[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND
RELATED AGENCIES APPROPRIATIONS FOR 2020
_______________________________________________________________________
HEARINGS
BEFORE A
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
________
SUBCOMMITTEE ON AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG
ADMINISTRATION, AND RELATED AGENCIES
SANFORD D. BISHOP, Jr., Georgia, Chairman
ROSA L. DeLAURO, Connecticut JEFF FORTENBERRY, Nebraska
CHELLIE PINGREE, Maine ROBERT B. ADHERHOLT, Alabama
MARK POCAN, Wisconsin ANDY HARRIS, Maryland
BARBARA LEE, California JOHN R. MOOLENAAR, Michigan
BETTY McCOLLUM, Minnesota
HENRY CUELLAR, Texas
NOTE: Under committee rules, Mrs. Lowey, as chairwoman of the full
committee, and Ms. Granger, as ranking minority member of the full
committee, are authorized to sit as members of all subcommittees.
Martha Foley, Diem-Linh Jones, Joseph Layman,
Justin Masucci, Perry Yates, and Randall Staples
Subcommittee Staff
_____
PART 2
Page
Food and Drug Administration--Status of Operations ............. 1
Office of the Inspector General................................. 133
Members' Day.................................................... 161
Oversight of Economic Research Service and National Institute
of Food & Agriculture .......................................... 201
Oversight of the Rural Economy................................... 265
Food and Drug Administration.................................... 341
U.S. Department of Agriculture.................................. 381
Economic Opportunities for Farmers.............................. 425
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
Printed for the use of the Committee on Appropriations
PART 2--AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION,
AND RELATED AGENCIES APPROPRIATIONS FOR 2020
AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND
RELATED AGENCIES APPROPRIATIONS FOR 2020
_______________________________________________________________________
HEARINGS
BEFORE A
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
_______
SUBCOMMITTEE ON AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG
ADMINISTRATION, AND RELATED AGENCIES
SANFORD D. BISHOP, Jr., Georgia, Chairman
ROSA L. DeLAURO, Connecticut JEFF FORTENBERRY, Nebraska
CHELLIE PINGREE, Maine ROBERT B. ADHERHOLT, Alabama
MARK POCAN, Wisconsin ANDY HARRIS, Maryland
BARBARA LEE, California JOHN R. MOOLENAAR, Michigan
BETTY McCOLLUM, Minnesota
HENRY CUELLAR, Texas
NOTE: Under committee rules, Mrs. Lowey, as chairwoman of the full
committee, and Ms. Granger, as ranking minority member of the full
committee, are authorized to sit as members of all subcommittees.
Martha Foley, Diem-Linh Jones, Joseph Layman,
Justin Masucci, Perry Yates, and Randall Staples
Subcommittee Staff
_____
PART 2
Page
Food and Drug Administration--Status of Operations ............. 1
Office of the Inspector General................................. 133
Members' Day.................................................... 161
Oversight of Economic Research Service and National Institute
of Food & Agriculture .......................................... 201
Oversight of the Rural Economy................................... 265
Food and Drug Administration..................................... 341
U.S. Department of Agriculture................................... 381
Economic Opportunities for Farmers............................... 425
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
_____
Printed for the use of the Committee on Appropriations
U.S. GOVERNMENT PUBLISHING OFFICE
36-667 WASHINGTON : 2019
COMMITTEE ON APPROPRIATIONS
----------
NITA M. LOWEY, New York, Chairwoman
MARCY KAPTUR, Ohio KAY GRANGER, Texas
PETER J. VISCLOSKY, Indiana HAROLD ROGERS, Kentucky
JOSE E. SERRANO, New York ROBERT B. ADERHOLT, Alabama
ROSA L. DeLAURO, Connecticut MICHAEL K. SIMPSON, Idaho
DAVID E. PRICE, North Carolina JOHN R. CARTER, Texas
LUCILLE ROYBAL-ALLARD, California KEN CALVERT, California
SANFORD D. BISHOP, Jr., Georgia TOM COLE, Oklahoma
BARBARA LEE, California MARIO DIAZ-BALART, Florida
BETTY McCOLLUM, Minnesota TOM GRAVES, Georgia
TIM RYAN, Ohio STEVE WOMACK, Arkansas
C. A. DUTCH RUPPERSBERGER, Maryland JEFF FORTENBERRY, Nebraska
DEBBIE WASSERMAN SCHULTZ, Florida CHUCK FLEISCHMANN, Tennessee
HENRY CUELLAR, Texas JAIME HERRERA BEUTLER, Washington
CHELLIE PINGREE, Maine DAVID P. JOYCE, Ohio
MIKE QUIGLEY, Illinois ANDY HARRIS, Maryland
DEREK KILMER, Washington MARTHA ROBY, Alabama
MATT CARTWRIGHT, Pennsylvania MARK E. AMODEI, Nevada
GRACE MENG, New York CHRIS STEWART, Utah
MARK POCAN, Wisconsin STEVEN M. PALAZZO, Mississippi
KATHERINE M. CLARK, Massachusetts DAN NEWHOUSE, Washington
PETE AGUILAR, California JOHN R. MOOLENAAR, Michigan
LOIS FRANKEL, Florida JOHN H. RUTHERFORD, Florida
CHERI BUSTOS, Illinois WILL HURD, Texas
BONNIE WATSON COLEMAN, New Jersey
BRENDA L. LAWRENCE, Michigan
NORMA J. TORRES, California
CHARLIE CRIST, Florida
ANN KIRKPATRICK, Arizona
ED CASE, Hawaii
Shalanda Young, Clerk and Staff Director
(ii)
AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND
RELATED AGENCIES APPROPRIATIONS FOR 2020
Wednesday, February 27, 2019.
FOOD AND DRUG ADMINISTRATION--STATUS OF OPERATIONS
WITNESS
SCOTT GOTTLIEB, M.D., COMMISSIONER, FOOD AND DRUG ADMINISTRATION
Opening Statement--Mr. Bishop
Mr. Bishop. The Subcommittee for Agriculture, Food and Drug
Administration, FDA, and related agencies will come to order.
Good afternoon. I would like to welcome everyone to today's
hearing, which is our first in the 116th Congress.
Before we get underway, I would like to personally welcome
all of the returning members to the subcommittee, as well as
our new members. Although they have not all arrived, Ms. Lee of
California; Ms. McCollum of Minnesota, Mr. Cuellar of Texas,
and of course, Ranking Member Fortenberry of Nebraska, and Mr.
Moolenaar of Michigan.
I would also like to thank Mr. Aderholt for his work on the
subcommittee. He served as chairman for the previously six
years.
I look forward to working with all of the members of the
committee in a productive and a bipartisan manner.
I also would like to thank Commissioner Gottlieb for
allowing us to start the hearing two hours later. We are very
appreciative for your flexibility.
The work of this subcommittee touches the lives of every
citizen on a daily basis. As we have said so often, many do not
recognize the far-reaching jurisdictions and programs that this
subcommittee addresses, a little bit of everything from food
safety to agriculture research, to drug approval, to rural
development, to protecting market integrity, through the
Commodity Futures Trading Commission.
Part of our efforts include providing necessary resources
to the Food and Drug Administration, which plays a critical
role in the lives of every single American.
In addition, we have a duty to make sure that those
resources are put to the best possible use by the agency.
With that, I would like to welcome our witness, Dr. Scott
Gottlieb, Commissioner of the Food and Drug Administration. We
are delighted to see you. Today we would like to discuss the
status of operations at the Food and Drug Administration,
including the impacts and the recovery from the longest and the
most pointless shutdown in U.S. history.
Before we begin, I would like to thank you and your very
committed employees for your efforts during the shutdown, many
of them working without pay. While the full impacts of the
shutdown will not be known for some time, there are undoubtedly
accrued backlogs of inspections, delayed drug and medical
device reviews, and potentially exhausted pools of user fees as
a result of the shutdown.
We look forward to hearing the processes put in place to
work through these backlogs as efficiently as possible and
other efforts to return to more standard operations.
And I would like to thank you for being with us today, and
I look forward to today's discussion.
I will defer the opening statement from our distinguished
Ranking Member, Mr. Fortenberry, until he arrives.
And at this time I would defer the comments from our
chairwoman of the full committee, Congresswoman Lowey, who I
believe is en route, and she will have some opening remarks.
Before Dr. Gottlieb begins, I would like to give a reminder
to members that as is customary with our subcommittee, members
will be recognized by seniority, for those who were here when I
gaveled the hearing to order and then in the order of their
arrival after that.
We will alternate majority/minority members, and we will
adhere to the 5-minute rule.
Commissioner Gottlieb, without objection, your entire
written testimony will be included in the record.
I will recognize you now for your statement, and then we
will proceed with questions from members.
Opening Statement--Commissioner Gottlieb
Dr. Gottlieb. I thank you, Mr. Chairman, and I want to
thank the ranking member as well, whom I had an opportunity to
meet with a couple of weeks ago, and I look forward to his
arrival.
I also want to thank the Members of the Subcommittee. I
want to thank all of you today on behalf of the FDA for your
continued support of our public health mission. We are witness
to, quite simply, a period of historic scientific advance right
now, and the opportunity that we have across our entire
portfolio to advance health and well-being and protect
consumers exceeds any comparable period of rapid technological
change, in my opinion.
And your support is helping us seize those opportunities.
The initiatives that Congress supported in our 2019 Budget will
help us uncover new treatment options for patients suffering
from debilitating conditions; improve competition to help lower
drug costs and improve patient access to medicines; and advance
the developments for rare diseases and secure good safety,
among many other initiatives.
To complement the support that you have given us and to
secure these scientific advances, we are also undertaking one
of the most significant policy modernizations at the Agency in
decades. And I would like to take this opportunity to tell you
about some of the elements of this undertaking and how I
believe they extend the opportunities and the resources that
you have provided with us.
These steps begin at the outset of a new drug development
process when a sponsor files an Investigational New Drug (IND)
seeking permission from the FDA to administer an
investigational drug or a biological product to patients for
the first time.
Beginning in the next few months, our Center for Drugs will
adopt a new standard template for the review of these
protocols. By using standardized templates for the submission
and review of these INDs, we believe it will help investigators
more efficiently advance new research while making sure that
the FDA has the information it needs to safeguard patients.
As part of our pursuit of more standardized methods for the
assessment of information across all aspects of our drug review
progress and to improve the rigor and predictability of these
methods, we are also extending these same approaches to how we
assess product safety.
We are launching a safety signal tracker to serve as a
repository for important information and potential safety
issues throughout a drug's life cycle, from early in IND
development, through application review and well into the post
market.
This consolidates information about safety concerns during
drug development in a single location, and in this way the
safety questions can be more consistently tracked and annotated
and continuously evaluated through every stage in the life
cycle of a new medical product.
It will help cement a more systematic approach to how we
continue to evaluate certain safety questions throughout the
new drug and biological products application review and could
measurably improve the drug development process.
This same commitment to using modern tools and policies to
achieve a more structured approach to drug development extends
into our review of clinical evidence in new drug applications.
For the first time in more than 20 years, we are undertaking
the first update of our guidance outlining how we assess the
clinical effectiveness for drugs, a large change in the last
few decades. We have much more opportunity as a broader array
of data is confirmatory evidence to help support new product
review, and this includes real-world evidence and real-world
data.
These same general approaches also extend to our efforts to
modernize how we assess post market drug safety. As part of the
new drug program modernization that we have launched, we have
put in place a new effort to analyze more safety data more
efficiently across the entire drug life cycle, including in the
post market.
We are implementing changes to capture more types of safety
data, enhance our data analytics, and grow our sentinel
database's ability to detect potential new safety problems.
We will be working to link claims data in our post market
sentinel system to electronic health records to improve our
ability to conduct active surveillance and use real-world data
to improve patient outcomes, and we will be using the new
resources as part of the 2019 Budget to help advance these
efforts.
By linking information from the electronic health records
to the data that we have on medical claims through our existing
sentinel system, we will be able to get a much more complete
picture of potential safety issues post approval and advance
the use of real-world data to study drug effectiveness.
As another part of these efforts, I am pleased to announce
that FDA's adverse event reporting system for drugs will be
expanded to cover more types of safety data, and for the first
time, this system will also include pre-market drug safety
data.
The support of this Committee is key to all of these
efforts, and it is key to our goal of helping leverage the
tools of science innovation to advance the public health.
I look forward to working with you on these shared goals
and many other endeavors and look forward to answering your
questions today.
Thank you.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Bishop. Thank you, Dr. Gottlieb.
We will proceed with questions. As I mentioned in my
opening statement, I applaud the efforts of you and your
agency's employees during the shutdown, and it is a testament,
I think, to their dedication. They were a bright spot in the
pointless shutdown.
impact of government shutdown
My question is: where does FDA stand in terms of getting
the agency back on track?
What kind of backlog accrued for your review work?
How long will it take to get it back to normal?
What is your assessment of the shutdown's impact on
employee morale, on hiring and recruitment issues?
I am very concerned about what would happen should we have
another shutdown.
What impact would a future shutdown have at FDA?
Finally, I am interested in understanding some of the long-
lasting effects of the shutdown. So if you would, could you
just take a moment to discuss the activities that FDA conducted
during the shutdown and how it was carried out by your
workforce, and in addition, what informed FDA decisions to
continue, reduce, or stop altogether its regular activities
during the shutdown?
Dr. Gottlieb. Well, Mr. Chairman, I appreciate the
question. I want to just start out by acknowledging the work of
the people at FDA, both those who continued to work in exempt
and accepted statuses, meaning that they were able to continue
their work because they were either being supported by user
fees or their work was considered critical to the protection of
the public health, as well as those who were on furlough.
I think being on furlough and being disconnected from the
Agency and the work that is important to them was perhaps the
most difficult position to find yourself in, and I want to just
commend their dedication, and especially the fortitude of their
families through what I have said was perhaps the most
difficult operational challenge that we have faced in modern
times through this extended shutdown.
I feel confident that things are back on track. I do not
think we are going to see significant impacts on our work going
forward as a result of the shutdown. I think that owes to the
dedication and the hard efforts of the men and women of FDA.
We will meet, for example, our user fee goals related to
medical products across most of our programs. There will be
some impacts. Certain policy work was delayed. Certain centers
were hit particularly hard by this shutdown. For example, our
Food Center was. Probably 90 percent of the Food Center was on
furlough. So policy work was delayed for the 5 weeks of the
shutdown.
Inspectional work over the course of the year, the number
of inspections that we are able to conduct, will be diminished
by an amount that's commensurate with the length of the
shutdown, probably by about ten percent from where we would
have been.
But across the board, as we get back to full operational
strength, and we are there now, and as we assess the impacts
across our programs, I continue to feel confident that we are
able to mitigate the hardest impacts and that we remain a
strong Agency.
Mr. Bishop. I wanted to discuss a topic related to food
safety. I would like to stress I am not criticizing you or your
decisions during the shutdown.
The Antideficiency Act, which governs legal determinations
during the shutdown, says an officer or employee of the United
States Government may not employ personal services exceeding
that authorized by law, except for emergencies involving the
safety of human life or the protection of property.
In 1995, the Justice Department advised OMB, ``We believe
that the emergencies exception applies only to cases of threat
to human life or property where the threat can be reasonably
said to be near at hand or demanding of immediate response.''
And as you know, we also fund and oversee Food Safety and
Inspection Service. When there is a shutdown, all FSIS
inspectors are required to be on the job, and while FSIS
operates under different authorization, the Antideficiency Act
only looks to the threat to human life.
So can you tell us why you did not initially bring back
inspectors to ensure continuation of high-risk food safety
inspections?
Dr. Gottlieb. Well, we were guided by prior decisions, but
none of those prior decisions were sufficiently robust to
accommodate all of the circumstances that we encountered
through this shutdown. The decisions that we made were
consistent with the Antideficiency Act, as you mentioned, Mr.
Chairman, and the legal advice that we obtained, and the public
health considerations of the circumstances that we encountered
in this shutdown.
I will say that initially, if you remember, the shutdown
occurred just prior to Christmas and there was thinking that
the shutdown would end just after Christmas, and we would not
have been in the position of conducting inspections over the 2-
week period of the Christmas break, as well as the week
following that. Typically, we would not have many inspections
scheduled during that time period.
When it became apparent to us that this shutdown was going
to be prolonged and when it became apparent to us that the
routine inspection work met the standard under the
Antideficiency Act for the protection of human life, we very
quickly initiated an effort to recall inspectors to begin
conducting those inspections.
I do not believe that we missed that many inspections. At
best we were delayed perhaps a week from ramping inspections
back up from where we would have been coming off a holiday
where we would not have been doing inspectional work.
I just want to close by acknowledging that these were
inspectors who were in unpaid excepted positions who were
accruing routine expenses on their government credit cards even
though we were able to offload the expenses of travel and
lodging. So they did endure hardship to carry out this mission,
and we received an overwhelming response from our inspectional
workforce when we recalled them into these important roles, and
I just want to acknowledge their commitment.
Mr. Bishop. Thank you, Dr. Gottlieb.
We have been joined by the distinguished chairman of the
full Appropriations Committee, and at this time I would like to
yield to her for an opening statement of whatever comments she
might care to make.
Opening Statement--Mrs. Lowey.
The Chairwoman. Well, thank you very much to our
distinguished chairman, and welcome, Dr. Gottlieb.
Excuse me, Doctor. I need a little help today. I do not
have a voice.
First of all, I would like to thank our chairman, Sanford
Bishop, and Ranking Member Jeff Fortenberry for holding this
hearing, Commissioner Gottlieb, and I welcome you back before
this subcommittee.
Among the many effects of the 35-day government shutdown
was a sharp reduction in FDA inspections of the Nation's food
supply. Routine safety inspections of food at high risk of
contamination, including seafood and vegetables, grounded to a
halt as hundreds of inspectors were furloughed without pay.
And while I commend the FDA for taking steps to restore
food surveillance, any unexpected break in inspections designed
to prevent contamination is simply unacceptable, particularly
with foodborne illness sickening 48 million people and killing
3,000 every year in the United States of America.
Of course, food inspections were not the only FDA service
curtailed by the shutdown. Applications for new jobs and
biologics submitted during the shutdown were also suspended as
policy statements and guidance documents related to drugs,
medical devices, review activities for products not funded by
UCs, such as over-the-counter medicines were also put on hold.
And pharmaceutical manufacturing inspections were delayed.
In short, unfortunately, we cannot repeal the shutdown, and
to that end, everyone, including the Trump administration, must
work together productively as we head into the fiscal year 2020
budget and appropriations process.
And, Commissioner Gottlieb, you know that every time you
come before this subcommittee there is that one topic that
hangs over our conversation, and that is tobacco products. I do
believe that we share a similar goal to eradicate addiction to
nicotine and improve public health.
But I remain concerned where our paths part. I continue to
believe that the FDA's decision to exempt e-cigarette
manufacturers from pre-market review until 2022 gave the public
the false perception that e-cigarettes are safe. They are not.
And FDA's decision to take its foot off the gas while
thousands of products have entered the market has led to the
epidemic we face today. I implore you. Do whatever you can to
take aggressive action to combat this public health emergency.
I know you have a lot to say on this subject, and I look
forward to discussing it during questions.
I appreciate the generosity of the chairman because, as you
know, I end up with roller skates, and I do not want to take
advantage as I go from hearing to hearing, but you are very
kind.
Thank you very much.
sesame allergen
Commissioner Gottlieb, as you know, eight major allergens
are required to be disclosed on food packaging. Although sesame
is estimated to afflict nearly a half million Americans, making
it one of the six or seven most common food allergens,
manufacturers are not currently required to label it in
compliance with the Food Allergen Labeling and Consumer
Protection Act, which I am proud to have authored.
It took a long time, by the way. It took a long time. It
took 5 years, but I should tell you that still is one of my
proudest achievements because although it took full time, could
not get one Republican cosponsor until 5 years later, it passed
on a voice vote. That is an important, important lesson for all
of us that when you are out there in the community, they
finally do what is right.
So in May of 2016, I wrote to the FDA in support of adding
sesame and requesting information on the status of the
petition. I am pleased that in October, FDA announced it would
open a 60-day comment period to receive feedback on adding
sesame to the list of major allergens, scheduled to conclude in
late December in the midst of the shutdown.
Did the shutdown add to a delay in processing comments from
the scientific community and the public?
And when will the FDA announce whether sesame will be
added?
Dr. Gottlieb. Is that a question?
The Chairwoman. I have one other question because the
chairman is so generous to me, but you can answer that, and he
gave me permission to do one other question, and you can guess
what that will be about.
Dr. Gottlieb. OK. Thank you. Thank you, Mr. Chairman.
We received about 4,000 comments to the docket related to
sesame. There is no question that the shutdown delayed our
processing of those comments. We were not doing work on the
petition over the course of the 5 weeks that we had a
government shutdown.
I share your concerns. You know, when you look at sesame,
the prevalence of sesame allergy is about on par with the
eighth allergen. The severity is significant, and I do not want
to prejudge the outcome of our process, but I will tell you
that, as you know, a public health professional, we are
concerned about it and are actively looking at whether it would
meet the criteria for inclusion.
We are going through the comments and are going to follow
the process prescribed by the law, but we are going to do it
very expeditiously.
e-cigarettes
The Chairwoman. Because of the generosity of the chairman,
I will go on to the next question. Thank you.
And now, Commissioner Gottlieb, you know the issue that I
am so passionate about. I have some e-cigarette questions for
you.
Juul argues that its products are intended only for adults
looking to transition from cigarettes. Yet it is clear that
products are being widely used by kids.
In prior comments, you alluded to FDA estimates on the
proportion of Juul sales that are going to children. Can you
share with us what percentage of Juul sales are to children;
what percentage of Juul sales from individuals who do not use
tobacco products, who did not use tobacco products prior to
using Juul?
Dr. Gottlieb. Well, I will just say at the outset, Mr.
Chairman, that this is one of the biggest public health
challenges that we face right now at the Agency, the rising use
of these products. We see an opportunity for these products to
be a vehicle for adults, currently addicted adult smokers, to
transition off of combustible tobacco onto less harmful, but
not harmless, products, especially at a time that we are
advancing regulation to try to regulate nicotine and
combustible products to render them minimally or nonaddictive
for adults who still want to get access to nicotine.
But these are not products for children, and we are deeply
concerned about the youth use and will be taking very
aggressive steps going forward.
With respect to your specific question, we did an analysis
internally with publicly available data to try to estimate what
percentage of Juul's reported sales are actually sales to
minors. In all candor, our analytics do not meet the level of
rigor that I would expect from its sponsor, and that is why I
have not put out that information. I do not believe it is
reliable.
But if you want where we ended up, we ended up with an
estimate somewhere between 10 or 20 percent of Juul's sales,
and this was data looking back at last year.
But, again, I did not believe that based on our ability to
look at publicly available data and make estimates off of that
that it was a reliable estimate. That is why we have not
officially put it out.
flavored tobacco
The Chairwoman. Well, thanks to the chairman.
I have one other question, but I can tell you I visit high
schools, junior highs. Every youngster I have interacted with
tells me 60 percent of the class at a minimum is using Juul,
and I guess Altria thinks it is pretty good because I read
about their recent purchase.
So I am very concerned, and I am glad you are skeptical.
In my judgment, from what I see, flavored tobacco products
have flooded the market. According to one estimate, there are
more than 15,000 e-cigarette flavors available. It should come
to no surprise that flavors such as Swedish Fish, Fruit Loops,
Gummy Bear appeal to youth.
Studies have shown that an estimated 96 percent of 12 to
17-year-olds who have used e-cigarettes started with a flavor
product.
And while I appreciate FDA's announcement that it will
limit where certain flavored products are sold, to be honest, I
do not think that is good enough. FDA needs to take a more
aggressive approach to reduce the youth e-cigarette epidemic.
Now, you said you do not believe statistics. I am glad
about that, but what would it take for FDA to ban flavors
altogether?
And I ask this question because I go to schools all
throughout my district, and just one student came to me just
recently and said, ``You know, one of my classmates takes the
lunch money, goes to the local bodega and buys these,'' Tutti
Fruity or Chummy Gummy or whatever you want to call them.
So what data will it take for the FDA to ban flavors
altogether?
Dr. Gottlieb. Well, I hear your stories, Congresswoman. I
will be speaking at a high school about this next Friday.
We outlined a series of measures in November. We plan to
implement that very shortly. I will implement those measures.
We are trying to thread a public health needle here where
we preserve some element of the availability of these products
for adults, while foreclosing them for kids or at least really
dramatically curtailing the ability of kids to access these
products.
But I have said to the industry that this is an existential
threat, and what I mean by that is that if we are not
successful at dramatically curtailing the youth use of these
products, and you are right that the flavors are the primary
vehicle by which the children are finding these products
attractive, we will change the application deadlines on these
products.
And I am willing to pull them off the market if we continue
to see the trends going in the direction that they are.
The Chairwoman. I know you are a father of a couple of
kids, two I think you said, and I appreciate your
understanding.
Dr. Gottlieb. Three.
The Chairwoman. Oh, three. I made a mistake.
Dr. Gottlieb. The five-year-old is going to be upset.
[Laughter.]
The Chairwoman. Well, I know you are sensitive to this.
We all make mistakes, but this was a big, big whopping
mistake. So I look forward to your work in this.
And I thank you so much, the generosity of the chairman,
for giving me this time. Thank you very, very much. Thank you.
Mr. Bishop. Thank you, Madam Chair.
At this time, I am pleased to recognize the new ranking
member of the subcommittee, Mr. Fortenberry, who was not here
to give his opening statements. So I would like to recognize
him at this time for an opening statement, and if he would
like, he can proceed with his questions.
Opening Statement--Mr. Fortenberry
Mr. Fortenberry. Thank you, Mr. Chairman.
I apologize for the delay, but thank you for your
generosity in allowing me to combine an opening statement plus
some questions.
And first let me say though, Mr. Chairman, I have enjoyed
our pre-meeting conversations and our robust interest in many,
many things in terms of our own food security in this country
and how we develop and continue to lead the world in terms of
food innovation, and I am grateful for your leadership in this
regard and continue to look forward to working with all of you
in this space.
Dr. Gottlieb, welcome. Thank you for your service. We
appreciate your expertise and your commitment to, again, the
highest ideals of public service as well.
I would venture to guess that most Americans do not fully
grasp the breadth and depth of the agency that you head. The
FDA's mandate touches our food, our drugs, our medical devices,
much, much more, regulating roughly 25 cents of every consumer
dollar spent in America.
So our work covers not only the expenditures supporting the
professionals whom you work with overseeing these products and
services, but we also have to ensure that these resources are
spent wisely.
In this coming appropriation that you just received, you
have got a significant increase, about 9 percent, over the
previous year. Of course, in Washington, we operate off good
intention. More money means good outcomes, but we have to be
careful about that set of working assumptions.
So I want to hear about what you intend to do about
outcome, and I will be a little more specific. Tell us about
your plans regarding faster generic drug approval; advancements
in digital health technology; the continuous manufacturing of
drugs; as well as keeping our food safe.
I think it is important for the panel, and I know it is a
clear personal interest to you, regarding the grim factors, the
grim epidemic of drug overdose that is taking 70,000 American
lives each year. It is a particularly devastating problem among
young people.
So but I am particularly interested as well and worried
about the safety of certain foods. Recently I held an informal
gathering of agricultural pioneers in my home State of Nebraska
in which food safety issues were of particular concern.
While we are increasingly and excitingly getting more of
our food from local sources where the prominence of the product
can reliably be determined, we still import a lot of food from
around the world, where the standards of inspection potentially
do not match our own.
So as I understand it, 90 percent of our seafood, over half
of fresh fruit, and over a third of our fresh vegetables are
imported, which are certainly staggering numbers.
Americans, again, are worried about drug prices, and while
I realize you only play a partial role in debating the policy
as to how to bring down these prices and increasing values to
patients, I hope that we will see a robust plan to accelerate
generic approvals and to minimize the perverse effects of
circumventing drug and device patents, as well as to encourage
more safe manufacture of the generics themselves.
So, Dr. Gottlieb, you have many challenges. So I look
forward to your responses. Imbedded in that statement, I think
were enough questions for you to leverage off of.
Dr. Gottlieb. Should I respond?
Mr. Fortenberry. It is your time, yes.
DRUG PRICING
Dr. Gottlieb. Thank you, Mr. Ranking Member.
Well, let me start with the pricing issue, if that is OK,
since that is where you ended. I think that when it comes to
drug pricing, I see three challenges.
First is that there are situations where we lack product
competition, and I think there is a lot that I can do to help
solve that challenge.
There are situations where we have branded drugs that are
off-patent, off-exclusivity, but are not subject to the generic
competition that Congress intended for either because branded
companies are gaming the system in ways that are blocking
competition or we do not have the scientific tools to allow the
genericization of certain drugs.
The second challenge that I see is once there is
competition in the market, we have payment systems set up that
sometimes do not allow government programs to take advantage of
that competition. And I see that particularly in the injectable
drug market with respect to Medicare Part B, where the
government is largely a price taker, and those drugs are not
competitively bid.
I think this is particularly acute as we see more
biosimilars coming to the market where government could be
taking advantage of effectively generic-like versions of
biological products, but do not competitively bid those drugs.
And then the third challenge is that when we do have
competition in the market and the competition does drive
discounting, the discounting comes in the form of back-ended
rebates that do not flow to the consumer. They flow back to the
health insurer. They are used to offset the cost of everyone's
premiums, but it effectively means that the patient who is
using the expensive drug and is either paying full freight or
is out of pocket for a large portion of that drug is spending
money that is being paid back later, but paid back in a form
that is used to subsidize the premium cost of healthy people,
which is the exact inverse of what we expect when it comes to
an insurance scheme.
But we at FDA are focused on the first element of that
challenge, which is how do we operationalize programs to bring
more generic competition to the market. The resources we have
gotten from this Committee will help advance those goals.
We are putting in place a structured review for the generic
drug program that is going to make it much more efficient to
adjudicate the generic review process, and we are also going to
spend some of those resources proactively updating the labels
on old generic drugs to try to drive their utilization.
We have generic drugs that form, for example, the backbone
of chemotherapy regimens that have labels on them that are
decades out of date, and there is no sponsor in the market who
is able to update that label anymore. The branded company has
long since gotten out of the market or maybe does not even
exist anymore.
With the resources that you provided us, we are going to
proactively take it upon ourselves to update those labels with
modern information so that we can help drive use of those drugs
where those drugs are still clinically relevant.
Mr. Fortenberry. How much will this lower drug costs?
Dr. Gottlieb. You know, it is a good question, Congressman,
and we have quantified the impact of our work. The Council of
Economic Advisors put out a report about 3 or 4 months ago
where they quantified the impact of the increased rate of
generic approvals that we have achieved over the last 2 years.
And if I remember correctly, we have increased the sort of
run rate for approvals, if you will, by 18 percent a month, and
we have had incremental improvements in our productivity, and
they did tie a number around that. I am forgetting it off hand,
but it was substantial.
I am hopeful that the resources that you provided and the
policies we are implementing over the course of this year are
going to continue to help us advance more generic development,
not just more approvals, but more approvals of drugs that face
obstacles being genericized, and what I am talking about are
particularly the complex drugs, drugs that are either inhaled
drugs; they are topical drugs; they are injectable drugs, where
there are complex formulations and cannot be easily measured in
the blood.
So the traditional framework of Hatch-Waxman makes it hard
to copy those drugs. That is where we have been focused. This
is not a trivial category of spend. One analyst has estimated,
that that is about $20 billion a year in drug spending for
drugs that are off-patent, off-exclusivity, but still sold as
branded drugs because they do not face generic competition
because they are hard to copy.
We are focused on that category. EpiPen was one such
example, and some of the metered dose inhalers for asthma were
another example, and we have been able to genericize those in
recent months.
Mr. Fortenberry. So, Doctor, if you could give an estimate,
even if it is rough, that you will not be held to if this set
of policies is fully implemented over a short period of time,
in the aggregate, what would that impact be on drug prices?
Are we looking at 10 percent, 20 percent, 30 percent?
Dr. Gottlieb. Well, the estimate that CEA put out was, if I
remember correctly, in the billions of dollars. Twenty-six
billion was the estimate that CEA put out. So over a year they
estimated----
Mr. Fortenberry. Maybe we can get a better stat, just the
percent of how much that will, in fact,----
Dr. Gottlieb. We could translate it into that.
Mr. Fortenberry. Throughout the hearing if you could get
that, that would be helpful.
Dr. Gottlieb. The stat would be in the aggregate. We could
translate it into the aggregate.
SAFETY OF IMPORTED FOOD
Mr. Fortenberry. OK. Before my time expires, is our
imported food safe?
Dr. Gottlieb. I believe our imported food is safe, and I
have confidence in it.
You made the opening statement that about 15 percent of our
food is imported overall, but to your credit, you made the
comment that it varies across food types. Seafood is a very
high percentage. Produce, I think you mentioned, is about half.
We employ different methods with respect to imported foods
than we do to domestic food. We have a multilayered approach.
We rely on foreign regulators. We target inspections very
carefully with our PREDICT system. We rely on third party
certification. We rely on verification by importers that they
have conducted certain audits.
We have a multilayered system when it comes to imported
food. I have confidence in the imported food, but across our
entire portfolio, we still have a lot of work to do to continue
to provide the assurance of safety that consumers expect when
it comes to the food that they eat.
Mr. Fortenberry. All right. Thank you, Mr. Chairman.
Mr. Bishop. Thank you.
Mr. Pocan.
Opening Statement--Mr. Pocan
Mr. Pocan. Thank you, Mr. Chairman.
And, thank you, Commissioner, for being here. I appreciate
it.
First just let me say, from what I understand your
department may be one of the few federally where morale is up
in the last couple of years, and I want to give you credit and
kudos for that because it stands out and it is what we are
hearing talking to folks.
As you know, a lot of companies in my area work with the
FDA. I know you know Kevin Conroy from Exact Sciences, for
example. I would love to extend the invitation if you would
like to visit some of the companies. Maybe wait a couple of
months if you are coming to Wisconsin. I would not recommend it
next week.
Dr. Gottlieb. Go ice fishing.
Mr. Pocan. I still do not understand ice fishing, but we
would love to have you come to Wisconsin.
GENERIC DRUGS
So I would like to try to get into three different subjects
if I can. One is around what you were just talking with about
generics.
You have talked about that a number of times before the
committee, and I really appreciate your efforts on that. As we
know, there are a large amount of drugs that are under the
generic area. You get one competitor and you can lower the
price 6 percent; another one, 48 percent; you get six of them
and you are down to a quarter of the price.
What are we doing specifically to spur the development of
multiple generic competitors?
Dr. Gottlieb. So we have implemented a policy. I will be
brief. We have implemented a policy to prioritize the review of
generic applications until we have three generic competitors
within a category because that is where you see the biggest
price break.
And we have actually updated that data. That data was
developed the last time I was at the Agency back in 2005, when
we updated it, and it is very consistent. The new findings are
very consistent with the old findings in terms of where you see
the sharp price reduction. It is when three competitors enter
the market.
Mr. Pocan. So you are working specifically?
Dr. Gottlieb. We are specifically prioritizing applications
until there are three competitors within each category.
CBD REGULATION
Mr. Pocan. Great. Second issue area around some CBD issues.
It has got kind of an A and a B.
The first one is you know under the Agriculture Improvement
Act of 2018, hemp was removed as a Schedule 1 controlled
substance. I was just wondering if the FDA has plans to work
with the USDA on CBD regulations.
Secondly, I know there was recently an issue around CBD and
food. I think the statement that came out at the end of last
year said there could be a possible pathway by which certain
hemp-derived compounds such as CBD might be permitted in food
or dietary supplements.
I guess my question is: how actively is the FDA pursuing
this pathway?
And what is the likelihood and timeline for the FDA to
issue a regulation to clarify the lawful circumstances under
which CBD could be used in food or dietary supplements?
Dr. Gottlieb. Well, I will say at the outset, Congressman,
we heard Congress loud and clear with respect to that
legislation, and I understand Congress wants there to be a
pathway for CBD to be available.
This is not a straightforward issue. Congress specifically
preserved our authority with respect to CBD. Our drug
authorities in CBD, as you know, exist in a higher formulation
as a pharmaceutical product and cannot be legally put in the
food supply at this time not only because it is a drug product,
but it is also the subject of substantial clinical
investigation, and we have active INDs.
So even if it was an approved product, it would still be
the subject of substantial clinical investigation, and
statutorily, it could not go into the food supply.
Now, the law does allow us to go through a regulatory
process and go through notice and comment rulemaking to
establish a framework to allow it to be put in the food supply.
We would have to work through that.
We plan to begin with a public meeting at some time in
April. We will be announcing that shortly. We will solicit
comments, and we have got to work through what that regulation
would look like.
You know, I can speculate at a high level about theoretical
frameworks that you can contemplate. For example, the product
existing in a high concentration, pure formulation as a
pharmaceutical product while existing in a different
concentration as a food product or a dietary supplement because
we want to preserve the incentive to study CBD as a
pharmaceutical product. We believe it does have therapeutic
value and it has been demonstrated.
But I will tell you this is not a straightforward process.
There is not a good proxy for us doing this through regulation,
and if we get comments back and find that this is sufficiently
complicated for the Agency, we will come back and have a
discussion with Congress about how we might be able to work
together on this.
Mr. Pocan. Great. Thank you.
DRUG SHORTAGES
And a third one I will try to get in if I can. This is
around drug shortages. There has been conversation around the
abbreviated new drug application. It is designated for priority
renewal when reviews are directed to prioritize the review
every step of the way beyond the initial priority designation
stage.
Is there a way to shorten timelines more aggressively and
actively communicate and advise folks to get faster approval
under this issue to address drug shortages?
Dr. Gottlieb. Well, we have a drug shortages list, and we
maintain a lot of transparency around that, and that group, it
is a large group now, works to try to provide timely
information about where shortages persist in the market.
Congress gave us very explicit authority to allow us to
receive notification from sponsors of an impending shortage,
and we provide notification around that.
And when we do have a drug that we believe either is going
to go into shortage or is on the shortage list, we do
prioritize the ability to get product on the market either
through other approvals or sometimes we have allowed limited
reimportation under very specific circumstances to help
mitigate the shortages.
Mr. Pocan. And thank you.
Mr. Bishop. Dr. Harris.
Opening Statement--Dr. Harris
Dr. Harris. Thank you very much.
And thank you, Dr. Gottlieb. I think we are getting a lot
of things right over at FDA.
I have four or five different topics. I will be brief about
them. First of all, with regard to fiber, I know we have
communicated about it, and I want to thank you for continuing
to handle dietary fiber petitions in front of the FDA.
And I know the food manufacturers in Maryland want to
comply with the January 1st deadline. They hope that FDA will
work with them to make sure they can figure out what is a
dietary fiber and what they ought to do with their labeling, et
cetera.
I want to thank you for, you know, paying attention to
that.
FLAVORED TOBACCO
With regard to the cigar issue, we talk about it a lot.
First off, I want to say it is great that combustible product
use is going down in the United States. Clearly, the youth
usage of cigars goes down year after year, and yet there is a
plan to ban all of the flavored cigars, which are not really
used by youth.
Again, cigar use going down year by year. What is the
justification for banning all of the flavored cigars?
Dr. Gottlieb. Well, Congressman, I will be direct on this.
I do not believe that there should be characterizing flavors in
combustible tobacco. Data show that the characterizing flavors
in the combustible tobacco drive use. Congress made an explicit
decision to take characterizing flavors out of cigarettes, and
then we saw a lot of flavors go into these cigarillos.
When you look at youth use patterns of tobacco products,
cigars is the fastest growing tobacco segment among black
youth, and a lot of that is the flavored cigar use among that
population. But we see rising use of flavored cigarillos across
the board.
So I have a lot of public health concerns around the
flavors in cigars. I mean, if I had an optimal configuration
with respect to tobacco, if adults wanted to get access to
flavored products, they would get access to flavored products
that were not combustible products and did not have all of the
health risks associated with combustion of tobacco.
Dr. Harris. Well, you talk as though all combustible
tobacco is equal, and obviously something that is not inhaled
has a much lower risk profile than something that is inhaled.
So that is why I say, you know, the one size fits all
approach I am just not sure is justified here.
So anyway, the other thing is I know we have worked with
you on marketing tobacco rolling paper to children. I do not
think that, you know, the Center for Tobacco Products has come
to a satisfactory result with this. I think there is still
marketing going on to children.
Obviously, rolling paper is not used for anything but a
combustible product, whether it is marijuana or tobacco, and I
know you have the authority to regulate and to take enforcement
action, and I hope you do.
CO-PRESCRIPTION OF NALOXONE
With regards to opioids and the locks on co-prescription, I
think that your statement yesterday on FDA's policy and
regulatory agenda to combat opioid abuse did not mention co-
prescription of naloxone.
Could you just give me an update on what your efforts are
and what your thoughts are on allowing co-prescription?
Dr. Gottlieb. We are actively considering the co-
prescribing of naloxone with opioids. We had a discussion
around this at an advisory committee recently, probably about 6
weeks ago, and we are going through different formulations of
under what circumstance that would be appropriate from a public
health standpoint.
You know, mandating co-prescribing of naloxone across the
board for all opioids would be costly to the system, but there
might be circumstances where there is a strong public health
justification for mandating that.
Dr. Harris. Thank you very much, and I appreciate the
thoughtful consideration of that.
I am going to agree with the gentleman from Wisconsin about
the CBD, and we have also talked about. You know, I go into
markets now and see these displays of CBD containing products,
and it is not at the pharmacy, behind the counter, obtained
with a prescription.
So, again, I think this is something that crept up on us,
and I know I appreciate your answer to Mr. Pocan on that.
SODIUM
Finally, with regards to sodium, you know, I have asked for
years, you know, again, if a one size fits all approach is the
appropriate approach on sodium. I know that your predecessor,
Dr. Califf, other established scientists, and an American Heart
Association publication last July have called for perhaps it is
time to do a randomized trial on sodium and to answer the
question: where is it harmful? Where is it helpful?
Yes, the majority of people probably might benefit from a
sodium reduction, but there are individuals who would not.
Would not a randomized controlled trial actually help inform
regulation?
Dr. Gottlieb. I think we would welcome more research on any
dietary subject, and there is certain precedent where Congress
has helped support this kind of research through the NIH, for
example.
It is obviously hard to study dietary habits. You cannot
randomize people carefully in the way you would in a drug
trial, for instance, but we have done research on diet and have
gotten good results from those research efforts in the past to
inform decision making.
Dr. Harris. Thank you very much.
I yield back.
Mr. Bishop. Mr. Cuellar.
Mr. Cuellar. Thank you, Mr. Chairman.
OPIOID USAGE
Commissioner, let me ask a question following what my
colleague asked. Prior to 2001, opioids such as oxycontin were
solely approved for short-term pain relief. However, in 2001,
the FDA decided to change the label for that, allowing it for
daily, around-the-clock, long-term treatment.
And I think the problem that I have with that is I do not
think there were any studies that were showing the impact of
its long-term effects of opioids.
Now, I do not want you to go back and explain the reasoning
of the FDA in 2001, but I would like if you can explain why,
after scientific studies have shown the negative long-term
effects of opioid usage, why the FDA has not acted or changed
the wording of oxycontin and issued strong warnings about
opioid usage.
Dr. Gottlieb. Well, I appreciate the question, Congressman.
I have gone back and looked at the history and spoken to my
staff about what was done in 2001, and in 2001 the specific
label change that was made that is the subject of some analysis
now was an attempt to try to restrict or narrow the use of the
drug.
I think in retrospect the Agency probably got some of the
wording in that change wrong. It was an attempt to try to drive
long-term use away from some of the IR drugs. If you look at
the utilization of opioids, more than 90 percent of all the use
of opioids is actually immediate release formulations of the
drug, not the extended release of the drug. And the Agency at
the time was trying to obviate the use of extended release
drugs just to situations where patients had syndromes that
required longer term use of opioids.
Now, that said and recognizing that some of that language
was done in a way that ultimately allowed for promotion that
was inappropriate and, I think, criminally sanctioned
ultimately, we have undertaken a process to use the authority
that we received under the SUPPORT Act to now mandate that the
sponsors of existing opioids that are on the market, as well as
opioids in development, must conduct long-term studies looking
at the long-term effectiveness with chronic administration of
opioids to see, to demonstrate whether or not there is a
declining effectiveness.
If we are able to demonstrate that there is a declining
effectiveness with prolonged administration of these drugs in
rigorous studies, which are the types of studies that we are
mandating, we could act to restrict the labels further to
contraindicate certain use, to narrow the circumstances when
opioids could be used in a long-term fashion, to implement
other risk management measures.
So we are undertaking that process very quickly, using the
authorities you gave us under the SUPPORT Act to get the
evidence we need to support a careful regulatory decision here.
Mr. Cuellar. Well, I would and I think all of us would
appreciate it if you can keep us posted on that work. As you
know, we appropriate billions and billions of dollars to
address the opiate issue that we have. So we appreciate you
keeping us informed.
COMPOUND PHARMACISTS
The other question I have has to do with compound
pharmacists. FDA has heard concerns about health care provider
groups about the need for immediate access to compound office
use medications to address health emergency. The FDA
enforcement action against 503(a) facilities for providing
office use medications, despite being permitted by State law
and/or regulation in a majority of States, continues to
restrict.
And I understand the history. There was an issue of people
being killed. I understand that, dying, but I guess my question
is when we talk about compound pharmacists or the pharmacist
and how they are regulated, there is a little confusion between
the State/Federal definitions, especially with the definitions
of distribute and dispense.
Are you all looking at trying to somehow align those
definitions? Because if you have a State and then you have a
Federal definition, that will cause some sort of confusion.
Dr. Gottlieb. Well, I think that the intent of Congress was
clear here and clear in terms of how the Agency is implementing
it. I think we have been clear that we do not believe that a
503(a) pharmacy can engage in large-scale manufacturing and
advanced shipping. A 503(a) pharmacy should be engaged in the
traditional practice of pharmacy where they are compounding the
drug in response to an individual patient prescription.
Now, I understand some 503(a) pharmacies do want to engage
in larger scale manufacturing and stock local doctors'
practices and will argue they have done that for years and they
have done it safely. I recognize that.
But those are the kinds of conditions that created the
public health risks that led to the passage of the DQSA and the
implementation of a new regimen.
Now, from my standpoint, what I want to do is try to make
it as efficient as possible for the 503(a) pharmacies that want
to engage in that activity to become 503(b) pharmacies where
they are subject to at least good manufacturing practices'
oversight, to ensure the safety of those products.
So I am very actively trying to work through policy, and we
are going to be issuing guidance imminently that I hope will
make it more affordable for some small 503(a) pharmacies to
engage in the business that they want to, but to do it as
503(b) pharmacies.
So to do that conversion, it does not cost millions of
dollars. So a smaller pharmacy can do it.
I will say, and I will close here, from an economic
standpoint, if a 503(a) pharmacy is doing this on a small
scale, they might be able to do it and evade notice. But once
they try to do it on any scale, they are going to get on the
radar of not just the State officials, but the Federal
officials. So they are effectively capped.
If they would convert to be a 503(b) pharmacy, they would
be able to grow their business into that segment that they want
be in, and I think it would be a much more enviable position
for them to be in. I am trying to make it efficient for them to
get there.
Mr. Cuellar. Yes. I know my time is up, but I appreciate
the efficiency on that.
Thank you.
Mr. Bishop. Mr. Moolenaar.
Mr. Moolenaar. Thank you, Mr. Chairman.
And, Commissioner Gottlieb, thank you for your comments
today and also your leadership, and especially in the area of
keeping the price of drugs down and promoting competition and
reducing barriers to the generic development and promoting
competition.
NON-OPIOID ALTERNATIVES
One of the areas kind of along those lines I wanted to ask
you about is that we have invested, I know, in NIH and in other
areas where there is nonaddictive pain medicine. There is a lot
of research going on in that area.
Is that something you are seeing as a potential answer to
this opioid crisis?
And what role does the FDA have in that?
Dr. Gottlieb. Well, it is one opportunity. I think what we
do to address this crisis is going to be an all of the above
approach, and there is no silver bullet given the magnitude of
this public health crisis that we are facing.
But there are opportunities for us, I believe, to help
advance the development of non-opioid alternatives for the
treatment of pain that we will be issuing over the course of
this year.
We withdrew our guidance document that delineated what
sponsors needed to do to get pain drugs onto the market because
we felt it was out of date and overly burdensome, and in its
place we are going to be issuing a series of guidance
documents, at least four, that look at what sponsors need to do
to develop alternatives to opioids for the treatment of
specific kinds of pain.
And we think that that will make the process for trying to
develop the alternatives that you are talking about much more
efficient. So we are focused on this.
PREMIUM CIGARS
Mr. Moolenaar. OK. Wonderful. And I want to just change
gears a little bit to go to your rulemaking area.
Almost a year ago the FDA announced an advanced notice of
proposed rulemaking regarding regulatory treatment of premium
cigars, and can you tell me what the status is of that
rulemaking?
Dr. Gottlieb. We received a lot of comments. I forget how
many in all, but it was a robust administrative record. We are
continuing to go through those comments, and you know, we will
keep you updated.
We specifically asked questions around whether or not there
were different patterns of use associated with premium cigars
that would cause us to consider whether we should regulate them
differently than other tobacco products. That was among the
questions that we asked.
So we are still actively engaged in that rulemaking
process.
Mr. Moolenaar. Thank you.
SUNSCREEN REGULATIONS
And then yesterday the FDA published a proposed rule aimed
at strengthening regulations of over-the-counter sunscreen. I
am 100 percent in agreement we want to make sure these
sunscreen products are effective and available.
Some of the concerns that have been raised are that the
tentative final over-the-counter sunscreen monograph will
essentially ban all but two of the approved UV filters used in
sunscreen products. And my understanding is there are only 90
days to comment and provide data for widely used ingredients
that have no known safety concerns.
I am wondering if you could elaborate on where things stand
on that. Does the FDA have plans to ensure there is no
disruption in the supply of these critical products as we start
to approach the summer months?
Dr. Gottlieb. Right. So they will not be banned, and they
will not be forced to come off the market. There were 16
currently marked active ingredients that were assessed in that
notice of proposed rulemaking. Two were determined to be
generally regarded as safe and effective (GRASE), zinc oxide
and titanium oxide. Two were determined not to be GRASE. So
they have to come off the market, but they are actually not
currently marketed in the U.S.
The other 12 ingredients had insufficient data for us to
make a final determination. In the course of the 90 days, if a
sponsor wants to, they can ask for a deferral of a decision on
those other 12 ingredients.
We expect at least six to eight of those ingredients to
request and be granted deferrals, and we can finalize the rule,
allow those products to stay on the market while we continue to
collect data.
We did the same thing with respect to the rulemaking on the
antiseptics. We were under a court order to finalize that rule,
but we did not have the data we needed to make a final
determination on all the antiseptic products. So we were able
to issue deferrals on some of those products and finalize the
rule while we continued to collect information.
So they will not necessarily be coming off the market just
because we have insufficient information to make a safety
determination at this time.
Mr. Moolenaar. OK. Thank you.
DAIRY LABELING
And then one last question I had for you is relative to
milk. My district is a strong agriculture district, very
diverse. Dairy is a big part of that, and one of the questions
I have is, you know, the labeling of milk, what constitutes
milk, you know, the FDA's definition, and how we protect that
definition.
Can you comment on where we are on that? Because I continue
to hear concerns from my constituents about this.
Dr. Gottlieb. Well, we are going through a regulatory
process right now where we are soliciting public opinion about
the use of the term ``milk'' on non-dairy products, on plant-
based milk products, which I think is where your question is
getting at.
You know, we are going through that process. I do not want
to prejudge the outcome, but from a public health standpoint,
the threshold where we would make a decision about that
standard of identity and when you can use the term ``milk''
would be, to give you one example, a situation where we are
able to demonstrate with data or people that consumers perceive
a certain nutritional content through the use of the term
``milk'' that they are not getting with plant-based products,
and that is having an adverse health impact on them.
And we have, in fact, seen examples of that where parents
said their children were using certain milk products, and they
did not have the vitamins and nutrition of dairy milk products,
and you saw adverse consequences.
So that is what we would be looking at.
Mr. Moolenaar. Thank you.
Thank you, Mr. Chairman.
Mr. Bishop. Ms. McCollum.
Ms. McCollum. Thank you, Mr. Chair.
REGULATING COSMETICS
Sir, I am going to kind of dovetail on a little bit of what
the last question was about, not milk, but cosmetics.
A recent New York Times editorial highlighted the FDA's
role in ensuring of cosmetic products on the market and how
little authority you actually have in regulating them. It is a
$70 billion cosmetic industry, which includes not only makeup,
but products every single one of us use in this room.
Any of you use toothpaste? Deodorant? Well, it is regulated
with an $8 million budget only, and 27 staff members at the
FDA.
The law giving you the authority to ensure the safety of
these products is only 2 pages long, and it has not been
updated since 1938.
While there have been several attempts to enact legislation
that would provide the FDA with expansive authority and
oversight, Congress has been unsuccessful in passing any
substantial legislation.
To this day, 80 years have passed. Cosmetic companies still
do not need to submit safety data to the FDA before marketing a
product. They are not held to basic good manufacturing
practices. They do not have to register with the agency. They
are not required to report adverse events that consumers may
relay to them.
Further, the FDA can currently not do a mandatory recall of
a product even if it is thought to cause serious harm. It
cannot inspect facilities to ensure that the products are being
made in a safe and clean environment. And less than 1 percent
of imported cosmetics are even inspected.
Clearly, you do not have the authority to meaningfully
regulate the cosmetic industry the way I am sure most Americans
assume that you do. In just talking to mothers, fathers,
elders, and young adults, they think that these have all been
tested and are safe to use when they go to the store to buy a
product for themselves or their families.
The FDA has taken steps with sunscreen, and I applaud the
FDA for doing that because that is a serious health risk if
someone is applying something to their skin thinking it is
going to block or delay or prevent cancer.
So I am asking you: what are some of your biggest hurdles
in ensuring the safety of these products? Because I am sure you
get calls and you do hear from consumers who say, ``Well, I
thought you inspected this. I thought there was consumer
protection.''
So Congress needs to update these antiquated laws, and so
what are some of the changes that you would suggest that we
work on in a fashion to make sure that these products are safe
as many people assume that they are?
Thank you.
Dr. Gottlieb. Well, I will just say briefly, Congresswoman,
I think you outlined some of the challenges very well, and this
is an area that we want to work on.
We very much look forward to working with Congress to try
to modernize not just this framework, but we can always do more
with more with respect to the resources.
You are right that it is a small team. Now, when you are
looking at our portfolio from a risk-based approach, these
products clearly pose a smaller degree of risk than a
complicated medical device or a pharmaceutical product. But
they are not risk-free, and we have not been able to expand the
scope of what we are able to do commensurate with the expansion
in the scope of this industry.
And so we would like to work with you on this and see how
we can make the system more robust.
Ms. McCollum. Mr. Chair, as was pointed out, we do not even
know how much harm these products could be because there is no
accumulation being reported on it. I know that drugs that we
take and medical devices, as the doctor pointed out, can have
an immediate effective, good outcome or a terrible outcome, and
those are reported, and we do know about it.
But as with sunscreen, there is a false sense of security
in the public that they read a label. They think it has been
inspected.
So, Mr. Chair, I think it is something that our committee
should take a look at. I thank the FDA is for looking at this
issue, and I look forward to working with the chair on this.
Thank you. I yield back.
Mr. Bishop. Thank you.
Mr. Aderholt, the distinguished former chair of this
subcommittee.
Mr. Aderholt. Thank you, Mr. Chairman.
And congratulations on your chairmanship, and on especially
this first hearing of the subcommittee. It is great to be
alongside of you.
And, Commissioner Gottlieb, welcome. Thank you for joining
us this afternoon.
Of course, I am no longer chair of the subcommittee, but I
wanted to remain on this subcommittee and asked to have a seat
on the subcommittee, and I continue to actively be interested
in the matters that you work on and this subcommittee works on
and look forward to working with you.
RAISING TOBACCO AGE TO SELL
I want to follow up on what the chair of the full committee
was asking about tobacco.
I think all of us remain concerned about youth access to
flavored tobacco products, and particularly e-cigarettes, and
it is not a partisan issue. Democrats and Republicans alike are
very concerned about that issue, especially with the youth
access.
Some members of Congress propose raising the Federal
minimum tobacco age to sell to 21. What is FDA's position on
that?
Dr. Gottlieb. We would support that, and I will tell you my
position is that I would be supportive of that.
From my perspective with respect to the e-cigarette
challenge we are facing right now, where we want to preserve
this opportunity for currently addicted adult smokers, but face
a sheer epidemic of youth use of these products, and the
numbers are going to go up this year as well and perhaps
significantly.
A lot of the youth access is not just 14-year-olds and 15-
year-olds going into convenience stores and buying these
products. It is enterprising 18-year-olds in high school buying
them legally and creating a business in their high school
selling them back to 16-year-olds and 15-year-olds.
And if we had a 21-age limit across the board on these
products, it would make it harder for that kind of activity to
take place.
And so I think it could help me address the most immediate
problem that I am facing with respect to tobacco, which is the
epidemic of youth use of these non-combustible products.
Mr. Aderholt. Yes. And I have been supportive of that as
well.
Of course, raising the minimum tobacco age of sale to 21
could drive more minors to purchase flavored tobacco products
online. I think that is one issue that we deal with.
AGE VERIFICATION FOR ONLINE TOBACCO SALES
What does FDA need in terms of authority to implement
effective age verification policy for online sale of tobacco
products?
Dr. Gottlieb. We have all the authority we need and will be
promulgating guidance that is going to outline age verification
requirements for online sales that we think are sufficient to
allow online sales to continue.
Currently, only a small percentage of the e-cigarette sales
that are taking place are online. It is actually a small number
of the products that are being bought online, but I do think
that the online route provides the opportunity for heightened
age verification requirements that--while not foolproof,
nothing is foolproof and that is not the standard that I think
we are going to be able to reasonably achieve--make it much
more difficult for youth to get access to those products
online.
You see, for example, wine sales online, liquor sales
online that require adult signature on delivery and very
stringent verification requirements that, again, while not
foolproof, are pretty good.
And we can look for a similar technology with respect to
online e-cigarette sales.
Mr. Aderholt. Do you have the authority to mandate age
verification?
Dr. Gottlieb. We believe we do. We are going to be
promulgating guidance that is going to require significantly
heightened age verification requirements for flavored e-
cigarette products sold in convenience stores and products sold
through online channels. And we will be implementing that
shortly.
Mr. Aderholt. Juul requires online customers to either
upload a government-issued ID or the last four digits of their
Social Security number or other identification information. Is
this something FDA could require of all the companies that sell
tobacco products online?
Dr. Gottlieb. I do not want to judge one process over the
other. What we are going to do is give some representative
examples of some processes that could be sufficient and allow
sponsors to submit other alternatives, other creative
alternatives.
But we do believe that there is technology and ways to put
in place online verification requirements that could be robust
and could meet a standard that we would think is sufficient.
CELL CULTURED MEAT
Mr. Aderholt. I know my time is running out, but let me ask
you. Of course, FDA and USDA have signed the MOU outlining how
both agencies will be involved in this regulating cell cultured
protein in October.
What is the status of the MOU?
Dr. Gottlieb. Very close to completion and public release.
We will absolutely meet the 60-day deadline that was in the
appropriations legislation.
And so I look forward to hopefully having an opportunity to
brief you on that, and I would just want to close by thanking
you for the support that you showed the Agency over the years
when you chaired the Committee.
Mr. Aderholt. Sure. And one last: will FDA allow USDA to
play a role in the collection of the cell from animals, both
post and ante mortem?
Dr. Gottlieb. I am not sure I am quite understanding the
question, but the way that we have designed the process is we
have designed a pre and post-harvest phase, and so the pre-
harvest phase is the living biosystem. Once that living system
is basically closed and the meat product is taken out of the
biological replication process, all of that jurisdiction shifts
to USDA.
So there is a handoff there somewhere. USDA plays a role in
that handoff and then has jurisdiction over all aspects of how
the product is formed, spiced, packaged, labeled, everything
else.
Mr. Aderholt. OK. Thank you.
Mr. Bishop. Ms. Pingree.
Ms. Pingree. Thank you very much, Mr. Chair. Thank you, Dr.
Gottlieb, for being here with us. I also appreciate the time
you take with our committee and the thorough answers that you
give on every topic. So thank you. And thank you for your
vigilance on flavored e-cigarettes. That is an issue that we
hear a lot about in our communities as well.
CBD REGULATION
Let me try to fit in two issues and be quick about it. My
colleague Mr. Pocan already got into the CBD discussion. And so
he has reviewed quite a bit of that with you. And, as you know,
we recently sent a letter. And I realize this is complicated,
but I just want to emphasize the need for some sense of urgency
around it and, the timing of this because so many of our states
have legalized hemp.
As you have heard from many other members, CBD is being
sold in a lot of places. And it has created an enormous amount
of confusion. My own state legislature is working on
legislation around it right now, but the role of the FDA
confuses everyone. So I guess I am wondering about how soon you
can do this. Are there resources available or do you need
further assistance to get this done?
And maybe this is premature, but I know you alluded to the
potential for a legislative fix and that you are looking at it
kind of. And what might be a pharmaceutical component? And then
what might be other sized doses or products that would not be
regulated in the same way?
Dr. Gottlieb. I will tell you that we are deeply focused on
this. We have taken on other hard challenges before. I think we
have a good track record of trying to come to resolution on
other challenges. And you have my commitment that I am focused
on this one.
I am going to announce shortly a high-level working group
that is going to report to me on this with some senior
officials in the Agency who are going to be chairing that. We
want to wait for the public meeting and solicit comments and
get input. I will tell you that if we make a determination that
the pathway here is going to be a multiyear regulatory process
that could take two, three, four years, I will come back to
Congress and have a discussion about whether or not there are
other frameworks that could help address this.
Again, I want to preserve the pharmaceutical opportunity
here while recognizing that Congress intended for there to be a
pathway for this product to be available in other forms. And I
think that there are different things we can contemplate
scientifically. I don't want to get too far ahead of myself,
but you could think about concentration and formulation and
other thresholds. That might or might not be something we can
do in regulation.
We might need a statute that either addresses this as a
whole framework or addresses CBD specifically. If that is the
case, we will work through a process to have a discussion
around that.
Ms. Pingree. Great. Well, we will stay in close touch and
look forward to any decisions that you make soon.
PRESCRIPTION DRUG PRICING
The second question is on the pricing of prescription
drugs. And you have already had several questions about this. I
really appreciate your answers relating to generics, rebates,
negotiating, all of the things that could be done that you have
some say over. I know in July of 2018, Secretary Azar directed
the FDA to establish a working group to examine safe
importation of prescription drugs.
That is an issue I have been concerned about for a long
time living in a border state, which Maine is. We have toyed
with this at a state level and had to go back and forth. So I
am very interested in what the FDA's working group is thinking
about this.
And just to emphasize the point because prescription drug
pricing is so critical, we called a couple of pharmacies. You
know, in our state, you can literally cross the border. And if
you have a duly licensed physician who writes you
prescriptions, you can buy prescription drugs across the
border. Advair, which, as you know, is used to treat asthma and
bronchitis, one of the top-selling drugs, was a cash price of
$378 at the Maine pharmacy. Across the border, it was $140 in
Canada.
Even worse, given the crisis that we have with insulin
right now, cash price for a vial of insulin, which was first
used in 1922, was $200 in Maine, a price many families can't
afford and we are hearing more and more about every day, but
that same vial of Humalog is available for $35 at the Canadian
pharmacy.
You know, I have worked on this issue for so long. And
people try to raise red flags, you know, Maybe it is not safe.
I know from living in a border state that Canadians have safe
drugs and pleasant, well-lit pharmacies where they go to
purchase them. And you really can't tell the difference in any
way. So I would love to be updated and follow your progress in
this.
Dr. Gottlieb. Canadians have safe drugs. And if you go into
a Canadian brick and mortar pharmacy and you purchase a drug,
you are getting a safe and effective drug. I have confidence in
the Canadian drug regulatory system. The places where we have
deep concerns is when people go online and buy drugs from
online pharmacies that are purporting to source their drugs in
Canada or other First World markets but are not. And we have a
lot of concerns, and we are seeing a lot of counterfeit drugs
being sold through those channels. We have a lot of ongoing
investigative activity and some fairly egregious things that we
are finding when we look at these websites. And so we have deep
public health concerns.
With respect to the workgroup, the work continues to go
forward. That was designed to specifically address a more
narrow circumstance of a situation where there is a big price
increase. It creates an access dislocation, so certain
situations of hardship that patients might face.
Ms. Pingree. I am out of time, but I would love to continue
the discussion with you.
Dr. Gottlieb. Thank you.
Ms. Pingree. Thank you very much.
Mr. Bishop. Ms. Lee.
Ms. Lee. Thank you very much. Thank you, Mr. Chairman and
Ranking Member. This is my first hearing, and I am excited to
be on this committee.
I get a chance, actually, Commissioner, to drill down on
two of my favorite subjects: Cuba and cannabis. [Laughter]
APPROVAL PROCESS OF HEBERPROT-P
Ms. Lee. I co-chair the bipartisan Cuba working group and
the bipartisan cannabis caucus. A couple of issues that I want
to raise with you about those two issues.
