    [House Hearing, 107 Congress]
    [From the U.S. Government Publishing Office]

                      AGRICULTURE, RURAL DEVELOPMENT, FOOD

                      AND DRUG ADMINISTRATION, AND RELATED

                        AGENCIES APPROPRIATIONS FOR 2003

    _______________________________________________________________________

                                    HEARINGS

                                    BEFORE A

                               SUBCOMMITTEE OF THE

                           COMMITTEE ON APPROPRIATIONS

                             HOUSE OF REPRESENTATIVES

                          ONE HUNDRED SEVENTH CONGRESS
                                 SECOND SESSION
                                    ________
         SUBCOMMITTEE ON AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG
                      ADMINISTRATION, AND RELATED AGENCIES
                         HENRY BONILLA, Texas, Chairman
     JAMES T. WALSH, New York            MARCY KAPTUR, Ohio
     JACK KINGSTON, Georgia              ROSA L. DeLAURO, Connecticut
     GEORGE R. NETHERCUTT, Jr.,          MAURICE D. HINCHEY, New York
    Washington                           SAM FARR, California
     TOM LATHAM, Iowa                    ALLEN BOYD, Florida
     JO ANN EMERSON, Missouri
     VIRGIL H. GOODE, Jr., Virginia
     RAY LaHOOD, Illinois

     NOTE: Under Committee Rules, Mr. Young, as Chairman of the Full
    Committee, and Mr. Obey, as Ranking Minority Member of the Full
    Committee, are authorized to sit as Members of all Subcommittees.
       Henry E. Moore, Martin P. Delgado, Maureen Holohan, and Joanne L.
                            Perdue, Staff Assistants
                                    ________
                                     PART 6
         FARM AND FOREIGN AGRICULTURAL SERVICE PROGRAMS AND FOOD SAFETY
                                    PROGRAMS
                                                                       Page
     Farm and Foreign Agricultural Service............................    1
         Farm Service Agency..........................................  119
         Risk Management Agency.......................................  364
         Foreign Agricultural Service.................................  472
     Food Safety......................................................  901
         Food Safety Inspection Service............................... 1062
         Explanatory Notes for RVS, RHS, RBCS, and Index for Part 7... 1201
                                    ________
                         U.S. GOVERNMENT PRINTING OFFICE
     79-821                     WASHINGTON : 2002

                          COMMITTEE ON APPROPRIATIONS

                       C. W. BILL YOUNG, Florida, Chairman

     RALPH REGULA, Ohio                  DAVID R. OBEY, Wisconsin
     JERRY LEWIS, California             JOHN P. MURTHA, Pennsylvania
     HAROLD ROGERS, Kentucky             NORMAN D. DICKS, Washington
     JOE SKEEN, New Mexico               MARTIN OLAV SABO, Minnesota
     FRANK R. WOLF, Virginia             STENY H. HOYER, Maryland
     TOM DeLAY, Texas                    ALAN B. MOLLOHAN, West Virginia
     JIM KOLBE, Arizona                  MARCY KAPTUR, Ohio
     SONNY CALLAHAN, Alabama             NANCY PELOSI, California
     JAMES T. WALSH, New York            PETER J. VISCLOSKY, Indiana
     CHARLES H. TAYLOR, North Carolina   NITA M. LOWEY, New York
     DAVID L. HOBSON, Ohio               JOSE E. SERRANO, New York
     ERNEST J. ISTOOK, Jr., Oklahoma     ROSA L. DeLAURO, Connecticut
     HENRY BONILLA, Texas                JAMES P. MORAN, Virginia
     JOE KNOLLENBERG, Michigan           JOHN W. OLVER, Massachusetts
     DAN MILLER, Florida                 ED PASTOR, Arizona
     JACK KINGSTON, Georgia              CARRIE P. MEEK, Florida
     RODNEY P. FRELINGHUYSEN, New Jersey DAVID E. PRICE, North Carolina
     ROGER F. WICKER, Mississippi        CHET EDWARDS, Texas
     GEORGE R. NETHERCUTT, Jr.,          ROBERT E. ``BUD'' CRAMER, Jr.,
    Washington                           Alabama
     RANDY ``DUKE'' CUNNINGHAM,          PATRICK J. KENNEDY, Rhode Island
    California                           JAMES E. CLYBURN, South Carolina
     TODD TIAHRT, Kansas                 MAURICE D. HINCHEY, New York
     ZACH WAMP, Tennessee                LUCILLE ROYBAL-ALLARD, California
     TOM LATHAM, Iowa                    SAM FARR, California
     ANNE M. NORTHUP, Kentucky           JESSE L. JACKSON, Jr., Illinois
     ROBERT B. ADERHOLT, Alabama         CAROLYN C. KILPATRICK, Michigan
     JO ANN EMERSON, Missouri            ALLEN BOYD, Florida
     JOHN E. SUNUNU, New Hampshire       CHAKA FATTAH, Pennsylvania
     KAY GRANGER, Texas                  STEVEN R. ROTHMAN, New Jersey
     JOHN E. PETERSON, Pennsylvania
     JOHN T. DOOLITTLE, California
     RAY LaHOOD, Illinois
     JOHN E. SWEENEY, New York
     DAVID VITTER, Louisiana
     DON SHERWOOD, Pennsylvania

     VIRGIL H. GOODE, Jr., Virginia

                     James W. Dyer, Clerk and Staff Director

                                      (ii)

       AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND
                    RELATED AGENCIES APPROPRIATIONS FOR 2003

                                  ----------

                                             Wednesday, March 13, 2002.

                     FARM AND FOREIGN AGRICULTURAL SERVICES

                                   WITNESSES

    J.B. PENN, UNDER SECRETARY, FARM AND FOREIGN AGRICULTURAL SERVICES
    JAMES R. LITTLE, ADMINISTRATOR, FARM SERVICE AGENCY
    ROSS J. DAVIDSON, JR., ADMINISTRATOR, RISK MANAGEMENT AGENCY
    ELLEN TERPSTRA, ADMINISTRATOR, FOREIGN AGRICULTURAL SERVICE
    MARY CHAMBLISS, ACTING GENERAL SALES MANAGER
    STEPHEN B. DEWHURST, BUDGET OFFICER, DEPARTMENT OF AGRICULTURE

                           Introduction of Witnesses

        Mr. Bonilla. The Subcommittee will come to order. We have
    with us today Dr. J.B. Penn, the Under Secretary for Farm and
    Foreign Agricultural Services, and along with him an all-star
    cast: Mr. James Little, the Administrator of the Farm Service
    Agency; Mr. Ross Davidson, the Administrator of the Risk
    Management Agency; Ms. Ellen Terpstra, the Administrator of the
    Foreign Agricultural Service; Ms. Mary Chambliss, the
    Department's Acting General Sales Manager, and of course, Mr.
    Steve Dewhurst. We are always delighted to see you, Steve.
        We have read your statement, Dr. Penn, and it will be
    included in the record in its entirety. Before we begin hearing
    your testimony this morning, I am delighted to yield to my
    colleague, Ms. Kaptur, for any opening remarks that she may
    have.
        Ms. Kaptur. Thank you Mr. Chairman.
        I just welcome Dr. Penn and all of your associates here
    today. I have been waiting for this particular group of experts
    from USDA, and we look forward to your testimony this morning.
    Thank you for your service.
        Mr. Bonilla. Thank you, Ms. Kaptur.
        We also have, for your information, 11 Appropriation
    Subcommittee hearings going on simultaneously this morning, so
    we will have Members coming in and out throughout the morning.
    They are very interested in hearing what you have to say and
    will have some questions for you. If you will just understand
    and bear with the logistics we are dealing with this morning,
    we would appreciate that.
        And at this time we would be delighted to hear your opening
    remarks.

                               Opening Statement

        Dr. Penn. Well, thank you very much, Mr. Chairman. I am
    very pleased to be here this morning with you and the Members
    of this Committee to talk about the 2003 program and budget
    proposals for the Farm and Foreign Agricultural Services
    mission area in the Department.
        As you indicated, I am surrounded by an all-star cast, and
    I am very pleased to have members of that cast with me this
    morning. On my right is Ms. Ellen Terpstra, who is in her
    second week as the Administrator of the Foreign Ag Service. And
    on my left is Mr. Ross Davidson, who is in his second week as
    the Administrator of the Risk Management Agency. Mr. Jim
    Little, also on my left, the Administrator of the Farm Service
    Agency, has been around a lot longer than that. And also, as
    you indicated, we have Steve Dewhurst, who is no stranger to
    this Committee. And we have a lot of institutional memory and
    expertise with Mary Chambliss, who has graciously consented to
    be the Department's Acting General Sales Manager until that
    position is permanently filled. And behind me are lots of other
    experts, as you indicated. So I think among us we should be
    able to provide the information that you require.
        I would like to take just a couple of minutes. I will be
    very brief and make some introductory remarks about the program
    and budget proposals that we have presented to you.
        I would note that the programs and services of the Farm and
    Foreign Agricultural Services mission area are at the heart of
    the Department of Agriculture's efforts to assist American
    agriculture to respond to the challenges of the 21st century.
    We provide a wide range of services among the three agencies
    here--price and income supports, farm credit assistance, risk
    management tools, conservation assistance, trade expansion, and
    trade and export promotion programs. So we provide the
    foundation for much of the economic safety net for America's
    farmers and ranchers.
        And the proposals that we have included in the 2003 budget
    fully support all of these activities. First of all, the
    development of sound domestic policies is covered in the
    additional $73.5 billion in mandatory funding over the 2002-
    2011 period that is included for new farm legislatoin. The
    budget fully funds our risk management and crop insurance
    activities. It supports our export expansion goals by providing
    a program level of over $6 billion for the Department's
    international activities. And it provides continued delivery of
    a large and complex set of farm and related assistance
    programs, while trying to improvethe management and delivery of
    those programs.
        The mission area that I look after comprises three large
    agencies. I want to just very briefly mention those one by one.
    The first of course is the Farm Service Agency. That is our
    front-line agency for delivering farm service. That is our
    presence in the countryside for dealing directly with farmers,
    and the budget places a priority on enhancing the ability of
    the Farm Service Agency to provide better service more
    efficiently to America's farmers and ranchers.
        The 2003 program levels for FSA salaries and expenses
    support a ceiling of about 5,800 Federal staff years and 11,250
    non-Federal county staff years. That is unchanged from the
    current level of 2002.
        Now, there will of course be workload implications from the
    new farm bill for FSA. At the time the budget was developed,
    what those workload implications would be was unclear, so we
    have not included any proposal for increased resources for
    implementing the new farm bill.
        It is anticipated that most of the programs that FSA will
    administer will be governed by the new farm bill. There are
    lots of changes that potentially could occur as a result of the
    farm bill, such as updating crop bases and program yields,
    which is a major task that has not been done since 1985. There
    could also be implementation of new and expanded programs, new
    conservation programs, perhaps new payment limit requirements,
    lots of programs that are going to substantially change the
    workload nature of FSA, but once we know more clearly what the
    final provisions of the farm bill are going to be, then we will
    assess the resource requirements and we will make those known.
        The Administration continues the practice of previous
    Administrations in trying to develop a much more efficient
    delivery of services by our Farm Service Agency. As you know,
    the resources in that agency have been declining pretty
    substantially over time as the nature of the farm programs has
    changed. A lot of that has been due to the introduction of new
    technology, new computer systems, and re-engineered business
    processes.
        We also have a couple of other obligations such as the
    Freedom to E-File Act, and some management initiatives
    involving the service centers that are laid on top of the
    requirements in the new farm bill.
        Very quickly, the 2003 budget supports about $4 billion in
    farm loans, about a quarter of which would be direct loans and
    the rest are guarantees. A substantial portion of the direct
    loans are reserved for assistance to beginning and limited-
    resource and socially-disadvantaged farmers and ranchers. So
    overall there is a modest increase for the Farm Service Agency
    without taking into account the new farm bill.
        Let me turn quickly to the Risk Management Agency. The
    Federal crop insurance program, and now revenue insurance and
    livestock insurance, provides one of the strongest safety net
    programs available to America's farmers and ranchers. In 2001
    the insurance program covered nearly $37 billion in liability
    and covered the production on 211 million acres. That is 5
    million acres more than in the previous year. And we have seen
    a very significant shift in the business over the past 2 years.
    Instead of more producers electing crop insurance, we have seen
    those that have it buy up to higher levels of coverage as a
    result of the increased premium subsidies.
        The 2003 budget requests an appropriation of such sums as
    may be necessary as mandatory spending for all costs associated
    with the program, except of course, for Federal salaries and
    expenses, and the level of funding that is proposed we think is
    necessary for that purpose. The budget also includes a proposal
    to cap the amount of underwriting gains the insurance companies
    may receive. That proposal is based on the fact that since
    1994, the insurance companies have received over $2 billion in
    underwriting gains, while the Federal Government has paid about
    $1 billion in excess losses.
        Now, let me turn very briefly to the Foreign Agricultural
    Service and the international area. As is well known, I think,
    to this Committee, our farmers have the capacity to produce
    far, far more food and fiber than we can ever consume in the
    domestic market. The application of new technology each year
    makes that capacity grow faster than demand, so if we are to
    have a profitable farm sector, we have to have increased access
    to foreign markets. We have to have access to markets and the
    customers in those markets, so we are pursuing a very
    aggressive strategy to try to make sure that our farmers do get
    access to those markets.
        Multilateral trade negotiations, the so-called Doha Round,
    regional trade initiatives, the Free Trade Area of the
    Americas, the Central America Free Trade Area, and bilateral
    free trade agreements, such as with Chile and Singapore, all
    represent activities on the trade expansion front.
        In addition to that, in FAS we try to monitor and enforce
    the existing agreements to make sure that people live up to the
    requirements that they have entered into, and in our budget
    proposals, we have tried to make sure that we have adequate
    resources for market promotion and development programs.
        The budget includes an expansion of about $10 million. That
    is largely for new technology, for new hardware and software,
    which is so desperately needed by that agency. It also includes
    an increase in the Cochran Fellowship Program, which has been
    an outstanding program over the past several years, and some
    minor increases elsewhere.
        One last point I would note is that the Administration has
    undertaken a review of the international food assistance
    activities in order to reform and rationalize their
    implementation and strengthen the effectiveness of those
    programs, and the results of that review are reflected in the
    2003 budget and program proposals. The P.L. 480 Food Assistance
    Program has a total program level of $1.34 billion, which would
    provide about 3.7 million metric tons. That reflects a
    substantial increase in the donations under Title II, and the
    reduction in 416(b).
        Overall, Mr. Chairman, to conclude, let me just quickly
    summarize and say that we believe that this is a good budget.
    It does not reflect any marked departure in policy direction.
    It attempts to provide resources to those areas where they are
    most needed for the most immediate problems in the three
    agencies.
        So with that, I would conclude, and along with my
    colleagues, would be happy to try to respond to any questions
    that you might have.
        [The information follows:]

                  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                         FARM BILL ADMINISTRATIVE COSTS

        Mr. Bonilla. Thank you very much, Dr. Penn. You touched on
    this briefly in your remarks, and you and I have talked about
    this one-on-one. Can you give the Subcommittee an idea if and
    when the farm bill is passed, what kind of figure you are
    looking at for these additional administrative costs? These
    costs are going to suddenly fall not just on your back, but on
    our back as well, to try to figure out how to pay for them.
        Dr. Penn. Well, as I indicated, we have been watching the
    farm bill process very closely. The House completed its version
    last October, so immediately thereafter Mr. Little and his
    colleagues began a very careful assessment of what might be
    involved in implementing that bill, and on the Senate side the
    same thing, once we saw exactly what that bill might be. And as
    I indicated in my remarks, there are some pretty substantial
    departures from the existing law in that bill. Again, the
    updating of acreage bases and yields is very time consuming,
    involves a lot of interaction with farmers, a lot of time spent
    in trying to make sure that farmers know what their options
    are.
        Also there are several new programs contemplated, like
    conservation programs which we haven't had before, which would
    be entirely new start-up programs.
        So we have tried to monitor all of that. We have tried to
    make some assessments of what the resource requirements are,
    but we really can't do that with any definitiveness until we
    know what the new farm bill is going to be. So at the point in
    time where we think we have got a pretty good handle on that,
    then we will try to polish up the numbers that we have. Then of
    course we will meet within the Administration and with OMB.
        Mr. Bonilla. Just so the Subcommittee can have a rough
    idea, we are talking of a figure in excess of $100 million, are
    we not?
        Dr. Penn. Yes, we are. I don't want to, of course, be
    pinned down.
        Mr. Bonilla. We are not asking for an exact number, but we
    would like to get an idea.
        Dr. Penn. We are talking something on the order of more
    than 2,500 staff years and something more than $100 million in
    order to implement this bill in a timely fashion.

                           CAP ON UNDERWRITING GAINS

        Mr. Bonilla. I want to now switch to crop insurance. The
    budget request proposes language to establish a cap of 12\1/2\
    percent on underwriting gains. You touched on this in your
    opening remarks. It has come to our attention that the Risk
    Management Agency issued Bulletin No. MGR-01-031 dated December
    20th of last year, stating, and I quote: ``FCIC is not
    canceling the 1998 Standard Reinsurance Agreement effective for
    the 2003 reinsurance year. Therefore, it will remain in effect
    for the 2003 reinsurance year.'' End of quote.
        Doesn't this constitute a contract that would preclude the
    proposed limitation? If you will note that question, I have a
    couple of others that go along with it and you can answer them
    all at one time. Why does the proposed language ask us to
    legislate that ``application of this paragraph shall not
    constitute the renegotiation of the Standard Reinsurance
    Agreement''? Normally the ``appendix'' to the President's
    budget request is not the place to go to find prose like this.
    This year, the proposal to cap underwriting gains is described
    as providing, and I quote, ``some constraints on windfall
    profits.'' Why are gains beyond 12.5 percent considered
    windfall profits? Has any consideration been given to returning
    to the days when the crop insurance program was delivered by
    USDA employees?
        I asked you two or three things at one time, but go ahead.
        Dr. Penn. Well, let me respond in general as best I can.
    First of all, the Standard Reinsurance Agreement was last
    entered into in 1998 and this is an agreement that is
    applicable for five years. The Department only has one
    opportunity in the course of that five years to renegotiate it
    with the companies. There are some very ticklish legal issues
    that get involved in terms of what constitutes a major change
    in the Standard Reinsurance Agreement.
        Of course we have spent a lot of time with our lawyers, and
    the lawyers indicate that a change of the type that we are
    proposing would not affect the Standard Reinsurance Agreement,
    but I think to be on the safe side, lawyers always like to have
    it in black and white, so that, I think, is the reason for the
    addition of the new language.
        Let me just say in a more general sense, Mr. Chairman, that
    the Agricultural Risk Protection Act is a new concept. The law
    was enacted in 2000 and we are still learning a lot about that.
    Previously, the Crop Insurance Corporation at USDA developed
    the insurance products, marketed the products, was the
    regulator, provided oversight to the program, and it was
    operated much as a farm program.
        But this is a new type of program in which the products are
    developed by the private sector, the products are delivered by
    the private sector, and the Risk Management Agency is the
    reinsurer and the regulator at the same time. So we have a new
    concept here. It is truly a public/private partnership, and we
    are trying very much to work with the insurance companies, and
    trying to work with our own staff to be able to deliver this
    product in a way that the Congress intended. There are stresses
    and strains as we are trying to do this.
        Finally, we have examined the financial aspects of this
    very carefully, and it is our number one concern that the
    interest of American farmers be looked after in all of this
    insurance business. We think that the insurance companies are
    on a solid enough footing, that the financial requirements to
    participate in these programs are solid enough, that these
    underwriting gains can be capped at 12\1/2\ percent and the
    program not be materially affected.
        As I indicated, the loss experience of the past few years
    has been very favorable, and the underwriting gains to the
    companies have been fairly considerable. Of course, the Federal
    Government takes any excess losses, and we have paid out about
    a billion dollars since 1998 in losses, while the underwriting
    gains have been something on the order of $2 billion.
        So that is a long answer, but you did have several
    questions involved there.
        Mr. Bonilla. I appreciate that, and just one final
    observation before I yield to Ms. Kaptur. One of the fun things
    to watch this time around is the big difference between OMB and
    CBO numbers. OMB scored this language as saving $115 million in
    both budget authority and outlays for fiscal year 2003. CBO
    scores it as saving $62 million in budget authority and nothing
    in outlays. Obviously, you have to live with OMB and we have to
    live with CBO. This is, to the best of our recollection, the
    largestdifference that we have ever seen in scoring something
    like this.
        Ms. Kaptur.
        Ms. Kaptur. Thank you, Mr. Chairman.
        Under Secretary Penn, this is your first formal appearance
    before our Subcommittee.
        Dr. Penn. Yes, it is.
        Ms. Kaptur. And we welcome someone of your incredible
    background to service in the Government of the United States. I
    take it, is this the first time you have served in a major
    position at the U.S. Department of Agriculture?
        Dr. Penn. It is the first time I have had a political
    appointment, yes. I was in a career position there many, many
    years ago.

                  ROLE OF USDA IN DETERMINING FOOD AID POLICY

        Ms. Kaptur. I wanted to say that you appear before us at a
    time when Enduring Freedom captures a lot of our attention,
    simply because of the magnitude of the challenge, and therefore
    my first question to you relates to how you view your own
    position. You have a really vast background in economic
    analysis, and in working with many of the major commodity
    groups and brokers in our country. But as I look at your budget
    submission to us, and I think about Enduring Freedom in
    particular, I am concerned about the lack of emphasis on
    programs like Global Food for Education. In fact there is no
    funding proposed for that, and yet we as a Nation are
    confronting, regardless of how many Taliban we kill, madrasas
    all over Central Asia that are turning out future Taliban or
    mindsets, as we sit here today. So the lack of funding for
    Global Food for Education is a concern of mine.
        I won't have time in this round to ask you questions about
    P.L. 480 and Section 416. You have essentially recommended the
    elimination of Section 416. And what I view as a substantial
    cut in international food programs, a de-emphasis on using
    private voluntary organizations who are essential to civic life
    in these places that we are engaged with now that really have
    no governance and it is going to be a long time before we get
    there.
        My fundamental question to you is, do you view the role of
    the Farm and Foreign Agricultural Services as largely a cash
    register that merely moves product around the world, or do you
    view the U.S. Department of Agriculture having some role to
    play in the fashioning of policy for this country to help us
    meet this enormous challenge for which Americans are now dying
    on the ground?
        Dr. Penn. Well, thank you for that question, and I think
    that is a very fair question. I think anyone who knows me and
    knows much about my background would certainly understand that
    I don't view the Department of Agriculture as a cash register.
    I take very seriously my responsibility that we are dealing
    with the taxpayer dollars. President Bush, in a letter to all
    the new political appointees said, ``Remember the money we're
    spending belongs to the taxpayer, so make sure that every
    single dollar is spent wisely.'' And I take that very
    seriously, and I try to do that.

                      GLOBAL FOOD FOR EDUCATION INITIATIVE

        I personally try to influence policy to the extent I can to
    see that every dollar is spent in furthering some overall
    objective of this Nation and certainly of the Department of
    Agriculture and the farm sector. I understand about your
    concern about the Taliban and the Global Food for Education
    Initiative. I think that is a very good program and I think we
    need programs like that that go to the village level, if you
    will, that try to show what America is all about, that try to
    transfer our values to people in these impoverished areas. You
    know the history of that program far better than I. It is a
    pilot program and we are in the second year. We are waiting for
    our own evaluation of the program. We have the people and the
    procedures in place to evaluate that. We have had some
    anecdotal reports, and they have been very positive. I mean it
    is really heartwarming when you hear reports about how villages
    in Uganda have mobilized to support the schools, how the
    enrollment of girls especially in school programs has
    increased, how everybody has taken on a new objective, a new
    meaning in trying to operate these programs.
        So we are going to look at this very carefully, and as you
    know, the farm bill is going to address the future of this
    program as well, so we are waiting to see how it gets resolved
    in that legislation.
        Ms. Kaptur. I thank you for those comments, Mr. Secretary,
    and I would just say to you that I don't think that the
    Department of Agriculture has measured up as a participant on
    the front lines in this war. I looked at all the testimony that
    has come before us, and it isn't only yours. But the parts of
    the world in which we are engaged, subsistence living is the
    norm. We have the ability but we don't have the will nor the
    vision to use food to build peace and to educate children in a
    different way than they are currently being educated. And if
    you look at the madrasas, and the chief lure in Pakistan and
    ultimately in Afghanistan, when we get things settled down over
    there, the schools are the key to the future. And the
    Department of Agriculture can't be a back bencher in this. And
    it can't diminish the role of private voluntary organizations
    which we are going to need and have to form in order to have
    some kind of stability over there. It is not going to be easy
    to do.
        What troubles me, as I look at your budget, just the
    perspective and the way things are presented, I don't view the
    Department of Agriculture as being a part of the solution in
    this war, and yet I think you should be right at the front
    lines. From a policy perspective, you are not there. And yet we
    have the food here. It was interesting to me how they dropped
    the food. We talked to Secretary Powell about doing that, and
    he responded very favorably, and that is sort of an emergency
    approach. But as we look toward the future, I would just urge
    you to reconsider the budget that you have offered us and place
    the Department of Agriculture on the front lines where it needs
    to be. Right now you don't take us there with the omission of
    key programs that I view as critical to the future. You have
    the knowledge, maybe not in your part of USDA, but surely in
    the cooperative research area and our extension system. You
    have the commodities, you have those. In terms of the long-term
    development that has to be done over there, I see in your
    background quite extensive experience in Latin America and in
    Poland.
        This challenge in this region goes to the heart of
    agriculture and subsistence, whether it is removing the hashish
    fields and the opium fields in Afghanistan and finding farmers
    an alternative form of support. I have been very disappointed
    as I have watched the Administration come up here and present
    their various requests to us, as if this wasn't even going on.
        So that is my first round of questions and I appreciate
    your appearance today.
        Mr. Bonilla. Thank you, Ms. Kaptur. I would like to add a
    note related to your comments. I was delighted to work with you
    in trying to make sure that this country does get the
    appropriate amount of recognition for some of the food we are
    distributing in Afghanistan. After you and I signed the letter
    asking that we have our products marked as U.S.A. products--if
    you will look at the photo up over my shoulder in the corner--
    we have proof that they are now trying to mark our donations on
    a regular basis. We are playing a larger role in Afghanistan
    above and beyond what our military is doing. Thank you very
    much.
        Mrs. Emerson.

                              FSA PROGRAM APPEALS

        Mrs. Emerson. Thanks, Mr. Chairman, Secretary.
        Time and time again, a producer may be wronged or may be
    wronged inadvertently by a county FSA office. I don't know
    which one of you wants to answer this question. Anyway, when
    the country board of appeals overrules the local office
    decision, and in many cases the State upholds the Board's
    ruling, the national office--let me just wait till a couple
    bells go here.
        [Pause.]
        Mrs. Emerson. The national office is required to make the
    final decision, and they will deny the appeal. I can't tell you
    how frustrating this is and it happens at an alarming rate, and
    has happened in my district in Southeast and Southern Missouri.
        Do you all have statistics on what frequency FSA or NAD
    rule in favor of the farmer during an appeal like that?
        Dr. Penn. I am going to ask Mr. Little to respond to that.
        Mrs. Emerson. Okay.
        Mr. Little. I don't believe we have statistics that would
    actually go back and say State by State what the appeal process
    has led to. The National Appeals Division reports to the
    Secretary. On occasion when the State overrides a decision that
    was made within the county committee, it does come to
    Washington. We normally review it in house and then if we
    disagree with the decision, we will appeal it to the National
    Appeals Division.
        On a case-by-case basis we can go back and check. As a
    matter of fact, on a couple State issues, I have gone back and
    asked what the statistics are. From a nationwide perspective, I
    don't think we have a statistic, but we could gather it, I
    believe.
        Mrs. Emerson. Well, I am curious because I believe there
    was an article last year that was written stating 85 percent of
    the cases are overridden by the Secretary and at the farmer's
    expense. So if a journalist or a researcher was able to catalog
    those statistics, then I suspect you all could too. Therefore,
    I would like to know this information, as it is a huge problem
    and I wonder if you could also provide for me the criteria used
    in making those decisions as to who is correct in a particular
    instance.
        Mr. Little. We can provide that for the record.

                         REPORTING FARM RECONSTITUTIONS

        Mrs. Emerson. I have a couple of other quick questions.
    This is an FSA-related question. Mr. Little, can you tell me
    what benefit the 30-day time limit on reconstitutions has for
    FSA offices? I have spoken to two separate county executive
    directors in my district, both of whom see absolutely no
    benefit in having a 30-day time limit. It has become a thorn in
    the side of many of my farmers, many of those in Arkansas and
    Mississippi, all along the Mississippi Delta. So what is the
    benefit of this 30-day limit?
        Mr. Little. The benefit is trying to bring the
    reconstitution or the change in farm ownership to closure. It
    was put into place so we would have a time specific by which we
    knew that we would get the information.
        Mrs. Emerson. What happens when our farmers don't know
    anything about this or aren't told about this, and suddenly
    find themselves in violation, which has happened on many
    occasions? Do you send letters? Are the FSA county folks
    supposed to tell people? I can't tell you how many cases we
    have had where people have no clue and then are fined,
    obviously, as a result of that.
        Mr. Little. I appreciate your concern because since I have
    been Administrator and as Acting Administrator, this has been a
    time-consuming effort on my part and Dr. Penn's part as well.
    The producers are supposed to be advised of the 30-day rule. It
    is in regulation, although I understand that farmers don't
    always read what the regulations say, but they are supposed to
    be advised when they sign up what their responsibilities are
    when they do reconstitute their farms. This is an issue that we
    are looking at to see if we can improve it.
        Mrs. Emerson. Because if you think about it from a common
    sense perspective, if a farmer doesn't know this 30-day limits
    exists and he or she gets penalized for having done a
    reconstitution it is the Department's fault----
        Mr. Little. They are supposed to be advised by letter, but
    it is an issue that we are taking a look at to see if we can
    improve the process.
        Mrs. Emerson. Okay. So you will get back to me?
        Mr. Little. Yes, ma'am.
        [The information follows:]

                  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                              2002-CROP LOAN RATES

        Mrs. Emerson. Okay, I appreciate that.
        And then one question just real quick for you, Dr. Penn.
    You know, the Secretary has announced that, or did announce I
    think on the 4th of January, she intended to let the farm bill
    process run its course before announcing loan rates for the
    2002 crop year. Now, if the conferees aren't able to complete
    the work sooner rather than later, at what point do you think
    the Secretary would make a loan rate announcement?
        Dr. Penn. Well, I think you are exactly right in what you
    say. We are watching the process very carefully, and at some
    point I think it will become clear that the conference can't
    complete a bill in time for it to be applicable to the 2002
    crops. So at that point in time then of course we would need to
    announce the loan rate for 2002. The loan rates for 2003 and
    subsequent years would be addressed in the farm bill.
        Mrs. Emerson. I understand that, but aren't we creeping up
    pretty close?
        Dr. Penn. Well, I think we have made some announcements
    with respect to the price elections for crop insurance, and we
    have a July 1 deadline there for giving producers the option to
    choose the new rate or the loan rates that we published in
    January. But it is very difficult to predict when the
    conference might conclude. You know, every day there is some
    new development, and so we are watching it very closely. We do
    understand the urgency, and we will try to make the
    announcement at the earliest possible time.
        Mrs. Emerson. Well, I would be grateful. I know that there
    are many of us who are very concerned that the Department might
    reduce the soybean loan rate to $4.92. I don't suppose I could
    get you to clarify any kind of position on this, could I?
        Dr. Penn. I understand your position very well. Thank you.
    [Laughter.]
        Mrs. Emerson. Thanks, Dr. Penn.
        Dr. Penn. Thank you.
        Mrs. Emerson. Mr. Chairman, thank you.
        Mr. Bonilla. Thank you, Ms. Emerson.
        Mr. Boyd.

                           FSA SALARIES AND EXPENSES

        Mr. Boyd. Thank you, Mr. Chairman.
        And, Dr. Penn, welcome to the Committee, and your
    background is an impressive one and I know you bring a lot of
    expertise along with the members of your team.
        I want to follow up on a question that the Chairman asked
    relative to the budget and the lack of funding for any
    implementation of a new farm bill in 2003. It appears to me
    that the salaries and expenses of FSA increased by about 4
    percent, maybe $48 or $50 million in the budget, and there are
    some assumptions of cost savings by about 3 percent, maybe $34
    million, but there is no detail or justification on those cost
    savings. Can you elaborate or maybe have Mr. Little elaborate
    about your plan about how to do that? That appears to be a net
    gain of somewhere of $80 million. Am I reading that right?
        Dr. Penn. Let's ask Mr. Little to elaborate then.
        Mr. Little. The net increase is $49 million. The majority
    of the increase, as shown in our explanatory notes, is for
    payroll and benefits. There is also an increase to cover the
    Administration proposal that the agencies have to cover
    accruing employee pension and annuitant health benefits. We are
    taking some savings in travel and other operating costs. We are
    identifying some reductions as we speak, and how those
    reductions are going to be taken into account. I don't believe
    we have any specifics at this time, but we do anticipate
    savings.
        Mr. Boyd. So I understand then that the $34 million figure
    or about 3 percent is a goal that you are trying to identify
    how you are going to reach it. Is that what your answer is?
        Mr. Little. Yes, sir.

