[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



 
                  AGRICULTURE, RURAL DEVELOPMENT, FOOD

                  AND DRUG ADMINISTRATION, AND RELATED

                    AGENCIES APPROPRIATIONS FOR 2004

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED EIGHTH CONGRESS
                              FIRST 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., Washington   MAURICE D. HINCHEY, New York 
 TOM LATHAM, Iowa                        SAM FARR, California
 JO ANN EMERSON, Missouri                ALLEN BOYD, Florida
 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 2

                        DEPARTMENT OF AGRICULTURE
                                                                   Page
 Secretary of Agriculture.........................................    1
 Departmental Administration......................................  341
 Office of the Chief Financial Officer............................  473
 Office of the Chief Information Officer..........................  557
 Office of the General Counsel....................................  805
 Office of Communications.........................................  883
 Office of Chief Economist........................................  911
 National Appeals Division........................................  939
 Office of Budget and Program Analysis............................  953
 Homeland Security Staff..........................................  973
 General Provisions...............................................  981
 Office of Inspector General......................................  989
                                ________

         Printed for the use of the Committee on Appropriations 

                                ________

                     U.S. GOVERNMENT PRINTING OFFICE
 87-650                     WASHINGTON : 2003


                         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 
 FRANK R. WOLF, Virginia                MARTIN OLAV SABO, Minnesota 
 JIM KOLBE, Arizona                     STENY H. HOYER, Maryland 
 JAMES T. WALSH, New York               ALAN B. MOLLOHAN, West Virginia 
 CHARLES H. TAYLOR, North Carolina      MARCY KAPTUR, Ohio 
 DAVID L. HOBSON, Ohio                  PETER J. VISCLOSKY, Indiana 
 ERNEST J. ISTOOK, Jr., Oklahoma        NITA M. LOWEY, New York
 HENRY BONILLA, Texas                   JOSE E. SERRANO, New York
 JOE KNOLLENBERG, Michigan              ROSA L. DeLAURO, Connecticut
 JACK KINGSTON, Georgia                 JAMES P. MORAN, Virginia
 RODNEY P. FRELINGHUYSEN, New Jersey    JOHN W. OLVER, Massachusetts
 ROGER F. WICKER, Mississippi           ED PASTOR, Arizona
 GEORGE R. NETHERCUTT, Jr.,             DAVID E. PRICE, North Carolina
Washington                              CHET EDWARDS, Texas
 RANDY ``DUKE'' CUNNINGHAM,             ROBERT E. ``BUD'' CRAMER, Jr.,
California                              Alabama
 TODD TIAHRT, Kansas                    PATRICK J. KENNEDY, Rhode Island
 ZACH WAMP, Tennessee                   JAMES E. CLYBURN, South Carolina
 TOM LATHAM, Iowa                       MAURICE D. HINCHEY, New York
 ANNE M. NORTHUP, Kentucky              LUCILLE ROYBAL-ALLARD, California
 ROBERT B. ADERHOLT, Alabama            SAM FARR, California
 JO ANN EMERSON, Missouri               JESSE L. JACKSON, Jr., Illinois
 KAY GRANGER, Texas                     CAROLYN C. KILPATRICK, Michigan
 JOHN E. PETERSON, Pennsylvania         ALLEN BOYD, Florida
 VIRGIL H. GOODE, Jr., Virginia         CHAKA FATTAH, Pennsylvania
 JOHN T. DOOLITTLE, California          STEVEN R. ROTHMAN, New Jersey
 RAY LaHOOD, Illinois                   SANFORD D. BISHOP, Jr., Georgia
 JOHN E. SWEENEY, New York              MARION BERRY, Arkansas
 DAVID VITTER, Louisiana
 DON SHERWOOD, Pennsylvania
 DAVE WELDON, Florida
 MICHAEL K. SIMPSON, Idaho
 JOHN ABNEY CULBERSON, Texas
 MARK STEVEN KIRK, Illinois
 ANDER CRENSHAW, Florida   
                                                                                                      
                                                                                    
                                                                                                           
                                    
                 James W. Dyer, Clerk and Staff Director

                                  (ii)



   AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND 
                RELATED AGENCIES APPROPRIATIONS FOR 2004

