Pest and Disease Monitoring and Management

Among other APHIS allocations noted in the committee report were $13.7 million for Animal and Plant Health Regulatory Enforcement, which includes increased funding to hire and train seven new investigators to address increased violations at major ports of entry referred by U.S. Customs and Border Protection.

The enacted omnibus bill provided $60.6 million in funding for APHIS avian flu surveillance, monitoring and eradication/preparedness activities. This is less than $67.4 million provided in FY2008, which included $500,000 to study AI virus in swine as part of the APHIS wildlife services account. The bill also provided $62.3 million for fruit fly exclusion and detection; $17.0 million for Chronic Wasting Disease; $9.6 million for brucellosis; and $27.0 million for agricultural quarantine and inspection.

Funds provided for APHIS in the enacted omnibus bill accept all transfers of funds proposed in the President's budget request. These transfers include $4.6 million from "Foreign Animal Disease/FMD" and $10.9 million from "Trade Issues Resolution and Management" into "Overseas Technical and Trade Operations;" $1.5 million "Trade Issues Resolution and Management" into "Import/Export;" $51.0 million from "Highly Pathogenic Avian Influenza'' and $15.6 million from "Low Pathogen Avian Influenza" into "Avian Influenza;" $1.9 million from "Biosecurity" and $2.0 million from "Biosurveillance" into "Emergency Management Systems;" and $3.7 million from "Emergency Management Systems" into "National Veterinary Stockpile."

Emerging Plant Pests

The emerging plant pests (EPP) account within the pest and disease management spending area (see above) would have been funded by the Senate committee at $133.7 million in FY2009, compared with an Administration request of $145.5 million and a FY2008 level of $127 million. The committee report further specified how most of this money should be divided among plant problems of major concern: $35.4 million for citrus health; $19.9 million for Asian long-horned beetle; $22.9 million for glassy-winged sharpshooter; $5.3 million for sudden oak death; $2.1 million for Karnal bunt; $34.6 million for emerald ash borer; $8.3 million for potato cyst nematode; $1.0 million for light brown apple moth; $1.5 million for Sirex woodwasp; and $2.1 million for miscellaneous pests. The committee report also provided for $469,000 to be used for Varroa mite suppression in Hawaii, in connection with concerns about colony collapse disorder among honey bees.⁹

More generally, the Administration and congressional appropriators have sparred for years over whether APHIS should—as appropriators have preferred—reach as needed into USDA's Commodity Credit Corporation (CCC) account for mandatory funds to deal with EPP and other plant and animal health problems on an emergency basis, or be provided the funds primarily through the annual USDA appropriation—as the Administration and OMB have argued.

Animal ID

The enacted omnibus provided $14.5 million for FY2009 to continue implementation of the National Animal Identification System (NAIS). This is an increase of $4.7 million from FY2008, but less than the Administration request of $24 million. As of July 2008, only about 500,000 premises were registered under the NAIS out of an estimated 1.4 million U.S. animal and poultry operations. This is despite USDA's commitment of approximately $128 million to the program over a number of years.

Progress has been slow on developing the NAIS. As a result, the omnibus report includes a list of date-specific NAIS objectives drawn from a 2008 APHIS animal disease traceability business plan. APHIS is directed to submit a report within one week after each of the milestone dates lapses describing the objective's status and why any deadline was missed. (See CRS Report RS22653, Animal Identification: Overview and Issues, by [author name scrubbed].)

Agricultural Marketing Service (AMS)

AMS is responsible for promoting the marketing and distribution of U.S. agricultural products in domestic and international markets. User fees and reimbursements, rather than appropriated funds, account for a substantial portion of spending by the agency. Such fees, which now cover AMS activities like product quality and process verification programs, commodity grading, and Perishable Agricultural Commodities Act licensing, will total an estimated $141 million in FY2008 and a projected $145 million in FY2009.

AMS historically receives additional funding each year through two separate appropriations mechanisms—the direct annual USDA appropriation and a transfer from the so-called Section 32 account. ¹⁰ Regarding the FY2009 direct appropriation, the Omnibus Appropriations Act provides $88 million, compared with $73 million in the Senate-reported bill, and unchanged from FY2008. The omnibus bill was $10.7 million above the Administration's FY2009 request of $77.3 million. The act provides $9.6 million under the Marketing Services program to implement the country of origin labeling (COOL) program. Also under the AMS Marketing Services account, $3.9 million is provided for the National Organic Program. Payments to states total $1.3 million under the Federal-State Marketing Improvement Program (FSMIP). FSMIP was funded at an unusually high level of $11.6 million in FY2008; the appropriators in that year used the program as the funding vehicle for $8.5 million in specialty crop (fruits, vegetables, tree nuts, and nursery crops) block grants to states as authorized under the Specialty Crops Competitiveness Act of 2004 (P.L. 108-465). With enactment of the 2008 farm bill, Congress now provides mandatory funding for specialty crop block grants through USDA's CCC account.

The 2008 farm bill also effectively sets new annual caps on how much Section 32 money AMS will be able to use for all of its other activities, the most significant being the purchase of surplus agricultural commodities. These caps are intended as a way to fund a fresh produce program for school nutrition programs and a computer system for commodity purchase support; without raising spending above the budget baseline, as estimated by the Congressional Budget Office (CBO). The farm bill cap for FY2009 was set at $1.173 billion; and the enacted omnibus lowered that to $1.072. The apparent effect of this reduction could be to free up additional Section 32 money (i.e., $101 million) that the committee presumably had redirected toward other programs in its bill.

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 is charged with ensuring competition and fair-trading practices in livestock and meat markets. The enacted omnibus provided $40.3 million in FY2009 for GIPSA salaries and expenses, which was less than the Administration's FY2009 request of $44 million but more than the FY2008 amount of $38.5 million.

Agency activities also are supported by user fees, amounting to approximately $42 million annually or about half the agency's overall budget. The Administration again proposed additional user fees—to take effect after FY2009—to offset some grain inspection and Packers and Stockyards (P&S) activities, to recoup an estimated $27 million annually; the omnibus report did not make note of this proposal, which would require authorizing legislation.

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 enacted omnibus provides $971.6 million for FSIS, approximately $41 million above the FY2008 level and approximately $20 million above the Administration request.

This congressional appropriation is being augmented in FY2009 by existing (currently authorized) user fees, which FSIS had earlier estimated would total $140 million for the fiscal year. The omnibus does not make note of an Administration request for new user fees totaling another $96 million, but not starting until after FY2009. This proposal, repeated from the FY2008 Administration budget, would have included $92 million in new licensing fees for meat and poultry establishments, and $4 million in "performance fees" charged to establishments involved in product retesting, recalls or illness outbreaks. Such fees would require new authorizing legislation.