                           LEGISLATION FOR 2002 CROP

        Mr. Boyd. To follow up on Ms. Emerson's line of questioning
    about the date for the 2002 crop as it relates to the farm bill
    and whether we will implement the farm bill with this crop. And
    that is a rather simple implementation or change on some
    commodities. But there are others that we are making
    significant changes in. I will give you one, is the peanut
    crop. And everybody has agreed that those reforms or changes
    are going to have to be made. It seems to me that the deadline
    for whether we get in on this crop or next year's crop would be
    different there than it would be the others. Would you address
    that and give me--I mean our guys are just a few days away from
    planting, and when you have a drastic change in a program like
    that, their planting intentions were--quite honestly, they are
    having difficulties with their bankers right now. I mean I get
    calls every day. Would you mind addressing this or maybe just
    give me a commitment that we will leave it like it is in 2002
    and your recommendation would be to implement with 2003?
        Dr. Penn. Well, let me just comment generally, Congressman
    Boyd. This is an extremely complex situation, as you can
    understand. And some people forget, but we are implementing the
    last year of the FAIR Act right now while we are talking about
    a new farm bill that might also apply to this year. So starting
    on October 1 last year, Mr. Little and his colleagues starting
    making the last of the $4 billion in production flexibility
    contract payments, and so we have got one farm bill process
    under way at the same time now we are looking at implementing a
    new one and it for the same crop year that we are in.
        As I said before, if we have to get involved in updating
    acreage bases for instance or updating program yields
    orimplementing new programs where we have to collect a lot of
    information and write new software, that is going to require a crash
    effort on our part to continue to implement and to take account of the
    payments that we have already made under the current law at the same
    time we are trying to overlay the second law.
        With respect to the peanut program, that is a special case.
    As you indicated, that's a very substantial change in a
    program. It would move that program from one that involves
    quotas to one that basically becomes like the grains and
    oilseeds, or the marketing loan program. So the difficulty is
    not so much in our implementing that program, because the loan
    rates and LDPs and all of that would be paid on the crop that
    is yet to be planted and yet to be harvested, so that would not
    cause us so much difficulty. The difficulty is caused to the
    people who are planning for what to do in the current year, and
    that is an uncertainty that we cannot remove just by saying one
    thing or another. I mean it really does depend upon the
    Conference Committee and whether they are going to reform the
    program this year or not.
        Mr. Boyd. Thank you, and I appreciate your difficulty in
    trying to implement the last year of a very bad program that
    this Congress did in 1996, and replace it with hopefully
    something better, but who knows.
        But you would concede that in any event that the date for
    implementation in this crop year is nearing us?
        Dr. Penn. Yes, sir.
        Mr. Boyd. Very quickly.
        Dr. Penn. Yes, I would.
        Mr. Boyd. Thank you, Mr. Chairman. I have other questions,
    but I would like to defer to the second round.
        Mr. Bonilla. Thank you very much, Mr. Boyd.
        Mr. Goode, before I yield to you, I would like to point out
    that we are hearing from a witness today, Mr. Little, the
    Administrator of FSA, a person who will not have to strain to
    understand anything you are saying this morning. [Laughter.]
        He spent a little time down in your territory, and also had
    a nice time at Virginia Polytechnic Institute, where he
    concentrated on developing a good ear for local accents. So,
    you may proceed with the utmost confidence this morning, Mr.
    Goode. [Laughter.]

                                  FSA STAFFING

        Mr. Goode. Thank you, Mr. Chairman. I hope Mr. Little can
    answer this question, and I hope it will be a favorable or at
    least not an unfavorable answer.
        The FSA staff in Virginia and the other States, as I read
    your statement, you don't anticipate any changes in that, any
    reductions?
        Mr. Little. No. The 2003 budget proposal has straight lined
    the 2002 levels, and they are the same as 2001. But as Dr. Penn
    mentioned in the introductory remarks, these do not reflect any
    increases that we might need when the farm bill is established.
    So once we know what the farm bill requires, hopefully we would
    be able to provide additional staffing.

                                  FOREIGN AID

        Mr. Goode. Thank you.
        Dr. Penn, I would like to make an observation about aid to
    foreign countries. Many in my area certainly don't mind, in
    support, getting U.S. produced and U.S. made food to foreign
    nations, but many are highly upset with the billions--and this
    doesn't come under the Department of Agriculture budget--but
    the billions that go out under the foreign appropriations
    section of the budget to foreign countries. And I just want you
    to keep that in mind, that there is a flip side to the coin on
    that. We are glad to feed them, but don't build them up too
    much so a new religious fanatic can't come in and take it over
    and use it against us. So you keep that thought in mind, I
    would appreciate it.
        Dr. Penn. I will do that.
        Mr. Goode. Thank you, Mr. Chairman.
        Mr. Bonilla. Thank you, Mr. Goode. Regarding the comment
    you just made about some of the feedback you get in your
    district, we want to emphasize that that is the same message
    that a lot of us are receiving as well when we go home. This is
    not by any means an overwhelmingly supported issue that we are
    talking about here today.
        Mr. Hinchey.

                                SPECIALTY CROPS

        Mr. Hinchey. Thank you very much, Mr. Chairman.
        Dr. Penn, welcome, and very nice to see you, and ladies and
    gentlemen, you as well.
        I would like to talk a little bit about the specialty crop
    situation. We have done some work on apples recently here in
    the committee. Last year's appropriations bill included a
    provision for $75 million in apple market loss assistance to
    growers to compensate for the low prices in the 2000 crop. Can
    you give me any idea when growers can expect these payments to
    be made?
        Dr. Penn. Well, I was just handed a piece of paper that----
        Mr. Hinchey. I saw that, and it was very well done.
    [Laughter.]
        Dr. Penn. The paper indicates that signup will be completed
    in the spring, and payments will be made after the final
    regulation is published in the Federal Register. I would ask
    Mr. Little to verify this, but I think that means that the
    payments will probably not be arriving until late summer or
    early fall, given the time it takes to put notices in the
    Federal Register and go through all of that process.
        Mr. Little. Yes, that is correct. We are looking at a four-
    week signup in April, and then making payments as soon as the
    regs are published, so it should be early to late summer.
        Mr. Hinchey. Well, of course, we wish it would be sooner
    than that because the need is there presently. Two years ago we
    appropriated $38 million for quality losses for both apples and
    potatoes, and even though the signup period for this program
    closed--I don't know exactly when it was but it was some time
    ago--I understand that the payments still have not been made.
    Any word on when these funds might be released?
        Dr. Penn. Well, that is a little bit of an embarrassment. I
    would like to say, Congressman, it occurred before my watch
    started.
        Mr. Hinchey. Yes, sir, I know that.
        Dr. Penn. You can only get away with that so long.
        Mr. Hinchey. Well, it is working so far. [Laughter.]
        Dr. Penn. Well, I will have to be back next year, and I
    want to make sure we don't have any more embarrassments like
    this, but that was a very popular program. It was funded at $38
    million, and it was way over-subscribed. It has taken some
    considerable amount of time I understand to sort out exactlyhow
    to allocate those monies. Mr. Little has some definitive word here, I
    think.
        Mr. Little. Yes. The signup did end in November, 2001. And
    since the program is limited to $38 million and we had people
    apply for more than that, we are now establishing a factor, so
    we do expect the payments to go out very soon.
        Mr. Hinchey. Would you recommend that we increase the
    amount in the future since this is a program that demonstrates
    a substantial need which is obviously not being fulfilled?
        Mr. Little. I will be honest, Congressman, I have not seen
    the actual dollar value of the claims that came in, so I really
    can't say whether or not we would need additional funding, and
    I don't know what the factor is going to be, to be honest.
        Mr. Hinchey. Would you mind sending that information over
    to us so that we could take a look at it?
        Mr. Little. Certainly.
        Mr. Hinchey. I would just be curious, actually more than
    curious, to know what the numbers were of the people who signed
    up, and so that we can try to judge need and interest out
    there.
        Mr. Little. Okay.
        [The information follows:]

                     Apple and Potato Quality Loss Program

        Claims for apple and potato quality loss assistance exceeded $129
    million. Because program funding was limited to $38 million, farmers
    will be paid about 27.8 percent of their qualifying losses. Payments
    are expected to be issued beginning March 22, 2002.

        Mr. Hinchey. I know that in one way or another we are all
    interested in free trade and fair trade, but the trade
    agreements under negotiation are going to be tough for people
    to accept unless they contain environmental standards, give due
    consideration of labor conditions, and contain real enforcement
    mechanisms. So while we see the benefits of free trade, we want
    very much for it to be fair. And those of us who represent
    agricultural interests on this Committee, and I guess all of us
    do in one way or another, are concerned about the dumping of
    products, frankly, that occurs from countries in Central and
    particularly South America.
        So I am wondering what your attitude is, Dr. Penn, with
    regard to environmental standards, labor standards, and
    enforcement mechanisms in trade agreements so that we can do
    whatever we can to prevent the dumping of these agricultural
    commodities on the American market.

                  IMPORTANCE OF AGRICULTURAL TRADE AGREEMENTS

        Dr. Penn. Well, there are a lot of issues wrapped up in
    your comment, but I think you are asking about my philosophy,
    and I certainly am pro trade. I am firmly convinced, as an
    analyst, that the long-term health of U.S. agriculture lies in
    foreign markets. I am firmly committed to that. If we can't
    utilize the resources to provide products to these markets, and
    the rate of return for agriculture farm incomes, all of these
    things are not going to be at acceptable levels.
        But having said that, I think that one of the best ways to
    gain access to these markets is through these multilateral
    trade agreements. I think if you bring everybody to the table,
    you introduce disciplines, rules that everybody has to live by,
    and then countries decide whether or not they think they can
    live by these rules. Once they agree that they do, then I am a
    strong believer that the rules ought to be enforced, and that
    we ought to make sure that everybody meets their obligations.
    And we are doing that.
        For example, China is one of the newest members of the
    World Trade Organization, just admitted late last year, and it
    is a very complex society, a very big society. But it has
    agreed to do certain things under the WTO. We have established
    a group within USDA, a China Monitoring and Compliance Group,
    so we are going to watch every single thing that the Chinese
    do. We are going to try to make sure that they live up to the
    agreements that they have signed. We don't think dumping is an
    appropriate thing, of course, and wherever we find infractions,
    we are going to try to get them corrected.
        So I think these agreements are good things, but I think
    people have to honor them, they have to live up to what they
    have agreed to.
        Mr. Hinchey. Well, thank you. I appreciate that, and I hope
    that we can carry through on that.

                                  FSA STAFFING

        I just wanted to ask one question about the FSA, following
    up on Mr. Goode's question to Mr. Little.
        In New York, the State FSA office has lost 32 positions
    over the past five years, while the work of the office has
    grown exponentially. Is there any examination going on within
    the Department of this situation, so that we might anticipate
    the Administration requesting additional funds for FSA
    staffing? The need is growing rapidly. But the number of
    positions has dropped and the work is just not getting done
    because there are not enough people to do it.
        Mr. Little. Well, Mr. Congressman, we are looking at
    overall staffing, current staffing, and how to redistribute
    what we do have to the States that appear to have more workload
    than some other States do, to do some reallocation with
    existing staff years. And then in conjunction with whatever
    comes out of the farm bill, for the additional staffing that we
    are going to require, we would be doing another reallocation
    amongst the 2,700 county offices that we have. So, yes, we are
    analyzing it.
        Mr. Hinchey. I appreciate that, but what you are saying to
    me is that you are not going to anticipate any additional
    positions, what you are going to try to do is tryto juggle what
    you have got to see if you can meet needs that aren't being fulfilled
    in some States and take it away from some others?
        Mr. Little. Yes, sir.
        Mr. Hinchey. I don't know, frankly, if that is going to do
    the trick. But I would like to hear from you, if you don't
    mind, with regard to how those States--New York is one--where
    the need is great and not being met. What can we do to try to
    meet that need?
        Mr. Little. Well, the Administration has several management
    initiatives ongoing right now that we are required to implement
    between now and 2003, including looking at our current office
    structure amongst the service center agencies and the
    Department as a whole. We are looking at administrative
    streamlining, cross-training between the agencies,
    administrative convergence for the IT arena, improving our debt
    servicing for the farm loan programs. We are looking at a lot
    of new initiatives, additional IT, and improving our IT
    infrastructure to try to give our employees the tools to better
    do their business. Along with the redistribution of the
    staffing, we believe that we can work within the staffing that
    we do have, except for the additional workload that is going to
    be generated by the farm bill.
        Mr. Hinchey. Thank you, Mr. Chairman.
        Mr. Bonilla. Thank you, Mr. Hinchey.
        As you have heard from the bells, we have a vote pending. I
    am going to yield to Mr. Boyd for a couple of minutes if you
    want to ask your additional questions. Then Mr. Kingston is
    going to come back, take the chair, and he will ask questions.
    Then Ms. Kaptur will begin the second round.
        Mr. Boyd, you go ahead and go as long as you like, before
    we have to go vote.
        Mr. Boyd. Thank you, Mr. Chairman.
        Dr. Penn, I just jotted down, paraphrased what you said I
    think a moment ago, the future health of U.S. agriculture
    depends on foreign markets. And that is not an exact quote, but
    paraphrasing. I would also submit to you that unless we can
    keep domestic agriculture healthy, then we won't have to worry
    about foreign markets, and I guess that is the thing that many
    of us fear in this, looking at the current state, profitability
    of the agricultural industry as a whole, where it appears that
    about two-thirds of the bottom line of U.S. agriculture now is
    coming directly out of the Treasury of the Federal Government,
    and I guess that is the struggle that many of us deal with
    daily on how do we mold a policy that works? So I just wanted
    to throw that out for your consideration.

                     CCC FUNDING FOR EMERGENCY PEST CONTR0L

        I wanted to mention to you another issue. We have a little
    industry in Florida called the citrus industry, that is about
    $9 billion, and it is under an extreme attack, has been for the
    last 5 or 6 years or so by a little pest called canker that was
    brought in through the Miami Airport, slipped through the APHIS
    inspection system, and now this country has spent State and
    Federal dollars, probably $300 or $400 million fighting that in
    addition to the losses suffered by the industry itself.
        The CCC, part of your operation, has a critical part in
    that, and you have lowered the outlay budget estimate for CCC
    in the coming year, which is in direct conflict with what is
    happening over the last 4 or 5 years out of that budget, out of
    that account. How do you justify that, and what is going to
    happen? Does that mean that we are going to stop funding the
    emergencies like citrus canker?
        Dr. Penn. Congressman, I don't think so. I don't think that
    is the intent at all. The CCC, as you know, is very complex and
    has lots of different rules and regulations as to how the money
    can be used, so I am going to ask Mr. Dewhurst if he would
    respond to that question.
        Mr. Dewhurst. Let me just say there is plenty of money in
    the CCC to meet the emergency needs under our emergency
    authorities. The actual outlay estimate, you are correct, is
    down in fiscal 2003. That is a reflection of the current
    baseline. It assumes the extension of the current '96 farm
    bill, and it has some economics built into it that show some
    favorable prices in some commodities. But that is a flexible
    number, it is just an estimate. It is not a constraint. And the
    money we have requested in this budget to reimburse the CCC for
    its losses is very sufficient to make sure it can meet all of
    its needs including those emergency needs that are of concern
    to you.
        Mr. Boyd. Thank you very much. Those are comforting words,
    to know that we will have what we need to meet these estimates,
    but I do want to make you aware, this has been discussed
    significantly with the APHIS folks, that the request for the
    $162 million set aside to fund the current ongoing existing
    emergencies like citrus canker, like plum pox, like the other
    that we are dealing with around the Nation, was not viewed very
    favorably by this Committee, that plan. And so we just want to
    make sure that if we have additional outbreaks of citrus canker
    in the State, our growers want to know that the Government is
    standing with them in helping fight this pest which slipped in
    through the Government checkpoint.
        Dr. Penn. Well, I think you can be assured of that.
        Mr. Boyd. I have the show by myself? [Laughter.]
        Well, I hate to leave. You know, I got it by myself. I
    would like--this is----
        [Laughter.]
        Mr. Boyd. We might do some interesting work here now that
    they are all gone.
        I think though in the interest of what is best for
    everybody concerned, including this Member who needs to
    probably get down there and vote, we are going to stand in a
    brief recess until Mr. Kingston returns. Thank you.
        [Recess.]
        Mr. Kingston [presiding]. Everybody is coming back from a
    very difficult vote on the journal. Subcommittee Members will
    be back here in a few minutes. So many members right now have
    three or four committee meetings at once, that we are kind of
    gunning and running--nothing new about that.
        Dr. Penn, I wanted to ask you a few questions. A huge issue
    in the State of Georgia has to do with the Russian boycott of
    American poultry. As you know, it is a propped up, trumped up
    kind of issue. They have done this before, but now it seems to
    be a little bit more serious. I realize it is more with the
    U.S. Trade Representative than with your office. I wish your
    office was the sole broker on it. Then I think you could come
    to a peace real quickly on it, but could you tell us a little
    bit about that.

                          RUSSIAN BAN ON U.S. POULTRY

        Dr. Penn. Yes, I can, and I think you make a very good
    point. This is a very big market for U.S. poultry
    products,something approaching $700 million, and we agree with you that
    there is absolutely no merit in the claims by the Russians about the
    quality and safety of our products.
        We are making every effort, on multiple fronts, to try to
    get this ban lifted immediately. The Office of the Special
    Trade Representative, as you indicated, is working through
    their channels with their counterparts in the Russian
    Government, Secretary Evans at Commerce is working through his
    channels, and Secretary Veneman is doing the same thing. In
    fact, I was just with her earlier this morning, when we were
    trying to talk to the Russian Minister of Agriculture. We were
    unsuccessful in reaching him.
        I think Secretary Veneman is going to call the Russian
    ambassador to the U.S. later today, to once again say that we
    think there is no merit in this ban and that we think it should
    be lifted immediately and that there is a lot that is riding on
    this. I mean, the Russians want to join the WTO, for instance.
    The Russians want to improve relations with us, and this is not
    the way to win friends and influence people. So we are trying
    to do everything that we can. We are working very closely with
    the USA Poultry and Egg Export Council and other people in the
    broiler industry. So we are trying to make an all-out effort to
    get this ban removed immediately.
        Mr. Kingston. What can we, as Members of Congress, do about
    it? Our constituents are truly concerned, and it is affecting
    them economically, affecting jobs and so forth. Is there more
    that we can be doing? I know we have got the first team in
    there, and we know you guys are on the front line, but how can
    we help you in this?
        Dr. Penn. Well, I think everything is being done in an
    organized fashion that can be done right at the moment, but it
    certainly helps when the foreign government involved knows that
    the members of our legislature are very keenly aware. We just
    had another problem with the Japanese, as you well know,
    involving poultry, and it was very helpful that several Members
    of Congress weighed in directly with their counterparts. So I
    think to the extent that you can make known that you are
    watching this issue, that it is a serious issue and that our
    efforts are coordinated from the U.S. Government side, I think
    that is all very helpful.
        Mr. Kingston. Are there any letters that you need? Would
    that help you if we circulated some letters?
        Dr. Penn. I do not think so right at this time. As you
    know, this is, as you said, a trumped up charge, and we are
    trying to be as responsive to the Russians as we can in
    providing evidence on sanitary and phytosanitary aspects of
    trade, but we do not want this to become bogged down and to get
    sidetracked into a lot of technical discussions because we do
    not think it merits that.
        So right at the moment we are trying to keep this at a
    policy level and trying to exert the maximum pressure that we
    can, but thanks very much, and if we find a way that you can be
    helpful, we will certainly be in touch.
        Mr. Kingston. Keep up the good work. We are behind you.
        The other question I wanted to ask gets back to one that
    Chairman Bonilla and Mr. Goode had asked about the foreign ag
    assistance. I think that we certainly have to be engaged in
    food assistance programs, and I think it has a stabilizing
    positive effect on marginal Governments. One of the issues that
    this Committee and Chairman Bonilla led on last year, was
    making sure that when we are giving food aid to a country like
    Afghanistan, that the label on the food shows, ``Made in the
    U.S.A.'' That label will foster a little more peace and
    understanding between the two countries. You know, in a crude
    sense, we want to get doggone credit for it, but there is a
    real national security reason to do that as well.
        How is that going in terms of labeling, and were you
    involved in that? I apologize for not knowing off the top of my
    head.

                   LABELING OF U.S. FOOD ASSISTANCE PACKAGING

        Dr. Penn. No, that was a little before my time, but I do
    know about it, and I think as the photograph on the wall there
    indicates, that the bags in which food aid is provided now,
    especially to Afghanistan, are clearly labeled, with ``U.S.A.''
    on one side, and the American flag very prominent on the other
    side of the bag. Then, where possible, in the recipient
    country's language, it indicates that it is a product of the
    United States.
        So we are trying to make very clear that we fully identify
    all of our food aid as being from the U.S.A.
        Mr. Kingston. I also support the role of NGOs in world
    affairs. However, sometimes NGOs are quick to get our money and
    then quick to pretend like they deserve it. Not all of them do
    that, and I am not indicting NGOs, but are NGOs cooperative in
    saying, ``Yes, as a matter fact, this was from the Yanks''?
        Dr. Penn. Well, I have no knowledge to the contrary. As far
    as I know, the NGOs and the PVOs that have been involved in
    this have been very cooperative. I have no knowledge otherwise.
        Mr. Kingston. I am going to have a few more questions, but
    let me yield the floor to Mrs. Emerson.

                            RICE TRADE ASSOCIATIONS

        Mrs. Emerson. Mr. Chairman, thank you. My next question
    goes to Ms. Terpstra. Congratulations on your new position. I
    know that you have only been there a short time, but I know you
    have familiarity with this issue.
        In last year's ag appropriations bill, I sponsored an
    amendment that requires FAS to withhold MAP and FMD funds to
    participating rice trade associations, unless and until those
    organizations get into an international activity agreement. The
    purpose of that language was to promote fairness and prevent
    the duplication of efforts under those programs. In fact, I
    offered that amendment after FAS did a great job working with
    those organizations to make sure that for the first time the
    activity agreement to fund those organizations was in place for
    the beginning of the fiscal year.
        Now I guess I am confused and would like perhaps some
    clarification from you about precisely why the Administration's
    budget proposes to strike from the law this requirement that
    has already proven its success.
        Ms. Terpstra. Thank you very much for the question and the
    opportunity to address this.
        I believe that our concern is more with the issue of
    precedence, in terms of having restrictions on program
    administration. We think the Department has shown that it is
    able to work with the various commodity groups involved to
    quickly resolve the differences and would seek the opportunity
    to continue to do that without the restriction.
        Mrs. Emerson. Can you assure me that would, in fact, occur
    without necessitating report language or something like that?
        Ms. Terpstra. I do not know if I can assure you.
        Dr. Penn. We will certainly do our best. I mean, we will
    make a good-faith effort, of course.
        Mrs. Emerson. Because, in fact, it does penalize some of
    our smaller rice producers, and I hope that you all, and I
    think that you do understand the great concern that I have
    about this issue and would hope that you would be able to enter
    into good faith continuation of that agreement.
        Ms. Terpstra. Yes.

                               RICE TO UZBEKISTAN

        Mrs. Emerson. Let me ask you another question, Madam
    Administrator. Yesterday it was announced that an agreement
    with the Government of Uzbekistan had been approved, under
    which we would supply about $20 million worth of rice under
    Title I of the P.L. 480 program. I am very excited about this
    and congratulate you on that initiative, having met with
    representatives of the Uzbeki Government, who want to purchase
    U.S. rice from my constituents and who hope to sell it to them.
        Can you tell me whether the purchase authorization, under
    this agreement, will continue the policy established by USDA
    last year and endorsed by this Committee to allow the Uzbekis
    the free choice to purchase U.S. rice in the form of their
    choice, whether it is rough, brown, milled, et cetera?
        Ms. Terpstra. Would you like to take that one?
        Ms. Chambliss. Sure, I would be happy to.
        Congresswoman, yes, we will follow our standard policy. As
    you are quite aware, we work with the governments, in this
    case, the Government of Uzbekistan, to seek to determine what
    kind of rice they are interested in purchasing. We will issue
    the purchase authorization--we will do it very shortly in about
    a week or so--so that they can buy the kind of rice that they
    wish to buy. They are customers of ours.

                              2002-CROP ASSISTANCE

        Mrs. Emerson. Excellent. Thank you very much.
        And perhaps to you, Dr. Penn, one final question. We have
    talked around this, and I wanted to see if there was perhaps a
    definitive answer, if the farm bill does not become law in time
    to implement it for the 2002 crop year, does the Administration
    intend to provide a supplemental assistance package for farmers
    as you all have in the last 3 years?
        Dr. Penn. Well, I think it has been the Congress that has
    initiated the supplementals in the last 4 years, since 1998,
    but I think it is a general understanding among Members of
    Congress, certainly, the Agricultural Committees and the
    Administration, that should the farm bill not be applicable to
    the 2002 crop, that there would be funds available for some
    kind of supplemental. The budget contains, as you know, $73.5
    billion for the 10-year period, and there is a specified amount
    for fiscal year 2002.
        Mrs. Emerson. How do you think a supplemental would impact
    the overall budget for ag?
        Dr. Penn. Well, it is included. I mean, there is----
        Mrs. Emerson. So, within that $73.5 billion, included is
    some sort of money for supplemental?
        Dr. Penn. Well, there is money included for farm program
    spending for fiscal year 2002 to 2011, and we would think that
    if the farm bill is not applicable to 2002, that some of that
    money could be used for a supplemental.
        Mrs. Emerson. Do you have any idea of how much would be
    available?
        Dr. Penn. No, I think our indication has been that the
    $73.5 billion would be available for the farm bill, and I do
    not think that we have talked about the amount for a
    supplemental.
        Mrs. Emerson. Thank you.
        Mr. Kingston. Dr. Penn, if the gentlewoman would yield, I
    also know one of the practical problems right now is that
    allocation will go to the Ag Committee, not necessarily to us,
    in terms of who makes the spending decision, and so that is
    something we will have to deal with as well.
        Mrs. Emerson. Thank you, Mr. Chairman, Dr. Penn.
        Mr. Kingston. Ms. Kaptur.
        Ms. Kaptur. Thank you, Mr. Chairman.
        Mr. Under Secretary, I want to keep pursuing my own inquiry
    into how intimately the USDA is involved in policy making for
    the Administration at the very highest levels, and I am going
    to try to do this with some specific questions.

                        OPIUM PRODUCTION IN AFGHANISTAN

        I would like to ask you if the U.S. Department of
    Agriculture participates in the Administration's discussions on
    how to address the opium production problem in Afghanistan. Do
    you participate in those discussions?
        Dr. Penn. Let me ask Mary Chambliss if she knows
    specifically about that issue.
        Ms. Chambliss. I do not know specifically about
    Afghanistan. I certainly am aware of similar discussions
    dealing with opium-type crops in past years, where often
    Agriculture's expertise, particularly through our International
    Cooperation and Development program area, has been sought to
    assist in developing alternative crops. I think we are probably
    most involved in the discussions when it comes down to how to
    carry out some of the policy goals.
        We may also, depending upon the country and the
    circumstances, have been involved at more senior-level policy
    discussions, but I think not extensively. Mostly our role would
    be helping to carry out the policies, and I am confident we
    will be involved as this plays out with Afghanistan, as we have
    been with other countries.
        Ms. Kaptur. This is why I am trying to get the Secretary's
    attention, to say you should be more than a down-chain player
    here. You should be an up-front player, and I will give you an
    example because of your extensive international work.
        When the United States and Syria worked to remove the
    hashish fields in Lebanon, there was never a policy to replace
    those fields with other crops. We helped to cause many, many
    areas of the country to be thrown into even more dire poverty
    than they were already, and those became the breeding grounds
    for the Hezbollah. One of my perspectives, after having served
    for many years, is the Department of the Agriculture does not
    make its weight felt in a world in which over half of the
    people live at subsistence levels and where agriculture is
    absolutely critical to the future. It is true in the Balkans,
    it was true in Lebanon, it is true in Afghanistan and Pakistan,
    and too often USDA is a downstream player, and she should be
    right up at the head of the queue.
        I wanted to also ask you, do you participate in any
    Administration discussions that are ongoing on how to
    counteract the enormous and ongoing power of the madrassas in
    breeding new terrorists?

                  USDA ROLE IN ECONOMIC DEVELOPMENT ACTIVITIES

        Dr. Penn. Let me address your question in a general sense.
    I think I understand what your concern is. I would point out
    that, as you well know, there are several agencies of the U.S.
    Government that have some expertise in agriculture or have some
    objectives that are very closelyrelated. Of course, we are
    talking about the U.S. Agency for International Development, both in
    terms of its responsibility for humanitarian assistance and for
    economic development.
        As you know, USAID, for many years, in the minds of many in
    this field, neglected agriculture, paid very little attention
    to development of the agricultural sector, and a lot of us I
    think who had some experience in economic development thought
    that that was not appropriate because of the importance, as you
    are suggesting, that agriculture and rural life have in many of
    the least-developed countries.
        So there is an overall activity, within the U.S.
    Government, to promote economic development. Now USAID has
    elevated agriculture once again. We do have discussions with
    that agency. We have made them aware of the expertise that we
    have. We have an entity in the Foreign Agricultural Service,
    the International Cooperation and Development group, in which
    they source a lot of people, and through various
    interdepartmental arrangements, we provide agricultural
    expertise to USAID.
        So, in that regard, we are very involved. We should be more
    involved, I agree with you. At my level we are helping the
    Administrator of USAID to make him more aware, and Secretary
    Veneman is doing the same. On these other issues, there are
    interagency committees, and our people are involved all of the
    time in all of these discussions.
        Ms. Kaptur. Mr. Secretary, let me just say we are going to
    provide billions of dollars, enormous sums of money, to try to
    deal with this Enduring Freedom problem, and it will be
    continuing. And I am really pleased to see Mr. Natsios taking
    more of an interest in agriculture publications and so forth.
    But from your work around the world and from my work around the
    world, we know what happens with AID in agriculture. I would
    strongly urge you to build in the incredible capabilities of
    our extension system, and our farmers, and our educators around
    this country who will never give up on a place, and they are
    not just in there for a 2-year contract. We can link to
    communities across this country and really help to build a
    better future. I fundamentally believe only agriculture can do
    that because AID is not connected to this country. They have
    these huge consulting groups that operate in places far flung,
    and they do important things, but they do not connect back
    here. They have their own sort of network. It is almost like
    the Foreign Legion. They are almost like a Foreign Legion, and
    they go and never come back home again.
        Our extension service, regardless of whether it is
    raspberry production or whether it is wells or whatever the
    issue might be, whether it is feeding children in schools so
    that they can learn, we have the experience through USDA and
    your enormous connections through the farm service agencies and
    our extension systems and universities across this country. I
    would just urge you, in the strongest possible terms I can,
    including additions to your budget, where appropriate, to get
    that connection with AID, so that you can deliver because you
    have the people who can deliver, and to connect in those
    private voluntary groups that exist in our country who can
    really make a difference.
        My time has expired, and I look for the next round of
    questions.
        Thank you.
        Mr. Bonilla [presiding]. Thank you, Ms. Kaptur.
        Mr. Latham has joined us, and I will now yield to Mr.
    Latham.

            IMPACT OF STEEL TARIFF DECISION ON AGRICULTURAL EXPORTS

        Mr. Latham. Thank you, Mr. Chairman. Welcome.
        I guess to start off I would just like to get your
    impression of the ruling the Administration recently made, with
    respect to tariffs on steel, and the impact you believe this
    could have on our agricultural exports, as far as new tariffs
    levied in other countries; is there any feeling that you have
    at this time?
        Dr. Penn. Well, that is a very good question.
        Mr. Latham. Thank you.
        Dr. Penn. We have been very concerned in the agriculture
    sector about the possibility of spillover from not only the
    steel case, but the so-called FSC or Foreign Service
    Corporation case with the European Union. We are in a very
    interconnected, very interdependent world, and whatever happens
    in one other sector of the economy can very quickly spill over
    into agriculture.
        We are in the process of analyzing the likely economic
    impact that could possibly come from the steel decision. We are
    hopeful that it will be nonexistent or at least very, very
    minimal. There has been some discussion that the Russian
    chicken ban that we were just discussing a little earlier might
    be in some way connected to the steel case, but I personally
    discount that pretty considerably. I think the Russians have
    their own agenda with respect to poultry and are pursuing
    something else, but it is a concern, and it is an
    interconnected world, and we will be analyzing what we think
    the impacts might be. And when we get that analysis done, I
    would be very pleased to share it with you, if you would like.