                              ----------                              


                      THURSDAY, FEBRUARY 27, 2003

                       DEPARTMENT OF AGRICULTURE

                               WITNESSES

ANN M. VENEMAN, SECRETARY OF AGRICULTURE
JAMES R. MOSELEY, DEPUTY SECRETARY
KEITH COLLINS, CHIEF ECONOMIST
STEPHEN B. DEWHURST, BUDGET OFFICER

                           Opening Statement

    Mr. Bonilla. The subcommittee will come to order. We are 
delighted today to have before us the Secretary of Agriculture, 
Ann Veneman, along with Deputy Secretary Jim Moseley; Chief 
Economist Keith Collins, and our Budget Officer that is with us 
at almost every hearing, and we love dealing with him on a 
regular basis, Steve Dewhurst.
    Before we begin, I would like to say that we just finished 
a very unusual appropriations process that no one on this 
subcommittee ever intended to be part of. This subcommittee has 
worked very well in a bipartisan way to produce a bill that has 
an overwhelming number of votes when we put the final product 
on the floor, and we are proud of that. We listen very 
carefully to the interests of everyone and we try to put 
together a product that is a good solid appropriations bill 
that everyone can walk out of the room and be proud to support. 
Unfortunately, we got intercepted last year. We do not expect 
that to happen this year. We are going to have timely, 
aggressive hearings that will have us wrapped up by March 20 on 
the hearing process, and our intent is to have this bill moved 
by midsummer, and we fully intend to keep to that schedule.
    We also would expect the Budget Committee to move quickly 
on a resolution that will guide our appropriations actions, so 
we do not anticipate a problem in that area either.
    I would like to make note of one matter at the outset. 
Yesterday we heard from your IG, Phyllis Fong, who did a very 
good job here. We were very pleased to hear that for the first 
time the Department and all of its stand-alone agencies 
received unqualified opinions on their fiscal year 2002 
financial statements, and we recognize this is a major 
accomplishment, and we commend your hard work in bringing that 
about.
    Before we begin with your testimony, I yield to my ranking 
member, to Congresswoman Kaptur, and then we are joined by the 
ranking member on the full Committee on Appropriations, Mr. 
Obey, who would like to make some remarks.
    Ms. Kaptur. Thank you, Mr. Chairman. Welcome back to our 
very efficiently operating subcommittee, Madam Secretary.
    Mr. Chairman, as we spoke before the hearing, the Senate 
has not even decided to hold their hearings yet, so 
congratulations to you. As usual the House takes the lead. We 
are pleased to welcome all of our guests here today, including 
members of the press.
    I obviously come from Ohio, and I am deeply concerned about 
what is happening in rural America and I know we will get into 
that during your testimony. With the drought and many of the 
difficult conditions that farmers face across the country and 
the bailouts that we have been required to perform here, the 
continuing diminution of the condition of rural America, not 
just the fact that we are largely holding up rural America 
through Federal subsidy--about 75 cents of every farm dollar is 
Federal subsidy--we are basically holding the farm credit 
system together, and the way out does not seem clear. I am very 
interested in your comments that help us find a way forward 
here so our farmers are not farming their mailbox, but the 
market.
    I am very concerned about what is happening in the social 
fabric. Yesterday Congresswoman Emerson referenced the number 
of drug busts in Missouri. If we look at the closures by the 
DEA in rural America, it is staggering. More labs were closed 
in Iowa than New York and New Jersey combined. I view those as 
symbols of a deteriorating social fabric which has really held 
this country together since our existence.
    So you come to us with enormous responsibilities, and we 
will get into this more during the question period. My 
fundamental question this morning is how do we make American 
agriculture competitive in a market sense here at home and 
begin to heal these communities that are being ripped apart. 
This is not the world that we inherited and I am not sure that 
it is the one that we want to pass on to our children and 
grandchildren.
    Thank you for your testimony and being here this morning.
    Mr. Bonilla. I yield to Mr. Obey.
    Mr. Obey. I thank the chairman.
    I cannot help but note the chairman's remarks about what 
happened to not just this subcommittee but a number of other 
subcommittees last year. Quoting my old philosopher friend, 
Archie the Cockroach, he said now and then people are mourned 
who are so unlucky they run into accidents that started out to 
happen to somebody else, and that is sort of what happened to 
this subcommittee and a number of others last year.
    Madam Secretary, ordinarily I would want to talk to you 
about dairy prices. Last week, as I understand it, the price of 
blocks of cheddar cheese on the Chicago Mercantile Exchange 
dropped 11.5 cents below the support price, and that translates 
into a price of $8.50 per hundredweight for class 3 milk. That 
is not going to thrill any farmer I know, and I think it is 
obvious to all but the most blind that if the purpose of dairy 
policy is to help keep farmers on the farm, it is not going to 
work without some substantial changes, but that is not what I 
want to talk to you about this morning.
    Madam Secretary, I have a serious problem that affects the 
entire State of Wisconsin, and I am going to take a little time 
to explain it because I have had virtually no help from your 
agency in dealing with it, and I have to say the response of 
your agency has led me to conclude that it is the petrified 
modern-day version of Sleepy Hollow. I have great respect for 
you, nothing I say is meant to be personal, nothing I say is 
meant to be political. It is meant to be representational, and 
let me explain what I mean.


