[House Hearing, 114 Congress] [From the U.S. Government Publishing Office] AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND RELATED AGENCIES APPROPRIATIONS FOR 2017 _______________________________________________________________________ HEARINGS BEFORE A SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS HOUSE OF REPRESENTATIVES ONE HUNDRED FOURTEENTH CONGRESS SECOND SESSION _________ SUBCOMMITTEE ON AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND RELATED AGENCIES ROBERT B. ADERHOLT, Alabama, Chairman KEVIN YODER, Kansas SAM FARR, California THOMAS J. ROONEY, Florida ROSA L. DeLAURO, Connecticut DAVID G. VALADAO, California SANFORD D. BISHOP, Jr., Georgia ANDY HARRIS, Maryland CHELLIE PINGREE, Maine DAVID YOUNG, Iowa STEVEN M. PALAZZO, Mississippi NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full Committee, and Mrs. Lowey, as Ranking Minority Member of the Full Committee, are authorized to sit as Members of all Subcommittees. Tom O'Brien, Pam Miller, Andrew Cooper, Justin Masucci, and Elizabeth King, Staff Assistants _________ PART 5 Page Food and Drug Administration................................. 1 Marketing and Regulatory Programs............................ 349 USDA Farm and Foreign Agricultural Services.................. 987 _________ Printed for the use of the Committee on Appropriations U.S. GOVERNMENT PUBLISHING OFFICE 21-398 WASHINGTON : 2016 COMMITTEE ON APPROPRIATIONS ---------- HAROLD ROGERS, Kentucky, Chairman RODNEY P. FRELINGHUYSEN, New Jersey NITA M. LOWEY, New York ROBERT B. ADERHOLT, Alabama MARCY KAPTUR, Ohio KAY GRANGER, Texas PETER J. VISCLOSKY, Indiana MICHAEL K. SIMPSON, Idaho JOSE E. SERRANO, New York JOHN ABNEY CULBERSON, Texas ROSA L. DeLAURO, Connecticut ANDER CRENSHAW, Florida DAVID E. PRICE, North Carolina JOHN R. CARTER, Texas LUCILLE ROYBAL-ALLARD, California KEN CALVERT, California SAM FARR, California TOM COLE, Oklahoma CHAKA FATTAH, Pennsylvania MARIO DIAZ-BALART, Florida SANFORD D. BISHOP, Jr., Georgia CHARLES W. DENT, Pennsylvania BARBARA LEE, California TOM GRAVES, Georgia MICHAEL M. HONDA, California KEVIN YODER, Kansas BETTY McCOLLUM, Minnesota STEVE WOMACK, Arkansas STEVE ISRAEL, New York JEFF FORTENBERRY, Nebraska TIM RYAN, Ohio THOMAS J. ROONEY, Florida C. A. DUTCH RUPPERSBERGER, Maryland CHARLES J. FLEISCHMANN, Tennessee DEBBIE WASSERMAN SCHULTZ, Florida JAIME HERRERA BEUTLER, Washington HENRY CUELLAR, Texas DAVID G. VALADAO, California CHELLIE PINGREE, Maine ANDY HARRIS, Maryland MIKE QUIGLEY, Illinois MARTHA ROBY, Alabama DEREK KILMER, Washington MARK E. AMODEI, Nevada CHRIS STEWART, Utah E. SCOTT RIGELL, Virginia DAVID W. JOLLY, Florida DAVID YOUNG, Iowa EVAN H. JENKINS, West Virginia STEVEN M. PALAZZO, Mississippi William E. Smith, Clerk and Staff Director (ii) AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND RELATED AGENCIES APPROPRIATIONS FOR 2017 ---------- Thursday, February 25, 2016. FOOD AND DRUG ADMINISTRATION WITNESSES STEPHEN OSTROFF, M.D., ACTING COMMISSIONER, FOOD AND DRUG ADMINISTRATION JAY TYLER, CHIEF FINANCIAL OFFICER, FOOD AND DRUG ADMINISTRATION Mr. Aderholt. Well, good morning. The subcommittee will come to order. I want to welcome all of you to today's hearing, and the intent, of course, of the hearing is to examine the Food and Drug administration's fiscal year 2017 budget request. And in addition to this committee's review of the budget request, the Members of the committee will seek information on the agency's use of current and past resources, including activities, policies, practices supported with appropriated funds. Our witness today is Acting Commissioner of the Food and Drug administration, Dr. Stephen Ostroff. He is joined by Mr. Jay Tyler, the Chief Financial Officer for FDA. I would note that we are pleased to see the Senate confirmation of Dr. Califf yesterday in the permanent position of the FDA Commissioner. During the transition period between Dr. Ostroff and Dr. Califf, I believe we are in good hands today. So thank you all, both you and Mr. Tyler, for being here today and for your presence. As I mentioned, in previous hearings we have established basically four primary goals for this subcommittee as we progress through the fiscal year 2017 hearings, which we are right in the middle of now. The first goal is increasing oversight, efficiency, and the need for effective outcomes. The second would be keeping rural American vibrant. Number 3 would be supporting American farmers, rankers and producers. And No. 4, protecting the health of people, plants, and animals. Given the myriad responsibilities assigned to the FDA by the Congress, there is a constant need for this body to increase our oversight. Our oversight not only covers the expenditure of resources, but also the corresponding activities, the efficiency in delivering those services, and the degree in which the agency delivered or failed to deliver meaningful outcomes. At the end of the day, our constituents demand that limited resources are spent wisely. For example, the fiscal year 2016 Omnibus bill provided FDA's full funding request to continue the implementation of the Food Safety Modernization Act, which we call FSMA. Your fiscal year 2017 budget request proposes a total increase of $212 million for food safety, yet the committee is still in need of the proper accounting for food safety expenditures for the current and past years. While you have provided us with more detail on your spending plans than in the past, we will continue to require regular updates on your use of these funds and what you are accomplishing. FDA's fiscal year 2017 request includes a modest increase in budget authority, and that actually more closely reflects the debt crisis that is facing our nation. Our Nation is over $19 trillion in debt, as most of us know, and it requires us to trim government spending where we can and to decrease the growth of government at a minimum. FDA is proposing discretionary increase of $31.2 million and reductions in the amount of $21.1 million, for a net increase of $10.1 million. It is worth noting that the total resources in this request represent a 21 percent increase above the fiscal year 2012 budget request. In looking at the proposed user fees, FDA is, again, proposing to collect and spend $202 million for new, unauthorized programs. While there is a time and certainly there is a place for user fees as demonstrated by the success of most of FDA's user fee programs, FDA provides no evidence to demonstrate that current efforts are effective in assisting the intended beneficiaries and that the resources requested for the new user fees will actually result in better service for the customers. In addition to the President's fiscal year 2017 budget request, Congress received the administration's request for approximately $1.9 billion in emergency appropriations in response to the spread of the Zika virus. I want to echo the remarks made by Chairman Rogers of this committee and also two of our other subcommittee chairmen that the most expeditious way to respond to the disease is by the use of unobligated funds that were previously provided for the Ebola response in fiscal year 2015. In fact, in January of 2016, FDA had far more unobligated funds left over from the Ebola appropriation than the total request for the Zika virus. This is yet another example of a situation in which the administration should utilize existing resources rather than coming to Congress for more money, which in the end compounds the nation's debt. Another goal for the subcommittee is protecting the health of people, plants, and animals, which is also the main mission of the Food and Drug administration. The United States has one of the safest medical product markets and one of the safest, most highly productive food and agriculture sectors in the entire world. The United States Government plays a unique role in ensuring that all of these sectors maintain their current vitality. We must continue to explore ways in which the FDA can fulfill its public health mission successfully, but do so in a way that gives regulated industry clarity on the rules of the road and they are not burdened with unnecessary regulation. Since FDA is informing Congress that the food safety, the medical product safety, and rent and infrastructure needs are the highest priorities this year, it is incumbent upon FDA to prove to Congress that such priorities cannot be funded out of the base resources, first and foremost. In addition, the agency must demonstrate that all efforts have been made to review current operations for any additional savings and efficiencies. Lastly, the subcommittee and the American public need assurance that the agency is coordinating and not duplicating other efforts across Health and Human Services, USDA, and elsewhere to ensure the most efficient means of accomplishing its mission. We hope to touch upon each and all of these issues more in detail as we move forward with the questioning portion of this hearing. The Food and Drug administration must also tighten controls for areas subject to large expenditures which have unclear results and where performance tasks or milestones are not met, such as information technology. In closing, I want to note that the work you and your colleagues perform at the Food and Drug administration touches the lives of every American, and we appreciate your dedicated service. Without question, you have no shortage of work to do at FDA, and there are many challenges facing your agency, from food safety, to opioid abuse, to antimicrobial resistance, and that is just to name a few. We look forward to hearing from you today as we proceed with the remainder of this hearing and about your funding proposals for the future and for what you are doing with available resources in the current year. So with that, let me ask the Ranking Member of this subcommittee, Mr. Farr, for any opening remarks that he might have at this time. Mr. Farr. Well, thank you very much, Mr. Chairman. And, Dr. Ostroff, before the new Commissioner takes hold, I just want to thank you for your public service and for your standing in and doing a great job. Dr. Ostroff. Thank you. Mr. Farr. I really appreciate it. This is my last year in Congress and on this committee, and this is one of the areas I think when I came to Congress I knew very little about the FDA, and it has probably been one of the most fascinating agencies that I have had to deal with because I find that the responsibility you have just touches all aspects of our life. I had no idea how broad the responsibility was, not only from food safety. I always thought the Department of Agriculture did food safety, but it is FDA that does food safety, except for poultry and meat and eggs. Drug development, everything that is out there, all those damn television ads on drugs, all of that has to go through you; even pet food standards and sun screens and beyond. So the mission you have is huge, and I think that unfortunately, despite what the Chairman says, I think we give you awfully short shrift. We ask a lot and give you very little money to do it; big mission, small budget. So I would like to explore that today, among others, and I really appreciate your help in helping us understand the interplay between the FDA mission and available resources because I think, again, we are asking a lot without a lot of money to be able to do it, and I would like to learn something about the backlog. So I am ready to move into the questions, Mr. Chairman. Mr. Aderholt. Sounds good. Dr. Ostroff, also I want to say thank you for your work. In your interim time at FDA, you have been certainly a pleasure to work with and always very reachable, and thank you for also reaching out to me on many occasions as you have done your work over there. So without objection, your entire written testimony will be included in the record, and we will recognize you for any statements that you want to make before we go into the question portion of the hearing. Dr. Ostroff. Well, thank you so very much, Chairman Aderholt and Ranking Member Farr and other Members of the committee. As you know, for almost all of the past year since our last budget hearing in March of 2015, I have served as Acting Commissioner of the Food and Drug administration, and I can tell you I was also very happy at the confirmation of Dr. Califf yesterday, as you mentioned, as the Commissioner of Food and Drugs. I have had the pleasure to work with Rob for the past year and think his selection is really quite an inspired choice, and I am thrilled with the bipartisan show of support for him and for the agency, and I very much look forward to handing over the baton to him in the not too distant future. So this particular testimony and hearing will likely be one of my last acts as the Acting Commissioner, and I would very much like to thank you for giving me the opportunity appear before you today to discuss the President's fiscal year 2017 budget request for FDA. Words cannot express how extremely proud and grateful I am to have had the distinct honor of being here today to represent the thousands of talented and dedicated men and women at FDA and the tremendous work that they do. This work occurs day in and day out in service to the health and wellbeing of the American people. It is an exceptional group of people, including the other FDA leadership that is sitting behind me. I would also like to very much thank the subcommittee for its past support of FDA, most recently through our fiscal year 2016 appropriation, which is so very helpful in meeting the demands of our increasingly complex and diverse mission at home and abroad. Your commitment recognizes and reaffirms FDA's critical and dynamic role in protecting and promoting the public health by ensuring that the food we eat is safe and nutritious, our medical products are safe and effective, and that we can reduce the harms associated with tobacco. Our mutual goal is that every American has full confidence in the products that we regulate and our ability to respond to new responsibilities, new challenges, new science and new opportunities both at home and abroad. After all, there are few other federal agencies, as you mentioned, that touch the lives of Americans every day to the degree that FDA's do. It is a great responsibility and it is one that we take very seriously and we never forget. Our accomplishments over the past year have been as substantial and as impactful as at any other time in FDA's recent history. My written testimony includes a number of examples of our achievements across the range of the products that we regulate, and I cannot possibly cover them all in my oral statement. Suffice it to say that we have continued without missing a step to make a substantial and positive difference in the lives of those that we serve, even during a period of transition in the leadership of the agency. Among the accomplishments that I will highlight is that we had another banner year in the approval of new drugs and biologics for therapeutic indications that range from the rarest diseases to the most common diseases to the most severe diseases. Some of these drugs have absolutely transformed the way that these diseases are treated and provide options that were not previously available to those who had little to no hope of having their diseases addressed. We accomplished this by being able to take advantage of innovations in the regulatory process that allow us to get these therapies to patients in America faster than any of our regulatory counterparts, and we accomplish that without sacrificing our high standards that sponsors be required to demonstrate safety and efficacy of the products that we review and approve. Last year we also approved the first biosimilar in the agency's history. We continue to take action to identify and protect the public from poor quality compounded drugs. We have taken major steps to address the growing problem of antibiotic resistance in human and agricultural settings, and last year we brought all uses of antibiotics in food animals under the supervision of veterinarians, and at the end of this year growth promotion indications will be voluntarily removed from the labels of all medically important antibiotics used in veterinary medicine. In the last year, we made major contributions to the response to international health threats like Ebola in West Africa, and today we are working very diligently with our federal partners and outside stakeholders to address the recently recognized threat from the mosquito transmitted Zika virus. And in recognition of the growing consequences of the opioid epidemic, a problem which has touched the lives of far too many families and affects nearly every community in this country, we recently completed a comprehensive review of FDA's activities and announced a far-reaching action plan to ensure that the way we review, approve and oversee these drugs contributes to ending this crisis. It is a plan that focuses on actions that can help us positively impact the epidemic while still providing patients in pain access to effective relief. It includes such actions as considering ways to widen access to antidotes to treat overdose; encouraging development of better products with abuse deterrent characteristics, including generics; strengthening and expanding warnings; expanding input through wider use of advisory committees and tapping the expertise of the National Academy of Sciences; requiring additional studies by manufacturers of opioids to fill very critical scientific gaps in our understanding of these products; considering expansion of the REMS for this class; and encouraging development of innovative medication assisted treatment for dependents. It also includes working with and supporting partners inside and outside of government to assure a multi-pronged approach to this problem. FDA's budget in support of our responsibilities remains a bargain for every American taxpayer. While the products that we regulate account for more than 20 percent of every U.S. consumer dollar, individual Americans pay only two cents per day to support our oversight and ensure that these products work as they are supposed to and are safe. It is a small price for lifesaving medicines and for medical devices, for confidence in medical products that are relied on daily, and for a food supply that is among the most diverse and safest in the world. FDA's 2017 budget request was constructed to ensure that we maintain this level of success while recognizing the tough fiscal environment by focusing targeted increases on the most urgent needs. The total budget request for fiscal year 2017 is $5.1 billion, which represents an overall increase of eight percent, or $358.3 million, compared to the fiscal year 2016 enacted level. This includes $2.7 billion for budget authority, a very modest increase of one-half of one percent, or $14.6 million, compared to the fiscal year 2017 enacted level; $2.3 billion in user fees, an increase of 12 percent, or $268.7 million compared to the fiscal year 2016 enacted level; and $75 million in new mandatory funding to support the White House Moon Shot to Cure Cancer Initiative. The biggest area of increase, as it was in 2016, is in food safety, specifically continued support to implementing the Food Safety Modernization Act, or FSMA. The fiscal year 2017 budget requests an increase of $211.6 million above the fiscal year 2016 enacted. This includes an increase of one percent, or $18.4 million in budget authority, compared to fiscal year 2016, and an increase of $193.2 million in user fees compared to the fiscal year 2016 enacted. Within the overall food safety budget there will be $25.3 million in new funds to improve food and feed safety through the continued implementation of FSMA. Congress enacted FSMA to recognize the very significant changes that have occurred over the years in the food supply, including its globalization and the changing nature of food borne disease threats themselves. FSMA quite simply fundamentally transforms our approach to food safety from a reactive system to one that recognizes that food borne illness can and should be prevented and implements the necessary steps to accomplish that goal regardless of where the food is grown or produced. Last year saw the finalization of five of the seven foundational rules for FSMA after several years of work by FDA and input from many, many stakeholders, and the last two rules are set to become final in March and May of this year. Now that the rules are final, this is a make or break year for FSMA. Now the rubber hits the road. Without full funding, FDA will be unable to complete putting in place the necessary program, standards and oversight that will bring FSMA from a concept to reality and allow American consumers and industry to begin to reap the benefits that it was designed to accomplish. The additional funding will help implement the Produce Safety Rule and provide states with the resources to help farmers prepare for it, support our enforcement efforts, and further implement the Foreign Supplier Verification Program which helps assure an even playing field for domestic and foreign products. In the area of medical product safety and innovation this year's request represents an increase of $116.2 million above fiscal year 2016 enacted. We are requesting an increase of 0.2 percent, or $3.2 million in budget authority compared to fiscal year 2016, and an increase of three percent, or $38 million in user fees compared to fiscal year 2016. In addition, there is the $75 million that was previously mentioned in new mandatory funding for the Cancer Moon shot. Our focus is on five priorities: leveraging real world data on medical devices through the National Medical Device Evaluation System; continuing to support the President's Precision Medicine Initiative; improving the safety of compounded drugs and combatting antibiotic resistant bacteria; supporting animal drug and medical device review; and harnessing the power of innovation to bring a new generation of cancer diagnostics and treatments to market. Let me just end my opening statement by once again sincerely thanking the subcommittee on behalf of our entire workforce for your support, your advice, and your assistance over the last year. I can only say that it has been especially helpful to me. This job is a tough one, as you mentioned, and has its share of challenges, but it is without question one of the most rewarding opportunities that I have ever had in my long public health career. Especially gratifying is the knowledge that our actions and the decisions that we have made help people across the country each and every day, and in the end that is what makes it worthwhile. I want to thank you for allowing me to be here today to discuss this year's budget and how it helps FDA meet its public health responsibilities. Coming at a time of enormous change, this budget is a modest request to help us meet the challenges of globalization, embrace groundbreaking and potentially lifesaving scientific and technological advances, and continue to provide American consumers and patients with the confidence in the people that work to protect and promote their public health. So with that I will end my statement, and I look forward to being able to answer your questions. [The information follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Aderholt. Thank you, Dr. Ostroff, for your testimony. On a lighter note, before we get into some of the issues, you mentioned about the transition between you and the new Commissioner, Dr. Califf, who has been confirmed. When does that transition actually take place officially? Dr. Ostroff. The official time and day has not yet been established. Mr. Aderholt. OK. That is what I wondered, if a time had been set. But regardless, as I said in my earlier testimony, we are in good hands either way. Dr. Ostroff. Well, thank you. Mr. Aderholt. We look forward to working with him, but certainly we have enjoyed working with you, and as you continue in this role, we know you will do a tremendous job. Dr. Ostroff. I am not leaving. GE FOOD LABELING Mr. Aderholt. Good. My first question deals with the GMO safety labeling. When Secretary Vilsack testified in front of this subcommittee two weeks ago, we touched upon two critical issues relating to GMO foods. As background, Secretary Vilsack recently brought the two major sides together, those for mandatory labeling and those that are against mandatory labeling, and his attempt was to try to forge a compromise on the matter. Over the past few years each side has shown great passion, as I am sure you well know, about their positions, and the current state of things, the GMO labeling debate has created much confusion on the part of consumers. My question would be, and just to the bottom line: does FDA believe that GMO products are safe for consumers? Dr. Ostroff. Well, thank you for that question, and I would totally agree with you that this is a very complicated issue. There is a great deal of passion on both sides of this debate, and certainly FDA has a very important role in this area. So you know, we have assessed from a scientific perspective genetically engineered foods, and as we have looked at these foods, from a scientific perspective, we have not seen differences in the food items in comparison to those which have not used genetically engineered production methods. And so as a result of that, and again, our criteria for issues related to labeling have to do with being able to provide the consumer material facts that are important from the perspective of their health, and so we are very supportive of a voluntary approach to labeling, and as we put out in the guidance that we put out in November 2015. Mr. Aderholt. Can you give us some reasons why FDA decided not to mandate labeling and the agency decision to approve the settlement? Dr. Ostroff. So, again, our perspective is that we believe that it is very important that consumers have information about the material that is actually in the foods themselves rather than the methods in which those foods are produced, and so that has been a very consistent position that we have had now for many, many years as it relates to whether something is genetically engineered, whether it is produced by free range or other types. You know, that is a method of production rather than a material fact regarding the material that is actually in the product. And so that has been the basis for us to determine that while we believe that it is very important for consumers to have information, that it does not represent a material fact. Mr. Aderholt. Vermont's mandatory labeling law goes into effect in July, and Secretary Vilsack was quoted yesterday as saying that it will, ``create chaotic circumstances,'' for the food and agriculture industry. As the lead agency for the labeling of 80 percent of the food supply, can FDA support preemption of menu labeling and not preemption for GMO labeling, especially if we end up with a patchwork of laws covering GMOs? Dr. Ostroff. So thank you for that question. We have not taken a position on those particular laws. Mr. Aderholt. What would be the implications for consumers and the farmers and the food manufacturers out there with this? Dr. Ostroff. Well, again, we can only look at it from the perspective of the guidance that we have previously issued in November of 2015, and again, we feel that the appropriate approach in that guidance, which is voluntary labeling, it is voluntary labeling whether there is genetically engineered material in a particular product, as well as whether or not there is no genetically engineered material in a product, is a very reasonable way to go. Mr. Aderholt. Well, regarding GMO products, I understand the information is important to consumers, and I certainly respect that. But if GMO products are safe, then my question would be: why are FDA or even sister agencies not doing more to educate the consumers that these products are perfectly safe? I am concerned, and I think many are concerned that some parts of the administration have not done enough to get in front of this debate and really use the influence and the information that you have to assure the public there is nothing to fear about GMO products, which as you know and as you have said have been deemed safe for decades. So I would hope that would be something that the agencies and sister agencies could be more engaged with, and to assure the public if they are so concerned. Dr. Ostroff. Yes. I think one other thing just to mention, as you know, the guidance that was put out in November 2015 was draft guidance, and obviously there were many comments that have come in, and we continue to review those comments. And certainly we will take that information into consideration as we work for the guidance to be finalized. Mr. Aderholt. Yes. Well, the take-away, like I said, we would just encourage you to try to communicate that so the public will have an assurance that there are no safety concerns with GMOs. Mr. Farr. Mr. Farr. Thank you, Mr. Chairman, and I appreciate that line of questioning. I think this is something where we have all, including industry and Secretary Vilsack, ought to be taking the lead in this. But what I do not understand in your answer to his question is that you are protecting the label for medical facts, but then you are going to allow it to be voluntarily adjusted. I mean, how is that protecting the label? Dr. Ostroff. Well, again, there are certain facts that we feel are necessary to inform consumers of the content of the actual product itself. There are many additional pieces of information that could be included in the product labeling that would not be required to be present, but on a voluntary basis to provide additional information to consumers. We would have no problem with that. Mr. Farr. Well, I guess that would be like the milk cartons that say that these cows are not treated with whatever. That is voluntary among the industry, right? Dr. Ostroff. Right. I mean, it is the same concept. Mr. Farr. It does not speak to the health of the milk. Dr. Ostroff. Right. It is the same concept, which is that it has to do with production methods and not the content of the product itself. Mr. Farr. Well, Mr. Chairman, I hope sometime we just have a separate hearing on this because I know states, and California included, who are doing a statewide initiatives on this, and here we are. I mean, this is the crown jewel of labeling. You know, if this is going to be a whole new initiative that everybody decides, each state, about how they are going to label products in their state, I think it is going to create tremendous confusion and lose confidence of the consumer. BUDGET Anyway, I wanted to get back to my original comment about how I think your agency has been asked to do a lot and been given very little resources to do it. I wondered if you are maybe given too big of a mission and too small of a budget. Can you tell me what are some of the tasks that might get short shrift because of the lack of adequate funding? Can you name one or two programs where you wished you had more funds to do a better job? Dr. Ostroff. Well, what I will say, Congressman, is that we are very supportive of the fiscal year 2017 budget request, and we believe that the request from the administration will allow us to continue the work that we have done, especially in areas that we have been especially successful, while in certain areas that are our greatest priorities being able to in very targeted fashion apply additional resources. Mr. Farr. Examples? Dr. Ostroff. So, again, within the budget our priority requests are in the areas of being able to continue to implement the Food Safety Modernization Act, as I mentioned; that this, for us, is really a very critical time period and that we are moving from developing the rules and regulations into implementation. And so there are great expectations. PRODUCE Mr. Farr. Well, I really appreciate it because Congresswoman Pingree and myself are very involved in specialty crops, which are essentially fresh vegetables, and my district is known as the salad bowl capital of the world, and we grow something like 70 percent of all the lettuce in the United States. There is no kill step in them. You do not cook lettuce. So the food safety requirements that these farmers have adopted in specialty foods are really keen. California invented this with the leafy green marketing order. What we are concerned about now is that there is going to be a new set of regulations and a whole bunch of bureaucracy that farmers are going to have to fill out in order to meet the Federal standards. You talked about having enough money to implement the program and to prepare the farmers. Are you going to put the money in the states and really make sure that this is integrated with what is going on in the states so that we do not have to have another bunch of paperwork and information? Dr. Ostroff. The short answer is yes. You know, one of the major tenets of our development of the regulations related to the Food Safety Modernization Act is this concept of the integrated food safety system. The integrated food safety system means partnerships at the federal level, at the state level and at the local level, and in addition, partnerships with industry and partnerships with all of the other stakeholders that have a role in assuring food safety. And so we have developed these regulations with a great deal of discussion with our state counterparts. We fully expect---- Mr. Farr. Well, for example, in California which already has a program in place, would you just absorb that as being adequate? Dr. Ostroff. So, the rules that were developed for FSMA were done in a collaborative fashion with the states to assure that there is no duplication of efforts. In addition to that, a very critical component of what we are doing with the resources that we have obtained, particularly the 2016 resources and, of course, part of the request for 2017, is to make sure that we can provide support to all of the states to be the front line interface with farmers and with the other small producers that are a critical part of the food safety system. So we do not look at this as being duplicative at all. Mr. Farr. Would it cost them any more money? Dr. Ostroff. So when you say will it cost them, are you talking the states or are you talking the farmers? Mr. Farr. Yes. Will the states and farmers have to pay more, like inspection fees for restaurants and things like that? Dr. Ostroff. Well, you know, to a certain degree it depends on where an individual producer happens to be. Very often virtually everything that is being required under FSMA, many of the farmers particularly in your area have a tremendous head start in implementing many of the things that are in FSMA, and so they should not be particularly impacted by much of what is particularly the Produce Safety Rule. Mr. Farr. Thank you. Mr. Aderholt. Dr. Harris. LABORATORY DEVELOPED TESTS Mr. Harris. Thank you very much, and good to see you again. I have a couple of issues and maybe we will get to some others in a second round, but I had a visit from some of the scientists up at Johns Hopkins, two pathologists who work in one of the laboratories, and they are very concerned about the laboratory developed test regulation, and they made a fairly cogent case to me that they are already regulated. Most laboratories are regulated by HHS under CMS, under CLIA, and what the FDA is about to bite off is probably a whole lot more than it can chew because there are by their estimate could be more than 50,000 laboratory developed tests out there. And as you know, they mostly have to be treated uniquely. That is just a whole lot. Can you just explain to me why the CLIA mechanism for regulation just will not do for these laboratory regulated tests and why you think a second level of regulation will not impede the access of patients, especially in oncology treatment, to sometimes lifesaving therapies? Dr. Ostroff. Thanks for that question. This is an area that I have actually spent a great deal of time looking at over the last few years not only while I have been the Acting Commissioner, but also in my previous role as the Chief Scientist. I think that there are a couple of things to point out. One of them is that FDA has always had the regulatory authority to regulate laboratory developed tests. However, since the 1970s we have always used enforcement discretion in this area, but I think one of the things that is really important to point out is that like so many of the areas that we regulate, there have been very significant changes in the area of laboratory developed tests from 1976 to the present. It has grown considerably. The complexity of the tests that are being done has grown considerably, and in some instances, and we published a report last fall where we detailed circumstances where there are significant problems with the quality of laboratory developed tests, particularly laboratory developed tests in circumstances where specimens are coming in from all over the country. It is a very different paradigm than the paradigm that in general has grown up in laboratory developed tests where these were tests that were performed in one laboratory for use directly in the institution in which the laboratory was affiliated, and there is a very substantial change. And from the standpoint of the patients themselves, they are not aware of whether or not something is being run as a laboratory developed test or whether it is a commercially available test that has been assessed by FDA for the diagnostic accuracy and the clinical validity of that readout. So that is part of the reason that we have embarked on this pathway to bring laboratory developed tests under our review. However, we have embarked upon this in a very cautious way. We did put out draft guidance approximately a year and a half ago, and as you might imagine, we have gotten a great deal of comments. Dr. Harris. Oh, I got those comments yesterday. I got an earful, and I have other questions. So I will just leave it at this. There is a great concern with me about this. Dr. Ostroff. But the other thing that I would say, you know, regarding the role of CLIA, we are in close partnership with CMS that oversees CLIA, and I guess the way that I would describe it is that our role has to do with the quality of the test itself, and CLIA is largely devoted to the systems that are in place to actually run the test rather than assessing the quality and the interpretation of that test. And so we view our role and CLIA's role as being complementary. You know, there have been hearings in which CMS has testified and indicated that they do not feel that they have the necessary technical expertise to actually be able to review