                          IMPACT OF SANCTIONS ON TRADE

        Mr. Latham. That brings up another area. What type of
    impact, in your opinion, do U.S. sanctions against other
    countries have on our agriculture exports? In other words, do
    you believe that our normal agriculture trade is impeded in any
    way?
        Dr. Penn. I think it is very clear, and the evidence is
    very clear that the imposition of sanctions does interfere with
    normal trade flows. The question, of course, becomes at what
    point are there other overriding objectives that involve the
    national security or the national interests that are more
    important than continuing trade with one particular sector of
    the economy. Agriculture, of course, being very export
    oriented, being very dependent upon foreign markets, gets
    buffeted about quite a lot in sanctions, and I think that leads
    to discussions of trying to find ways to protect our producers,
    when the broader national security interest is sometimes being
    served by these sanctions.
        Mr. Latham. I am not going to make this long, but I would
    like to get your impression, on the excise tax Mexico has on
    high-fructose corn syrup. We have been trying to build a
    facility in my district for the last five year and the Mexican
    situation has been the hang-up. I think as soon as that issue
    is resolved and adequate supplies of fructose can be shipped to
    Mexico, the facility will be built. It is probably a $70- or
    $80-million facilitywith a lot of good jobs. I just wondered
    where we are on that situation.

                           MEXICAN TAX ON CORN SYRUP

        Dr. Penn. The most recent development is that the Mexicans
    have now removed the excise tax that they had placed on high-
    fructose corn syrup being used in soft-drink products. We were
    adamant, the Office of the Special Trade Representative was
    adamant, in saying to the Mexicans that discussions could not
    continue on resolving the overall sweetener and sugar problem
    until that excise tax was removed. Well, they have now done so,
    and they have been----
        Mr. Latham. Is that permanent?
        Dr. Penn. No, until September the 20th. So it does provide
    a window, a negotiating window here, in which we can see if we
    can try to resolve this issue. As you know, this issue is very
    complex. It has a long history. It involves NAFTA, the side
    letters, and it is going to take some concerted effort to
    resolve, but I think it is in both of our interests to try to
    resolve this as quickly as we can.
        Mr. Latham. Good. You do not have any idea of how it will
    be resolved or timing or----
        Dr. Penn. No, but I do know that it is a high priority for
    USTR. I know that they are trying to clear the slate of as many
    of these lingering trade irritants as they can, and last year
    they had some success with bananas and some other things, so
    they would like to quickly resolve this one, as well as beef
    hormones with the EU and some others.
        So I do think they are going to be paying a considerable
    amount of attention to it, and I think the industry, the high-
    fructose industry, the sugar industry, and people who are
    trading and investing in general hope that it gets resolved
    fairly quickly.
        Mr. Latham. So do I.
        I can see I am out of time, Mr. Chairman. Thank you.
        Mr. Bonilla. Thank you, Mr. Latham.
        Mr. Boyd.
        Mr. Boyd. Thank you, Mr. Chairman.

                                  ARPA STATUS

        Dr. Penn, I want to talk about the crop insurance program.
    I know in 2001, the IG reviewed the operations of RMA and the
    FSA in implementing the disaster programs in 1999. That was not
    a very favorable report. You know we got a new law since then,
    but that report on the 1999 year showed that we continued to
    hand out millions of dollars to folks who probably were
    overpaid insurance benefits.
        Do you have any information about whether, at this point in
    time, whether our new law is working any better, the incentives
    we put in place to police ourselves, are they working and can
    we expect a better report in the future?
        Dr. Penn. Well, that is a very interesting point that you
    bring up, and I think you said the critical thing when you said
    we have a new law. The Agricultural Risk Protection Act of
    2000, as I indicated before, is really trying to put risk
    management on an insurance basis to try to develop some
    actuarial soundness in this program. We are trying to implement
    it and operate it in a way that protects the integrity of the
    insurance program, the actuarial soundness of the program, to
    the extent that we can.
        It is not just another farm program. It now is a different
    program. As I said earlier in my remarks, it involves not only
    a Government agency, but now we have some 18 or 19 insurance
    companies involved. These are private-sector companies that are
    operating in our system for a profit, and we have to operate in
    a much different manner than we probably have operated in the
    past. So we are increasing compliance efforts.
        The ARPA law itself had some direct mandates about
    increased compliance efforts, and we are trying to carry those
    out. We are trying to make sure that we can protect the
    integrity of this program and that we do not have cases, as you
    suggested before, where we have gross mismanagement or
    overpayments or other missteps in the program.
        Mr. Boyd. When will we be far enough along in the
    implementation of the new law to get an independent review by
    the IG or someone so that we will have sort of a baseline to
    measure against how we are doing against how we were doing
    before?
        Dr. Penn. I think we are nearing the point of having enough
    experience now. I think we are getting close after having gone
    through the first year and the bumps, and then going through
    the second year and having worked out some of those.
        Mr. Boyd. Would that review come automatically or does the
    Department have to call for one or how does that work?
        Dr. Penn. I do not know. I will have to find that out.
        Mr. Boyd. Okay. That would be good information for us to
    have.
        [The information follows:]

        RMA has recently been contacted by the Office of the Inspector
    General regarding plans to conduct an audit survey to assess
    implementation of changes resulting from the passage of ARPA.

                         SUPPORT FOR BEGINNING FARMERS

        Mr. Boyd. One other question. I noticed in a 2001 GAO
    report that there has been a substantial decrease in the number
    of farmers in this country under the age of 35 in the last
    decade or so. In reviewing your budget, you continued to shift
    away from direct loans and to guarantee loans. Many of us
    believed, you know, I agree with you that is a good policy, but
    could you talk to us briefly about that philosophy and how it
    affects the young people, attracting young people into the
    industry and what is the long-term effect of that.
        Dr. Penn. There are two parts to that, and I am going to
    ask Mr. Little to respond to the farm loan programs. I would
    just respond on the RMA side that I think you make a good point
    there. We are constantly trying to look at the profile of who
    the customer is, the policy holder, and we are trying to
    identify the underserved areas. We are trying to identify the
    young and beginning farmers. We are constantly working with
    outreach efforts to try to talk about risk management, to try
    to teach people about how these tools can be used to their
    advantage. So I know on the risk management side that there is
    an active program underway and that young and beginning farmers
    and disadvantaged farmers are especially targeted.
        In terms of the much bigger loan programs, let me ask Mr.
    Little to respond, if I could.
        Mr. Little. As Dr. Penn mentioned, in the direct loan
    programs, we are targeting towards the beginning farmers and
    the socially disadvantaged farmers. As a matter of fact, in
    2001, we provided $706 million of our loans to beginning
    farmers, so it is an initiative where we are really trying to
    get to that group of people.
        We are doing a lot of outreach trying to get the word out
    about our programs, not only to beginning farmers, but to other
    disadvantaged elements of the society, and we are making good
    progress on it.
        Mr. Boyd. As one Member, I just want to encourage you, as
    you shape your policy, to continue to direct it at the young
    farmers. Those of us who have done it for a long time, if we
    cannot do it without the help of Government agenciesand
    lending, then maybe our time has passed, but it is almost impossible at
    home for a young person to get into it unless he inherits it or has
    some other advantage like that. So I would like to continue to
    encourage you to shape your policy in that direction.
        Mr. Bonilla. Thank you, Mr. Boyd.
        If I could, Ms. Kaptur, I think Mr. Latham has just a
    couple of remaining questions, and then I will yield to you to
    finish out your questions.
        Mr. Latham.
        Mr. Latham. Thank you very much, Mr. Chairman, and Ms.
    Kaptur.

                REACTION TO CODEX ALIMENTARIUS COMMISSION REPORT

        Recently, the Codex Alimentarius Commission, which
    consisted of officials from the United Nations Food and
    Agricultural Organization, the World Health Organization, and
    nongovernmental organizations joined together in drafting a
    document entitled, ``Principles for the Risk Analysis of Foods
    Derived from Biotechnology.'' This document suggests that
    efforts should be made to improve the capability of regulatory
    authorities, particularly in developing countries, to assess
    and manage the safety of GM foods as a result of European
    protectionism, and in an effort to stem the tide of biotech
    through questionable arguments not grounded in scientific
    principles.
        This comes at a time when our U.S. Trade Representative,
    Mr. Zoellick, is weighing a World Trade Organization challenge
    to European countries' unwillingness to accept U.S. biotech
    products. Apparently, also, Dr. Henry Miller, from Stanford
    University, said that ``the Codex has purposefully ignored
    scientific principles and the basic axiom that the degree of
    regulatory scrutiny should be proportionate to the risk, and as
    a result,'' he said, ``a country that wished to block trade in
    gene-spliced foods for any reason can defend against challenges
    of unfair trade practices simply by demonstrating this
    referring to Codex.''
        Apparently, last year in our appropriation bill, the other
    body put an additional $500,000 into the Commission;
    unfortunately, it helped them make their case against us.
        I just wondered what your reaction to that report is and
    how we can work together with USTR to make sure those markets
    stay open.
        Dr. Penn. Well, I have got several reactions, and you
    raised some pretty critical points.
        First of all, with respect to biotechnology, we at the
    Department are convinced of the scientific soundness of
    biotechnology. We are very supportive. We think it is probably
    the greatest technology for agriculture ever, beyond any that
    we have ever seen before, and that we have only seen the tip of
    the iceberg.
        Now, having said that, there is a matter of consumer
    acceptance, and there is a matter of getting this technology
    fully rolled out and of trying to do that in a way that does
    not interfere with trade.
        Now we have argued, and others before us have argued, that
    we should employ a sound science base in trying to determine
    the sanitary and phytosanitary provisions that govern trade.
    Once you move away from a sound science base, then everything
    becomes arbitrary. So we are adamant in insisting upon that.
        We have tried to develop international bodies, where there
    can be agreement on this sound science basis. The Organization
    of International Epizootics for animals, governing livestock
    diseases and things of that nature, is one. There is an
    International Plant Protection Convention, which governs
    diseases and tests on plants that are internationally
    recognized.
        And we think that Codex, in a similar sense, should be an
    international technical body, not a political body, not a
    negotiating body. Mr. Tom Billy, as you know, from the United
    States, is the chairman of Codex for this year and next year,
    and he is of the same mind, of course, and is very actively
    trying to make sure that Codex adheres to the technical aspects
    and not the political aspects.
        So we are trying, where we can, to keep the trade policy
    and the trade negotiating aspects over in the WTO and to try to
    keep the international scientific standards over in other
    bodies that are more suited for that. So, to the extent that we
    can bring that about, then maybe we can get the developing
    countries, our other trading partners, everybody, to use sound
    science and international conventions in setting the standards
    for these products.
        We certainly hope that is the case for biotechnology
    because it is such an important new technology.

                          FARM SERVICE AGENCY STAFFING

        Mr. Latham. I appreciate that.
        A couple of quick questions on the Farm Service Agency. I
    have heard from some of the local county office employees about
    the lack of funding out in the country, and while we have built
    up a lot of bureaucracy here in Washington. Outside of
    Washington where the people are, where the rubber hits the road
    and there is real contact with farmers, we have really shorted
    those folks. It seems that a lot of work is done by temporary
    people in new jobs that they have to assume all of the time,
    with continual new training all of the time. Certainly, I would
    encourage emphasis on putting money out in the country, rather
    than having more bureaucracy here.

                                 E-LDP PROCESS

        I would also like to have you comment on a proposal about
    the e-LDPs and how that is basically going to bypass the local
    office and if there is going to be any scrutiny of these LDPs.
        Mr. Little. On the electronic Loan Deficiency Payment
    process, which is currently being tested, we hope to deploy
    that within the next month or two. It is not going to bypass
    the county office. The producer will have to come in before he
    can get access to the electronic process. He will have to
    actually sign up for the process and indicate to the county
    office, this is my yield for this particular crop, this is what
    I expect to initiate LDP payments for. We will basically be
    giving him a drawing account for his maximum LDP benefits.
        He will get a password to log into the system, and then
    once he actually starts marketing the commodity, he will be
    able to get on-line at home and start drawing down on
    individual LDPs.
        The information that is processed in our Kansas City office
    will be certified by the producer. Clearly, you are correct
    that they in Kansas City will not know exactly whether the
    information is valid or not, but they will know the maximum the
    county office has set for them to draw upon. So, based on the
    certification that the producer is actually indicating on line,
    the Kansas City system will start drawing down on the account.
    The information is transmitted back to the county office. The
    county office has access to it. It will become a part of the
    producer's local record. So the process is not cutting the
    county office out.
        With respect to knowing exactly whether or not it is an
    accurate payment, we believe that we have controls in place
    that are going to ensure it. If the producer has a problem, he
    is not going to be going back to Kansas City to correct it. He
    is going to be going to the county office. Since the county
    office will have the information there, they will be able to
    take care of any issues on it.
        Mr. Latham. I think a major concern is that the county
    offices are going to clean up the mess after it happens, and
    there are no controls. I am all for technology, but I can see
    real problems out there.
        Mr. Little. We realize there will be maybe some bumps in
    the road as we first start this out, but we really believe down
    the road we are going to be accountable for it. We believe it
    is going to free time up in the county offices. Once a producer
    has signed up, it will save him from having to fax his LDP
    request in or come into the county office to actually process
    it. It isgoing to free time up from the county offices'
    perspective, it is going to free time up for the producer. And we
    really believe that we will have controls in place so that the time
    required for clean-up is going to be minimal. That is the way we are
    looking at it.
        Mr. Latham. But you are not expecting the people in Kansas
    City then to really look at anything other than rubber stamp.
        Mr. Little. I believe that they will be looking at what the
    maximum is that they can draw down, and making sure what the
    commodity that they say they are going to be drawing the LDP
    upon is going to be. There will be areas that they will be
    checking.
        Mr. Latham. You can have a computer do that, once the light
    goes off. I have got concerns about it.
        Again, I want to emphasize that I want to see people out in
    the country actually interact with and help the people. That is
    where our safeguards are in the system.
        Mr. Bonilla. Thank you, Mr. Latham.
        Mr. Latham. Thank you.
        Mr. Bonilla. Ms. Kaptur.
        Ms. Kaptur. Thank you, Mr. Chairman.
        Again, I go back to one of my basic themes this morning,
    and that is whether there is a foreign policy consciousness at
    the USDA, as opposed to only a foreign sales consciousness.
        Dr. Penn, you have incredible background it appears with
    Dr. Balog in Poland, where farmland was never collectivized.
    But as we move east into Russia, and Ukraine, and some of the
    other countries, surely the situation was different. There is
    no memory of the private market. And as I look at USDA's
    activities in that part of the world over the last decade, I
    want to make a part of the record the fact that of USDA
    assistance into that part of the world in the form of food
    commodities, for example, either through our 416 program or PL
    480, there is 45-times more emphasis on Russia than on Ukraine.
        Now, from a foreign policy standpoint, I do not think that
    is a very wise posture to be in. I think there should be
    equity. I think there should be an evenhandedness, and surely,
    in terms of conversion of the former collective farms, the
    experience is pitiful. Now the World Bank and others are
    engaged in land-titling reform, but without the technical
    assistance to help people function in a market economy, it will
    not happen.
        I just wanted to point this out and to ask if you might
    consider writing the Committee or us a letter, where you might
    sketch out the perspective of USDA toward the former
    collectivized countries and what USDA might do over the next
    few years in regard to the conversion of those collectivized
    areas, what we can do to help move them toward a market
    economy, perhaps it is signing agreements with AID, but again I
    know the expertise is not there, and then also in the
    assistance that has been given to strengthen the NGO sector
    which is absent.
        I tried to get seeds into Russia, into villages, during
    this period where production has been reduced by about 80
    percent and cannot do it. There are no networks to deliver it
    that one can really trust, so I would just ask for your help
    there. I would also ask for your help on our own continent.
    This past weekend again there were uprisings in Chiapas, and
    we, through APHIS, there is a screwworm facility down there to
    eliminate screwworm on the continent, as you know. Through the
    Clinton administration and now through the Bush administration,
    there is not much vision in terms of how we might use
    agriculture to help stabilize a really very tender and
    difficult situation there. But in my own mind, without
    question, agriculture is at the basis of a better future for
    the people there.
        So, if you have any suggestions of how we might better use
    our resources in the Chiapas area, how we could broaden what is
    being done at the screwworm facility, which is a very specific
    function, but at least it has placement and has continuity. The
    facility is not owned by us, but by the Mexican Government. We
    rent space in it or something like that. It just seems to me
    that in the area of tropical fruit production or technical
    assistance, we could be doing something to contribute to a
    safer and better world.
        If you have any comments on either of those, either the
    former Soviet Union or Chiapas, I would welcome them.

                      AGRICULTURE AND ECONOMIC DEVELOPMENT

        Dr. Penn. Let me say just very briefly, as you indicate, I
    have had a lot of experience in what we used to call Eastern
    Europe and also have experience in Russia and Ukraine, and I
    accept your comments. I would be happy to prepare a letter in
    which I lay out some views because, for an economist, the
    situation was absolutely fascinating to see how Poland
    developed so quickly and why Russia and Ukraine have not
    developed, and we are now more than 10 years past liberation.
    So, anyway, I would be pleased to do that.
        In terms of Mexico, let me just say that there is a new
    initiative that is being led by President Fox and President
    Bush called Partnership for Prosperity. Two weeks ago, Mexican
    counterparts to USDA came, and we spent a couple of days
    discussing how we might encourage investment, how we might
    encourage trade, and how we might encourage development that
    would bring new technology and bring new opportunities for the
    most remote regions of Mexico, including Chiapas. So there is
    some attention being given to that.
        I think the problems that they face in those regions and
    how those problems spill over to the United States, in terms of
    out migration, and border crossings and things of that nature,
    are well recognized. So, to the extent that you can create
    economic development in the Chiapas and other regions, then you
    help solve a lot of problems. There are some efforts under way
    in that regard.
        Ms. Kaptur. If I am not mistaken, that facility, our
    screwworm facility, employs the largest number of people in
    that region. It is not the prettiest work in the world, but at
    least it is work, and it is income. If we have any positive
    presence, maybe we could build on that. That is why I would ask
    you to comment on how we might use that or some other
    initiative that might help contribute toward a better future
    for the people there, and frankly a better future for ourselves
    as well.
        Mr. Chairman, I have other questions, but I do not want to
    not allow others to ask theirs.
        Mr. Bonilla. Thank you, Ms. Kaptur.
        Mr. Nethercutt.
        Mr. Nethercutt. Thank you, Mr. Chairman.
        Ladies and gentlemen, welcome. I am sorry to have missed
    your testimony. I had conflicting hearings this morning, but I
    appreciate your being here.

                    USE OF EXPORT ENHANCEMENT PROGRAM FUNDS

        Let me ask about the question of EEP, Export Enhancement
    Program funds. We have had EEP in the budget and appropriated
    for years. If I am not mistaken, it is $478 million in the
    fiscal year 2003 budget request. These funds are rarely used.
    We used a bit for a barley account 3 or 4 years ago. What is
    your take on EEP? Are we ever going to use it? Why are we
    keeping it in the budget if it is not going to be used to help
    our farmers? What is your philosophy and what is your intention
    with respect to EEP funds and the utility of them?
        Dr. Penn. Well, let me make a couple of observations, Mr.
    Nethercutt.
        First of all, you know the history of how we came to have
    the Export Enhancement Program. I mean, it was one of the major
    tools that the U.S. Government used to bring the Europeans to
    the table in the Uruguay Round agreement, when it became pretty
    clear that we had a war between the treasuries of the two
    countries and that basically we were not doing either one any
    good, but we were just spending the taxpayers' dollars.
        So, after having successfully concluded the Uruguay Round
    and having put some discipline on export subsidies, I think it
    became the position of the Governments at the time to not use
    the Export Enhancement Program funds, that they had served
    onemajor purpose.
        But a second, and perhaps even more important, point is
    that the economists tell us that it would not do any good to
    spend that money. It was largely used for wheat, and given the
    fundamentals of the wheat market today, we could probably
    subsidize a lot of exports, but it would only benefit the end
    user. It probably wouldn't benefit the American farmer very
    much. We are already pretty competitive in the wheat markets
    and probably the only effect would be to drive down the price
    for all of our wheat crop, not just for the marginal amount
    that gets exported.
        So I think the fact that the trade situation has
    stabilized, and that we are into a new round of negotiations
    where the elimination of export subsidies is on the table, is
    one reason for not using the EEP. The second reason is just the
    efficacy of the program. I think there are some legitimate
    questions as to whether it would be of any benefit to American
    farmers, especially wheat farmers.
        Mr. Nethercutt. I think you have some wheat farmers in my
    district who grow, and sell, and export soft white wheat who
    may disagree with you. Assuming that what you say is the
    position of the Administration, why are we budgeting $478
    million? Why not spend that money on some other account that
    would be better for production agriculture?
        Dr. Penn. Well, I cannot answer that precisely, but I think
    part of the reason is that it is an arrow to have in the
    quiver. I mean, if the European Union started misbehaving, for
    instance, we could always very quickly utilize the funding that
    we have. I think it is a threat.
        Mr. Nethercutt. So your assumption is they have not been
    misbehaving in the last year that you have been in the
    Administration and the prior years? I know Secretary Glickman
    did not want to ever use it. My sense is it is there as a tool,
    we ought to use it as a tool, and in the proper conditions.
        Dr. Penn. I think, as I said, when we concluded the Uruguay
    Round agreement in 1994 and started implementing it in 1995,
    then there were limits placed on the amount of subsidies that
    could be used, and then they have to be reduced, and they have
    been reduced every year for the past 6 years.
        And so in 2001, we had fully implemented the Uruguay Round
    agreement, and now we have the new Doha Round which is to try
    to build upon that, and it is the intent of the U.S. to try to
    bring about the complete elimination of export subsidies. As
    you rightfully indicate, the European Union uses export
    subsidies far more than anybody else in the world.
        Mr. Nethercutt. Right, I understand. Well, maybe we better
    have further discussion on this one.
        Dr. Penn. Okay.
        Mr. Nethercutt. Let me ask a second question, if I may.
    Administrator Terpstra, maybe this is the one for you. I have
    talked to Secretary Veneman here in this hearing, a prior
    hearing in this room, with respect to our competitive nature
    with other nations who use a single-desk system in the
    marketing of their commodities. My perception is we get the
    short end of that stick because it takes us so long to deal
    with State, and with Treasury and Ag in securing a sale and
    issuing a credit so that we can capture a market. Pakistan, in
    particular, sticks out in my mind. I think we have lost several
    hundred million dollars' worth of sales to other competing
    countries, because we have been slow to pull the trigger, so to
    speak, and I am frustrated by that.
        I think the testimony we have taken here is, we have got to
    work better on that, and we are trying our best to have some
    seamlessness between the agencies. But, again, respectfully I
    refer to the State Department. I noticed in the newspaper this
    morning, the Washington Post, that Mr. Reich as under secretary
    made a rather negative comment about ag sales to Cuba. I know
    he has a secondary motivation to make those comments. And some
    of my colleagues may disagree with me on this issue, but I
    happen to think it is a market that is available to our farmers
    to take that money from this Communist dictator, and in turn
    give him, I should say the country, the people of Cuba, our
    American products that are superior to those that are grown in
    China and Vietnam.
        So I am going to get beyond this in a little while and deal
    with it later, with respect to Mr. Reich's exclamations, but it
    seems to me we are missing the boat if we have State
    Department, Treasury Department, and Ag Department not
    coordinating and communicating well, and one agency frustrating
    the decision making that needs to be done to capture a market
    to help our farmers. I know you have worked in the rice
    industry and the apple industry. Well, they are going to buy a
    thousand metric tons of apples from my State, and 20,000 metric
    tons of peas. That means a lot to our farmers.
        So having vented here a little bit, maybe you could give me
    your impression or the Committee your impression about the
    feasibility of really doing something substantive to have this
    seamless policy occur and capture sales and markets abroad,
    which is your job.

                            CAPTURING OVERSEAS SALES

        Dr. Penn. Do you want to answer that?
        Mr. Nethercutt. Or anybody, not just you, I mean, whoever
    wants to answer it.
        Dr. Penn. Congressman, let me say that Administrator
    Terpstra is in her ninth day on the job, and so we want to save
    her for a later date.
        Mr. Nethercutt. I am sorry. Forgive me. Forgive me. Does
    anybody else care to comment?
        Dr. Penn. Just give her a little grace period, and then she
    will be all yours, but today we will protect her. [Laughter.]
        Mr. Nethercutt. I am respectful in my questioning, but I
    just think it is a big problem, and we need to try to capture
    markets.
        Dr. Penn. Let me ask you, help me understand what you mean
    in the first part of the question about the lack of
    coordination among the departments in capturing markets.
        Mr. Nethercutt. The single-desk mentality of the Canadians
    and the Australians for sure, they virtually sit next to each
    other, and they say, ``Let us cut through all of the
    bureaucracy, and let us go get this sale. And if Pakistan
    tenders, let us go get it, and we will grant the credits, and
    we will counter whatever needs to be done by others, and we
    will get the sale.'' That is what I mean.
        And it seems to us by the time you make the decision to
    secure a sale and issue the credit, you have got to get State
    to approve, and then you have got to get Treasury to approve,
    and by then, too late, lost the sale.
        Dr. Penn. The export credit programs. I did notunderstand
    the reference at the beginning there.
        Well, I am going to ask Mary Chambliss, you know, she has
    been here a long time, and I would just say we will try to do
    better next year, but I will let her answer. [Laughter.]
        I will let her respond.
        Mr. Nethercutt. I do not want you to wait until next year.
    We will follow up after the hearing, but go ahead.
        Ms. Chambliss. Thank you, Congressman.
        Maybe I can shed just a little bit of light because you
    have mentioned a complex of issues, I think, the State trading
    versus the situation in Pakistan. I am familiar with the
    situation that occurred in Pakistan when the Australians got
    the wheat business. I think that is what you are referring to,
    right?
        Mr. Nethercutt. Yes.

                        EXPORT CREDIT GUARANTEE PROGRAM

        Ms. Chambliss. We do have the export credit guarantees, our
    GSM program. Just for the record, we do not seek interagency
    approval on the GSM programs. We, in the Department, are
    responsible. We do seek information from other agencies,
    particularly Treasury, on the financial situation of a country
    because we are incurring risk on behalf of the American
    taxpayers, so it is part of a process, but we do that early in
    the year, and we announce lines.
        We shared your disappointment. We made some special efforts
    in the GSM program with Pakistan at that point in time to
    extend the length of time of the guarantee. We did a number of
    things that we sincerely hoped would assure that that purchase
    came to the United States. At the end of the day, the Pakistani
    financial analysis believed that they got a better deal with
    the Australians. What all of the components of the deal were, I
    do not know, but we certainly did have the program out there to
    respond quickly. I think we generally can with the GSM program.
    So just so you know it does not go through an interagency
    process.
        In countering our colleagues in the State Trading
    Enterprise--STE arena, obviously, as Secretary Penn has noted,
    one of our objectives in the next Doha Round is discipline on
    STEs, is transparency of what is happening. I think that is
    what we need as much as anything to understand how to counter
    that, so we are going to continue to work on that aspect.
        Mr. Nethercutt. Thank you.
        Thank you for your forbearance, Mr. Chairman.
        Mr. Bonilla. Thank you, Mr. Nethercutt.
        Mr. Nethercutt should wear a badge of honor for always
    advocating opening more markets for our producers in this
    country. I think there is not a year that goes by or a week
    that goes by that he is not pushing very hard for that.
        I believe Ms. Kaptur has a couple of remaining questions,
    and I will yield to her at this time.
        Ms. Kaptur. Thank you, Mr. Chairman.
        Dr. Penn, I will look forward to hearing from you on which
    of your accounts would be the most important to augment to make
    USDA's impact in the foreign policy arena more significant. I
    have also asked, if you could, to please give us your
    perspective on Russia and Ukraine and the Department's approach
    in those two countries over the next few years.
        I have asked you on the Chiapas situation for comments. I
    forgot to also request, though I mentioned it, Lebanon, and
    your recommendations on what we do to try to replace the fields
    that have been burned, the hashish fields, and what actions we
    might take or how we organize ourselves to address that
    situation, which has been lingering for a very, very long time.

                                    BIOFUEL

        I wanted to shift gears, if I might, on the domestic front.
    My own view is that one of the reasons that we have this
    situation that we are dealing with in Central Asia and the
    Middle East is for too long oil and petroleum imports have been
    an excuse for our foreign policy. That is my own perspective,
    others may disagree, but I have some numbers to support that.
    In the past year, I think we had about a $60-billion trade
    deficit in petroleum which continues to be a large and growing
    share of our overall international trade deficit.
        I have been as strong an advocate as I know how for the
    development of biofuels. I am not the only person supporting
    this. Senator Lugar has been a real leader in our country in
    this regard. In fact, his article I commend to you that was
    written in Foreign Policy magazine, 1999, along with former CIA
    Director James Woolsey, called, ``The New Petroleum.'' I put it
    in the Congressional Record again last Tuesday evening. But it
    talks about the absolutely critical need for us to move more
    quickly in the biofuels arena.
        I would like to ask you, in the testimony that you have
    presented today and as you look at the future in terms of what
    you had jurisdiction over, what in your submission today deals
    with a new fuels future for America based in agriculture. I
    would also like to ask you to comment or any of your associates
    on the $150 million that was put in the Commodity Credit
    Corporation account for ethanol and biofuels over the last year
    or so and how that has been used.
        Dr. Penn. Let me just respond to the last point first.
        As you noted, there has been a 2-year program funded from
    CCC for $150 million each year to encourage additional
    production of biofuels and at the same time to utilize the
    products of American agriculture. The first year of that
    program has been completed, and it did result in additional
    fuel production and the utilization of agricultural products.
        The second year is just under way. I think that the
    allocations were just made, Jim, and the proposals accepted----
        Mr. Little. Last week.
        Dr. Penn [continuing]. Last week. So I am pretty timely
    here. The second year of that program is being unfolded. I
    think the only change from the first year is that the rendering
    industry was included for participation in the second year. So
    that program is well under way.
        Now the scene shifts to the farm bill, and as you know,
    there has been lots and lots of discussion about an energy
    title in the farm bill, about biofuels, renewable fuels, and at
    USDA we have been very involved in the energy area. We have
    been very actively involved, especially through the Office of
    the Chief Economist, and so we have had a lot of input with the
    Agriculture Committees as these discussions have taken place.
        We have tried to look at what might be some novel and
    unique ideas and some cost-efficient ways to do exactly what
    you are suggesting, to encourage greater development of
    renewable fuels as a new market for agriculture. I mean, we
    have had the food market for a long time, and here is an
    industrial product market that could be expanded.
        So there is a lot of activity in that area, and I think at
    this point the objective is accepted. The idea is to find
    programs that are workable, that are cost-effective ways to use
    the taxpayers' money.
        Ms. Kaptur. I would urge you, though I have been
    unsuccessful myself in this regard, to engage in some
    discussions with the Department of Interior and the Strategic
    Petroleum Reserve administrators over there. Because we must
    spend--I do not remember the number any more--it is over $175
    million a year just for maintenance of storage of our reserves.
        I have proposed amendments several years in the
    Appropriations Committee to swap some of the oil in the reserve
    and use the proceeds to purchase biofuels. If we had done that
    3 years ago we would have doubled ethanol and biodiesel
    production in this country. The excuse we are given by Interior
    is, ``Well, you know, first of all, it is not our mandate,''
    but the other one is, ``Well, we cannot store it. There are
    problems with ethanol. There are problems with biodiesel.'' We
    all know there are problems everywhere, but the point is we are
    frozen in the petroleum age, we cannot get out of it, and USDA
    has to help lead us out of it.
        And if there is any way you could even spend some time over
    there and talk to some of those folks, even encourage them to
    use soy diesel in some of the vehicles that they power, and by
    the way our Forest Service does not do a very good job of that.
    We asked them that question when they were up here the other
    day, and they are one of the biggest buyers of vehicles in this
    country. They are not even ethanol and biofuels conscious. It
    is a part of the Department of Agriculture, so I cannot even
    imagine what part of Interior is thinking, but I just wanted to
    encourage you along these lines.
        Could you be a little more specific to tell me, of the
    purchases that were made, what really happens? What really
    happens when CCC expends those dollars?
        Dr. Penn. I am going to ask Mr. Little to provide you with
    the details.
        Mr. Little. Companies which produce biodiesel fuel enter
    into an agreement with the Commodity Credit Corporation where,
    if they are going to increase production of biodiesel from
    eligible commodities, we will reimburse them for part of their
    increased purchase of eligible commodities. So, in 2001, we
    were able to increase the use of eligible commodities. We
    increased the production of bio-diesel fuel by 6.4 million
    gallons by purchasing 4.6 million bushels of soybeans.
        Dr. Penn. We basically subsidize the price of the
    feedstock. So we make it cheaper to buy the feedstock, whether
    it be corn or soybeans or whatever, so that they can produce
    additional product. This has to be new production, not what
    they were doing last year, but an expanded amount, and we make
    it feasible for them to do that.
        Ms. Kaptur. So you are saying, if you have an ethanol plant
    in Minnesota or Indiana, that you somehow make it cheaper for
    them to buy their feedstock that goes into the process?
        Dr. Penn. That is exactly right, if they are going to
    expand their capacity, if they are going to expand output, so
    that we get new output. We do not want to just subsidize the
    output that they are already doing, but we want to encourage
    them, as you suggested, to produce more.
        Ms. Kaptur. Mr. Chairman, I take it you want to ask some
    questions or turn it over to Mr. Nethercutt.
        Mr. Bonilla. Mr. Nethercutt has a remaining question or two
    as well.
        Did you have additional questions?
        Ms. Kaptur. I do, but I am happy to yield to him.
        Mr. Bonilla. Mr. Nethercutt.
        Mr. Nethercutt. Thank you, Ms. Kaptur. Thank you, Mr.
    Chairman.
        Mr. Little, I want to commend to you Jim Fitzgerald, who is
    doing a great job out in our part of the country with FSA and
    the good committee. He is a fine good and really is committed
    to the Agency. He wants to do a good job, and so you have got a
    good man out there.