            chronic wasting disease in wisconsin


    I want to talk about the absolute uselessness with which 
USDA has responded to the outbreak of chronic wasting disease 
in the State of Wisconsin and your agency's failure to 
sufficiently expand testing capacity to provide hunters with 
some assurances whether or not the deer they have killed are 
infected. The rigidity of your department on this matter has 
led to the use by hunters of unapproved tests for CWD being 
conducted at uncertified labs who are publishing unconfirmed 
results, and this I would add is exactly the result that USDA 
states in its CWD position paper that it seeks to prevent in 
order to avoid unnecessary public concern and costly regulatory 
action.
    I think people understand what chronic wasting disease is 
and why it is so feared by the general public and by the 
farming population. The situation was that on February 28 of 
2002 it was announced that routine testing by the Wisconsin 
Department of Natural Resources turned up three cases of 
chronic wasting disease among the wild deer population in 
Wisconsin, the first time it appeared east of the Mississippi, 
and since then it has been found in other places.
    Deer hunting is a major part of the culture in my State, 
and it is a vital element to Wisconsin's economy. In response 
to the discovery of the disease, State officials in Wisconsin, 
led by the State DNR, devised a plan for greater surveillance 
testing of the deer population to determine the extent of its 
spread in order to try to control it and eradicate the disease. 
Until recently the only approved test has been the 
immunohistochemical test, which is costly, slow, and very labor 
intensive.
    Just before the election last year, the previous Republican 
Governor of Wisconsin and the USDA jointly announced that as 
many as 200,000 tests would be conducted on Wisconsin deer in 
order to provide fee-for-service testing for every hunter who 
wanted it. Clearly to do that you have to greatly expand 
testing capacity. In preparation for that, the State of 
Wisconsin, under the previous Republican Governor, approached 
the Marshfield Clinic, located in my district, and asked them 
to become involved in testing for CWD. The Marshfield Clinic is 
one of the premier medical laboratories in the Nation, and both 
the Federal Government and the State government work closely 
with it. The National Cancer Institute spends more than $2 
million at that institution. The National Heart, Lung and Blood 
Institute spends $3.6 million at that institution. CDC is 
working with them on the West Nile virus and Lyme's disease 
with more than $1 million in expenditures. NIOSH is funding 
$1.3 million in activities at that operation. The EPA, the 
Navy, the Justice Department are all working with them. It is 
good enough for all of them, but it is not good enough for 
USDA.
    In 2002, Federal research and development expenditures at 
that institution totaled $10.7 million with an additional $1.7 
million in Federal program support funding. State R&D 
expenditures that same year amounted to almost a million 
dollars. Marshfield has been designated the State public health 
lab for the entire State of Wisconsin by the State. It is good 
enough for the State of Wisconsin, but it is not good enough 
for USDA.
    In response to the approach from the State, Marshfield 
invested more than $300,000 to construct bio safety level 2 
plus labs to enable it to handle the prions in the way that 
they have to be handled. It involves creating a self-contained 
facility with dedicated processing equipment, dedicated waste 
disposal and distillery equipment for medical and biochemical 
waste, a dedicated storage facility, specific airflow and 
venting.
    By anybody's standards, except USDA's, Marshfield is one of 
the leading labs in the Nation. If you don't believe me, ask my 
predecessor, Mel Laird, who was Secretary of Defense under 
Richard Nixon. Despite all of this, your agency has made clear 
that they do not think Marshfield is good enough to participate 
in testing on the deer population. It is good enough for human 
medical research, but not good enough for the deer. That is 
ludicrous.
    I cannot understand why instead of utilizing the resources 
at Marshfield Clinic, USDA prefers to send tens of thousands of 
possibly highly infectious tissue samples thousands of miles 
away to less well-equipped laboratories in California or a 
number of other States rather than treating those samples in 
Wisconsin. We have the ludicrous situation where you are 
refusing to approve the premier medical lab in that part of the 
country, a lab which is approved to do testing on human 
diseases, but apparently not good enough to do testing on deer 
diseases.