the test itself for diagnostic accuracy. Dr. Harris. Again, my time is running out, but I will get around to it in the second round. That is true. They do not, but you know, all of these tests, and you can correct me if I am wrong, they are all ordered by physicians or, you know, advanced health professionals; is that right? Dr. Ostroff. Yes. Dr. Harris. Sure. So they are actually ordered by someone who might actually have the training and the certification and documentation and degrees and all the rest to be able to make that decision. And now what I see is FDA stepping in and making what traditionally has almost been a practice of medicine decision. I really do feel that way. I think that this is too bad because as we embark on a new cancer initiative, we are about to throw a huge regulatory roadblock and not all laboratory developed tests deal with cancer, but a large number of the complex ones do. We are about to throw a huge regulatory roadblock in the way. I yield back. Mr. Aderholt. All right. Ms. Pingree. Ms. Pingree. Thank you very much, Mr. Chair. Thank you for being here today and for the work that you have been doing and I know you will continue to do in spite of the changes going on, and we will look forward to working with the new leader of the organization. FSMA RULES But I want to follow up a little bit on what the Ranking Member said, and I have another question. So I will just give you all my thoughts and will let you answer them. We can follow up in writing. But just on the FSMA rules, I appreciate the Ranking Member bringing up many of the concerns that people have. We have worked very closely with you, and we appreciate Mr. Taylor coming to Maine. I know you have really focused over the last few years on some of the impacts that it is going to have with farmers who will be newly introduced to this. Mr. Farr talked about the fact that, some of the farmers that he works with are very large scale. They have already implemented many of these safety procedures, but in my region of the country we are going to have a lot of new farmers affected by it. So just a couple of things. I want to say that in terms of this national integrated food safety system that stakeholders will have a chance to provide some input on the plans. At some point I would just like to see a record and a timeline for the record that tells us what the overview of that will be and how it will be implemented. And secondly, I know you are thinking about and there are some increases in the budget about how the training process will be, but you can imagine there is tremendous confusion and great concern that this is going to be a big challenge, particularly with small and medium size farmers who have not been experienced in this procedure before and a lot of confusion about who qualifies and who is required to do what. So on the amount of training money available particularly going to the states, we have heard from the National Association of State Departments of Agriculture that there is not sufficient funding. So, again, I know there is increased funding, and I know you are thinking about directing a lot of it to the states, but I just wanted to reiterate that that is one of the continuing concerns as we get into the implementation phase. We care deeply about food safety, of course, and that has been a big mission of Congress to move forward on that. But on the reverse of it, we do not want it to be this cumbersome bureaucracy that farmers cannot figure out or that, frankly, reduces some of the ability of farmers who have moved into new markets and are really having great success with direct to consumer and farmers' markets and a whole variety of new marketing techniques around the country in everyone's district. So we do not want to see that getting in the way. OPIOIDS So I am just going to throw that out there. The real question I want to get to, because I know we will have a chance to follow up on that, is an issue that concerns everyone on this committee. I just came from another hearing on this topic, and that is the opioid crisis, and I know you are very engaged in that and working on plans to deal with it. And we have been appreciative of reading some of the things that the Department is doing. Obviously the President is making it an important initiative. I am sure there is not a state here that has not got their own long list of stories about what a challenge this is. And I just want to talk about one little part of it. In thinking about what the FDA can do to improve prescribing practices, expanding risk evaluation and mitigation strategy requirements for the immediate release of opioids, I know that the Department has called the development of non- pharmacological approaches to pain an urgent priority. So I just want to hear: do you think that there is a lack of safe and effective alternative treatments for chronic pain? And, if so, can you elaborate on some of the efforts underway in collaboration with the NIH and industry stakeholders to fill that need? And would the FDA consider emphasizing non-pharmacological treatment options in the continuing medical education component of the risk evaluation and mitigation strategy? It just seems like that is a good opportunity here available to us. Dr. Ostroff. Those are a lot of points that you raise. Ms. Pingree. It is a lot to answer in a minute, I know. Dr. Ostroff. What I am going to try to do at least let me just touch upon the first issue that you raised because one of the ways that we have developed and one of the sort of central points of FSMA is to educate while we regulate, and I think that that is very important. In other venues we have also said educate first and regulate second, but they actually do go hand in hand. And so we are in full agreement with you that it is really, really critical that we be able to develop the necessary educational programs down to the farm level and also for the small producer so that they have a full understanding of what they are supposed to do because it is much more important that we come there and be able to say, ``You know, you are doing it right,'' rather than to come there and say, ``Uh-oh, you did not do it right.'' Ms. Pingree. Absolutely. Dr. Ostroff. So we think that that would be a win-win for virtually everybody, and it has been from the very beginning one of our priorities. In the area of opioids, I think that you mentioned a number of things. We have taken all of those issues into consideration. You know, if you were to distill the action plan that we put out a few weeks ago, I would put it into three different areas. One of them is to reduce abuse. The second one is to save lives. And the third one is to facilitate treatment and recovery. And so that action plan contains items in each of those areas. Obviously one of the ways to reduce abuse is to minimize the use of opioids when it is not necessary to use them, and obviously we have worked very collaboratively with our colleagues at the Centers for Disease Control and Prevention and their opioid prescribing guidelines. You may know I worked there for a long time. So I know these folks quite well, and there is a very critical role for being able to use other approaches for pain management that do not necessarily involve the use of opioids. They should not be necessarily the first thing that you turn to. And there is a very important research need to be able to develop more alternatives to opioids that would be able to address the needs of patients. Ms. Pingree. Thank you. I have gone over my time. I appreciate your coming. Mr. Aderholt. Mr. Rooney. Mr. Rooney. Thank you, Mr. Chairman. I think one of the things you could start with or one of the agencies could start with is: this fall my son broke his nose playing football, and we went to the emergency room to have it reset, and as we left, they gave us a prescription for Percocet. He is 13. Dr. Ostroff. It is really unfortunate. We hear that a lot. Mr. Rooney. Yes. I mean, I did not have that when I got hurt playing football when I was younger. It was, you know, take some Advil and suck it up. TOBACCO DEEMING But anyway, I was shocked. I was shocked, but I am going to switch subjects if I could and talk about tobacco. I want to talk about the deeming regulations and the proposed rule to deem e-cigarettes and cigars under the jurisdiction of the Center for Tobacco Products. The FDA estimates a number of pre-market tobacco applications that the FDA expects to receive is 27, one for cigars and pipes and the rest, the remaining 25 for vapor products. Congress statutorily mandated that the tobacco industry, including cigar manufacturers and importers, pay a user fee to fund the Center for Tobacco Products. Each entity share was determined by how much each paid into that tobacco buyout. Did you consult with the USDA about the number of cigar manufacturers and importers that participated in that tobacco buyout to determine the number of applications the FDA would receive annually? And did you consult with the Alcohol and Tobacco Tax and Trade Bureau over how many cigar companies would have registered with them? Dr. Ostroff. If you might indulge me, Mitch Zeller, who runs the Center for Tobacco Products, is just behind me and since he was very heavily involved in the development of the proposed deeming rule at the time that I was not, I will let him at least answer that particular question. Mr. Rooney. Thank you. Mr. Zeller. My name is Mitch Zeller. I am Director of the Center for---- Mr. Aderholt. Hold on just a second. We need to just get unanimous consent to allow the testimony. Is there any objection? [No response.] Mr. Aderholt. Proceed on. Mr. Zeller. My name is Mitch Zeller, and I am Director of the Center for Tobacco Products at FDA. Consultation with USDA, in addition to a number of other sources of input, went into the calculations that were in the proposed rule. I would say in response to the proposed rule, we received a number of comments from industry and others on that, and unfortunately I cannot talk about what is in the final rule, but we received a lot of comment on the numbers. The numbers in the proposed rule are our best assessment at the time. We have taken all of the comments into consideration that we received on this, and when the final rule is published, you will be able to see revised numbers principally based upon the input that we received as the system is supposed to work through the comment and rulemaking process. Mr. Rooney. OK. I do not know if this is also for you, but industry analysts and trackers estimate the sale of e- cigarettes in 2015 were more than three billion, and vapor shops sell more SKUs than obviously we can probably count. And in the 9 years since the February 15, 2007, the existing predicate date, tens of thousands of cigars have been introduced to the market. Given that information, do you think the regulation put out to deem electronic cigarettes and tobacco products underestimates the number of pre-market tobacco applications that manufacturers will have to file? Dr. Ostroff. Again, there were numbers that were included in the proposed deeming rule. As you are probably aware, we received an extraordinary number of comments based on the proposed rule, more than 135,000 comments that we had to go through as we worked towards finalizing the deeming rule, and so you know, I cannot discuss what might be in the final version of this, but we have taken all of those comments into consideration. Mr. Rooney. OK. Thank you, Mr. Chairman. I yield back. Mr. Aderholt. Mr. Bishop. Mr. Bishop. Thank you very much, Mr. Chairman. I apologize for my delinquency. I was at another hearing going on at the same time, and I was required to stay there until its completion. SECURITY OF FOOD RECORDS Let me welcome the witnesses this morning, and let me get right into FDA security of food records. Some Members of Congress have expressed concerns about whether FDA has taken adequate measures to protect additional trade secrets and confidential information entrusted to the agency as part of its regulatory activities under FSMA. In particular, in August of 2015, the House committee on Energy and Commerce investigated FDA's security of food industry trade secrets and confidential information. The report notes that FSMA expanded FDA access to company records involving sensitive business information of regulated entities in the food industry, and it questioned FDA's ability to protect that information. In February of this year the committee leadership sent a letter to FDA asking for information to allow the committee to determine whether FDA has taken adequate measures to protect additional trade secrets and confidential information entrusted to FDA. Can you describe what actions FDA has taken to respond to these concerns? Dr. Ostroff. What I can say is that I do recall seeing that particular letter and we are in the process of developing a response to that letter. It is an issue that we take quite seriously, and probably what would be best is if we developed a response to that letter and provide the information back to you in greater detail. Mr. Bishop. Thank you. Thank you very much. I look forward to that. FSMA FUNDING State agriculture officials and representatives of the National Association of State Departments of Agriculture have continued to push for full FSMA funding so that front line State officials can prepare for implementation. NASDA further supports the administration's request for an additional $25.3 million in budget authority for FDA food safety and FSMA implementation for fiscal year 2017. Can you describe how FDA's federal staff work with your state partners on the ground to ensure that states have adequate technical support and resources to implement the various regulations under FSMA? And what type of support is provided to the state public health and agricultural agencies to implement FSMA's requirements? And what is the level of financial and technical resources that is provided to states? Dr. Ostroff. Yes. Thank you for that question. So as I mentioned before, we have worked very, very closely with our state counterparts not only in developing the rules and regulations, but also in assuring that, as part of the integrated food safety system, there are appropriate resources to be able to meet the requirements of these regulations, including working very closely with our partners in State Departments of Agriculture. Three have been funds, including funds in fiscal year 2016 and part of the request in fiscal year 2017 are prioritized for being able to provide support to all of our state partners so that they can fulfill the expectations as part of that integrated food safety system for the role that they have, particularly working with the produce, the farms that are producing fruits and vegetables around the country and also the small producers. So we do know that that is a priority. In the funding that we received in fiscal year 2016, $19 million of that funding is specifically to go for support to the states, and in the request that we have in 2017 an additional proportion of the $25.3 million, and I believe the figure is just over $11 million, is also for funding to go to the states. Mr. Bishop. Thank you. CANCER MOONSHOT Let me talk about the Cancer Moon Shot Initiative. February 1st, the White House launched the National Cancer Moon Shot Initiative, and according to the President's budget request, FDA is requesting $75 million in mandatory resources, a direct transfer. As part of the initiative, FDA will establish a virtual Oncology Center of Excellence to streamline collaboration across FDA's human drugs, biologics, and devices and radiological health programs. It has also mentioned collaboration with NIH. Can you explain the collaboration between NIH and FDA, and what are the expected deliverables in fiscal year 2016 and from what resources? Dr. Ostroff. So, again, the Cancer Moon Shot funding is for fiscal year 2017, and then it is for a five-year period. However, having said that, we have a very close working relationship with NIH. As you can imagine, even the development of the Moon Shot itself in collaboration with the administration and, in particular, the Vice President's Office was very, very close. You know, if you think about what is necessary for successful medical product development, what you have is you have the phase of discovery. You have the phase of translating those discoveries into medical products, and then you have the very critical role of FDA, which is bringing those medical products through the approval process so that they can then be used by patients. All of them are critical, and they have to be done hand in glove, and so you know, with all of the discovery work which is being done by NIH and NCI, we have worked very closely with them in developing this particular proposal. As far as the Virtual Center of Excellence is concerned, it is a very important concept because one of the main objectives of the Moon Shot itself is to be able to break down barriers between investigators not only in terms of the way the clinical trials are done and doing large scale clinical trials across multiple institutions, but in addition to that, being able to share data and being able to enhance patient enrollment into the various clinical trials. Just as breaking down those types of barriers that have inhibited some of the work, we need to break down the internal barriers within the FDA. You know, we have work that goes on on medical devices. We have work that goes on within biologics. We have work that goes on within pharmaceutical, and this is an opportunity to bring together all of the individuals across the agency that are working on cancer related activities, whether it is diagnostics or whether it is the therapeutics, and make sure that they are all working in the same direction. Mr. Bishop. I commend you for that, and as a cancer survivor, I certainly appreciate the elimination or the proposed elimination of all of the silos that have slowed down the collaboration. So I wish you the best in that, and any way that we can do to be helpful, please let us know. Dr. Ostroff. Thank you very much. Mr. Aderholt. Mr. Yoder. Mr. Yoder. Thank you, Mr. Chairman. Commissioner, great to have you back before the committee, and we appreciate you sort of being a pinch hitter, to step in and be the Acting Commissioner, and you have done a good job. You have been easy to work with and responsive, and I appreciate that and commend you on your service. Dr. Ostroff. Well, thank you very much. Mr. Yoder. I want to associate my comments with some of the comments my colleagues made, first off, Mr. Bishop's in highlighting the important role the FDA plays as it relates to NIH. We have discussed before the Moon Shot and certainly 21st Century Cures, which I believe had $500 million to support the collaboration in moving these products through the FDA so that we can realize the goals of the NIH. So with the FDA, the NIH does not really ultimately get its drugs to market. So thank you for your work there and your making that part of your mission. I want to associate my comments with Mr. Bishop's comments. I also want to associate myself with Dr. Harris' comments on LDTs and the concerns he raised, and I think he has raised some very legitimate concerns, and I look forward to working with FDA and the Energy and Commerce committee, which is working on this as well, to ensure that we are not overregulating those. Then I also want to associate myself with the comments of Mr. Rooney, and I wanted to maybe follow up where he had left off regarding the predicate date, the February 15, 2007 predicate date. VAPOR PRODUCTS You know how important this predicate date is to Americans because it delineates the two pathways that tobacco products or nicotine derived from tobacco, how those products can come to market. It is a critical date, and a lot of Members of Congress, based upon the question Mr. Rooney was asking you, believe that the predicate date should be moved forward and that it is too early in terms of 2007 and that we need a new date. So I just want to talk to you a little bit about vapor products in particular and how they are impacted by this. You know, there is virtually no ability to find an appropriate predicate date prior to February 2007 for vapor products. They just did not exist on the market at that point. So essentially your agency has substantially, hindered the equivalence pathway to market for this entire class of product. There is no substantial equivalence allowed. It seems backwards, I think, that the FDA would have a higher bar for a product that maintains the public health. And what many, including the government of the United Kingdom, believe is significantly less harmful than a conventional cigarette. Why we are putting a higher bar there does not really make a lot of sense. As the proposed rule is written, once the final rule is published, manufacturers will have two years to submit an application to the FDA for each product, but as Mr. Rooney highlighted, it is not just the branded name product. It is an application for each variant of the product, including flavor, nicotine content, size, FTA. Not changing the predicate date would burden smaller manufacturers, jeopardizing many small businesses. It would take significant resources. Estimates range from 300,000 to 20 million to achieve the necessary requirements. If the higher estimates are correct, only corporations with significant assets and resources will be able to get their products through the application process. The proposed rule has a significant potential to decimate the emerging vapor market, as well as driving many small manufacturers out of business, causing a significant economic impact. Additionally, the regulatory burden on the Center for Tobacco Products will be enormous. As Mr. Rooney highlighted, a number of applications will inundate the center. It could potentially number in the tens of thousands, including both vapor products and cigars. This committee has witnessed the significant problems the Center for Tobacco Products has had with substantial equivalence applications in years past, and so I guess with all of that being discussed and the reasons outlined, would it not be better to move the predicate date forward for newly deemed products and specifically set standards for vapor products? Dr. Ostroff. So there is a lot in your question, obviously. Let me just try. It is difficult to address all of those issues, but what I would like to sort of focus on is a couple of different areas. One of them is that everything is a very difficult balancing act, as you know, and one of the major concerns and the legislation that established the Center for Tobacco Products was particularly to reduce the harms of tobacco in youth, and so much of the work that gets done has to do with youth. And one of the major concerns with e-cigarettes, and there has been a lot of data that has been published, including from the CDC, showing that the rate of use of electronic cigarettes in our youth has tripled over the last couple of years and now exceeds the use of other types of tobacco products, particularly cigarettes, and this is a tremendous concern to see that proportion of our youth initiating the use of e- cigarettes because of the potential public health consequences from that. And so that has been a very, very strong consideration as we developed the proposed rule. And obviously as I mentioned previously, we have huge numbers of comments, and as you can imagine, those comments are on all sides of the issue, and so we have been very carefully considering those comments as we move towards the final rule. In terms of the backlog of substantial equivalence applications, I think it is important to note, and I know that we have had multiple discussions with Chairman Aderholt about this particular question. You know the Center for Tobacco Products itself is only 6 years old, and so they were started from scratch and have significantly expanded based on the resources that are available under the Tobacco Control Act, and so they are in a considerably different place today than they were even three or 4 years ago. And at this point in terms of the backlog of substantial equivalence application, by and large these have been cleared up. Seventy-three percent of all of the SE backlog that we previously had has been resolved as of December 2015, and the vast majority of those that have not been resolved are products that are currently on the market. So right now for new applications that come into FDA, there is no backlog. Mr. Yoder. Well, I appreciate your efforts to try to clear that backlog. I think it will be ultimately greater than maybe we are estimating, and I would just say that having the predicate date in the 2000 year for these products essentially eliminates their ability to use the substantial equivalence route, and I just think that that does not really solve the issue with children using these. And we would be better, I think, working together to specifically set standards for these vapor products and moving that date forward, which would achieve your mission, which I share, which is setting standards here to ensure that these are not getting into the hands of children without totally eliminating the product from consideration because it did not exist before 2007. So I hope in your taking in the comments you will take that into consideration. Dr. Ostroff. Thanks very much. Mr. Yoder. Thanks. Mr. Aderholt. Mr. Palazzo. Mr. Palazzo. Thank you, Mr. Chairman. Dr. Ostroff, thank you for being here today. FOREIGN SEAFOOD The number of U.S. rejections of imported shrimp has skyrocketed. In 2015, we saw the highest level in history of refusals due to banned antibiotics. Foreign organizations and producers of shrimp readily acknowledge the use of banned antibiotics and other chemicals in their ponds. For example, the Vietnamese Association of Seafood Exporters and Producers has issued statements warning as members that continued use of banned antibiotics will result in products being banned from entry into the European Union. So my question is: in light of these record number of shrimp rejections and the ample evidence of widespread use of banned chemicals in foreign shrimp production, why has the FDA not instituted a product specific alert to ensure that all imported shrimp are free of banned chemicals and antibiotics? Dr. Ostroff. Well, as you can imagine, the supply is quite diverse in terms of the locations that these come from, and so we have a system in place where we evaluate every single import line that comes into the country, and we use a risk based approach to actually do inspections and to do sampling of those products. And where we do find problems, we do institute import alerts. And so that is a very critical tool that we use when we do find problems that exist. You know, the idea of doing a wider import alert, you know, would depend on the information that is available, but as I said, seafood safety is a very big priority of ours, and you know, we work very closely through the seafood HACCP, which is a critical component of this, to work with the overseas producers of these products to assure that they understand what is required, and that there is compliance with the seafood HACCP requirements. Mr. Palazzo. Well, I personally do not know who would want to buy shrimp abroad, but you know, America has the best shrimp, and the Gulf of Mexico has even the better shrimp. I will just put it out there, and I represent a district on the Gulf of Mexico, in full disclosure. ARSENIC IN RICE I would like to discuss your agency's ongoing health review of rice and the possible risk associated with rice consumption. Can you give me a status update on this? Dr. Ostroff. So this is an issue that we have devoted a lot of time and attention to. I actually started at FDA two and a half years ago in the role of the Chief Medical Officer on the food side of FDA, and so we were in the process of developing a risk assessment on the issue of arsenic in rice. It is a very complicated issue. We have been working with a number of stakeholders inside and outside of government to be able to finalize that risk assessment and the associated risk management plan. Mr. Palazzo. Does that include domestic rice farmers, I mean, as the stakeholders? Dr. Ostroff. Oh, yes. Mr. Palazzo. You are working with them? Dr. Ostroff. Actually, you know, we have actually visited rice farmers in a number of different states to be able to get firsthand input from them. No question about that. Mr. Palazzo. Where are we with that? Is it still a review process going on? Dr. Ostroff. Yes, it is definitely still in the review process. I can tell you that it is a very high priority of mine, regardless of what role I happen to be in, that we finalized that risk assessment. It is an important thing to do. Mr. Palazzo. Thank you, Dr. Ostroff. If you could, please keep my office informed on it. Dr. Ostroff. Absolutely. Mr. Palazzo. Thank you. Mr. Aderholt. Are you finished? Mr. Palazzo. I yield back. Mr. Aderholt. OK. At this time I would like to recognize the Ranking Member of the full committee on Appropriations, Mrs. Lowey. Mrs. Lowey. I thank you very much, Mr. Chairman, and I apologize, but as you know, Chairman Rogers and I wish we had roller skates. There are about three or four hearings going on at the same time. But this hearing is so very important to me I wanted to be sure that I was able to join you, and I thank you, Dr. Ostroff. I thank you, Jay Tyler. Thank you for being here today. TOBACCO DEEMING I want to focus on the FDA's ability to regulate new tobacco products, including e-cigarettes. Now, according to the CDC and FDA, the use of e-cigarettes has tripled in just one year between 2013 and 2014, and now exceeds youth use of regular cigarettes. You can tell by the tone of my voice, I am horrified by this. Medical studies are clear that nicotine, which is a central ingredient in e-cigarettes, is highly addictive and that nicotine exposure can harm the adolescent brain, cause cognitive impairment, attention deficits and other health issues. The FDA should have the power and the resources to regulate tobacco products, to make sure consumers are aware of the risks and that parents do not believe these products are safe for children to use. The funding level for tobacco review was set many years ago in the Family Smoking Prevention and Tobacco Control Act. I am concerned that once the tobacco regulations are finalized, thousands of tobacco products will have to be reviewed, and that the FDA will struggle to regulate these projects quickly. First, when will you release the final deeming regulations? Will the budget requests adequately provide the FDA with the funds necessary to regulate new tobacco products? Dr. Ostroff. Thank you for your comments, and it is really terrific---- Mrs. Lowey. As you can see, I feel rather strongly. Dr. Ostroff. And you know, if you had been here a few minutes ago when I was having a discussion with Congressman Yoder, I actually used the same statistic that you just quoted. Mrs. Lowey. And I just want to say one of these stores opened in my neighborhood, and I walk by and you see Tooty Fruity and every kind of cute name for these products. Dr. Ostroff. So without question one of the major impetuses, and I do not know if ``impetuses'' or ``impeti'' is the correct term, of developing the deeming rule was specifically for the reason that you cited, which is the potential impact that this has in youth initiation of nicotine use and tobacco products. And so it has been a primary driver as we developed this proposed rule, and as you can imagine, there is a great diversity of opinion from all sides on this particular issue. We received a phenomenal number of comments on the proposed rule that came out previously. And working through those and working through all of the various very technical and difficult issues related to getting the deeming rule finalized has been a priority of mine ever since I took over as the Acting Commissioner. It was a priority for Dr. Hamburg, as you well know, and we are working as hard as we can to be able to get this rule to final. As far as are we prepared for the implementation of the deeming rule when it does go final, we have been working now and we proposed this more than a year and a half ago. Mrs. Lowey. May I ask you how long you have been working on this issue? Dr. Ostroff. So the proposed rule came out in late 2014, and there were large numbers of comments, more than 135,000 comments that were received, and the proposed final rule has gone through interagency clearance and through the White House. We have been working on trying to get all of the aspects of this finalized. I cannot tell you when it will actually be finalized. All I can say to you is that we are as passionate as you are about being able to get this to final. We have been preparing for the workload that it will entail. The Center for Tobacco Products has been evaluating that. They are raring to go, and we hope that as soon as the rule gets final we can get started. Mrs. Lowey. I just want to say that I just find it shocking that these stores are opening up in all of our districts, and there has been no rule out there and nobody publicly evaluating officially as to whether it is safe or not. Dr. Ostroff. Well, that is one of the reasons to put the deeming rule out there and bring these under our regulatory purview as we have with other tobacco products because once that occurs, then we will be in a much better position to understand what is actually in these products. Mrs. Lowey. Well, thank you. SESAME ALLERGEN And do I have time for another questions? Mr. Aderholt. Certainly. Mrs. Lowey. You are very kind. Eight major allergens are required to have a label displaying their inclusion on a list of ingredients on food packaging. This is an issue I worked on many years ago, and I am very pleased about that. People with celiac disease, all kinds of allergies, are really grateful for the work that we all did together. Now, sesame is not one of them even though sesame allergies are estimated to afflict nearly a half a million Americans and growing, making it one of the six or seven most common food allergens. And for consumers with a sesame allergy and parents of children with the allergies, sesame is particularly troublesome because of its derivative ingredients that may not even mention sesame in the ingredients at all. And for these consumers, it is difficult to know what products they can purchase, what they cannot, which could lead to significant harm. The FDA does have the ability under the Food Allergen Labeling and Consumer Protection Act to add new ingredients to the list of major food allergens. Has the FDA considered adding sesame to the list of major food allergens? Dr. Ostroff. So thank you for that question as well, and it is one that I am aware of. It is our understanding that the law itself stipulates the major food allergens, and that FDA itself cannot make changes to the list that is in that particular law. However, it does not mean that we do not have the regulatory authority to address other food allergens. Food allergens are a very important issue, particularly for consumers who need the information to know whether or not they should consume that particular product. It is obviously a material fact, and in some instances the label itself may not contain or may not list sesame as the particular ingredient. It may simply be on there as spice or something like that, and so this is something that we are working on. Mrs. Lowey. Can you tell me what we can expect and how long will it take? Now, I should just share with you my colleague who has been here probably as long as I have, maybe a little longer remember that at one point we did not have labels on food, and it took me five years. I could not get anybody on the other side of the aisle to sponsor the food labeling. Finally Jim Greenwood, and some of you may remember Jim Greenwood, joined me on it, and then it passed on a unanimous vote of the Congress, which made me very pleased. So I never knew about sesame at the time or we would have worked to include that, and signs continues to give us more information. So I just wonder since people are really suffering, getting very ill as a result of this, give me an idea of what it would take and how long would it take to include sesame and if you agree it should be considered one of the food allergens. Dr. Ostroff. Well, again, you know, we are assessing all of the available information so that we can develop a path forward. Mrs. Lowey. How long have you been working on this? Dr. Ostroff. It is certainly not a new issue, and so you know, developing the necessary information to take the appropriate regulatory steps, as you can well imagine, takes some time. So I cannot give you a very specific answer in terms of when our assessment may be completed and when we will move forward. One of the things to know, and thank you, Jay, for reminding me, is that we do have a citizen's petition that has been submitted to us on this specific issue, and so we will have to develop a response to that citizen's petition. Mrs. Lowey. I wish you would get back to me and give me some approximate idea how long it will take. Dr. Ostroff. We certainly will. [The information follows:] Please be assured that the issue of the potential allergenicity of sesame and the citizen petition on sesame labeling are priorities for FDA. The petition contains complex data and information from studies published in the scientific literature. FDA has also received over 350 comments on the petition. FDA will consider the information in the sesame petition and any public comments received, together with the most recent related scientific data, in determining if any changes to the regulations are justified. After completing its review of the petition and reaching a decision, FDA will notify the petitioner concerning its decision to grant or deny the petition, in whole or in part, in accordance with our regulations on citizen petitions (Title 21 of the Code of Federal Regulations, section 10.30). We estimate that we could finish reviewing the information submitted with the sesame petition and in the comments as early as the end of this year. If FDA decides to consider amending the regulations, as the petition has requested, we will need to initiate rulemaking, which will involve a longer process. In addition to evaluating the available relevant science, FDA must analyze the costs and benefits of the potential regulatory change and develop the specific proposed regulatory requirements. To amend the regulations, we must publish a proposed rule or an interim final rule, receive and respond to comments that may be complex and