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Tele-News Conference Update on Environmental Issues
with Agriculture Secretary Ann M. Veneman
December 17, 2003 - Washington D.C.

MR. QUINN: Good morning from Washington. I'm Larry Quinn speaking to you from the Broadcast Center of the U.S. Department of Agriculture. Welcome to this news conference to provide an update on environmental issues.

For reporters, if you wish to ask a question today during our question and answer session, you need to press one on your telephone touch pad. That will signal us of your question request and put you in our line-up for questions.

Now, it is indeed my pleasure to introduce to you Secretary of Agriculture Ann M. Veneman. Good morning, Madam Secretary.

SECRETARY VENEMAN : "Good morning, Larry, and thank you again for hosting us today, and good morning and thank you to all of you out there who are listening today, and thanks for being with us.

"We again apologize for the last time we were here when our equipment didn't work, and we didn't get to answer questions, but hopefully that will all be worked out today.

"I am very pleased to be joined today by our under secretary for Natural Resources and the Environment, Mark Rey; our chief of the Natural Resources Conservation Service, Bruce Knight; and our chief economist at USDA, Keith Collins.

"The Bush administration remains deeply committed to protecting the environment. The administration is taking major steps toward that goal, including the President's Healthy Forests Initiative, with supporting legislation, and the President was here at USDA just a couple of weeks ago to sign that legislation. It will improve forest health; it will reduce the risk of catastrophic wildfires and give us the ability to better manage public lands.

"We also have new rules in the administration to dramatically reduce diesel fuel and power plant emissions. The President has said that there are no better stewards of the land than the people who rely on the productivity of the land. America's farmers and ranchers are pioneer environmentalists. They live on the land, they work on the land, and they depend on the land for their livelihood.

"Today, I am pleased to announce two major actions under USDA's implementation of the 2002 farm bill that will have positive benefits for the environment.

"First, USDA today is releasing the proposed rule for the Conservation Security program, which was authorized in the 2002 farm bill. Bruce Knight and the NRCS are taking the lead on this program and have done a tremendous amount of work to produce the proposed rule.

"As you know, getting to this point has not been easy. CSP is a new program. It is a unique and complicated program, and we've needed to take the time to get it right. As you may know, we hosted several listening sessions around the country to get input, and we went out with what we call an advance notice of proposed rulemaking to gather input from all stakeholders about what this program should look like and how it should be put together.

"The direction given by Congress on the Conservation Security Program was very open-ended, and since the passage of the farm bill, Congress has made three legislative changes to CSP that have required us to make adjustments in how we are proposing to implement the program. Completing the proposed rule was complicated by uncertainty over the funding level, recognizing that the funds for CSP will be limited.

"We are currently expecting funding of $41 million for fiscal year 2004. This number is based upon the omnibus appropriations bill that was passed last week by the House of Representatives and that is still pending in the Senate. This new program would reward agricultural producers who historically have been the best stewards of their land, while providing an incentive for those who want to increase conservation practices or, as we have said before, reward the best and motivate the rest.

"The proposed rule will target the most environmentally sensitive areas and priority watersheds in various areas of the country, with a focus on efforts addressing water and soil quality. Because of funding limitations, our initial focus will be on the most pressing environmental concerns, with eligibility criteria proposed by USDA's Natural Resources Conservation Service, which will have responsibility for this program.

"CSP is a complement to our existing conservation program. It will not affect payments under USDA's commodity programs. Eligible producers will receive payments under three tiers, with increasing payments for higher levels of resource treatment. Payments are capped at $20,000 a year, with five-year contracts in Tier 1, $35,000 under contracts of five to ten years in Tier 2, and $45,000 under contracts of five to ten years in Tier 3. Most agricultural land will be eligible, with the exception of forest lands and land enrolled in the Conservation Reserve, Wetlands Reserve or Grassland Reserve programs.

"Details of the proposed rule are available on our website at www.usda.gov. I encourage all interested parties to submit comments during the 60-day comment period. The proposed rule will also be the subject of a series of listening sessions. Details of these will be announced at a later date.

"We are working hard to meet the intent of Congress in the implementation of CSP, and we are aiming to complete the rulemaking process and begin sign-up during the summer of 2004. While CSP is a new and complicated program, its goals are simple--to improve the conditions of America's working farms and ranches and to enhance natural resources for the public as a whole.

"Through the programs focused on activities such as conservation tillage, nutrient management and grazing management, CSP also is expected to provide greater opportunities for wildlife habitat on working lands. CSP will yield conservation benefits while, at the same time, making farms and ranchers more economically and environmentally sustainable.

"USDA today is also releasing a proposed rule that will spur additional procurement of bio-based products by the federal government. Keith Collins and his team are taking the lead on this program and have put a lot of hard work into this proposed rule. It builds upon President Bush's commitment to promoting energy independence, while protecting the environment.