According to the explanatory statement to accompany the enacted omnibus, the FY2009 increase includes the "full estimated costs" of implementing two 2008 farm bill (P.L. 110-246) provisions which require FSIS to begin inspecting catfish products, and to offer state-inspected plants a new option to ship their products across state lines. (For details see CRS Report RL32922, Meat and Poultry Inspection: Background and Selected Issues, by [author name scrubbed].)

The explanatory statement also notes that the increase includes an additional $2 million for strengthened enforcement of the Humane Methods of Slaughter Act (HMSA). Language in the law itself directs USDA to employ no fewer than 120 full-time equivalent positions solely for HMSA inspections and enforcement, and also to obligate $3 million to maintain the Humane Animal Tracking System. The Department had come under criticism in 2008 when an animal welfare advocacy group released a videotape showing the mistreatment of cattle at a California slaughter plant. The charges led to questions about enforcement of the HMSA, the entry of some nonambulatory ("downer") cattle into the food supply, and the largest meat recall ever. This was despite dedicated funding and instructions from Congress in several previous appropriations laws to increase enforcement of the humane slaughter law. (See CRS Report RS22819, Nonambulatory Livestock and the Humane Methods of Slaughter Act, by [author name scrubbed].)

The explanatory statement expresses "very serious concerns about contaminated foods from China and therefore the bill retains language prohibiting FSIS from using funds to move forward with rules that would allow for the importation of poultry products from China into the U.S." It calls on USDA to submit a report to Congress on the safety implications of such changes and a plan of action to guarantee the safety of Chinese poultry product imports. Language blocking this rule to allow certain processed poultry products to enter, which was published as a final FSIS rule on April 24, 2006, was effectively delayed by the FY2007 and FY2008 Agriculture appropriations measures.

Farm Service Agency

USDA's Farm Service Agency (FSA) is probably best known for administering the farm commodity income support and disaster assistance programs, and making these payments to farmers through a network of county offices. In addition, FSA also administers USDA's direct and guaranteed farm loan programs, certain mandatory conservation programs (in cooperation with the Natural Resources Conservation Service), and certain international food assistance and export credit programs (in cooperation with the Foreign Agriculture Service).

FSA Salaries and Expenses

All of the administrative funds used by FSA to carry out its programs are consolidated into one account. A direct appropriation for FSA salaries and expenses pays to carry out the activities such as the farm commodity programs. Transfers are received for administration of CCC export credit guarantees, P.L. 480 loans, and the farm loan programs.

The enacted FY2009appropriation provides $1.483 billion for FSA salaries and expenses, comprised of $1.17 billion in direct appropriations plus $312 million in transfers from other parts of USDA. The total is 3.7% higher than FY2008, but 2.5% below the Administration's request.

Unlike the past few years' appropriations bills, the FY2009 act did not contain language prohibiting closure of FSA county offices. That language was incorporated into the 2008 farm bill as a two-year prohibition with certain exceptions (P.L. 110-246, sec. 14212).

The conference agreement notes that $22 million is for information technology expenses and stabilization of the existing network. Separately, the economic stimulus act (P.L. 111-5) provided another $50 million for maintaining and modernizing FSA's computer system. These amounts address "stabilization" and a limited amount of "modernization" of the existing outdated USDA mainframe system. Stabilization for FY2010 and modernization plans through FY2011 will need future appropriations of about $320 million according to USDA's plans.

For many years, FSA has had problems with an outdated mainframe computer system. Its service to farmers—particularly through its network of county offices where enrollment and verification occurs—has been jeopardized by computer malfunctions. At one time in 2007, the computer system would fail daily or county offices would be rationed in the amount of time they would be allowed to use or access their computers because of overloading the system. Data processing requirements are increasing with each farm bill, and the 2008 farm bill's new Average Crop Revenue Election (ACRE) and adjusted gross income limits are expected to further stress the antiquated computer system. For many years, FSA has sought increased funding for computers, and to some extent partial funding has been appropriated through annual appropriations bills, but the computer problems have continued.

Following the 2007 computer system failures, USDA developed a "stabilization and modernization" plan in consultation with industry experts. The stabilization plan is meant to shore up the current computer system while upgrades are implemented and prepare it for migration to the new system. The modernization plan (called MIDAS, "modernize and innovate the delivery of agricultural systems") would replace antiquated mainframe hardware that relies on the outdated COBOL computer language with a modern Web-based system.

A May 2008 report by the Government Accountability Office (GAO) finds that the USDA plan addresses technical issues, but lacked details in the business plan for efficient implementation.¹¹

In August 2008, FSA estimated that the stabilization plan needed $87 million in additional funding through its duration of FY2010. For the modernization plan, the development and initial implementation of MIDAS was estimated to cost $305 million over a three-year period (FY2009-FY2011).¹² In August 2008, the Bush Administration made a supplemental FY2009 budget request for $172 million for FSA computers, including $51 million for stabilization, $66 million for MIDAS costs in FY2009, and $55 million for costs to implement the 2008 farm bill.

FSA Farm Loan Programs

The USDA Farm Service Agency serves as a lender of last resort for family farmers unable to obtain credit from a commercial lender. USDA may provide direct farm loans (loans made directly from USDA to farmers), but it can also guarantee the timely repayment of principal and interest on qualified loans to farmers from commercial lenders. FSA loans are used to finance farm real estate, operating expenses, and recovery from natural disasters. Some 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 from farmer non-repayment of the loans. The amount of loans that can be made—the loan authority—is several times larger than the subsidy level.

The regular FY2009 appropriation is $147 million of budget authority to support $3.427 billion of loans. This is the same loan authority as for FY2008, with 1% less budget authority.

Given the financial pressures of the global financial crisis in 2009, FSA has experienced higher demand for its loans. At the end of May 2009, the demand for direct farm operating loans was up 81% over a year ago, demand for direct ownership loans was up 132%, and demand for guaranteed operating loans was up 31%. An unusually high number of direct operating loan applications are from new customers: 45% this year compared with about 20% usually.¹³

Because of this increased demand, Congress has made two supplemental appropriations for FSA farm loans and USDA made an internal transfer within the loan program. First, the economic stimulus act (P.L. 111-5) provided an additional $173 million of guaranteed operating loans in February 2009. That amount, however, was consumed quickly by the backlog of approved but unfunded loans. In June 2009, a second supplemental appropriations act (P.L. 111-32) provided an additional $810 million of loan authority for direct farm ownership loans, direct farm operating loans, and guaranteed farm operating loans. Moreover, USDA used its authority to make an internal transfer from the lesser-used interest-assistance guaranteed operating loan account into the backlogged direct farm operating and guaranteed farm operating accounts.

Table 7 summarizes the FY2009 funding sources for FSA loans. For more on agricultural credit in general, see CRS Report RS21977, Agricultural Credit: Institutions and Issues, by [author name scrubbed].