                           RISK MANAGEMENT EDUCATION

        I would say, Mr. Davidson, it seems to me that the risk
    management education for farmers is a good thing and that maybe
    the best way to implement is through the extension system. I
    think the extension system can do a good job in helping our
    farmers with their risk management. Would you agree with that?
    Does that make sense to you?
        Mr. Davidson. I think you are correct. It is something that
    is in place right now. There is a relationship.
        Mr. Nethercutt. Right.
        Mr. Davidson. There is a trust, and to the extent that that
    can be a good delivery system, we would like to use it. We have
    done quite a bit in expanding the education system over the
    last little while, as prior legislation has encouraged us, and
    you have provided us funds to do, and I am pleased to say that
    we have spent those funds wisely.
        Mr. Nethercutt. Are you encouraged by the progress that has
    been made in risk management for farmers in the education part
    of it?
        Mr. Davidson. Well, I think education is the foundation of
    risk management. If the farmers are not aware of ways in which
    they can deal with the many risks that are presented to them,
    we can help them out.
        Mr. Nethercutt. No, my question is are you satisfied with
    the progress that has been made so far?
        Mr. Davidson. No, I do not think we ever should be
    satisfied.
        Mr. Nethercutt. So you think there is more we can do?
        Mr. Davidson. Yes.
        Mr. Nethercutt. Do you have some plans for this year?
        Mr. Davidson. Yes, I will provide the plans for the record.
        [The information follows:]

        RMA is planning to establish educational partnerships for crop
    insurance and risk management education programs this year, enlisting
    the assistance of State agriculture departments, universities, and
    other public and private agricultural organizations. The first program
    will reach U.S. producers of speciality crops and underserved
    commodities with broad risk management training, and the second will
    reach agricultural producers in 15 underserved States with a program
    focused on crop insurance education and information.

        Mr. Nethercutt. One final question or comment.
        Ms. Chambliss, I appreciate your comments about the whole
    trade situation. I think the fact that in light of the legal
    embargo that was imposed on Pakistan 4 years ago that the
    Congress turned around and lifted in the aftermath of their
    testing perhaps can be credited in some part with the
    cooperation that our country has received from Pakistan in our
    latest war effort.
        So my point to you is, and to all of you, is I think
    agriculture is a national security issue. And relationships,
    and trade relationships, and capturing markets, and granting
    credit, all of that has a benefit to our national security
    because we do not know what we are going to need downstream.
        I will also, Dr. Penn, I noticed the comments that you made
    in Australia, with respect to the relationship between
    Australia and the United States, and the relative assistance
    that our farmers receive versus the Australians. Frankly, I
    think the Australians, as you indicated, have a pretty good
    deal. They are getting a benefit as it relates to dealing with
    markets around the world, and we have to be a very tough
    competitor, and that is why I think vehicles like EEP may be
    necessary and other tactics that we might have to encourage
    sales and prevail over the competitive nature of the world
    markets. So I appreciate your thinking through that as youdo
    your job well.
        Dr. Penn. Thank you.
        Mr. Nethercutt. Thank you, Mr. Chairman.
        Thank you all.
        Mr. Bonilla. Thank you, Mr. Nethercutt.
        Ms. Kaptur.
        Ms. Kaptur. Thank you, Mr. Chairman.

                             SYMPOSIUM ON BIOFUELS

        I wanted to invite Dr. Penn and any of your associates to a
    conference, actually a symposium, that Congressman Nick Smith
    of Michigan and I are hosting at the Ohio-Michigan border on
    the subject of biofuels. We are looking for which individuals
    from USDA we could invite who could present a complete picture
    of what USDA is doing in the area of building a new energy
    future for America. We were not quite sure who to put on that
    invitation list, but we are exceedingly interested in the
    topic.
        Obviously, Mr. Smith serves on the authorizing committee as
    the chairman of the Research Subcommittee. I sit over here, and
    we have a region vitally interested in this question. As I
    listened to your comments about the CCC, for example, and its
    role in biofuels, yesterday we had the transit authorities of
    our State in our offices, and my own local transit authority is
    saying to me, ``Marcy, we will make biofuels, in order to help
    contribute to a new future for America, 20 percent of the
    volume we purchase annually. What do we buy, and where do we
    buy it, and are our engines properly suited? Will the Cummins
    engine work with soy diesel?''
        I said, ``Do not ask me.'' But those are the questions, and
    we want to get that specific, and we want to aggregate demand.
    We want to help to build this industry in our region. We want
    your help in how to do it. So, if there is any way you can
    think about who at USDA might be the best persons to work with
    us, we would be most grateful.
        I wanted to turn, if I might, just for a second to a
    continuing concern of mine which the Secretary has been
    sensitive to, and that is if you look at the overall budget of
    USDA, two-thirds of it is in nutrition programs and a third of
    it in production agriculture programs. It has been a continuing
    cause of mine to get the nutrition side of USDA to talk to the
    production side of USDA, and it is very hard to do.

                    SENIOR FARMERS MARKET NUTRITION PROGRAM

        Example: Yesterday I was out in my community at a major
    announcement of our Senior Farmers Market Nutrition program for
    this summer, and we had all of the farmers, potato growers, and
    apple growers, and vegetable producers. I was asked questions
    like, ``Well, can we sell cider, if we sell apples? Can we sell
    honey?''
        I said, ``I do not think so, but I have got to go back to
    Washington and check.'' And this Senior Farmers Market
    Nutrition program is so popular with specialty crop producers.
    These are not necessarily row crop producers, but they are the
    farmers that live in our area. What is very interesting about
    them is they do not get any subsidies from the Government
    because they are specialty crop producers, but they are the
    ones that provided the food to our food banks. They donate
    their commodities, and there is no Federal program--if there is
    one, let me know--where they get credit or a payment for
    donating food to the food banks. The food chains, for the most
    part, do not. When we put out a plea across our community to
    help feed the hungry, the farmers come forward.
        And so when I see the very same people who donated to our
    food banks being the ones that benefit from the Senior Farmers
    Market Nutrition program or the WIC Farmers Market program, I
    know I have hit a home run.
        And so, Mr. Secretary, my explanation this morning is, A,
    to inform you of how those programs impact, but they are so
    terribly small. The Senior Farmers Market Nutrition program,
    according to legislation we passed last year, asked the
    Commodity Credit Corporation to expend approximately $15
    million, and then we appropriated an additional $10-, For a
    total of $25 million. It is really nothing across the country,
    and I have letters here from Congresswoman Clayton that I am
    going to submit for the record.
        [The information follows:]

                  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        I have information from other States where we cannot expand
    these programs.
        Mr. Little knows the trouble that our farmers are in, in
    every single region of this country. These programs put real
    dollars into their pocket. They deal directly with consumers.
    They need to be expanded. We need to find a way to do that. We
    can feed the people in our community who do not have enough
    money to purchase good fruits and vegetables, and we need to
    find direct income sources for our farmers. There are not
    better programs that I have found anywhere.
        My question to you is why does the Department appear to be
    hesitant in expending funds out of CCC to expand the Senior
    Farmers Market Nutrition program this year and for next year?
        Dr. Penn. Well, let me say that is an unusual program in
    that its genesis is on the food assistance side of the
    Department, not on the farm or commodity side of the
    Department, as you suggest. So the responsibility for the
    program is in another mission area, but like you I have heard
    only good things about the program. Virtually everybody who
    talks about it says good things.
        The State Commissioners of Agriculture met a couple of
    weeks ago, as you know, and I saw several of them, and almost
    to the person they mentioned what a great program it was in
    their area.
        We do have under consideration at the current time some
    supplementary funding, funding that would augment the amount
    that has been appropriated. That is in the decision process
    within the Department, but as you know, we have to make
    recommendations to OMB and go through the interagency process
    to get all of the approvals for that. We are in the process of
    doing that at the current time.
        Ms. Kaptur. I believe, Mr. Secretary, that that is under
    your jurisdiction. I might be incorrect in my understanding,
    but----
        Dr. Penn. Well, let us ask Mr. Dewhurst, who seems to know
    all of these arcane matters here.
        Mr. Dewhurst. The CCC funds that help support that program,
    of course, come out of this jurisdiction, but the overall
    management of the program is charged to the Food and Nutrition
    Service. So it is a mixed responsibility.
        Ms. Kaptur. Well, all right, then I think it is important,
    and I will place on the record, nine programs that were not
    funded: Connecticut, Florida, New Jersey, North Carolina, South
    Carolina, West Virginia, Oklahoma, Grand Traverse Indian
    Nations in Michigan and now Wisconsin, along with States like
    my own only having the program operating in one region because
    the squeaky wheel gets the oil.
        But the point is, and I think the fact that it is
    interjurisdictional within the Department is a very important
    issue because this gets back to my question of the
    Nutritionside of Ag being able to talk to the Production side of Ag,
    and the Farm Service Agency can do a whole lot to help to cause these
    discussions to occur at the local level.
        I wanted to mention, also, other programs like the School
    Breakfast and Lunch programs, our Temporary Emergency
    Assistance Feeding programs. When the Department bids on those
    programs or sends money to the States, believe me they do not
    talk to the farmers. The farmers never get plugged into the
    equation, maybe one or two places in America, but for the most
    part, farmers are not encouraged, through the mechanisms at
    USDA, to use in my State the hundreds of millions of dollars
    that come down over a 5-year period to provide even apples,
    apples into a school lunch program.
        I know this is not under your jurisdiction only, but it is
    a huge problem, and it is a source of income to our farmers.
    Yesterday, I had apple people come up to me, Ohio apple people,
    and talking about why was it so difficult? And I said, ``You
    know why it is so difficult? Because when the money comes down
    from Washington, it goes to the Ohio State Department of
    Education.'' They know nothing about agriculture. So it is not
    even in their mission. Their mission is feeding children, but
    how do you make the connection?
        One farmer said to me, ``Well, Marcy, you know, I got some
    money years ago under the TEFAP program. I provided some
    commodities. Whatever happened to that program?''
        I said, ``Well, it still exists. You mean, they have not
    been in touch with you?''
        There is something missing in the juncture between your
    side of Ag and the other side of Ag, and I am just highlighting
    it since you are all new, and you can really do something about
    it, and you have new energy and new vision.
        And it needs to get right down into that county office.
    They have got to see this as an opportunity and they have to
    bid on it. In some cases, it will work; in some cases, they do
    not have processing capabilities for some of the foods that are
    required. But I am telling you we are missing the boat because
    the bulk of the money that goes out is in the nutrition
    programs. They have got to meet your producers, and that is not
    happening, for the most part.
        That is it for me, Mr. Chairman.
        Mr. Bonilla. Thank you, Ms. Kaptur.
        I want to thank all of you who have appeared before us
    today and for your patience and willingness to answer all of
    our questions.
        Steve, thank you for always sitting there. Sometimes we do
    not ask much of you, but you are always there when we need you,
    and we appreciate that very much.
        Mr. Dewhurst. Thank you.
        Mr. Bonilla. You help us in our process as we put our bill
    together, and we will be interacting with you beyond today's
    hearing. I appreciate your cooperation and look forward to
    putting together a good bill this year, in a bipartisan way,
    that will help producers and all of the beneficiaries of our
    programs through this bill.
        Thank you very much.
        Dr. Penn. Thank you, Mr. Chairman.
        Mr. Bonilla. The subcommittee stands adjourned.

                  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                              Thursday, March 14, 2002.

                       FOOD SAFETY AND INSPECTION SERVICE

                                   WITNESSES

    ELSA MURANO, UNDER SECRETARY FOR FOOD SAFETY
    MERLE D. PIERSON, DEPUTY UNDER SECRETARY FOR FOOD SAFETY
    MARGARET O'K. GLAVIN, ACTING ADMINISTRATOR, FOOD SAFETY AND INSPECTION
        SERVICE
    STEPHEN B. DEWHURST, BUDGET OFFICER, DEPARTMENT OF AGRICULTURE
        Mr. Bonilla. The committee will come to order. Good morning
    to all who are participating in our hearing this morning.
        Today, this subcommittee takes up the very serious issue of
    food safety for this country. We are going to hear about that
    and the administration's fiscal year 2003 budget request for
    FSIS. I am very delighted to be welcoming Dr. Elsa Murano this
    morning, the Under Secretary for Food Safety, who is appearing
    for the first time. I have to say she is already making a
    tremendous impact in the community. I speak for many who
    appreciate the effort that you already have underway.
        The Under Secretary is a respected microbiologist,
    university professor and a member of several national advisory
    committees on food safety. Dr. Murano, I think your expertise
    is unsurpassed in terms of what you bring to this position, and
    we all hope to learn a lot from you today.
        We also extend a welcome to your colleagues, Merle Pierson,
    the Deputy Under Secretary, and Margaret Glavin, the Acting
    Administrator for FSIS, and of course Steve Dewhurst, who joins
    us again today.
        The job that FSIS inspectors, researchers and auditors do
    is extremely important, and I hope they realize that all of us
    appreciate their fine work. A safe food supply is crucial to
    every one of us, and this Nation has been extremely successful
    in continually raising the level of food safety for its people.
    We look forward to continuing that success, but before we begin
    hearing your opening comments, I would like to yield now to my
    colleague, Ms. Kaptur, for any opening remarks that she may
    have.
        Ms. Kaptur. Thank you. I just wanted to welcome Dr. Murano
    and her colleagues here this morning. We wish you very well.
    Your service to the people of our country and, indeed, the
    world, and there is no more important question, if you look at
    our own jurisdiction, on the minds of the American people, than
    the question of food safety.
        The system we have set in place is one that is the finest
    in the world, and we want to make it better. So we look forward
    to your testimony, and I thank you so very much for being with
    us this morning.
        Mr. Bonilla. At this time, we would be delighted to hear
    your opening remarks, Dr. Murano. We will include your
    statement and Administrator Glavin's statement on the record.
    Please proceed.
        Ms. Murano. Thank you, Mr. Chairman and Ms. Kaptur. I am
    pleased to appear before you today to discuss the fiscal year
    2003 budget for Food Safety within the Department of
    Agriculture.

                           Introduction of Witnesses

        As the chairman said, I am Dr. Elsa Murano, Under Secretary
    for Food Safety, and with me today are Dr. Merle Pierson,
    Deputy Under Secretary for Food Safety; Margaret Glavin, Acting
    Administrator of the Food Safety and Inspection Service, and
    USDA's Budget Director, Stephen Dewhurst. We also have other
    FSIS representatives here, including our deputies who are
    sitting behind us.
        Since this is my first time here, I would like to introduce
    myself to you. I am a native of Havana, Cuba. I am a scientist
    by profession, as you said, having earned an M.S. degree in
    anaerobic microbiology and a Ph.D. in food science from
    Virginia Tech. For the last 12 years, I have dedicated my life
    to the study of food safety, as professor and researcher at
    both Iowa State and Texas A&M University.

                               Opening Statement

        At USDA, our number one goal is to protect the meat and
    poultry supply for consumers here and abroad. Every day 7,600
    inspection personnel insure that plants are meeting food safety
    rules. The Pathogen Reduction and Hazard Analysis and Critical
    Control Points (HACCP) rule has been implemented nationwide in
    plants of all sizes. HACCP represents a significant
    modernization in the way meat and poultry are processed, with
    emphasis on prevention and control of food-borne hazards. The
    success of the rule has been proven in a number of ways.
        First, Salmonella testing data shows that the prevalence of
    this pathogen has significantly decreased in all product
    categories.
        Secondly, data from the Centers for Disease Control and
    Prevention (CDC) shows significant reductions in food-borne
    illness, which CDC has stated are likely due to the
    implementation of that rule.
        We have made headway in food safety, and we are on the
    right track. To help us continue our efforts, the fiscal year
    2003 budget includes a record funding request for the Food
    Safety and Inspection Service of $905 million, a $28-million
    increase above the year 2002. So, as HACCP moves into the next
    stages, we will work to improve it through two overriding
    principles; first, that we use science to guide us and
    technology to continue to improve the safety of meat and
    poultry; and, second, that we have a transparent process, one
    that provides the opportunity for those with different points
    of view to have a forum in which to express them.
        So, today, I would like to discuss five goals that I
    believe will help us to keep going and to take food safety to a
    new level. These are not listed in any specific order because I
    strongly believe that they need to be pursued simultaneously in
    order to achieve our mission of protecting the public's health.
        Our first goal is to improve the management and
    effectiveness of FSIS programs. Last March, FSIS conducted
    reviews of small and very small Federally inspected meat and
    poultry establishments in New York City and the New
    Jerseymetropolitan area.
        This review illustrated two important lessons: One,
    communication within FSIS needs to be open and readily
    available; and, two, we need to improve the accountability of
    our workforce, including management. Their performance
    expectations, lines of authority and accountability for
    assuring compliance with regulatory requirements are essential
    to meet our public health objectives.
        Our second goal is to enhance coordination of food safety
    activities within and outside USDA. We have several efforts
    underway. For example, within USDA we are working to improve
    the coordination of FSIS veterinarians with those in APHIS. One
    effort involves joint training opportunities in foreign animal
    diseases.
        Outside of USDA, we are working with the Food and Drug
    Administration (FDA). As you may know, FSIS and FDA have had an
    agreement in place since 1999 to exchange information on an
    ongoing basis about dual jurisdiction establishments. I believe
    there are other opportunities for us to enhance coordination
    with FDA in these types of establishments to further leverage
    our resources for the maximum public health benefit.
        We are currently working on a couple of initiatives with
    FDA. One includes the possibility of deputizing FSIS inspectors
    to help FDA address threats to the food supply.
        The third goal is to enhance a scientific basis of existing
    food safety policies and systems. Achievement of this goal is
    essential if we are to make sound decisions in protecting the
    public's health. One way to accomplish this is to use risk
    assessments as a way to identify hazards and provide a basis
    for making risk-management decisions. The analyses we make must
    be complete, and the models that are generated must stand the
    rigor of the peer-review process.
        Another topic I want to discuss related to science-based
    policy development is performance standards. Science tells us
    that performance standards are needed, since they serve as a
    measure of the success of food safety programs. For FSIS, they
    serve as an important verification tool for HACCP. However, it
    is not enough to set just any performance standard, we must set
    performance standards that are accurate in terms of reflecting
    when control of hazards has been lost.
        As you know, we have turned to the scientific community to
    get input on FSIS's microbiological performance standards. Both
    the National Advisory Committee on Microbiological Criteria for
    Foods and the National Academy of Sciences are studying this
    issue. Both reports should be completed by the end of this
    year.
        In the meantime, we continue to use microbial sampling as
    one way to verify whether HACCP or sanitation standard
    operating procedures implemented by industry are successfully
    controlling hazards. As you know, our inspectors are charged
    with such verification activities, which also include record
    reviews, visual monitoring of plant personnel and product
    sampling. Since the vast majority of enforcement actions taken
    by FSIS since implementation of the rule have to do with HACCP
    and sanitation failures, verification of HACCP and sanitation
    implementation is crucial to maintaining food safety.
        As part of our efforts to ensure our policy decisions are
    science based and that the process is transparent and inclusive
    of all interested parties, we have planned a series of meetings
    to discuss how FSIS can integrate scientific principles into
    its activities and decision making. In January, for example, we
    hosted a 2-day public meeting to discuss the role of
    epidemiology, and its use in investigating food-borne illness
    outbreaks and initiating product recalls.
        We are planning a scientific meeting for May 7th and 8th to
    discuss the state of pathogen reduction measures, including
    HACCP and to discuss performance standards.
        In addition, we are planning a risk analysis symposium for
    the fall. These symposia will provide an opportunity for an
    open discussion of ideas.
        Our fourth goal is to enhance outreach and public education
    efforts. We will host a food safety education conference in
    September of this year, co-sponsored by the Department of
    Health and Human Services (HHS) and the Partnership for Food
    Safety Education. It will provide an opportunity for food
    safety education and communication leaders from across the
    country to present and share projects, assess current trends
    and plan for the future.
        And last, our final goal is to ensure that our meat and
    poultry are safe from intentional contamination. We have taken
    specific steps to accomplish this. Within the USDA Homeland
    Security Council, we created the Food Biosecurity Action Team,
    or F-BAT, to coordinate and facilitate all activities
    pertaining to food biosecurity and emergency preparedness
    within USDA. In addition, and in partnership with HHS, we
    created the Food Threat Preparedness Network or Prep Net, which
    includes all food safety agencies of the Federal Government.
    Both of these entities, F-BAT and Prep Net, are fully engaged
    in the development of plans to quickly respond to biosecurity
    threats, as well as preparedness strategies designed to prevent
    or contain events to the greatest extent possible.
        And now for the fiscal year 2003 budget request. FSIS is
    requesting a net increase in appropriated funds of $28 million.
    Let me briefly explain the four specific components of this
    request.
        First, $10.8 million is for pay and benefits increases;
        Second, we are requesting $14.5 million to implement the
    FSIS Automated Corporate Technology Suite, FACTS. FACTS is an
    initiative to replace FSIS's existing disjointed information
    systems with a system that has data-sharing capabilities,
    making program data available at all levels of the
    organization;
        Third, our budget includes a $1.5-million request to expand
    risk prevention and management efforts in small and very small
    meat, poultry and egg establishments; and,
        Fourth, our budget contains a request of $1.2 million to
    conduct targeted epidemiological surveys at slaughter
    establishments. As part of this effort, raw product samples
    will be taken at meat and poultry slaughter operations and
    analyzed for the presence of lesions, and drug or chemical
    residues. This information will allow the Agency to better
    assist producers and processors in the prevention of food
    safety hazards.
        Mr. Chairman, I am committed to realizing these five goals,
    and in doing so, strengthening the safety of our meat, poultry
    and egg product supply.
        This concludes my statement. Thank you for the opportunity
    to testify before you on behalf of the Office of Food Safety at
    USDA, and I do welcome your questions.
        [The information follows:]

                  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Bonilla. Thank you, Dr. Murano. I would like to preface
    my questions with a general remark and a suggestion for all of
    you who are answering questions here today, and that is to feel
    free to use charts, graphs or anything like that. We are very
    interested in data, strong data that you may have to present
    this morning, so please do that if the opportunity arises.

                                IMPORTED PRODUCT

        My first question, Dr. Murano, has to do with imported
    meat. There has been a lot of concern lately about meat
    imported from Mexico. I think that people would be more assured
    if they understood the standards, and the checkpoints that we
    have in place to make sure that our meat supply is safe. I
    think people would also be surprised to hear what a small
    percentage of meat we are talking about that is consumed by
    Americans in this country that comes from Mexico.
        So can you tell us about the checkpoints along the border
    that FSIS has and whether or not we should be scared.
        Ms. Murano. Surely. I would be happy to.
        Let me begin by explaining a little bit about our system.
    It is a system based on equivalence, and it is a three-pronged
    system that we believe works very well.
        No. 1, when a country wants to export meat or poultry to
    us, to the United States, they have to submit to us evidence
    that they have an equivalent inspection system to what we have
    here in the United States. That means having an inspector in
    every plant, that means having a food safety program such as
    HACCP, and sanitation procedures, good manufacturing practices
    and so forth.
        The second, or I suppose as part of that first prong, is
    that we not only get these assurances from the country that is
    planning to export to the United States, but we actually go and
    visit that country and verify for ourselves if, in fact, they
    do have the infrastructure, with inspectors, that they follow
    the food safety methodologies that we follow, that they have a
    system like HACCP and sanitation operating procedures and so
    forth. At that point, they are approved to export to the United
    States.
        The second part of this three-pronged approach is the
    reinspection of products within our borders at about 124
    inspection houses here in the United States. And our
    inspectors, as product comes from Mexico, let us say, reinspect
    that product.
        The third approach or the third part of this equivalence
    system is that we do at least annual audits of those countries
    that export to the United States. That means we send a team of
    our experts to the country to do audits of several plants. If a
    country has very few plants that are exporting to the United
    States, we will visit every single plant. Countries that have a
    lot of plants, we will visit a certain number of plants
    designed by statistical analysis to be representative of that
    country. So it is, we believe, a very extensive and systems-
    approach-based methodology to ensure the safety of products
    that are brought into the United States.
        We do not tolerate noncompliance, and when I say ``we,'' I
    mean me. I have been here 4 months as Under Secretary for Food
    Safety, and when I was here hardly a month, we had visited,
    FSIS inspectors, auditors, I should say, had visited Mexico and
    had done an audit and found three of their processing plants
    not to have Mexican Government inspectors on the premises,
    which they are required to have if they are to have an
    equivalent system to ours.
        So the Agency moved quickly to delist those three plants,
    and I took the opportunity, at that time, to make a phone call
    to my counterpart in Mexico, Dr. Javier Trujillo, and spoke to
    him very directly and said to him, in no uncertain terms, if
    you want those three plants to be relisted, you have to act
    promptly and swiftly, put inspectors in there that are
    Government inspectors, and he did. He responded very, very
    quickly. I know Dr. Trujillo to be someone who cares a lot
    about food safety.
        But, you know, trust, but verify. Somebody famous said
    that, I believe, and I certainly ascribe to that tenet. So what
    we have done is every shipment from Mexico, meat and poultry,
    is receiving 100-percent reinspection here at the border by our
    inspectors until we go back to Mexico in April and do another
    audit, basically, and see how the situation is.
        We feel so strongly about this that the Acting
    Administrator of FSIS, and myself, and our congressional and
    public relations officer, went to Mexico last week, I believe
    it was. We visited with Dr. Trujillo, spoke about these issues,
    and toured a few plants. One of the plants was one of the ones
    that had been delisted by us in November that quickly had
    inspectors from the Government put into place by Dr. Trujillo.
    We reviewed very extensively their HACCP plans, certainly, and
    visually inspected or audited the plant, I should say. I have
    done a lot of HACCP workshops in my day before coming to USDA,
    so I can tell you right away when I look at records whether
    these are sound plans or not. And we were certainly satisfied
    that the plant is operating as it should.
        So it is a system that really depends on having a
    relationship with a country where the way in which that country
    responds and whether we can trust their assurances is critical
    to our continuing doing business with them.

                             RESOURCE REQUIREMENTS

        Mr. Bonilla. Dr. Murano, do you feel like the resources
    that you are asking for are sufficient to continue making sure
    the imported meat is safe?
        Ms. Murano. I do, Mr. Chairman, because we have inspectors
    at each of these 124 inspection houses, as we call them, who do
    this reinspection of product. But let me add to that that one
    idea that we discussed with Dr. Trujillo was the possibility of
    perhaps having us send some of our personnel for, say, a month-
    or 2-month-long visit to Mexico just to make sure that things
    are going well and do that for a certain period of time.
        These are the kinds of projects that if we come to an
    agreement to do something like that, then we will probably be
    utilizing some monies that I think we may be able to secure
    through Homeland Security funds because it is, after all,
    protection of the homeland when you are reinspecting product
    that comes from other countries.
        Mr. Bonilla. One more question before I yield to Ms.
    Kaptur. It relates to the safety of the product in our country.

                        SALMONELLA PERFORMANCE STANDARD

        A recent court decision stated that a plant cannot be
    closed down solely in this country based on the presence of
    Salmonella bacteria. I want to emphasize a point the Secretary
    made during her hearing with us here just a few weeks ago that
    this court decision does not impact food safety.
        I want to reemphasize this point, Dr. Murano. Does the
    court decision in this case impact the Agency's ability to
    close down production when a safety hazard is present?
        Ms. Murano. No, it does not.
        Mr. Bonilla. There has been a lot reported, a lot of
    information out there that indicates otherwise.
        Ms. Murano. I realize that. I have read the articles
    myself, and I would like to take this opportunity to
    emphatically make sure everybody hears me when I say we have
    not lost our ability to shut down meat or poultry plants that
    fail to abide by our food safety requirements.
        What we require of plants is to have a sound HACCP plan
    that follows the seven principles of HACCP, and that they
    operate with sanitation standard operating procedures.
        The court decision basically stated that we could not take
    enforcement action based only on the results from our
    Salmonella testing. Now we continue to do Salmonella testing at
    all of these plants because we are using it as a way to verify
    whether a plant has control of the hazards, and the control of
    the hazards, again, takes place through following a sound HACCP
    plan and sanitation operating procedures.
        So the crux of the matter is that HACCP, as I said in my
    opening statement, is really the backbone, if you will, of our
    food safety programs, as well as the sanitation procedures. And
    the microbial testing simply helps us to point our eyes to do a
    very detailed scrutiny of the HACCP plans, and the sanitation
    operating procedures, to make sure that those are meeting the
    objectives of controlling hazards.
        So I can tell you certainly that since the Supreme Beef
    decision, we have continued to take enforcement actions and
    have done that in several instances.
        Mr. Bonilla. Thank you, Dr. Murano.
        Ms. Murano. You are welcome.
        Mr. Bonilla. Ms. Kaptur.
        Ms. Kaptur. Thank you, Mr. Chairman.

                                IMPORTED PRODUCT

        Dr. Murano, according to information I have, the Centers
    for Disease Control estimates that food-borne diseases cause
    approximately 76 million illnesses annually in our country,
    325,000 hospitalizations and 5,000 deaths each year. When we
    have talked with the CDC and others, one of the difficulties in
    getting accurate numbers sometimes is the lack of reporting
    from the local public health service and hospitals to the CDC.
        But we have been seeing these numbers over the years, and
    they do not appear to be going down. Perhaps it is because our
    population is increasing. But my question to you is, as you
    look at the history of food inspection in this country, and you
    look at the rising level of imports into the United States, do
    you believe that the recalls in the last 2 years, over nearly
    200 recalls, and I will go into these in a little more detail,
    does the fact that this number appears to be increasing have
    anything to do with rising amounts of imported product that are
    blended or used in this country?
        I am trying to get a sense of how important the imported
    meat issue is compared to domestic difficulties that we may be
    having. Give us some relationship here.
        Ms. Murano. Sure. I would be happy to.
        First, I should certainly reiterate the fact that since the
    implementation of the Pathogen Reduction HACCP rule just a few
    years ago, FSIS really drastically changed, if you will, the
    way that it was inspecting meat and poultry products, and
    certainly industry had to do a drastic change themselves in
    having HACCP plans and so forth.
        And the reason I am saying this to you is because part of
    this new system that came into being, about 3 years ago,
    consisted of checks and balances that have resulted in our
    being able to document the microscopic, not visible with the
    naked eye, hazards to the food supply. For that reason, it has
    pointed us to problems that maybe before we were not
    addressing.
        So, when you see that change, you start to see certainly
    more recalls, more enforcement actions and so forth, simply for
    the reason that you have a new system and it's a system that is
    very stringent, and it looks for these problems in food safety
    for contamination and for causes of contamination within a
    processing plant.
        We do not know what the impact of imported products is to
    foodborne illness any more than the Centers for Disease Control
    does, but----
        Ms. Kaptur. We know that, Doctor.
        Ms. Murano. Because it is the same reason we do not, the
    CDC, let me say, not everybody who gets sick goes to the
    doctors you know very well. The reporting of foodborne
    illnesses is not perfect in any country, and certainly it is
    not in our country, but the CDC established a few years ago the
    Food Net, which is a way to proactively try to seek out that
    information from hospitals, from doctors and so forth to try to
    get a better estimate. And so these figures that you quoted
    basically come from the best estimates that CDC can provide
    through the Food Net surveillance data.