One is, you know, 30 million Americans, about 9.4 percent
of the population, has diabetes. For African Americans, those
numbers are even worse. African Americans are 80 percent more
likely to get diabetes than their white counterparts. And
currently 13 percent of African Americans have diabetes.
Now, as I mentioned in our meeting, Cuba currently has a
diabetes drug called Heberprot-P. It has helped and prevented
deep foot ulcers, and it is not just being used in Cuba, but in
20 countries around the world. It does prevent amputations.
Seventy-one thousand Cuban patients have been treated. And
overall, 300,000 patients worldwide have been treated.
Now, it is my understanding that as of March last year,
Cuban and U.S. companies came together and signed an agreement
to begin to look at how to move forward with clinical trials
and getting approved. They are still waiting, though, approval
by FDA. And so I am wondering if you could give us a status
report of this approval process. I have been working on this
for 10 to 12 years--for this drug. And do you think we will see
the approval for this in the United States? Because this is a
very, very serious issue and for everyone, especially in
minority communities, in terms of diabetes amputations.
CANNABIS-DERIVED COMPOUNDS
Secondly, just in terms of cannabis, it is my understanding
to date that FDA has approved only one plant-derived medicine
from cannabis and that it was awarded, quite frankly, to the
British pharmaceutical company GW Pharmaceuticals because they
are licensed by the U.K. Government to privately grow strains
of cannabis for the purpose of drug development. Many members
of Congress support medical cannabis research to facilitate
Federally approved clinical trials. And so it is really
important to understand cannabis therapeutic applications and
its impact on health and wellbeing. So I am wondering if you
believe it is possible that under our U.S. Federal system,
whereby cannabis is still a Schedule I substance, can a U.S.-
based company similarly bring a plant-derived cannabis-based
drug to market via the traditional FDA review and approval
process? Because so many states now have passed medical
marijuana initiatives, and it is a shame that we haven't been
able to move forward with the research.
APPROVAL PROCESS OF HEBERPROT-P
Dr. Gottlieb. Well, on the first question, Congresswoman, I
appreciate our discussion about this when we met. We owe you an
answer. And I want to be careful because I am not sure which
aspects of where they are in the application process
constitutes commercial confidential information that I
shouldn't reveal in this setting, but I will get back to you,
one way or the other, on what we can tell you about where that
process stands. And I look forward to following up with your
office.
Ms. Lee. OK. I appreciate that because it has been going on
a long time and a lot of people are waiting for this.
Dr. Gottlieb. I understand. We will. I will make sure we
get you as much information as we can about that. And I
recognize and appreciate your interest in that matter.
CANNABIS-DERIVED COMPOUNDS
With respect to hemp-derived or cannabis-derived compounds,
it really depends on which active ingredient you are talking
about, whether you are talking about THC or CBD, and whether or
not it is being derived from marijuana or hemp. I think one of
the active questions on the table is whether or not CBD--so GW
Pharma was marketing a product that was a purified form of CBD
derived from marijuana, if I remember correctly, in that case,
but the active question on the table right now is whether or
not CBD derived from hemp, which Congress made the decision to
deschedule hemp, whether or not the CBD derived from that is
also descheduled and can be studied in a more fluid fashion.
And I think that that is an active question right now on the
table.
I have my own personal opinion reading the plain language
of the statute, but if I give a legal opinion, my lawyers are
going to grimace at me. So I won't offer it. But I think we are
going to have a resolution on that very soon about whether or
not the CBD derived from hemp doesn't fall under the scheduling
process.
Ms. Lee. Yes. OK. Thank you very much, but I want to
clarify this British pharmaceutical company, GW
Pharmaceuticals. They are licensed by the U.K. Government to
privately grow strains of cannabis for the purpose of research.
Did FDA award this contract to this British company or----
Dr. Gottlieb. No.
Ms. Lee. Could you clarify that?
Dr. Gottlieb. I mean, so it is the case in the United
States that the ability to conduct research with marijuana is
more restricted, more heavily regulated. You have to use
product that is sourced from the government. I don't know all
the nuance of it. So, you know, over the years, you have seen,
in all candor, you have seen, companies go overseas to conduct
research with foreign-grown product that is more easily sourced
for the purposes of clinical trials. And so the issue that you
are getting at is a valid one. The only thing I could say is
that the environment here is changing quickly.
Ms. Lee. Very quickly.
Dr. Gottlieb. And we would certainly support more research.
Ms. Lee. OK. Thank you very much. Thank you, Mr. Chairman.
Mr. Bishop. Ms. DeLauro.
Ms. DeLauro. Thank you very much, Mr. Chairman. And
welcome, Dr. Gottlieb. It is a pleasure to be with you today.
Just a couple of points, and I have two questions.
With regard to the issues of prescription drugs, which was
mentioned, and the issue on generics, I just make you aware--I
am sure you may be aware--with the renegotiated NAFTA
agreement, the way it is currently constructed would delay
generics and biosimilars given the way the patent exclusivity
has currently been awarded to pharmaceutical companies. So just
take a look at it because it directly affects where I think you
want to go.
With regard to food safety, according to--Centers for
Disease Control and Prevention studied imported food safety.
Both the number and proportion of outbreaks from imported food
has increased. Since 1996, outbreaks associated with imported
produce and fish were the most common. My two questions have to
do with both. One is food safety, and then it is the safety of
imported pharmaceutical drugs.
FOOD SAFETY AND POST-OUTBREAK INVESTIGATIONS
Last year, FDA investigated the outbreak, multistate
outbreak, of E. coli infections that were linked to romaine
lettuce from the Yuma growing region. Total reported illness is
210 people across 36 states, 96 hospitalizations, 5 deaths. The
outbreak highlighted the devastating effects of FDA's
inadequate oversight of food safety, particularly among fresh
produce. The investigation with regard to that, the agency did
not conduct sampling for the environmental assessment until
June 2018, more than 2 months after the outbreak started. It
confirmed that the outbreak's frame was positively identified
in an irrigation canal used by many growers in the region.
What was located next to this irrigation canal is a large
cattle feedlot operation, significant because E. coli is
naturally found in the intestinal tracts and manure of cattle.
In fact, FDA sampling at the feedlot found multiple positive
samples of dangerous E. coli strains, though not an exact match
to the outbreak strain. Noted in FDA's written environmental
assessment, the sampling conducted at the feedlot was
``limited'' and is ``not possible to draw valid conclusions.''
I am curious to know why FDA did not conduct additional
sampling at the feedlot operation, especially given its
proximity to the irrigation canal and the fact that cattle are
carriers of E. coli. In your opinion, as a matter of public
health, should large feedlot operations, like that in Yuma, be
located near irrigation canals and fields growing fresh
produce? Given all of these findings, why is FDA still pursuing
its delay of the agricultural water testing requirements under
the produce safety rule?
Dr. Gottlieb. Well, there is a lot that we could have a
discussion around on these issues, and I know my time is brief.
Look, we have gotten a lot better when it comes to these post-
outbreak investigations. And if you look at what we were able
to do with respect to romaine lettuce in California, we were
able to make much more rapid determinations about what the
potential source was of that outbreak. So I think we are
getting better and continue to get better. The resources that
this Committee provided is going to go specifically, at least
in part, to building out the teams that do these post-outbreak
investigations because this is a very important part of our
overall approach to food safety and public health.
With respect to the Concentrated Animal Feeding Operation
(CAFO) and its proximity to the irrigation canal, there have to
be measures put in place to make sure that there isn't direct
proximity that can lead to the kinds of contaminations that you
talked about. There are rules in place. They need to be
reexamined in terms of what measures farmers are taking.
And with respect to the agricultural water rule, you know,
we have implemented most of the major parts of the Food Safety
Modernization Act (FSMA). The ones that we have either delayed
or still have to implement are the ones that are really hard,
and this one is really hard. Trying to get in place
agricultural water standards that are not only rigorous and are
going to provide the measure of safety that you expect and
want, and that I want for the American people, but that can be
actually implemented across a very diverse array of farmers
where, if you look in the Pacific Northwest, they trade water
on a daily basis, and we have to make sure our testing
requirements accommodate much different practices with respect
to where farmers get their water in different parts of this
country.
Ms. DeLauro. Well, I hope we will move on these issues and
take a look at where we go with dealing with feed lots.
SAFETY OF IMPORTED PHARMACEUTICALS
I've got about 27 seconds left, but the issue is safety of
imported pharmaceutical drugs. Largest prescription drug
recalls in recent history, class of blood pressure medications
manufactured in China found to be contaminated with impurities
that cause cancer; the bigger issue outsourcing pharmaceutical
manufacturing to countries like China--they don't have the same
level of consumer protection and safety laws of those in this
country; long been concerned about FDA's oversight of foreign
drug manufacturers. GAO released their findings on the issue
and found that with despite the foreign offices that have been
opened, FDA has not assessed these offices' contributions to
drug safety. Nearly half of their authorized positions are
unfilled. GAO made recommendations, I will not go through that,
I am sure you know what it is.
Foreign offices--why are they not being utilized as they
can for the safety of pharmaceuticals coming into the United
States? Are we on track to meet previous targets of inspections
of foreign drug facilities?
My time has run out, but I think that these are important
issues I am suspected I can not----
Dr. Gottlieb. May I take 15 seconds, Mr. Chairman? Foreign
inspections have gone up, Congresswoman, in recent years. The
number of warning letters that issued have gone up
substantially as a result of us targeting our inspections
better. They will continue to go up. The other thing I would
add is that we will be undertaking the first significant
modernization of our Good Manufacturing Practice (GMP)
standards with respect to active pharmaceutical ingredients,
particularly with respect to generic firms, in probably over 20
years. I share your concerns. I have confidence in the
manufacturing of generic drugs, but we can always be doing a
better job.
Ms. DeLauro. If you can just get back to me on the pursuit
of this largest prescription drug recall in recent history and
where we are going on that.
Dr. Gottlieb. Absolutely. Absolutely.
Ms. DeLauro. Thank you so much. Thank you, Mr. Chairman.
THIRD-PARTY LOGISTICS
Mr. Bishop. Dr. Gottlieb, let me just ask you about third-
party logistics. As you know, the Drug Supply Chain Security
Act of 2013 was enacted to protect patient safety, and ensure
security of the drug supply chain through a single, national,
uniform product serializing and traceability system. Despite
the passage of federal legislation in 2013 that would provide
third-party logistics companies who have the preemption from
state licensing requirements, FDA's failure to right
implementing regulation has resulted in states trying to fill
the void by introducing new licensing regulations.
The Drug Supply Chain Security Act required the FDA to
issue final regulations for the licensing of third-party
logistics providers and wholesale distributors by November
2015. However, as of today, not even the proposed license of
standards have been issued. Where is the rulemaking package
related to licensure? When can we expect to see the proposed
licensure standards? And don't we need to have some
uniformative (sic) licenses secured to keep the supply chain
moving?
Dr. Gottlieb. That rule is moving through the Agency and
through the process. I can get back to you with an exact target
date on when it will be displayed. I have been briefed on it
recently. It was crafted in a way that is going to provide
uniformity across the country and a federal preemption
standard.
E-CIGARETTES
Mr. Bishop. I wanted to go back to a subject that you and I
have frequently discussed, and that is e-cigarettes. On the
comprehensive plan for tobacco and nicotine regulation that you
announced July 2017, the deadline for noncombustible e-
cigarette market applications has moved to 2022. That was 19
months ago.
I continue to be concerned about how smaller companies that
make these products are going to be able to afford the cost of
the required applications. I fear that they are going to have
to go out of business unless we find a way to address this. If
we do not, we will have a smaller market controlled by big
companies with fewer choices for adult smokers, higher prices
and probably less innovation. If adult smokers who wish to use
e-cigarettes to reduce or end their use of combustibles cannot
find the products that they like, they may not make that
change, and the public health will suffer.
What have you done to address the costs that may devastate
the smaller companies in this industry, and what do you plan to
do going forward?
Dr. Gottlieb. Well, we are cognizant of this concern, Mr.
Chairman, and in part, you know, our desire to extend the
application deadlines on these products and give them until
2022 is to give us the time to put in place the implementing
regulations and guidance that would not only provide the rules
of the road for how to effectively traverse the PMTA process,
but also take into consideration the kinds of challenges that
you bring up about how we can build into our regulation and
guidance accommodations for small manufacturers. We have tried
to do that in other areas of tobacco regulation. We will try to
do that in this context as well.
GE SALMON
Mr. Bishop. Thank you. AquAdvantage Salmon was approved by
FDA in November 2015 after an exhaustive and rigorous review.
Despite FDA approval, the company is still not able to market
its salmon in the United States. As you know, our bill over the
past few years has carried language from the Senate that
prohibits market and production of genetically engineered
salmon until FDA issues final labeling guidelines ``for
informing consumers of such content.'' Your website says the
FDA has determined that no additional labeling of food from
AquAdvantage Salmon is required.
Am I correct in believing that as the law stands now, FDA
will not do what the Senate language asks it to do, and
therefore the product will continue to be barred from entering
the United States?
Dr. Gottlieb. This is a very active area of discussion
inside the Agency right now. We hope to have something to say
on this very shortly, hopefully within a matter of weeks, not
months, but we are working through the question of whether or
not the final rule that USDA put out in conjunction with the
2016 law where they are now assuming jurisdiction over the
labeling of these products, what that does to the language that
is in our appropriations rider, and what, if any, continued
jurisdiction or obligations FDA has in this regard.
Mr. Bishop. Thank you very much. Let me call on my
colleague, Mr. Fortenberry.
IMPORTED FOOD INSPECTIONS
Mr. Fortenberry. Thank you, Mr. Chairman. I want to go back
to the discussion that Ms. DeLauro had raised regarding
imported food. You said 13 percent of our consumption, as I
recall, you said is imported.
Dr. Gottlieb. Fifteen.
Mr. Fortenberry. Fifteen? How much of that comes from
China? And you may recall some years back the head of China's
Food and Drug Administration was executed because of tainted
pet food. Now if you make an error we're not going to do that,
but nonetheless I understand we have about 50, at most, 50
inspectors worldwide for food and drugs, and then how much of
our food comes from China? How many inspectors do we have?
Dr. Gottlieb. We do not have inspectors that are just
dedicated to foreign inspections versus domestic inspections.
We do have a foreign inspectional cadre, but we do use
inspectors across both domestic and foreign inspections. We
conduct about 1,600 foreign inspections a year of facilities.
About, as I said, 15 percent of the food that we eat is
imported. I do not have an overall number of what percentage of
food comes in from China offhand. I can get back to you on
that. What you will see is that it is going to vary by food
product. So for example, a high percentage of fish might be
imported from China; other products, a high percentage might be
imported from other regions of the world.
We put out this week a framework for how we intend to try
to improve our overall oversight of foreign inspection of food
products. I recognize this is an area of concern for Congress;
it's an area of concern for me, as the percentage of the food
that we eat grows from imports. I have confidence in the system
right now, but that is only because we continue to invest in
this, and I believe that we are going to continue to do a good
job by modernizing these approaches.
Mr. Fortenberry. So how many inspectors do we have in
China? Or elaborate on the framework of inspection in China.
How does that work?
Dr. Gottlieb. I would have to get back to you on that. We
have a dedicated office in China that I think has allocated 26
FTEs. I believe that there are six FTEs there right now and six
more that are in the process of being on order, but that is not
really the operative number of people because inspectors that
we would use to do Chinese inspections would be domestic
inspectors that would be based here and going over to do
foreign inspections.
What I could tell you is the number of inspections that we
conduct by country. That might give you an indication as
opposed to FTE levels allocated to country. But we can get back
to you with all that data. I just do not have it offhand.
Mr. Fortenberry. Yes, I am assuming FTEs means outcomes. If
there is some other metric that determines safety levels, that
would be helpful to know.
Dr. Gottlieb. Number of inspections by region relative----
Mr. Fortenberry. Obviously it is a variable but, so, yes,
help us understand is it robust enough? That is my concern.
Dr. Gottlieb. I understand. I would just, if I may, I would
just say that the metric that I would--I would not use the
metric of inspections by region or inspections by percentage of
imports coming from an area because so much of our foreign
oversight is contingent upon shared oversight with foreign
regulators, third-party audits, requirements we impose on
importers, and so it is a multi-layered system. So for example,
we rely on regulators in New Zealand, Canada and Australia. We
have joint agreements with them, and we are negotiating one
with the UK, so in those countries we may conduct fewer
inspections because we trust the Canadian regulators, we trust
their inspections. So it is going to depend by the region and
what other tools we have----
Mr. Fortenberry. Even China's inspections?
Dr. Gottlieb. China currently is not on the list of
regulators whose inspections we recognize.
Mr. Fortenberry. No?
Dr. Gottlieb. No.
NON-OPIOID ALTERNATIVES
Mr. Fortenberry. All right, thank you. Let me go two other
quick questions. It was touched on earlier I believe by Mr.
Moolenaar. What is your plan to develop abuse deterrent
formulations to replace opioids, the current opioid?
Dr. Gottlieb. We continue to feel that this is an
opportunity, both non-opioid alternatives for the treatment of
pain, as well as abuse deterrent formulations of opioids, is an
opportunity as one of the tools to address this crisis. We
promulgated guidance just this last year on some of the
standards for developing generic versions of abuse deterrent
formulations. We are working through a process to readjudicate
the nomenclature that we use to describe the abuse deterrent
formulations, so we are trying to get in place a robust
regulatory framework to allow these products to go forward.
You know, one of the conditions that we would consider if
we were to sweep the market of a non-abuse deterrent
formulation to allow just abuse deterrent formulations within a
category of drugs, is could you have the availability of
generic versions of that drug, and that is why the guidance on
allowing generic versions of the ADF drugs to come forward was
so important. It opens the door to our ability to convert the
market to ADFs.
Mr. Fortenberry. So that would replace the immediate-
release opioid?
Dr. Gottlieb. Well, you know, the abuse deterrent
formulations that have been put in development, to my knowledge
right now are the extended release, long-acting formulations.
But there are early development with some abuse deterrent
formulations of the immediate-release drugs. And you are right
in pointing that out because 90 percent--more than 90 percent
of utilizing are the IR drugs. That is where the exposure is
happening.
Mr. Bishop. Mr. Cuellar.
Mr. Cuellar. Thank you, Mr. Chairman. Commissioner, on the
question that I asked you about, the oxycontin and the work
that you all want to do about possible relabeling, and then on
the compound pharmacist's efficiency work that you all want to
do, what is the time table on each of them just so we can get
an idea? What are you talking about? Months? Years? Decades?
Dr. Gottlieb. So on the guidance that I believe will help
to find a more efficient pathway for 503A compound is to
convert to being 503B compounders, days to weeks. With respect
to the studies, the studies to look at the implications of the
long-term use of opioids and whether or not this diminished
effectiveness with chronic administrations of opioids, that
will be a multi-year process. I think that those studies, once
we put the mandate on the companies, which we are going to do
in the next several months, I think those studies can
potentially be conducted within a year, and you are looking at
potentially another year to read out the results. And so it is
a multi-year process.
As much as it seems intuitive that there is declining
efficacy with prolonged administration of opioids, and there is
some evidence in the literature to suggest that there is an
evidence that meets the statutory standard that we are required
to meet in order to effect regulatory change. We need to
conduct rigorous perspective randomized trials. These are going
to be randomized withdrawal studies. And so those do take time
to conduct, but they can form the basis of the enduring
regulatory change, which is what I think we need in this space.
APPROVAL OF DSUVIA
Mr. Cuellar. OK. I sit on the Defense Approps so I have a
question dealing with that and your agency. Last November the
FDA announced the approval of another opioid, Dsuvia, a drug
that is 10 times more powerful than fentanyl. Commissioner, you
admitted to the potential dangers of this drug but have said
that Dsuvia could be beneficial for the military in use in the
battlefield situations because the drug can be administered
under the tongue. You have stated that it ``fills a specific
and important but limited unmet medical need in treating our
nation's soldiers on the battlefield.''
My question, Commissioner, is has the military given you a
requirement for this type of drug? Have you talked to the
military about the need for this potent of a drug on the
battlefield? And you said that the main benefit will be to the
military, but how do you intend to limit the drug's use to
solely military battlefield environments? And again, I do not
want to see, with all due respect, a 2001 situation again.
Dr. Gottlieb. I understand. And so let me just give a
little bit of a table set if I may, and I will be quick here.
It is a very potent formulation of fentanyl but it is a very
small piece of the drug. So it is actually the equivalent of 15
milligrams of morphine, which is not a trivial dose of morphine
but it is not an extremely large dose of morphine. If I have a
patient coming in with a kidney stone, I would routinely use 15
milligrams for morphine.
The reason why you need to use a very potent formulation of
the drug in order to deliver 15 milligrams of morphine, which
is really a standard dose of analgesia for a bedside surgical
procedure, is because you want it to be absorbed quickly. If
you were using something that was not potent, it might be this
big and it is not going to be absorbed under the tongue. So you
had to use a very potent formulation of fentanyl in order to
allow sublingual delivery of that drug.
With respect to the Department of Defense, in particular,
we made a commitment to Congress as part of the MDAA that was
passed last year that we would prioritize drugs and medical
products that were important to the frontline soldiers and to
the DOD and give them priority status and soft touch from the
FDA. Dsuvia was on the list of products that the DOD
prioritized. That list was about 10 products and so this was
important to the DOD, at least as they identified it to us, and
so we did work collaboratively around this product.
Mr. Cuellar. So they did give you a requirement for this
type of drug?
Dr. Gottlieb. Not a requirement, but they did flag this as
something that was a priority of theirs on the priority list
that they gave us of, if I remember correctly, around 10
products.
Mr. Cuellar. So how do we make sure that this stays on the
battlefield? Because I mean you have soldiers, they became
veterans, they might need some help afterwards and we--with all
due respect, I do not want to see a 2001 situation.
Dr. Gottlieb. I understand, and I will tell you that this
is--Dsuvia is going to be, as it is used in hospital settings--
and it does play a role there, too. If you are a doctor and you
need to do a bedside surgical procedure, and I have been there
where I had to put in chest tubes and could not get a line in
the patient and could not give them any analgesic, and that is
not a comfortable position to be in, this can be a useful
product for that niche kind of circumstance. This is a product
that will be dispensed in hospitals under tight controls. It
will probably be secured in Pyxis systems. That does not mean
that there is not opportunity for some diversion in hospitals.
The kind of diversion you are talking about would typically be
among healthcare providers, unfortunately. We do see some abuse
of drugs by anesthesiologists and other physicians and
providers in the hospital setting, that goes on. But there are
much tighter controls on that kind of activity and it does not
go on as much as it used to, and I am not saying it is not
going to happen.
When it comes to fentanyl, this is a challenge, but this is
a challenge where perhaps dozens or maybe hundreds of people
can potentially be exposed, and I am not trying to trivialize
that. The biggest challenge we face with fentanyl, quite
frankly, is the illicit fentanyl that is pouring across the
international mail facilities and God knows where else, but we
are----
Mr. Cuellar. Do not say the southern border because we
know----
Dr. Gottlieb. Yes, no, I am talking about the international
mail facilities where I have jurisdiction. That is where I am
also focused, Congressman.
Mr. Cuellar. Thank you so much, Commissioner, thank you.
Mr. Bishop. Thank you. Dr. Harris.
DIETARY FIBERS
Dr. Harris. Thank you very much. Just one follow-up on the
fiber question I had. How many dietary fiber petitions do you
currently have in review? And what is the timeline for that
response, again? And will you respond by rulemaking or are you
going to be communicating directly with the petition?
Dr. Gottlieb. I believe we have three to five petitions
currently in house, and we will be communicating directly with
the petitioners. You know, we are doing what we can to try to
get as many people over the line as possible, and that has been
our goal from the outset.
RECALL STANDARDIZATION
Dr. Harris. OK, good, again, because, you know, I know that
our food manufacturers really want to comply with that January
1st deadline. With regards to recall standardization, the USDA
has standardized its food recall communications, particularly
with respect to disclosure of retailers, and that streamline
approach has been pretty effective at disseminating consistent,
accurate retail information to consumers. It would probably
be--I think it might be helpful for the FDA to take the same
approach.
Is there an initiative to do that? And are you also
considering an online submissions process like Canada has that
would negate the differences that you see now between what
different FDA regional offices are requiring?
Dr. Gottlieb. When I look at food safety, Congressman, I
look at it from the perspective of the consumer, what the
consumer wants. They want timely recalls and adequate
information, and able to know whether or not they have a
violative product. They want effective track trace so they can
know where their products are coming from, and they want the
assurances and safety that we provide through things like the
inspections.
We have taken steps in recent years to try to make our
recall process more robust, including providing information
about where a product may have come from, if you went to a
local store and a recalled product was purchased in that local
store, highlighting the stores where products may have been
sold. We are going to continue to try to modernize that product
because I think this is one of the core pillars of what
consumers want when they think about food safety.
Dr. Harris. Sure, and, again, do you think it would make
sense to unify the process between the FDA regional offices so
it is a uniform requirement?
Dr. Gottlieb. Yes, I am not aware that it is not, and I can
get back to you on that in terms of specifically what concerns
you may have about where there may be discrepancies about what
we do from region to region, because we do try to have, you
know, nationalized standards in place to these kinds of core
elements of our food safety approach.
FISH CONSUMPTION ADVICE
Dr. Harris. Sure, no, thank you. I appreciate you getting
back to me on that. Finally, one issue that has come up is
the--and I know this is an issue personally in the family
because my oldest daughter is expecting my eighth grandchild,
and I just talked with her yesterday--two days ago, actually,
about fish consumption and how the potential benefits of fish
consumption, both on neurological development, and now the
latest on basically resulting in--increasing fish consumption
especially after 24 weeks resulting in an increased body
weight, but lean body weight, as a child.
Has the FDA calculated an updated benefits of fish
consumption on fetal development? And why aren't--why isn't the
FDA actively encouraging fish consumption for pregnant women
given the scientific evidence that it is actually beneficial?
Dr. Gottlieb. First of all, congratulations. We do actively
encourage fish consumption, and we think fish is under consumed
by pregnant moms, expectant moms, and we have taken steps to
try to encourage more fish consumption. And the changes we made
to how we define what fish is safe to eat during pregnancy was
intended and designed to try to promote more fish consumption.
This continues to be a goal of the Agency.
Dr. Harris. And, for instance, on your website available to
the public, I mean, does it mention the calculated benefits of
fish consumption, or does it just say eating some fish is good?
Dr. Gottlieb. I believe it does. We can get you the
specific language that we use on the website, but I believe it
does, and we have had campaigns in the past. I see your chief
of staff shaking his head no, but we can take a look at that
and there may be more that we can be doing there because this
is a public health goal of ours, we share your concern.
Dr. Harris. I thank you very much, and again, thank you for
appearing before the subcommittee.
Mr. Bishop. Thank you. We are winding down and I think last
question, I will recognize Mrs. DeLauro.
IMPORTED SEAFOOD
Ms. DeLauro. Thank you very much, Mr. Chairman. Just to
respond to, if I can, my colleague Mr. Fortenberry. First of
all, 94 percent of our seafood is imported into the U.S. In
terms of top imports from China: tilapia 78 percent; cod 51
percent. I might add to that that is farmed. They farm their
fish. I do not have to describe what that process is about. I
might also add that most of our shrimp comes from Malaysia or
Thailand, and in fact, that is farmed as well.
So I would just say to my colleague from Maryland, I would
be wary of what kind of fish my pregnant daughter was eating
and where it was coming from, know where it is coming from.
Apple juice is 50 percent from China; mushrooms 34 percent;
garlic is 31 percent. This issue, at a longer discussion, gets
into equivalence and what are the standards under which this
regulatory framework, whether, yes, Australia, Canada, et
cetera, but we do business with a whole lot of other countries
who do not have the kind of regulatory framework we do, and
that, I think, presents a problem for food safety.
IMPORTED PHARMACEUTICALS
Another point, again, in terms of the safety of the
imported pharmaceutical drugs, just let me highlight that it is
about the outsourcing of pharmaceutical manufacturing to
countries, which is something I think we have to talk about,
and that's like China. They don't have the same level of
consumer protection and safety laws as those of this country.
It is estimated that as much of 80 percent of active
ingredients in U.S.-branded pharmaceuticals and over-the-
counter drugs originate from either China or India. I think
that is an area that we have to explore and to find out, what
again--we've got food, we've got pharmaceuticals coming from
places that have potentially--I'll just say potentially--I
believe it puts our people at risk.
E-CIGARETTES
I, too--because we're all going down the vaping and e-
cigarette road, Dr. Gottlieb--I happen to believe that that is
the growing epidemic of youth vaping has reversed decades of
progress that we made in reducing youth nicotine addiction. In
2019, the vaping industry is still exempt from any meaningful
FDA oversight and regulation. Your tweet December 2018 on
riding CEOs of e-cigarette manufacturers asking them to meet to
discuss commitments they made last month and why some are
changing course. This is an urgent matter. January 4, 2019, New
York Times, Juul and Altria made very specific assertions in
their letters and statements to the FDA about the drivers of
the youth epidemic. Their recent actions and statements appear
to be inconsistent with those commitments. Altria--industry
actions coupled with Altria recently purchasing 35 percent
stake in Juul demonstrate to you that the industry cannot be
relied upon to take voluntary action to solve the epidemic.
Why has the agency refused to implement mandatory rules
which the industry must follow? Let me ask that question.
We also have deeply false and misleading and frankly
illegal marketing advertising of e-cigarettes and vapor
products. Family smoking and prevention of tobacco products
prohibits health claims about reduced risked tobacco products
where such claims are not scientifically proven or would cause
net public harm. FDA continues to allow e-cigarettes to make
implicit, explicit, unauthorized, modified risk claims. FDA, as
I understand it, you tell us, FDA has not granted such
authorization for such modified risk claims, nor has the FDA
approved any e-cigarette as a cessation device.
You are on their website, Dr. Gottlieb, of Juul's website.
It's called harm reduction. You are quoted. This is about--they
talk about potential harm reduction, less risky products, and--
read it if you haven't read it. So Altria is quoting you on
that promotional website. What about these claims that they are
making? Why are we refusing to implement mandatory rules on
this industry?
Dr. Gottlieb. Well, Congresswoman, I share all your
concerns. This is the biggest challenge I face right now that I
don't feel we have all the policies in place to deal with it.
The biggest public health crisis we face is clearly the opioid
crisis. I feel like we have policies in place that allow us to
try to address it within the scope of what we are capable of
doing. With respect to e-cigarettes, we still don't have those
policies in place. We will. This is one of my highest
priorities right now. I am working through my own process
within my own administration to get these rules and guidances
out. I am hoping they will be out very soon.
Ms. DeLauro. Watch their advertising because in my state of
Connecticut the radio ads are on about harm reduction and there
are billboards now going up, full page ads in the Washington
Post, Wall Street Journal, New York Times from July. The
advertising has to got be watched and very, very closely. Thank
you very much, and thank you, Mr. Chairman, for the time. I
appreciate it.
Closing Statement--Mr. Bishop
Mr. Bishop. All right, well, I think this meeting has been
a very, very exhaustive hearing. I appreciate your patience,
Dr. Gottlieb. You have been very helpful and forthcoming. And
if any members would like to submit anything to the record or
would like to submit questions to Dr. Gottlieb that he can get
back with us, please feel free to do so. With that we will
adjourn this hearing of the Agriculture, Food and Drug
Administration, Rural Development Committee, Appropriations.
[Questions and answers for the record follow:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Tuesday, March 12, 2019.
OFFICE OF THE INSPECTOR GENERAL
WITNESSES
PHYLLIS K. FONG, INSPECTOR GENERAL, USDA
GIL H. HARDEN, ASSISTANT INSPECTOR GENERAL FOR AUDIT, USDA OFFICE OF
INSPECTOR GENERAL
ANN COFFEY, ASSISTANT INSPECTOR GENERAL FOR INVESTIGATIONS, USDA OFFICE
OF INSPECTOR GENERAL
Opening Statement by Mr. Bishop
Mr. Bishop. The subcommittee will come to order. Let me say
good afternoon and let me apologize for my delay. There was a
moment of silence in remembrance of the 23 people who lost
their lives in the tornado in Alabama on March 3. That tornado,
of course, killed 23 people in Lee County, Alabama, which is
adjacent to my district, but the tornado also came across from
Alabama, the west side in Alabama, the Chattahoochee River over
into Harris County and into Talbot County, which is in my
congressional district.
And I was standing with my colleagues from Alabama as we
remembered and had our thoughts and prayers going out to those
people impacted. So I apologize for keeping you waiting, but I
think it was for a worthy cause, and I appreciate your
patience.
Let me just welcome everyone to today's hearing, especially
our witnesses. Ms. Fong, Mr. Harden, Ms. Coffey, thank you for
appearing before us again. I have an abiding interest in your
work and in what you do. We have to do everything that we can
possibly do to eliminate fraud, waste, and abuse and
mismanagement. And we have to do all we can to assure that USDA
programs, over which our subcommittee has oversight, are
operated with the best possible efficiencies in order to create
the best possible outcome for those who use the agency.
I was particularly pleased to see your annual plan for
fiscal year 2019 focuses on many of the concerns that the
subcommittee has, from enforcement of the Animal Welfare Act to
food safety threats to oversight of disaster assistance
programs. We rely on you to conduct audits and investigations
to ensure that the programs we fund are run efficiently and
that issues are addressed in a timely manner.
While I am glad that you have an active oversight profile,
I do have some concerns about the number of recommendations
that remain open and the agency's efforts to close them out.
Based on your last semiannual report, there are recommendations
pending final agency actions going back to 2005. We would like
to hear your thoughts on how to incentivize the agency to act.
So today I would like to hear more about your plans to
conduct adequate oversight of USDA programs as well as the
challenges that you face in ensuring agreed-upon
recommendations are implemented. In addition, I want to ensure
that civil rights issues are getting thoughtful and appropriate
attention throughout USDA. I look forward to discussing that
with you as well as other important issues, and I thank you
again to you and to all of the OIG staff for all that you do.
Now let me ask our distinguished ranking member, Mr.
Fortenberry, if he has any opening remarks, and I would like to
recognize him at this time.
Opening Statement by Mr. Fortenberry
Mr. Fortenberry. Yes, sir. Thank you, Mr. Bishop, Chairman
Bishop.
And we appreciate all of your willingness to appear before
us today. Ms. Fong, nice to see you again. I think the last
time we had direct interaction was on the Agriculture
Subcommittee on Nutrition, but I really do appreciate your
intensive work and the entire team here, am very grateful.
You have a very experienced team, and obviously we are
looking forward to your testimony today to understand the
progress that you have made to correct any problems, policies,
or practices that may be of concern. So that is the primary
intent that I have to learn more about what you are doing
today.
On the one hand, you are our police force out there, making
sure that billions are spent legally and effectively. On the
other hand, you must audit the programs managed by 29 agencies
to ensure that they are operating as designed, everything from
commodity to conservation to school meal programs to rural
development loans. You have a big portfolio.
I would like to delve a little bit deeper into a couple
major areas of your work, particularly the investigative work
involving fraud and waste and any abuse of taxpayer funds as
well as the audit work which helps determine if USDA programs
are operating as designed and if you think we need to be in
more robust partnership with you in that regard.
While certainly the vast, vast majority of farmers and
ranchers and participants in Nutrition Assistance Programs are
honest people, someone out there will always try to game the
system, which makes your work all the more important. And,
frankly, sometimes I am amazed at the amount of scheming that
certain people will do to commit fraud, as in your testimony
you point out one Detroit store defrauded the WIC program alone
by $2 million.
Someone else stole $174.7 million from the Rural Business-
Cooperative Service, as I understand it, Business Industry Loan
Program. So I will be very interested to hear what tools you
have in place to identify and act upon these types of fraud and
abuse situations sooner. It is not just about improper use of
taxpayer dollars. When this type of activity happens, it
actually takes money away from those in need who we are
actually trying to help. That is what is so deeply abusive and
scandalous here.
One program in particular, I want to talk about food safety
and bring this to your attention, and why a producer was able
to break the law and put millions of pounds of meat and poultry
into the marketplace without safety inspection and not be
caught for years. I think this would be a good thing to delve
deeper into, and maybe we can revisit that after your
testimony.
So it is my understanding that for the year the budget
request is $98.2 million, the same level of funding you
received last year. Of course, we will decide if your agency
deserves or--and you can point out if you desire more resources
to oversee such a massive portfolio, although there are $200
billion in assets.
So, again, Ms. Fong, your real dedication to public service
speaks for itself, and we are grateful to have you and your
impressive team here.
Thank you so much, Mr. Chairman. I yield back.
Mr. Bishop. Thank you, Mr. Fortenberry.
And before Ms. Fong begins, a reminder to members that, as
is customary with our subcommittee, members will be recognized
by seniority for those who were here when I gaveled the hearing
to order and then in the order of arrival after that. I will
alternate majority/minority members and we will adhere to the
5-minute rule.
Ms. Fong, without objection, your entire written testimony
will be included for the record. And I recognize you now for
your statement, and then we will proceed with questions. You
may summarize or you may give the entire statement. It is
completely up to you.
OPENING STATEMENT BY MS. FONG
Ms. Fong. Thank you very much, Mr. Chairman and Ranking
Member Fortenberry and members of the committee. It is a real
pleasure to be here again this year to talk with you about our
work at USDA, and we appreciate your invitation.
I want to start out by thanking this subcommittee for the
support that you have given us over the years. In addition to
our fiscal year 2019 funding level, which is very helpful to
us, you also included the OIG in the disaster recovery
supplemental last year, and that has been very, very helpful to
us in terms of planning oversight of the Department's disaster
work. So we appreciate that ongoing support.
And as you all know--you have referenced it--our job within
USDA OIG is to help the Department deliver its programs more
effectively and with integrity. And we do that through a number
of different products, and I think today we may be able to
highlight some of the new approaches that we are taking in
addition to audit and investigation. But in the end, as you
mention, we make recommendations, and it is up to the
Department officials to implement those recommendations that
they see fit to implement. And I think that is where the rubber
really hits the road.
As you have my written statement, you see the range of
things that we are working on. So I just want to mention a few
highlights that struck me as we were preparing for this
hearing. I want to emphasize that the safety of USDA employees
is a very significant and top priority for our office. We
recently issued an audit report on sexual misconduct and
harassment concerns in Region 5 of the Forest Service and what
the Forest Service is doing to address those issues. But I want
to highlight the fact that these issues and our work extend
beyond the Forest Service.
Within USDA as a whole, we want to send the message that we
take very seriously any allegation or complaint of sexual
misconduct. Our investigators can and do respond immediately in
many instances to allegations of sexual assault and other
criminal misconduct, and we have had some very good results,
very quick results working with Federal prosecutors in some of
these cases.
Turning to another part of USDA, as has been mentioned, we
do focus significant resources on oversight of SNAP and the
Nutrition Programs. And we are in the middle of issuing a
series of reports on the summer food summer feeding program,
which provides meals to students during the summer when school
is not in session. We have a series of audit reports in this
area as well as very significant investigative results due to
bad actors in this program.
Finally, I want to note we have summarized a number of
reports in the farm Program, Conservation Program, and Rural
Development, as well as Crop Insurance, and we also focus quite
bit of attention on management issues affecting the Department
as a whole, namely financial management, financial statements,
cybersecurity and improper payments. Progress in these areas
requires continued attention by all of us.
So, in closing, I want to thank the subcommittee for your
support, your ongoing interest in our work, and we look forward
to responding to your questions.
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I89open audit recommendationsMr. Bishop. Thank you very
much, Ms. Fong. As I mentioned in my opening statement, I am
grateful for all the work that your office does, so I don't
want any of it to go to waste. Looking at your last semiannual
report, as of September 30th, 2018, there were 359 audit
recommendations awaiting final action by USDA agencies. Two-
thirds of these pending items were for 2017 and prior years,
with the oldest from 2005.
Why do so many take years to be implemented, what are your
plans to call attention to those issues, how can you help the
agencies or maybe shame them into action, and what do you need
from us to help close these recommendations?
Ms. Fong. OK. Let me make a few comments, and then Gil may
have some comments as well.
We make a priority to follow up with the Department on our
recommendations. This is a joint responsibility between the
Office of the Chief Financial Officer and the program agencies
and then our office as well. And we have over the years tried
to think of initiatives to assist the Department in this area.
A year or two ago we issued a report taking a look at the CFO's
office and how it was managing that whole system of closing out
final audit recommendations. We made a number of
recommendations to that office, which I think they agreed with
and are in the process of implementing.
In addition, we asked the question, what can we ourselves
do to shine more light on this? And so we have started a new
line of products, which we call final agency verification
reports, where we pick several audits from the past each year
and we go in and we take a look at the agency actions to see if
the agencies really accomplished what they said they were going
to do or whether there is still work to be done. I think the
first two that we issued looked good. The agencies were doing a
good job. Obviously, there is still more progress that can be
made.
Mr. Harden. And I would add there is a significant number
of outstanding recommendations without final action. That is a
discussion we have had with the Department for the last several
years to bring focus to that part of the process. We have a
continuing dialogue with them to see how that is progressing,
but we are also using these final action verification reviews
as ways to do an additional check to see that they implemented
what they agreed to implement.
We also, for significant audits, we do followup audits. We
go in and see how effectively they implemented the
recommendations. We have several in that line over the last
couple years related to food safety. We have upcoming work
related to animal care, where we will look at how they
addressed prior recommendations as well.
INFORMATION TECHNOLOGY SECURITY
Mr. Bishop. OK. In April of 2018, the Council of the
Inspectors General on Integrity and Efficiency issued its
first-ever report on top management and performance challenges.
At the top of the list was information technology security and
management.
I am glad to see that you will devote some of your 2019
resources to that issue. Last fall, your office issued an audit
of USDA's efforts to improve security of its information
technology systems and, in short, you gave USDA an overall
score of, quote, ``ineffective,'' end quote, for IT Security
Program. There was also another audit where you found USDA did
not fully implement federally mandated security requirements.
What is the primary cause of USDA's ineffective security
posture? Is it complacence, lack of management priority, lack
of resources, or is it just an impossible problem to fix?
Our subcommittee invests hundreds of millions of dollars a
year on IT for USDA agencies to deliver their programs. And
based on your audits, would you put money into systems that
have ineffective security protection?
Ms. Fong. I think IT systems are a fact of life for
managing and delivering complex programs, and our job here is
to make sure that those systems are as good as they can be and
they meet all standards. We do look at these systems every
year, as you mentioned, and USDA is making what I would
characterize as slow progress forward.
There is a commitment to attacking these issues at the
Department level. The challenge that we have seen over the last
5 to 10 years is that there is a commitment on the part of the
CIO's office, but then it needs to trickle down to all the
agencies, all the program managers, and that is a difficult
thing in a complex, large organization.
Mr. Harden. I would add that they have made changes
recently to centralize at the agency level, at the mission area
level CIO activity, so there is more of a connection between
the Departmental CIO and agency CIOs to try and bring that
together. This would be the first year that that has been in
effect.
And so as we go through doing FISMA, the IT security review
that we do every year, as well as other IT reviews that we do,
that is a question that we are asking to see how well that is
helping them do that.
Mr. Bishop. Ms. Coffey, anything to add?
Ms. Coffey. I am going to say that the IT expertise lies
with my colleague as opposed to the investigation side of the
house. I mean, periodically we do see some issues that arise
with IT, but not from really the security perspective from
investigations.
Mr. Bishop. Thank you very much. I think my time has
expired.
Mr. Fortenberry.
FOOD SAFETY
Mr. Fortenberry. Let's return to the case that I brought up
earlier, where you had a massive recall of meat and poultry
that was on the market for a number of years. So what broke
here? What was not enforced? Why was it not enforced? Why did
it take you a long time to catch it?
Ms. Fong. Well, let me offer a couple of----
Mr. Fortenberry. And let me step back further and I will
ask you one more question: Is our food safe? Now, in all
fairness, I asked Dr. Gottlieb last week at the Food and Drug
Administration the same thing. There are overlapping
responsibilities here. But it ultimately is that question.
Ms. Fong. Our mission in OIG is to deal with the problem
situations. I would hesitate to say that the problems are
pervasive, but when they occur they do occur and they have a
significant impact. Millions of pounds of recalls, as you
mentioned.
Mr. Fortenberry. Do you think this is--I would assume this
is an isolated incident, but to the degree that we do not want
this isolated incident generalizable to a trend or principle, I
think you need to speak to how isolated is it.
Ms. Fong. And I think that is a very good point. The
questions that we always like to ask are, was this a systemic
issue, was there a breakdown in controls, or was it just a real
bad actor who got very creative?
This particular fact situation I think was perhaps a little
unusual, and Ann can comment. My understanding of it is we had
a processor in California who had a grant of inspection for a
facility and had a second facility and was processing meat at
both of those facilities, did not have a grant of inspection at
the second one and was labeling the products from the second
facility as coming out of the first. And so on its face----
Mr. Fortenberry. He shouldn't do that.
Ms. Fong. No, he shouldn't do that, and I am sure FSIS is
not happy.
Mr. Fortenberry. So walk through the mechanism by which
this was caught, and then why did it take several years?
Ms. Coffey. So, in terms of how we get the information,
normally we have to obtain individuals who step forward.
Obviously, FSIS was not aware that there was a second facility
that was operating illegally until it obtained information. And
I can't really get into the specifics in a public setting as to
how we came across that information.
But we identified the fact that there was a second facility
that was alleged to be producing this--misbranding the meat
that had not gone through Federal inspection.
Mr. Fortenberry. I think the question though is, again, did
we have enough internal robust controls to find this out or
did--look, I understand it happens a lot of times in law
enforcement. There is a tip or you stumble upon something
inadvertently. I get that.
But, again, I think the heart of the question is, are the
controls, the system robust enough to have caught something
like this so that we know that it is not systemic, or is this
such a peculiar, isolated case that everything that we have in
place still wouldn't have caught it?
Ms. Coffey. I would say that in this particular instance,
it is falling under the realm of more peculiar instance where
you don't normally--when we have had recalls that you may have
seen that have been public previously, they are usually because
there has been some sort of outbreak or illness that has come
about and it is not necessarily due to a fraud that has
occurred. There may be some internal controls within a
particular plant that may have broken down that led to that.
In this case, FSIS, if they are not aware that there was a
second facility that was operating----
Mr. Fortenberry. It just seems the level of volume is high
enough to have drawn suspicion, or it is just peculiar that no
one would have known that there is some second facility, given
the volume here.
Ms. Coffey. Yes. I mean, it depends--that would be really
something that FSIS, in terms of investigations, we look at
sort of how the fraud was perpetrated and then proving that it
actually occurred and then pursuing prosecution of those
individuals.
Mr. Fortenberry. So this came to you from external sources?
Ms. Coffey. That is correct.
Ms. Fong. But you do raise a good point. We will go back
and look at our investigative file and see if there is any
indication there that a control may have been bypassed that we
can pass on to FSIS, in terms of addressing the issue for the
future. We will take a look at that specifically.
Mr. Fortenberry. Yes. I am just trying to imagine what a
second meat processing/packing facility looked like that
escaped anybody's notice. It just is, again, a peculiar kind of
thing. And it begs the question is the system that we have in
place adequate to catch this, or do we defer to that very
random peculiar incident that this one fell through the cracks.
Ms. Fong. We will take a look at that and see if there is
anything there that we can offer to FSIS in terms of analyzing
trend data, perhaps, that might be useful.
Mr. Fortenberry. Thank you.
Mr. Bishop. Ms. Pingree.
ERS AND NIFA RELOCATION
Ms. Pingree. Thank you very much, Mr. Chair.
Thank you so much for the work that you do and for being
here with our committee today.
I have a lot of concerns about the proposed relocation and
reorganization of NIFA and ERS, and I think every Democrat on
this subcommittee and I have expressed our opposition to the
plan. And we have heard from farmers, university, former
leaders of these research agencies who are also opposed.
I guess everybody kind of wants to know why this proposal
seemed to come out of nowhere, and it just seems like the
agency is still pulling things out of thin air to justify it.
Stakeholders have suggested to me that the ERS reorganization
was proposed because research coming out of the agency didn't
align with the administration's views on topics such as SNAP or
climate change. That would be of great concern to me, and I
think we should take those allegations seriously.
So I am wondering if the OIG's report on the reorganization
and relocation of USDA research agencies will look into these
allegations.
Ms. Fong. As you mentioned, we have an ongoing review of
the relocation/reorganization, and we had set out our scope and
objectives very succinctly at the beginning of our review.
Until very recently, we had not heard any information that
there may be a concern about research not aligning with the
administration's views. That is a very new piece of information
that we have just heard. It is not part of our audit scope,
because it is new.
If there are allegations that are of concern on that
matter, we would be very interested in discussing that with
anybody who has any information on that. In the meantime, our
audit inspection is going forward, and I think our fieldwork is
just about done on that. Gil?
Mr. Harden. Yes. We are closing in on the end of fieldwork
for that and we will start discussing what issues we have and
whether we have recommendations to make with the Department in
the very near future and proceed after that reporting.
DIETARY GUIDELINES
Ms. Pingree. OK. Well, we will follow up with you on that
so that, you know, any allegations that are being raised will
be clear to you and you can proceed.
So another question: Last month, my colleague Congresswoman
DeLauro, who is not here with us right now, and I sent a letter
to the Office of Inspector General for the Department of Health
and Human Services. And there, we were requesting an
investigation into reports that the food and beverage industry
had inappropriately influenced public health policy through
relationships with high-level CDC officials. There were
specific concerns about agencies setting priorities based on
industry-funded research.
As I know you know, DHHS and USDA work together to jointly
publish the dietary guidelines for Americans every 5 years. The
Ninth Edition of Dietary Guidelines will be published in 2020,
and the first meeting of the Advisory Committee was just
announced yesterday. The Dietary Guidelines have important
implications for Federal nutrition programs and inform other
health and food policies.
So has your office previously looked into whether and how
the food and beverage industry has influenced the Dietary
Guidelines, given that there were just reports of potential
inappropriate influence at DHHS? How do we make sure that the
Dietary Guidelines are based on objective, scientific
information and not industry-funded research?
Ms. Fong. To answer your first question, we have not done
work on Dietary Guidelines in the past. Gil is confirming that.
In terms of moving forward, we would have to give that some
thought as to how we could design work to evaluate that. We
would welcome a chance to dialogue on that issue. Since it is a
new issue for us, we have not spent time thinking about that.
Ms. Pingree. Great. Well, I am very happy to raise two new
issues for you.
Ms. Fong. Thank you.
Ms. Pingree. And I will follow up on both so that we can
pursue the conversation a little more than just today. But
thank you again for your work.
And I will yield back. Thank you, Mr. Chair.
Mr. Bishop. Mr. Moolenaar.
OPEN AUDIT RECOMMENDATIONS
Mr. Moolenaar. Thank you, Mr. Chairman.
And thank you for being here and for the work you are doing
to ensure that the USDA is open and transparent and producing
recommendations to eliminate and limit fraud within the agency.
I wanted to ask about--according to your written testimony,
the OIG in 2018 issued 42 final audit reports and made 203
recommendations to strengthen and improve USDA programs and
operations. And you highlighted certain cases where agencies
generally agreed with your findings or recommendations.
It is hard to imagine agencies wouldn't follow up with your
recommendations aimed at improving their operations or
programs, but are there certain agencies or programs that you
find are on your radar screen that don't seem to follow up with
your recommendations?
Mr. Harden. I guess the way I would start that is that we
do have a very good I think professional relationship with all
the agencies in the Department, in terms of us bringing the
concerns that we have through the audits that we do. We have
good healthy dialogue and debate as we are coming to what
caused the problems and what would be the appropriate
recommendations.
Where, you know, we have seen breakdowns in the past is
that the agencies agreed with what we were wanting to do, they
went about implementing that, and when we went back in
sometimes it wasn't as effective as they wanted it to be and so
we may have had some additional work.
But even though there are a large number of recommendations
that they are working on, it is not a relationship where there
is constant, you know, pushback on what should be implemented
at the root of the problem.
Ms. Fong. I would offer that when we have very productive
dialogue and there may not be agreement on a recommendation, it
is not confined to a particular agency or group of agencies. It
would be very topic-specific or recommendation-specific, in the
sense that it may be a particular policy that that agency feels
strongly about.
Mr. Moolenaar. OK. And does OIG have internal enforcement
mechanisms to ensure compliance, or it is all based on
recommendations and then, as you mentioned, you have the final
agency verification reports that kind of report as to whether
it is being followed up on?
Ms. Fong. Yes, that is exactly right. We have the power of
persuasion.
Mr. Moolenaar. OK.
Ms. Fong. And that is it.
FOOD AND NUTRITION SERVICE
Mr. Moolenaar. OK. In the audit of the Food and Nutrition
Service's financial statements for fiscal year 2017 and 2018,
the finding states that the FNS high-risk programs were not
compliant with the requirements of the Improper Payments
Information Act.
Were there recommendations that you had, or what was it
that they weren't in compliance with?
Mr. Harden. Yes. Annually we do work on the compliance with
improper payment reporting, and that focuses on the ten
departmental programs that are high-risk programs. Five of
those programs are FNS Nutrition Programs. It is SNAP, school
lunch, school breakfast, WIC and CACFP. And they have not met
one or more of the requirements over the seven years that we
have reported on that compliance.
And so we had a series of recommendations over the years
and made recommendations this year. Although we have seen
progress at the Department level in terms of reporting it, it
is just a matter of for some of the FNS programs that they get
some of their data up to date so that they have ways of
producing the estimates of what the improper payments should be
and reaching their targets.
Mr. Moolenaar. And in your written testimony, you mentioned
that OIG makes recommendations to improve how programs operate.
During fiscal year 2018, your audit and investigative work
resulted in potential monetary results totaling more than $368
million. That is significant. If there had been--if the
recommendation had been made for the audit of FNS' financial
statements, how would that dollar amount be affected?
Mr. Harden. The information coming behind that does not
result in what we would have as a questioned cost, or funds to
be put to better use. That is driven by what the agency is
doing to comply with those reporting requirements.
We have done work in the past to look at the quality of
those improper payment estimates and have found weaknesses,
particularly with the SNAP program. We issued a report in 2015
where FNS agreed to kind of retool the whole way that it did
the error rate for that program.
Also, we have done work in school lunch and school
breakfast, which has very high error rates, so that they can go
in trying to look at how they come up with that number and if
there are ways that we can offer a better way to get at that
number. And they were receptive to recommendations on both of
those fronts.
Mr. Moolenaar. OK. Thank you.
And thank you, Mr. Chairman.
Mr. Bishop. Ms. McCollum.
FOREST SERVICE MINERAL WITHDRAWALS
Ms. McCollum. Thank you, Mr. Chair.
In 2018, the Forest Service was doing an environmental
review on proposed mineral withdrawals of the National Forest
System lands. Methow Headwaters in Washington State, an area in
the heart of the North Cascades and important for water
quality, wildlife protection, recreation and salmon recovery
and restoration; the Emigrant Crevice in Montana in former
Secretary Zinke's backyard; 30,000 acres of public land just
north of Yellowstone National Park, where mining could damage
the environment and hurt the area's tourism-based economy; and
the Rainy River Watershed in Minnesota just outside the
Boundary Waters Canoe Wilderness Area, the most visited
wilderness area in the country.
Sulfate or mining pollution could cause irreparable harm to
these pristine waters, and you don't have to take my word for
it. In a letter that I have, former Forest Service Chief Thomas
L. Tidwell issued a denial of consent to renew two leases in
the withdrawal area. In December 2016, he concluded, and I
quote: ``The inherent potential risk of mining near the BWCI,''
I quote again, ``might cause serious and irreplaceable harm to
this unique, iconic, and irreplaceable wilderness area.''
I point this out because the Forest Service completed the
studies in Washington and in Montana, but on September 6, 2018,
Secretary Perdue issued a one-page press release stating that
USDA was canceling the proposed mineral withdrawal study
impacting the Boundary Waters 20 months into a 24-month study.
I am concerned that a different standard was neither fair nor
consistent as it applied to the Boundary Waters as compared to
the other two mineral withdrawals.
USDA and the Department of the Interior followed the
established process when assessing the other two applications
for mineral withdrawals. The Forest Service completed and
released a full environmental assessment, and the assessments
were submitted to the Bureau of Land Management as part of a
complete withdrawal package. It is unclear why the Forest
Service deviated from the established process for the study
impacting the Boundary Waters. And a one-page press release
from the Secretary is not adequate substitute for a full
environmental assessment and submission of a complete
withdrawal application to the BLM.
I would ask you, do you agree that canceling the study with
just 4 months left seems like an efficient use of time, energy,
and taxpayers' dollars? And are you aware of the Forest Service
ever canceling a mineral withdrawal in this manner before? If
not, can you report back to us who ultimately made this
decision to cancel the Forest Service study and how a decision
like this was made, based on the other two studies going
forward in the good faith in which the BWCA and Rainy River
Watershed should have been given the same due consideration.
Ms. Fong. Thank you for raising that. We have not done any
work in that area so we are not familiar with the study. It is
a very interesting set of circumstances. We would be happy to
talk with you and your staff to get more information and figure
out what assistance we can provide.
FOREST SERVICE WORKPLACE MISCONDUCT
Ms. McCollum. That would be helpful. It was very much in
the press.
Mr. Chair, I know my time is limited, but I would like to
ask any comments you would like to make on what the Forest
Service has been doing in its initiatives to address workplace
misconduct. I also am the chair of the Interior Committee where
there is overlapping jurisdiction. I am very concerned about
what is going on and if you think that there is any work that
we should be following up on.
Mr. Harden. As you know, we just recently issued our report
on sexual harassment and misconduct for Region 5. It was
designed around the agreement that Forest Service had with the
Department at the Assistant Secretary for Civil Rights level
and OGC, in terms of a plan for making the workplace better in
Region 5.
We found that they had been implementing what they had
agreed to in the plan, but there were some other areas where we
saw improvements to the workplace that they could make. One of
them, notably, was doing better background checks or reference
checks on people that are being hired. They weren't asking
direct enough questions to know that people had, you know,
sexual misconduct/harassment issues in their past, and then
they were promoted into other supervisory positions.
In response to questions that we got in a hearing related
to that subject last November, one of the things that we are
currently doing is that we have asked--I have polled my
counterparts in the oversight community to draw out reports
that everybody in the community has done related to this issue
so that we can possibly talk to Forest Service about best
practices or other standards that others have applied that they
may need to consider.
I know that we will be in continuing discussion with Forest
Service as well as members and their staffs, because of the
interest in this area and in additional work that may be
considered.
Ms. McCollum. Thank you.
Thank you, Mr. Chair. It looks like we have some work to do
together.
ERS AND NIFA RELOCATION
Mr. Bishop. Thank you, Ms. McCollum.
Last September, Majority Leader Hoyer and Congresswoman
Norton asked your office to look at USDA's proposal to relocate
the Economic Research Service and the National Institute of
Food and Agriculture, and to reorganize ERS under the Office of
the Chief Economist. Your written testimony indicated your
office will be performing this review.
Can you briefly tell us about the scope of the project and
what the status is, when do you expect to issue your results,
and can you give us a preview of what you found so far?
Ms. Fong. I will be happy to comment on that. We have
started work on that in response to the request. The scope of
the work is to look at the Department's legal authorities to do
a reorganization and a reprogram of those funds, and a
relocation; to look at the Department's budget authority to do
those actions; and third, to determine if the Department
followed any procedures that it has governing relocations and
reorganizations. So we are looking at those three issues in
particular response to the request.
We have just about finished our fieldwork. We have been
working very diligently to obtain all the information that we
need. We have been talking to and interviewing witnesses. I
think we are almost at the stage where we are going to start
drafting a report. And at that point, we will be talking with
all of the stakeholders about what we are seeing. We are also
very aware of this committee's interest in those issues.
ANIMAL WELFARE INSPECTIONS
Mr. Bishop. Thank you. I am happy to see that your 2019
audit plan includes a review of animal care programs overseen
by the Animal and Plant Health Inspection Services,
specifically on animal breeders and exhibitors. Our news
reports indicate that there has been a dramatic drop in APHIS
citations in 2018 over previous years. Will you be looking into
the reasons for that drop?
Mr. Harden. Yes.
Mr. Bishop. Do you have any indications at this point what
some of those reasons might be?
Mr. Harden. No, I don't have anything on the reasons, but
we are aware of what has been reported in the media. But, you
know, this work will follow up on work that we did and
recommendations that we made to this program in an earlier
audit. And knowing what they are reporting is part and parcel
to understanding how they are running the program for both the
breeders as well as the exhibitors.
GOVERNMENT SHUTDOWN
Mr. Bishop. Thank you. We just had the longest shutdown in
history during which food inspectors were working without pay.
And USDA issued SNAP benefits for February early, causing most
recipients to have a gap of up to 50 days while waiting for the
March benefits to be issued. This resulted in increased demand
for food at food pantries and other assistance outlets. Some
FSA employees were called back to work.
Do you have any plans to review any agency operations
during the shutdown?
Ms. Fong. That is not in our current work plan. As you
mentioned, we published our fiscal year 2019 work plan, and we
published that before the shutdown. I think as we go through
our work, as it touches those agencies and those programs, if
an impact from shutdown surfaces we will certainly address
that. And if there are other concerns that come forward, we are
happy to consider any other concerns.
HOTLINE COMPLAINTS
Mr. Bishop. According to your last semiannual report, your
office received almost 5,000 complaints through the OIG hotline
between April and September of 2018. You reviewed 137 of those
complaints, under 3 percent of the total. The majority of the
complaints, 91 percent, were referred to the USDA agencies for
responsive tracking.
Do you have a process to follow up with the referred
entities to see if they took appropriate actions, how do you
ensure the agencies did their due diligence, and what do you
need from us so that legitimate hotline complaints are properly
dealt with?
Ms. Coffey. Sir, the hotline falls under investigations. We
do have a process in place. For the entire year of last year,
we received over 12,000 complaints that came into the OIG
hotline. The majority I would say, probably about 96 percent of
those were related to SNAP recipients, individuals who were
calling in to report that there is some sort of fraud in either
the eligibility status of individuals who are receiving
benefits or that they are misusing their benefits.
In those instances, we usually work with FNS to follow up
on those. The ones that we do refer to the program agencies
other than FNS, we do have a process in place where the
agencies are required to respond to our office to provide
information, whatever information they have identified based on
the complaint when they have looked into the matter, and we are
looking at those responses and making a determination whether
or not we believe that that has resolved the matter or they
have adequately looked at it or if we need to raise it to a
higher level within the agency. So we do follow up on those
investigations.
Mr. Bishop. Thank you. My time has expired.
Mr. Fortenberry.
EPHEMERAL GULLY EROSION
Mr. Fortenberry. Thank you, Mr. Chairman.
Who is the expert on ephemeral gully erosion?
Mr. Harden. I don't know that I would use the word
``expert,'' but yes, there was a report that had those words in
it.
Mr. Fortenberry. The Natural Resources Conservation Service
issued new guidelines. This can happen to farmers
inadvertently. There is an issue about tilling, concern
expressed by the agency that this would put someone out of
compliance. I support the conservation compliance requirements,
but I want to make sure that farmers have time to comply with
the new requirements and do not get disqualified from Crop
Insurance or other farm programs because there may not either
have been time for information, training; or secondarily, is
there enough flexibility built into the program, given
different regional considerations and different weathering
conditions in regions, to make it viable for farmers to
actually respond appropriately with enough time, with proper
agency notification? Can you comment on these matters?
Mr. Harden. I will take it from the aspect that yes, we had
concerns with that portion of the program and made
recommendations to NRCS to make improvements. We relied
basically on their management expertise, in terms of what they
needed to do to fix it and if they had a timeframe that they
wanted to do that in. We didn't on our side have a way of
saying, well, it should have been 10 years or 5 years or 3
years. We usually try and work with them and their expertise in
knowing that.
Now, if they went about implementing those recommendations
or those changes in response to the recommendations and
realized, hey, this wasn't going to work as well as it could
have been, if it is related to something they agreed to with
us, there is a process in place for them to come back to us and
say, hey, what we have agreed to really won't work. We need to
change what we are doing so that it doesn't impact the farmers
that you are talking about.
Mr. Fortenberry. So is it fair to say that NRCS should have
to go through a notice and comment period before having these
conservation compliance changes go through so that, again,
farmers aren't inadvertently caught in a system that may result
in the loss of farm program eligibility?
Mr. Harden. I would have to go back and find out.
Mr. Fortenberry. I think it is an important question. It is
the heart of the matter.
Mr. Harden. OK. I would have to go back and find out why
they did or did not go through a notice and comment period.
Mr. Fortenberry. OK. Based upon what is in front of me,
that is not clear to me either. But let's presume there was not
a comment period. I think, again, the issue, given certain
complexities of different regions and certain weather patterns,
of having proper advance notice before there is an enforcement
against a farmer is only fair.
Mr. Harden. That makes sense to me, yes.
Mr. Fortenberry. OK. Well, I have learned, Mr. Chairman,
how to take yes for an answer, so that is all I have. Thank
you.
Mr. Bishop. Ms. McCollum.