Commodity Credit Corporation

Although the Farm Service Agency pays the discretionary salaries and expenses to administer the farm income support and disaster assistance programs, the Commodity Credit Corporation (CCC) is the funding mechanism for the mandatory payments that farmers receive. Most spending for USDA's mandatory agriculture and conservation programs was authorized by the 2008 farm bill (P.L. 110-246). For more information, see CRS Report RL34696, The 2008 Farm Bill: Major Provisions and Legislative Action, coordinated by [author name scrubbed].

The CCC is a wholly owned government corporation that has the legal authority to borrow up to $30 billion at any one time from the U.S. Treasury. These borrowed funds finance spending for programs such as farm commodity subsidies and various conservation, trade, and rural development programs. Emergency supplemental spending also has been paid from the CCC over the years, particularly for ad hoc farm disaster payments, for direct market loss payments to growers of various commodities in response to low farm commodity prices, and for animal and plant disease eradication efforts.

Although the CCC can borrow from the Treasury, it eventually must repay the funds it borrows. It may earn a small amount of money from activities such as buying and selling commodities and receiving interest payments on loans. But because the CCC never earns more than it spends, its borrowing authority must be replenished periodically through a congressional appropriation so that its $30 billion debt limit is not depleted. Congress generally provides this infusion through the annual USDA appropriation law. In recent years, the CCC has received a "current indefinite appropriation," which provides "such sums as are necessary" during the fiscal year.

Mandatory outlays for the commodity programs rise and fall automatically based on economic or weather conditions. Funding needs are difficult to estimate and more or less of the Treasury line of credit may be used year to year. Similarly, the congressional appropriation may not always restore the line of credit to the previous year's level. For these reasons, the appropriation to the CCC may not reflect the outlays of the CCC for the agricultural programs. Outlays (e.g., payments to farmers) in FY2009 will be funded initially through the borrowing authority of the CCC and reimbursed to the Treasury through a separate (and possibly future) appropriation.

For FY2009, USDA projects that CCC net expenditures (outlays) will be $12 billion, up from $8.2 billion in FY2008 and $10 billion in FY2007, but down from $20 billion in FY2006.

To replenish CCC's borrowing authority with the Treasury, the enacted FY2009 appropriation concurs with the Administration request for an indefinite appropriation ("such sums as necessary") for CCC, estimated to be $11.1 billion, down 14% from $13 billion in FY2008. With these amounts of outlays and appropriations, the CCC would have about $25 billion of its $30 billion line of credit available at the end of the fiscal year.¹⁴

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 and are reimbursed by the government for their administrative and operating expenses.

The annual Agriculture appropriations bill traditionally makes two separate appropriations for the federal crop insurance program. First, it provides discretionary funding for the salaries and expenses of the RMA. Second, it provides "such sums as are necessary" for the Federal Crop Insurance Fund, which finances all other expenses of the program, including premium subsidies, indemnity payments, and reimbursements to the private insurance companies.

For the salaries and expenses of the RMA, the FY2009 Omnibus Appropriations Act concurred with the Administration request for $77.18 million, which represented a 1.4% increase over the FY2008 appropriated level. Also, the act allows RMA to tap mandatory money made available under the Federal Crop Insurance Act for improving the agency's information management system.

Appropriators also concurred with the Administration estimate of the need for an FY2009 appropriation of $6.58 billion for the Federal Crop Insurance Fund, although the amount actually required to cover program losses and other subsidies is subject to change based on actual crop losses and farmer participation rates in the program. The Administration's FY2009 estimate for the fund is significantly higher than the estimated $4.82 billion in FY2008. Crop losses in FY2009 are expected to be greater than last year's low loss experience. Also, the increase is partially due to the higher value of crops given higher market prices.

For more information on crop insurance, see CRS Report R40532, Federal Crop Insurance: Background and Issues, by [author name scrubbed].

Conservation

The enacted bill provides increased funding for discretionary Natural Resource Conservation Service (NRCS) programs, rejecting some of the Administration's proposed reductions. The enacted omnibus makes few changes to mandatory programs.

Discretionary Programs

The enacted omnibus provides $969.2 total for FY2009 discretionary conservation programs. This was $31.6 million (+3%) more than was provided in FY2008, nearly $1 million less than was provided in the Senate-reported bill, and $167.6 million more than was requested by the Administration. All the discretionary conservation programs are administered by NRCS.

Most of the increase was in appropriations for Conservation Operations (CO), the largest discretionary program. The enacted omnibus provided $853.4 million for FY2009, which was $19 million above the FY2008 enacted level and $58.6 million above the Administration's request. The omnibus specified that no more than $250,000 be available for alterations and improvements to buildings and other public improvements, and that $31.7 million (3.7% of total CO funding) be available for congressionally-designated projects. The omnibus also specifies that $10 million of CO is to be used to strengthen NRCS's budgeting, accounting, contracting, and information technologies system and requires the agency to submit multiple reports relating to a 2008 financial audit, additional technology funding, and the Conservation Stewardship Program (CSP).

The enacted omnibus also maintained similar funding levels for other discretionary programs at levels enacted for FY2008, thus restoring funding for programs the Administration proposed to terminate, including the Watershed and Flood Prevention Operations (the enacted omnibus included $24.3 million for FY2009) and the Resource Conservation and Development (RC&D) program ($50.7 million for FY2009). The omnibus also specified that no more than $15.5 million of funds for Watershed and Flood Prevention Operations be used for technical assistance; of the $24.3 million enacted for the Watershed and Flood Prevention Operations, $23.6 million (97%) is directed to congressionally-designated projects; and no more than $3.1 million of funds for RC&D could be available for national headquarters activities. The Administration proposed to reduce funding for the Watershed Rehabilitation Program to $6 million, but the enacted omnibus contained $40.0 million for FY2009.

Supplemental Appropriations

The American Recovery and Reinvestment Act (ARRA, P.L. 111-5) provided the Watershed and Flood Prevention Operations $145 million and the Watershed Rehabilitation Program $50 million for FY2009 and FY2010. Unlike the enacted omnibus, this supplemental funding was not directed to congressionally-designated projects. For additional information on conservation program funding in the ARRA, see CRS Report R40160, Agriculture, Nutrition, and Rural Provisions in the American Recovery and Reinvestment Act (ARRA) of 2009, coordinated by [author name scrubbed].

In a second FY2009 supplemental appropriation (P.L. 111-32), Emergency Conservation Program (ECP) funding that was previously appropriated specifically for 2005 hurricane relief may now be used for current and future year disaster relief. Currently, the Farm Service Agency (FSA) has approximately $71 million in unobligated ECP from the 2005 hurricanes. Aside from servicing current contracts, FSA reports no significant demand for those remaining ECP funds. This change does not provide new funding but rather allows the unobligated balance to be used for current and future ECP needs. FSA has approximately $40 million in unfunded ECP requests for disasters, including previous hurricanes, floods, ice storms, and tornadoes. The agency expects an additional $30 million will be requested before the end of FY2009 based on prior year experiences, current drought conditions, and hurricane and tornado seasons.

