November 29, 2001
Mr. Billy Ray Smith
President
National Association of
State Departments of Agriculture
1156 15th Street, N.W., Suite 1020
Washington, D.C. 20005-1711
Dear Mr. Smith:
Thank you for your letter of October 4, 2001, regarding the agricultural economic assistance funds provided to States to support activities that promote agriculture, with priority being given to specialty crops. We are happy to respond to your questions and have already responded to numerous inquires from other commissioners.
States are required to disburse the economic assistance funds within 1 year of the date the funds were provided to the State. The Commodity Credit Corporation (CCC) is using
September 30, 2002, as that target date. During November 2001, the Controller, CCC, provided more specific instructions to each State concerning: (1) handling earned interest; (2) reporting expenditures; (3) the timing of required actions; and (4) requests for extensions of time beyond 1 year. The enclosed copy of the CCC Controller's instructions provides answers to questions 1A, 1B, and 2C in your letter. Requests for an extension beyond September 30 will be considered on a case-by-case basis.
While States are not required to conduct audits of multiyear projects or third party subcontractors as asked in question 2A, States should exercise reasonable oversight to ensure the funds are being used for the intended purpose. CCC does reserve the right to audit State fund use as provided for in the Agreement between CCC and each State government.
With respect to question 2B, States are to use their best judgement in determining what constitutes reasonable and necessary administrative costs and ensure that funds are managed properly and in accordance with the terms of the signed agreement between CCC and each State government.
In response to your remaining questions, there are no further restrictions on the use of these agricultural economic assistance funds beyond the definition of speciality crops provided in the statute, Public Law 107-25. The specialty crop grants are a State-run program, and it will be incumbent upon each State to determine what complies with the statute. As a result, aquaculture, if it involves food or fiber production, could be treated as a specialty crop if determined to be appropriate by a State.
In our earlier letter, we encouraged States to consider utilizing the funds provided for un-reimbursed costs that they may have incurred for foot and mouth disease prevention or other plant and animal health programs. In light of the events of September 11, 2001, we urge you to reconsider these needs in your State. We are confident that State officials will make judicious decisions concerning the best use of these funds to benefit agriculture in their own State. Your offer to compile a report on State activity is greatly appreciated.
We recognize that the legislation provided States and USDA little guidance in utilizing these funds. We would be happy to meet with you or other NASDA representatives to further discuss your questions and concerns.
Again, thank you for your letter.
Sincerely,
/signed/
Ann M. Veneman
Secretary
Enclosures--Special Instructions for CCC Grant Advances and Quarterly Grant Activity Report