CROP INSURANCE FRAUD
Ms. McCollum. Thank you, Mr. Chair.
There has been a lot of political angst and discussion over
fraud and abuse in the SNAP program, but the fraud and abuse,
if there is to be found much in the SNAP program, would pale in
comparison to the amount of money that appears to be involved
in the Crop Insurance when fraud is happening.
So last year, your office was involved in a few
investigations involving crop insurance fraud. The one case,
the party in question was found guilty of defrauding taxpayers
out of more than $5.6 million in false insurance claims,
sentenced up to 25 months in prison, is prohibited from
participating in Crop Insurance Program for 5 years.
Another, the party was sentenced to 13 months in prison for
illegally obtaining crop insurance and claiming crop losses for
land he did not farm. He had to pay a half a million dollars in
restitution.
Crop Insurance is a vital tool for our farmers in Minnesota
and throughout this country, but reports of fraud at this level
are very troubling. In the budget that was released yesterday,
the administration calls for some Crop Insurance reforms,
including new means testing that would limit the program to
producers with an adjusted gross income of $500,000 or less.
Do you think reforms like these, based on the information
that you have been learning, the one proposed in the
President's budget in particular, would help address some of
the fraud that we see in the Crop Insurance Program, or can you
talk about any other work your office is doing to address fraud
within the Crop Insurance Program or other subsidy programs for
the authorizers to deal with and to make sure that the
appropriators make sure every penny is spent appropriately?
Ms. Coffey. I have not had a chance to look at the
information that was in the President's budget with respect to
the Crop Insurance Program. I will say that in a general
comment just in terms of both the food assistance programs as
well as the Crop Insurance Programs that we are utilizing data
analytics, and that is really helpful. It is a significant help
for us to be able to identify the fraud that you see, and
obviously there are large dollar amounts.
And what we typically have seen in terms of the Crop
Insurance is that there are usually multiple individuals that
are associated with or engaged in the fraud schemes. It is
usually not just one producer. There is usually an agent, a
producer. There is a very extensive network of individuals that
are involved in those programs. And obviously, we are working
with RMA in trying to identify the fraud. And obviously, we
will be looking at the means testing that was put in place to
see if that would have an impact with respect to perhaps
reducing the fraud.
Mr. Harden. And on our side, we do have an audit in process
that is looking at adjusted gross income requirements for FSA
and NRCS programs. We are in the middle of fieldwork on that
right now, but that may shed some light on those types of
requirements as well.
Ms. McCollum. One of the things that I am finding in the
other committee that I chair with the EPA, we don't have enough
people doing inspections and enforcement. Did you uncover any
concerns about inspection and enforcement and if that needs to
be beefed up no matter what the reforms are?
Ms. Coffey. We have not looked at that. Again, we really
come in sort of at the tail end where there has been an
identification that something has occurred, and we proceed to
investigate to substantiate those allegations. But I will say,
obviously, the use of data analytics has helped significantly
in helping us in that particular aspect. I am not sure if Gil
has looked at that aspect.
Mr. Harden. Not that particular aspect, but a running theme
through a lot of our work is looking at how the agencies
oversee the various programs they have in place. And one of the
main management challenges that we have pointed out year after
year for the Department is maintaining that accountability and
oversight and having the right type of focus not only on
program delivery, because that is very much important, but also
having somebody there in the oversight role knowing that the
money is going where it is intended to go for eligible
purposes.
Ms. McCollum. Thank you.
Mr. Chair, any kind of reform has to have good oversight
with it, and what seems to be a pattern that I am starting to
notice within this administration is that there are jobs that
are posted--there are jobs that could be filled, but they are
never posted to be filled, especially in enforcement.
So just having the number there without having actually
gone out and even sought out the individuals to fill the post
will leave the fraud and abuse no matter what reforms you come
up with continue to happen.
Thank you, Mr. Chair.
SMALL AND DISADVANTAGED BUSINESSES
Mr. Bishop. Mr. Fortenberry.
All right. I have just a couple of questions and we will be
ready to, I think, wrap it up.
Ms. Fong, small businesses are the cornerstone of our
economy, and Federal support is especially important for small
and disadvantaged businesses in rural areas. That is why I was
disturbed to read your audit from last October that found that
over $42 million went to small businesses that could not
support their claim of being certified as small or
disadvantaged businesses. That means over $42 million could
have gone but did not go to businesses that were at least 51
percent owned by a woman, by a veteran, by a minority, by other
socially or economically disadvantaged individuals.
The audit included three recommendations for USDA to help
them do a better job of getting money to those who are actually
eligible. Have you followed up with USDA to see what actions
they have taken, and how confident are you that USDA has
improved in getting much-needed Federal dollars to the
businesses that should be getting this help?
Ms. Fong. Yes, I remember that audit very well. It is a
very interesting situation. As businesses want to get into the
Federal sector, they work with SBA to get certified as to their
status. Then once they are certified, they can participate in
USDA and other programs.
And I think one of the findings that we had was that over
time businesses who may have been eligible initially may have
graduated or lost their eligibility because they grew or
something might have changed. And we saw that there would be a
need there to partner with SBA to figure out how to get to
those situations.
We made some recommendations. It hasn't been 6 months yet.
So I think the agency still has a little bit of time to
implement, but we will be following up on that.
Mr. Harden. But one of the most novel things about that
recommendation was to get that dialogue going between USDA,
asking the questions of people that are part of the program,
and sharing what they will learn with SBA and GSA.
2501 PROGRAM
Mr. Bishop. Well, it is important that we monitor that
closely, because we want to make sure that those dollars go to
the small and disadvantaged businesses as they were intended
to.
The 2018 omnibus included $3 million of discretionary funds
for the Outreach and Assistance to Socially Disadvantaged and
Veteran Farmers and Ranchers Program known as the 2501 Program.
These funds were intended to supplement $10 million of
mandatory funding and be used for grants to support minority
and veteran farmers and ranchers.
Our understanding is that only a third of the $3 million
went to grants, that USDA used over $2 million for training and
for a website. Your current annual plan listed an audit of the
grants awarded with this money.
Can you tell us what the status is of the audit, when the
audit will be completed, and what can you share about whether
the funds were used properly?
Mr. Harden. We can definitely take that information into
consideration as we are planning the scope and objectives. The
original plan for this audit was to follow up on the 2501 Grant
Program, because we had issued two reports in I think 2012 and
2015 where there had been serious concerns with how the program
was run. We would want to, of course, take a look at current
operations to see if they have strengthened the program. That
is slotted to begin I think in the fourth quarter of fiscal
year 2019, so it will be kicked off before October.
Ms. Fong. If you or your staff have particular concerns or
objectives that you would like us to look at, we would welcome
dialogue on that as we design the audit.
Closing Statement
Mr. Bishop. Thank you. Ms. Fong, Mr. Harden, Ms. Coffey,
thank you all for being here today. I know that there are a few
things on which you are going to get back with us. We will also
forward additional questions for the record, and we appreciate
your diligence in getting your responses to us in a timely
manner. Thank you again for your testimony. We look forward to
working with you as we continue the fiscal year 2020 process.
With that, this subcommittee is adjourned.
Tuesday, March 26, 2019.
MEMBERS' DAY
WITNESSES
HON. GLENN THOMPSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF
PENNSYLVANIA
HON. JENNIFFER GONZALEZ-COLON, A DELEGATE IN CONGRESS FROM THE
COMMONWEALTH OF PUERTO RICO
HON. NEAL DUNN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA
HON. SHEILA JACKSON LEE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF
TEXAS
HON. JAMES P. MCGOVERN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF
MASSACHUSETTS
Opening Statement--Mr. Bishop
Mr. Bishop. The hearing will come to order. Let me welcome
everyone and say good afternoon. I am very pleased to have this
hearing and allow Members to present testimony on their
thoughts and priorities for the fiscal year 2020 Agricultural,
Rural Development, Food and Drug Administration, and Related
Agencies bill.
As I remind people all the time, the work of this
subcommittee is far-reaching and it touches the lives of every
citizen and millions abroad throughout our international food
delivery programs, everything from research to conservation to
food safety to domestic and foreign nutrition to food and drug
safety to commodity futures.
So this subcommittee has a lot to consider. We are still at
the beginning of the process, but this is an important day as
we hear from our colleagues. Testifying today, we have a number
of Members from each party that represent different parts of
the country. The subcommittee has a reputation for working
across the aisle, and I expect that bipartisan spirit to
continue this year.
I look forward to hearing from all of you today and working
with us as the process moves forward. And at this time I am
happy to recognize my colleague Mr. Fortenberry for any opening
remarks that he might have.
Opening Statement--Mr. Fortenberry
Mr. Fortenberry. Well, thank you, Mr. Chairman. I really do
appreciate your emphasis on bipartisanship. Agriculture is one
of the areas that can, when there is the will, transcend any
perceived divides. And that is why I think it is good that the
general perception of the public is countered by the way in
which this committee operates under your leadership. So thank
you very much.
I want to also welcome the Members--Mr. Thompson, you are
here first, and others who will join us. Agriculture represents
a cross-section of diverse constituencies and regions affecting
us all. The food security space is an absolutely critical part
of America's public policy and one that is often overlooked.
And yet, as we all saw last year, we came together and passed a
bipartisan farm bill, and now we are in the process of
implementing that.
But it is great to be here again. I thank you for your
emphasis on the bipartisan dynamic of the committee, and look
forward to hearing from our Members.
Mr. Bishop. Thank you, Mr. Fortenberry.
I will now recognize the gentleman from Pennsylvania, Mr.
Glenn Thompson, for five minutes.
Opening Statement--Mr. Thompson
Mr. Thompson. Mr. Chairman, thank you. Chairman Bishop,
Ranking Member Fortenberry, members of the subcommittee, thank
you for your leadership and your service with the
appropriations process. Very much appreciated. And I want to
thank you specifically for the opportunity to be here this
afternoon to share my priorities for the agriculture
appropriations bill for the fiscal year 2020.
The programs under this subcommittee's jurisdiction play an
integral role in supporting our farmers, ranchers, and, quite
frankly, rural America, while also ensuring that America will
always have the world's most abundant, safest, and most
affordable food supply.
As a lifelong Pennsylvanian, agriculture has always been a
critical segment of the Commonwealth's economy. It remains our
No. 1 industry today. However, times have been tough for many
farmers in Pennsylvania and many other farmers around the
Nation over the last decade.
In fact, average farm income has been cut in half for the
past 5 years for a variety of reasons. The dairy industry in
particular has been hit hard over the past decade as we lost
markets, and milk consumption has decreased over that period.
With this in mind, I am pleased that we were able to get the
2018 across the President's desk this past December, and I
thank all of you for your support through the process.
FARM BILL
The farm bill provides strong support for our bedrock
agriculture conservation programs, and that is where I would
like to start. These include the Conservation Stewardship
Program, the Environmental Quality Incentive Program, the
Agriculture Conservation Easement Program, and the Regional
Conservation Partnership Program.
Now, these programs help provide farmers and ranchers the
tools to be able to implement best management practices on
their operations to improve water quality, soil health, and the
environment, along with farm productivity. In short, these
programs are good for the environment and the long-term
sustainability and fiscal health of our Nation's farms and
ranches.
In Pennsylvania we are also continuing our efforts to
restore the Chesapeake Bay watershed, which makes these
programs all the more important. That said, I request full
funding for our agricultural conservation programs and the NRCS
in accordance to the 2018 farm bill.
From conservation to crop insurance and energy programs to
emergency loans, the Farm Service Agency, FSA, provides the
boots on the ground for farmers. Because of this important role
in providing local expertise and outreach, I request robust
support for FSA.
Similarly, we must continue to fund and support agriculture
research and extension activities. Agriculture is science and
technology and today, and we need that support at both our
land-grant universities but also other higher education
institutions.
So much important research is performed at our
universities. But without the necessary funding and resources,
such work would not get out to actually benefit farmers and
ranchers. As such, I strongly support full funding for both the
Agriculture Research Service and the National Institute of Food
and Agriculture.
In terms of Animal and Plant Health Inspection Services, or
APHIS, like all farm areas, Pennsylvania continues to have
serious challenges with invasive species. While we have had
some success in dealing with these threats over the years, our
latest pest wreaking havoc is the spotted lanternfly.
First identified in 2014, this insect has been spreading in
Pennsylvania. It attacks a variety of plants and trees, fruit
trees, hardwoods, hops. And it is a great treat to farmland.
Now, for several years now our State Department of Agriculture
has been working hand in hand with USDA, Penn State, and others
to contain and eradicate this invasive.
Along with this coordination, USDA and this committee have
been supportive with funding. As more work remains, I strongly
urge the committee to support the APHIS work on invasives
through the plant pest and disease program and request
continued resources to deal specifically with the spotted
lanternfly.
In addition, as in other States with prominent cervid
populations, Pennsylvania continues to search for a cure for
Chronic Wasting Disease. For those not familiar with Chronic
Wasting Disease or CWD, it is a neurological disorder impacting
deer, elk, and moose populations, and as the name suggests,
contracting the disease always ends in fatality.
While much research and on-the-ground identification has
been happening in Pennsylvania, Wisconsin, and Louisiana, just
to name a few States, more funding and research is needed to
manage and ultimately cure this disease.
The 2018 farm bill recognizes this issue and actually
includes language I proposed providing priority status for
Chronic Wasting Disease within APHIS animal health programs.
For these reasons I request that the committee provide full
funding for animal disease research, particularly Chronic
Wasting Disease.
And finally, I would like to register my strong support for
the Rural Development and Rural Utility Services programs in
general.
Again, I want to thank you for the opportunity to be here
today, and I look forward to working with you as the
appropriations process for fiscal year 2020 moves forward.
Mr. Bishop. Thank you very much, Mr. Thompson.
Next we will hear from Mr. Neal Dunn of Florida. I am
sorry. Mr. Fortenberry.
Mr. Fortenberry. Mr. Thompson, if you could for just a
moment, all I wanted to do is just thank you for your long
leadership on the Agriculture Committee. You have been a
stalwart there. The voices that represent agriculture in the
Congress have a long continuity of tradition, and you have
carried that tradition very honorably and well. I want to thank
you.
Mr. Thompson. Well, thank you. As you know, agriculture
is--we need a strong farm team.
Mr. Fortenberry. Yes.
Mr. Thompson. And I think we have it through this
appropriations subcommittee and the work of the Agriculture
Committee. That partnership of authorization and appropriations
has always been strong, and I look forward to continuing that.
[The written statement of Mr. Thompson follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Fortenberry. Thank you.
Mr. Bishop. Thank you very much.
Mr. Dunn.
Testimony--Mr. Dunn
Mr. Dunn. Thank you very much, Chairman Bishop, Ranking
Member Fortenberry. I appreciate the opportunity to testify
before you today. I am here to advocate on behalf of our
Nation's farmers, ranchers, and foresters, and the programs
that ensure the continued prosperity of rural America.
Most importantly, and as Chairman Bishop knows all too
well, the Southeastern agricultural economy was absolutely
devastated by Hurricane Michael in this last year. Hurricanes
cause billions of dollars of damage, including $1.5 billion in
Florida alone.
While I remain hopeful that Congress will pass a
supplemental appropriations for fiscal year 2019 as soon as
possible, these disasters illustrate the critical importance of
the farm safety net. We must ensure adequate funding to allow
our producers the certainty that when future disasters occur,
the Federal Government has programs in place to keep them going
until help arrives.
Unfortunately, due to a longer growing cycle, timber
producers many times do not have access to these critical
programs as other farmers do. I look forward to working with
this committee as well as my colleagues on the House
Agriculture Committee to correct this going forward.
I would also like to urge the committee to continue to
prioritize important agricultural research programs like the
Agriculture and Food Research Initiative, and the land-grant
universities' research and extension capacity programs. In
addition, the 2018 farm bill established the framework for
investment in our Nation's research infrastructure.
I support the administration's request for a new $50
million competitive grant program for facilities improvement at
land-grant universities. Programs like this support the
scientific innovation at the institutions like the University
of Florida, Florida State University, and FAMU in Tallahassee.
And there are other great schools, obviously, all over the
country.
Recently, Secretary Perdue announced the first down-select
list of communities across the country vying to host the USDA
Economic Research Service and National Institute of Food and
Agriculture. I strongly support his efforts to ensure that the
USDA is the most effective, most efficient, and most customer-
focused agency in the Federal Government. This decision to
bring important USDA resources closer to many stakeholders and
improve the USDA's ability to attract and retain highly
qualified staff is another great step forward toward achieving
that very goal.
ERS/NIFA RELOCATION
I would also like to commend the Secretary for his
commitment to ensure that no ERS or NIFA employee will be
involuntarily separated during that transition, and I trust
that this committee will provide him with the resources to
honor that promise. I request that the committee support the
transition and ensure that the relocation is completed as
smoothly and efficiently as possible.
Thank you very much, Mr. Chairman, Mr. Ranking Member, and
I yield back.
Mr. Bishop. Mr. Dunn, are you aware that there is a
tremendous amount of opposition to that movement of ERS and
NIFA?
Mr. Dunn. I had a chance to discuss it with Secretary
Perdue, and he was really enthusiastic about it. And he won me
over.
Mr. Bishop. Actually, the committee is going to be holding
a hearing tomorrow on it and we will have, of course, a
representative from the Secretary's office as well as other
stakeholders who will have a say. We will hear from him
tomorrow. So I would like to invite you to come and listen.
Mr. Dunn. I will make every effort to be there, Mr.
Chairman.
Mr. Bishop. Thank you.
Mr. Fortenberry.
Mr. Fortenberry. Thank you, Mr. Chairman. Yes. The Chairman
rightly points out that this is not yet a settled issue. It is
still under debate. We have been forthright in our exchange,
and I have a university system that is vying potentially for
the site. So we have some differing perspectives.
But tomorrow there will be a hearing to unpack objectively
the pros and cons of this and some other considerations. So if
you can make it, I think you might gain helpful insights.
Mr. Dunn. Thank you very much for your concern.
Mr. Fortenberry. Yes. And we remain very grieved by what
happened to your district, and are continuing to try to think
creatively as to the appropriate types of assistance that can
be applied.
Mr. Dunn. It cannot come soon enough, Mr. Ranking Member.
Thank you.
Mr. Bishop. Thank you very much, Mr. Dunn. I appreciate
your taking the time to come and share your interests with us.
Mr. Dunn. Always an honor to be here, sir. Thank you. I
yield back.
[The written statement of Mr. Dunn follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Bishop. OK. At this time we would like to invite
Representative Jenniffer Gonzalez-Colon to the podium--I should
say to the table. Thank you very much.
Welcome.
Testimony--Ms. Gonzalez-Colon
Ms. Gonzalez-Colon. I really appreciate to have the time
today to express our requests coming from Puerto Rico. I am the
sole representative for 3.2 million American citizens on the
island. I do represent them in Congress, so I want to thank
you, Chairman Bishop and Ranking Member Fortenberry, for
actually allowing this to happen.
As you are probably aware, Puerto Rico does not participate
in the Supplemental Nutritional Assistance Program, or SNAP,
like our counterparts in the 50 States, District of Columbia,
U.S. Virgin Islands, and Guam, since 1981. Instead, Puerto Rico
has a capped block grant called Nutrition Assistance Program,
or NAP, which is typically funded to 1.8 to $1.9 billion per
year.
The hurricanes in 2017 revealed the many challenges tied to
NAP, starting with the remarkable difference in the benefits
our people receive. To give you just an idea of the program on
the island, a household of one in Puerto Rico receives $112 per
month, while a household of one in the continental States and
the District of Columbia receives $194 per month.
The amount of funding tied to NAP has proven to be
insufficient, especially in the aftermath of both hurricanes,
when people were experiencing extreme financial hardships.
Additionally, the $600 million that we are requesting for NAP
this year in additional disaster funds--I have been advocating
for that--included both in the House version and in the Senate
version of the upcoming disaster bill are not yet available to
my constituents. And that is the reason the Government of
Puerto Rico is cutting more of those $112 per month to the
beneficiaries so they can receive some kind of assistance.
NUTRITION ASSISTANCE PROGRAM
It becomes clear that we need to improve the Nutrition
Assistance Program on the island. And with this in mind, I am
requesting your consideration for including report language in
the upcoming appropriations bill for the fiscal year 2020
related to the Puerto Rico NAP program.
My first request is tied to the Thrifty Food Plan. The
calculation of our block grant is heavily influenced by the
Thrifty Food Plan calculation of the contiguous 50 States. It
is totally different for Puerto Rico. However, we import more
than 80 percent of the food items we are consuming, and this is
being factored into the price consumers pay when they are
purchasing those items.
The proposed language would require USDA to measure the
cost of the Thrifty Food Plan in Puerto Rico and give us a
better idea of how this calculation will be better addressed
and reflect the reality of purchasing food on the island.
The second request directs the USDA to publish information
of the NAP program on their website. One of the reasons why NAP
is a challenging program for many to understand is due to the
lack of access to reliable data. Having USDA publish
information, including basic program rules, monthly enrollment
and disbursement data, and other program information will
increase the transparency and will inform us on how we
potentially can change the program and improve the program,
make informed decisions.
Like right now, I am pushing for a complete transition from
NAP to the SNAP program for Puerto Rico to have the same way as
the U.S. Virgin Islands, Guam, and DC.
I want to just thank you for the consideration of those
requests. We are pushing for the $600 million for the disaster
bill that are included specifically for NAP for a year. And
believe me, the people of Puerto Rico are really in need.
Thank you, and I yield back.
Mr. Bishop. Thank you very much for your testimony. And I
want you to know that we are very much aware of the specific
needs of Puerto Rico. And I am in agreement with my colleague,
our colleague, Jose Serrano, who is a very strong advocate for
the territories getting equitable treatment with the States.
DISASTER FUNDING
And I know that I have every intention for every piece of
legislation that we offer that offers anything for States that
the territories be placed in the same condition and be treated
with equal dignity. Hopefully we will be able to implement that
policy for the Government because I do understand that it is
not an even-handed treatment.
With regard to the disaster and the $600 million, as you
know, we are doing our very best to get that disaster bill
passed. It is my understanding that the Senate will take up
their disaster bill and will offer that as an amendment to it
either tomorrow or, at the latest, Thursday. We are hopeful
that that will happen.
Of course, the consequences of--I should say the results of
what has happened weather-wise in Nebraska and the Northwest
over the last week is going to require some additional
amendments and considerations for the losses of the grain and
the cattle that occurred there. So that could possibly delay
it.
We hope that it will not. But as of now--I think Mr.
Fortenberry would agree--we do not know what the full estimate
is going to be for Nebraska and for the Midwest. And we expect
that there will be some significant additional damages. And we
are not really in a position to allocate, I believe, an
adequate amount to deal with those disasters.
So I am hoping that we can go ahead and finish the disaster
bill that we passed through the House on the 16th of January,
get that done, and at the appropriate time be able to do
another supplemental to deal with what is inevitable for the
Northwest. It is tragic. There has been a lot of loss there.
And we do not yet know what the full losses are going to be
because snows have not melted, and the waters have not gone
downstream fully, and we are not fully aware of what the impact
is going to be. But we want to get started on that. We are
mindful of that, and our thoughts and our prayers go out to all
of those who are impacted. And of course, as far as Puerto Rico
is concerned, we hope that we can get that taken care of
forthwith.
Ms. Gonzalez-Colon. Thank you, Mr. Chairman. I want to
express the same solidarity with our brothers and sisters from
Nebraska. We know how difficult it is. In any way we can help,
not just with prayers but with actions, we would be more than
glad.
And I want to thank the committee, this committee, for
actually approving the first $600 million. And we have been in
conversations with the Senate side, with Senator Perdue and
Secretary Scott, to the $600 million that are included already
in the Senate version.
I would love to have the Senate version approved, and then
in the conference we can put together whatever is missing,
because at this time the bill is at a standstill and the people
are not receiving the same benefits, even we receive less than
the rest of the people living on the mainland. But thank you
for that.
[The written statement of Ms. Jenniffer Gonzalez-Colon
follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Bishop. Mr. Fortenberry.
NEBRASKA FLOOD DAMAGE
Mr. Fortenberry. Thank you, Mr. Chairman and Ms. Gonzalez-
Colon, about the people I represent and others who are so
adversely impacted by this flooding.
I will tell you a quick story. I was in a place called T-
Bone Cafe, which is in Columbus, Nebraska. And I saw the
``before'' pictures before I got there. The wall had a line
about 4-foot high where the water and muck came in, and it was
just an absolute disaster.
By the time I got there, though, a lot of things had been
shoveled out and cleaned up. And they looked at me and said,
``This is T-Bone's. We do not mess around. We are Nebraskans.
We get it done.'' Right outside of there they have good humor;
there is a sign on the fence that said, ``Mud wrestling
tomorrow.'' [Laughter.]
But of course you ride down the road a little bit and there
is dead cattle on the side of the road. You are exactly right,
Mr. Chairman. The ag losses are going to mount. It is unclear
as to what they were, as people just pull themselves together
and start cleaning up.
The Air Force base there, which I represent, Offutt Air
Force Base, was a third underwater. I am not sure many people
realize that here. It did not affect our readiness, as planes
were able to be moved. And that facility also houses Strategic
Command, which is our nuclear nerve center, which was
unaffected, thankfully.
But nonetheless, the damage is very high and real. I think
the chairman has it right. There is movement in the Senate to
add potentially some new language that will make a
conferenceable item with what we did in the House, or the House
did last year. And then maybe all of this gets tied up. If
there is some good news out of bad, I think additional problems
actually perhaps create more momentum to get something done
quickly.
In regards to your testimony about report language, what
you said seemed to me to be eminently reasonable. So I hope
that we can potentially work with you on that, and that may
land in the bill. And thank you. I do not think most people--do
you mind if I reference you as Jenniffer?
Now, we were talking this morning. Jenniffer represents 3.2
million people. Now, you get to run every 4 years; it is a
little bit different. But 3.2----
Ms. Gonzalez-Colon. I will change that in a minute if I can
vote on the floor. [Laughter.]
I do not mind that.
Mr. Fortenberry. Every 4 years. Right? But the enormity of
her job, to represent that many constituents, only elevates my
respect for her intensity to continue to be engaged here at the
table. So thank you very much.
Ms. Gonzalez-Colon. Thank you.
Mr. Bishop. I might point out that one of the problems with
the Senate bill that I hope that we can fix in conference or
prior to the time they bring it to the floor is that they do
not add any additional money for the Nebraska or the 2019
disasters. And that is a problem because we were hardly able to
adequately fund relief for the 2018-2017 storms that we need.
And of course, we have got to add some additional resources
to make good on our capacity to help the folks in the Midwest
and Nebraska as well as the people who are already long-waiting
in a critical stage for relief from the hurricane that occurred
back in the fall of 2018.
So we have got to do that, and we have got to do it
quickly. People in the Southeast are at planting season right
now, and if we do not get this bill passed, we are soon going
to have a lot of people that will not be able to plant, will
not be able to service their operation loans from last year,
and will find themselves out of business.
Lenders are very, very concerned because they do not know
what to do. They do not know what resources will be available
to give to the farmers who will then be able to service that
debt. So we have got a real critical situation, and I am
hopeful that by the end of this week that we can have it
addressed and get something to the President for his signature.
Ms. Gonzalez-Colon. I agree with that, Chairman. And I just
want to add my being very grateful to you guys and for
Congressman Jose Serrano. I know he is not running for
reelection after yesterday's announcement in the family, having
the Parkinson's disease.
But he has been a great advocate for the people of Puerto
Rico for many, many years. And he has always been more than a
friend to me, like a mentor. He has been helping us out on
equality issues across the island for many, many years. And I
know everything that we have managed to include during the last
5, 10 years has been because of his hand in the committee.
So please, I want to thank him, but I want to thank all of
you for having Puerto Rico in your hearts.
Mr. Bishop. Thank you.
The committee will stand in recess.
[Recess.]
Mr. Bishop. The committee will come to order.
We welcome Mr. McGovern. We know that you have a very busy,
busy schedule, and so we appreciate your being able to break
away and come and to spend a little time with us.
Mr. McGovern. Thank you.
Mr. Bishop. And we would be happy to entertain whatever
thoughts you may have on our 2020 appropriations bill review
process.
Testimony--Mr. McGovern
Mr. McGovern. Thank you very much. So, Chairman Bishop and
Ranking Member Fortenberry, and my colleague Mr. Pocan, and
members of the Agriculture Subcommittee, thanks for allowing me
to testify here today. I appreciate it.
As your subcommittee begins drafting the appropriations
legislation, I strongly urge you to provide robust funding for
programs that work to end hunger across our country. You know,
as one of the--we are the richest country in the history of the
world, and yet we have close to 40 million Americans who are
food insecure, who do not know where their next meal is going
to come from.
And I believe that hunger is a political condition. I think
we have the power and the resources to end hunger in the United
States. What we need is the political will.
A few weeks ago, I testified before the Budget Committee in
support of the Supplemental Nutrition Assistance Program, known
as SNAP, which is a mandatory program. I urged the committee to
protect the structure of SNAP, which is our Nation's first line
of defense against hunger, and oppose any efforts to diminish
participation of able-bodied adults without dependents.
Today, I urge this committee to provide at least $3 billion
for the SNAP contingency reserve account to ensure that all
participants have continued access to benefits, even if the
program incurs unanticipated expenses or events.
The Special Supplemental Nutrition Program for Women,
Infants & Children, WIC, provides 6.8 million low-income
pregnant and parenting women and children access to nutritious
food, education, and other services. And I strongly urge the
committee to continue to fully fund WIC at $6.1 billion,
including, at minimum, $67 million for the breastfeeding peer
counseling program.
I also want to highlight the work of charitable
organizations like our food banks in alleviating hunger across
the country. But the truth of the matter is, Mr. Chairman,
charities alone cannot solve hunger. It takes a strong federal
commitment as well.
The Emergency Food Assistance Program, known as TEFAP,
provides highly nutritious food that food banks pair with
donated items to craft packages for their clients. Although
TEFAP commodities funding is mandatory, TEFAP storage and
distribution funds are discretionary, and I urge the committee
to continue to provide robust funding for the storage and
distribution account.
FUNDING FOR NUTRITION PROGRAMS
I also urge this committee to increase funding for
nutrition programs administration. Staff morale at the U.S.
Department of Agriculture's Food and Nutrition Service has
shown need for improvement in recent years. Staff at FNS are
largely focused on SNAP integrity.
But at the same time, other programs, including child
nutrition and regional operations, often suffer. I urge this
committee to continue to provide robust funding for nutrition
programs administration, so that they can expand adequate
coverage to all of their programs.
Mr. Chairman, I just would like to next say a few words
about our international food aid programs. As you know, I led
the effort to create the George McGovern-Robert Dole
International Food for Education and Child Nutrition Program.
Congress established the program in the 2002 farm bill, and
since that time it has provided literally millions of the most
vulnerable children in the world with a nutritious meal in a
school setting for over a decade.
Each year, USDA receives more proposals than it can fund,
highlighting the need to expand the program, rather than reduce
or eliminating funding.
I have visited many McGovern-Dole programs in Latin America
and Africa, and you may have as well. I can testify that these
programs advance the health and productivity of children, they
improve their school performance, increase attendance rates,
especially among girls, and solidify community support for
education, health, and nutrition.
And I am very grateful to this committee for maintaining
level funding or providing modest increases each fiscal year,
often under very tight budget constraints. For fiscal year
2020, I and many of my colleagues on both sides of the aisle
are asking for $235 million for McGovern-Dole, an increase of
$25 million.
FOOD FOR PEACE
Second, Public Law 480, Title II, Food for Peace, is our
most important humanitarian food aid program, as well as
supporting projects that address chronic food insecurity. As
the world faces its greatest refugee crisis since World War II,
and increasing numbers of natural disasters, we cannot cut
funding for this program. It is simply unfathomable to think
otherwise.
This program supports American farmers, whose commodities
literally save tens of millions of lives each year. The program
is now even more effective in getting food to those in need
rapidly and effectively, combining Meals-Ready-to-Eat,
vouchers, cash grants, local purchase, and U.S. commodities.
And for the past couple of years, Food for Peace has
received about $1.7 billion each year. And for fiscal year
2020, it needs to receive at least that level funding, and I
would recommend a more substantial increase to $1.9 billion,
given the many existing crises requiring urgent attention and
the knowledge that more are surely likely to come in the next
12 months. McGovern-Dole and Food for Peace advance U.S.
national interests and reflect the very best of American
values. I urge continued, robust funding, and marked increases,
if possible, for each.
APHIS FUNDING
And, lastly, Mr. Chairman, I just want to speak briefly
about another issue unrelated to food and nutrition. Since
2008, my hometown of Worcester, Massachusetts, has been dealing
with the largest Asian Longhorned Beetle infestation in North
America. More than 35,000 trees have been cut down, and
eradication and replanting efforts continue.
I urge this subcommittee to provide at least $54 million
for tree and wood pests under USDA's Animal and Plant Health
Inspection Service, including at least $42 million for efforts
to eradicate the Asian Longhorned Beetle, ALB, with no state or
local cost share requirement.
I can just tell you that my neighborhood was literally
transformed overnight. When I left for Washington one day,
there were trees everywhere. When I came back, it was--I could
not see a tree in sight. That is how dangerous these Asian
Longhorned Beetles are. And we have made progress, but we need
to make sure they do not return.
And I would just say, finally, you know, I think that the
best of America is in our--is represented in our food and
nutrition programs. And I think without them, you know, we
would see hunger around the world increase dramatically, and we
would see more instability around the world. So I think these
are smart investments, and I thank you for your consideration.
Mr. Bishop. Thank you, Mr. McGovern. I think over the past
several years this subcommittee has been very thoughtful in
supporting both of those programs and the SNAP program as well.
The nutrition programs are vital. It is a key part of our
mission, and I think the committee has been very supportive.
And that has been on a bipartisan basis.
I think last year I was the ranking member, Mr. Aderholt
was the chair, and we worked very well in trying to assure
adequate funding for both programs. And I think we were
successful in doing that, and I am hopeful that this year we
can continue to support them. They are sound programs. They do
a lot for the people that are the recipients, but they also do
a lot for us in terms of our foreign policy, so I will be
supportive.
Mr. Fortenberry.
Mr. Fortenberry. I just want to thank you, Mr. McGovern,
for your long-held advocacy in this ever-critical space of food
security. And we call it the farm bill, but it really is about
food security, risk mitigation, processes, policies for our
farmers and ranchers, and for those who are in vulnerable
circumstances, access to nutritious, good food.
So I recall fondly the days when we worked together in
leadership on the Nutrition Subcommittee on Ag. But, again,
appreciate your passion and consciousness around this most
critical of American issues. Thank you.
Mr. McGovern. I appreciate that. And I just want to point
out, you know, these programs are not extravagant. The average
SNAP benefit is about $1.40 per person per meal, and most SNAP
recipients end up going to food banks midway through the month
in order to have enough food for their families.
So, you know, these are vital and as I said before, I mean,
nobody in this country should ever have to go hungry, and I
think this program goes a long way in dealing with that.
Mr. Bishop. Thank you very much, Mr. McGovern.
Mr. McGovern. Thank you. I appreciate it. Thank you.
[The written statement of Mr. McGovern follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Bishop. All right. At this time, I am happy to
recognize the gentlelady from Texas, the Honorable Sheila
Jackson Lee, one of the most hardworking members of this
Congress.
Welcome, Ms. Lee, to our subcommittee, and we would be
delighted to hear your thoughts about 2020 appropriations
process for agricultural development, Food and Drug
Administration, and related agencies.
Testimony--Ms. Jackson Lee
Ms. Jackson Lee. I thank the chairman for his gracious
comments, and to the ranking member. I have had the opportunity
to work with both of you, as well as my chair, Mr. Pocan, on
the CPC. But let me just say that my view of America is that we
are the breadbasket for both our Nation and around the world.
And over the years, I have worked with so many
organizations dealing with the issue of hunger. And certainly
there--more to that, as I look at your regulation over food and
drug, I am reminded of an incident that is occurring with those
of us who have been breast cancer survivors in the utilization
of a certain implant that has caused great illness or
recurrence of breast cancer.
So your appropriations is important on many levels, and I
want to thank you for your very important work. I also want to
thank you, generally speaking, for your important work for
farmers and for the agricultural community. Interestingly
enough, my district, as large as it is, has been--have added
areas that can be subjected to the rural development funding.
And I can assure you that is powerful to small communities.
So let me just quickly say that I am supporting the $85
billion for Supplemental Nutrition Program. I would always
argue for more because SNAP is a cornerstone of the Nation's
nutrition assistance. It is a safety net, and it really goes to
the question of hunger. Many of you know my predecessor, the
Honorable Mickey Leland, who was the founding co-chair with
Congressman Emerson, the late Congressman Emerson from the
Midwest, to deal with hunger in America. We are still there. We
are still there.
FUNDING FOR NUTRITION PROGRAMS
I support $6.5 billion for Special Supplemental Nutrition
Program, the WIC Program, and I think I heard Mr. McGovern say
that these are not handout programs. These are programs that
give families--in equal stair steps for families who get it
just automatically because of their status in life. They
provide for their infants, their children. They provide good,
clean milk for their infants and toddlers, and we need to do so
for our children who are not as economically advantaged.
I support $329 million for Emergency Food Assistance, and I
support $55 million for USDA Summer Electronic. Let me say to
you that during Hurricane Harvey, my community, people were
starving. I am being very frank with you. They were not able to
access, either because of their resources, the devastation of
their home, this catastrophic event.
And thank you to the state, working with the U.S.
Department of Agriculture, to be able to give us that emergency
disaster food dollars. And we served, in addition to those who
had already gotten it, when we determined that people were
still in need around the October timeframe, we were able to
provide 30,000 more new people, because of these resources, the
ability to access food that took them through the November and
December timeframe. This is a lifeline to people, and I attest
to its importance.
I support $35 million for grants under section 105 that
deals with--and $22 million for the Senior Farmers Market
Nutrition Program. And this provides low-income seniors with
coupons that can be exchanged for eligible food.
I support the $240 million for the Commodity Supplemental
Program used in my district, and I support the $100 million for
the TEFAP storage/distribution, $36 million for the pollinator,
which focuses on research and decline in pollinator
populations, and I support that, most notably that of
commercial honeybees.
I support the $62 million for the Evan Allens Program that
deals with awards to African Americans in agriculture. We have
black farmers in Houston and Texas, and I have worked with them
over the years.
I support $35 million for the Healthy Food Finance
Initiative, and then I support all of the programs dealing with
animal protection, national veterinary medical at $6.5 million,
$70.5 million for horse protection, and $28.7 million for the
Animal Welfare Act.
As relates to the rural development, the $350 million for
Commodity Futures trading I support, and I support the $40
million for the Hispanic-Serving Agricultural Colleges, which
we worked together with my colleague who was here previously,
we worked on HSIs--will play a critical role, crucial role in
addressing this education, enrolling 57 percent of the Hispanic
college students.
I support the $16.9 million for the USDA Circuit Rider
Program, and I certainly support the work that the agricultural
funding is doing for the HBCUs and working extensively with
them, and I know your commitment.
CHILDHOOD HUNGER
Finally, let me say, as I mentioned, I am the successor to
the Honorable Mickey Leland, so we have been talking about
hunger for a very long time. It is tragic that there are
children that go to bed hungry here in the United States, and
anything that we can do to provide--I will use the word
``small'' not because it is small, but because in the measure
of the largest of this appropriation, the largest of this
budget, and the largest of our economy here in the United
States, to stop these children from going to school and going
to bed without the right kind of nutrition.
I am an almost predominantly--one of my school districts,
Title I school, we have breakfast, lunch, and dinner. It is
only through your funding. And in the summertime, we are able
to open our parks to feed our children only through this
funding.
And I believe that was Mickey's passion. Of course, he saw
hunger around the world, but it was his passion that people not
go to bed hungry. As you know, he organized the Mickey Leland
Hunger Center. That is still going, training young people how
to deal with hunger in terms of going into communities and
finding creative ways to not have to have people suffer because
of their status, their economic status, or non-status, and
their ability to provide for their family.
And it should be made known that people do not do this
purposely. They do not do this purposely. They do this because
they are in need.
My final point is I represent something called the
Interfaith Ministries. They are the largest Meals on Wheels
Program, which is so very important to our seniors. And I have
gone out with the meals, knocked on doors, and see what a vital
program the Meals on Wheels Program is.
So I want to thank you for your work. I have tried to cover
things that are so important to my constituency, but as you
support our farming industry, our small farmers, large
entities, I think it should be reminded that you are feeding
people who otherwise would not eat without the various programs
that are under your umbrella and the rural development that
helps so many communities like mine get an ambulance and help
build a devastated police station after the hurricane. Small
towns that benefit from these programs.
Thank you.
Mr. Bishop. Thank you very much, Ms. Lee. You were very,
very thorough. You touched upon all of the programs, and you
certainly remind us that we live in a country where we produce
the highest quality, the safest, the most abundant, and the
most economical food and fiber anywhere in the world. And there
is absolutely no reason why we should have food deserts, or why
there should be hunger.
And I hope through this committee and the subcommittee that
we will do our dead-level best to try to reduce that and
eliminate it, is possible, so that we can really have a healthy
nation, and that we can have healthy people, and we can help
our friends outside of our country to be healthy also.
So thank you very much for your comments, and I yield to
Mr. Fortenberry for any comments that he might like to make.
Mr. Fortenberry. Well, let me echo what the chairman just
said in terms of your breadth of not only understanding but
advocacy for a whole range of agricultural policies that are
essential to both sides of the agricultural question.
The idea of the support mechanisms that create the
conditions by which we have the lowest grocery prices in the
world, and yet combining that with the humanitarian impulse
that Americans have to help those most in mind, to the idea,
you are exactly right, of seeing or hearing about a child going
to bed hungry in America is heart wrenching, given our
abundance and largesse, and yet, at the same time, we respond
because we have the capacity to respond and the humanitarian
impulse to do so as well.
So thank you for reminding of that essential public policy
that is borne out of conscience.
If I could divert one moment. You talk about your
interfaith ministry work, how is Pastor Rudy?
Ms. Jackson Lee. Doing very well.
Mr. Fortenberry. Do you remember when I told you I met him
on a plane?
Ms. Jackson Lee. Yes. Yes. Rudy Rasmus----
Mr. Fortenberry. Is his part of this?
Ms. Jackson Lee [continuing]. St. John's--yes--trying to
build more housing for the unhoused, actual homeless people on
the streets.
Mr. Fortenberry. Would you give him my regards, please?
Ms. Jackson Lee. I will certainly do so. Still working.
Let's put it that way.
Mr. Fortenberry. Is he? All right.
Ms. Jackson Lee. Still working.
Mr. Fortenberry. Thank you very much.
Ms. Jackson Lee. Still working, still feeding, still
working.
Mr. Bishop. Mr. Pocan.
Mr. Pocan. Nothing really to add, other than Ms. Jackson
Lee is such a fierce advocate for her values. Thank you,
Sheila. I appreciate it.
Ms. Jackson Lee. Thank you very much. Thank you for the
time.
Mr. Bishop. With that, I think we have----
Ms. Jackson Lee. Thank you for your patience.
Mr. Bishop [continuing]. Completed our business, and this
committee will stand adjourned.
[The written statements of Ms. Jackson Lee and Mr. Posey
follow:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Wednesday, March 27, 2019.
OVERSIGHT HEARING ON U.S. DEPARTMENT OF AGRICULTURE'S PROPOSED
RELOCATION OF THE ECONOMIC RESEARCH SERVICE AND THE NATIONAL INSTITUTE
OF FOOD AND AGRICULTURE
WITNESSES
KRISTI J. BOSWELL, SENIOR ADVISOR TO THE SECRETARY OF AGRICULTURE, USDA
GALE A. BUCHANAN, PH.D.
JOHN E. LEE, JR., PH.D.
KATHERINE SMITH EVANS, PH.D.
CATHERINE E. WOTEKI, PH.D.
Opening Statement by Mr. Bishop
Mr. Bishop. Good morning. I would like to welcome everyone
to today's hearing. Today we will hear from two panels as we
discuss the department's proposal to relocate the Economic
Research Service, ERS, and the National Institute of Food and
Agriculture.
On our first panel, we will have Ms. Kristi Boswell, senior
advisor to Secretary Sonny Perdue. She advises the Secretary on
a wide array of issues, including intramural and extramural
food and agriculture research, and she interacts with all
levels of USDA management and stakeholders in the food and the
agriculture community.
Our second panel consists of four senior, former USDA
officials. Two are former Under Secretaries for Research,
Education, and Economics and two are former Administrators of
ERS. Combined, they have 70 years of experience at USDA. They
bring unparalleled understanding of the agencies' operations.
All of our witnesses' insights will be valuable to the
Subcommittee as we discuss the Department's proposal, and I
would like to thank you all for your participation here today.
Last August, with very short notice, employees and
stakeholders heard that the department announced a plan to
relocate ERS and NIFA outside the National Capital Region.
Since that announcement, this committee has heard from many,
many stakeholders. But to date there has been little or no
debate of the proposal in a public forum.
So despite multiple requests for information, USDA has
continued to move full speed ahead. And at the moment, there
appear to be far more questions than there are answers. And of
course, since the proposal was announced last August, we have
sent written communications and held phone calls and meetings
with USDA and the Secretary and asked for more information, and
we have continued to air our concerns about the lack of
justification for the proposal and the lack of a cost-benefit
analysis showing that it is a good move. In fact, I cosponsored
a bill to stop the move, and we included report language in the
2019 Omnibus Appropriations Bill--all of that to no avail as
USDA continues to move forward.
That is why we are holding this hearing today. And in fact,
it would be irresponsible for us not to have a hearing on this
proposal because it has far-reaching implications. Today we
will drill down deeper and examine USDA's intentions and any
analysis that was done by the Department about the consequences
associated with relocating NIFA and ERS.
I am concerned that the method for rolling this proposal
out, and the lack of clear, transparent communication with ERS
and NIFA employees, has already done irreversible damage to the
Department's reputation. I am concerned that the cost-benefit
analysis and input from stakeholders was not done prior to the
decision. There are questions of how the Department will
attract and retain highly qualified staff for ERS and NIFA if
its current workforce loses trust in its leadership.
One of the justifications the department provided for the
proposal is that it will place important USDA resources closer
to its stakeholders. However, neither the public nor
stakeholders were given the opportunity to weigh in and
comment. Further, wherever you relocate those agencies, it
would be inconvenient for someone. Stakeholders who have
limited resources for travel, such as schools and universities,
our land-grant schools, moving the agencies outside of DC would
mean additional expenses they would have to incur in order to
maintain collaboration.
Now, let me suggest that in deciding where to locate a
Federal agency, it should be the purpose and the mission of
that agency, and the mission of the agenda can best be
accomplished. And we understand that not all Federal entities
have to be located in the Nation's capital.
In the case of ERS, there were reasons 50 years ago for
some of its staff to be located away from Washington in the
department's agriculture, economics, and land-grant
universities. And those staff worked mainly on economic
adjustments that were faced by small and family farms.
But huge changes have taken place in agriculture, and farms
are large and efficient and farmers now get their management
and marketing technology information from private and public
sources worldwide. What they need most today is the unbiased
data and the research that provides the bigger picture, the
larger economic context within which business decisions are
made.
What are the trends in global markets? What factors will
affect those trends? How do policies in other countries affect
market opportunities? How do changes in patterns of consumer
behavior change market opportunities for producers in various
commodities?
The answers to these and hundreds more questions like that
need to be known and understood by decision-makers in all parts
of the trillion-dollar food industry as they consider their
management strategies and long-term investments. And it is
equally important that Federal policy-makers know the answers
to these same questions as they consider--as we consider--
policy effectiveness, changes, and alternatives just to
understand what is happening in our food system.
This is what ERS does, and ERS is very heavily linked to
other Federal agencies that both supply and use ERS information
and research. There are regular staff interactions, sometimes
through joint working committees, with examples of the Commerce
Department, Defense Department, intelligence agencies, Bureau
of Economic Analysis, Energy, Census, and multiple USDA
agencies.
Partly through these interactions, ERS remains constantly
reminded of the key policy issues and industry concerns, all of
which help shape the ERS research priorities. The data and the
research produced by ERS inform USDA officials and USDA
agencies, Members of Congress, and food and agriculture
organizations that are headquartered in Washington. In short,
moving ERS out of the Washington area will move it away from
its most direct stakeholders and strategic partners.
Let me say that, Ms. Boswell, in your testimony, you
acknowledge there were missed opportunities to engage
stakeholders. And referring to this as a missed opportunity is,
I believe, an understatement.
The biggest unknown of this proposed relocation is what
analysis the department has done that shows a benefit to
stakeholders, department efficiencies, and any potential
savings. Instead of providing hard data, the department asserts
that there will be savings, and we are not sure how that is
going to be determined. I also find it ironic that a proposal
involving research and data-driven agencies that keep our
Nation well-informed with objective, well-researched data on
agriculture in this country and in the global sphere seems to
have no hard data supporting it.
If this move were to happen, there is no question that it
will disrupt normal operations at each agency. Our Nation's
agriculture industry cannot afford delays to the vital economic
data that ERS provides and the technological innovations that
researchers and universities develop through NIFA support. We
must be really careful not to give our farmers and researchers
a raw deal by possibly weakening a well-established
infrastructure for research that has kept American agriculture
number one in the world.
Finally, the Department has proposed to realign ERS under
the Chief Economist. Our focus today, however, is on the
proposed relocation because Congress has spoken on that issue
in the 2019 omnibus.
I want to make very clear that my strong opposition to the
realignment is not conflating realignment with relocation for
the purpose of halting progress on relocation. I, along with
many others more knowledgeable than I, believe that the
relocation of these two agencies is simply a bad idea.
So for today, I would like to welcome a robust discussion
on this issue, and I know there will be continued interest as
we move forward. I deeply appreciate your interest and your
active participation.
With that, I would like to ask our distinguished ranking
member, Mr. Fortenberry, if he would like to have an opening
remarks. Mr. Fortenberry.
Opening Statement by Mr. Fortenberry
Mr. Fortenberry. Yes, Mr. Chairman. Thank you very much for
convening this very important discussion and hearing today. Ms.
Boswell, welcome. I understand you are from Shickley? Yes. I
was hoping that you might be in the 1st Congressional District,
we just missed you, but it is the neighborhood. Welcome to the
hearing.
When the USDA rolled out this proposal last August, the
department, it is my understanding, has generated interest from
136 locations from around the country, and is now down to 68.
In response to the proposal, USDA energized a handful of
groups, mostly in DC, in opposition.
I believe that the concept Secretary Perdue proposed could
produce positive outcomes and results, but you do clearly, as
the distinguished chairman said, have some work to do to
convincing all members of the merit of the proposal.
I should in full disclosure, state that I have signed a
letter, along with the Nebraska delegation, commending the
prospects for the proposal and asking that we be given due
consideration in Nebraska because Nebraska would be good, we
think. But we could perhaps submit that to the record, along
with a letter here from I believe it is 35 members--is that
correct--35 members on the minority side supporting the
proposal who sit on the Agriculture Committee.
While there might be some higher priority matters for the
subcommittee to consider, such as international trade or
biotech foods or the safety of imported food or medical
products, I do agree that it is important for us to have this
hearing and review the proposal today. As I mentioned to the
chairman yesterday, my goal here is to have a fair and open
discussion of the merits of the move.
So I would like to acknowledge some other USDA actions and
proposals related to this relocation in order to give a full
context. To Secretary Perdue's credit, he has taken a number of
actions over the past two years to increase effectiveness at
the department and improve the delivery of services to our
constituents, from farmers.gov to the merger of the Grain
Inspection and Packers and Stockyards Administration, GPSA,
into the Agriculture Marketing Service, to the Farm Credit/Farm
and Production Service Center consolidation.
It is important to note that the proposed relocation of
NIFA was prompted by the agency losing its office space by the
newly remodeled harbor on the Potomac River, and new office
space at that location would not be economical, and the
Economic Research Service in a very costly office space, much
higher than other rates in the field.
The idea of moving out of Washington, DC is not a
Republican idea. The idea has been floated, past and present,
by both parties; in fact, one of the members of our current
Appropriations Committee once said, ``The technology available
to us today allows for seamless communication and collaboration
regardless of geographic location, and is already allowing a
web of Federal offices and agencies across the U.S., such as
the Centers for Disease Control in Atlanta, to perform their
work without being inside the DC Beltway.''
I believe, again, given the diversity and dispersement of
agricultural production around the country, again, it lends
itself to the prospect of a dispersement of the USDA as well.
I also want to point out that Congress included report
language accompanying the final fiscal year 2019 appropriation
law. The language requested further documentation in the fiscal
year 2020 budget to justify this move. And to my knowledge, and
the chairman and I discussed this yesterday, we are still
waiting for some information and expect USDA to promptly
deliver supporting documentation when it is available.
It is also important to note that neither the 2019
agricultural appropriation nor the 2018 farm bill forbade the
USDA from moving forward with this proposed relocation when
Congress had the opportunity to actually prohibit it.
So the department has an opportunity now to convince more
Members of Congress that the relocation is the right thing to
do, both from an efficiency standpoint and benefit to service
delivery. So we look forward to hearing from you today.
I yield back, Mr. Chairman.
Mr. Bishop. Ms. Boswell, I invite you to give whatever
statement you would like on behalf of the proposal representing
Secretary Perdue. Thank you very much for your participation,
and the floor is yours.
Testimony by Ms. Boswell
Ms. Boswell. Mr. Chairman, ranking member, and members of
the committee, thank you for providing me the opportunity to
testify before you today.
USDA is committed to being the most effective and efficient
customer service department in the entire Federal Government,
and as a result, we have looked critically at the way we do
business. As part of that department-wide evaluation, USDA
assessed the Economic Research Service and the National
Institute of Food and Agriculture's mission functions and
operating courses within each agency.
That review led to the 2018 announcement to begin the
process of relocating most of ERS and NIFA outside of the
National Capital Region. That announcement resulted in 136
expressions of interest from 35 States. USDA has retained Ernst
& Young to assist in those relocation efforts.
Briefly, I would like to mention that in August, we also
announced the intent to realign ERS from the Research,
Education, and Economics Mission Area to the Office of the
Chief Economist. While the focus of this hearing today is on
the proposal to relocate, we generally believe those opposing
realignment appear to be conflating realignment with their
opposition to relocation.
USDA is committed to answering any continued questions
about the proposal for realignment, but appreciates the
committee's recognition that these are two separate issues and
bifurcating them today at this hearing.
Improving mission function and limiting impact on our
current employees during the transition are top priorities for
USDA. The relocation allows ERS and NIFA to be closer to the
broad array of customers and stakeholders who live and work
outside and DC so that our team can hear ground-level upcoming
issues and developing research needs.
Significant research priorities and issue development occur
outside of Washington, DC. USDA could have and should have been
more agile in setting priorities to address emerging issues
like farmer stress and mental health, organic research and
extension development, and rural prosperity and hardship.
We also recognize that both NIFA and ERS have many
stakeholders here in DC. To that end, we have identified
critical functions that will remain in the DC area to fill
these important roles, and we have recently shared that
information with employees.
Relocation will also improve our ability to attract and
retain highly qualified staff with training and specific
interest in agriculture, many of whom come from our land-grant
universities. Additionally, much of the recruited talent are
new Ph.D. and Masters graduates.
The well-documented and empirically understood high cost of
living and long commutes of DC limit the ability for some to
take these jobs. In a new location, employees will be able to
live closer to their workplace, lower their commute times, and
improve their overall quality of life.
Additionally, the decision to relocate will benefit the
American taxpayer, ultimately allowing for savings on
employment and facility costs, which can be more effectively
put straight back into research and programs and allow more
employees to be retained in the long run, even in the face of
tightening budgets.
The heart of any agency is its people. The talented
employees of both ERS and NIFA provide our customers valued
service and research every single day. Each of those permanent
employees will have the opportunity to relocate and remain in
their position at a new location, and we hope that many do.
However, we know that this process is hard, and we know
that we are affecting real lives and we are affecting real
families. And that is not something that we take lightly. We
are engaging our employees throughout every step of this
process in the site selection analysis, and is why we have
established what many have called an ambitious timeline to
limit this limbo period of uncertainty.
Lastly, USDA would like to directly address some
misconceptions that you may hear today. First, we are confident
that both ERS and NIFA will remain trusted and objective
sources of information for the food and ag sectors, and ERS
will remain a Federal statistical agency. We only need to look
at the Centers for Disease Control and Prevention as a clear
example of a leading, respected, objective scientific agency
that resides outside of Washington, DC.
Second, this decision was not made rashly. The August
announcement was the beginning of a still ongoing process led
by an expert team at Ernst & Young to perform the site
selection analysis. USDA values stakeholder input in this
process immensely, and since the August announcement has
consistently met with stakeholders, answered questions, and
provided for opportunity for feedback at REE listening sessions
to ensure those concerns are reflected in the complete
evaluation.
Those efforts have occurred at the Secretary, deputy
secretary, mission, mission area, agency leadership, and staff
levels. We are confident that the completed analysis will show
we can be more efficient with our dollars and be in a community
that provides for a high quality of life for our employees.
Third, attrition during this transition period is something
that we too are monitoring closely to ensure we are delivering
our mission effectively. We cannot reiterate enough how much we
value ERS and NIFA employees and the work that they do. We plan
for a rolling transition of staff to the new location, and have
already begun focused hiring to fill any vacated positions to
ensure as little disruption as possible.
In closing, we fully believe that by relocating, we can
better carry out our mission, placing more dollars on research
than overhead, and providing a better quality of life for our
employees. Moving forward, we will continue to implement this
process in the most transparent way possible, and will continue
to keep Congress apprised every step of the way.
Thank you for the opportunity to present this testimony. We
look forward to a continued dialogue and answering the
committee's questions.
[The information follows:]
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REALIGNMENT OF THE ERS
Mr. Bishop. Thank you very much. Let me begin the
questioning. I will go to the realignment first. Perhaps we
will not dwell on that too long.
ERS, as I understand it, removing it from Research,
Education, and Economics and putting it under the Chief
Economist would appear to reduce assurances of the scientific
integrity and the objectivity of the ERS statistics and
research, and perhaps would threaten the accuracy of its
statistical products.
It is my understanding that the Code of Federal Regulations
says that the Office of the Under Secretary for Research,
Education, and Economics and the Chief Scientist is explicitly
and exclusively charged with upholding scientific integrity.
And a number of actions by various REE undersecretaries have
countered attempts to prevent or delay publication of ERS
research reports or statistical updates.
By contrast, the delegations of authority to the Chief
Economist's Office have no such responsibility for scientific
integrity, and in fact, it requires consideration of the USDA
secretarial policy positions via the requirement that the Chief
Economist's Office ``oversee and clear for consistency analyst
assumptions and results of all domestic matters applying to
man, including such estimates and analyses prepared for public
distribution by the Foreign Agriculture Service, the Economic
Research Service, and by any other agency of the department.''
Those seem to be pretty distinct responsibilities. And I
would think that to move the agency under the Chief Economist
would make it have less integrity and less independence.
Do you not agree with that?
Ms. Boswell. Thank you for the question. First, I would
like to address the scientific integrity policy. USDA is a
science-based, facts-driven agency. And the Scientific
Integrity Officer and the work of that team, and under the
office of the Chief Scientist, monitors and ensures that
department-wide, we are operating with scientific integrity.
That is not exclusive to the REE mission area. As you can
expect, throughout the department in all mission areas, there
is scientific research being done, economic analysis being
done, and that role not only dictates the work done in REE, but
again department-wide. And that will continue to operate
department-wide.
Secondly, in regard to the claim and criticism that this
realignment would somehow diminish the credibility of this
research, we fundamentally disagree with that. In fact, we
believe that there is more potential for politicization, if
there is potential, remaining under REE.
The reason for that is because the ERS administrator is a
career SES employee. The Chief Economist is a career SES
employee who reports to the Secretary. Under the current
position----
Mr. Bishop. Excuse me. But do they not have different
functions? One has the obligation to maintain the integrity
under the CFR or the research, and the other has the obligation
to carry out the secretarial policy.
Ms. Boswell. That is inaccurate.
Mr. Bishop. Pardon me?
Ms. Boswell. That is inaccurate, with all due respect.
Again, the scientific integrity policy applies throughout the
department. The Chief Economist currently implements WASDE,
which is a statistically regulated report that is done under
the purview of the Office of Chief Economist. That has not been
called into question, as far as I am aware, of that integrity
of that report. Also, the REE undersecretary is a political and
also reports to the Secretary.
Again, if there is a view that there could be impropriety,
we believe that this actually is sheltering ERS through another
layer of a career SES employee.
Mr. Bishop. Thank you. I will yield at this time to Mr.
Fortenberry. My time is about expired. We will have another
round.
THE SELECTION PROCESS
Mr. Fortenberry. OK. Thank you, Mr. Chairman.
Can you give the timeline of the Ernst & Young process?
Ms. Boswell. Thank you for the question. USDA, as a Federal
Government Agency, had to undergo a little bit of a unique
process rather than how maybe a private company would do that.
When the opportunities that we saw to benefit our mission
came forward, we knew that we needed expert help to make sure
that this was done objectively and that it was done with the
expertise that this type of decision warrants. We also knew
that we had to notify Congress. And we also wanted to make sure
that we were transparent and engaging with our employees.
So the August decision began that process, the process that
is still ongoing today. Ernst & Young was retained and is
implementing an agency-driven analysis. Employee committees are
reporting to their agency leadership, and then agency
leadership is coordinating with mission area leadership all the
way through the deputy secretary and Secretary's office. That
dialogue is consistently occurring. In fact, we have even
designated a specific staff to do touchpoints with our
employees to make sure that their feedback is delivered to
Ernst & Young in this process.
The timeline, as I have mentioned, has been viewed as
ambitious. But the rationale for that is that we know that this
period for uncertainty for our employees is only causing more
angst and anxiety. We were a little bit delayed with the
shutdown, but we expect a--we have just released a middle list,
from 136 to 67 expressions of interest.
We will have a shorter list determination presented to USDA
in the coming days, actually, and through April Ernst & Young
will conduct more discussions with submitters. Employees will
be able to attend site visits. And ultimately, with a site
recommendation and full cost-benefit analysis that we began
before the initial decision to start the process, but always
anticipated that, again, that was the beginning of a long
process that we are still undergoing. And that analysis will be
presented in an ultimate site recommendation.
Mr. Fortenberry. So its precise timeline is unclear. I
understand you are leaving some purposeful ambiguity here. But
six months?
Ms. Boswell. We anticipate that we will have a site
recommendation to the Secretary in early May.
AGENCY TRANSPARENCY
Mr. Fortenberry. Regarding the ongoing process, you
mentioned in your testimony that you very much value
stakeholder input, and reemphasized that here, particularly
within the department. Perhaps you noted, though, the
chairman's complaint about the slow walk of information to him.
And I would like to hear you address that.
Ms. Boswell. The Secretary is transparent in everything he
does. It is why we are here today, to make sure that we can
have an honest and transparent discussion in front of you and
answer your concerns. The Secretary has committed to the
chairman personally to answer all questions related
specifically to the realignment, and we look forward to
receiving that from your staff so we can respond to your
constituent and stakeholder concerns.
We have consistently engaged and answered questions as they
have come before us. We have also voluntarily participated in
stakeholder events, specifically a webinar, where we could
answer concerns even though we were not initially invited.
We want to be transparent and we want to be open in this
process and hear that feedback. And truthfully, that feedback
is going into the Ernst & Young analysis to make sure that we
can ultimately fulfill our goal, which is benefitting our
mission of providing better and more diverse research.
Mr. Fortenberry. You mentioned that there are certain
critical functions to remain here. Can you define those?
Ms. Boswell. Yes. We have announced this to employees and
provided additional information in a briefing to the
appropriator committee staff. This was an agency-driven
analysis. Both ERS and NIFA conducted this through engagement
with their employees, and the administrator of--acting
administrator of ERS and director of NIFA evaluated that and
presented those options to the Secretary.
Because they are two separate and distinct agencies, they
are different approaches. For ERS, there will be approximately
76 critical function--employees holding critical function
remaining in the National Capital Region. That is nearly a
third of the agency.
NIFA, because again they have different roles and different
missions, had a different approach, and they are having
approximately 20 critical functions and employees holding those
positions, remaining in the National Capital Region.
Again, that analysis is based on----
Mr. Fortenberry. Out of a total of?
Ms. Boswell. For ERS, 253 would be relocated, and under
NIFA, 315. And that is based off of current appropriated
staffing levels.
Mr. Fortenberry. Thank you very much.
Mr. Bishop. Ms. Pingree.
Ms. Pingree. Thank you very much, Mr. Chair, and thank you,
Ms. Boswell, for being here with us today and for the work that
you do at the USDA.
I have been one of the people who has been very concerned
about this move. And just to mention a couple of things, I do
not feel like it has been a transparent process. Back in August
when we first learned about this, we sent a letter--all the
Democrats on the committee sent a letter--to the USDA, and we
got a two-page response. So that did not feel thorough to us,
as the committee that has oversight on the budget.
We also have not been able to find out how many staff--we
do not have much data about it--how many staff have actually
left since the proposal was announced. And while I understand
there is some argument to be made that if people are going to
have to go through this dramatic change, leaving them in limbo
for as short a period of time as possible is helpful.