"This program has the potential to improve our environmental health by finding ways to use renewable resources from our farms and our forests, to produce products that previously have been derived from fossil energy resources. It will enhance the development of high-performing and environmentally friendly products. This new program was established by the energy title of the 2002 farm bill.

"The program requires all federal agencies to greatly increase their use of bio-based industrial and commercial products, which is expected to contribute to the development of a wide range of these products. This includes the Department of Defense, which is the largest purchasing department in federal government. Under the preference program, agencies will be required to purchase bio-based industrials or commercial products when their cost is not substantially higher than fossil energy-based alternatives, when the bio-based products are available and when they meet the performance requirements of the user agency.

"In a later rulemaking process, USDA will compile a list of items or groupings of products that are designated for preferred procurement of bio-based alternatives. Manufacturers and vendors would then be able to certify that their products qualify under the designated items and meet the statutory definition of bio-based products. This program is similar to the Resource Conservation and Recovery Act of 1976 or what is commonly referred to as RCRA, which expanded the use of recycled content products by the government.

"We expect that this new program will lead to a similar expansion in the availability and the use of high quality and environmentally friendly bio-based products. We encourage all interested parties to comment on this rule during the 60-days comment period. The proposed rule will be published and available on the USDA website on Friday. More details on the program are available at www.usda.gov.

"In closing, both of these programs will have many benefits for the environment and for farmers and ranchers. They will help us make great strides in conserving soil and water and in helping agricultural producers provide for more of our government's procurement needs in an environmentally friendly way.

"Once again, I want to thank you all for joining us. We wish you all a very happy holiday season, and we will be glad to take the questions that you have."

"Thank you very much."

MR. QUINN : Thank you, Madam Secretary. And, yes, as we begin that question period, let me remind you that if you have not touched that touch-pad with a number one, I wouldn't know that you have a question. Please do that now and signal us of your question request.

And we're going to start our questions today with Sally Schuff--Sally of Feedstuff magazine. Go ahead, Sally.

QUESTION: Hi Madam Secretary. This is very good news about the CSP program. I was interested in your remarks about the critical watershed areas. How will those areas be chosen and what practices will be eligible within that program?

SECRETARY VENEMAN: "Well, this is a determination that will be made after input on the rules by the NRCS, and I'll have Bruce Knight comment a bit more on the specific requirements that will be utilized in making those judgments."

MR. KNIGHT: We intend to be looking at the watersheds based off of their projected improvements or they could be made as it pertains to overall water quality, soil quality, what you could do to augment the needs in that particular environmental aspect.

Then the second half of your question was to what sorts of practices are going to eligible under CSP. CSP will not be a practice-based program, but instead its a resource-based program, so we're looking at the ability to address the total comprehensive resource needs as opposed to a particular practice that an individual operator may be able to do. Practice-based programs are what we're doing now with EQIP and WHIP.

MR. QUINN: Our next questioner will be Phil Brasher from the Des Moines Register, followed by Allison Freeman.

Phil, would you go ahead with your question, please?

QUESTION: This is for Bruce or the Secretary. How did you--you were initially concerned that the eligibility would be so broad that the cost of this program would be uncontrollable. What did you all do to control the cost, restrict the eligibility, and what kind of cost do you have projected? Obviously, you're just starting the program in FY '04, but could you talk about the cost beyond that over the next 5 to 10 years.

MR. KNIGHT: We have two constraints that have challenged us as we're looking at the cost. One is the overall cost for the program. '04 in the omnibus, assuming that moves forward, there would be $41 million. Then statutorily there is also a restriction that we cannot spend more than 15 percent of the money on implementation of the program, and that also constrains the cost.

So in developing this program, which is essentially as designed in the current omnibus language, would be a capped entitlement in this first year, we have to be able to say yes to everybody that is eligible for the program, but be able to restrict how you go forward with that. The primary way of doing that is through the watershed basis, by only doing a limited number of watersheds in the first year. The secondary nature of that would be to use categories or bars of participation that would be used to determine which farmers you then accept that participation from that are within the watershed, Phil.

MR. QUINN: Our next question comes from Allison Freeman of Green Wire Publishing, and she'll be followed by Gary DeGuiseppe. Allison, would you please proceed?

QUESTION: Bruce, I think that you sort of covered this in your last question, but I'm still a little confused if the program is being approached as an entitlement program or not?

MR. KNIGHT: As it is currently done, it is a capped entitlement program. Anyone who meets the eligibility would have--would be able to participate much like a farm program, but it has a cap placed on it by Congress. In the omnibus that was most recently passed by the House, still to be considered by the Senate, that operating cap for 2004 would be $41 million.

