By Gilbert M. Gaul, Dan Morgan and Sarah Cohen
Washington Post Staff Writers
Tuesday, July 18, 2006; A01

CHANDLER, Tex. -- On a clear, cold morning in February 2003, Nico de Boer heard what sounded like a clap of thunder and stepped outside his hillside home for a look. High above the tree line, the 40-year-old dairy farmer saw a trail of smoke curling across the sky -- all that remained of the space shuttle Columbia.

Weeks later, de Boer was startled to learn that he was one of hundreds of East Texas ranchers entitled to up to $40,000 in disaster compensation from the federal government, even though the nearest debris landed 10 to 20 miles from his cattle.

The money came from the U.S. Department of Agriculture as part of the Livestock Compensation Program, originally intended as a limited helping hand for dairy farmers and ranchers hurt by drought. Hurriedly drafted by the Bush administration in 2002 and expanded by Congress the following year, the relief plan rapidly became an expensive part of the government's sprawling system of entitlements for farmers, which topped $25 billion last year.

In all, the Livestock Compensation Program cost taxpayers $1.2 billion during its two years of existence, 2002 and 2003. Of that, $635 million went to ranchers and dairy farmers in areas where there was moderate drought or none at all, according to an analysis of government records by The Washington Post. None of the ranchers were required to prove they suffered an actual loss. The government simply sent each of them a check based on the number of cattle they owned.

At first, livestock owners were required to be in a county officially suffering a drought to collect the money. But ranchers who weren't eligible complained to their representatives in Washington, and in 2003 Congress dropped that requirement. Ranchers could then get payments for any type of federally declared "disaster." In some cases, USDA administrators prodded employees in the agency's county offices to find qualifying disasters, even if they were two years old or had nothing to do with ranching or farming.

In one county in northern Texas, ranchers collected nearly $1 million for an ice storm that took place a year and a half before the livestock program was even created. In Washington state, ranchers in one county received $1.6 million for an earthquake that caused them no damage. In Wisconsin, a winter snowstorm triggered millions of dollars more. For hundreds of ranchers from East Texas to the Louisiana border, the shuttle explosion opened the door to about $5 million, records show.

John A. Johnson, deputy administrator for farm programs for the USDA, said that initially the program provided meaningful assistance to ranchers in areas suffering from drought. But after Congress loosened the rules, he acknowledged, "what was meant as disaster assistance ended up being given to people who didn't have a need or a loss."

The money doled out for the livestock program was part of more than $20 billion that taxpayers have given to ranchers and farmers since 1990 to compensate for droughts, hurricanes, floods and other forms of damaging weather. Many of those events caused serious damage. But in some cases, routine storms triggered millions in payments, The Post's investigation found.

"The livestock program was a joke. We had no losses," de Boer said. "I don't know what Congress is thinking sometimes."

Still, while de Boer said he was embarrassed by the $40,000 check, he added: "If there is money available, you might as well take it. You would be a fool not to."

Shortly before the 2002 congressional elections, the Bush administration faced growing pressure from ranchers and politicians in a handful of Western states that were hit hard by drought. Of special political concern to the White House, sources said, was South Dakota, where Republican Rep. John Thune was close to unseating Democratic Sen. Tim Johnson.

The USDA responded with a plan to give ranchers cash payments based on how much livestock they owned. A beef cow would count for $18; a dairy cow, $31.50. Lesser payments would be awarded for buffalo and sheep. The maximum an individual rancher could get was $40,000.

Ann M. Veneman, then secretary of agriculture, proclaimed at a September 2002 news conference that the plan "will provide immediate assistance to producers who need it the most."

To qualify, a rancher had to be in a county that was suffering from a drought and declared a disaster by the agriculture secretary in 2001 or 2002. More than 2,000 counties had such declarations at the time, including many with only modest dry spells.

All that livestock owners had to do was show up at their county agriculture office and fill out a short form certifying the number of animals they owned as of June 1, 2002. Short-staffed county offices were hard pressed to verify the numbers. They did only limited spot checks.

A spokesman for the USDA, Ed Loyd, said last week that the system was meant to distribute funds quickly. "Given the severity of the drought, we were confident enough of the losses" to forgo the time-consuming process of checking every farm and ranch, Loyd said.

Agriculture officials estimated the program would require $752 million. But so many ranchers and dairy farmers applied that the cost quickly ballooned to $900 million. At the time, a second year of the program wasn't being contemplated.