On the other hand, a move this dramatic with this many
moving parts and this much money associated with it requires
more in-depth thinking, in my opinion. And so we should be much
more engaged. And I appreciate the point of the hearing today,
but I would say up until this point we have not been able to
access a lot of information such as how many people have left.
REASONS TO MOVE
I guess let me just ask you a couple of questions from your
perspective. When the Secretary did announce this in August, he
identified three reasons for the relocation. But one of them
was not advancing agricultural research. And I think we should
all be able to agree that advancing agricultural research
should be one of our top priorities, particularly when farmers
are dealing with so many challenges--strained markets, climate
change, just a lot of variables out there and a lot of threats
to their livelihood.
So why was improving agricultural research not a
consideration in this proposal?
Ms. Boswell. Thank you for the question. And first, I do
want to apologize if there is a feeling that we have not been
transparent. I actually have answers to some of those specific
things that you raised, and am happy to provide that, either if
our time remains here or following.
Mission function was the key focus, and the Secretary
viewed a lot of opportunity when we were reviewing the cost of
overhead in these two agencies. And he believes that the
mission function will ultimately be enhanced by the three
specific access: More access to be in the forefront of emerging
issues, and being more agile to set priorities; being able to
attract and retain the highly talented individuals with ag
backgrounds that are all across the country that,
unfortunately, do not want to or cannot afford to live in DC;
and third, being more efficient in our spending of our taxpayer
dollars to allow more dollars into research and programs, and
even retaining more staff in the long run, than on overhead
cost.
Ms. Pingree. So I am not sure I agree with you on
everything, but I do appreciate that you have answered your
perspective on how that would improve agricultural research.
But I am not sure we will attract better staff or any of the
other things that you said.
Based on that middle list--and while I am sure--and I know
the ranking member has left the room, but I am sure that
Nebraska is a fine place to locate this. And you are from
Nebraska, and I fully believe that it would be a wonderful
place to be.
INPUT ON RELOCATION
All that said, Nebraska does not get any closer to Maine
farmers. To Maine farmers, accessing it in DC is actually more
helpful. So if USDA is truly interested in providing
stakeholders with the best service, why did Maine farmers not
get a chance to have some input in all this, and what is to say
that they would rather have to deal with an agency in Nebraska?
Ms. Boswell. Thank you. Well, first, the expressions of
interest notice that went out in the Federal Register allowed
for any interested entity, group, university, or all of the
above to submit, express interest. And we received broad
response from that, 136 in 35 States, of groups of individuals
that believe science can be done objectively outside of DC, and
that there is a lot of talent that does not live here.
But we do also recognize again that there are important
stakeholders and communities like your constituents that would
easier access Washington, DC, and that is why we have----
Ms. Pingree. Let me ask you one more--thank you for that.
And let me ask you one more quick thing before I am out of
time.
And Mr. Fortenberry, I do want to say that I did
acknowledge that although I am opposed to this, I am sure
Nebraska would be one of the ideal States, based on your
service and Ms. Boswell as well.
On the same day the Secretary announced the relocation, the
ERS administrator was reassigned. This administrator was a long
time and highly qualified employee. Why was the ERS
administrator reassigned on that same day the proposal was
announced? I think we deserve some clear answers from the
department on that particular fact.
Ms. Boswell. I appreciate that question. However, personnel
matters cannot be discussed.
Ms. Pingree. All right. Well, we will take that up at
another time. And I yield back my time. Thank you.
Mr. Bishop. Dr. Harris.
Dr. Harris. Thank you very much, and thank you very much
for appearing before the subcommittee.
As you know, I represent a rural area in the Eastern Shore
of Maryland, and agriculture is one of our most important
products, of course. And I appreciate the Secretary being
interested in actually helping those kinds of communities.
RELOCATION FROM A RURAL PERSPECTIVE
And I will tell you, in this day and age I do not
understand why either of these agencies cannot relocate. We are
not in a day and age where you need to be physically present
anywhere for a lot of things. And our rural communities need
the--and I think that is an important point that is made, is
our rural communities really do need the economic boost from
having a government agency, especially one that serves the
local community like these two agencies do in our agricultural
communities, from being there.
That being said, as you know I have actually had three
rural areas in my district that were very interested. I am
going to say I am disappointed that the two locations that made
the medium list from Maryland are not rural areas. The bottom
line is, if one of the objectives is to move out of the
Washington, DC area and then to pick Montgomery County and
College Park--I know they have representatives, but I have got
to tell you, you do not see corn growing in College Park.
But from all those three locations that I recommended, you
could look out and see grain fields. And they are ones where
the cost of living is lower, and again, the economic boost
would have been much appreciated.
So that being said, I know that other agencies have--in the
government, I know that CJIS, for instance, the FBI's Criminal
Justice Information Service, moved out of Washington to West
Virginia last year. Our understanding is that that move
actually resulted in a higher retention rate at that facility
and they did not have much attrition.
I guess, interrupting the narrative that unless something
comes inside the Beltway it is not going to work or it is not
going to operate or people are going to flee, which I think is
a narrative that, again, I think is rapidly--the falsehood of
that narrative becomes very apparent once you get outside the
Beltway and actually go into communities where people actually
think it is nice to be able to own a home instead of having to
rent for your entire life. It is nice to actually be able to
walk to things or to have short drives, no traffic, all the
things associated with rural communities.
So can you address--are you familiar with the move of the
FBI's CJIS to West Virginia? And it seems parallel. The only
difference is, actually, there is no nexus of the Department of
Justice into West Virginia. But there is certainly a nexus of
USDA agencies into a rural area or a more rural area.
Ms. Boswell. Thank you for that question. I am not
personally as familiar with the intricacies and the background
of that particular relocation, but definitely agree that
especially considering 90 percent of our employees are
currently outside of the National Capital Region, and in fact
these two agencies are the only agencies that do not have
representation outside of the National Capital Region, there is
synergies there.
And we are--we believe that this relocation is going to
maximize the opportunities to hear on-the-ground feedback and
to be at the forefront of emerging policy issues just as your
constituents inform you of emerging policy issues, that we will
be able to attract the best and brightest with ag backgrounds
that may still want to participate in their family operation,
or have some ties to their rural communities.
We also believe that we can be more efficient. The work
that these two agencies are doing is exceptional already. But
we can be better, and the Secretary expects us to be more
efficient and provide better service for our customers,
ultimately.
Dr. Harris. And again, just to reinforce, again part of my
disappointment with looking over the middle list, or I guess
you call it the middle list, of relocation sites, again, they
are not all rural areas. Again, I am just--and speaking for my
State, like I say, you can drive up through College Park today.
It is not rural. There is no nexus with USDA except obviously
there is the University of Maryland there.
But I would urge the--I think this is exactly the way the
Federal Government ought to go. I think we ought to move the--
we ought to take advantage of the internet age and move these
agencies out among the people because as you know, if you go
outside the Beltway, there is a reason why it is the phrase
``outside the Beltway,'' because people outside the Beltway
look and say, ``Look, this is not the real world that goes on.
People do not understand what the real concerns are.''
And I think this kind of policy decision by the Secretary
is a good policy decision, and I yield back.
Mr. Bishop. Mr. Moolenaar.
Mr. Moolenaar. Thank you, Mr. Chairman.
And thank you for your testimony today. I appreciate you
explaining this process. I have just a few pcs-type questions
for you, and it has to do with the criteria.
You have mentioned that you have 67 expressions of
interest. Are there certain criteria that are public that you
are saying, OK, these are the 10 most important things that we
are looking for in a new location?
SITE SELECTION CRITERIA
Ms. Boswell. I appreciate the question. We have retained
Ernst & Young. A very talented team is working on this for us.
No USDA political official has seen the expressions of
interest. We turned all of them that we received over to Ernst
& Young for their evaluation. And because we are a Federal
agency, we did have to do this a little bit differently.
I will tell you Ernst & Young typically would do all of the
work that they are doing right now in secret. But because,
again, we needed to put out the public notice and get that
feedback from all across the country, the criteria that they
are using was based on the high-level criteria that was in the
Federal Register notice: transportation logistics, workforce,
community quality of life, and capital operating costs.
Because the 136 is such a large list, they then took a cut
at it with five other criteria that were based specifically on
mission operations. And that feedback came directly from the
agencies on what were the we have to have/we need to have type
of criteria.
And that related to compatibility with business schedules,
transportation scheduling, labor force statistics--which is
critical not only for our employees but our employees'
spouses--and then filtering within the EOIs within the National
Capital Region.
We were inclusive. Again, we sent everything to EOI even
though the intention is to relocate outside of the National
Capital Region. And they conducted an analysis based on
proximity to headquarters and comparing that to the Beltsville
location.
But as we go forward, now they can do the deep diving. Now
they can really get into the weighted criteria that is from
feedback from our employees through their agency leadership to
the mission area. We have all sat together and went through
what is important.
And the following criteria in the weighted order that they
will be evaluating them in their model is: quality of life,
including diversity index, residential housing cost, access to
healthcare, and home and community safety rankings; cost,
include cost of living, commercial real estate costs, land
costs; wage rate growth, workforce, labor force growth rate,
labor force population; and then logistics and IT
infrastructure; lodging availability is especially important
for NIFA and our peer review panels; our proximity to
stakeholders; and travel time to and logistically from those
headquarters.
Also I would note, in ERS, access to a census data center
is part of that criteria, and also ensuring the IT
infrastructure, as they will remain a Federal statistical
agency. That is the nuts and bolts modeling that they are using
with their expertise. But there are a lot of qualitative
factors that go into this as well. This is not a math equation.
And in their benefit analysis, they will perform that as well.
Mr. Moolenaar. And that is very helpful, just to hear those
weighted factors. I was assuming there were some, but I did not
know if that was public information or how widely understood
that was. But that is very helpful for people, to know that.
And so for next steps, you mentioned going from 136 down to
67, and you said there will be a shorter list coming up in the
coming days. And let's say you have a group of 20, or I do not
know what that shorter list looks like. Would that group then
be asked to submit a proposal? Or is it simply that that is the
group that there will be a site evaluation and go through these
criteria? Or what are some of the next steps in the process?
Ms. Boswell. As I said, we have not seen--I personally have
not seen--the expressions of interest. But from my
understanding, they vary greatly. Some expressions of interest
have one site; some have 20. Actually, the 136 expressions of
interest totaled 308 potential sites.
And so Ernst & Young has had their hands full. But there
will absolutely be further discussions, negotiations, site
visits, and again, looking at that qualitative analysis. The
example that Ernst & Young has used that really resonates with
me is, you can find a building anywhere. We need to make sure
that the community works for our employees and the mission
overall.
And so they are doing that process. Once they get to this
shorter list--and again, in the coming days and weeks I will
caveat that a little bit--and then doing that qualitative
analysis and site visits and negotiations, which inevitably, I
think, will require additional information from those who
submitted.
Mr. Moolenaar. Thank you very much. And thank you, Mr.
Chairman. I yield back.
CURRENT USABLE FACILITIES
Mr. Bishop. Ms. Boswell, let me ask you, you mentioned the
need for the move, it was spawned by the expiration of leases.
But we have not seen any data to support that need. You cite
the recruitment and retention, with attrition, but we do not
have any statistics on that.
We do know that there was a hiring freeze recently. We know
that you are concerned about the cost of the rental space. But
we also have information that the department had planned for
the expiration of those leases some time ago, and in fact, that
there is a plan at USDA to renovate the South Building and the
Carver Center, which are USDA-owned facilities.
Would not those facilities, once renovated, provide
sufficient space for all of the ERS and the NIFA employees in
the Capital Region at an optimal cost? Since you already own
it, you would not have to pay rent.
Ms. Boswell. Thank you for the question. I am not--as I was
not in the previous administration, I am not sure what other
considerations were made at that point. But I can speak to
that. Secretary----
Mr. Bishop. The department does not maintain records from
previous administrations?
Ms. Boswell. I was not personally involved in----
Mr. Bishop. I am sorry?
Ms. Boswell. I was not personally involved in those
discussions or what those proposals were. I can talk to----
Mr. Bishop. But you have been involved in trying to
relocate. Would you not look at previous research that was done
and plans that were already developed to accommodate the
expiration of the leases, which you give as the basis for the
move?
Ms. Boswell. Absolutely, Mr. Chairman. And in fact, we did,
and there was an analysis done for NIFA because their lease was
expired, and looking at the cost associated with relocating in
the DC area. And Secretary Perdue and USDA currently are
reevaluating our space utilization, and that was independent of
the decision to relocate ERS and NIFA.
Mr. Bishop. Would it not be appropriate to do that in the
context of property that you already own, that is USDA-owned,
and you would not have to rent other space nor pay the expenses
of moving?
Ms. Boswell. That certainly is going to be a consideration
in the Ernst & Young analysis. However, that was only--the cost
was one of the factors that the Secretary put forward as
furthering our mission. That does not help our employees in
their cost of living or quality of life.
Mr. Bishop. Let me ask you, that was not what I understood
the Ernst & Young mission to be. My understanding was it was to
take proposals outside the capital area, and the properties I
mentioned are right here almost on Capitol Hill.
Ms. Boswell. Well, Mr. Chairman, in any cost-benefit
analysis there has to be a baseline. And that baseline is going
to look at the status quo and other available opportunities
within USDA and present a full, robust analysis for the
Secretary to consider.
Mr. Bishop. It seems like you are sort of turning your head
or refusing to look at existing plans that anticipated the
expiration of leases that you mentioned.
Let me ask you, in terms of the stakeholders, are not the
primary stakeholders for ERS and NIFA really the people who
have to do that research, and the direct stakeholders are those
of us who have to take the data that is produced to make policy
decisions? And are not most of those agencies based right here?
And would not that facilitate collaboration? And is that not
consistent with the national science principles for statistical
agencies?
Ms. Boswell. There is no one-size-fits-all stakeholder for
these agencies. We have the customers, the farmers, that are
using this data, and the market analysis and the forecasting
they are doing to make their business decisions. There are the
nutritionists that are using the research in school meal
planning and other food safety or food program developments.
There are also, as you mentioned, our academic colleagues
that work as partners with us in delivering and investing in
research. There are also policy-makers, and we believe that we
should be informing policy from ground level rather than only
reacting to policy and different legislative proposals that
occur here in DC.
And the ultimate stakeholder as well is the American
taxpayer. And we need to make sure that we are efficient with
our dollars to make sure that we are carrying out our mission
the most effectively.
Mr. Bishop. I could not agree with that more. Thank you.
Mr. Fortenberry.
Mr. Fortenberry. Just briefly. One question. Mr. Chairman,
thank you.
We have talked about the initial request for consideration
or request for interest that generated 136 responses at
locations across the country. That is abstract. Can you give a
better feel for the intensity of interest around the country by
various locations?
GAUGING INTEREST
Ms. Boswell. Thank you for the question, Ranking Member. We
have received stacks and stacks and stacks of support letters
from Senators, Members of Congress, governors, community
leaders, business leaders, associations, and local communities
that are advocating not only for their particular site but the
fact that science can be objective and trusted and done very
well outside of the National Capital Region. And there is a lot
of talent, untapped talent, that we could reach into that, just
again, cannot afford or do not want to live in Washington, DC.
Mr. Fortenberry. Thank you. I yield back.
Mr. Bishop. Ms. Pingree.
Ms. Pingree. Thank you. And thank you again for your
answers to the questions. And I do not disagree with the basic
premise that there are great people doing science in other
places. We have incredible research universities. We have other
institutions and labs around the country. All those things are
true. I am from Maine. I think we do incredible work there. I
do not think everything has to be in DC, and I do not think
most of us are DC-centric.
But the question about all this is the role of Congress in
this oversight committee and other oversight committees, in
being engaged in this conversation and understanding why these
decisions were made. And yes, it is cheaper to live somewhere
else. But there are also reasons why it is easier to
collaborate and do some work here in DC. So there are pluses
and minuses about this.
And so I think our general argument is more about being
engaged in the process, being part of the conversation, and so
far disagreeing that this is a good move. We have been talking
a lot, and you have mentioned multiple times about Ernst &
Young and their role here. But I think we have very little
understanding on this committee about the role of Ernst &
Young.
When were they first contracted? When was this contract
first signed with them? What is in the original contract? What
are the scenarios in the cost-benefit analysis that they are or
have been conducting? What are we paying them? How much have
you already paid? What is the--do you have answers to those
questions?
THE ROLE OF ERNST & YOUNG
Ms. Boswell. Thank you for the question. And again, I
really want to apologize if there is a feeling that we have not
been transparent. We are striving to be. We take the report
language very seriously. The Secretary and the Deputy have both
had personal conversations with members of this committee.
We have engaged with staff consistently, answering their
questions, have provided the opportunity to visit with Ernst &
Young with your staff, and more opportunities like that are
always available. And we are eager to answer any more
questions.
Specific to the Ernst & Young contract, we retained Ernst &
Young following the solicitation and competitive bidding
process. I would have to look at the specific day of when it
was signed, but I believe it was around October following the
extension of the expression of interest period, which I believe
ended October 15th.
We recognize that there is obviously a small cost, a cost
in retaining that. But we felt that the objectivity and the
expertise that they brought to the table would value and bring
value to the process rather than having any appearance of
political influence in this or lack of expertise in the area.
We knew we needed to bring in that expert help.
The two agencies split the cost of that, and that total
cost, I can tell you right now, is approximately $340,000.
Ms. Pingree. And what is the scope of the contract?
Ms. Boswell. To ensure I stay in my lane, I am happy to
provide that information back to you. We have----
Ms. Pingree. You can give me that in writing.
Ms. Boswell. Perfect.
Ms. Pingree. And I would also be interested to know what
are the scenarios in this cost-benefit analysis? If we could
see the contract, that would be great. If we could know more of
the detail of what they are being asked to do.
Ms. Boswell. Absolutely. We can provide that. And also I
would like to take this moment to mention that that cost-
benefit analysis will be made available to you all when it is
complete and conducted with a site recommendation.
Ms. Pingree. Great. Thank you, Mr. Chairman.
Mr. Bishop. Dr. Harris.
Dr. Harris. Thank you. Just very briefly, my understanding
is that there actually--in the last Congress there were a bill
or bills that actually would not only--would attempt to block
the Secretary's reorganization. I take it this is part of the
Secretary's reorganization. But it actually might have the
effect of actually requiring some of the agency employees that
actually are around the country to actually move back to
Washington and things.
So I would take it that the Secretary does not agree with
that kind of philosophy, I take it, in terms of the centripetal
idea, that everything has to come inside the Beltway in order
for it to function well?
Ms. Boswell. Thank you for the question. Yes. That proposed
legislation, we provide technical assistance on. And it would
in fact require thousands of employees to move to Washington,
DC, and it would close many ARS labs and NASS regional offices
as a result of that legislation. It is definitely over-broad.
If the intent was to--you get to the matter at hand, it
would have dramatic impact on our scientific agencies across
the country.
Dr. Harris. And I take it not only would it have a dramatic
impact on them, but I guess it would increase the costs, if you
are taking people from around the country and moving them into
a high-cost area?
Ms. Boswell. I would expect that it would.
SITE PROXIMITY
Dr. Harris. Now, when you gave the proposals to Ernst &
Young--and because when you were going through some of those
criteria, some of those criteria are addressable by advances in
technology that are not here yet. So for instance, there are
communities where a year ago there was not broadband, there was
not any, but there is going to be.
One cannot conceive where, within the four years it would
take to move an agency or build a building where it is not
going to be there. So was that taken into consideration or was
Ernst & Young asked to take that into consideration?
It is not only the present capability, but it is the
reasonably projected future capability of an area.
Ms. Boswell. Thank you.
That is the perfect example of the qualitative analysis
that they are doing. Not everything can be put into a model and
modeled out.
As you are aware USDA is taking broad initiatives on
broadband and working to expand broadband access throughout the
country, and so that infrastructure is absolutely not only for
now, but we need to make sure that this is laying the
foundation for long-term success to deliver our mission and
provide more diverse and more effective research in the long
run.
Dr. Harris. And which Ernst & Young office is doing this?
Ms. Boswell. We actually have a team that is based here in
DC and in New York. The analysis part of this is led by their
construction team that is in New York that does this for
private and public entities and has vast experience.
Dr. Harris. And when you say New York, do you mean New York
City?
Ms. Boswell. It is New York City.
Dr. Harris. And just out of curiosity, I mean, you are
asking people from Washington and New York to judge the ability
to move something to a rural area. Are you really confident
that the people on the team actually understand how competent a
rural area is to handle this job?
Again, I understand the biases, and they are present, and
anybody who pretends they are not present, leave the Beltway
for a while.
Are you confident that a team based in New York and
Washington is going to make an adequate judgment about the
ability to move something to an area that is not New York or
Washington, that does not look like New York or Washington? Let
me put it that way.
Ms. Boswell. My role in this is to be the extension of the
Secretary and to make sure that his intent is carried out with
the guidance of our agency teams through the, again, employee
committee processes to the Administrator and Director of NIFA,
Acting Administrator and Director of NIFA, through the mission
area and making sure that this is an Ernst & Young analysis.
They are only providing the analysis of the information
that we are giving them, and that is agency-driven, mission-
focused information.
Dr. Harris. OK. Thank you very much.
I yield back.
Mr. Bishop. Ms. Lee.
Ms. Lee. Thank you very much. Thank you, Mr. Chairman.
Good morning.
ERS/NIFA SENIOR STAFFING
Let me ask you a couple of questions with regard to the
Acting ERS Administrator, who I understand is not an economist.
You have had an Acting Administrator since August.
And it is my understanding you have had trouble finding a
permanent person, and my understanding is that the job position
for the ERS Administrator, there is no requirement to submit a
description of how the applicant's experience and skills
reflect Federal executive leadership qualities.
So this is not part of the application process or a
limiting factor for selection in the position, and I want to
make sure that is correct. And if so, why did that occur?
Why did you do that actually?
And what does this mean for the type of individuals that
you are willing to accept as an ERS Administrator?
And then also, in terms of just the budget request, you
would only retain, it is my understanding, 160 professional
employees at the agency of about 350 employees that ERS had in
September of 2017. This seems to be fairly inconsistent with
the messaging that has been provided to the staff, nor to the
public, by the Office of Secretary at USDA.
So it seems like this request really does gut ERS, and if
it does not, how are you going to handle it?
Ms. Boswell. Thank you for the question.
First in regard to the posting for the Administrator
position, we cannot discuss specific personnel issues. However,
we have posted, as you are aware, through the USA Jobs process.
That is an ongoing process to make sure that we get the best
individual for the job.
That is being carried out through our Mission Area
leadership to conduct that analysis, just as----
Ms. Lee. Yes, but Federal executive leadership requirements
or qualities, that is not a personnel issue, is it? That you
can talk about just in terms of the criteria.
Ms. Boswell. The posting that was, again, gone through or
has went through the USA Jobs and is now being reissued, I can
share that information with you.
Again, that is being led at our Mission Area level as all
hiring decisions of the like would be, but I am happy to get
you more information about it.
To your second question, the Secretary will be here to
discuss the President's budget in detail in the coming weeks,
and so I will kind of yield to specific budgetary questions to
him.
But I will say that our intention, and we have stood true
to this and plan to going forward, this is not a reduction in
force. And, in fact, the Secretary has authorized the hiring of
60 positions at ERS, which is the highest single approved
hiring plan since it was centralized in DC.
For NIFA, we have approved 75 positions of hiring. So we
are making sure that we are hiring to appropriated levels, and
we are being strategic in creating redundancy and filling
critical positions to make sure we carry out our mission
effectively during this transition period.
Ms. Lee. Well, let me go back to the question I asked about
the Federal executive leadership experience. I appreciate your
getting us a copy of the job description, but could you just
answer whether or not that is listed in the job description?
Because I would think you would know and you could tell us
whether that is or is not a qualifying requirement for this
position.
Ms. Boswell. Thank you.
Again, because, again, this is done and operated at our
Mission Area level, that is not something as a senior advisor
to the Secretary I am directly involved with, but I am happy to
get you more information about that and answer those questions.
Ms. Lee. So you just do not know.
Ms. Boswell. Correct, and I do not want to speak
inaccurately.
Ms. Lee. OK. Thank you very much.
Thank you, Mr. Chairman.
Mr. Bishop. Thank you.
I notice that the President's proposed budget for ERS would
cut total funding from $86.8 million to $50.5 million. Fifty,
point, five million of that is dedicated to the relocation.
ERS staff-years would be cut from 330 to 160, 76 of which
would be located in USD Headquarters.
It seems to me that ERS is not being given the resources or
not having the resources requested by the administration to
maintain the high quality of research that we have enjoyed in
the past with that dramatic cut.
ADDITIONAL REASONS
Now, let me ask you. You point out that many USD agencies
are located outside of Washington, DC, and you use that
partially as a rationale for relocating ERS and NIFA. And that
is true, to a certain extent.
But you take USD agencies like NRCS, Risk Management
Agency, and FSA. They actually run programs that assist farmers
and ranchers directly, and of course, regulatory agencies like
GIPSA and Food Safety Inspection Service need to be able to
work in the field, and very large agencies like ARS are able to
tailor their programs to distinct regional needs, and they
obviously need to be distributed across various regions of the
country.
But can you tell me some compelling reason for a national
level program for policy evaluation to be located outside of
Washington, DC, when the major stakeholders, the vast majority
of the beneficiaries of ERS research and statistical
collections are the Administrators of the USDA programs, the
food and agriculture policy decision makers, the members of
Congress, and the other Federal agencies that depend upon the
research that is done by ERS and NIFA or that is funded by NIFA
in any event?
Can you tell me why there is a compelling reason to move
it?
We do not have any data that says that you are losing
employees because of the cost of living. You did not supply us
with that data, and apparently you had resources that you
intend to hire additional employees.
You did not look at the cost of renovating the South and
the Carver Buildings, which would obviously not require you to
pay rent.
Can you tell me what the compelling reason is to move it?
It seems like where I come from they say, ``If it ain't
broke, don't fix it.''
Ms. Boswell. Thank you for the question, Mr. Chairman, and
the opportunity to even further explain the Secretary's goals
here.
First of all, we can always be better, and we can always be
more responsive, and again, the teams at ERS and NIFA do great
work. But we believe that we can be better and should be
better.
The mission of these agencies is agriculture and food
research. The primary customers and really facilitators of this
research are the agriculture sector and food sectors. This is
farmers; this is rural America. These are food companies. It is
food and agriculture production.
And while you are absolutely correct that policy makers at
the Federal level and other departments utilizing that
research, especially specific to ERS, just as your constituents
bring policy matters to you, we believe we can bring ground
level policy issues to DC and inform that policy in a proactive
way rather than being only reactive.
Mr. Bishop. We have a worldwide interest here, and our
producers in America that export worldwide need to have the
information, and it is not just localized in our various
communities. We have producers all over the country. We have
manufacturers and exporters of food all over the country.
Ms. Boswell. You are absolutely right, Mr. Chairman, and
frankly, we do not see a compelling argument that that research
at a global level cannot be done outside of DC.
Mr. Bishop. Thank you very much.
Dr. Harris.
Dr. Harris. Thank you.
RURAL PROSPERITY
Just very briefly, you know, I am reading the strategic
goals of the USDA, and goal number four is a very important
goal. It is: facilitate rural prosperity and economic
development.
I would hope that that actually, again, in this age of
technology where you really can site a lot of things in a lot
of places, that that would be of a very high priority as you
look to relocate these agencies that are paid for by the U.S.
taxpayer, but are really for the farmers and for the rural
communities.
That is all I would suggest. It is one of the strategic
goals. You probably do not need to look any further.
Thank you, Mr. Chairman.
Ms. Boswell. Thank you.
Mr. Bishop. Well, let me thank you very much, Ms. Boswell,
for your engagement and your participation, and we appreciate
very much your comments in behalf of the department.
And at this time we will take a brief recess so that we can
have our second panel.
Ms. Boswell. Thank you for the opportunity.
[Recess.]
Mr. Bishop. The committee will reconvene.
I now would like to introduce our second panel.
Dr. Buchanan and Dr. Woteki are former Under Secretaries
for Research, Education, and Economics, who served under
President Bush and President Obama, respectively, for 10 years.
Dr. Lee and Dr. Evans served as Administrators of the
Economic Research Service for a total of 60 years under
Presidents Reagan, George H.W. Bush, George W. Bush, and Obama.
This is a very impressive group with intimate knowledge of
USDA leadership, organization, and management. We welcome your
insight, and we are very pleased to have you appear before our
committee today.
And let me ask Dr. Harris for Mr. Fortenberry if he has any
remarks before hearing from our panel.
Dr. Harris. No, I do not, but thank you for asking.
Mr. Bishop. Well, thank you.
And let me recognize our distinguished guests for brief
oral statements, and then we will proceed with questions.
I note that each of your entire written statements will be
included in the record.
Dr. Buchanan.
Testimony by Dr. Buchanan
Dr. Buchanan. Well, thank you, Mr. Chairman and members of
the subcommittee for giving us the opportunity to share some of
our thoughts on the proposals to relocate NIFA and ERS out of
the Nation's capital region and to realign the Office of
Economic Research Service.
While this might appear to be a simple administrative
change, in my opinion, it is a major fundamental change that
will have far-reaching implications for our research programs
in the future.
Mr. Bishop. Would you pull your microphone towards you?
Thank you.
Dr. Buchanan. Can you hear me better now, Mr. Chairman?
Thank you.
As soon as I heard this back early last fall, I immediately
called some of my former colleagues, administrative heads of
agriculture, and told them what it was that I had heard and had
they heard it, and I got a unanimous concern from all of the
people that I called about it.
And so several of us put together a letter outlining our
concern, and I have learned that has now been signed by well
over 75 agricultural leaders in the Land Grant Universities and
some of the support people.
And as of this date I have not gotten a single and I am not
aware of any support coming from any individual for the
proposal that is not from a group, institutional organization,
that is looking to host NIFA and ERA.
And for the past half century, many agricultural research
leaders, such as myself and the folks here at this table, have
worked hard to try to more fully integrate agricultural science
into the greater scientific community in Washington, and I
think we made a lot of progress over the years, but we still
have a long way to go.
I think that we have got to build and continue to build and
strengthen our relationship with all of the agencies involved
in research in Washington, and that includes NIH, NSF, EPA,
NIST, NASA, DOE, the various National Academies, and other
groups that have an interest in research because we want to be
a part of the greater research community.
And agricultural research benefits greatly from funds
contributed by other departments and agencies in Washington.
Funds for co-funded projects reached almost $2.5 billion above
that provided by NIFA for agricultural research.
Research policy is pretty much made in Washington, and we
need to be where the action is, and I think that is important.
We clearly see that both State and Federal sides are true
partners in agricultural research and education programs. In
fact, during the celebration of the 150-year celebration of the
land grant legislation that created our Land Grant
Universities, USDA and the Land Grant Universities issued a
statement about principles of partnership for the future
strength of the system and the true beneficiary of this effort
is the American people.
The research component for agriculture was ushered in with
the Hatch Act by this body of 1887. The Smith-Lever brought in
an extension in 1914, but there has been many, many, many major
changes and reorganizations of our system since then, starting
with the Adams Act of 1906, the Purnell Act of 1925, the
Bankhead-Jones Act of 1935, and several others.
Congress recognized a lot of problems along the way, too.
For example, the 1890 legislation provided for a land grant
status for African Americans. The 1994 legislation provided for
a land grant status for Native Americans, and it was not until
the 1977 farm bill that the Congress recognized the need for a
mission for the 1890s for research.
So this body has been actively involved in so many changes
over the years in our agricultural research and education
system.
And finally, the 2008 farm bill had a lot of major changes.
I know some of you remember those. I was very much involved in
that since I was Under Secretary during that time, but in the
2008 farm bill, the Cooperative States Research, Education and
Extension Service was reorganized and renamed. That is when we
got the NIFA name in the 2008 farm bill.
AN EMPHASIS ON DUE DILIGENCE
But also the bill provided for a Chief Scientist for USDA,
which is something that I think is very appropriate that came
out of this body after a lot of deliberations, and I know some
of you remember.
We had meetings on top of meetings with everybody, and we
had private groups that had interest. We had APLU, and of
course, the department had interest. So it was a long process.
I share this background for one particular reason, to
illustrate the many changes that have been made in our system
over the years. But I want to emphasize something that always
these changes were made with a lot of discussion and a lot of
debate and a lot of input from just about everybody that wanted
to have input, never by spur of the moment, unilateral
decisions.
Changes are usually based on two criteria: to fix a problem
or to make something better. The department has proposed some
items to be fixed, such as the high cost of rent, recruitment
and retention of staff, working conditions for personnel, and
being closer to farmers.
One could question the validity of each of these problems
or so-called problems. For example, the idea of being closer to
farmers makes absolutely no sense to me. NIFA's primary
clientele are not farmers. NIFA's primary clientele are the
scientists, administrators, and national agricultural research,
and the greater scientific community. That is their primary
clientele. They work primarily with other scientists and with
the administrators, not directly with farmers.
The department does not offer any rationale at least so far
that I have seen for making our research system better. I
suspect this is because I really do not see a way that it is
going to make our research system any better by relocating
somewhere outside of the Nation's capital region.
In view of this, I cannot see why or any value in expending
any research resources for this until such time as Congress
receives, reviews, and approves a real honest cost-benefit
analysis.
I truly hope the Secretary will reconsider this proposal
and keep NIFA and ERS in the area where I think they can do a
better job of the things that they are supposed to do. They go
back all the way back to the first Office of Experiment
Stations in 1889, which was set up to coordinate and to try to
bring some type of cohesion to the whole system that is spread
all across this great country.
In my opinion, our agricultural research system is far too
important to be fundamentally changed without careful study and
thoroughly investigating all of the options available. Such
changes should clearly fix an identifiable problem or to make
our system better.
Thank you very much for your attention.
[The information follows:]
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Mr. Bishop. Thank you, Dr. Buchanan.
Dr. Woteki.
Testimony by Dr. Woteki
Dr. Woteki. Good morning, Chairman Bishop, Dr. Harris, Ms.
Pingree. Thank you for this opportunity to testify today.
I am opposed to the Secretary's proposal and believe that
it will significantly weaken the scientific enterprise that is
so critical to Americans' food, economic, and national
security.
There are four main reasons that I oppose the proposal, and
I explain those reasons in more detail in my written testimony,
which I have submitted for the record.
I also believe that the proposal that is the topic of
today's hearing should be considered together with the
President's budget request for fiscal year 2020, which was
recently made public. Taken together, they undermine America's
ability to address looming threats to our food security and
national well-being.
Briefly, my four reasons for opposing this proposal are:
One, the organizational structure and location of these
agencies are not the problem. The major problem facing
agricultural research is the disinvestment in public funding
that has occurred over the last 30 years and that imperils our
future agricultural productivity and poses threats to our
economic competitiveness and national security.
Two, throughout this process justification, consultation,
and due process have been lacking. The Secretary's plan did not
have appropriate review and consultation prior to sending out
the request for expressions of interest from States, and the
reasons provided for moving the agencies, quite frankly, do not
hold water.
Neither NIFA nor ERS experienced any extraordinary issues
with recruitment and retention, does not put them closer to
stakeholders, and no analysis of costs and benefits has been
provided.
Studies by the Office of Personnel Management, the National
Academy of Sciences, and the Office of Science and Technology
Policy have shown that low pay is the biggest problem for
recruitment and retention of scientists and economists. This
proposal will actually lower pay and make it more difficult to
recruit a talented workforce.
My reason number three is that realigning ERS to report to
the Chief Economist is really a fundamental misreading of roles
and responsibilities. ERS is a research and statistical agency
and appropriately belongs in the research, education, and
economics mission area.
Lastly, the functional capacities of ERS and NIFA are being
damaged, and since the Secretary's announcement both agencies
have lost experienced, well trained staff, and the President's
budget, as you pointed out, Mr. Bishop, proposes cutting 170
staff-years from ERS.
In conclusion, I want to thank the members of this
committee for holding this oversight hearing and providing the
opportunity for me to share my views on what I consider to be a
proposal that is ill-considered and terribly damaging to our
long-term future.
I urge you to include language in the fiscal year 2020's
appropriation spending bill that will provide no funding to
relocate ERS and NIFA outside the National Capital Region,
prevents the realignment of ERS or NIFA outside of USDA's
research, education, and economics mission area, and that
includes a general provision prohibiting any other funds from
being used for the realignment or relocation of either ERS or
NIFA.
I look forward to your questions.
[The information follows:]
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Mr. Bishop. Thank you very much.
Dr. Lee.
Testimony by Dr. Lee
Dr. Lee. Thank you, Mr. Chairman and committee members.
I appreciate the opportunity to make a statement.
My name is John Lee. I had a 32-year career with USDA's
Economic Research Service, the last 12 years as Administrator,
and my remarks today are focused on ERS, but I would be happy
to speak to the importance of NIFA, which I think is a
tremendously important agency.
Now, regarding ERS, I would like to make just three points
and the fleshing out of these points is in my submitted
testimony.
The work of ERS is very important. Much of what Americans
know about U.S. agriculture and the food industry comes from
ERS. For decades ERS has monitored changes in the structure and
organization of the agriculture and food industry. It has
explained the economic and technological forces driving these
changes. It has analyzed the consequences and implications of
these changes and evaluated the effectiveness of alternative
policies in dealing with those changes.
ERS is not a policy organization. It is a non-political
research organization whose work is available to all who make
decisions about agriculture and food and natural resources in
the interest of evidence-based or informed decision making.
And most people do not see ERS on the stuff they pick up
and read in the papers or read in farm magazines or read in the
commodity magazines, but most of the stuff there has ERS
product as a basis for what is in there.
Second, the reasons given by the USDA administration for
relocating ERS out of the Washington area and reassigning ERS
to the Office of the Secretary, I believe, could easily be
challenged, and I do that in my larger testimony.
And, third, I think the very existence of ERS could be
under threat. ERS staff continues to do the best they can with
the resources they have. They turn out excellent work, but talk
of politization of the agency and uncertainty about location
weighs heavily on morale.
Top researchers are being hired away, and proposals by the
department for further draconian cuts of ERS staff and budget
could be the beginning of the agency's demise.
Mr. Chairman, I will be happy to speak further to any of
these points and to others. I deeply appreciate your interest
and that of the committee members in protecting the access of
American agriculture to honest information and analyses.
I urge the Congress to see that ERS stays intact, stays in
Washington, and stays non-political and adequately funded.
Thank you, Mr. Chairman and members of the committee.
[The information follows:]
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Mr. Bishop. Thank you, Dr. Lee.
Dr. Smith Evans.
Testimony by Dr. Smith Evans
Dr. Smith Evans. Thank you.
I get to do clean-up. So many good points have been made.
Thank you, Chairman and members of the subcommittee, for
this opportunity.
John has me beat, but I was with ERS for 29 years, 10 of
which was associate or acting or actual Administrator.
ERS has worked since 1961, collecting critical data and
doing research that serves the public good, and the agency
focuses on national issues, not local; U.S. global food
security, which are elements of national security; the
efficient and effective design and management of food and
agricultural programs; and the collection, compilation, and
interpretation of statistics that describe national phenomena.
I want to give a couple highlights from my testimony on
realignment and also rebut some of the USDA's rationale for
relocation.
So OMB's statistical Directive Number 1, which currently is
being codified under the foundations for Evidence-based Policy
Making Act, identifies the independence of Federal statistical
agencies from political bodies as a necessary principle, going
so far as to say that even the perception that its data
collection, research, or dissemination of its findings might be
manipulated for political or partisan reasons is unacceptable.
The REE Under Secretary's Office is the buffer, has always
been the buffer that protects that from happening.
It has been said, you know, the Under Secretary is a
political appointee, and the Chief Economist is a civil
servant, but that is totally beside the point. As was already
pointed out, the Under Secretary in the Code of Federal
Regulations is given responsibility for scientific integrity.
And I have seen that responsibility exercised expertly and
routinely by these two and other REE Under Secretaries. It is
not easy to talk back to the Secretary and say, ``That is
science. We are not going to delay the publication of that
report,'' and they have done it.
And the Chief Economist has no responsibility for research,
much less scientific integrity.
Now, turning to USDA's rationale for relocation, I agree.
Somebody else said it does not hold water. It surely does not.
While farmers and ranchers are informed by ERS work, they are
not direct recipients or users of most ERS products.
ERS is not a regulatory or farm program agency that must
work directly with agriculture producers. It is not a large
research agency like USDA that has a regional component. So the
comparison of ERS with agencies located primarily outside of
Washington, DC is meaningless, I think.
Finally, I am not sure that the Secretary's Office has
visited a Land Grant College Department of Agricultural
Economics lately. I value them. I have many, many colleagues
there, but few students anymore are the sons and daughters of
farmers and ranchers. They used to be. They are not, and there
are not enough of them to populate the Land Grants.
Many are city folk, and according to information from the
National Science Foundation, increasing numbers of Ph.D.
recipients are not American citizens, which means they cannot
be hired by ERS.
So I do not see how the relocation in any way helps use,
recruit or retain people by virtue of our proximity to Land
Grants.
I look forward to your questions. Thank you very much.
[The information follows:]
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Mr. Bishop. Thank you very much, Dr. Evans.
On the issue of realignment in your testimony you mention
the scientific integrity as set forth in the Code of Federal
Regulations, and you also mention the National Academy of
Sciences' authoritative principles and practices of a Federal
statistical agency.
EXPLAINING THE MOVE FURTHER
Would you, and each of you if you care to, comment on how
this move would violate those principles and violate that
responsibility, as well as, again, elucidate or elaborate on
the Chief Economist as opposed to the scientists, the
researchers, and the roles within the department with regard to
the Secretary and policy versus data and research?
Dr. Smith Evans. The Chief Economist has responsibilities
for coordinating across many agencies in the department, the
production of situation and outlook, commodity situation and
outlook and trade statistics.
It is an amalgamation of information that is qualitative
and quantitative; that is opinion based; and some of the
agencies sometimes do insert some political opinion--opinion;
let's just say ``opinion''--and it is the Chief Economist's
responsibility to take all of that and come out with a
projection or a baseline that is used as a baseline for
evaluating USDA policies.
But it is not research. You are not testing any hypotheses.
Mr. Bishop. On the other hand, the----
Dr. Smith Evans. And the Under Secretary does have. I said
and elaborated in my testimony that that function is for
research and science. Yes, responsible for scientific integrity
across the department, but focusing on the science agencies.
Mr. Bishop. Anyone else?
Dr. Woteki. Well, I might further expand on that since that
scientific integrity policy was developed during my watch to
actually respond to what had been abuses of science during the
previous administration or I should say perceived abuses.
The scientific integrity policy, as Dr. Smith Evans said,
resides for its overall enforcement with the Chief Scientist,
who is also the Under Secretary for REE, and it is a
department-wide purview.
The other key role of the Under Secretary for REE is
setting the broad priorities for the research programs under
the purview of the REE mission area, and those were laid out in
the road map for science that was required in the 2008 farm
bill and subsequently elaborated further in the Agricultural
Research and Action Plan.
The work that the Economic Research Service does is
integral towards achieving those research objectives, and ERS
research, along with its role as a statistical agency, I
believe are more secure, will be better protected if the agency
remains within the REE mission area.
Mr. Bishop. Thank you.
What are the reasons that as a national function ERS and
NIFA should be in the capital area as opposed to in a regional
location?
And my time is almost up.
Dr. Smith Evans. Very quickly, we worked--``we,'' I still
say ``we.'' I have been done for 8 years.
ERS works closely with other people in different
statistical agencies. It meets monthly with all of the
statistical agency heads. I do not think you can do that by
Skype.
A lot of it is informal. You are talking on the side, and
you know, as proceedings are going along, and we would miss out
on that.
Dr. Buchanan. I would like to comment.
I think the single most important thing is the opportunity
to visit with all of these other agencies. We have so many
collaborative relationships. A lot of you do not realize.
EPA, for example, we have many, many cooperative
relationships between NIFA and EPA, the educational component,
but all kinds of activities. And it is not done just at the
leader level. It is done at the worker bee level.
So if you move, if you divide your troops, it leaves so
many people here, NPLs, for example. Certainly they will be one
way to coordinate, but that is not where all of the
coordination is done. The coordination is done very often at
the lower level of echelon of personnel, at the scientist
level.
REASONS TO HALT THE MOVE
Mr. Bishop. My time is up, but, Dr. Woteki, you wanted to
respond to that?
Dr. Woteki. Yes, just one further brief point. These are
national programs, as Dr. Smith Evans pointed out. In the 90
percent figure that Ms. Boswell provided of USDA personnel
being located around the country, those are service delivery
functions, the inspectors for the Food Safety and Inspection
Service, the people who are working in the national forests,
the people who are working in the county offices for NRCS and
the Farm Services Agencies.
So they are quite distinct and different roles.
Mr. Bishop. Thank you.
Dr. Harris.
Dr. Harris. Thank you very much.
And thank you all for your service to the agriculture
community.
Now, I assume all of you are aware that the USDA has stated
that a core group of staff will remain in DC from these
agencies. So they are not moving everything out of DC.
So, Colonel Buchanan, because I like that title best for
you, I was a commander in the Navy. I like the Colonel title.
In your testimony you say the idea of being closer to
farmers makes absolutely no sense, but I am going to ask you,
and I do not know if you were in the room when I asked the last
panelist. You know, I brought up the strategic goal of the
Department of Agriculture. One of them is to facilitate rural
prosperity and economic development.
Now, I assume all four of you are going to agree that is a
reasonable goal, and I assume all four of you understand how
farming communities work. They work in a cycle. You get a bunch
of bad weather. You are in a bad cycle.
One thing that can save that community is having something
in their economy that actually has no cyclicity, and ladies and
gentlemen, the Federal Government has no cyclicity. OK? I know
we have shutdown, but everybody gets paid. Those paychecks come
in. There is no cyclicity.
And representing the rural community is of critical
importance, that we have economic development in those
communities of something that offsets the cycles of
agriculture.
So, Colonel Buchanan, would you not say that if you could
put this agency one hour and 15 minutes away where you open the
windows and you see corn fields all around you, but you could
drive into Washington for that monthly meeting maybe or you are
close to the capital area, that might fulfill the requirement?
Dr. Buchanan. Being located in the National Capital
Region----
THE VIRTUES OF PROXIMITY
Dr. Harris. OK. Let me back up just a little bit. National
Capital Region is an artificial designation. If you look at the
map, it includes the entire Loudoun County, but it only
includes half of Anne Arundel County in Maryland. It includes
none of my district right across the Bay Bridge, which is
within one hour and 15 minutes' drive to NIH, to the USDA
headquarters.
So when you say you cannot move it outside the capital, do
you really mean that or do you really mean you should be within
reasonable driving distance for an occasional meeting that has
to take place downtown, but where the cost of living is one-
half of what it is in Washington, where bringing those Federal
dollars could be very important?
Would you agree with me that that might be reasonable?
Dr. Buchanan. Of course, and this is where a real honest to
goodness debate would have been helpful.
Dr. Harris. I could not agree with you more. Let me keep on
going because we have got votes in a few minutes.
Dr. Woteki, you say this has to be taken in context with
the President's budget request, but you have been around
Washington long enough to know that the President's budget is
dead on arrival in Congress, and that the President's budget
had to be low because Congress has not set new budget caps that
are above even the budget cap deals from 2 years ago, right?
So the President merely followed the statute. I mean, did
you want him to create a budget that did not follow statute?
I mean just basically because two of you brought up the
issue of the President's budget and ERS decrease in funding
positions that we know are never going to occur. Is that not a
straw man?
Dr. Woteki. No.
Dr. Harris. Well, I am going to disagree with you on that.
Dr. Woteki. No, sir.
Dr. Harris. I think it is a tremendous straw man, and my
prediction, Doctor, is that next year we will have the same
number or more of ERS positions, and our agriculture funding
will be level.
So I think it is a straw man, and I will be proven out.
Dr. Lee.
Dr. Woteki. The President's budget is an expression of
policy.
Dr. Harris. Ma'am, ma'am, it is not. It is expression of
the failure of Congress, and that is a shame because you could
have made the argument, and I respect you making the other
arguments you made, but as soon as you brought up the
President's budget in the context of the failure of Congress to
pass budget caps, it became a partisan argument.
Agriculture should never be partisan. It should be about a
very important economy in our country to that.
And I will tell you again, and, Dr. Lee, I was just going
to say, again, you know, putting it within reach of a
reasonable drive of Washington seems like that is kind of win-
win.
Because agriculture communities, and I just want to
reinforce this, and I think everybody up here kind of
represents agricultural communities in their districts. They
need that constancy of some of the economics. So whenever we
can, we should think of creative ways to move these, move some
of the economic development that a Federal agency can bring to
a region to one of those regions.
And I would urge that we think outside the box on this, and
if we need to move it outside what is technically the National
Capital Region but into an area that does have the economic
swings of an agriculture community, we ought to do it.
And with that, I yield back, Mr. Chairman.
Mr. Bishop. Ms. Woteki, I think Dr. Harris cut you off. You
were trying to elaborate on the relevance of the budget to the
scientific research.
SCIENCE AND THE PRESIDENT'S BUDGET
Is there some relationship between the standards set by the
principles that you referred to in your testimony?
Dr. Woteki. Well, sir, in my response, what I was trying to
say was at least during my tenure, 6 years that I was Under
Secretary and Chief Scientist at USDA, we did our best to put
together a budget that reflected what our priorities and
principles were for research.
And so my dismay at seeing the President's budget and the
implications for the Economic Research Service, the budget is
at direct odds with the stated testimony of Ms. Boswell, who
just preceded us, of the intent to invest in these agencies and
particularly ERS.
Mr. Bishop. Just before I yield to Ms. Pingree, the
principles and practices for Federal statistical agency, which
OMB has designated ERS as one, include an active research
program, which means that it has to be adequately funded; is
that not correct?
Dr. Woteki. This is correct, sir.
Mr. Bishop. So this would not be consistent with the
National Academy of Sciences' standards.
Dr. Woteki. Correct, sir.
Mr. Bishop. Thank you.
Ms. Pingree.
Ms. Pingree. Thank you, Mr. Chair.
And I would just say that, Dr. Harris, that Mr. Fortenberry
should have never left the room because he had the chance to
make the case for Nebraska, and you have been making the case
for Maryland. [Laughter.]
He is kind of losing out with your argument there.
But that said, I still oppose the move out of Washington,
no matter what, even if it is nearby. I do not think that
works.
But first, I want to thank you all for your service, for
the hard work that you have done over the years for the USDA
and for the American people and for keeping scientific
integrity in this agency, which is critically important, and
you have all made really wonderful cases for why this move
should not happen.
And I appreciate your taking the time today to come and do
that, and come back to help us better understand why that is
challenging.
And in many ways, I do not have any other questions for
you. I think you have done such a good job articulating it. I
could ask you some more questions to restate what you have
already said, but I am not sure I need to.
One thing that did occur to me in listening to you talk,
you brought up some other interesting information that I would
just like to hear a little bit more.
PUTTING AN EMPHASIS ON RESEARCH
At different points in your testimony, and anyone can feel
free to elaborate on this, you mentioned that one of the real
problems is just our overall disinvestment in public research,
which I think is true in many ways, and that is also reflected
here.
And one of the reasons that it may be difficult at times to
find the people to do the jobs is low pay, not that we need to
move them to some other part of the country to find a pool of
people to do those jobs, especially when you are talking about
people with the skills and experience we are looking for.
And then just any underlying concerns that you have that
this move is related to a general undermining of scientific
integrity or just valuing science. It may not be just to skew
the science, but are we increasingly putting less and less
value on investing our Federal dollars in science to have the
information that people need, especially as decisions get more
difficult going into the future?
So I am sorry. That was a long explanation, but you have
all said a little bit about this, and anyone who wants to
elaborate on any of those things, I would just like to learn
more.
Dr. Buchanan. Well, I would like to say that I think the
perception that I have is there is a failure to really
understand the real role of NIFA in our system, and that causes
decisions to be made that I think are counterproductive.
I go back to what I mentioned earlier about the Office of
Experimentation. You know, with the passage of the Hatch Act in
1887 by William Henry Hatch, he was chair of the Agriculture
Committee at that time, and he is the one that took the lead
after the guy from Iowa and the guy from Illinois lost the
election.
So he picked up the mantle and drafted the legislation that
created the Hatch Act, but there had already been about 14
States that had started some type of experiment station, mostly
on a shoestring, but that was the impetus to get it started.
But it only took a year before they realized that they had
created this system of State experiment stations that were
quite independent. The way the experiment station was
structured was very, very unique, and the money was allocated
to the State, and then the State determined what research would
be done.
But they needed some way of coordinating the effort of all
of these independent State experiment stations, and that is
when the Office of Experiment Stations was created, and in one
sense that is, I guess, the forerunner.
Going back to then, there have been Lord knows how many
changes over the years to get to NIFA. Of course, I lived
through CSRS, and then CSRES, and now NIFA, and what comes next
I do not know, but there has been many, many changes, but
always looking to how we could make the system work better.
And so I guess that would be my response to your question.
Ms. Pingree. Thank you. That is very helpful. Thank you.
Dr. Woteki. I have included a couple of graphs with my
testimony.
Ms. Pingree. Oh, great.
Dr. Woteki. They are actually based on ERS research and
make some of these points that you just asked some questions
about.
And I know that the Appropriations Committees have had a
tough time over the last several decades in finding funds to
continue the public investment in agricultural research, but
the situation we are in now is that the current level of public
investment in agricultural science in constant dollars is less
than what it was in the 1980s, and that at least for the short
term, it does not look like we will be seeing that changed or
any decline in agricultural productivity.
But the future trends in agricultural productivity because
that is so tightly tied to the public investment in
agricultural research are at risk. And this is based on
research that ERS has done, the kind of research that I think
is in danger with the budget proposal and with this relocation
and realignment proposal that is on the table.
So there is more in the written testimony if you would like
to take a look at that.
Ms. Pingree. I will go through that. Thank you.
Dr. Smith Evans. Thank you.
I would like to point out something we have not talked
about, and that is that the research and the commodity outlook
and projections were highly complementary, highly complementary
of each other; that the outlook projections benefit from the
research that is done on basic principles of commodity markets
and so forth, and the research benefits from the deep knowledge
of commodities by the commodity analysts.
To separate them reduces the effectiveness of both, and
according to the stay list that the USDA released, it is the IT
people and the commodity experts that would stay in DC, and
everybody else, which I guess is the research staff of 84,
would be outside there.
And I think that the coordination and collaboration between
the two would be damaged.
Ms. Pingree. Thank you. That is helpful.
Dr. Lee. Monday night I had a call out of the blue from the
president of the University of Nevada at Reno. I was surprised
to get the call. I met this man years ago, but he had seen I
was coming here.
And he said, ``I just want to impress upon you the critical
importance of keeping ERS in Washington and keeping it
objective, keeping it in a situation that it provides sort of
the intellectual center, if you will, of what we are doing out
in the States and the universities. It is so important to us,
and we could not function if there were any perception of loss
of integrity or objectivity.''
And the same Monday afternoon, I got an email from a
department head in a southern State who said, ``I just want to
let you know that it does not have to be any loss of integrity
if there is just the perception of loss of integrity, we will
not be doing business with you because we cannot afford to be
affiliated with an agency now that has a loss of integrity.''
I think those two points are very important.
Ms. Pingree. Yes. No, that speaks to a lot.
And I thank the chair for indulging me on the extra time,
and I thank you all for your answers.
I just will add one quick thing. While I completely
understand why every State that has capacity would want this to
move to their State and it would be a benefit for a rural area,
I was at UC, Davis a couple of months ago for a conference
related to food waste, but I was talking to a lot of the people
in the department and I was struck by the fact that they said
across the board to me, ``Even though we would really like this
to move here, of course, we think this is a very bad idea and
it should not move.''
So I think there is something to be said for exactly what
you said.
So, again, thank you for all of your time and your
testimony today.
Mr. Bishop. Mr. Fortenberry.
ONE LAST EFFORT
Mr. Fortenberry. Yes, just briefly for everyone on the
panel, and I am sorry if the question sounds redundant, but if
you could in one sentence, and we will just go through
everyone, tell me why this will not work.
Dr. Lee. Anything can be made to work, but what is missing,
I think, is overwhelming evidence that it would work better
than it works now, and I think that is where I stand on it.
Mr. Fortenberry. Thank you.
Dr. Smith Evans. It will not work because you will not be
able to recruit the best and the brightest, even in the nicest
rural area that you can find. Many ERS staff come from
economics departments. They are married to people who have jobs
here or want to have jobs here.
This is where the market is for economic analysts, and it
will not work if you are located elsewhere.
Mr. Fortenberry. Thank you.
Dr. Woteki. I cannot improve on Kitty's statement. I agree
completely.
Mr. Fortenberry. OK.
Dr. Buchanan. Well, I agree with what Kitty said, but I
think the biggest problem is the question that it would work
better in other ways. It certainly will not be as effective as
having the opportunity to have our research agency located with
other research agencies.
If you move all of the others, if you move NSF and NIH and
all the other research agencies out to where we are going to
move it to, then maybe it might work, but that is not possible.
So it just is a matter of degree of working. We have to
make it work if it is done. We have no choice but to make it
work, but it just will not work as well.
Mr. Fortenberry. Thank you, Mr. Chairman. I yield back.
Mr. Bishop. Thank you very much, Mr. Fortenberry.
And let me thank all of the witnesses for your willingness
to engage and to give us advice and counsel on this very, very
monumental change.
Dr. Buchanan, Dr. Woteki, Dr. Lee, Dr. Evans, thank you all
for being here today, and we very much appreciate your taking
your time out to share with us your knowledge and your wisdom.
I hope the irony of making decisions about data-driven
agencies without data is not lost on anyone, but again, thank
you all for your testimony.
And with that, this hearing is adjourned.
[The testimony of Sonny Ramaswamy follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Tuesday, April 2, 2019.
OVERSIGHT HEARING ON THE RURAL ECONOMY
WITNESSES
DALLAS P. TONSAGER, BOARD CHAIRMAN AND CEO, FARM CREDIT ADMINISTRATION
JEFFERY S. HALL, BOARD CHAIRMAN, FARM CREDIT SYSTEM INSURANCE
CORPORATION
PAXTON POINTEVINT, PRESIDENT AND CEO, SOUTHWEST GEORGIA FARM CREDIT,
BAINBRIDGE, GA
MARK JENSEN, PRESIDENT AND CEO, FCS OF AMERICA/FRONTIER FARM CREDIT,
OMAHA, NE
ROD HEBRINK, PRESIDENT AND CEO, COMPEER FARM CREDIT, SUN PRAIRIE, WI
Opening Statement by Mr. Bishop
Mr. Bishop. The subcommittee will come to order. Before we
begin, I want to raise a small piece of old business.
During the Members Day hearing last week, we committed to
include Representative Posey's testimony in the record because
he was unable to attend. Because of the press of time and
votes, we did not ask unanimous consent to do that during the
hearing.
Similarly, it had been our intention to ask unanimous
consent to include the written testimony of former NIFA
administrator Dr. Sonny Ramaswamy in the hearing last week on
relocation. We also failed to do that.
I would like to accommodate both of these with a unanimous
consent request. This has been cleared with the minority staff.
And I ask unanimous consent to include both traumas in their
respective hearing transcripts.
Without objection, so ordered.
Good morning, and let me welcome all of you to today's
hearing. This morning we are examining the state of the rural
and farm economies through the lens of farm credit. We have two
panels to help us understand the challenges and opportunities
our farmers, ranchers, producers and rural communities are
facing.
The first panel consists of two members of the Farm Credit
Administration board, Dallas Tonsager, who is the chairman and
CEO of the Farm Credit Administration, and Jeffery Hall, who is
an board member and chairman of the Farm Credit System
Insurance Corporation.
While few people outside of the agriculture world may know
about this small, independent agency that is tucked inside the
executive branch, it has an important regulatory role in
overseeing the banks and associations within the Farm Credit
System.
The second panel consists of three CEOs of regional
Agricultural Credit Associations within the Farm Credit System.
Created by Congress more than 100 years ago, the Farm Credit
System, which is the largest agricultural lender, provides
safe, sound, and reliable source of credit and related services
to farmers and rural communities.
The members on this panel represent large portions of the
country, from the Southeast to the Midwest, and will give us a
sense of what is happening on the ground and lend a voice to
our farmers. I thank everyone for being here today, especially
those who had to travel a great distance to get here.
This discussion comes at a critical time for our farmers,
our ranchers, our producers, and for our rural communities.
Recent natural disasters across the country--including
hurricanes and tornados in my home State of Georgia and
unprecedented flooding in Nebraska, the home State of our
distinguished Ranking Member Mr. Fortenberry, and other
disasters across the country and in the territories--have
created stress and uncertainty, on top of the impacts from the
ongoing tariff situation.
And that is not to mention the fact that farmers have faced
years of declining commodity prices. I have heard from my
constituents, as I am sure my colleagues have, too, and there
is a lot of anxiety. Farmers and ranchers are resilient by
nature, but for many the future holds a lot of unknowns.
To be honest, I did not think we would still be sitting
here in April without a disaster aid package that had been
signed into law. I am hopeful it will happen soon, but I am
extremely frustrated and am eager to hear from our witnesses on
the second panel who are having to deal with the aftermath of
disasters firsthand.
Even with all that uncertainty, there are reasons to be
optimistic. As if 2017, the Farm Credit System made more than
$9 million in outstanding loans for young farmers and more than
$12 million in beginning farmers investing in the future of
agriculture, whether it be research of people. It is a priority
of this committee, and I am looking forward to hearing more
about Farm Credit Administrations and the Farm Credit System's
outreach to these farmers.
In addition to making loans, farm credit banks and
associations serve as a trusted resource of information for
people in agriculture in rural America. They build
relationships, offer trainings, support trade associations, and
donate time and resources after natural disasters have
occurred.
Finally, as the chairman of this subcommittee and as a
member from a rural district in southwest Georgia, rural
development is one of my top priorities. I have a real passion
for trying to utilize this opportunity to see that rural
America is able to prosper. It should not matter what zip code
a youngster is born into or in which his or her family lives.
That should have no impact on their capacity or their ability
to realize their full potential. I was glad to see all our
witnesses took time to address the issues of rural America in
your written testimony, and we will explore this topic further.
I want to thank all of our witnesses for being with us
today, and I look forward to today's discussion.
I would like to ask my distinguished ranking member and my
friend, Mr. Fortenberry, if he would like to have some opening
remarks.
Opening Statement by Mr. Fortenberry
Mr. Fortenberry. Yes, I would. Thank you, Mr. Chairman, and
thank you for convening this important hearing. Good morning,
gentlemen, and welcome to the subcommittee. We look forward to
your testimony.
I am eager to get an update on the Farm Credit System and
how it continues to play a critical role in providing stable
and dependable sources of financial credit for, as the chairman
mentioned, the hard-working men and women of rural America.
I am pleased to see that our chairman, Chairman Bishop, has
called the Farm Credit back to testify here. Only the second
time, as I understand it, before the subcommittee in the last
21 years. So welcome home, and again, thank you, Mr. Chairman,
for your initiative.
Your appearance before us is timely, as our farmers,
ranchers, and producers face a number of threats to their
livelihoods, from low commodity prices and tight margins to the
externalities born of hard but necessary trade negotiations as
well as the problem of natural disasters, and something very
often overlooked that is that is really impacting rural
America, the high cost of healthcare.
Most prominent in my mind is the historic levels of damage
caused by the Platte and Elkhorn and Missouri Rivers to farming
and rural communities in my district, as well as certain urban
communities, but also, the many neighboring districts in the
Midwest. And thank you, Mr. Chairman, for recognizing that in
your opening statement.
To see the power and devastation of this once-in-every-500-
year series of events bomb cyclone, as it has been called, it
leaves an indelible mark on you, especially when there is
uncertainty about what both private and public resources will
be available to support these communities as they recover. So
on a related note, I do want to thank the Farm Credit
Administration for the public statement that you offered,
encouraging credit institutions to use flexibility following
the disasters so it can help borrowers get back on their feet.
Chairman Bishop, as he mentioned, has also seen this type
of disaster in Georgia after the hurricane last fall and
hurricanes from previous years. So we are hopeful that Congress
can move quickly to pass a disaster supplemental for all of the
2018 and 2019 disasters in order to reassure lenders that the
Federal Government is there to lend a helping hand.
Today we will discuss the function of the Farm Credit
Administration within the context of the Farm Credit System.
And you all will touch upon the operations of the budget of the
administration, its policies and regulation, and something that
I think we need to spend a little time on, the worsening
financial situation in today's farm economy.
Many outside the agricultural community have little
familiarity with what you all do and how it plays a critical
role in ensuring that America has among the lowest per capita
grocery prices in the world. We overlook this. We are among the
lowest in terms of food cost in the world. But this also
depends upon certain preconditions. Without farmers' and
ranchers' access to affordable credit, the less access we
potentially have to abundant and good-quality, affordable food.
So as your testimony points out, the Farm Credit System
remains healthy despite some challenges, including a decrease
in net farm income, and uncertainty of revenues tied to
exports, and the impact of these natural disasters. You also
point out that the system is well-capitalized and the portfolio
credit risk remains manageable. I think this is the key
component of this hearing that we need to unpack.