Mandatory Programs

Mandatory conservation programs are administered by NRCS and the Farm Service Agency (FSA). Funding comes from the Commodity Credit Corporation (CCC). The enacted omnibus makes few changes to mandatory conservation programs. Overall, FY2009 funding for NRCS's mandatory spending programs in the Senate bill was reduced by $435 million (Table 5) from the FY2009 level authorized by the 2008 farm bill.

Specifically, funding levels for the Environmental Quality Incentives Program (EQIP) are limited to $1.07 billion for FY2009—a reduction of $270 million from the authorized level of $1.34 billion in the 2008 farm bill. Funding for the largest conservation program, FSA's Conservation Reserve Program (CRP), did not change and was estimated at about $2.0 billion for FY2009.

The Watershed Rehabilitation Program is authorized to receive mandatory funding in addition to the $40 million in discretionary funding for FY2009 as described above. The 2008 farm bill authorized $100 million of mandatory funding for FY2009 (available until expended). The enacted omnibus specified that no mandatory funds be used the Watershed Rehabilitation Program, which includes the newly authorized $100 million in FY2009 and $65 million in carryover from an FY2007 funding restriction.

Rural Development

Three agencies are responsible for USDA's rural development mission area:

• Rural Housing Service (RHS),
• Rural Business-Cooperative Service (RBS),
• Rural Utilities Service (RUS).

An Office of Community Development provides community development support through field offices. This mission area also administers the rural portion of the Empowerment Zones and Enterprise Communities Initiative, Rural Economic Area Partnerships, and the National Rural Development Partnership.

Part of the rural development appropriation covers the federal cost of making loans, referred to as a loan subsidy. Loan subsidy is directly related to any interest rate reduction provided by the government, as well as a projection of anticipated loan losses from non-repayment of the loans. The amount of loans that can be made, the loan authority, is several times larger than the subsidy.

For FY2009, the enacted omnibus bill provides $2.73 billion (+17% over FY2008) in discretionary budget authority to support $17 billion (+3% over FY2008) in USDA rural development loan and grant programs. The Senate recommended $149 million more in budget authority, but this amount would have supported $551 million less in program funding. The Administration had requested $603 million less in budget authority, and $4.2 billion less in loan authority. The appropriation also includes $20 million for high priority information technology infrastructure.

Rural Housing Service (RHS)

The enacted omnibus provides a $1.75 billion appropriation for RHS loans and grants, about 32% more (+$422 million) than enacted for FY2008. This budget authority will support a loan authorization level of $8.1 billion, over $2 billion more than FY2008. Almost all this loan authorization difference is accounted for by the enacted appropriation for the Section 502 single family housing loan program.

Single-family housing loans (Section 502¹⁵ direct and guaranteed loans) constitute the largest RHS loan account and represent 90% of the total loan authority under RHS. Guaranteed loans under the Section 502 program account for 85% of this total ($6.2 billion), and Section 502 direct loans comprises the other 15% of the total ($1.1 billion). The Section 502 program also received $200 million in supplemental funding under the American Recovery and Reinvestment Act of 2009 (ARRA) to support an additional $11.5 billion in direct and guaranteed loans.

For the rental assistance program (Section 521), the enacted omnibus provides just over $896 million in budget authority, an increase of $424 million over FY2008 (+109%). This is approximately $100 million less than recommended by the Senate and House bills, and nearly the same as requested by the Administration. The doubling of the omnibus enacted amount over the FY2008 enacted level reflects a higher demand or need for the rental assistance program by low income tenants, who are requesting contract renewals at a higher rate.

For mutual and self-help housing grants, the omnibus bill authorizes the same as in FY2008 ($38.7 million), and the same as recommended by both House and Senate bills. The Administration requested $0 for the program. For the rural housing assistance grants, the omnibus enacted bill provides $41.5 million, $2 million more than the Senate recommendation and $2 million less than the House bill.¹⁶ For the farm labor account (Section 514/516), the omnibus bill includes $18.3 million for loan subsidies and grants, about $3 million less than enacted for FY2008. The Committee directed USDA to use 10% of the Section 516 grant appropriation for technical assistance for farm housing and requested the Government Accountability Office to conduct an assessment of the farm labor housing program. The Administration requested no funding for the program. For the multi-family housing revitalization program, the omnibus enacted bill contains $27.7 million, nearly the same as enacted for the program in FY2008.

Within RHS, the omnibus bill provides $63.8 million for the Rural Community Facilities account to be allocated among direct loan subsidies ($16.5 million), guaranteed loan subsidies ($6.4 million), and grants ($20.1 million). The appropriation also includes grant funding fro the Rural Community Development Initiative ($6.3 million), Economic Impact Initiative grants ($10 million), and Tribal college grants ($4 million). Total funding for the Rural Community Facilities program is approximately $5 million less than for FY2008 and approximately $40 million more than the Administration's request.¹⁷ The Community Facilities program also received $130 million in supplemental budget authority for loans and grants under ARRA.

Rural Business-Cooperative Service (RBS)

The omnibus enacted bill provides RBS $132 million in budget authority ($46 million less than FY2008, -26%), which will support $1.1 billion in loan authority, 14% less than FY2008. These amounts were higher than the Administration's request, which was for $54 million in budget authority and $734 million in loan authority.

The appropriation includes $87.4 million for the Rural Business Program account (see footnote 17), nearly the same as FY2008. This budget authority provides $38.7 million for Rural Business Enterprise grants, $2.5 million for Rural Business Opportunity grants, $43 million in loan subsidies for Business and Industry (B&I) loan guarantees ($993.0 million in loan authorization), and $3.0 million for the Delta Regional Authority. These funding levels were the same as enacted for FY2008 and nearly the same as requested by the Administration and recommended by both House and Senate bills. In addition to the appropriation in the omnibus enacted bill, the Rural Business Enterprise program and the B&I loan guarantee program will receive $150 million from ARRA.

The omnibus bill also includes $8.1 million for the rural Empowerment Zone/Enterprise Communities (EZ/EC) grants programs, the same as FY2008, and the same as recommended by the Senate and House bills. The omnibus appropriation for the Renewable Energy Program is $5.0 million ($31 million less than FY2008 and $45 million less than recommended by the Senate bill). However, the farm bill also authorized $55 million in mandatory spending for the program in FY2009. The enacted level will support $26 million in loans ($180 million under FY2008). The Administration had requested $0 for these programs.