numerous, and then determine whether to publish a final rule. This process takes a significant amount of time and resources. If we need additional information before proposing changes, it may be necessary to publish an advance notice of proposed rulemaking in the Federal Register. This will add to the time and resource requirements. Generally speaking, the rulemaking process is lengthy and complex, and can take several years. Mrs. Lowey. Because I am particularly aware having worked on these issue for a very long time that this saves lives. Dr. Ostroff. Yes. Mrs. Lowey. And saves a great deal of suffering. Thank you, and thank you, Mr. Chairman. Dr. Ostroff. You know, again, there is no question that food allergens present in the food supply is a material fact that needs everyone needs to understand. Mrs. Lowey. Thank you for your work. Mr. Aderholt. Mr. Valadao. Mr. Valadao. Thank you, Chairman. Thank you, Dr. Ostroff, for making some time for us today. A couple comments were made here by Congressmen Yoder and Rooney, and I want to associate myself with those comments, along with the predicate date line of questioning. It is something that I have also been following and am very concerned with as well. HEALTHY LABELING My first question, though, is the FDA has devoted significant resources in the past few years towards rulemaking to update the nutrition facts panel and related food labeling requirements. However, FDA's regulations about nutrient content claims for food have not been updated since the early 1990s and are based on the dietary guidance and science that is now outdated. For example, food such as pastries and pudding cups are now able to be labeled as healthy while foods such as nuts, avocadoes and salmon are not. I understand the FDA is currently considering a request to update the healthy nutrient content claim regulation and to reevaluate all its nutrient claim regulations. Does the FDA intend to reevaluate the nutrient content claim regulations to ensure consistency with current federal dietary guidance? And understanding the rulemaking process takes years, what are the FDA's plans in the upcoming year to ensure that food producers can make truthful statements about the healthfulness of their products without fearing FDA enforcement based on outdated nutrient content claim regulations? Dr. Ostroff. This could well be the shortest answer that I have given so far, and the answer is yes. And so as you know, the new Dietary Guidelines were just recently issued, and we will be looking very closely at the content of the Dietary Guidelines as it pertains to the way products are labeled and the information that is available on those products, particularly around nutrient content claims. And so without question, yes, we will be looking at that. Mr. Valadao. You found that yes a way to make it a little bit longer, did you not? Dr. Ostroff. Yes, yes, yes. Mr. Valadao. So, no, that is obviously a big issue. My district farms quite a bit. Dr. Ostroff. I understand completely, yes. Mr. Valadao. And this has a huge implication obviously on health. When you look at people who are actually mindful of their eating habits, and looking for salmon, looking for nuts, looking for avocadoes are all things that you would think are very healthy. Dr. Ostroff. So we think that those nutrient content claims ought to be in the context of the totality of the information that is in the label. Mr. Valadao. Thank you. SODIUM So as FDA contemplates recommendations to reduce sodium intake, I would like to emphasize the importance that all data and scientific research is considered before making decisions regarding sodium recommendations to the American public. The National Academy of Medicine identified sodium as just one of just four nutrients in need of dietary reference intake review. Additionally, the agency continues to expend resources on sodium reduction when it regularly reports that it lacks the funds needed to focus on issues Congress has asked for it to work on, such as implementing the Food Safety Modernization Act. Can you please comment on why the FDA continues to focus resources on sodium reduction while we have outdated DRI and the FDA lacks the funds to focus on the issues that are currently under Congressional mandate? Dr. Ostroff. So what I will start by saying is that I am a health care provider. I know Dr. Harris is also a health care provider, and we know that one of the most significant contributors to cardiovascular disease, other than tobacco, is the high levels of sodium in the American diet, and doing something about excess sodium consumption has the potential to significantly have a positive impact on cardiovascular disease in this country. There are estimates that the typical American consumes about 3.400 grams of sodium per day. That is far in excess of what the recommendations that are in the Dietary Guidelines and that others have recommended say that they should be, and we feel that rational, voluntary approaches, which I will say many in the industry are already embarked upon, are a very reasonable way to approach this problem in reducing the overall sodium content in the diet because most of this is in products that the consumers do not really have an option of understanding what is there. Mr. Valadao. And then I think I have got time for just one more. STATE COOPERATIVE AGREEMENTS As you know, FDA plans to pursue a cooperative agreement with the National Association of State Departments of Agriculture and State Agriculture Departments related to FSMA Produce Safety Rule. FDA says this agreement will provide funding and support necessary to determine the current foundation of state law, the resources needed by states to implement the Produce Safety Rule as well as help develop a time line for successful implementation. What are the details of the state cooperative agreements? Specifically, how will the FDA partner with states to enhance or enforce this partnership? Dr. Ostroff. Thanks. So, you know, as I mentioned earlier, we consider the work that we do with the states in implementing all aspects of FSMA is really quite critical. They are a full partner in what we refer to as the Integrated Food Safety System, and one of our priorities is to assure that we can get resources to all of the states for them to be in a better position to fulfill their part of the various rules in the Food Safety Modernization Act, most importantly as it relates to produce safety. And so in 2016, of the additional resources that we obtained for FSMA implementation, $19 million of that funding goes to the states, and in our request in fiscal year 2017, a substantial amount of our request is for funding to the states. Mr. Valadao. Thank you. Thank you, Chairman. Mr. Aderholt. Ms. DeLauro. Ms. DeLauro. Thank you very much, Mr. Chairman. My apologies to you, Dr. Ostroff, but Secretary Burwell was at Labor HHS. FOREIGN FOOD FACILITY INSPECTIONS I understand my colleague, Mr. Palazzo, asked about seafood and the explosion of seafood that will be coming from Vietnam and Malaysia. Let me just ask a quick question there because I want to move to a couple of other areas. My understanding is that we are going to cut off--and this is from the budget--FDA will not increase the number of foreign food facility inspections that it will conduct. The budget indicates that the percentage of port-of-entry inspections for imported food will drop. Do we have enough money? Do we have enough capacity to be able to deal with this issue? And I am going to ask you for a quick answer because I want to get to Essure. Dr. Ostroff. I can tell you that among the rules, the foreign supplier verification is really a critical aspect of what we are doing with FSMA because we need to assure that the safety of imported food is equivalent to the safety of food that is produced domestically. And so part of the funding that we received in 2016, as well as a large part of the request in 2017, is specifically devoted to be able to address import safety. FSMA FUNDING Ms. DeLauro. I want to make a point about FSMA, which I am a strong supporter of, et cetera. CBO's original score was for $583 million. We have funded--this is our responsibility--a total of $267 million. That is less than half. So therefore, all of the implementation of FSMA, my view, is at risk, and that would include this inspection process that we are dealing with with foreign imports. I am going to leave it there. But you do not have the money. You do not have the money to deal with what FSMA asked us to do and to protect the food supply coming in. And that is going to increase substantially in tainted food coming from Vietnam and from Malaysia. ESSURE Let me move to Essure, which is something I am very concerned about. We have 5,000 adverse event reports filed by doctors and patients about this contraceptive device. I am not going to go into all of the details. We have seen four adult deaths related to the device, five fetal deaths that occurred in women who became pregnant following the placement of Essure. Thousands of women have signed a citizens petition to get Essure taken off the market. I wrote to you as well, asking for an investigation into this effort and asking that while the investigation is pending, that it come off the market in order to save lives. We put language into the 2016 Omnibus Appropriations Act that directs the FDA to issue recommendations on how to address concerns raised regarding Essure. The agency has to the end of this month to issue them. Are you going to issue them? And I am going to ask the other question: Are we going to take this product off the market and save women's lives? Dr. Ostroff. Let me mention a couple of things. One of them is that part of our budget request in 2017 has to do with moving forward in something called the National Medical Device Evaluation System. And the reason that I think it is pertinent to this question is that one of the major objectives of that system is to be able to do better monitoring than we currently do of products in the postmarketing setting, no question about it. And so that would help contribute to being able to address issues like this. The second thing that I will say is that we are very well aware of the language that is in the Omnibus. As you know, we took this issue to an advisory committee last fall. We received a lot of feedback from the advisory committee. There were a large number of patients that participated in that discussion. We have taken that feedback. We indicated that we would be issuing a report on those findings by March 1st, and we intend to do so. Ms. DeLauro. Well, but I am asking you again. I do not know how much more monitoring needs to get done of a product that so far has killed five women and four fetal deaths, and the hundreds of thousands of women who have signed a petition talking about their specific incidents. And in the meantime, while we were going to take some of the 2017 money and look at monitoring, this product is there and women are at risk. And I do not know how much more data we need in order to be able to say, ``let's take it off the market until you collect more of your data,'' in the meantime, thereby trying to save peoples' lives and pain for women around the country. I strongly urge you to take this off the market until you are finished with an investigation. Do not tell me on March 1 that we are going to continue to study this effort to make sure that we have all of these various pieces in place while women are suffering out there in the hundreds of thousands--not two, three, 10, 12, 100. Hundreds of thousands who signed the petition. Thank you, Mr. Chairman. Mr. Aderholt. Thanks. Mr. Young. Mr. Young. Thank you, Mr. Chairman. Doctor and Mr. Tyler, thank you for being with us here today. As you know, the FDA is moving toward its menu labeling final rule. Can you just talk about how that is going with stakeholders and where we are on meeting with the industry and stakeholders? MENU LABELING And also, you are supposed to give some kind of educational and technical assistance as well when there are some issues that came up in your meetings with stakeholders. And I hope you will allow in the end for a certain amount of the use of technology and innovations in allowing that to be involved here with menu labeling because some folks have concerns it could really put a mandate on some of these restauranteurs or grocery stores, and the technology and those innovations can be very helpful. Dr. Ostroff. You are specifically referring to menu labeling? Mr. Young. Yes. Dr. Ostroff. Yes. So obviously, I hate to be redundant, but everything is a high priority for us. And I wish that we could make progress further. Again, related to what is in the Omnibus, we certainly understand the language of this in the Omnibus that indicates that until the guidance is finalized regarding implementation of the menu labeling requirements, that they do not take effect, either, until December of this year or 12 months after that guidance is finalized. And so we have been working quite hard to get the guidance finalized so that we can start moving forward towards implementation. As part of finalizing the guidance, obviously we have had a lot of input from a variety of stakeholders, and we have been working with other stakeholders in terms of the implementation. Mr. Young. Give me examples on the stakeholders. Dr. Ostroff. Well---- Mr. Young. I mentioned grocery stores because a lot of the grocery stores have delis and they have restaurants within them. Dr. Ostroff. Yes. So there are a fair number of stakeholders that have a role in this, and they range from the food marketers to the restaurants themselves, and then the various associations. We have talked with all of these individuals repeatedly. PHARMACEUTICAL ADVERTISING Mr. Young. Thank you. I want to talk about industry usage of the internet and social media platforms when it comes to the guidance for pharmaceutical advertising. Early this year the FDA put out its guidance agenda for 2016, listing new and revised guidance. Give us an update on that. How is that going? And how is the FDA seeking stakeholder input on this as well? Dr. Ostroff. As you know, any time that we issue guidance, it goes through a proposal, and we receive a variety of comments before we finalize any guidance that we put out or any regulations that we put out. And this would be no different than that. As far as the specifics of this, we would be happy to give you a further detailed briefing in terms of where that stands and input that we received. Mr. Young. And I am not going to spell out the acronym, but we are talking about the social media advertising and promotional labeling of prescription drugs and medical devices. Dr. Ostroff. Yes. And I will not say the acronym, either. REGIONAL FOOD SAFETY CENTERS Mr. Young. OK. Food safety training centers. Last week the FDA announced a grant for Iowa State University to establish the North Central Regional Center for Food Safety Training, Education, Extension, Outreach, and Technical Assistance. Dr. Ostroff. Another long one. Mr. Young. Another one. To comply with the Food Safety Modernization Act requirements, last year the FDA estimated it was $276 million short of what is needed to roll out the FSMA guidelines and regulations. And this time around, the administration proposed another $18 million increase in the fiscal year 2017 budget. I am pleased the FDA selected Iowa State University. But can you talk about how funding for the FSMA could impact the goals and operations of not only this new center, but also the other centers as well? Dr. Ostroff. You know the total request on the food side of the agency was in two areas. It was direct budget authority as well as the proposed user fees that have been put forward repeatedly in the last several years. And if again, Congresswoman DeLauro mentioned this, that the CBO had made an estimate of the total costs of FSMA implementation, and we ourselves had put together estimates of what it would take to fully implement FSMA. And those numbers we have looked at repeatedly. They are not that far off from the CBO, and if you put the number of the budget authority increases with the user fee increases, it would get us a substantial part of the way towards what we need to fully implement FSMA. As far as the training centers, they are a very important part of what we are doing with FSMA because, as I said earlier, being able to provide the technical assistance and the educational that is required so that all of the stakeholders implement FSMA correctly rather than us having to come after the fact and say you did not do it quite right is really very important. And so we have four centers of excellence in technical assistance. One of them is Iowa State. One of them is in Vermont at the University of Vermont. And the other two, one is in Florida and the other is in Oregon. Mr. Young. Thank you. I have a few more questions. I will wait till the next round. Thank you, Mr. Chairman. Mr. Aderholt. Thank you, Mr. Young. GENERIC DRUG LABELING During the FDA hearing two years ago, Members on this panel raised concerns about the potential negative impacts from an FDA proposed rule on label changes to generic drugs that had the potential to allow different warning labels in the marketplace at one time. Members also raised questions about the motivation for this proposed rule after it was revealed that FDA met with a trial lawyer group prior to the FDA's issuing of the proposed regulation. This proposal that we are talking about is against the backdrop of an environment, and I know you are well aware of it, in which many in the public are concerned about the rising cost of prescription drugs. By some estimates, the proposed change would increase the cost of the generic pharmaceutical industry by as much as $4 billion annually. FDA, in spite of receiving more than 23,000 comments on the proposed rule, has never met with the industry representatives to discuss the rule, nor has the agency made any effort to provide a realistic estimate to how the rule would have an impact on prescription costs and access. My question: How can the administration tell the public they are concerned about rising cost of prescription drugs on one hand, and then on the other finalize a rule that could add another $4 billion to the cost of prescription drugs? Dr. Ostroff. What I can say is that this is also an issue that I am very well aware of, and it is a very complicated issue. What I can say without question is that our primary consideration is not related to litigation; it is related to being able to assure that the labels contain information that is important regarding the safety of products, whether it is the reference drug or whether it is the generic. And so this very complicated interplay between the licensed reference drug and the generic drugs and the safety information that is contained on them regarding adverse events is a really important issue. And it is a very complicated issue because of the way that the regulations and the statutes are written. And so we have been looking at this for an extended period of time. And as you know, there has been a fair amount of feedback that we have received, and we continue to work on trying to finalize this. Mr. Aderholt. Well, I just want to point out the inconsistency because the cost of drugs is a very real concern I think that the American public is concerned about. And then, of course, adding another $4 billion of costs would be something that would be inconsistent with the concerns. During Dr. Califf's confirmation hearing over on the Senate side, he was asked about the status of finalizing the labeling rule. In response to that question, he said that finalizing the rule was a top priority, and added that FDA needs to make sure that if there are problems with generic drugs that come up later, and they do with a better surveillance system, that is a way of making sure the labels are up to date and consistent across similar products. I believe that the pending rule would require the generic company that identified the adverse event to unilaterally change their drug label information prior to the review and approval of the FDA. But it would not require the remaining generic companies or brands to change their labeling, this continuing to allow for a lack of consistency or a lack of sameness. In light of your desire to assure consistency and timely updates of information across similar products, why do you believe this proposed rule is necessary? Dr. Ostroff. This is part of the complexity. And part of the difficulty is that very often, for many of these products, there is just not one generic; there are multiple generics. And so we do believe that it is very important, to the degree that we possibly can, that there is consistency across all of the various forms of a particular drug because it may be that one manufacturer has access to information that the others do not. And there could be circumstances, for instance, where the reference product is not even marketed any more. And so the ability to move information back and forth between the reference manufacturer and the generics can be very challenging. And so getting this correct in a way that we have consistency in the information that is available across all of the generics for a particular product type is really important. Mr. Aderholt. So when do you anticipate making a final determination on whether to move forward with this rule? Dr. Ostroff. I cannot tell you exactly when we may get to that point. But it is something that we are working quite hard on. Mr. Aderholt. Do you have any evidence or data to suggest that generic drug manufacturers are not compliant with the current reporting requirements? Dr. Ostroff. I would have to get back to you. I am not aware of any. [The information follows:] The proposed rule focuses on the obligation to update labeling to reflect newly acquired information, not on the legal duties to report adverse drug events to FDA or, more generally, to meet post-market surveillance requirements associated with adverse event reporting obligations. The proposed rule neither cites, nor is based on, evidence that generic drug manufacturers are not submitting to FDA required reports of spontaneous adverse event reports that they receive. Mr. Aderholt. Thank you. Mr. Farr. Mr. Farr. Thank you very much, Mr. Chairman. I also share that line of questioning on generic labeling. We are concerned about the cost increase to them. SUNSCREEN Every year this committee talks about the Department doing sunscreen labeling, and nothing gets done. Here we are lauding the Cancer Moonshot, and yet with sunscreen labeling, we have not gotten anything. This has gone on for years. What is the delay, and when are we going to get you to deal with it, sunscreen labeling? Dr. Ostroff. Thank you for that as well. This is, again, a very important issue and it has to do with taking action on it. Mr. Farr. Do you have a date when you are going to get to it? Dr. Ostroff. Well, as you know, we looked at all of the products that were submitted to us and determined in each instance that there was not information to make a final determination, and have set out a very clear course that the various manufacturers of these products have to use to be able to assure us of the safety of these products. These sunscreens, when they are used as they are supposed to be used, are repeatedly applied to large portions of the body. And we feel that it is really, really, really critical to be able to determine whether or not there is systemic absorption of these materials that might have long-term consequences, health consequences, to individuals. We recognize that that is a very delicate balancing act in terms of prevention. Mr. Farr. I know. I just want a simple answer. I just remember earlier we were talking about GMOs. You said---- Dr. Ostroff. Yes. But there is not a simple answer. Mr. Farr [continuing]. You do not pay much attention into the process. You want to know what the facts are. I think the questions we are asking is, the facts are, when are these dates going to happen? Is it going to be this year? Is it going to be something? Is this going to be back here asking the same question again next year as we did the last couple of years? Dr. Ostroff. I can say that we have had--including myself, have had discussions with the various manufacturers about the pathway forward to be able to accumulate the information. Mr. Farr. I do not care about process. Give me an answer of time. Dr. Ostroff. Well, we have set out for the manufacturers what they need to do to provide the information to us so that we can make a determination. Mr. Farr. And when will that be? Dr. Ostroff. Well, the manufacturers have to get back to us. Mr. Farr. Never mind. Never mind. COMPOUNDING Compounding. With the additional funds that we gave you to assist in the oversight of the pharmacy compounding for human and animal health, I am concerned, from the reports that I hear--and these are reports that are coming back to our office from patients, physicians, veterinarians, pharmacy groups, that the FDA is exceeding the authority granted by Congress in implementing the guidance for both human and animal drug compounding. The concern expressed is that these actions will unreasonably limit the patient and provider access to compounded medications, and will result in the kind of legal challenges that Congress sought to prevent when it passed the Drug Quality and Security Act of 2013. Given the language we included in last year's budget agreement, what assurances can FDA provide us that these resources are being spent in a way that does not confuse the ability of pharmacists to compound human drugs versus veterinary drugs? Dr. Ostroff. Compounding is an area that we have devoted a lot of efforts to, and particularly developing all of the necessary guidance to implement DQSA. And the critical aspects of this is that compounding go forward in a way that is safe, especially as it relates to sterile products. And that is precisely what we are doing. Mr. Farr. But Dr. Ostroff, I have never had anybody in front of this committee that is better at talking bureaucracy and not getting--you always talk process. The questions here-- everybody has been asking all day for dates, times, when are we going to get decisions. And you talk about, well, we are doing stuff, but nothing to answer. I do not know what assurances you are giving us. But let me go on to another question. Maybe I can get a straight answer. MEDICAL GASES Congress required the FDA to promulgate and update regulations on medical gases by July 9th of this year. That is only three and a half months away. Yet the FDA has not even issued a proposed rule on the topic. I know that the FDA has issued guidance on the matter, but that guidance is not helpful to the industry because inspectors are relying on old regulations and ignoring the new guidance. When will FDA issue the regulation as the law is intended? Dr. Ostroff. This is something that I have also learned a lot about. Mr. Farr. That is a ``when'' question. When? Dr. Ostroff. This is a--well, we understand the deadline. And so the requirements that were in FDASIA was to be able to assess the situation, to submit a report to Congress about things that we considered to be necessary, and it is our assessment that most of the changes that need to be done in the area of medical gases--and again, we have done this with a lot of discussion with industry---- Mr. Farr. When? Dr. Ostroff [continuing]. Including last December, can be done through guidance. We did have a proposed rule that was issued in 2006, and one of our objectives is to be able to finalize that rule by the date---- Mr. Farr. When? Dr. Ostroff [continuing]. By the date that was established. Mr. Farr. By July 9th? Dr. Ostroff. Yes. TOBACCO DEEMING Mr. Farr. All right. Then I want to just follow up on Nita's question. Time is out. But this is just a ``when.'' When will the tobacco regulations get vaping under control? Dr. Ostroff. I cannot give you a specific date as to when we may be able to get the final deeming rule out. We have been working very hard---- Mr. Farr. This year? Dr. Ostroff [continuing]. In finalizing that rule. I am not able to give you a specific date. I certainly was hopeful that that rule would be final while I was still in the acting role. It is not. But we are working as hard as possible to be able to finalize it. Mr. Aderholt. Dr. Harris. TRADE SECRETS Dr. Harris. Thank you very much. And I am sorry. Like the gentlelady from Connecticut, I was next door with Secretary Burwell and missed some of the discussion about the trade secrets. But I just want to associate myself with the concern that we have to address making sure that trade secrets are protected when the FDA has access to them. SODIUM Let me follow up a little bit about the sodium discussion the gentleman from California started. And you know I have indicated my concern in meetings with you. It comes to my attention that the National Academy of Medicine has said that the DRI for sodium probably needs to be reviewed. I think it was last done in 2003 or the early 2000s. It has been a while ago. Is that something that--do you know, for instance, what their time frame is to do their DRI review of sodium? Dr. Ostroff. No. Dr. Harris. OK. Is that something that you would take into consideration as the FDA considers where to go with sodium? I would hope you would wait to see what the DRI is. Dr. Ostroff. Well, yes. Again, we will take all sources of information, including what is in the Dietary Guidelines, into consideration as we move forward with this. We think that the voluntary approach to reducing the overall amounts of sodium in the food supply is the right approach. Dr. Harris. All right. And of course you realize as a physician what we are probably going to find out a few years from now, is that for some people, it makes a difference. For some people, it does not. And we have no idea which camp you are in right now, but I am sure we will know in a few years. ADDED SUGARS With regards to the nutrition facts label, there is just some concern I have that adding the added sugars designation is probably going to--I think it may confuse some people because, in my mind, it is the total sugars that really makes the--I mean, you really want to make sure that total sugar stays below a certain percent of your diet, and that subdividing it may just add confusion. So my question is simple. I understand that there are studies that look at how consumers process that information, and whether it actually helps them in decision-making or not, whether it confuses them, because it does distract you from the discussion of total sugars in a product. Do you plan to do any consumer research to see what the consumer understanding of the proposed added sugar addition to the nutrition facts label will do? Dr. Ostroff. We have done that sort of consumer research, and that has helped inform the direction that we feel we should go in with the nutrition facts label. And I understand what you are saying about the total sugar versus added sugar. And it is not the same because in general, when sugar is naturally present in many food items, it is present in association with many other important parts of the diet for a proper balanced diet and health; whereas added sugars are essentially empty calories and they do not contribute to a balanced and healthy diet. And so we feel it is very important that there be a distinguishing between total sugars and added sugars. And that has been what the proposal was. And we have been working on what the best way is to present that to the consumer. Dr. Harris. Good, good. Because again, I think there can be some confusion. Yes, I understand there may be some other benefits of foods that have sugars. But total sugar intake would be important. TOBACCO DEEMING Finally, with regards to the predicate date for tobacco products and the whole idea of regulation, as we talked about with some of the e-cigarette regulation, what I hope does not get lost is that for some people, there is harm reduction when they switch to those products. I remember one of the people on my staff, as I think I told you last year, I mean, this guy smoked a couple packs a day. And once he went to the e- cigarette, his use went way down, and I am convinced that his risk is lower. Again, population-wide, I do not know. But we just should not lose sight of the fact that there are some individuals in whom harm reduction occurs because of these products. So that as you go forward, to make it easier to market a new cigarette because of the predicate date, then a new e-vaporization product just is one of those unintended consequences that you can come up with. And I thank you again, and thanks for being before the subcommittee. I yield back. Mr. Aderholt. Ms. Pingree. Ms. Pingree. Thank you, Mr. Chair. HEALTHY LABELING I want to associate myself with a couple of my colleagues' remarks. Mr. Valadao is gone now, but I do appreciate that he brought up some of the concerns. He mentioned nuts, avocados, salmon, and I know you said you are close on those guidelines. But because there has been so much rethinking about healthy fats, I just think it is important that that information is out there and that we catch up with the labeling and what the public and nutritionists are already telling us. And then also Congresswoman DeLauro and Mr. Palazzo both mentioned some of the issues around imported shrimp, and the challenges with potential contamination are issues. I do want to take issue a little bit with Mr. Palazzo, who suggested that the Gulf of Mexico has the tastiest shrimp. [Laughter.] I'm very happy to have a challenge with Maine shrimp. This is our season right now, and they are pretty darn good. So we might want to just have a little face-off over that. Yes, yes. I think a blind taste test. Mr. Palazzo. I accept that challenge. I would happily participate in a taste test. Ms. Pingree. OK. There you go. I kind of think I am going to win, but I am willing to let you into it. ANTIBIOTIC RESISTANCE But I just want to have a little bit of a dialogue about antibiotic resistance with you. I know that is a huge concern in the public health community; providers and the administration have put some focus on it. I am just worried we are not doing enough and we are not doing enough fast enough. So I know that the FDA published guidance in 2013 asking industry to remove the production claims for medically important antimicrobials, and I think that is good. In 2015, there was the Veterinary Feed Directive Final Rule and Guidance, again good. And the fiscal year 2017 budget request is $41.6 million for antimicrobial resistance activities, which is the same as fiscal year 2016. So I am a little concerned about whether FDA has the resources to ensure FDA is compliant with the Veterinary Feed Directive and FDA's guidance on production claims for medically important antimicrobials. So can you tell me what you are thinking? How much of your budget request will go towards the animal side of the FDA's antibiotic resistance activities? Do you have the resources to monitor compliance with the directive and the production claims? And if you do not have sufficient resources, then what is the impact on public health and safety? Dr. Ostroff. Thank you for that question. This is a very important year for us in terms of the activities related to the veterinary side of the antimicrobial resistance challenge in that the 2013 guidance that you referred to, which removes production indications for medically important antibiotics, actually takes effect at the end of this year. In addition to that, the Veterinary Feed Directive rule went final in the fall of last year. And so they will both be in place as of the end of this year. And one of our really critical challenges is to be able to monitor the impact of these changes, in particular establishing a baseline. We have multiple systems in place to be able to monitor this, including a requirement that was in the original animal drug user fees, to collect data on sales of medically important--or sales of antibiotics for use in food animals. And so we have been collecting that data. And we have actually proposed that we make some changes in the way that data is collected so that we do it by species and have better ability to track sales of antibiotics by animal species. In addition to that, we have the National Antimicrobial Resistance Monitoring System, which actually collects samples, isolates various important foodborne pathogens, and looks at the resistance patterns. And that is yet another way for us to be able to monitor the impact of these changes. However, one of the very important aspects of this is actually to be able to drill down and get some information about what is actually happening on the farm. And we had a meeting last September that we held jointly with USDA and CDC to put together the framework for being able to do this. Unfortunately, we do not have the funding to be able to implement it. And so we are trying to work on what the options may be to be able to accomplish this because it is really critical that we establish the baseline. In 2017, we are proposing moving some of the resources that we received on the human side--not to say that they are not also very much needed--to move them over to the veterinary side to be able to do some of these activities. Ms. Pingree. Well, thank you for your response. And I would express my alarm and concern that there is not sufficient funding, and certainly encourage you to do whatever is possible, and this committee to support you in that, to make sure we do have good baseline data and that we are able to follow what happens after this directive comes into place. Dr. Ostroff. Thank you. Mr. Aderholt. Mr. Palazzo. Mr. Palazzo. Thank you, Mr. Chairman. SEAFOOD SAFETY Coming back to shrimp again--I am glad my colleagues on the other side see that this is an important issue--but to follow up on your risk-based approach to inspect shrimp being imported into our country, funding has been provided. It was provided to the FDA in fiscal year 2016. I think you received an additional $5 million to look into foreign high-risk inspections. And how are you using those funds? Are you using the data that is available, or are you trying to depend on growing the full-time employees at FDA? Because I know you cannot cover all these nations and all these risk areas. But if there is data out there that you can use to target these high-risk businesses that we know are sending polluted shrimp, or trying to send polluted shrimp, to America---- Dr. Ostroff. That is the way that that funding is being used, to be able to put together as many information sources as possible so that