Agricultural financing is a unique and challenging sector
of our economy, with certain unpredictable swings in commodity
prices as well as land values. So if risk to the system
continues to rise, the Federal Government and the Farm Credit
System must be ready to respond.
So Chairman Tonsager, thank you very much, Chairman Hall,
for appearing before us today, and we look forward to your
testimony. I yield back, Mr. Chairman.
Mr. Bishop. Thank you, Mr. Fortenberry.
Mr. Tonsager, without objection, your entire written
testimony will be included in the record. And I would like to
recognize you now for a brief opening statement, and then we
will proceed with questions.
Opening Statement by Mr. Tonsager
Mr. Tonsager. Thank you, Chairman Bishop. Thank you,
Ranking Member Fortenberry. My name is Dallas Tonsager, board
chairman and CEO of the Farm Credit Administration. On behalf
of my colleagues on the board, Jeffery Hall of Kentucky, and
Glenn Smith of Iowa, and all the dedicated men and women of the
agency, I am pleased to provide this testimony.
I would like to thank the subcommittee members and their
staffs for their assistance during the most recent budget
process. The resources provided will be critical for recruiting
and training highly qualified staff to maintain the safety and
soundness of the Farm Credit System (System or FCS) and the
Federal Agricultural Mortgage Corporation (Farmer Mac).
FCA is an independent Federal agency that regulates and
examines the banks, associations, and related entities of the
FCS and Farmer Mac. Our responsibility is to ensure that the
System and Farmer Mac meet their congressional missions--for
the System to provide a dependable source of competitive credit
for agriculture and rural America, and for Farmer Mac to
provide a secondary market for agricultural real estate loans,
rural housing loans, and rural cooperative credit.
For more than 100 years, the System has helped our Nation's
agricultural producers provide the most abundant, affordable,
and safest food supply in the world. The System includes four
banks and 69 associations. The banks provide loan funds to the
associations, which in turn lend to farmers and ranchers, farm-
related businesses, and other eligible borrowers.
Of the four banks, only CoBank has retail lending authority
with express authority to lend to agricultural cooperatives and
to support rural infrastructure like water, power, and
communications. The System obtains loan funds by selling
securities on the national and international money markets.
These securities are not guaranteed by the Federal Government.
Investor demand for all System debt remains positive, allowing
the System to continue to issue debt on a wide maturity
spectrum at competitive rates.
U.S. farmers are facing challenging economic conditions.
After several years of robust times, many farmers and ranchers
are facing declining financial conditions amid large commodity
supplies and weak prices for crops and livestock products.
Higher operating costs for labor, farm inputs, and other
expenses are putting stress on farm cash flows and liquidity
levels.
At current price levels, many farmers will be under
financial stress in 2019 despite the USDA's projected increase
in U.S. net farm income. For example, profitability of corn and
soybean enterprises remains well below levels reported earlier
in the decade.
Adjusting production costs to meet expected commodity
prices will challenge many producers. Despite these headwinds
in the overall farm economy, I am pleased to report that the
System's banks and associations, as well as Farmer Mac, are
fundamentally safe and sound, and they maintain a strong
position to carry out their mission.
While overall portfolio credit quality has declined
compared to a year ago, credit quality in the System's loan
portfolio remains strong. Non-performing assets totaled $2.3
billion at the end of 2018. While elevated from $2 billion at
the end of 2017, the System's loan portfolio continues to
perform well.
Other factors supporting the overall strength of the System
are stable earnings, a strong capital base, and reliable access
to debt markets. For calendar year 2018, the system reported
$5.3 billion in combined net income, and the System's total
capital equaled $58.4 billion, up from $55.4 billion a year
ago.
Finally, the System's loan portfolio continued to grow in
2018. The System currently supplies around 41 percent of our
Nation's farm credit. At year-end 2018, gross loans totaled
$271.9 billion, up 5.1 percent from 2017. I would also note
that Farmer Mac's business volume grew by $717 million to $19.7
billion during 2018, and overall credit quality remained
stable, with substandard assets and 90-day delinquencies
remaining well below historic averages.
I appreciate that you have included my written statement
for the Record. Thank you, sir.
[The information follows:]
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Mr. Bishop. Thank you, Mr. Tonsager. Your excellent and
frank testimony seems to raise at least a flashing yellow light
with respect to our rural economy, which is the subject of our
hearing today.
FARM BANKRUPTCY
You cite a 9 percent decline in U.S. agriculture exports in
the fourth quarter of 2018, labor availability concerns, net
cash farm income that is well below the level achieved 5 years
ago, somewhat lower cropland prices for the rest of 2019, a 4
percent increase in total farm debt, and a rise in farm
bankruptcy rates. And I thank you for noting the serious impact
that extreme weather events have had on farmers in many parts
of the country. Taken together, all of this is very, very
concerning.
Would you say that we are at a tipping point in 2019? And
what would you say are the major warnings signs that we should
be paying attention to as we go forward, preparing for 2020?
Mr. Tonsager. Yes. I think there is great concern,
especially related to net farm cash income. That number alone
should cause all of us engaged in helping agriculture concern.
I do believe that the Farm Credit System is in the strongest
possible position in my memory to help deal with the challenges
associated with that.
That all being said, there is nothing more difficult than
being someone in bankruptcy and having to deal with the issues
associated with that. I think that farmers grew a general
strong balance sheet some 5 years ago or so when things were
quite good. But there is an erosion of that that is occurring.
And I think that the early participation of Farm Credit
System loan personnel with producers to help them deal with--
whether it be the difficulties of the farm economy, the
physical difficulties of the storms that we have had--I think
is absolutely crucial. And I think that the System is prepared
to engage with producers that way, and is engaging with them.
Mr. Bishop. You mentioned USDA's projection of net cash
farm income in your testimony. For my colleagues, I want to
point out that it is the Economic Research Service that does
this estimate. My staff checked the Farm Credit Administration
website and found that there are many, many citations to ERS
studies in your reports and publications.
Does the Farm Credit Administration value the independence
and the work of the Economic Research Service?
Mr. Tonsager. Yes, we do. We have a small economic staff
but a very good one, five, six people that are directly engaged
in the economic issues. They rely heavily on the ERS's work as
a check on our own work, as well as an early warning system, if
you will, that points to trends that may be occurring. So yes,
we rely on them significantly.
Mr. Bishop. I understand that the Farm Credit Act and the
Farm Credit Administration regulations require credit programs
and annual reporting on young, beginning, and small farmers.
Can you discuss these credit programs?
And in today's market, with the challenges that you have
discussed, are young people deciding not to go into farming and
to pursue something else, given the tremendous challenges that
we are now facing?
NEW FARMER PROGRAMS
Mr. Tonsager. I think that the Farm Credit System program
for young, beginning, and small farmers is probably the best in
the country. It was initiated on a rulemaking in 2000, so it is
about 19 years since that rulemaking occurred. The rule
requires that each institution of the Farm Credit System
establish a program to work with their producers, so it is
identified to their particular regional needs.
And so it might be reduction in interest costs. It might be
reduced collateral requirements. But each of them
enthusiastically embraced this effort to make sure it works. So
they report to us. We examine them to make sure that they are
following the program they have established.
But you may be aware that we have recently put out an
advance notice of proposed rulemaking on the 2000 provisions
because we think after 19 years, it makes sense to reexamine
what the System is doing in that area, especially the reporting
information that we get, and hope to improve it.
Mr. Bishop. Thank you, Mr. Tonsager. My time has expired,
and I would like to yield to Mr. Fortenberry.
Mr. Fortenberry. Thank you, Mr. Chairman.
Mr. Tonsager, I have your name written out phonetically in
my opening notes, but we are going to get to the bottom of this
once and for all. [Laughter.]
Did I say it wrong the first time and right the second
time?
Mr. Tonsager. Well, yes, you just did now. Thank you very
much. I have encountered that issue a number of times over the
years. [Laughter.]
Mr. Fortenberry. OK. Thank you. But you will answer to
either in case I do that again?
Mr. Tonsager. Most people just go with Dallas.
Mr. Fortenberry. Mr. Chairman, would that be all right?
[Laughter.]
Let's try to reconcile a few things here that are being
talked about. And frankly, I think I heard the answer embedded
in your testimony.
Investor demand for your securities are positive?
Mr. Tonsager. Yes.
Mr. Fortenberry. Cash flow, farm cash income, is down?
Mr. Tonsager. Yes.
Mr. Fortenberry. USDA predicts a little rosier scenario. Do
you or not? That is one question. So I think the question
becomes, farmer debt levels, have they significantly decreased?
You referenced strong balance sheets having been built 5 years
ago.
So are we living now off the seed corn, if you will, of a
stronger balance sheet, which gives us a better position to
weather the net income loss at this time, which then
contributes to, again, investor confidence in your securities.
Is this a correct analysis?
Mr. Tonsager. Yes. I think that we would agree with USDA's
analysis of the income. We do not attempt to recalculate that
ourselves. We rely on their calculations when we talk about it.
BOND MARKETS
I think that the Farm Credit System has done an excellent
job of building confidence in the marketplace in the bonds
issued. So for generations, there has been very little
disruption on the part of the System relative to the bond
markets.
The bonds have always been paid, and the bond markets give
them one of the highest ratings in the world for the quality of
the bond issuances that the System does, which is an enormous
benefit to all of the 500,000 stockholders that are
participants in that. So it is a huge advantage.
And the very strong capital position helps the System, I
think, address some of the issues that are involved with credit
and to be able to be assured the System we can continue to pay
those bondholders back, or they can pay the bondholders back on
those securities.
Mr. Fortenberry. Well, there has to be another dynamic here
as well, another variable. I would assume that, again, the
adjustments of the farm bill, the authorized programs that
provide more robust risk mitigation, create the scenario in
which, again, with the ups and downs of incomes, it does not as
significantly impact credit risk as it used to.
Is that a fair statement?
Mr. Tonsager. Absolutely. I think the crop insurance
program and the other risk mitigating factors you described
certainly are key to all lenders--not just the Farm Credit
System, but others. Without that basis, we would be much
farther behind in our ability to help producers get credit.
FARM CREDIT DISASTER RESPONSE
Mr. Fortenberry. I may bring this up with the next panel,
but you are intimately familiar with what has happened to us
back home in the Midwest. So how is the Farm Credit System
responding?
Mr. Tonsager. Well, I think the strategy that the Farm
Credit System pursues, and we press them, is to seek the best
possible outcome for all producers. I think, in looking at a
disaster situation or the general erosion of farm income and
assets, asset preservation needs to be part of that dialogue
with producers.
In the 1980s, and I was a dairy farmer in the 1980s in
South Dakota, people went a long ways in borrowing money. So
they wanted to stay on the farm. It was absolutely critical to
them. We ended up with a real crisis that resulted in a
tremendous amount of bankruptcies and other factors.
So the term that we have pressed the System with and they
talk about themselves is trying to seek the best possible
outcome for every producer.
Mr. Fortenberry. Let me go back to an earlier question
before my time expires, regarding debt levels that farmers are
carrying, because I do not think I got an answer from you in
that regard.
Mr. Tonsager. There has been an increase in debt level.
Generally it is a restructuring process, where longer-term debt
is taken out and replaced with shorter-term debt. And so while
the farmers' position still looks good, they have lost some
ground in their available short-term----
Mr. Fortenberry. Maybe, as you proceed in your testimony,
you can unpack as compared to when. I would like to know the
historical comparison. I am out of time, but maybe we can come
back to that.
Mr. Tonsager. Sure.
Mr. Fortenberry. Thank you, Mr. Chairman.
Mr. Bishop. Mr. Cuellar.
Mr. Cuellar. Mr. Chairman, thank you, And to the ranking
member also.
TARIFF MITIGATION
Mr. Tonsager, let me ask you, in your written testimony you
mentioned the tariffs that the administration has imposed on
China and other countries. And as you know, they have resulted
in retaliatory tariffs on many of the American agricultural
products. In fact, I was just communicating with some of them
right now.
Mr. Tonsager. Sure.
Mr. Cuellar. This has increased price risk for our
agriculture and key commodities that many farmers grow in my
district and across the Nation. Can you talk a little bit more
about what the Farm Credit Administration has done to marketing
the negative effects that these tariffs have had on farmers.
And my personal opinion on this--I do not want to see
subsidies or bailouts for farmers. We went through that in
2009, and some of those folks that were complaining are now
getting what they complained about some years ago. So I do not
want to see bailouts for them.
I think the most important thing is to get markets because
you understand the way this works--if they lose a contract to
somebody else, they just cannot turn on that contract right
away. I mean, once they lose that, it might be gone for a
while. So I would rather give them markets instead of subsidies
or bailouts.
Tell me what you all are doing on that aspect.
Mr. Tonsager. Well, I think we are being very much aware,
and we are anxious to--we are anxious to be prepared for the
issues associated with that. The Farm Credit System is a credit
provider. And the need for producers is if there are short-term
issues, and hopefully prices are short-term issues, that the
System is in a position to help producers get through that
difficult time.
So we are following it closely. The System is following it
closely. We are trying to help, or the System is attempting to
help, producers get through that difficult period while paying
attention to their situation over time. So we know that there
are issues that hopefully will be resolved regarding trade, and
that will help producers move forward.
Mr. Cuellar. We have even talked about the President trying
to shut down the border. I mean, if you want to talk about
economic impact to our agriculture folks, that would have an
extremely negative impact. Every day there is more than 1.6-,
$1.7 billion of trade between the U.S. and Mexico. That is over
a million dollars a minute on it. So that is another issue
because Mexico is a huge partner to the agriculture industry.
Let me ask you about 2017. Hurricane Harvey, as you know,
hit Southern Texas. And you know the numbers, and the
agricultural losses topped more than $200 million. I really
appreciate the good work that you all have done to support
recovery efforts. And if you can just tell me, update me on
your efforts. And I have heard a lot of good, thanks to what
you all are doing. But if you can just tell us where we are
right now.
Mr. Tonsager. Well, I think we examined it and discussed
this yesterday. The Farm Credit System, I think, when you look
at the disaster, of course, you get into all the issues
associated with what disaster assistance there was, and crop
insurance, and regular insurance.
But it appears that that whole region that was subject to
that has been recovering nicely, that the credit issues have
not been extreme. They have not put the association in any kind
of jeopardy in that area. And so of course there are risks. I
am sure there were cases where producers lost their farms or
otherwise.
But by and large, it has recovered nicely. Delinquency
rates have not gone up dramatically. So people have done their
jobs and done their work, and I think it has been very
beneficial.
Mr. Cuellar. Thank you. I appreciate the good work you have
done on that. I have a defense appropriations; as you know,
they are all at the same time. So again, with your respect, I
will be stepping out.
Thank you, Mr. Chairman and Ranking Member.
Mr. Bishop. Thank you, Mr. Cuellar.
Mr. Moolenaar.
Mr. Moolenaar. Thank you, Mr. Chairman, and thank you for
being here today.
HEMP GROWER FINANCING
One of the areas in the farm bill of 2018 classified hemp
as a commodity, and in turn, it makes it eligible for crop
insurance. And some farmers in my district have expressed an
interest in growing it as part of their rotation.
Could you explain what the next steps would be for farmers
that are interested in growing hemp in terms of financing?
Mr. Tonsager. I would like to offer some thoughts. In
addition, we are prepared to provide some guidance to the Farm
Credit System on exactly that subject. And so it is clear that
the hemp that is low-THC levels, under 3/10ths percent, is now
legal to be produced. The 2018 farm bill also established a
program to be operated by the Secretary and the States to help
the growth of the hemp program. But they do not believe that it
is going to be available until 2020, is my understanding.
The Secretary has recommended that people operate under the
authority of the 2014 farm bill that is granted and been out
there and available to people to use on a pilot basis. We have
identified a list of criteria that we are going to be giving to
the Farm Credit System, under which they could potentially
finance it.
I would like to offer to my colleague here; I know he has
great interest in the hemp issue as well.
Mr. Hall. While there is a lot of clarity, there is a lot
of uncertainty, too. It is not USDA but the Food and Drug
Administration who is going to have to make some decisions on
hemp products.
We really see there are three different categories we find
States in right now. Some States do not even have State
authority to produce hemp, sell hemp, market hemp. States like
Kentucky and several others--I think maybe 20, 25 others--have
a pilot project that has been in operation since 2014 once it
was a pilot project in that farm bill. Those States are moving
forward.
And then there is a middle ground, where States do not have
a pilot project. They are working to try to develop one. And so
we are trying to put out guidance to address all three of those
situations. But it is clear, as the chairman stated. It is
legal now, and we are trying to make sure that we get the
proper guidance out to System institutions so they can provide
credit to borrowers.
Mr. Moolenaar. And you said to rely on--it will not be
available until 2010?
Go ahead.
Mr. Hall. I think that 2020 is when we anticipate USDA
putting out their regulations. I know they are in the process;
in fact, I am attending a field hearing next week with AMS to
get some more information on that. But just given the growing
season, something is going to have to come up pretty soon, and
I just do not see anything, probably, this growing season. It
is going to be those States that have some pilot project
already in place who will be able to produce.
Mr. Tonsager. But I am saying that we are ready to provide
guidance now to the Farm Credit System regarding financing.
TRADE ISSUES
Mr. Moolenaar. OK. Thank you. Also, to follow up on the
discussion on some of the trade issues, you mentioned in your
projections corn and soybeans. You felt that that was going to
be down right now.
How do you account for things? I know China has said they
will take more of our soybeans. I do not know where that stands
today. But how do you factor in those kinds of considerations,
and are you doing that?
Mr. Tonsager. Well, we rely generally on ERS's projections
for those. We study closely. We talk to the System
institutions. They have policy established for financing. And
so each institution would establish what they think the right
number is for the value of the crop in their region in
calculations of how they would support producers, along with,
of course, as we talked about earlier, crop insurance and the
other risk mitigating tools that are available.
Mr. Moolenaar. And then when it comes to the USMCA, my
understanding is that will help open some dairy markets in
Canada. Overall, does that affect any of your projections? And
are you urging passage of that? Would that be a benefit for the
farm economy?
Mr. Tonsager. We have provided guidance to the Farm Credit
System regarding what was in the farm bill approach for
improvement, and asked them to look at that closely. I am not
as familiar with the USMCA.
Mr. Moolenaar. Is that something that you would typically
weigh in on? Is that something that----
Mr. Tonsager. Yes. Well, we certainly--it has been pointed
out to us by several parties that there is help coming for
dairy producers, and that the System should allow for that help
to be made available, and that they should account for that in
their lending practices.
Mr. Moolenaar. OK. Thank you. Thank you, Mr. Chairman.
Mr. Bishop. Mr. Aderholt.
RURAL DEVELOPMENT
Mr. Aderholt. Thank you, Mr. Chairman. Thanks. Good to be
here today. Sorry I am a little late; we have had a full
morning. But I think most everybody that is on this committee,
whether you experience it firsthand or whether you just know
about it from your colleagues, know that rural America is
different from urban America. And it is no surprise that rural
lending needs, particularly to farmers and ranchers, are also
unique.
I am comforted knowing that there are entities like Farm
Credit who understand the needs of rural America. And I
appreciate all the work you do for producers and for the
districts like that I am proud to represent in North Alabama.
Financing needs of farmers in rural communities are more
than any one type of lender can handle alone, in my opinion.
Could you talk about your instrument, how it works
cooperatively with community banks and others in the area to
meet the needs of the overall communities and agriculture?
Mr. Tonsager. Yes. There, I think, one of the unknown
things is there are thousands of transactions occurring all the
time between the Farm Credit System and community banks in
serving agricultural producers. Sometimes there are arguments
over the institutions.
But they, in the field, do a significant amount of risk-
sharing on farmer projects particularly, but also on rural
projects. There are quite often community facility kinds of
loans made where the System attempts to be helpful for a
community facility and bank. We require that they seek the
participation of the bankers with them in developing these
kinds of projects.
And of course the System engages in water or sewer system,
broadband communications, and it tries to participate broadly
with other lenders in those areas. So I think in general, there
are good working relationships that occur between community
banks and the Farm Credit System.
Mr. Aderholt. Are there ways to encourage more cooperation
that would help meet rural financing needs that you could think
of?
Mr. Tonsager. Yes, I believe so. I think we currently
provide individual--the board approves individual projects
under the Farm Credit Act in community facilities in rural
America. And I think more of that could be done. I think they
are treated as third party investments. So if a project is
coming to finance in rural America, a package is put together
that the Farm Credit System, bankers and others, can
participate together in.
And as a former undersecretary of rural development, to be
successful, I think, in development in rural America, it is
about spreading risk, putting together deals where multiple
parties take a piece of the risk. And so it is not too much for
any one institution to take.
And I think the more that can be done in creating these
kinds of participatory arrangements, the better off rural
America is going to be. We need everybody in rural America
participating together and sharing risks together to make sure
that there is success because nobody can take the whole risk.
USDA is a great example. It participates with its community
facility programs with private partnerships and helping put
deals together.
LOSS MITIGATION
Mr. Aderholt. Let me switch topics just a bit. Alabama
ranks third in broiler production, right behind the chairman's
home State of Georgia, and then of course Arkansas. And my
district in Alabama is the most broilers produced in the state.
Of course, avian influenza has had a terrible impact on the
poultry growers in Alabama, and Alabama Farm Credit went out of
its way to work with products that were impacted by the last
outbreak that occurred in our State. Did your associations have
a similar problem? And how did you work with producers who
experienced losses like those that are in Alabama?
Mr. Tonsager. Again, the information that I receive is
there is significant effort by the System to work with any
party in these kinds of difficulties. And I think the many
years of experience. Avian influenza is not new. It has been
around a while. It has come and gone.
And I think that that experience helps the loan
underwriting within the System and making sure that when they
look at these cases, they know that there is a coming out, that
you get over it, you get on, and you can go on to the next
thing.
So that experience, I think, has given them a confidence in
being able to work with producers to help make sure we can keep
moving forward and keep financing them and help them make some
money, hopefully, along the way.
Mr. Aderholt. Thank you. I yield back.
Mr. Bishop. Thank you. Let me just follow up on the rural
development discussion that we had a little earlier. As I had
indicated, one of my priorities is investing in and giving
renewed focus to rural development; and for rural America to
thrive, we have to close the digital divide between urban
America and rural America.
We have got to invest in critical infrastructure, which
includes roads, bridges, water, wastewater, and we have got to
improve rural health and rural education. And much of that
focus, of course, is within the jurisdiction of USDA. But the
Farm Credit System has to play an integral part there.
In addition to providing credit to agriculture producers,
the system also makes loans for rural housing and for rural
utilities. You had mentioned it is to ensure a safe, sound, and
dependable source of credit and related services for all
creditworthy and eligible persons in agriculture and rural
America.
PILOT PROGRAM--LESSONS LEARNED
It is my understanding that in 2014, the Farm Credit
Administration ended the pilot programs associated with
investments in the rural America. What lessons did FCA learn
from these pilot programs? And are there any plans for
establishing similar projects in the future?
Mr. Tonsager. Yes. The pilot program went on for several
years, and we did learn some issues, and we--of course, during
that time, there was strong debate among many about their
participation. I think that we chose to take a route that we
felt very secure about going forward.
And we feel very confident that there is the ability for
the System to participate in these kinds of investments. At
this point, we have chosen to do it through individual
approvals by the board and these institutions. So they
continue.
We have developed a much more efficient process for
improvements at the agency on these approvals, and generally we
strive for trying to do them in two weeks. Sometimes it goes a
bit longer. We are continuing to look at processes that might
allow us to accelerate those investments. But we have come to
no conclusions on what might be the process for that.
As I mentioned earlier, I believe that it is critical, in
providing credit to institutions in rural America, that as many
partnerships can be made as possible; many institutions in the
System like to be engaged in those partnerships. So I
appreciate your interest in that, and we are diligently looking
for ways to continue to grow that.
I would like to add also that Congress authorized the Farm
Credit System to invest in what are called Rural Business
Investment Corporations. And many institutions have taken
advantage of that. There has been, I think, six or seven new
investment companies created, and the Farm Credit System has
invested significantly in those. And it is out there involved
in investments this way as well.
Mr. Bishop. The key to it is a real robust investment in
broadband and the internet because connectivity is going to
mean everything for quality of life in rural communities.
DISASTER ASSISTANCE
Let me switch gears for a moment and go back to the impact
of the lack of passage of the Disaster Bill, which has been
pending now in the Senate since January 16. We had volcanoes
and the damage done in Hawaii, the cyclones in the Mariana
Islands, wildfires and mudslides in California, hurricanes and
tornadoes in the Southeast, the Gulf Coast, the Eastern
Seaboard, the floods in Nebraska and the Midwest.
What is the impact of the slowness, the inability allow
assistance for farmers and rural communities from the lack of
passage of this? How is that impacting the Farm Credit System,
and what are the prospects that will come out of that?
Mr. Tonsager. Well, any assistance that can be provided by
the Federal Government or other parties to these people that
are affected by this is helpful. And it is not only helpful in
the giving of a grant. It also gives lenders comfort in seeing
that help occur. So I think any time the resources of the
Government are provided or other parties, it has a positive
effect.
And I cannot measure the effect of the lack of approval of
a statute.
Mr. Bishop. My time is expired. Mr. Fortenberry.
FARM CREDIT SYSTEM ADVANTAGES
Mr. Fortenberry. Thank you, Mr. Chairman.
I want to go back to a question that Congressman Aderholt
hinted at. Many of us receive complaints from the commercial
banking sector that the Farm Credit System has an unfair
advantage. Just a rough calculation: You have had about a 20
percent increase in assets over the last 5 years. Are they
correct in saying that the Farm Credit System has an unfair
advantage?
Mr. Tonsager. I understand the arguments that occur. But I
would mention a few things.
The Farm Credit System has roughly 40 percent of the
agricultural credit. The banking industry has roughly 40
percent of the agricultural credit; the Farm Credit System----
Mr. Fortenberry. Is that a recent statistic, or that has
remained the standard article?
Mr. Tonsager. It has been pretty close. It has varied a few
percentage points over time. The System was established 100
years ago as a cooperative System, so there are 500,000 farmer
owners of the System that are the beneficiaries of the Farm
Credit System.
The cooperative structure generally allows for the profit
of the System to be given to the producers, who in turn pay the
tax on it. Many of the banking industry participate in a
subchapter S structure that also allows the profits to pass
through to them.
The profits of the long-term credit lending for
particularly real estate are not taxed. The banking industry
has access to the Federal Home Loan banking system as well, and
gets some advantages that way.
So I would argue yes, there are debates that occur. But by
and large, this is a 100-year-old institution that benefits
producers, and there are offsetting issues in some cases. And I
am not aware of any analysis that has been done in recent times
that would compare the two.
Mr. Fortenberry. Thank you. Regarding beginning farmers and
ranchers as well as small farmers, you have credit available as
part of your portfolio to persons in this category. Would you
unpack some specifics?
One of the things that I am hinting at here--I will just
tell you the pretext here--we have something exciting going on,
actually, in the agricultural family. Now, while we only have a
certain amount of land, and the barriers to entry for someone
entering without connection to perhaps a family or some other
institution to obtain a larger-scale production agriculture
farm with all of its land requirements, while its capital
requirements are diminishing. That is reality.
But the interest in agriculture, particularly among young
people, is growing, particularly as there is a convergence of
different fields of science, whether that be environmental
quality, conservation, international development, are all
components of providing the necessary means toward food
security and environmental security.
What is happening is niche markets are developing, small
farms that maybe direct market to consumers, reconnecting the
rural to the urban and the farmer to the family, as well as all
types of value-added opportunities, even increasing significant
revenue on traditional production agriculture farms.
So one of the entryways into the agriculture family again
is through some of these value-added opportunities or unique
niches. Is farm credit involved in that type of issuance of
credit for those types of entities?
Mr. Tonsager. Yes. There is a strong recognition of that,
the growth of that. The Farm Credit System does provide
assistance in some cases to help getting farmers markets going.
We are all examining closely the LAMP program that was recently
provided for in the farm bill, and see some opportunity there.
Mr. Fortenberry. Well, yes. I am glad you raised that
because I think you are not in front of this dynamic yet, that
might be an important on-ramp to leveraging the Farm Credit
System to again participate in what is already organically
happening, and expansion of the agriculture family creating
exciting new opportunities.
Mr. Tonsager. Yes. I have always been a strong believer in
the value-added producer grant program. I think that has been a
great tool. And I have seen projects where the institutions
have been involved heavily in it. I think they make
contributions, and you can speak to them in the next panel, of
course, about efforts they have seen in their own areas about
the evolution of that. And I think it is exciting as well.
Mr. Fortenberry. Yes. So that was half a question and half
a speech. I think you understood the intention of my speech.
Mr. Tonsager. Yes. Sure.
Mr. Fortenberry. Thank you.
Mr. Bishop. Dr. Harris.
NAVIGATING CBD REGULATION
Dr. Harris. Thank you very much, Mr. Chairman. And I
apologize, but we have concurrent hearings. And one of the
topics I am going to ask about, actually, is--we just discussed
at the hearing with the NIH, and it is the CBD issue.
I understand that my colleague has brought it up already.
But I need to dissect this a little further because we just had
the head of the National Institute of Drug Abuse testify three
doors down that we do not know what CBD does on developing
brains right now. A 10-year-old can go in and buy CBD items at
a store.
And it is a little disconcerting to understand that now we
may be loaning money to farmers who might find out six months
from now, when the FDA regulates it, that there is--the vast
marketplace goes away. Because the amount of CBD raised or
grown for the licensed drug is minuscule compared to this huge,
overwhelming market that could come under tight regulation.
So you have got to walk me through this. Why, when this is
completely up in the air--I mean, the FDA--I spoke to the
Commissioner about this. They are very close to regulating this
industry. If they regulate it, it can fall under the
scheduling, the DEA scheduling, and could eliminate the market,
not for all hemp--obviously, you still have the fiber product--
but the CBD market.
So how are you going to factor that in when you make this
loan? Because that crop, I have got to tell you, if you are
raising it just for the rope, for the fiber, it is probably not
a profitable crop for a lot of farmers. And yet the credit
association is going to be advancing or suggesting that credit
be advanced for it.
Mr. Tonsager. Of course, it is a combination of issues that
we are struggling with. And that is, this is now a legally
available product, crop, to be produced.
Dr. Harris. OK. That, of course--and I am going to
interrupt you right there because you know, of course, that is
questionable because the raising of that crop for other than
use to make the FDA-licensed drug is actually of questionable
legality.
I understand there is an issue of disagreement on this. But
in that setting--and let me take it back one step. There are
other places a farmer can get a loan to grow hemp. Is that
right? They do not have to do it through the Farm Credit
Administration. Right?
Mr. Tonsager. Of course. Yes.
Dr. Harris. So why would the Farm Credit Administration
wade into that in a period of regulatory uncertainty? Because,
you see, the trouble is that my farmers who do not grow it now
are subject to risk because we have the coop system and all
now. They are subject to risk because of a decision made in
Washington that farm credit ought to be advanced to a product
that is of questionable legality.
Mr. Tonsager. My understanding is the statute provides for
any hemp that is to be grown of TH3, of--excuse me--.3 THC or
less, which is obviously a very low level involved with it.
Dr. Harris. I fully understand that. That is only the
definition of hemp. That is a botanical definition that
separates it from other cannabis products. It does not say that
you can sell the CBD legally. That is not a corollary of that.
So again, my question is: Why would FCA wade into this area
of uncertainty? I do not get it. There are other ways--these
farmers want to get loans; there are other ways to get it. I
know there are because the marijuana growers in my State
certainly do not get farm credit advanced to them. Is that
right?
Mr. Tonsager. That is correct.
Dr. Harris. Because of the questionable legality. Right?
Because in Maryland, it is legal to grow the drug in Maryland.
It is just not legal to grow it in the United States. Right?
Mr. Tonsager. We are--well, we are----
Dr. Harris. How is this not analogous? Is the next thing
that someone in your shop is going to say, ``You know what?
Some States approve it. It is a profitable product. Let's go
ahead and lend money for marijuana growth.''
Mr. Tonsager. Well, certainly with marijuana we are a
Federal agency and we comply completely with--marijuana is
still on the contra substance list and we are not touching it.
Dr. Harris. I am going to interrupt you once again.
Cannabis is still on the list, on DEA Schedule 1. Read what it
says. Read what it says. Cannabis is on the list. Hemp is a
cannabis plant. So again, I am going to say--and again, so I
just want to--you and I understand that there is a
disagreement, and there is question about this going forward.
Why would a banking institution--which is what the FCA is,
for all intents and purposes--take a risk on this, on this
remaining legal?
Mr. Tonsager. The guidance we provide will allow the
institutions to set their portfolio standards. So they will
evaluate the risk for themselves, for their institution, and
for the people that might be financing it. So they are going to
look at the market, which may become overwhelmed with hemp
availability, and they will have to assess that risk. They will
look at the marketplace to see if there is a market for it. And
they will look at the overall issue that occurs regarding the
hemp.
I was unaware of this particular argument. It is new to me.
It is part of the struggle. And it is probably why USDA is
moving slower. They are talking about implementation of the
program in 2020. So I suspect there are real considerations
going on of that all as well.
I would also like to allow my colleague to comment, if he
would like to.
Dr. Harris. My time is up.
Mr. Tonsager. I am sorry.
Dr. Harris. Thank you.
Mr. Bishop. Thank you, Mr. Tonsager and Mr. Hall. Thank you
all for being here today. I appreciate your honesty and your
genuine assessment of our rural agricultural economies. And I
want to thank you for your testimony. We look forward to
working with you to meet the challenges that we have discussed
today. They are significant, to be sure, but we remain hopeful.
With that, we will take a brief recess to set up for our
next panel, which I hope we can do quickly. Thank you. We will
stand in recess for 3 minutes.
[Recess.]
Mr. Bishop. All right. The hearing will now come to order.
And I would like to now introduce our second panel.
Mr. Hebrink is the president and CEO of Compeer Financial
in Sun Prairie, Wisconsin. Mr. Jensen is the president and CEO
of Farm Credit Services of America in Omaha, Nebraska. And Mr.
Pointevint is president and CEO of Southwest Georgia Farm
Credit in Bainbridge, Georgia.
As you can tell, the panel represents a diverse geographic
area. We welcome your insight, and we are pleased to have you
appear before the committee today and to give us a sense of
what you are seeing back home.
Let me ask Mr. Fortenberry if he has any remarks before
hearing from the panel. Mr. Fortenberry.
Mr. Fortenberry. Thank you, Mr. Chairman, again for calling
this important hearing. I would rather proceed right to the
witnesses. Thank you very much.
Mr. Bishop. Thank you. Let me now recognize our guests for
brief oral statements, and then we will proceed with questions.
Note that each of your entire written traumas will be included
in the record.
Mr. Hebrink, please proceed.
Testimony by Mr. Hebrink
Mr. Hebrink. Chairman Bishop and members of the committee,
thank you for the opportunity to testify. My name is Rod
Hebrink, and I am the president and CEO of Compeer Financial.
We provide financing, risk management, and financial services
to farmers and rural communities in Illinois, Minnesota, and
Wisconsin.
You are well aware of the economic challenges facing
farmers. The crop and livestock sectors we serve are best
described as struggling, impacting farmers of all ages,
experience levels, and sizes. In our region, dairy is the most
significantly affected, with hundreds of dairy farmers exiting
business this past year.
While commodity prices have always been cyclical, the
current downturn has been prolonged. We work with producers
through all economic cycles. Our team is actively meeting one-
on-one with farmers to review their financial information, to
help them better understand their cost of production and ways
they can improve their operation. We strive to assist farmers
in managing through the downturn, to position them to succeed
when the agriculture economy improves.
Each of us have farmers who have been impacted by recent
weather-related disasters. Heavy snowfalls this winter resulted
in structural damage to farm buildings. We have responded
quickly, providing 140 farm families immediate grants through
the Compeer Fund for Rural America. We want them to know we
have their backs as they begin the process of recovery.
Compeer supports the next generation of farmers through our
young, beginning, and small farmer programs. We are proud with
farmers such as Emily, a young organic dairy farmer in Illinois
who I described in my written testimony. Compeer has a strong
commitment to minority farmers. We have created effective
partnerships with community and immigrant organizations who
recruit farmers and provide training while we focus on lending
and technical assistance.
We are proud of our successful work with the Hmong American
Farmers Association that has resulted in more than 20 new
families growing and selling food to area restaurants and
farmers markets. Many of these Hmong families live in
Congresswoman McCollum's district.
Our focus in championing the hopes and dreams of rural
America goes beyond our farmer customers. We are concerned
about the continued decline in the health of rural communities.
Strong rural communities help agriculture thrive. Fresh
thinking is needed to sustain these rural communities and
agriculture.
Fulfilling our public mission includes enhancing the
vitality of rural communities. Compeer has taken a proactive
approach through partnerships with the USDA Community
Facilities Program and Rural Business Investment Companies.
Among the rural areas we have helped is Renville County,
Minnesota, which has a very personal connection. Compeer
partnered with local banks, AgCountry Farm Credit, and CoBank
to rebuild the outdated hospital where I was born, and provide
rural families a $24 million state-of-the-art facility.
Residents now have access to the quality of care previously
available only at great distances. But we did not stop there.
Farm credit grants purchased telemedicine equipment, allowing
cardiologists in Minneapolis to diagnose life-threatening heart
conditions real-time. This investment will save lives.
Compeer is one of USDA's key community facility partners,
with $760 million of projects across 17 States. We thank the
committee for your past support of USDA's programs, and request
your continued support in this year's budget.
Finally, a significant challenge to the future prosperity
of rural communities is the lack of equity capital. Developing
new approaches to attracting investments into rural communities
is essential to creating opportunities for agriculture.
Compeer began partnering on RBICs to address the shortage
of equity capital for rural America. Nearly 1500 potential
investments have been identified, representing $7.2 billion in
opportunities.
On behalf of Compeer Financial and, more importantly, on
behalf of the farmers and communities we serve, thank you for
your time today. As a partner in their success, it is a
pleasure to share their stories and the impact they are making
each and every day.
We are honored to partner with them to champion the hopes
and dreams of rural America.
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Mr. Bishop. Thank you.
Mr. Jensen.
Testimony by Mr. Jensen
Mr. Jensen. Mr. Chairman, Ranking Member Fortenberry, and
members of the committee, thank you for the opportunity to
testify today. My name is Mark Jensen, and I am the president
and CEO of Farm Credit Services of America and Frontier Farm
Credit, with our service territory covering Nebraska, Iowa,
South Dakota, Wyoming, and the eastern third of Kansas.
I will refer you to my written testimony, and I am happy to
add a few opening remarks to give you more insight into the
challenging economic environment the farmers and ranchers in
our territory are working through.
Located in the middle of the country, our portfolio is
reflective of Midwestern agriculture. Half our lending is
committed to producers concentrated on grain production, and
another 25 percent on the protein industries, primarily beef
feed lots, swine, poultry, dairy, and cow-calf production. I
will focus my comments on the grain sector.
Make no mistake--grain producers in the U.S. are world-
class when it comes to raising a crop. Above-average yields
have helped some producers, but increased volatility in
commodity markets has given them a very narrow window for
marketing grain at or above the break-even levels. Barring
unforeseen events, there are no signs indicating a significant
change to projected profitability levels.
Grain producers with higher debt levels and/or those having
higher costs to raise their crops have generally experienced
losses over the last 4 or 5 years. For many producers, these
losses have more than offset profits they may have experienced
from 2010 to 2013, during a time of higher gross prices.
Some producers are running out of options to make
adjustments to their operations and are at risk of continued
price and weather volatility. The financial outlook for 2019
does not look favorable for crop prices relative to the cost to
produce these crops, and we anticipate an additional number of
producers experiencing credit challenges.
This is the time of year that we work with farmers to
establish their credit needs for the upcoming growing season,
and this is what we know: Profit margins for producers continue
to be tight. We also know the projected crop prices for 2019
are at or below break-even level for many producers.
What we do not know is when trade agreements may be
completed which would bring needed stability to grain price
levels. Of course, we also do not know the weather. And
speaking of the weather, across much of the Midwest major
weather events over the last two weeks have taken lives, ruined
machinery and equipment, caused substantial livestock deaths,
destroyed critical infrastructure, and damaged homes and
livelihoods. It will likely take months to fully assess the
damage, but the need for assistance is immediate.
We are mobilizing staff and resources to help farmers and
ranchers and the rural communities in which they live. We have
a standard disaster assistance program that is tailor-made to
work at times like these. Producers impacted by the floods and
winter storms will qualify for this program. The program
includes more lenient credit standards, deferment of payments,
reamortization of loans, and interest rate relief.
Our staff is and will be spending a significant amount of
time helping individual producers think through their options.
We are grateful for the committee's support of the pending
Disaster Bill, and urge you to include assistance for Midwest
producers devastated by these storms, and pass the bill
immediately. With spring planting season just ahead of us, the
timing of disaster assistance is critical. We urge fast action.
Let me close by saying the agriculture industry is very
dynamic and has always adjusted. There remains confidence in
the future of agriculture and that market volatility will
improve. In this environment, agriculture needs Congress's
continued support for the farm bill, the ethanol industry, and
the Federal crop insurance program. Providing access to the
world markets through strong trade agreements is also critical
to the viability of U.S. producers.
The U.S. agriculture industry is positioned better than
anyone to feed the world for decades to come, and we are
excited to be a part of that future. Thank you, and I look
forward to addressing your questions.
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Mr. Bishop. Mr. Pointevint.
Testimony by Mr. Pointevint
Mr. Pointevint. Mr. Chairman, thank you very much for what
you do for Southwest Georgia, especially as it relates to
agriculture and rural America. Ranking Member Fortenberry, my
thoughts and prayers are with you and your constituents back
home during this time.
Members of the subcommittee, I am Paxton Pointevint, CEO of
Southwest Georgia Farm Credit, which is headquartered in rural
Bainbridge, Georgia. On behalf of the association's boards of
directors, my colleagues, and especially the resilient farmers
and rural communities of Southwest Georgia. I would like to
thank you for allowing me to be here today.
I would also like to thank each of you for the countless
hours you have spent on the disaster assistance package for the
farmers and communities that are suffering from recent storms
and wildfires.
In my home State of Georgia, agriculture contributes more
$72 billion each year to the State's economy. One in seven
Georgians work in agriculture, forestry, or a related field.
Agriculture is the lifeblood of our local economies. Our
farmers create jobs that support local business and industry.
They buy food in their local grocery stores. They purchase
tires from the family-owned tire stores. They seek and receive
care at our small hospitals. They send their kids to local
schools, and the list goes on. It is safe to assume that when
our farmers struggle, our rural communities struggle.
Southwest Georgia farmers are fortunate to grow a diverse
mix of row crops, including cotton, corn, peanuts, soybeans,
and a variety of vegetables. This is primarily due to soil
types, climate, and a consistent supply of well water for
irrigation. Such diversification and access to water has
historically provided risk mitigation for both farmers and
creditors.
However, after several years of suppressed farm income,
rising input costs, volatile trade conditions, and catastrophic
weather events, many of the customers are now suffering. The
benefits of irrigation, excellent soil types, and mild climate
cannot overcome these other factors.
Since Hurricane Michael, approximately 10 percent of our
loan portfolio's credit quality has deteriorated due to
financial-related stress on our borrowers. We expect to see
more of this deterioration as we continue to work through the
annual operating loan renewal cycle.
On the morning of October 11, 2018 our crops were at their
most vulnerable state for wind damage. Cotton plants were full
of fiber, and pecan trees were loaded to the hilt with quality
nuts and foliage. Much of the peanut crop had been harvested,
so most of the farmers had turned their attention to the
harvest of what appeared to be a very strong cotton crop, one
that would allow farmers to take advantage of an uptick in
cotton prices while improving their production history for crop
insurance purposes.
Unfortunately, we were quickly reminded Mother Nature has
the ultimate say in a crop's fate. By nightfall, Hurricane
Michael had swept through our area and decimated most of the
cotton and pecan crops. The storm also damaged agriculture-
related infrastructure and equipment like poultry houses, grain
elevators, and center-pivot irrigation systems.
Not only had Hurricane Michael created tremendous adversity
for the current production cycle, for some farmers the struggle
will continue for many years to come. Hurricane Michael's
devastating impact on cotton and pecan farmers was felt
immediately. Unable to harvest their crops in many cases, some
farmers did not make enough money to pay creditors or make
necessary repairs to equipment and infrastructure.
Fortunately, crop insurance and farm support programs have
provided many of the legal farmers with the ability to repay
some of their annual input costs. At the end of the day,
however, some farmers are still faced with significant cash
shortages, meaning there simply is not enough earnings from
their operations to repay all their obligations.
Regardless of the situation facing our farmers and rural
communities, Southwest Georgia Farm Credit remains committed to
fulfilling our mandated mission. We are currently working with
our borrowers to finance their operating losses when justified,
provide funds to repair equipment and infrastructure, and renew
operating lines for the 2019 production cycle.
As you can imagine, many of the farming families in our
area have depleted their equity and liquidity as they have
tried to salvage their operations. Given lower projected
commodity prices, lower projected farm income, and volatile
trade markets, farmers in rural communities will continue to
struggle.
Therefore, strong crop insurance programs, farm support
programs, and trade agreements remain critically important. But
more importantly, it is time to help our farmers. The time for
Federal disaster assistance is now.
Thank you very much for the opportunity to testify, and I
will be happy to answer any questions from the committee.
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Mr. Bishop. Thank you very much, Mr. Pointevint, Mr.
Hebrink, Mr. Jensen. Thank you again for being here. As I said,
the written and oral testimony is heartfelt, is compelling, and
is honest.
Can each of you just take a moment to respond to,
reiterate, or emphasize any of the testimony that you heard
from our first panel? Are there any stories or anecdotes that
you can share that will help the subcommittee get a sense of
the mood of farmers from your respective regions? And I think
we just got a taste of that from Mr. Fortenberry.
FARM DISASTER AID FROM THE PERSPECTIVE OF THE PRIVATE SECTOR
Mr. Pointevint. Mr. Chairman, I think I would add that the
best way I know to describe it is there is very little room for
error in our area, Southwest Georgia. Given the history, the
recent history, I would say the 5-year history of suppressed
commodity prices on top of the storm, it is a very critical
situation at this time in our territory.
So I think it is important for lenders like Farm Credit to
be there for their customers to try and work through these
times, and we are committed to doing so. We are looking at loan
restructures, providing additional working capital loans,
financing irrigation repairs and infrastructure repairs and
things like that, to get ready for the 2019 production cycle.
Mr. Bishop. Mr. Jensen. Mr. Hebrink.
Mr. Jensen. Mr. Chairman, I would just make a comment. As
we have dealt with both a decline in income, net farm income
across the Midwest, particularly in grain production, as well
as dealt with a disaster or two over the last few years, I
think I would call out the consistency in philosophy between
FCA, Mr. Tonsager and his testimony, and what we execute on
every day in working with our customers.
In terms of--they have been encouraged to work with
customers, or the agency has been encouraging to work with
customers through these challenging times, both in terms of the
disaster and what we have seen of the grain industry. So I
would call that out. It is important, as we work with customers
every day, which is our focus.
Mr. Bishop. Mr. Hebrink.
Mr. Hebrink. Mr. Chairman, both Chairman Tonsager's
testimony and some of the follow-up questions he had referenced
broad statistics from USDA and overall farm income. And while
accurate and indicative of the challenges and the stress within
the financial sector, it is important for us to keep in mind
that on individual producers, the impact can be very, very
different.
And for those individual producers who are exiting the
business and as I referenced, our why statement, our position
statement, that we exist to champion the hopes and dreams of
agriculture in rural America, we understand that when
individual farm families suffer, that is a suffering and a
death of one of those hopes and dreams of individual families.
And that is what we are there and who we are there to serve on
an ongoing basis, to help them through those challenges and
hopefully see the uptick in the agricultural economy.
SOUTHERN STORM DAMAGE
Mr. Bishop. Mr. Pointevint, as you know and as most people
probably know, Georgia is famous for peaches, peanuts, pecans,
and cotton. But a lesser-known fact is that Georgia is
consistently ranked at the top of the forestry industry in
terms of privately owned forestry.
In 2017, the forestry industry contributed $18.7 billion to
the Georgia economy and supported 82,800 jobs. And the
University of Georgia has estimated that Hurricane Michael
resulted in nearly $800 million in direct losses to the Georgia
timber industry.
Can you give the subcommittee a sense of the damage to the
Georgia forestry industry? And can you tell us from your
perspective how three consecutive years of hurricanes have
impacted our Georgia farmers, and to reiterate the impact of
not having passed the Disaster Bill?
Mr. Pointevint. Mr. Chairman, you are exactly right. The
timber industry is extremely important to the State of Georgia.
And I can tell you, if you took a trek across our territory on
October 10 and took that same trek, about a 40-mile stretch
across our area, you would see the landscape looks totally
different. And that is due to the significant timber damage in
our area.
Much of the timber, unfortunately, at this time is done by
private individuals. And a lot of our farmers have diversified
their operations through their timber operations. So much of
that timber was put in place as an investment for retirement
purposes, or to pass along to future generations.
One description I like for timber and pecans is the fact
that we consider it to be a generational crop, meaning it takes
many years to grow. It is typically 10 to 12 years before you
can generate any material income from a pecan tree, and it is
10, 12, or 15 years before you can generate any type of income
from a timber operation. So it has had a significant impact on
our area.
As for the three hurricanes, you are exactly right, Mr.
Chairman. 2016, Hurricane Matthew came across the southeastern
part of Georgia, and really at a bad time, just like Hurricane
Michael, really damaged the cotton and pecan crop in that area.
2017 we had Hurricane Irma that came through southwest Georgia,
not quite as severe winds but did significant damage to the
cotton crop; again, it was at a very bad time.
And then obviously in 2018 with Hurricane Michael and the
significant damage that it did on our cotton and pecans in
October.
Mr. Bishop. My time is expired.
Mr. Fortenberry.
NEBRASKA FLOODING
Mr. Fortenberry. Thank you, Mr. Chairman. Thank you for
your questions and your vivid description. Sometimes when we
are talking balance sheets and debt ratios and deferred
interest and loan consolidations, we are in the realm of the
abstract. So stories that point to the significance of the
problem out there are always very helpful. Let me give you an
idea of what happened in the area which I represent.
So we had three 500-year events along three rivers where
they basically converged: the Platte, which runs from west to
east, flowing into the Missouri; the Elkhorn, from the north
down to the south end of the Platte near the convergence of the
Platte and the Missouri.
So you have rain on top of frozen ground on top of snow,
with rising temperatures, causing a slurry of soil and ice that
is not absorbed into the ground smashing against flood control
barriers, levees and other designed systems to protect our
communities.
So when it hit the Missouri, this wave, this tsunami of
sorts, couldn't not go anywhere except backwards, upriver,
which then came over the top of the levee system designed to
protect Offutt Air Force Base, which is a significant part of
our Nation's military infrastructure, which houses, by the way,
Strategic Command, which is the most--the place of the most
powerful command of weaponry in the world. Going back upriver,
all along the Platte as well as the Elkhorn where you had levee
systems failing, it looks like Swiss cheese, according to the
Corps of Engineers.
The town of Fremont was largely spared except in the
southern portion of it, when the Platte River decided to take a
new course, going back to the 1940s route that it once had,
blowing out 400 yards of levee that I saw. The little town of
North Bend had water just coming like fingers straight through
the streets.
And then going further west, south of the town of Columbus,
which is 25,000 people, there is a little truck stop called T-
Bone Cafe. Well, I saw the initial pictures of T-Bones, which
had water and mud four feet high. By the time I got there, a
lot of that mud was out, and I looked at the manager, Fred, and
he said, ``We don't mess around. We're Nebraskans. We get it
done.''
The point of all this is, there is a real cooperative
spirit where I live. And in America in general, the disasters
tend to bring about the best of us. Neighbor helps neighbor.
Local governments have done an extraordinary job of responding.
Our role here is to provide the backup mechanisms, which when
local responses are overwhelmed, we are here to help.
So can you speak to any specifics in regards to some things
that you have done? You talked about the grain sector, but the
livestock sector is also significantly impacted.
Back to T-Bones. They have two boots, large six-foot or so
cowboy boots that greet you on the outside. One was found about
300 yards away in Mitulka's Garage, and the other one about
half a mile away on Highway 81. These are big, concrete boots,
big boots sunk in concrete that were just tossed about like
toys.
So that's kind of amusing. But at the same time, when you
see a bloated cow right next to that area on the side of the
road, who knows where it comes from? It points to the issue
that the agricultural losses are going to mount. It is almost
easier, in a way, to identify the losses in the urban
communities because they are dense and the resource mechanisms
are right there to begin to count. It is a little bit harder in
the agricultural community.
HANDLING LOSS AND PREDICTING CASUALTY
So two questions, Mr. Jensen. What specific examples of
what you have already done with persons who are benefitting
from your credit portfolio? And second, how intense do you see
the agricultural losses rising, or how intense will the rise
be?
Mr. Jensen. Congressman, thank you for the question. And it
has been an interesting week or two, has it not? It is a
disaster that I do not think any of us were ready for or
anticipated.
I am going to start off my response to your question with a
letter I received, actually, from one of our customers. And
this is the letter that was received on March 25, so within
days after this occurred. And it was after one of our loan
officers had already been out to meet with the customer and
look at some of the extent of the damage they have seen and
start talking about, ``What about next steps?''
And this is how we kicked off--this customer happens to be
from the Columbus area, which you just mentioned. ``I am one of
the victims of the terrible flooding across the State of
Nebraska. It is going to be a long road to recovery.'' So that
is how he kicked it off.
So we are in the process right now of meeting with many of
these customers in these affected areas. We know that there
will be many that would be impacted. We also had many employees
impacted. I think we identified 11 employees that had
significant damage to their homes; four of them may lose their
homes. So we are dealing with it both in terms of customers and
employees.
There were a couple of unique aspects to what happened
there, and you mentioned many of them and how all those things
converged at one time. The extent of this flooding is probably
something we had not seen; this flooded outside of what would
typically be some of your river typical flooding areas if you
were to get some mild flooding.
And then how quickly it happened--it converged all within a
day or two. A lot of our customers did not have time to get out
there and remove grain from bins, remove livestock from those
areas, move machinery and equipment out. The impact is
significant, and there are all kinds of estimates, and I know
you have seen them, too, how broad this could be. Clearly it is
in the hundreds of millions of dollars, if not billions.
What we are doing immediately is, when an event like this
occurs, what we find is the customers need some time just to
get their arms around what has happened and deal with what is
ahead of them. And then one of the first conversation was to
start to work with their loan officer, their banker, to start
talking about what options they have.
So the things that we have done so far is this is not only,
as you mentioned, impacted a lot of farm producers. But their
communities to some degree have been devastated. So the
Nebraska Farm Bureau immediately set up a relief fund. You have
got to give them a lot of credit for how quickly they responded
to that.
So we have made a significant financial obligation to them,
to the Nebraska Cattlemen's, to the Red Cross, and then also
the Farm Credit system has an employee relief fund that we have
donated a significant amount of dollars to. Add that up, we
have donated about just under $200,000.
In addition to that, as I mentioned, we are starting to
have conversations with our customers. And we have what is
called a disaster assistance program that is built for these
types of situations that--unfortunately, we see them from time
to time, and we pull that off the shelf, which starts to lay
out options for customers to look at--a lot of the cases, they
need to buy a little time. There might be payments coming due
here in February--excuse me, in April or May.
So there are ways that we, under that program, defer
payments, reamortize some loans, advance some additional
dollars under a low-interest loan program to help them. So
those are some of the things that we are doing immediately and
some of the things we have done for the community. And I
realize I am running out of time, too.
RURAL DEVELOPMENT INTERACTIONS AND EXPERIENCES
Mr. Bishop. Thank you. I am interested in learning a little
bit more about your rural development activities. Rural
communities and agricultural are interdependent, and the Farm
Credit Association has played an important role in financing
and supporting rural hospitals, housing, and infrastructure. As
you know, our committee oversees rural development at USDA.
From what you see on a day-to-day basis, what are the
greatest needs that you see in rural America? Do any of you
have experience working with the Rural Development Agency,
USDA? And have those interactions been positive? Because what
you have to do is, whether it is housing, whether it is
infrastructure, whether it is education or healthcare, you have
got to help make it affordable and accessible in order for the
quality of life in those rural communities to be improved.
Can you comment on that? Each of you?
Mr. Hebrink. Yes. Thank you, Mr. Chairman. Your
observations and insights are correct. In order to retain
population in rural areas, we need many of these amenities,
whether it is access to healthcare, jobs, education, and other
infrastructure, such as broadband in rural communities, to be
able to retain the rural population that exists in the young
families, your younger generation.
Compeer has been one of the most active Farm Credit
Associations within rural development. We have participated
very actively with the USDA in those rural development
programs, particularly the community facility programs. We have
been involved in the development of 40 projects over the
Midwestern part of the United States across 17 States, largely
rural, critical access care facilities, senior living
facilities, and other community living facilities.
We have had a strong partnership with the USDA. Those
programs have been essential to put into place the financial
structure that allows those communities to move forward and
finance those projects. It has been a public-private
partnership between Farm Credit, community banks, and the USDA
programs. And we look forward to continuing to work on those
USDA programs on future projects.
Mr. Bishop. Mr. Jensen.
Mr. Jensen. In addition to those type of programs, at more
of a local level we are involved in promoting various different
agricultural programs, include 4-H programs, the county 4-H
level. We have a Hands On Learning agriculture initiative that
we participate in. We provide scholarships for 32 individuals
for $2500 each scholarships last year, and also local farmers
markets, like the Fallbrook Farmers Market in Lincoln,
Nebraska.
So those are various different types of opportunities we
take advantage of to help rural America.
Mr. Bishop. Mr. Pointevint.
Mr. Pointevint. Mr. Chairman, I would echo the comments.
But I would say that job creation is an absolute must in the
rural areas, especially in southwest Georgia. And the only way
to create jobs and lure those industries to our area is to
ensure we have access to quality healthcare, access to quality
education, and obviously, as you mentioned earlier, the
infrastructure, including broadband, to create the connectivity
we need to thrive.
But that is definitely the biggest challenge for our rural
area in Southwest Georgia.
Mr. Bishop. Well, thank you. I want to thank all of you,
all of our witnesses, Mr. Hebrink, Mr. Jensen, and Mr.
Pointevint. And on behalf of the committee, we truly appreciate
your willingness to come to Washington today to discuss a rural
economy and to provide personal, on-the-ground insight of what
is going on and what is needed from Congress.
The work that you do is extremely important, and I am glad
that we were able to have you to assist us and discuss this
important topic today.
Again, I want to thank you all for your testimony. And with
that, the subcommittee is adjourned.
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Wednesday, April 3, 2019.
FOOD AND DRUG ADMINISTRATION
WITNESS
SCOTT GOTTLIEB, M.D., COMMISSIONER, FOOD AND DRUG ADMINISTRATION
Introdution of Witness
Mr. Bishop. The subcommittee will come to order.
Good morning. I want to welcome all of you to today's
hearing. Our primary objective this morning is to examine the
Food and Drug Administration's fiscal year 2020 budget request.
Our witness is the Commissioner of the Food and Drug
Administration, Dr. Scott Gottlieb.
Commissioner, welcome back.
Dr. Gottlieb. Thank you.
Mr. Bishop. I remember well your first appearance before
the subcommittee. I think you had only been in office a few
weeks then. And now you appear to be--you are, unfortunately,
appearing before us, which will probably be your last time and
with just a few days left in your service at FDA.
I think I can speak for many people when I say that you
have been a fierce advocate for public health, tackling
critical issues such as reducing youth tobacco use, addressing
the opioid epidemic, reducing drug prices, and approving
generic drugs. You have taken on these issues during a time of
sharp partisan divides on many issues, and yet you have earned
broad bipartisan support. I congratulate you on that.
It has always been a pleasure to have you here, and I wish
you the best in your future endeavors. I hope you enjoy
spending time with your family back in Connecticut. But your
efforts and leadership as Commissioner are greatly appreciated.
Dr. Gottlieb. Thank you.
Opening Statement--Mr. Bishop
Mr. Bishop. Prior to your departure, we are going to take
one last opportunity to discuss the impacts of your agency's
fiscal year 2020 budget request.
As in past years, the FDA's request is in stark contrast to
much of the Federal Government. Many administration officials
have appeared in the recent weeks defending steep cuts to their
budgets. That is not the case here. Your request totaled $6.1
billion, an increase of 7 percent from fiscal 2019. The
increases include nearly $176 million in budget authority and
$241 million in user fees. These additional resources are on
top of a significant increase for fiscal year 2019.
On the medical product safety side of the agency, you
requested $254 million more than last year's enacted level, an
increase of over 7 percent. For the food side of the agency,
the FDA is requesting almost $56 million more than fiscal year
2019, which is an increase of 4 percent. I should also note
that you are requesting authority to increase tobacco user fees
by $100 million from the e-cigarette industry.
Again, I want to thank you for being with us today, and I
look forward to today's discussion.
My ranking member, Mr. Fortenberry, has been delayed, but I
will yield to Mr. Aderholt, the former chairman of the
committee, for any comments that he might wish to make.
Opening Statement--Mr. Aderholt
Mr. Aderholt. Thank you, Mr. Chairman. It is good to be
here. It is good to be the ranking member for a few minutes
here while we are waiting on the real ranking member to get
here.
As you know, I had the privilege to chair this committee
for 6 years. And after 6 years, I am now over at the Commerce,
Justice, Science Subcommittee. But I am glad I am able to
maintain a seat on this subcommittee and to work with everyone
that is on this subcommittee, including the chairman and his
great work.
But, Commissioner, welcome. It is good to have you here. I
would like to take a moment to congratulate you on your
tremendous productive tenure at the Food and Drug
Administration. I have enjoyed working with you to address a
number of issues that we have worked with on this subcommittee.
And, quite honestly, it is really rare in a town that someone
is able to accomplish quite as much as you have over the last 2
years. And I believe I speak for many as we appreciate your
service to the country and the fact that you are leaving FDA in
a strong shape speaks well of you as your successor takes over.
I applaud the work of the agency that it has done over the last
few years to bring increased competition to the market in order
to lower the drug prices and expand access. I know that this
has been a priority for you and the administration, and I look
forward to working with your successor in that regard.
I also appreciate your leadership to curb the tide of the
opioid epidemic, between enforcement measures against companies
that are violating the law to helping speed alternative
nonopioid-based pain medication to the approval process to your
efforts to reduce misuse and abuse of opioid drugs, the FDA,
under your leadership, has been a leading partner in fighting
the scourge on many of our communities across the Nation, and
particularly in my part of the country where the Appalachian
region has been hit hard. And, of course, I say the commission
because I just, the last couple weeks had the co-chair of the
Appalachian Regional Commission down to my district. And we
were able to discuss some ways that we can try to fight and
help this scourge that has been on a lot of the States and
particularly the Appalachian region.
And, finally, I am encouraged by your work to curb the
epidemic of youth e-cigarettes by addressing youth access and
youth appeal to these type of products. And so, again, we are
sorry to see you go, but we look forward to seeing you in your
next chapter of your life, and I know you will have great
success. So, again, thank you for being here, and I look
forward to following up with you in the future.
And thank you, Mr. Chairman, for having this hearing today
and having the Commissioner here in his last week in office.
Thank you.
Mr. Bishop. Thank you, Mr. Aderholt.
Mr. Gottlieb, without objection, your entire written
testimony will be included in the record. I will now recognize
you for your statement, and then we will proceed with questions
from the subcommittee.
Opening Statement--Dr. Gottlieb
Dr. Gottlieb. Well, thank you, Mr. Chairman, for your kind
comments at the outset. They mean a lot to me and to my
colleagues at FDA.
And I want to thank you as well, Congressman Aderholt, for
the work that we have done together over the last 2 years.
And I want to thank all the Members of the Subcommittee and
the chance to appear before you today.
As was mentioned, this is the last time I will appear
before the Subcommittee as the 23d Commissioner, and I am
grateful for the opportunity to have worked with you. I am
proud of what we accomplished together on behalf of the FDA's
public health mission. We are especially thankful for the
funding increases the Subcommittee provided to FDA in 2019.
That new funding comes at a critical time. It is going to help
FDA modernize our approach to medical product manufacturing and
make product review more efficient and safer and help us
protect our food supply. The funding request in the President's
2020 Budget will allow FDA to advance our work to ensure the
safety of food and medical products that we regulate.
Today I want to focus on one of my priorities, and one of
my biggest priorities and my biggest concerns right now is the
youth vaping epidemic. This is one of the most significant
public health crises facing FDA and also facing our Nation. And
it is one of the most significant problems that we are trying
to address.
To help address that concern, the President's 2020 budget
requested $100 million in new tobacco user fees. These new user
fees are critical to ensuring that the FDA can continue to
fight the youth epidemic and, at the same time, create a modern
regulatory framework for the appropriate oversight of e-
cigarettes. It is key that we have the resources to continue
standing up a framework to put e-cigarettes through an
appropriate series of regulatory gates and that we aggressively
confront kids' use of these products to make sure children
don't become addicted to nicotine.