SECRETARY VENEMAN: "I think it's fair to say that one of the reasons that this program has been so complicated to implement is because there have been various changes made by the Congress since the statute was passed as part of the Farm Bill, and because there is a monetary cap on the amount of money that can be spent, we have to have restrictions on the way that we actually implement the program so that you can stay within those monetary caps.

"So while it's called an entitlement program, it will be put together in a way that will limit the amount of money that can actually go out, and so thereby limit--you know, during the sign up, there will be limits on, you know, the eligibility so that we can stay within those caps."

MR. QUINN: Gary DeGuiseppe from the Arkansas Radio Network is next with a question, followed by Jerry Hagstrom. Gary, would you go ahead, please?

QUESTION: Thank you. I want to stray from the subject of the press conference if I could. It's being reported from the EPA end that the administration is withdrawing plans to allow the farming and other activity of small wetlands that had been used largely, as stopovers for migratory foul. And I was wondering whether Secretary Veneman or Under Secretary Rey could comment on that?

MR. REY: What EPA announced today is they would not proceed with a rulemaking to further interpret a Supreme Court decision that limits the reach of the Clean Water Act. That doesn't affect the underlying Supreme Court decision. The two agencies involved, the Environmental Protection Agency and the Army Corps of Engineers simply indicated that they do not believe that the decision requires further rulemaking to interpret. And that decision will not affect any of our programs like the Wetlands Reserve Program or some of the other Farm Bill programs.

MR. QUINN: Before I go to the question from Jerry Hagstrom, I will remind reporters if you have a question that you would like to ask, please press 1 on your telephone touch pad to signal us so we can call on you. And our next question will be from Jerry Hagstrom.

QUESTION: Thank you very much. Bruce particularly, you said that the program will be not practice-based but resource-based. I'm afraid that the use of the term resource-based is one I'm going to have to explain to my readers. Could you talk about that a little bit more?

And also, when you say it's a capped entitlement, does that mean that everybody who is viewed as entitled or eligible for the program is going to get some money, even if it ends up being tiny amounts, or does that mean that you are going to restrict the eligibility so that all the people who do get money will get it in an amount that they can do something with it?

MR. KNIGHT: Two parts to that question. First resource-based versus practice-based. The best way for me to illustrate that is actually with an example. Often folks ask us if--"I'm a no-till farmer. Will I be able to participate in CSP?" Yes, you could participate, but the practice of no-till does not make one eligible for CSP. It's the ability to address the resource that we're trying to get at, both soil erosion and water quality, and perhaps water quantity in a total resource-driven package. So it's more than just an individual practice like no-till. It's more than an individual practice like a conservation buffer strip. It's how you operate the larger unit. And so that's the difference between resource-based and practice-based.

Then as it pertains to your question on the entitlements, that was one of the quandaries that we really faced, Jerry, as we were working on and developing these rules. And the fact of the matter is if we interpreted that to mean that everybody that was eligible, and you prorated the dollars, it becomes phenomenal that you don't end up gaining any environmental benefits.

And so what we have done is followed the model that came actually from the Veterans Administration, where they create bars or categories of folks with desirable outcomes, and you then accept folks that fit into each of those categories as long as you have money available. And so we're following that template, which was the best one we were able to find, as a means of managing this unique capped entitlement concept.

MR. QUINN: Our next question comes from Jay Newton Small from Bloomberg News, followed by Dan Goldstein. Jay, go ahead, please.

QUESTION: In talking about this new proposed rule, you said that it's going to prioritize the different watershed lands that are at risk. Why not just--is there a question of money where there has to be priorities first, that those are dealt with first? And then, you know, why not just do all of them at the same time, or you know, they're just too big?

SECRETARY VENEMAN: "Well, I think, as we've indicated, it is certainly a question of money, and we're going to have to set some priorities in terms of where we target initially the benefits. I mean $41 million is a capped amount that we expect--again, this is not law because it hasn't been passed by the Senate--but that's what we are operating as an operating assumption right now for this proposed rule. We are operating under the assumption that the $41 million that's in the omnibus that's been passed by the House and is pending in the Senate, will be the amount of money that we'll be operating with.

"So it is--we are looking at ways to establish a program that is limited by a monetary cap."

MR. QUINN: Before we go to another question, let me remind, once again for reporters, please press 1 if you have a question so that we can recognize you. Our next question comes from Dan Goldstein from Bloomberg, followed by Ed Maixner.

Dan, go ahead, please.

QUESTION: Thanks. Madam Secretary, you were talking about the federal agencies increasing their use of bio-based products. Does that include more ethanol, and can you give us some examples of some of these products that you're going to ask your agencies to purchase.

SECRETARY VENEMAN: "This does not include ethanol, but I'm going to have Keith Collins make a comment on generally how this process will work because it is another very complicated rule to implement, and so I'd like him to say a few words."