we can most appropriately develop the risk framework for the inspections and the sampling. Mr. Palazzo. So it helps. When we have a lack of resources, we cannot really afford hiring all the people to do the job. Dr. Ostroff. Correct. So we have to---- Mr. Palazzo. We use contractors, use data. Dr. Ostroff. Well, we have to make maximum use of the resources that we do have available. Mr. Palazzo. OK. If you give me a second. ARSENIC IN RICE And going back to rice, would the risk assessment or other guidance establish a regulatory, whether it is enforceable or unenforceable, limit on the amount of arsenic in rice or rice products? Dr. Ostroff. The risk assessment is what it says that it is, which is a risk assessment. But what we are hoping to do in concert with the risk assessment is a risk management plan. So that is also a very important component of what it is that we are doing, as well as how we would engage in risk communication about the information that is contained in the assessment. Mr. Palazzo. Do you know what type of level it is going to be, whether it is guidance, regulatory, or action? Dr. Ostroff. Well, again, it is still being worked on. Mr. Palazzo. Still being worked on. Since arsenic is an element common in soil, water, and most foods, what authority are you using to regulate this naturally occurring substance? And has the authority changed since the issue was raised early last year? And if so, why? Dr. Ostroff. It is a naturally occurring substance, and rice seems to disproportionately absorb arsenic from the way that it is produced and from the soil and from the fact that it sits in a lot of water. And so not only are we doing the risk assessment and looking at ways to reduce any health risks that may be associated with the presence of arsenic, particularly in organic rice, and taking a very comprehensive approach not only in terms of what standards may be in place but also ways to be able to reduce that absorption and ways that the actual amount of arsenic that may be present in rice that is consumed can be reduced. Mr. Palazzo. Is the FDA planning on limiting any other foods that you are aware of, issuing limits on other foods similar to what you are reviewing with rice right now? Dr. Ostroff. Well, you know we always are reviewing information about health risks in the food supply and taking actions when they are necessary. Mr. Palazzo. All right. Thank you, Mr. Chairman. I do not know if anybody is craving shrimp quesadillas right now, but I am. [Laughter.] Mr. Aderholt. Mr. Bishop. Mr. Bishop. Thank you very much. I want to talk about Congressional directives regarding the FDA foods program. The enacted fiscal year 2016 agricultural appropriations bill contains a number of other policy riders for a range of programs that are related to FDA's foods program, and not all of the provisions are directly related to food safety activities but involve other FDA food programs. For example, the enacted law prevents the use of any funds to, one, implement the 2015 Dietary Guidelines for Americans unless the Department of Health and Human Services and the U.S. Department of Agriculture comply with specified requirements; two, prohibits implementation of policies that would require a reduction in the quantity of sodium contained in the federally reimbursed meals, foods, and snacks sold in schools below a certain level set in the regulation; and three, enforce FDA's final regulations regarding restaurant menu labeling. The fiscal year 2016 appropriations bill also allows states to grant an exemption to schools from certain whole grain requirements that took effect in July 2014, and it asserts that no partially hydrogenated oils shall be deemed unsafe or adulterated until FDA's formal phaseout, starting in June 2018. The Senate committee report further expresses concern that FDA has not published the results of its study of consumer responses to nutrition labeling regarding added sugars. Can you describe how the FDA has responded to these congressional directives within the agency's food program? I note that FDA's preliminary responses to some of these requirements were discussed in your justification of estimates for the Appropriations committee. So would you address that for me, please? Dr. Ostroff. Sir, not all of those things that you cited fall under FDA as opposed to USDA. But what I can comment on are a couple of the things that you mentioned. One of them is the issue of the partially hydrogenated oils. And as you are probably well aware, in the middle of last year we did issue a final determination that trans fats, which PHOs are the primary source of trans fats, would not be considered generally recognized as safe. And there is a three-year time period for them to be phased out of the food supply. We also did offer opportunities for petitions to come into the agency that would help inform the determination that was made. And so in the interim time period, before that actually takes effect in 2018, we will be considering any petitions that come in. As far as the nutrition facts label, as I was mentioning before, we did put a re-proposal out last year related to added sugars. And that included having a reference value for added sugars in the proposal that was issued, which is consistent with the dietary guidelines, is that in the average diet, not greater than 10 percent of calories should be in the form of added sugars. And that is the direction that we have been going in with the nutrition facts label. Mr. Bishop. Thank you, sir. That is all I have. Mr. Aderholt. Mr. Young. Mr. Young. Thank you, Mr. Chairman. Just having a very important conversation. My colleague, Ms. Pingree, was here and talking about antimicrobials. And you are asking for data from drug makers out there, and I wonder how that is going. Are you getting the information you need? What are you specifically looking for? And if you are not getting what you need, what do you need from us to help you out? Dr. Ostroff. Yes. As you know, that provision to collect information on annual sales of antibiotics was included in the Animal Drug User Fee Act in 2009. And so we have been, on an annual basis, collecting that information and publishing reports on the findings. One of the things that I can say to you is that if you look at the trend that has occurred between 2009 and the last report that we issued, which was, I believe, in 2014, covering 2014 data, there has been a 22 percent increase in the overall sales of antibiotics for use in food animals. And if you look just between 2013 and 2014, it has increased by 4 percent. And so the trend is certainly not going in the right direction. However, I do think it is important to point out that that is data that is being collected before the implementation of what was just discussed. And part of our hope is that when these are implemented, that we will see the trends change. As I also mentioned, one of the things that we think is very important to be able to collect as part of that information is sales by species because that will enable us to be more focused in terms of if we do not see what we think we ought to be seeing as a result of these changes, it will help us better target where the problems may be. Mr. Young. Thank you. Keep us abreast of how this is going with data collection. I want to try to get a timeline from the FDA on their draft guidance regarding animal drug compounding. And there is some concern that the FDA's draft guidance on compounding from bulk drug substance could complicate a veterinarian's ability to treat animals. And I wonder if you could address the timeline, and how you will incorporate changes reflecting the concerns of the stakeholders such as veterinarians? Dr. Ostroff. Well, all I can say is that we always look at the comments that we receive very carefully. I cannot give you a time frame. I know that frustrates Congressman Farr, but all I can say is that we will look very carefully at all the comments that we receive. Mr. Young. Thank you for being here, both of you. Thank you for your service. I appreciate it. Dr. Ostroff. Thank you. Mr. Young. And I yield back, Mr. Chairman. Mr. Aderholt. Ms. DeLauro. Ms. DeLauro. Thank you, Mr. Chairman. ADDED SUGARS Dr. Ostroff, I want to say thank you for the designation of added sugars. I think that is a great thing. And thank you for the work you have done on menu labeling. And we do not have time here at the moment, but if you can get back to me on this recent bill that was passed in the House of Representatives and how that may undermine the work that you have done at FDA to be responsive, quite frankly, to industry concerns, and what would be the ramifications if this was passed into law. DIETARY SUPPLEMENTS Also, another answer to a question is, can you tell me how this new Office of Dietary Supplement Programs is going to work, if you have the money to do that, and are you moving in the direction of premarket approval for dietary supplements. Naloxone: The work that you guys are doing in terms of including reclassification of it as an over-the-counter medication, given the scale of the opioids. And misleading food labeling--I will not go through all of the recent articles on food fraud and mislabeling, a recent discovery that grated products labeled 100 percent parmesan cheese in fact contain higher levels of cellulose than are allowed under the law. This does have trade implications since we are in negotiation with Europe on these things. And I know that U.S. folks want to have these geographic indicators. But if we have a product that is misleading and is not what is in the product, we need to know that, and we rely on you to do that. SALMONELLA OUTBREAK But two questions I do want to address a little bit more substantively is the cucumber outbreak, and very serious. Six deaths across 39 states, Salmonella-tainted cucumbers, 888 illnesses, 191 hospitalizations. A public health crisis. What is happening, though, is cucumbers, as I understand it--and I am not a farmer--but they have a two-week shelf life. But CDC is reporting an additional number of consumers being sickened. So my question is, what is the agency doing to investigate all levels of the supply chain to determine the ongoing source of the contamination? Are you working with food retailers to ensure proper cleanup and decontamination? How are consumers still being sickened if the cucumbers have been recalled and the FDA has issued import notices? Dr. Ostroff. Thank you for that question, and I wish that I had the ultimate answer to the last question that you asked because it is something that we are following very closely and we are watching closely. I will say one thing, and that is that if you need an example of why what we are doing with FSMA is so absolutely critical, that particular outbreak hits two of the very critical aspects of FSMA. One of them is produce safety, and the other one is foreign supply. Ms. DeLauro. Foreign supply. Dr. Ostroff. Because we had, in 2015, several outbreaks that have that particular combination. And it is why it is so critical that we make progress in implementing the produce safety rule, regardless of whether we are talking about produce from outside the country or inside the country, and that we move on foreign supplier verification so that we can do more, working with our Mexican colleagues in the produce safety partnership to be able to address these types of problems. This was a very sizeable outbreak, as you pointed out. And we, working with CDC, looking at various clusters of disease, were able to determine the distributor and the source of the distributor's cucumbers that led back to nearby Mexico. And based on that information, we issued two import alerts in September. And as a result of those import alerts, if you look at the data for that outbreak, about 88 percent of the cases occurred before we issued the import alert. And so they certainly looked like they played a major role in reducing the risk associated with these cucumbers. But one of the things, as you pointed out, that we have observed is this very steady, low-level incidence of cases that are associated with the very same strain. And we have been working very hard throughout the supply chain, including doing extensive sampling of cucumbers that are being imported, to see if we can identify other potential sources of why this is occurring and whether or not it is that there are other sources where the Salmonella happens to be in cucumbers that are coming into the country, if it has got something to do with the crates that they are packed in, or whatever it happens to be. This is something that we are looking at quite closely. DIRECT-TO-CONSUMER ADVERTISING Ms. DeLauro. I am going to try to sneak in one last question, if the Chairman will let me. And this is skyrocketing drug prices. The United States and New Zealand are the only two countries that allow direct-to-consumer drug advertising. In 2007, WHO made a strong recommendation against the practice, calling it, and I quote, ``A significant risk of exposing more patients to the adverse effects of new drugs.'' Federal law does not require the FDA to approve these advertisements before they are released to the public. The ads often run with erroneous or misleading information. The FDA can take action against these companies, but only after the ads have been aired and have been seen by the public, which can sometimes be too late. What is the FDA's capacity to review all the direct-to- consumer advertisements that get submitted for review? What is your timeline for review? What resources or funding would you need to be able to review the ads in a timely manner? Dr. Ostroff. Yes. What I would say is that because I do not have those specific figures available to me, it is probably something that would be best if we were to get back to you. [The information follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Ms. DeLauro. OK. A very serious issue because we know that the direct-to-consumer advertising is absolutely linked to the increased health care costs. People see the ad. They think, oh, my God, this is for me. They go to the doctor and they ask for it. And so it is very, very significant issues associated with it. Thank you very much. And thank you, Mr. Chairman. PREMIUM CIGARS Mr. Aderholt. Thank you. We have talked a little bit about tobacco and youth access and the deeming issue. Premium cigars have also been an issue. It does not have that youth access issue, and they are only sold in adult establishments. The goals of the Tobacco Control Act were to limit youth access, as you know, and prevent negative health effects from habitually used products. Neither apply, in my understanding, to premium cigars. The question is, should FDA leave this category out of the regulations? Dr. Ostroff. Again, I think that you know what was in the proposed rule related to cigarettes, particularly premium cigars. We asked several questions and we solicited comments about how premium cigars ought to be addressed. And I cannot presage what may be in the final rule. However, I know that we have looked at available information regarding how premium cigars are used. And I think that you may be a bit surprised at the fact that there actually are younger individuals that do use premium cigars. And so even in younger folks, particularly those over 18, they are used. Mr. Aderholt. They are used for ages over 18, though. Right? Dr. Ostroff. Yes. UPCOMING REGULATIONS Mr. Aderholt. We have seen some situations in the past where the administrations in the past have decided to release controversial, unpopular regulations in the last few months of an administration that is not returning to power. And I guess the question would be to you is, could you inform the subcommittee if there are any regulations that are a priority to FDA that may be released before President Obama leaves office? And even if there are no specific plans for release of regulations, what might be on FDA's agenda toward the end of the year? Dr. Ostroff. As you may imagine, there are many things that we have been working on throughout all of our product categories. Certainly one example, and I said without question when I took over as the Acting Commissioner, the deeming rule was a very high priority. And we are working very hard to try to get that to final because of the recognized public health implications. And so that is certainly one. And then there are activities going on, especially related to various guidances such as the menu labeling guidance, that we are working on, some of the other things that I think were discussed over the course of the hearing. All of these are things that we are working on trying to get final as quickly as we possibly can. FOREIGN FOOD INSPECTIONS Mr. Aderholt. Many of our domestic producers are concerned that they are disadvantaged when it comes to treatment of imports, that they would be on the same comparison level. The regulated industry has very strong concerns as it relates to the implementation of the FSMA regulations. According to FDA's 2010 report to Congress, the agency estimated that there were over 300,000 facilities in a hundred different countries that produce products that enter the United States at over 300 ports of entry. Despite significant funding increases from this Congress, FDA increased foreign inspections from 1,339 to 1,357, or about 18, between 2014 and fiscal year 2015. Foreign inspections in general are often impeded by exporting countries, such as we saw in China, a country that exports quite a few food and medical products or ingredients to the U.S. The Chinese government has not been completely cooperative when it comes to granting timely work visas for our inspectors, and of course, the fear of the inspectors we have in place, the fear of inspections that they can perform. Once FDA puts staff on the ground, they seem to have different rules for notifying the firms of FDA's plans to inspect the facility. Does FDA give notice to facilities in the U.S. when it plans to conduct an inspection for all products under its authority? Dr. Ostroff. Well, it depends on the reason for the inspection, and so to the degree possible, we do work with regulated industries regarding inspections. But there are some times where it is more appropriate to do an unannounced inspection, depending on the circumstance. What I can say is that one of the core principles of FSMA, as you very well know, is that we have parity in terms of the safety of foods that are produced domestically with foods produced internationally and imported into the country, and that we have equivalent levels of food safety, and that we have equivalent levels of oversight and regulation of what is required in the FSMA rules. It does not make any difference if it is produced domestically or produced overseas. And so being able to ensure that we have equivalent levels of safety--and there are a variety of ways to be able to do that; it is not simply inspections--to do that is really quite important. Another example is that one of the other rules in FSMA is third party certification. And we also are very aggressively moving towards systems recognition. We already have systems recognition in place with New Zealand, and we will hopefully in the not too distant future have the same with Canada and with Australia because what we do not want to be doing is investing our resources in areas that have equivalent levels of food safety that we have in the United States, that we can focus our resources on where they are needed. Mr. Aderholt. I think the concern is probably China. And do we have different standards in place for places like China than we do in the United States? Dr. Ostroff. Well, not under FSMA. I mean, that is part of the principles of FSMA, is that there has to be an equivalent level of implementation of the various FSMA requirements, regardless of where the food is produced. Mr. Aderholt. Well, as it was mentioned last year, in China investigators posted in-country generally provided a few days' notice for routine inspections unrelated to a public health emergency. And if there is a potential significant public health risk, in-country investigators can perform an inspection within a day, and unannounced when necessary. So it seems like there is maybe a different standard. Dr. Ostroff. Well, part of the reason to have an office in China is to be able to work as closely as possible with our Chinese counterparts. That is a win for us, and it is a win for them as well. And we would rather be able to again raise the standards, which I think that we have been doing by working with them, especially in helping them incorporate some of the FSMA standards into their regulatory requirements so that we are not in always a position that we have to continuously take actions. Mr. Aderholt. Have you experienced any delays in receiving visas from the Chinese government or---- Dr. Ostroff. No. This was an issue a couple of years ago. That has been resolved, and we are not currently having problems with obtaining visas for individuals that we want to place in our China office. We have 10 new positions that have been established. Six of the individuals are already in place; four of them are being processed to be able to be relocated over to our China office. And so we are not quite having the same problems that we did several years ago. Mr. Aderholt. Mr. Farr. Mr. Farr. Commissioner, I want to follow up on your China questions. But first, if you are going to promulgate any new rules or regulations, I hope, with the craziness going on in American politics right now, that you will bring the mental health drugs up to the priority because this country needs a lot of them right now, including Congress. [Laughter.] JERKY PET TREATS Mr. Farr. The chairman's questions about China interest some staff around here about the jerky dog treats from China. I mentioned in my opening comments that you regulate dog food as well, and the jerky pet treats that were imported from China, I think exactly a year ago the FDA said--5800 dogs had--and it included more than had been affected--in more than a thousand canine deaths. The last report that we could find on your website was last Tuesday, and that was issued a year ago. Can you update us on the investigation and the work you are doing with CDC, and what the findings of the joint CDC/FDA study might be? Let me just read all these, and then you can respond once. In the past, the FDA has issued statements that it no longer has problems getting into and inspect facilities in China. But in the response you just gave to the Chairman and the inspectors in 2012 that tried to get into the pet food plants, it appears that while FDA inspectors got into the plants, they got the runaround from the Chinese and were not able to take any samples, their own samples, to be tested. Has that changed? Do you have unfettered and unrestricted access to all the inspections, not just those related to pet treats? And I know you have issued ``detain without physical examination'' orders for some Chinese pet food manufacturers. Have these ``detained without physical examination'' orders had an impact on the volume of pet treats imported from China-- since it was done a couple years ago? And do you know how many Chinese pet food manufacturers are still shipping pet treats to the United States? Dr. Ostroff. Yes. Obviously, these are specific pieces of information that we are going to have to get to you. What I can say is that the issue of the pet jerky treats is something that we devoted a lot of energy and resources to trying to figure out exactly what was happening. And that included collecting samples of various types of jerky. It included doing autopsies on various dogs, et cetera. And it is my understanding, at least, that the actual causation, I mean what precisely is going on, is still a question. What does appear to be the case is that the problem seems to be decreasing for whatever reason. [The information follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Farr. Do you take those samples in China, or are those samples from the stores here? Shouldn't we try to stop stuff before it even gets into the United States? Dr. Ostroff. Well, in trying to figure out the causes of this, which are not that straightforward, it has been looking at samples, even in some instances that the consumers were providing to their pets. And so we have been trying to address this at all stages along the continuum. But again, it has been difficult to be able to ascribe a particular cause to the problem--in other words, what is actually going on here and causing the problems. And so it remains something that we have been actively investigating, but---- Mr. Farr. Didn't you stop certain manufacturers from importing these treats? Dr. Ostroff. Again, it was a matter of--we did take various actions, including import alerts in 2014, to be able to address this problem. Again, it does look like--in terms of the occurrence of the problems in the pets themselves, it appears to be abating. Mr. Farr. It appears to be abated? Dr. Ostroff. Abating. Mr. Farr. Abating. Fewer deaths. Still--but there is still---- Dr. Ostroff. Fewer problems than we saw in the past, yes. Mr. Farr. So what does that all mean? You are just going to continue to monitor, try to find the---- Dr. Ostroff. We will continue to work on this problem until we have been able to solve what is happening. Mr. Farr. All right. Mr. Aderholt. Without objection, I have got a letter that I would like to submit for the record. It is signed by 109 Members regarding the development and treatment of a rare disease called Duchenne muscular dystrophy. And I would like that for the record. [The information follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] HUMAN GENE EDITING Mr. Aderholt. And just in closing, when we did the fiscal year 2016 Omnibus bill, there was a restriction in there regarding the editing genes in human embryos. An advisory committee on ethical practices regarding genetic engineering of human embryos, at the request of FDA and in conjunction with the National Academy of Science, recently gave a green light to ``go forward, but with caution,'' with certain forms of genetic engineering. And I understand that the main focus of the committee was due to the eventually dream of trying to eliminate terminal diseases and also debilitating diseases. But the fear among many, on this panel and of course constituents, and I know there are different opinions on this, but the risk of unintended consequences with genetic modification has a potential to create new defects and/or disease. Given that FDA requested this advisory committee's work last year prior to the congressional restriction being in place, it makes some wonder whether FDA is actually engaged in the process. Can you confirm that the provision in the fiscal year 2016 Omnibus will prevent FDA from accepting applications at this time? Dr. Ostroff. Yes. Mr. Aderholt. And what is FDA's position--well, clearly, based on what the restriction is, then I think that speaks for itself. Dr. Ostroff. Yes. Mr. Aderholt. So with that, let me---- Mr. Farr. Would you yield on that? I would like to just have some discussion on that. I mean, the fear also was unintended consequences. This rule would prohibit the research that could be done on building organs and things like that. I think that the motivation here was to not allow designer babies, and I think we unanimously supported that. But I think the way the language came out, it could not be much broader. So I do not want to stop this research. So it is going to move offshore, and America will lose all of this opportunity. Mr. Aderholt. I think it went beyond just designer babies. I think it went to toying around with embryos. Dr. Ostroff. That is correct. That is what the language says. Mr. Farr. What is it going to do to beneficial research? Dr. Ostroff. Well, this is always the conundrum. And I think that when you look at the report that was recently issued by the Institute of Medicine, they point out exactly this problem. And it is part of the reason that we went to them to ask them to take a comprehensive look. And this was specifically dealing with something that is called mitochondrial transfer for individuals that have mitochondrial diseases. And so they provided feedback to us in terms of the framework that may be appropriate to go forward in this area. And obviously, we are looking very carefully at that report because it lays out very nicely what you just said, which is trying to balance the risks with the potential benefits. But we are very cognizant of what the language in the Omnibus was, and that will not happen in this fiscal year. Mr. Farr. What will the consequences be, then? Dr. Ostroff. Well, any research activities that involve genetic manipulation of embryos will not occur in this fiscal year. Mr. Farr. Is that a good thing for America? Dr. Ostroff. Well, again, the language very specifically expressed Congressional intent. Mr. Farr. Well, you could debate that Congressional intent. And we tried to make sure there was not quite as extreme as I think it is being interpreted. But I think that is not a good future for this country in medical research. I agree with the Chairman on some things, but I think this research is going to go on in the world. It is just not going to occur in the United States, and we are going to lose a lot of great minds that will be moving to other countries to be involved in research. Mr. Aderholt. Well, thank you, Dr. Ostroff, for being here today, and of course, Mr. Tyler, for your assistance as well. And we wish you the best. I know you will be very active, so we look forward to seeing you and continuing to work with you in one facet or another. But thank you again for your service here in this acting time. Dr. Ostroff. Well, again, I said I am not going away. Mr. Aderholt. Right. Well, that is what I say. We look forward to working with you. Dr. Ostroff. Thank you so much. Mr. Aderholt. Just with a little bit different hat on. Dr. Ostroff. And again, thank you for the opportunity to work with you over the past year. It has been a real privilege, and your assistance has been very helpful. Mr. Aderholt. Well, all the best. Thank you. [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Thursday, March 3, 2016. DEPARTMENT OF AGRICULTURE, MARKETING AND REGULATORY PROGRAMS WITNESSES ED AVALOS, UNDER SECRETARY, USDA MARKETING AND REGULATORY PROGRAMS KEVIN SHEA, ADMINISTRATOR, ANIMAL AND PLANT HEALTH INSPECTION SERVICE ELANOR STARMER, ACTING ADMINISTRATOR, AGRICULTURAL MARKETING SERVICE LARRY MITCHELL, ADMINISTRATOR, GRAIN INSPECTION, PACKERS AND STOCKYARDS ADMINISTRATION MICHAEL YOUNG, BUDGET OFFICER, DEPARTMENT OF AGRICULTURE Introduction of Witnesses Mr. Aderholt. Well, good morning. Sorry for the delay in getting started this morning. We had votes called about 5 minutes before the hearing was to occur. So thank you all for your patience this morning, and we are probably going to have votes called in another hour, hour and a half. It just depends on how long the debate actually goes. So what I am going to do is to hold to the 5-minute rule pretty steadily. I try to generally, but sometimes people are in the middle of an explanation and I do not want to cut anybody off, but we will try to adhere to 5 minutes so we can go through as many questions as possible and as many Members as possible. But I want to welcome all of you to the hearing today. It is good to have all of you here. We are pleased to begin review of the fiscal year 2017 budget request from the agencies of USDA's Marketing and Regulatory Programs mission area. And I would like to welcome to the subcommittee Mr. Ed Avalos, USDA's Under Secretary for Marketing and Regulatory Programs. Also today, Mr. Kevin Shea, Administrator for the Animal and Plant Health Inspection Service, or better known as APHIS. Ms. Elanor Starmer, Acting Administrator for the Agricultural Marketing Service, and your first time here before us. Welcome. We are glad to have you here. And Mr. Larry Mitchell, Administrator for the Grain Inspection, Packers and Stockyards administration, or better known as GIPSA. And Mr. Mike Young, USDA's Budget Officer. So welcome to all of you. Opening Statement--Mr. Aderholt I have emphasized in previous hearings that really there are four goals that we have for the subcommittee, and let me just briefly go through those. First, of course, increasing oversight efficiency and the need for effective outcomes. Second is keeping rural America vibrant. Third, supporting American farmers and ranchers. And, fourth, protecting the health of people, plants and animals. The Marketing and Regulatory Programs mission area is key to accomplishing many of these goals. Your agencies implement programs everyday that support U.S. producers with domestic and international marketing opportunities, address agricultural threats to safeguard animal and plant health, and ensure fair practices in the marketplace, all of which have made rural America great and a world leader in agriculture. USDA is requesting a total of $1.03 billion in discretionary resources for fiscal year 2017 for the MRP mission area and a modest increase of $8 million from the 2016 enacted level. For AMS and GIPSA, the requests maintain current activities with only requested increases for pay costs. However, APHIS increases for animal health and emergency preparedness are mostly offset by decreases to the popular and beneficial programs that receive bipartisan support. For example, APHIS has requested an increase to enhance implementation of the Lacey Act provisions. There is some concern, I will have to admit, about supporting such an increase at the expense of higher priority and more effective animal and plant health programs, many of which the agency has proposed to decrease. It is this subcommittee's responsibility to ensure that the additional funds being requested for several initiatives are not to the detriment of the critical and successful programs. As the request is analyzed, we will be looking for evidence that current efforts are effective, and I would like to know what industry and public support exist for the expanded efforts. Last year at this hearing, we discussed the importance of your mission area, establishing a long-term strategic infrastructure plan that is crucial to moving products domestically in order to expand trade and marketing opportunities. USDA has been reacting to market disruptions like those at the ports and railroads instead of having a proactive plan in place. The fiscal year 2016 Agriculture Appropriations Explanatory Statement directed USDA to develop an infrastructure plan that will benefit American producers, and we look forward to receiving that report. In recent years, we have provided additional funding for APHIS to address significant agricultural threats, and just let me add we are very appreciative of your work with the private sector to address citrus greening and other threats to plant and animal health, such as the highly pathogenic avian influenza. As you know, in the Fourth District that I represent, we have quite a few poultry producers, and the Alabama poultry industry employs over 85,000 people and generates about $15 billion annually. In the event of an avian influenza outbreak in the northern part of the state of Alabama, our folks could face billions of dollars in losses. That is why I greatly appreciate APHIS working with its partners in the public and the private sector to prevent, control and eradicate this disease. I know all of us will appreciate hearing more from you on the lessons that APHIS has learned in combatting this disease and how the request supports your efforts as we move forward. Today and in the coming months, we expect to have an ongoing dialogue with your agencies in order to develop a fair and responsible budget for the next fiscal year. We will have tough allocation decisions to make, and again, I want to be sure that we maintain funding for the most critical and the most successful programs. So at this point let me recognize Mr. Farr, Ranking Member, for any opening remarks that he may have. Opening Statement--Mr. Farr Mr. Farr. Well, thank you very much, Mr. Chairman. Thank you for convening the meeting today, and I look forward to our discussion. And I thank all of you for coming to this hearing. Many of you may know that I am retiring at the end of this year, and these are my last Ag. Appropriations hearings. I am very reflective on lessons that I have learned and issues that I have taken up. But as I look back on subjects that I cared a lot about, I came here from the California State legislature where I created the first organic standards law in the Nation, which Senator Leahy and Senator Cranston offered as the Federal standard. They used our bill as the model and then came back here and, frankly, Mr. Chairman, we told Secretary Glickman at the time because he had not adopted the rules some 8 years later that if he did not adopt the rules, we were going to remove his salary from the budget. So we got the Federal rules adopted. What is amazing is just to see what has happened with that industry. It is, you know, a multimillion dollar industry nationwide, but I think as it emerged it is new and it essentially had to carry its own kind of cost of enforcement and certification, but I think as they move into major, major efforts in agriculture, the fastest growing economic engine in agriculture is organic sales, but I think that these producers need to be provided the support as traditional commodity crops and others have gotten research, things like that, as in sort of a new law, a new industry. I think in most cases with flat funding, you have got to rob Peter to pay Paul, but I think that there is so much in savings coming out of less inputs for producers that they can make the savings on those, and we ought to transfer some of those savings into providing the support that organic is going to need. And then over my tenure I have certainly learned a lot about what we call specialty crops. I think when I arrived here, we called them ``minor crops''. Congressman Valadao certainly knows about specialty crops because we grow over 400 crops in California. I think we grow 40 crops that no other state grows. All the almonds come from California. All of the pistachios come from California, and most of the strawberries in this country come from my district, and that is about $2.5 billion. Over one-third of the country's vegetables and two-thirds of the country's fruits are grown in California. So, again, this is really going from a minor crop where we were trying to decide, well, will we help them out with pesticide reduction and alternative uses and things like methyl bromide, the research that is necessary, and I