The omnibus bill also provides $12.6 million in Rural Cooperative Development Grants (-$15.2 million compared to FY2008) to support the Cooperative Development program ($4.4 million), Appropriate Technology Transfer for Rural Areas ($2.6 million), Value-Added Product Grants ($3.9 million), and Grants to Assist Minority Producers ($1.5 million). The appropriation for Value-Added Product Grants is $15 million less than enacted for FY2008 and $12 million less than recommended by the Senate bill. However, the farm bill (P.L. 110-246) included $15 million in mandatory spending for the program in FY2009, providing a total of $18.9 million for FY2009. The Senate bill had recommended not spending this mandatory funding. The omnibus bill also includes $18.8 million to support $33.1 million of loans for the Rural Development Loan Fund, the same as for FY2008.

Rural Utilities Service (RUS)

For FY2009, the omnibus enacted bill provides $653 million of budget authority and $7.76 billion in loan authorization. This is $1.4 billion less than enacted for FY2008, with only $4 million more in budget authority. The enacted loan level is more than requested by the Administration, but $1.4 billion less than in FY2008.

Loan subsidies and grants under the Rural Water and Waste Disposal Program account (see footnote 17) represent the largest share of budget authority under RUS programs (about 84% of the total). For the various water and waste disposal programs, the omnibus enacted bill contains $556.3 million in budget authority, $2 million less than FY2008 and $287 million more than requested.¹⁸ This enacted level will support $75 million in direct and guaranteed loans, over $1 billion less than for FY2008. The enacted level is also over $1 billion less than requested and recommended by both House and Senate bills. However, the 2008 farm bill (P.L. 110-246) provided $120 million in budget authority for a one time funding of back-log water and waste water project applications. In addition, the American Recovery and Reinvestment Act of 2009 includes a supplemental appropriation of $1.38 billion. This supplemental budget authority under ARRA will support a program level of $3.8 billion in rural water and waste water projects.

The committee noted its concern that certain changes in the procedures for setting borrower interest rates authorized in the farm bill could have the effect of decreasing funding for water and waste water projects in the poorest and most remote rural communities. The Committee further noted their expectation that USDA will deliver the same total program level to these communities in the absence of the changes authorized in the farm bill. They directed USDA to provide a report by November 2009 describing the quantitative measure used by USDA to determine the socioeconomic and geographic characteristics of the rural communities served by the water and waste water program. They also directed USDA to provide a report indentifying Native American, Alaska Native, and colonia areas where water and waste water assistance has been provided and where further resources are most needed.

The omnibus bill includes $15.6 million in budget authority to support $400.5 million in broadband telecommunication loans, approximately $103 million more than FY2008. The bill also provides $13.4 million for telecommunication grants. Supplemental budget authority under ARRA will provide $2.8 billion for broadband infrastructure development, supporting more than $4 billion in new broadband infrastructure to rural areas.

For the Distance Learning/Telemedicine program, the omnibus bill contains approximately $34.7 million in grant support, the same as for FY2008, and the same as recommended by both House and Senate bills.

For more information on USDA rural development programs, see CRS Report RL31837, An Overview of USDA Rural Development Programs, by [author name scrubbed].

Domestic Food Assistance

Funding for domestic food assistance represents two-thirds of USDA's budget. These programs are, for the most part, mandatory entitlements; that is, funding depends directly on program participation and indexing of benefit payments. The biggest mandatory programs include child nutrition programs, the newly renamed Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp program), and The Emergency Food Assistance Program (TEFAP). The three main discretionary budget items are the Special Supplemental Nutrition Program for Women, Infants, and Children (the WIC program), the Commodity Supplemental Food Program (the CSFP), and federal nutrition program administration.

For FY2009, the enacted omnibus appropriations measure makes available a total of $76.2 billion for domestic food assistance administered by the USDA. The Senate's bill would have provided a total of $65 billion, about $900 million more than the Administration's request and $5 billion more than FY2008.¹⁹

Programs under the Food and Nutrition Act (Formerly the Food Stamp Act)

Appropriations under the Food and Nutrition Act support (1) the regular Supplemental Nutrition Assistance Program (SNAP), (2) a Nutrition Assistance Block Grant for Puerto Rico and small nutrition assistance grants to American Samoa and the Commonwealth of the Northern Marianas (all in lieu of the SNAP), (3) the cost of commodities and administration under the Food Distribution Program on Indian Reservations (the FDPIR), (4) the cost of commodities for TEFAP (but generally not related administrative or distribution expenses, which are covered under the Commodity Assistance Program budget account), and (5) Community Food Projects and grants to improve access to the SNAP.

The omnibus appropriations law funded the above-noted programs covered by the Food and Nutrition Act at a total of $54 billion. The Senate bill would have appropriated a total of $43.4 billion in FY2009, up from $37.9 billion in FY2008 and approximately the same as the Administration's request—in all cases, a $3 billion contingency reserve for SNAP benefits was included in case cost projections prove too low.

• On the basis of revised projections of participation and the value of indexed benefit amounts, the omnibus budget agreement provides $51.8 billion for the regular SNAP (including a $3 billion reserve fund). The Administration had asked for a $41.4 billion appropriation for the regular SNAP, including the $3 billion contingency reserve and a small amount to cover new program costs attendant on termination of the CSFP (see later discussions of the Commodity Assistance Program account and Special Program Initiatives). This represented a $3.5 billion increase over FY2008. The Senate bill effectively adopted the FY2009 dollar request, but rejected the Administration's proposal to end the CSFP.
• For Puerto Rico, American Samoa, and the Northern Marianas, the omnibus appropriations bill provides $1.8 billion, based on new estimates of food price inflation. The Administration and the Senate had proposed an FY2009 amount totaling some $1.7 billion for these outlying areas, a slight increase over FY2008.
• For the FDPIR, the omnibus appropriations measure increases funding to $115 million. The Administration's FY2009 budget for the FDPIR had asked for $92 million, up from $88 million in FY2008, and the Senate bill adopted the Administration's amount.
• For FY2009, the funding level for TEFAP commodities in the omnibus appropriations law is noticeably higher than the Administration's request for $140 million (the amount available in FY2008). It appropriates $250 million, reflecting a mandatory spending requirement in the 2008 farm bill.
• As with the Senate bill, the omnibus appropriations measure makes $5 million available for both Community Food Projects and SNAP access grants (no change from FY2008 or the Administration's request).

Child Nutrition Programs

Appropriations under the Child Nutrition account fund a number of programs and activities covered by the Richard B. Russell National School Lunch Act and the Child Nutrition Act. These include the School Lunch and Breakfast programs, the Child and Adult Care Food Program (the CACFP), the Summer Food Service program, the Special Milk program, assistance for related state administrative expenses, procurement of commodities for child nutrition programs (in addition to those funded from separate budget accounts), state-federal reviews of the integrity of school meal operations ("Coordinated Reviews"), "Team Nutrition" and food safety education initiatives to improve meal quality and safety in child nutrition programs, technical assistance and other similar activities related to the CACFP, and data collection efforts. Funding for a program offering free fresh fruits and vegetables in schools is discussed later in the section on "Special Program Initiatives."