                          laboratory capacity


    In correspondence with your agency, USDA has argued that 
its policy is to use only public labs. My understanding is that 
there are currently 14 of those public labs that have been 
approved to conduct testing. I will address your rationale for 
that shortly, but the fact is if the public labs you have 
approved are anything like the State labs in Wisconsin, they 
leave a little to be desired in contrast to Marshfield Clinic.
    For example, there was a news story about the public State 
lab in Madison, Wisconsin which appeared in the Wausau Daily 
Herald in March 2002. The story was headed, ``Lab lacks money 
to do tests for deer disease.'' The article relates the story 
of the lab's 10-year-old electron microscope, essential for 
diagnosing viral diseases, a microscope which was purchased at 
a garage sale and needs repairing at a cost of $320,000. The 
article states that the public State lab will need $1.3 million 
to update its core equipment in order to do the testing.
    Now, compounding your agency's mishandling of this disease 
outbreak with respect to bringing on-line qualified private 
labs such as Marshfield is your handling of a rapid test that 
would provide hunters with testing on demand. I understand that 
Colorado, where CWD originated, has been using a rapid test to 
provide hunters with testing on demand for the past few years 
but until last year USDA prohibited its use everywhere else. 
USDA did provide the go ahead for the rapid test for deer 
killed in Wisconsin, but when they did it the announcement 
stated that testing could go on only at those public labs 
already approved for the IHC test. Unfortunately, according to 
the company that manufactures that test, none of those labs 
could actually perform the test because they did not have the 
necessary staffing, equipment or the funding necessary to 
acquire them.
    So USDA, according to my information, has created a perfect 
Catch-22. It approves the rapid test only for those labs that 
can't do the test, and they maintain a prohibition on labs such 
as Marshfield Clinic that can do the test. I would like to know 
if outside of Colorado there is currently any testing being 
done using the rapid test at any of the approved labs.
    Finally, in the most recent example of USDA's incompetence, 
Marshfield received a blanket purchase agreement from USDA 
dated January 30 indicating that the USDA would be sending 
tissue samples to Marshfield for testing. Had USDA finally seen 
the light? Unfortunately, no. Because when Marshfield Clinic 
responded to USDA's letter, Marshfield was then told, whoops, 
their letter was a mistake and subsequently it was cancelled by 
USDA.
    So what is the USDA rationale for this ludicrous situation 
where the finest private labs that are well-equipped, staffed 
and capable and eager to do the testing are prohibited from 
doing so? As best I can make out, USDA's argument is as 
follows: A letter from Bill Hawks, Under Secretary for 
Marketing and Regulatory Programs, dated December 3, 2002, 
refers to seven State labs having agreed to conduct CWD testing 
on a fee-for-service basis for interested hunters and 
expressing the belief that the additional testing capacity will 
meet the testing needs of hunters.
    I would say if that is so, how do you explain the thousands 
of hunters who have purchased unapproved private testing kits 
and sent samples to uncertified labs which have published 
unconfirmed positive results for CWD. Clearly, if your efforts 
had been sufficient those hunters would not have felt compelled 
to purchase those unapproved test kits.