hope that this industry will get similar help, those afforded the large commodities. On animal rights issues, I in the California legislature banned the puppy mills and buying and selling animals from puppy mills in California. I was just thinking the other day that all of these animals you see performing in movies now, dogs driving cars, in California we created a retirement account just like other actors and performers get so that when they get too old there is a benefit to put them into a retirement home for performing animals. We created the first Red Wings horse retirement farm for people that bought horses that had been sold for slaughter and things like that where they actually would buy them and then put them in a pasture where they could retire. We banned horses from being hauled to slaughter on cattle trucks which were built for cows that do not have long necks. And so the list goes on and on, and I have certainly been interested in the humane treatment of animals at the federal level. I was with a Republican. We tried to ban performing elephants and we had quite a hearing with a lot of these movie stars, and the bill never got out of committee. But last year Barnum & Bailey decided not to use elephants anymore in circuses, and I think a lot of the issues that we brought up here they paid attention to. And now we are going into a new era. I represent probably 25 or 30 marine research entities, both public and private, around Monterey Bay, and I think what we are looking at is the new marine mammal rules, and I would hope that we would have the ability to respond to the animal diseases that are coming out of marine mammals that could be really fatalistic to tourism and an eco-economy on the oceans. So I look forward to all of these discussions and thank you, Mr. Chairman, for this hearing and allowing me my time. Mr. Aderholt. Thank you, Mr. Farr. Mr. Avalos, without objection, your entire written testimony will be included in the record, but I want to recognize you for your opening statement and any comments you would like to make. So go ahead, and then we will proceed with the questions. So the floor is yours. Opening Statement--Mr. Avalos Mr. Avalos. Thank you, Mr. Chairman, Members of the subcommittee. I am pleased to once again be here to appear before you. I represent the MRP mission area and to present our 2017 budget proposals for AMS, GIPSA and APHIS. Mr. Chairman, you already introduced the folks up here. I just want to say a little bit more about Elanor Starmer. She has been at USDA since 2011. She has been a senior advisor to the Secretary and she has worked on many issues on AMS. Now, they also have submitted statements for the record and are here to answer questions. As you know, I have been here almost seven years. This is my last time testifying before you as the Under Secretary, and I want to take this opportunity to thank you, Mr. Chairman, to thank you, Mr. Ranking Member, and to thank the subcommittee for the support that you have provided to this mission area. In many, many areas we have been able to provide support for agricultural producers, for shippers, for exporters, and for so many folks throughout the country that make their living from agriculture. You have enabled us to support these hard working Americans, to support our rural communities, to support our rural economies. I personally am very, very appreciative and grateful. I also want to congratulate Ranking Member Farr on your retirement. We truly appreciate his passion for the welfare of animals and for the farmers of California and for farmers throughout the country. Congressman Farr, like they say back home, ``te felicito.'' Before discussing the requests, I want to highlight contributions of the MRP agencies to shared goals. MRP agencies support trade through the removal of phytosanitary and sanitary trade barriers, the export verification program, and GIPSA's inspection and weighing program, and so many other activities. The three MRP agencies facilitate our agricultural exports. Through APHIS' animal and plant work and through other programs in the mission area, the MRP agencies protect agriculture. Through AMS' Market News and standards setting work, to just name a few, MRP agencies provide marketing opportunities. MRP agencies also support innovation. A good example are the revisions that APHIS made to the biotech petition review process which has resulted in our continued progress in eliminating the backlog. In closing, Mr. Chairman, MRP supports agricultural exports, protects domestic agriculture, assists in the development of markets, and supports innovation. Our 2017 request allows us to continue this important work. This concludes my statement. I look forward to working with the subcommittee, and we are ready to answer any questions you might have. [The information follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] HIGHLY PATHOGENIC AVIAN INFLUENZA Mr. Aderholt. Thank you, Mr. Avalos, and we appreciate, again, each of you being here today and for helping us get through a few questions that we wanted to pose to the panel. I wanted to start with the discussion of highly pathogenic avian influenza. I first want to say thanks to all the folks at APHIS who really have done a tremendous job working on that program to try to combat highly pathogenic avian influenza over the past few months and working with the states and the poultry and layer industries to not only prevent but to combat and contain the disease. As I mentioned in my opening statement, there are a lot of poultry growers and producers in the district down in Northern Alabama. So we have been closely watching the Department's response on this disease. Second, I want to hear your thoughts on the Secretary's use of emergency authority to access $1 billion to respond to this outbreak. Previously the funds covered indemnity payments for producers as well as cleaning and disinfecting the birdhouses. Lastly, I would like to hear from you on the lessons learned and how the fiscal year 2017 budget can help prevent future outbreaks. My first question would be regarding the Nation's poultry sector having lost nearly 50 million birds last year. Between the Federal dollars and the losses in the private sector, this outbreak will cost well over $1 billion. What could USDA have done differently to either identify the virus or contain the virus earlier? Mr. Avalos. Mr. Chairman, as you mentioned this was a devastating, devastating outbreak. Under the direction of Mr. Shea and his people at APHIS, we were able to rapidly address what I would call the worst animal disease outbreak in the history of our country. I want to ask Mr. Shea to talk a little bit about the lessons learned, talk about his emergency response plan and other work that is being done at APHIS to address highly pathogenic avian influenza. Mr. Shea. Thank you, Mr. Avalos. Mr. Chairman, there are a number of lessons we learned. Probably the most important lesson is that we and the industry need to really do a better job with biosecurity. The level of biosecurity in the poultry industry was good, but it was good for an ordinary time, not good for a time of an extraordinary disease like high path avian influenza. So we really need to do a better job with biosecurity. We need to be able to respond faster and with more people, and indeed, that is one of the primary increases we are asking for in our budget this year, is to add as many as 80 first responders. If we could have had more trained veterinarians and animal health technicians on the ground faster, I think we would have had a better outcome or a quicker outcome. We also learned that we need to rapidly depopulate poultry houses when they become infected. The longer the poultry houses sit there infected, the level of infection rises, can spread easily. So we really need to depopulate quickly. We need to make sure that we are working very closely with the producers to get them compensation quickly so they can get back in business as soon as possible and also to encourage them to report the disease as soon as possible. I think also we learned that we need consistency of message when we are on the farm. By not really being fully staffed with emergency responders, we had to rely probably more than we would have liked on contractors, which led to some inconsistency in message from farm to farm about what they should do. So I think that was important. I think we also learned that we need to know what to do with the carcasses once they are put down. The very best thing to do is to compost them right on the farm, but if that is not possible, they need to be sent somewhere else. We need to make sure there are disposal facilities available. What we found last year was that many landfills simply would not take the carcasses. So we need to be better prepared to deal with that. We also need to make sure we are working better around the world for an understanding of this disease, and what we are doing to deal with it. A few countries cut off all U.S. poultry from Alabama to California because of poultry diseases in Iowa and Minnesota, and we think that we can do a better job working with our partners around the world to understand that they should draw restriction lines on a much more narrow basis going forward. So all of those are things we have learned. Mr. Aderholt. All right. In keeping with the five minute rule, I am about down so I am going to go ahead and recognize Mr. Farr. LIGHT BROWN APPLE MOTH (LBAM) Mr. Farr. Thank you, Mr. Chairman. Talking about specialty crop pests and combatting those pests with all of the input from transportation hubs and international hubs, both land and sea and air, there are always pests coming in unexpectedly and creating outbreaks of non- native threats. And one of those was the light brown apple moth, and we kind of hoisted our own petard because we told countries that if they had any light brown apple moth, we were not going to allow any of their produce into our country and then, lo and behold, we have it, and in order to export our product we have to certify that every crate essentially has to be inspected, hand inspected, and including all foreign exports. So I want the Department to tell me that it will direct adequate resources to ensure that the agricultural export markets impacted by LBAM quarantines will be protected going forward. And how does the USDA plan to balance the competing regulatory needs for the nursery industry while providing sufficient resources and infrastructure for the core regulatory program for exports? Mr. Avalos. Congressman---- MARKET NEWS LOCAL FOOD DATA Mr. Farr. Quickly. Why do I not ask my questions and then you can answer them, and if not we can get them back? The other was many parts of the country and in my district more and more producers are differentiating their products as locally grown, organic or grass fed or other ways to tap into the rapidly growing markets that everybody wants, you know, local and fresh. It is important for the industry to have up to date information on changes in the market so that they can adapt quickly and make informed business decisions. So this question really goes to the work of going through the market news to track and report these growing markets so that farmers, buyers, aggregators, sellers and others will have information that they need. Are we paying attention to that? Just a nod, that is good. I am going to have to be careful of time because I run over more than anybody does. NATIONAL ORGANIC PROGRAM (NOP) The National Organic Program is charged with regulating, enforcing organic regulations as well as ensuring that they evolve to keep pace with consumer expectations. They asked for a small increase. As the organic sector grows, the job of NOP grows. Does the small request for the increase in NOP keep pace with what is happening with the farm, ranch and consumer needs in organic? Do I have any time left? ORGANIC AQUACULTURE RULE The other question I have is, and this is one that I am really kind of ticked that I never can get a hard answer for, and it has to do with the organic aquaculture rule. So many people in our area are interested in organic aquaculture. Certainly we cannot just keep hauling everything out of the wild ocean and expect it to be sustainable. We have got to start shifting and growing our fish and shellfish in an organic way in aquaculture. I know that the USDA has got a proposed rule to OMB last August. They were supposed to have 90 days to review it, and it is really held up. But as I understand it is held up by National Oceanic Atmospheric administration (NOAA) now, but it is your rule. So who takes the lead to get it out of NOAA and get it adopted? And that is the last question I will ask for this round. Mr. Avalos. Congressman, just to save time, I know how important this aquaculture rule is. I am going to give it to Ms. Starmer. She is also going to answer your NOP question. And Market News, I just want to put a plug in for Market News. It is so important to the large and small producers and so important to other stakeholders. Mr. Farr. We understand that. Mr. Avalos. So I will not take up any more time. I want to let Elanor talk a little bit about some of the other things that we are doing to address Market News in local and regional. Mr. Farr. In about a minute. MARKET NEWS LOCAL FOOD DATA Ms. Starmer. Yes. Thank you, Congressman. Market News, as you know, provides critical information for the industry that can impact billions of dollars of trades each year, and we have worked very hard to ensure that that program innovates with new needs in the marketplace. So we now have over 270 organic price reporting programs through Market News. We have developed a Market News program for local food prices, which includes farmer's markets, farm- to-school activities, and food hubs, and we have a grass-fed beef Market News price reporting service as well as one for non-GMO products. Mr. Farr. How are we doing in creating that grass-fed as an organic meat? Because, you know, that is the process that is so costly. You have to have your slaughter certified and everything and then keep it identified as organic, and a lot of people want to create smaller slaughtering centers. Does the newsletter keep that information? Ms. Starmer. It certainly helps provide price transparency across the whole supply chain, yes, but I think this gets to your other question about how we are supporting the organic industry overall. We have certainly made great strides within AMS in that, but we also have a full-time employee who works across USDA to ensure that things like our Credit Programs, our Crop Insurance Programs, and our research agenda are adequately meeting the needs of the organic industry. So our budget request really reflects, I think, a growing capacity across the institution to support this market. Mr. Farr. I would like some copies of that. Ms. Starmer. Absolutely. And finally, sir, on aquaculture, we are working very hard to address the questions that we are getting out of OMB. I know they are very complex. We are working diligently on that. [The information follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Aderholt. Mr. Yoder. VETERINARY BIOLOGICS Mr. Yoder. Thank you, Mr. Chairman. Welcome to the committee, everyone. It is good to see Mr. Young back for a fifth time now maybe. I want to associate myself with the comments of our Chairman and the concerns that he has raised related to threats to the food supply, and he brought up avian issues. You know, in general, I think we all have to be certainly concerned about threats from terrorism, you know, in Kansas obviously, and in Manhattan they are building NBAF, National Bio and Agro-Defense Facility. So it is an issue that is important to my state, important to producers, but it is ultimately going to be important to every American if the food supply gets disrupted. And so I just want to associate myself with those comments. And I am interested, in particular, related to vaccines and how that relates to this. As we know, animal vaccines are critical to protecting America's flocks, herds, and pets from domestic and foreign animal diseases. What improvements have been made to speed up the approval process for new veterinarian biologics? Mr. Avalos. Congressman, I am going to ask Mr. Shea to answer. Mr. Shea. Thank you, Mr. Under Secretary. Yes, we made great progress on veterinary biologics. We entered into a business process improvement process four years ago, and we have dramatically reduced the amount of time it takes to get something on the market from the day it is first brought to us for approval. And just this last year we approved a single claim label, which will also speed up the process, because before a label would have many claims which took us much longer to approve for each claim. By just approving the single claim, which is the most important that producers will need, we have dramatically reduced the time. So we are making great progress. BIOTECHNOLOGY REGULATIONS Mr. Yoder. Well, that is great to hear, and that is obviously a bottleneck on the ability to solve this if we do not have the vaccines moving quickly. So I am glad to hear that. I want to turn your attention to some comments that Secretary Vilsack made when he was before the committee a few weeks ago. I asked him about any new regulations that were coming forward that we ought to be concerned about or that producers and farmers should be aware of. You know, in the last year of an administration, Republican or Democrat, frankly, there is sometimes a flood of last minute regulations that come forward, and I have had some producers in Kansas raise some concerns about the modifications and regulations in Part 340, and I wondered if you could speak to that. What I hear from my folks is that it would represent a significant increase in what could be regulated. USDA authority would no longer be limited in many areas, and I think we all want smart regulations, just not over-regulations that are costly and burdensome, and we have to always remember that for the producers that have to implement these regulations, it is expensive for them. Ultimately it hits the cost of groceries for everyone. So we need greater efficiency and new technologies available to farmers, but not to increase the regulatory burden making it more difficult, and I thought you could speak to how you are balancing that and ensuring that we are keeping that in mind. Mr. Avalos. Congressman, I appreciate your question and your comments because I can relate to them. We are considering changing the biotech regulations. They have not been updated in over two decades. I am going to ask Mr. Shea to tell you a little bit about where we are on this. Mr. Yoder. Sure. Mr. Shea. It is certainly not our intention to make it more difficult for new technology to get to market, and in fact, some of the possibilities are that we are regulating more things than we need to be regulating now. So that is why we put out a notice of intent to do an environmental impact statement, and the comment period, by the way, has been extended for 75 more days. So there will be lots of time for folks to comment on this, but we are looking at all possibilities. One would be for us to entirely get out of the regulation business. One would be for us to do nothing different at all, and then there is a regulation or option that would have some more regulation, and then there is another option that we think may be the best one, but we need to get comment on this and analyze those comments, and that is to have a method where things that are proven safe, have been approved before and simply and extension of an early approval, that we do not spend a lot of time on those so we can move more quickly and get those to market. So we certainly understand your concerns, share those, and believe me, it is not our intention to make the process more difficult but rather streamline it as we go forward. GIPSA INSPECTION AND WEIGHING USER FEE CAP Mr. Yoder. I appreciate your comments. Lastly, in looking at the proposed budget for GIPSA, I noticed there is a proposition to remove the cap on user fees that your agency is allowed to collect. Given the current budgetary constraints felt by everyone, I would like to hear the justification for increasing these fees, and if we are taking into account the impact on the producers. Mr. Avalos. Congressman, let me ask Mr. Mitchell to answer your question. Mr. Yoder. Mr. Mitchell. Mr. Mitchell. I would be glad to, Congressman. The cap is on using our user fee account. That cap is there whether we are having a good year or a bad year on our exports. So there are some years where we have a very high level of grain exports. We bring in the revenue from the user fees, but we are capped on how much of those fees we may utilize to ensure we have the proper staff in place. As a provision of the Reauthorization Act of last September, we now have a system that will be in place that requires us to adjust our user fees each year so that we carry a window of between 3 and 6 months' reserve in that account, and so we should be able to deal with things a little bit better. Now, like I say, in a strong year, such as last year, we had record grain exports. It got pretty thin at times on how we could make sure we had the proper people in the proper place at the right time. But with this new three to six-month cap or a calculation on what the user fees will actually be, I think that is an additional place where we will keep this as inexpensive as possible. We are currently doing the entire service for exporting grain. It is weighed and inspected. Almost everything that goes out of this country, it is well under a penny a bushel, is the total cost. That is a pretty good bargain for producers who deal with risk mitigation in many, many levels. It is probably one of the least expensive places that they are allowed to buy that risk mitigation to ensure that our overseas buyers continue to buy from us and that our grain exports continue. Mr. Aderholt. Ms. Pingree. MARKET NEWS LOCAL FOOD DATA Ms. Pingree. Thank you very much, Mr. Chair. Thank you everyone for being here today and for the work you do. I will just throw a couple of quick questions out in the interest of time. First, for Ms. Starmer, thank you, and I appreciate the Ranking Member's questions. I think I got my first question answered, but maybe if you are going to follow up with him, I would be interested in some of the same things about the local food data. I know that it's a relatively new expansion, and I am interested in how you go about collecting the data, and I would like to see some of the results. I know you said you were already doing it, but just anything about how you are moving forward and expanding your capacity because that has got to be one of the trickier things, to get the right kind of data. I was actually thrilled to hear that you have a full-time employee working across all of those sectors because I do think that this is such a great economic opportunity for agricultural sector, and there are a lot of pitfalls along the way. So maybe sometime, not in the committee, but we could just hear a little more about how that is working on that one. FOOD SAFETY MODERNIZATION ACT (FSMA) The other question for you is around FSMA, which of course is an enormous rule. FDA has finished a lot of work on it, and probably the biggest question I get from farmers in my state is just how the implementation will work out. And I think for a lot of the small and medium size farmers, there are a lot of issues there. So I know you are launching the GroupGAP in April, and I am interested a little bit in how that is going to be there to help small and midsize farmers as they tackle the implementation and just want more assistance in doing that. And I will stop there because I hear our buzzers are ringing. Ms. Starmer. I thank you, Congresswoman. Thank you for your leadership on all of these issues. Quickly on the local food data, we are working through cooperative agreements with states to gather data. They may go out to the farmer's markets. The farmer's markets may report it, and they are looking, as I mentioned, at farm-to-school activities as well. Ms. Pingree. Great. Ms. Starmer. So all of that data is then going to flow into a number of our other programs and hopefully influence their effectiveness for that sector. On your question about FSMA, and I do want to say on a personal note that many of the producers in my home state of New Hampshire look quite a bit like some of the folks in your district. So this is something that I am personally very committed to ensuring we figure out. Ms. Pingree. Great. Ms. Starmer. Although the main responsibility for food safety is obviously lying with FDA, AMS has worked for a long time to try to bridge agricultural producers' needs in ensuring food safety verification in the marketplace through the Good Agricultural Practices (GAP) Program. And as you mentioned, we have developed GroupGAP. We will launch that in April. It helps smaller groups of producers share the cost of certification and audits across that whole group. So the burden is less for them, and then there are spot audits to ensure accountability. So we are very pleased with how our three-year pilot for that program has gone, and we are really looking forward to rolling that out in April. In addition to that, we do have a full-time employee who works with FDA on FSMA, who has been able to bring the perspective of the agricultural industry to those discussions, and she will continue to do that work. We jointly fund the Produce Safety Alliance with FDA, which is a Cornell University-based outreach and education program. We also fund through our Specialty Crop Block Grants Program and now through the new Specialty Crop Multi-State Program. We expect to fund a number of food safety-related projects there. I do know in Maine over the last few years, I think, since 2009 the state has been able to make about 12 grants specifically targeted to small and organic producers around food safety education. So that is a really important program as well for that work. So there are lots of tools in the toolbox, but it is very important that we make sure this works for everyone. ANTIMICROBIAL RESISTANCE Ms. Pingree. Well, we will certainly look forward to working with you on that as this progresses and as people start to implement this in the field. I will just throw one quick question in there for APHIS, Mr. Shea. I know you know antimicrobial resistance is a huge concern, and I think last year you said APHIS would gather on- farm data on antibiotic use. Unfortunately, I know you did not receive the funding you requested, but can you give me just a little bit of an update? Are you currently doing any data collection? I know you have requested $10 million again, which would be very helpful. How would you use that funding if you are able to procure it? Mr. Shea. Unfortunately we will not be able to do anything without the funding, and so we are asking for that funding again. We really want to gather that data so there can be a fair and reasoned discussion about antimicrobials. Ms. Pingree. Right. Mr. Shea. There are those who believe that farming is all of the problem. We do not think that is probably the case, and so we think it would be very helpful to have that data so there can be a real science discussion here. Ms. Pingree. Great. Well, we will hope that you are able to receive the funding this year. It is an important conversation to have. Thank you, Mr. Chair. Mr. Aderholt. OK. Thank you, Ms. Pingree. The bells have rung. We have got a couple of votes coming up. So I think we will have time to go to Mr. Valadao and then we will come back and try to make sure everybody gets at least one round. So, Mr. Valadao, you are recognized. WILDLIFE SERVICES Mr. Valadao. Thank you, Chairman, and I will be brief. Thank you, Under Secretary and fellow guests. Mr. Shea, I understand that some federal programs are administered by the USDA and APHIS through cooperative agreements directly with the counties in California. One of those programs is the Wildlife Services Program. I know that counties in California are under increasingly intense legal challenges and financial pressures. Can you please explain how APHIS distributes funds to states like California for this program? And I would also like to better understand how the cost share for Wildlife Services is split between APHIS and county cooperators in their cooperative agreements. Mr. Shea. Mr. Congressman, we spend about $2.5 million on wildlife services' work in California. The counties and other cooperators put in about $2.2 million. Unfortunately the state does not really put much money into wildlife services' work in California. At one time the ratio was about one-third, one- third, one-third, but then the state pretty much stopped doing that. We are very aware of some of the legal challenges underway that the counties are dealing with, and we really tried to help with that. One thing we did was put a full-time National Environmental Policy Act (NEPA) coordinator in California to help with all of the counties, and particularly the counties in litigation now, to develop the data needed to respond. We also added another $200,000 to what we allocate to the counties from what we did the previous year to also help defray the costs that they are encountering in these cases. But we believe we are putting a pretty fair amount of money into California as a whole and certainly understand the need that exists in many counties throughout California, but we do look for more cooperation from the state. Mr. Valadao. Yes, and I apologize. Time is running short. I know we have got to go vote because they will cut us off. But that is an important issue in some of our counties facing these legal challenges and fighting it out in court is something that we do need to address quickly. I will see if I can come back and continue this conversation. Thank you. Mr. Aderholt. We will adjourn for votes. If you all will just bear with us for a few minutes, we will probably be back in ten or 20 minutes. Mr. Avalos. OK. Thank you. [Recess.] Mr. Aderholt. OK. subcommittee, come back to order. We'll recognize now Ms. DeLauro. POULTRY PRODUCTS FROM CHINA Ms. DeLauro. Thank you very much, Mr. Chairman. Welcome to everyone here today. Mr. Avalos, the USDA Office of Inspector General, they issued a report, and it was entitled, ``AMS Procurement and Inspection of Fruits and Vegetables,'' in which it found fault with the agency's track record on closing out contracts and for not tracing back the source of the produce it was purchasing to ensure that it was from domestic sources. As you know, the Sacramento Bee revealed that some school districts in California were purchasing canned peaches from China in violation of the Buy American requirements for the National School Lunch Program. But as part of the 2017 USDA budget submission, the administration is recommending the elimination of Section 730 of the 2016 Omnibus that would prohibit the purchase of poultry product from China for the various nutrition programs USDA administers because there is already a Buy American provision for food purchased by USDA. In light of the agency's track record on closing out contracts and tracing back the source of food purchases, tell me why we should drop that provision in future appropriations bills. Mr. Avalos. Congresswoman, first I want to applaud your efforts to promote America---- Ms. DeLauro. Thank you. Mr. Avalos [continuing]. Promote American products. It is so important to our rural communities, so important to our farmers and ranchers. To answer your question, I'm going to ask our administrator to answer. Ms. DeLauro. OK. Ms. Starmer. Thank you, Congresswoman, and thank you for your leadership on these issues. We did appreciate the OIG report and the recommendations that it put forth. We do have a timeline for addressing those, and we're ahead of schedule on all of them. They raise procedural and documentation issues, not-- nothing that raised any concerns about food safety or other issues of nonconformance. And I can say that we are required by statute to purchase a hundred percent domestic products. So, even if the general provision were removed, that would not affect our purchase of a hundred percent domestic. That's governed by a separate part of the statute. SCHOOL MEALS PROGRAMS Ms. DeLauro. Well, but as to that point, just let me say that that's correct. But the majority of the food used in the National School Lunch Program and the School Breakfast Program does not come from USDA commodities. It comes instead from private vendors. Under the USDA regulations, the vendors must use only 51 percent domestic ingredients, meaning that items like chicken burritos or chicken soup may contain Chinese processed chicken at up to 49 percent of the finished product. Moreover, under the School Lunch/School Breakfast Program, the 51 percent rule may be waived entirely if bids reveal that a domestic product costs significantly more than a foreign product. And there is no 51 percent requirement at all in the child and adult care food program or the Summer Food Service Program. So, that while that is there, the fact of the matter is that it is--quite frankly, it's meaningless. There are so many ways in which to avoid purchasing American products--and this Section 730 was all about prohibiting the purchase of poultry products from the People's Republic of China, a country that doesn't have exactly a stellar record on food safety. So, there was agreement that we would do this. Now, to remove that while it is in the Omnibus bill seems to me that why are we trying to do that when we both have a situation of canned fruit from China, and we have a law now that is--you can drive a Mack truck through it. Ms. Starmer. Yes, Congresswoman, and you've identified the distinction between the different programs that are at play there. The AMS Commodity Purchasing Program is required to be a hundred percent domestic. The other issues are covered by FNS, so I can't speak to them. Ms. DeLauro. Well, but the AMS purchased products for the school lunch program. Ms. Starmer. We purchase commodities, and those must be a hundred percent domestic. Ms. DeLauro. Well, I'm sorry. I don't know--then, I will double-check. Ms. Starmer. The other ones are Food Nutrition Service Purchase. Ms. DeLauro. Well, then it---- Ms. Starmer. Or--excuse me--the schools purchasing directly using funding from the other agency. So, our commodity purchases for school lunches are governed by statute that requires them to be a hundred percent domestic. Ms. DeLauro. Well, what I would just say is I don't see then--while you are trying to do what has been asked of you with regard to the canned fruit--incidentally from China as well, I might add. There seems to be a great interest in purchasing products from China overall when we know what the safety record has been on those, and we know that we have no ability, no ability whatsoever, to oversee what is happening in China when they process chicken. We don't know what goes into what. We don't know at what temperature it's done. We have none of that information because we are not overseeing that process. So, it would seem to me that that section 730 would be a safeguard and that it ought to stay there. And I think you understand that--and especially when we just put it in the Omnibus, overwhelmingly budget deal, budget agreement, etcetera. And now, it's the administration that wants to pull that piece out. I find that very, very troubling, and you can be sure that I will do my best to keep us from turning this around for the safety of the product that we feed our kids in a school lunch program or in a school breakfast program. Thank you, Mr. Chairman. Mr. Aderholt. Mr. Rooney. CITRUS HEALTH RESPONSE PROGRAM Mr. Rooney. Thank you, Mr. Chairman. Good to see you all. I wanted to talk about citrus funding today. The FY 2017 budget cuts funding the Citrus Health Response Program or CHRP by adjusting the federal cost share rate from 94 percent to 80 percent. Your budget requests an overall decrease to the Specialty Crop Pest Program, including a reduction of $7.2 million to the CHRP program. I understand USDA has a lot of factors to consider when determining what the federal portion of that tab is going to be. You all have indicated that--to take into consideration whether it's a new threat or a longstanding program effort, whether the pest or disease spreads quickly, and what the commercial interests are at stake. I would argue that the current Huanglongbing (HLB) challenge more than addresses these qualifications. The President's budget request reduces the federal cost rate, again, from 94 to 80 percent. This might not seem like that much, but at this critical time, we need all the help that we can get. Last year you indicated that USDA had not conducted an analysis to determine whether or not state and local entities would be able to increase their portion of the cost share. And I don't need to remind you of the important stake agriculture has to our economy in Florida and the fears of how deeply aggressively dropping citrus production will impact our state. We have shown that we do have skin in the game in Florida, but the industry is getting to the point where it can't support a lot of the systems it used to rely on. A very prominent group of companies involved with the citrus industry recently suggested that our State Department of Citrus needs to reduce their budget by 70 percent. ``The impact of citrus greening has been overwhelming and unprecedented. And it is not an exaggeration to state that we are in a struggle for our very survival.'' The letter said, ``This challenge has dictated a need to change and adapt, and the undersigned believe that the industry makes a dramatic change. It's prudent to consider significant modifications to the Department of Citrus to adapt the crisis and give the industry the best chance of survival and rebuild.'' My question is, if the growers are unable to support their in-state organization, the Department of Citrus, how can you expect that a reduction in the federal investment is appropriate? And in the event that the states cannot afford an increase in the cost share rate, will this result in your overall decrease in CHRP funding? What CHRP activities would be impacted? If you can provide specifics, that would be great. I just want to editorialize at the end of my statement there. These growers are at the end of their rope. It is a critical time in Florida for us to be able to defeat greening and move forward. So, I appreciate your answer. Mr. Avalos. Congressman, we understand very well how devastating citrus greening has been to the growers. And I want to show