Then lawmakers from Arkansas to Wisconsin wrote more than 100 letters to Veneman's office, complaining that the USDA's sign-up deadline of Sept. 19, 2002, was "arbitrary" and "bureaucratic." Deserving counties, they said, were being excluded. Virginia's delegation alone sent 20 letters, including six from Republican Rep. Virgil H. Goode Jr. The congressman's office said he was responding to requests from his constituents.

The Agriculture Department soon added dozens of counties to its drought list.

"There was pressure that year to grow emergency declarations for drought," recalled Hunt Shipman, a former top USDA official who now works as a lobbyist in Washington.

Still, even with the growing list, hundreds of counties remained ineligible because they had not been declared drought-stricken areas. That, Shipman said, is when "Congress came back in. They decided to drop the drought requirement in the second year."

Under Congress's new version of the program in 2003, livestock owners could qualify as a result of any type of weather-related disaster declaration by the secretary of agriculture. Or they could become eligible if their county was included in a presidential disaster declaration. Under the new rules, the time period covered also was extended, to Feb. 20, 2003. One rule remained the same: Livestock owners still did not have to prove a loss.

The expansion was pushed by a bipartisan group of senators from Western states and House members from the Southeast. House-Senate negotiators then added the legislation to a huge annual spending bill that was not subject to amendments on the floor.

Sen. Thad Cochran (R-Miss.), the top-ranking Senate GOP negotiator on the agricultural provisions, did not return telephone calls seeking comment. Former Rep. Max Burns (R-Ga.), who introduced legislation to extend the livestock program in January 2003, also did not return calls requesting comment.

As a result of the changes, 765 counties that had no droughts in 2001 or 2002 qualified for cash in 2003. In some cases, entire states -- including Arkansas, Florida, Mississippi, West Virginia and Wisconsin -- were now included.

With the rules relaxed by Congress, federal agriculture officials pushed their local offices to find disasters that would make more livestock owners eligible, records and interviews show. It didn't matter if it was a cold snap or a storm that was two years old.

The Agriculture Department inspector general's office eventually audited the program, saying the payments should have gone only to those with legitimate losses. But that was long after the looser rules led the USDA to hand out an additional $234 million in 2003.

No state did better than Texas. In the end, all 254 of its counties qualified. Ranchers in counties without droughts collected $45 million in 2003, on top of the $67 million that had flowed to the state in 2002.

In northern Texas, Cooke County ranchers qualified for $906,000 in 2003 on the basis of an ice storm that hit the area more than two years earlier. Tim Gilbert, former head of the USDA county office, recalled that "there was no damage in Cooke County to the crops or livestock. Maybe a few pine trees got knocked down."

Nonetheless, the county had been included in a presidential disaster declaration because of the storm. "The state office called and said, 'Yeah, you are eligible,' " Gilbert said. "I said, 'How can I be eligible for a storm in December two years ago?' "

Over in Denton County, northwest of Dallas, ranchers weren't hurting from a drought in 2002. Nor were they pressuring county USDA official Blake English for the livestock money. "There has not been anything like an uproar, because most everyone agrees that there was not a disaster in Denton County," English wrote in the minutes of a December 2002 meeting of a local farm advisory committee.

Still, in 2003, English said, he got word from his state bosses to go back and look again for a disaster -- any disaster -- under which local ranchers could qualify.

"I don't deny it," English said. "We got the message, a message to take another look. It came from our state office, probably through the district director." English said it was "pretty clear that we wanted the entire state of Texas to be eligible."

John Fuston, the Texas USDA director, confirmed that the county offices were urged to look for weather events and disasters that could qualify ranchers for the program. He said the agency was following the rules set by Congress.

Without any real disasters in Denton County, though, English was left to scramble. "We didn't have a drought," he said. "In fact, we were wet. The crops were above normal at the time."

English said he did his best, preparing a report on a rainstorm that had blown through more than a year earlier. "We knew it wasn't a disaster," he said. "We knew it wouldn't be approved." And, according to English, it wasn't.

Then, on Feb. 1, 2003, the shuttle exploded. To ensure recovery of the debris and pay for emergency costs, President Bush issued a federal disaster declaration. As an unintended result, most of East Texas was then eligible for livestock funds. Denton County's livestock owners collected $433,000, records show.

"Speaking personally, I didn't think it was necessary at that point in time," said Calvin Peterson, an 81-year-old rancher who heads the local farm committee. "It might have been more political than anything."