                                PRODUCT RECALLS

        Ms. Kaptur. But, Doctor, my question to you is, as we look
    at the recalls and we look at the levels of illness and death
    in our country, to what extent are those rising levels due to
    imported product versus domestic product that is not being
    properly presented to the public?
        Ms. Murano. That is information that is not known.
        Ms. Kaptur. It is not available.
        Ms. Murano. It is not available, correct. But let me say
    one thing, if I may, Ms. Kaptur, which is the fact that we have
    seen, from 1996 to last year, that the incidence of foodborne
    illness has actually been going down on several specific
    pathogens; Salmonella, Listeria, E. coli 0157H:7, and so forth.
        And CDC is ready to put out their new figures April 15th,
    as I understand it, for the year 2001. They have told us so
    far, preliminarily, that their results look very positive. Not
    all pathogen diseases have gone down, but the ones that
    certainly are of interest to us because they are involved with
    meat and poultry, CDC tells us that those numbers are going
    down.
        Ms. Kaptur. For instance, information I have on recalls
    here, there were 16,895,000 pounds of Cargill turkey products
    that were recalled in Waco, Texas, and the pounds recovered for
    Listeria, only 2 million pounds of that are recovered. When it
    says ``turkey products,'' I look on here, it says, ``Imported
    Product, No,'' and some do not have any indication for other
    recalls, where the product might have originated. Are you
    telling me that under your inspection system, you have no way
    of distinguishing between what is a domestic product and what
    is an imported product? Am I hearing you correctly?
        Ms. Murano. That is correct, simply because, as product
    comes in from another country, and let us say that it is a raw
    product, it may end up in a plant here in the United States
    where it is further processed into, say, sausage or some other
    kind of product. It gets reinspected again, I might add to you,
    and the recalls that you are seeing, what I am trying to tell
    you is that it is a good sign, you have to look at it that way,
    that our system is working because it is able to catch these
    products. Again, I reiterate the fact that you have got,
    according to the CDC, a decrease in foodborne illness from a
    lot of these pathogens. This is the data that they provide to
    us.
        Ms. Kaptur. Let me just ask this: I am going to ask you
    before you finish in this first round to give me the three
    countries with which you feel we should have the most concern,
    where we are bringing in product where we found problems.
        And then I would like to know which companies are shipping
    from those countries to us. Do you maintain that as a part of
    the recall record?
        Ms. Murano. Yes.
        Ms. Kaptur. Could you give us a list of the those
    companies.
        Ms. Murano. Let me say a couple of words, and then I will
    let Maggie Glavin, who can tell you more details on the
    specific aspect of your question, I believe.
        We, and in fact this goes back to a question that the
    chairman asked that I failed to answer, we import from, just to
    stay on Mexico, about .4 percent of our meat poultry comes from
    Mexico. Canada, New Zealand, Australia are really the big
    exporters to us of meat and poultry.
        Having said that, certainly our system of audits that I
    explained before shows us which countries are the ones that we
    perhaps need to pay more attention to and do pay more attention
    to. That is why we do audits more frequently on those
    countries, and that is why we went down to Mexico and spoke
    with Dr. Trujillo and talked about the possibility of our doing
    more audits, and perhaps having someone resident for 1 or 2
    months in the country, and so forth.
        So, if you ask me for names of countries, Mexico would be
    one that we, at least for now, would need to, and are, focusing
    more attention to, Brazil is another one, and Italy. So I gave
    you the three that you needed, but I will let Maggie Glavin,
    perhaps----
        Ms. Kaptur. Thank you, Doctor.
        Ms. Glavin. I would just like to say that on the recalls,
    the number of recalls for imports is a very small percentage of
    total recalls, and I can get you the exact number for the
    record.
        [The information follows:]

                  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                           INCREASED LAB CAPABILITIES

        Secondly, in terms of why so many recalls, it is really a
    result of the increased ability we have to find contaminated
    product through our increased microbial and chemical sampling
    of product over the past several years. We have greatly
    increased our lab capabilities so that we find things through,
    our increased follow up, our improved ability to follow up on
    foodborne outbreaks and our increased coordination with both
    CDC and with State and local health departments.
        The increased number of recalls is because we are finding
    things that we did not find in the past. There is no indication
    that there is an increase in problems, it is that we are better
    able to find those things and get them out of the marketplace.
        Mr. Bonilla. Thank you, Ms. Kaptur.
        Ms. Emerson.
        Mrs. Emerson. Thank you, Mr. Chairman.
        Dr. Murano, thanks for being here.

                              MEXICAN MEAT IMPORTS

        Let me follow or continue this line of questioning if I
    could, and I apologize for missing the beginning and hope I am
    not repeating something, but back on the 25th of February, the
    Washington Post had a very scary, quite frankly, article
    called, ``USDA Relies on Foreign Inspections.''
        If I might quote just for a couple of sentences in here,
    ``The arrangement worked until U.S. inspectors paid a rare
    visit to the plant in May 1999. Greeted by filth and flies, the
    visitors cut off trade at once,'' Then we come to another
    sentence here that said, ``Instead, the Agency, USDA, relied on
    Mexico as the primary enforcer of U.S. sanitation laws, a
    standard flunked by 5 out of 10 Mexican plants visited by U.S.
    inspectors that spring.''
        I am certain that my colleagues have also read this
    article, and if you have not, I will provide copies to you
    because it will make you very nervous or, hopefully, you will
    make me feel better and not as nervous.
        You say that you wanted to go down and visit with your
    counterpart, Dr. Trujillo in Mexico.
        Ms. Murano. Yes, we did.
        Mrs. Emerson. Talk to me about how much meat comes from
    this facility and what USDA and others are doing to assure we,
    the consumers, that other facilities meet our standards and our
    regulations.
        Ms. Murano. Sure, I will be happy to.
        The facility that is mentioned in the article, I guess, is
    the one that you are referring to is----
        Mrs. Emerson. Carnas Velmo.
        Ms. Murano. Carnas Velmo, exactly. That facility, and I am
    going to defer to Maggie Glavin if she wants to add something
    to it. When we initially allowed Mexico to export meat and
    poultry to us, and they proved that they had an equivalent
    system and so forth, that was a facility, along with others,
    that was put on the list as able to ship product to the United
    States because, at the time that that decision was made, the
    facility was in good shape.
        We went on an audit and saw the conditions of the facility.
    By the way, that particular company had never shipped product
    to the U.S., even though it was on the list of approved plants
    to ship, it had never shipped product to the United States. In
    our annual audit in 1999, we went to that plant, saw the
    conditions that you see described in that article, and promptly
    delisted the plant. That plant has never shipped product to the
    United States, not before the delisting and certainly not after
    the delisting, which it really is a puzzlement to me.
        I was actually interviewed by the reporter, as you can see,
    because there are a couple of very small quotes that are
    attributed to me. The reporter never did ask me about that
    plant. He just simply asked me; ``can you tell me about your
    inspection system, and can you tell me something about what you
    do with Mexico.'' I could not respond to what he did not ask
    me, and I certainly did not know he was going to put in a plant
    that had never shipped product to the United States, which
    seems interesting to me.
        I am here to tell you we import about .4 percent of our
    meat and poultry from Mexico, which I mentioned before. Our
    visit to Mexico with Dr. Trujillo, during which we alsovisited
    some plants, was meant to have an eyeball-to-eyeball dialogue where he
    would realize, and he does, that we do not tolerate noncompliance, we
    really do not. It is something that we feel very strongly about. This
    is why we discussed with him the possibility of perhaps having some of
    our inspection auditors go down and stay for a prolonged period of
    time, to see where we go from there.
        He and I talked about some initiatives that he is pursuing
    with his own Government because, frankly, the three plants that
    we delisted back in November were in very good shape,
    hygienically speaking, HACCP plans, et cetera. They just did
    not have the full complement of Government inspectors there. It
    is a question of resources for them. Basically, their current
    system does not give them resources to pay for enough
    Government inspectors. This is something he is pursuing a
    solution for with his own legislature, let us put it that way.
    He has assured us that all of the plants that are exporting to
    the United States now have a full complement of Government
    inspectors.
        We are, reinspecting 100-percent of the product that comes
    in from Mexico because we need to verify that things are fine.
    When we go back in April, we will see what we find.

                         REINSPECTION OF IMPORTED MEAT

        Mrs. Emerson. So, when you said, very early on in your
    comments, that a country has to prove to us that they have an
    equivalent system, that is a HACCP-type of system, correct?
        Ms. Murano. Correct.
        Mrs. Emerson. And if, in fact, they do not have the
    resources or the personnel to carry out the inspection
    functions, then should we be allowing them to inspect on our
    behalf? You talked about just .4 percent or Mexico you are
    reinspecting----
        Ms. Murano. Right.
        Mrs. Emerson. Are we reinspecting all of the imported, 100
    percent of every imported meat product?
        Ms. Murano. From Mexico, from Mexico.
        Mrs. Emerson. Only from Mexico, not----
        Ms. Murano. From all of the other countries, we do a
    reinspection, but it is not 100 percent because it is based on
    the history of the audits that we do in each country. It is
    based on statistics, if you will, that tell us how many
    shipments we need to inspect to give us an idea of the quality
    of the products that are coming in.
        Again, do not forget that when we go do those audits, we
    are looking at the infrastructure of those countries. When I
    said that it is the Mexican Government that does not have the
    resources to pay their inspectors, the plants are not owned by
    the Mexican Government. They are owned by companies, obviously,
    and they are the ones who have the burden of having a HACCP
    plan, sanitation and so forth.
        The Mexican inspectors are the ones that have to do what we
    do in our own plants here, which is be there every day. That is
    what we require them to do, be there every day, inspect their
    product and make sure that it abides by HACCP and sanitation
    operating procedures, which they have assured us now that that
    is the case. We will return in April to make sure that that is
    the case.
        Mrs. Emerson. I think the gentlewoman from----
        Ms. Kaptur. I just wanted to ask, for the record, if Dr.
    Murano could tell us how many tons or pounds does .4 percent of
    your volume represent annually?
        Mrs. Emerson. I think Maggie knows this.
        Ms. Glavin. First of all, it is .4 percent of imports are
    coming from Mexico, and I believe it is about 16 million
    pounds, but I will get you the exact number for the record.
        [The information follows:]

                  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Bonilla. I am impressed that you could even do that off
    the top of your head like that.
        Ms. Murano. We have been talking about this issue a little
    bit lately. [Laughter.]
        Mr. Bonilla. Thank you, Ms. Emerson.
        Mrs. Emerson. I guess that means that I do not get one more
    question?
        Mr. Bonilla. Go right ahead, Ms. Emerson.
        Mrs. Emerson. This will just take a minute, and I am not
    sure you want to answer the question.

                           COUNTRY OF ORIGIN LABELING

        Would some of these problems be alleviated or could we at
    least make the American consumer feel more comfortable if we
    actually then labeled imported meat as imported meat and
    labeled American meat as--in other words, country of origin
    labeling, would that be something that would make the consumer
    feel more comfortable?
        Ms. Murano. I will answer that question by telling you that
    I feel very strongly that my mission is, and our mission
    certainly at USDA is to make sure that the meat and poultry
    that ends up on the dinner plate of our citizens, our
    consumers, it does not matter where it comes from, whether it
    comes from right here in the good old U.S. or from a country
    that is exporting to us, that it is as safe as possible, and
    that is why we have the system of import equivalency, and
    audits, and reinspection at our border, and so forth and so on.
        Let us put it this way, if we are doing a good job of
    making sure that meat and poultry that is imported into the
    United States is as safe as the product that is produced in
    this country, then country of origin labeling is not a food
    safety issue. It might be something that people may want to do
    as a marketing tool or what have you, and that is just not
    something that I think about.
        Mrs. Emerson. I appreciate your answer.
        Thanks, Mr. Chairman, for the extra time.
        Mr. Bonilla. Thank you, Ms. Emerson.
        Mr. Hinchey.
        Mr. Hinchey. Thank you very much, Mr. Chairman. This is a
    fascinating subject.
        Ms. Murano. Yes, it is.

                         INCIDENCE OF FOODBORNE ILLNESS

        Mr. Hinchey. I must admit I am a bit confused about these
    situations, so I want to I guess go back over a little bit of
    the ground that we have already covered and cite some of the
    information that we have gotten.
        Ms. Kaptur said a moment ago that the Centers for Disease
    Control reports that 76 million people get ill, 325,000 are
    hospitalized, and 5,000 die from foodborne illnesses every
    year. It seems to me that that remains a very serious problem
    if CDC is giving us those numbers.
        They tell us also that from 1997 through 1999 food-borne
    illnesses have declined at nearly 20 percent. At least 855,000
    fewer Americans each year suffer from foodborne illnesses as
    compared to pre-1997.
        However, CDC estimates that food poisoning is still, even
    with that progress, still 34 percent above what it was in 1948
    and that officials at the Department of Health and
    HumanServices project that food-borne disease reports may increase by
    10 to 15 percent during the next 10 years. So, if HHS and CDC are
    telling us this, it seems to me we have a problem on our hands that we
    are not dealing with adequately, and the first thing we need to do is
    face up to it.
        Ms. Murano. Mr. Hinchey, you could not be more correct. The
    whole reason why I left the safe confines of Texas A&M
    University to come to USDA is because I want to do something
    about this. I am not a bureaucrat or a politician, I am a
    scientist, I am a university researcher, so that is why I came
    here, for exactly what you just said.
        It is a complicated issue because, exactly as you said, we
    have seen decreases in foodborne illness lately, since we
    implemented a lot of these food safety programs, like HACCP.
    CDC attributes that some of these decreases may likely be due
    to HACCP and so forth, but it is a big problem, obviously, in
    the sense that you have a lot of people still ill from
    consuming food.
        The thing that we have to remember is that we, at USDA, are
    doing everything that we possibly can do and do this every day
    of the week on meat, and poultry and egg products, which is our
    jurisdiction. Of course, the numbers that you see from CDC
    include everything, all foods. We have had conversations with
    CDC. I know that they are very interested in and very
    diligently working at trying to ascribe those numbers, break
    them down, to see which illnesses are due to meat, and which
    are due to poultry, what is due to fruits and vegetables so
    that we can hone in on where problems are.
        And then adding to all of this, of course, is when you
    compare to 1948, those are the years when we did not go out to
    eat as much as we do now. We used to prepare our own food,
    instead of having somebody else prepare it for us. Things have
    changed tremendously, of course. We have had emerging new
    pathogens, and so forth and so on. So I appreciate the
    complexity of this, and it is something that we are working on.
        Mr. Hinchey. I understand all of that, and of course that
    is all true, but that does not excuse the problem.
        Ms. Murano. No, absolutely.
        Mr. Hinchey. It merely focuses what----
        Ms. Murano. Correct.
        Mr. Hinchey [continuing]. To merely focus our attention on
    more acutely.
        Ms. Murano. I agree.
        Mr. Hinchey. And describe for us some of the things that we
    need to do. Now, in that context, I am concerned not about your
    approach to this personally, I happen to believe that it is
    very good and that you are a person who is very sincere, and
    diligent and is determined to do a very good job here, but I am
    concerned about the authority that you have. Now the Fifth
    Circuit Court has determined that you do not have the authority
    to shut down a processing plant; nevertheless, you say that you
    do. Now where is the truth in this?

                        SALMONELLA PERFORMANCE STANDARD

        Ms. Murano. Can I explain this a little bit?
        Sure, what the Circuit Court decision said is we cannot
    shut down a grinding operation based solely on the Salmonella
    performance standards. What I am contending here, and what I
    can show you with records of plant shutdowns we have already
    done since the Supreme Beef decision, is that we can shut them
    down, and do, when they fail their HACCP plans; when they fail
    their sanitation programs. The microbial test that we cannot,
    solely based on it, in grinding operations use to shut down
    plants, that is the same microbial test we continue to use as
    an indicator that we need to look at that particular plant's
    HACCP plan a little bit more closely.
        Mr. Hinchey. Would you like the authority to close down
    plants on the basis of finding Salmonella?
        Ms. Murano. I am going to say that what the science says,
    Mr. Hinchey, is that if we rely on finding a particular
    pathogen, if we put all of our eggs in that basket and say to
    ourselves we are going to rely on microbial testing, whether it
    is Salmonella or whatever it is, we are going to rely on that
    to tell us whether the product is safe or not, that is not a
    good way to do it. Because it basically says that if I am
    testing a product lot, and let us say you have 100 units of
    whatever you want to call it, I cannot possibly microbially
    test every single unit because then I will have no food left to
    eat. I have to do statistical analysis and figure out how many
    samples to take.
        When you have a low incidence of pathogens, and some
    pathogens are found in very low numbers, such as a 3-percent
    incidence, in meat or poultry, then sampling is not perfect.
    Sometimes you will not find a positive. The problem with
    relying completely on those microbial tests is that when you do
    not find a positive, you think everything is great. You think
    the lot is safe, and it may not be.
        [Clerk's note: The following information was added
    subsequent to the hearing:]

        In addition, a certain microbial performance standard may not be an
    accurate predictor of the presence of all pathogens of concern. In
    fact, the Salmonella performance standard is not a good predictor of
    the presence of E. coli O157:H7. If you look at the data from November
    2000 to November 2001, there were 23 establishments that had to recall
    ground beef because it contained E. coli O157:H7. Every single one of
    the 23 passed their pathogen performance standards, showing that the
    Salmonella performance standard was not able to predict the presence of
    this pathogen. By comparison, 17 of the 23 plants had at least one
    HACCP failure and 18 out of 23 had at least one SSOP failure, pointing
    to the advantages of relying on HACCP and SSOPs as the true measure of
    safety.]

                           AUTHORITY TO CLOSE A PLANT

        Mr. Hinchey. I am not suggesting that you rely completely
    on any one thing, but I am concerned that the court has told
    you that you do not have the authority to close down a plant
    when you find Salmonella. Now you may find an abundance of
    Salmonella, and you still cannot close down that plant. So I am
    not suggesting that you ought to be closing down plants when
    you find a tiny bit of bacteria, but it seems to me that you
    ought to have the authority, when you go into a plant and find
    an enormous amount of Salmonella, as was found in this
    particular case, that you ought to be able to do something
    about it.
        The court has said that you do not have that authority.
    Senator Harkin is introducing a bill to give you that
    authority. It seems to me that you would want to have it, and
    of course you would use good judgment, scientific procedures
    and common sense in carrying out that authority, but I would
    much rather see you have that authority than not. At the
    present time, you do not have it because that is what the court
    has said.
        Ms. Murano. May I say to you that right now and 2 seconds
    after the Supreme Beef decision, if we found a plant that had
    Salmonella numbers exceeding what we had set as a standard, it
    indicates a failure in HACCP or sanitation. So we could
    certainly shut down the plant based on HACCP or sanitation
    failures.
        You see, what causes pathogens to be reduced or even
    eliminated or controlled in food is HACCP; is sanitation. The
    microbial test, as very good as it is, is a tool to indicate
    that. It is almost like, if I give you the analogy, of someone
    testing your cholesterol, doing that test of your cholesterol,
    as a microbial test analogy, if youfind the cholesterol to be
    high, you look at your diet, your exercise routine and so forth. The
    same thing, if we find Salmonella, we look at the plant's HACCP and
    SSOP plans.
        If there are high numbers of Salmonella, as you said, there
    is a failure in the HACCP plan. What we do is review the plant
    to find the failure and then shut down the plant based on HACCP
    failure, or based on sanitation failure. These are the systems
    that are controlling that Salmonella hazard or are supposed to
    be controlling it.
        Mr. Hinchey. My time is up. I would just add I would like
    to pursue this on the second round of questioning.
        Again, I say we still have 5,000 people a year dying
    because of foodborne illnesses, so that tells me that we are
    not doing a good job if 5,000 people in this country every year
    die because of food-borne illnesses.
        It seems to me that either you do not have the proper
    authority or it is not being exercised or you do not have the
    personnel to carry it out. I am not saying this about you,
    personally. I am talking about us, all of us involved in this.
        Ms. Murano. All I can say to that, Mr. Hinchey, and I
    welcome talking to you about this, that this is a subject that
    is extremely important. There are other groups, other than CDC,
    that have come up with reports.
        The Center for Science in the Public Interest, for example,
    came out with a report very recently where they did a fairly
    good job of trying to figure out all of the outbreaks of
    foodborne illness, and what foods can they ascribe the
    illnesses to. When you look at meat and poultry, it is down at
    the bottom of that list.
        I submit to you that the 5,000 deaths, the 76 million
    people that are ill, if we were to break it down, it would be
    interesting to see what impact what we do at FSIS with meat and
    poultry has had on reducing those illnesses that have to do
    with our inspected products.
        Mr. Hinchey. Thank you very much.
        If I may, Mr. Chairman, just in response to that, I think
    it is right on point.
        Mr. Bonilla. Go ahead.
        Mr. Hinchey. The Center for Science in the Public Interest,
    which you just cited, also says that this court decision, and I
    quote, ``Was a huge step backwards in the safety of ground beef
    products,'' and it goes on to say, ``The USDA can close down a
    plant for having too many cockroaches, but it cannot if there
    is too much Salmonella in the meat that the plant is producing.
    This clearly shows,'' says the Center for Science in the Public
    Interest, ``that we need a new, modern meat inspection
    statute.''
        So the source that you cite is one that is being very
    critical of the process that we have and the authority that the
    Congress has given you to carry out your responsibilities.
        Mr. Bonilla. We will be delighted to have Mr. Hinchey
    pursue this further.
        Ms. Murano. Okay. I cannot answer it? I would be happy to
    respond, if I may, Mr. Chairman.
        Mr. Bonilla. Go right ahead. We are trying to just be
    courteous to the members who are waiting to ask questions.
        Ms. Murano. Surely. Let me submit to you for your thoughts,
    so that when you come back around, we can talk about this some
    more. When we look at our enforcement actions since the
    pathogen reduction HACCP rule was implemented, the vast
    majority of our enforcement actions, several hundred, 400-and-
    some enforcement actions (that means plant closures and
    suspensions of inspection) were due to HACCP or sanitation
    standard operating procedure failures, as opposed to only six
    plant closures due to Salmonella failures.
        Mr. Bonilla. Thank you.
        Mr. Hinchey, we would be delighted to pursue this on the
    next round.

                                  FOOD SAFETY

        Before I yield to Mr. Goode, I appreciate the questions,
    Mr. Hinchey. We are all concerned about food safety. I eat beef
    and poultry, and my kids eat beef and poultry. My mother eats
    beef and poultry, and everyone's grandchildren eat beef and
    poultry.
        I think we need to keep our eye on the ball. I know that
    there is disagreement here about how we should proceed, but the
    success rate that we have in keeping our food supply safe,
    while we can always stand for some improvement, is remarkable.
    If you consider breakfast, snacks, lunch, dinner, late-night
    snacks, there are probably a billion servings of meat and
    poultry in this country a day. The ratio of success that we
    have is remarkable. If you had a billion-to-one success rate in
    our hospitals or schools, people would be standing up and
    cheering.
        Again, I want to emphasize that we all are concerned about
    this. There is not a person who is not concerned about food
    safety on a personal level. Sometimes I think we lose sight of
    the success stories that we have to talk about in this country
    and should not lose sight of that.
        We will certainly be revisiting this, Mr. Hinchey, on the
    second round.
        Before I yield to Mr. Goode, you should know that Dr.
    Murano spent some time at Florida International, Mr. Goode, at
    Texas A&M, and at Iowa State, but she claims no allegiance to
    either of those schools because she spent some time at Virginia
    Tech and says she is a Hokie. [Laughter.]
        I know you will have a great appreciation for that.
        Ms. Murano. That is right.
        Mr. Goode. She has allegiance to the right school, Mr.
    Chairman. [Laughter.]
        We certainly appreciate her hard work, and like the
    chairman, I think, overall, our food safety is very good
    compared to the rest of the world.

                 FOOD PRODUCTS ATTRIBUTED TO FOODBORNE ILLNESS

        I think Mr. Hinchey stated that there were, and you
    concurred, that there were 5,000 foodborne deaths last year,
    but that meat and poultry were at the lower end. What is at the
    top end of the causes?
        Ms. Murano. Sure. Well, I started this whole thing by
    citing a report titled, ``Outbreak Alert,'' by the Center for
    Science in the Public Interest which is not a Government
    organization. Basically when they try to break down the food
    vehicles of outbreaks, from 1990 to 2001, seafood is the top
    vehicle for outbreaks of food-borne illness, followed by whole
    eggs, produce, fruits and vegetable, and then beef and poultry.
        Mr. Goode. Did they give a breakdown on the seafood?Are raw
    oysters up at the top? I want to know what to avoid.
        Ms. Murano. They do not. They do not give that kind of a
    breakdown. It is very hard, you know. I appreciate their effort
    because it is very difficult to try to do that because it
    depends on whether someone is ill and reports the illness, and
    whether it can be traced to a particular food. Sometimes that
    does not necessarily happen because a person may go to the
    doctor, and they either do not remember what they ate, they ate
    a variety of foods, or the food is no longer available for a
    test to be done to see which was the cause.
        That is why it is very hard to have data that is as
    complete as possible. I appreciate their effort in trying to
    get as much data as possible to show us some indication of
    where we are.
        Mr. Goode. I would take it, with regard to seafood, raw
    seafood is more likely to have it than----
        Ms. Murano. As a microbiologist, I would tend to agree.

                           STATE INSPECTION PROGRAMS

        Mr. Goode. To jump to another topic, a member of the
    Virginia General Assembly called me about the meat inspectors.
    You have no plans, do you, to change the situation in those
    States, where if they participate in the payment for meat
    inspection, State inspectors can do it instead of the Federal
    inspectors; is that----
        Ms. Murano. You are talking about interstate shipment or
    what are you talking----
        Mr. Goode. No, I am just talking----
        Ms. Murano. Just simply the 27 States that now have their
    own inspection?
        Mr. Goode. Right.
        Ms. Murano. We do not plan on making changes. We are not--
    --
        Mr. Goode. You are not reducing the Federal participation.
        Ms. Murano. No, sir.
        Mr. Goode. I did not see it in the budget, but I received a
    call from a member of the General Assembly.
        Ms. Murano. The only thing I can think of is, and maybe
    Maggie Glavin can help me with this, there might be one State
    that is actually requesting to withdraw from the program. It is
    a resources question--if you remember, Maggie, is that right?
        Ms. Glavin. That is right. There are a number of States who
    are finding it difficult to meet their share of the costs and
    are considering dropping the program, but our support remains
    the same. In fact, there are increases in line with the
    increases for the Federal inspection, for the grants to States
    in this budget.
        Mr. Goode. If the States do not pay their share, what is
    their share?
        Ms. Glavin. We match up to 50 percent.
        Mr. Goode. I think Virginia is a 50-50. If the State pays
    its half, then the State inspectors can continue the beef and
    other inspections too.
        Ms. Glavin. Yes, sir. They must maintain a program that is
    equal to the Federal program, and then we pay 50 percent of
    their cost of doing that.
        Mr. Goode. Now, if they can't put up their share, then the
    State people are replaced by Federal inspectors; is that not
    correct?
        Ms. Glavin. That is right. Then the Secretary is required
    to put Federal inspectors in those plants.
        Mr. Goode. All right. Thank you, Mr. Chairman.
        Mr. Bonilla. Thank you, Mr. Goode.
        Mr. Boyd.
        Mr. Boyd. Thank you, Mr. Chairman.
        And, Dr. Murano, welcome.
        Ms. Murano. Thank you.

                     HACCP-BASED INSPECTION MODELS PROJECT

        Mr. Boyd. I would like to talk about HACCP and your health
    inspection model pilots. I know there are some positive, but
    maybe some would say mixed reviews on what is going on. I
    understand there is a GAO report about the pilot, and that
    report was based in part on an incomplete third-party
    assessment of the performance of the model pilots. Do you have
    any additional information you could bring the committee this
    morning about what was contained in the GAO report and how we
    are doing with the implementation?
        Ms. Murano. Sure. Sure. Let me say a few words. Then I
    think maybe I will turn it over to Maggie to add a few more
    details. But the HACCP-based Inspection Models Project (HIMP)
    system, is a pilot project. The GAO report stated that, it is a
    pilot project, that needs to be tweaked and improved. Such
    feedback is what we need in order to make it the best possible.
    Certainly, the GAO had several recommendations that I think
    were very good recommendations.
        They started off by saying that this program has merit to
    it. Then they started to make recommendations such as the idea
    of our phasing it in, which we agree with. The GAO recommended
    that the plant personnel who do the activities; looking at what
    the birds are like and so forth, that they receive formal
    training. I could not agree with that more, being an educator
    myself. To me that is extremely important; it is the key to it
    all. They also suggested that we use statistical process
    control and I absolutely agree with that.
        I went to a few plants to see the system for myself. I have
    to tell you that if it is done correctly with people who are
    trained properly that you simply have more birds verified by
    the inspectors. I went to a poultry HIMP plant where the FSIS
    verification inspector had the freedom then to pull more birds
    off the line to do a verification than in the traditional
    system, where you are only able to pull out 20 birds as opposed
    to 80 birds. The statistical process control that this
    particular plant had was extremely impressive in the sense that
    as birds went by the line, the information was being entered on
    a computer so that you had real-time data. If you had four
    lines of production, you could see--and our verification
    inspector, could certainly sit at the terminal and see how the
    different lines are doing in terms of their defects. I
    certainly saw the value of pursuing this pilot project.
        But the GAO's recommendations are extremely helpful to us,
    and we are absolutely planning to put them into place.
        Let me turn it over to Maggie, if she can give you some
    specifics on some of the data.
        Ms. Glavin. As Dr. Murano indicated, the study design for
    this project was established to compare the accomplishments of
    our traditional inspection system with the accomplishments of
    this new pilot system. Participating plants in the pilot are
    required to revise their HACCP plans in order to meet stringent
    food safety standards, and also todevelop process control
    systems for the control of other consumer protection issues. These are
    issues that we are responsible for, but that are not food safety
    issues.
        It is that design that we have had an independent party
    gather data on, both data from the traditional system and data
    from these pilot plants. We are planning, at our June Meat and
    Poultry Advisory Committee Meeting to bring data from the
    completed data sets from all poultry plants in this project to
    the Meat and Poultry Advisory Committee, and begin a discussion
    of where we go from here.
        The data that we have received so far and the data that we
    have gathered as part of our inspection process in these plants
    indicates we can see a much superior product under HIMP
    inspection than what we get from our traditional plants. We
    will, at the June Advisory Committee Meeting, be in a
    discussion of the data and a discussion of where the agency
    will go from here with it.

                                 COURT DECISION

        Mr. Boyd. I know a lot of the problems we had in
    implementation here are legal. Where are we?
        Ms. Murano. That is right.
        Mr. Boyd. Could you address that shortly?
        Mr. Chairman, if I could be allowed to continue?
        Ms. Glavin. Yes, sir. The Federal union that represents our
    inspectors sued the Department on this project. In the initial
    decision, the Department prevailed. On appeal, we did not
    prevail. We made adjustments to how we are running the project
    and how we are inspecting in those plants to meet the concerns
    of the Appeals Court. On the second appeal--that was remanded
    back to the trial judge. We won there, and it is back on
    appeal, and we would expect a ruling in the next several
    months.
        Mr. Boyd. Thank you very much for that.
        I just wanted to say, Mr. Chairman, to the committee, I had
    the opportunity to visit some of these plants that are trying
    to implement the pilots, and it is very impressive. Like you,
    Dr. Murano, I am very optimistic that this is going to improve
    our food safety, and it will be better for everybody when we
    get it implemented, so I want to encourage you and let you know
    that you have got the support of this member to implement it as
    quickly as possible.
        Ms. Murano. Thank you.
        Mr. Bonilla. Thank you, Mr. Boyd.
        Mr. Kingston.
        Mr. Kingston. Thank you, Mr. Chairman.
        Dr. Murano, I wanted to ask you, as a member of this
    committee, when we implemented HACCP we were very excited
    because we felt that that would take a lot of the subjectivity
    out of meat inspection. One of the things that we heard from
    our poultry and meat plants back home is that if a veterinarian
    has a bad day, you could be in trouble. There is a real fear
    out there that might not be expressed freely to Washington and
    certainly not to the bureaucracy who is inspecting them. They
    do have a fear of the subjectivity, and so we have been excited
    about HACCP and the scientific standards it contains.
        Also I think the court did the right thing in the Supreme
    Beef case. I was shocked when the Senate--some day I am going
    to quit being shocked by Senate action--but when they try to
    reverse court cases, you know, I guess somebody hasn't informed
    them that they are really not directly related--they don't
    speak from the oracle of Apollo as they seem to think
    sometimes. [Laughter.]