you that we're not going to abandon the growers. We're still looking for solutions, looking for tools to help them overcome this devastating disease. I'm going to ask Mr. Shea to talk a little bit more on your statement and your question. Mr. Shea. Mr. Congressman, we are certainly devoted to this cause, and I know Secretary Vilsack is as well. And we are hoping that some of the tools that we've been able to develop over the last few years, thanks to the funding provided by this committee, will make a big difference. Thermotherapy, Dr. Ehsani at University of Florida has done great research there, and it looks like you can indeed provide protection for a tree for four years, treating the tree at a cost of about $1.56 a tree with thermotherapy. We think that might help. We think the use of antimicrobials will help. And currently the state has a pending Section 18 exemption request with EPA, which they believe they will receive this year or this month, that will allow the use of these under foliar spray. And we believe that can provide indefinite protection to a tree. So, that's another tool that we put into the hands of the growers that they didn't really have a couple of years ago. And also the use of biocontrol using parasitic wasps, they had great success so far in Texas, an 85 percent reduction in the number of silletes in Texas where we've used these, and we think that can have good success in Florida as well and California too for that matter. And of course, another big issue in Florida, as you're well aware, is how do we manage abandoned groves. And I know that the state has done some good work on that with private landowners. So, we think we have more tools available than we did before and that these maybe have some effect coming forward. Mr. Rooney. Thank you. Thank you, Mr. Chairman. Mr. Aderholt. Mr. Valadao is back, so I'm going to go ahead and--you only used about half of your time, so I'm going to go ahead and give you the rest of your time on this first round. SPECIALTY CROP PESTS Mr. Valadao. Thank you, Chairman. And I'm back. So, took a second there. I apologize. But the 2017 budget proposal Specialty Crops Program--Pest Programs to be funded at $146 million. However, the estimated 2016 budget is $164 million. Given that we are seeing an increase in fruit fly, HLB, Asian Citrus Psyllid (ACP) and other pest and disease outbreaks in specialty crops, this $18 million decrease in funding seems inadequate. In California, Florida, Texas, and other citrus-producing states, ACP and the devastating disease HLB continue to spread. Can you please give the committee a breakdown of what programs you anticipate will be cut, and what is your plan to continue to combat these pests and diseases while cutting the budget so dramatically? Mr. Avalos. Congressman, I'm going to ask Mr. Shea to answer your question. I still want to talk about wildlife services. Mr. Valadao. All right. Mr. Avalos. I thought we were going to come back. But I just wanted to make a statement about wildlife services, that it's so important a program to our farmers, our ranchers--not just to rural communities but to citizens all over the country that so many people don't realize. I wanted to say that, but I knew you were going to break to go vote, so I just wanted to get it in. Mr. Valadao. And yeah, it was a little more just a statement of how important the program was. And some of our counties are facing lawsuits, and they continue to be sued. Some settled and actually came back to second round of lawsuits, and so it is something that we are obviously paying attention to. And I wanted to make sure that was on your radar, so thank you for that. But back to that question if you don't mind. Mr. Shea. Yeah, Mr. Congressman. On this specialty crop issue, we hope there is no reduction whatsoever in those programs. We hope that the states will step in and pick up a bigger share of the program than they have in the past. Now, we were just talking about the Citrus Health Program where the Federal Government has been paying 94 percent and we think the states could pay a little more there and the same with the other programs, glassy-winged Sharpshooter, all the programs. Same goes with the Tree and Wood pest programs. We are simply-- -- Mr. Farr. How much is the state paying? Mr. Shea. Well, for the glassy-winged sharpshooter, the breakout is about 53 percent federal and 47 percent state, and we would kind of like to reverse that. And for glassy-winged-- or I'm sorry--for the light brown apple moth, the state actually puts no money into it, and we are paying a hundred percent of the cost. And if I could very quickly--I didn't get a chance to answer your question about that. OK. I'm sorry. Mr. Valadao. I'll be happy to yield a little bit of time if you want to add to that. Mr. Farr. No, I'm interested in what we do. Usually the first money comes from the growers themselves, you know, through their association marketing orders. But I think the question is, will you sustain it. And if not, I mean, is there a standard? I mean, disaster assistance, 75 federal and 25 local. That's sort of the standard. Is that the standard in matching these outbreaks? Mr. Shea. I think that's a good example. In an emergency situation early on, we think a very high Federal percentage is appropriate. But for long-term sustained management programs like glassy-winged Sharpshooter and Light-Brown Apple Moth, we think that the states should bring up--pick up more of the cost than they have been. I might add that producers themselves are picking up quite a bit of the cost. And on light brown apple moth, I just want to give you the firm commitment you asked for earlier. We will not back away from what's needed to keep trade moving. And we also have something in mind that will help the nursery people, and that is getting away from inspecting every plant that leaves and, instead treating. And doing that would remove that need, we hope, going forward. I apologize for taking some of the time to answer the light brown apple moth question. Mr. Valadao. No, I'm fine. I think my time is up, so---- Mr. Aderholt. You still have a little time. Go ahead if you've got--you need anything else? Mr. Valadao. No, I'm good. Thanks. Mr. Aderholt. OK. PORK INDUSTRY LAWSUIT Mr. Young. Thank you, Mr. Chairman. Acting Administrator Starmer, I want to thank you for allowing Arthur Neal to come out a few weeks ago to the Third District and participate in an agriculture transportation roundtable. He's a great representative for the USDA and the AMS. Two thoughts here, one, Pork the Other White Meat lawsuit. I hope the USDA is working with the pork producers on this ongoing suit. My understanding is a settlement is being discussed. And I'm not sure who in the industry is speaking for the pork industry, but I'm hearing a lot of voices back home that their voices aren't being heard. And so, I just want to make sure that you're reaching out to the pork producers to be part of the settlement discussions at least. Ms. Starmer. Yes, sir, we do to the degree that we are able to, given that there is pending litigation. So, we aren't really able to talk about it, but we have certainly worked as hard as we can to bring the parties together on this. Mr. Young. OK, because many of the producers are wondering who is representing them in this settlement, in this lawsuit and who is speaking for them because they do not feel like their voice is heard. HIGHLY PATHOGENIC AVIAN INFLUENZA Second issue here--and the Chairman touched on this--and that's about the avian influenza, the bird flu. In Iowa it was 31 million chickens, turkeys, backyard flocks. And we had some lessons learned about how we go forward to address these and put them into action. One thing that was very concerning to folks on the ground in Iowa was the lack of communication and the length of time it took to dispose of birds; and the reimbursement process, they said, was slow. How are you working to implement the lessons learned. This was one of the biggest viral outbreaks in livestock to date that we really know of. How do we go forward with this and streamline the communication problems and put those lessons learned into action? What are you doing to help rectify this? Mr. Avalos. Congressman, again, I want to reinforce that it was the largest single disease, animal disease outbreak in the history of this country. Mr. Shea spoke to that a while ago. And maybe I'll ask you to go ahead and repeat some of the stuff you said. Mr. Shea. Mr. Congressman, specifically on the things that you mentioned, we have a request to add about 80 emergency responders in the animal health area. If we would have had trained APHIS veterinarians to dispatch and stay on site for the entire time, I think we would have overcome a lot of those communication issues. When we had to rotate people in and out, that led to some inconsistency in message. So, if we had the emergency responders in place who could stay there, I think we would have been better off. In terms of compensation, we've streamlined that process already so that we can make the calculation of indemnity based on paperwork that the owners already have rather than do some other kind of inventory later. So, I think we made great progress on that as well. And in terms of rapid depopulation, you're absolutely correct. If we can do that in 24 hours, we help that producer get back in business sooner, which is important. But more important, if we can knock that virus load down, there's less virus to spread around. So, 24 hours is our standard that we want to apply. And that's certainly a big lesson we learned. FOREIGN ANIMAL DISEASES Mr. Young. One final note. The Homeland Security subcommittee on Emergency Preparedness recently had a hearing on agro-terrorism. Witnesses called for increased scrutiny of imports to prevent diseases such as foot-and-mouth disease or African Swine Fever from entering the country. Can you talk about how APHIS determines whether a foreign site visit is warranted? Mr. Shea. Well, we start with a presumption, if a disease is present in another country, that we will not accept products from that country, whether it's beef, pork, what have you. When another country makes a request of us to allow their product to be imported, that's when we would do a risk assessment. And certainly, a risk assessment almost always entails a site visit, an in-country site visit. Certainly, any country that has major diseases in the past like foot-and-mouth disease or classical swine fever, we would indeed do an in-country visit to help with that risk assessment. Mr. Young. And do you work in partnership with the FDA these risk assessments and these inspections abroad? Mr. Shea. We tend not to because these requests are only on the animal health side of it. Mr. Young. Thank you for your testimony and coming for us today and your service. I yield back. GENETICALLY MODIFIED ORGANISMS (GMO) LABELING Mr. Aderholt. Thank you. I want to ask a little bit about GMO labeling. And Mr. Avalos, and of course, anybody on the panel, I certainly need your input on this. Secretary Vilsack and the Acting Commissioner of the FDA were both here before the subcommittee. And I asked both of their opinions on the safety of genetically modified organisms, GMOs. Both of those individuals, Acting Commissioner and the Secretary, clearly stated that the science behind these products supported the federal government's position that these products are safe for planting and safe for human consumption. He and I also spoke about the lack of information out in the public. And as you know, has been the case that we've been dealing with, regarding GMOs. And a great deal of the misinformation that is relayed in the public realm. Your mission area plays a lead role in the regulation of genetically engineered organisms, as it relates to agriculture. Correct me if I'm wrong on this, but essentially, APHIS will decide if a seed can be sold in interstate commerce, planted in the ground, or allowed to go to the market. How many years has the federal government been studying GMO products? Mr. Avalos. First off, Mr. Chairman, I know that there's been considerable discussion on this topic. And I know that the House and the Senate continue to work on the subject. And, this mission area, we do provide technical support. But to answer your question on the deregulation of GMO products at USDA, I'm going to ask Kevin to respond. Mr. Shea. Mr. Chairman, of course, we're a part of the federal framework. The EPA has a role in this. The FDA has a role in this. Our role is rather limited, really. We only determine whether or not a proposed event, as they call it in that business, would pose a plant health threat. That is our role. So we don't really address the human health angles. Someone else does that. Or even other environmental angles. Now, certainly they are part of the overall rulemaking. As, because any rulemaking has to have some economic and environmental analysis to it. But the bottom line for us is, is a new biotech proposal, proposed item, a plant-pest or not? Will it cause harm to plant heath? That is our only role in it. And it's the role we've had in this framework, federal framework now, since 1987. It's why I mentioned earlier, we put that framework together and our rules together based on the technology of the day, which has changed pretty dramatically. And in terms of improving products, I will say, we've kept our commitment to you. The backlog has essentially been eliminated. We had 23 products in the backlog four years ago. All but one of those have been deregulated. And the only one that hasn't is involved in a very complex environmental impact statement. Since then, 16 more have come in. Eleven have already been deregulated and four are on the quick path towards deregulation. Mr. Aderholt. But you are responsible to go through and approve if different seeds or products can get approval, is that correct? Mr. Shea. Yeah, but only for the plant health angle. We can approve that. But if EPA hasn't done its part of it, the products still couldn't be used. Mr. Aderholt. As far as what your role has been, in that limited role that you mentioned, do you have a rough estimate of how many different seeds or products have been approved by APHIS? Mr. Shea. We'll get that for the record. But I think it's probably hundreds. [The information follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] ORGANIC EGG STANDARDS Mr. Aderholt. Let me start out, let me go ahead and ask about one other issue that I'm aware that there are concerns from the organic egg producers about some of the requirements the National Organic Standards Board has recommended in regards to organic egg production. If implemented by USDA's National Organic Program, these recommendations would effectively ban the use of endorsed outdoor access areas that are called porches. It's already been said, and you know that we've just faced one of the largest or maybe the largest animal health event, with the outbreak of the highly pathogenic avian influenza. It could cost over a billion dollars and result in the depopulation of nearly 50 million birds. The egg laying industry has significantly been impacted by this. And a question, birds that are exposed to the outdoors run a much greater risk of being infected with avian influenza. Yet it sounds like the proposal would require organic layer hens to be outdoors. Has APHIS been consulted about this potential requirement, as they may have different thoughts on exposing all organic layer hens to outdoor elements? Mr. Shea. We're working very closely with our colleagues in the Agricultural Marketing Service on it, yes. Mr. Aderholt. So certainly that possibility is being looked at then? You're saying that they stand a much greater risk there for that to occur? Mr. Shea. Well, I think that there are mitigations that can take place. And that rule is still under development as I understand it. I'll defer to Ms. Starmer. But I think that rule is still under development and we're still working closely with our colleagues on it. Ms. Starmer. Yes, that's correct, sir. The rule, the proposed rule is currently over in OMB. As you mentioned, it did grow out of recommendations from the National Organic Standards Board, as well as from OIG and some statutory requirements that we create clear standards for organic producers. And so we have attempted to do that. We have certainly met with stakeholders from across the industry and we believe the proposal incorporates their feedback. And there will also be ample opportunity for public comment when the proposal comes out. But right now it is, it is with OMB for review. Mr. Aderholt. Yeah. Well, our hope, or my hope is that as you move forward, you would certainly carefully consider the threat of avian influenza and the devastation that banning porches could bring upon the organic egg layer industry as we move forward. So, Mr. Farr. ORGANIC AQUACULTURE RULE Mr. Farr. Well, thank you very much. On the hot seat. You said you're working on the organic aquaculture rule? Ms. Starmer. Yes, sir. Mr. Farr. But I want a hard answer, because everybody's been working on it for a long time. Ms. Starmer. Yes. I have in my limited amount of time here in the agency, I have learned about the rule as well as about how important it is to you, sir. So I appreciate that. Mr. Farr. Now, when? Ms. Starmer. I cannot give you a firm timeframe. It is with OMB. As I mentioned, we do continue to receive questions that we are working to respond to as expeditiously as possible. Mr. Farr. Tell me what some of that is. Because I understood that they sort of flipped it over to NOAA. Ms. Starmer. Well, there is an inter-agency review process that happens. That's standard for this type of process. And so there have been a number of agencies that have reviewed it. I don't think I can go into the specifics, given that the rule is still under review. But I can say that we're working as quickly as we can to address those questions, so that we can move it forward. Mr. Farr. Well, it was submitted in August, so---- Ms. Starmer. That's right, sir. Mr. Farr [continuing]. Is there a time frame? Ms. Starmer. We are working as quickly as possible. Mr. Farr. I know. I don't want a specific date. I just want like, you know, months or, before the end of the like, summer, or. Ms. Starmer. I wish that I could give you a firm time frame. I can't. I apologize. But we are working as quickly as we can to address--it's, I think, reflective of the complexity of the rule and the equities that our federal partners have in it. Mr. Farr. You don't know how many times that's the answer we've gotten this year on these questions of rules and time, and studies and everything. Ms. Starmer. Yes, sir. Mr. Farr. But it's really not fair to the consumer, just to, you know, pay--we have our process, and we say it's going to take 90 days or take whatever it is. I mean, we in government. And then the government can't give us an answer. I think you got to--you've got to put the time frame that's allowed in law, we've exhausted. So we keep delaying it, because we're getting more and more questions. But you got to take some leadership on this and just jam this thing through. Ms. Starmer. We are doing everything that we can to move it, sir. Mr. Farr. Well, I'd kind of like to know what those things are. Can you give us a letter or whatever it is, or talk to my staff about it? Ms. Starmer. Absolutely. [The information follows:] Organic Aquaculture Rule As of February 2016, the Aquaculture rule is with OMB. USDA staff followed up with Congressional staff and will make themselves available to discuss all matters and questions related to the Aquaculture rule. Mr. Farr. We get a call a day from our constituents on this. This is how important it is. They worked years putting the proposed suggestions together. Ms. Starmer. Mm-hmm. Mr. Farr. And they can't just understand why government hasn't accepted their suggestions. They're all professionals. They're in the industry. Ms. Starmer. Of course. Yes, we would be happy to follow up with your office on this. HORSE PROTECTION Mr. Farr. All right. Well, let's get it done. Thank you. I've never been able to get a hard answer on that. In 2012, the GAO Horse Welfare Report made some recommendations regarding inspections, especially to improve completion and oversight of travel certificates for horses crossing the Canadian and Mexican borders. My own daughter, you know, in shipping her horse to Canada for a horse show, landed in all kinds of problems. So just getting across the Canadian border, proving ownership and all that, and health records. So I really experienced that. Because she called me at three in the morning, wanting to know if I could help. Can you provide some follow up on any changes that have come from these recommendations? Mr. Avalos. Congressman, I don't know of any changes pertaining to horses going into Canada or Mexico or coming back from those countries. Mr. Shea, do you have any information on this? Mr. Farr. Well, there were, in 2011. The GAO Horse Welfare Report made some recommendations regarding inspections. And especially improved completion and oversight of these travel certificates for horses crossing the borders. And you were supposed to, the agency, well, you are probably supposed to get back to, what those improvements were. Or where they are. Mr. Shea. We'll have to look into that and get back to you. [The information follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] APHIS OPERATIONAL AIRCRAFT Mr. Farr. All right. According to another report, you're, this year's budget, you're currently, you currently own 41 operational aircraft, that you use by the Wildlife Services. And the budget this year is asking for $8 million more, to expand the fleet. I presume that's the aircraft fleet. Apart from aerial gutting, what other activities are carried out by these aircraft? And given the high cost of aerial gutting operations and human risks involved, what are the alternatives that have been looked at by the research arm? Mr. Shea. Mr. Congressman, we are not asking for $8 million this year. There were $8 million in the Fiscal Year 2016 Omnibus to purchase two helicopters and two fixed wing aircraft, but we are not requesting anymore funding for anymore aircraft, for Wildlife Services, in 2017. Mr. Farr. So what are the activities that are being conducted out of those aircraft, and what are the alternatives to guiding operations from the air? Mr. Avalos. Congressman, the helicopters, there's one being placed in Alabama. There's one being placed in Mississippi. They'll be used for feral swine control. The airplanes, one being placed in New Mexico and one being placed in Wyoming, would be used for, on a regular predator control. Alternatives? Mr. Farr. Can we get any other bang for the buck? I mean, from just, from use of those aircraft? Or is it just used for aerial---- Mr. Avalos. They're strictly for feral swine control and predator control. And it's not--they don't just stay in that one state where they're placed. They work a whole region. Mr. Farr. Are there any alternatives to that? It's expensive---- Mr. Avalos. We do have--I want to ask Mr. Shea. Mr. Farr [continuing]. Predator control. Mr. Avalos. But I just wanted to touch on one alternative that I really, really promote and I really, really like. It's the Protection Dog Program. It's an alternative that we use primarily out west. And it's primarily to address the issue of grizzly bears and wolves. And I'll never forget, Congressman, Mr. Chairman. I'll never forget. I was in Montana. We had a roundtable. And there was the leader for the Hunter Right Colony. And he was complaining about the grizzly bears and the wolves. And when I brought up the Protection Dogs, he said, ``I want to tell you, Mr. Under Secretary, that we really appreciate the Protection Dogs. So once we got the three dogs, our wives, our children, could take their afternoon walks without fearing the grizzly bear and the wolf.'' So I think that the Protection Dog Program has a lot of merit. And that it's something that can be used in the future as a non-lethal weapon. Mr. Farr. Well, those are alternatives. And I think that's a good idea. Are your ideas, is there any money in your budget for that? It's certainly cheaper than helicopters. Mr. Shea. We're certainly pursuing non-lethal methods. And in fact what we've begun the last year is having non-lethal workshops where we bring producers in to inform them about new methods. And in fact, we're even working with the Natural Resources Defense Council, which is not a fan of Wildlife Services generally speaking, on some projects out west as well. So we are pursuing those. We are developing non-lethal methods through our Methods Development Program in Wildlife Services. So we continue to pursue non-lethal methods for sure. Mr. Farr. Well, I appreciate that. Particularly for the compound 1080 Livestock Protection. I know that there have been protracted deaths and unintended non-predators from consumption of 1080. So. Mr. Aderholt. Mr. Valadao. Mr. Farr. My time's up. BIOTECHNOLOGY REGULATIONS Mr. Valadao. So Biotech is the next one for me. I'm hearing concerns about implementation of USDA's proposed rewrite of the biotech regulations. I understand the 30 day comment period was recently extended another 45 days. And I want to stress how important it is to ensure the department gets this done right. Many groups representing production and agriculture asked for the extension, because some of the concepts USDA is considering in its proposed alternatives appear to be significantly different from the way UDSA has regulated Biotech crops in the past. For example, the new terms defined in the Notice of Intent (NOI) would bring under the scope of the USDA's regulations on products developed using newer breeding methods, as well as potentially including products like seedless watermelon, that have been safely consumed for years, or even breeding methods used in organic production. Can you assure this committee that you will carefully consider the potential negative impacts of any new proposals on the ability of our farmers to produce an adequate and wholesome economic food supply and compete in a world or a global marketplace? And that's basically a yes or no question. Mr. Avalos. Yes. Mr. Valadao. Thank you. What specific problem with the current regulation are you trying to address? Mr. Avalos. You made it easy. Mr. Valadao. Well, I've got follow ups. What specific problem with the current regulations are you trying to address, and how does your current thinking address this problem? Further, how will you ensure that it addresses the perceived problems without causing more? That's not a yes or no question. Mr. Avalos. Congressman, I'm going to give that part of your question to Mr. Shea. Mr. Shea. I think the basic problem we're trying to address is that the regulations are nearly 30 years old. And the technology has changed. So we may very well be putting products through a regulatory process that don't need to be anymore. And there may be some others that we probably should be looking at. So we're trying to get it right for 2016. And it's certainly not our intention to make it more difficult to get these products to market. As I mentioned earlier, we've completely eliminated the backlog that we had been dealing with, in deregulation. So we don't want to get into another backlog situation. And that's what we're trying to do though, is make these regulations current. Because we're operating under a 1987 kind of paradigm. BIOTECHNOLOGY REGULATORY SERVICES Mr. Valadao. All right. And then the budget requests for Biotechnology Regulatory Services Program for Fiscal Year 2017 is less than a 1 percent increase. If the USDA intends to complete its update within this administration, does the request for a nominal increase provide any indication about how the USDA is thinking of changing the scope of regulation? Mr. Shea. Well, I would say that perhaps it indicates that we don't intend to have a massively larger regulatory structure in place. That's not where we see this going. Of course I hasten to add, there's, as you mentioned, a total of 75 day comment period. We added 45 to the original 30. So we need to hear from everyone. So we haven't made up our minds for sure. But we don't want to be headed toward a greater regulatory structure. Mr. Valadao. All right. Mr. Shea. So I think the funding that's requested is certainly adequate. PRODUCE SAFETY Mr. Valadao. And Ms. Starmer, in 2009, you authored a report on Produce Safety. In the report, you recommended that policy makers must avoid taking a one size fits all approach to produce safety. Recommended practices and record keeping mechanisms must be adaptable to a range of farms and supply chains. As an employee of AMS, you work closely with the FDA in developing the FSMA regulations. How would you grade FDA's regulations in terms of providing flexibility for producers in different regions, of different sizes and different products? Ms. Starmer. I would say--and thank you for the question, Congressman. In my time as a Senior Advisor to the Secretary, I was the liaison to FDA from the Office of the Secretary. And we did provide significant technical assistance in the drafting of those rules, and now in implementation. I think my point then, and this is still something that I feel very strongly about now, is that it is critical that we have robust food safety standards that everyone is held to. There are going to be different needs, depending on the type of operation and the size of that operation. And I think that FDA has done a very good job of being responsive to the range of industry perspectives on this during the rulemaking process, and that the technical assistance opportunities that are available for the industry are reflective of that diversity. So everything from the Produce Safety Alliance, which AMS helps support with FDA, to some of the cooperative agreements that FDA is putting out to provide technical assistance to special groups such as tribal producers and others. We are responsible for ensuring that the produce industry can make these rules work regardless of their size or where they're located. Mr. Valadao. I think my time is up. Thank you. Thank you, Chairman. USDA REGULATORY AGENDA Mr. Aderholt. Thank you. I think Mr. Farr and I may have a couple of more questions as we close out. We've seen situations in the past where administrations have decided to release some controversial or more unpopular regulations in the last few months of the administration,--especially those that are not returning to power. Are there any regulations that are a priority within your mission area, that may be released before President Obama leaves office? And even if there's no particular plans to release, for release of regulations, what will be on your agenda for the end of the year? Mr. Avalos. Mr. Chairman, I'm trying to think. The first rule that came in mind is something that's been pending for a long time. It's the Scrapie rule, to help the sheep industry in this country finally eradicate Scrapie and be able to trade with our foreign partners. And Mr. Shea, Ms. Starmer, Mr. Mitchell, are there others that come to mind? That's the first one that came to my mind. And we can always get back to you on your question. But that's the only one that I can think of at this time. Mr. Shea. I think we'd probably like to conclude the Marine Mammals Rule that has been pending for so long. So that is one we'd like to finish. Mr. Avalos. Mr. Chairman, if you allow us to put more thought into this, then we can, we can send it in for the record. [The information follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] CERVID HEALTH Mr. Aderholt. OK. All right. Cervid health. As you know, in FY 2016, the Approps bill provided APHIS with no less than $3 million for cervid health activities and gave consideration to indemnity payments if warranted. Can you tell us how this funding is being spent and how much is being planned for indemnification? Mr. Shea. As in the previous two years, we would allocate about $1 million of that $3 million for indemnification. We allocate about $200,000 for research into live animal testing. Because right now we can't determine whether the animal is diseased until it's dead. And the rest of the money goes into our work in the Voluntary Certification Program. GRAIN INSPECTION AND WEIGHING USER FEE CAP Mr. Aderholt. Anything else that anyone wants to add to that? Regarding GIPSA, as your testimony notes, the budget includes a request to eliminate the limitation on inspection and weighing services. It's my understanding that this limitation has been in place for a number of years. Has the Federal Grain Inspection Service had to deny any requests for services under the limitation? Mr. Avalos. I want to ask Mr. Mitchell to answer your question. Mr. Mitchell. Yes, sir. We've asked to eliminate the cap on what we can spend out of the user fee funds. One of the main reasons is the recently enacted reauthorization of the U.S. Grain Standards Act. It provides, or requires us to establish a mechanism for determining our user fees on an annual basis, to ensure that we have a three to six month reserve on hand. We believe that first off, we have cut back a lot of our spending. We've got it to--we're very economical in what we're doing. But with this provision, that's in the reauthorization, we believe that that mechanism will help us and future administrators deal with this issue better. One of the reasons that we asked to remove the cap is the cap isn't related to appropriated funds. Of course, it's user fee funds. A year like last year, last marketing year, we had record bulk grain exports. Grains, oils, seeds. That means a lot more activity for us. It means actually a lot more revenue coming in through the user fees. But it also means increased expenses for making sure that job gets done. And we got very close to breaching last year's user fee cap. So I think that we have the mechanism in place to ensure that we continue to do a very efficient job with the funds to keep those user fees as low as we possibly can, without the cap. Mr. Aderholt. Without the limitation in place, how much funding would be available for grain inspection and weighing activities? Mr. Mitchell. For user fees, it would probably still be in that $50 million range. Are you asking--we do get appropriated funds for a couple of other issues dealing with the Federal Grain Inspection Service. That's what you're asking about? Mr. Aderholt. Well, either way. But you said $50 million would be--in the neighborhood of $50 million? Mr. Mitchell. $50 to $55 million is our expectation. It might actually be a little lower this year. Our exports are down a bit from last year. Of course last year being a record. You usually don't win the Super Bowl every year. So we're spending a little bit less this year. But that is our best estimate at this time. Mr. Aderholt. OK. Mr. Farr. U.S. MEAT ANIMAL RESEARCH CENTER Mr. Farr. Thank you, Mr. Chairman. I just want to state I think that the Chair is sort of precautionary, in rulemaking. But, look, we're all hired, or elected to do a job up until we're not doing it. So you have to carry out your responsibilities in law to do everything that you're responsible for doing. And I don't think you ought to hold back. I mean, we're not a lame duck until after November 8th. That's when new President will be President Elect and will be putting in their administration. And we'll know who won the Congressional seats. But as long as we're in Congressional offices or Senate Offices, they ought to be doing their job. And the President ought to nominate people for the appointments that he's Constitutionally responsible to do. And Congress should do its job by confirming or rejecting him. But I just, this idea that there's going to be a new administration next year, and that we ought to just stop government right now is ridiculous. I wouldn't be here. Because why should any Member of Congress show up to any meeting or introduce any legislation or have ideas? So I feel very strongly, we're all hired to do our job responsibly. And if it takes making rules to address concerns, then make them. One of the things that the Chairman and I are very concerned about is that we directed the ARS to execute an agreement with APHIS within 90 days of enactment, to deal with the U.S. Meat and Animal Research Center (MARC). With great concern to the subcommittee after the New York Times story alleged animal mistreatment. And you were--the inspections that were supposed to be consistent with the Animal Welfare Act, at each ARS research facility that uses animals in research. That directive was reaffirmed in the conference report that both houses adopted, and the President signed. For the benefit of the public and our Members, will you give us a status report on this timetable? And I understand you are currently doing pre-compliance inspections of all ARS facilities. Are these just a walkthrough, or can they uncover issues that need to be address? And have any issues of concern been found? And if so, what are they? And as a follow up, because of the information we received, it's really unclear that you in fact do unannounced inspections on all your facilities following the pre-compliance inspections. And we actually got a copy of one of the inspection reports. It's one page. It seems to be a little flimsy on what actually was done. How can we be sure that you're doing your job as requested by Congress? Mr. Shea. Mr. Congressman, we have entered into that agreement. I personally signed that agreement just a few weeks ago. We have done the pre-compliance inspections already at 13 facilities. And we will have completed 21 of the pre-compliance inspections by May 1. So we're making great progress there, and we'll do them all by the end of the year. Mr. Farr. But the question is, how thorough are these inspections? Are you discovering things, and are they then addressing what you're discovering? Mr. Shea. Yes. We're addressing this just like we would any other new licensee. We go in, look at the facility. Just as we do with private or university facilities. And help them find what violations might exist now and what they need to do to improve. So we've done that already at 13 of the facilities. And we actually are going to begin unannounced inspections at some of those by May 1st. So we're moving expeditiously to do this. I think we've got a really good process in place, with my counterpart, Dr. Jacobs-Young, in the Agricultural Research Service. And we will do our best, our inspections just like we do for everybody else. We will post those inspections on the internet, just like we do for every other inspection we do. And