On the basis of new projections of increased participation and the indexed value of child nutrition subsidies, the omnibus appropriations bill makes some $15 billion available for FY2009. The Administration had proposed an FY2009 appropriation of $14.5 billion for all child nutrition programs (based on older cost estimates), an increase of some $550 million over FY2008. The Senate bill followed the Administration's requested amounts for FY2009. No specific program-by-program break-out of the total child nutrition appropriation is available. However, it is clear that about 75% of the funds will be available for school meal programs and some 18% will be provided for programs serving children outside of regular school venues (e.g., child care centers, summer programs).

The WIC Program

The enacted omnibus FY2009 appropriations law provides $6.86 billion for the WIC program. The Senate bill would have provided a substantially larger amount for the WIC program than requested by the Administration: $6.75 billion vs. $6.0 billion. The final appropriation and the Senate's amount were based on more current estimates of program needs (participation and food costs) than the Administration's and sought to assure that there would be sufficient funds to serve all those eligible who wish to participate.

Commodity Assistance Program

The Commodity Assistance Program supports several discretionary programs and activities: (1) the Commodity Supplemental Food Program (the CSFP), (2) funding for administrative and distribution costs under TEFAP, (3) the WIC Farmers' Market Nutrition program, (4) special assistance for certain nuclear-affected zones in the Marshall Islands, and (5) commodity assistance in the case of natural disasters.

For FY2009, the Administration had proposed a major change affecting this budget account; it recommended terminating the CSFP, which was appropriated $142 million in FY2008 (see "Special Program Initiatives" at the end of this section). As a result, its requested total amount was $70 million (down from $212 million in FY2008). The budget request for the remaining program areas asked for FY2009 funding at the same level as in FY2008: $49.5 million for TEFAP administrative and distribution expenses, $19.8 million for the WIC Farmers' Market Nutrition program, and a total of some $1 million for the nuclear-affected zones and disaster assistance.

On the other hand, the Senate-reported provision for the Commodity Assistance Program account rejected the proposal to terminate the CSFP and, instead, increased funding to $155 million in FY2009. In other respects, it adopted the Administration's request. As a result, the Senate bill would have provided a total of $225 million for FY2009.

The omnibus appropriations measure increases total FY2009 funding for the Commodity Assistance Program account to $231 million, with approximately $160 million available for the CSFP.

Nutrition Program Administration (and the Congressional Hunger Center)

This budget account covers spending for federal administration of all the domestic food assistance programs noted above, special projects for improving the integrity and quality of nutrition programs, and the Center for Nutrition Policy and Promotion (CNPP).

For FY2009, the Administration requested $150 million for nutrition program administration activities. This was a significant increase over the approximately $140 million provided for FY2008 and took into account salary increases and new initiatives relating to program integrity and oversight and dietary guidelines. As with the Senate bill, the omnibus appropriations law appropriates $143 million for nutrition program administration.

Discretionary grants for the Congressional Hunger Center (and its Bill Emerson and Mickey Leland hunger fellowships) also have typically been administered as part of this budget account. The FY2008 appropriation provided $2.5 million for the Center, but the Administration proposed no money for FY2009. Section 731 of the Omnibus Appropriations Act appropriates $2.3 million for the Hunger Center (the Senate would have appropriated $2.5 million).

Special Program Initiatives

In addition to regular appropriations, the FY2009 omnibus appropriations law included (or rejected) changes to program rules established in underlying authorizing laws for domestic food assistance programs.

Child Nutrition Programs

In Section 735, the omnibus measure adds two additional states (Maryland and Vermont) to the eight states in which federal subsidies are offered for suppers served in after-school programs. The eight existing states are Delaware, Illinois, Michigan, Missouri, New York, Oregon, Pennsylvania, and West Virginia. The Senate bill had added one state (Vermont).

Fresh Fruits and Vegetables in Schools

The 2008 farm bill established a program offering fresh fruits and vegetables in selected elementary schools nationwide. This replaced a fresh fruit and vegetable program that operated in a limited number of states (up to $20 million was available for FY2008). The farm bill provided mandatory funding (outside the regular appropriations process) for this expanded effort. For school year 2008-2009 (beginning July 2008), the farm bill included $40 million. For school year 2009-2010 (beginning July 2009), it provided $65 million. As with the Senate bill, the omnibus appropriations law delays the availability of some of the 2009-2010 funding: $16 million on July 1, 2009, and the remaining $49 million on October 1, 2009. For more detail, see CRS Report RL33829, Domestic Food Assistance and the 2008 Farm Bill, by [author name scrubbed].

The WIC Program

The Administration proposed to cap the amount of the per-person grant that states get to administer the WIC program and provide nutrition education and other services (in addition to money for WIC food vouchers). Savings of some $150 million were projected. It also recommended denying automatic WIC eligibility to Medicaid participants with income above 250% of the federal poverty income guidelines. However, the omnibus appropriations law (following the Senate bill) rejects both proposals.

Commodity Assistance Program

As in previous years, the Administration recommended terminating the CSFP in FY2009. It contended that the program duplicates benefits provided under the SNAP and the WIC program and provided for special SNAP benefits and outreach efforts to the elderly population who make up almost all of the CSFP caseload. As with the Senate bill, the omnibus FY2009 appropriations law turns down the Administration's vproposal and provides increased funding for the CSFP.

Agricultural Trade and Food Aid

The FY2009 omnibus includes discretionary appropriations for USDA's international activities in fiscal 2009 of $1.499 billion, with P.L. 480 Title II humanitarian food aid being the largest component. This fiscal 2009 appropriation is just $2.6 million less than called for by the Bush Administration in its budget request. An additional $3.4 billion of mandatory CCC funds are allocated in the Administration's budget to other USDA international programs during FY2009. Since the enacted measure imposes no restriction on mandatory international program spending, funding for these activities (export market promotion, export credit guarantees, and some international food aid) will be at levels authorized in the trade title of the 2008 farm bill (P.L. 110-234).

The enacted bill provides $164.5 million for the Foreign Agricultural Service (FAS) to administer USDA's international programs, up from $158 million in FY2008, but $2.6 million less than requested by the Bush Administration for FY2009.

For P.L. 480 foreign food assistance, the amount appropriated is $1.229 billion, all for Title II commodity donations, and only $25,000 less than the budget request. The fiscal 2009 appropriation for Title II is $15 million more than enacted for fiscal 2008. However, this appropriated amount is less than the $2.5 billion of discretionary funding authorized for Title II in the recently enacted 2008 farm bill (P.L. 110-246). The FY2008-FY2009 "bridge" supplemental appropriations (P.L. 110-252) included $395 million for Title II commodity donations in FY2009 bringing the appropriation available for Title II in FY2009 to a total of $1.627 billion.

