[Senate Hearing 107-439]
[From the U.S. Government Printing Office]

                                                        S. Hrg. 107-439

                            AND THOMAS DORR



                               before the

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION


                             MARCH 6, 2002


                       Printed for the use of the
           Committee on Agriculture, Nutrition, and Forestry

  Available via the World Wide Web: http://www.agriculture.senate.gov

                     U.S. GOVERNMENT PRINTINT OFFICE
                            WASHINGTON : 2003

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                       TOM HARKIN, Iowa, Chairman

PATRICK J. LEAHY, Vermont            RICHARD G. LUGAR, Indiana
KENT CONRAD, North Dakota            JESSE HELMS, North Carolina
THOMAS A. DASCHLE, South Dakota      THAD COCHRAN, Mississippi
MAX BAUCUS, Montana                  MITCH McCONNELL, Kentucky
BLANCHE L. LINCOLN, Arkansas         PAT ROBERTS, Kansas
ZELL MILLER, Georgia                 PETER G. FITZGERALD, Illinois
DEBBIE A. STABENOW, Michigan         CRAIG THOMAS, Wyoming
BEN NELSON, Nebraska                 WAYNE ALLARD, Colorado
MARK DAYTON, Minnesota               TIM HUTCHINSON, Arkansas

              Mark Halverson, Staff Director/Chief Counsel

            David L. Johnson, Chief Counsel for the Minority

                      Robert E. Sturm, Chief Clerk

              Keith Luse, Staff Director for the Minority


                            C O N T E N T S



Nomination Hearing for Nancy S. Bryson, Grace Daniel, Fred 
  Dailey, and Thomas Dorr........................................    01


                        Wednesday, March 6, 2002


Harkin, Hon. Tom, a U.S. Senator from Iowa, Chairman, Committee 
  on Agriculture, Nutrition, and Forestry........................    01
Lugar, Hon. Richard, a U.S. Senator from Indiana, Ranking Member, 

  Committee on Agriculture, Nutrition, and Forestry..............    01
Baucus, Hon. Max, a U.S. Senator from Montana....................    20
Clayton, Hon. Eva, a Representative in Congress from North 
  Carolina.......................................................    25
DeWine, Hon. Mike, a U.S. Senator from Ohio......................    03
Grasseley, Hon. Charles E., a U.S. Senator from Iowa.............    17
Voinovich, Hon. George, a U.S. Senator from Ohio.................    02


                                Panel I

Bryson, Nancy S., of the District of Columbia, to be General 
  Counsel for the Department of Agriculture......................    11
Dailey, Fred, of Mount Vernon, Ohio, to be on Board of Directors 
  of the Federal Agriculture Mortgage Corporation................    04
Daniel, Grace, of El Macero, California, to be on the Board of 
  Director of the Federal Agriculture Mortgage Corporation.......    07

                                Panel II

Dorr, Thomas, of Marcus, Iowa, to be Under Secretary for Rural 
  Development for the Department of Agriculture..................    22

                               Panel III

Clayton, Hon. Eva, a Representative in Congress from North 
  Carolina.......................................................    25
Crump, Leon, of East Point, Georgia, on behalf of the Federation 
  of Southern Cooperatives/Land Assistance Fund..................    32
Keeney, Dennis, of Ames, Iowa....................................    28
Naylor, George, of Des Moines, Iowa, on behalf of the Iowa 
  Citizens for Community Improvement.............................    30

                                Panel IV

Bailey, Varel, of Anita, Iowa, Former Chairman, National Corn 
  Growers........................................................    37
Curris, Constantine, of Chevy Chase, Maryland, President, 
  Association of State Colleges and Universities.................    41
Fretz, Thomas A., of College Park, Maryland, Dean and Director, 
  Agricultural Experiment Station, University of Maryland........    40
Hier, Nancy, of Marcus, Iowa.....................................    36
Langston, Ron, of the District of Columbia, National Director, 
  Business Development Agency, U.S. Department of Commerce.......    34


Prepared Statements:
    Bailey, Varel................................................   120
    Bryson, Nancy S..............................................    99
    Clayton, Hon. Eva............................................    89
    Crump, Leon..................................................   111
    Curris, Constantine..........................................   124
    Dailey, Fred.................................................    96
    Daniel, Grace................................................    98
    DeWine, Hon. Mike............................................    86
    Dorr, Thomas.................................................   101
    Fretz, Thomas................................................   122
    Grassley, Hon. Charles.......................................    88
    Harl, Neil...................................................   126
    Hier, Nancy..................................................   118
    Keeney, Dennis...............................................   104
    Langston, Ronald.............................................   115
    Naylor, George...............................................   106
Document(s) Submitted for the Record:
    Bryson, Nancy S., (Biography)................................   150
    Cochran, Hon. Thad...........................................   130
    Dailey, Fred, (Biography)....................................   131
    Daniel, Grace, (Biography)...................................   140
    Dorr, Thomas, (Biography)....................................   170
    Support Letters and Testimonies for Thomas Dorr's Nomination220-269
    Opposition Letters and Petitions to Thomas Dorr's Nomination270-348
    Letters to and from Senator Harkin and Secretary Veneman....349-364
Questions and Answers:
    Harkin, Hon. Tom (some questions not answered)...............   366
    Conrad, Hon. Kent............................................   391


                              THOMAS DORR


                        WEDNESDAY, MARCH 6, 2002

                                       U.S. Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:35 a.m., in 
room SD-106, Dirksen Senate Office Building, Hon. Tom Harkin, 
[Chairman of the Committee], presiding.
    Present or submitting a statement: Senators Harkin, Baucus, 
Stabenow, Wellstone, Dayton, Lugar, Thomas, and Allard.


    The Chairman. Good morning. The Senate Committee on 
Agriculture, Nutrition, and Forestry will come to order.
    We are here this morning to consider four nominations. 
First, we will consider the nomination of Mr. Dailey, and then 
Ms. Daniel, and then Ms. Bryson, and then Mr. Thomas Dorr to 
serve as Under Secretary of Agriculture for Rural Development.
    To each of the nominees, I want to say I wish we could have 
scheduled the hearing sooner, and I hope your families and 
friends were not too inconvenienced by our several attempts to 
schedule this hearing. September the 11th brought many 
challenges to conducting business on Capitol Hill. Then we 
became embroiled in another great challenge, passing a farm 
bill, and we are still in the middle of that effort as we try 
to work with the House to reach agreements on the two bills.
    With that said, I would welcome our first panel--that is 
Ms. Bryson and Ms. Daniel and Mr. Dailey--to the witness table. 
Before I administer the oath to these three nominees and before 
I recognize Senator Voinovich and Senator DeWine for the 
purposes of introduction, I would turn to my distinguished 
ranking member, Senator Lugar, for any opening statement that 
he might have.


    Senator Lugar. Well, thank you very much, Mr. Chairman. I 
join you in welcoming the nominees and witnesses who will speak 
about them today. I look forward to an excellent hearing. I am 
glad that we have an opportunity to bring these witnesses to a 
point of confirmation.
    I will have more to say as the hearing progresses and we 
have opportunities to question the witness. We thank you all 
for appearing. We appreciate our colleagues Senator DeWine and 
Senator Voinovich coming this morning to be with us.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Lugar.
    Now, I would ask the three nominees--Ms. Nancy Bryson, Ms. 
Grace Daniel, and Mr. Fred Dailey--to please rise and raise 
your right hand, and I will administer the oath to all of you 
in unison.
    Do you swear to tell the truth, the whole truth, and 
nothing but the truth, so help you God?
    Ms. Bryson. I do.
    Ms. Daniel. I do.
    Mr. Dailey. I do.
    The Chairman. Thank you. Please be seated.
    I would first recognize Senator Voinovich from Ohio for the 
purposes of introduction, and then I would recognize Senator 
    Senator Voinovich, welcome to the Agriculture Committee.


    Senator Voinovich. Thank you very much, Mr. Chairman.
    It is my pleasure to join with the senior Senator from 
Ohio, Senator DeWine, to introduce to this committee President 
Bush's nominee to the Board of Directors of the Federal 
Agricultural Mortgage Corporation and my dear friend, Fred 
    Fred, I would first like to extend a welcome to you and 
your daughter, Calley, and extend my regrets that your wife, 
Rita, is not able to be here today. I would also like to thank 
you for your willingness, Fred, to serve your country in this 
    Mr. Chairman, as Governor of Ohio, I appointed Fred Dailey 
to be the Director of the Department of Agriculture in 1991, 
and I have often said that Fred was one of the smartest 
appointments that I made. He served me for 8 years, and then 
the new Governor came in and extraordinarily decided that he 
wanted to continue to have Fred's services. That really speaks 
volumes about how he is regarded in Ohio.
    To say Fred has a vast knowledge and understanding of and 
experience with the agriculture community would be an 
understatement. Besides his current duties, Fred has his own 
farm where he and his wife, Rita, raise Angus beef. In 
addition, Fred is past president of the Midwest Association of 
the State Departments of Agriculture, having previously served 
the organization as vice president and secretary. He is past 
president of the Mid-America International Agritrade Council, 
and he has received the Future Farmers of America's Honorary 
State Farmer Degree from both Ohio and, Senator Lugar, from 
    He is also the recipient of numerous other agricultural 
awards, including Agrimarketer of the Year, industry service 
awards from commodity organizations, and the Golden Boot Award 
presented by Agri-Broadcasting Network.
    Perhaps the greatest endorsement of Fred Dailey is from his 
peers who have selected him as president of the National 
Association of State Departments of Agriculture.
    Mr. Chairman, I have had the privilege of knowing Fred for 
many years, and he is unquestionably a man of exceptional 
character, talent, and integrity, the kind of person that we 
would want to serve on any of our boards. His professional 
demeanor and his thorough knowledge of the agricultural 
community combine to make him truly an excellent candidate for 
the Board, and I am delighted that Fred has once again accepted 
the call to public service.
    Mr. Chairman, it is my pleasure to give Fred my highest 
recommendation, and I would like to thank you for the 
opportunity that you have given me this morning to introduce 
him to the committee.
    The Chairman. Thank you very much, Senator Voinovich, for 
that great statement and for your strong support of Mr. Dailey.
    Now I would recognize the senior Senator from Ohio, Senator 


    Senator DeWine. Mr. Chairman, thank you very much. I have a 
written statement which I would like to submit for the record 
with the Chair's permission.
    Let me also welcome to the U.S. Senate and to this 
committee Fred and his daughter, Calley. We are delighted that 
Calley could join you, Fred, today.
    We are very proud, Mr. Chairman, of Fred Dailey in Ohio. 
Senator Lugar, as has already been pointed out, Fred also has 
roots in Indiana agriculture as well.
    We are very proud of him, as my colleague, Senator 
Voinovich, has indicated. Fred has actually now served under 
three Governors in the State of Ohio. He has been someone who I 
got to know and spent a lot of time with when I was Lieutenant 
Governor, the 4 years that I served under then-Governor 
Voinovich. Fred and I worked very closely on a number of 
agriculture-related issues, and he was always someone who I was 
very impressed with the depth of his knowledge of agriculture. 
He was a great administrator, is a great administrator, someone 
who has made the department run very, very well. When you would 
see Fred out talking with other farmers, when you would see him 
traveling the State of Ohio, you just really got a feel that 
this is a man who truly does, in fact, understand agriculture.
    I am delighted that Fred has agreed to allow his name to be 
put in nomination by the President, and I could not recommend 
him higher to this committee.
    [The prepared statement of Senator DeWine can be found in 
the appendix on page 86.]
    The Chairman. Thank you very much, Senator DeWine, for your 
strong support and for your great statement.
    Before I recognize Mr. Dailey, I recognize Senator Allard 
from Colorado, for any opening statements or comments that you 
would like to make.
    Senator Allard. Mr. Chairman, thank you very much. I don't 
have an opening statement. I look forward to this hearing. 
Thank you very much.
    The Chairman. Thank you very much, Senator Allard.
    Senator DeWine and Senator Voinovich, I--well, I see he has 
already--I know we have busy schedules. We all have hearings to 
    Senator DeWine. Thank you, Mr. Chairman.
    The Chairman. Thank you very much for being here.
    The Chairman. As I said, we will go in order with Mr. 
Dailey, then Ms. Daniel, then Ms. Bryson. That is rather 
logical. The first two, of course, are nominees for the Board 
of Directors of the Federal Agricultural Mortgage Corporation.
    Mr. Dailey, we welcome you and congratulate you on your 
nomination. There is one question I have to ask each of you 
after administering the oath.
    Mr. Dailey, do you agree to appear before any duly 
constituted committee of the U.S. Congress if asked?
    Mr. Dailey. I do, Mr. Chairman.
    The Chairman. Thank you very much, Mr. Dailey.
    Mr. Dailey, I would recognize you for any opening statement 
that you might have for the committee.


    Mr. Dailey. Mr. Chairman, I am going to keep my opening 
statements very short since you were kind enough to let both 
our U.S. Senators speak on my behalf. I would like to recognize 
my daughter, Calley Dailey, who is a student at Miami 
University, and thank you for allowing her to come to this----
    The Chairman. Miami of Ohio.
    Mr. Dailey. Miami of Ohio, that is right.
    The Chairman. I just wanted to make sure the record showed 
    Mr. Dailey. Purdue would have been her second choice, 
    Mr. Dailey. I appreciate the opportunity to appear before 
you today, and I want to share with you my background as it 
relates to this appointment and my enthusiasm for our Nation's 
agriculture industry.
    As Governor Voinovich, now Senator Voinovich, when he asked 
me to serve with the administration, that was back in 1991. We 
have come a long way since that time. Even before then, I 
served in Indiana under the Lieutenant Governor, who serves by 
statute as Commissioner of Agriculture in the State of Indiana. 
I have had a variety of jobs, from being a soldier to a U.S. 
sky marshal. For the last 25 years, my professional experience 
has revolved around agriculture.
    Currently, I oversee 500 employees at the Department of 
Agriculture. Our role and mission is primarily regulatory, and 
much of that revolves around food safety. As Senator Voinovich 
indicated, I am immediate past president of the National 
Association of State Departments of Agriculture, and I would 
like to say that we have spent a lot of time at the State 
Departments of Agriculture since September working on bio-
terrorism. We have done a lot of testing of anthrax in our 
laboratories. Routinely we do 400 to 500 tests a year. We have 
also done a lot of preparedness for potential agro-terrorism 
events--foot-and-mouth disease, table-top exercises, and BSE 
exercises, mad-cow disease, with the Food and Drug 
    I currently live on a farm and commute back and forth to 
Columbus, Ohio, a 270-acre farm where we raise Angus cattle. As 
I indicated, most of my professional career has involved 
farmers and agriculture in some manner or another.
    I will be candid with you, Mr. Chairman and members of the 
committee. I am not a banker. I don't have a degree in finance. 
I do have a strong commitment to the Nation's agriculture 
industry, and I am interested in this appointment because it 
allows me to further serve our Nation's agriculture industry by 
assuring that there will continue to be a ready and competitive 
secondary market for agricultural mortgages.
    I am hopeful that I can carry out the mandates of this 
program as envisioned by Congress and that we can continue to 
provide an ever-growing secondary market for agricultural 
mortgages, thereby assuring the continued availability of 
reasonably priced credit to our producers and agri-businesses 
as well as capital to our rural banks and credit institutions.
    Mr. Chairman, it has been my experience working with 
farmers directly that we have moved from being a very labor-
intensive industry to a capital-intensive industry. It is 
important that we have reasonably priced capital for our 
    Thank you again for inviting me here today, Mr. Chairman. I 
would be happy to answer any questions that you or members of 
the Senate Ag Committee would have.
    The Chairman. Well, thank you very much, Mr. Dailey. Again, 
we have heard many good recommendations on your behalf. I 
really don't have a lot of questions, except the one that I 
just posed to you. Many of us on this committee for a long time 
have wrestled with the difficulty of getting young farmers and 
starting up their own operations. As a committee, we continue 
to look for ways to address the challenge. We look for ways 
that USDA and the institutions regulated by the Farm Credit 
Administration, including Farmer MAC, and private lending 
institutions can provide access to credit, reasonably priced, 
for beginning farmers.
    I guess just my general question to you is: How do you 
believe that Farmer MAC could help contribute to this process, 
this goal of trying to enable younger farmers to get a foothold 
in agriculture?
    Mr. Dailey. Mr. Chairman, you have really done a very good 
job of helping young farmers. In the new farm bill, as you have 
proposed it, there are additional provisions that would provide 
additional dollars for first-time beginning farmers. As I 
indicated, it is difficult for young farmers to get started, 
and especially perhaps in some of those States that are very 
rural. In our State, in the urbanized States, you can work 
second jobs, but in many of the other States you can't.
    At the same time, those rural banks need to have the 
liquidity so that they can provide credit to farmers, and that 
is where Farmer MAC comes in because it provides increased 
liquidity, generates additional capital that those farmers have 
in the rural areas so they can lend money to hopefully 
beginning farmers and other farms as well.
    The Chairman. Thank you, Mr. Dailey. I look forward to 
further discussions with you as we go through the months ahead 
on that one subject.
    Senator Lugar.
    Senator Lugar. Mr. Dailey, I appreciate all the good 
comments that have been made about your Indiana experience in 
addition to the vast experience you have had in Ohio. I would 
just simply add for the record that Anderson University and 
Ball State University are very proud of you, as well as your 
service with the Lieutenant Governor of Indiana.
    Mr. Dailey. Thank you.
    Senator Lugar. My question is prompted by the chairman's 
question and your response; namely, the farm bill, at least as 
passed by the Senate, does have substantial emphasis on young 
farmer loans, and that is deliberate, and that is a 
conferenceable item. This is still in flux. The chairman and I 
have a strong feeling of support for that. Hopefully all of the 
conferees will come to that conclusion.
    In preparation for either dealing with young farmers or 
others in Farmer MAC, you mentioned that you were not a banker, 
but obviously your experience in agriculture is extensive. What 
preparation have you taken to prepare yourself for this role? 
Have you visited with other members of the Board, with people 
who have been involved with the bank? Or can you describe at 
all, at least for the sake of this hearing, your own 
preparation for this responsibility?
    Mr. Dailey. Mr. Chairman, Senator Lugar, first of all, I 
had a chance to read the briefing materials, the Securities and 
Exchange Commission reports for the past four quarters. I had a 
chance to look at the outline of the charter--I haven't read 
the charter itself--and some of the amendments that we have 
made to that.
    I have had the chance to come into the Farmer MAC office 
and receive a briefing, along with my counterpart here, Grace 
    On top of that, I have had a chance to go to the Rural 
Development Service of the USDA that also sells paper to the 
Farmer MAC program, and they were very appreciative of this 
program and having that outlet, and many of their programs are 
guaranteed programs. I have had a chance to talk to some 
bankers about the program, too, that have used it.
    My learning curve is still continuing, I would hasten to 
add, and I still have a lot of work to do. I am very concerned 
about transparency. We have an excellent management team in 
place. The track record is good. I know that my role as one of 
the Board members is to make sure that things continue to go as 
Congress envisioned it, and I pledge to you my best efforts to 
do that.
    Senator Lugar. Well, thank you very much. As you know, the 
Farmer MAC organization and much of its acceleration has 
occurred because of hearings such as this one in the committee 
and actual legislation passed in various farm bills. From time 
to time in the early days, Farmer MAC's existence seemed 
precarious. Members such as yourself or Board members came to 
tell us of their difficulties and asked for support, which they 
received. This is not a perfunctory hearing. As far as we are 
concerned today, this is a very important institution that 
really has arisen from the needs of agricultural America. I 
appreciate your answers. I look forward to supporting your 
    Mr. Dailey. Thank you.
    Senator Lugar. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Lugar.
    Senator Baucus.
    Senator Baucus. No questions. Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Allard.
    Senator Allard. Mr. Chairman, I just want to re-emphasize 
what my colleague from Indiana, Senator Lugar, said about being 
sure that we have good transparency. It is a well-managed 
program and investors have confidence in Farmer MAC. Just 
before I came to the Senate, I served on--in fact, I was 
chairman of one of the subcommittees on the Agricultural 
Committee over on the House side. Farmer MAC was under our 
jurisdiction. We had some concerns at that particular time 
about Farmer MAC and among other things, its financial 
stability. Apparently most of that is behind us, but I can't 
emphasize enough how important it is, particularly during 
economic downturns, that we maintain investor confidence in 
Farmer MAC. That is an important part of making sure that money 
is available for beginning farmers and their needs.
    One of the things that we noticed is that some farmers for 
one reason or another, didn't qualify as beginning farmers. It 
seems these same farmers kept defaulting on their loans and 
continued to come back and for another loan. That is something 
that we need to watch in the portfolio.
    The Chairman. Thank you, Senator Allard.
    Mr. Dailey, thank you very much.
    [The prepared statement of Mr. Dailey can be found in the 
appendix on page 96.]
    The Chairman. We will turn now to Ms. Grace Trujilo Daniel, 
of California, a nominee for the Board of Directors of the 
Federal Agricultural Mortgage Corporation. I would ask you, Ms. 
Daniel, do you agree to appear before any duly constituted 
committee of the U.S. Congress if asked?
    Ms. Daniel. I do, sir.
    The Chairman. Thank you very much. We welcome you to the 
committee, Ms. Daniel, and if you have an opening statement, 
please proceed.

                   DIRECTORS OF THE FEDERAL 

    Ms. Daniel. I do, if I may. First of all, I wanted to 
introduce to you my guests today. Unfortunately, my husband, 
Tony, could not be with me but my brother-in-law and my sister-
in-law, who live nearby, were kind enough to join me today for 
moral support, and it is John and Mandy Wertz. They are sitting 
right here behind me.
    The Chairman. We certainly welcome them here to the 
    Ms. Daniel. Then it just happened that this is the week 
where the U.S. Hispanic Chamber of Commerce had its legislative 
conference, so I am lucky enough to introduce you to some of my 
board members of the Sacramento Hispanic Chamber of Commerce, 
and they are in those back two rows back there. They are all 
here wanting to see the process in action. I am very proud to 
have them here today.
    The Chairman. Well, we certainly welcome you to the 
Agriculture Committee. Welcome.
    Ms. Daniel. Anyway, good morning to you, Mr. Chairman, Mr. 
Harkin, Senator Lugar, Senator Allard, Senator Baucus. Thank 
you for allowing me today to make brief statements, and they 
will be brief.
    I am honored, privileged to be before you today as the 
nominee of George W. Bush to this fantastic Board of Directors, 
Farmer MAC Board of Directors.
    If confirmed by the Senate, I look forward to serving on 
the Farmer MAC Board to ensure liquidity to lending 
institutions that provide loans to agricultural borrowers. I 
fully recognize the importance--the important role agriculture 
plays in the strength of the U.S. economy and the need to 
enable farmers and ranchers to access much needed financial 
    I would like to briefly discuss with you my credentials for 
the position and how I can provide this experience to Farmer 
MAC's loan programs.
    As director of the California Small Business Office and the 
Small Business Advocate for the State of California, I became 
very familiar with government-guaranteed lending and the 
importance of providing financial flexibility to developing 
small businesses and to rural farming communities. In that 
capacity, I was responsible for the management of the eight 
California Small Business Financial Development Corporations 
that provided loan guarantees and direct farm loans.
    I am proud to say that during my tenure, from 1992 to 1996, 
we increased both the dollar amount of the State's trust fund, 
from $30 million to $70 million, and doubled the number of 
guarantees from 200 to 400 loans, and doubled the direct farm 
loans from 28 to 52. This may seem insignificant considering 
the size of Farmer MAC's lending capability, but this truly 
prepared me for some of the important things that we need to 
look at when we are trying to support the farming communities, 
especially what we were trying to do in California.
    In closing, I would like to restate my feelings of the 
great honor I feel for being nominated by President Bush to 
this Board and the commitment I have to serving my country in 
this capacity. I truly feel my background and experience have 
prepared me for this position.
    If confirmed, I will seek the advice of the Federal 
Agricultural Mortgage Corporation staff and Board members, this 
committee, and other Members of Congress, as I attempt to 
effectively discharge the duties as a member of the Federal 
Agricultural Mortgage Corporation Board of Directors.
    I thank you for your consideration.
    The Chairman. Ms. Daniel, thank you for your statement. 
Thank you for your willingness to serve. You certainly have a 
distinguished background.
    As you know, Farmer MAC also serves as the secondary market 
for rural business and community development loans and certain 
other loans guaranteed by the USDA under the Farmer MAC II 
Program. We on this committee have worked hard to help provide 
new opportunities for rural businesses, which we feel is a 
crucial ingredient to a healthy rural economy.
    With your experience as the former director of the 
California Office of Small Business and as a private 
consultant, could you make some brief comments on what role 
Farmer MAC should and could effectively play in rural economic 
development for small business development?
    Ms. Daniel. One of the major roles or challenges that 
Farmer MAC is going to have is to have an education program. We 
have found that some of the rural farmers and some of the small 
business owners did not access programs that were available to 
them is because they were not aware of them, and they were not 
aware of how to prepare themselves to qualify for some of these 
opportunities. One of those would be an education that we would 
have insure we have in place.
    The Chairman. More effective outreach.
    Ms. Daniel. Absolutely.
    The Chairman. I appreciate that. Thank you very much, Ms. 
    Senator Lugar.
    Senator Lugar. Ms. Daniel, as I questioned Mr. Dailey 
before, the committee faced within the last decade a situation 
with regard to all of farm credit that was very dire. It did 
not approach the size of the savings and loan crisis, although 
at the time there were some wild estimates of how many billions 
of dollars might be required of taxpayers to somehow really 
bail out those elements, not necessarily Farmer MAC but well-
established institutions in the Federal Credit System.
    Your background is extensive in marketing, in business, and 
working through these problems, but are you aware generally of 
the history say of farm credit in the last two decades, both 
its rise and its fall and its resurrection, and how the 
resurrection came about, namely, the bailout did amount to a 
little over $1 billion, not 10 or 20, but still sizable sums of 
money to reorganize what we had, with Farmer MAC then added 
really to give these additional services the chairman has 
mentioned. I just want you in your own words to describe your 
preparation for this experience, your idea of the history of 
farm credit so that as now a trustee on behalf of all of us of 
a part of it, and a very important part, you will be prepared 
to alert us in this committee or others as to problems that you 
foresee so that we do not go into the drink again, as we are 
inclined to do given the cycles in farming in America.
    Ms. Daniel. In my past experience in California, I had two 
main responsibilities when I was overseeing the financial 
centers. One of them was to protect the trust fund and to 
ensure that that trust fund was being managed properly. Second, 
to make sure that the underwriting requirements were as 
stringent as we could make them, and yet flexible enough so 
that those that could qualify could receive this funding. We 
wanted to make sure that this money was used and it was a trust 
fund, so in view of that, I feel that for Farmer MAC, I would 
apply those same principles of ensuring that taxpayers' money 
and in this case, the investors of Farmer MAC's fund is 
protected. Also I am also aware of Farmer MAC's underwriting 
requirements and the necessary steps that the loan program--or 
the people who are going to be accessing these loans need to 
make in order to qualify for these direct loans and for the 
loan guarantees.
    I feel that they're in place. I am looking forward to 
learning more about how we can make this as safe as possible.
    Senator Lugar. Have you studied the portfolio to the extent 
of knowing the number of loans that are in arrears as far as 
payments or classified in some degree of jeopardy of repayment 
and what kind of program Farmer MAC has to try to bring this 
back to equilibrium?
    Ms. Daniel. I haven't studied thoroughly the portfolio, but 
I was aware during our briefing that the default loans were 
quite minimal and that a lot of effort was made to ensure that 
they were paid ultimately.
    I'm not a banker, either, but I felt pretty confident that 
the measures they have in place are good lending practices.
    Senator Lugar. Thank you very much, Mr. Chairman.
    The Chairman. Thank you, Senator.
    Senator Baucus.
    Senator Baucus. No questions. Thank you.
    The Chairman. Senator Allard.
    Senator Allard. No questions.
    The Chairman. Thank you very much, Ms. Daniel.
    [The prepared statement of Ms. Daniel can be found in the 
appendix on page 98.]
    The Chairman. Now we turn to the nomination of Nancy S. 
Bryson for the position of General Counsel at USDA.
    Ms. Bryson, you have been nominated to serve as General 
Counsel. This is an important position with many 
responsibilities as part of the Secretary's sub-cabinet. The 
General Counsel is the chief legal officer of the Department 
and, therefore, plays a critical role in the regulatory and 
legal affairs of the Department.
    I should warn you at the outset that I do know a little bit 
about the Office of General Counsel. My wife once served as the 
Deputy General Counsel there. That has been a few years ago. We 
also have Charlie Rauls as the counsel to our committee, who 
was your predecessor and who served for two and a half years as 
General Counsel at the Department of Agriculture. It is an 
extremely important position.
    I have always heard good things about the quality of the 
lawyers at the Department and their dedication to public 
service, and I am sure that tradition will continue under your 
leadership. Before I recognize you for an opening statement, I 
have one more question I have to ask you. Do you agree to 
appear before any duly constituted committee of the U.S. 
Congress if asked?
    Ms. Bryson. I do, Mr. Chairman.
    The Chairman. Thank you very much, Ms. Bryson, and if you 
have an opening statement, please proceed.