if there are serious violations found that aren't corrected quickly, then there's commitment from ARS leadership that the local IACUC, which is the Institutional Animal Care and Use committee, will stop research until those things are fixed. So I think we're in a good place with this. We have great cooperation from the leadership of the Agricultural Research Service. And I think this program will work well. Mr. Farr. Are you going to do unannounced inspections at all of your---- Mr. Shea. Yes, yes. Once we've done the pre-compliance inspections, we'll then go back and start doing unannounced inspections. Mr. Farr. And those as you said are online, then, the findings? Mr. Shea. Yes, we will post those online. Mr. Farr. OK. Because I think that's going to reestablish some confidence in our government responsibilities. Mr. Shea. Mm-hmm. Mr. Farr. I appreciate that. Thank you for taking it up. I thought I would get you the answers for our rulemaking. I'm going to find out when the unannounced--Chairman, I have no further questions. And we're breaking for 10 days. And so have a nice break. Mr. Aderholt. Thank you, Mr. Farr. Well, thank you all for being here today and for your testimony. And we look forward to continuing to work with you as we work on the FY 17 budget. So the hearing is adjourned. [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Thursday, March 17, 2016. DEPARTMENT OF AGRICULTURE, FARM AND FOREIGN AGRICULTURAL SERVICES WITNESSES ALEXIS TAYLOR, DEPUTY UNDER SECRETARY, FARM AND FOREIGN AGRICULTURAL SERVICES BRANDON WILLIS, ADMINISTRATOR, RISK MANAGEMENT AGENCY VAL DOLCINI, ADMINISTRATOR, FARM SERVICE AGENCY SUZANNE PALMIERI, ASSOCIATE ADMINISTRATOR, FOREIGN AGRICULTURAL SERVICE MICHAEL YOUNG, BUDGET OFFICER, DEPARTMENT OF AGRICULTURE Introduction of Witnesses Mr. Aderholt. The subcommittee will come to order. Good morning and happy St. Patrick's Day to everyone. Welcome everybody here to today's hearing. Sorry for the little delay in getting started, but just before we were to begin the hearing, the vote was called. So we were delayed there, but we are back now. We still have another series of votes, but we are going to continue on and see how far we get before they call the vote. It sometimes can be longer than they anticipate. So we will just play it by ear. So anyway, good morning, and it is good to have you here. The primary goal of our hearing today is to examine the fiscal year 2017 budget submission from the Farm and Foreign Agricultural Services mission area and its respective agencies. This is the eleventh and our hearing for the fiscal year 2017 budget hearings. So we have had quite a busy month as we have heard a lot from your colleagues in the Department of Agriculture. Joining us today are Ms. Alexis Taylor, the Deputy Under Secretary of the Farm and Foreign Agricultural Services mission area. We welcome you. Mr. Val Dolcini, Administrator for the Farm Service Agency. Thank you for being here and welcome. Ms. Suzanne Palmieri, who is the Administrator of the Foreign Agricultural Service. Welcome. Mr. Brandon Willis, Administrator of the Risk Management Agency. Welcome to you. And, of course, welcome back Mr. Mike Young, the USDA's Budget Director. He gets to hear all of it, so he gets to know all of it. Opening Statement--Mr. Aderholt But to begin with, I want to welcome Ms. Taylor for her first time to testify before the subcommittee in this current role. I also want to commend you and your team for achieving several key accomplishments over the past fiscal year, including opening new markets for American agricultural products, such as the South African markets, to American poultry, beef, and pork for the first time in 15 years; and the continued implementation of the 2014 farm bill; and also the reinstatement of marketing loan certificates as directed in the subcommittee's fiscal year 2016 appropriations bill. We have emphasized in this subcommittee over the previous hearings that we have had over the last few weeks basically four areas that we try to focus on and to emphasize as we move forward. The first goal would be increasing oversight, efficiency and the need for effective outcomes. The second is that we keep rural America vibrant. Number 3, we support American farmers and ranchers. And, fourth, protecting the health of people, plants and animals. During the hearing today, we will have an opportunity to discuss the topics that include the Risk Management Agency's budget proposal to use mandatory crop insurance funding for its salaries and expenses account. We will highlight significant reductions in the U.S. commodities and maritime sealift capability supplied to food aid programs in recent years, and concerns this subcommittee has expressed in regard to the Modernize and Innovate the Delivery of Agricultural Systems Program, better known as MIDAS. The Farm and Foreign Agricultural Services mission area plays a unique role at USDA and also within the United States economy. It implements the essential safety net for the American farmer through crop insurance. It maintains access to credit through farm ownership and operating loans and oversees numerous disaster, conservation, and supplemental assistance programs. At the same time, the Foreign Agricultural Service is working in over 170 countries around the world to promote the products and the commodities American farmers produce. The mission area also represents a large portion of America's humanitarian food assistance overseas, using American taxpayer dollars to send American food on American ships to feed those that are in need. The President's budget request for the Farm and Foreign Agricultural Services mission area is $3.4 billion. This budget request uses a number of gimmicks and out-of-touch assumptions to achieve this funding level. For example, the budget shortchanges the food aid programs, including reductions of $116 million for the Food for Peace Program and $20 million for the McGovern-Dole Food for Education Program. This comes at a time when our world is facing a global refugee crisis, one that directly affects us here at home. And I will be honest. The budget request continues in a worrisome trend we have found in many mission areas under this subcommittee: paying for discretionary programs with mandatory funding. The President's proposal to transfer $20 million of mandatory crop insurance funding to the Risk Management Agency is simply a non-starter. The budget also proposes to once again open up the 2014 farm bill and to cut the Federal Crop Insurance Program, which provides a crucial safety net for our farmers, our ranchers, and our producers across the country. In 2015, USDA estimated that American producers would feel cuts of 36 percent in farm income. That is the lowest income rate in nine years. Not only is this proposal hurtful to our agricultural economy, but also it is misguided by seeking to change a mandatory spending program through the appropriations process. With regard to food aid programs, this budget request reflects a decline in support for key constituencies that have made up the backbone of the food aid program: the American farmers and the shippers. Changes to the traditions of these programs in recent legislation and the outright circumvention of the Food for Peace Act, largely led by this administration, have eroded the participation of these groups. This decline is reflected no more starkly than in the sharp decline in the tonnage of U.S. commodities and shipping activity in the Food for Peace program alone, a drop of almost 25 percent in metric tons since the reforms were enacted. These reductions have been offset by the use of local and regional purchases and cash transfers backed by questionable legal interpretations. This subcommittee has been a strong champion of our food aid program and their 60-plus year tradition. Last year, this subcommittee included a one-time $250 million increase for refugees and other emerging crises around the world in the Food for Peace Program. We have also discussed USDA's long-awaited response to the 2014 Farm Bill provision establishing an Under Secretary for Trade and Foreign Agricultural Affairs. The study required by Secretary Vilsack is in its second year of delay. The fiscal year 2016 Omnibus reinforced the Farm Bill mandate and supports the establishment of this position and a new mission area. This new position would concentrate USDA's role in promoting U.S. agricultural exports, overseas imports, and supplying food aid overseas. In closing, I would like to say that we are grateful for your mission area and the role they play in helping our nation's farmers and ranchers. I look forward to discussing these matters in a little more detail and getting your input and input from the subcommittee members as we move forward. Before I recognize the Ranking Member, I want to say a word about a good friend and a colleague, the ranking member, Sam Farr. Sam, as you may know, has announced his retirement, and this is his last scheduled hearing to be the Ranking Member this year and this Congress, and he will be sorely missed. He was first elected to Congress in 1993 in a special election, and he succeeded a young man by the name of Leon Panetta, and he went on to serve then on the Appropriations committee and on this subcommittee subsequent to being elected. I believe I can speak for all of us on this subcommittee and all that know Sam that we really know that he has a genuine interest in looking out for those who are underprivileged. He has a real desire to fix problems that are in government, and we will miss his personal stories and also hearing about the Salad Bowl that he represents. Sam, as you often do, you come and thank the Members and thank our witnesses for their service, but we do want to thank you. I will tell you a little story. Right after I first got elected, I had the opportunity to travel on my first congressional trip with Sam, and we became friends on that trip. This was back in 1999, and we were able to go to Bosnia right after the war and see what was happening there trying to restabilize that region. But one of the fun things about that trip is that my wife was about to have our first child, and she was 7 months pregnant, and we did not want to know if it was going to be a boy or a girl. We decided to let that be just a surprise. But Sam predicted that it would be a girl, and he predicted that because every Member of Congress that was on that congressional trip, their first born was a girl, and Sam was right. It was a girl. [Laughter.] Mr. Aderholt. I will always remember that. Sam, we do appreciate your service and your dedication to those not only in your district, but also California and the United States. So let's give him a round of applause. [Applause.] Opening Statement--Mr. Farr Mr. Farr. Well, thank you very much, Mr. Chairman. And I have to say that I will miss it. I think that the most constructive part of this job is subcommittee hearings. It is where you really get down, as we all talk about drilling down; this is where you drill down, and you really understand the largess of government in all capacities and how incredibly necessary all of these programs are. Can we do things better? I think so, and that is why I am always trying to reorganize or suggest collaboration that is different. And I want to thank you, Mr. Chairman, because you have been a really good Chair of this committee and we have been able to work out many differences that we have in these budgets. We do not always agree, but we certainly do get along together, and that is what it is all about. And I want to thank the panel. I want to thank particularly Val for your incredible service first on the Hill here with Vic Fazio, and now in the Department, and I really appreciate your career and all of you for volunteering. I mean, most of the people in this room have volunteered to be government employees and legislative employees. Thank you all, including the staff behind me. As you said, this is my last Agriculture Appropriations hearing, and I am glad to see in this budget a lot of items that I do not think would have ever been here. I would not have imagined that they would be before us when I first got here. Particularly as you talked about, I represent the Salad Bowl of the world. My county of Monterey does $4.8 billion in agriculture. They grow 100 crops. It is just one small county. You know, there are 58 counties in California, and all of those are specialty crops. So we did not even use that word when we got here. The phrase that everybody used was ``minor crops,'' not knowing what in the hell that meant. It is very active in the National Organic Program. We did not have rules yet established. I carried a bill to the State legislature to create the California certified organic law, and I remember then Alan Cranston, Senator Cranston, and Senator Leahy asking if they could use that bill as a model for the Federal Government. Yet when I got here, the rules had not been yet established for the National Organic Program. So we have seen that come to fruition. We have seen the Market Access Program (MAP), the Technical Assistance for Specialty Crop Programs (TASC), the MAP and the TASC helping expand conventional and organic markets around the world. We have seen within the United States the Risk Management Agency has expanded the types of insurance for crop coverage to producers of organic and specialty crops. Those were not available when I first arrived. Food safety is no longer a matter of buyer beware, but a modern process using most of the up to date technology available to ensure that the meals we prepare for our families and friends are healthy and wholesome. And now with the fiscal year 2017 budget and the budget for the Foreign Agricultural Service and plans to expand its network with the opening of an overseas office in Cuba, I am very excited. I am going with the President and your Secretary this Sunday to Cuba. It is only 90 miles off our shore, and it imports the majority of all of its food, most of that from other Western Hemisphere countries, not from the United States, and I think we have a great opportunity to expand those markets for all our growers in the country. You know, on a less positive note, Secretary Vilsack said here a couple of weeks ago that he described rural America as the heart and soul, not the glitz and glitter, and I do not feel that we are showing much heart or much soul in proposing cutting the Food for Peace Program. I disagree with the Chairman on the implementation of that program. I am not part of that. I think that we need to change it. When you think about how we have to grow that food, harvest that field, transport that food, then to get on an overseas carrier, usually by ships, get it overseas, get it off those ships, distribute it to a center, then distribute it to the countries that are the recipients of that food, and then work it out in the local markets, that is the most expensive food in the world. And what we are missing in that is we are not helping those countries invest in their agrarian economic development, not creating the opportunity to grow and create markets and investments in their own countries. I think that is why I am interested that we give some of that money to the local communities because I'm very supportive of doing that at home. I think we need to expand. We need to invest in the Local and Regional Procurement Program. In my district right now the University of California at Santa Cruz has been challenged as have all University of California campuses to look at how you could reanalyze the markets, get all the public buying, all the buying that goes for school lunches, for universities, for jails, for hospitals, for everywhere you have these public feeding programs, and find out how much of that food is grown locally, and then if so, we just go right to those local growers and reach contracts with them. What does that do? That cuts down on these incredible transportation costs. We are sending food away just to get it come right back, and we want to distribute that locally. So I think that is something we need to work on. And there is some money in that for the first time, and hopefully we can keep that in there. So I think it is about smarter investments, getting a better bang for our limited buck at the federal level. I think one of the interesting things and why most of us are on this committee, it is not just because of a commodity. Some people are on the Agriculture committee. When I got there and I told them that we grow over 100 crops in my district, they just could not believe it because they were growing corn or wheat or something like that. I think what the Department of Agriculture is is really about all of America, the whole of America. When you think we have overseas offices, we deal with the Commodity Futures Trading Commission. We deal with poverty programs. We deal with food commodity programs, specialty crops, insurance, the whole thing. It is just an awesome department. Thank you, Mr. Chairman, for bearing with me for all of these years where I brag about my district, but I am not going to be representing it anymore, but I will still brag about it. But thank you very much for giving this time to open in this last subcommittee meeting before this panel, and thank you again for your presence here today. Mr. Aderholt. Thank you. Thank you, Mr. Farr. Deputy Under Secretary Taylor, without objection your entire written statement will be included in the record, but at this time we recognize you for any opening remarks you would like to make before we go into the question series of the hearing. Opening Statement--Ms. Taylor Ms. Taylor. Thank you for that, Mr. Chairman. Mr. Chairman, Ranking Member, I would like to thank both of you for your opening comments. Mr. Chairman, I would also like to just echo your comments on Ranking Member Farr's leadership on this subcommittee and really his commitment to U.S. agriculture. Happy St. Patrick's Day to you as well. Taylor may not be an inherently Irish name, but I assure you it actually is. So it is a day special for me as well. We certainly appreciate the knowledge and understanding of what the Farm and Foreign Agricultural Services does and the important role that it serves for rural America. Mr. Chairman, you introduced my colleagues. So I will not do that again but just thank them as well for being here with me today. I would also like to thank the Members of the subcommittee for being here. As you said, this is my first time testifying before your subcommittee, and I will be here to present, along with my colleagues, the 2017 budget and program proposals for the Farm and Foreign Agricultural Services. We appreciate the challenges of today's budget environment and the need to reduce the federal deficit while striving to streamline our operations, improve efficiency, and reduce administrative costs. Today, American agriculture faces significant challenges. Falling farm income and natural disasters have increased the stress on America's farmers and ranchers. Our commodity disaster crop insurance and farm credit programs are important parts of our farm safety net to American producers and our rural communities. Turning to the Farm Service Agency (FSA), the budget request for salaries and expenses is $1.5 billion. FSA delivers its programs through about 2,100 offices located in all 50 States, Puerto Rico, the Virgin Islands and Western Pacific territories. FSA provides a broad range of services, including direct loans and loan guarantees, disaster assistance, marketing assistance loans, and certain conservation programs. FSA has developed a program service delivery model which focuses on improving customer service and streamlining program delivery. For farm loans, the budget proposes a program level of about $6.7 billion, $255 million more than the 2016 level. The budget request reflects our request and commitment to support new, beginning and veteran farmers and ranchers, including $3.9 million to support 25 new regional coordinators for outreach and mentorship opportunities. The request also includes $1.5 million to enhance the StrikeForce Initiative. For the 2015 crop year, the Risk Management Agency (RMA) through the Federal Crop Insurance Corporation, provided about $102 billion of insurance protection. Our current projections for the 2016 crop year is that protection will be just over $100 billion. For salaries and expenses of RMA, the budget requests $67 million to support 466 employees. This would be supplemented by a transfer of up to $20 million in existing crop insurance fees into the salaries and expenses account, if authorized by Congress. RMA continued to implement key 2014 Farm Bill programs during 2015, including the supplemental coverage option, STAX, and the actual production history yield exclusion. Also, RMA is currently offering whole farm revenue protection in every county in the country for 2016. This is a first for the crop insurance program. On the international side, the budget provides $197 million for the Foreign Agricultural Service salaries and expenses, about $5 million more than 2016. For trade expansion and promotion activities, the budget includes $200 million for the Market Access Program, $34.5 million for the Foreign Market Development Program, $10 million for the Emerging Markets Program, and $9 million for the Technical Assistance to Specialty Crops Program. For international food aid, the budget includes $182 million for McGovern-Dole, including $5 million for local purchases, and $175 million for Food for Progress. In addition, the budget activities includes $15 million for Local and Regional Food Aid Procurement Program. For P.L. 480 Title II, the budget provides $1.35 billion. Mr. Chairman and Members of the subcommittee, thank you for the opportunity to be here today, and we look forward to any questions you may have. [The information follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Aderholt. Thank you. FOOD AID REFORM--FOOD FOR PROGRESS Let me start out with the food aid reform issue. The President's budget, once again, proposes to slash spending for food aid, including a $116 million cut to the Food for Peace Program. The President is also proposing to transform these programs into a cash-based assistance program. Reforms have already been enacted into law that undermine support for these programs by cutting them out of U.S. commodities and maritime sealift capability to use. I fear that the President's request has realized concerns of many past and current stakeholders about the unintended consequences associated with these proposed reforms. As I previously noted, I know others in Congress are concerned that removing the American farmer and shipper from participation in this 60 year old tradition of the Food for Peace Program does not create intended efficiencies, but instead it will lead to cuts to the program due to simply a lack of support. These reforms enacted for the Food for Peace Program have reduced overall commodity and sealift capability usage by almost 25 percent, as I had mentioned earlier. For example, in just the two years leading up to and following the enactment of these so-called reforms, purchases of U.S. grown rice fell by 65 percent. U.S. wheat fell by 56 percent, and U.S. soy fell by 100 percent. Even the demand for nonprofit groups seems to have drastically dropped off. Proposals submitted to the Food for Progress Program, for example, have dropped by 76 percent in the last five years. Without the support and the participation of the American farmer and the shipper, it is hard for many of us to go back to our constituencies and justify spending more money on foreign aid programs at a time when our Nation's deficit is out of control. In fact, when asked, the majority of Americans consistently choose foreign aid as the number one place to cut funding, and that is just a fact. I think we have to realize that. Thankfully, this subcommittee won support in the fiscal year 2016 Omnibus for one-time additional funding of $250 million due to exceptional circumstances with the refugee crisis in the Middle East. The budget claims that the cuts to the food aid programs are offset by efficiencies gained through the supposed reforms. Have we actually seen gains come about as a result of efficiencies enacted in the recent years, including those changes in the 2014 farm bill? And are more people being fed now than before? Ms. Taylor. Thank you for that question, Mr. Chairman. In-kind food aid is an important component of the international assistance that the U.S. government provides. It is certainly, I think, foundational to what USDA provides in McGovern-Dole and also Food for Progress. I think the 2008 farm bill provided authority to do some local and regional pilot programs. We did find efficiencies in getting food to certain populations quicker and more affordably. The 2014 farm bill provided us with permanent authority to do this, and the subcommittee last year granted us $5 million. We are working to get the rule out to utilize that $5 million. We greatly appreciated the flexibility that the farm bill provided, but then also the money to really utilize some of that flexibility. As I said, I think in-kind food aid is vital to the food programs we provide at USDA. I think long term it is going to continue to be part of the tool basket that we have, but really what we are looking for are the best use of tools to target what the situation is in each country and each crisis that is ongoing. Mr. Aderholt. What feedback have you received from stakeholder groups that have traditionally been involved in the food aid programs, including the commodity groups, the maritime groups that you have dealt with, and also in regard to the reductions since these reforms have taken place? Ms. Taylor. We have worked quite closely, I think with all of the stakeholders on some of these additional flexibilities through the farm bill, but also through the recent WTO negotiations that went on in Nairobi and concluded in December. I was there. We actively negotiated some disciplines around food aid, and we worked to ensure that in-kind food aid and particularly monetization which the Food for Progress Program is based upon was able to continue to operate as it currently does today, and so we have been talking to stakeholders, I think, all along through the farm bill, through the budget process, but then also quite closely, including the commodity groups, in the World Trade Organization (WTO) Nairobi decision. Mr. Aderholt. Well, can you talk just a minute about the decline in the amount of U.S. commodities purchased over the past few years? Ms. Taylor. I think part of that obviously when you're talking about tonnage declines is really tied to commodity costs, and you know, for the past few years commodity prices have been higher than they are today. Commodity prices have certainly softened, and so that lessens the amount of overall that you can buy. Mr. Aderholt. My time is up. Mr. Farr. Mr. Farr. Well, Mr. Chairman, I just Googled how much food you are talking about of our production. It is 0.015 percent. Do you think that if we just stopped the entire program that our American agriculture is going to fall apart? I am surprised, and frankly, I have been struggling with this for years. This ought to be a Republican issue. This is the most expensive food in the world you want to cut, squeeze and trim. What we are doing here is trying to feed people and, boy, do we need to. I just came out of a seminar about Syria. They have murdered 300,000 people in Syria. Every professional is leaving. They are leaving by boat. They go to Greece, and they walk all the way to Germany with their families. These are like lawyers and doctors, professional people. And all that food that is supporting all of these refugee camps is all done by USAID and comes from these programs. So it is absolutely essential for these refugee camps to make sure that the food is there, but I think what is happening is you have got to put these countries back together and they have got to have agrarian countries. Their economic start, their first step is in agriculture, even if it is in small stuff that just can feed a village so that they do not have to migrate. I mean, it gets into all of these issues with Genetically Modified Organisms (GMOs) and stuff like that. I know when we were in Africa, the irony is that Tanzania has banned GMO corn. GMO corn is the only kind of corn that will grow in that kind of climate. I mean, these are real serious issues. You know, we get lobbied heavily by the Seafarers Union. I voted for this amendment and I was a member of the Seafarers Union. I was in the Merchant Marine when I was in college. They hate me, but I just think it is the right thing to do. I know the farmers, but I mean, frankly, we are not talking about a lot of food that if our commodity growers did not get to buy from the U.S. for Food for Peace or other food programs, they would not go bankrupt. I would just like to have you comment on this. Ms. Palmieri, is that your program? Ms. Palmieri. Yes, sir, it is. Thank you. Mr. Farr. I just Googled it. I do not know what the real data is. Ms. Palmieri. No, that is our understanding. This is less than one percent of our exports, and we are proud to be a part of the team that has had seven record years of exports for agriculture. So we know that we are shipping product. It is not all going through our food aid programs at this point. I just wanted to report that for Food for Progress Program for fiscal year 2015, we did have increased tonnage going out, and so we are mindful of the use of commodities when we can. Thank you. FOOD AID PROGRAMS Mr. Farr. How is our marketing program? Is there any MAP Program where we try to encourage countries to buy American agriculture, for example, strawberries in the Southern Hemisphere during their winter and our summer? Here with one hand we are spending taxpayer money to encourage advertising of American products, and with the other hand we are just giving the stuff all over the world with no cost. The taxpayer is paying for that, too, the give-away program and the marketing program. Do people look at how we can use both of those programs and maybe develop better infrastructure within country so that they can buy our food rather than getting it for free? Ms. Taylor. Congressman Farr, if I could talk to that point, I do think we do not target our food aid programs based upon necessarily creating U.S. market demand. It is targeted to the need and needy populations. However, I think there is a correlation here, and I think that is partly why we have market development programs. We have got the trade promotion arm under the Foreign Agricultural Service, but also our International Food Aid Programs and capacity building. A lot of the programs we do like Food for Progress, we monetize U.S. commodity, but then we do development work and help that country build capacity. I was just in Jordan last year where we signed a Food for Peace wheat grant, and it will help Jordan build some of their capacity in the Jordan Valley so they can create some of the agriculture themselves. You know, then the next step from being a food aid recipient to being able to have their own markets and feed themselves is eventually moving into a trading partner with the United States. That is not the target of these programs. As I said, it is to feed hungry people and target those populations, but certainly there is a reason all of this is housed under one agency at USDA. Mr. Farr. Well, that is helpful. I appreciate that. I am glad that there is the carrot there as well as the stick. Ms. Taylor. Yes, sir. Mr. Aderholt. Mr. Palazzo. INSURANCE FOR CONTRACT POULTRY GROWERS Mr. Palazzo. Thank you, Mr. Chairman. Ms. Taylor and team, thank you for being here today. Poultry is a significant industry in Mississippi with a large economic impact within my congressional district, and as you know, contract poultry growers have often struggled for long-term solutions to provide some form of safety net in the event of other types of economic losses. I further understand that the contract grower-integrator relationship is very unique. In the last farm bill Congress asked RMA to conduct studies of ways RMA could provide risk management programs for contract poultry growers. Can you update the committee on those efforts? And can you tell me what is being done within the agency to develop more long-term policy solutions to help contract growers establish a viable safety net through the USDA in the event of catastrophic losses or business interruptions? Mr. Willis. Yes, the farm bill required a handful of studies, some for poultry, a little for swine as well. Some looked at business interruption. Others I think that you referenced focused more upon not business interruption but catastrophic diseases. What we did with those is we had a third party. We contracted out to those in the private sector who are experienced in crop insurance and have knowledge to do such a study. They went out. They talked to growers. They talked to experts in the field, and they presented us with a study. We put that study out on our website in the middle of December. Their recommendation was that there are a lot of hurdles to go, to be very honest. Some of the exact problems they mentioned are things you alluded to as far as the relationship with the integrator and the farmer. What we have allowed though is we posted on our website we wanted comments. We want to continue discussions with those producers, and where it stands today is I think our door is open. We are more than willing to visit with those producers and talk about some of the hurdles in this study and perhaps talk about ways that those can be overcome. The reality is we want the crop insurance program to be a safety net for as many producers as we can in rural America, and while the study pointed out some large hurdles, that does not mean that we are not open to conversations on ways that those hurdles could be overcome. NEW, BEGINNING AND VETERANS FARMERS AND RANCHERS Mr. Palazzo. Thank you. Also, Ms. Taylor, you mentioned the FSA is requesting $3.9 million for a new, beginning and veteran farmers' and ranchers' initiative. It looks like this would include a certification program to help veteran farmers prequalify for loans. Can you tell me a little bit more about this request and how is it different from programs that you may already have in place? Ms. Taylor. Thank you for that question, Congressman. Some of this money would go to help develop outreach coordinators. One thing that we have done on the veteran side is recently sign a Memorandum of Understanding (MOU) with the Department of Defense, and what they have, they have the Transition Assistance Program so that all of the people transitioning out of the military, all service men and women come in and learn about different types of educational or career opportunities out there. Prior to just recently, agriculture was not part of that. USDA was not part of that. They have these Transition Assistance Programs all over the country, and we are now going to be partnering with them to develop an educational course on agriculture, on farming careers, and farming and ranching, and then the tools that we have at USDA to help many of those men and women coming back who want to go back to their rural communities and farm. Mr. Palazzo. Thank you. Mr. Chairman, I yield back. Mr. Aderholt. Mr. Bishop. PRICE LOSS COVERAGE Mr. Bishop. Thank you very much. Let me welcome you, and before I start let me associate myself with remarks of other colleagues and our witnesses with regard to our colleague, Mr. Farr. He has really brought thoughtful, meaningful questions and ideas to this committee, and we are going to miss him very greatly, and I just want to add my voice to those who are saying adieu and indicating how much we really are going to miss your thoughtful dialogue here. I have got a couple of questions. One, the Price Loss Coverage (PLC) Program, there are a number of farmers who participate in the Price Loss Coverage Program who have recurring difficulties in the processing of payment requests, as well as issuing of the payments themselves. In 2015, you enrolled 1.76 million farmers in the Agriculture Risk Coverage (ARC) and the Price Loss Coverage Programs by conducting unprecedented education campaigns. ARC and PLC are part of the farm safety net providing assistance only when there are year-to-year crop revenue and commodity downturns. It is my understanding that the FSA IT staff determined that the issue was a defect that occurred in the payment software process which supports several of FSA's payment applications. We first contacted the Department regarding this issue in December of last year, and we were assured in January that the software issues were being addressed and corrected. In fact, we were told that the software had been modified and was being tested for a late January release. But just as recently as last week several farmers have contacted our offices to express concern that the problems still persist and have not yet been addressed. Can you tell us exactly what the status is and what the plan is to get this issue resolved? Mr. Dolcini. I would be happy to do that, Mr. Bishop. I will work with your staff directly to get more details about the specific payment issues regarding PLC. I think across Georgia and really throughout most of the country, PLC as well as ARC have been very successful Title 1 programs, and the payments made to farmers in your district and farmers all over the Nation have gone out without any significant difficulty. But I am happy to follow up with your staff to get to the bottom of it. Mr. Bishop. Please do because we continue to get recurring complaints from our constituents. Mr. Dolcini. Will do. [The information follows:] While there was a software related issue that delayed a small number of PLC payments earlier in the year, this issue was resolved in late January 2016. The Georgia FSA office reports that the only remaining unpaid payments that they are aware of are being held due to a contract dispute between producers on a farm. Payment is being withheld until the dispute is resolved. USDA's Office of the General Counsel has been consulted to provide guidance on this dispute. cottonseed Mr. Bishop. Let me talk about cotton. Earlier this year I joined 99 members and colleagues requesting that you make cottonseed an eligible commodity under the new Price Loss Coverage and the Agriculture Risk Coverage Programs that were created under the 2014 farm bill. Needless to say many of us were quite disappointed with your decision and the legal interpretation that the farm bill does not provide you the authority and that you do