The President's budget proposed (for the third time beginning with FY2007) to allow the Administrator of the U.S. Agency for International Development (USAID) to use up to 25% of P.L. 480 Title II funds for local or regional purchases of commodities (i.e., non-U.S. commodities) to address international food crises. The enacted appropriations measure again does not include this proposal. The 2008 farm bill, though, contains a provision authorizing $60 million of CCC funds, not Title II appropriations, over four years for a pilot project to assess local/regional purchases of food aid for emergency relief. The explanatory statement accompanying the underlying bill (H.R.1105) noted that the 2008 farm bill contained a provision mandating a minimum level of P.L. 480 Title II funds (a "safe box") to be used for non-emergency (development) assistance ($375 million in FY2009). The explanatory statement directs FAS to "immediately notify the Committees (House and Senate Agriculture and Appropriations committees) once a determination is made that the need for emergency assistance will exceed the amount available." The fiscal 2009 act concurred with the President's request for no funds for P.L. 480 Title I sales and grants. Authority for Title I concessional food aid has not been requested since FY2006, reflecting, according to the fiscal 2009 budget submission, declining demand for concessional food aid finance and increasing need for food aid for emergency relief. Eliminating food aid loans and providing only commodity donations as food aid also accords with proposals in the on-going Doha Round of multilateral trade negotiations to provide food aid in fully grant form.

Two USDA-administered food aid programs, Food for Progress (FFP) and Section 416(b) donations, receive mandatory funding. The President's budget assumed $340 million of CCC funds for FFP, which provides food aid to emerging democracies. P.L. 480 Title I funds can be allocated to FFP, but in the absence of an appropriation for Title I, that source would be unavailable in FY2009. Similarly, USDA anticipates that no CCC commodity inventories would be available for distribution as food aid under Section 416(b), a program that makes surplus agricultural commodities available overseas. The Bill Emerson Humanitarian Trust, a reserve of commodities and cash to meet unanticipated food aid needs, did not receive a specific allocation of CCC funds in the 2009 budget submission. The statement accompanying the bill directs the Secretary, in consultation with the Administrator of USAID, to submit quarterly reports to the Committees on the status of the Bill Emerson Humanitarian Trust, as well as notify the Committees when the Trust has been drawn down.

P.L. 111-8 provides $100 million of discretionary funds for the McGovern-Dole International Food for Education and Child Nutrition Program, the amount requested by the Administration. In addition, the 2008 farm bill authorized $84 million of mandatory funds from the CCC for McGovern-Dole in FY2009 to be available until expended.

The FY2009 omnibus appropriation includes $5.333 million for administrative expenses of CCC export credit guarantee programs. The President's budget estimated this would finance, all in short-term guarantees, U.S. agricultural exports in FY2009 of $2.6 billion. The 2008 farm bill repealed authorization for an intermediate credit guarantee, one of several changes intended to help bring CCC export credit guarantee programs into compliance with a WTO dispute panel decision that found such programs to be prohibited export subsidies because they do not recover operating costs.

The President's budget proposed that $200 million of CCC funds would be allocated to the Market Access Program (MAP). In addition, other export market development activities would receive CCC funding in FY2009 at levels established in the 2008 farm bill: $34.5 million for the Foreign Market Development Program, up to $10 million for technical assistance under the Emerging Markets program, and $7 million for the Technical Assistance for Specialty Crops (TASC) program. Legislative authority for the Export Enhancement Program was repealed by the 2008 farm bill. USDA's other smaller export subsidy program, the Dairy Export Incentive Program (DEIP), would be allocated $3 million for FY2009.

The explanatory statement accompanying the fiscal 2009 appropriations bill, noted that both USDA's Office of the Inspector General (OIG) and the Office of Management and Budget (OMB) had reviewed USDA's export market development programs and expressed concerns that "the programs could not provide assurance that they were effective or served a clear need."²⁰ OIG and OMB also noted that the programs subsidize entities that may not need government funding and that the programs may not even provide useful information to U.S. exporting companies. Accordingly, the explanatory statement directs FAS to submit to the Committees a report that details how the agency has addressed OIG's recommendations and implemented management reforms; the results that newly instituted management reforms have had on program performance and accountability; and how FAS oversees the performance of grants and contracts funded through its market development programs, including the Market access Program.

For additional information on USDA's international activities, see CRS Report RL33553, Agricultural Export and Food Aid Programs, by [author name scrubbed].

Food and Drug Administration (FDA)

The Food and Drug Administration (FDA) regulates the safety of foods and cosmetics, and the safety and effectiveness of drugs, biologics (e.g., vaccines), and medical devices.²¹ Now a part of the Department of Health and Human Services (HHS), FDA was originally housed in the Department of Agriculture. The Agriculture appropriations subcommittees retain jurisdiction over the FDA budget. FDA's program level, the total amount that FDA can spend, is composed of direct appropriations (also referred to as budget authority) and user fees. The Omnibus Appropriations Act, 2009 (P.L. 111-8), enacted five months into FY2009, provided FDA a total program level of $2.66 billion for FY2009. The total is within 1% of the Administration's request ($12 million less) and 10% more than the total FY2008 program level. (Note: FDA received no funding in the economic stimulus package, P.L. 111-5, the American Recovery and Reinvestment Act of 2009.)

The FY2008 enacted appropriation in P.L. 110-161 plus the $150 million supplement to FDA in P.L. 110-252 provided the agency with a total direct appropriation of $2.42 billion. The President's request for FY2009, as amended,²² was for $2.046 billion in direct appropriations (19% more than FY2008). The enacted FY2009 omnibus provided $2.051 billion in direct appropriations, including Salaries & Expenses ($2.038 billion) and Building & Facilities ($12 million). The Senate-reported bill also would have provided $2.051 billion in direct appropriations.

For user fees, the enacted FY2009 omnibus included $613 million, including prescription drug (PDUFA), medical device (MDUFA), and animal drug (ADUFA) user fees; export and color certification fees; Mammography Quality Standards Act (MQSA) fees; and newly authorized animal generic drug user fees (AGDUFA). The total FY2008 appropriation set FDA's FY2008 user fee appropriation level at $549 million. The FY2009 request included three categories of fees: continuing fee programs; newly authorized fee programs; and proposed fee programs. For continuing programs, the request was $595 million ($565 million for prescription drug, medical device, and animal drug fees; and $30 million for mammography, and export and color certification fees), a 3% increase over FY2008. The FY2009 request included $14 million for the advisory review of direct-to-consumer (DTC) television advertisements for prescription drugs, a new fee program authorized by the FDA Amendments Act of 2007 (FDAAA, P.L. 110-85). This amount brought the total request for authorized fees to $609 million, which would have been 11% higher than the total FY2008 appropriation. The budget justification documents included two sets of proposed fees, which would require authorization in law before appropriations could be made. One set of proposed fees ($21 million) would provide revenue for FDA to enhance the review of generic human and animal drugs (the latter of which was subsequently authorized and included in FY2009 appropriations). The Administration categorized these as proposed definite appropriations and included the revenue in its fee total, which it presented as $630 million, 15% more than the total FY2008 appropriation. The second set of proposed fees ($27 million), labeled in the request as "mandatory fees—non-add" and not included in the request's user fee total, covered reinspection, and food and animal feed export certification. The Senate committee report did not include either set of proposed fees or the newly authorized fee program for DTC advertisement review. The Senate bill, therefore, included $595 million in total fees.