    Ms. Bryson. Thank you. Mr. Chairman and distinguished 
members of the committee, it is an honor for me to appear 
before you today as President Bush's nominee for the position 
of General Counsel of the Department of Agriculture.
    I thank the President and Secretary Veneman for the trust 
and confidence they have placed in me in choosing me for this 
nomination. If confirmed, I will work to the best of my ability 
to faithfully discharge the duties of my office.
    I would like to introduce my family members who are here 
with me in the audience: my husband, John; my son, Alex, who is 
a junior at Georgetown Day School here in the District; my 
father-in-law, Brady Bryson; and my cousin, Donna Whitman. If 
you will bear with me----
    The Chairman. Welcome. Welcome to the committee.
    Ms. Bryson. I would like to say others who are here with us 
in spirit but couldn't make the trip include: my son, Sam, who 
is attending class at Harvard University as a sophomore; and my 
mother and father, James and Marjorie Southard; my sister, Sue 
Southard; and my brothers, James, Christopher, and Bruce 
    My goal, if confirmed by the Senate, will be to provide the 
best possible legal advice and counsel to the Secretary on the 
many challenging issues facing the Department of Agriculture. I 
look forward to working with USDA's strong professional legal 
career staff to achieve this goal and to a close working 
relationship with this committee.
    I was born and grew up in the rural community of Hancock, 
Massachusetts. For much of my life there, Hancock had more cows 
than people. I was an active member of our local 4-H Club when 
I was growing up. I worked summers during college in a farm 
machinery business operated by one of my uncles, the father of 
my cousin, Donna. I went to Boston University on a full 
scholarship and then to Georgetown University Law Center here 
in the District.
    I have spent my legal career as a practicing attorney. I 
began as a Government attorney first at the Department of Labor 
and then at the Department of Justice. In that capacity, I 
learned how to try cases, both civil and criminal, how to 
prepare and argue them on appeal, and how to work with the 
Solicitor General's office on Supreme Court cases. I learned 
how the Department of Justice functions at the working level 
and how it interacts with its client agencies. I learned the 
administrative and managerial aspects of running offices full 
of busy lawyers, including staffing and supervision of legal 
work, providing effective performance evaluations, managing 
resources so as to get the greatest possible value, and 
negotiating differences of opinion about the optimum legal 
strategy for particular matters.
    I left Government service after 9 years to explore the 
opportunities of a Washington legal practice, joining Crowell & 
Moring in 1984. I built a successful environmental law practice 
at the firm in this highly competitive field. That practice has 
been a constantly evolving one, as the breadth of what are 
considered environment law issues has continued to expand. I 
have worked on legislative initiatives with clients involving 
the reauthorization of the Federal pesticide law and in a 
number of Clean Air Act issues for nontraditional sources. 
During the past several years, I have developed an 
interdisciplinary practice in biotechnology and have 
represented clients working to secure approvals for innovative 
products at the Environmental Protection Agency.
    When I look at the full spectrum of laws and programs which 
USDA administers, I see both a great challenge and a wonderful 
opportunity for the lawyer who becomes General Counsel at USDA 
under the leadership of Secretary Veneman.
    I am keenly aware of the importance the Secretary has 
placed on ensuring USDA's compliance with civil rights and 
equal employment opportunity for everyone. I share the vision 
which the Secretary has expressed in our Civil Rights Policy 
Statement--consistent education and outreach to ensure civil 
rights are protected, our laws are enforced, and discrimination 
in any form is prevented. I will work to implement that vision.
    I look forward very much, if confirmed, to serving my 
country as General Counsel at USDA in this administration, 
working for this Secretary, and with the highly professional 
OGC staff, and the committee.
    Thank you, again, Mr. Chairman.
    The Chairman. Thank you, Ms. Bryson, for your statement. 
Thank you for your willingness to serve.
    I basically have just one question I would like to pose to 
you, and it would be something that I would think that we would 
want to followup on as we move ahead. You have written a 
somewhat critical article about the subject of judicial 
deference to agency decisionmaking, but particularly when it 
comes to agency decisions based on science or risk analysis. I 
understand that most of these articles dealt with rulemaking 
procedures at EPA, but as you know, USDA also frequently 
undertakes rulemaking proceedings in which science plays an 
important role particularly in the areas of food safety and 
protection of plant and animal health.
    Could you briefly explain your views about the role that 
Federal agencies such as USDA have in making policy in the 
public interest based on science and risk assessment?
    Ms. Bryson. Certainly. The role of the Federal agencies is 
to adopt regulations which implement the laws which Congress 
passes and directs them to administer. Increasingly the 
agencies face very difficult scientific questions in which it 
is a challenge for non-scientists to understand what the issues 
are and how to address them in a way that makes the public feel 
that public safety is being protected and that there can be 
confidence in the products that enter the market and in the 
regulatory structures the agencies put in place to protect 
    Risk assessment is a critical aspect of being able to issue 
those kinds of regulations. There are many issues that relate 
to the science which require a basic level of certainty about 
the science. It can't be sufficient to meet the standards that 
the Supreme Court has set out in Daubert for causation and 
litigation. Certainly there has to be a vetting of the science 
and understanding of what it is telling us and adoption of the 
appropriate responsive risk assessment regulation.
    The Chairman. Ms. Bryson, can you assure us that you will 
effectively represent the Department in formal rulemaking and 
adjudicatory proceedings and work with the Department of 
Justice to effectively represent the Department in civil 
actions arising out of its administrative activities?
    Ms. Bryson. I will.
    The Chairman. Thank you very much, Ms. Bryson.
    Senator Lugar.
    Senator Lugar. Thank you, Mr. Chairman.
    Ms. Bryson, you have an extraordinary record and a very 
good one and extensive experience in the Government of the 
United States. I am simply curious as to how you were nominated 
for this particular position with the Department of 
Agriculture, not that your experience at EPA would not be 
relevant, and the chairman has already led to that in his 
questions, or the Department of Justice, but there are 
obviously issues that are peculiar to the Department of 
Agriculture and the defense at least of that Department, the 
Secretary with whom you have indicated you wish to work, and 
activities of this committee.
    Can you trace at least how you came into this situation? Is 
it a position that you sought? Did the administration seek you? 
Do you have a pretty good idea of the type of activities that 
your predecessor had to face, or your predecessors over, say, 
the last decade or so?
    Ms. Bryson. I was given a wonderful opportunity. That is 
why I am here, Senator. I was asked in August of this past year 
if I would be interested in being considered for this position. 
President Bush and Secretary Veneman had decided they wanted a 
candidate for General Counsel with a strong background in 
environment and natural resources because of the many issues in 
that field which face the Department.
    I entered the door. I was recommended by a number of 
colleagues who I have encountered in the course of my career in 
Washington. I was very interested from the beginning simply 
because our agriculture and forestry resources are such an 
asset for us and will be so important in the coming century.
    My interview actually with Secretary Veneman was scheduled 
for September 11th at 4 o'clock in the afternoon. It was 
rescheduled very quickly after that, but after September 11th, 
I wanted very much to be part of the administration and to 
serve my country in this capacity.
    I have been the beneficiary of some wonderful briefings 
from the Office of General Counsel and the fine staff that 
exists there on the issues. I do at this point have a good 
sense of the range of issues which confront the Department 
across the board, in the regulatory programs, in the farm 
credit programs, in issues relating to competition in 
agriculture, certainly forestry and water rights. With the 
assistance and the wonderful team at OGC we're going to be in a 
position to provide very strong support to the Secretary.
    Senator Lugar. Well, I thank you for that response. I would 
just say that as you have wished this day to come, so have many 
of us to have the General Counsel before us and have an 
opportunity to confirm this nomination, because it fulfills a 
very vital role for the Department. I wish you well, and I look 
forward to supporting your nomination.
    Ms. Bryson. Thank you, Senator.
    The Chairman. Thank you, Senator Lugar.
    Senator Baucus.
    Senator Baucus. I wish you all well. These are not easy 
jobs. No job in Government today is easy. I appreciate your 
willingness to work in these various capacities.
    A concern I have slightly is, in looking at your resumes, 
none of you has any experience between the Mississippi River 
and the Cascades, that is, the central heart of America in 
    Ms. Bryson, you are Boston, DC Ms. Daniel, you are 
    Ms. Daniel. Quite a large ag community.
    Senator Baucus. I know, but it is a different kind of 
agriculture. It is totally different. Mr. Dailey, of Ohio, 
essentially as I read your resume.
    I was slightly concerned listening to you, Ms. Bryson, 
because clearly we have laws and regulations and we are here to 
serve people, average, ordinary people. We have lots of laws 
and lots of regulations, and sometimes we get wrapped around 
the axle trying to figure out what the laws and regulations are 
and forgetting why they are there in the first place, just 
serving people, our employees--excuse me, our employers, your 
employers, my employers.
    I am trying to figure out how I can encourage you to spend 
time in my part of America so it gets in your blood, so you 
feel it and taste it and smell it, and know what it is like to 
be out there on a farm, when a crop doesn't come in. I am 
talking about dryland farming, where it doesn't rain, or 
pulling a calf at 3 in the morning or just seeing how tough it 
is for producers--I am talking about grain producers and 
livestock producers--to make a living. It is extremely tough.
    When we are thinking about rules and regulations and all 
that and getting briefed by OGC staff about all these various 
components, that is not what this is all about. This is about 
people, real live people in America.
    How can you tell me--what can you tell me that can reassure 
me that you have a sense of that?
    Ms. Bryson. Well, Senator, one of the things that I did in 
private practice was work for about 4 years with a farmers co-
op in Nebraska, the Central Nebraska Public Power Group, on 
relicensing of their hydroelectric facilities on the Platte 
River. I spent a lot of time in Nebraska. I went to Lake 
McConaughy with them to look at the hydro facilities. We worked 
with wildlife experts and the farmers to evaluate questions 
FERC and the Fish and Wildlife Service were asking about the 
impacts of farming around the Platte, on bald eagles, whooping 
cranes--it is a critical habitat for whooping cranes there, 
sandtail cranes--and came to have a very strong appreciation 
from my representation of these people about how issues that 
are created and sometimes decided in Washington affect people 
in their daily lives in the heartland of America.
    Senator Baucus. I appreciate that. I would like you to come 
to Montana. Will you come to Montana?
    Ms. Bryson. Absolutely.
    Senator Baucus. This year?
    Ms. Bryson. Absolutely.
    Senator Baucus. OK. We will find a good visit, just to get 
around and get a sense of what is going on.
    Ms. Bryson. I would be delighted.
    Senator Baucus. Thank you very much. I appreciate that. 
Good luck.
    Ms. Bryson. Thank you.
    Senator Baucus. Thank you, Chairman.
    The Chairman. Thank you very much, Senator.
    Senator Allard.
    Senator Allard. Thank you, Mr. Chairman.
    I appreciate you coming by and visiting with me, Ms. 
Bryson. One of the things I want to get on the record is to see 
if you have taken time to understand water law as it applies to 
the West. This is a followup on questions asked by Senator 
Baucus. Water as it applies to natural resources, particularly 
forests and public lands, is a rising issue. In the West, there 
are fundamentally two sets of water laws that we deal with. The 
kind of water law that you get east of the Mississippi, which 
is a riparian water rights system. The system west of the 
Mississippi, which is used in the State of Colorado and 
throughout the West, is one of prior appropriation. There is 
actually a property right assigned and it is adjudicated at the 
State level. In other words, the Federal Government and the 
Congress have agreed that the primary role in controlling that 
water is with the State. I just want to get some assurance from 
you that you have taken time to understand Western water law, 
particularly the doctrine of prior appropriation, and if not, 
that you will take time to fully understand it.
    Ms. Bryson. Yes, Senator, I have since our discussion spent 
quite a bit of time looking into the water law issues and how 
they affect positions that the Forest Service takes in 
administering the national forest system. I am sure I need much 
more education, and----
    Senator Allard. I would be glad to help you with that.
    Ms. Bryson. I will be glad to get--take all the help that I 
can get.
    Senator Allard. If you don't mind a little consulting with 
a veterinarian.
    Senator Allard. Specifically, one of the problems we have 
with the Forest Service in Colorado is concerned with ditches 
that run through the mountains that were there before the 
national forest was. The forest has a renews the permit for the 
ditch to go through, they have begun, instead of asking for a 
flat fee to renew the permit, to ask for a percentage of the 
water right, which then allows them to move in front of the 
State primacy in controlling how water is allocated in the 
State. We have seen this on the agricultural bill with what has 
been referred to as the Reid amendment. In this instance with 
CRP land, there is an allocation of water that may be allowed 
to the Federal Government which bypasses the State's primacy 
role in States where we have the doctrine of prior 
    What has happened with these ditches is that they come back 
and ask for water. Each time you renew the permit, if you take 
a percentage of that water, pretty soon the farmer will be out 
of business. He was there relying on that water before the 
Forest Service established the land in question as a national 
forest. Many States view water as a property right. This action 
is viewed as a taking of private property.
    I just hope that you look really closely at that particular 
issue because it does surface from time to time in Colorado and 
other States as well, Idaho, probably Montana, Wyoming, those 
of us that are in the Rocky Mountain region, certainly there 
are higher reaches of mountainous areas. This is probably an 
issue that you will be faced with. I would be surprised if you 
don't have a lot of issues coming up related to water, 
particularly in the West. I hope that you will take time to 
thoroughly understand water law and perhaps to have someone on 
your staff who is particularly knowledgeable in Western water 
law. It would also be nice to have someone, even yourself, to 
take the time to attend some of the courses that are offered in 
some of these States that discusses the uniqueness of the water 
law in Western States.
    Thank you.
    The Chairman. Thank you very much, Senator Allard.
    That does not mean, however, Ms. Bryson, that you are now 
in charge of rain.
    The Chairman. We thank you all very much. I compliment each 
and every one of you on your distinguished careers. We thank 
you for your willingness to serve this Nation in your various 
capacities. We look forward to working with you in the future.
    With that, this panel will be dismissed, and we will bring 
up our next nominee. Thank you very much, all of you.
    [The prepared statement of Ms. Bryson can be found in the 
appendix on page 99.]
    The Chairman. The committee will now move to the 
consideration of Mr. Thomas Dorr, who has been nominated by the 
President to serve as Under Secretary of Agriculture for Rural 
Development. We would ask Mr. Dorr to please come to the 
witness table.
    Mr. Dorr, before I recognize Senator Grassley and you for a 
statement, I would ask you the same question I have asked the 
other nominees. Mr. Dorr, do you agree to appear before any 
duly constituted committee of the U.S. Congress if asked?
    Mr. Dorr. I do.
    The Chairman. Thank you. Again, I would ask you to rise and 
I will administer the oath. If you would raise your right hand.
    Do you swear to tell the truth, the whole truth and nothing 
but the truth, so help you God?
    Mr. Dorr. I do.
    The Chairman. Thank you very much, Mr. Dorr.
    Now I would recognize the senior senator from the State of 
Iowa, Senator Grassley. Senator Grassley, I certainly 
appreciate your being here this morning to introduce the 
nominee, and we recognize you at this time to make a statement.


    Senator Grassley. I thank you very much, Chairman Harkin, 
my colleague from Iowa, Senator Lugar, and everybody who is 
present for one of the most important positions in the U.S. 
Department of Agriculture, an opportunity for us from the State 
of Iowa, at least in Republican administrations to have the 
first person from Iowa this high up in the administration of 
agricultural policy and rural development policy since C.D. 
Lodwick of Weaver, Iowa served in this important position in 
the years of 1982, 1983, maybe 1981, 1982, 1983. It gives me a 
privilege then to nominate somebody that I feel is very 
qualified as C.D. Lodwick was qualified to lead in agricultural 
    It is an opportunity for me to say that there is a void 
within the Department of Agriculture of people who represent 
the upper midwest, in a type of agriculture where family farms 
are so prominent compared to other areas of the United States, 
and that does not denigrate all the good people that are from 
other states, members of this committee like a prominent member 
for Indiana in the Agricultural Department, or prominent person 
from Mississippi in the Agriculture Department, and maybe a lot 
of other prominent people. I guess I look at this maybe in a 
parochial way, that somehow west of the Mississippi and from 
Missouri north, there is a little different view toward 
agricultural policy than there is in some parts of the United 
States, so it gives me an opportunity to say that this 
nomination fills a void that needs to be better represented in 
the Department of Agriculture.
    I am pleased to introduce to you a fourth generation Iowan, 
whom President Bush has nominated to be Under Secretary for 
Rural Development at the Department of Agriculture. Rural 
Development is one of the most important mission areas in the 
U.S. Government, and particularly for my home State of Iowa, 
and I know that the Chairman shares my belief about the 
importance of rural development.
    Rural Development programs benefit every State represented 
on this committee. It is critical for the health and well being 
of rural America that this mission area function efficiently. 
That is why I believe the President has made an excellent 
choice in nominating Tom Dorr to lead Rural Development.
    As Under Secretary for Rural Development, Mr. Dorr will 
oversee efforts to improve the economy and quality of life for 
residents of communities across rural America. He will be in 
charge of programs which support essential public facilities, 
such as water and sewer systems, housing, health clinics, 
emergency service facilities, and electric and telephone 
service. He will also be responsible for supervising the U.S. 
Department of Agriculture's efforts of promoting economic 
development by supporting loans to businesses through banks and 
community-managed lending pools, and assisting producer 
    For these programs to function at their best, they need a 
manager who has a strong understanding of business, of finance, 
modern information technology as well as agriculture, and I 
believe that Tom Dorr has all this and more. The more is that 
he understands rural America because that is where he is from. 
Tom is not from inside the beltway. He is not a lawyer. He is 
not an economist. He is not an old bureaucrat that claims to 
understand agriculture because they regulated lots of programs 
and talked to farmers and other folks from rural America.
    He is from a farm near Marcus, Iowa. This is an individual 
that understands rural America because that is where he was 
raised. He has had dirt under his fingernails for decades. He 
knows what it means to be a farmer and to try and make a living 
and support a family in rural Iowa. He will bring extraordinary 
talent and experience to the Under Secretary's position from 
his work on the Board of Directors of the Federal Reserve Bank, 
to his success in helping to develop Heartland Care Center in 
Marcus, Iowa, a cooperative for senior citizens.
    Whether it is big city relationships that he has 
established or whether the care of senior citizens in rural 
America, he brings a breadth of background to this job.
    Now, I have noticed from newspaper articles that several 
organizations will be testifying against his nomination. Some 
of these, like the Iowa Citizens for Community Improvement, is 
a well-established organization, credible in their helping to 
improve lives in rural America. I have worked with them on many 
issues. Or there is a African-American group that represents 
farmers, who will be testifying. I have had an opportunity to 
work with that group as well on helping African-American 
farmers get legislation to sue the FSA because they did not 
get--because they were discriminated against. All I can say is, 
as these groups come to present their opposition, I would ask 
them to take into consideration that there are a lot of people 
who will be testifying as well, who know Tom personally, and I 
would ask the committee to give fair consideration to all these 
points of view.
    I do not blame anybody who wants to testify in any 
particular position, but I hope that we will give primary 
consideration to those individuals who know Tom well, and so I 
am prepared now to make some references to these, a strong base 
of support that I know Tom has because they have worked with 
him. A number of these folks wrote to my colleague, Senator 
Harkin, who is Chairman of the committee, Senator Lugar as the 
ranking member. They also wrote to me. The reason I am 
mentioning these folks is because they have known Tom for 
years. They are his neighbors, coworkers, peers. These are 
folks not speculating about Tom. They know him and they know he 
will do a great job as Under Secretary.
    Tim Burrick, a farmer from Arlington, Iowa, former 
president of the Iowa Corn Growers' Association, wrote, quote: 
``I know him personally, and I can attest that Tom is a good 
and decent man who values, not disparages, diversity in all its 
forms. I believe that you'll find his intentions and his views 
on diversity nothing short of honorable.''
    James Kersten, Chief Operating Officer, Heartland 
Communications, Fort Dodge, wrote, quote: ``Mr. Dorr is very 
qualified for this position. I believe he will work hard to 
help Iowa and other rural States expand and diversify their 
    David Cruz, President of Comstalk Investments from the 
little town of Royal, Iowa. Senator Harkin, this is the same 
person that wrote a very nice piece about you and I, that when 
we work together, things can get done for agriculture. Mr. Cruz 
wrote: ``Tom Dorr is a worthy candidate for USDA Under 
Secretary. I encourage your support of the President by 
confirming his nominee.''
    Mike Hunter, President of the Cherokee State Bank; LeRoy 
Shone, Cherokee County Supervisor; Charles Sand, President of 
Sands of Iowa; Darryl Hawk, President of the Little Sioux Corn 
Processors; Darryl Downes, Mayor of Marcus; Ray Wetherall, 
Cherokee County Supervisor; Kenneth Olgren, President of 
Farmers State Bank, in a letter collectively signed, wrote: 
``We would like to request your efforts to get Tom Dorr 
confirmed as Under Secretary of Agriculture for Rural 
Development. We feel his leadership will not only benefit 
Cherokee County but all of rural Iowa.''
    Two more. Lee Cline, Chairman, National Corn Growers, has 
asked me to enter in this record, a strong statement in support 
of Tom, so if that is all right, Mr. Chairman, I would like to 
have that entered.
    The Chairman. Without objection.
    Senator Grassley. There are many more, but I will conclude 
with only one more from Dr. William C. Hunter, the Senior Vice 
President and Director of Research of the Federal Reserve Bank. 
Dr. Hunter hoped to be here in person, but he states this in 
his letter. Quote: ``I have known Tom for almost 7 years and 
have come to greatly respect and admire his dedication to the 
development of sound economic and agricultural policies. Tom 
was one of a handful of people to understand that while the 
adaption of technological advances in the farm sector would 
lift productivity to new levels, these same changes could also 
have adverse implications for the viability of the traditional 
family farm. In particular, he often expressed concern for the 
plight of the traditional family farm. Tom continually raised 
concerns about the lack of coherent plan for maintaining the 
viability of the small family farm. As an African-American,'' 
Mr. Hunter remarks, ``I have never heard him offer disparaging 
remarks about people of color, the intrinsic value of diversity 
or about small farmers.''
    Before I give my closing paragraph, I just thought of Mr. 
Dorr's service on the Iowa Board of Regents, and in my 42 years 
of serving Iowa public office, both as legislator and as State 
legislator, Congressman and senator, you can measure the 
quality of people in the State of Iowa that serves on the Board 
of Regents. I speak, whether it is Governor Loveless, Governor 
Hughes, Governor Ray, Governor Branstad, or even now Governor 
Vilsack--so that is a range of Republicans and Democrats--
people that serve on the Board of Regents only get there 
because they are outstanding leaders in their field, in public 
service, in civic duty, and also because they are well 
qualified to govern higher education in the State of Iowa, 
consequently our three universities.
    In closing, I know that Tom has spoken to a few of the 
members of this committee personally. I hope those meetings 
went well. He is a qualified farmer from Iowa who wants to make 
a difference, and that is why I am here introducing him. I want 
more people like Tom, farmers from Iowa and other rural areas 
of America, to get involved in agriculture. That is why I 
pushed so hard to make sure that if we were not going to have a 
Secretary of Agriculture that could speak about having dirt 
under their fingernails, at least we had deputies who had dirt 
under their fingernails before coming to these very important 
positions. People coming from the farm to leadership in the 
U.S. Department of Agriculture is very important for the 
preservation of the institution of the family farm in America 
    This proposition serves us well to draw from family 
farmers, their knowledge and experience, because it is 
invaluable and it is impossible to duplicate. After you listen 
to Tom, I am confident that you will agree with the President's 
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Grassley can be found in 
the appendix on page 88.]
    The Chairman. Thank you, Senator Grassley.
    Senator Baucus has to leave very shortly, and I will 
recognize him for a statement, but let me just begin this part 
of today's hearing by picking up I guess a little bit where 
Senator Grassley just left off, by saying that few nominees for 
senior positions at the Department of Agriculture have 
generated quite the degree of interest that we have seen here, 
and unfortunately, that is not really a positive thing either, 
one way or the other. Frankly, most nominees at USDA go through 
the committee without a lot of controversy.
    Well, obviously, if you read the papers or read my mail, 
one would see that this one has been different, and frankly, I 
have been surprised by the level of opposition that has been 
expressed. I cannot say that I am happy about that, or the time 
that we now need to spend to appropriately and fairly consider 
this nomination. We are in the midst of the conference on the 
farm bill, and there are many, many other priorities that need 
our attention. However, I have said that we should fairly hear 
this matter, and that we plan to do so today or for as long as 
it takes. That is our responsibility and we will meet that 
    Let me assure the candidate, as I did in a private meeting 
last week, and everyone else, that I have an open mind, and am 
assured that other members of this committee do also. There are 
issues that need to be explored, and concerns that need to be 
addressed. We will do so fairly and try to finish within a 
reasonable period of time. I expect, Mr. Dorr, that there will 
be a fair number of written followup questions, especially from 
members who told me they could not be present this morning, and 
before the committee moves to a business session to consider 
reporting the nomination, we will need to consider fully the 
information gathered at the hearing today along with any other 
information which is properly brought to the committee. Mr. 
Dorr, with that said, and before I recognize you, I would just 
recognize the Senator from Montana for a statement, because I 
know he has to leave.


