On November 30, the Senate Ag Committee held a hearing to consider the pending nominations of the Honorable Summer K. Mersinger for a second term as Commissioner of the Commodity Futures Trading Commission (CFTC), as well as Basil Ivanhoe Gooden to be Under Secretary of Agriculture for Rural Development. The two witnesses of the hearing were:
- The Honorable Summer K. Mersinger, CFTC
- Dr. Basil Ivanhoe Gooden, USDA Rural Development
Below is a summary of the hearing prepared by Delta Strategy Group. It includes several high-level takeaways, followed by summaries of opening statements and witness testimonies and a summary of the Q&A portion of the hearing.
Key Takeaways
The following is a summary of the main topics explored in today’s hearing. Each is discussed in further detail in the Discussion section below.
- Members questioned Commissioner Mersinger and Dr. Gooden on a range of topics involving agriculture, climate, equitable market access, rural development, and cryptocurrency. Most questions for Dr. Gooden focused on his commitment to expand and improve USDA’s role in rural development, while questions directed towards Commissioner Mersinger addressed the role she plays at the CFTC as a strong advocate for robust risk management practices and price discovery opportunities within the agriculture industry.
- Commissioner Mersinger highlighted that agriculture markets are sensitive to underlying market fundamentals and noted the declining number of Futures Commission Merchants as a barrier preventing market efficiency for farmers and hedgers. As the sponsor of the Energy and Environmental Markets Advisory Committee (EEMAC), she advocated for renewable energy and said the advisory committee is working to understand how the physical infrastructure related to energy could impact our markets. Commissioner Mersinger briefly touched on crypto currency regulation, stating that the digital asset space needs to have a federal framework to oversee the cash markets for digital assets, and that the CFTC needs more legislative authority in this space.
- Dr. Gooden committed to promoting rural livability and expressed his desire to adequately support USDA’s field-based operations. In strengthening USDA’s “boots on the ground,” Dr. Gooden committed to fight for equitable access of USDA rural development programs across rural America. Specifically, he highlighted his goal to make the application process easier to access and complete for farmers and ranchers. He said that housing will play a large roll in securing the sustainability and growth of rural communities.
SUMMARY
Opening Statements and Testimony
Chair Debbie Stabenow (D-MI)
- My three goals for the Farm Bill are to keep farmers farming, keep families fed, and keep rural communities strong. The role of Under Secretary of Agriculture for Rural Development is essential to all three. Addressing these challenges will be no small undertaking, but I know that Dr. Gooden is up to the task.
- The CFTC plays an essential role in our economy as derivatives markets provide farmers and producers with tools they need to manage their business risks. The CFTC’s work to safeguard market integrity has never been more important. Congress must do its job and provide the CFTC with sufficient, reliable funding. As Congress considers how to regulate digital assets, we will need to lean on the experience of the Commission to make sure we get it right. Commissioner Mersinger knows that agricultural commodities are the backbone of our economy and understands the importance of well-functioning derivatives markets. As the sponsor of the CFTC’s EEMAC, she hears directly from energy producers and consumers about the challenges of modernizing our power grid and transitioning to clean and renewable resources with this experience. Commissioner Mersinger is well-suited to help lead the CFTC.
Ranking Member John Boozman (R-AR)
- Much of rural America lacks necessities such as clean drinking water. Sanitation, broadband, healthcare, and childcare, among others. I trust Dr. Gooden will draw upon his previous experiences and familiarity with rural Virginia to represent Americans well and work tirelessly to advance their interest.
- Derivative contacts serve as resilient risk management tools. As a sponsor of the CFTC’s EEMAC Commissioner Mersinger has championed resiliency of agriculture and energy markets, which are essential risk management price discovery tools. She has also led the call for regulators to deliver clear guidance in a timely manner. I have appreciated Commissioner Mersinger’s perspective on no-action relief and her recognition that while no-action relief is a good thing, extending without fixing our broken rule creates risk and uncertainty. I applaud Commissioner Mersinger for calling to codify repeatedly extended no-action relief which would ultimately reduce uncertainty.
Dr. Basil Ivanhoe Gooden
- If confirmed, I will work every day to advance the top priority of promoting rural livability. We will do this at rural development by ensuring that our program applications are easier for our customers to access, better using technology to streamline our work, supporting and strengthening our workforce, and building our partnerships to better deliver and leverage resources in rural America.