Consistent with the Administration and congressional committee formats, each program area budget amount in Table 8 includes funding designated for the responsible FDA center (e.g., Center for Drug Evaluation and Research or the Center for Food Safety and Applied Nutrition) and the portion of effort budgeted for the agency-wide Office of Regulatory Affairs to commit to that program area. Table 8 also apportions user fee revenue across program areas as indicated in the Administration's request (e.g., 89% of the animal drug user fee revenue is designated for the animal drugs and feeds program, with the rest going to Headquarters and Office of the Commissioner, GSA rent, and other rent categories). The enacted omnibus contained $343 million in specific budget authority increases, which are listed by program area, below.

Foods

The FDA's foods program area remains totally funded by direct appropriations. The enacted FY2009 omnibus included $649 million, 12.5% more than the total FY2008 appropriation and 1.8% less than the Administration request.

Noting the increases in appropriations for both FY2008 and FY2009, the omnibus explanatory statement listed areas in which it expects FDA to make progress, including identifying, prioritizing, and planning how to address food safety risks. Congress required the agency to provide quarterly reports of number and estimated costs of new hires, inspections, and information technology acquisition and spending. Referring specifically to the $142 million increase for food safety in the FY2009 omnibus, the explanatory statement listed activities including increasing foreign and domestic inspections, screening technologies, surveillance and warning, risk communication, foreign offices, traceability capabilities, state and local information technology partnerships.

Human Drugs

The enacted FY2009 omnibus provided $777 million for the FDA human drugs program, which includes $413 million in direct appropriations and $364 million in fees. The total is 9.8% more than the total FY2008 appropriation (including the supplemental) and 1.4% less than the Administration request.

As described in the introduction to this report's FDA section, neither the Senate committee nor the enacted omnibus included the DTC advertising fees authorized by FDAAA in the appropriations bill, thereby prohibiting their collection and use. By omitting those and the revenue requested for the proposed Generic Drug User Fee Act, the omnibus recommendation for human drug program fee revenue totaled $364 million, an 11.3% increase over the total FY2008 level rather than the requested 16.4% increase.

The FY2009 omnibus explanatory statement, in noting a $114 million increase for medical product (drugs, biologics, and devices) safety, directed FDA to "prepare and provide to the Committees on Appropriations a comprehensive approach to ensuring the safety of medical products from the manufacturing of raw ingredients or components to consumer use." The explanatory statement mentioned foreign and domestic facility inspections, laboratory infrastructure and analysis tools, unique device identification system, information technology, and information data warehouse, and data systems to support electronic screening to identify problems and risks with imports. The explanatory statement also specified a $6.6 million increase in direct appropriations for the Division of Drug Marketing, Advertising and Communication to use for review of DTC advertisements.

Biologics

The FY2009 omnibus provided $271 million for the biologics program, including $183 million in direct appropriations and $88 million in user fees. The total is 9.2% higher than the total FY2008 appropriation and 1.3% above the Administration request. Although neither the bill nor the explanatory statement specified the breakout across programs, some of the $114 million increase for medical product safety (discussed in the previous section) would go to the biologics program.

Animal Drugs and Feeds

The FY2009 omnibus provided $134 million for the animal drugs and feeds program, including $116 million in direct appropriations and $18 million in user fees. The total is 17.2% higher than the total FY2008 appropriation and 1.7% above the Administration request. The amended FY2009 request called for $128 million, including about $114 million in direct appropriations (an 18% increase over FY2008), almost $14 million for brand-name animal drug user fees, and $4 million for a proposed animal generic drug user fee program.²³ The requested increase in direct appropriations would presumably be used to enhance animal food and drug safety, and modernize scientific and workforce activities, per the Administration request.

Devices and Radiological Health

The FY2009 omnibus provided $330 million for the devices and radiological health program, comprised of $281 million in direct appropriations and $49 million in user fees. The total is 8.5% higher than the total FY2008 appropriation and 1% above the Administration request. The omnibus explanatory statement noted the following device and radiological health items: demonstration grants for improving pediatric device availability ($2 million), directions to report on proposed amendments to the Mammography Quality and Standards Act, and an unspecified portion of the $114 million increase to the agency for medical product safety.

Other Activities

The FY2009 omnibus provided $53 million for the FDA National Center for Toxicological Research, all in direct appropriations, 10.8% higher than the total FY2008 appropriation and 1.3% above the Administration request.

The omnibus specified $1 million increases each to the Office of Women's Health and the Office of Cosmetics and Colors. It also provided $55 million for cost-of-living increases, more than double the amount in the Administration request.

Table 8 displays, by program area, the budget authority (direct appropriations), user fees, and total program levels in the total FY2008 appropriation (including the FY2008 supplement to FDA), the FY2009 amended request, the Senate committee recommendation for FY2009, and the Omnibus Appropriations Act, 2009.

Commodities Futures Trading Commission (CFTC)

The 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 remains vested in the agriculture committees because of the market's historical origins as an adjunct to agricultural trade.

Jurisdiction for CFTC appropriations is split between different subcommittees in the House and Senate, and placement in the enacted appropriation alternates between the chambers. In the House, jurisdiction is with the Agriculture appropriations subcommittee; in the Senate, it rests with the Financial Services and General Government appropriations subcommittee. CFTC's FY2008 appropriation was enacted in the Agriculture appropriations bill. In FY2009, its appropriation was enacted in the Financial Services appropriations bill.

For FY2009, enacted funding was included in the Financial Services section of the Omnibus Appropriations Act (P.L. 111-8). The act provides $146.0 million for the CFTC, an increase of 31% over FY2008. The Administration had requested $130.0 million and the Senate Appropriations Committee $157.0 million. The House did not act separately on CFTC funding since the Agriculture appropriations bill was not reported out of committee. The FY2009 increase was related to concerns over CFTC's ability to monitor futures markets, particularly those in energy commodities. Of the amount for FY2009, $34.7 million is to be available only after the agency has submitted an expenditure plan for FY2009 to the agriculture committees of the House and Senate.

For more information about CFTC appropriations, see CRS Report RL34523, Financial Services and General Government (FSGG): FY2009 Appropriations, coordinated by [author name scrubbed].