    Senator Baucus. Thank you very much, Mr. Chairman, and I 
thank my fellow colleagues for indulging here.
    Mr. Dorr, I cannot tell you how important the position of 
Under Secretary of Rural Development is to the State of 
Montana. It is critical. There are people who have had that 
position in Washington and also in Montana, for example, who 
have helped breathe economic growth into our State. I say this 
because I am very concerned about statements that have been 
attributed to you and people's reactions to your concept of 
agriculture. The statement that is attributed to you, is 1998, 
I guess the ``New York Times'', basically saying that you 
envision a Nation of 225,000 acre farm operations. I do not 
know if you said that or not, but at least that is in the 
papers. A little quick calculation shows that is a place of 
about 350 square miles. I know you have this concept of pods, 
and it is very technologically organized and computerized and 
so forth, which raises a whole other set of questions. I have 
to tell you, we do not have any places in Montana that large 
with the possible exception of Ted Turner, and he is not really 
a Montanan.
    I say this because we are a State where agriculture is in 
dire straits and small towns are in dire straits. USDA Rural 
Development provides the infrastructure in many cases for small 
towns in rural America, towns under a population of 10,000, for 
example, water, sewage and so forth. If, unfortunately, your 
vision were to materialize, at least the vision as it has been 
represented, all of those small towns would die on the vine, 
and you will be working at cross purposes with your vision. 
Clearly it will not work. You cannot have both.
    My real deep concern is you have this vision that is 
nearly, it is almost in your DNA, which you are going to be 
driving for, which is antithetical to rural America, 
antithetical to rural America. That is my worry. That is my 
    Now, I know you will come back and say, ``Well, gee, we are 
trying to liberate farmers so they do not go down the road of a 
lot of chicken producers and a lot of hog producers and maybe 
even some cow producers that are being taken over in a certain 
sense by the packing industry. I understand all that. Your 
vision, as I see it, is just the same anyway, because nobody 
would own his own place, very few will; rather they will be 
working for the people like you. They do not have their own 
    I say that also because that is the comments, like I say. 
Neil Harl has made comments to the fact that your concept is 
very unusual. I have a quote here. It says it creates a sector 
of serfs, very respected economist, Iowa State University.
    I just wanted to say to you, this is not fair I have to 
leave, because you are not able to answer the questions I am 
posing, but I must leave, but if you are confirmed, Mr. Dorr, I 
want you to come out to my State of Montana, and I want you to 
walk around with those folks, and I want you to see how 
impossible it is, it is impossible, and it is wrong to pursue, 
quote, your vision.
    Now, I appreciate that agriculture needs a lot more 
technology. We can have a lot more data. Whether it is weather, 
soil conditions, fertilizers and whatnot, I agree with all of 
that. Our farmers are doing it. Not in the grand scale that you 
are talking about which is so technical and so money driven, 
and it is so contrary to the lives that Montana farmers and 
ranchers want to lead, that is, having their own place and 
making a go of it. I am just deeply concerned that it is too 
focused on something you think makes too much sense. You 
probably made a lot of money doing it for yourself and your 
family, but it is not the American way of life for agriculture. 
I hope you think very seriously about that if you are 
    Thank you, Chairman.
    The Chairman. Thank you, Senator Baucus.
    I recognized Senator Baucus because he does have to leave. 
My plan is to recognize Senator Lugar. I want to recognize Mr. 
Dorr for his opening statement, and then I know our 
distinguished Congresswoman Eva Clayton is here, and has been 
waiting to testify. I will recognize Senator Lugar for his 
comments, and then I will recognize you, Mr. Dorr, for a 
statement. I will dismiss you and I will bring up the panels, 
and we will recognize Congresswoman Clayton first off at that 
    Senator Lugar.
    Senator Lugar. Thank you, Mr. Chairman. I simply want to 
thank you for scheduling this hearing. It is very important 
that we hear from the nominee. I was impressed, and 
Congresswoman Clayton will make these comments, I suspect, in 
her statement, but she points out that farm income amounts to 
less than 3 percent of total rural personal income, and among 
farm families only 12 percent of total farm income comes from 
farming. This illustrates the reason why many of us in this 
committee, during markup and floor debate, were strongly in 
favor of much greater sums for rural development, and some 
specific program suggestions that have come forward in the farm 
bill that we have passed.
    What I look forward to pointing out, Mr. Dorr, is your 
strategy for rural development in a comprehensive way. That is 
the position for which you have been nominated. It is an 
extraordinary priority of this committee and of the Senate as a 
whole as is spoken, and I look forward to that testimony.
    I thank you, Mr. Chairman.
    The Chairman. Thank you, senator.
    Mr. Dorr, welcome to the committee, and please proceed with 
your opening statement.


    Mr. Dorr. Thank you, Mr. Chairman, Ranking Member Lugar. 
Senator Grassley, I am most appreciative of your kind and 
gracious introduction.
    I am deeply honored by the nomination of the President to 
serve as Under Secretary for Rural Development. It is with a 
great deal of humility that I appear before you today in this 
confirmation process.
    I am a farmer from Marcus, located in Northwest Iowa. My 
great grandfather, a German immigrant, was the first 
homesteader in Amherst Township in Cherokee County. Even today 
a single large tree marks the spot near the creek where he 
built his first sod home. As a fourth generation farmer, I 
operate a corn and soybean farm, a grain elevator and 
warehouse, and also finish swine in a business with other 
family members.
    I am the second child and eldest son of a family of nine 
children. Only two of us, my brother John and I, remain in 
production agriculture. My father is deceased, and although my 
80-year-old mother, Margaret Dorr, would like to have been 
here, her health precludes that. However, without my parents' 
guidance, support and love, I would not be here today.
    I would like to take just a moment to introduce my wife of 
over 30 years, Ann Dorr, our two children, our daughter Allison 
and her husband Karlton Kleiss of Des Moines, and our son, 
Andrew, sitting next to Ann, who is a student at the University 
of Iowa. I have a brother, Kurt, in the crowd also, who is from 
the Chicago area. Kurt is in the back.
    Finally, I would like to introduce three other very close 
friends of mine who traveled here from Iowa to be with us 
today. One is Keith Heffernan from Des Moines, Iowa, Bob Engle, 
my banker from Marcus, Iowa, wanted to be sure he was here; and 
Rod Ogren, the Director of Economic Development from Marcus.
    The Chairman. We welcome you all to the committee.
    Mr. Dorr. These friends, family members and many others, 
have supported me in the quest to maintain the family farm for 
nearly 30 years. The view that there is a special and unique 
synergism between the value of family and farms is not a myth. 
It is real. It is worth protecting and revitalizing. Farming is 
one of the very few endeavors in which those who labor realize 
that they truly do not control their own destinies, a higher 
order, God, or the forces of nature, however you may view it, 
created a particularly unique set of circumstances which make 
it necessary for farmers to develop relationships with their 
families and neighbors in order that they may survive.
    My father and mother embodied this realization by their 
examples, of civic and community involvement. It was their 
philosophy that to whom much was given, much would be expected. 
Early in my career I was urged by my parents to be responsive 
to the needs of our community and agriculture.
    After spending nearly 8 years attending college, serving in 
the military and working for an educational research 
organization, I returned to the family farm in 1972. At that 
time agriculture was viewed as dynamic and growing. We were 
going to feed the world.
    In the mid 1970's I became actively involved in the Iowa 
Corn Growers Association, served on its Board of Directors, and 
worked hard to pass the first ever statewide corn check-off in 
the nation. Later I was elected by my peers to serve on both 
the Board of Directors and the Executive Committee of the 
National Corn Growers.
    In addition to my agricultural service, I was nominated and 
confirmed to serve a 6-year term on the Iowa Board of Regents, 
and I served two 3-year terms on the Board of Directors of the 
Federal Reserve Bank of Chicago.
    Of all my efforts in public service, those involving local 
issues have been perhaps the most meaningful to me. One such 
example is the successful development of the Heartland Care 
Center in Marcus. I helped organize and became the first 
president of that Board of Directors.
    The Heartland Care Center project led to a successful 
community-wide effort, which resulted in the construction of a 
much needed 50-bed extended care and nursing home facility. It 
is significant because it helped maintain the viability of our 
rural community. Instead of having to place elderly family 
members in facilities 15 or 20 miles from our community, their 
licensed home now allows our loved ones to remain near their 
families. In addition to solving this very personal need, it 
also created job opportunities within the community.
    Significant changes are taking their toll on the rural 
landscape. Since the late 1980's two major events have had a 
dramatic effect on the structure of rural America, the 
development of the Internet and related technologies, and the 
growth of global competition. However, if we can determine how 
to treat these and other changes as opportunities, I believe it 
may be possible, it may be possible to revisit the dynamics of 
the early 1970's, the period which so effectively enticed Ann 
and me, and many more like us, back to the family farm.
    Examples of these possibilities may involve focusing on how 
to conserve and utilize the natural resource base of this 
country. By developing ways to cost effectively generate 
renewable energy resources, improve water quality through 
farmer-owned filtration opportunities, or other yet unknown and 
undeveloped ways, we may have the potential to develop 
significant new income sources for America's farmers and 
    These are just a few examples. The issue becomes how do we 
preserve the integrity of rural America for those who not only 
do the farming, but for those who support and share in the 
risks of living in rural areas? It is a difficult charge, one 
which all of us who love rural America and live in it, have 
struggled with for some time.
    Hopefully, by working with you to explore these and other 
possibilities, our collective efforts will make them relevant, 
accessible, and profitable for rural America.
    If confirmed, I look forward to working with each of you to 
make this rural rejuvenation, which all of us so desperately 
desire, a reality. Thank you for your consideration, and I look 
forward to your questions.
    [The prepared statement of Mr. Dorr can be found in the 
appendix on page 101.]
    The Chairman. Thank you, Mr. Dorr.
    As I stated, we have a distinguished member of the House, 
and a senior member of the House Agriculture Committee here. I 
would ask you, Mr. Dorr, if you could please take a seat back. 
We will bring these panels to the table and then ask you to 
come back for a question and answer session at that time.
    Mr. Dorr. Thank you.
    The Chairman. Thank you, Mr. Dorr.
    I would like to bring the panel to the table. The first 
panel is the Honorable Eva Clayton, Congresswoman from North 
Carolina; Mr. Dennis Keeney of Ames, Iowa; Mr. George Naylor of 
Des Moines, on behalf of the Iowa Citizens for Community 
Improvement; and Mr. Leon Crump of East Point, Georgia on 
behalf of the Federation of Southern Cooperatives.
    In consultation with Mr. Dorr last week, we asked who he 
would like to have testify on his behalf and after this panel, 
we will have a second panel with Mr. Ron Langston, Ms. Nancy 
Hier, Mr. Varel Bailey, Dr. Thomas Fretz and Dr. Constantine 
    That is how we will proceed, and then we will bring Mr. 
Dorr back to the witness table for further questions by the 
    Congresswoman Clayton, as a senior member of the House 
Agriculture Committee, we welcome you here. I apologize that 
you had to wait so long, and of course, we look forward to 
working with you to get a farm bill through as we meet in 
    Congresswoman Clayton, again, welcome to the committee. 
Your statement will be made a part of the record in its 
entirety, and please proceed as you so desire.

                      FROM NORTH CAROLINA

    Mrs. Clayton. Thank you, Mr. Chairman. Good morning, 
Chairman Harkin and Ranking Member Lugar and other members of 
the committee. I appreciate the invitation to appear before you 
today regarding the nomination of Thomas Dorr for Under 
Secretary for Rural Development at the Department of 
Agriculture. As you may know, I have long had a great interest 
in the topic of rural development, especially for under served 
and minority communities such as that I represent in the First 
District of North Carolina. With your consent, I ask that my 
entire statement and attached materials be entered into the 
    The Chairman. Without objection. Congresswoman, we are 
going to try to keep it to 5 minutes if we could, but 
obviously, I am going to give you as much time as you need.
    Mrs. Clayton. I will try my very best.
    I come before you today on behalf of almost 20 Members of 
the Congressional Black Caucus who wrote to you expressing deep 
concern regarding the proposed nomination of Thomas Dorr. I am 
glad you have called this hearing today to give Mr. Dorr an 
opportunity to explain some of his past statements and also to 
lay out his vision for rural development at USDA, particularly 
for under served and minority communities.
    Mr. Dorr visited me earlier this week, and I was pleased to 
listen and discuss the issues raised here in my testimony. I 
shared with Mr. Dorr that my only knowledge of him were the 
insensitive and troubling remarks reported, and explanations 
would need to reach a very high bar indeed to overcome the 
hurdle that he placed for himself.
    I would like to stress at the beginning though that this 
hearing ought not to be simply a referendum on Mr. Dorr's 
statements regarding economic development and ethnic diversity, 
though it should be a topic of discussion. Rather, this hearing 
must concern much larger issues, should be about the decline of 
rural America, it should be about the tremendously 
disadvantaged communities and rural areas throughout the 
country, about Mr. Dorr's vision for the resurrection and 
revitalization of these communities, and about his 
qualifications to do so.
    Let me make no mistake about the importance of this task, 
for hundreds of communities across the country this is a matter 
of seriousness and urgency. I represent the First District of 
North Carolina. The First District of North Carolina is a 
majority black district, rural district in Eastern North 
Carolina. My district has been hit hard in recent years. 
Repeated hurricanes, loss of textile and manufacturing jobs, 
and serious downturns in the agricultural economy, all have 
taken a serious toll on the communities I represent. The rural 
problem of which President Theodore Roosevelt spoke almost 100 
years ago continues to exist in Eastern North Carolina. The 
administration and the Senate Agriculture Committee should 
consider carefully the extent to which this nominee for Under 
Secretary for Rural Development has the capacity, the 
creativity, and the energy to approach the tremendous challenge 
posed by struggling rural communities.
    I would also like to stress the need of rural America to go 
far beyond agriculture. No one familiar with rural communities 
could fail to understand the critical importance of the 
agricultural economy for rural communities. The farm sector has 
long played an important role in the prosperity for rural 
families across America. Rural America does not end as the 
field's edge. In fact, statistics bear witness to the fact that 
we must think beyond the farm sector when working for the 
revitalization of rural America.
    Today, farm income amounts to less than 3 percent of total 
rural personal income. Senator Lugar recognized that. Even 
among farm families, only 12 percent of the total farm income 
comes from farming, and in 1999, 90 percent of all farm 
operators' household income came from all farm sources. Given 
these statistics, it is surprising that Mr. Dorr's vision for 
rural America involves farms of over 200,000 acres and 
increasingly large and vertically integrated livestock 
    Until we reinvigorate our rural communities and farm 
economy, we need someone with a commitment to support family 
farms as strongly as he supports big corporate farms, and who 
will recognize that simply increasing the scale of the farm 
economy will not be a panacea for the ills of rural America.
    Thomas Dorr's preference for large-scale agriculture and 
his statements linking the lack of diversity with economic 
prosperity simply do not mesh with the mission of USDA Rural 
Development. USDA Rural Development Long-Range Plan 2000-2005 
states that the program delivery depends on working in 
partnership with ``small farm operators and organizations that 
represent small farm interests; minorities' organizations; and 
community-based and nonprofit organizations.'' End of quote.
    I would now like to reference a letter from Members of the 
Congressional Black Caucus to the Senate Agriculture Committee 
leadership that is the impetus for my appearance here today. 
This letter enumerates quite clearly the issues that require 
serious examination by this committee.
    The letter notes that Mr. Dorr's statement at an 
agricultural conference sponsored by our State university in 
December 1999, while I am aware that many here are familiar 
with these comments, I believe that they are worthy of noting, 
and I quote.
    ``And I know this is not at all the correct environment to 
say this, but you ought to perhaps go out and look at what you 
perceive the three most successful rural economic environments 
in this state...you'll notice when you get to looking at them 
that they are not particularly diverse, at least not ethnically 
diverse. They're very diverse in their economic growth, but 
they're very focused, uh, have been very non-diverse in their 
ethnic background and their religious background and there's 
something there obviously that has enabled them to succeed very 
    That Mr. Dorr would make a comment such as this is puzzling 
at best, deeply offensive at worst. He did share with me in our 
conversation the context and how the remarks came to be made. 
I, for one, cannot help but wonder what the correct environment 
for such a comment would be.
    However, it is imperative that we not simply look at this 
statement in isolation. These comments and the nomination of 
Mr. Dorr for the Under Secretary for Rural Development must be 
placed within a long history of civil rights discrimination and 
struggle at the Department of Agriculture. I would note, 
parenthetically, this has been acknowledged by you, the U.S. 
Senate, because you indeed included an Assistant Secretary for 
Civil Rights at USDA during the markup of a farm bill.
    The civil rights abuses at the Department of Agriculture 
are well known. The consent decree of Pigford v. Glickman class 
action lawsuit by black farmers has led to the payments of 
hundreds of millions of dollars to farmers who have made it 
through the complicated settlement procedure. These settlements 
are just a fraction of the real cost to these farmers and their 
families have, and in most cases, continue to face.
    The Congressional Black Caucus has endeavored for many 
years to rectify the Department of Agriculture bias against 
minority farmers, and to improve the capacity at USDA to work 
with minority and economically disadvantaged farmers. To 
confirm Mr. Dorr as the Under Secretary for Rural Development 
without a deeper understanding investigation into his 
sentiments regarding ethnic diversity, would send the message 
that the administration lacks an adequate commitment to civil 
rights and minority farmers.
    I ask as well that the committee bear in mind the 
unfortunate fact that many of the poorest communities in our 
country, those most in need of rural development assistance, 
are rural communities of color, stretching from the Indian 
reservations of the Southwest, to Latino border communities, 
and across a deeply impoverished black belt of the Southeastern 
United States. The Under Secretary for Rural Development is 
charged above all else with working with these communities and 
supporting them in their own efforts to create sustainable 
livelihoods for their residents.
    The intersection of race and poverty is not a coincidence, 
nor should it be incidental to this hearing. Disadvantaged 
rural communities throughout the country know what it means to 
be disregarded and ignored by economic development experts, by 
state officials, and by Federal programs. While this disregard 
may not be intentional or malicious, it is not less real and no 
less painful to those communities or their residents. While it 
is certainly not my intent to tar Mr. Dorr with the accusation 
of racism, I do urge the committee to remember that race and 
rural poverty go hand in hand. While there is certainly more 
than enough disadvantage in rural America to go around, and 
while I am all too aware that poverty knows no racial or ethnic 
boundaries, it is nonetheless the case that for communities of 
color, poverty is persistent, deeper and consistently more 
    In assessing the qualifications of Mr. Dorr for Under 
Secretary for Rural Development, I ask the Senate to step back 
and to look at the long history of discrimination of which I 
have spoken. The question before the committee should not, in 
my opinion, be whether Mr. Dorr's comments were in themselves 
unsettling enough to accept or reject his nomination. Rather, 
the question is whether or not the administration has brought 
to bear on the nomination the care that is necessary to ensure 
the eventual appointee is not just aware of this history of 
discrimination, but actively concerned about it.
    Should the Senate confirm Mr. Dorr as the Under Secretary 
for Rural Development at the United States Department of 
Agriculture, I will work cooperatively with him and will 
continue to vigorously challenge him on these important issues 
facing rural America.
    Thank you very much, Mr. Chairman.
    [The prepared statement of Congresswoman Clayton can be 
found in the appendix on page 89.]
    The Chairman. Congresswoman Clayton, thank you very much 
for your statement, for your patience in being here today. I 
know you are extremely busy, and if you have to leave, please 
do so.
    Mrs. Clayton. Thank you.
    The Chairman. We look forward again to working with you on 
the Conference Committee.
    Mrs. Clayton. Thank you.
    The Chairman. Thank you.
    Now I would turn to the testimony of Mr. Dennis Keeney of 
Ames, Iowa, and I will start enforcing the 5-minute rule. We 
will permit statements of up to 5 minutes. At that time I am 
going to have to cut it off. The time is getting late. You 
certainly can understand that we would let the distinguished 
Congresswoman and others go on a bit longer than the 5 minutes.
    We thank you for being here, and Mr. Keeney, your statement 
will be made a part of the record, and please proceed with your 


    Mr. Keeney. Thank you, Chairman Harkin and Mr. Lugar, for 
inviting me to talk in front of you and to the rest of the 
    I am probably here because of my background in directing 
Leopold Center for Sustainable Agriculture. I directed the 
Center starting in 1988 and was the first permanent director of 
the center.
    I would like to say that I have a high degree of respect 
for Tom Dorr and for his accomplishments, and so this is 
concerns that I want to share that we have interacted with on 
and off over the years I was director of the Center.
    I first heard of Tom when I came from Wisconsin to take the 
Leopold Center position, and Tom was explained to me as one who 
was known as an innovator in agriculture technology especially 
at the large farm scale and was very skeptical of the 
sustainable ag. movement. This was 1988, remember, and 
certainly Tom was not alone in being skeptical of this 
particular movement.
    I tried, through the auspices of Stan Johnson and Keith 
Heffernan, to find a common ground with his Tom, where his 
concepts and the Leopold Center could possibly fit because I 
realized we should be working together if we could. It just 
never quite worked out. I believe our closest encounter was 
trying to get some work going in precision agriculture, but 
this technology really did not fit the Leopold Center mission, 
which was to try and get management skills that keep farmers on 
their land.
    It was apparent early in my tenure that Tom Dorr was going 
to be a strong critic of the Leopold Center legislation. It is 
my belief that at that time Tom considered sustainable 
agriculture to be a step backward from modern agriculture 
technologies, and that he viewed the concerns that row crop 
farming was damaging the environment as misguided.
    Tom's criticisms of the Leopold Center did not particularly 
concern me. In fact, I found his views were a good measure to 
use in our progress. Were there ways we could address the 
interest of those in Iowa who see agriculture more in terms of 
commodities and profits as opposed to others who see it in 
terms of communities and people? Mr. Dorr's sharpest criticisms 
of some of our work dealt with the sociology agenda of the 
Center and the College of Agriculture, particularly the use of 
surveys to find out what was going on in agriculture.
    Mr. Dorr's generally critical but hands-off attitude toward 
me and the Center changed about the time he became a member of 
the Board of Regents. At that time he was strongly questioning 
many things we had under way, especially our work in nitrogen 
management and my leadership of a Certified Crop Advisor 
Program. I would have welcomed more discussion of our 
difficulties, but again we never seemed to reach a common 
ground on this.
    Instead at times Tom used his influence to question us 
negatively in public and in private. It was not a pleasant time 
because of his status as a regent.
    We continued to invite Tom to the Leopold Center advisors 
board meetings, give him specific notice of our agendas, mainly 
because he was on the agriculture Regent at that time. He did 
attend several meetings, and at times offered some discussions. 
There was nothing particularly negative in the inputs that Tom 
had to these meetings.
    I can only give a very general impression of how Tom might 
perform in the role he is being asked to fill. I do not see him 
as a leader for rural development issues except as they might 
pertain to large business and farming groups, and it would be 
hard for me to see him relating to the needs of people who are 
trying to stay on the land and face financial adversity, or 
citizens who are in need of help because they have not had the 
opportunity to share in the financial gains of our country over 
the past 20 years. Perhaps Tom has or is changing his views. 
That we will hear from him I am sure. If he is confirmed, I 
would hope that he listens well to those who so badly need the 
assistance of the Government to improve their quality of life.
    Thank you for this opportunity.
    [The prepared statement of Mr. Keeney can be found in the 
appendix on page 104.]
    The Chairman. Thank you, Mr. Keeney.
    Before we question our panel, we will now move on to the 
testimony of Mr. George Naylor from the National Farm Action 
Campaign. We have your statement, Mr. Naylor, and it will be 
made a part of the record in its entirety. Please proceed.


    Mr. Naylor. I would like to thank Senator Harkin, Senator 
Lugar, and the committee for inviting me to testify. My name is 
George Naylor. I farm with my wife and two sons near Churdan, 
Iowa. Senator Harkin has been my representative, first in the 
House and now in the Senate, for the full 25 years that I have 
farmed, and I want to thank him for his good representation. I 
would also like to say hello to Senator Grassley and thank him 
for his good representation also. I appear here as a member of 
the nonpartisan group, Iowa Citizens for Community Improvement, 
and as a steering committee member of the National Farm Action 
Campaign, the group that has spearheaded national opposition to 
Thomas Dorr's confirmation.
    I appear today to ask you to reject the nomination of 
Thomas Dorr as Under Secretary of Development of the USDA. 
Widespread opposition to this nominee has grown as America has 
become aware of Thomas Dorr's disastrous vision of the future 
of rural America and his reprehensible views of equating 
economic success with a lack of religious and ethnic diversity. 
165 groups signed a letter to the Senate Agriculture Committee 
opposing Mr. Dorr's nomination. Some of those groups were the 
American Corn Growers Association, the Sierra Club, Defenders 
of Wildlife, Humane Society of the USA, the NAACP, La Raza, 
LULAC, AFGE and the United Farm Workers.
    I urge you to read the supporting documents attached to my 
written testimony, and ask that they be included in the 
official record.
    Our member organizations believe that the family farm is 
one of the Nation's most precious but misunderstood 
institutions. The family farm is not merely a nostalgic 
artifact from the past. It is the foundation of modern 
sustainable economy in the 21st century. Family farmers have 
provided a safe and reliable food supply while serving as a 
backbone of rural economic development. Family farmers 
represent personal initiative and personal responsibility. When 
family farmers do something right or wrong, you know who is 
responsible. Because family farmers want to pass their land on 
to the next generation, we have the irreplaceable incentive to 
serve as good stewards of the land and water without the 
necessity of costly regulations or incentives.
    It is important to contrast this tried and true institution 
with the corporate industrialized model of agriculture that 
increasingly invades our neighborhoods. Absentee landownership, 
contract farming and polluting animal factories are rapidly 
bringing blight to our beloved landscape. Absentee investors 
take profits out of the community while vulnerable immigrant 
labor languishes in poverty. Property values decline, family 
farmers leave the land, and small communities lose their 
schools, grocery stores, and churches and health care. It 
should be clear to all that corporate industrialized 
agriculture is not compatible in any shape or form with 
healthy, vibrant rural communities.
    However, Thomas Dorr's publicly touted vision of the future 
of American agriculture embraces that corporate industrial 
agriculture. It is clear that his mega-farm folly would clearly 
not buy inputs locally resulting in the closure of businesses 
up and down Main Street. Tom Dorr may say that farm 
consolidation is inevitable and that we can make it a good 
outcome for family farmers in rural communities. Well, I have 
heard that story before. 23 years ago I served on the Iowa Corn 
Promotion Board, where I heard the same hollow promises from 
the National Corn Growers Association. They said just wait for 
exports to bring corn prices up, and in the meantime get bigger 
and more efficient. My organization's hog farmer members heard 
the same thing from the National Pork Producers Council, while 
polluting vertically integrated operations nearly took over hog 
    Given the economic distress in rural America, why should 
Tom Dorr and these organizations have any credibility at all?
    One of the strengths of American agriculture is diversity 
of techniques and the supporting economic institutions, from 
banks to suppliers, veterinary clinics and repair shops. This 
diversity and the economic development associated with it would 
    The growing conformity of production techniques would make 
our food system more brittle and subject to catastrophic 
mistakes. Does anyone really believe that huge centrally 
managed farms, where farmers become serfs on the land, fits 
with the American dream?
    In an April 8th article of 2001, in the ``Des Moines 
Register'' Jennifer Dukes Lee said that, quote, ``In his 
hometown, farmers call Tom Dorr the poster boy of corporate 
agriculture.'' One Republican farmer, who has known Tom Dorr 
since he was a child, is quoted as saying, ``He would be very 
counter to rural development unless you would consider that 
rural development is one farmer in every county.'' At a 
conference at Iowa State University he joked that because of 
his views, he was the pariah of Marcus, Iowa.
    I see that my time is running out, and I would like to beg 
for a little more time, considering the bombshell that came 
this morning in the ``Des Moines Register'', and I will leave 
some of the other issues to my colleague, Mr. Crump, here.
    Iowa CCI filed a lawsuit, and because our Freedom of 
Information Act request for information about an alleged 
incident where Mr. Dorr received payments from FSA that he was 
not eligible for, and it turns out that according to the ``Des 
Moines Register'' this morning, that what we suspected is in 
fact the case. In the ``Des Moines Register'' article it says 
that Thomas Dorr arranged his trust, allegedly arranged his 
family trust, and quote, ``are operated with ASCS to quite 
frankly avoid minimum payment limitations.'' This was in a 
transcript of a tape recording that Mr. Dorr was having with 
someone else.
    The Chairman. Mr. Naylor, I am going to have to cut you 
off. I assure you that the committee members have copies of 
that article.
    Mr. Naylor. OK. Well, in conclusion, I would ask that this 
committee take this breach of integrity seriously, and 
therefore, and for all the other reasons also, oppose this 
nomination. Thank you.
    [The prepared statement of Mr. Naylor can be found in the 
appendix on page 106.]
    The Chairman. Thank you, Mr. Naylor. I do have some other 
letters that have come from other groups, and those will be 
made part of the record.
    The Chairman. Next we turn to Leon Crump of the Federation 
of Southern Cooperatives and Land Assistance Fund.
    Mr. Crump, your statement will be made a part of the 
record, and again, please proceed for 5 minutes. Thank you.