Last month, FDA proposed to end our current compliance
policy as it relates to flavored electronic nicotine delivery
system products other than menthol-flavored e-cigs. We put all
manufacturers and retailers on notice that we expect to see
heightened age verification requirements in place for these
flavored products sold online and at retail. And if rates of
use among kids don't come down, we will need to take additional
steps.
Our concern about kids' use of these products isn't just
based on the potential for kids to become addicted to nicotine
from the e-cigs and then transition to combustible tobacco
products. It is also based on the direct risks posed by the e-
cigs. While e-cigs could be less harmful than combustible
tobacco for currently addicted adult smokers who can fully
transition off of cigarettes, they are not safe. For one thing,
nicotine is especially problematic because of the impact it can
have on a still-developing adolescent brain. But there are
other risks as well.
And while we are still learning about the long-term
potential benefits and health risks of e-cigs, existing
scientific research offers some clear evidence that several of
the dangerous chemicals in tobacco smoke are also present in
aerosol of some of these products. And we know that this
exposure is a major health concern due to the ability of e-cig
particles penetrating deep into the respiratory system. Some of
the toxic chemicals and other substances contained in e-cigs
can go deep into lungs and may pose the risk for disease not
usually seen in smokers.
This isn't idle speculation. And studies have shown that e-
cig vapor contains chemicals that can damage cells and cause
illness and aging. Research we have reviewed shows substances
found in e-cig vapors can pose a risk for decreased lung
development, breathing difficulties, lower defense against
bacterial and viral pathogens, and vaping-induced inflammatory
reactions. We are especially concerned about evidence from
animal studies that vapor and e-cigs can cause changes to
tissue in the airways that could induce cancer or be a
precursor to cancer.
Today, I am announcing that the FDA has initiated a
comprehensive research plan to fully evaluate these risks, and
we will report our results publicly. The FDA Center for Tobacco
Products and the Center for Drug Evaluation Research are
already leading these research efforts. Four distinct types of
Electronic Nicotine Delivery Systems products are being tested,
each with three different flavors. We need to fully evaluate
the potential risks that we have identified to inform the
public as well as our own regulatory decisionmaking.
We also have other safety concerns about e-cigs. Today, FDA
is notifying the public of a potential emerging safety issue.
We have reports indicating that some people who use e-cigs,
especially youth and young adults, are experiencing seizures
following their use of e-cigarettes. While seizures or
convulsions are a known potential side effect of nicotine
poisoning, they are more commonly encountered with intentional
or accidental swallowing of nicotine-containing e-liquids. But
our review of voluntary adverse event reports for these
products submitted to the FDA and to poison control centers has
identified 35 reported cases of seizures following use of e-
cigs between 2010 and early 2019. We believe this signal
warrants full investigation.
We want to be clear that we don't know yet if there is a
direct relationship between the use of the e-cigs and a risk of
seizure. We are sharing this early signal information just as
we would share similar information with other products we
regulate. We have identified it as a goal to communicate early
about potential safety concerns and to share when a safety
signal is under active investigation by the Agency.
As we work to evaluate these potential risks, we will
remain especially committed to preventing kids from using any
tobacco products. Any policy steps to advance innovations that
could be alternatives to smoking can't and won't come at the
expense of addicting a generation of kids to nicotine through
these same products and exposing kids to all these potential
risks.
I look forward to answering your questions today, and I am
grateful for the opportunity to be here. Thanks a lot.
[The information follows:]
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Mr. Bishop. Thank you very much, Dr. Gottlieb.
Let me start the questioning.
APPLICATION DEADLINES FOR E-CIGARETTE MANUFACTURERS
At our February hearing, you and I discussed the issue of
small e-cigarette manufacturers' ability to afford to submit
product applications to FDA. In response to my question, you
said, quote: Our desire to extend the application deadlines on
these products and give them until 2022 is to give us the time
to put in place the implementing regulations and guidance that
would not only provide the rules of the road for how to
effectively traverse the application process but also take into
consideration the kinds of challenges that you bring up about
how we can build into our regulation and guidance
accommodations for small manufacturers.
In light of this response, I have to say that I was a bit
surprised that you recently decided to shorten the deadline to
2021. I will tell you that your response was somewhat vague. I
think that we need to have a robust market for adult e-
cigarette consumers with competition and wide product choice
instead of a smaller market controlled by the big companies
with fewer choices for adult smokers, higher prices, and
probably less innovation.
If adult smokers who wish to use e-cigarettes to reduce or
to end their use of combustibles cannot find products that they
like, they may not make the change, and public health will
suffer.
And compounding, FDA has requested funds to help small
compounders become outsourcing compounders. While this isn't
exactly analogous, do you feel like the FDA should request
funds specifically to help small manufacturers navigate the FDA
regulatory process regarding e-cigarettes?
Dr. Gottlieb. Thank you for the question, Mr. Chairman.
We would certainly use the resources from the user fees
that we requested towards that purpose. And, you know, part of
the hope by trying to request funding to create a regulatory
paradigm for these e-cigarette products and for all the newly
deemed ENDS products is that we create a proper regulatory
framework that can apply, you know, the right regulatory touch,
including making accommodations for small manufacturers.
I would just point out, we shortened the application
deadlines for the flavored e-cigarette products as an attempt
to reduce the access and appeal of those products to kids, to
make sure that we have a proper Premarket Tobacco Product
Application (PMTA) process to adequately evaluate the risks of
those products, recognizing they are being more widely used by
children. It wasn't all of the e-cigarette products that we
addressed.
But, you know, make no mistake, we still have to put in
place all the foundational rules. We issued the substantial
equivalence (SE) rule last week, we should be releasing the
PMTA ENDS guidance within a couple of weeks. I was hoping to
get that out before I left, but it will be coming out. And we
will have the PMTA rule and the Modified Risk Tobacco Products
(MRTP) rule, two other important foundational rules, out before
the end of year.
So, you know, we are putting in place the elements of the
modern regulatory process for these products and, in the
context of doing that policymaking, trying to take into
consideration exactly what you are bringing to light here. We
do not want a process that is only accessible to three large
companies.
OLIVE OIL STANDARDS OF IDENTITY
Mr. Bishop. Thank you, Dr. Gottlieb.
And I want to applaud and let me you know that I think we
all support your efforts to keep e-cigarettes and all tobacco
products out of the hands of youth.
Let me turn to a more parochial level for the remaining
time I have regarding olive oil standards.
Georgia is home to several small olive farms that produce
some small batches of extra virgin olive oil. And,
unfortunately, there is no single standard of identity in the
U.S. for extra virgin olive oil. In the fiscal year 2019
appropriations bill, the committee directed the FDA to
establish a separate U.S. standard of identity for different
grades of olive oil, including extra virgin olive oil.
What progress has FDA made in the development of these
separate standards of identity for different grades of olive
oil? Studies show that the extra virgin olive oil provides
certain health benefits that no other grades of olive oil
provide.
Do you believe that the U.S. should have one single
standard of identity for extra virgin olive oil to ensure that
American consumers know exactly what they are paying for when
they go to the grocery store?
Dr. Gottlieb. Well, unfortunately, Mr. Chairman, with
apologies, I am not going to be able to answer the question
directly. But I will certainly get an answer back to you.
We have over 300 standards of identity, and we have been
fortunate to receive some funding from this Committee to
undertake a broad process to modernize those standards,
including more than 100 that relate to dairy products.
And so, I will get back to you on this specific question
around this specific standard of identity. It is not one that
has come across my desk yet, but I will make sure it does
before I leave the Agency in 3 days.
Mr. Bishop. Thank you very much.
Mr. Aderholt.
YOUTH NICOTINE ADDICTION
Mr. Aderholt. Thank you, Chairman.
And, Dr. Gottlieb, let me just start in and follow up on
the first question that the chairman asked about the e-
cigarettes.
I am encouraged by your agency's work to curb the epidemic
of these e-cigarettes that are used by the youth. And I will be
introducing a bill this week that would, number one, raise the
minimum age for tobacco products to 21. Number two, it will
require online sellers of vapor products to obtain the name,
the birth date, the address of customers, and verify the
customer's identity through a third-party database, and it
would require an adult to sign for the product on delivery.
My question will be to you is, do you think a bill like
this is needed to help address the youth nicotine addiction
epidemic that we are seeing?
Dr. Gottlieb. Well, I appreciate the question, Congressman.
I will just say at the outset, you know, while we take
aggressive steps to try to address the youth use of these
products, we still believe that these products could offer a
viable alternative for currently addicted adult smokers to
fully transition off of combustible tobacco on to something
that is less harmful, notwithstanding our concerns around the
risks associated with these products. And we do believe they
have risks. These are not safe products.
We also believe they are less harmful than smoking
combustible tobacco. That obviously needs to be demonstrated
through a proper regulatory process. We plan to put these
products through that process. But we still believe in some
public health promise of these products for currently addicted
adult smokers, which is why we are trying to strike this
balance, even while we vigorously address the youth use.
We do believe that raising--and I believe personally that
raising the age to 21 for tobacco products can help address
this crisis. A lot of the sales of e-cigarettes that we see to
youth are secondary sales of enterprising 18-year-olds going in
the store and buying a lot of product and reselling it in a
high school.
And as far as online sales of these products, one of the
things we plan to address with the guidance that we are
promulgating is trying to put in place height and age
verification requirements for these products being purchased
online. We have seen other products being sold online where
there is good age verification. Not 100 percent foolproof but
certainly better than what we have today. You look at things
like alcohol sales online, wine sales online, we have adult
signature on delivery and other kinds of age verification. And
they are more foolproof than what historically has been in
place with the e-cigarette products. Some companies have
voluntarily taken those steps now. But we think a more uniform
standard could be helpful in trying to address the youth access
issue when it comes to these products.
Mr. Aderholt. Well, I know, when you were asked just what
you said just now, you have said in the past that you want to
preserve access to noncombustible for adult smokers. And a lot
of the youth access isn't just 14- and 15-year-olds buying
illegally. It is these enterprising 18-year-olds that are
selling to minors. And increasing the age to 21 will make it
harder for this type of activity.
As I understand, approximately 80 percent of high school
seniors will turn 18 by the time they graduate. FDA's past data
indicates amongst 15- to 17-year-olds, 74 percent of access to
vapor products come from social sources; 57 percent asked for
or someone offered a vapor product; and 17 percent gave someone
money to buy for them.
If this bill that I plan to introduce, a bipartisan bill,
when it is introduced, how quickly do you think we could
reverse these current trends that we are seeing?
Dr. Gottlieb. You know, I hope quickly. I think that the
challenge here is going to be that once you have sort of an
epidemic like this under way, we are going to continue to see
some increases before we start to see decreases. I am not
optimistic that, when you have the data for the National Youth
Tobacco survey in 2019, it is going to go down. I think it is
going to go up. If it goes up, you know, 30, 40, 50 percent, we
are going to need to be stepping into the market with
additional regulation.
So my short answer to the question is I don't know. We need
to be vigorous here. And if we continue to see these kinds of
increases year over year for an additional year, we are going
to have to be very direct.
And the next place we would look is at the pod-based e-
cigarettes as a class, because these are the ones that are
being abused by kids. And, you know, at some point, there is
going to be so much use of these products that we are going to
have to conclude that there is not enough redeeming public
health value in having these products available for currently
addicted adult smokers to offset all that youth initiation.
HANDMADE PREMIUM CIGARS
Mr. Aderholt. OK. Let me see if I can sneak one more
question in.
FDA last week released nearly 200 pages of proposed
framework for the substantial equivalent process. The documents
seek input on how process may apply to handmade premium cigars.
As you may know, as with all handmade products, no two are
actually the same.
Given that FDA remains in the early stages of addressing
this process, would it not be appropriate to delay the
implementation of the regulations relative to the narrow
premium cigar category until FDA has clear guidance for these
small manufacturers on how to keep their products on the
market.
Dr. Gottlieb. Well, as you know, Congressman, we pushed off
the application deadlines for the cigars as a category while we
issued an advanced notice of proposed rulemaking to collect
questions looking at questions specifically related to the
premium cigars and whether or not there were different patterns
of use associated with those cigars that might inform the
Agency about how we might regulate these differently.
We haven't formed any conclusions. We are still going
through comments on that Advanced Notice of Proposed Rulemaking
(ANPRM). This is a question that is actively before the Agency
right now. I would just make note that we did get out the SE
rule, which does provide a pathway for these products to come
to the market using a predicate. And we have also grandfathered
a large number of cigars, more than a thousand. And that
pathway is also available to the premium cigars.
And just in conclusion, I will mention that we provided
Technical Assistance (TA) back to your office on the
legislation that you talked about at the outset and look
forward to working with you on that.
Mr. Aderholt. Thank you.
Thank you, Mr. Chairman.
Mr. Bishop. Thank you.
Ms. Pingree.
Ms. Pingree. Thank you very much.
And thank you to Chairman Bishop and the ranking member for
holding this hearing. It is bittersweet to have our last
hearing with Commissioner Gottlieb.
Mr. Chair, I do want to just, as an aside, I had no idea
that olive oil was produced in Georgia. And I don't want to rat
anyone out, but there was some grumbling next to me about
Italian olive oil.
And I really think the only solution here is an olive oil
tasting because I feel convinced that domestic olive oil and
buying American must be a good thing to do. So I would be
interested to learn more about that.
Sorry. I am just sorry.
But there is actually--you know, olive oil is one of the
products with the highest rate of fraud and mislabeling. And so
it is an interesting topic in and of itself.
But we are here to speak to you, Commissioner Gottlieb. And
I just thank you so much for your service and dedication. The
chair said it very well, but you have really worked on a broad
range of issues under the FDA's jurisdiction. And I know all of
us have enjoyed working with you. And I have in particular. You
have been so responsive, so knowledgeable about so many topics
and been willing to tackle many of the tough issues that come
before us just in a straightforward way. And we are going to
miss you. We are grateful that you get some time with your
family and look forward to staying in contact. But thank you so
much, really, for all you have done.
And, in particular, I want to thank you for a few
announcements that FDA made yesterday. First, FDA is working
with USDA and EPA on elevating our country's food waste
reduction problem during the month of April. Most people don't
know that this is Food Waste Month, but we appreciate that you
are helping us to do that. The challenges of food waste is
something I am focused on quite a bit, and so I appreciate the
joint effort.
Second, you announced some updates on finding legal
pathways for CBD products including forming a high level
working group and setting the public meeting for May 31. So,
again, thank you for prioritizing this issue, which is causing
substantial disruption in the hemp market in Maine and in
States across the country. And it would be good to have some of
these things resolved.
But since I have you here, I am going to start with a
couple of questions.
CHEMICALS IN FOOD CONTACT MATERIALS
One I wanted to ask you about I don't think I have
discussed with you before, but that is chemicals that are in
food contact materials. Public concern about food safety due to
chemical substances in our food supply continues to grow, and
we are currently dealing with PFAS contamination crisis, and
phthalates are also widely used in U.S. food contact materials,
like packaging and processing equipment.
Does the FDA consider new scientific information once an
indirect food additive has been approved? There is some concern
that some of these substances in food contact materials were
approved years ago and may need to be reassessed. And
additionally, does FDA currently coordinate with other Federal
agencies, such as the EPA and the U.S. Consumer Product Safety
Commission, on chemicals that are used both as food contact
substances and/or for other purposes subject to the
jurisdiction of these agencies?
Dr. Gottlieb. Thank you for the question.
We would evaluate the food contact materials in the same
way we would evaluate other food additives. We do a scientific
safety assessment of them. If there are historical compounds
still in use that your specific question is about, I would be
happy to take that back and take a look at what the process was
that they went through and whether or not there was updated
scientific information that we have taken into consideration.
On the food waste issue, which you and I have talked about
a number of times, I will just mention that, and we have
discussed this, we are going to be sending out letters to the
industry to encourage adoption of best-if-used-by nomenclature
on the labels. So, as long as the dating is for quality reasons
and not for safety reasons, we find that is the best language
to be using to try to discourage food waste.
Ms. Pingree. That is great. And my understanding, after
researching that quite a bit, is that changing that in a way
that would bring some sensibility to what a label means, which
are, as you know, arbitrary on most things, would be the
greatest return on our investment in reducing food waste that,
frankly, people just pick it up, and if a label tells them to
throw it away, they throw it away, even if it may be just a
little bit old.
Dr. Gottlieb. Not in my house, but----
Ms. Pingree. There you go. See.
In most houses, there is an argument, so you clearly have a
harmonic household.
PRODUCE SAFETY RULE INSPECTIONS
Let me slip in one other quick question. The FDA's fiscal
year 2020 budget request includes an increase of $16 million
above the fiscal year 2019 level for FSMA implementation to
provide inspections through the State cooperative agreement
programs. It is my understanding that, through cooperative
agreements, FDA and most State departments of agriculture will
soon begin produce safety rule inspections. FDA has indicated
that they will visit farms that are qualified exempt under the
produce safety rule, but it is understanding that States will
have discretion in whether to conduct on-farm inspections of
qualified exempt farms.
Is the FDA planning to show up at farms that are exempt
from most parts of the rule? Will it vary from State to State
as to whether qualified exempt farms will receive on-farm
inspections.
Dr. Gottlieb. Well, in that kind of a framework, we would
defer to the States unless we had a cause to be on the farm. I
mean, there might be situations where we would.
But we are trying to work in a cooperative fashion with the
States and leverage their resources. So this is $16.5 million.
It is $11.7 million in new money on top of 2019. We received
some money. We were fortunate to receive money from this
Committee about $2 million, for this effort. But this would go
towards, as you mentioned, the State cooperative agreements
program.
It would also help manufacturing and processing facilities
comply with the rule. Right now there are no resources for
those inspections. And so these are important resources for the
Agency to help advance the Food Safety Modernization Act
(FSMA). We are grateful for the support that we have received.
Ms. Pingree. Great. Well, I am out of time. But just to
clarify, I think we do realize you have limited funds
available. There was some concern that the FDA, not the States,
would be making visits to qualified exempt farms, and that
doesn't seem like the best use of resources.
Dr. Gottlieb. We would agree with that. We are looking
wherever we can to leverage the resources to States.
Ms. Pingree. Great.
Thank you very much.
Mr. Bishop. Mr. Fortenberry.
Mr. Fortenberry. Thank you, Mr. Chairman.
Dr. Gottlieb, welcome back.
You were before our committee maybe about a month ago. It
might have been the same day that you announced that you were
leaving government.
Was it something that we said?
Dr. Gottlieb. It might have been a week or two before, but
it was not the same day. But I appreciate the----
Mr. Fortenberry. Well, thank you for your service. And you
have navigated process and possibilities very well, and we are
grateful and wish you all best.
Dr. Gottlieb. Thank you.
Mr. Fortenberry. You will be with us for another month or
so. Is that right?
Dr. Gottlieb. Another 3 days.
Mr. Fortenberry. I see. Well, we better hurry and get these
questions in.
GENETICALLY ENGINEERED ANIMALS
Can you explain the state of the science regarding
genetically engineered animals? And then I would like your
perspective on the state of the ethic debate in that regard.
And then explain your proposed regulatory pathway, which I
believe you released a statement yesterday in that regard.
Dr. Gottlieb. So I think, you know, when you and I spoke
about this, we were speaking about gene editing in animals. We
see a lot of promise in this technology right now. And there
are indications in the literature. There are public disclosures
in literature of where people try to use gene editing Cas9,
zinc-finger nuclease. There are other forms of gene editing to
try to edit in modifications that can be inherited to try to,
for example, guard against certain diseases where there is no
effective vaccines or engineer other qualities that could make
the animals more advantageous for food production uses and more
impervious to disease.
And so this is a field where there is significant promise
and ethical considerations across the board. I think where the
ethical considerations are most acute, frankly, in my
estimation and where I have been outspoken, is when we are
looking at doing gene editing on germ line cells for human
reproduction. You have seen the National Academy of Medicine
(NAM) and other groups come out and talk about the need for
potential moratoriums or registries. My concern is that I can't
find a good-use case on why you would introduce gene editing in
human reproduction. And all the ones that have been brought
forward to me as a theoretical basis seem to be things that
could be addressed with modalities and through methods that are
far less high-risk and raise far fewer ethical considerations.
And so I think, as a society, we need to consider whether
or not we just put a moratorium in that kind of scientific
inquiry because I think if we cross boundaries that cause deep
concern for a large section of the population, we end up
potentially besmirching this technology for all the potential
beneficial uses, whether it is in animals or whether it is to
help cure inherited disease in pediatric patients through gene
editing.
So that is where I think the most acute ethical
considerations are right now, and I think this issue is very
ripe having seen experimentation done in China that tried to--
that did edit germ line cells, edited embryos for trying to
introduce a hereditable trait with, really, I think, not
significant enough medical rationale to support the risks that
they were taking in that case, and other people proposing other
experiments in this regard.
The resources that we are requesting would help stand up a
comprehensive program inside FDA to consider all these
technologies, particularly on the animal side, where we see a
lot of opportunity not just from biotechnology in the context
of animals and the use of these technologies, like Cas9, but
also continued biotechnology with respect to crops as well. And
we think it is time that FDA should have a comprehensive
program addressing all these possibilities. We think this could
be a significant area of growth for the United States as a new
scientific opportunity.
Mr. Fortenberry. And that is a part of your proposed
budget?
Dr. Gottlieb. That is. There was a request, I believe, for
$8.2 million, if I am remembering correctly, of budget
authority and then a user fee on top of that.
Mr. Fortenberry. Do you think that the FDA is the proper
regulatory authority in this regard particularly in response to
your thoughtful response regarding the ethics? Because I,
frankly, was surprised and pleased by the outcry from the
international scientific community about this rogue scientific
experiment in China. And I don't know if those persons are now
being watched or are part of a database to see what happens to
these persons or not or whether, again, this is just some
random thing that a scientist does because he can untethered to
the larger consequences for all of humanity.
But this question and issue was specifically to animals.
But then, of course, there is ethical considerations regarding
persons. So will you, as a part of that budgetary proposal,
have a very considered structure around the ethical question as
well?
Dr. Gottlieb. Well, I think FDA is absolutely the optimal
place to consider this technology with respect to animals, for
a whole host of the reasons, not least of which are the ones
you have brought up here today. I mean, we have a deep
experience in uses, technology, across human and animal health.
I think if we are going to watch these innovations go forward
effectively, we have to instill confidence in them. And FDA is
the proper authority to evaluate the safety of these products.
And that is our first consideration.
I think, frankly, also, the ethical questions and the other
kinds of broader questions, the societal questions and public
health questions that we have to consider across our portfolio,
and FDA, looking at this technology across an entire portfolio,
allows us to make the distinctions between doing something in
an animal and putting a hereditable trait into an animal
versus, why would you ever consider doing that in a human? And
so, keeping the technology within the domain of an agency that
can make those considerations across a portfolio makes eminent
sense for a whole host of reasons, not least of which are the
ones you brought up.
Mr. Fortenberry. Thank you very much.
Mr. Bishop. Ms. McCollum.
Ms. McCollum. Thank you, Mr. Chair.
Before I get into my question, I wanted to share this with
the committee because I agree with my colleagues who are
concerned about this. This is from Bloomberg News: China is
selling genetically modified mice for as much as $17,000 a
pair. Demand for animals that mimic human disease is
skyrocketing as President Xi Jinping works to churn the country
into a biomedical powerhouse by 2025.
So this is something that we need not only to be addressing
here in the United States but something that we need to be
addressing with our colleagues and friends, you and around.
REGULATION OF COSMETICS
So good morning. Thank you for being here. And I want to go
back to one of our first conversations when I asked about
cosmetic regulation, or should I say therefore the lack of
regulations. And I asked you about some of the tools available
at the FDA to ensure the safety of the millions of cosmetic
products on the market today. And I have been learning a little
more, and I want to thank your office and others for helping us
with this.
Part of the problem is Congress has granted you and the FDA
very little authority to even regulate cosmetics. You don't
have the ability to order mandatory recalls. You can't inspect
facilities or records. You can do that with other food and drug
products, but you can't do that with cosmetics. And cosmetic
companies don't have to submit safety data before marketing
their product. They are not required to register their
facilities with the agency or even comply with basic good
manufacturing practices.
So, even if you did have mandatory recall, cosmetic
companies are not required to even report their adverse effects
to you. So, clearly, I think there needs to be more done.
In a 2017 letter from the FDA to Energy and Commerce Chair
Frank Pallone, said 2.9 million products were imported. Less
than 1 percent were physically inspected. But of the products
that were physically inspected, and this is 1 percent, 15
percent had adverse findings. And additionally, where the U.S.
has been banned or restrict 11 substances for use in cosmetics,
the European Union has banned more than 1,300.
And I point these numbers out because it seems like we
might not be giving you all the tools in the toolbox you need
to do to carry out basic functions I think the American people
assume even in cosmetics that you are doing. One of the offices
of congressional appropriations at the FDA in fiscal year 2019
was $7.3 million, 27 full-time employees devoted to cosmetics.
In 2019, a little increase to $8 million and 31 full-time
employees or plans.
So I am glad to see the trending is going upwards. But at
the same time, Congress had tried to pass unsuccessfully
legislation that would have expanded your authority over the
industry. But short of that happening, and that is something I
am going to be working with others on, is there anything that
you can point to us in the 2019 budget that you are going to
build on to help make it safer for consumers and the role that
you are going to have with the extra employees and the extra
dollars so that we know the direction to help, due to lack of
regulation, to make you more effective in protecting U.S.
consumers?
Dr. Gottlieb. Well, I appreciate the question. And you and
I have had the opportunity to talk about this. And I share your
concerns that there are a lot of things that we think we would
like to be doing as the industry gets more modern, as more
products are on the product, more diversity of products,
products with more active ingredients and creating more
potential opportunities but also more risks. You know, looking
at mandatory recall authority, Good Manufacturing Practices,
inspection capacity, reporting of adverse events, looking at
issues with metals in tattooings, for example. We have seen a
sharp increase and changing patterns of how people use tattoos.
It is another area of regulation where we have some questions
and things that we would like to be doing.
There is nothing specific in the Budget, to answer your
question directly. I hope you don't take that as a reflection
of our lack of concern and interest in doing something.
Ms. McCollum. No.
Dr. Gottlieb. What I would say is that if we are unable to
try to do something within the cosmetics program itself, my
long-term plan, we worked this up internally, would be to move
the cosmetics program to the drug center where, you know, more
and more of the cosmetics themselves have active ingredients in
them where they could be able to leverage some of the resources
that we have in our drug center.
I don't want to do that. I would rather see it reside as it
historically has resided within the food center. But if we
can't get more resources into that program, one way to try to
support it better would be to move it into our center for
drugs.
Ms. McCollum. Thank you. Thank you, Mr. Chair.
I think some of the heavy metals that I am finding in some
of the cosmetics, I think most women would be taken back,
because it is women who are primarily using these products, but
more men are starting to go use them too.
Thank you.
Dr. Gottlieb. That is right.
Mr. Bishop. Ms. Lee.
Ms. Lee. Thank you very much, Mr. Chairman. Thank you for
this hearing to you and our ranking member.
And thank you for being here, Dr. Gottlieb. I just want to
say I wish you well and good luck in this next chapter of your
life. It has been great getting to know you.
DIABETES DRUGS
As you know, I am going to bring up again my two favorite
subjects: Cuba and cannabis. And, you know, when you were here
in February, I mentioned that I care very deeply about reducing
diabetes, especially in communities of color. Thirty million
Americans--that is about 9.4 percent of the United States
population--has diabetes. And for African Americans, those
numbers are even worse. African Americans are 80 percent more
likely to get diabetes than their white counterparts. And
currently 13 percent of African Americans, the entire
population, has diabetes. And, unfortunately, in many of these
cases, amputations are prevalent.
So it is my understanding that the FDA cannot comment on
this possible ongoing approval of a Cuban diabetic drug called
Heberprot-P which helps prevent and treat foot ulcers and also
prevents amputations. I have visited, I have seen, with members
of the American Diabetic Association, Members of Congress, it
is used in many countries.
So, while the drug was signed by the Cuban company, it is
called Heber Biotec, and the U.S. company, Mercurio Biotec, we
still don't know where the FDA is on their approval. And this
drug has already been made available in--I believe it is over
20 countries in the world.
So what can you tell us about what is going on? Are you
familiar with the companies? How do we get an update if, in
fact, we can't just ask what the status is? And what is the
regulatory framework for dealing with drugs from other
countries?
Dr. Gottlieb. I appreciate the question.
I can't comment on a specific sponsor and whether or not
that sponsor has filed an investigation or a new drug
application and is, in fact, engaged in the regulatory process
just because that would constitute commercial confidential
information. As much as I would like to answer your question
very directly, I would put the question back to the sponsor,
and I would hope that they would be responsive to you.
I would say, though, just at a broader level, a drug that
met the profile of what you are suggesting and if it showed
promise in an early stage clinical study that it could achieve
the kinds of outputs, end points that you have suggested here
today, that kind of drug would potentially qualify for
breakthrough designation with the Agency. It would be something
that we would be very interested in.
But as far as this specific drug and whether or not they
have engaged FDA, that is a question that the sponsor would
have to answer.
Ms. Lee. I understand they have engaged FDA somewhere in
the process. We just don't know where it is. It has been there
for a year, 2 years.
Dr. Gottlieb. Right. I am not sure what they have said
publicly, about their engagement with the FDA and whether or
not they have an active Investigational New Drug.
Ms. Lee. So we should go back to the sponsor.
Dr. Gottlieb. And ask them if they have an investigational
new drug application on file with the Agency.
Ms. Lee. And they could tell us the status?
Dr. Gottlieb. They should be able to give you some
information about that. And, you know, that would give you an
indication of where they are and what stage of development they
are in.
We could help guide you on the questions to ask them.
Ms. Lee. OK. No, I would like to do that because this has
taken much too long, and we need this.
LAWFUL MARKETING OF CANNABIS DERIVED PRODUCTS
You announced steps yesterday that the FDA has advanced in
our cannabidiol regulatory pathways for lawful marketing of
cannabis-derived products. Since the public hearing, I guess on
May 31, an interagency working group is going to explore
dietary supplements and conventional foods containing CBD and
public website updates. It is a good first step, especially
considering we just passed into law the farm bill which has
hemp now as a descheduled schedule I control substance.
So I am concerned about the proper interagency
communications with this working group. And I wanted to find
out who do you plan to include in the public hearings? And are
you working with an intergovernmental body to make sure that
nothing drops through the cracks and our regulations are
consistent and you are collaborating with Congress?
Dr. Gottlieb. Right. I appreciate the question.
We have engaged with DEA and USDA around some of these
questions. I think a lot of them fall within the purview of the
Agency.
You know, we have heard Congress loud and clear that there
was an intent to provide a regulatory pathway that allowed for
the lawful marketing of products derived from hemp, including
CBD. But that bill also preserved FDA's drug authorities. And
so what we need to do is craft a framework that allows CBD to
lawfully be put into food products, even though it is a drug
product and didn't previously exist in the food supply. That is
the conundrum here: Because it never previously existed in the
food supply and it is subject to substantial clinical
investigation and also approved as a drug, we would have to
create a separate regulatory scheme in order to allow this to
be put lawfully into the food supply. We don't have a really
modern proxy for where this has happened. That doesn't mean we
can't create such a framework.
But part of what we are going to do--and this is a working
group being chaired by Amy Abernethy, who is here with me
today, the Principal Deputy Commissioner at the FDA and a
physician--part of what we are going to do is also look at
potential legislative remedies where you could potentially
have, for example, and I don't want to speculate too much, but
you could have situations where CBD exists in lower
concentrations as a food additive and in a more purified high
concentration form as an approved drug.
I will just say, CBD is not entirely safe. We have CBD in
the context of some of the drug applications, and there are
side effects associated with it. And so, when you think of the
cumulative effects of having CBD for breakfast and lunch and
dinner in different food products, you might be getting a dose
that could potentially cause public health concerns, safety
concerns, including liver damage.
Ms. Lee. Thank you very much.
Mr. Bishop. We have been joined by the distinguished
gentlewoman from New York, the chairwoman of the Appropriations
Committee. And she has an extremely busy schedule, so I ask my
colleagues to please indulge me as I recognize her out of turn
but, of course, in turn as our distinguished chairwoman.
The Chairwoman.
The Chairwoman. Thank you very much, Mr. Chairman. But we
have several hearings going on at the same time.
I want to welcome you, and I also want to wish you well.
And I won't say I told you so.
E-CIGARETTES
But we have had a discussion about what is going on with
these kids and the fact that 60 percent of the kids are vaping
today. And the now it is going down to junior highs and
elementary school. But any event, we have had many
conversations about this.
Last month you described a difficult meeting with Altria
suggesting the tobacco giant went back on its earlier promise
to withdrawal pod-based products from the market all while
moving forward on a $12.8 billion investment in Juul--boy, I
saw that in the newspaper, and I was pretty upset--valued at 35
percent stake in the e-cigarette maker. I was so alarmed by
this sale. I am not sure that I was surprised, but I was
alarmed.
Do you believe that Juul and Altria are working in good
faith to reduce youth use of e-cigarettes? By the way, you look
at the local newspapers, huge advertise for Juul; in the
bottom, ``This could be dangerous to kids,'' so I don't know if
that is the exact word.
Why would Altria publicly say it is so concerned about
youth use of the e-cigarettes that it would offer to
voluntarily remove flavored products from the market pending
FDA review and then shortly thereafter make this investment in
Juul? And what can we do about this?
Dr. Gottlieb. Well, Mrs. Chairman, you did warn me. And,
sadly, you were right about the epidemic that ensued with
respect to these products and kids.
You know, you ask about, can we rely on their good faith? I
am not dependent upon their good faith. That is why we have a
regulatory system in place, and that is why we have been taking
regulatory action.
I will take voluntary action where I can get it. And if
these companies want to voluntarily comply with our rules and
take other steps to try to thwart this epidemic, I welcome
that. But we are not dependent upon that.
Unfortunately, I can't answer your question. I invited
Altria and Juul in to answer that specific question. And I
can't say that I walked away from my meeting with them with
clear insight into why they would send me a 15-page letter
saying that they believe that the pod-based products are so
concerning with respect to, you know, stoking this youth
epidemic, and the flavored products in particular are so
problematic that they are going to voluntarily withdraw their
entire portfolio from the market pending either a successful
PMTA application or otherwise the abatement of the youth
addiction crisis and then, several months later, make an
investment to extend market access to the flavored pod-based
product that happens to be, the top selling product with
adolescents.
And so, those two don't seem to square with me. I thought
maybe they would come in and tell me they thought the youth
crisis had abated and met one of their criteria in the letter.
But, clearly, they are not going to be able to say that. So I
am not sure what their rationale was from a public standpoint.
The Chairwoman. Let me just ask you, because time is
limited. We have had many ongoing conversations, and I
appreciate your concern, and I wish you good luck in your
future.
What kind of advice do you have for your successor? Do you
have any recommendations or cautionary tales, particularly
regarding tobacco regulation and enforcement? Are you free to
really share with us whether you think--never mind could have--
what can be done now to possibly prevent this spread?
It is just widespread, as you know, everywhere.
Dr. Gottlieb. I appreciate the question.
I have had a lot of advice for him. I have to temper some
of my advice for him because I want him to show up for work on
Monday. But, I think a lot of this is going to depend on what
we see with the 2019 National Youth Tobacco Survey, which we
are doing in the field right now. We will have the results
probably late July or early August given the fact that we will
probably try to take an early look at them.
I think the policy that we announced several weeks ago,
that we will fully implement shortly to try to put in place
significantly heightened age verification requirements for the
flavored products and the pod-based products at retail
settings, is going to impact this. But unfortunately, our
regulatory action in the setting of any epidemic--and this is
the lesson we learned from the opioid crisis--you are always
sort of one step behind a burgeoning epidemic. And that is why
we are trying to act so aggressively to get in front of this
one.
The Chairwoman. Thirty-three seconds. One thing that you
would like him to do?
Dr. Gottlieb. So, if the 2019 National Youth Tobacco Survey
shows another substantial increase, I think we need to look at
the potential market withdrawal of the pod-based products as a
category because those are the products that are being abused
by the kids and particularly the flavored products. That is
what we are going to have to start to look at, the cartridge-
based, pod-based products. If we see another 30, 40, 50 percent
increase and we see youth tobacco use rates of this country hit
40, 45 percent, which is where we will be if the increase in
cigarettes continues to go up.
And I will just add, we are not going to see an increase in
e-cigarette use among kids without also starting to see a
corresponding increase in cigarette use among kids. So all the
dramatic gains that we have made in recent years from a public
health standpoint, abating smoking among kids, will have been
reversed.
The Chairwoman. Well, thank you very much, Mr. Chairman.
And I wish you good luck. And I just hope, as you leave, based
upon--we all have could have, should have, would have. I do
hope you leave a very clear directive and perhaps encourage us
to work with the FDA in place--putting in place some really
stringent, stringent actions.
So thank you very much and good luck.
And thank you, Mr. Chairman.
Mr. Bishop. Thank you for your patience.
Mr. Moolenaar.
Mr. Moolenaar. Thank you, Mr. Chairman.
And, Commissioner Gottlieb, thanks for being with us, and
thank you for your service and all you have done at FDA and the
work you have done to advance the mission and protect public
health. I really have appreciated the time I have had to get to
know you briefly and just see your passion for your work. So
thank you for being here today.
OPIOIDS
I wanted to follow up with you on some of the testimony you
have had about fiscal year 2020 budget request, where you have
requested an additional $55 million to support FDA's efforts in
addressing the ongoing opioid crisis. And I understand you are
focusing on four priorities: decreasing exposure, preventing
new addiction; supporting the treatment of those with opioid
use disorder; fostering the development of novel pain-treatment
therapies; and increasing enforcement and assessing benefit
risk.
I wonder if you could comment on what the FDA is doing to
expedite the approval of nonaddictive, opioid-alternative
treatments.
Dr. Gottlieb. So, thank you for the question. We have
stated that we are going to withdraw the existing guidances
that we have in place as it relates to laying out a regulatory
pathway for the development of drugs, particularly to treat
chronic pain--acute and chronic pain, but particularly acute
pain, and be replacing those with new guidances that are
indication-specific. So, outlining a regulatory pathway for
pain related to minor post-surgical procedures or pain related
to dental pain or bunionectomy or other sort of common places
where you see analgesics prescribed, trying to allow for
sponsors to come to the market with more targeted studies
rather than having to do, five or six studies across multiple
indications. We think this will create a more efficient pathway
for the development of nonopioid alternatives for the treatment
of pain.
So these guidances are going to start to roll out. We have
one specifically addressing evidentiary standards for nonopioid
alternatives. So, this is sort of a modernization of the
overall framework as it relates to the development of these
products, and I will just say, in closing, we have also said
that we have been very clear that a product that could
potentially treat pain, without all of the addictive qualities
of opioids, would probably be a product that would qualify for
breakthrough designation and all the benefits of all the
expedited processes that Congress has legislated over the past
several years.
Mr. Moolenaar. OK. Thank you. Are there any other lesser
known programs or initiatives within the FDA that--maybe that
you haven't highlighted in the budget that you are believing
that this subcommittee should further investigate, to address
the opioid crisis?
Dr. Gottlieb. Well, I think one of the things that is sort
of embedded in the budget is continued efforts to try to
rationalize the prescribing of opioids. I believe that the
agency--and we have sort of taken on a view over the last
couple of years, that we play a significant role in trying to
reduce the rate of new addiction by trying to rationalize
prescribing; making sure fewer prescriptions are written; they
are only written for appropriate circumstances; and when they
are written, it is for a duration of use that comports with the
clinical reasons why the prescription was given in the first
place.
So a lot of the resources that we got last year are going
towards developing evidentiary standards, evidence-based
guidelines that can potentially be used by physicians and maybe
even eventually be incorporated into drug labeling to try to
better delineate what the appropriate dispensing and
prescribing should be by indication. Because when we look at
our data, if you look at, you know, postsurgical procedures,
cholecystectomy, things like that, typically it is a day or two
of prescribing of opioids, and yet you still see doctors
prescribing 30 pills in those situations. And so we want better
evidence-based guidelines that can be used to help guide those
circumstances.
We are also going to be implementing, very soon, authority
that you gave us to acquire the immediate release formulations
of the drugs we put in blister packs, so that more doctors will
default maybe to a one-a-day pack of drugs, rather than, again,
a 30-day tablet fill. So that whole area of activity, I think,
continues to be exceedingly important in a place where FDA
plays a unique role and perhaps a singular role in trying to
address this crisis.
THERAPEUTICS FOR RARE CANCERS
Mr. Moolenaar. Thank you. Occasionally, I will meet with
people who, in my office, who talk about some of the rare
cancers, and I wonder if you are--kind of what you could
comment on the FDA doing to help develop more therapeutics for
those rare cancers and how the FDA might be able to incentivize
or accelerate drug development in these areas.
Dr. Gottlieb. I think we have had tremendous success in
recent years, trying to target rare and ultra-rare diseases and
particularly in the oncology setting. More than 40 of the
record 59 approvals that we had last year were in oncology, and
some in pediatric oncology and other very, very rare tumor
types.
The challenge is, in many cases, recruiting enough patients
for these trials. So that is where we look at things like
master protocols where you can allow multiple drugs to be
tested within the same protocol. We put out guidance to sort of
delineate that framework for the development of oncology
products; basket trials where you can test multiple indications
within the context of the same trial; tissue-agnostic approvals
where we might approve a drug that is targeting a rare mutation
that might be seen in multiple different types of tumors, but
rather than approving the drug in tumors in the pancreas and
tumors in the liver, we would approve the drug on the basis of
the marker that it is trying to address that drives multiple
different types of cancer.
So all of these innovations in the clinical-development
process, I think, are having an impact to try to achieve the
purpose that you are identifying here to make it more efficient
and to develop products for these very rare cancers.
Mr. Moolenaar. Thank you very much. And again, thank you
for your service.
Dr. Gottlieb. Thanks a lot.
Mr. Bishop. Ms. DeLauro.
Ms. DeLauro. Thank you very much, Mr. Chairman.
And I just want to welcome Dr. Gottlieb. Thank you so much
for being here today, but really thank you for your service
over the last several years.
You and I have not seen eye to eye on every issue, but I
really do appreciate many of the important initiatives that you
have spearheaded, and I hope that, moving forward, two things,
one, FDA will continue much of the work that you have started,
and then, for you personally and for your family, that you move
on to another productive chapter in your life. So thank you
very, very much, for going back and forth with us.
I just want to mention to my colleague, Mr. Aderholt, who
is not here, but the online sales of e-cigarettes--we
introduced the Youth Vaping Prevention Act in January 2019, the
first section of which deals with online sales and age
verification. So we will communicate that to him.
OPIOID LABELING
Let me just ask a question with regard to FDA's role in
opioid labeling. Your testimony, you describe the ongoing
crisis of addiction, one of the highest priorities. You are
familiar with the 60 Minutes report, ``Did the FDA ignite the
opioid epidemic?'' 60 Minutes identified a controversial
labeling change in 2001 for Purdue Pharma's oxycontin.
The approval of oxycontin in 1995 was based on science that
showed oxycontin to be safe and effective, underscored, only
for a, quote, short-term use. 2001, FDA allowed the label to be
changed to include terms like, quote, daily, around-the-clock
for an extended period of time, end quote.
It later becomes--and this is still true today, as I
understand it, that, quote, there is long-term use, which has
broadened the drug's use to all chronic-pain patients. If this
labeling change occurred without a clinical trial to support
it, as has been reported, would that be a violation of the law?
And just a yes or no answer on this one.
Dr. Gottlieb. The labeling change itself would not. What
was a violation of law--and we know that now--was how they
marketed off of that label. And they have been criminally
convicted for it.
Ms. DeLauro. But only with a short period of time for a
clinical trial, which I believe it was about 2 weeks in time--
Dr. Gottlieb. It is hard for me to relitigate the labeling
change made many years ago, but I am familiar with the history.
But the labeling change was made with good intention. The
language that they used tried to discourage the use of the
long-acting formulations when immediate-release formulations
could do. So we were seeing doctors using these long-acting
formulations for things like postsurgical procedures, when you
really should be prescribing Vicodin or Percocet for a few
days. What we couldn't envision was how the company would
inappropriately market off of that language.
Ms. DeLauro. But with regard--my understanding is that the
law says that a drug must have substantial evidence of
efficacy, that the drug has the effect it purports to have in
the label. I really would love to see, and if you can get to
us, with getting us the substantial evidence of efficacy, for
oxycontin's label of chronic, long-term use.
Dr. Gottlieb. Well, I will tell you, we are doing that now.
The changes that were made historically were with the best of
the intentions by the FDA staff, but we are using the authority
that Congress has given us under the SUPPORT Act to require
long-term efficacy studies with chronic administration, and
require that those studies will be done, that information will
be put into the labeling, and we could take additional
regulatory action on the basis of what we find. So we are doing
that.
Ms. DeLauro. OK. But because, you know, if you look at the
label, it shows a single, 2-week efficacy study in the 20
milligrams dose. That was it. And we are talking about a drug
whose launch and aggressive marketing, honestly, you would
acknowledge, I would, we all would acknowledge, is the most
responsible for igniting the epidemic that we have today. In
your opinion, is this 1, 2-week study legally enough to justify
long-term, chronic-use labeling for oxycontin?
Dr. Gottlieb. Yeah, it is hard for me to sit here and
comment today on the historical information that they had at
the time. I am not familiar with all of the studies that they
were evaluating at that time and what the standard was for the
decision. I will tell you the company was criminally convicted.
They marketed inappropriately off of this label.
Ms. DeLauro. Yeah, I knew that, but I think we have to look
at what the labeling change was just as for future use. Now,
this is Dr. Woodcock at the FDA on chronic labeling. She says
here, in 2013, and I quote: FDA is not aware of adequate and
well-controlled studies of opioid use longer than 12 weeks.
Again, the FDA--how does the FDA justify the current
labeling for chronic, long-term use? Let me just ask this
question because my time is up.
OK, thank you, Mr. Chairman.
And I will get the question to you in the last 3 days of--
--
Dr. Gottlieb. Thank you.
Ms. DeLauro [continuing]. Of your tenure.
Dr. Gottlieb. Thanks a lot.
Mr. Bishop. Dr. Harris.
Dr. Harris. Thank you very much.
CBD REGULATION
And, Dr. Gottlieb, I think you are one of the best FDA
Commissioners, certainly the most knowledgeable, very
responsive. So I congratulate you on your tenure and wish you
luck going forward. I do want to just follow up on this--the
release--I guess, yesterday about CBD and regulation. And I
think it takes--I think it takes a necessary first step, but I
am not sure it goes far enough. I mean, you know, you make the
statement that you issued multiple warning letters, and I think
you have an example of the three companies, marketing products
with egregious and unfounded claims that are aimed at
vulnerable populations. What would be a founded claim for CBD,
other than for, you know, pediatric seizures?
Dr. Gottlieb. Well, right now, it is a good question. There
is probably no----
Dr. Harris. OK. There is no founded claim----
Dr. Gottlieb. You can't make a structure or function claim
because it is not a lawfully marketed dietary supplement, so--
Dr. Harris. Correct. So my question--and so there are two
issues--one is--well, three really because if you go online,
and anybody who wants to go, go online and see, you can buy CBD
that is supposed to be pure, that is actually at a price
about--my calculation, about 40 percent of the list price of
the FDA-approved drug. It is claimed to be pure. So I am not
sure how the FDA allows an American company to sell, claiming
they are selling pure CBD, which is exactly what Epidiolex is,
I don't understand why that isn't being stopped, as they are
selling a pharmaceutical. OK? Now, then, there are nutritional
supplements and food supplements. On the food supplement side,
I mean, I am assuming that CBD is not generally recognized as
safe. Is that correct?
Dr. Gottlieb. That is right.
Dr. Harris. And we went to extraordinary levels with trans
fat, for instance, to make sure there was zero in any food
supplement, zero. Not like minuscule amounts, because it is
naturally occurring, just like CBD is naturally occurring, but
zero. Why isn't the FDA going as hard a regulatory pathway?
Because--I walked into a store, a little country store in my
district, and find a CBD food display in the store. Now, it
didn't say, you know, show us proof that you are 21 or 18 or
something, just like anybody come in, and they are buying a
food supplement. So how is the FDA allowing a food supplement,
which is not generally recognized as safe, to be put in food
products and not regulated?
And then, finally, in terms of nutrition supplement, I
think, you know, you hit the nail on the head. The bottom line
is that we have a regulatory scheme that basically says that,
you know, CBD has been regulated by the FDA as a pharmaceutical
product, and as you said, there is no grandfathering in for it
being a nutritional supplement.
So I think the FDA has to come down a little hard on these
institutions, on these individuals who are making money--and
they make a lot of money in this--selling a product that has--
that I think we agree has no founded claim except for pediatric
seizures, right, in the FDA's mind. Why is it taking so long
and we are going to--you know, you are going to study it a
little bit more? How do you need to study when CBDs is being
sold as a food additive when it is not generally recognized as
safe?
Dr. Gottlieb. Well, I would just say--and Congressman, I
appreciate the question--we are not allowing it. You know, we
have taken enforcement action. We are taking a risk-based
approach, where we are going after places where CBD is being
marketed, in situations where we think the claims are either
misleading to the point of encouraging a patient forego
otherwise effective therapy for a medical condition, and are
being marketed in a formulation and a dose that is, at a level
that creates significant safety concerns.
We expressed concern yesterday, I did, about CVS and
Walgreen's stepping into this market. So you now see big box
stores seeking to market CBD products for some uses where the
claims seem to be potentially, over-the-line claims for the
treatment of pain, for example. So we are not allowing this.
What is happening is we see a burgeoning market, and we can't
boil the ocean, so we are trying to take a risk-based approach
to enforcement, like we do in all matters. And we are hoping by
taking selective enforcement actions, you are going to see
voluntary compliance from the legitimate manufacturers and
retailers because they are marketing an unlawful product. Now,
that said, I recognize Congress wants there to be a pathway
here. So we are trying to work at the same time to
expeditiously create a viable pathway that could differentiate
between potentially appropriate use of the product if we can
have scientific evidence to support its appropriate use, and
use of the product that creates safety risks for the consumers.
Dr. Harris. Sure. So, again, and I see, you know, your
actions basically looked at a therapeutic claim, but as a food
supplement, I don't see any action at all. I mean, I am going
to walk into that store 2 weeks from now, and it is still going
to have a food supplement, CBD food supplement--foods that have
it as a supplement. And I wish you would take action. I don't
think you have to take much action before everybody gets the
message you shouldn't be doing this.
USE OF FETAL TISSUE IN RESEARCH
Just one final question. I know that there was a
controversy about the FDA using fetal tissue in research, and I
understand the contract has been canceled. Has the research
been stopped, or is it just--the contract just been reissued
with another entity?
Dr. Gottlieb. I don't believe there is any ongoing research
right now with fetal tissue at the FDA. That is right, yeah.
Dr. Harris. So that contract was canceled, and it just----
Dr. Gottlieb. That contract was canceled, and there is no
ongoing research.
Dr. Harris. Thank you very much. I yield back.
Mr. Bishop. Mr. Pocan.
Mr. Pocan. Sure. Thank you, Mr. Chairman, and thank you,
Commissioner Gottlieb. I want to associate myself with the
first 10 seconds of my colleague's remarks on the other side. I
don't know if you disassociate with the other 4:50, but I do
think you have been an excellent FDA Commissioner. You have
improved morale--I mentioned that last time--in the Department,
one of the few where I have seen that happen with the change of
administration. The companies that work with the FDA have--in
my district--have had nothing but praise for working with you
and your staff. I have always appreciated your candor when we
agree and even when we don't; in fact, even more when we don't
agree, because I really have learned a lot in our
conversations.
And what I would like to do, almost as more of the exit
interview, because I do hate to see you leave the position.
Independently, in your opinion alone, when you look at the
FDA--and I also really appreciate the three generic-equivalent
goal of the FDA, and I hope that continues under the FDA--what
would you like to see done differently, you would hope that if
you had that ability, that magic wand, whether it be, you need
additional funds in some area that the White House and Congress
never look at, you are doing something that is idiotic and you
think is a waste of your agency's time and takes you off
course? I have always appreciated your candor. I hope you will
give some candor here, but what would you do--you know, as you
are leaving, what would you say would improve the FDA based on
your experience?
Dr. Gottlieb. Well, I think--I appreciate the question. And
I haven't quite left yet, so I probably have to temper it a
little bit.
I still have residual concerns about the have and have-nots
in the agency, and I have always had those concerns, having
been around the FDA now for almost 15 years. And particularly
on the food side of our house, you know, we have struggled to
fully fund our obligations and have adequate authorities. And
so I would be taking a hard look at what we do with respect to
cosmetics, dietary supplements and the resources that we have
to carry out our food-safety mission. Those are the higher risk
parts of the agency, the places where you can wake up one
morning and find out that something really bad has happened and
a lot of people have been hurt. And so I think that we need to
be looking hard at that and how we shore up those parts of FDA.
Mr. Pocan. And what are you doing that you wish you didn't
have to do? You look back and you are going, I don't think it
serves the public mission and those resources could be
allocated towards what you just brought up?
Dr. Gottlieb. That is a good question. In all candor, I
would have to give that more thought, because I think, you
know, everything that hits my desk, and everything that I have
been involved in, I think, is really important. The agency has
a very vital mission.
Mr. Pocan. Ms. Pingree just said maybe congressional
hearings, you would like to----
Dr. Gottlieb. I have always----
PRESCRIPTION DRUG COSTS
Mr. Pocan. And just to this point--and I really appreciated
it when you said it last time--because the price of generic,
when you have that third equivalent, really brings it down.
What else could the FDA be doing, again, if you were just in
charge, to help bring down the cost of prescription drugs? It
is something we all say we want to do, but you don't see the
activity. I think the American people aren't seeing the
activity. I think that was a good suggestion that you had. What
else should the FDA be doing or could it do, with or without
additional resources, to help work towards this?
Dr. Gottlieb. Well, there are still a lot of areas where we
don't see all the expected product competition after
exclusivities have elapsed on branded drugs. And the one place
is looking at the complex formulations of complex drugs, where
sometimes it is, from a scientific standpoint, hard to develop
generic copies of those drugs and demonstrate that they are
seen through a conventional regulatory process. I mean, you
could contemplate changes to the Hatch-Waxman construct that
allow the agency to look at small complements of clinical data
in the context of an approval of a complex drug. You would have
to go through the difficult job of defining what a complex drug
is. I can define what I know it is. It is sometimes hard to
define what you know it isn't.
And, you know, I am growing increasingly concerned about
the lack of second-to-market--timely second-to-market
competition for novel drugs. And we see more and more drugs
that are approved for these very rare disorders where, once the
drug is approved and the population that has the disease is
treated, the financial incentive to approve a second drug for
the treatment of the same condition has gone down
significantly. And the market is so small, it might not support
second-to-market innovation. And we literally see companies
slowing down the development of products if they think they are
going to be second to market. That is going to be a problem
when you get into things like gene therapy. If the market is
only big enough to sustain one product, then you get monopoly
pricing in perpetuity and no competition, and it forestalls
access. And so that is a concern of mine. I think there are
things we can do to make the development of second-to-market
innovation more efficient. It has been a focus of mine.
Mr. Pocan. I have 27 seconds, and we have NATO coming in.
But I really do want to say thank you. You know, the
companies--and I have so many that are spinoffs from our
University of Wisconsin network--with you, have had nothing but
praise. We appreciate that. We look forward to the Department
continuing, and, you know, I think maybe it is bad luck when
you are like my favorite Trump appointee. The next one may go
down as well. But thank you for your service, I appreciate it.
Dr. Gottlieb. Thanks a lot, Congressman. I appreciate it
very much.
Mr. Pocan. Thank you.
Mr. Bishop. Mr. Cuellar.
Mr. Cuellar. Mr. Chairman, thank you so much.
Commissioner, I really appreciate the service that you
provided to our country and give you God speed to your next
endeavor. Again, thank you so much.
COMPOUNDING
I want to follow up on what we talked about last time you
were here, and I want to talk about compounding. The center--
you are looking at establishing--you have plans to establish a
compounding center of excellence, to provide training on
manufacturing practices, as well as establishing investigators
for inspectional activities. And my two questions are: Can you
explain how this compounding center for excellence will help
decrease costs for those in need of compound medication? And
number two is, how is the FDA taking small pharmacist issues
with regulations regarding distribution and dispensing of
medications into consideration? And I want to thank you for
doing this. I really, really want to because I have been to
different parts of the country, and this issue is something
that we certainly have to look at. So I want to thank you for
your leadership on this.
Dr. Gottlieb. All right, thank you for the question, and
thank you for your comments. I appreciate them very much.
The $12 million that we received in 2019, to establish this
compounding center for excellence, is focused exactly on some
of the challenges that you have identified. How do we help
small pharmacies get into a regulatory framework where they can
engage in a wider scale of activity, particularly some
manufacturing engaging in potentially office stock, shipping to
hospitals? And so what we want to do is make it easier and less
expensive for the 503A pharmacies to become 503B pharmacies,
outsourcing facilities. And what we believe is by developing a
center that can work more directly with pharmacies, help train
them on how to meet GMP requirements, provide a high level of
touch, train them on how to be inspected. We believe we can
help actually provide sort of almost consultative-type services
to these pharmacies to try to get them over that transition and
also promulgate policies and guidance that adjusts the amount
of regulation that we are going to impose based on the size of
the pharmacy and what they are doing, so take a much more risk-
based approach. So, if a 503A pharmacy wants to compound
relatively lower risk products and do it on a small, local
scale, we shouldn't be applying the same level of regulation as
someone who is going to ship hundreds of thousands of vials of
a sterile product nationally because that is more risk.
And so the resources are going to allow us to develop a
center that is going to be focused on that and help develop
this domestic industry. I believe, and I still believe, that if
we can get more 503A pharmacies to more less expensively
convert to 503B pharmacies, we also offer them a tremendous
economic opportunity to expand their businesses. Because if
they remain a 503A pharmacy, they are always going to be capped
in terms of what they can do. If they become a 503B pharmacy, a
much broader range of opportunity becomes accessible. Those
resources are different than what we requested in 2020. We were
asking for $13.5 million. That is to help expand the 503B
opportunity set to finalize the bulks compounding list and
develop guidance from regulation that is going to further
clarify how the 503B pharmacies can operate in a regulatory,
compliant fashion.
This is a relatively new industry, and we envision that
this should be a robust industry, but we want to be more
actively engaged in making that come to fruition.
Mr. Cuellar. Thank you. I do want to say, thank you so much
for--on this forward thinking on this. So thank you, thank you
so much.
Dr. Gottlieb. Thanks a lot.
Mr. Cuellar. Thank you, Mr. Chairman.
Mr. Bishop. OK. Thank you, Mr. Cuellar, for that last
question. You saved me from having to explore that.
FUTURE OF FDA
Dr. Gottlieb, I want to take a moment to discuss the future
of FDA and where you would like to see it in the next 5 years.
As you know, too often a regulatory agency is forced to spend
most of its time responding to various issues that arise, and
sometimes without any warning, rather than to help build a
foundation for the technological innovations that would drive
the industry forward.
Regarding the medical side of FDA, where do you see the
industry moving forward, and what are the most important things
that FDA is doing to help safely and effectively guide it
there? And on the food safety mission side, tell us the same
thing about that mission area.
And, finally, is there an area of FDA's work that deserves
a bigger spotlight moving forward?
Dr. Gottlieb. I appreciate the question. I think that there
are things in the 2020 budget--and I would come back to that--
that I think can be sort of the foundational elements of a
modern transformation of the agency. And I would point to what
we are trying to do to try to develop knowledge management
systems and more structured approaches to medical product
review across the entire continuum to make more of the
application review process, a structured, templated approach to
review, where we are not receiving paper applications from
industry anymore, but we are actually receiving information
that is in a cloud-based environment, pulling that information
down, and then populating templates and applications that are
standardized from review to review to review, to help
standardize the review, make it far more efficient, and having
our team sort of collaborate around single applications that
are in a virtual environment.
What I have just described probably exists inside every
corporation that deals with data and makes decisions based on
information, but it is not the way FDA has traditionally done
business because we haven't had the resources. So the money
that we are asking for to fully develop the new data enterprise
is focused on that. It would fundamentally transform how we go
about our work.
Another transformational element is the ability to use
information from electronic health records to do post-market
safety assessments and also look at real-world evidence derived
from Electronic Health Records (EHRs) as a component of how we
assess, not just safety in the postmarket, but also benefit
pre- and postmarket. And so that is another transformational
opportunity set for the agency, and those are embedded in that
2020 Budget request, and we received partial funding in 2019.
On the food side of our house, I think there is more work
that we want to do to improve the recall process. We have a
request in the budget for 26 Full time Employees (FTEs) in our
Office of Regulatory Affairs (ORA), for example, to improve how
we do on recalls and how we get timely information to
consumers. I think we need to contain and make investments
there, but I think one of the more transformational things we
can do from a technology standpoint, in terms of modernizing
the regulatory process, is putting in place modern track and
trace. What people want to know is, are they getting an
assurance of safety from FDA? And that is where all the tools,
the preventative controls in FSMA come into play. They want to
know, if something goes wrong, will they find out about it
quickly? And that is where everything we are trying to do to
modernize the recall process comes into play.
But they also want to know where their food is from, and
they want us to be able to trace it right back to the source.
And that is where modern track and trace comes into play. And
as we have seen, when we have recalls, if we recall romaine
lettuce, it takes us a long time to trace it back to the
specific farm where it might have come from. We think there is
much more we can do with traceability in the system using
modern technology like blockchain.
We hired, as a Deputy Commissioner, Frank Yiannas, who is
here today, who used to head up food safety for a very large
retailer and has deep expertise in this. And he has many
purposes in coming to FDA, but one of them is to try to stand
up this modern framework. So we have requested resources for
that as well. I think these could be transformational elements.
The final thing I will just say--and I will put a plug in
for one more thing that is in the budget, if I may, with just
30 seconds--is what we want to do with the blood pathogen
technology and basically pathogen reduction technology to
improve the safety of our blood supply. I think this is another
tool that could be transformative in improving the safety of
the blood supply and lowering the costs, reducing the need to
defer people who want to donate blood. And it is a technology
that exists. It is a technology that we could be adopting, and
I think it could be transformative on the blood side of our
house.
And if you ask me, in closing, where the biggest risks are,
it is the places in the FDA portfolio where you have the
potential for latent risks that become widely distributed
before they fully manifest, before we discover them. And those
kinds of risks only exist in a few places in our portfolio, but
one of them is in the blood supply, if there is some undetected
pathogen in the blood supply. And another one is on food safety
part of our house, where you could have a food contaminent that
gets widely distributed very quickly in today's supply chain,
has latency associated with the pathogens. So, by the time
people start showing signs of illness, it has been out there in
the food supply for 5, 6 days, and you could have a lot of
people exposed.
Mr. Bishop. Thank you.
I would like to recognize Mr. Fortenberry.
GENERIC DRUGS
Mr. Fortenberry. Dr. Gottlieb, I want to return to the
issue of generic drugs that Mr. Pocan brought up. The last time
you were here, I had asked for the broad calculation if the
full vision that you have for generics was implemented, what
would we say? Do you have that number yet?
Dr. Gottlieb. I have----
Mr. Fortenberry. It doesn't have to be absolutely precise,
but you--let's move from the--the problem is, let's move from
the abstract to----
Dr. Gottlieb. Right.
Mr. Fortenberry [continuing]. What is potentially real.
Dr. Gottlieb. Well, I don't have the number yet, the
aggregated number. What we do have is an updated--and we can
make this available to you--we have an updated estimate of what
the price reductions are as you get multiple product
introductions in a category. And it is more substantial than
what we have seen historically. We haven't been able to publish
that yet, but we could certainly get that data to your office.
Mr. Fortenberry. OK, but you are leaving in 3 days.
Dr. Gottlieb. Well, I will get it to you before we leave.
Mr. Fortenberry. Are you staying?
Dr. Gottlieb. She is--yeah. We have it.
Mr. Fortenberry. OK.
Dr. Gottlieb. We can get it to you today.
Mr. Fortenberry. That is all I have. Thank you, Mr.
Chairman.
Mr. Bishop. Thank you.
Dr. Harris.
Dr. Harris. Thank you very much.
CBD AS A FOOD SUPPLEMENT
Let me just follow up on, again, the CBD as a food
supplement. So what would you need in order to establish
regulatory action or, you know, actions against these stores
that are selling CBD as a food--put it in food? You know, I
don't care what food they have them in. There is one that sells
gummies, for God sake, with the stuff in it. Talk about
marketing to children. But my understanding is the schedule V,
right? Epidiolex is in the schedule V. Is that right?
Dr. Gottlieb. I believe it is, yes.
Dr. Harris. Yeah. So they obviously move from I to V, but,
you know, codeine is in V. So I assume that if I went into that
display in that store and it said, you know, ``Buy these
products with codeine in it,'' and they were food products, I
would assume that the FDA has instant regulatory authority to,
you know, stop the sale of those. Does the FDA have authority
to stop the sale right now of food products containing CBD?
Dr. Gottlieb. We do. And we are taking action.
Dr. Harris. What action are you taking?