In Henderson County, about 100 miles southeast of Dallas, Nico de Boer felt the same way. When he arrived from the Netherlands 17 years ago, de Boer had 90 acres, a house, one barn and fewer than 200 cows. Today, he has 1,000 acres, multiple cow barns and sheds, 650 cows that produce 3 million pounds of milk monthly, a BMW in the driveway, a swimming pool, and two more farms in neighboring counties.

The rolling hills surrounding his sprawling farm receive a generous average of 40 inches of rain annually. When the shuttle exploded, pastures were full and there hadn't been a drought or any other type of weather disaster in years, records show. But after the presidential disaster declaration, John Reeves of the local USDA office informed livestock owners in Henderson County they were eligible. They eventually collected $751,083 despite no shuttle damage.

Reeves said he had no choice but to write the checks. "Congress passed legislation and approved us for that Livestock Compensation Program, and that's what it was," he said.

"The closest debris I heard about was 10 to 20 miles away. There wasn't anything here," de Boer said. "Believe me, we would be better off if the government got out of the business and limited the payments to those who really need them."

On Feb. 28, 2001, the 6.8-magnitude Nisqually earthquake hit near Olympia, Wash., collapsing brick facades of businesses and leaving cracks in several state office buildings. About 170 miles away from the epicenter, in Whatcom County, near the Canadian border, residents felt some of the aftershocks but experienced little damage.

"We registered about a 3 [magnitude] or something," said Don Boyd, a local emergency management official. "We had some minor shaking, some cracks in the chimneys, that sort of thing."

USDA officials didn't check for damage because none of the local dairy farmers complained.

Yet in 2003 more than 200 livestock owners in Whatcom County collected $1.6 million under the Livestock Compensation Program -- one of the largest payouts for a county nationwide -- for the same earthquake.

A 2001 presidential disaster declaration for the Nisqually earthquake had named 22 counties, including Whatcom. Dairy farmers and ranchers in Washington state collected nearly $4 million in livestock funds, according to records analyzed by The Post.

"Don't blame us," said Gary M. West, chief administrator for the USDA's Farm Service Agency in Washington state. "We don't get to choose which programs we implement. We have to work with what Congress gives us."

Larry Reeves, who heads the Whatcom County USDA office, echoed that view. "We do what we are told," he said. "Our thoughts and feelings generally don't have a bearing."

Terri Noteboom and her husband received nearly $13,000 in livestock funds for their dairy farm in Lynden. Noteboom also chairs the farmers committee that advises Reeves. She said some Whatcom County dairy farmers came into the office to report that they had accidentally received government checks.

"I told them, 'No, you didn't. It wasn't an accident. It's yours,' " she said.

"The way I see it, many times they do these programs and instead of applying it to one area, they find a way to apply it to the entire country. I don't know if you call that a loophole or not."

In November 2002, Ben Brancel, the top USDA official in Wisconsin, sent out a news release notifying livestock owners that none of the state's counties qualified for the Livestock Compensation Program because they had not received drought declarations from the secretary of agriculture.

Five months later, in April 2003, Brancel put out another news release: As a result of Congress broadening the eligibility criteria, 53 Wisconsin counties now qualified for that cash.

In still another news release, Brancel implored livestock owners to apply for the money. "If you own eligible livestock in eligible counties you are eligible," he wrote. "In these tough economic times, you don't want to miss the opportunity to receive money to help pay some of the bills."

Wisconsin livestock owners took Brancel up on his offer, collecting more than $39 million. Still, some dairy farmers and county officials were confused about why they were getting the money.

"In this county, we got a lot of questions from producers: 'Why are we eligible?' " recalled Tom Schneider, the head of the USDA office in Manitowoc County, where livestock owners got $1.5 million. "Our answer was 'Because we were told you were eligible.' "

Several Wisconsin counties qualified on the basis of a two-year-old disaster declaration for a January 2001 snowstorm. "It was a nasty winter storm," recalled Teresa Zimmer, the USDA official in Green County. Asked how the storm affected ranchers, she said, "There were several days where livestock owners couldn't get to the market . . . to sell their animals."

Ranchers in Green County collected nearly $1.5 million. One of those who got a payment was Cornell Kasbergen, who helps run family dairy farms in Green County and Tulare County, Calif. Family members received a total of $72,000 in livestock funds, records show.

"It was a program that was available that we took advantage of," Kasbergen said. "Did we have any losses? I couldn't tell you. In my mind, I think a lot of these programs are a waste of money."

Researcher Alice Crites contributed to this report.