    Mr. Crump. Thank you, sir. I also brought a petition that 
we had signed at a Georgia meeting with over a hundred 
signatures, over 200 signatures. I would like to be added part 
of the record to oppose to Mr. Dorr.
    The Chairman. Without objection.
    [The petition can be found in the appendix on page 277.]
    Mr. Crump. Thank you so much for having me and giving me 
this opportunity. No one would think that a son of a 
sharecropper would have an opportunity to speak before members 
of the Senate Ag Committee.
    My brothers and I were directly affected by USDA. In 1985 I 
spoke to a House Subcommittee about Ag. credit problems through 
USDA because my brother and I had a farm at the time. We raised 
hogs and vegetables. They sold our farm on the courthouse steps 
while they had somebody there pushing up the price. Now I rent 
land to farm, and my brother since died in 1997. I have 
personal experience with the USDA and some of the problems that 
they deal with.
    They also talked about bringing beginning farmers into 
agriculture. Our Government makes loans every day to countries 
with no interest for a period of time before the first payment 
come due. They can also do that for minority and small farmers. 
Let me get to my statement, the reason I am here.
    The Federation of Southern Cooperatives has been around for 
35 years. We work with farmers in rural communities. We are 
licensed to do work in 16 Southern States. We have over 100 
cooperatives. We work with 10,000 black farmers, 75 
cooperatives, and 35 of those are agricultural cooperatives. We 
have 17 credit unions as well with $24 million in assets, and 
made $72 million in loans. Under the Rural Housing Program we 
develop 350 rural housing units and built 126 multi-family 
units. We have been utilizing the Rural Development programs 
quite well.
    I do not want to take up most of my time. You can read part 
of my statement there, especially when you get to the third 
page, you will see some of the list of loans that we have 
processed, starting with $2.8 million down to $500,000.
    The point I want to make right here is this last page, and 
I will be through. The above are just some examples of the 
essential programs being offered under USDA Rural Development 
Agency, and the difference it has made in the black community 
in the rural South.
    We are very concerned that these successful initiatives 
will be jeopardized by the appointment of Thomas Dorr to serve 
as Under Secretary for Rural Development. This huge agency has 
enormous responsibilities for setting the tone for the 
development in rural America. Whoever serves as head of this 
agency must understand the needs of rural America, its unique 
diversity in terms of minorities, religion and cultures, and 
that the strength of rural communities demand local control 
self help, diverse entities that develop and foster wealth and 
    Tom Dorr is not qualified to serve as head of this 
important agency. He has stated that North Carolina, with its 
hog factory farms should be demolished for development. He 
supports then corporate control highly concentrated 
agriculture, rather than family farms which have been the 
backbone of American development and food safety. He is noted 
for saying that companies are economically strong if they are 
not diverse in terms of race, religion and culture. His 
understanding then and appreciation of the needs of low-income 
and diverse communities across rural America are highly 
questionable and of concern to family farmers and the minority 
community everywhere.
    We urge the Senate not to confirm Thomas Dorr. The work of 
Rural Development is far too important to communities across 
rural America to have as its head someone without an 
appreciation for the needs of our diverse population and for 
small family farmers, and small landowners and business owners 
in general. In fact, there are those who will, at this 
testimony, refer at length to the devastating impact to rural 
communities because of increased concentration of agriculture.
    It is well known that the best stewards of the land are 
small family farmers. They have a vested interest in their 
major resources, land and water systems. Small farmers live on 
the land. They are witness to the daily necessities of 
production agriculture, and they will protect their land and 
water resources that they have always done in the long term. As 
most black farmers and small family farmers, the impact of 
forcing most of them off the land because of factory farm 
agriculture, the most disruptive and destabilizing of the rural 
areas; where else can small black farmers who are forced off 
the land go to but the urban areas where their valuable skills 
as farmers cannot be utilized. The best investment that could 
be made by our country for our economy and food safety is to 
assist in the development of sustainable black and minority 
farmers, and in fact, all family farmers. Often because of 
racism and discrimination, small businesses in the banking 
world, opportunities for minority communities is not available 
regarding loans, obtaining loans from commercial lending 
institutions, technical assistance to access business 
    The Rural Development Agency has often made a difference 
for these minority communities. We must continue with this 
important program and continue to build sustainability in our 
diverse and rural communities. Dorr is clearly not the person 
who can lead the agency in this direction. His corporate 
control mentality is not what we need. If he is appointed, then 
all the decisions of rural communities and development will 
probably be made similar to the devastating corporate decisions 
from the likes of Enron, without any input from family farmers 
who understand the needs of the rural areas. Our rural 
development needs and food safety are far too important to be--
too important and too valuable to be handed over to 
irresponsible short-term corporate greed.
    Thank you.
    [The prepared statement of Mr. Crump can be found in the 
appendix on page 124.]
    The Chairman. Thank you for your statement.
    I thank all the witnesses for being here. I ask you to 
stand by because we may have some further questions for you, 
but at this time, we will dismiss this panel and bring up 
another panel. If you would stay here, we would certainly 
appreciate that.
    I call to the panel Mr. Ron Langston, Ms. Nancy Hier, Mr. 
Varel Bailey, Dr. Thomas Fretz, and Dr. Constantine Curris.
    Senator Lugar. Mr. Chairman.
    The Chairman. I am sorry. Senator Lugar.
    Senator Lugar. Mr. Chairman, in this interval, may I 
introduce into the record a number of letters and statements 
from neighbors of Tom Dorr or his former colleagues, who wished 
to testify, but could not be here today?
    The Chairman. Without objection, they will be made a part 
of the record.
    Senator Lugar. I thank the Chair.
    The Chairman. We wil proceed in the order in which I called 
the names, and again, you will observe the 5-minute rule. Your 
statements will be made a part of the record in their entirety, 
and I would start first and welcome Mr. Ron Langston, National 
Director, Minority Business Development Agency, U.S. Department 
of Commerce.


    Mr. Langston. Good morning. Mr. Chairman, it is good to see 
you again. Senator Lugar, Senator Grassley, who was here, and I 
am sure will be back, members of the committee:
    I am very appreciative for the opportunity to appear before 
the distinguished committee. I am here to support the nominee 
for Under Secretary for Rural Development, Tom Dorr of Iowa. My 
appearance is not a coincidence. I asked for this opportunity 
and the privilege to support a fellow Iowan. I believe Tom Dorr 
will follow in the rich legacy of other Iowans who have served 
this Nation, and in particular, those who have been leaders in 
U.S. and global agriculture.
    Tom Dorr and I have much in common. We both have roots in 
Northwest Iowa. We have lived among the diversity of the Iowa 
plains, a diversity that includes the Dutch, the Germans, the 
Irish, Native Iowa Tribes, Latinos, and yes, a historically 
vibrant Iowa African-American community.
    Mr. Chairman, I dare say that I am probably one of the few 
individuals present today, and certainly in this room, who is 
African-American, and has actually lived in Northwest Iowa. I 
have benefited from the educational system in Iowa and the 
warmth and openness of its rich prairie culture. It has been 
good to me, Senator, and it has been good to my family.
    I have served in the Legislative Service Bureau for the 
Iowa General Assembly. I have also worked as a legislative 
assistant in this body for Senator Roger Jepsen. I am a former 
chair of the Iowa Commission on the Status of African-
Americans. I served as a State Transportation Commissioner. 
Early in my career, I was active in the Iowa-Nebraska NAACP and 
also at the Des Moines branch at NAACP. I am a member of the 
African Methodist Episcopal Church. I am also in good standing 
with Omega Psi Phi Fraternity. I am a contributor to a book, 
``Outside In, a History of African Americans in Iowa.'' I am 
here today in my capacity as an appointee of the President of 
the United States within the Department of Commerce.
    Now, I have noted all of the above for the record, because 
it is important to convey to this committee and to the Senate 
that if I believed for 1 second that Tom Dorr was of a mind of 
behavior that was contrary to the social, economic and 
political upward mobility toward people of color, and 
especially African-Americans, I would not be here today 
speaking on behalf of his appointment.
    The fact is, Senator and members of the committee, I need 
Tom Dorr. I need him to help me address issues of minority 
business enterprise in under developed areas in rural America, 
especially in the deep South. I need this relationship with the 
Under Secretary of Rural Development to strategically 
collaborate with the Minority Business Development Agency in 
areas such as the Black Delta Region of the U.S. MBDA is an 
organization in the process of transformation from an 
administrative focused organization to an entrepreneurial one. 
We believe in entrepreneurship. We believe in an entrepreneur 
economy. Agriculture is a major segment of the Nation's 
entrepreneurial foundation.
    There are great synergies between Agriculture and the 
Department of Commerce, Labor and HUD. There is much we can do 
together to bring technology, e-commerce and infrastructure to 
America's rural communities. I am very excited about the 
Department of Agriculture and Department of Commerce working 
together to provide value-added opportunities for the National 
Minority Business Enterprise community.
    Finally, sir, I look forward to also reaching out to 
America's historically black colleges and universities, in 
partnership with Tom Dorr and the team at Department of 
    For the reasons I have noted above, I would ask you, this 
committee, and the U.S. Senate, to support the nomine. I thank 
you very much.
    [The prepared statement of Mr. Langston can be found in the 
appendix on page 115.]
    The Chairman. Thank you, Ron, for your statement. It is 
good to see you again.
    Mr. Langston. Good to see you, sir.
    The Chairman. Next we would recognize Ms. Nancy Hier. Did I 
pronounce that right?
    Ms. Hier. Correct, thank you.
    The Chairman. Of Marcus, Iowa. Again, we have your 
statement. We will make it a part of the record, and welcome 
and please proceed.


    Ms. Hier. Thank you. Mr. Chairman, members of the 
Agriculture Committee, guests.
    I, Nancy Hier, live in Tom's home community. I have known 
Tom as a student, a business man and a farmer. Of more 
importance in my being able to attest to the true character of 
Tom, is the fact that there has been a longstanding respect and 
friendship between my family and the Dorr family. Three 
generations ago they were immigrants who plowed virgin soil and 
helped develop a community. My father became involved in a 
number of farm organizations that affected farm policy locally 
and nationally. At the height of the Depression, Henry Wallace 
called several to Washington to write the first USDA farm 
program. My father was one of those, of that group of 25. Here 
is a citation by President Lyndon Johnson, commemorating the 
35th anniversary of that original Agricultural Adjustment Act 
of 1933.
    Thereafter, I remember discussions between Tom's father and 
mine at the kitchen table out at our farm. There was mutual 
respect for the vision, the hard work, the capacity to expedite 
ideas to fruition. The fourth generation is now finding time to 
exchange ideas and challenge their thinking.
    All this is to say that I know Tom, I know from where he 
comes. His judgment is based on sound moral principles. His 
christian ethic overrides all considerations. He has recently 
devoted considerable leadership and time to our local church, 
and after he moved to Washington, he said that he missed his 
church family more than any other group.
    Family is foremost in Tom's perspective of a stable 
community. His concern is exemplified by not only the unity and 
success within his own home, but in the character of his own 
children, who are reaching out to serve others. When he 
accepted his proposed appointment to Washington, it was 
necessary to change his farm operation. As he made preparations 
for these changes, the welfare of his employees was dominant. 
All effort was made to accommodate their needs. As Under 
Secretary he will strive to protect not only the business 
aspect of the smaller farm, but also of the coveted lifestyle.
    Tom is a man who possesses great energy of purpose. He will 
strive to formulate innovative solutions to the problems facing 
the small, as well as the large operator. His work ethic will 
be directed toward serving the cause of agriculture, not toward 
enhancing his political career. He will commit to extensive 
homework and then defend his stance, but he will concede his 
opinion if shown to be in error.
    I believe that the initial newspaper article that got so 
many misleading ideas into the public mindset, wasn't due to a 
desire to derail Tom's nomination. When you go into a small 
rural community unannounced in the middle of the afternoon, you 
are not going to find certain men. You are only going to find 
certain men at the coffee shop. An entirely different group is 
out doing the cattle chores and vaccinating piglets and 
auguring soybeans into the truck for sale. They did not get 
interviewed, and those of us who know Tom did not recognize him 
from the article. To suggest that he is a racist is to deny his 
philosophy of life. He has been wrongly accused of intolerance 
because his comments concerning diversity were taken out of 
context. He applied statistical facts, hitherto unused 
criteria, to measure economic success. To his credit, Tom 
applied innovative ideas in making his assessment. Besides, 
just last Christmas I was part of a discussion that was held 
some distance from Marcus. Participants reported Tom's 
suggestion that a nearby county bring ethnic diversity to their 
labor force in order to enhance their economy. You see, many 
understand that he has no racial prejudice.
    Spring is coming, and he will very well remember the feel 
of the soil under his feet, the aroma, the eye on the weather, 
the hope, and the spring rush. With resolve, he will work hard 
to sustain and enhance rural development.
    Thank you.
    [The prepared statement of Ms. Hier can be found in the 
appendix on page 118.]
    The Chairman. Ms. Hier, thank you very much for a very 
eloquent statement.
    Senator Lugar. That was very eloquent.
    The Chairman. Very eloquent statement.
    Next we turn to Varel Bailey, who is no stranger to this 
committee. He has been here in the past many times, Varel, from 
Iowa. Again we have your statement, Varel, and it will be made 
a part of the record, and please proceed.

                      GROWERS, ANITA IOWA

    Mr. Bailey. Mr. Chairman, members of the committee, ladies 
and gentlemen, thank you for this opportunity.
    I appear in support of the nomination of Thomas Dorr, USDA 
Under Secretary for Rural Development.
    I am Varel Bailey, farmer from Anita, Iowa. My son Scott 
and wife Jackie and I operate a corn, soybean, grass, cattle, 
hog and sheep operation, and I really regret that Senator 
Baucus departed, because I am the farmer employee. The night 
before last I midwifed quadruplet lambs. It is great to be here 
in these surroundings today.
    Tom and I have worked together since the mid 1970's. We 
were part of a group of farmers that worked to make the 
National Corn Growers a federation of State associations. That 
group of farmers went on to lobby for check-off legislation, 
passed the corn referendum, as was mentioned, and that effort 
created the first major push for what was called ``gasohol'' 
back then, that resulted in the alcohol fuels industry that we 
have today. Tom's skills really came to the front during the 
1980 grain embargo, as the Corn Growers Association struggled 
to find policy solutions for market chaos that the embargo 
created. This was followed by policy development work and 
lobbying for the 1985 farm legislation and the 1980's farm 
financial crisis, and I might add here that we worked on some 
of the early work on Farmer MAC, as we thought that there were 
things missing in the farm financial arena at that time. We 
worked on the corn gluten feed export disputes with the 
European communities, Spain and Portugal entrance into EC and 
preparations for the Uruguay Round of the GATT. Tom went, as 
has been mentioned, to serve on the Iowa Board of Regents and 
served the midwest on the Chicago Federal Reserve Bank Board of 
Directors. Just three months after the fall of the Iron 
Curtain, Tom participated in a delegation to Hungary, 
Czechoslovakia, Poland and East Germany. The delegation worked 
on agriculture, education and humanitarian issues and resulted 
in the formation of the Iowa International Development 
    Working with Tom over these years on many projects, I have 
found that he has many attributes that suit him for the Under 
Secretary of Rural Development position. He is smart. He is 
intellectually smart and he is street smart. After a 
conversation with him, it is obvious that he is a voracious 
reader and stays at the cutting edge of technology and of human 
    He is visionary. His ability to conceptualize accumulated 
nuances into expected trends and goals is uncanny. Tom was one 
of the first to identify the forces that are causing the 
crumbling of agriculture infrastructure today. Tom couples this 
with modern technologies, enabling a quantum increase in the 
span of management. The result is a potential concept for a new 
food and fiber supply chain. Some perceive this as advocacy for 
huge corporate farms to the detriment of family farms.
    To the contrary. I value Tom's articulation of these 
concepts, because it gives my family farm time to reorganize as 
these new supply chains form. My farm can grow vertically and 
capture value in these new supply chains, instead of 
continuously just competing with my neighbors for more land. 
The ever-increasing overhead costs of business require that my 
farm lower costs, increase the margin per unit of production, 
or increase in size to spread those costs in order to survive. 
Those increasing costs are not likely to abate. Early 
participation in farming supply chains is very important to my 
    I actually participate in a number of rural development 
operations in Southwest Iowa, but it is more important to talk 
about Tom's attributes here than it is to talk about those 
initiatives that are happening today.
    He is energetic. Faced with a challenge, his enthusiasm is 
contagious. During the 1980 grain embargo debate, the spectrum 
of emotion within the group ranged from utter despair to 
visceral anger. It was Tom who helped rally the troops and show 
that only three things are needed to change the course of human 
events. You need a crisis, access to the people who must solve 
the crisis, and a plan of action to help the situation. The 
Corn Grower developed a 14-point plan, carried it to 
Washington, and by lobbying, achieved adoption of 12 of those 
    He is analytical. His knack for figuring out the drivers of 
change and sorting out the optimal alternative solution is 
appreciated by all that work with him. Whether the policy 
debate was on the payment-in-kind, export enhancements, Spain 
and Portugal entrance into EC or the marketing loan programs, 
Tom's analyses were important for refinements to make them 
    He is articulate. His oratory during policy development 
debates that makes the point, lists the reasons, and negates 
the alternatives, is legendary to all who know him.
    He has financial prowess. Watching him look at a business 
plan, rough out a rate of return and estimate the various 
leverages is a skill not held by many people. His ability to 
ferret out the inbred boards of directors, incompetent 
management and unwise relationships that leave all the profits 
on the table have helped many startup businesses in his area. 
He understands the land/labor/capital relationship. He knows 
just having financial capital may not make the project succeed. 
A combination of money, technology, human capital and social 
capital must come together in the right combination to make 
rural development work. He understands the easiest way to kill 
social capital is make a Federal grant.
    He has a set of skills of a chief executive officer. Most 
farmers have management skill levels of a plant manager. Tom 
definitely has executive level management skills.
    He is sensitive. He is aware of the feelings of people 
around him and goes the extra steps to be inclusive. If he 
seems abrasive, it is calculated to cause a person or group to 
rethink their position. He is very aware of the plight of rural 
America. He has lived and farmed through the economic, social 
and political decline. The difference between Tom and most 
other people, that he steps up and tries to help. If a small 
town needs a nursing home, he rallies the people to make it 
happen. If technology is not getting out of the university 
laboratories for businesses to use, he serves on the Board of 
Regents and the Wallace Technology Transfer Foundation. If 
rural banks are abandoning their customers, he serves on the 
Federal Reserve Board. If he finds a farmer in post-Communist 
Poland that needs sweet corn processing and communications 
capability, he finds used equipment and helps start a new 
industry in Poland. If he finds a community in East Germany 
that has no medical service, he helps get medicine to those 
people. If he seen an opportunity to enhance the way USDA Rural 
Development programs stimulate new and economic opportunity, he 
steps up and offers his service as the Under Secretary for 
Rural Development.
    Mr. Chairman, members of the committee, ladies and 
gentlemen, I can think of no better person qualified than 
Thomas Dorr to be USDA Under Secretary of Rural Development. I 
urge his endorsement of his nomination. I yield to questions.
    [The prepared statement of Mr. Bailey can be found in the 
appendix on page 120.]
    The Chairman. Mr. Bailey, thank you very much for your 
    Now we will turn to Dr. Thomas Fretz, Dean and Director of 
the College of Agriculture and Natural Resources at the 
University of Maryland, and your statement will be made a part 
of the record.

                     COLLEGE PARK, MARYLAND

    Mr. Fretz. Thank you. Mr. Chairman, Senator Lugar, members 
of the committee. I appreciate this opportunity to be here 
today. My name is Thomas Fretz. I currently serve as Dean of 
the College of Agriculture and Natural Resources at the 
University of Maryland, and the Director of Maryland 
Cooperative Extension.
    I appear before you today because I am pleased to support 
the nomination of Thomas Dorr as Under Secretary for Rural 
Development as USDA.
    I was asked to come before you and appear today, when it 
was learned that there was some opposition that was growing out 
of the comments which were made at a Visionaries Conference at 
Iowa State University in November 1999. I suggest to you today 
that perhaps there are only two people in this room that were 
present in that conference, and that sat through that entire 
conference, and it was Thomas Dorr and myself.
    The Visionaries Conference arose as a result, Chairman 
Harkin, of an anonymous and enormous gift that came to Iowa 
State University and the University was struggling, as was the 
College of Agriculture at Iowa State and the Department of 
Agronomy, on how to best access and use that gift to really 
make a difference.
    I participated and I chaired a panel of visionaries that 
were brought to Ames, Iowa to think out of the box and to 
provide guidance and a vision for the faculty. You should know 
by way of background the reason that I was asked to participate 
in that conference and the reason that I was asked to chair the 
panel of visionaries was that I had served for 5 years as the 
Associate Dean of the College of Agriculture and Associate 
Director of the Iowa Agriculture and Home Economics Experiment 
Station at Ames.
    More to the point and to the allegations that Mr. Tom Dorr 
made comments that were not supportive of an ethnically diverse 
society and environment, I feel they are unfounded, they are 
totally unfounded. I observed nothing in Mr. Dorr's comments 
during the 1999 Visionaries Conference, nor subsequently in 
reviewing the tape of the conference, that would lead me to 
believe that he is unsupportive in any fashion of the creation 
of a diverse economy. Mr. Dorr simply stated in a panel in 
response to a comment that had come from the floor at that 
meeting, that many of these funds and programs should be put 
into place that would create a more diverse society. He simply 
stated what I believe was the obvious, that there are 
communities that are not ethnically diverse, but are 
economically viable.
    I believe we all favor a diverse multicultural society. I 
do not think there is anybody here that does not suggest that. 
I am confident that Mr. Dorr believes the same. To infer 
otherwise I believe is to misconstrue the facts and the 
evidence--the facts as they were at the Visionaries Conference 
in November 1999. He simply stated the reality, that many rural 
communities lack diversity, yet remain economically viable. To 
make or construe anything else from his comments is to take 
them out of context. That is a misrepresentation of the facts 
and the events of November 1999.
    Let me close by saying that what I believe Tom Dorr brings 
to the Office of the Under Secretary for Rural Development at 
USDA is out-of-the-box thinking. He challenges the norm. He 
challenges the bureaucratic normalcy which exists within 
agencies, and I believe he looks for finding imaginative 
solutions to the issues that we face in rural America.
    This concludes my testimony, and I stand here today in 
support of Mr. Dorr. Thank you.
    [The prepared statement of Mr. Fretz can be found in the 
appendix on page 122.]
    The Chairman. Thank you very much, Dr. Fretz.
    Now we turn to the statement of Dr. Constantine Curris with 
the American Association of State Colleges and Universities, 
former head of the University of Northern Iowa. Welcome, Dr. 
Curris, and your statement will also be made a part of the 