                          SUPREME BEEF COURT DECISION

        Mr. Kingston. But, you know, in the Supreme Beef case, is
    your authority diminished in any way? Did the court tie your
    hands in any way?
        Ms. Murano. It did not, Mr. Kingston, and this a point that
    I am sure I will discuss some more with Mr. Hinchey when his
    turn comes again. It hasn't. The last statement that I was
    making to him is the fact that we have not stopped suspending
    inspection in plants since Supreme Beef. If it had taken our
    authority away, then you would see that we are not able to shut
    down plants, but we have continued to do so. The fundamental
    idea here is that HACCP and sanitation protocols are what
    control the hazards. The microbial testing that is inherent in
    the pathogen performance standards is an indicator, is a flag,
    that would tell us to look at the HACCP plan, look at the
    sanitation procedures.
        As a scientist I have to be ruled by the data because it is
    objective, it is not an opinion, it is data. And the data shows
    me that since 1999, when I look at all the enforcement actions
    we have taken prior to Supreme Beef, the vast majority, 420 or
    so enforcement actions on meat and poultry plants were due to
    HACCP and SSOP failures, as opposed to only 6 enforcement
    actions due to failure of the salmonella performance standards.

                  PREVALENCE OF PATHOGENS IN MEAT AND POULTRY

        Mr. Kingston. Let me regress a little bit in my own
    ignorance. Salmonella, that is not necessarily an indication
    that a processing plant has failed to comply with sanitary
    standards. Salmonella is actually prevalent in meat and
    poultry----
        Ms. Murano. Salmonella is an organism that can be found in
    raw products, whether it is meat or poultry or produce or
    whatever it is, because it is an organism that is found in
    nature. And if you have a raw product, one that you don't have
    a step where you are actually cooking it or what-have-you to
    eliminate it, you may find salmonella there, and this is why--
    --
        Mr. Kingston. As a scientist, do you think most people
    understand that basic?
        Ms. Murano. I think so. I think people know that you
    certainly don't eat raw poultry and you don't eat ground beef
    without cooking it, because people realize that this is a
    product of animal origin. This comes from an animal, the same
    way that you don't drink raw milk and so forth. Because of the
    world we live in, you are going to have microorganisms. They
    are ubiquitous. They are in this room right now. They are on
    our skin. They are everywhere. So what we have to do is figure
    out how can we control them by the best means possible, or
    minimize them to the greatest extent possible so that we can
    achieve the public health objective of improving food safety,
    and minimizing foodborne illness. That is after all the goal,
    minimizing foodborne illness.
        Mr. Kingston. So there is an inherent risk when you eat
    something. You just have to use common sense and prudence, more
    than common sense, to make sure that you have dealt with it.
        On foodborne illnesses, this 5,000 people who die, how much
    of that is from problems that happen in the plant versus in the
    kitchen?
        Ms. Murano. That is an excellent question. What I can refer
    to is--and I am thinking back a little bit here--there was a
    report that CDC did put out some years ago where they tried to
    look at exactly the factors that play into the incidence of
    foodborne illness. Whether it happens in the processing
    establishment or in the food preparation area, we want to know
    where exactly is the cause of the illness.
        And certainly, all of these elements have a role to play.
    We know that you can have as clean a product as possible coming
    into your kitchen, but if you have a filthy kitchen, or you
    don't wash your hands, and keep filthy instruments, you know
    that no matter how safe it was before, you are going to ruin it
    in the kitchen.
        Mr. Kingston. Well, I don't know what happens in the ladies
    rooms across the great eating establishments in America, but I
    can tell you, we men always wash our hands thoroughly.
    [Laughter.]
        But I actually did read that CDC report, and I think it
    was----
        Mr. Bonilla. Be careful. Your credibility is on the line
    here, Mr. Kingston. [Laughter.]

                       FOOD CONTAMINATION IN THE KITCHEN

        Mr. Kingston. I think that was extremely lopsided to the
    degree that most of the foodborne illnesses do not happen in
    the grocery store or the plant, but happen in the kitchen once
    it is brought home.
        Ms. Murano. That is correct, yes.
        Mr. Kingston. And I think the number is maybe 70 to 80
    percent.
        Ms. Murano. I don't remember, but, yes, that is right.
        Mr. Kingston. That CDC report is available to all members
    of Congress, and I think the number of deaths was actually
    closer to 4,000 than it was 5,000. And I also think that the
    statistics that the Chairman has already said is just
    absolutely remarkable.
        Now, you know, 4,000 is too high for this committee. I know
    it is too high for the FSIS. But at the same time, the
    education level needs to get up as to exactly what we are
    talking about. Let's don't use somebody's tragedy for political
    hysteria and rhetoric. It is too important to the American
    people. We should spend our time more productively on educating
    people as to the nature of this and how you can prevent it, so
    I urge you as a scientist to bring your science to the
    administration and say, we are going to make sure these type
    things are done methodically, non-subjective, and we are just
    going to be level across the board with everybody, let the
    truth prevail, not the politics.
        Mr. Bonilla. Thank you, Mr. Kingston.
        Ms. DeLauro.
        Ms. DeLauro. Dr. Murano, welcome, welcome to all of you. I
    am delighted to have the opportunity to ask some questions. I
    am sorry I wasn't here for the testimony.

                          SUPREME BEEF COURT DECISION

        To my colleague from Georgia, who I truly am very close
    friends with, I say we should just blame people for this and
    then maybe that is the way we would get away with it. If I
    understand Supreme Beef--and my colleagues have asked this
    question; USDA thought that there was something wrong here to
    withdraw their inspectors. This is their enforcement tool. They
    thought that it was the proper thing to do.
        Now, this is a company who has repeatedly, repeatedly
    violated salmonella levels. This wasn't a one-shot deal. This
    was somebody over and over and over again who had done this.
        Now, the fact that we don't have--or the agency has no way
    in which to do what they thought was the right thing. They
    started on the right track, and the court shot them down. We
    have got a company who repeatedly violated salmonella
    regulations. I mean, let's not sugar coat the issue. It is a
    very serious issue. People can differ on where you come from on
    this, but this is a very serious issue.
        I was hospitalized at age 2 with salmonella, and for 12
    days I was in isolation where my folks couldn't see me. Knowing
    my own personality, my parents tell me that I wasn't talking to
    them when I got out because I thought they had abandoned me.
    But I was 12 days in isolation with salmonella. It is not just
    nothing out there. It is serious.
        I am going to move on to a different area now.
        Mr. Kingston. Rose, I do want to say on the case of Supreme
    Beef, I think they actually had extremely been very careful and
    good citizens, and for the USDA to smear the name of a good
    corporate citizen, who had cooperated and been forthcoming with
    all the inspections. I hate to see us in Washington judge a
    company in Texas that had actually been very proactive, very
    involved in I would say responsible citizenship. They have a
    story to tell in its own right, and I think unfortunately, it
    became a political issue a lot more than a scientific issue.
        Ms. DeLauro. This, for me, Jack, quite frankly has nothing
    to do with politics. If this were a company in Connecticut that
    had repeatedly violated the USDA regulations as it concerns
    salmonella and their products just continued to exceed the
    levels, I would stand in front of the plant in Connecticut,
    wherever it was, and say these people ought to be shut down
    till we can find out what is wrong, and that they are going
    forward with what our rules and regulations are. As I said,
    USDA started from the right premise, but got shot down.
        Ms. Murano. May I say one thing that is very positive on
    that? Here we are in March 14th of 2002, and I am committed to
    utilizing HACCP and sanitation, and making sure through those
    avenues, and using microbial testing as my verifier, that we
    don't have situations like you just described. I believe that
    if we do a good job of looking at the plant's HACCP plans and
    its sanitation, we would have found problems in that plant and
    we would have been able to shut them down without relying on
    the microbial test.

                           MANDATORY RECALL AUTHORITY

        Ms. DeLauro. Dr. Murano, we had a chance to talk a few
    weeks ago and thoroughly enjoyed the conversation, and I think
    you know where I am coming from on this issue. I truly do
    believe that USDA and FDA for that matter need to have
    mandatory recall authority. I would like to give you that
    authority. I would like to give Tom Ridge budgetary authority
    to try to see if we could get some things done. But under
    current law USDA does not have the ability to initiate a
    mandatory recall of meat and poultry products.
        And to follow up on a couple of things that my colleague,
    Mrs. Kaptur, was talking about, on the issue of what is the
    total pounds recalled, and then the total pounds recovered, it
    is pretty startling what is still out there.
        There have been many, including the former Secretary of
    USDA, Dan Glickman, that have argued that USDA should have
    mandatory recall authority. Before I ask you about mandatory
    recall authority, could you tell me how the current program
    works? How do you track recalls? Are there specific time frames
    within which the company must comply? And would you support
    legislation that would give USDA mandatory recall authority? If
    yes, fine. And if not, can you tell us why?
        Ms. Murano. Sure. Let me start by answering the second part
    of your question because the details on tracking of recalls and
    so forth I will leave to Maggie Glavin.
        As you know, Ms. DeLauro, we have a voluntary recall
    system, but we also have the power to detain and to seize
    product. In all the years that this system has been in place,
    there has only been one time that my colleagues at FSIS have
    told me that a company refused, when told ``You need to do a
    recall.'' What happened in that particular situation, is we
    detained their product, and they recalled the product.
        So based on that, I have to say that I do not believe that
    we need that recall authority. If we had recall authority--
    let's maybe put it to you this way--if we all of a sudden had
    recall authority, I believe that it would delay the time that
    it would take for a product to be recalled. We would have to
    provide the evidence to do that, and we would have to also bear
    the burden of any recalls that would be done. If we called for
    a recall and it was our mistake in calling for a recall, who
    pays for that liability?
        But the important point here is that I have not seen
    evidence that we need to have it; or that there have been
    companies refusing recalls. If there were people refusing
    whenever we say to them, ``We think that you have to have a
    recall,'' if we had companies refuting that and defying that,
    and saying, ``No way, you have no authority, we are not doing
    it,'' then I would say that there was a need for that kind of
    an authority, but it is not what the evidence has shown me.
        Let Maggie Glavin explain to you what the actual mechanics
    of the recall process and perhaps we can talk some more if you
    have some more questions.
        Ms. Glavin. Okay. I can give you a real quick sketch of it,
    and I can also submit something for the record that----
        Ms. DeLauro. Why don't you give us a sketch, and then if
    you wouldn't mind, just submit something for the record.
        [The information follows:]

                  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                RECALL DECISION

        Ms. Glavin. When we become aware of a problem with a
    product in commerce, and that may be because the company has
    alerted us to it, it may be because of our microbial testing,
    it may be for a variety of reasons. We become aware of a
    problem, we get in contact with the company, and begin to
    discuss with them what products are involved, where those
    products are, et cetera. At a point in time when we have enough
    information that we believe that in fact the product in
    commerce is adulterated or whatever the particular problem is,
    we request the company to make a voluntary recall, and as Dr.
    Murano indicated, in all but one or two cases they have always
    done so.
        Ms. DeLauro. What is the time frame in which the----
        Ms. Glavin. The time frame ranges from a few hours to a
    day, and most of that time is involved in determining which
    products are involved. Is it a complete lot? Is it a day's
    production? Is it several lines? Is it one line? So there is a
    lot of information gathering by FSIS and that is where most of
    the time is involved.
        At the time that the company begins the recall, USDA
    notifies the public in two ways. One, through a press release
    and two, through posting the recall on our website.

                                 PRODUCT RETURN

        The follow up is that our compliance staff does recall
    effectiveness checks. In other words, they go around to
    warehouses, grocery stores, et cetera, to see if the product is
    indeed off the shelves. We also track how much product is
    returned. It is generally a fairly small percentage because the
    product is often beyond the grocery store. It is in consumers'
    homes. Consumers may or may not bring it back to their grocery
    store. They may just throw it in the trash. The grocery store
    may or may not keep track of what they are getting back. They
    may get product that isn't part of the recall, but they will
    accept it for good customer relations purposes. So the
    percentage that is actually returned is generally fairly small.
        Ms. DeLauro. Does that concern you?
        Ms. Glavin. Yes and no. If in fact the product remains in
    consumers' hands and they don't know that it is unsafe, it
    would be of great concern. If what is going on is consumers are
    simply throwing the product out, then no. What we do know is
    that when we have been involved in a foodborne illness
    outbreak, that a recall of the product puts a very quick stop
    to the outbreak. That would lead me to believe that we are
    getting the product, and we are getting the info to consumers
    not to consume the product.
        Mr. Bonilla. Thank you, Ms. DeLauro.
        Ms. DeLauro. May I have another second?
        Mr. Bonilla. You may, Ms. DeLauro. Thank you.
        Ms. DeLauro. Thank you very much.

                                RECALL AUTHORITY

        Just a final point. I am just trying to think of the
    approach of wanting to have the ability to be able to deal with
    what can be a worst-case scenario orseveral worst-case
    scenarios in terms of recall. Just like any other measures, this is, an
    arrow in a quiver amongst many, so that you don't move with your most
    difficult--the toughest piece before you try to move along the
    continuum. And it would just seem to me that in terms of being able to
    carry out the mandate of the agency in these instances of food safety,
    of having all of the tools that are necessary, one trust leaders, as my
    colleague, Mr. Hinchey, pointed out, with authority, that says you
    don't overstep the authority if there is no need to do that. But you
    negotiate, you work it through, but in the final analysis you have the
    ability and the people you are dealing with have some understanding of
    that as well. Just in terms of the process of being able to go where
    you want to go more quickly and with greater safety to the public, you
    don't always have to use all of the tools at your disposal, but you do
    use the tools that are adequate to what the situation is. I would hope
    you all would think about whether or not that kind of authority is
    something that would be not so particularly beneficial to you, but
    beneficial to the people of this country.
        Thank you, Mr. Chairman.
        Mr. Bonilla. Thank you, Ms. DeLauro.
        We are now going to proceed with our second round of
    questions. If any new members join us, we will yield to them in
    the interim. Appropriation Committee members are juggling eight
    hearings simultaneously this morning. It is the season, but we
    have to get our work done. We are the only committee that
    produces a minimum of 13 bills a year, and we have to do that
    to keep the Government funded and operating at the end of the
    fiscal year. I mention this just to give you a little bit of
    the layout as to why members are coming in and out as we move
    along this morning.

                       PERSONAL HYGIENE AND FOOD HANDLING

        I am delighted that Mr. Kingston brought up the issue of
    personal hygiene and the handling of food. I was going to get
    into that. I want to associate myself with his comments, and
    again, reemphasizing that we are all concerned about trying to
    somehow reach a more perfect world in having safer food in
    front of our kids every day. We are not going to take our eye
    off the ball, but we just have to be realistic about what
    causes some of these foodborne illnesses. I know that it is
    difficult to determine the percentage of foodborne illnesses
    that are a result of personal hygiene--the lack of washing that
    knife after you have sliced that chicken before it is cooked,
    and then using it on your hamburger meat. People do that every
    day and don't understand or don't want to take an extra minute
    to make sure that they take that precaution.
        I want to move on to something that I wanted to ask you
    about, Dr. Murano. There is a report out that I understand you
    might be familiar with from IFT that is called ``The Emerging
    Microbiological Food Safety Issues.'' This is a very
    comprehensive report that dealt with microbiological food
    safety and factors in a lot of different elements that we now
    have to deal with, as well as the importance of a science-based
    regulatory approach to ensure safe food.

                              END PRODUCT TESTING

        There is one point that I wanted to draw your attention to.
    It relates to microbiological testing of finished product or
    end-product testing. The report says that end-product testing
    can be misleading in that negative test results do not ensure
    safe food. You have alluded to that and drawn the parallel
    between that and a person getting a physical exam or having
    their blood tested. Our law includes performance standards and
    requires some end-product testing. I wonder if you would
    elaborate a little bit more on that and how sometimes that is
    not the most wisest road to travel down.
        Ms. Murano. Sure. I think all food microbiologists, pretty
    much all agree that unless you are able to test every single
    unit in a production lot or what it is that you are producing,
    you could never be 100 percent sure that you have found
    whatever contaminant you are looking for. So we have to rely on
    statistics. For raw products that is certainly the case. When
    you are talking about a ready-to-eat product which should not
    have particular contaminants, the microbial testing that is
    done certainly is useful in that it shows us whether we have
    achieved the control over the hazard that that cooking step or
    processing step that would have given us.
        But to more directly answer your question, the reason HACCP
    was even invented was back in the late '50s, 1959 to be exact,
    was that the space program wanted assurances that the food that
    they were going to send up with the astronauts was safe.
    Pillsbury at the time had the contract to provide the food for
    the astronauts, and was doing what everybody else was doing,
    which is end-product testing, producing a food product, and at
    the very end doing some testing of some of the products. Since
    you cannot really test all of the product, you do have to do
    random testing. They realized very quickly that to assure as
    best as possible that the astronauts would go up there with as
    safe a food supply as possible, they needed to go to a
    preventive system, not rely on that end-product testing, try to
    prevent contamination. That is where they developed the concept
    of HACCP, where you actually look at your process, look at
    where contamination can come in, look where it can be
    controlled, and establish those steps where you can control it,
    what they call critical control points. That way if you control
    those points, you can be assured to the greatest extent
    possible that the end product will be as safe as possible. Then
    you use microbial testing as a verification for each of those
    critical control points.
        I would be remiss if I didn't tell you, Mr. Chairman, that
    my deputy under secretary, Dr. Pierson, is actually one of the
    authors of that particular publication that you mentioned, so
    of course I am very well aware of it. He has 50 copies that he
    has been handing out to everybody and wondering if we want it
    autographed. And I don't think anybody has asked for his
    autograph.
        Is there is anything you would like to add, Dr. Pierson,
    since you were co-author of that publication?
        Mr. Pierson. Thank you. You covered it very nicely. I
    appreciate your making reference to the Emerging
    Microbiological Food Safety Issue report. The report
    represented very serious thought by a group of scientists who
    were dedicated to evaluating emerging foodborne pathogens, and
    the influence of environmental pressures on development of
    resistance, ecology, etc. and systems for effectively managing
    food safety.
        I was in the academic environment for 31 years before I
    took this position. Years ago we talked about testing, and its
    effectiveness. However, I ended up in the area of HACCP knowing
    that although testing had good points, how could food safety be
    managed better? HACCP offers effective pathogen control in our
    food system through critical control points where we are
    assured that these points are effective in what they are
    supposed to be doing, and using the testing part as a
    verification role.
        Basically what this report recommends, is that food
    processors need those types of effective control systems.
        The report goes beyond HACCP; it talks about what
    Government should be doing in the risk area, how you establish
    food safety objectives how you introduce then these control
    systems, and food safety management systems such as HACCP.
        Mr. Bonilla. Thank you very much, Doctor. Good work and I
    am going to have this report entered into the record for this
    hearing. We appreciate that. It is widely respected and being
    reviewed as I speak.

        [Clerk's note: The report is too lengthy to be printed in
    the record. It will be retained in the Committee files. The
    following is a press release announcing the release of the
    report and where the report can be found on the Internet.]

                  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Bonilla. Before I yield for our second round to Ms.
    Kaptur, I would like to thank Ms. DeLauro for presenting us
    each with a jar of apple butter. Ms. DeLauro, I presume this is
    from your district?
        Ms. DeLauro. Yes, it is, Mr. Chairman. It is from Bishop's
    Orchard, which is a wonderful place in my district, and I would
    like all of you to get to know about the agricultural interests
    of the Third District of Connecticut.
        Ms. Murano. It is fat free.
        Mr. Bonilla. Ms. Kaptur.
        Ms. Kaptur. Thank you, Mr. Chairman, and we thank Rosa
    DeLauro. We appreciate it very much.

                            CAUSE FOR FOOD POISONING

        I wanted to ask Dr. Murano if you know of the deaths that
    occur due to food poisoning in this country? How many of those
    if it is between 4,000 and 5,000, are due to meat, poultry or
    egg related poisoning.
        Ms. Murano. I don't have that information with me, and that
    is the kind of information, again, that CDC is trying very hard
    to come to grips with--providing as accurate as possible a
    breakdown of exactly that.
        The thought is certainly on a proportionate basis--and we
    don't know what the proportion is, but if you look at the five
    product categories that I mentioned earlier, seafood, eggs,
    produce, beef, and poultry, we don't know what is really the
    proportion of foodborne illness, let alone deaths,
    unfortunately, for each of those. We know for specific
    outbreaks where the source has been identified. Certainly we
    can get you that information. We can ask our colleagues at CDC
    to provide information noting where the vehicle of an outbreak
    infection, has been identified through the epidemiology tests
    that CDC conducts during outbreak investigations.
        Ms. Kaptur. May I just say, doctor, that as a non-scientist
    but as a data freak, I would have to tell you that in the year
    of 2002 the fact that you don't know is an amazing statement.
    And when I look at the budget both for USDA--and you comprise
    75 percent of the food budget that we spend as a country; FDA
    about a quarter of that, so food safety funding for--this was
    fiscal year 2000--was about $751 million back then. You have 75
    percent of it. The fact that you don't know what percent of
    these deaths and how people died related to those products
    under your inspection is an astounding statement to me. And you
    have 75 percent of the budget. It would have seemed to me after
    all these years somebody over there would have been curious,
    and we welcome your new energy and your microbiological
    expertise to help us answer.

                                IMPORTED PRODUCT

        I wanted to move on because I have several questions here.
    In terms of imported product, I would like to know from Ms.
    Glavin, is the imported market share going up for meat, poultry
    and eggs? If one looks at total consumption in this country,
    you use the figure of .4 percent in terms of what comes in from
    Mexico as far as meat and poultry I took it. What is happening
    to the imported meat portion, meat, poultry, egg portion, what
    you regulate of overall consumption in this country?
        Ms. Glavin. I believe it has risen slightly in the past few
    years, but I would prefer to get that for you for the record,
    exactly what it is.
        [The information follows:]

                  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                INDUSTRY GROWTH

        Ms. Kaptur. All right. I would appreciate that. Data that
    we have from the Economic Research Service indicates that USDA
    is projecting that overall meet and poultry consumption in our
    country, production will be 2.9 billion pounds higher in 2003,
    this near year, than in 2000, that egg production will be 319
    million dozens higher in 2003 than in 2000, and yet the number
    of food safety inspectors will remain flat during this entire
    period, based on your budget proposal. How can the system
    possibly work?
        Ms. Glavin. Well, most of the meat and poultry in this
    country, the overwhelming majority of it is produced in a very
    small number of plants in perhaps 300 to 400 plants, and the
    number of--the overwhelming number of our inspectors--or a
    large number of our inspectors are in the smaller plants which
    don't produce the large proportion of the food.
        In poultry and in the large poultry, beef and pork plants
    an increase in production doesn't require a huge increase in
    the number of inspectors. We believe that we have a large
    enough inspection workforce to cover projected growth. We do
    work very closely with ERS on what their projections are so
    that we can pay attention to that. We believe that we have a
    sufficiently large workforce to cover projected growth.

                                PRODUCT RECALLS

        Ms. Kaptur. I may have further questions on that in the
    next round, but let me just say, Ms. Glavin, in the first round
    of questioning, when I asked about all of the recalled product
    that we have lists of here--and there is one from Ohio--Ohio
    establishment recalls chicken base products--whatever that is--
    because of undeclared ingredients.
        You stated to me that the fact that we have all these
    recalls is a sign of HACCP's success. In other words that we
    have these lists and the reason that we have more listings of
    recalled product, my question to you is, recalled products are
    already in the marketplace. You said the system is working. My
    question to you is this is already out in the marketplace. How
    can the system be working if we are recalling this much more?
        Ms. Glavin. Yes. I am sorry if I misled you on that. It is
    not a sign of success when we have a recall. It means that
    there has been a failure. But we are, because of thingslike
    increased testing, because of closer work with CDC and with State and
    local health departments, better able to find out when those failures
    have occurred and get the product out of the system. So I apologize if
    I led you to believe that I thought that was a success because it is
    not when an adulterated product gets into the marketplace.
        Ms. Kaptur. I agree with you and I thank you for that
    clarification.

                COUNTRIES EXPORTING MEAT AND POULTRY TO THE U.S.

        I just wanted to ask for the record if the agency could
    provide me from which countries imported product is coming in,
    and then from which firms in which countries? I would like to
    know the nature of the flow, and then the prior question
    regarding the percent of the marketplace. My sense is it is
    growing and there is a lot of blended product. I would like to
    verify my own sense of what is happening out there.
        [Clerk's note: The requested information was too lengthy to
    print on the record. It will be retained in the Committee
    files. However, all of the information can be found on the
    Internet at www.fsis.usda.gov/ofo/faim.]
        And finally--and it will only take a few seconds here--let
    me just say, as my final question on this round to Dr. Murano--
    I take it, based on statements you have made regarding your
    conversations with administrators in Mexico that they are not
    paying the cost of their own inspection of these plants?
        Ms. Murano. They are.
        Ms. Kaptur. They are?
        Ms. Murano. Yes, ma'am.
        Ms. Kaptur. So all inspection that is currently being done
    for Mexican product coming into the United States does not
    expend a single taxpayer dollar from the people of this
    country?
        Ms. Murano. That is correct.
        Ms. Kaptur. For any aspect of what is being done. The
    only----
        Ms. Murano. Is our audits.
        Ms. Kaptur [continuing]. When it comes over the border, if
    it is rechecked on this side?
        Ms. Murano. Correct. And because of our going over there at
    least once a year to audit.
        Ms. Kaptur. So prior cost associated with our sending
    inspectors down there and paying for all, that is finished?
        Ms. Murano. Correct.
        Ms. Kaptur. Thank you.
        Mr. Bonilla. Thank you, Ms. Kaptur.
        Mr. Hinchey.
        Mr. Hinchey. Thank you very much, Mr. Chairman.

                    INDUSTRY GROWTH AND INSPECTION STAFFING

        This has been a very interesting exchange and I want to
    thank you very much for your very conscientious answers to
    these questions, and I think they are difficult questions. My
    inclination is that we are far too casual about our food safety
    inspection regime in our country, and the numbers seem, over
    and over again, to bear that out. The point has been made about
    the recalls, and the point particularly that you do not have
    the authority to institute a recall, that the recalls are made
    voluntarily by the companies involved.
        Ms. Murano. Correct.
        Mr. Hinchey. And the overseeing of those recalls is also
    voluntary, done by the companies involved for the most part. As
    a result, we find over and over again that only a fraction of
    the material that is recalled actually is returned. Your
    recalls are based upon contamination primarily of bacteria, E.
    coli, listeria, salmonella, some other foreign elements
    sometimes, but mostly bacteria. And the result of the recalls
    is very inefficient. Millions of pounds of meat remains out in
    the marketplace and in people's homes of restaurants after the
    recalls are made. And I was amused by the point that was made
    earlier about the problem being contamination that occurs in
    the kitchen. Well, yes, if the meat gets into the kitchen,
    absolutely, that is where the problem is going to happen.
        And we, apparently, are moving along with a situation where
    millions of pounds of contaminated meat are allowed to get into
    the kitchens and restaurants and homes in our country. And I
    think our attitude about it is far too casual, and that I think
    to some extent is born out by our budgetary approach to the
    issue. The effect will be that by the end of the budget year,
    given the facts of the present budget submission, we will have
    had a three-year freeze on the number of food safety inspectors
    at FSIS. And that is in the face of rapidly increasing
    production of meat and poultry.
        For example, the U.S. Department of Agriculture tells us
    that 2.9 billion pounds of additional food products were
    produced in this 3-year period. Between now and the end of 2003
    we will see millions of pounds of meat and poultry products out
    on the market, same number of inspectors; that egg production
    will be 319 million dozens higher in 2003 than in 2000, same
    number of inspectors. So the workload obviously is increasing
    very substantially, but we are not improving our ability to
    keep up. I am told that there will be 381,818 pounds of more
    meat to be inspected for every inspector that we have. So the
    workload for each inspector over the course of the next 3 years
    is going to increase by 381,818 pounds.
        I think that I was convinced last year and the year before
    that we were not doing enough. It seems to me that a bad
    situation is being allowed to get worse. We are told that food
    safety is a major concern in our war against terrorism and is
    in fact one of the weaknesses in our shield against protecting
    the American people against terrorism. So I guess we are not
    doing enough. And what ought we be doing to do a better job
    here?
        Ms. Murano. Let me see if I can address a few of your
    comments, Mr. Hinchey. Certainly I can understand Secretary
    Thompson making those remarks because when we compare, FDA with
    what we do, we have an inspector in every one of the plants
    that we regulate and FDA doesn't. They are only able to
    inspect, I think the figure is 1 percent of the product that
    they are supposed to regulate. Certainly with that in mind, you
    would--if that was the case with us--let's put it that way--
    absolutely you would see me here saying I need enough
    inspectors to be there in every plant.
        As Maggie explained, and I think if she wants to add some
    more comments to clarify what she said before, we monitor the
    staffing situation very closely because we by law have to have
    an inspector in every meat and poultry and egg processing
    plant. We try to have not only enough inspectors, but highly-
    trained inspectors.And I want to tell you that to me, even
    though I am a scientist, I believe that field operations, where the
    inspectors reside in the agency, is the most important part of the
    agency. It is not the Office of Public Health and Science, even though,
    obviously, that ranks right up there, but to me, it is the field
    inspector force because those----
        Mr. Hinchey. People out in the field doing the actual
    inspections, they are the critical element.
        Ms. Murano. You are absolutely right. It doesn't matter
    what policies we come up with, how good and fancy they are,
    those are the people who are implementing them, and they are
    our eyes and ears, they are the front line of food safety for
    the products that we regulate. I want to just reiterate to you
    something that I absolutely have as a top priority, ensuring
    that we have not only enough inspectors, but we have to have
    them very well trained.

                             ENFORCEMENT AUTHORITY

        Mr. Hinchey. Madam Secretary, I am convinced of your
    intellectual ability. I am convinced of the strength of your
    scientific background. I have no question about you personally.
    I think you are a terrific person. But even the best person,
    even someone like you cannot do the job that is required here
    given the meager tools that you have at your disposal. You
    cannot close down a plant. You cannot institute recall. You
    have an enormously growing workload and a stable number of
    inspectors. You have one inspector for each plant, but some of
    these plants cover acres and acres. So I don't doubt you or
    what you have going for you, but I doubt the power that you
    have, the authority that you have, and the ability that you
    have to carry out an important responsibility.
        Ms. Murano. I appreciate your concern on this issue because
    I share it. But I do want to say that I humbly disagree with
    you, that I do have the power to shut down plants. I can
    provide you with the plants that we have shut down since
    Supreme.
        Mr. Hinchey. You can't shut them down because of
    salmonella. You can't shut them down for listeria. You can't
    shut them down for E. coli.
        Ms. Murano. Sure we can. We can shut down plants that----
        Mr. Hinchey. The judge has said you can't. That is the law
    in the fifth circuit, unless the Supreme Court or the
    legislative body overrules the court, which hasn't done in this
    case. We have to live by the law as it has been interpreted by
    the court. In this particular case the court has said you don't
    have the authority.
        Ms. Murano. Legal counsel has explained to us that the
    Supreme Beef case involved a grinding operation. Legal counsel
    also explained the reason the judge ruled the way he did is
    because he basically said a grinder who buys trimmings already
    carrying the microorganism salmonella into his plant, cannot be
    expected to bear the burden of reducing that load. Right or
    indifferent, I am not going to argue that right now because I
    am not a lawyer and I don't want to get into that. What I am
    trying to tell you is that when we looked at our history of
    closing down plants, we closed very few, only six, due to the
    salmonella performance standards only.
        All I am trying to tell you is that what I am going to
    focus on and what I do focus on is the food safety system that
    Dr. Pierson was explaining. That is really the basis for the
    reduction in pathogens. Now, regarding the inspectors, believe
    me, that I will be the first one over here telling you, ``Mr.
    Hinchey, we need more money for more inspectors,'' if we see
    that we are not going to have enough inspectors.
        Let me give Maggie Glavin a chance to explain to you how
    many inspectors we typically have in plants.