not otherwise have the authority to make that cottonseed designation. However, as a result of some direct conversations and discussions with the Secretary, it appears that we may have an alternative temporary solution, which would center around the creation of a Cotton Gin Cost Sharing Program. Can you update the subcommittee on any progress which has been made in this area or if there are any other developments with respect to cottonseed, and what administrative authority does USDA have that can be used to provide assistance to the cotton folks who are in dire need right now? Ms. Taylor. I appreciate that question, Congressman Bishop. We, like the subcommittee, are quite committed to ensuring that cotton farmers have an adequate safety net, particularly as we are seeing farm income decline and commodity prices soften. Cotton is no exception to that. I actually met with some cotton producers just yesterday who were in my office talking about the economics that they are seeing, but also what USDA may be able to do to try and help them. The Secretary was up here a few weeks ago talking about this issue. I do not know on cottonseed specifically. I do not think I have anything more to add to that, but we are looking, as he alluded to, setting up a cotton ginning program. We are working through some of those specifics right now and what that might look like, and some of the unanswered questions we still have in trying to work through that process. We will certainly keep the subcommittee apprised as we make progress and work closely with you to ensure that it is within the administrative authority that we have today that we can structure a program that helps the maximum amount of cotton farmers possible. But we are also willing to work with the subcommittee on some of the restrictions on USDA's programs and really what is preventing us from providing assistance directly to cotton farmers. Mr. Bishop. Thank you. I think my time has just about expired. So I will yield back. Mr. Aderholt. Mr. Valadao. DAIRY AND TRANSPACIFIC PARTNERSHIP Mr. Valadao. Thank you, Chairman. Thank you, Ms. Taylor and guests. My first question has to do with dairy and Trans-Pacific Partnership (TPP). Canada continues to contemplate dairy measures that would move us backwards on market access and choke off hundreds of millions of dollars in dairy exports. As we prepare to consider deepening trade ties with Canada and TPP, what are we doing to make sure that they are not simply taking with one hand what they promised to give with another? Ms. Taylor. I appreciate that question, Congressman. So TPP itself, I think, has some protections in there. We got good market access, but as you alluded to, it's ensuring that then Canada lives up to that market access. We negotiated a side letter that covers a host of commodity issues, but really requires in consultation before any kind of these changes happen. We continue though outside of TPP to work with our Canadian colleagues and press them on these issues as well. Secretary Vilsack recently met with his counterpart who is new and brought up some of these issues that I think you are alluding to. I have personally written letters to my counterparts up in Canada, and so we would certainly see it as a priority and will continue as a whole of the U.S. Government to raise this issue with our Canadian counterparts. CROP INSURANCE PROGRAM Mr. Valadao. I would also like to thank Mr. Willis for the time you have taken meeting with me personally on some issues on crop insurance. But on this issue of crop insurance, do you agree that during the period of 2011 to 2013, specialty crop insurance agents in California and other states received substantial reduction in the agent commissions as a result of inequities built in the cap and factor formula in the 2011 Standard Reinsurance Agreement (SRA)? Mr. Willis. What we saw in those years specifically was commodity prices for corn and soybeans, et cetera, rose dramatically. That reduction made it so all commissions were capped at a certain point. What happened is in 2011 and 2012, you saw that hit agents in areas where they had specialty crops. California, for example, was hit quite hard. Since then as commodity prices have moderated, we have kind of seen just the opposite, which they are actually doing better than their counterparts across the nation. But for those two years, yes, due to commodity prices they were below. Today, I mean, just to give you one example, before the cap was set, agents in California, the Administrative and Operating expense subsidy (A&O) was $41 million. Last year it was $68 million. Mr. Valadao. I know we have spoken on this in the past. What I am hearing is from the agents that deal with the smallest of our farmers and the commission that they have been capped at, I know the numbers have increased overall, and when you spread it out and throw an average out there, you are including large with small. But those who service the smallest farmers are the ones who seem to be hurting the most and the agents I am hearing from on a regular basis, and they have actually been in my office quite a bit. So I appreciate the efforts you have made, and I hope to continue working with you on that. Mr. Willis. Thank you. COTTON Mr. Valadao. Then I also have a question on cotton, U.S. extra-long staple (ELS), I am more familiar with it as Pima. Given the current economic state of the U.S. cotton industry, including the ELS production concentrated in the Western United States, California, Arizona, and New Mexico and parts of Texas, we were asking for FSA officials to work with the U.S. cotton industry and specifically on the ELS or Pima industry to make the necessary changes to ELS cotton competitiveness program to ensure it operates, functions as intended. This means the program will help keep U.S. ELS cotton competitive relative to ELS cotton produced in other countries by adding back the Egyptian ELS price quote that was previously removed. It also is including the Chinese ELS price quote to reflect the significant production increases in that country. If there are ongoing concerns by the FSA about the qualities of the cotton represented by these quotes, I encourage the FSA to work with the cotton industry to make the necessary price adjustments based on quality and any other adjustments based on location differentials. Can you assure me that the FSA will work closely with our cotton industry to accomplish these important changes to make the ELS competitiveness program functional and effective once again? Ms. Taylor. Congressman, I will commit to going back and talking to staff about this and taking a look at it and then following up with your staff. Mr. Valadao. I appreciate that, but obviously the industry, those who grow the crops here in our district or our country play a role in this as well. So I would appreciate it if you would take some time to meet with those who are on the ground level of this, too. Ms. Taylor. Yes, absolutely, sir. Mr. Valadao. Thank you. Mr. Aderholt. Ms. Pingree. NEW, BEGINNING AND VETERAN FARMERS AND REANCHERS Ms. Pingree. Thank you, Mr. Chair. Thank you very much to everyone on the panel. I am sorry to miss some of the earlier testimony, but I really appreciate the work that you do and how you help the farmers in my state. So thank you very much for that. I think I missed some of the nice things that people were saying about our Ranking Member, but I will just join in and say that we are going to miss you very much, and I have really been grateful to learn so much on this committee from you and your wonderful stories. So I hope you will not go too far way. I know you are going to be missed in your district. I hear that from people all the time. So we will miss you, too. I missed Mr. Palazzo's question, but I think he was asking a little bit about the new and beginning farmer outreach program. I think that the President's request has $3.9 million for beginning farmer projects at FSA. He might have focused a little bit on veteran's programs, which we are very interested in in our state and have some great work going on, but I know that part of the funds will support a pilot project that will help to mediate intergenerational transfers and leasing issues between one generation and the next. In my state, land access is such a critical issue. This is really challenging. So I am interested in that project. Can you tell us a little more about it? Mr. Dolcini. I would be happy to do that, Ms. Pingree, and thank you. The intergenerational transfer rule for dairies in particular was an important part of the farm bill, and I think that that is mostly implemented at this point. Beyond that, you know, the work that FSA and agencies all across the Department are doing on beginning farmer and rancher issues, I think, are just as important in Maine as they are in California and every other state. And just using the micro loans, for example, it is sort of the work horse of our farm loan portfolio around the nation. We have made 18,000 of these micro loans in three years. Seventy percent of them have gone to beginning farmers and ranchers. So that is 18,000 American dreams that we are helping fund in your State and in other States. Ms. Pingree. Right. Mr. Dolcini. And 50 percent of those micro loan recipients are first time customers for the Farm Service Agency. So these are people walking through our doors for the very first time. We deal with farm storage facility loans, low cost crop insurance. The Natural Resources Conservation Service (NRCS) does it with their conservation programs. Rural Development does it with its value added business grants. We are really trying to provide the soup to nuts approach to building up the economic wherewithal for beginning farmers and ranchers around the country. INSURANCE FOR COVER CROP Ms. Pingree. Well, all of those are much appreciated and critically important, particularly in regions like mine where a lot of young people are wanting to get into farming but not having all of the assistance that they need. So thank you for that. Just a little bit about cover crops. Thank you, Mr. Willis. I can tell you visited all of us. You have been everywhere to talk to people about crop insurance, and thank you all for some of the changes that we are going through. It is about cover crop termination rules. So I understand farmers have to follow a complicated set of guidelines if they want to plant a cover crop and not have it impact a farmer's eligibility for crop insurance. Those guidelines vary around the country. They require a farmer to terminate their cover crop a certain number of days before planting a cash crop. As I understand this, there is no other common farming practice that has such rules. Generally a farmer just has to follow what the RMA calls good farming practices to ensure they do not compromise their eligibility for crop insurance indemnity. I know there are several groups that have recommended that cover crop termination rules should be decoupled from federal crop insurance eligibility, and instead cover crops should simply have the same good farming practice process that other widely used agricultural management processes are subject to. So is RMA considering getting rid of these complicated cover crop termination rules and instead considering cover crops a good farming practice? It seems to me like something that the RMA should prioritize so we do not dissuade folks from using sustainable practices like cover cropping. Particularly in sustainable and organic agriculture, cover crops are such a critical part of building up the soil, and with the tremendous amount of topsoil loss we are having in our country, I feel like we should be doing everything we can to get more of them in use. Mr. Willis. Thank you for the question. We do fully support cover crops at the Risk Management Agency. In fact, a few years ago one of the things that I think we are proud of is the fact that we sat down with NRCS, FSA and RMA, and we tried to simplify the guidance on cover crop and also tried to make all of the agencies consistent. The guidelines you talked about are available on the website. They are greatly simplified. Having said that, we have had conversations with people who wish we would continue that, and we have had discussions. I think we want to continue those discussions. The last thing anybody wants is to have any of the agencies be inconsistent, which we are on the same page right now, but we also want to support cover crops and the crop insurance program as well. So we are happy to continue that dialogue. We are pretty proud though of what came out a few years ago with the new guidelines. Ms. Pingree. So I would be interested to follow up with you. I am not sure why it cannot be included under good farming practices. I can see that you have put a lot of time and thinking into this, but if we are hearing people raise concerns about it, it must be a stumbling block. So at least if you could help us understand if there is a reason we cannot just take it one step further. Thank you for the work you have done, and thank you for your answer. Thank you, Mr. Chair. Mr. Aderholt. Dr. Harris. COMMODITY CREDIT CORPORATION (CCC) AUDIT Dr. Harris. Thank you very much. Let me first ask, Ms. Taylor, about the CCC and the financial statement issues. The USDA's financial statements were delayed for a second year in a row this year, due in part to issues between the CCC and the USAID. Can you describe the specific issues with those financial statements and what those deficiencies were? Ms. Taylor. Thank you for that question, Congressman. So first I just want to say that obviously USDA, CCC and FSA take their financial responsibility quite seriously here. Some of what you are specifically alluding to is what the auditors call a parent-child relationship and how we are passing money to USAID but then not looking in and seeing exactly how they are spending it. They have their own OIG and auditors on that side of the books, but there were some processes that we should be looking at from the best accounting practices and that we were not. Dr. Harris. And is the intention to start looking more closely at the USAID books? Ms. Taylor. So we received this audit and the findings in mid-February. We have 60 days to respond. So that puts us about mid-April. We are actively going through each of the findings and creating a roadmap and a way to address it. I think there are short-term things we can do, and then there is a long-term strategy that we are going to have to develop here. In the short term some things we are doing is FSA CCC recently contracted with some professional firms on audit readiness, and also all of USDA is really taking this quite seriously and helping. Our Chief Financial Officer recently detailed one of his senior executives, a seasoned professional, over to fill a vacant deputy FSA CFO role. And so we are ensuring in the short term we have the resources we need to build that long-term plan. INTERNATIONAL FOOD PROGRAMS MOU Dr. Harris. And the fiscal year 2015 and 2016 Omnibus included directives to update the MOUs that lay out the framework for our USDA and USAID cooperating on international food programs. Can you update me on the status of whether that MOU has been updated? Ms. Palmieri. I am going to take that question if it is okay. Dr. Harris. Sure. Ms. Palmieri. I can update you on that, yes, we are having ongoing conversations currently with USAID. We are drafting a new MOU agreement to define the roles and responsibilities. There are productive conversations currently. We are hoping to have a report more fully reporting to you, this subcommittee. Dr. Harris. Any time now? Ms. Palmieri. Yes, any time now. I had hoped it would be here ahead of me, but it is not. So, yes, we are expecting the report to come through. FOOD FOR PEACE Dr. Harris. OK. And just one final subject is to follow up, I think, on something the Chairman asked about, which is really the attempts, it appears, to circumvent the Food for Peace Act and the fact that it is supposed to be a way of using American commodities, not American cash, to help in foreign food programs. So right now it seems that in the 2017 justification that was submitted, USDA includes a provision that would allow funds made available to programs at Department of State to meet the funding requirements of the safe box. Obviously those State Department funds would not be subject to the Food for Peace Act requirements of the food aid and take the form of U.S. commodities grown here and, of course, shipped on U.S. flag carriers. Is that true? Can you tell me right now whether or not you are meeting the safe box levels using those funds, without using those funds from the State Department? Ms. Palmieri. I will need to talk with our colleagues at USAID and get you a precise answer. I do not want to answer that incorrectly today. [The information follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Dr. Harris. OK. I guess it is the Community Development Fund that is also over at, I guess, the State Department that is potentially another end run around, you know, the Food for Peace Act. Look. I understand, you know, the importance of cash, and as the gentleman from California indicates, it is not a large part, but it is the philosophy that we are helping. I visited Kenya, and like Tanzania, I am at a food distribution center refugee camp and the corn is not American. I asked, ``Why is this not American corn?'' Well, because they do not allow GMO corn. So let me get it straight. I mean, we are actually donating food to these countries, but they do not want the food that we actually grow here and we eat? So I have got to tell you, you could see how potentially a use of cash would be to buy some other country's corn instead of using our corn. That does not make sense to me. So I would just say that, you know, we have to think carefully about this because in the end, you know, our farmers are the most productive in the world, and when we donate food through Food for Peace, it ought to be Food for Peace grown by American farmers. That is just my philosophy, and I yield back. Mr. Aderholt. Mr. Yoder. EXPORT MARKETS Mr. Yoder. Thank you, Mr. Chairman. You know, when I talk to farmers back home or farmers that come here to Washington, D.C., they express a lot of concern related to the current state of the agriculture economy. I think we are all aware that yields are doing well in a lot of parts of the country, but the prices are down, and they may be down for a while, and farm incomes down over 50 percent, I think, on average across the country, and so that is going to have an impact on job opportunities, and economic opportunity for all of us. I know, Ms. Taylor, I read you grew up on a farm in Iowa. I grew up on a farm in Kansas. It has been in my family for generations as well, and so we have an appreciation for how hard those folks are working, and we want them to be successful. I offered the remark that I grew up in the 1980s when half of our neighbors went bankrupt. Those painful memories still stick with us. I do not think we are still in that same situation. We are not as leveraged as we were in the 1980s, but you know, we do not want to go back there. So I want to ask a couple of questions about how we help what your agency does in particular and I want to maybe focus a little bit on opening up export markets. I know the Chairman brought that up in his comments as well already. I saw Secretary Vilsack announced the removal of some trade barriers with Peru a couple of days ago, and that seemed like a very welcomed result, and so I thought maybe you could talk a little bit about the Peruvian trade barriers that were removed briefly and then more broadly talk about what other markets we are specifically working on to open up the same opportunities because if we can get countries buying our goods or if we are donating the goods and they were taking American goods. I tend to agree with Dr. Harris on that. What are we doing to eliminate those export barriers specifically? And if you could also speak to our work in China, in particular. That seems to be the largest untapped market for meat and poultry. Ms. Taylor. Thank you for that question, Congressman. I think as we talk about what is going on in the farm economy, farm incomes are down over the past several years. Commodity prices have softened. I think tying that to the direct importance of trade is vital. Twenty percent of farm income comes directly from agricultural exports. It is key to keeping our farmers and ranchers in business. We are highly efficient producers in this country of safe, quality, affordable product, but 95 percent of the customers in the world live outside our borders, and so we produce far more food than we are going to consume. So having export opportunities is vital. As you mentioned, the announcement of the Secretary who is in Peru as we speak or this week he was, and Peru lifted some remaining Bovine Spongiform Encephalopathy (BSE) restrictions that they had on U.S. beef exports there. We continue to discuss this with markets all over the world. We have seen a lot of successes over the past several years in opening up markets that were restricting our beef because of BSE. Some other big successes have been Japan, and Korea. Most recently it was South Africa, but you alluded to China, and we continue to have conversations there on a host of products that are being restricted currently. Beef is certainly one of them and at the top, but also poultry with highly pathogenic avian influenza. We take issue with how for low path avian influenza they regionalize at a state level. For high path they ban the whole country. We think that is not consistent with international norms and standards and spend a lot of time trying to talk about the concept of regionalization and the strong biosafety protocols we have in the United States. There is just one other point I would add, I would be remiss if I am talking about trade and not talk about TPP and really the importance that that could mean to the U.S. farm economy. Forty percent of the world's economy is in the Trans- Pacific Partnership. You know, Japan is a very exciting market. You know, depending on the year, they are in our top four, top five export markets, number one for a host of products, number one for pork, top four for dairy, and so they are important in lowering tariffs there in the short term is going to be key, but then you can look at some other market opportunities, Vietnam, Malaysia, very exciting. There are young populations. About 43 and 45 percent of their population, respectively, is under 25 years old or younger. What that means is we have an opportunity today as their middle class grows to get them a taste for American food products and really grow that market as their populations grow. Today there are hundreds of millions. You know, in a couple of years they are going to be measured in billions of people, and so there is a really big market opportunity in the short term, but the long term is really hard to measure. The Farm Bureau recently came out and I think they said that they expect a $4.4 billion boost to net farm income based upon TPP, and so it is something we cannot afford to pass up in the short term. Mr. Yoder. I appreciate your attention to this. I know it is part of the philosophy, and as the population continues to grow in these developing countries, they are going to need more and more food products. We are the best, most efficient growers in the world. We want to sell them American grain and meat and poultry. That creates jobs at home, and so there ought to be bipartisan unity on breaking down these export barriers and making that a top priority for the agriculture community. Thanks for your testimony. Mr. Aderholt. Mr. Young. CONSERVATION RESERVE PROGRAM (CRP) Mr. Young. Thank you, Mr. Chair. Under Secretary Taylor, it is good to see you. Congratulations on your new role. As Mr. Yoder pointed out, you are an Iowan. Of course I like that. Administrator Dolcini, I want to talk to you about, and Mr. Yoder also mentioned, what is going on in agriculture. In Iowa, incomes are down about a third. Yields are great though. Inputs are high. Commodity prices are low, and you look at the land prices, too, and how they are adjusting one way or another and more in ways down. There are many farmers who are frustrated by the high CRP rate. I want to talk about that. They say they can get more money from rolling in CRP than to farm the ground. Some feel like they are competing with the government at times, that the government may be putting them out of business. Livestock producers are concerned as well specifically because diluted due to CRP, some of the operations run into lack of grazing and pasture land. As you know, this seems to be a systemic issue. We have seen the cycle before as commodity and land prices decline. NRCS adjusts their rental rates, as you know. It lags the land market and takes some time to catch up. So a question for you. When FSA looks at rental rate annually, those rates are not always adjusted. Will you please share how often the FSA is reviewing or re-evaluating CRP rates and plans, and what causes you to act and when? Mr. Dolcini. Well, we look, sir, at rental rates based on statistical information that we receive from NASS, the National Agricultural Statistics Service, and so we typically make those changes every couple of years. Sometimes it varies a little bit, but that is about the timetable. And I would be happy to come back and visit with you and your staff a little more specifically with regard to what we have done in Iowa. Mr. Young. What is the longest period of time you have waited until you have adjusted it? Mr. Dolcini. That is a good question. I do not know off the top of my head, sir. I will have to get back to you on that. CRP though in general, I think, has been a very successful program. It has been an important economic tool for farmers to incorporate into their overall practices, and I think we have seen a lot of activity certainly in Iowa and throughout the country with regard to, you know, the various uses of CRP, whether it is continuous programs or general sign-up or some of the other things that we are working with it. [The information follows:] Since 2006, the longest time between systematic national updates has been 2 years. The 2014 farm bill replaced the requirement for an annual survey with flexibility to conduct surveys ``not less frequently than once every year'' (16 U.S.C. 3834(d)(5)). Mr. Young. In any way do you also have data detailing the economic impact that this program has on some of the communities? Mr. Dolcini. Perhaps the Economic Research Service (ERS) has done a study. I can certainly look into that and get back to you on that, sir. DIRECT FARM LOANS Mr. Young. We will contact them. Thank you. But jumping to another topic, Administrator, access to capital is one of the most significant barriers that beginning farmers face when they are looking to start a career in farming. FSA direct farm loans provide a crucial source of capital for beginning farmers. In light of the increasing age of farmers, we need new farmers to come in. Tell me about the 17 percent increase for direct operating loans that is included in your budget request. Why do you need more money and tell me about the importance of this funding. Mr. Dolcini. Part of it is the issue that you described and that Mr. Yoder has referenced and other members of the subcommittee in terms of the overall demand on farm loans, both commercial loans as well as loans that are provided by the Farm Service Agency. We have seen a real demand in our direct program, and I think that the budget request reflects the demands that we are seeing in places like the Midwest and Texas and other parts of the nation. The programs have a very low delinquency rate and a very low default rate. So it is a very good tool for us to use to make sure that folks are taking advantage of the credit safety net that the FSA offers. Mr. Young. Thank you for that. Mr. Chairman, I am going to yield, but before that I want to thank my Ranking Member for allowing me to be part of this. Thank you for your kindness to me, this our last hearing, that you have shown me as a new Member. Thank you for your sage wisdom and advice and about how to put this all in perspective. Thank you very much. Mr. Farr. Thank you. I am not dead yet. [Laughter.] Mr. Young. We are not looking for you to go anywhere any time soon. UNDER SECRETARY FOR TRADE AND FOREIGN AGRICULTURAL AFFAIRS Mr. Aderholt. Let me talk a little bit about the trade. Under Secretary, in your written testimony, you talk about the importance of U.S. exports to the agriculture sector, and this is one of the few sectors of our economy that has a consistent trade surplus. In order to keep this momentum and continuation at record levels, the 2014 farm bill mandated the creation of an Under Secretary for Trade and Foreign Agricultural Affairs at USDA. The new position provides a focal point at the Under Secretary level for the in-the-trenches issues like the agencies that serve in the Foreign Agricultural Service, and it would establish a USDA proprietary role in providing international food aid overseas. In the fiscal year 2015 Agriculture Appropriations Bill, money was appropriated to assist an independent study of this new position and how potential reorganization would occur. USDA was required to complete this initial study, this reorganization, within 180 days of enactment of the farm bill. This study should have been completed August of 2014. It has been almost a year and a half, and we have still not received it. Can you tell me a little bit about the delay and why it has been held up and what progress that you have actually made on it? Ms. Taylor. Thank you for that question, Mr. Chairman. As you have alluded to and I think Ms. Palmieri mentioned, we have seen the strongest seven years in agricultural trade in the history of our country since we started recording it in the past seven, and so agricultural exports are obviously very vital to the U.S. farm economy. I think this is a Department-wide question. It is not just an FFAS or FAS question. It is hard to see when you look across the 17 agencies or seven mission areas, many of them have some components to international activities. FAS is the coordinator. But it is not just the international components. I think it is also the domestic components as well. You would be changing leadership structures, and so I think it is a more complicated question than many people anticipated in the beginning, and that is why I think it is taking the department a little while to wrap its arms around this and really look at this question. As you mentioned, this subcommittee directed us to do a study. We have received that study and the Department is going through that study and building upon what they provided for that report that was directed in the farm bill, and we hope by the end of this year to have that to Congress. Mr. Aderholt. Well, the 2016 Agriculture Appropriations law directed USDA to complete a study by June 16th of this year, and this is the second law that has been passed that required a completion of the study. I guess my question to you: can you personally commit that you will deliver us a report no later than that date? Ms. Taylor. As I said, Mr. Chairman, this is a much larger question for the whole Department. You are looking at a Departmental reorganization, and it is much larger than what I can control or what my mission area does. What I can commit is I am certainly part of that conversation, and we have the study that the National Academy of Public administration (NAPA) did. We are working quite hard on this. We take it quite seriously. We take whatever laws Congress passes and directs us to do quite seriously, and we are certainly committed to working through the issues and the complexity of this in a pragmatic way and one that gives our employees certainty, but also gets Congress what they have requested. Mr. Aderholt. Well, again, it has been over 2 years, and this is just a study. So what I will do is I would like to ask for your personal commitment that you will deliver that message and that you will do everything that you can when you get back to make sure that by June 16 that we have something. Like I said, we understand the whole thing cannot be completed. We are just asking for that study to be turned into us by the 16th. Ms. Taylor. I will certainly go back and deliver that message, Mr. Chairman, and work on the pieces that I can control. Mr. Aderholt. Thank you. Mr. Farr. FOOD FOR PEACE Mr. Farr. Thank you, Mr. Chairman. I just want to make a comment about Food for Peace. I mean, my feeling here is that Secretary Vilsack said the other day that the privilege we all have to choose a profession is because we have people growing food for us, and we do not have to go out there and grow it. We do not have to produce our food every day in our house. And it seems to me that in our Food for Peace, do we not want these poorest countries who are at risk for all kinds of national, international risk, security risks because of migration and starvation; should we not be teaching them how to fish so that they can, indeed, produce professionals? It is interesting that on TPP you said was 40 percent of the world market. None of the countries we send the food to are part of that. I mean, these countries have gotten on their feet, and now they can participate in trade with us. And it seems to me that we are going to have a strong world economy if we can work people out of poverty, and we cannot work them out of poverty unless they can at least start with growing their own food and having their own local markets. PRESENCE IN CUBA That is my comment. I just want to say that Mr. Yoder was talking about breaking down export barriers. I wish our former colleague Jo Ann Emerson were here today. She was a very active member of this committee, a Republican from Missouri, and she and I were involved in the first bipartisan Cuba Working Group, and I think she sat here trying to figure out how we could break down this political barrier that we have created in the United States so that farmers in Missouri and other States could do business with Cuba. Now, there is some money in here to open up an office in Cuba. I am very excited about that. We sold $367 million worth of goods to Cuba last year. What will this office do in Cuba? How will it help the farmers now and in the future? Ms. Taylor. Thank you for that question, Ranking Member Farr. Obviously Cuba is an exciting market for U.S. agriculture. Our farmers and ranchers commodity groups are very excited by the possibility to be able to not just sell more product, but eventually when the embargo is lifted to be able to directly market to the Cuban people. Cuba imports roughly 80 percent of its food, somewhere between $1.8 to $2 billion. In some years we have had a 50 percent market share of that. The past few years it has been declining. There is no reason when they are 90 miles off our coast that we should not have the majority of that. Setting up a presence in Cuba is a priority for USDA. Certainly in the short term as more tourists from the United States will be going or more professionals for travel will be going to Cuba. That increases the risk of certain pests and diseases when they are coming back to the United States. So having an Animal and Plant Health Inspection Service (APHIS) component there is going to be very important. It is also about rebuilding relationships. I had the ability to and the opportunity to travel with Secretary Vilsack in November on his first trip to Cuba, and it was the first time a U.S. Secretary had been there since the late 1950s and really rebuilding those relationships with our Cuban counterparts and finding areas of commonality. One area of commonality that we discovered was citrus greening. We are doing a lot of work in Florida and research to combat citrus greening. Cuba has it as well and they are doing research as well, and we have looked at it from different perspectives. There is a way to collaborate there and share what we have each learned and not kind of recreate the wheel. So I think there are a lot of different areas for us to work together in the short term, not just about selling more product, which our market development programs because of the embargo today are prohibited from being used there. ORGANIC CROP INSURANCE Mr. Farr. Thank you very much. The last question I have is how is RMA going to expand access to crop insurance for diversified, sustainable and organic farms, and what more can we expect to see from RMA in the fear future? Mr. Willis. Well, the employees of the Risk Management Agency over the years have gone the extra mile to bring insurance to crops, to regions, to farming practices that have previously not had crop insurance. You know, in 2009 we did not offer crop insurance for organic crops. Recognizing the price today, we are at about 56 crops that have that. We added 30 last year. We are creating new tools it seems like every few months to help these growers. We had a new program a year and a half ago called the Whole Farm Program that works well for diversified producers, but we did not just stop. We actually went out. We sent our team out to talk to farmers across the nation in the last year to find out what worked and what did not work, and we went back to the drawing board and made some changes. The other way that we are seeing crop insurance grow is through private submissions. We have a board process where farmers can bring new products to a committee. Mr. Farr. So you will continue to expand that as time runs out and we have got to go. Mr. Willis. I am very confident we are going to continue to expand and to serve farmers' needs very well. Mr. Farr. Thank you. Thank you, Mr. Chairman. Mr. Aderholt. All right. With that, you heard the bell. So we have got a vote on the floor, but we thank you for being here. We appreciate your service. We look forward to working with you, and we look forward to getting that report real soon. Thank you. [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] W I T N E S S E S ---------- Page Avalos, Ed....................................................... 352 Dolcini, Val..................................................... 1035 Mitchell, Larry.................................................. 398 Ostroff, Stephen................................................. 4 Palmieri, Suzanne................................................ 1032 Shea, Kevin...................................................... 397 Starmer, Elanor.................................................. 393 Taylor, Alexis................................................... 992