    Mr. Curris. Senator Harkin, Senator Lugar, Senator 
Stabenow, Senator Dayton, it is an honor to appear before this 
committee, and I am pleased to be part of a group that 
recommends the confirmation of Thomas Dorr.
    I met Tom Dorr in 1991 when I served as President of the 
University of Northern Iowa, and he served on the State Board 
of Regents. I would note that Mr. Dorr was appointed by 
Governor Terry Branstad, a Republican, and was confirmed by the 
Iowa Senate, a majority of whom were Democrats.
    During the 4 years of our overlapping tenure, I came to 
know him through monthly meetings of the Board, special 
committee meetings and personal discussions. I found him to be 
a man of integrity and commitment. He was, and remains, bright, 
thoughtful, well read, and a public policy engaged citizen. 
While we do not share similar political philosophies, I respect 
him as a creative thinker, a caring citizen, and a genuinely 
good person, qualities that transcend politics, qualities that 
serve government well.
    Much has been stated about his comments at that Iowa State 
forum. I was not present. In fact, I was not even in the State 
at the time, so it would be inappropriate for me to discuss 
that, but I am comfortable in addressing the extrapolations 
that some have drawn from that forum. Let me state clearly that 
in the 4 years I worked with Tom Dorr, there was never any 
instance that raised concerns to me about racist attitudes or 
inappropriate values. In all my dealings I found him to be an 
individual committed to equal opportunity and civil rights for 
all citizens.
    I would like to share a personal instance. The University 
of Northern Iowa had initiated and funded a collaborative 
program with the Davenport School District, 3 hours distant, to 
mentor middle and high school African-American students, and to 
cultivate their interest in teaching. Because of State revenue 
shortfalls and the higher cost of this program, we received 
criticism for its continuation. Tom Dorr was a stalwart 
supporter. He expressed the belief that our efforts to raise 
the educational aspirations of these youngsters was exactly 
what we ought to be doing, and that Iowa very much needed an 
initiative to staunch the declining number of teachers of color 
in the classroom. His support was important to the university 
and to the students we served.
    Early in 1995 I accepted appointed as President of Clemson, 
the Land Grant University of South Carolina. Although most of 
my life had been spent in small towns and rural areas, it was 
during my nearly 5 years at Clemson that I came to understand 
fully the challenges of revitalizing rural America.
    The responsibilities of the Under Secretary are significant 
and in many ways daunting. What I learned from my experiences 
in Iowa and in South Carolina, is that there are no simple or 
easy solutions, no tried and true formulas for success. We fool 
ourselves if we believe there is an orthodoxy of beliefs, which 
if applied, will reverse the declining fortunes in rural 
America. I do not think any one person has the answers, and 
clearly having been president of a university in a state with 
over 33 percent minority population and with large pockets of 
minority rural areas, I feel very keenly about some of those 
problems. If we bring to Government bright, creative and 
thoughtful folks, and if we are open to new ideas and 
approaches, we will make progress in finding policies and 
programs that work in rural areas.
    I believe Tom Dorr has the qualities needed to provide 
leadership to the Department and to the country, and I am 
pleased to recommend him to the committee and for confirmation. 
Thank you.
    [The prepared statement of Mr. Curris can be found in the 
appendix on page 124.]
    The Chairman. Thank you very much, Mr. Curris. Thank you 
all very much for your statements.
    In consultation with Senator Lugar, the committee will now 
bring Mr. Dorr back to the table. We will go until 12:20, at 
which time we will then recess until 2:30, and we will come 
back at 2:30, and I hope to finish the hearing at some point 
this afternoon. The senators have a number of different 
obligations. I know that Senator Lugar has to meet with 
President Mubarak of Egypt. There is a briefing by Secretary 
Rumsfeld that most senators want to attend at 1:30. It is my 
intention to come back at about 2:30. Now we will proceed until 
12:20. I thank this panel.
    I would say that this senator, later this afternoon, has 
some questions for Mr. Dennis Keeney. If it is at all possible, 
Mr. Keeney, I would appreciate it if you could be here this 
afternoon. If you have a plane to catch, I certainly understand 
that. Thank you all very much.
    We would like to recall Mr. Dorr to the witness table.
    I would now recognize Senator Lugar for questioning, and 
then I will recognize Senator Mark Dayton. I will be back very 
    Senator Lugar.
    Senator Lugar. Thank you very much, Mr. Chairman.
    Mr. Dorr, in some of the testimony this morning and in many 
press accounts, you are quoted as having given a vision for the 
future of very large farm entities. Frequently a farm in excess 
of 200,000 acres has been mentioned as an ideal that you had 
proposed, and some had ridiculed that in your own state, saying 
this would be about one farm per county or this type of thing.
    Just for the sake of the record, and at least to have on 
record your own views of these allegations or of what you said, 
would you try to explain the origin of this concept, what your 
vision is really, and attempt to bring at least to completeness 
this portion of the record.
    Mr. Dorr. Well, I surely will, Senator. I must say that 
when I began working in these areas of discussion back in the 
1980's and the early 1990's, I surely did not think that some 
day I would be sitting before this august committee trying to 
rationalize all of those thought processes. I do appreciate the 
committee's concern, and I will give it my best.
    The real simple answer to this is that it has dawned on me, 
as I watched things unfold, that technology, and as we shifted 
from a resource to a knowledge-based economy, that technology 
and the appropriate use of it was probably the one thing that 
could give us as farmers and producers access to the 
marketplace and to the margins which would ultimately allow us 
to survive in a manner that made sense. That's really the 
essence of my point on this.
    I would be glad to go into more lengthy dialog on whatever 
aspect of it you want, but it was very clear to me early on 
that access to knowledge was the one thing that would allow 
farmers to bring those vendors and those end users more inside 
the farm gate to get them on our turf, to allow us to expand on 
our margins and maintain more of those, rather than giving them 
up outside the farm gate.
    Senator Lugar. Well, many agricultural commentators would 
agree with you that these breakthroughs in technology offer 
opportunities for enhancement of return on invested capital. 
Try to express yourself to the size issue. In other words, 
could not these breakthroughs in technology bring profit in 
returns say to a farm of 500 acres as well as one 10 times that 
size? The criticism, as I understand it, of your point of view, 
as people have either understood or misunderstood it, is that 
you are advocating very large aggregations of land, and for 
people who are involved as small family farmers, this certainly 
appeared to be threatening.
    Mr. Dorr. Sure.
    Senator Lugar. What are the elements of size that are 
involved? Many have written about this question, and indeed 
USDA has discussed farms of 500 acres or less, or those from 
500 to 1,000, and those that are 1,000 or more, and aggregated 
amounts of income that come in America farming from these 
groups, as well as the return on investment. Would you address 
the size issue?
    Mr. Dorr. Sure. Essentially where the size issues 
originated from was in the final analysis when you look at the 
harvesting side of a crop operation. The logistics--the 
harvesting costs and the logistics to move the crop from the 
farm to the ultimate user frequently involves somewhere in the 
neighborhood of 50 to $75 an acre in terms of combining costs, 
freight costs, and a myriad of things.
    Two things happened that prompted me to look into this. No. 
1, as many of my farmer friends know, many of the machinery 
companies have had, for a long time, programs that would allow 
farmers to run a combine for one year, as long as they put no 
more than 100 to 150 hours of use on it, and then turn it over, 
and they would trade or lease them a new combine the following 
    As I evaluated that, that frequently was nothing more than 
eating into the equity of the producer who was in that program. 
Those combine costs were really quite considerable when I 
determined, working with one of my young fellows on my farm, 
that we actually had about 550 hours of available time. When I 
found that out, I contacted one of the large machinery 
companies, and I asked them. I said, ``What would you charge us 
to lease the largest combine you have for 200 hours worth of 
use and for 400 hours worth of use?'' They said, ``We don't do 
it that way. We do it in 300 and 600 hour increments, but for 
300 hours we charge you $39,000. For 600 hours we charge you 
    It was clear to me that they knew where those break even 
utilization costs were, and that if we could capitalize on 
that, we could mitigate those costs a great deal.
    Second, and in the same vein of that discussion, I 
contacted a friend of mine, and I said, ``Would you do me a 
favor and find out what the difference in cost is to ship a 
100-ton car of coal from the Powder River Basis of Wyoming to 
Chicago, versus what it costs to ship a 100-ton car of corn 
from my hometown of Marcus an equidistant to an end user?'' The 
difference came back to be $1,000 greater to ship the car of 
corn than the car of coal. That amounts to 28 cents a bushel. 
Those two factors alone lent themselves to utilizing technology 
to create the kind of synergies necessary for producers to 
migrate or to keep, rather, much more of that income in their 
    Now, the 200,000 acres, and that's the trick. What actually 
happened was I went to one pretty standard size concrete 
elevator in one part of the county, and I went to another one 
in the other part of the county, both on different rail lines 
and different markets. I said, ``Can you in fact ship one train 
of corn a week from your elevator?'' The first reaction was, 
``No, we couldn't do it.'' A matter of fact, 3 or 4 days later 
they both got back to me and said, ``You know, we think we 
    I don't have the math in front of me. When I figured, using 
an 80 percent efficiency factor, those two locations, running 
40 trains of grain a week with a mix of corn and beans, using 
the mix that we typically plant, means that if we could as 
farmers figure out a way to manage the logistics of our 
delivery, and keep a fair amount of the grain back in the 
county for the livestock industry and other processing needs, 
we could, in that envelope, it would amount to about 225,000 
acres. The question became, what do you do, how do you do that 
in a way in which the family farm can maintain ownership and 
operation of their farm, and yet build on those technologies?
    That was the genesis of that discussion. That is how it 
happened. There was never any intention to exploit that 
technology. Frankly, it's ludicrous to think that anyone could 
bring that kind of an acreage under control. It's just not 
something anybody would want to do. That's where the numbers 
got their genesis from.
    Senator Lugar. Well, I appreciate that explanation. We had 
testimony before the committee by Professor Parlberg, trying to 
address hog operations, and the consolidation in that industry. 
One of his suggestions that came out of Purdue was that farmers 
form very, very large cooperatives so that there were tens of 
thousands of head of livestock available for the bargaining 
purposes with the packers or the stockyards or whoever they 
were dealing with, with the thought that that was about the 
only way, at least, theoretically, you could break through this 
problem of the small hog farmer, which we deal with a lot in 
this committee. Now, that's very tough to do because the 
independent spirit of most hog farmers is that they don't want 
to be involved in a large conglomerate cooperative even if it 
does mean bargaining power, so this has not proceeded, and much 
of the dispute still has proceeded. I thank you for your 
    If I may just ask one more question in this round, Mr. 
Chairman. In the course of our committee hearings, I have often 
shared with members anecdotes from my own operation. It is 604 
acres, and so I define that size to begin with. Over the course 
of the last 45 years, which I have had responsibility, we have 
had a roughly average return of 4 percent on invested capital 
as I calculate it. I am both comforted and dismayed by the fact 
that national statistics usually give a range of 3 to 5 percent 
for farms in America, wherever they are, which leads persons 
who are not involved in the farming business to wonder why a 
rational person would be involved in this enterprise for 45 
years, given the government's bond interest possibilities, with 
no risks, no export problems, no pestilence, floods or anything 
    Now the reason we always get back to this is that we like 
farming, we like to farm. A family tradition, the same as you 
have. It is not in theory a rational economic decision. However 
I would like for it to be, so I have tried to explore actively 
ways in which that return could be enhanced over the course of 
time, as you have.
    Now, it is very difficult in these hearings frequently to 
get testimony from live farmers, dairymen, or people involved 
in the fruit and vegetable industry as to what kind of return 
on investment they obtain from their farms. Most of the 
testimony is to the effect that we are, listen, we are 
struggling simply to get cash-flow to stay alive. You have to 
understand we are trying to meet the banker. We have not really 
ever had time to get into these high-faluting accounting ideas 
of return on investment.
    I understand that, and we have tried to help, as you will 
have to if you are confirmed in the development situation. All 
I am asking, I suppose, is first of all, your views as to how 
this kind of return can be enhanced, and you have given some of 
those, as you have analyzed transportation. Some have talked 
about GPS systems if you have a large enough entity to use the 
satellite technology and the data that might flow to your 
combine from that. Some of this requires larger farming and it 
does require people coming together in some cooperative 
venture, which may or may not work. Now, as a part of your job 
you have to consider Congresswoman Clayton's view that there 
are a lot of very small farmers in America. Whether they are 
able to survive or not is of great consequence to this 
committee, and we spend a lot of time trying to think of how 
the safety net might be constructed for that to occur. What 
programs in rural development are at least in the back of your 
mind that might help the very small family farmer, the farmer 
that is going to be much less than this 3 to 5 percent return 
on invested capital that may be at best marginal? Yet this is a 
way of life, and if it were not for that, there would be large 
dislocations in our counties throughout the country, and that 
is why rural redevelopment is so important to all of us. How do 
you speak to those issues?
    Mr. Dorr. Well, Senator, that is a very broad and difficult 
question which not only you and those others of your committee 
have been struggling with for a long time, so have those of us 
who have been living in rural America.
    In all honesty, the very small farm size that Congresswoman 
Clayton referred to is something that we are not nearly as 
familiar with in Iowa, so it would be remiss for me to suggest 
that I have some particular answer for that.
    I will relate a couple of very brief things, and that is 
that in rural development, No. 1, we know that the focus of 
that area is in infrastructure development, housing, 
fundamental infrastructure, and there is another area called 
business and industry loan programs.
    The Senate Ag Committee, as I understand, is working 
aggressively in this particular body of legislation, trying to 
figure out ways to facilitate the generation of capital and the 
development of it in a constructive way that creates economic 
growth. The really very interesting thing--and this is a bit of 
an aside--but the deputy at Rural Development for Policy and 
Planning is a young man by the name of Gil Gonzalez, who's come 
from San Antonio. His background, frankly, is in urban 
development in areas with diminished resources frequently. The 
focus that he's brought to the Department in some discussions 
that I've had with him with regard to the use of community 
development venture capital firms or perhaps the newly 
legislated rural business investment co-ops, that thing, make 
an awful lot of sense.
    We have the need to provide some education. We have to 
figure out effective ways to leverage the asset base that we 
have in rural America, but most importantly, we really need to 
focus on the fact that we have an awful lot of very bright, 
capable people out there, and frequently we tend not to give 
them enough leash. We tend not to give them their due and the 
respect that they really are very capable, and that if we give 
them some opportunity, they well may do things that were above 
and beyond our expectation. It's a combination of struggling to 
look for new ideas, leveraging, and really going after the 
resources that you have in the people that are out there, and 
attempting to help them exploit their capabilities.
    Senator Lugar. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Mr. Dorr--well, I am sorry. Senator Dayton 
has been waiting patiently.
    Senator Dayton. No, I defer to the Chairman.
    The Chairman. Well, I know the Senator has been waiting, 
and I am going to be back here at 2:30. I do not know if the 
Senator can come back.
    Senator Dayton. I am not sure whether I can, so I 
appreciate the Chair's indulgence.
    The Chairman. I would let the Senator go ahead.
    Senator Dayton. Thank you very much. Thank you, Mr. 
    Mr. Dorr, I apologize. I had other hearings this morning, 
but I have read you testimony and the testimony of all of the 
other witnesses who spoke on the other panels. I wanted to 
focus on the article which was in the ``Des Moines Register'' 
today, and bear with me because I just got this information 
this morning, and I am looking through it, and also then just 
received, as I came into this hearing, a transcript of this 
audiotape. Just to clarify my understanding at the outset, sir, 
how many farms do you own and operate?
    Mr. Dorr. I own personally a grand total of 250 acres of 
    Senator Dayton. That is Pine----
    Mr. Dorr. Dorr's Pine Grove Farm Company was an operating 
company. It was an operating corporation that I owned that 
owned the machinery that did the farming and that employed 
myself and my associates who did the operating of the farm.
    Senator Dayton. Pine Grove Farms is a corporation which 
owns the farm which you then operate?
    Mr. Dorr. No, I personally own--Dorr's Pine Grove Farm 
Company did not own and does not own any farmland. Tom Dorr and 
my wife and I owned about 250 acres. My family, my father a 
corporation that my father owned, and a couple of family trusts 
and an aunt and uncle, collectively we owned and operated--I 
say ``we'' meaning these two families, but not me personally--
approximately 2,200 to 2,300 acres of farm ground.
    Senator Dayton. You say owned and operated in the past 
tense? Are you still involved in that, or your family?
    Mr. Dorr. The ground was operated this past year. It will 
be rented out this coming year.
    Senator Dayton. Then do you have a beneficial interest in 
any other farm or farming activity?
    Mr. Dorr. I am a--I have a beneficial interest, a one-
eighth--yeah. Well, regarding the article, at that time a one-
eighth beneficial interest in something known as the Melvin G. 
Dorr Irrevocable Family Trust. I also, as a result of a gift 
from my father, have something around 9 percent equity in a 
company called Dorr, Incorporated, which owns some farmland and 
some other equity assets.
    Senator Dayton. Thank you. You just referenced the M.G. 
Dorr Irrevocable Family Trust?
    Mr. Dorr. That's correct.
    Senator Dayton. Does that own some of this farmland that 
you and your siblings have been involved with?
    Mr. Dorr. Yes.
    Senator Dayton. The 2,200 acres. That's the--according to 
the article is the trust that was cited by the Farm Service 
Agency in violation of shares in 1993, 1994 and 1995; is that--
    Mr. Dorr. That's correct.
    Senator Dayton. Then the tape that is referenced again in 
the article, references two other trusts, the Belva Dorr Trust 
and the Harold Dorr Trust. Are those irrevocable Trusts or how 
do those trusts function?
    Mr. Dorr. The Belva Dorr, those trusts I have no beneficial 
interest in, nor was I a trustee or did I have any direct 
control over. They were trusts set up by my Uncle Harold Dorr, 
who he and my Aunt Belva Dorr are both deceased. My Uncle 
Harold and my father Melvin were in business for many years 
together, and so that's how the relationship between the two 
    Senator Dayton. Does each of those trusts then own 
    Mr. Dorr. They are--they are included in that 2,200 to 
2,300 acre mix, that's correct.
    Senator Dayton. Who owns the 2,300 acres?
    Mr. Dorr. The 2,300 acres, 2,200, 2,300 acres are owned by 
myself, back in 1993, 1994, 1995, were owned by my father and 
mother, by Dorr Incorporated, by the Melvin G. Dorr Irrevocable 
Family Trust, the Harold Dorr Irrevocable Family Trust, the 
Belva Dorr Revocable trust----
    Senator Dayton. Each of these trusts owns part of the land?
    Mr. Dorr. Yes, yes.
    Senator Dayton. Can you provide for the committee, please, 
a breakdown at that time of exactly how these ownerships were--
that is a lot of different ownerships of 2,200 acres or so.
    Mr. Dorr. Sure.
    Senator Dayton. You outright own, in your own right own 230 
    Mr. Dorr. About 250 acres more or less.
    Senator Dayton. The other trusts each owned----
    Mr. Dorr. There was none of the trust--excuse me. I didn't 
mean to interrupt you.
    Senator Dayton. Going back to the M.G. Dorr Trust and the 
Belva Dorr Trust and the Harold Dorr Trust, these are three 
separate trusts, and each of them owns land, specific land?
    Mr. Dorr. Right.
    Senator Dayton. That is farmed by you or your family?
    Mr. Dorr. That's correct.
    Senator Dayton. All right. The beneficiaries of these trust 
are who then, please?
    Mr. Dorr. To get really to the meat of this issue is, I was 
operating my farm company and operating family land in which 
there were 8 siblings in my family, an aunt and 5 siblings in 
that family, along with an excess of 20 grandchildren, who in 
one form or another were receiving some income out of these 
properties, and I was responsible to the extent necessary to 
try to get everything done in a way in which they wanted it 
done, and to satisfy the needs that they all presented.
    I was trying to be a master of a lot of tricks to get 
everything taken care of for everyone.
    Senator Dayton. In the tape transcript then it says that 
either in 1990 or 1991--this is reportedly quoting you; you 
have been identified as the voice on the tape by others--``I--
we filed the way the farm, the trust land, both for the Belva 
Dorr Trust and the Harold Dorr Trust are operated with the ASCS 
to quite frankly, avoid minimum payment limitations, OK?''
    The first part of the question is how many entities did you 
file with ASCS, including yourself and then each of these three 
trusts as separate entities; is that the case?
    Mr. Dorr. Senator Dayton, I was--I believe the record shows 
that I had power of attorney for the various family entities 
with regard to filing papers at the ASCS or now the FSA office. 
I worked in consultation with my aunt and a cousin of the 
Harold Dorr side of the family. I worked very closely with my 
father and the trustees of the trusts for those entities and 
properties that worked on our side of the family. There was--it 
was my citing the papers at the ASCS or the FSA office now, but 
it was in consultation with those other members of the family.
    Senator Dayton. Thank you. What I'm trying to understand 
then is did you file with the ASCS at that tie office yourself 
individually, and then each of these three trusts, the H.G. 
Dorr Trust, the Harold Dorr Trust and the Belva Dorr Trust, so 
are all of those filed as separate entities, farming entities 
with the ASCS?
    Mr. Dorr. No. Let me back up. You need to----
    Senator Dayton. Let me just explain the context. What I am 
trying to understand is the news article references--and I do 
not have a copy of the citation from the--whatever from the 
Farm Service Agency. The article says that that agency 
determined that the M.G. Dorr Irrevocable Family Trust was, 
quote, ``in violation of shares'', close quote, in 1993, 1994 
and 1995. That is the article there.
    Then the tape has you stating, ``I--we filed the way the 
farm, the trust land, both for the Belva Dorr Trust and the 
Harold Dorr Trust are operated, with the ASCS to quite frankly 
avoid minimum payment limitations, OK?''
    I am trying to understand, each of those three trusts was 
filed as a separate trust entity with the ASCS and then 
yourself as an individual owner and farmer in addition to that?
    Mr. Dorr. There was--the Belva Dorr Trust was not filed as 
a separate operating entity at any point in time other than as 
the trust itself. Dorr's Pine Grove Farm was filed as an entity 
to rent property from these various properties, as well as to 
do custom farming. The Melvin G. Dorr Farm Irrevocable Family 
Trust was set up as an individual entity, as was the Harold 
Dorr Irrevocable Family Trust.
    Senator Dayton. I am sorry? It was what, sir?
    Mr. Dorr. As was the Harold Dorr Irrevocable Family Trust.
    Senator Dayton. The Dorr's Pine Grove Farm was set up, was 
registered. Then the M.C.--I am sorry--the M.G. Dorr----
    Mr. Dorr. The M.G. Dorr Irrevocable----
    Senator Dayton. The M.G. Dorr Irrevocable Family Trust was 
registered. The Harold Trust--Dorr Trust was registered, and 
then the Belva Dorr Trust was not?
    Mr. Dorr. Well, the Belva Dorr Trust was not registered as 
an operating unit in the sense that it was operated like the 
other two trusts, no.
    Senator Dayton. In the tape here when you are speaking, 
reportedly speaking and said, ``I--we filed the way the farm,'' 
you are referring to the farm being the Dorr's Pine Grove Farm?
    Mr. Dorr. Right. I assume I would have to look at----
    Senator Dayton. The farm, the trust land, both for the 
Belva Dorr Trust and the Harold Dorr Trust. You said you filed 
the Harold Dorr Trust, but you are--in this tape then you were 
speaking in error when you say here that you filed the Belva 
Dorr Trust?
    Mr. Dorr. Well, I'm not exactly sure what that tape says, 
Senator. The----
    Senator Dayton. I will come back, Mr. Chairman, and maybe 
in the interim you could look at that if you could, so I could 
clarify. I guess what I am trying to understand here is, how 
many entities were filed and for what purpose? That many 
entities were filed for 2,200 acre operation--let me just 
complete then. Did you--the Pine Grove Farm was filed, two or 
three trusts were filed. Were you then as an individual filed 
as well?
    Mr. Dorr. What we're getting to is the core of the 
difficulty of all of these issues. The history----
    Senator Dayton. What is the core of the difficulty?
    Mr. Dorr. The history of a farmer attempting to deal within 
the constraints and the confines of farm programs, and to keep 
his arms wrapped around all of these issues----
    Senator Dayton. Mr. Dorr, you created these entities. ASCS 
did not create these entities, did not require you to file 
them, any such thing. You or your family created the entities. 
Now I am the beneficiary of family trusts, so I am just trying 
to understand how they were established, but nobody required 
you to file any of these with ASCS, so for you to be blaming 
the Government program for your own decision and your own--that 
you are responsible for is really misleading this committee and 
    Mr. Dorr. Sir, I am not trying to--first of all, let me say 
that this was a family matter that I regret having said some of 
the things I said on that tape, quite clearly. They were said 
in the context--and I want to get into this because perhaps it 
will be--let me back up.
    Every farm entity has to be registered at the FSA Office. 
All of the family entities including, Dorr Incorporated had 
farmland. It was registered at the FSA Office. The Belva Dorr 
Revocable Trust, which is a trust accruing interest to my 
living Aunt Belva at the time was registered. It had some farm 
property. The Harold Dorr, the Melvin Dorr Irrevocable Family 
Trusts were registered. My own personal farmland was 
registered. My parents' farmland was registered, and Dorr's 
Pine Grove Farm was listed as an operator of a number of these 
properties. That is part of the requirement of the farm program 
to participate in those.
    Senator Dayton. OK. I have to go back and look at the 
language of the regulations at that point in time, but I guess 
what you are quoted as saying on the tape is, either in 1990 or 
1991, ``I--we filed the way the farm, the trust land, both for 
the Belva Dorr Trust and the Harold Dorr Trust are operated, 
with the ASCS, to quite frankly, avoid minimum payment 
limitations, OK?''
    That says to me that you made a decision--maybe it fit 
within the requirements. Maybe it was required, but you made a 
decision, what you are saying here, the way I interpret this, 
you filed the way the farm, the trust land, both for the Belva 
Dorr Trust and the Harold Dorr Trust are operated with the ASCS 
to quite frankly avoid minimum payment limitations.
    Was that your intent?
    Mr. Dorr. Senator, no.
    Senator Dayton. Am I misunderstanding what the tape quotes 
you as saying? Did you not make that statement?
    Mr. Dorr. The statement was made in the context of a 
discussion with a sibling who, quite frankly, had had a great 
deal of difficulty with our entire family for some time. We had 
previously gone through some other issues with him 3 or 4 years 
prior to that, and when this issue was broached again, 
initially, it was broached in a manner that I assumed he was 
suggesting that I was taking advantage of the trust.
    There were----
    Senator Dayton. You are saying that you were not taking 
advantage of the trust, you were taking advantage of the 
Federal Government?
    Mr. Dorr. No, I was not taking advantage of the Federal----
    Senator Dayton. It says here you set that up to, quite 
frankly, avoid minimum-payment limitations.
    Mr. Dorr. Senator, farmers always have to work within the 
confines of the farm programs. As a farmer who is responsible 
for his fiduciary responsibility for himself, and his family, 
and those which he works with, he will always work within the 
farm programs. The way those programs and the way those 
properties were set up, to the best of my knowledge, would not 
have violated any payment limitation.
    For one not to attempt to maximize the payments from the 
farm programs has a significant detrimental value on one's 
ability to generate an adequate rate of return or an adequate 
living on the farming operation. It was within that confine and 
that context, not just me, but the trustees of these two 
trusts, had elected to do what we did.
    Senator Dayton. Well, maybe so. It says here, in another 
part of the transcript:
    ``Unknown Voice: This was all done that way in an effort 
    Then your voice is cited as saying: ``Avoid a $50,000-
payment limitation to Pine Grove Farms.''
    Was that not the intent of setting up these different 
trusts, filing them, and the later arrangements, which we can 
go into after lunch, was to avoid the payment limitation that 
was in place at that period of time?
    Mr. Dorr. No, the intent was to set up and structure the 
organization in a way that was in compliance with the rules in 
the farm program.
    Senator Dayton. I am quoting you, sir. I am quoting you in 
the transcript, ``to avoid a $50,000-payment limitation to Pine 
Grove Farms.''
    That is what I am quoting you as saying, that that was the 
    Mr. Dorr. It was not, but it was not----
    Senator Dayton. It was an effort to avoid a $50,000-payment 
limitation to Pine Grove Farms. That is what it says in the 
transcript, and it cites your name. I was just going by what 
the transcript refers to you, in your own words, what your 
intent was.
    What else am I supposed to assume, sir?
    Mr. Dorr. Sir, there was the opportunity to have other 
entities, operating entities set up that would qualify for 
$50,000-payment limitations. I have known many, many farmers 
over the years who do that and----
    Senator Dayton. I am not talking about many, many farmers.
    Mr. Dorr. OK, that is fine.
    Senator Dayton. Many, many farmers are not here to be 
appointed to what Senator Grassley rightly earlier referred to 
as an extremely important position in USDA. You, alone, sir, 