                              INSPECTION STAFFING

        Ms. Glavin. The number of inspectors in a plant will be
    dependent upon the volume in the plant. We inspect every
    carcass in every plant every day. In a plant that has four
    lines of chickens being slaughtered, we will have an inspector
    on every one of those lines. It is not necessarily one
    inspector per plant.
        Mr. Hinchey. Well, can I just question that because FSIS
    has 7,600 full-time inspectors to inspect 6,000 plants.
        Ms. Glavin. Yes, sir.
        Mr. Hinchey. Now, assuming these people are working 40-hour
    weeks, I assume that. Is that correct?
        Ms. Glavin. Yes.
        Mr. Hinchey. They are working 40-hour weeks. Some of them
    are on vacation. Some of them are going to be out sick. How can
    you have 7,600 full-time inspectors inspecting 6,000 plants,
    and expect me to believe that every single carcass in every
    single plant is being inspected? It is physically impossible.
        Ms. Glavin. No, sir. Every single carcass is being
    inspected----
        Mr. Hinchey. Well, if it is, it is a very superficial
    inspection.
        Ms. Glavin. No, it is actually not. Our inspectors are
    trained to make decisions about every carcass as they see them,
    and they do that. We also have quite a few very small
    processing plants. For example, in a downtown metropolitan area
    there may be a dozen or more plants in a very small area, and
    we will have an inspector that covers a number of those plants
    in a day. Those are not slaughter plants. Those are processing
    plants where they might be cutting up or grinding, and so we
    might have one inspector covering 4, 5, or 6 plants in a
    several-block area. So that it is not----
        Mr. Bonilla. Mr. Hinchey, we must move on. Thank you. We
    will come back for another round, Mr. Hinchey, if time permits.
        Mr. Hinchey. Thank you, Mr. Chairman.
        Mr. Latham has just joined us. I know he has been juggling
    several hearings this morning, and we appreciate his arrival.
    We will now yield to him.
        Mr. Latham. Thank you, Mr. Chairman. And welcome.

                               EMERGENCY RESPONSE

        I apologize for not being here earlier, knowing everything
    that has been covered. I have a meeting this afternoon with
    some folks from the FBI in response to questions I had last
    week with the Director about coordination and cooperation
    between Federal law enforcement and the USDA food inspection
    entities with respect to agroterrorism, both foreign and
    domestic. There are various radical groups that have threatened
    to destroy our livestock industry by bringing diseases and
    other maladies into effect.
        I just wonder what type of cooperation we can expect in
    trying to prevent this. And in case of an incident, what type
    of response.
        Ms. Murano. I will be happy to at least start, and ifyou
    have any more questions, we can certainly see if anybody else has
    something that they can contribute.
        As I said in my opening statement--and I will just give you
    the gist of it. I was here September 4th as a consultant to
    USDA, just a week before September 11, which of course just
    threw everything into just a different state of mind. I was
    always concerned about biosecurity in terms of terrorist attack
    even before coming to USDA, but I thought that would be
    something I would have as a lower priority, and that quickly
    became a top priority.
        I realized right away is that we needed to have a couple of
    things, number one, a system within, or an entity, within USDA
    that could handle the coordination, the rapid response, even
    the prevention if possible, of those kinds of events. We also
    needed an ability to better communicate and coordinate
    activities with the Centers for Disease Control, with FDA, EPA,
    Department of Defense, et cetera.
        When I came to USDA I first thought, well, what is here
    already? The agency that I oversee, FSIS, they deal with
    foodborne outbreaks and recalls and emergency response type of
    scenarios on a regular basis. I knew that we had the cadre of
    people in the agency that could help in this effort, so we
    quickly formed our Food Biosecurity Action Team (F-BAT) so that
    we could focus our attention on what we need to do to prevent
    and rapidly respond to intentional contamination. Then I
    quickly designated F-BAT to act as the arms and legs, of our
    biosecurity efforts outside of USDA.
        I immediately went and met with Deputy Secretary Claude
    Allen at HHS; our Deputy Jim Moseley facilitated that meeting.
    We immediately began working together to form the Food
    Preparedness Network or Prep Net, which is co-chaired by the
    acting administrator of FSIS, Maggie Glavin, and the Director
    of the Center for Food Safety and Applied Nutrition, CFSAN,
    which is under FDA. When you compare that to the system that
    was in place before, that was formed several years ago, a
    system called Force G. Force G's interaction occurred only at
    the high levels where people were not interacting as well as
    you might think on a day-to-day basis. What do you do when you
    have to respond quickly?
        We have tabled Force G for a while and are concentrating on
    F-BAT, within USDA, and having it be our liaison with Prep Net.
    What we have been able to accomplish with Prep Net--through
    several meetings we have done joint tabletop exercises with
    FDA, is we have helped each other in developing guidelines for
    our different industries in terms of what we can help them
    with; in terms of information that they might need to better
    protect the food supply.
        It is a challenge for all of us, but certainly the fact
    that we have inspectors in every plant and that we have HACCP
    systems, it makes it a little bit easier for us to control
    intentional contamination. Nothing is absolutely perfect,
    unfortunately, and we are working very, very hard to make it be
    as protective a system as possible.
        But certainly FDA has its own challenges. One of the things
    that we are doing with them, is trying to figure out what
    laboratory capabilities, that FDA has, that CDC has, and that
    we have. In the past, when there was an event dealing with meat
    and poultry, we would have had to deal with it. If it was some
    other product, FDA had to deal with it. That was the way it
    worked.
        The way we are doing it now, is if there is an intentional
    contamination of the food supply and we can help FDA because
    maybe we have the expertise or the ability in our labs to take
    their samples and analyze them, we will do that, or vice versa.
    That is the collaboration with FDA that we have developed, and
    it hasn't been easy. I am not going to tell you it was easy,
    but I think we are there.
        The fact that FDA has a new Deputy Commissioner, Dr. Lester
    Crawford, who both my deputy, Dr. Pierson, and I know very
    well, it has made just a world of difference. Just yesterday we
    sat and had lunch with him, and we are going to do so on a very
    regular basis, and in a matter of two minutes we solved a
    couple of issues just like that. That is what is needed at this
    time, more than ever.

                         HOMELAND SECURITY SUPPLEMENTAL

        Mr. Latham. You are speaking of the funding in the
    supplemental for the bioterrorism issue. Is that where those
    dollars are going? Or what specifically are they being used for
    at this time?
        Ms. Murano. The $15 million, is that----
        Mr. Latham. Where the funding for the bioterrorism
    initiative to expand the agency's capability.
        Ms. Murano. I don't know either. We have a $15 million
    biosecurity appropriation.
        Mr. Latham. Okay. This is the supplemental.
        Ms. Murano. Yes, the supplemental. Yes, sir.
        Mr. Latham. And it says the committee recommends a total of
    $9.8 million as follows: $900,000 for security measures at St.
    Louis, Missouri, and Alameda, California, and $8.9 million to
    finance a bioterrorism initiative in order to expand the
    agency's capability to react and respond to bacterial and
    chemical agents in contaminating the food supply.
        Ms. Murano. Yes, I believe, Mr. Latham, that probably you
    are referring to the House version versus the final version.
    The final version turned out to be $15 million supplemental
    appropriation.
        Mr. Latham. The House version is what counts.
        Ms. Murano. I know that. [Laughter.]
        But they gave us more money. But basically. I could go over
    it a little bit with you, if you would like.
        Mr. Latham. I guess my major interest is really the
    coordination. Are you working with law enforcement at all as
    far as notification and coordination?
        Ms. Murano. Yes, sir, we certainly are. And let me allow
    Maggie Glavin to talk a little bit about this since she is our
    co-Chair for the PrepNet and she can explain some of the
    activities in more detail.
        Mr. Latham. I am a little over my time, Mr. Chairman. Yes,
    go ahead, and maybe more completely for the record.
        Ms. Glavin. With other agencies, we are working with FDA,
    with CDC, with APHIS at USDA, with the Department of Defense,
    and with EPA, as well as with the States.
        With respect to law enforcement, since September 11, we
    have had a number of threats made, a number of hoaxes, et
    cetera, and we work very closely both with local lawenforcement
    and, through the OIG at Agriculture, with the FBI.
        Mr. Latham. If there are other comments, please just submit
    them for the record as I am out of time.
        Thank you, Mr. Chairman.
        Mr. Bonilla. Thank you, Mr. Latham.
        I am going to yield next to Ms. DeLauro. I also want to
    announce Mr. Kingston has been kind enough to take the Chair
    for, the remainder of the hearing. I am departing now but I
    want to thank you all personally for your appearance here today
    and for all the hard work that you put in day in and day out.
    Thank you.
        Ms. Murano. Thank you, Mr. Chairman.
        Mr. Bonilla. Ms. DeLauro?
        Ms. DeLauro. Thank you very much, Mr. Chairman.

                              INSPECTOR SHORTAGES

        A follow-up on my colleague Mr. Hinchey's comments about
    inspection. This is a comment from an April 2001 Inspector
    General report, ``We found that inspector shortages occur
    because FSIS does not have a method of estimating staffing
    needs based upon all meaningful criteria, including projections
    of changes in attrition, industry production levels. In the
    absence of a supportable prescribed staffing level, we were
    unable to ascertain what the actual shortfalls were. My
    suggestion on this is I think we have to take a close look at
    the methodology for determining inspection staff.''
        Now, even without that, a year ago, probably more than a
    year ago, in this year's agricultural appropriation bill I
    offered in subcommittee, in full committee and I offered on the
    floor, prior to September 11th, $213 million in funds for
    increased inspection. The portion for USDA FSIS was $50
    million. That was defeated in this committee, it was defeated
    in the full committee, and it was defeated on the floor of the
    House. Again, prior to September 11th, where we now have--and
    it was truly based on information coming across the table here
    about the percentage of imported food coming into the country,
    the ability to provide for the public health and safety of
    people with regard to our food supply.
        I asked you at FSIS--and we need to talk through this about
    an adequate system of dealing with inspections and food
    inspection in this country. It should not be a partisan issue,
    but I will also indicate that when I offered those amendments
    in this subcommittee and in the full committee, on a party-line
    vote it was defeated, on a party-line vote.
        Now, that is politics. It is not the safety. It comes back
    to you. Have an adequate estimate of the number of inspectors
    you need, and you will have support on this committee to help
    you do your job.

                           SINGLE FOOD SAFETY AGENCY

        This only sounds to me, in terms of other questions that
    have been asked, that we need a single agency to deal with food
    safety in this country. We have a fragmented system of food
    safety, and within that fragmented system, we have lax rules
    and regulations and no real authority to go after those--not
    everyone--to those who would abuse the system. And smart
    people, reasonable people, and concerned people will use the
    tools at their disposal to do what is right. I believe in what
    is right and wrong, and I believe in the good faith of people
    to do what is right.
        This is stunning, just stunning.

                                    LISTERIA

        Let me move further to a question on Listeria. In August
    1998, Listeria in ready-to-eat deli meats and hot dogs produced
    by Sara Lee sickened 100 and killed 21. Listeria is estimated
    to cause 2,500 illnesses and 500 deaths each year. USDA has a
    risk assessment demonstrating that Listeria is a public health
    problem of serious concern.
        It has been over a year since USDA issued its proposed rule
    requiring testing for Listeria. When will the final rule be
    adopted? Is anything being done to speed up the process? Will
    you finalize this rule quickly and then fully enforce it?
        Ms. Murano. On Listeria, if I may give you a little bit of
    a time line on that, obviously February 2001 is when the
    proposed rule came out with a comment period, as typically
    these proposals have.
        Ms. DeLauro. How long was the comment period?
        Ms. Murano. This comment period had a deadline of May 29.
    In May, the agency held a technical meeting, as I understand
    it, and also a public meeting to discuss some of the issues
    related to what do we need to do to better protect consumers
    from Listeria in meat and poultry products. The comment period
    was extended to June 28th because of all the comments really
    that were being received, as there was a need to really
    consider all the different aspects of this very complex issue.
        There were so many requests to extend the comment period
    that it was extended again and finally closed in September
    2001. There is a requirement for us to do a cost/benefit
    analysis and to do a risk assessment as we consider a final
    rule. I can tell you that the risk assessment that you talk
    about, of which, I happen to have a copy right here, this was a
    risk assessment that was done on selected categories of ready-
    to-eat foods. It is a very good document in the sense that it
    certainly does give you part of a picture of the kinds of risks
    that are present because of Listeria.
        But this risk assessment, because it was at the retail
    level, certainly doesn't give us the information that we need
    in order to develop a policy, a risk management policy, to deal
    with Listeria at the processing plant, which is what we are
    supposed to be doing.
        We needed to develop a risk assessment because of this
    requirement, and to develop that risk assessment, we realized
    that there were some data needs. ARS began a study that they
    are going to complete in the early part of the summer,
    hopefully in June, to give us information that we need to build
    the model for the risk assessment at the processing line. That
    is what we have to have in order to really decide what is the
    right approach in putting out the final rule.
        I share your concern, Ms. DeLauro, about foodborne illness
    and certainly about Listeria monocytogenes, because if you look
    at this draft assessment, it is the populations at the highest
    risk, the susceptible populations, that we need to focus on.
    Those are the people that need our help.
        What we have been doing in the meantime, because these
    processes obviously have taken time, is implementing the
    sanitation procedures and verifying that they work by testing
    product for Listeria monocytogenes. It is something that we
    have been doing since 1999. The agency has collected enough
    data to show that from 1999 to 2001, we have seen a 57 percent
    decrease in the number of positives forListeria. It is not
    perfect. We are not there yet. But it is a good sign that the
    sanitation procedures that we are requiring in plants and that we are
    holding them accountable for, are having some effect. It is not perfect
    yet, so we are continuing this.
        But in the meantime, not only do we test the product, but
    we have a directive that is designed to encourage plants to do
    the kinds of things that the proposed rule is talking about,
    which is to test the contact surfaces, the product contact
    surfaces for Listeria, and if there is contamination that is
    found, then to look at the product.
        As a microbiologist, I know that Listeria, which is a
    ubiquitous organism, unfortunately, tends to find a niche in a
    processing plant. Finding that niche is the key to eliminating
    it from the processing line and ensuring that you will have a
    ready-to-eat product that is free of this pathogen.
        Ms. DeLauro. Dr. Murano, when will we have a final rule in
    your estimation?
        Mr. Kingston [presiding]. Dr. Murano, I hate to rush you,
    but if you would answer quickly and move on.
        Ms. Murano. I am sorry. Yes.
        Ms. DeLauro. I would like to know when we can have a final
    rule.
        Ms. Murano. Yes, absolutely. Because of all these processes
    and getting the ARS data and finalizing our risk assessment so
    that we can input the data and see what are the measures that
    are going to actually truly eliminate this organism, we are
    thinking that 2003 is the earliest time for us to have a final
    rule.
        Ms. DeLauro. God help us.
        Mr. Kingston. Thank you very much.
        Ms. Kaptur.
        Ms. Kaptur. Thanks, Mr. Chairman, very much.

                             FOOD SAFETY TECHNOLOGY

        I wanted to continue on the questions on recalls, and, Ms.
    Glavin, I was interested to hear your explanation that the
    reason that we don't need more inspectors is because the added
    production that will be occurring in meat and poultry and eggs
    will be in the larger plants, and there are already inspectors
    in those plants and so forth. In a way, that almost seems like
    USDA has some prejudice toward the larger plants because they
    pay for their inspectors. I don't buy my meat, if I can help
    it, from large plant-produced meat. I like to buy from farmers
    who raise animals in our area and I know what they eat and they
    taste better, anyway.
        But I am concerned about the possibility that because there
    aren't enough inspectors within the system, that you may be
    using technology such as washes and irradiation as a substitute
    for physical inspections.
        Is it true that this may be happening, because the
    processing lines are moving very fast and, frankly, there
    aren't enough inspectors out there? Do you see a substitute--is
    there a substitution going on here of technology for
    inspections?
        Ms. Glavin. No, there is not. We strongly encourage meat
    plants to make the maximum use of technologies that can reduce
    foodborne pathogens on their products, and we certainly
    encourage that. But that is the food plant making use of
    technology to produce a safer product. It has no impact on our
    inspection.

                              INSPECTION STAFFING

        Ms. Kaptur. Let me ask this: Is there any prejudice by USDA
    toward favoring large plants over smaller ones in the way you
    operate your inspection system?
        Ms. Glavin. No, there is not.
        Ms. Kaptur. The costs?
        Ms. Glavin. No.
        Ms. Kaptur. How is that managed so it doesn't discriminate
    against the smaller processors?
        Ms. Glavin. We provide the inspection resources that are
    needed for a plant to operate. A slaughter plant must have
    sufficient inspectors for every carcass to be inspected, or
    they can't operate. And we do provide that. And we also provide
    for daily inspection of all processing plants. It doesn't
    matter whether they are large or small.
        Ms. Kaptur. Is the cost per unit produced borne equally by
    the large and small plants?
        Ms. Glavin. I am not sure I understand your question.
        Ms. Kaptur. It is my understanding that processors have to
    pay for the cost of inspection. Is that true?
        Ms. Glavin. No, they do not.
        Ms. Kaptur. You pay for it all.
        Ms. Glavin. Yes.
        Ms. Kaptur. Okay. Oh, that is good. I didn't know that.
        Ms. Glavin. If a plant has the need for inspectors to work
    overtime, then they pay for that. They reimburse USDA for--if
    we cover from 9 to 5, for example, in a plant and on a given
    day they have got a customer who has a particular need and they
    need to run to 5:30 or 6 o'clock, then for that part of the
    day, they reimburse the Department for the cost of that
    inspection.
        Ms. Kaptur. Only on overtime.
        Ms. Glavin. Yes, ma'am.
        Ms. Kaptur. All right. So there would be no undue burden on
    the smaller firms in the way you----
        Ms. Glavin. No, because it is federally funded.
        Ms. Kaptur. Okay. I am going to put in the record the
    recalls over the last couple years, from 2000 to the present,
    which are, frankly, quite substantial. And then I am going to
    put into the record the recall cases from the year of 2002.
        [The information follows:]

                  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Ms. Kaptur. And as I study these a little bit, and in the
    minimum amount of time we have to deal with the issue of food
    safety, which is two and a half hours--imagine that. Two and a
    half hours. We are not going to see you again until next year.
        Ms. Murano. I will be happy to come to visit with you and
    talk about anything you would like.
        Ms. Kaptur. It is nice to have an open public hearing.
        Ms. Murano. Yes, it is.
        Ms. Kaptur. Where people can ask questions and learn from
    one another. We always learn at these meetings. It is really a
    tragedy that we have 13 simultaneously scheduled subcommittee
    meetings while this one is going on and some of our most
    experienced and able members can't be with us this morning. It
    isn't the way I would run the place, but it is the way it is
    being run now. And this subject is very important to the
    American people as well, so I apologize to the members of the
    public who are here that we have this little discussion in
    which the public can hear and participate through us.

                                PRODUCT RECALLS

        But on this recall list from the year 2000, what amazes me
    as I look through it is how much remains in the marketplace. I
    mentioned earlier on Cargill--this was turkey and chicken. I
    don't know what RTE is? RTE turkey, chicken?
        Ms. Murano. Ready-to-eat.
        Ms. Kaptur. Ready-to-eat turkey and chicken, Listeria,
    16,895,000 pounds recalled but only 2 million recovered. But if
    I look down this list, the figures that really jump out at me
    are the ground beef, the poundage that is out there from
    companies that are very well known--Omaha Steaks, 22,000 pounds
    recalled, 10 pounds recovered, ground beef.
        Okay. I go to Rochester Meats, again, ground beef. Ground
    beef seems to stand out. E. coli, and that is really--most of
    this is related to E. coli, 30,000 pounds recalled, only 10,000
    recovered.
        Here is something they can't figure out what the company
    name was, but it came in from Canada, evidently, 73,800 pounds
    of E. coli-infected material, pounds recovered only 250.
        Moyer Packing, Pennsylvania, 253,000 pounds recalled, only
    7,900 pounds recovered.
        Packerland Packing, 196,000 pounds of ground beef out there
    infected with E. coli, only 6,700 pounds recovered.
        It is really--Campbell's Soup, 109,000 pounds recalled,
    only 16,000 pounds recovered in vegetable beef soup.
        My question to you is: Where is the stuff that wasn't
    recovered? Where is it?
        Ms. Murano. I think that is what Maggie had alluded to.
    Some of it probably was eaten, some of it was probably thrown
    out. And this, if nothing else, is what gives me the impetus to
    say to myself we can do better and we have to do better, and
    this is why controlling the hazards, is the key. With the
    ground product that you are mentioning, that especially is a
    challenge, because a product that comes into those plants in
    the trimmings, that is where the burden comes in.
        So the idea is: Can we put a control either at the grinding
    operation itself or have those grinding operations demand that
    their suppliers have a control measure? And this is where, to
    be honest with you, we are going to make some strides in
    reducing all of those recalls.
        [Clerk's note: The following information was added
    subsequent to the hearing:]

        The one issue that does not depend on who has recall authority,
    whether the USDA or industry, is the amount of product that is actually
    recovered. This is a complex issue, and is affected by many factors. In
    1997, the Centers for Disease Control conducted a survey of the
    consumers who had been involved in a salmonellosis outbreak from
    consumption of contaminated ice cream. The identity of consumers was
    easy to obtain, since this was a case involving clients of the
    Schwann's corporation, which delivers food right to their customers'
    door. In short, 31% of the clients went ahead and consumed the ice
    cream after hearing about the recall. This points to the fact that even
    when consumers are aware of a recall, they may choose to ignore it, a
    factor that contributes to the low percentage of recovered product.]

        Ms. Kaptur. I was amazed at the amount of ground beef. I
    don't think I will ever buy ground beef again.
        I wanted to also insert in the record the summary from a
    GAO study done on food safety in the year 2000 entitled
    ``Actions Needed by USDA and FDA to Ensure that Companies
    Promptly Carry Out Recalls.''
        [The information follows:]

                  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                           GAO REPORT ON FOOD SAFETY

        Ms. Kaptur. And let me read one of the conclusions, Doctor,
    and ask you your opinion on this.
        According to the conclusions, it says, ``According to USDA
    officials, their inspectors do not attempt to determine the
    cause of contamination for every recall. They believe this is
    the responsibility of the recalling company. But FDA officials,
    do attempt to determine the cause of contamination for every
    recall. In fact, FDA guidance to its inspectors says that the
    facility will be examined to determine how the food became
    contaminated.''
        Do you intend to follow FDA type procedures as you work
    toward elimination of these pathogens in the food processing
    process?
        Ms. Glavin. The way we operate is we require the plant to
    determine the cause. It is the plant's responsibility, and we
    hold them responsible for that.
        Ms. Kaptur. And if they don't--obviously, with the number
    of recalls, there is a lot of non-compliance. What do you fine
    them if they don't?
        Ms. Glavin. We have no civil penalty authority.
        Ms. Kaptur. Well, I would just urge your consideration of
    the FDA procedures. Could I ask, would you be prohibited from
    using them, or do you need additional legal authority in order
    to do that?
        Ms. Murano. I don't know. We will have to look into that.
    But let me say this to you: When Maggie says that it is the
    responsibility of the plant to find out the cause of it and
    that we hold them responsible for that, it is not that we turn
    away and say ``you find the cause, we don't care what it is.''
    We hold them responsible, meaning that we demand to see what
    the plant has found out.
        So this is not a case where we are looking the other way at
    all, because to us that is important because it gives us, if
    nothing else, the information that we need to figure out what
    we have to change so that this doesn't happen again.
        HACCP as a preventive system, has seven principles, one of
    which is corrective actions. We demand, in fact, expect by law
    that these plants abide by HACCP. They have to take corrective
    actions when there is a deviation, as we call it, or a failure.
    And so this is something that they have to have already
    prescribed in their plan--What they are going to do when there
    is a failure. The corrective action plan must address not only
    what they are going to do so that this doesn't happen again in
    the plant, but what they are going to do with the product. It
    must also address if the product is already in the market, what
    they are going to do with it. When it comes back to the plant,
    the plan must state what they will do about it, and how they
    will find out what the cause was. All of these things are part
    of the corrective actions that they write, and we review or
    revise. We are the ones who oversee what they write and hold
    them to it.
        Ms. Kaptur. But essentially your inspectors will not be
    giving guidance to examine the cause of the contamination as
    FDA does?
        Ms. Glavin. Our inspectors require the plant to present
    corrective and preventive actions and to review that
    presentation.
        Ms. Kaptur. And that is in the regulations?
        Ms. Glavin. Yes.
        Ms. Murano. As part of a HACCP plan, they have to have
    that.
        Mr. Kingston. We need to move on. I wanted to say, one of
    the things, that we sometimes overlook in Washington is that
    you are not the last line of defense standing in between the
    consumer and the producer of meat. You are not. The market is.
    Any producer who consistently produces a contaminated or
    inferior product is not going to last. But more importantly
    than that, if that plant produces contaminated meat, there is a
    plethora of people in this society called trial lawyers who
    will be glad to take that battle on, on an individual or a
    class-action basis in a lawsuit form. I was in the product
    liability insurance business, and we handled the insurance for
    poultry and meat plants. I can tell you that they worked
    closely with USDA, but their biggest fear was getting sued, and
    losing market share.
        Now, there is also the ethics of it. Most of these people
    are very good citizens and eat their own products. They give
    their own product to their own family, and wouldn't dream of
    putting something out that was even a little bit questionable.
    However, even good people can make mistakes, and that is why we
    have a tort system that keeps a sharp eye on a business that
    would produce an inferior product.
        But in addition to that, we have you. I think that the
    dynamics of the ethics, the concerns and the good will of the
    corporation, plus the tort system, plus USDA, give us a good
    system. Ms. Kaptur was concerned about the amount of recalls.
    How much meat is not recalled? Do you have a number? Is 10
    percent of the product that is out there recalled? Or is that 1
    percent?
        Ms. Glavin. The amount recalled is way under 1 percent of
    the amount produced, but we can get you an actual number. We
    know what is produced and we know what is recalled.
        Ms. Kaptur. Would the gentleman be kind enough to yield?
        Mr. Kingston. Certainly, but I think that would be of
    interest to know. And, again, as we have stated repeatedly on
    this committee, if anything is recalled we want to try to do
    whatever we can to eliminate that. But it would also be good to
    know the percentage. I will be happy to----
        Ms. Kaptur. I would just say, I have listened to the
    gentleman's comments throughout the morning, and what startles
    me a bit about your presentation so far is that you haven't
    expressed any concern about those that are continuing to be
    harmed, Jack. So if you have got 76 million people in the
    country that are getting sick----
        Mr. Kingston. Well, let me recall my time----
        Ms. Kaptur [continuing]. And you have people who are
    dying----
        Mr. Kingston [continuing]. And say----
        Ms. Kaptur [continuing]. It would seem to me that is a
    pretty important----
        Mr. Kingston. Recalling my time, to say that there are
    those who, may want to play politics about this, but to suggest
    that a member of this committee on either side isn't concerned
    about people, that is--that is interesting. I would not think
    anybody who is a Member of Congress, a responsible member in
    either party, would come here without regard. I am saddened by
    those remarks.
        Ms. Kaptur. I am saddened by your lack of attention to them
    in your questioning this morning.
        Mr. Kingston. I will be happy to yield to Mr. Hinchey.

                                  TORT SYSTEM

        Mr. Hinchey. Thank you very much, Mr. Chairman.
        I am interested in what you said a few moments ago about
    the tort system, and I think that fortunately we do have a very
    good tort system in our country, but we continue toundermine
    it. Just yesterday, the House of Representatives passed a bill which
    would undermine the tort system by forcing every class action suit
    essentially into over-crowded Federal courts, taking them out of State
    courts. That would hamstring a substantial portion of the tort system
    in our country.
        It is a shame that that bill passed, but it did, and its
    effect is to weaken the ability of people to get recompense for
    injustices.
        But I wanted to address my questions in what I guess will
    be the last opportunity to do so today--I am sure you are very
    delighted to hear that. [Laughter.]

                       INTENTIONAL CONTAMINATION OF FOOD

        Mr. Hinchey [continuing]. On an aspect of this question
    which embraces the issue of national security. I am reading
    from the Office of Inspector General's Semi-Annual Report. This
    is for fiscal year 2001, so it reaches back into the previous
    administration. And one of the issues it talks about is as
    follows: A Michigan-based corporation pled guilty in Federal
    court to the distribution of adulterated food products and was
    fined $50,000. On April 13, 1999, FSIS deemed over 21 million
    pounds of meat and poultry products produced at this plant
    unfit for human consumption. The investigation of the Office of
    Inspector General showed that the corporation failed to notify
    FSIS of 16 positive tests for Listeria monocytogenes in 1997
    and 1998.
        So this, of course, brings us back to the voluntary
    compliance aspect of our system here and demonstrates for us
    once again the very acute weaknesses of that system.
        Assisting in the investigation were FSIS compliance
    officers and the Office of Special Investigations for the U.S.
    Air Force. Why was the U.S. Air Force involved? Because U.S.
    Air Force personnel were consumers of these meat products.
        If you wanted to disable a substantial portion of the
    American military, just say for example, one of the ways that
    you would do it would be to buy up a few of these companies and
    send out contaminated food into military operations.
        Secretary Thompson said last year that he feared
    intentional contamination of food more than anything else under
    his jurisdiction. And the reason he said that, I believe, is
    because the General Accounting Office reported on USDA's
    efforts to address major management issues. GAO stated that the
    inspector general--and I quote--``reported that USDA needs to
    identify and halt criminal activity involved in the intentional
    contamination of food products.'' GAO found that the ``FSIS
    fiscal year 2002 performance plan did not have a performance
    goal related to identifying and halting criminal activity
    involving the intentional contamination of food products.''
        So what we are seeing here is that there is a criminal
    element that is involved in the food production system. I know
    organized crime is involved in the food production system and
    the distribution system and the restaurant business to some
    extent in many places across our country. I can tell you that
    from my experience in the New York State Legislature.
        There has always been an element of intentional crime. But
    now we are facing a new level of intentional crime, with the
    international terrorism phenomenon which we are currently
    confronting.
        We have a brand new problem on our hands, and we are not
    doing anything to deal with it. We have 381,818 additional
    pounds of meat per inspector to be examined. Nobody is gearing
    up for that, no additional inspectors. And in commenting on the
    draft of the report from the GAO that I just read a minute ago,
    FSIS stated that it was unaware that the Office of the
    Inspector General considered this to be a major management
    challenge and that it had enhanced its efforts to review high-
    risk firms in the last few years.
        How could FSIS not know that the IG thought that criminal
    activity and the intentional contamination of food was a major
    issue?
        Ms. Murano. I will let you answer that.
        Ms. Glavin. Sure. The Office of Inspector General (OIG) had
    not brought this to our attention at that time, and that is why
    our response to the GAO was along those lines.
        Mr. Hinchey. Okay. I accept that as a fair response. What
    is your response today?
        Ms. Glavin. Clearly, with the events of the past year, this
    is an area where we are focusing our attention. Dr. Murano
    outlined earlier some of the activities that we have been
    involved in to increase our ability to identify and respond to
    intentional contamination of the food supply. It is a much,
    much higher priority than it was.
        Mr. Hinchey. What is the procedure that you employ in
    dealing with incidents where you find intentional criminal
    activity in the contamination of food?
        Ms. Glavin. Very fortunately, sir, there has not been
    intentional contamination of the meat and poultry supply. There
    have been a number of----
        Mr. Hinchey. Well, the Office of the Inspector General is
    telling us something quite different. He is telling us that
    there is intentional contamination. Secretary Thompson says
    that the thing he fears most is intentional contamination of
    the food supply.
        Ms. Glavin. Yes, and we are also very concerned about the
    possibility of----
        Mr. Hinchey. You are telling me there is no intentional
    contamination.
        Ms. Glavin. I am telling you that there has not yet been an
    incident of intentional contamination.
        Mr. Hinchey. He reports on one in the 2001 report, the
    second half of 2001. What are we talking about here?
        Ms. Glavin. I believe the situation he was reporting on was
    one where there was unintentional contamination of product that
    the plant did not report to us.
        Mr. Hinchey. Ms. Glavin, the Inspector General says in his
    report that there were 16 or 17 intentional incidents of
    contamination that he found in his investigation, and he
    reported that to you.
        Ms. Glavin. He found incidents where the plant should have
    come to us and reported it to us, where the plant perhaps was
    negligent.
        Mr. Hinchey. You are playing a semantic game with me. I am
    telling you what the Inspector General told you. The Inspector
    General told you that you have a problem of intentional
    contamination of the food supply, that some of this intentional
    contamination of the food supply involvesorganized criminal
    activity.
        I am suggesting to you that some of this intentional
    contamination of the food supply, either presently or in the
    future, may very well involve active terrorist elements in our
    country.
        Ms. Glavin. Yes.
        Mr. Hinchey. And I am wondering what your attitude is about
    this and what you intend to do about it.
        Ms. Murano. Let me say one thing before you answer that,
    because, you know, I am a new kid on the block myself, so when
    I read these reports, I, like you, want to get to the bottom of
    it. I want to find out is it so? If it is, let's fix it, et
    cetera.
        But from what I am understanding that you read and what I
    am understanding that Maggie is talking about, at this
    particular plant, they were not reporting test results to us--
    not that they were intentionally putting Listeria in product.
    They were finding Listeria, but not telling the Government. And
    that is criminal activity, no question about it. But I
    understand also what you are saying, is that if someone wanted
    to--which is the situation we are facing right now because of
    9/11. If someone wanted to buy up these plants and
    intentionally put a pathogen into the product, what are we
    doing to prevent that from reaching the consumer?
        Mr. Hinchey. Yes.
        Ms. Murano. Is that what you are asking?
        Mr. Hinchey. Yes.
        Ms. Murano. And this is something that requires that we
    have inspectors that are at these plants diligently looking for
    these things, and these have to be inspectors that have to be
    doing their job correctly. And what I am assuming is that
    obviously did not happen in those plants.
        Mr. Hinchey. It didn't happen in this case.
        Ms. Murano. Correct.
        Mr. Hinchey. It didn't happen in all of these cases in one
    year either, involving literally millions of pounds of meat
    products. So there are enormous gaps in this system.
        Now, when you have enormous gaps in a system like this and
    you have 5,000 people dying a year, I suppose you can say,
    well, you know, that is the marketplace and, you know, people
    die in accidents----
        Mr. Kingston. Let me interrupt my friend. We have got about
    3 minutes until we have to vote, Maurice, so why don't you----
        Mr. Hinchey [continuing]. And they die in other ways. I
    think that is rather callous myself. But I have heard people
    suggest things like that. But when you are dealing with a
    situation now of national security and when we have the
    Inspector General telling us that you have intentional
    contamination of food, criminal activity involved in the
    intentional contamination of food, and one of the President's
    Cabinet members telling us that he thinks that the intentional
    contamination of the food supply is one of the most dangerous
    aspects of our current involvement against terrorism, I think
    it is time to do something.
        Mr. Kingston. Mr. Hinchey, would you like to come back? We
    can if you want. But we need to go ahead and vote. We have got
    2 minutes left. Do you want to come back?
        Mr. Hinchey. We better go. No, I think we have gone as far
    as we can.
        Mr. Kingston. Okay. Ms. Kaptur?
        Ms. Kaptur. I have several items to submit for the record.
    I did mention in prior remarks that we will have several recall
    summaries along with sections of two major reports from the
    General Accounting Office: one on food safety and security,
    fundamental changes needed to ensure safe food; and another one
    on food safety, actions needed by USDA and FDA to ensure that
    companies promptly carry out recalls.
        [The information follows:]

                  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Kingston. Dr. Murano and all the panelists, we want to
    thank you for being with us. As you can tell, this is something
    we care deeply about. We think it is a debate worth having. We
    can always do a better job at something even though we are
    doing a good job now. Thank you for your time and than you for
    your frank answers.
        Ms. Murano. Thank you very much.
        Mr. Kingston. We stand adjourned.