Dr. Gottlieb. We have sent warning letters to a number of
companies to ask them to remove products from the market. And
when we send a warning letter, that is a legal action, and if
the company doesn't comply, we could go to court and seek an
injunction against the manufacturer. You know, this has
exploded, Congressman, and----
Dr. Harris. Oh, I know.
Dr. Gottlieb [continuing]. And, you know, we are taking a
risk-based approach, but with more resources, we can not only
accelerate our policymaking process here to try to create a
legal framework that will form the basis of more effective
enforcement action but also put more resources behind the
enforcement activity.
Dr. Harris. Well, so you don't have the legal framework in
place to enforce----
Dr. Gottlieb. We have the legal framework in place to
enforce right now. I think what Congress wants is a framework
that could allow us to better differentiate between where this
could be permissible and where it is clearly crossing the line.
You know, I am hearing a lot of different voices on this issue
from a lot of different folks. Right now, they are all
presumptively illegal, and we have been taking enforcement
action based on risk.
But what I think we would ideally like to do, having heard
from Congress very clearly on this, is try to create a
framework, that if there are places where CBD can be
appropriately marketed as a food product, and safely, perhaps
in very low concentrations, whatever the scientific criteria
might be--and it would need to be a science-based process that
ultimately defines what is permissible--have the framework to
do that, and that would make it more efficient for us to then
take enforcement action where risks are being created.
I don't know the science on this. It could be, at low
levels, CBD might not pose a risk to consumers. And if that is
the case, then we need to define what that is and where it
could be marketed as a food product and not. Right now, we
can't do that. To your point, everything is illegal. We could
be taking enforcement action against all of it, and if I do
that, that is the only thing that my agency will be doing right
now.
Dr. Harris. OK. But you can take action and--so you don't
believe that you could, just by taking action against a few
companies--I don't know, are these the letters in your--in the
statement, these are the three companies that got letters:
Advanced Spine and Pain, Nutra Pure, and PotNetwork Holdings?
Dr. Gottlieb. And we also put out a statement yesterday
about other concerns we had, including my statement about the
concerns I had with respect to what some of the big box stores,
like CVS and Walgreen's, are attempting to do here. And we are
going to be calling them up to have a discussion with them
about it. I do think this is going to have a deterrent effect.
So you don't see a lot of legitimate food packaging companies
and large stores putting CBD products into their stores and
into their food products right now because they know it is
illegal. I think they are all trying to work with us to see
what a legal pathway would look like. But they are not doing it
right now.
So I do think these steps are going to have a deterrent
effect. So we have to see where we are in 6 months. Because to
your point, there is a lot of people out there and----
Dr. Harris. How about the flavored vaping products that are
being marketed online with CBD?
Dr. Gottlieb. All of that causes concern to us.
Dr. Harris. OK.
Dr. Gottlieb. They are all a public concern.
FLAVORED CIGARS
Dr. Harris. So just one very brief point, I noticed that--
what is the action you are taking on the flavored cigars? I
mean, this--because my understanding is the usage is going
down, but still it may still be inappropriate. But the usage is
going down. So how aggressive is the FDA going to go after
flavored cigars?
Dr. Gottlieb. Well, cigars are the largest growing segment
of tobacco use among African American teens. So I don't know
that it is going down overall, but it is certainly not going
down in the segments where we have deep public health concerns.
The guidance that we promulgated several weeks ago that will be
finalized shortly would ban characterizing flavors in all
nongrandfathered cigars. We also seek to advance a rulemaking
process to ban characterizing flavors in the grandfathered
cigars. We would need to do that if the rulemaking was
committed. I don't believe any characterizing flavor should be
in any combustible tobacco product.
Dr. Harris. OK, but grandfathering is probably the way you
will go at first?
Dr. Gottlieb. Well, we will seek to ban.
Dr. Harris. Right.
Dr. Gottlieb. Ultimately, once our full policy framework is
in place, there shouldn't be any characterizing flavor in any
cigar.
Dr. Harris. Yeah, OK, thank you very much.
I yield back. Thank you, Mr. Chairman.
Mr. Bishop. Thank you.
Dr. Gottlieb, once again, I would like to extend our
appreciation for your work. During your tenure, you have been a
wonderful advocate for public health, transparency, and you
have been willing to take on some very, very tough issues. You
certainly have my respect and that of my colleagues as you have
heard today. But before we close, I wanted to turn the floor
over to you to share with us a little bit about your
experiences and any lessons learned as the Commissioner of FDA
that might be instructive for us.
Dr. Gottlieb. Well, I appreciate that, Mr. Chairman. I will
share with you some of the advice that I imparted on my
successor, Ned Sharpless, who I think very highly of, and I
think is an outstanding public health official, who is going to
lead the agency very effectively. And this is a lesson I
learned having worked at the agency before and with multiple
Commissioners. I think that as a sort of Commissioner coming
into this agency, you need to come in with a clear sense of
what you want to accomplish from a broad standpoint when it
comes to public health and advancing the public health mission
of the agency. And I came in with the sense that we needed to
be doing things a little bit differently, a little bit more
when it came to the opioid crisis. I wanted to try to use the
tools of the agency to try to address public health issues
related to challenges with access to affordable drugs. There
were other areas where I wanted to see if we can use the
agency's tools in a more robust fashion to effect certain
public health goals.
But how we ultimately address those issues, the idea is the
policies, that came from the career leadership. It came from
the center directors. It came from the professional staff. If
you are going to make enduring policy inside FDA, that is the
way you need to go about making policy. You need to have that
engagement directly with the scientific and professional staff
and respect the policymaking process inside the agency.
And so the very first thing I did was make sure that I meet
every week with the center directors, and hardly a day goes by
that I don't engage with them directly. Those relationships are
among the most important relationships that I have in terms of
my ability to effectively lead this agency, accomplish things
on behalf of the agency and the public health of the country,
and accomplish policy goals.
So that is the advice that I left my successor. I know he
took it to heart, and I know that is the way he has operated at
the National Cancer Institute (NCI). So I am very confident
that the agency is in good hands.
Mr. Bishop. Thank you, Dr. Gottlieb, for being here today.
We really appreciate your taking time to share your knowledge
and your experience with us. I think it is safe to say that we
have all appreciated working with you and your efforts at FDA,
and we look forward to working with your successor. And, of
course, we wish you the best in your future endeavors. So,
again, thank you.
And, with that, this subcommittee is adjourned.
Tuesday, April 9, 2019.
U.S. DEPARTMENT OF AGRICULTURE'S FISCAL YEAR 2020 BUDGET REQUEST
WITNESSES
HON. SONNY PERDUE, SECRETARY, U.S. DEPARTMENT OF AGRICULTURE
ERICA NAVARRO, BUDGET OFFICER, U.S. DEPARTMENT OF AGRICULTURE
Opening Statement--Chairman Bishop
Mr. Bishop. The Subcommittee will now come to order. Good
morning, and welcome to today's hearing on the Department of
Agriculture's fiscal year 2020 budget.
I'm pleased to introduce our witnesses this morning:
Secretary Sonny Perdue. The Secretary and I have a three
decades-long relationship. He has a deep commitment to our
farmers, ranchers, and to our rural communities.
Before we begin, I want to say that we need to get a
supplemental disaster bill through Congress. I know that the
Secretary shares my sense of urgency about this. The House
passed its bill in January, and we are ready to go to
conference with the Senators as soon as it passes the bill.
I know that all House Members are committed to ensuring the
areas of the Midwest that were hit with monumental floods just
a few weeks ago have the funds that they need, as well as the
folks impacted by the tornadoes last month in Alabama and
Georgia.
Twenty-six of the 29 counties that I represent in Georgia
are rural, with average populations of between 10,000 to 15,000
people. These counties are some of the most economically
disadvantaged counties in the Nation. They face immense
challenges in healthcare, nutrition, rural housing and
utilities, broadband and economic development.
As chairman, I am intensely focused on rural development. I
believe that the ZIP codes in which a child is born, or a
family lives, should not prevent them from realizing their full
potential.
The administration's interagency task force on Agriculture
and rural prosperity correctly recognized five key indicators
of Rural Prosperity: e-connectivity, quality of life, rural
workforce, technological innovation, and economic development.
But unfortunately, once again the administration has put
forward a woefully underfunded budget request that fails
agricultural communities and rural America. Many of the short-
sighted proposals contained in the administration's request
have been submitted by the Department before and will be
rejected by the Subcommittee once again. I am somewhat
surprised that the fiscal year 2020 budget request is
essentially a carbon copy of the past few years. The Department
submits this at a time when the agricultural and the rural
economies of our Nation face significant challenges.
This budget comes to Congress with a reduction of over $4.2
billion, or 21 percent, in discretionary funding from Fiscal
Year 2019, and it seeks to re-open the farm bill with
significant legislative requests to change mandatory programs.
The proposed elimination of programs such as Food for Peace,
McGovern-Dole, the Commodity Supplemental Food Program, Summer
EBT, rural watershed protection programs, and nearly all of the
rural housing loan and grant programs is wholly unacceptable.
Other programs face drastic cuts. I was extremely
disappointed to see that rural broadband funding was cut by
$350 million. One of the greatest barriers to entry into the
modern economy in rural America is access to adequate
broadband. I have children in my district who go to the local
library after school or after football practice, at hours when
the library is closed, just to access the internet. They sit in
their parents' cars, outside the library, to do their homework.
I find that unacceptable in 2019.
I was disappointed that the budget cuts agriculture
research by over $179 million. I was disappointed to see that
under this budget there would be significant staffing
reductions, specifically in Rural Development and the Farm
Service Agency.
There are also, once again, many legislative proposals
related to the Supplemental Nutrition Assistance Program, most
of them rejected by Congress in the 2018 farm bill. We expect
to reject them again.
Finally, the proposed relocation of ERS and NIFA. As the
Secretary and my colleagues know, I and most knowledgeable
stakeholders of these agencies strongly oppose this, as well as
the proposal to move ERS under the Chief Economist. We will
discuss this a little bit further today.
Mr. Secretary, I believe that you are honestly trying to
bring positive changes to USDA, and we are always looking for
ways to do things more efficiently. My concern is that the
Administration has not asked for appropriate resources and
staffing. I want to ensure that the resources that this
subcommittee provides are used as intended.
I also believe that to make rural America a priority, you
must invest the necessary resources. You must put your money
where your mouth is. While this budget falls short, I pledge to
do my best to work with you and Ranking Member Fortenberry to
develop a bill worthy of the farmers, the ranchers, the rural
communities who rely so heavily on the services provided by
USDA.
So hopefully, the conversation today will provide some
insight into the disconnect between the budget proposal
submitted by the Department and the economic realities that
rural America faces.
Again, I would like to thank you for being with us today,
Mr. Secretary, and by the way, I would also like to thank you
and your cousin, our junior Senator from Georgia, Senator David
Perdue, for your presence and the very thoughtful comments you
made at the ham and egg breakfast last Friday, at our state's
second land grant university, the Fort Valley State University.
Now let me ask our distinguished ranking member, Mr.
Fortenberry, if he has any opening remarks.
Opening Statement--Ranking Member Fortenberry
Mr. Fortenberry. Yes I do, Mr. Chairman. Thank you so much
for convening this hearing.
What is this ham and egg breakfast I didn't hear about?
This is the first I've known about this, so maybe we can better
coordinate next year.
Anyway, Mr. Secretary, nice to see you. How in the world
did you navigate that media scrum out there? I was so excited
to see the Secretary of Agriculture attracting 20 national
cameras outside of the Appropriations hearing on the budget. It
is an unprecedented event, so I hope that went well for you
outside.
Secretary Perdue. ``Release the reporters''.
Mr. Fortenberry. I think that's a pretty good summary.
Anyway, one other quick story before I start my remarks. I
was--as we visited about a month ago over at the Department, I
had stopped by Ms. Navarro's office. I believe that's the same
office, interestingly, that I had when I was an intern in the
USDA. So interns had a bigger status back then, but--maybe that
is a result of tight budgets, putting Ms. Navarro in that
space, but it was a pleasure to see you and thank you for
being--again, for being here today.
Mr. Secretary, before we dive into the budget request, I do
want to commend you for your leadership over the last few
years. The Department's efforts across a vast portfolio of
responsibilities is immense. Perhaps not well understood, and
USDA touches the lives of hundreds of millions of people in the
United States and abroad in one way or another.
And in particular, I want to express my appreciation for
what you and your staff have done in providing assistance to
farmers and ranchers in my state and neighboring states of the
Midwest, who have endured the devastating effects of the
flooding. These were three 500-year events along three rivers
that converged in a moment, due to rain on top of frozen
ground, on top of rising temperatures, on top of melting snow,
that created a flurry of ice and sludge that impacted levees
and created swiss cheese types of effects all up and down these
rivers, devastating many communities. But thank you for your
eager and willing response, as we unpack the damage here
further.
A natural disaster like this can also, in some ways, create
blessings in disguise. In that regard, what I mean is, our
Nation will oftentimes put aside politics and other differences
in order to simply just lend a helping hand to our citizens,
and I think Americans want Congress to actually do the same; to
put aside any differences, and find consensus and quickly pass
some type of budget supplemental that will provide additional
help to my constituents affected, those from Chairman Bishop's
district, and many more who have waited and waited for some
help.
Let me add, over the past year, your Department has
assisted producers in other ways, dealing with the effects of
trade disputes, assisting rural communities--communities in
rebuilding inadequate infrastructure, and fed those who were
hungry, across the world. So for that, I want to commend you,
and as we've all heard you say before, Mr. Secretary, ``do
right, and feed everyone''. What a great summary of your
values.
The Department has a number of challenges, obviously, that
we are going to discuss today, as well as opportunities. Top on
that list is the implementation of the farm bill, enacted last
December. And we would like to hear from you about the farm
economy against the backdrops of some challenging financial
conditions.
I want to also recognize your actions and efforts to
streamline certain functions within the Department, in engaging
with customers and striving to improve service and enhance
engagement. You are trying to, clearly, repair the relationship
between the USDA employees and their customers, so efforts to
upgrade the effectiveness of websites like Farmers.com should
ultimately save farmers and ranchers time, if they don't--can't
drive in to the FSA or NRCS county office to process paperwork.
Other efforts, such as the proposed relocation, from my
perspective, of ERS and NIFA--they may be controversial, but
they are based upon good intent, to save our constituents'
hard-earned taxpayer dollars.
The subcommittee will need to keep abreast of the
Department's actions and planned actions, as it relates to
these efforts, including an assurance that any reduced staffing
levels are not negatively impacting the delivery of important
services.
In turning to the 2020 budget requests, there are some
initiatives that will likely receive bipartisan support, and
other proposals that I'm sure none of us can get behind, for a
variety of reasons. I agree with your proposed increases in
rural development for community facility grants, business and
industry loans, as well as distance learning and telemedicine
grants.
On the other hand, steep cuts to rural housing programs,
international food aid and crop insurance cannot find an
acceptance right here. When it comes to rural housing, it will
be extremely challenging for our rural communities to grow
without access to low-cost loans and grants. While this
subcommittee has always supported responsible investments, in
light of the 22 trillion dollar national debt, it is my
perspective that some of these cuts would actually be very
counter-productive.
Whether the items in the budget are true policy positions,
or just our annual budgetary theater, we are going to unpack
that, and I listen--I look forward to listening to your
thoughts and rationale for some of these reductions, especially
given the challenges of the farm economy and rural America.
So again, I want to thank you for being with us today, and
look forward to fullness of discussion with you.
REORGANIZATION OF THE OFFICE OF BUDGET AND PROGRAM ANALYSIS
Mr. Bishop. Thank you, Mr. Fortenberry.
Secretary Perdue, in my opening statement I failed to
mention the--a letter that I had just recently seen. In fact, I
saw it just as I was leaving the office to come down to the
hearing. It was from you, with regard to a planned
reorganization of USDA's Office of Budget and Program Analysis.
You indicated in the letter that it is--it would realign the
functions and the staff internal to OBPA, to clarify roles and
responsibilities for the four primary business processes.
I read the letter, and my staff had already seen the
letter, and it seems as if that is an insightful move, to more
efficiently operate and streamline those processes, so I just
want you to know that I would personally, and I think our staff
would concur in that; you will probably be getting a letter
from us forthwith indicating that.
I also failed to welcome your Budget Officer, Ms. Erica
Navarro, who is accompanying you, and we want to welcome you
both, and at this time I'd recognize you for your statement,
and also let you know that your entire written statement will
be included in the record.
Opening Statement--Secretary Perdue
Secretary Perdue. Well, thank you, Chairman Bishop and
Ranking Member Fortenberry and distinguished members of the
subcommittee. I really do appreciate the spirit in which we
were welcomed here this morning. I think, again, while we may
find some differences of opinion, I don't think we have
differences of intent in trying to serve the American people.
And I very much appreciate that spirit.
I also appreciate, really, the natural tension that our
founders created between the executive branch and the
constitutional role of budgeting and appropriating and
oversight of the congressional role in that regard. And we--our
goal, as I have indicated to you before, is to be, where we
can, agreeable and compliant, certainly not defiant without
reason of defending what our recommendations are.
So I appreciate very much the relationship that we enjoy
with you and your members. And we look forward to continuing,
even when we can't, maybe, finally agree on the fundamentals of
what policy is there. But we understand your constitutional
role and responsibility. And we respect that and we want to
behave and communicate as transparently as we can our thoughts
about budgeting and how we--we use the money that is
appropriated.
We stand ready to be responsive in defending and
communicating about how that was utilized. So thank you for
that opportunity. It is no surprise that you began with a
disaster that has been on the minds of our constituents,
really, since last fall when you witnessed, in your district,
primarily, and I think Representative Aderholt's district in
southeast Alabama as well a terrible hurricane, Michael, there,
that I've never seen that kind of destruction that far inland
with pecan trees, which is a mainstay of your district, and
cotton, certainly, destroyed the way it was.
And we are very anxious. Your constituents and constituents
throughout those areas and the Carolinas in a previous
hurricane and the more recent floods, as far as the wildfires,
are waiting anxiously, some of them literally devastated. We
have got--as you all know, we have safety net provisions. The
Farm Safety Net is alive and well, and you all have
appropriated safety net functions like emergency livestock
provisions, watersheds and those kind of things, and the
Environmental Quality Incentives Program for losses. But it
doesn't contemplate utter devastation like we've seen.
So I appreciate both of you mentioning that, and hopefully
we can come to a reconciliation. I do agree with Ranking Member
Fortenberry. This is a time where Congress has demonstrated its
ability to put partisanship aside and typically respond on
behalf of your citizens. And I hope that we can do that as
well. Certainly trade is a big issue that we hear about in the
agri-economy across the country. And it is never over until it
is over. We are seeing some positive signals from China in that
regard. But we are not just focusing there. Ambassador
Lighthizer will be over tomorrow speaking to a committee about
trade responses with Japan as a big market.
Actually, Under Secretary Ted McKinney has been circling
the globe since he came on board last year looking for new
markets. We don't want to put all of our eggs in the China
basket. But that seemed to be progressing, but it is never over
until it is over in that regard. You mentioned infrastructure
to a certain degree. And I didn't realize our broadband history
was as bad as you made it sound, Mr. Chairman. I thought we had
been doing better.
In broadband, we are beginning to receive the applications
in just a couple of weeks for the money that you appropriated
last spring and for the--the rural broadband there, we have
gone through a very careful and judicious application process.
Since the beginning of last year, we have given technical
assistance to many different groups. I am delighted in the fact
that various groups are showing a lot of interest from Electric
Membership Corporations and rural telecoms and other nonprofits
in these different areas, as well as communities themselves
over applying for this.
It will be three different tranches of money that we think
will absolutely help the connectivity that you describe that I
agree with you that is so--is so critical in that regard.
Obviously, you all passed a great farm bill in 2018, December
20. And our Department is working feverishly to implement that
farm bill. You understand your constituents rely on the rules
and regulations of specificity that USDA provides to them. And
we are hoping to get those out.
In fact, we focused on dairy particularly. That has been
the sector that is under the most stress. And we are on track
for the--the dates that I gave the full Committee earlier on
those types of things. We will begin to get returning money
over previous premiums later this month. And we believe that we
will have the full program implemented by that June timeline
that we--we indicated earlier in that regard.
So we are working on all those areas of the farm bill
implementation. Now speaking to the budget, I look forward to
answering your questions and your subcommittee questions over
the--over the budget. You know that there is--obviously, it is
a time of great risk here. But we believe that our
administration has taken the step of providing a fiscally
responsible budget that doesn't continue to kick the can down
the road on a $22 trillion deficit.
While no one likes cuts, we at USDA are prepared, if we
could implement this across to government-wide, to do our share
in returning to fiscal responsibility in all of these areas.
Many are positive things in the--in the budget that--I know
you mentioned some negative things. And we look forward to
discussing those with you. But there are also many positive
things in the budget as well. But we do believe the
administration is prepared to propose a budget that is fiscally
responsible and deals with some of the realistic issues that we
have here regarding national debt.
And I want to commit to you that whatever resources are
provided by you all as the appropriators, we will do our very
best to provide the kind of customer service that I think your
constituents want and deserve each and every day. In providing
for them, we hope that we have been responsive to your members
and requests over constituent issues heretofore.
And we look forward to continuing to provide the most
efficient and effective customer service to agents in the
Federal Government. We, first of all, consider you and your
subcommittee and members of Congress as our primary customers
with whom we expect to be responsive and responsible for those
funds. And I appreciate the opportunity to testify this morning
and look forward to your questions.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Bishop. Thank you very much, Mr. Secretary. We
appreciate your efforts. My colleague, Ms. McCollum chairs the
Interior Subcommittee of Appropriations. And she has a hearing
that she needs to chair very shortly. So with the
subcommittee's indulgence, I would like to forgo my opening
questions and yield to Ms. McCollum so that she may ask her
questions quickly and be able to go on to the subcommittee that
she has to chair this morning. So I recognize Ms. McCollum.
MINERAL WITHDRAWAL STUDY
Ms. McCollum. Thank you, Mr. Chair, and I look forward to
repaying the kindness and the courtesy that you've extended to
me today. Secretary Perdue, you were talking about taxpayers
and our obligation to live up to commitments we make to our
taxpayers. You have responsibility over our national forests.
And it's shared between Mr. Bishop's subcommittee and the
subcommittee I chair, Interior Environment.
And two years ago, you testified before the Interior
Environment Subcommittee. And, at that hearing, I asked you
whether the mineral withdrawal study, which the taxpayers were
paying for, and the watershed of the Boundary Waters Canoe Area
would continue.
Your response to me and to the rest of the interior
subcommittee was--and I quote, ``I think your statement
regarding the two-year study over sound science, none must know
what to do without the facts based on sound science, and we are
absolutely allowing that to proceed. You also know that your
state has a shot at that after the recommendation as well. So
we are determined to proceed in that effort and to let it run
its course. No decision will be made prior to the conclusion of
that.'' And I end your quote, sir.
Secretary Perdue, those were very reassuring words to me at
the time because you were following the direction of Congress.
But those words were completely belied by your actions. You
failed to live up to your words when you announced in September
the abrupt cancellation of the mineral withdrawal study, 20
months into a 24-month study review, 20 months of collecting
public input, 20 months of science-based assessment.
And all you released was a one-page press release and that
is completely inadequate. We still have not seen any of the
science behind the science-based decision. I have sent multiple
letters, first in November and then again on March 1, along
with the chair from the Natural Resources Committee, asking
your agency to release the relevant documentation from the 20-
month review. Your own press release said the review included,
and I quote from the press release, ``Mineral resource report,
a biological and economic impact assessment, potential impacts
to water resources, wilderness areas and cultural resources.''
Secretary Perdue, were all of those reports completed as part
of the environmentals assessment?
Secretary Perdue. I can't answer that question directly,
ma'am.
Ms. McCollum. So if you don't have complete scientific
reports to review before making your decision to cancel the
withdrawal, one has to ask what your decision was based on. Do
you have any idea what your decision was based on, sir?
Secretary Perdue. Yes, ma'am. I do. Would you like me to
describe?
Ms. McCollum. I would like the documentation that you said
that you weren't aware of so you couldn't answer my original
question.
Secretary Perdue. Certainly. We will do our best to provide
that.
As stated in USDA's December 11, 2018 letter to you and
Congressman Grijalva, the Regional Forester of the Eastern
Region submitted an application to the Bureau of Land
Management (BLM) for an administrative withdrawal on December
14, 2016. DOI accepted the application and issued a Federal
Register notice providing for the 2-year segregation on January
19, 2017. The Forest Service initiated work on a withdrawal
package and held public meetings during a 15-month period. On
September 6, 2018, I announced the cancellation of the Rainy
River mineral withdrawal application. The documents being
prepared for the withdrawal application were never finalized.
The incomplete application package was not reviewed by agency
officials.
Applicable Federal laws, such as the National
Environmental Policy Act and 16 U.S.C. 508b, provide for
procedural review and considerable discretion regarding new
mineral leases. The State of Minnesota likewise has
environmental review processes for mineral development for the
protection of natural resources. A case-by-case approach,
rather than an inflexible 20-year withdrawal, will ensure
adequate review of future lease offerings. Should the BLM
decide to lease National Forest System land--assuming the
requisite Forest Service consent to such leasing--the lease
terms and conditions, lease stipulations required by the Forest
Service, and the requirements of any operating plan would
undergo close review and require approval by the Forest
Service. I am confident the processes presently in place
preserve the high-quality fishing, wildlife viewing, and
recreational opportunities Minnesotans and visitors from around
the world enjoy in the Boundary Waters Canoe Area Wilderness.
Ms. McCollum. Are you aware, sir, that the very same month
that the abandoned mineral withdrawal proposal in--you
abandoned the mineral withdrawal proposal in Minnesota that the
United States Forest Service recommended withdrawal of mineral
leases on national forest lands in Montana, which is adjacent
to a national park, and in Washington State within a national
forest?
Secretary Perdue. I am aware of that.
Ms. McCollum. All three of these withdrawals were proposed
in response to the serious threat of acid drainage from gold
and copper sulfide ore mines. Can you explain to me why the
Forest Service has a different standard for withdrawal from the
study in Minnesota? Minnesota's withdrawal is international
forest. It's adjacent to a national park, and it's adjacent to
a national wilderness area.
Secretary Perdue. When I learned that, I think, Minnesota
really has the last vote on this as a State government where
the Governor had determined already that he was not going to
allow this to go forward, it made sense for me to proceed,
there has not been one permit issued. There will not be one
permit issued until it's a complete environmental impact
statement and study based on that and it looked to me to be
duplicative after I realized that after my statement to you in
May of 2017 at my first hearing. And, therefore, the State of
Minnesota has the last vote on this. And I would expect them to
do what the citizens of Minnesota would decide.
Ms. McCollum. Well, sir, I respectfully disagree with your
analysis of this. Once the Forest Service didn't go forward on
the study, BLM started moving forward on lease renewal. Once
the study wasn't completed and I asked for all the information
on it, the taxpayers paid for it. I have not received it. So,
sir, I feel that--that the Forest Service did not fulfill its
congressional obligation by moving forward with the full 2-year
study.
And the watershed that the Boundary Waters is in--all water
is precious, but it makes no sense to me at all that the Forest
Service abandoned its due diligence resource. I look forward to
receiving the information from you. But I take this issue very
seriously. You are stopping--the study started a roller coaster
of events that will lead to, possibly, the destruction of these
pristine waters. Thank you, Mr. Chair and thank you, sir.
Secretary Perdue. Thank you, ma'am.
Mr. Bishop. Thank you, Ms. McCollum.
Mr. Fortenberry.
DISASTER ASSISTANCE PROGRAMS
Mr. Fortenberry. Mr. Secretary, there is a lot of
consequences to flooding, some of which are--couldn't be
perceived before it actually happens, one of which is the loss
of onsite grain that was stored. You know, you're dealing with
the immediate aftermath of floodwaters rushing over fields,
drowning cattle, covering fields in debris and sediment, making
the possibility of planting not only difficult, maybe even
impossible in many areas. But another manifestation of this has
been the loss of grain stored onsite.
So are--do you--so I want to ask you two questions. Are you
looking at that issue through the lens of any flexibility that
you have in current programming or as a part of the disaster
assistance package that is potentially coming through Congress?
And then, secondly, I think it would be helpful, particularly
for the public, if you could just tick through a high-level
summary of what the USDA is already doing in response to the
flood.
Secretary Perdue. Sure. Unfortunately, I would love to
answer in the affirmative that these stored grains would
qualify for the safety net that is there. They do not
currently. And that is why the disaster appropriation
supplemental is so important to cover issues that were not
covered in the destruction and devastation by the floods
flooding there. But this is an area that is not legally or
statutorily approved under our safety net provisions currently.
Certainly, the second part of your question, there is the
Emergency Conservation Program where we pay a cost share on
practices recovering stream banks and other types of debris/
sand removal, regrading the land, filling gullies and restoring
other properties in that way as well. Certainly one of the uses
is the Livestock Indemnity Program where the cattle or
livestock losses can be paid for that--due to the disaster and
that is--there is an adult cow rate based on that. It is 75
percent of the national average, fair market average so that
helps.
The Livestock Forage Program that is utilized to feed, for
cattle feed and livestock feed, also qualifies for grazing
losses due to drought, flood or fire in that regard. And then
there is emergency livestock assistance for livestock as well.
And that is another program that FSA can advise your producers
and farmers about that.
The Emergency Watershed Program is another that, again,
helps with debris removal from the streams and culverts and,
again, helps to reshape stream banks. And that is--in a flood,
that is certainly necessary. Vegetative cover, repairing levies
and other conservation practices have been destroyed by the
floods. Those are examples of that. And we'd be happy--on our
website, farmers.gov, you go if you have had a disaster, see
what you qualify for. And I would advise your constituents to
take advantage of that.
ONSITE GRAIN STORAGE
Mr. Fortenberry. Thank you. One other subset of this is, do
you have any idea--and it can be just an approximation of how
many farmers actually use private insurance to indemnify on-
stored--on-site storage of grain because I am trying to get a
handle on just how large the problem is. I suspect that is
pretty small but I don't know.
Secretary Perdue. We don't know, either, the exact number.
I expect it is very, very, very small.
Mr. Fortenberry. I see.
Secretary Perdue. Commercial operations, elevators, have
that kind of stock coverage for their operations. But typically
producers, once it is out of the field and crop insurance is no
longer a factor, most of them do not cover the stock within
their bins over their--their grain production. So I think it's
a very, very small number.
Mr. Fortenberry. So in the supplemental disaster package
that's being written currently, are there--is there enough
flexibility in this regard to potentially help you to help with
the problem of onsite grain storage that's been lost?
Secretary Perdue. We would love to be involved in helping
the language as the disaster bill moves along to make sure that
gives them the flexibility. The 2017 disaster bill was fairly
flexible based on giving the USDA an opportunity to design the
program to help the most consumers and the most customers out
there. But that was not contemplated or specified. And we would
like to probably have some additional language that would
ensure that.
Mr. Fortenberry. OK. Mr. Chairman, I think this is a very
important point, either in terms of the architectural
flexibility or some specificity for the Secretary so that he
can help with this particularly devastating consequence of
these floods, which is a secondary effect that was completely
unanticipated. So if we could work directly with you all on the
type of language that you are perceiving that you need, either,
again, at a high level of flexibility or specifically targeted
to this, that would be very helpful to me, Mr. Chairman.
Secretary Perdue. We would be happy to give technical
assistance----
Mr. Fortenberry. Thank you.
Secretary Perdue [continuing]. Over the language we think
would give us----
Mr. Bishop. Thank you, Mr. Fortenberry.
Ms. Lee.
SNAP LEGISLATIVE PROPOSAL
Ms. Lee. Thank you very much. Good morning, Mr. Secretary
and Ms. Navarro; right? Thank you very much for being here.
First of all, let me just say it's no secret that some of us
believe that this $220 billion cut in SNAP benefits is cruel.
And the Harvest depression-era food box for SNAP recipients,
it's stigmatizing. I mean, how in the world can this box keep
up with families who are unhoused or even low-income families
who rely on their EBT card, as they are forced to live--and we
know the huge homeless population in their cars or with
friends.
And so I just wanted to mention, you know, currently,
unhoused SNAP recipients are able to get benefits within three
days of onsite application. And it can be also mailed to a
homeless shelter. So I don't understand this new Harvest box. I
know you say it is to reduce administrative waste. But it seems
like you are layering more paperwork on warehouses and what
have you. And it is to reduce--you say to reduce fraud. But it
seems like it is going to go in the opposite direction. And so
can you kind of talk about why you think this is a dignified
way to help those who need help?
Secondly, and I will try to do this very quickly, you know,
it is no secret that I am a former food stamp recipient. And it
is a bridge, really, over troubled water for many people.
Three-quarters of a million people would lose their SNAP
benefits simply because they can't find work through no fault
of their own.
We have waivers now which you want to eliminate in your
budget where there--when the unemployment rate is at a certain
level. There is significant pockets, in my district, for
example, of real unemployment rates by--with people of color
and communities of color where workers have been displaced, and
yet you are talking about eliminating this waiver in your
proposed rule.
And, finally, let me just ask you, with regard to people
who have serious health conditions and with disabilities, one
in four SNAP recipients are people with disabilities. Your rule
claims to only target so-called able-bodied adults without
dependents. But individuals with disabilities and serious
health conditions who don't receive Social Security Disability
benefits would be at risk of losing food assistance if they
can't log 20 hours of work per week. So many people face
barriers to work, especially those who are disabled and have
chronic health conditions. It's mean-spirited. I think it's
wrong, and I hope that you would reconsider all of these
proposed cuts and rules because people need this program
desperately.
Secretary Perdue. Thank you, ma'am. I'd love the
opportunity to visit with you in order to give you more
thorough than we can do in this meeting today our thoughts
about that. Certainly when you describe them as cruel and
stigmatizing in that kind of way, we have proposed the Harvest
box again. Grocery shopping is changing. Many of your most
affluent citizens get their groceries delivered to their
doorstep in that way.
We think it is a very effective way and we'd love--if you
all don't want to authorize it at all, to give us an
opportunity to have a pilot program to prove the concept in
that way and to do that. Regarding the able-bodied decisions,
that probably--the definition describing ``able-bodied'' may
need some fine-tuning on that. Certainly we are talking about
people who are able to work. When I think they hear the term
``able-bodied,'' people who are able to work from ages 18 to
49, not senior citizens, not parents with dependents, not
pregnant women, able-bodied adults without dependents.
We think 20 hours a week of either volunteer, training or
work is reasonable based on the 1996 law that was still
contained in the farm bill that was passed this year. The
waiver provisions also, when there are pockets of higher
unemployment there in this time of national low unemployment,
when a particular region has a localized unemployment rate
higher, I think, of--than the national average by a factor,
then that qualifies for the waiver. We are not doing away with
that waiver at all but localized unemployment pockets for
whatever reason will qualify, along with the fact that the
states also have a 12 percent--no excuses--12 percent margin
that they can designate through their 12 percent waiver that
was passed in the farm bill. So I'd love the opportunity to
personally visit with you to help really persuade you. We are
not trying to be cruel or stigmatize people who are on food
stamps.
Ms. Lee. Thank you, Mr. Secretary. I look forward to
meeting with you, but I can't help but say, when you look at
one in four SNAP recipients who are disabled with chronic
health problems, they are going to have to choose between
paying their medical bills or food.
Secretary Perdue. Well, I wouldn't consider them able-
bodied so, anyway, we will have to define that.
Mr. Bishop. Dr. Harris.
TRANSPORTATION STOPAGE
Dr. Harris. Thank you very much and thank you, Mr.
Secretary, for being here. And, you know, I know the--because
Congress has kind of handcuffed the administration in terms of
the budget and caps until Congress takes action--and I
appreciate the Department had a pretty tough job because you
actually have to follow the law, I mean, as set forth by
Congress with the caps set under the original Budget Control
Act.
Anyway, a couple of things. First of all, you know, I'm
glad that the Department did propose the new rule for the able-
bodied receiving SNAP benefits. I think that is the right thing
to do. And I hope that that--that you are able to go forward
with that effort. I think that is important that, you know, we
give people a--you know, we help them when they are in need but
we also help them get back into the--into the workforce,
certainly what we need to do with a full working economy right
now.
I also want to indicate my support for the move to relocate
NIFA and ERS. I think that there--that--you know, obviously
taking into consideration the possibility that geographic
proximity may be important, there really is no need for these
to be inside the Beltway. And I would hope that, throughout the
Department--and I think the Department has one of its--one of
the points of emphasis is getting the rural economies going.
And certainly moving parts of the government into rural areas
provides a stabilizing effect on the local economies, as I am
sure you can appreciate the cyclicity of the agriculture
industry and the non-cyclicity of the government in general.
So citing those kind of institutions which are agriculture-
related in rural areas, I think, is a good idea. Two areas of
concern. One is I--and I'm sure you are aware of it, the hours
of service requirement for trucking livestock around.
Obviously, in my district, the poultry industry is very
important. And, clearly, you know, you can't--if you run into
traffic, you can't just stop a truck with a truckload of birds.
Bad things happen if that happens. So could you just, very
briefly, indicate what is being done to address that issue?
Secretary Perdue. We have been working with the Federal
Motor Carriers, the Department of Transportation, for over a
year. And that issue has first became aware that the--the rules
on safety, hours of service, were negatively impacting not only
livestock transfers but also fresh vegetables. And some of
these hours of service were creating some unintended
consequences. Fortunately, they've been--they have been
reasonable.
We have some proposed rules coming out that will better
define agricultural products and agricultural exemptions. So
from an interagency perspective, we feel like we've gotten the
attention of the Federal Motor Carriers. And, hopefully, by
this summer, we can see some resolution of some of those hours
of service issues over the electronic logging devices.
ROUNDUP CONTROVERSY
Dr. Harris. Good. And I'm glad to hear that.
Finally, one is issue is this issue, the Roundup
controversy. You know, in my district, as you know, grain is
very important. The ability to use a very effective agent like
Roundup is exceedingly important in maintaining our high crop
yields. And I personally am worried when I hear about multi-
hundred billion dollar settlements or jury verdicts when my
understanding is that the EPA, the NIH have both concluded that
this is not a carcinogen, that--you know that the value of the
company has decreased 25 percent due to this, and this is just
the tip of the iceberg in terms of the cases. I'm worried that
it could disappear. Could you--that the use of Roundup could
disappear. They could choose just not to assume the risk of
selling it anymore. What would the impact of that be on our
agricultural community, especially our grain production?
Secretary Perdue. I think it would be devastating,
Congressman. I think, again, much of the productivity increases
you've seen over the last 25 years since these type of crop
protection chemicals have been out have been almost exponential
in that way. If we're going to nine and a half to ten billion
people by 2050, we're going to need all the tools at our
disposal. I'm afraid that while the groups that oppose these
types of uses have not been able to win on the science side,
they're chosen the litigation route. And you go before juries
with some sad cases of people having cancer, and they used this
product once or twice in the yard and are having multimillion
dollar awards. I'm hoping that the appeals court will see
through this and make better decisions about that. But it would
be literally devastating to our productivity capacity
worldwide. What we're seeing in the European Union along this
route, I call it a technology-free zone, and I think, again,
they will pay the price for this in the future.
Dr. Harris. Well, thank you. Is there anything the
Department can do to educate Americans about the importance of
cutting-edge technology, like Roundup and the GMO crops
obviously that keep our American farmers the best in the world?
Secretary Perdue. Well, we try to advocate for sound
science and good scientific discovery about that, which, as you
indicated, NIH and others have indicated, there is no health
risk there from these chemicals. This is a topical chemical
that does not transfer in the soil. And actually it works on
the product that you do not want, the weeds, rather than the
crop that's produced. So we are concerned. All we can do is
continue to communicate what we think the truth that science
does. EPA certainly has the ultimate responsibility of
approving or disapproving these chemicals. We work with them in
helping them to have the research they need to make the best
decisions in that regard.
Dr. Harris. Thank you very much. Yield back.
Mr. Bishop. Thank you, Dr. Harris.
Mr. Secretary, it is now my turn.
Secretary Perdue. OK. I thought you'd already had your
turn. [Laughter.]
RELOCATION OF ERS AND NIFA
Mr. Bishop. As you know, two weeks ago we had a hearing on
the proposed relocation of ERS and NIFA. Like Hallmark, you
were unable to attend, but you cared enough to send the best.
And you sent your representative, Ms. Kristi Boswell, to
articulate the Department's position on why this is a good
idea.
However, in my opinion, her best efforts were not
sufficient to overcome the well-documented and well-reasoned
case against such reorganization and relocation. We heard from
four former USDA officials with a total of 70 years of
experience in the USDA research agencies. We heard from Dr.
Gail Buchanan and Dr. Catherine Woteki, both of whom are former
Undersecretaries for the Research, Education and Economics
Mission Area. And they served under President Bush and
President Obama respectively for 10 years.
We also heard from Dr. John Lee and Dr. Katherine Smith-
Evans. Both of them are former Administrators of the Economic
Research Service and combined have 60 years of service spanning
from President Reagan to President Obama. In total, their
experience speaks for itself. The understanding of these
agencies' functions and how they fit into the greater research
community are what's clear from their eloquent testimony.
Besides those individuals who testified, there's an
enormous number of groups and individuals who publicly oppose
the plan, including the National Farmers Union; the Association
of American Veterinary Colleges; the American Statistical
Association; the National Coalition for Food and Agriculture
Research; at least another 104 agriculture, science and food-
related organizations; at least 24 university departments of
agriculture and/or economics; at least 37 deans, provosts, et
cetera of university agriculture departments; more than 1,150
individual scientists from 47 states.
On the issue of the ERS specifically, besides those who
testified, a list of senior government officials publicly
opposed includes two former Deputy Secretaries of USDA, two
former Chief Statisticians of the United States, several past
Undersecretaries outside of the REE area from both parties,
past heads of NIFA and ERS, three former heads of the National
Association of NASS, former heads of the Census Bureau, two
former heads of the Bureau of Labor Statistics, three former
heads of the Energy Information Administration and multiple
former senior statisticians at the IRS, the Justice Department,
the Commerce Department and the CDC.
I understand the Department's position, but after that
hearing, I still do not agree that this is a good decision. It
does not make any sense, and it seems to be a solution in
search of a problem.
You indicate that you want to move ERS and NIFA to be
closer to the stakeholders. But upon close examination, this
doesn't hold water. Farmers and ranchers may be informed by ERS
reports, but they are not direct recipients or users of most of
the ERS products. ERS and NIFA are not regulatory or farm
program agencies. These agencies do not implement farm programs
like FSA or NRCS or inspect plants like FSIS.
You indicate that this will benefit taxpayers, but we still
do not have a cost benefit analysis that was used to make this
decision.
Finally, you claim the move will help USDA attract and
retain highly qualified staff. This, too, is questionable. The
subcommittee has only heard anecdotes about commute times, home
prices and Ph.D. lifestyles. We've seen no actual analysis to
back up the claim that it will be easier to hire outside of
Washington, DC.
Your response, sir.
Secretary Perdue. Mr. Chairman, I'm just amazed that all
those people you mentioned could all be wrong. [Laughter.]
Certainly this is maybe one of those areas where you and I
are friends, but we'll have to disagree over the issue going
forward.
We are somewhat restrained or constrained right now on a
cost benefit analysis, because we have not narrowed that list
down to the final few and looking for their final invest
proposals over the cost benefit. When that happens, we will
present that to you all in the subcommittee, so that you all
can evaluate that from the best value perspective. We think
those reasons that we've been giving and Kristi so well-
articulated that day are bona fide and beneficial to retracting
and retaining those type of talents that we want in both of
those agencies and organizations.
Mr. Bishop. Mr. Secretary, we hear the assertion, but we
don't see the data to back it up. We don't see the problem. It
seems the case of--is--back home in Georgia, they would say if
it ain't broke, don't fix it. And we don't see that it's being
broken. And all of these experts indicate to us that it's not
broken, that, in fact, if we do this relocation and the
reorganization as you're proposing, that it will break it as
opposed to allowing it to continue doing the work that it's
doing. So I--and my time is up. I'll revisit this in my next
round. But if you'd like to comment, then I'll allow you to
make it----
Secretary Perdue. I appreciate that.
Mr. Bishop [continuing]. Your comment, and then I will
yield to Mr. Moolenaar.
Secretary Perdue. Some of the experts you talk about were
around in the USDA before the internet was developed and the
ability to communicate and get work done today. It's a
different day in research and others, and we'll, again, as we
narrow these down, have a real cost benefit analysis. We will
further communicate our reasons and our recommendations and our
value and our decision. So thank you.
Mr. Bishop. Sir, it seems like the cost benefit analysis
should be before the fact rather than after the fact. It seems
like after the fact you'll be justifying what you did as
opposed to using the cost benefit to make the decision.
Secretary Perdue. We had a beginning cost benefit analysis
of what we estimated. What I want to provide to you are the
actual cost benefit of the exact location.
[The information follows:]
USDA received 136 Expressions of interest from 35 States to
host ERS and NIFA. USDA has retained a consulting firm to
evaluate those Expressions of Interest, which recently narrowed
down the list to 67 possible locations. The consultant will
provide a benefit-cost analysis during the site selection
process, and the results of the analysis will be made available
as soon as feasible.
Mr. Bishop. Thank you.
Mr. Moolenaar.
DAIRY MARGIN COVERAGE PROGRAM
Mr. Moolenaar. Thank you, Mr. Chairman.
Secretary, thank you. For your presence here. I wanted to
talk with you a little bit about dairy. I'm from Michigan, and
dairy farmers make up a large portion of our agriculture
industry in my district and in our state. A lot of uncertainty
there. The Dairy Margin Coverage Program established in the
farm bill is going to help, and last month I joined 76 of my
colleagues in a letter to you expressing the importance of
implementing the Dairy Margin Coverage Program as soon as
possible, and I want to thank you for your response. I'm
wondering if you could comment on what you anticipate in terms
of enrollees for the Dairy Margin Coverage Program as compared
to the old Margin Protection Program and then how long the
processing period will last.
Secretary Perdue. I think, again, the Dairy Margin
Protection Program that was designed in 2014 for most everyone
didn't perform as they had hoped, and it really got kind of a
bad name, the MPP program, and that's one of the reasons you
all chose to refund the premiums from that, and those will
begin going out very soon, hopefully by the end of the month,
in that regard. That kind of makes up for it, and then a new
name I think also helps.
I expect the enrollment, certainly from those herds that
are under the 250, 300-count herds will virtually be everyone.
I can't imagine why a dairy farm would not sign up for the
program that you all have designed under this new program.
Certainly larger dairies that are over that cap may not find it
as beneficial in that regard. But certainly the up to 250, 300
cows, it seems like to me it would be a no-brainer.
Mr. Moolenaar. OK. Thank you. And then, as you know, this
is a crucial safety net for farmers, and many of us are hoping
that we can even move up the start date. Is there a scenario
where the Farm Service Agency might be able to open up prior to
the June 17 goal?
Secretary Perdue. This is a pretty aggressive goal that we
are struggling to meet, and it's still on track. I don't think
that we can do that any earlier. There are a few steps here to
do it. It's a fairly complex program. We had to go back.
Unfortunately, the first two years of the Margin Protection
Program were kept on paper and spreadsheets, and we didn't have
a database.
As you know, the reimbursement program has to go back and
find out who the record of owner--the owner of record was in
that dairy farm and, make sure the money gets to the right
people. There have been some changes of ownership, going out of
business and others. So it's a very laborious process to get
that done. So I think the June 17 date is a pretty aggressive
date to get that done. I'd like to tell you we can get it done
sooner, but we're probably not going to able to meet any sooner
than that.
UNITED STATES-MEXICO-CANADA AGREEMENT
Mr. Moolenaar. OK. Thank you. And just to follow up on some
of the dairy issues, I'm encouraged under the USMCA that Canada
has agreed to increase market access for dairy products from
the U.S. and ending their class 7 pricing screen. Obviously
it's important that we pass the USMCA. One of the questions I
get is this use of broad-based tariffs, how that's going to
affect the passage of the USMCA. I'm wondering if you feel that
some of these--if the Administration might be able to address
some of the disputes over tariffs on imports of steel and
aluminum before the USMCA either is voted on or goes into
effect.
Secretary Perdue. Well, it's no secret I've advocated to
the administration over the resolution of the 232 Steel and
Aluminum Tariffs between Mexico and Canada. If the President
would choose to utilize potential quotas, tariff-rate quotas in
lieu of tariffs, I think that would resolve and make the
ratification of the USMCA in all three countries more likely to
occur sooner.
BROADBAND PROGRAM/OPIOID CRISIS
Mr. Moolenaar. I know we're running out of time, but two
other issues I wanted to just touch on. Rural broadband, the
fight against opioids, those two issues. I know the farm bill
had efforts in both of those areas. Can you make any comments
on those?
Secretary Perdue. Yes, our Rural Development is active in
the opioid crisis. In fact, our former Assistant to the
Secretary that was in charge of Rural Development, we have lost
her to the drug czar to work. She'd done such a good job in the
opioid area in RD and USDA that she's working full-time on that
now, and she knows our programs in Rural Development, so we'll
be able to work more in sync with what the Administration's
goal is in eliminating the opioid epidemic.
And certainly broadband is an issue that we look for these
applications coming in April--end of April, April 23rd, in
order to evaluate and get money out, starting hopefully in the
early summer.
Mr. Moolenaar. OK. Thank you very much.
Thank you, Mr. Chairman. I yield back.
Mr. Bishop. Ms. Pingree.
CLIMATE CHANGE
Ms. Pingree. Thank you very much, Mr. Chair.
And thank you, Mr. Secretary and Ms. Navarro, for being
with us today. And, Mr. Secretary, I appreciate the many areas
you've been willing to work with me on this. The topic of
agriculture is a big concern in my state and certainly with me.
And I know the Chairman did an excellent job expressing his
concerns about the relocation of NIFA, ERS and you were kind
enough to give me some time outside of the Subcommittee to
express my concerns with you and I think you and I have reached
an impasse. But I will look forward to see any future studies
you're able to produce. But I'm going to count myself in the
camp of, as the Chairman said, someone who doesn't agree with
this particular move. But I have such limited time, I want to
ask you a couple other questions today.
I've also had a little bit of a chance to talk to you about
the issues around climate change and the USDA's role and
expressed with you, which I think you share this concern, that
it's very concern when talk about climate change, which I
consider a very pressing issue for us, and I think you've seen
this particular majority is putting a huge focus on that, but
often people want to lay all the blame at the feet of the
farmers and not think about the opportunities there for farmers
to be real participants. Many of them are, with our
conservation programs, and we're fortunate to have another
hearing tomorrow where the Acting Associate Chief of NRCS will
be with us, so we're going to be able to talk about soil health
and a lot of those programs.
But I'm particularly interested in this notion of how the
USDA can continue to play an important role in assisting
farmers and sequestering carbon in the soil. I think most
people think about--when we're sequestering carbon, they all
think, well, we should go plant a tree and not understand that
organic matter in the soil holds a tremendous amount of carbon
and can be a really big part of mitigating that.
And so I know it's a topic you're giving some thought to,
but I'm just interested if you could talk to us a minute about
the potential USDA role in measuring that or participating and
anything you'd like to say.
Secretary Perdue. Absolutely. I very much appreciate the
question because, as you know, farmers and producers have been
somewhat really very intense victims of climate change from
droughts to floods to other things. And the types of things
that USDA is doing from a research perspective, from an applied
research and an extension delivery is trying to help mitigate
those changes and also contribute.
You mentioned one that we've been really guilty of not
talking about enough, of how farmers can be part of the
solution of greenhouse gas emissions by capturing more carbon.
Their practices that they are doing now regarding no-till,
leaving that organic matter in the soil, and carbon sinks that
way as well as cover crops, all three of those practices help
to capture carbon in the soil.
And if you think about all the arable acres we have in this
country, it's amazing the tons of greenhouse gas and CO2
emission that we could capture in our soils if we have, I
think, the incentivization of maybe a carbon market from
Agriculture to do that. USDA would love to play a part in that.
We think it could probably be developed in the private
sector, but there has to be some sort of regulatory referee I
think out there to quantify that and the degree of capture as
well as making sure the rules are complied with and people
don't--there have been other efforts here that haven't done
that because they've been unregulated, and we think we could
provide some help in that regard.
Ms. Pingree. Do you see a role--from my conversations and
what practices are going on now, I understand that there aren't
readily acceptable measurement tools. And so kind of, as you
said, you have to have a fair referee. Do you see a role for
the USDA in doing more with that?
Secretary Perdue. We do. Research and sensors and
technology are being able to quickly identify, quantify, and
measure the degree of soil capture in the soil would be one of
those tools. And I think that technology is really available
now. We just need to learn how to deploy it in a ubiquitous
fashion.
Ms. Pingree. There are seven climate hubs, apparently, as
part of the USDA. Is that anything you're actively engaged with
or that you're working with?
Secretary Perdue. I thought we had ten, but it may be
seven.
Ms. Pingree. Even better.
Secretary Perdue. I think there are ten there. And they are
obviously in various regions, internationally even, and we have
one in Puerto Rico that talks about different effects of
climate change, how we can and how it can affect and inform our
farmers about the mitigation techniques of climate, how they
can be part of that solution. So they serve as practical
research applications and real on-the-ground data--recovery
data assessment tools around the country.
Ms. Pingree. I'm about to run out of time, so I don't have
time to follow up. But I'd like to learn a little bit more
about what we're actively doing through those and I can follow
up with you on that. But thank you for your time.
Thank you, Mr. Chairman.
Mr. Bishop. Mr. Pocan.
AGRICULTURAL PROGRAMS AND FACILITIES
Mr. Pocan. Thank you very much, Mr. Chairman. I appreciate
it.
And thank you, Secretary, for being here. I actually have a
follow-up on two questions Mr. Moolenaar had right off the bat.
I want to also add about the Margin Protection Program. About a
quarter of the people in the program are farmers in Wisconsin.
We lost 700 dairy farms last year. Our herds are down about 40
percent in the last decade. So, you know, milk prices are low,
and quite honestly, the President's trade policies have really
hurt a lot of dairy farmers. So the earlier we can get that
going would be very much appreciated, because it impacts a lot
of farmers, not just in Michigan, but also Wisconsin. So I
really would appreciate that.
Also, to rural broadband, I know in 2019 we added the
provision to make sure the speeds were a little higher. I think
we were only at three Mbps download. We're required--we made
sure it was 25. But with the cut to funds for rural broadband,
by the USDA's own report, 29 percent of farms in the U.S. don't
have broadband. 39 percent don't have that speed of Mbps. So if
you're almost at 40 percent of the farms with all the work
that's happening--we just had someone in talking to us about,
you know, tracking cows, et cetera via broadband--we really
need that money more than you could imagine. And they say about
10--I think it's billion dollars is what's needed to actually--
it's one estimate to get rural broadband out there, any cuts--a
$315 million cut is 3 percent of that. It's a big cut. So I
just want to reinforce those two messages.
As you may know, the University of Wisconsin in Madison is
home to one of the top plant breeding and genetic programs in
the country. It's a large part. It has a very close partnership
with the USDA, the Agricultural Research Service. The vegetable
crop research unit has been working on innovative plant traits
with farmers across the world. Out of that facility, however,
it is really, really seriously outdated and needs to have a new
vegetable crop research unit there working with ARS. I don't
think right now it's on a list to do that, but if you could
take a look at that, it is a seriously outdated facility.
Secretary Perdue. We will. Unfortunately, we see a lot of
those. I go on campuses across the country, and all the state
buildings are new and modern, and some of our Federal buildings
look the shabbiest of any on campus.
SNAP BENEFITS/SWINE SLAUGHTER INSPECTION RULE
Mr. Pocan. Yeah. So just if you could specifically look at
that one, I would really appreciate it, because we would really
like to get that--it's one of the top priorities for our
university, looking forward on some of the agricultural
programs they're doing.
Let me just go real quick to SNAP. So I know that with the
work requirement, I just want to share a little experience from
Wisconsin where this has failed miserably. It is not a good
provision. From July 2015 to December 2018, over a 100,000
Wisconsinites lost their SNAP benefits, but only 31,000 were
connected with jobs. And so when you have that big of a cut,
this is going to have a real impact on people, and often these
are noncustodial parents and families that aren't going to get
that.
Realistically, Mr. Secretary, 6 years ago I did a week of
SNAP of when we did a SNAP challenge here, $31.50. I don't know
if you've ever had a chance to do a SNAP challenge, but I'll
tell you when you do, you have a different appreciation.
I bought a bag of oranges, I bought peanut butter, I bought
the cheapest bread I could I find, I bought my ramen noodles, I
was ornery all week. You can check my office.
And, you know, you go to the Trump Hotel here in town and a
cocktail could be $25, right? But now we're at $33.50? That has
not kept up with inflation over the 6 years in a realistic way
on food and food products.
So this is something that I really wish you'd take a look
at, because it has not worked in Wisconsin. It's not worked the
way I think people try to intend to. Instead it has been
punitive, and that is a real problem.
And then the last area I think I can get to is under the
monetarization of swine slaughter inspection rule. You know, as
you're probably aware, meat packing workers are injured at a
rate almost 2\1/2\ times other industries. They face illness at
rates 17 times that of workers in other industries. It's
estimated that--the USDA has estimated that the number of
Federal inspectors in pork plants could decrease by 40 percent
under the proposed rule, and I think we have real concerns over
worker safety and on the product that comes out, on people's
safety on eating the swine with this rule in place. So can you
address that at all? We just have great concerns.
Secretary Perdue. You know, I had shared some of those same
concerns when they described that to me. What I found was most
of this effort has to do with presorting the animals to make
sure those from a visual perspective that don't look healthy
initially are not processed along in between the others, which
streamlines that process. We're not having a carcass that does
not have a USDA inspector put that stamp on there. That's not
the intention at all. The plant personnel who are doing that
are the ones who are sorting and gathering and maybe even
sending back prior to slaughter and that is a more efficient
process. So the line speed, if you're uniform in that way, can
operate in a better efficient fashion. What we're doing is
asking the plant people to presort those animals. USDA
inspectors are looking at every animal that's slaughtered.
Mr. Pocan. And we'll still be watching very closely.
Secretary Perdue. I understand.
Mr. Pocan. On people as well. Thank you.
Secretary Perdue. Sure. As will I.
Mr. Bishop. Mr. Cuellar.
TRADE ON THE TEXAS BORDER
Mr. Cuellar. Mr. Chairman, thank you so much.
Mr. Secretary, thank you for being here. I wanted to talk
about trade. I'm a big supporter of what I call NAFTA 2.0. And,
as you know, being from the State of Texas, Texas does a little
bit of agriculture, and I want to talk about two things that
affects us down there.
One of them has to do with the Department of Agriculture
and how you support CBP in facilitating legitimate trade
through agriculture inspections and other methods at the U.S.
border. One of the things I would ask you to look at is if you
can have your folks review to make sure there's sufficient of
your personnel down there, because whether it's in Pharr, Texas
or Laredo, Texas or wherever the case might be, there's been a
lack of some of your folks down there. And if you tell us what
we need to do to try to get the chairman and the ranking member
of the subcommittee to put a little bit of money because we
want to make sure we facilitate that trade through our ports of
entry. So I would ask you to have your folks look at that, work
with the subcommittee, and certainly we want to be helpful on
that part.
Then I have another question about avocados before my time
runs out.
Secretary Perdue. We'll certainly look at the APHIS
staffing there on the borders. You're hearing that they've been
slowed down or not enough people to process in a timely
fashion?
Mr. Cuellar. Yes. That is one. The other one is--it has to
do not with y'all. But as you know, because of, you know, the
people coming across, they move CBP--they move 750 CBP officers
from doing port inspections to what I call changing diapers and
doing other things that are not their mission. And that has
slowed down the trade. So I've been--I sent five suggestions to
the CBP Commissioner, Mr. Kevin McAleenan, which he understands
this very well. So I'm waiting for him to give us some ways
that we can move the trade. So anything you can help us down
there at the border to facilitate and what we need to do to
provide you the proper resources, please let us know.
Secretary Perdue. That cross-border commerce is very, very
important not only to Texas, but to the overall agriculture
economy of the United States. So it's really important we
expedite those as much as possible.
Mr. Cuellar. Right. And thank you for your effort last--I
think it was last effort, last April, about making sure of the
withdrawal. Because when it comes to that trade, there are
three options. One, withdrawal, which is a mistake.
Secretary Perdue. Right.
Mr. Cuellar. Two, keep the status quo. And No. 3, look at
this new trade agreement with a lot of improvement that we have
done. So I certainly want to say thank you for your effort to
make sure. Because every state, including Hawaii and Alaska--
not only the 48 continental States--have trade with Mexico.
Every day there is more than 1.5, 1.7 billion dollars of trade
between the U.S. and Mexico. That's over a million dollars
every single minute. So it's very important. I know you
understand that. So I do want to thank you for talking to the
President about the importance of those negotiations. Now, let
me talk to you about avocados.
Secretary Perdue. Right.
AVOCADO TRADE WITH MEXICO
Mr. Cuellar. If you want to see a crisis at the border,
it's when you stop avocados from coming in. As you know,
there's--I sent you a letter, along with John Cornyn, Senator
Cornyn, Ted Cruz, and other Texas members. And I think we are
still waiting for a response. We sent it back in November. And
basically what we are asking is, there's an APHIS final rule
that was published in May 2016, dealing with avocados.
And I think what we are waiting for is the required
operation workplan has to be signed; where we bring in the
State of Halesco. Maybe some other states, to expand. Because I
think right now we are just dealing with the State of
Michoacan, in Mexico. But we are trying to expand it, and make
sure there's no risk to the public. And unless, if I didn't get
a copy of the letter. And it was sent only to Senator Cornyn
and Senator Cruz. I haven't seen a response. But I would ask
you to look at that, and if it hasn't been signed, I would ask
you to do that.
So it's not only the trade agreement, but it's also this
workplan. At least on that particular effort. And of course the
work that you all do at the border. And I have met some of your
folks that do a heck of a job. And I would ask you to just keep
working with us. I got about 20--19 seconds now. Fever ticks.
Secretary Perdue. Yeah.
FEVER TICKS
Mr. Cuellar. Fever ticks. We've been adding money on this
issue. The quarantine in Texas--and that could affect the
cattle industry. The quarantine is not shrinking. And we have
added millions of dollars. It's not shrinking. We have to think
outside the box, because if we think we are going to dip every
cow, it's not going to work. We have to think outside the box.
Because there's wildlife. There's animals across the Rio
Grande. So I just--any way we can work with this, let us know.
Secretary Perdue. OK.
Mr. Cuellar. And that's very important, on that. So I just
want to say thank you for the work that you all are doing.
Secretary Perdue. Thank you, sir. I thought we were making
progress on fever ticks. I'll have to check with APHIS again on
that. But certainly that continues to be a problem, and can
affect the whole Texas and larger cattle industry.
[The information follows:]
I agree with you that we must address wildlife and animals
crossing the border. For this reason, APHIS used the additional
funding provided in recent years to treat free-ranging wildlife
for cattle fever ticks (CFT) as well as inspecting livestock
crossing the border. Beginning in FY 2017, APHIS increased the
use of feeders with medicated corn to treat tick infested
white-tailed deer on private property and expanded these
feeders to wildlife refuges in FY 2018. APHIS also used
appropriated funding to collaborate with the Agricultural
Research Service on several projects including: studies on
anti-parasitic products that prevent or control ticks; on-going
research to create cost-efficient ultraquiet sprayers for
treating ticks found on wildlife; and research and testing on
the release of natural parasites that target CFT. APHIS will
continue to work with our partners to develop new strategies to
prevent CFT infestations from occurring both within and outside
of the permanent quarantine zone. While this continues to be a
problem, we are seeing progress. In FY 2018, APHIS saw the
number of newly tick infested premises decrease from 165 in FY
2017 to 110 (41 premises inside the quarantine zone, 69
premises outside the quarantine zone).
Avocados, I know, this is very important in Mexico. And we
have discussed with them, we have some issues obviously with
them over potatoes and things we would like to get some
resolution over as well. But we don't want to start a guacamole
revolution here, with no avocados.
Mr. Cuellar. That would be the crisis at the border.
Mr. Bishop. Thank you, Mr. Secretary. Mr. Secretary, is----
Secretary Perdue. By the way--and can I respond?
Mr. Bishop. Yes. Go ahead.
Secretary Perdue. My staff just told me that letter of
response on avocados was sent on February 1. So if you have not
received--if your office doesn't have a copy, let us know. And
we'll get you another copy.
Mr. Cuellar. Yeah. I would like to see if we have a copy.
Secretary Perdue. OK. All right.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Cuellar. Thank you. Thank you, sir.
REORGANIZATION OF ERS UNDER THE CHIEF ECONOMIST
Mr. Bishop. Thank you, Mr. Secretary. My turn again. Back
to ERS, and the Chief Economist. You indicated that a copy of
the beginning cost/benefit analysis had been furnished. I think
there have been several requests from this subcommittee as well
as from Senator Roberts and Senator Stabenow on the Senate side
for the beginning cost/benefit analysis. And none of us, it's
my understanding, have received that. What we have received
are, again, anecdotal comments. But no cost/benefit analysis
that led to the decision to consider this. Now the proposal to
move ERS under the Office of Chief Economist doesn't reflect
the differences between the two agencies. ERS is one of the 13
OMB designated principal statistical agencies of the United
States.