are in that position so you, alone, are the one I am asking 
these questions about today.
    Mr. Dorr. Yes, sir. As near as I can tell, I, alone, and 
our family trusts have done nothing out of the ordinary 
relative to the way many farms are operated. We did that within 
the confines of the way we thought it was best to be handled.
    Senator Dayton. Mr. Chairman, you cited 12:20 as the time 
for luncheon break. It is 12:30 now. I am willing to relinquish 
my opportunity, if I may, though, with the understanding that 
when the hearing resumes at 2:30, I can continue my 
    The Chairman. If that is agreeable to the chair.
    Senator Dayton. Or whatever arrangements the chair wishes 
to make with me.
    The Chairman. I say to the Senator we will be back at 2:30. 
I have relinquished my right to ask questions, but I will pick 
that up at 2:30, and I will recognize----
    Senator Dayton. I will be glad to defer to the chairman, 
and may I go after the chairman because then I do need to go 
onto other----
    The Chairman. I would recognize the Senator at that time.
    We will recess for 2 hours, but before we do, just to 
borrow the well-worn phase from Apollo 13, ``We have a problem 
here. We have a real problem here,'' and it has to do with the 
fact, as I see it anyway, that a finding was made with the U.S. 
Department of Agriculture, verifying certain things that later 
turned out not to be so. We will get into that this afternoon. 
Then it gets to the issue of intent. Was this just a simple 
mistake or not?
    The FSA, later on in 1995 or 1996, I guess without the 
benefit of this documentation, said, well, just pay the money 
back, and the money was paid back. I have not heard this tape. 
I heard about it. It has been rumored it has been around, but I 
never heard the tape and still have not. Obviously, we have the 
transcript now, and I was following it as Senator Dayton was 
asking his questions. There is a problem here, and we will get 
into it a little bit more this afternoon.
    With that, we will recess until 2:30. We will come back at 
    [Whereupon, at 12:31 p.m., the committee adjourned, to 
reconvene at 2:30 p.m., this same day.]AFTERNOON SESSION[2:30 
    The Chairman. The Senate Committee on Agriculture, 
Nutrition, and Forestry will resume its hearing.
    We are here this afternoon to continue the discussion on 
the nomination of Mr. Thomas Dorr to be Under Secretary of 
Agriculture for Rural Development.
    I might say to you, Mr. Dorr, I know some people are still 
over at Secretary Rumsfeld's briefing on Defense, and I do not 
know when others might come in here, but there are some areas 
that I, personally, wanted to cover with you, but I am going to 
defer again to Senator Dayton, who probably has other things to 
do this afternoon too.
    Senator Dayton. Thank you, Mr. Chairman.
    The Chairman. One of the great privileges of being a chair, 
you just get to sit here all of the time, right?
    Senator Dayton. That is right.
    The Chairman. I appreciate it.
    Senator Dayton. It is too far to walk.
    The Chairman. Right. Then to continue the discussion, I 
recognize the Senator from Minnesota.
    Senator Dayton. Thank you, Mr. Chairman, because I do have 
other engagements to go on to.
    Mr. Dorr, going back then to these filings with the ASCS 
back in the early 1990's, my understanding from the Des Moines 
story this morning, the Des Moines Register's story this 
morning, that the Farm Service Agency, the successor to ASCS, 
found that the M.G. Dorr Irrevocable Family Trust was in 
violation of shares agreements in 1993, 1994, 1995, and that as 
a result, $17,000 was paid from that trust to the FSA; is that 
    Mr. Dorr. That is correct, Senator. If I could possibly go 
back to try to answer one of your earlier questions, you asked 
about the number of trusts and about the number of acres, and I 
did go back over lunch and pull that information together for 
    There were actually seven different entities. One of them 
was my mother and father, Melvin and Margaret Dorr. They had 
360 acres, and these are all more or less, but I am pretty 
close; there was the Melvin G. Dorr Irrevocable Family Trust 
that had 280 acres; there was the Harold Dorr Irrevocable 
Family Trust, it had 320 acres; there was the Belva Dorr 
Irrevocable Trust with about 470 or 480 acres; there was the 
Harold Dorr Irrevocable Trust that had 245 or 250 acres; there 
was a company called Dorr, Incorporated, that at one point was 
jointly owned by my father and uncle that, at that point, was 
owned by my father, that had 280 acres; and I, personally, had 
250 acres.
    Now I understand that this is rather complex. However, my 
father and uncle set up these various farming entities back in 
the early 1970's to facilitate the transition and hopefully to 
maintain the family farm intact and to move the farm from one 
generation to the other. At that point, I had an uncle, my 
Uncle Harold, who was very interested in a couple of his 
grandchildren possibly returning, and it was one of the ways in 
which he could facilitate that.
    It was not my responsibility to put all of these entities 
together. I did not structure them. This took place prior to my 
being there, and ultimately I was saddled with this myriad of 
    The tape conversation that you were referring to earlier in 
the day was one between a brother and myself, and, frankly, it 
was one in which he did not understand, truly understand the 
implications of my father's estate plan, and we were simply 
trying to work within the context of that plan, put in place by 
the previous generation, my father and uncle, within the 
framework of the laws at that point.
    In response to your question now, the county FSA was 
approached by this brother and asked to look into this matter 
with the trust, and they did. They originally determined, in 
fact, they did determine that there were no violations, no 
shares violations or anything of that sort.
    Somehow out of that, and I do not know why, the State then 
decided that they were going to get involved in it, the State 
FSA, and they promulgated what ended up being what is known as 
an end-of-year review. That end-of-year review took place, was 
completed in late 1995. The trustees, my other brothers and 
myself, were notified that they thought there was this shares 
violation. In fact, they then said that we had to repay the 3 
years' penalties, which approximated $17,000.
    The trustees and myself, my other brothers and myself, 
disagreed with that ruling. In fact, we were disappointed with 
it. We had earlier sought legal counsel as we got into this 
thing. We referred it to him. He, too, thought it was an 
inappropriate decision. After looking at it and evaluating it, 
he said we could appeal this probably, and we could probably 
win, but it is probably going to cost you somewhere between two 
and three times the amount of the fees.
    Consequently, in our fiduciary capacity and reviewing it 
with the other beneficiaries and trustees, we elected to repay 
these funds. Once we repaid the funds, then I went back to the 
county FSA office, and I said, ``OK. Tell us how you want us to 
restructure this so that we, in fact, are in compliance with 
all of the rules and regulations.''
    That is the essence of this whole issue, and that is 
probably as good a guidance as I can give you on it at this 
point because that is really the end of the story.
    Senator Dayton. The M.G. Dorr Irrevocable Family Trust paid 
the $17,000, is that correct, for----
    Mr. Dorr. That is correct.
    Senator Dayton [continuing]. What ASCS or FSA then 
subsequently determined was a violation, and you paid it off--
    Mr. Dorr. That is correct.
    Senator Dayton [continuing]. Without dispute.
    Who operated, at that point, the M.G. Dorr Irrevocable 
Family Trust?
    Mr. Dorr. The Irrevocable Family Trust had three trustees, 
myself and two brothers, and we collaboratively made the 
    Senator Dayton. You had the power of attorney for the 
trust, I understand.
    Mr. Dorr. I had the power of attorney to sign at the FSA 
office, that is correct. That was the only place that I had 
power of attorney to do business.
    Senator Dayton. The arrangement then was between the M.G. 
Irrevocable Family Trust, of which you were a trustee and had 
power of attorney, and then yourself dba Pine Grove Farms, 
    Mr. Dorr. It was not with myself. It was with my company, 
Dorr's Pine Grove Farm Company, that is correct.
    Senator Dayton. Pine Grove Farm Company is a--what is 
    Mr. Dorr. Dorr's Pine Grove Farm----
    Senator Dayton. What kind of a corporation is that, sir?
    Mr. Dorr. That is a C corporation.
    Senator Dayton. You are the CEO or the president?
    Mr. Dorr. I am the CEO, and I am the sole stockholder with 
my wife.
    Senator Dayton. You set up an arrangement between this 
trust, M.G. Dorr Irrevocable Family Trust and your company, 
Pine Grove Farms, and you characterized it in the filings with 
the ASCS as a custom fee arrangement; is that----
    Mr. Dorr. No. The Melvin G. Dorr Irrevocable Family Trust 
was set up as an operating entity, entitled to receive 100 
percent of the benefits from the various farm program payments, 
bearing in mind this was a 280, yes, it was a 280-acre 
    Then the trustees worked with Dorr's Pine Grove Farm, they 
asked us, Dorr's Pine Grove Farm, to operate the farm, which 
was in the context of what my father wanted them to do, and 
Dorr's Pine Grove Farm then did provide custom farming services 
for the family trust. That is correct.
    There was not a filing that indicated we were a custom fee 
operation or anything like that.
    Senator Dayton. Well, was that not the basis under which 
ASCS originally determined that it was subject to the limits; 
whereas, before, they had determined that it was not? That 
under a crop share agreement, where you would be receiving norm 
is 50 percent of the proceeds, that is subject to the payment 
limits; whereas, a custom fee arrangement is not subject to the 
payment limits.
    Mr. Dorr. Custom fee arrangement----
    Senator Dayton. It is my understanding that you certified 
to ASCS that it was a custom fee arrangement, that that was the 
way you described the relationship between Pine Grove Farms 
Company, yourself, and the trust, which was again essentially 
yourself because you had the power of attorney, and that you 
described that relationship as a custom fee arrangement so that 
it was not counted against the payment limit?
    Mr. Dorr. Well, Senator, the only power of attorney I had--
    Senator Dayton. Is that correct or incorrect?
    Mr. Dorr. No, that is incorrect, sir.
    Senator Dayton. That is incorrect. What is incorrect?
    Mr. Dorr. First of all, the trustees, myself and two 
brothers, made this arrangement.
    Senator Dayton. You had the power of attorney. The trustees 
made you----
    Mr. Dorr. The only power of attorney that I had was to sign 
the documents at the ASCS office.
    Senator Dayton. The trustees made the arrangements. You and 
your brothers made the arrangements.
    Mr. Dorr. That is correct.
    Senator Dayton. With yourself.
    Mr. Dorr. They in turn then contracted with Dorr's Pine 
Grove Farm to pay for, on a custom basis, these arrangements. 
    Senator Dayton. On a custom basis?
    Mr. Dorr. On a custom basis, that is correct.
    Senator Dayton. Is the representation that you had made 
    Mr. Dorr. That was, in fact, the case, sir--Senator.
    Senator Dayton. What was the fee you were paid on a custom 
fee basis?
    Mr. Dorr. I was, Dorr's Pine Grove Farm, was a custom 
operator. We not only custom farmed ground for the Melvin Door 
Trust, we did it for other farmers in the neighborhood, as 
well, so it was not something----
    Senator Dayton. What was the fee arrangement then with the 
    Mr. Dorr. The fee arrangement was arrangement that we made 
Dorr's Pine Grove Farm and the trustees agreed upon.
    Senator Dayton. What was that arrangement?
    Mr. Dorr. That arrangement was to pay for the machine 
services that we provided to the trust.
    Senator Dayton. That was the only payment made by the trust 
to this company?
    Mr. Dorr. The trust reimbursed Dorr's Pine Grove Farm 
Company for the machinery services, and the management 
services, and other things that we did for the trust, yes.
    Senator Dayton. In this recording, you are describing this 
arrangement, you said that you are receiving 50 percent of the 
payments, of the proceeds from net of these payments on the 
machinery, that you had set it up in just that fashion.
    You said, ``Besides those two machine charges, everything 
else is done on a 50-50 normal crop share basis,'' that you got 
half of the proceeds and the trust retained half of the 
proceeds, net of the use of machine and expenses. That is the 
way you described the arrangement in this conversation. Is that 
accurate or inaccurate?
    Mr. Dorr. Senator, the trustees approved all of the charges 
that they paid----
    Senator Dayton. I understand. I am just asking what is the 
    Mr. Dorr. The arrangement was that they paid for the 
charges for my management services, my marketing services. They 
paid Dorr's Pine Grove Farm for the machinery services, and 
that was the charge that they paid.
    Senator Dayton. Well, as you know, since you are a farmer, 
there is a very real difference here, I am not just quibbling 
over words, between a custom fee arrangement, where the 
payments are not subject to the payment limits under then-ASCS, 
and a crop share arrangement where they are. We are not dealing 
with semantics here. You, yourself, in this conversation said 
that everything was done on a 50-50 normal crop share basis.
    In fact, a crop share arrangement, at least as I understand 
it--and it applies to Minnesota, I assume it applies in Iowa--
is that kind of 50-50 arrangement. That is subject to the 
payment limit. You were representing this to ASCS, on the basis 
of your filings, and the trust was representing it on the basis 
of its filings, as a custom fee arrangement which, in fact, 
would have been about, what, $60 or $70. It is significantly 
less money, and a very different arrangement, and this was 
done, according to your own statement here, and again I will 
read the tape, ``Besides these two machine charges, the 
expenses, everything else is done on a 50-50 normal crop share 
    That unknown voice, ``This was all done that way in an 
effort to,'' and this is your voice attributed, ``Avoid a 
$50,000-payment limitation to Pine Grove Farms.''
    It was my understanding that ASCS, when they came in and 
did an evaluation, determined that the reason the trust owed 
the $17,000 back was because the trust had represented this 
arrangement as a custom fee arrangement, and in fact it was 
not. It was a crop share arrangement.
    Mr. Dorr. Senator, to suggest that I was trying to take 
advantage of the----
    Senator Dayton. I am just quoting your own words, Mr. Dorr.
    Mr. Dorr [continuing]. Of the farm programs, is not 
    Senator Dayton. I am not suggesting anything. I am just 
reading you the transcript.
    Mr. Dorr. It was an arrangement that was entered into by 
Dorr's Pine Grove Farm and the trustees within the framework of 
what we were allowed.
    As I pointed out to you early on, there were several 
different entities. All of these, in one form or another, would 
have been eligible for some payment limitation or payment 
program. We did nothing, as near as I can tell, and according 
to everything that I have received from the FSA, we have done 
nothing that was inappropriate. They did not agree with the way 
in which we did it at the time. We did not believe it was 
incorrect, and I find that----
    Senator Dayton. They did not agree with your 
characterization of it.
    Mr. Dorr. Pardon?
    Senator Dayton. They did not agree with your 
characterization of it as a custom fee arrangement because, in 
fact, it was, what they determined it to be, which is what you, 
yourself, said in the transcript it was, a crop share 
arrangement. Again, I am not inferring anything. I am quoting 
your own words here that it was done to avoid the payment 
    You further go on to say, the question asked again, you say 
in the tape, ``I have no idea if it is legal. I have no idea. I 
suspect that if they would audit and somebody would decide to 
come in and take a look at this thing, they could probably, if 
they really wanted to, raise hell with us,'' which is, in a 
sense, what ASCS did. I do not know about ``raising hell,'' but 
they came in and questioned what had been done here.
    Then they go on to say, ``That custom fee actually is not a 
custom fee. That is crop rental income to me. That is my share 
of the income,'' and then you go on to say, and I am leaving 
some parts out here, but I will certainly insert all of this 
for the record, ``I, we, filed the way the farm, the trust 
land, both for the Belva Dorr Trust and the Harold Dorr Trust 
are operating with the ASCS, quite frankly, to avoid minimum 
payment limitations, OK?''
    It seems to me you are stating here very, very clearly that 
that was your intent. In fact, that is what ASCS determined was 
the discrepancy between what you represented, what you 
certified on those documents, as both the trustee and with the 
power of attorney an arrangement that was with yourself and 
then what it was determined to be.
    I take you at your word, sir, in these tapes that you made 
these arrangements so that you could circumvent the payment 
    Mr. Dorr. Senator, let me say one more time for the record, 
that these were not arrangements that were made with myself. 
They were made between Dorr's Pine Grove Farm Company and the 
family trust, in full knowledge of all of the trustees and of 
all of the beneficiaries, No. 1.
    Senator Dayton. Let us clarify the record. You were one of 
the trustees.
    Mr. Dorr. I was one of three trustees----
    Senator Dayton. You had the power of attorney for the 
    Mr. Dorr [continuing]. I was one of eight beneficiaries.
    Senator Dayton. The trust made the arrangement with 
yourself operating Dorr's Pine Grove Farms.
    Mr. Dorr. The only benefit of the power of attorney with me 
at the FSA was to enable me to sign the papers without having 
to send them around to two other trustees. We----
    Senator Dayton. You were one of the three trustees.
    Mr. Dorr. Second, Senator, the tape refers to something 
called the Belva Door Trust which was, in fact, an entity which 
was never farmed on a custom farming basis. The tape, according 
to my brother, was actually a tape that was put together out of 
a couple of conversations and, to a large extent, there are 
portions of it that were taken out of context.
    It was a family matter that was involving a brother who had 
    Senator Dayton. I do not----
    Mr. Dorr. The discussions in this were taken----
    Senator Dayton. Were you misrepresenting the situation? I 
am taking you at your own word. I do not----
    Mr. Dorr. No, what I was trying to do was assure my brother 
that we were not taking advantage of the family trust.
    Senator Dayton. I assume you were describing to him 
accurately what was going on at the time. Whether it is your 
brother or anyone else, the conversation, I am trusting your 
voracity, you were describing to him, who was a beneficiary, 
and I believe the context was questioning what the payment 
allocation was, you, yourself, were explaining to them why you 
had set it up this way, why it was being operated in this way.
    As I understand it, and I am just, again, quoting you at 
your own words here, that you are saying it was set up, 
frankly, to avoid minimum payment limitations, that that is why 
the trustees--you being one of the three--set it up that way 
and represented it to ASCS as a custom fee arrangement when, in 
fact, you say here it was not a custom fee arrangement.
    You, yourself, knew that for a fact, when you were 
certifying otherwise, it was a crop share arrangement, which if 
it had been disclosed as such, would have meant you would not 
have been able to claim the payments from that trust, all of 
them without going up against the fee limit or at least that 
was your contemplation.
    Mr. Dorr. No, that is not correct because if you would have 
dubbed all of those payments together, any way you want, we 
would have never exceeded the payment limitation----
    Senator Dayton. Who is ``we''?
    Mr. Dorr. Dorr's Pine Grove Farm, the family trust, any way 
in which you would have put these together, we would never have 
exceeded the payment limitations.
    Senator Dayton. This audit, as I understand it, which was 
completed by FSA and because the repayment is only for the M.G. 
Dorr Family Trust----
    Mr. Dorr. That is correct.
    Senator Dayton. Only that one.
    Mr. Dorr. That is correct.
    Senator Dayton. You have described here having a similar 
arrangement with the Harold Dorr Trust?
    Mr. Dorr. That is correct.
    Senator Dayton. For some inexplicable reason, the FSA, at 
least from my information, did not audit that trust and that 
relationship. Would they find the same thing here, that this 
was reported as a custom fee arrangement?
    Mr. Dorr. I do not know how they would find that, Senator. 
I do know that the reason that these were set up----
    Senator Dayton. It was the same arrangement as with the 
other trust.
    Mr. Dorr. It was the same arrangement with the other trust, 
and the reason these were set up was because my uncle, shortly 
before his death, asked me to do that.
    Senator Dayton. Those are two trusts, the two trusts which 
you were receiving half of the income and that are being 
reported erroneously----
    Mr. Dorr. We were not receiving half the income. We were 
receiving custom payments that were arranged--I was not a 
trustee, nor did I have a beneficial interest in that trust. I 
worked very close with my aunt and cousins and took direction 
from them.
    Senator Dayton. I am taking you at your word that it was a 
custom, that it was the same arrangement as the other one, 
which you described variously as a custom fee arrangement, 
which you then acknowledge, and which the ASCS determined, was 
a crop share arrangement, which has very significant different 
application of Federal law and the regulations for these 
    If you are receiving those payments, even though the second 
trust was not audited, and should have been by the FSA, and if 
you are receiving payments now from two different trusts, you, 
yourself, are receiving that, then I can start to understand 
what the intent was here, which was to avoid yourself running 
up against these payment limits.
    Mr. Dorr. No, Senator. We were simply trying to work within 
the restraints of the law.
    Senator Dayton. This is not ``simple.'' You were not 
simply--you were operating these--in fact, the trust, as I 
understand it, the M.G. Trust was set up and operating as a 
contract share trust until about 1987 or 1988, when you changed 
it to a custom fee arrangement, so called, and then----
    Mr. Dorr. That is correct, and that was at the request of 
my uncle. I did not initiate that.
    Senator Dayton. It was reported as such to ASCS and on 
which basis you were not, you were collecting payments, as were 
the trust, and then after ASCS came in and reviewed these 
matters, found that this was not a custom fee arrangement.
    Mr. Dorr. Senator, at the time, those were set up that way. 
There was nothing illegal, there was nothing inappropriate, and 
there was nothing with outside----
    Senator Dayton. I am not saying that it was illegal. There 
is nothing illegal in setting them up that way, but the 
disclosure to the ASCS during this period of time, which was 
under review, and I do not know if it was the case before the 
period of time, before 1993, was as a custom fee arrangement. 
That was, certainly, if not illegal, highly questionable 
because, again, that was done, by your own account, to avoid 
the payment limit.
    Mr. Dorr. Senator, excuse me. I am sorry.
    Senator Dayton. Yes.
    Mr. Dorr. Senator, the trustees of both of those trusts 
could determine what they decided to reimburse Dorr's Pine 
Grove Farm with--it was their discretion.
    Senator Dayton. Who filed the report, who filed the trust 
report with the FSA or ASCS at the time?
    Mr. Dorr. I am not 100----
    Senator Dayton. Who signed the document?
    Mr. Dorr. I believe, in fact----
    Senator Dayton. You had the power of attorney.
    Mr. Dorr. No, I believe, in fact, on the Harold Dorr 
Irrevocable Family Trust, my aunt did.
    Senator Dayton. No, the M.G. Dorr Irrevocable Family Trust.
    Mr. Dorr. On the M.G. Dorr Irrevocable Family Trust, I did, 
but I am----
    Senator Dayton. You signed the documents----
    Mr. Dorr. That is right.
    Senator Dayton [continuing]. Representing it as a custom 
fee arrangement.
    Mr. Dorr. That is right.
    Senator Dayton. You, yourself, believed at the time that it 
was--at least told your brother--that it was, in fact, a crop 
share arrangement, not a custom fee. You signed the document 
stating it was one kind of arrangement when, you, yourself, 
said to others that it was not that arrangement.
    Mr. Dorr. No, what I was explaining to my brother, that it 
was not any worse or any different than any other arrangement 
and that we were not, as Dorr's Pine Grove Farm, making an 
unduly large amount of money off of the custom farming 
    I would want to point out--I am glad you brought that up--
that I do believe, and I can find that document, I believe, 
that my aunt Belva Dorr, who is now deceased, did, in fact, 
sign the document for the Harold Dorr Irrevocable Family Trust. 
At the time, that was set up that way as well.
    Senator Dayton. Based on her hands-on operation of that 
trust and the farming operation or based on representations 
that you or someone else made to her?
    Mr. Dorr. It was based on decisions that she and my uncle 
at the time decided to do it for----
    Senator Dayton. She went down to ASCS these years, and she 
attested that this was a custom fee arrangement rather than a 
crop share arrangement because that was her knowledge of the 
    Mr. Dorr. No, I do not think she went down there year after 
year after year, but she signed----
    Senator Dayton. Filed the reports or signed the documents.
    Mr. Dorr. She signed the documents, and it was done in 
order to facilitate a continued cash-flow for my uncle's 
grandchildren and their college education, and that is what he 
had intended for, and it was a way in which he could get----
    Senator Dayton. If this had been reported, as it was, that 
you were the recipient of these two crop share arrangements, 
and you listed seven entities, so I do not know whether you 
were receiving income at the time from these trust arrangements 
as well, would you have then exceeded the payment limit for 
those years?
    Mr. Dorr. Senator, if all of those entities combined, this 
is what I tried to tell you a moment ago, if all of these 
entities combined would have been operated on a crop share 
basis, at no time would we have ever exceeded the payment 
limitations. We are not talking about a huge tract of land. 
This was about 2,200 acres of property. If I would have----
    Senator Dayton. You went to a lot of effort for nothing.
    Mr. Dorr. Pardon?
    Senator Dayton. You went to a lot of effort setting all of 
these up or operating them this way for----
    Mr. Dorr. That was what I----
    Senator Dayton [continuing]. Out of no necessity, in 
    Mr. Dorr. That was what I tried to explain earlier. I did 
not set those all up. They were set up by my uncle and by my 
father for purposes of trying to pass this----
    Senator Dayton. The trusts, the trusts were set up----
    Mr. Dorr. The trusts and Dorr, Incorporated----
    Senator Dayton [continuing]. As crop share arrangements, 
and then in the late 1980's, they were changed to custom fee, 
represented as being changed to custom fee arrangements. Again, 
I am taking you at your word when you said in 1995 that these 
custom fees are actually not a custom fee. They are crop rental 
income. That is your share of the income, and you were, at the 
same time, representing then to at least one trust where you 
were a trustee, where you did sign the documents, you were 
representing to the Federal Government something different from 
that, for the purpose, you thought, of having a different 
characterization of those proceeds.
    Mr. Dorr. Well, Senator, I would simply reiterate that the 
county committee originally reviewed this, decided there was, 
in fact, no violation of shares. They, ultimately, it was taken 
to the state committee by someone, I do not know who, when they 
determined--frankly, I view this matter, $17,000, it is not a 
huge sum of money, and I look at it, to some extent, as a tax 
    Senator Dayton. Mr. Dorr, I look at it differently. I look 
at it, and any farmer in Minnesota who deals with these 
programs looks at it for what you, yourself, in these tapes 
said it was; a clearly intended attempt to violate or to 
circumvent, evade these payment limitations.
    I cannot imagine that somebody could be put in place of 
administering this agency, which is responsible for all of 
these programs, somebody who has devoted himself to trying to 
circumvent the very regulations and laws which were set up just 
for this reason, and where you, yourself, knowingly falsified 
statements and documents that were submitted to the Federal 
Government, attesting to an arrangement that you, yourself, 
were saying at the time did not exist, that a different 
arrangement existed. That is how I view it, sir.
    I also think, Mr. Chairman, before this matter comes to the 
committee for a vote, that we should request that FSA review 
these other trusts and these other documents and find out if 
this is--because the FSA, for some inexplicable reason, only 
audited this one irrevocable family trust, the M.G. Dorr 
Irrevocable Family Trust. Before I want to vote on this matter, 
Mr. Chairman, I want to know the totality of all of these 
different arrangements, and what the payment arrangements were, 
and who signed the documents and the like, so I can make a 
determination, whether as you say this was one inadvertent 
situation or whether this represents something more than that.
    Thank you, Mr. Chairman.
    The Chairman. Thank you. I let the Senator go on longer 
than the usual 5-minute rule because we are the only two here, 
but also because this is a matter of extreme importance and 
somehow we are going to have to get to the bottom of it.
    I do not wish to go over all of that ground again, but I do 
have, Mr. Dorr, a couple of questions.
    How were the payments made to you? How were the payments 
from this trust or all of these trusts made to you in your 
capacity as farming the land and harvesting the crops? How were 
the payments made?
    Mr. Dorr. These payments were invoiced out, as the charges 
were made, and then when the trusts had money, they would pay 
me. That is, when there was money in the bank account and they 
had grain sales and other things, they would reimburse us then 
for our charges.
    The Chairman. Were your charges then based upon the usual 
and customary custom farming fee in your area?
    Mr. Dorr. No, actually, these charges were higher than the 
normal customary farming fee, and that was agreed upon by the 
trustees, as well as the beneficiaries.
    The Chairman. How much more were they than the normal and 
customary custom farming fees in that area?
    Mr. Dorr. I do not know. It varied from year to year. 
Perhaps, depending on the services that we provided, I did 
grain marketing services for them, I managed all of the daily 
drainage crop monitoring normal management issues, so there 
were payments for those. All in all, I suppose we probably 
garnered somewhere between $150 and $175 an acre in custom 
farming fees.
    The Chairman. Are you saying that at that time that, from 
the proceeds of the farming operations for these trusts, that 
you did not, as the head of Pine Grove Farms or you 
individually receive 50 percent of the value of the crops 
harvested during any 1 year? You did not receive 50 percent?
    Mr. Dorr. I do not know, Senator, without going back and 
looking at them. That was back in the mid-1990's. There were 
times when we got close to that. I do not know if it was 
exactly 50 percent. I do not know if it was more or less.
    The Chairman. Then what are we to understand when you say 
in this transcript that, besides the two machine charges, 
everything else is done on a 50-50 normal crop share basis? 
Were you being honest with your, I do not know, whoever the 
unknown voice is there or were you not? Were you doing it on a 
50-50 normal crop share basis?
    Mr. Dorr. Actually, we were doing it for a little less than 
a 50-50 crop share basis. What I was trying to do was assure 
this brother, who was quite disconcerted about this, that, in 
fact, we were not taking advantage of the trust. We were 
clearly trying to operate it under the premise in which it was 
set up by my father and by my uncle in the way in which they 
    The Chairman. Then when this unknown voice says, ``This was 
all done that way in an effort to,'' and you respond, according 
to the transcript, I have not heard the tape, you respond, you 
say, ``Avoid a $50,000-payment limitation to Pine Grove 
    There was never any payment limitation consideration to the 
    Mr. Dorr. Excuse me. I guess I did not understand your 
    The Chairman. You said that you had set up this arrangement 
