program's success has yielded a class of borrowers who no longer need government subsidies. For these borrowers, private-sector loan guarantees are proposed. Additional amounts of low-interest funds are proposed as safety nets for electric and telephone borrowers who cannot afford market rates. MEANS TEST Question: Recently USDA proposed regulations to implement a 'means test" for direct loans through the authority of the 1990 Budget Reconciliation Act which empowered REA to take necessary steps to lessen the adverse impact of the cuts in the loan levels. Since the authority for this regulation seems to be derived from the Act, do you agree that this means test would "sunset" after the Act expires in 5 years. Answer: The proposed rule was silent on this issue. Several comments similar to yours were received during the rule's comment period. REA is evaluating these along with all others and will address them as we proceed to implement the rule. Question: Given the Department's proposed regulation for the development of a "means test" for direct REA loans, would not such a "means test" inherently inhibit the long-range budgetary decision making of a rural electric cooperative? If so, isn't a means test adverse to the purpose of REA to provide electrical service to rural America? Answer: As a practical matter, by blending the eight criteria, a borrower would have to experience substantial change in several areas in order to change significantly in their rank. To help insure against large swings, six of the criteria are based on 2-year averages. In order to help with long-range planning, the rule calls for a borrower's rank to be published annually even though they may not be applying for a loan. It is important to note that the level of credit authority per borrower is not in question. Full funding will still be available. A loan guarantee can be provided for any differences attributed to a reduction. The only item subject to change is the interest rate. Interest rate changes would occur regardless of the methodology used to implement the reductions. Historically, it has been the practice of REA to allocate its funds on the basis of need. The general funds rule was a form of needs test, and the supplemental lending policy is an attempt to allocate insured funds based on need. Given this historical perspective, along with the new guaranteed authority and previous directions from Congress to encourage borrowers to use other resources, REA's rule is consistent with the objective of providing rural electric service. Question: In your proposed regulation for the development of a "means test," how often will a rural cooperative be reviewed under the test, or would each loan application be subject to the test? Answer: The rankings for all borrowers are published annually, and an individual loan would be based on the ranking at the time of application. Applications are "locked in" for a period of 18 months. STRAY VOLTAGE Question: Recently there have been reports of financial damage to farmers, particularly milk producers, resulting from stray voltage. It is my understanding that stray voltage originates from utility lines that release electrical energy into the surrounding ground. Reports indicate that this electrical current may pass into the cow, causing discomfort and reduced milk production. Has REA investigated this matter of stray voltage and its affects on the farmer? If so, what form of remedies do you recommend to the rural utilities and farms that may suffer from stray voltage? Answer: Because "stray voltage" is sometimes confused with "neutral to earth" voltage, it is important to have a common understanding of the terms. Neutral to earth voltage is the voltage measured from an electrical system neutral to a reference ground at remote earth potential. Neutral to earth voltage is always present on a multiple grounded electrical system, both primary distribution system and secondary farm electrical system. It is the result of electrical current flow. "Stray voltage" is a special case of electrical potential across animal contact points. One contact point is an object that is electrically connected to the system neutral and the other contact point is any other conductive object (floor, etc.) that the animal can simultaneously contact. These stray voltages are usually very low level voltages that cannot be felt by humans. The level of stray voltage that any animal may be subjected to is dependent on the voltage difference between the two animal contact points and is dependent on both the electric system neutral potential and the degree of bonding (gradient control) at the particular location under consideration. REA has kept abreast of studies and papers on this subject and has these recommendations. We believe that all three of these recommendations should be followed. 1. The electric utility system should be well 2. The farm wiring should be in compliance with state potential is as low as the desirable stray voltage 3. Since it is necessary to keep the stray voltage SUBCOMMITTEE RECESS Senator BURDICK. Thank you. Anybody else? [No response.] We will now be in recess. [Whereupon, at 10:55 a.m., Tuesday, April 16, the subcommittee was recessed, to reconvene at 9:57 a.m., Friday, April 19.] AGRICULTURE, RURAL DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1992 FRIDAY, APRIL 19, 1991 SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, U.S. SENATE, Washington, DC. The subcommittee met at 9:57 a.m., in room SD-138, Dirksen Senate Office Building, Hon. Quentin N. Burdick (chairman) presiding. Present: Senators Burdick, Bumpers, Cochran, and Specter. COMMODITY FUTURES TRADING COMMISSION STATEMENT OF DR. WENDY L. GRAMM, CHAIRMAN ACCOMPANIED BY: DR. EWEN WILSON, EXECUTIVE DIRECTOR OPENING REMARKS Senator BURDICK. Good morning, ladies and gentlemen. Today we continue our hearing on the fiscal year 1992 budget for Agriculture, Rural Development, and Related Agencies. We will review the budgets for the subcommittee's related agencies: the Commodity Futures Trading Commission, the Food and Drug Administration, the Farm Credit Administration, and the Farm Credit System Assistance Board. We will begin with the Commodity Futures Trading Commission. Welcome to our committee, Dr. Gramm. In summary, CFTC proposes an increase in the budget from $43,960,000 for 1991 to $48,285,000 for 1992. We have your statement, Dr. Gramm. I would ask you to summarize it at this point and make any additional comments you would like. Dr. GRAMM. Thank you, Mr. Chairman. I appreciate the opportunity to present to you the Commission's fiscal year 1992 budget request. Accompanying me today are Dr. Ewen Wilson, our Executive Director, and Ms. Madge Bolinger, Budget Director for the CFTC. I will be submitting my written testimony for the record, and I will briefly summarize it right now. BUDGET REQUEST The Commission is requesting a fiscal year 1992 budget of $48,285,000 and 621 staff-years. This represents an increase of 10 |