The Honorable Summer K. Mersinger
- The agriculture futures markets are not only invaluable tools for price discovery, but also for mitigating those risks inherent in production agriculture. Each day, I approach my work at the CFTC with farmers and ranchers in mind. I was very intentional when I picked the EEMAC Advisory Committee as a committee to sponsor because I think one of the largest input costs for America’s farmers and ranchers is the cost of energy. If confirmed, I will continue to be a voice for agriculture at the CFTC.
Discussion
Stabenow (D-MI): How do you plan to use clean energy funding in your position at USDA to address the climate crisis and ensure the timely allocation of these funds?Gooden: We understand the vital impact that these clean energy programs have on rural America, and we are committed to working with our rural utility service administrator and program to make sure that we meet the timeline to deploy these funds as congress has intended.
Stabenow (D-MI): What common barriers to entry do you see in rural communities trying to access these rural development programs? Gooden: Making our application process more accessible and easier to complete is a top priority for me.
Stabenow (D-MI): What is the CFTC’s responsibility to support the transition to a low-carbon economy? Mersinger: Whether it is for energy end users, farmers, ranchers, or those who are using our markets to hedge the risk and costs of the underlying components that are needed for renewable energy and electrification, our main job is to make sure the markets we regulate are well functioning.
Boozman (R-AR): Can you talk about some of the work you have done to guarantee agriculture and energy derivative markets remain robust and resilient and any future initiatives? Mersinger: As sponsor of EEMAC, we are examining metals that are important to renewable energy and how the physical infrastructure related to energy could impact our markets.
Boozman (R-AR): Can you provide examples of some initiatives Congress should pursue to generate sustained economic growth in rural areas? Gooden: We are working very diligently to bring the resources of the federal government, in partnership with state and local municipalities, to ensure that rural counties can avail themselves to the opportunities within the federal government.
Smith (D-MN): Can you speak to the role the rural housing services plays in attracting folk to rural communities? Gooden: I share your concern and interest in rural housing development as housing plays a vital role to the accumulation of wealth in rural communities. I will commit to working with our rural housing administrator and partnering with our other organization to address these issues.
Smith (D-MN): Do you think the CFTC has a role to play in helping producers who do not get a fair market value for their products due to price transparency issues? Mersinger: We are very focused on price discovery issues. We have seen a significant drop in numbers of Futures Commission Merchants and we are examining ways we can address potential barriers to entry.
Ernst (R-IA): Will you commit to supporting USDA’s Bio Preferred program? Gooden: I will commit to making sure that the program has the resources and attention that it needs to make the impact that Congress intended.
Ernst (R-IA): Can you commit to the continuation of the Higher Blends Infrastructure Program? Gooden: Yes, I commit to that.
Marshall (R-KS): If you could to one thing in the next six months to help rural America what would it be? Gooden: I would like to promote rural livability, and I would focus heavily on our staff to make sure we are adequately supported in our field-based operations.
Bennet (D-CO): How will you work to reduce the burdensome application and contracting requirements for the USDA rural development programs? Gooden: One of the top priorities that I have is making our application process far easier to access and complete. We will work to shore up the support of our staff to make sure that they can help applicants better understand that process.
Bennet (D-CO): What can USDA do to speed up the environmental review process for the New Era program? Gooden: We have contracted with others to help us be able to complete those environmental reviews so we can move rural development projects forward.
Tuberville (R-AL): How are you focused on providing access to broadband for rural communities? Gooden: We are very focused on the quality of broadband we provide to our farmers as new technology emerges.
Tuberville (R-AL): What are you doing at the CFTC to make sure derivatives products are more accessible to producers? Mersinger: We are working on our outreach to better educate small farmers and ranchers on these risk management tools.
Warnock (R-GA): Will you commit to providing an efficient roll out of broadband development funds? Gooden: I fully commit to ensuring that we work with your staff and other members of Congress to make sure that we roll out our reconnect program.
Warnock (R-GA): What role does the CFTC play in promoting financial technology in rural communities? Mersinger: As long as there is regulatory oversight and consumer protection, I think that fintech can play a role.
Braun (R-IN): Do you think we need more crypto regulation? Mersinger: Yes, CFTC enforcement is done after the fact, and we need proactive resources to stop fraud from happening in the first place. The CFTC needs more legislative authority in this space, and we need a federal framework for crypto.
Hyde-Smith (R-MS): What opportunities do you see to strengthen access to rural water programs? Gooden: We can work with our partners on the ground, but it is important that we hear from Congress to understand where our rural water programs can help.