According to the National Academy of Sciences, there is a
mandate for these agencies, and I quote, ``to be credible,
trustworthy and unhindered in its mission, a statistical agency
must maintain a position of independence from undue external
influences, and avoid the appearance that its collection,
analysis or dissemination processes might be manipulated for
political or partisan purposes.''
Now, its independence is safeguarded under the Code of
Federal Regulations by the Under Secretary for Research,
Education and Economics, who was designated as USDA's Chief
Scientist. The Under Secretary specifically and uniquely
directed to quote, ``develop mechanisms to address scientific
integrity,'' end of quote, in the Department. There's no such
language in the Code of Federal Regulations with respect to the
Chief Economist. In fact, the Chief Economist is charged with
such functions as the coordination of economic analysis and
checking for consistency in Departmental analytic consumptions,
consistent with the Secretary's policy implementation.
These are very important functions. But they are not
research. The Under Secretary for Research, Education and
Economics is the sole person in charge with overseeing
scientific integrity in the Department and is the person who
can safeguard this, and not the Chief Economist. Your comments
on that, Mr. Secretary?
Secretary Perdue. Certainly. The designation that you
indicated would not change if this were realigned under the
Office of the Chief Economist. I guess one of the things that I
fail to understand as far as any kind of undue influence--to
which I concur--is that your Under Secretary for Research,
Education, and Economics is a political appointee confirmed by
the Senate there. I would suggest to you, if anyone is more
subject to political influence, it would be someone appointed
by the administration.
Mr. Bishop. Sure. But Mr. Secretary, they have clearly
designated different functions. The Chief Economist's function
is basically to the Secretary, whereas the other one is
directly responsible for maintaining the scientific integrity
of the research.
Secretary Perdue. I would hope----
Mr. Bishop. Pursuant to the National Academy of Sciences
designation.
Secretary Perdue. I would hope, sir, that----
Mr. Bishop. And the OMB designation.
Secretary Perdue. I would hope that the Under Secretary for
Research, Education, and Economics would also feel a little bit
that he works for the Secretary of Agriculture as well. If
that's not the case, we probably need to revisit that. The
Office of the Chief Economist is a career position, of which it
is the same as the previous Administration. And the Office of
the Chief Economist is the chief user of the ERS data. So those
are the reasons it does not appear that today we are going to
be able to resolve this issue. But one of these days we are
going to resolve our differences on this.
Mr. Bishop. Yes, sir. And my time is about to expire on
this. But we have these thousands of individuals and people
with all of these years of experience in the agency, who have
seen the interaction, and political interference from time to
time. And they feel very strongly that they need to maintain
the separateness that currently exists, in order to maintain
that integrity for the research.
OK. Mr. Fortenberry.
INTERNATIONAL FOOD AID
Mr. Fortenberry. Thank you, Mr. Chairman. Mr. Secretary, I
want to talk to you about two additional things: International
Food Aid, and Rural Broadband. Let me turn to food aid first.
International Food Aid is indispensable to America's
humanitarian outreach. Our impulse is not to simply sit around
while other people die. And we have done this for decades. It's
a part of the fabric of who we are. Secondly, it's inexplicably
intertwined with good diplomatic relations.
And third, very much related to our own national security
and we create the conditions for stability throughout the
world. Finally, our international food aid gives us great
conditions for market access for us and our farmers, as well
as, indirectly, becoming a price support mechanism. It's zeroed
out in this budget. And that's not realistic.
Now, Andy Harris, Congressman Harris, said it very well.
Congress's own law mandates that you meet certain budgetary
caps and there's certain constraints there. However, I think,
Mr. Secretary, you probably would realize that you were not
going to not hear this from me, to place an accent mark and an
emphasis on just how critical this programming is for the well-
being of not just farmers and ranchers, but America and the
world itself. Let me stop there, and let you respond. Then I
want to turn quickly to rural broadband.
Secretary Perdue. I don't think you are going to get any
disagreement with me, sir.
RURAL BROADBAND
Mr. Fortenberry. Fair enough. Let's turn to rural
broadband. The Chairman gave some anecdotes that I think
demonstrate both the possibilities and then still the gaps. We
have, in the last two budgets, given you $600 million and $550
million, this past year. Can you briefly unpack what the
American Broadband Initiative is achieving?
Before you do that, I want to read some language that I
have actually submitted for this year's appropriations process,
which I eagerly anticipate the chairman will delight in. It
says this. And what I am driving at here is, broadband is more
than a wire. It's more than a program. It has to nest itself
within an ecosystem of what I call the potentiality for
livability.
And so this is the language I submitted: ``You should work
on developing metrics that can impact across functions such as
telehealth, telecommuting, precision agriculture and the
economic benefit to diverse populations. Metrics that assess
the quality of life, livability, impact on community inclusion,
and vitality in building community social capital.''
These are a little bit less tangible than miles of wire,
than customers served. But it is actually a critical function
to assure that the Broadband Initiative--that I think most of
us agree with, as again, the 21st Century architecture for how
we move forward with a whole list of concepts on rural
development--ought to be considered.
So, these words are kind of open-ended, and it's a bigger
challenge. But I think they are absolutely necessary. They're
not abstractions. They're absolutely necessary to making sure
that your initiatives around broadband actually complete the
fullness of the mission of what we are trying to achieve.
Secretary Perdue. I agree with you whole-heartedly. In
fact, I think what you have articulated with the description is
what I call the transformative moonshot opportunity of
ubiquitous broadband. What we will see is the cultural
transformation of rural America take place, because of, I
think, as the chairman has talked about, sitting in parking
lots of libraries or fast food restaurants, getting a signal
there. But just the education component. The telemedicine
component. The entrepreneur e-commerce component. The
precision-agriculture component. All of that changes the
culture. I do literally believe that ubiquitous broadband has
the ability to bridge the urban-rural gap that we see dividing
more and more in this country.
Mr. Fortenberry. I think we have got some work to do. That
is very well-expressed. Thank you. Work to do, though, in
translating that subset of subsidies and the mechanism by which
we subsidize the provision of broadband into metrics that
assure the outcome of this greater vision. Or else I am worried
that we lay wire.
Secretary Perdue. We would love to have your input as we
continue to revise and reform the criteria of these
applications.
Mr. Fortenberry. Right. Good.
Secretary Perdue. And looking at that----
Mr. Fortenberry. OK.
Secretary Perdue [continuing]. That's what we have spent
almost a year doing, in order to try to get the criteria of
unserved areas, which was the goal of that.
Mr. Fortenberry. Well, I welcome that comment. I think it
is very important.
Secretary Perdue. Mm-hmm.
Mr. Fortenberry. This shows an alignment of, again,
imaginative possibility, and not just more money for
traditional programmatic requests.
Secretary Perdue. No, we are kind of like energy. All of
the above.
Mr. Fortenberry. OK. Thank you.
Mr. Bishop. Ms. Pingree.
ORGANIC DAIRY LIVESTOCK
Ms. Pingree. Thank you, Mr. Chairman. Thank you again, Mr.
Secretary, for being here today. And I do want to appreciate my
colleagues. I won't ask too many questions about SNAP benefits.
But I really appreciate and concur, they are exactly the same
concerns I hear from my home State of Maine. So I whole-
heartedly agree. I want to ask you a question about the origin
of organic dairy livestock. You are always great about talking
about protecting the integrity of the USDA Certified Organic
Seal. And the 2018 farm bill reiterates that, protecting the
integrity, effective oversight of organic production practices,
to ensure organic products meet consistent standards for all
producers. But there's no consistent enforcement of organic
dairy standards.
The industry, organic dairy industry, has been waiting I
think 15 years for this issue to be addressed. And the USDA
actually removed the origin of organic livestock rulemaking
from the Unified Regulatory Agenda in 2017. So it was there,
and now it's gone. This is one place where I think everyone in
the organic industry is very united. So, will you be planning
to take regulatory action? And if not, why not?
Secretary Perdue. When you say ``everyone,'' we have found
there's a good bit of division within the industry over the
organic standards in dairy, and doing that. So we'd like to
hear more of what your conclusions are based upon, so we can
learn from that. But we would love to have a regulatory
standard everyone feels that is fair and can comply with. But
we hear, frankly, right now, a good bit of division over
winners and losers in the dairy organic space. But we are
willing to enforce those criteria. It is important to have
integrity of the process. But I'd like to know more about what
your concerns are in that area.
Ms. Pingree. Well, that's news to me. So, and again, it may
be a little hard to drill down on it right here. I know one
practice I hear about quite a bit is taking conventional calves
and moving them into organic herds. And many of the smaller
producers feel that's a disadvantage. And I don't know if this
is disagreement between the large producers and small
producers. But I am of the opinion that we can arrive at a
scientific basis for what organic integrity is. And maybe we
just need to spend a little time talking about where the
differences are.
Secretary Perdue. We will do that. I think it's, my
information is a little more complex than that. But we will
talk about that.
Ms. Pingree. OK. Well, I will take that question offline
with you, and perhaps see if we can pursue it. I think there's
just a general feeling that those standards need to be arrived
at.
Secretary Perdue. OK.
FOOD WASTE/INTERAGENCY BIO-GAS OPPORTUNITIES TASK FORCE
Ms. Pingree. And that today, there are winners and losers,
only they don't tend to be the small producers. They're the
ones that operate with a higher standard. Let me just take
another quick question. And I wanted to say that I appreciate
how much the USDA and you in particular have embraced the
issues around food waste. When we talk about environmental
problems, food waste is a tremendous source of methane gas when
it ends up in a landfill. And yet another way we need to deal
with that. And I think this afternoon the EPA and the USDA are
having a joint event. And I appreciate being asked to
participate.
I have a feeling we'll be busy voting on the floor, so I
may not be there. But I just think moving forward on this,
getting a liaison, continuing to do this work, is very
important. And what I have learned, how much activity goes on
in European countries in particular with all areas of the waste
stream, they are just so far ahead of us. And that's not always
surprising. But I am glad to see that you are embracing this
and also working with the EPA, as it is an environmental issue.
I am interested in the establishment of an Interagency Bio-
Gas Opportunities Task Force. I think that's called for in the
2018 farm bill. Because bio-gas can be an on-farm solution for
both dealing with animal manure, which can be an enormous
problem, as well as food waste, in the areas where we have seen
it be successful. We have one operating in Maine. And it's just
a really good solution. It produces bio-gas, which is a
valuable thing, and reduces methane just being lost into the
environment. So, I am wondering how--if you could give me an
update on the establishment of that? And are there sufficient
resources to prioritize getting that task force up and running?
Secretary Perdue. Certainly. Again, that's part of the farm
bill implementation. And I can't give you specificity this
morning regarding the progress that we have made in the forming
of that group. But I do know that USDA has been involved in the
bio-digestor areas. Particularly at large concentrated animal
feeding operations that would help to, again, process this gas
and the waste there in a very beneficial way. We'll continue to
do that, and be informed when we get this council done. I do
want to mention, back on food waste. I appreciate you
mentioning that. Again, this is really a cultural issue. We're
trying to start with the youth, over really making food waste
at our plates a moral issue. Of just portion sizes and those
kind of things. Learning to. Like, buffets, you see, ``Take
what you can eat, but then don't throw away the rest.'' And
much of the waste comes from that area. This is a long-term
cultural thing like smoking or seatbelts. I know we'll continue
at it, to get the real impact over food waste.
Ms. Pingree. Yeah. And when I worked on a comprehensive
bill on food waste, that was one of the areas was really the
public education. I think people have no idea we waste 30 to 40
percent. And some of the best efforts going on today are in
schools. Share tables, or things to encourage young people. I
am way out of time. But thank you very much for your work on
that. And thank you, Mr. Chairman.
Mr. Bishop. Ms. Lee.
SNAP TIME LIMIT WAIVER RULE
Ms. Lee. Thank you very much. Just a second. Let me just go
back to the SNAP cuts. $220 billion in SNAP cuts. And then with
the new rule, it looks like over three-quarters of a million
people are going to lose their SNAP benefits. The reason I say
it's cruel, and really morally wrong, is one, we have three-
quarters of SNAP recipients are working, first of all, already.
Secretary Perdue. Mm-hmm.
Ms. Lee. Secondly, two-thirds of SNAP recipients are
children, the elderly, the disabled. And so you are talking
about people who need food assistance, in the wealthiest
country in the world. And so this is mean-spirited. It's wrong.
And it's going to hurt a heck of a lot of people. And it's
going to lead to more hunger. Would you clarify? Again, you
said, you mentioned that, in your proposed rule, as it relates
to the unemployment area waiver--I wasn't clear whether or not
this is a blanket waiver? You're going to repeal that? Or
eliminate that? Or are you doing this by unemployment
statistics in a region? Or how is this going to work?
Secretary Perdue. Regional statistics. In the rule, the
regulations are, if a localized area has an unemployment rate
at a factor times the national rate. I can't recall how many
points above it is specifically. But then they can apply for a
waiver, and it would be approved. What's happened, I was a
governor, Ms. Lee. And what we did is, my role as governor was
to draw down as much Federal money as I could. Because Georgia
didn't have any skin in the game regarding our food stamp
money. You folks were paying for it all. So my goal was to get
all we can. We've seen states that have state-wide waivers
where they may have one county that fits that criteria. But you
also, in the farm bill, allowed for 12 percent exemptions for
no reason at all. They can just designate 12 percent
categorical exemptions.
Ms. Lee. OK. Well, I understand that, Mr. Secretary. But
just--and again, I am using my district as an example. The
unemployment rate may be coming down. But when you look at
African Americans and people of color, it's not. And there are
no jobs or job training programs, if in fact we wanted to
reduce this, you know, this unemployment rate.
So this waiver is going to hurt people who are looking for
jobs, and the jobs just aren't available because of the budget
cuts in workforce training and all of the other areas and
programs that we need to make sure that we do provide for jobs
for communities of color and people of color. I hope you go
back and look at that. Because you can't just look at the
overall unemployment rate when you grant a waiver.
Secretary Perdue. Well, maybe we can come----
Ms. Lee. Or repeal the waiver.
Secretary Perdue [continuing]. And visit with you, and look
at your district specifically from a----
Ms. Lee. And that's just an example.
Secretary Perdue [continuing]. Demographic perspective.
INDUSTRIAL HEMP PROGRAM
Ms. Lee. OK. Now, let me ask you about industrial hemp.
Because in the farm bill, we have legalized the production of
industrial hemp. It's caused a lot of excitement across the
country, and in California. Now, I understand you are working
on the rules and the regulations about the production, insuring
and marketing this relatively new crop. Some may be
complicated, because it's new.
And so I'd just like to know where you are in the process
of developing these regulations for industrial hemp, and when
can we expect to see a draft? And also we said--I believe in
the farm bill it was to implement it, as much sums as
necessary. And I don't believe we have appropriated any funds
yet for the Industrial Hemp Program. And so I'd like to find
out how much you believe USDA is going to request or need to
implement this.
Secretary Perdue. Well, you are correct. And there's a lot
of excitement and interest. It's probably created as much
interest as anything in the farm bill. Maybe because it's new,
or because it's CBD oil. And it's all the new fad of medicine
in that regard. And it probably has a little bit of allure,
because the plan is very, very similar to its Federally illegal
cousin, the high-THC marijuana plant.
But the fact is, we are not expediting this like we are the
dairy program. We're taking this slow. States will still have a
primary responsibility in the regulation of that. They are
submitting their applications to USDA now. We probably--it's
2019 planting season now. We won't have the rules and
regulations out for the 2019 planting season. Our goal is to
have them out in plenty of time for the 2020 planting seasons,
where we approve the state lands, and the states will provide
fees for participating. And they will be the primary regulator
of the Federal rules in that regard.
Ms. Lee. OK. Thank you very much, Mr. Secretary.
Secretary Perdue. Thank you.
Ms. Lee. And I look forward to meeting with you.
Secretary Perdue. Thank you. Thank you.
ERS/NIFA MOVE
Mr. Bishop. Mr. Secretary, my turn again. Going back to ERS
and NIFA. Of course, we have discussed your proposal to
relocate ERS and NIFA outside the greater Washington area. And
now that your budget is out, I have some additional questions.
And here's what jumps out at me. You request an increase of
$267 million to renovate the USDA Headquarters Complex. $60
million to renovate the Carver Center in suburban Maryland. $25
million to pay for the cost of moving ERS and NIFA staff
outside the Washington area. It's a total of $352 million this
year. The renovations will vastly increase the seats available
in USDA owned, rent-free space in the National Capital region.
Sufficient space will be available to keep ERS and NIFA in
the Washington area and not incur relocation costs, buy-out
costs, early retirement costs, likely commercial rent costs in
a new location, not to mention the disruption of the agency's
activities in the process of the transition. In fact, even
without any renovations, you currently have 1,675 unoccupied
seats in the Washington area right now. That's enough to
provide for NIFA, whose lease is up in January, and probably
ERS as well. How, in any way, does it make budget sense to move
ERS and NIFA outside of DC when there is rent-free space here
available?
Secretary Perdue. Well, sir, if there were rent-free space
available, why are we renting space for NIFA that expires in
January? That's the----
Mr. Bishop. Good question.
Secretary Perdue. That's a great question, is it not? And
we are doing a comprehensive space analysis of all of that.
That's why our recommendations over this renovation gets a lot.
But we have got other agencies. APHIS is in Riverdale. We've
got other places out here in Patriot's Plaza. We've got a lot
of utilization.
Mr. Bishop. Just the question, Mr. Secretary, I just want
to make sure that we have got the proper cost/benefit analysis
up front.
Secretary Perdue. And that's what----
Mr. Bishop. Let me transition to another area. And you can
respond later to that question.
Secretary Perdue. Certainly.
[The information follows:]
USDA received 136 Expressions of Interest from 35 States to host
ERS and NIFA. USDA has retained a consulting firm to evaluate those
Expressions of Interest, which recently narrowed down the list to 67
possible locations. The consultant will provide a benefit-cost analysis
during the site selection process, and the results of the analysis will
be made available as soon as feasible.
RURAL DEVELOPMENT BUDGET REDUCTIONS
Mr. Bishop. I have serious concerns about your budget
proposal and staffing levels at Rural Development. This is the
heart of USDA's mission, and the huge reductions to staff and
resources are alarming to us. Compared to the 2018 actuals,
Rural Development would lose more than 750 staff years, which
is a cut of 17 percent. Rural Development would be cut by more
than $1.5 billion, a cut of 35 percent. And our home state of
Georgia had 100 Rural Development staff on October 1st, 2017.
But as of March 18th, 2019, it had only 76 people.
I know that your budget has to hit a number, but it is also
a statement of priorities and values and from these reductions,
I don't see Rural Development as a priority for USDA. With all
due respect, how can you justify these cuts considering in your
opening statement and your written testimony, you emphasized
the importance of facilitating rural prosperity and economic
development for our rural communities? Why are they not in the
budget, and why doesn't your budget reflect those priorities
and those values for Rural Development? I'm very passionate
about rural America.
Secretary Perdue. Well, as I am, and I think again, the
contrast that you indicate really has to do with the way the
budget is formulated, certainly. The Administration has decided
that some of these programs through the Rural Utilities
Service, and with EPA and their water program, certainly rural
housing with HUD, and the Rural Business Service with the Small
Business Administration be consolidated, and you will see some
of the efforts in that regard. I can't necessarily say that I
agree or disagree with that, although we are going to do the
best with the value of money that we are given to facilitate
those programs.
Mr. Bishop. I have about 30 seconds left, and I'm going to
yield that back and allow Mr. Fortenberry to go ahead, and I
have one more round of questions that I want to get to.
Mr. Fortenberry. All right, OK.
Mr. Bishop. And it won't be ERS or NIFA.
Mr. Fortenberry. My turn, Mr. Chairman?
Mr. Bishop. Yes.
FARMER TO FARMER PROGRAM
Mr. Fortenberry. Thank you, thank you. Mr. Secretary let me
talk to you about a small program that I am not only aware of.
It was started by my predecessor, Congressman Doug Bereuter,
called The Farmer to Farmer Program. So, the potentiality is
enormous in terms of what we are trying to achieve with the
full integration of U.S. agriculture into international
markets, again, consistent with our diplomatic space
initiatives that the Department plays a critical role in as
well.
So, The Farm to Farmer Program is a USDA program, but then
is outsourced to USAID. For my perspective, it has become
fragmented over the years, doled out, is not adequately
branded. Think about a farmer, a producer, who spends a
lifetime with a specialty in grain sorghum or millet or rice or
corn or livestock production that has a capacity to potentially
do something overseas to help his neighbor to develop
agricultural practices among those who are marginalized or
poor. Again, taking the best of America's humanitarian impulse
and sharing it with people worldwide.
That is the fundamentals of The Farmer to Farmer Program,
but again, I think it is lost or never adequately developed a
brand. I think this is an ideal program for USDA to take back
that is completely consistent with your diplomatic missions,
takes on a certain lyricism and poetry to what you're doing,
but if it could be regenerated with inside your Department, I
think the potentiality to reach the greater intentions of your
mission are really there.
Again, it's a small program, but I am very interested in
this because it is a hybrid program that cuts across multiple
intended outcomes.
Secretary Perdue. We would welcome that. I am not sure
really the genesis of moving it to USAID. We were working with
private sector partners who have experience as well as the
World Food Program and Governor Beasley in that effort in some
of these countries as well to do that. There is, certainly. I
can almost see it like, I guess, its score, the big business
executive's thing from a farmer perspective, you know, doing
that kind of thing.
Mr. Fortenberry. Yes, you mentioned Governor Beasley doing
a tremendous job with the World Food Program. Again, let's
think creatively about the constructive partnerships that could
potentially be out there that use our expertise of our farmers
and their good heart and good will to be an adjunct to our
diplomatic missions to help the poor around the world. This has
huge potentiality and we have got a Foreign Agricultural
Service that, from my perspective, doesn't really touch this at
all as far as I am aware.
And yet, tremendous amounts of resources devoted there with
embedded personnel and embassies throughout the world. Why
couldn't this be folded under there? Why couldn't David
Beasley's, or the World Food Program, which enjoys tremendous
international stature led by the United States? Be a partnering
component in solidarity with this?
Again, tie the extension model in our country has been a
tremendous model if we get where the economic development
largest of our own country comes from, but again, it is
consistent with those ideas as well. Transferring technology
and assistance to those in need by the farmers who have the
capacity at a certain point in life to be effective volunteers
force worldwide. It is like a diplomatic agricultural corps.
Secretary Perdue. I am not aware. I am not aware of whether
that is a statutory move or administrative move, but I would be
happy to explore that with you.
Mr. Fortenberry. Well, I would appreciate that. I kind of
slogged through this in the last farm bill, and we got some
modifications. Not fully to where I want to go because again,
what I am talking about is a substantive realignment of the way
in which the program has been implemented. I don't know if you
have the flexibility to do that or not. Perhaps you do but
again, I think this could serve many, many purposes that are
consistent with the vision of the Department.
Secretary Perdue. We do similar types of things, certainly,
in our Foreign Agricultural Service, that I think is in 63
countries, so I think the potential is there.
Mr. Fortenberry. All right. I yield back, Mr. Chairman.
Thank you, Mr. Secretary.
LIVESTOCK INDEMNITY PROGRAM
Mr. Bishop. Thank you, Mr. Fortenberry. Mr. Secretary, this
is not about ERS and NIFA. A constituent of mine whom I believe
you know must be dealing with one of the more interesting and
bizarre Livestock Indemnity Program cases in history. His flock
of organic chickens are preyed upon by bald eagles. There are
now close to 80 bald eagles on this property, as I have been
told. I have been to his farm and I have witnessed three, four,
five bald eagles in one tree. It is quite a sight to see, and
it is quite a unique problem.
Since 2015, FSA has denied his claims to receive payment
under the Livestock Indemnity Program on several occasions. He
has appealed all of those decisions to the Office of Hearings
and Appeals, which ruled in his favor every time, saying FSA's
decisions were erroneous, but still, FSA refuses to act on the
Livestock Indemnity Program applications.
It has been nearly 5 years, and he still has no closure one
way or the other. Can you discuss why FSA could ignore the
Office of Hearings and Appeals' rulings, and can you give me a
sense of how many Livestock Indemnity Program applications are
denied by FSA, and are they often overruled by the Office of
Hearings and Appeals, and what becomes of them once they are
overruled?
I understand that most Livestock Indemnity Payments are due
to livestock that are lost to extreme weather. Is this just a
case of FSA not having a lot of experience with predatory bird
claims, or does the Office of Hearings and Appeals have the
authority to determine the final payment or the settlement of
this case? I mean, he has been waiting for five years and
continually upheld by the Office of Hearings and Appeals, but
USDA just refuses to pay him.
Secretary Perdue. Well, those are good and complex
questions. I will have to get back with you on the answer. I
did not realize we could not comply with the Office of Hearings
and Appeals ruling on that, but I will have to determine where
we are, you know, and answer all the questions regarding the
amount of livestock indemnity. Are there any other cases where
it is not death or caused by a disaster or those sorts of
things, but I am not aware of anything else from a predatory
nature. I guess the sheep crowd could probably claim from
wolves or bears or whatever, but I am not aware of those. But I
am not aware that we could totally disregard the Office of
Hearings and Appeals' decision.
Mr. Bishop. It is our understanding and we have seen the
decisions that have been referred back to FSA repeatedly with
instructions from the Office of Hearings and Appeals, and FSA
just does the same thing over and over again, almost as if they
are determined that this individual and this farm will not get
relief from FSA under the Livestock Indemnity Program.
Secretary Perdue. I will get you a response on that.
Hopefully, it will be more satisfactory than NIFA and ERS.
[The information follows:]
The National Appeals Division (NAD) has issued several rulings
dealing with the referenced producer for 2015 and 2016 Livestock
Indemnity Program (LIP) applications for assistance. None of the NAD
rulings make any final determination on the producer's eligibility for
LIP benefits. NAD merely ruled that the Farm Service Agency (FSA) erred
when it initially denied the producer's LIP applications and determined
that FSA must reexamine the loss evidence to determine if the producer
had provided reliable records to substantiate their losses. In a
subsequent appeal, NAD determined that FSA erred since a final decision
on the LIP applications had not been made.
In response to the latest NAD ruling, FSA is moving forward to
bring the 2015 and 2016 LIP applications to a close and has reached out
to the producer with regard to these applications. FSA will issue a
final decision and if the producer does not agree, the producer can
choose to seek an administrative review of that decision.
Closing Statement--Chairman Bishop
Mr. Bishop. All right. Thank you very much, Mr. Secretary.
We will look forward to that. We know that you are definitely
service-oriented, and you want to make sure that the
stakeholders of USDA get the full customer service to which
they are entitled.
Mr. Secretary and Ms. Navarro, thank you for being here
today. We look forward to working with you as we continue the
Fiscal Year 2020 Appropriations process. I know that there are
a few things that you are going to get back with us on, and we
look forward to submitting a few additional questions for the
record, but we appreciate your diligence in getting the
responses to us in a timely manner.
So again, I would like to thank you for your cooperation
and thank you for the job that you work so hard to do for the
constituents and the stakeholders of USDA, because we want to
make sure that we continue to produce the highest quality, the
safest, and most abundant, the most economical food, fiber, and
fuel anywhere in the industrial world.
So, again, thank you for being here and with that, the
subcommittee is adjourned.
Secretary Perdue. Thank you, Mr. Chairman. Thank you.
Wednesday, April 10, 2019.
ECONOMIC OPPORTUNITIES FOR FARMERS THROUGH SUSTAINABLE AGRICULTURAL
PRACTICES
WITNESSES
KEVIN NORTON, ACTING ASSOCIATE CHIEF, NATURAL RESOURCES CONSERVATION
SERVICE, USDA
NATE POWELL-PALM, CERTIFIED ORGANIC FARMER, MONTANA
JASON WELLER, SENIOR DIRECTOR OF SUSTAINABILITY, LAND O'LAKES, SUSTAIN,
MINNESOTA
Opening Statement by Mr. Bishop
Mr. Bishop. The subcommittee will come to order.
Good morning, and let me welcome everyone to today's
hearing.
First, I would like to give a shout-out to some of my
colleagues, Ms. Pingree, Ms. McCollum, and Congresswoman
DeLauro, for suggesting the topic for our hearing this morning.
I am delighted that we are having the hearing.
Today's topic is sustainable agriculture, specifically the
economic opportunities for farmers through such sustainable
agriculture practices.
To be sure, farmers have known for a long time that
implementing simple practices, such as crop rotation and no-
till, can increase both soil health and the bottom line.
There is a renewed focus more broadly now on
sustainability, and rightly so. Our farmers, consumers, and
industry are more conscious than ever about how their actions
will impact air quality, water quality, soil health, and animal
life. Consumers want to know where their food comes from, and
they are increasingly drawn to products that are produced in a
sustainable manner.
That is why I am very excited about our witnesses and the
discussions that we are about to have this morning. Agriculture
is a leader when it comes to sustainability and conservation,
and it deserves public recognition for what it has done and
what it is doing in this area.
Moreover, sustainable practices can reduce the impact of
natural disasters--and, unfortunately, as we have seen too
often over the past several years, droughts and flooding have
cost farmers billions of dollars--improve sustainability, and
help reduce those negative impacts.
This is an exciting time for agriculture. New technology
and research allow farmers to make more precise and cost-
effective business decisions. They can increase yield, while at
the same time decreasing waste. I think everyone can agree that
it is a win-win. And that is what we want to convey today:
Agriculture is doing its part.
One of the bigger challenges for farmers is just
understanding all of the tools that are available to them. We
discussed this yesterday with Secretary Perdue, as a matter of
fact, and I hope we can explore that today here as well.
Our panel includes Jason Weller, a senior director for the
Land O'Lakes SUSTAIN Program. I am pleased to note for some
colleagues who have been on the subcommittee as long as I have
that Jason worked for this subcommittee and then went to USDA
and ultimately became the chief of NRCS.
Welcome back, Mr. Weller.
Mr. Weller. Thank you, sir.
Mr. Bishop. We also have Nate Powell-Palm. Nate is a young
farmer from Montana who has taken sustainability to heart and
he shows what is possible with a little hard work. Let me
rephrase that and say a lot of hard work.
Finally, Acting Associate Chief Kevin Norton of the Natural
Resources Conservation Service. He is here to fill out the
picture of Federal resources that can help farmers undertake
sustainable practices and to share his years of experience on
the ground at NRCS with us.
So I will defer the comments from our ranking member, Mr.
Fortenberry, until his arrival. But with that, I would like to
recognize our distinguished guests for brief oral statements,
and then we will proceed with questions. And without objection,
the entire written testimonies will be included in the record.
So please proceed in any order that you wish. You can go
left to right, you can go Mr. Weller first. It does not matter.
So if you would, we will start with Mr. Palm.
Shall I say Powell-Palm or Palm?
Mr. Powell-Palm. Powell-Palm, please.
Mr. Bishop. OK. Mr. Powell-Palm.
Opening Statement by Mr. Powell-Palm
Mr. Powell-Palm. Thank you, Chairman Bishop, and thank you,
Ranking Member Fortenberry, when he is here, and distinguished
members of the subcommittee, for the opportunity to testify
today.
My name is Nate Powell-Palm and I am a first-generation
grain farmer and cattle producer from Belgrade, Montana. On my
farm, Cold Springs Organics, I raise just about 875 acres of
durum wheat, yellow peas, grass hay, alfalfa hay, and cattle.
I got my start in agriculture when I was 9, when my parents
let me purchase a steer to raise and take to the Gallatin
County Fair. My parents themselves aren't farmers by
profession, but certainly by heart.
From that experience with the 4-H calf, I became determined
to get into the cattle business. When I was about 12 years old
I applied for and was awarded a junior agriculture loan from
the Montana Department of Agriculture for $3,400 to purchase
three bred cows, a little bit of fencing, feed, and a stock
trailer to haul them around in.
After three calf crops, my small herd was growing, I was
really enthusiastic. However, my bank account was not growing.
And so, in 2006, I became acquainted with certified organic
agriculture. I purchased certified organic hay from a few
really pioneering farmers in Helena, Montana, and over the next
2 years I learned about this world where farmers actually
request to be certified and inspected and they are really
interested in having the excellence of their farming practice
recognized and to sell into a market where demand is
outstripping supplies. Folks are really interested in
purchasing and paying a premium for the crops that certified
organic farmers are growing.
So in 2008, I applied for and received organic
certification, and I just had my 11th annual organic
inspection.
After my first organic inspection, I quickly joined the
Montana Organic Producers Co-op, which is a 22-member regional
marketing organization for grass-fed certified organic beef,
and after joining it I was able to realize about a 30 percent
premium on my calves and finished animals. And because of that
premium and that stability in the market, I was confident that
I could go out and start expanding my operation and thinking
about leasing more land and possibly hiring someone.
CERTIFIED ORGANIC
Shortly after my junior year of college I sent out 90 cold
call letters trying to tell local landowners that if they would
lease to me, I would get their farm certified organic, I would
be able to pay them above market rates, and I would be able to
start a process of building soil on their ground. And I think
that I got about 10 letters back and they were all really
excited about the prospect of working with me. And so that is
ultimately how I came to lease about 875 acres in the Gallatin
Valley in Montana.
By 2017, I had 240 acres in a grain rotation along with the
balance in hay and pasture. And while I had good markets for
the wheats, I knew I could really improve my soil and my crop
rotation if I could be raising and selling legumes, including
yellow peas, garbanzo beans, lentils, but I just needed to find
a customer, a contract customer.
So in 2016, I joined the Organic Trade Association, and
during their annual fly-in, several farmers were invited to sit
in on the Grain Council panel. And at this meeting, we really
tried to express to grain buyers, large institutional grain
buyers, that the folks who are buying grain really need to buy
an entire rotation, not just wheat or not just one crop,
because in order to diversify our farms we need to be able to
sell those respective crops.
And so in that meeting there was a representative from
Annie's Mac and Cheese, which is a subsidiary of General Mills,
and the folks at Annie's reached out to me and said they wanted
to reimagine their traditional pasta products by incorporating
yellow peas into their rotation. And so, by doing so and
working with me, they would give me a market for my yellow
peas.
And just a brief history on yellow peas and why they are so
fantastic. They fix nitrogen, which is the biggest fertility
input that farmers have. And so, by fixing nitrogen, I am
getting paid to grow my own fertilizer.
They are also going to purchase my durum wheat. And they
are going to make this protein-packed certified organic product
that is something that consumers are really interested in
purchasing.
So the first batch of this pasta here hit the shelves in
the spring of 2018, and we have our second edition of single
origin pasta coming out, incorporating more farmers and more
rotations from Montana.
And so when farmers can receive a premium in the market for
sustainable practices it is a win-win. I chose organic to do
that, and everything I have just shared with you is possible
because of the trust consumers place in the organic seal. It is
this transparent rigorous certification process that allows
farmers to be economically compensated for clearly defined land
stewardship practices.
In order for this opportunity to stay available to farmers
like myself, USDA must accommodate and be accountable to
advancing organic standards and to emphasize continuous
improvement in an organic public-private partnership. And I
hope others have the availability and this opportunity stays
available to farmers in the future.
Thank you.
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Mr. Bishop. Thank you, Mr. Powell-Palm.
Mr. Weller.
Opening Statement by Mr. Weller
Mr. Weller. Good morning, Mr. Chairman and Mr. Fortenberry
and members of the committee. I really appreciate the
opportunity to be here today.
Mr. Powell-Palm, drop mike. I think you just summarized
really the sustainability journey that in part we are trying to
advocate for. My former colleague, continued colleague, Mr.
Norton, and I have been friends and peers for a long time, and
we have been in the space of sustainable agriculture through
USDA.
Let me talk a little bit, back up a little bit, and first
talk about my pride in terms of public service in having
served, of course, this committee, but also in other Federal
offices. But, of course, really proud of my time and being a
colleague of Kevin Norton and the NRCS team at USDA.
But also equally proud of my time now working for a farmer
cooperative. And so I joined the Land O'Lakes team about 2
years ago. And in part working for a co-op, having the
discipline, but also responsibility to work for America's
farmers and for members of our cooperative system to help them
be successful.
And that has really been a shared vision between USDA and
ultimately our cooperative owners and our cooperative system,
is how do we help farmers like Mr. Powell-Palm be economically
successful, but also not just be successful 1 year, it is
really for year over year, multiple seasons, multiple crops, if
not multiple generations.
And so, ultimately, that is what we aspire to do through
Land O'Lakes, but also through USDA, and how do we help ensure
the economic and profitability success of producers like Mr.
Powell-Palm, but also ensure the vitality, the productive
capacity of our environment and our soils and our waters to
grow for generations to come.
So none of this is possible, and in part I just want to
also then commend the committee for its leadership and talk
briefly about how the programs that you all oversee and invest
in truly are an investment in the public trust, in this case
providing for the foundation upon which the science, the
conservation programs, the practices, the delivery
infrastructure, to take all this expertise out in the field and
allow for producers like Mr. Powell-Palm to be successful.
THE NATURAL RESOURCES CONSERVATION SERVICE
And so more than ever now, seeing it from the private
sector and seeing it from where I work with the cooperative
system hat, you have to have a place like USDA, and in
particular an organization like NRCS. It is the only thing like
it on Earth. It is a special place that employs visionaries and
leaders, people like Gilbert Borrego from New Mexico, Tim
Griffiths from Montana, Dr. Dave Naugle from Montana, Jane
Hardisty from Indiana, Leonard Jordan from Georgia.
There are leaders and visionaries across this organization
who toil and work day in and day out to provide service to the
public, but also crucially service to the farmers, and it is
upon their shoulders upon which we now stand. And much like how
in other sectors where the public has invested in science that
return on investment not only creates an internet or creates an
aerospace industry, it also creates a really successful and
vibrant agriculture sector.
So coming to Land O'Lakes, the Land O'Lakes story. We are a
98-year-old farmer co-op. We started in St. Paul, Minnesota, 98
years ago as a dairy creamery. And this cooperative system
approach, where farmers are coming together to co-invest for
their shared benefit, to invest in innovation, but also then in
shared support for each other is really the cooperative way.
And so I am really proud to be now working for a Land
O'Lakes cooperative system where now I represent and proud to
be here talking for and speaking on behalf of 3,700 owners
across the whole system, include dairy operators, row crop
farmers, local and regional farmer cooperatives, and
independent ag retailers, collectively coming together.
And Land O'Lakes as a board having the vision and to create
now the unit I work for, this team called Land O'Lakes SUSTAIN,
where our goal is to help our cooperative system build up the
capacity and expertise to work in partnership with NRCS, but
then also to be able to then work directly with growers like
Mr. Powell-Palm across the United States to help them identify
conservation opportunities on their lands.
In this case, conservation being in balance, the balance
being profitability and ensuring they are successful for this
crop season, but also always having that stewardship hat on and
ensuring the long-term capacity or their fields to be
productive year over year.
And so I am excited for today's hearing. This is a really
important topic. And that is about our future ability not to
just feed ourselves, but the world, but always holding in
balance this ability to address changing weather, extreme
conditions. But ultimately helping that family farmer be
successful and stay on the land and be able to pass that asset
and that land in that rural community, keeping that intact and
allowing it to be passed on to future generations.
So thank you very much for today's hearing. I look forward
to the conversation.
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Mr. Bishop. Mr. Norton.
Opening Statement by Mr. Norton
Mr. Norton. Thank you, Mr. Chairman, Ranking Member
Fortenberry, and the subcommittee members. I really do want to
take this time to express our appreciation to you for your
continued support of the conservation programs that Jason spoke
about. In fact, I am really having trouble getting my thoughts
together after the inspirational message that he had around our
partnership with agriculture producers, and it really is a lot
of what I wanted to talk about with you all today.
It is a great honor and opportunity to be here with you. As
the Natural Resources Conservation Service, we were born out of
the Dust Bowl 70 years ago, over 80 years ago, a terrible
environmental disaster that brought birth to our agency. And we
have moved forward hand in hand with agricultural producers
ever since.
Our model is trained conservationists on the farm with the
individual producer, working with their land resources. Their
business model is their model, it is different from one farm to
the next. Their capacity to accept change is something that
they have to deal with themselves, and it takes a professional
conservationist working with them on their farm to make that
happen.
It is a model that has worked well. It is a partnership.
Number one, our number one partner--and we will talk more about
partners--but our number one partner is that private landowner.
Seventy percent of the United States of America is under
private ownership in agriculture production, and they are the
person that we need to be working with if we are going to make
meaningful change and support to the agriculture community.
It is an effective model, as I said earlier. Our farmers,
ranchers, forest landowners, they are on the front lines of
weather volatility. As Jason mentioned, we had fires in the
West, in the Central Plains, we have had just as recent as a
month ago the bomb cyclone. Those farmers, those ranchers,
those forest landowners feel the effects of those.
Our conservation programs actually create a buffer to a
certain extent to those kinds of events, does not solve them.
But if we can help minimize the risk, then they have a greater
opportunity to be successful on the other side of this event
with all the other support that might come their way through
the agriculture community.
We are in the community. We have 2,100 offices scattered
across the country. Those individuals are living in those
communities, they are a part of that community. Our employees
feel the same things those farmers are feeling as they are
dealing with the events of weather, the climate, the changes in
the markets. They are right there in those communities with
them, so they understand. And it is a great model that we have.
We work with producers large and small, whether it is a
small producer just getting started that is growing his
operation, as we have heard from Nate. There are folks out
there that are just like that. We work with them.
We work in the urban agriculture space. We do hoophouses.
We work in these food deserts to help create opportunities.
In my home State of Louisiana, we have a visible presence
in New Orleans and have helped stand up a farmers market there
through the USDA programs and wonderful produce. It rivals
anything you will see in a grocery store and it is right there
on the street corner available to the folks that don't have
access to those fresh fruits and vegetables and produce. So we
are in the community, we are a part of that.
You know, I think back in my time how agriculture has
changed. And as it has changed, it has created great
opportunities. Our objective from the very early part of our
agency has been to treat each acre on an individual farm within
its needs and capabilities, including the landowner or the
producer's goals and objectives. As we move to precision
agriculture, we are seeing a greater ability to actually do
that.
BENEFICIAL DEVELOPMENTS IN AGRICULTURE
I will share with you real quickly about a farmer that is a
friend of mine. Ten years ago in the State of Louisiana I went
out on his operation, he had embraced geospatial technologies,
precision agriculture, had a cotton stripper on his farm. The
GPS unit had gone out, his yield monitor was not working like
it was supposed to be, it was parked there.
His father-in-law, who he was renting and operating on his
place, could not conceive, he had a cotton crop to get out of
the field, but would not take that working piece of equipment,
except for a yield monitor, would not take it to the field and
get that crop out. And he said: You have to understand that if
I put that piece of equipment in the field without the data it
is going to return to me I have lost my year's work in
understanding what is going on on my farm.
He was able, because of the data he was given through this
precision agriculture technology, he was able to identify the
places on his farm that were not productive that he was putting
more resources in than it was returning to him in terms of
profit. He was able to make those changes.
And they are now, through the use of our programs, he used
the Conservation Reserve Program for some buffers, he used the
Environmental Quality Incentives Program, even the Wetland
Reserve Program, and he was able to take those marginally
productive areas that were really costing him money and take
them and put them into a conservation use.
So we have those kinds of success stories all the way
across the landscape and things that we are encouraging with
the programs that you all have provided us the resources to
deal.
As these things have changed, as agriculture has changed,
the farm bill has drawn us to a greater investment and a
greater and a broader mission as an agency. If you go back to
the 1985 farm bill, the first one, that had the conservation
title in it, it was about soil erosion and wetland
conservation, that was it. That was really the focus.
And you look at every successive farm bill since, they all
have challenged us to work with producers in a broader
landscape to expand our work, to look at water quality,
wildlife habitat, grazing land resources, all those kinds of
things.
And I will say this. When you go back to the Dirty
Thirties, the Dust Bowl, to today, I would say the American
agriculture producer has a great story. We are sustainable. We
produce more food on less cultivated acres than we did back in
history. We are removing streams from the 303(d) list, water
quality, impaired streams, we are removing those from the
303(d) list.
We have through the farm bill, conservation programs, and
the private landowners utilizing our programs delisted the
black bear, the smelt, several different species. And there
are, what, 12 other species, Jason? He envisioned the Working
Lands for Wildlife.
We put the wheels to that thing and we have probably 12
other species that are probably not on the--actually more, but
I am comfortable with 12--that are not on the Endangered
Species List because of the engagement with the private
landowners using these conservation programs.
We have a tremendous success story. It is all driven by
locally led conservation, not making decisions here, having
these resources, moving them out, as you all have given them to
us, to the local level, because the things that are going on in
Maine are different than the things going on in Georgia. The
needs of those producers are different, the crops, the climate,
the variability.
The Plains. I was raised in Oklahoma, the Plain State of
Nebraska, I am very familiar with living out in that kind of an
environment, very different. We need to have our conservation
programs locally driven.
So I will just close real quick. We have a lot of work
going on, the climate hub space. Those are just tremendous, 10
of those around the country. We are using those to assess our
natural resource conditions, what is going on in these events
like this, so that we can make adjustments as we have through
the history of our programs to be better and more effective
with the agriculture producer, to promote resiliency, to
mitigate drought through those kinds of things.
I will leave you with this closing remark. And I want to
take you back in time. As I was preparing for this, as a young
man in the Future Farmers of America, I remember a quote, and
it just rings real true to me. It is from William Jennings
Bryan. It says, ``The great cities rest upon our broad and
fertile prairies. Burn down your cities and leave our farms and
your cities will spring up again as if by magic. But you
destroy our farms, and the grass will grow in the streets in
every city in the country.''
And I believe that is true. I believe that working
relationship we have with agriculture, I believe we are
sustainable. I think it is the partnership of the Federal
investment with the private sector through the programs that
you have authorized us to do that we can have a stronger, more
resilient, and sustainable agriculture years into the future so
that our children enjoy the blessings that we have today.
Thank you very much, Mr. Chairman.
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Mr. Bishop. Thank you.
At this point let me recognize Mr. Fortenberry. We deferred
his opening statement earlier.
And, Mr. Fortenberry, would you like to make an opening
statement? If so, I recognize you for that purpose.
Opening Statement by Mr. Fortenberry
Mr. Fortenberry. Yes, Mr. Chairman. Thank you very much for
recognizing me. I apologize for my tardiness. If you knew where
I was, though, I think you would be happy by the distraction.
It was at a meeting on conservation.
Let me just truncate my opening remarks. I want to tell you
all three things: Conservation is development, sustainable
business is good business, and stewardship is a noble value.
And what we have in our society, what we have in our
economy, what we have in our agricultural policies is an
alignment of these three variables, that sustainability can be
good business when thoughtfully developed in harmony with other
needed outcomes of the economy, that the value of stewardship
is something that unites and does not divide, and that all of
this can actually be a new way to think of the term
development.
It is not just building more and more, it is using what you
have in a responsible manner, which actually creates the
opportunity for enhanced income, well-being, and longevity of
the very practice, whether it be a farm or a business.
And so this is a very important discussion. I want to thank
you, Mr. Chairman.
As a bit of an aside, several years ago I undertook a
project, it is a little bit remote from the considerations
here, but it is related to this idea of stewardship. It got hot
in Nebraska and I turned the air conditioner on and it didn't
work. So I called the repairman after I did what I could do in
lay terms. And he opened it up and there was a mouse that had
gotten in there and chewed the wires.
So he replaced the capacitor, turned it back on, and it
started to smoke--the capacitor, not the mouse. And he said,
``Jeff, just sorry, it is done.'' So OK, that is $3,000.
I started to think through this. I am highly interested in
the whole concept of distributed energy generation, which is a
component, an emerging field actually, in agricultural
production. And so I began to look at the financial dynamics of
installing a geothermal system. And it is complicated.
But after having worked with the HVAC company, having used
the Federal tax credit, having leveraged the energy loan
program in my own State, having gotten a rebate back from the
manufacturer, and having gotten a certain subsidy from my own
utility, the financial package made enough sense for me to tip
that balance.
I wanted to do it anyway because of the example it sets of
moving toward a more sustainable future, energy future, but we
went ahead and did it.
Now, the payout is a bit longer than I perhaps would have
liked, but nonetheless, I will probably get 20 years of cost-
free energy from that once the initial capital is paid off.
Again, there are barriers to entry here, but if we can
overcome them through smart public policy and certain subsidies
when necessary where there is not a market dynamic that can
sustain this, but the larger externality costs certainly
justify it, where there are young new generations of people who
are actually expanding the agricultural family.
I come from a production ag State. That is the backbone of
who we are. We help feed America and feed the world and we are
very proud of that. There are a lot of young people who may
never have access to a thousand-acre grain production facility
because they just don't have the land or the capital, but they
are starting to do niche markets, organic farming, farm to
table, participating in farmers markets, being employed
elsewhere but doing this on the side.
This is exciting news. And the Department of Agriculture's
program or the agricultural programs at the University of
Nebraska are growing, because there is a convergence of
fields--conservation, international development, environmental
security and stewardship programs, along with traditional
agronomy and animal husbandry and other programming elements.
So I think this is actually a very exciting time to discuss
all of these things, Mr. Chairman. And I really wish we could
get beyond getting into political lanes when we are confronted
with the hard, hard realities of extreme weather events and the
reasons for those and actually look toward the solutions that
move us toward a sustainable energy future that reduces our
overdependence on hydrocarbons to run our economy and looks for
the harmonious balance of sustainable development that you
talked about, Jason.
By the way, Derek Kilmer, Congressman Kilmer from
Washington State, I think could be your brother. You look very
much alike.
Do you agree with that? Does the panel agree?
I am sorry to divert like that, but I am looking at you and
thinking that at the same time.
Mr. Weller. There are worse comparisons.
Mr. Fortenberry. So actually, instead of all of what we are
talking about being somehow reasons for divisiveness, are
actually reasons for consensus.
Thank you, Mr. Chairman.
Mr. Bishop. Thank you, Mr. Fortenberry.
Votes have been called. We will try to move through this as
quickly as we can and we will reduce the normal questioning
time from 5 minutes to 3 minutes.
Let me start off. Both Mr. Fortenberry and I have both had
some unfortunate recent experience with natural disasters in
our districts. In my case, it was Hurricane Michael and in his
case it was the devastating floods that washed through much of
the Midwest a few weeks ago. Obviously, we can't stop Mother
Nature, but we can mitigate the devastation that she wreaks, at
least to some extent.
Would each of you care to discuss how you think sustainable
practices can contribute to farmers' and communities' abilities
to withstand natural disasters and to bounce back?
SUSTAINABLE DISASTER SOLUTIONS
Mr. Norton. I will weigh in here real quick.
You know, whenever you look at this idea, you can't stop a
natural disaster and it is going to have impacts.
I actually have heard from a farmer in Nebraska that is
very much engaged in the cover crop effort, and he showed me
pictures. The flood engaged his property. And the damage that
he had is not near as visible as other properties that were not
using cover crops, those kinds of things.
So you can do the best you can, be as healthy as you can,
and then whenever the illnesses, the storms hit you, hopefully
you aren't hit as hard and you are more resilient and able to
respond back. Certainly you all have given us some tools
through the appropriations and programs. We have used the
Environmental Quality Incentives Program to go back in and
repair work that we had done on farms back through history.
There is the Emergency Conservation Program that also provides
resources to do that work. And then we are there with the
communities.
In your State specifically, irrigation systems that we have
put in place, we are back in there cleaning them off, repairing
them, and reestablishing irrigation, which is critical to some
of the crops that are produced in Georgia.
So we engage, move in, as I said, we are right there in the
community, we move in very quickly and start trying to work to
help producers.
Mr. Bishop. Mr. Weller.
Mr. Weller. I am sorry, I still have goose bumps from Mr.
Fortenberry's opening remarks.
Really passionate, sir. Thank you very much for your
illustrative and insightful comments.
Real quick. What we are trying to do through our system is
really to help our producers best manage their soils. And Kevin
talked about that. Nate has talked about it as well. And that
soil management is really the foundation of our food system. It
not only feeds us, but it is how you care for that most
valuable asset, the farmer. This really will help farmers
withstand strong storm events, variable weathers, drought, and
flood.
And so it is really then working through our cooperative
system, helping farmers identify the right mix of practices on
their farms and in their fields, to help improve the soil
carbon, the soil organic content, the structure. But really the
physical, chemical, and biological properties of the soil
system will help it better withstand extreme weather.
Mr. Bishop. Mr. Powell-Palm.
Mr. Powell-Palm. Thank you.
We have to both be resilient in our environmental
practices, but also for the economic reality of the farm. And
so when we have markets that reward farmers for their
ecological stewardship, we also have the ability to have more
resilient farms from a business point of view. Organic farms
are 35 percent more profitable than the average farm.
And so when you hit weather events, which are going to be
inevitable, the ability to bounce back from that setback is the
difference between a community closing shop and people leaving
and being able to recover after a natural disaster.
Mr. Bishop. Thank you.
Mr. Fortenberry.
Mr. Fortenberry. Mr. Chairman, since I gave a longer
opening speech, why don't I defer to the rest of the panel who
may have questions before we have to vote and just yield back.
Mr. Bishop. Thank you.
Ms. Pingree.
SOIL QUALITY
Ms. Pingree. Thank you, Mr. Chair.
And I have to say this kind of made my week, and it is a
short week. But I am so grateful to the chair for having this
hearing, which I think is a really important topic for all of
us.
I am thrilled to listen to the ranking member talk about
his renewable energy system and how he put all that together,
so that is critically important.
And yesterday we had Secretary Perdue in here and we got a
chance to talk to him a little bit about the positive side of
what agriculture can do with carbon sequestration and opening
up carbon markets to farmers and how we are going to go about
doing that.
So to me it is a big week, I can go home now. Actually we
are going home, so it works out.
I don't have a lot of time to ask questions, but I would be
interested, Mr. Norton, to hear a little more about the process
of how we use some of these wonderful conservation practices
that we already have and better quantify what is going on in
the soil so that farmers can take advantage of potential carbon
markets out there.
I get really frustrated in this wonderful debate we are
having about climate change and it is incredibly important that
we do tackle this. But so often people's understanding doesn't
go beyond planting a tree. And while I come from a forested
State, we love trees, I also want to understand this topic we
have been discussing a little bit today, recognizing that
farmers play this amazing role in sequestering carbon in the
soil, but we have to have good conservation practices.
And then more importantly, we have to be able to measure
that and be able to have that sustainable in a market. And I
know that is something that best rests at the Conservation
Service. And so can you talk a little bit about where you are
with that and how you see us moving forward?
Mr. Norton. Certainly. So number one is we do have a tool
called the COMET tool that actually does give producers the
opportunity to quantify, look at their operations, start
quantifying the services, the carbon things they are
sequestering. So we have that going on.
Beginning in 2011, we started a process through our
Conservation Innovation Grants of going out to the private
sector, to research entities, to nonprofits, and helping build
that science behind the carbon sequestration. We rely heavily
on the Agricultural Research Service and our land grant
universities to also fill that space.
We are making headway. We are having conversations today
with organizations around the soil health and how we can
quantify the buildup of carbon in those soils so that farmers
can begin to communicate, potentially access markets, and make
exchanges on those benefits. So we are working in that space.
Ms. Pingree. I am going to quickly cut you off, because I
am going to run out of time and I want everyone else to have a
chance.
Jason, do you want to comment at all?
And, Nate, I will follow up with you after the committee so
I can ask more questions.
But are farmers using these tools?
UTILIZING NEW TECHNOLOGY
Mr. Weller. They are. And this is in part through Land
O'Lakes.
We have made an investment through Land O'Lakes SUSTAIN to
build that kind of technology that leverages the public data
that USDA has created and many of the tools that Kevin just
talked about and puts it into a platform where then one of our
sales agronomists from one of our co-ops can go out and work
with a producer like Nate and not just understand the flux and
the complexity, but actually visualize where in their field
they are gaining carbon, where they are losing carbon, where
erosion is occurring, and how then to mix and target the right
conservation system on that field to reduce the loss of carbon,
if not increase the adoption of carbon in the soils.
Ms. Pingree. Great. And, again, I will follow it up.
Thank you for your wonderful testimony, Nate.
I yield back.
Mr. Bishop. Ms. McCollum.
Ms. McCollum. Thank you, Mr. Chair.
Good to see you, Mr. Weller. Thank you for being here. It
is always good to have one from Minnesota here.
And to Mr. Powell-Palm, having spent so much time at the
Richland County Fair as a youth, congratulations on your 4-H
win.
ADJUSTING TO EVERPRESENT CLIMATE CHANGE
I am going to focus a little more on climate change. This
is a copy of a map that the Star Tribune published, working
with the University of Minnesota Center for Forest Ecology.
Scientists looked at three scenarios, one with a major decrease
to CO2 emissions, one with a minor decrease, one with no
decrease.
Under the scenario where there is no decrease in CO2
emissions, scientists estimate by 2070 most of Minnesota's
boreal forests will disappear and our State's ecosystem would
resemble that of Kansas.
No offense to Kansas, but we like our trees in Minnesota,
being the Land of 10,000 Lakes.
So producers are already facing climate change, and you
gentlemen know that well, whether extreme weather or disasters
caused by weather that is so extreme.
So could you--maybe I will address both questions at the
same time to Mr. Weller--can you talk maybe a little bit about
what Land O'Lakes SUSTAIN is doing to help with the adaptation
of climate change?
And, Mr. Powell-Palm, any recommendations for this
subcommittee--I know your generation is very concerned about
climate change--what we can do to help producers like yourself
make the adjustments?
Thank you.
Mr. Weller. So it starts first with building the capacity
for our agronomists in the field. These agronomists work
through local farmer co-ops and ag retailers. Every day they
are out working with growers to identify the right agronomy
system or practices on their fields that are ultimately going
to help them to be the most profitable and productive.
But we are now weaving into this agronomy conversation, it
is now a sustainability stewardship conversation. And so for us
addressing extreme weather and a changing climate is about what
is the right mix of soil management and nutrient management
practices that will help that farm be profitable and be more
resilient, but also reduce the loss of soil carbon and nitrous
oxides into the atmosphere.
That is something we start with the farmer, to help them
achieve what is most profitable and effective for that farm.
And then through our system we are linking those farmers back
downstream with food companies. So we have food company
partnerships, like with Campbell Soup Company and with Tate &
Lyle, which is an ingredient manufacturer company, who are very
interest in climate change. And so now we are creating a farm-
to-fork system.
Ms. McCollum. I see the clock running, so we will follow up
more back home.
Mr. Weller. Absolutely, OK. Thank you.
Ms. McCollum. Mr. Powell-Palm.
Mr. Powell-Palm. Thank you so much for the question.
A recent study came out showing that certified organic
farms sequester 26 percent more carbon than a regular
conventional farm. And why that is so impactful is that we--and
not to--I realize--I will follow with Representative Pingree--
but, OK, that we need a market, adoption of processes and
technology needs a market incentive.
Consumers want to purchase certified organic food. And so
through that market we are able to monetize those practices and
reward producers for those practices.
And so by fully funding the National Organic Program and
making sure that we are trying to pursue as much as we can the
support of those programs that have already been proven out to
have a market possibility, then we are able to see a lot more
quickly adopted practices.
Ms. McCollum. Thank you, Mr. Chairman.
Mr. Bishop. Ms. DeLauro.
Ms. DeLauro. Thank you very much, Mr. Chairman.
Just a quick note. I don't know whether Mr. Weller looks
like Mr. Kilmer, but I feel very proprietary toward Mr. Weller.
He served as staff with this subcommittee for many, many years,
including when I was chair.
And what a delight to see you on this side of the table,
Jason. It is really great.
Let me just see if I can in 3 minutes get most of this in.
NAVIGATING BUDGET CUTS
NRCS' budget request cuts, a $40 million cut from the
Agricultural Conservation Easement Program, elimination of the
Conservation Stewardship Program. The House farm bill also
proposed eliminating CSP. That was rejected, I might add, on a
bipartisan basis.
So to you, Mr. Norton. Look, you are not here to defend
what you are doing about the budget, but could you shed light
on what the impacts would be if we allowed these cuts, other
cuts to conservation to be enacted?
Let me also say there is a $16 million cut to sustainable
agriculture in the budget. I don't know what are the negative
efforts of that.
To Mr. Powell-Palm, we have the withdrawal of rules related
to organic animal welfare standards. Tell me about the
rollbacks there and the impact on organic farmers.
So let's go. Mr. Norton, where do we go on the budget, what
impacts?
Mr. Norton. So certainly it is a process and that is how
this is moving forward. We will do with the resources that you
all give us, we are going to do the best we can to be as
effective with those resources.
Ms. DeLauro. I understand. Are you going to--just tell me
if you can do--if you are of the view you can do more with
less. I got a yes or no here, because my time is running.
Mr. Norton. So, no, we can't.
Ms. DeLauro. OK.
Let me ask you, Mr. Weller, about the cut to sustainable
agriculture.
Mr. Weller. So we are working very hard to build upon
public-private partnerships. And we are working very hard then
to link our farmers and our local cooperative system with NRCS
at the State and local level.
And so cuts in the NRCS capacity on the ground, the
professionals that work in the field, but also the programs
they deliver, if they are cut or reduced that absolutely
impacts the ability for our farmers to do what is needed.
Ms. DeLauro. To be able to do for sustainability. Thank
you.
Yes, on the organic farmers and the trust in the public in
organic farming.
Mr. Powell Palm. Absolutely. So the Organic Livestock and
Poultry Practices rule, which was not finalized, is a critical
component of moving our industry forward.
As I said in my opening statement, organic farmers want to
be regulated because they have a relationship with consumer
trust. And as we are continuously moving toward continuous
improvement we are hoping that we can see OLPP come to fruition
and actually being finalized because the consumer expects it of
us and it makes sure that we have consistency in the rulemaking
process.
Ms. DeLauro. OK. We should be moving in that direction.
Thank you all very, very much.
Thank you, Mr. Chair.
Mr. Bishop. Thank you.
We are pressed for time and I apologize, but I am so happy
that our witnesses were here. I think this was very, very
helpful.
To Mr. Weller, Mr. Norton, Mr. Powell-Palm, thank you all
for being here today. We really appreciate your taking the time
to come out and share with us your knowledge and your
experience and to give us your advice and counsel.
From the testimony, I am excited about the future of
farming and I believe that we have the responsibility to
protect our planet and the environment. But farming needs to be
economically viable in order to keep farmers like Mr. Powell-
Palm, the people Land O'Lakes represents, and the people USDA
serves in business.
Again, thank you all for your testimony.
With that, the subcommittee will stand adjourned.
W I T N E S S E S
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Page
Boswell, Kristi J. senior advisor to the Secretary of Agriculture 205
Prepared statement........................................... 208
Buchanan, Gale A................................................. 162
Prepared statement........................................... 165
Dunn, Hon. Neal, a Representative in Congress from the State of
Florida........................................................ 167
Prepared statement........................................... 169
Fong, Phyllis K., Inspector General, U.S. Department of
Agriculture.................................................... 135
Prepared statement........................................... 137
Gonzalez-Colon, Hon. Jennifer, a Delegate in Congress from the
Commonwealth of Puerto Rico.................................... 171
Prepared statement........................................... 174
Gottlieb, Scott, M.D., commissioner, Food and Drug Administration
Prepared statement
Answers to submitted questions............................... 44
Hebrink, Rod, president and chief executive officer, Compeer Farm
Credit......................................................... 293
Prepared statement........................................... 295
Jackson Lee, Hon. Shelia, a Representative in Congress from the
State of Texas................................................. 190
Prepared statement........................................... 194
Jensen, Mark, president and chief executive officer, FCS of
America/Frontier Farm Credit................................... 300
Prepared statement........................................... 302
Lee, John E., Jr................................................. 242
Prepared statement........................................... 243
McGovern, Hon. James P., a Representative in Congress from the
State of Massachusetts......................................... 179
Prepared statement........................................... 183
Norton, Kevin, acting associate chief, Natural Resources
Conservation Service, U.S. Department of Agriculture........... 441
Prepared statement........................................... 444
Perdue, Hon. Sonny, Secretary, U.S. Department of Agriculture.... 385
Prepared statement........................................... 388
Pointevint, Paxton, president and chief executive officer,
Southwest Georgia Farm Credit.................................. 308
Prepared statement........................................... 310
Posey, Hon. Bill, a Representative in Congress from the State of
Florida, submitted statement................................... 199
Powell-Palm, Nate, certified organic farmer, Belgrade, MT........ 426
Prepared statement........................................... 429
Ramaswamy, Sonny, president, Northwest Commission on Colleges and
Universities, submitted statement.............................. 263
Smith Evans, Katherine........................................... 248
Prepared statement........................................... 250
Thompson, Hon. Glenn, a Representative in Congress from the State
of California.................................................. 162
Prepared statement........................................... 165
Tonsager, Dallas P., board chairman and chief executive officer,
Farm Credit Administration..................................... 268
Prepared statement........................................... 270
Weller, Jason, senior director, Sustainability, Land O'Lakes,
Sustain, MN.................................................... 434
Prepared statement........................................... 436
Woteki, Catherine E.............................................. 235
Prepared statement........................................... 237