in a way to avoid a $50,000-payment limitation to Pine Grove 
Farms. That was a separate entity from the different various 
trusts that you were farming.
    Mr. Dorr. It was the company that rented the other ground 
and did other custom farming for other organizations, that is 
    The Chairman. You were concerned about the $50,000 payment 
limitation to your operation, not to the trusts. In other 
words, if there was a 50-50 normal crop share basis, if there 
was a problem with a $50,000-payment limit to one entity, would 
there not be a payment limit to another entity, the other 
entity in the crop share arrangement?
    Mr. Dorr. There was no payment limitation issue concerned, 
that I am aware of. Pine Grove Farm, as I just explained to 
Senator Dayton, had you taken all of the payments from all of 
these farms and laid them out in a 50-50 basis, assumed that 
all acres were operated 50-50, there would never have been a 
payment limitation issue.
    The Chairman. To the trust.
    Mr. Dorr. No, to Dorr's Pine Grove Farm.
    The Chairman. Then why did you say you wanted to avoid a 
$50,000 payment limitation? If there was never any problem with 
the payment limitation, why did you say you set it up this way 
to avoid a payment limitation?
    Mr. Dorr. Senator, in 19--I believe it was in 1976 or 1977, 
when the farm bill was written, it was the first time in which 
it was indicated that it would allow one to prove yields. We 
aggressively began to prove yields because I assumed that, at 
some point, farm program payments would be based on yields.
    When one operates a farm, and as one of the earlier 
discussants, I believe it was Senator Lugar, talked about this 
morning in terms of the limited narrow margins in returns, one 
attempts, and if he does not, I would be surprised, but one 
attempts to work within the confines of the programs in which 
they are defined and the way they are set out in order to make 
sure that he can capture as much of the farm program payments, 
et cetera, that are involved in any way that is within the 
confines or the proper precepts of the farm programs. If you do 
not do it that way, it frequently makes it impossible to 
    We did nothing, that I am aware of, in the way in which we 
structured these operations, to farm outside the constraints of 
the farm programs. The payments that were paid to Dorr's Pine 
Grove Farm for custom farming fees by the trusts, either one of 
the trusts, were done full knowledge with the trustees, with 
the beneficiaries and everyone involved.
    I did a good job of marketing. I did a good job of land 
stewardship. We did a good job of operating a variety of 
things. There were charges that we were paid for by our 
landlords over the years that normally people do not charge 
for, and it was on a continuing basis for that style of 
management that we did, and that is the way in which we 
    The Chairman. Well, as you said earlier, there is nothing 
wrong, and you alluded to the tax system, there is nothing 
wrong with getting a good tax lawyer and trying to figure out 
how to minimize your taxes. There is nothing wrong with that. 
There is nothing wrong with running a farming operation to 
maximize farm payments. There is nothing wrong with that.
    What is wrong is if one falsifies a document or falsifies 
tax returns in order to maximize benefits or Government 
payments. That really is the crux of the issue here and it is 
obvious that something was misstated on the filings on how this 
arrangement was run. After all, there was a payment repayment 
of over $16,000--16,000-and-some-odd dollars. Obviously, if 
nothing had been done out of line, I do not know why anyone 
would have to pay anything back.
    Senator Dayton. Mr. Chairman, if I may, if the Senator 
would yield, I want to associate myself with your last remark 
because these programs depend upon the honesty and the 
integrity of the participant farmers. I believe there are 2.5 
million farmers that receive these payments. If every one of 
them were taking the tact of misrepresenting what they are 
doing in order to collect additional money or avoid payments, 
the system would break down totally.
    I know good Minnesota farmers who operate under the same 
very tight margins that Mr. Dorr describes. I know farmers, in 
fact, that have gone bankrupt, but who would have cutoff their 
right arm before they would have misrepresented on a document 
anything for the purpose of avoiding limits or receiving funds 
to which they were not entitled. That is not a standard in 
Minnesota, and that is not a standard, frankly, that I want to 
be represented here in Washington for programs that Minnesotans 
are participating in.
    Thank you, Mr. Chairman.
    The Chairman. I would just say, again, on the transcript, 
again, Mr. Dorr, on down it goes on as a conversation and says:
    ``Tom Dorr: What actually happened there was way back in 
perhaps even 1989, but--no, no, it was in 1990 because that 
does not show up until then, either 1990 or 1991. I--we filed, 
we filed the way the farm, the trust land, both for the Belva 
Dorr Trust and the Harold Dorr Trust are operated with the ASCS 
to, quite frankly, avoid minimum payment limitations. OK?'' End 
of statement.
    Now, if you had said we farmed it the way we did, here is 
the way we farmed it, and we did this and this to maximize the 
amount of farm payments we are going to get, no one is going to 
argue with that. The argument is your own statement saying that 
``we filed, we filed the way the farm, the trust land, both for 
the Belva Dorr Trust and the Harold Dorr Trust are operated 
with the ASCS to, quite frankly, avoid minimum payment 
    That, I believe, is the crux of the problem. As I said 
earlier, we have a problem here, and that is the crux of it 
right there.
    Mr. Dorr. Senator, we did not file for the Belva Dorr 
Revocable Trust. That trust was operated on a crop share basis. 
The record will clearly show that.
    The Harold Dorr Irrevocable Family Trust was filed as an 
operating entity, in which ultimately Dorr's Pine Grove Farm 
Company custom farmed it, and that was filed and signed by my 
aunt. I did not do that. She did that, and that was at the 
behest of my uncle, in discussions we had with him earlier, 
because he wanted to make sure that there was plenty of cash-
flow coming out of that trust. There were 24 grandchildren who 
were beneficiaries of that and who were getting some of their 
college tuition money from that.
    He said, ``I would like to do it this way.'' He said, ``We 
will pay you well when things are going good, but when you have 
a poor crop year, you are going to have to take less for your 
custom farming operation in order that we keep the revenue 
stream up for these kids for their college education.''
    There were also two of those children who were actually 
trying to consider coming back to the farm at one point, and it 
was the way in which he wanted it handled.
    I am sorry that there is a misunderstanding on this. There 
is nothing in this that was falsified with the ASCS office. 
There is nothing that I am aware of that was done illegally. In 
fact, the county committee, as I have said earlier, early on in 
the original evaluation of this, said there was no problem.
    The Chairman. Was your operation a crop share operation 
previously, until 1989?
    Mr. Dorr. Whenever, yes, prior to that it was a crop share 
    The Chairman. Prior to 1989?
    Mr. Dorr. I do not know what year exactly it was, Senator, 
whether it was 1989 or 1988. I cannot remember for sure what 
year it was.
    The Chairman. This is the same operation that you had from 
1989 to 1995, but during that period of time you called it 
custom farming for those years.
    Mr. Dorr. That is correct.
    The Chairman. Before, it was crop share; after that, it was 
custom farming, and yet nothing else had changed?
    Mr. Dorr. Correct, other than my uncle approached me----
    The Chairman. Then one must ask why would you change it 
from crop share to custom farming? FSA looked into it and said 
that was not a truthful characterization; is that not right? Is 
that not what FSA said, that that was not a truthful 
characterization of the arrangement that you had?
    Mr. Dorr. No, they did not say it was a--they said there 
was a division of shares violation. They did not agree with the 
allocation of the capital and the management that was given to 
the system.
    The Chairman. FSA, basically, said that it was custom 
farming. Did they say that was custom farming? Did they agree 
with you on that?
    Mr. Dorr. I do not know what FSA said. I do know that we 
did not agree with the ruling. I know that we had considered 
appealing it. In retrospect, I wish we had. I also know, as I 
stated earlier, similar to a tax audit or anything else, you 
make business decisions, and if, in fact, someone does not 
agree with them, and they are reviewed, and you look at them, 
and you say, ``OK, fine. What is the best way to resolve it?''
    It was much less expensive than hiring an attorney, 
spending a lot of money on legal fees, and so we decided to go 
ahead, and not only did we go ahead and pay the requested sum 
back, but we then also asked them to tell us how they wanted us 
to set it up so that it would be structured in a manner that 
they felt was proper.
    The Chairman. It is my information that FSA said that 
nothing changed, that it was crop share all the way through.
    Mr. Dorr. I guess I disagree with that, but that is their 
interpretation of it.
    The Chairman. What changed in 1989? You, yourself, just 
said here it was crop share until 1989, and then after that it 
was custom farming. I do not see that there is any change in 
any relationship or anything that indicates that, other than 
your own words on that.
    Now, I----
    Mr. Dorr. Senator, excuse me.
    The Chairman. Go ahead.
    Mr. Dorr. The difference is in terms of how you and others 
view whether or not we were paid too much for the services that 
we provided. Frankly, if you would discuss it with anyone in 
our family, with the exception of this one particular brother, 
they all felt that the services that they paid us for were 
adequate and that they intended to do that and that there was 
nothing out of line with regard to that particular situation.
    The Chairman. Mr. Dorr, I want to move on to several other 
areas in which I have some concerns, a departure from this part 
of it to just a few more things.
    I am going to go back to 1991, when you were a member of 
the Iowa Board of Regents. You expressed opposition to the Iowa 
law related to requiring minimum purchases of State vehicles 
powered by alternative energy sources. It was supposed to be 5 
to 10 percent of all vehicles purchased. What this amounted to 
was an effort to provide a small amount of support for State-
owned vehicles to use ethanol.
    I am just reading from the transcript here of a meeting of 
the regents. It said, ``Regent Dorr expressed his concern 
regarding the requirement to purchase vehicles powered by 
alternative energy sources at a minimum of 5 percent to 10 
percent of all vehicles purchased. President Pomerantz said it 
is a State law. Therefore, it is mandated, and they have no 
choice. Regent Dorr said that requirement ties in with the 
whole issue of funding. The law is an extremely expensive 
proposition. It is a bad piece of legislation.''
    Do you still hold this view?
    Mr. Dorr. Senator, I am glad you read the document. I had 
forgotten about that, and I guess that was just not something 
that I was aware of. However, I will say this. At that point, 
my responsibility on the Board of Regents was one of fiduciary 
oversight, governance of the three universities and the two 
special schools as one of a nine-member board.
    I am very strongly in support of ethanol, and biomass, and 
the utilization of biomass resources for the benefit of adding 
value to agricultural products in the State of Iowa and 
throughout the country. We have made a lot of progress in that 
    By the same token, in that particular situation, we had a 
finite amount of resources, and as you heard Dr. Curris say 
earlier this morning, and quite frankly I had forgotten about 
that, as well, until he brought it up, we were having 
difficulty always making choices and selections about what were 
priorities, at that particular situation and that particular 
time, I obviously felt that it was a higher priority to make 
sure that we had adequate resources to provide educational 
opportunities for our students and the resources to maintain 
strong, viable institutions in the State, and it was a decision 
I made based on those obvious judgments at that time.
    The Chairman. Will USDA Rural Development be less 
supportive of ethanol than in the past under your leadership? 
Rural Development has been very supportive.
    Mr. Dorr. Absolutely, I understand that. Frankly, Rural 
Development has a very vital and potentially strong role to 
play in the commercialization of all of these alternative fuel 
and value-added initiatives. I would expect them to continue to 
do so under my leadership if I am so confirmed.
    The Chairman. I asked Mr. Keeney to stay here this 
afternoon. I wanted to talk a little bit about sustainable 
agriculture and the Leopold Center. Quite frankly, I am more 
than a little concerned about Mr. Keeney's testimony, and some 
of the things that have come up about the Extension Service and 
also the Leopold Center.
    Sustainable agriculture has made great progress and 
provided new opportunities for diversification. Through 
sustainable agriculture, farmers have improved the quality of 
our environment and our standard of living.
    During your time on the Iowa Board of Regents, did you try 
to restrict the director of the Leopold Center to further his 
efforts to promote sustainable agriculture?
    Mr. Dorr. Senator, I was a bit surprised by that statement, 
and to the best of my knowledge, no. There were discussions 
that he and I had, and he knew that I did not necessarily 
always agree with the direction that they were going, but to 
the extent that I recall my time on the board and my 
involvement with the Leopold Center, I thought that all of our 
discussions were in the context of an enlightened discussion 
and not one which necessarily meant that I was trying to impact 
the efficacy of that organization.
    The Chairman. Well, Mr. Dorr, did you at any time threaten 
the Leopold Center's budget?
    Mr. Dorr. If I did, I do not recall, no. No, I, frankly, do 
not have any recollection of ever having threatened their 
    The Chairman. Mr. Dorr, did you at any time ever contact 
members of the Iowa legislature's Appropriations Committee to 
carry out an intent to help cut the Leopold Center's budget?
    Mr. Dorr. Not that I am aware of, no.
    The Chairman. Did you at any time contact any members of 
the Iowa legislature's Appropriations Committee urging them to 
cut the budget for the Leopold Center?
    Mr. Dorr. [No response.]
    The Chairman. You do not recall that?
    Mr. Dorr. I do not recall that, no.
    The Chairman. In 1995, well, let me ask, there was one 
other issue on this that Mr. Keeney said that--well, we will 
have to submit it for the record then. I understand, according 
to, again, an article that was in the newspaper, that ``Mr. 
Keeney says that Mr. Dorr, while serving on the Iowa Board of 
Regents, barged into the Leopold Center's campus offices and 
complained about sustainable agricultural programs. Keeny said 
ISU officials had to ask Marvin Pomerantz, the Regents' 
president at the time, to explain to Dorr that he needed an 
    In his testimony today he said, ``In order to protect my 
colleagues, staff and myself from similar outbursts, I 
questioned the propriety of this kind of action by Mr. Dorr. I 
was told that a member of the Board of Regents must have any 
meetings on campus approved in advance by the president's 
    He quoted here, he said, ``The regents cannot just walk 
into an office and give you hell, but he was doing that, Keeney 
said. He would all of a sudden look up and there he was. He was 
badgering the staff.''
    Again, I am just quoting that. I am concerned about the 
Leopold Center.
    Mr. Dorr. May I respond to that?
    The Chairman. Absolutely.
    Mr. Dorr. Let me say, first, that when the Leopold Center 
was originally established, I looked at it with a great deal of 
intrigue and interest. In fact, I am not sure if Dr. Keeney was 
the director at that time or not, but the assistant director, 
and I apologize, I cannot remember his first name, but the 
assistant director was a Dr. Swann. I believe he came from the 
University of Minnesota.
    At the time that this was set up in the late 1980's, mid/
late 1980's, we were in the business of retailing soybean seed 
and, like many dealers, had Field Days. I tried to invite a 
dearly departed friend of bio agriculture, now, Chet Randolph, 
who did show up, along with Dr. Swann. They came to our Field 
Day, and they made a presentation, and they talked about the 
Leopold Center.
    Early in the development of the Leopold Center, I was 
intrigued, I was interested, and quite frankly I was anything 
but, I was very supportive. To suggest that I have had an 
innate, antagonism toward the Leopold Center is just not a fair 
characterization of my background and perception of this.
    I also have had a great deal of concern over the years as 
to how farm policy and issues have evolved to the extent that 
they impact individual farm producers in a way that they are 
subjected to rules and regulations, and costs, and expenses 
that they simply cannot bear up under and continue viable 
    One of the times, and this is the particular issue that Dr. 
Keeney was talking about, I was at a continuing education 
seminar in December 1991. I do not remember all of the 
specifics of the issue, but one of his staff members was making 
a presentation at this continuing ed seminar for commercial ag 
producers. That presentation, as I recollect, was given out of 
context relative to what the research was about. It was 
involving the nonpoint source pollution of water. For whatever 
reason, and again I do not--you have caught me a bit off guard 
here. I do not remember exactly why--but I knew it was out of 
context, and I knew it was not appropriate.
    When I got done, I was rather upset, but I did not say 
anything there. I walked across campus, and I did walk into Dr. 
Keeney's office, and I asked if I could meet with him, and he 
said, yes. We went into his office. I do not believe I badgered 
any of his employees or any of the staff members. I said, ``One 
thing I want to make perfectly clear, Dr. Keeney, is I am here 
as Tom Dorr, farmer, agribusinessman. I am not here as Tom 
Dorr, Regent.''
    Then we discussed this matter. He, in fact, and as I 
recollect, indicated that perhaps my understanding of what was 
said and what the research was intended to be may have been, in 
fact, correct. You may recall, also, that in the spring of 1990 
and 1991, after some particularly dry years in 1987, 1988, and 
1989, there was a deep concern for the high level of nitrates 
coming down through the Des Moines River watershed, through the 
city of Des Moines, and Mr. McMullen, I believe is his name, 
the head of the water system, was concerned about having to 
install denitrification equipment.
    At the time, I said to Dr. Keeney, ``When, in fact, are we 
going to have an opportunity to look at the research that goes 
back to the early 1940's, prior to the implementation of 
commercial fertilization and find out what those nitrate levels 
    Unbeknownst to me, at that point, and I do not know exactly 
why, but he admitted that they had a young researcher on their 
staff that had gone back and dug through some archives and had 
determined that in circumstances very similar to 1990 and 1991, 
that, in fact, the nitrate levels in the Des Moines River were 
as high or maybe even a little higher than they had been that 
    My question was, ``Well, then why do we not discuss this? 
Why do we not have this as part of the debate? Because we are 
talking about instigating programs that are going to create a 
certain amount of expense for producers, perhaps detract from 
their ability to raise the proper size crop they need to 
sustain themselves, and implicate a lot of expense for the city 
of Des Moines.''
    He said to me, and I have not forgotten this, he said, 
``Well, the young researcher that did that was a very bright 
young man, and for that to come out at this point may, in fact, 
negatively impact his career.''
    I said, ``Fine.'' I left it at that. I was disappointed. I 
let him know that I was disappointed. I walked out. I did not 
go to the president of the university. I did not go to anyone 
in his department. I did, in fact, discuss it with friends and 
colleagues of mine, but it was not until about 2 or 3 months 
later that I even had any inclination that he had gone to 
someone to suggest that I was acting inappropriately in his 
particular office, and the result of that was that everyone 
said it really was not a very big issue.
    That was the gist of that particular situation, and I am, 
you--that it needed to be clarified.
    The Chairman. Well, but you would say that if you were the 
Under Secretary for Rural Development that you would be 
promotive of programs dealing with sustainable agriculture?
    Mr. Dorr. I see no reason why I wouldn't. I----
    The Chairman. Well, that is----
    Mr. Dorr. Well, Senator----
    The Chairman. You wouldn't, OK. Just be honest. You 
wouldn't be, right? You said----
    Mr. Dorr. I would be, yes.
    The Chairman. You wouldn't--you would be.
    Mr. Dorr. I would.
    The Chairman. You would be supportive.
    Mr. Dorr. To suggest that I am not supportive of a 
sustainable agricultural system in this country goes against 
everything that I and my family stand for. My father and my 
uncle had no high school education. There were 14 siblings. 
They educated all of them on those family farms. Some of them 
got extended master's degrees. Over half of them did. They 
believed strongly in education, and they believed in the value 
of the land and what the farm could do for their family and for 
their community. They were dedicated and devoted to that rural 
community. My father was the president of the school board when 
it was built. My wife and I had been actively involved in other 
things in those communities. To think that sustainability in 
agriculture is not directly related to rural communities and 
rural America and is something that I wouldn't be supportive of 
goes against everything that I have ever lived and believed and 
    The Chairman. Thank you, Mr. Dorr.
    Senator Thomas has been very patient. Thank you for coming 
    Senator Thomas. Yes, well, I apologize for not being able 
to stay. We had some energy things going on and so on. Welcome, 
Mr. Dorr.
    Mr. Dorr. Thank you, Senator.
    Senator Thomas. Good to have you here.
    I guess first I would like to say that this is an unusual 
hearing. I don't know that I have ever been in one like this 
before in my 6 or 7 years here, partly because of the approach 
that has been taken here and the questioning that comes from 
newspaper articles and things like that. That is interesting.
    The second is it seems to me it is unacceptable that we 
have gone a year before this has been done, and I am a little 
disappointed in that. Nevertheless, I just hear the last of 
this questioning, and I guess the bottom line is: Did anyone, 
FSA or Government offices, find some faulty activity, some 
illegal activity in this payment thing that you went through?
    Mr. Dorr. Senator, I will--they said that there was a 
division of shares violation. Subsequently, there was a letter 
sent out that said that there was nothing criminal or no scheme 
or whatever involved in this. It was a difference of opinions.
    Senator Thomas. I have a letter here that has indicated did 
not participate in a scheme or a device to evade the maximum 
payment limitation regulations, which sounds pretty good.
    Let me go back more to what is really more important to 
where we are. Could you tell me just in your view what is the 
mission of the Rural Development Agency as you see it, as you 
have looked at it and pondered being a part of it?
    Mr. Dorr. It's very clear that rural development up over 
the many years has been primarily focused on the development of 
infrastructure, capacity, housing, and to a lesser extent, the 
development of making available resources for entrepreneurial 
activities or business activities that had access to limited 
    A very significant component of rural development 
historically was obviously the rural electrification, rural 
telephone systems, and development implementation.
    On the one hand, it tended to, in my view, end up taking a 
back seat to many of the other programs in the various farm 
bill debates. It's very clear to me that now rural development 
has a very significant and substantial role to play in the 
sense that we are at a critical crossroads in how we define 
what our rural communities are going to be.
    My fundamental view is that we have a responsibility to try 
to facilitate ways to encourage and make it exciting and 
attractive for people in businesses to invest in rural America 
so that those of us who wish to live there and reside there and 
have an adequate way of making a living and enjoy the 
environment and the benefits from living there can.
    This is going to be difficult. It's going to take some 
creativity. It's going to take some work. In the few months 
that I have been in and out of town, that we have a good staff 
of people. There are a lot of folks who have given a lot of 
thought to these things, and we are well prepared to embark on 
this. If I am confirmed, I am looking forward to that an 
    Senator Thomas. The Congresswoman that was here this 
morning from North Carolina was talking a lot about the 
difficulties in her communities and so on. Do you think that 
kind of an approach will have an impact on the economy in that 
area particularly?
    Mr. Dorr. Senator, it's a struggle trying to identify the 
various opportunities that will be effective in these rural 
communities. We all know that. It's perhaps one of the things 
that has over the years created some problems for me, and that 
I frankly didn't expect I would be sitting here, but I was 
always trying to search for ways and means in which we could 
revitalize these communities.
    We have to look at different ways and how we leverage our 
assets, both our human and our financial assets in these rural 
communities, in the context of congressional mandates and the 
congressional direction that come down the road.
    I understand in the Senate farm bill there are some very 
significant discussion being made toward venture capital 
programs and that thing, and they would give us a great deal of 
    Senator Thomas. We had a meeting in Wyoming a while back. 
Someone from the Kansas City Federal Reserve spoke and 
indicated--and I can't remember exactly the number, but a very 
high percentage of rural--a low percentage of rural communities 
now are dependent on agriculture, that they indeed have to have 
other kinds of things to supplement the agricultural community, 
which we all want to leave there, of course.
    Do you think value-added cooperatives and niche markets, 
that kind of direct marketing for agriculture and so on, has a 
place in this activity?
    Mr. Dorr. Well, it's clear that as we explore what--
knowledge-based economics, the utilization of technology, et 
cetera, really, in fact, do give us a real leg up in rural 
America. If we can have access to broadband and if we can have 
access to these kinds of tools--and we can--it will make it 
possible for a lot of these bright entrepreneurs to exploit 
their niches and their opportunities in those areas, and we 
can, yes.
    Senator Thomas. Well, it is difficult, there is no 
question. Agriculture is changing, as is the rest of the world, 
and our agricultural markets are changing and so on. We will 
see change, and certainly--well, I know there is often 
disagreement in appointments and so on, but obviously the 
President has prerogative of selecting and putting forth his 
applicants. We have the choice here of voting however we want 
to, but I am glad we are doing this. This needs to be resolved. 
There needs to be somebody there. We need to be moving. I wish 
you well.
    Thank you, Mr. Chairman.
    Mr. Dorr. Thank you.
    The Chairman. Thank you, Senator. I would just say to my 
friend from Wyoming that I did not assume chairmanship of this 
committee until July and that the Senator may have prevailed, 
tried to prevail upon the former chairman to move this nominee. 
I don't know, but it was not done at that time.
    Senator Thomas. This is March, however, Mr. Chairman. July 
was quite a ways ago.
    The Chairman. Well, I find it more than passing strange and 
curious that my friend from Wyoming complained loudly last year 
that we were moving too fast on the farm bill and a little too 
slow on this. Too fast, too slow.
    Senator Thomas. I have to say in fairness, this has been 9 
months. There we got the word--we got the farm bill at 10 
o'clock one night and voted on it the next day, Mr. Chairman. 
You can say what you want, but that is the way I feel about it, 
and I felt about it then and I will continue to feel about it.
    The Chairman. The Senator is certainly entitled to his 
    Senator Thomas. Thank you.
    The Chairman. Let the record show that the nominations came 
to this committee in April. They immediately became 
controversial. I became chairman in June--actually, not until 
July did I actually get chairmanship. We did not have a full 
committee until July. The USDA Inspector General was 
investigating the FSA payment matter until September the 26th 
in 2001, and I didn't feel it was advisable to have a meeting 
on this particular individual until the Office of Inspector 
General had completed its investigation.
    The Senator from Michigan.
    Senator Stabenow. Thank you, Mr. Chairman. I would just 
also note that with the farm bill and all of the efforts that 
have gone on for months and months, I am pleased that we 
achieved that, and thank you for your leadership on the farm 
bill, and now we are able to move on to other important things.
    Mr. Dorr, I appreciate, your being here----
    Mr. Dorr. Thank you, Senator.
    Senator Stabenow [continuing]. Your willingness to serve. 
We appreciate that.
    The challenge for us always is in matching up individuals 
with particular positions, and that is really our role, to have 
an opportunity to ask questions and see whether or not there is 
a fit in terms of philosophy or perspective.
    In hearing Mr. Bailey this morning speak in support of your 
nomination and praising your business and management skills, he 
said something that I was concerned about, and I am sure he 
meant this as praise. He said that you understand that the 
easiest way to kill social capital is to make a Federal grant.
    My concern is that rural development is the awarding of 
loans and grants, in large part. We took a look at last year 
and through USDA, $2.5 billion was spent on rural development, 
much of that was grant money. That leveraged a total of $8.2 
billion in Federal support for rural communities. Coming from 
the great State of Michigan, our small communities have relied 
on those loans and grants, whether it is to address sewer and 
water problems or to deal with other critical issues that 
affect our rural communities.
    I am wondering if you might respond to Mr. Bailey's comment 
that the easiest way to kill social capital is to make a 
Federal grant. As Under Secretary, how would you intend to 
award grants to rural communities? In fact, do you agree with 
this statement that Mr. Bailey made?
    Mr. Dorr. Well, Senator, I am aware that rural development 
is heavily involved in making a variety of grants, particularly 
in infrastructure development areas. Quite honestly, I can't 
speak for Mr. Bailey. I'm not exactly sure to what he was 
    I would simply say this: that Mr. Bailey knows that I 
believe very strongly, am very passionate about the untapped 
potential of many of our citizens, that they are--we have lots 
of folks out here in rural America who are very, very capable, 
who are underexploited, and who, given the opportunity, could 
be real success stories, real great opportunities.
    What Mr. Bailey was probably suggesting was that if we feed 
them too much and stifle their energies and stifle their 
creativity, it's a mistake. Does that mean that we can't and 
should not sustain Federal grant programs? Absolutely, the 
infrastructure development programs, the broadband programs, 
those are all very constructive programs that we need to foster 
this development. That's--I feel very strongly about that.
    Senator Stabenow. I am wondering, though, in the context of 
your role if you were Under Secretary, would you argue for 
additional dollars for rural development or fewer dollars for 
rural development in the form of grants and loans?
    Mr. Dorr. Actually, Senator, the President has made it very 
clear that he feels that this country has a strong obligation 
to sustaining rural America in a way in which it maintains its 
viability and its strength. We've had a history of a social 
contract with rural America, and there's nothing that I've seen 
or heard or, frankly, feel myself personally that would suggest 
that we would want to diminish that social contract. The 