                  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                  PART 6 INDEX

                                  ----------

                              Farm Service Agency

                                                                       Page
    2002-Crop:
        Assistance...................................................    96
        Farm Bill Implementation.....................................    87
        Loan Rates...................................................    86
    Acquired Property:
        Credit Sales.................................................   191
        Inventory..................................................177, 193
    ADP Spending.....................................................   121
    Administrative Support:
        CRP Signups..................................................   138
        Farm Bill....................................................    61
        Travel Costs.................................................   125
    Agriculture, Status of...........................................   211
    Appeals..........................................................    65
    Beginning Farmers................................................   101
    Biofuel...................................................110, 114, 216
    Biographical Sketch, Administrator, FSA..........................    30
    Boll Weevil Eradication Loans....................................   201
    Citrus Canker Eradication........................................    92
    Commodity Credit Corporation:
        Borrowing Authority..........................................   162
        Contractual Services.........................................   144
        Dairy Purchases..............................................   208
        Emergency Pest Control.......................................    92
        Export Credit Guarantees.....................................   145
        Interest Rate on Borrowings..................................   147
        Inventory....................................................   147
        TEFAP Donations..............................................   151
    Common Computing Environment.....................................   204
    Conservation Programs............................................   126
    Conservation Reserve Program:
        Administrative Costs.........................................   138
        Cover........................................................   134
        Enrollment............................................134, 197, 200
        Estimates....................................................   139
        Farmable Wetlands Pilot Project..............................   200
        Signups and Eligibility Criteria.............................   135
        Technical Assistance.......................................138, 140
    Cotton...........................................................   201
    County Offices...................................................   131
        Employees....................................................   155
        Workload.....................................................   196
    Dairy Market Loss Assistance Program.............................   220
    Discrimination Lawsuit Settlement................................   119
    E-Government:
        E-LDP's......................................................   104
        Program Applications.........................................   216
    Emergency Conservation Program:
        Allocations................................................141, 142
        Needs........................................................   200
        Practices....................................................   143
    Equipment Purchases..............................................   121
    Explanatory Notes:
        Commodity Credit Corporation.................................   300
        Farm Service Agency..........................................   221
    Farm Bill:
        Administrative Costs........................................61, 203
        Funding......................................................   213
        Implementation for 2002 Crops................................    87
        Staffing Impacts.............................................   199
    Farm Loans.......................................................   200
        Activity.....................................................   169
        Budget Request...............................................   169
        Debt Write-Off...............................................   167
        Delinquencies................................................   173
        Economic Assumptions.........................................   168
        Loans to FSA Employees.......................................   194
        Rescheduling.................................................   172
    Farm Operating Loans.............................................   181
    Farm Ownership Loans.............................................   182
    Farm Storage Facility Loan Program...............................   197
    Hazardous Waste Management Program...............................   162
    Homeland Security................................................   218
    Indian Tribe Land Acquisition Loan Program.......................   194
    Information Systems..............................................   204
    Loan Rates......................................................86, 207
    Loan Service Fees................................................   132
    Non-Insured Crop Disaster Assistance Program Delivery............   213
    Object Classes:
        25...........................................................   195
        41...........................................................   126
    Opening Statement, Under Secretary, FFAS.........................     2
    Questions Submitted for the Record:
        Chairman Bonilla.............................................   119
        Mr. Latham...................................................   204
        Ms. Kaptur...................................................   208
        Mr. Farr.....................................................   220
    Reconstitutions..................................................    66
    Salaries and Expenses......................................86, 161, 199
    Senior Farmers Market Program....................................   208
        Space........................................................   130
    Specialty Crops..................................................    89
    Staffing..........................................88, 91, 104, 161, 214
        County Offices...............................................   155
        Employees on Detail..........................................   199
        Farm Loan Program Administration.............................   195
        Levels.....................................................204, 214
        State Offices................................................   159
        Training.....................................................   214
    State Mediation Grants...........................................   188
    Written Testimony:
        Administrator, Farm Service Agency...........................    19
        Under Secretary, Farm and Foreign Agricultural Services......     5
           RISK MANAGEMENT AGENCY--FEDERAL CROP INSURANCE CORPORATION
                                                                       Page
    Biographical Sketch of Mr. Davidson..............................    42
    Congressional Affairs............................................   417
    Crop Insurance Industry Annual Meetings..........................   405
    Crop Insurance Program:
        2002--Crop Loan Rates........................................    86
        Coverage in Ohio.............................................   441
        Crop Participation Rates.....................................   413
        Group Risk Plan..............................................   374
        Insured Crops................................................   409
        Program Delivery.............................................   368
        Program Indicators...........................................   415
        Program Participation........................................   365
        Revenue Assurance............................................   394
        Risk Management Education..................................113, 417
        Specialty Crops..............................................   440
        Summaries of Risk Management Education Projects..............   421
        Support for Beginning Farmers................................   101
    Dairy Options Pilot Program......................................   373
    Explanatory Notes................................................   446
    Hotline Investigations...........................................   417
    Information Technology Costs.....................................   367
    Introduction of Witnesses, Mr. Bonilla...........................     1
    Legislation:
        ARPA Status..................................................   100
        Cap on Underwriting Gains....................................    61
        Legislative Proposal..................................367, 418, 419
        Statement on Crop Insurance Cap Proposal.....................   419
        Underwriting Gains Versus A&O Expenses.......................   419
    Object Class 25..................................................   366
    Opening Statement, Under Secretary, Farm and Foreign Agricultural
      Services.......................................................     2
    Questions submitted for the record:
        Chairman Bonilla.............................................   364
        Ms. Kaptur...................................................   440
    Reinsured Companies:
        Currently Active Reinsurance Company Agreements..............   400
        Delivery Expenses............................................   405
        FCIC/Reinsurance Experience..................................   407
        Payments to Companies vs. Producers..........................   364
        Profits and Losses.........................................364, 396
    RMA/FCIC Financial Condition:
        Administrative and Operating Obligations and FCIC Fund
          Activities.................................................   403
        Commercial and Assigned Risk Funds...........................   398
        Total Administrative and Operating Costs.....................   401
        Treasury and Commodity Credit Corporation (CCC) Borrowing....   411
        Unobligated Balance--FCIC Fund...............................   415
    Staffing, Plans..................................................   364
    Testimony, Mr. Davidson, RMA Administrator.......................    31
    Testimony, Under Secretary, Farm and Foreign Agricultural
      Services.......................................................     5

                          Foreign Agriculture Service
                                                                       Page
    Agricultural Trade Offices.....................................472, 526
    Arrearages.......................................................   507
    Azores Collaborative Research and Education Group................   562
    Bill Emerson Humanitarian Trust..................................   553
    Binational Agricultural Research and Development Fund............   529
    Biography of Ellen Terpstra......................................    60
    Biotechnology Approval Regimes...................................   566
    Budget Request...................................................    52
    Capturing Overseas Sales.........................................   109
    Cochran Fellowship Program.....................................527, 831
    Codex Alimentarius...............................................   818
    Continuing the Liberalization of Trade in Agriculture............    47
    Cost of Staffing Changes in Balkans and Ukraine..................   563
    Dairy Export Incentive Program.............................57, 492, 519
    Emerging Markets.................................................   822
    European Union Ban...............................................   552
    Explanatory Notes................................................   836
    Export Credit Guarantee Program.......................56, 109, 493, 554
    Export Enhancement Program............................57, 488, 492, 561
    Export Incentive Program.........................................   492
    Export Promotion Programs of U.S. Competitors....................   823
    Facility Guarantee Program.......................................   553
    Farmer-to-Farmer Program.........................................   828
    FAS Buyouts......................................................   552
    FAS Conferences..................................................   527
    FAS Management Retreats..........................................   527
    FAS Presence in Ukraine..........................................   562
    FAS Profile......................................................    12
    FAS Program Activities...........................................    43
    FAS Resources....................................................   821
    FAS Technology:
        Computer System Failures.....................................   559
        E-gov Initiative.............................................    53
        FAS Increase for Information Technology......................   564
        FAS Telecommunications.......................................   561
        LANDSAT Data.................................................   526
        Recent System Failures.......................................   560
    Food Aid:
        Countries Graduating from Food Aid Programs..................   552
        Food Aid for Afghanistan and the Region......................   833
        Food Aid Programs............................................   824
        Ocean Freight Differential Costs for Food Aid Program........   535
    Food Assistance Policy Council...................................   830
    Food Security Commodity Reserve..................................   552
    Foreign Currency Accounts........................................   554
    Foreign Food Assistance..........................................   568
    Foreign Market Development Program..............................57, 536
    Former Soviet Union..............................................   487
    Global Food for Education Initiative.................555, 558, 566, 825
    GSA Rent.........................................................   561
    High Fructose Corn Syrup.........................................   820
    International Cooperation and Development Program................   472
    International Food Shows.........................................   522
    J-1 Visas/Cochran Fellowship Program.............................   817
    Japanese Ministry of Agriculture, Forestry, and Fisheries........   835
    Language Training................................................   526
    Maritime Administration Reimbursements...........................   561
    Market Access Program (MAP):
        2001 MAP Brand Companies.....................................   478
        2001 MAP Participants........................................   476
        Market Access Compliance.....................................   553
        Market Access Program.......................................57, 474
        MAP and the Foreign Market Development Program........819, 822, 823
        FY 2001 FMD and MAP Participant Contributions................   551
    Marketing Strategy...............................................    51
    Monetization.....................................................   518
    Opium Production in Afghanistan..................................    97
    P.L. 480:
        FY 2001 P.L. 480 Commodity Mix (Approved Programs)...........   512
        FY 2001 P.L. 480 Operating Year Budget (Approved Programs)...   513
        P.L. 480.....................................................    58
        P.L. 480 Title I Agreements..................................   508
        P.L. 480 Title I FY 2001 Country Allocations.................   509
        P.L. 480 Title I Local Currency..............................   553
        P.L. 480 Title I Ocean Freight Differential..................   510
        P.L. 480 Title II............................................   510
        P.L. 480 Title II External Transportation....................   518
        P.L. 480 Title II Internal Transportation....................   518
        P.L. 480 Titles I, II, and III...............................   519
        Shipping of P.L. 480 Title I Commodities.....................   555
        Transfer of Funds from P.L. 480 Title II to Title III........   555
        USAID/P.L. 480 Title II......................................   817
        Priorities for 2002 and 2003.................................    46
    Questions Submitted for the Record:
        Chairman Bonilla.............................................   472
        Mr. Latham...................................................   818
        Ms. Emerson..................................................   822
        Ms. Kaptur...................................................   828
        Mr. Farr.....................................................    35
    Quality Samples Program........................................562, 823
    Reimbursements to State Department...............................   552
    Representation...................................................   527
    Restriction on AID Programs......................................   474
    Retaliation Against Steel Imports Decision.......................   565
    Rice:
        International Activity Agreement for Rice....................   558
        Rice and USDA Export Programs................................   563
        Rice to Uzbekistan...........................................    96
        Rice Trade Association.......................................    95
    Russian Poultry Ban..............................................   565
    Russian Request to Inspect U.S. Poultry Plants...................   833
    School Lunch Program.............................................   518
    Section 416:
        Section 416..................................................   828
        Section 416(b) and Food For Progress Transportation Costs....   519
        Section 416(b) Assistance for the Current Year...............   830
        Section 416(b) Commodities...................................
    520, 556
    Statement of Ellen Terpstra, Administrator, FAS..................    43
    Strategic Planning Process.......................................    50
    Supplier Credit Guarantee Program................................   472
    Trade Show Office 2002/2003 Strategic Plan.......................   522
    USAID Administration.............................................   828
    Value of U.S. Food Aid Commodities Programmed:
        FY 1992......................................................   570
        FY 1993......................................................   590
        FY 1994......................................................   617
        FY 1995......................................................   643
        FY 1996......................................................   660
        FY 1997......................................................   693
        FY 1998......................................................   721
        FY 1999......................................................   742
        FY 2000......................................................   766
        FY 2001......................................................   794
    Value of U.S. Food Aid Commodities Programmed Summary............   568
    World Trade Organization:
        China WTO Accession..........................................   553
        World Trade Organization.....................................   558
                       Food Safety and Inspection Service
    2003 Budget Request............................................929, 963
    Activities Funding..................................1,104, 1,107, 1,113
    Biography:
        Elsa Murano..................................................   934
        Merle D. Pierson.............................................   935
        Margaret O'K. Glavin.........................................   968
    BSE Risk Assessment..............................................   949
    Codex Alimentarius....................................962, 1,103, 1,113
    Condemned Products............................................... 1,083
    Country of Origin Labeling.......................................   981
    Egg Products:
        Egg Products Inspection and Salmonella Enteritidis........... 1,099
        Egg Products Inspection Training............................. 1,101
    Electronic Export Certificates................................... 1,103
    Eligible Exporting Countries...............................1,067, 1,130
    Emergency Response............................................... 1,007
    Explanatory Notes................................................ 1,139
    Financial and Accounting Procedures, External Review of.......... 1,105
    Farm Bill Provisions............................................. 1,128
    Field Automation and Information Management (FAIM).........1,101, 1,105
    Food Safety:
        Coordination of Activities...............................916, 1,125
        Education....................................923, 958, 1,124, 1,137
        Foodborne Illness..........................................981, 986
        Improving the Food Safety System..................985, 1,044, 1,133
        Research..................................................... 1,064
        Safe Handling by Consumers...................................   996
        Technology................................................... 1,012
    Foreign Country Equivalency Determinations....................... 1,077
    FSIS Enforcement Activities...................................... 1,093
    Grants To States...........................................1,089, 1,101
    HACCP:
        HACCP-Based Inspection Models Project (HIMP)...............948, 987
        Pathogen Reduction.......................................946, 1,112
        Plants....................................................... 1,100
        Review of HACCP Operations................................... 1,121
    Homeland Security.............................940, 1,009, 1,046, 1,117,
     1,127, 1,136
    Import Inspection.............................969, 970, 971, 977, 978,
     980, 1,076, 1,077, 1,118, 1,135
    Industry Growth............................................1,003, 1,004
    Infrastructure...................................................   937
    Information Technology...........................................   943
    Inspection:
        Establishments............................................... 1,065
        Exemptions................................................... 1,087
        Frequency of Inspections..................................... 1,122
        Product Inspected:
            Amount of Poultry Inspected.............................. 1,095
            Number of Livestock Inspected at Slaughter............... 1,097
            Technology............................................... 1,022
            Volume and Cost of Meat and Poultry Inspection At
              Slaughter.............................................. 1,091
    Interstate Shipment of State Inspected Meat...................... 1,120
    Laboratory Accreditations........................................ 1,085
    Licensing Fee.................................................... 1,016
    Listeria......................................................... 1,011
    Meat and Poultry Hotline......................................... 1,100
    Ohio School Lunch Delivery Issue................................. 1,120
    Opening Statement................................................   902
    Microbiological Testing, Outsourcing............................. 1,106
    Overtime Inspection User Fee..................................... 1,115
    Pathogens in Meat and Poultry....................................   990
    Pilot Programs................................................... 1,062
    President's Management Agenda....................................   925
    Product Recall..............................992, 972, 995, 1,003, 1,037
    Questions Submitted for the Record:
        Chairman Bonilla............................................. 1,062
        Ms. Kaptur................................................... 1,118
        Ms. DeLauro.................................................. 1,133
    Residue Tests (SOS, STOP, CAST, FAST)............................ 1,087
    Regulations, Revision of......................................... 1,105
    Salmonella:
        Performance Standards................................... 971, 1,110
    Sentinel Sites................................................... 1,100
    Single Food Safety Agency........................................ 1,134
    Staffing:
        Attrition for FSIS Inspectors................................ 1,104
        Inspection Staffing......................................954, 1,004
    State Inspection of Programs.................................986, 1,082
    Supreme Court Beef Decision......................989, 991, 1,006, 1,133
    Translating Science into Policy.................................. 1,137
    Voluntary Inspection............................................. 1,089
    Witnesses......................................................901, 902
    Written Testimony of Elsa Murano, Ph.D...........................   906
    Written Testimony of Margaret O'K. Glavin........................   936

                                  PART 7 INDEX
                                  ----------

                     Food, Nutrition and Consumer Services
                                                                       Page
    Application Simplification.......................................   336
    Budget Request, Food and Nutrition Service.......................   269
    Child and Adult Care Food Program:
        Enforcement..................................................   104
        Reimbursement Rates..........................................   110
    Child Nutrition.............................................60, 73, 112
        Competing Food Enforcement...................................    43
        Dietary Guidelines...........................................    40
        Purchasing Power.............................................    39
        Student Choice...............................................41, 71
    Colonias.........................................................   240
    Commodity Assistance Program.....................................   173
    Commodity Purchases:
        Farmer Impact................................................61, 66
        Fresh Produce................................................    52
    Commodity Purchases and Distribution, Department of Defense...... 62-63
    Commodity Supplemental Food Program..................175, 283, 300, 307
        Bonus Items..................................................   302
    Commodity Surplus................................................   301
    Competitive Foods................................................   326
    Coordinated Review Effort........................................    79
    Diabetes.........................................................    36
    Economic Research Service Evaluations..........................243, 319
    Elderly Feeding Program..........................................   239
    Electronic Benefit Transfer...........................57, 195, 274, 281
    Emergency Food Assistance Program..........................176-177, 304
    Employment and Training Funds....................................   231
    Explanatory Notes................................................   347
    Farm Bill........................................................   303
    Farmers Market Nutrition Program........................36, 38, 44, 287
        Ohio.........................................................   290
        Seniors............................................29, 56, 285, 288
    Farmers Markets:
        Alternatives.................................................31, 37
        Virginia.....................................................    59
        Vouchers.....................................................   152
    Five-A-Day Campaign..............................................   295
    Food Banks......................................................77, 304
    Food Distribution on Indian Reservations:
        Fresh Fruit and Vegetables...................................   183
        Participation Levels.........................................   238
    Food Program Administration, Funding Levels......................   244
    Food Programs:
        Nutrition Goals..............................................   297
        Operations...................................................   306
        Participation................................................   345
    Food Safety......................................................    47
        Food Safety Training, Ohio...................................   323
    Food Stamp Program:
        Benefit Reserve............................................189, 279
        Block Grant Program..........................................   231
        Direct Farmer Benefit........................................    58
        Enforcement..................................................    28
        Error Rate...................................................    27
        Fraud Reduction Efforts......................................   275
        Ohio.........................................................   327
        Over-Issuance................................................   181
        Participation..............................................237, 327
        Proposed Legislation.......................................241, 280
        Retailer Integrity...........................................   182
        Trafficking..................................................   278
    Fruit and Vegetable:
        Bars.........................................................   323
        Consumption..................................................    54
    Infant Formula, Cost.............................................   152
    Meat Inspection Requirements, Ohio...............................   323
    Milk Program, Special............................................   108
    Nutrition Education............................................270, 316
        Child Nutrition..............................................    69
        Food Stamp Program...........................................   180
        WIC..........................................................   156
    Nutrition Monitoring.............................................   344
    Obesity, Child and Adolescent....................................   312
    Packaging, Commodity Purchases...................................    66
    Program Funding Definitions......................................   123
    Program Integrity................................................   338
    Questions Submitted For the Record:
        Chairman Bonilla.............................................    79
        Ms. Kaptur...................................................   285
        Ms. DeLauro..................................................   343
    Rebates:
        Infant Formula...............................................   148
        Other Than Infant Formula....................................   149
    Regulation and Reporting.........................................   305
    School Breakfast Program, Pilot Program........................100, 109
    School Lunch Program.........................................42, 46, 67
        Eligibility..................................................   339
        Fresh Produce................................................    55
        Participation................................................   102
        Plate Waste.............................................68, 70, 320
        Program Control..............................................    71
        State Reimbursements.........................................    74
    School Meals Initiative..........................................   105
    Snack Programs.................................................103, 109
    State Administrative Expenses....................................   107
    Studies and Evaluations...................................245, 265, 268
    Summer Food Service Program......................................   283
    Wage Incentive Program, Special..................................   230
    WIC Program:
        Breastfeeding Promotions.....................................   178
        Carryover...................................................32, 157
        Caseload Management..........................................    51
        Contingency Fund............................................56, 284
        Eligibility.................................................33, 124
        Food Package.................................................   278
        Funding Definitions..........................................   158
        Funding......................................................   343
        Income Eligibility.........................................151, 153
        Infant Participation.......................................167, 171
        Obligations................................................110, 166
        Participant Study............................................   125
        Participation.....................................32, 111, 274, 282
        Program Violations...........................................   141
        Reauthorization Act of 1998..................................   143
        Spend-forward Funding......................................139, 158
        Vendors......................................................   145
        Waiting Lists.............................................146, 284

                               RURAL DEVELOPMENT

                                                                       Page
    Farm Bill, Additional Costs for..................................   632
    Administrative Funding and FTE's.................................   600
    Alternative Energy Development...................................   627
    Application and Grant Process....................................   606
    Appropriation History............................................   603
    Automated System Projects........................................   653
    Applications, Backlog of.......................................603, 610
    Bio-Energy Production............................................   632
    Biofuels.......................................................627, 673
    Biographical Sketch of Michael E. Neruda.........................   587
    Business and Industry Programs:
        Appropriations...............................................   778
        Direct.......................................................   579
        Guaranteed............................................578, 610, 629
        Transfer Authority...........................................   665
    Carryover for Rural Development Programs.........................   643
    Centralized Servicing Center.....................................   653
    Circuit Rider....................................................   664
    Conference Agreements............................................   664
    Goodfellow Facility, Consolidation of the........................   662
    Contract Support.................................................   661
    Centers for Excellence, Designation of...........................   630
    Empowerment Zones, Enterprise Communities, and Colonias........625, 640
    Explanatory Notes................................................   677
    GSA Rental Costs.................................................   659
    High Energy Cost Grants..........................................   657
    Information Technology...........................................   659
    Introduction of Witnesses........................................   535
    J-1 Visas......................................................591, 666
        Fact Sheet.................................................598, 671
        Letters from Deputy Secretary Mosley........594, 596, 599, 667, 669
    Loan Approvals...................................................   611
    National Food and Agricultural Council...........................   637
    Native Alaska Villages...........................................   663
    Notice of Funds Availability.....................................   636
    Opening Statement................................................   536
    Overall Funding..................................................   602
    Pre-Development Costs............................................   605
    Questions Submitted for the Record:
        Mr. Bonilla................................................592, 640
        Ms. Kaptur...................................................   673
    Rural Areas Dominated by Non-Farming Activities..................   673
    Rural Community Advancement Program..............................   656
    Rural Community Assistance Programs..............................   664
    Rural Community Development Initiative.........................655, 663
    Rural Development:
        Councils.....................................................   646
        E-Gov Multi Year Plan........................................   661
        Salaries and Expense.........................................   656
        State Offices................................................   658
    Rural Development Budget Request...............................536, 541
        Administrative Expenses....................................538, 546
        Rural Business--Cooperative Service........................537, 543
        Rural Housing Service......................................538, 544
        Rural Utilities Service....................................537, 542
    Rural Economic Area Partnership..................................   630
    Rural Television Satellite Loans Program.......................663, 747
    Service Contract, FY 2001........................................   651
    Southwest Border Initiative......................................   637
    State Participation..............................................   626
    Statement of Michael E. Neruda...................................   540
    Water and Waste Disposal Program.................................   663
    Water and Sewer Grants and Loans.................................   665
    Witnesses........................................................   535
    Write-Offs and Losses............................................   646

                            RURAL UTILITIES SERVICE

                                                                       Page
    Application and Grant Process....................................   606
    Applications on Hand......................................613, 635, 734
    Backlog of Applications..........................................   604
    Bio-Energy Production............................................   633
    Biofuels.........................................................   750
    Biographical Sketch of Hilda Gay Legg............................   588
    Broadband Loans and Grants.......................................   556
    Budget that Leads................................................   550
    Circuit Rider Programs...........................................   743
    Colonias.........................................................   744
    Deferments.......................................................   736
    Distance Learning and Telemedicine Program................556, 734, 747
    Electric and Telecommunications Loans............................   736
    Electric Program.................................................   550
    Electric Utility Loan Debt Restructuring.........................   745
    Emergency Community Water Assistance Grants......................   744
    Explanatory Notes..........................................Part 6, 1202
    Farm Bill........................................................   750
    Foreign Travel...................................................   739
    Investing Where Resources are Most Limited.......................   553
    Local Network Television Service...............................621, 628
    Modern Telecommunications in Rural America.......................   554
    New Energy Sources...............................................   620
    Pre-Development Costs............................................   605
    Questions Submitted for the Record:
        Mr. Bonilla..................................................   731
        Ms. Kaptur...................................................   750
    Rural Telephone Bank Program Liquidating Account.................   746
    Rural Television Satellite Loan Program........................663, 747
    Rural Utilities Service Troubled Electric Borrowers..............   747
    Statement of Hilda Gay Legg......................................   549
    Subsidy Rates....................................................   733
    Technical Assistance.............................................   744
    Three Program Areas, Working Together............................   557
    Treasury Rate, Guaranteed, and Hardship Loans....................   555
    Water and Environmental Programs.................................   551
    Water and Sewer Grants and Loans...............................665, 745
    Water and Waste:
        Disposal Program...........................................663, 740
        Grant Applications on Hand...................................   635
        Improvements.................................................   747
        Loan Program.................................................   634
    Water:
        Debt to Texas................................................   636
        Needs........................................................   751
        Treaty with Mexico...........................................   639

                             RURAL HOUSING SERVICE
                                                                       Page
    Applications on Hand.............................................   615
    Backlog..........................................................   611
    Bio-Energy Production............................................   633
    Biographical Sketch of James C. Alsop............................   589
    Borrower Privacy.................................................   773
    Community Facilities Loans.....................................615, 761
    Contracting Out..................................................   775
    Explanatory Notes..........................................Part 6, 1226
    Farm Bill........................................................   776
    Farm Labor Housing.............................................616, 772
    Inventory Property...............................................   756
    Multi-Family Housing...........................................615, 767
    Native Americans Benefit From RHS Assistance.....................   570
    Questions Submitted for the Record:
        Mr. Bonilla..................................................   753
        Ms. Kaptur...................................................   773
    Rural Housing Service:
        Homeownership Programs Reach the Underserved.................   560
        Private and Nonprofit Organizations, Partnerships............   562
        Programs.....................................................   633
        Farmworkers, Programs........................................   569
        Facilities for Distressed Rural Communities..................   566
        Community Facilities, Elderly................................   568
        Rental Programs Serve the Most Vulnerable Rural Americans....   564
        Rural America and Local Community Needs......................   572
    Rural Home Ownership.............................................   631
    Rural Housing and Economic Development Program...................   772
    Rural Housing Preservation Grants................................   758
    Rural Rental Assistance Program:
        Cost of Providing............................................   771
        Expiring Contracts...........................................   754
        Housing and Urban Development..............................764, 776
        Projections..................................................   767
        Section 515..................................................   607
        Wage Matching................................................   754
    Section 502:
        Backlog......................................................   768
        Low-Income Families Served...................................   634
        Pending Requests.............................................   754
        Qualification Criteria.......................................   764
        Subsidy Rates................................................   767
    Section 504......................................................   765
    Section 514......................................................   767
    Section 515:
        Backlog......................................................   753
        Occupancy Surcharge..........................................   765
        Rural Rental Housing.......................................607, 770
        Subsidy Rates................................................   767
    Self-Help:
        Grants.......................................................   758
        Housing Land Development.....................................   761
    Single Family Housing............................................   617
    Statement of Mr. James C. Alsop..................................   559
    Subsidy Rates..................................................753, 767
    Very-Low Income Housing Repair Grants............................   758
    Very-Low and Low Income Loans....................................   765

               RURAL BUSINESS-COOPERATIVE SERVICE
                                                                       Page
    Agricultural Marketing Research Center...........................   793
    Agricultural Production Market Development Grants................   792
    Allocations to States............................................   795
    Alternative Agricultural Research and Commercialization
      Corporation....................................................
    789, 791
    Application Backlog..............................................   610
    Applications on Hand.............................................   619
    Technology Transfer for Rural Areas, Appropriate.................   584
    Bio-Energy Production............................................   633
    Biofuels.........................................................   627
    Biographical Sketch of John Rosso................................   590
    Business and Industry Programs:
        Appropriations...............................................   778
        Direct.......................................................   579
        Guaranteed............................................578, 610, 629
        Transfer Authority...........................................   665
    Cooperative Research Agreements................................791, 794
    Cooperative Service Technical Assistance.........................   787
    Cooperative Stocks Purchase Program..............................   789
    Centers for Excellence, Designation of...........................   630
    Electric and Telephone Liquidating Account.....................786, 794
    Explanatory Notes..........................................Part 6, 1257
    Farm Bill........................................................   801
    Intermediary Relending Program............................580, 782, 797
    Loan Approvals...................................................   611
    National Food and Agricultural Council...........................   637
    National Sheep Industry Improvement Center.....................585, 788
    New Energy Sources...............................................   620
    Questions Submitted for the Record:
        Mr. Bonilla..................................................   778
        Ms. Kaptur...................................................   796
    Rural Cooperative Development Grant Program....................584, 785
    Rural Business Enterprise Grant Program........................581, 784
    Rural Business Opportunity Grant Program.......................583, 784
    Rural Economic Area Partnership..................................   630
    Rural Economic Development Programs.......................583, 786, 799
    Salaries and Expenses............................................   586
    Statement of John Rosso..........................................   574
    Status of Cooperatives...........................................   796
    Subsidy Rates....................................................   778
    Value-Added Agricultural Product Market Development Grant........   585