[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:]

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    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.

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                                          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.
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    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.
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                       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.
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    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:]

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                            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.

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                              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
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