iterations that it takes, as you all know, change from time to 
time. Changes occur and we have to evaluate them. What I--in 
all honesty the venture capital, the rural business investment 
cooperative or corporation sorts of things that the Senate is 
looking at now in the pending farm bill make a great deal of 
sense. The ability to maintain adequate housing, health care 
facilities, and those sorts of things that come from the 
assistance from these various community facility loans and 
grants are critical.
    I would make one real quick comment on that as an aside. In 
our hometown, when we built the nursing home, Heartland Care 
Center that I referred to earlier, we did a very good job at 
raising the initial capital. What we found out was that because 
we had raised enough money early on, at that point the way the 
programs were set up, we were not able to qualify for a 
guaranteed loan from Farmers Home Administration because we had 
raised too much money. We were too successful.
    What we ended up having to do was to go to the investment 
banking community. There were no banks locally that could make 
the loan. Had we been able to get a guaranteed loan, what would 
have happened is our interest rates would have been lower. Our 
ability to sustain it and pay that note off and keep that 
facility viable would have been far more effective. Most 
importantly--and I have made this point there, then; I have 
made the point in some discussions with people here since--that 
the money we would have saved could have gone to the bottom 
line, been reapportioned to the employees, the people that work 
in those nursing homes. Frankly, we have a lot of people who 
work for minimum wages in nursing homes taking care of our 
loved ones. This is a way that we could use Government and use 
it effectively without a cost to make it possible to be more 
efficient and more effective in sustaining the jobs and those 
people that work in those communities. That's the thing that I 
would look at.
    Senator Stabenow. Mr. Chairman, if I might continue for a 
    I am wondering if you might comment on some comments that 
were attributed to you in the past during your time with Iowa 
State University, that the Extension Service was bogged down in 
tradition and no longer serves a useful purpose.
    I should tell you that I am a twice graduate of Michigan 
State University, and we have not only a great land grant but 
an effective cooperative extension history, as well. I wondered 
if you could shed some light on those comments and your opinion 
regarding cooperative extension.
    Mr. Dorr. Well, in fact, you are correct. You have a very 
fine program at Michigan State. Dr. McPherson and some of the 
friends or the colleagues that he has taken there are doing a 
fine job.
    The Extension Service, as we all know, evolved out of a 
myriad of grants and acts way back in the 19th century, and 
they were very, very significant and very effective in bringing 
education to the masses and helping us become a more well-
educated and a more defined and a more focused society. It was 
very, very effective.
    My concern at the time I made the comments in the newspaper 
here that, as times change, how quickly can the Extension 
Service change to accommodate those, and things are changing 
very rapidly and that makes it difficult. My concern was then--
was whether or not the Extension Service could, utilizing all 
the funds that it had at its disposal, accommodate that kind of 
change to equip these rural communities and these rural 
citizens in a way in which they were able to enhance 
    Senator Stabenow. What was your answer to that question, 
what would you see as the vision for cooperative extension, or 
do you believe that it has in fact, outlived its useful purpose 
as it is currently structured?
    Mr. Dorr. Senator, I don't know that extension has outlived 
its usefulness. I know that there are an awful lot of folks 
struggling with how to continue to help extension evolve and 
make it more effective. I do know that under the last--in the 
last several years under Dr. Johnson, his tutelage as the vice 
provost of extension at Iowa State, they've done some 
remarkable things. They have changed and they have accommodated 
a lot of the things that I frankly feel are very effective.
    My sense is that there are areas in which they do change, 
and they are changing rather readily, and when those occur, 
we'll find it viable.
    Senator Stabenow. Thank you. One other question. In our 
bill that we passed in the Senate, the farm bill, it contains a 
provision for an Assistant Secretary of Civil Rights. I 
apologize if you were asked this earlier and I was not here. I 
am wondering at this point if you would support having someone 
specifically in charge of civil rights at the USDA to assist 
you in your position and how you would feel about having an 
Assistant Secretary of Civil Rights?
    Mr. Dorr. I would absolutely endorse that. This whole 
particular issue has been one that has been a bit detracting, 
and the bottom line is that civil rights and treating all 
people with respect, equally, and according them all the 
opportunities possible is not just the law. It is, in fact, the 
law. It is the moral and the right thing to do. I would support 
that and support that aggressively in its entirety.
    Senator Stabenow. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Stabenow.
    Senator Thomas. Mr. Chairman, may I ask permission on 
behalf of Senator Grassley to insert this in the record? It is 
an addendum to his statement.
    The Chairman. Absolutely. Without objection, so ordered.
    The Chairman. Mr. Dorr, I have just a couple of other areas 
I want to cover with you, and it has a lot to do with your 
views on perhaps Government in general and some other views you 
might have as it might pertain to you as the head of rural 
    As Senators, public servants, we get a lot of strange mail 
a lot of times. Things come in. We can't figure out what it is 
all about.
    Two years ago, you sent me a letter, and I don't know if 
you want a copy to take a look at or not.
    Would you give him a copy?
    You probably don't have it, so I wanted you to have a copy.
    [The memo can be found in the appendix on page 217.]
    The Chairman. Mr. Dorr, I don't know who was on the 
distribution list, but obviously I was. I don't know who else 
was on the distribution list. It has to do with telephone and 
telecommunications taxes. You said--and what you sent me was 
some copies of your telephone bills, three of them, to show the 
charges for both the Federal Universal Service Fee and the 
National Access Fee.
    You stated in this letter, ``The monthly National Access 
Fee per business line of $4.31 in conjunction with the 4.5 
percent `Federal Universal Access Fee' frequently exceeds the 
total monthly phone usage charges, which are necessary to have 
emergency phone lines at our individual farm and hog sites. 
Those taxes don't include the Federal and State excise and 
sales taxes.''
    ``These taxes are confiscatory,'' you say. 
``Confiscatory.'' You said, ``The total tax for this 
statement,'' up in the first paragraph, ``is 14.65 percent.'' 
You say, ``This is outrageous.'' ``Outrageous.''
    There are a couple of other things I want to ask you about 
here, but first of all, one of the responsibilities you will 
have, you would have as the head of Under Secretary for Rural 
Development does directly link up with telecommunications and 
access to telecommunications. That is a very important feature 
in rural development.
    The Universal Service Fund, of which you complain loudly 
about in this message you sent me, has existed since the 
1930's--since the 1930's--because Congress realized that every 
American ought to have access to the telephone network and that 
a telephone call in New York City or a telephone call in 
Marcus, Iowa, shouldn't be any different. That was the concept 
of universal service, to spread the cost of the telephone 
infrastructure across America.
    The same thing was true with electricity when REA came 
through. In New York City, you have 100 people on a mile of 
line, but in Iowa we have one person on a mile of line. It says 
that we keep those even. The universal service provides reduced 
cost for phone service where it is more expensive to provide 
it. It is more expensive to provide it in rural Iowa, and to 
low-income consumers.
    In 1998, schools, libraries, and rural hospitals also began 
to receive the benefits of the Universal Service Fund through 
lower-cost access to advanced telecommunications systems such 
as the Internet. That is the Universal Service Fund.
    Now, this has always existed in phone bills. Always, since 
the 1930's, since, before you were born, before I was born. 
Only recently, I guess, have long-distance companies begun to 
include it as a separate item on the bill, but it has always 
been there. It was used as a way of offsetting the low number 
of people per line that we have in rural areas.
    Again, I am, quite frankly, curious about this message you 
sent me, including the phone bills, and the Universal Service 
Fee here is--on one bill you have $4.74. That is for a month. 
On the next one it is 3 cents--3 cents. On the next bill, it 
is--well, there is not one on the next bill. Why isn't there 
one? I don't know. For some reason there is not one on the 
other bill. I don't know why there is not.
    Then there is a National Access Fee, which is--the National 
Access Fee, and that is $4.31 per month. It is not a tax. It is 
the cost that long-distance companies pay to local telephone 
companies to help cover some of the fixed costs associated with 
the interstate portion of the local loop. It is not a tax. That 
is what the long-distance companies pay. That is the National 
Access Fee, and as you point out, it was $4.31.
    I guess, Mr. Dorr, I am just a little curious--I am more 
than curious that you would be complaining so loudly about 
$4.74 or 3 cents for the Universal Access Fee, which has been 
set up to specifically help rural America.
    I find that just really curious. Please respond.
    Mr. Dorr. Well, frankly, I am caught a little cold. You are 
right, it is my memorandum. I would simply state that I vaguely 
remember writing this. At the time that I wrote it, it was 
after--there was a substantial increase in the national access 
fee, and one of these bills, perhaps another would have been 
similar to it. The actual outbound or long distance service was 
$2.77. The access fee was $4.31.
    I had an employee who lived on the farm. It was actually 
brought to my attention by him. He said, ``How long do they 
expect us to be able to pay these increased taxes?'' I believe 
there was, at that point, some significant change n the--and I 
don't know enough about this, quite frankly, to discuss it 
pragmatically, but as I indicated in my memo, the total taxes 
on the bill--and I'm not arguing with the access fee and the 
universal fee issue--but when it got down to the point that the 
total tax on the bill was nearly 15 percent, it does seem a bit 
egregious and particularly to low income people in rural areas 
who, in order to have a bill end up with--if they have any kind 
of long distance charges--a tax structure that amounts to close 
to 15 percent. I guess I was voicing my concern at that point, 
particularly as a result of my own experience, but stimulated 
by that of an employee.
    Senator Stabenow. Mr. Chairman, would you mind if it--did 
not mean to interrupt, if you are going ahead.
    The Chairman. I just wanted to point out, again, these are 
not taxes. Well, the universal access fee is. That is one that 
has existed since the thirties. The other one is the fees that 
are charged by the companies, not our taxes, not our taxes, Mr. 
    Mr. Dorr. All we were doing was responding to the increase 
in fees, the fees that come about as a result of whatever the 
mandates rules and regulations are that get passed on down to 
the consumer, and it's very difficult to maintain----
    The Chairman. Well, the only one that was a tax, as I 
pointed out, was the Federal Universal Service Fund. It is 
calculated at 4.5 percent, and as you--this is what you sent 
me. It is on the second page that was sent out by MCI WorldCom, 
reflecting an increase of 4/10ths of a percent. That was--yes, 
that was something that we did here.
    Mr. Dorr. Uh-huh.
    The Chairman. The reason we did that was to provide better 
universal service for schools and libraries to hook up to the 
Internet and to get better access to the Internet. I guess my 
point is that you complained loudly about it and yet I'm--
again, I'm saying this bothers me because you are going to be 
the head of Rural Development, and here you are as an 
individual complaining about a bill that was $4.74 and one that 
is 3 cents. This goes to basically help our rural areas.
    Mr. Dorr. Senator, I appreciate the need to maintain rural 
phone service. It is a very vital link. It is a necessity. On 
the other hand, my point was that ultimately 15 percent taxes 
or 14.65 percent taxes and fees, et cetera, become a bit of a 
burden to people in rural communities. That was my point. I'll 
let it rest with that.
    The Chairman. Did you have something that you wanted to--I 
have a question, but go ahead.
    Senator Stabenow. I was just going to followup with you, if 
you would not mind, Mr. Chairman, just indicate that, just for 
the record, that only 25 percent of the universal service fee 
listed on the bill was new as a result of the 
Telecommunications Act, I understand, and it was also for rural 
hospitals. This was done specifically in order to pay for 
Internet access for rural hospitals.
    I do not know, Mr. Chairman, if you were going to ask about 
anything else in the memo, but I was concerned, in reading 
this, and wonder if this is how you feel at this point. The 
memo says ``School and local government systems in Iowa alone 
have been subsidized so long without commensurate performance 
expectations, that a large number have slipped into a slothful 
state far exceeding mediocrity. They probably don't receive 30 
percent of these taxes. They sure don't need them.''
    Then you went on to say, ``I'm sure my rantings won't 
change your approach to maintaining a constituency dependent on 
government revenue, but should you decide to take a few side 
trips through the Iowa countryside, you'll see an inordinate 
number of homes surrounded by 5 or 10 cars. The homes generally 
have a value of less than $10,000.'' This just confirms my 
``10-car, $10,000 home theory.'' ``The more you try to help, 
the more you hinder. The results are everywhere.''
    I just wondered if you would want to comment on what you 
meant by that?
    Mr. Dorr. Well, it is reasonably self-explanatory, Senator, 
but I feel very strongly that citizens of this country are very 
bright and very capable, and given the right opportunities and 
right circumstances can do marvelous things. I have observed 
over the years the--in the case of telecommunications, the 
increase in local and other access fees, the demands that they 
put on our elderly citizens in the communities, the difficulty 
to deal with phone bills, the difficulty that they have with 
keeping track of all of them and paying them, and it is 
something that has concerned me.
    I was perhaps relating my exacerbation with that particular 
    Senator Stabenow. Well, I was not clear, Mr. Chairman. When 
it says ``the more you try to help, the more you hinder,'' I 
was not sure if Mr. Dorr was referring to public assistance or 
what that particular comment was about. Again, rural 
development is about helping.
    Mr. Dorr. You are absolutely right, and there are some 
very, very good programs in rural development, but my focus is 
more on the reliability and the success of teaching people how 
to fish, and I believe there's a lot of merit in that 
particular philosophy. To the extent that that answers that 
question, I hope it will.
    The Chairman. Mr. Dorr, you said that--I want to get back 
to this universal fund. Before 1998 when schools began 
receiving the universal fund money, less than 30 percent of 
Iowa schools had Internet access. As of the end of last year, 
more than 77 percent of Iowa schools were hooked up. That is a 
credit to the universal service fund.
    Again, my point is, and my question to you on this, do you 
oppose these initiatives like that, that help keep rural 
America equal to its urban neighbors?
    My staff did some interesting research, found out that the 
Marcus School District got $5,000 from the universal service 
fund. My question is, do you--your letter seems to indicate 
that you oppose those, and I ask you here to clarify that.
    Mr. Dorr. No. I do not oppose the fact that we make it 
possible for rural communities, schools, hospitals and other 
institutions to have access to the same capacities and 
infrastructure that our urban citizens do. It's the right thing 
to do, and we need to do it and do it in a cost-effective way.
    The Chairman. Are you opposed to the universal access fund?
    Mr. Dorr. No, I don't know that I would be.
    The Chairman. Now, I am going to ask you this. Senator 
Stabenow brought it up. You said, ``I'm sure my ranting won't 
change your approach to maintaining a constituency dependent on 
Government revenue.'' Then you said--I just repeat what Senator 
Stabenow. ``If you drive around''--let me see this again. ``But 
should you decide to take a few side trips through the Iowa 
countryside, you'll see an inordinate number of homes 
surrounded by 5 to 10 cars.'' I drive around a lot, I don't see 
that. Anyway, ``The homes generally have a value of less than 
$10,000. His just confirms my 10-car $10,000 home theory.''
    What theory is that?
    Mr. Dorr. Senator, my frustration has been over the years 
that we have not been able to maintain strong, viable rural 
communities, and to the extent that we have been unable to do 
that and for whatever reason haven't been able to create the 
right kinds of economic opportunities or get the--let me go 
back to my earlier example when I talked about the community 
facility loans and our inability at Marcus to get one for the 
Heartland Care Center because we had raised too much money.
    Had we been able to get that loan, a direct Government 
loan--a guaranteed Government loan to substantially lower our 
interest, whether it would have been 100 basis points or 50 
basis points, those funds could have stayed in the community, 
they could have gone directly to the people working in that 
nursing home, many of those who are working as nurses aides and 
other folks. The tax structures that we have for many of our 
rural citizens--and I've seen them, where you have people 
earning not a lot of money, 30 or $35,000, but when they get 
all done, they may have, after taxes and after the telephone 
taxes and everything else, maybe $20,000 worth of expendable 
money. That doesn't leave them a lot to live on.
    My frustration is, and what you end up with is you end up 
with people moving in with one another, you see devalued 
properties in these rural communities, and my contention is we 
have to figure out a better way, a better way to make it 
economically possible for these people to have the kind of life 
that our urban cousins do. That was my frustration that I was 
expressing. That's the point that I'm coming from, and to the 
extent that that makes any sense out of that paragraph.
    The Chairman. Well, certainly, I don't know that. It still 
understand the theory, the ``10-car $10,000 home theory.''
    Mr. Dorr. Senator, I guess I would respond in this manner. 
My focus, from rural economic development point of view, is 
that we need to clearly look at all the ways we can that create 
60-hour a week jobs that pay $60,000, and forget about trying 
to salvage the 80-hour week jobs that are paying $20,000. 
That's a general broad-brush statement. We can do that. We can 
do that if we look at value added. We can do that if we look at 
other creative ways in which we can stimulate growth in these 
rural communities.
    The Chairman. You just said 60-hour weeks that pay $60,000.
    Mr. Dorr. That's a--that's a general statement that I made 
to use----
    The Chairman. Eighty-hour weeks that pay $20,000? Did I 
hear that correctly?
    Mr. Dorr. Sure.
    The Chairman. An 80-hour week that pays 20,000.
    Mr. Dorr. There are a lot of struggling farmers that work 
awfully hard, put in an awful lot of hours, and don't make very 
much money. They're not--they're not wage--they're not base 
wage employees. They're independent family owners, family 
business owners, and it's very difficult.
    The Chairman. Well, I still find this a little baffling. 
Then you said, ``The more you try to help, the more you 
hinder.'' I assume, I can only read this as plain English, you 
talk about Government maintaining a constituency dependent on 
Government revenue. ``The more you try to help, the more you 
hinder.'' That is what Senator Stabenow said. ``The results are 
    Well, Mr. Dorr, the way I look at it, it seems that the 
Dorr family has benefited a lot from Government help. Did you 
not, did not the Dorr farms receive farmers home loans back 
during the farm crisis of the 1980's?
    Mr. Dorr. I don't believe we received a farmer's home loan. 
I believe I received a guaranteed loan during the 1980's, 
that's correct.
    The Chairman. That is a guaranteed loan.
    Mr. Dorr. That's correct. I appreciated it.
    The Chairman. You went to college. Did you get student 
    Mr. Dorr. Yes, I did.
    The Chairman. Those were Government backed?
    Mr. Dorr. Yes.
    The Chairman. You have received farm payments.
    Mr. Dorr. Yes.
    The Chairman. From the Federal Government, obviously. Has 
all this hindered you?
    Mr. Dorr. No. Let me make one quick comment. In my farming 
operation that many would like to construe as a mega corporate 
farm, we employed, I believe 6 or 7 full-time employees. The 
employee that had been with us the longest, nearly 35 years, 
interestingly enough his wife was in fact a Native American, 
raised a Native American. In our program with our employees we 
set up retirement accounts, health benefits and a myriad of 
programs to benefit them. These were, quite frankly, possible 
because of farm program payments and other things of that 
nature. These did not go to benefit the largesse of the Dorr 
family. We take our social responsibilities very, very 
seriously, and we've tried to conduct ourselves accordingly.
    The Chairman. I appreciate that. I just--I just found 
really, really disturbing a number of things in this, this 
``10-car $10,000 home theory.'' I will read the record to get a 
better understanding of what you just said. I am not certain I 
still understand it. I am really concerned about that kind of 
an attitude. It is almost--I do not know, it is almost like 
poking fun at poor people. Maybe you did not mean it that way, 
and I will take you at your word you did not, but it almost 
seems that way, that you poke fun at poor people. A lot of 
times they live in a run-down house.
    I once asked someone. I said, ``How come there are so many 
cars here?'' They said, ``Well, because they're all so bad we 
had to junk one to take care of the other.''
    Mr. Dorr. Senator, I was not poking fun at poor people. I 
was lamenting the fact that we have far too many of them, and I 
was looking in my own perhaps poor way, at ways in which we 
could figure out to help them out of that.
    The Chairman. Well, Mr. Dorr, you have been very patient, 
and you have been more than generous with your time.
    I have to ask unanimous consent to include in the record 
letters to the committee that oppose or express concern about 
the nominee.
    [The letters can be found in the appendix on page 220-348.]
    The Chairman. There are perhaps some other things that we 
could go through, but that we have spent a good deal of time 
here. This committee will just have to deliberate on this.
    I would say that we do have some matters from the Office of 
Inspector General, which we cannot go into here. It is my 
intent, and I spoke about this, I believe, with the ranking 
member, about having a committee meeting to discuss the matters 
that were in the OIG report, which is confidential, and which 
we cannot bring out to the public record due to the Privacy Act 
and things like that.
    Well, Mr. Dorr, again, it seems to me that you are 
certainly an interesting individual. As I said when I saw you 
last week, to the best of my knowledge our paths never crossed 
before. You reminded me that maybe we did at one time or 
another. There are a lot of your friends who are here who are 
supporting you, and many of them I respect highly. There are a 
lot of your neighbors who speak very, very highly of you. Then 
again there are some neighbors that do not speak too highly of 
you either. Those letters have been included also.
    This is a vitally important position at the Department of 
Agriculture on Rural Development. In our deliberations on the 
Senate Agriculture Committee we probably spend as much time and 
effort and energy on the Rural Development section as we do 
anything. Because we realize as does the House, that we have to 
have more of an effort in rural development as part of 
agriculture. We have a provision in our bill that sets up a 
rural equity fund, in which the Federal Government will put in 
150 million, $150 million. That seems to have good support here 
and on the House side. You can understand my concerns at some 
of the statements that you have made in the past, and some of 
the things that are on the record that give me pause as to 
whether or not you would see it as your mission to take that 
and move that ball down the field aggressively, and to say, 
``Yes, the Federal Government has a role to play here.'' We 
need equity investments in rural America.
    Mr. Dorr. That's correct.
    The Chairman. To the extent that the Congress wants it, we 
are going to put in money to help invest in new enterprises, 
new businesses in rural America. The last thing we need is 
someone heading the Rural Development division that thinks that 
Government support hinders people, and that somehow that is not 
a proper role for us.
    I would think that if you take that attitude into the 
Department, you are going to have a lot of problems with this 
committee and the committee on the House side. They will be 
breathing down your neck every day to find out just how much 
you are doing to promote rural economic development with 
Federal help, with Federal intervention, with Federal support, 
with Federal guidance, with Federal direction. This is not the 
State Government, it is the Federal Government.
    Yes, I agree with you, a lot of times we make mistakes 
around here, we do not do things right. A lot of times programs 
live beyond their usefulness. I have to agree with you on that 
too, that is true. We devise these programs and devise these 
things to try to meet emerging needs that are out there. We put 
a great deal of emphasis on rural development. Energy, 
developing energy resources in rural America. Broadband access, 
we had $100 million in our bill for broadband access. Rural 
water, waste water. In fact, I would say that in the scheme of 
things in terms of what is going to happen to rural America, 
that takes its place as equally as important, rural development 
takes its place as equally as important as the commodity 
support programs that we have.
    Mr. Dorr. Absolutely.
    The Chairman. Just as we would take pause here to approve 
someone for the head of the commodity programs who was opposed 
to the commodity programs, we would take pause to appoint 
someone who maybe does not see a proper role for the Federal 
Government in rural economic development. That is probably a 
lot of the concern here. That is my concern.
    That does not get to the other issue, the major issue that 
Senator Dayton and others brought up, but that is why there is 
a lot of concern about your nomination. I do not doubt for a 
minute that you are a good person. Too many of my friends whom 
I trust and for whom I have a great deal of respect, think very 
highly of you. You ought--I have no qualms about your person, 
that you are a good person and a caring person. I just assume 
all that. It is just where you are in your mindset in terms of 
the role of the Federal Government and how aggressively you 
would pursue your job as a head of Rural Economic Development, 
and to take the tools and the things that we have given to the 
Department to carry out, and whether they would be carried out 
aggressively and forcefully, or would it be doing the minimal 
that is required. That is my concern.
    I would yield to you for the last word today.
    Mr. Dorr. Thank you, Senator. Let me say first that until a 
year ago I had no idea that I would be considered for this 
position. To the extent that I have said things in the past 
that have been misconstrued or misinterpreted, or perhaps less 
than sensitive in the perception of some people, I truly regret 
that. There was no intention to do that. I have, as been 
outlined by several here today, always been one who enjoys 
thinking about issues and thinking outside the box, and perhaps 
doing it too aggressively in some cases.
    On the other hand, I would like to assure you that if I am 
given the opportunity to be confirmed for this position, that 
there are--and I have had the chance to look at the tools in 
the Rural Development toolbox, and that there are a myriad of 
very intriguing and interesting opportunities in there. I do 
strongly believe that rural America will only be as strong and 
will only be as effective and as vibrant as we are using those 
tools now. That suggests that I would continue to use them in 
the traditional and the ongoing ways that have always been 
there. I suspect not. I suspect I would push people that I was 
responsible to, and in conjunction with consultation with you 
and other Members of Congress as to new initiatives and new 
ways to go about this.
    Frankly, I'm aware, very much aware of your initiatives in 
the environmental arena and in the energy arena. Wind energy is 
a great example. I really think that wind energy has a 
tremendous potential, particularly for those of us that live in 
the Buffalo Ridge area of the country, and there are a myriad 
of other areas that have similar capacity.
    One of the things that intrigues me, as an example is, is 
there a way to structure those so that we just don't go out and 
on a royalty-fee basis allow some electric company to come in 
and put a tower up and we walk away with $2,000 a year in 
towers--tower royalty fees. In fact, is there a way that we can 
collaboratively and collectively own those farms as producers 
in whose land it's on? Can we work out arrangements to work 
with rural communities that have municipal electrical systems 
so that we can tie our systems, the rural electric wind 
systems, into those things?
    These are areas that I have not seen a lot of thought given 
to, at least in my limited exposure to these things. There are 
lots of ways that we can leverage the asset base and the people 
base in rural America in new and different and creative ways 
that have the ability to give us strategic and regional 
opportunities that would go far beyond our grandest 
expectations. I've seen it. I've seen it in various areas of 
the country. I've seen regions of the country where they have 
fantastic, sophisticated manufacturing facilities or very 
unique value agricultural added facilities, but they don't 
always work in the same old structure that we're used to. That 
kind of change I recognize is sometimes hard to understand and 
hard to come by, but with someone with leadership and 
management skills and the right level of encouragement and the 
right level of urging, we can effect a lot of those changes. 
That is possible, and I don't quibble with you in terms of your 
view that we need Government resources to do that.
    I would merely part with the fact that I don't discount 
Government and all Government programs. What I do suggest and 
what I do submit is that there are sometimes other ways that we 
can take a look at doing them. I am older. I am more mature 
than I was 2 years ago or 5 years ago, and frankly, I know that 
you can't make these changes overnight, you can't make these 
changes in 4 years or 8 years or 2 years, but I do think with 
the right kind of leadership, we can do some things that are 
very intriguing and very constructive.
    I appreciate the time that you've taken yourself and with 
your staff and your committee today, and if confirmed, I'll 
look forward to working with you.
    The Chairman. Thank you very much, Mr. Dorr.
    We will include in the record the statement of Neil E. 
    [The prepared statement of Mr. Harl can be found in the 
appendix on page 126.]
    The Chairman. Since there is no other business, obviously, 
to come before the committee, the committee will stand 
adjourned until the call of the Chair.
    [Whereupon, at 4:28 p.m., the committee was adjourned.]

                            A P P E N D I X

                             March 6, 2002















































                             March 6, 2002















































































































































































































































                             March 6, 2002