DR. COLLINS: Thank you. This program is kind of a sleeper program. It has the potential to be a very significant booster of demand for bio-based products. The program requires the Secretary of Agriculture to designate items, which are classes of bio-based products, and after those items are designated, all federal agencies will have to prefer those items in their procurement. Now, there are a couple of exceptions to these bio-based products. One is electricity, another is motor vehicle fuels. So ethanol would not be included.

Examples of items that could be designated, and now this is part of the proposed rule, and in the proposed rule we list what we believe is a reasonable universe of items the Secretary could designate, but we're asking for comment on those items, and let me give you an example of some of the classes.

One would be inks, for example, and everyone knows about soybean ink. Another would be lubricants. Another item would be construction materials. Another would be fiber and paper packing material. So there's quite a range of items, and then inside of those items there are specific bio-based products. So once all of the requirements are met for a designation, then federal agencies will have to prefer these in procurement, and so it represents a great opportunity for agriculture and for environmental health to boost the purchase and production of these products.

MR. QUINN: And our final question today comes from Ed Maixner from Kiplinger Ag Letter.

Go ahead, Ed.

QUESTION: Thank you. This is Ed Maixner, Madam Secretary, and probably to whoever else can answer it.

Two things. One is Congress essentially passed, with CSP, a mandated entitlement program and capped it. You've addressed that you've written those on the basis of this cap that's currently still on it on the budget, which has been kind of a confusing item, but what happens in the next 60 days, while you're in the midst of a comment period, if Congress, in fact, removes the cap beyond the current fiscal year, the '04 fiscal year? How does that affect how you proceed to finalize the provisions of the program?

And then, secondly, I had understood, is there essentially a preference the way you're proposing implementation on CSP for a future or future conservation practice on the farm versus those that are already in place?

I was wondering about those two things.

MR. KNIGHT: First off, Ed, in the omnibus that is currently pending, there is a cap for this year of $41 million. If there were any significant adjustments or changes in that, the understanding we have is, with OMB, is that we would move out with an amendment to the rule to reflect any particular changes resulting from Congressional action that would need to be there. So we can be flexible and adjust according to Congressional acts.

MR. QUINN: That's all of the time we have for questions today.

Madam Secretary, do you have any closing comments?

SECRETARY VENEMAN : "Well, again, I want to thank everyone for joining us today, and I want to especially thank you for your questions. I think that, as you can tell, these are both enormously complicated programs. It is one of the reasons it's taken us some period of time after the passage of the 2002 farm bill to implement them. But we believe that we want to do this right, and that's why we've taken the time to analyze all of the options. These are both proposed rules. They will both be open for public comment for a period of 60 days, and so we would encourage all of those who are interested to make sure and give comments on them during the comment period.

"I'd like to also move off the topics which we're discussing today, which are related to the environmental provisions of the farm bill, to update our listeners on just a couple of other things.

"One is that there is going to be an announcement today that we have reached agreement with the United States and four of the Central American countries--El Salvador, Guatemala, Honduras and Nicaragua--to conclude a Free Trade Agreement that further advances trade liberalizations with these countries. One of the remaining CAFTA countries--Costa Rica--has not been yet included in the signing of this agreement because they are further determining if they can agree to all of the provisions.

"But under this agreement, U.S. agricultural exports, which are now at about $1 billion dollars a year, will compete more favorably in this nearby and growing market of 31 million consumers. So that's certainly positive news for U.S. agriculture, and it is positive news on top of our currently strong agricultural economy. This agreement will provide expanding long-term opportunities for our producers in a growth market that's right here in our own hemisphere. So, again, there will be a more formal announcement coming on this later this morning or early this afternoon, but I did want to make sure that you were all aware of that new development from this morning.

"In addition, there has been a tremendous amount of interest in the country of origin labeling rule, and we will be putting out, later today, a press release that announces that we will be extending the comment period on that rule for a period of 60 days. This is in response to the request of several producer groups, including producer groups that are both in favor of the country of origin labeling rule, as well as those who are opposed.

"And given the strong amount of interest in having more time to comment, the press of the holidays was another reason given, and so we have determined that we would give the additional 60 days and that this will not impact our ability to complete the rule in the prescribed time under the statute to make it effective September of '04.

"So I wanted to update you just briefly on those two issues as well.

"But, again, I want to thank you all for joining us. It's the time of the holidays. It's a time where we all have much to be thankful for. It is a time where we particularly give thanks to those people in our country who produce our food and fiber because they do an incredible job for the U.S. and for people all around the world.

"So thanks again and happy holidays."

MR. QUINN: Secretary of Agriculture Ann Veneman, I'm Larry Quinn bidding you season’s greetings and happy holidays from Washington.

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