                      surveillance testing on deer


    With respect to surveillance testing, in a letter to the 
Marshfield Clinic dated February 11, John Clifford, Associate 
Deputy Administrator in Mr. Hawks' department, said, ``Limiting 
validation to Federal and State laboratories with which we have 
already established relationships ensures that any necessary 
regulatory actions can occur swiftly and consistently. Federal 
and State labs, unlike private laboratories, have a direct 
reporting relationship and are better integrated with the 
Federal and State regulatory officials who have the legal 
authority to institute appropriate disease control measures 
such as restricting animal movement and ordering animal 
depopulation.''.
    He continues, ``The validation process for eligible 
laboratories include several levels of inspection. Our agency's 
veterinary service program requires inspection of laboratory 
facilities to ensure the proper bio security protocols are in 
place for receipt and handling of any restricted pathogen. We 
also conduct compliance inspections after a laboratory has 
received restricted pathogens.''.
    I would like to point out that in July, Marshfield's 
laboratory was inspected by the USDA, and it was clear from the 
remarks of the inspecting veterinary medical officer, Dr. Tim 
DeVoe, that Marshfield laboratories ``not only meet but exceed 
the standards set by USDA for that purpose.'' yet they are not 
being approved.
    I would also note that the explanation suggests if you want 
to eradicate a disease the first thing you do is to limit the 
testing only to public labs. That seems to be counterintuitive. 
It is exactly backward. Second, with respect to the validation 
process, I see nothing in USDA's inspection and security 
reporting protocols that cannot be as easily applied to private 
labs as they are to public labs.
    Furthermore, the central point in this rationale appears to 
be that necessary regulatory actions can only occur swiftly and 
consistently with respect to Federal and State labs because of 
a ``direct reporting relationship'' with officials who have had 
the legal authority to institute appropriate control measures.
    My questions are: Why can this not be done with private 
labs? What regulatory actions cannot occur with private labs? 
What legal authorities don't you have over private labs? What 
reporting relationship cannot be replicated by private labs? 
Are you saying that the protocols that Marshfield Clinic has in 
place for research on sophisticated research on human diseases 
like cancer, heart disease, West Nile virus, Lyme's disease, 
all of that work being done with NIH and CDC, are you saying 
that those protocols are not adequate for testing on deer 
samples under your pristine and precious agency? I mean, are 
you saying that labs like Sloan-Kettering and Marshfield and 
Mayo are not as qualified as some public labs to do this 
testing? That is ludicrous. How goofy can your agency get?
    I don't expect you to reply here because this is frankly an 
ambush. I have communicated with your agency for 6 months on 
this issue and gotten no response whatsoever that was anything 
but gibberish, and neither has Marshfield clinic. You may not 
be embarrassed by USDA's obtuse actions, but I am. I want to 
know why your agency is preventing Wisconsin from doing what it 
wanted to do at the onset of this outbreak, which is to go to 
the best damn lab in our State for testing to make certain that 
we did not get the very false positives that your agency says 
that they do not want to see. Now we have those false positives 
because there were no sufficient laboratory tests, so farmers 
and hunters went out and they got these unapproved tests. They 
developed false positives, and now you have the very public 
panic that you say you were trying to avoid. I have never seen 
such incompetence in my life. It is pitiful.
    Thank you, Mr. Chairman.
    Mr. Bonilla. Mr. Obey in advance of the hearing did ask as 
a point of privilege to go beyond his normal time that we would 
allow on the subcommittee. We were happy to indulge.
    If the Secretary would like to respond briefly, that is 
your prerogative.
    Secretary Veneman. Mr. Obey, we do take your concerns very 
seriously, and I appreciate the fact that you have put such 
detail into the record today. I am going to go back and ask 
APHIS to review your questions and the details that you have 
outlined.
    [The information follows:]

    Upon returning to the Department, I reviewed your concerns 
about USDA's policy regarding pest and disease testing by 
private laboratories. Accordingly, I have directed USDA's 
General Counsel to lead a group consisting of the Under 
Secretary for Marketing and Regulatory Programs, the Under 
Secretary for Food Safety, and the Under Secretary for 
Research, Education, and Economics to review that policy and 
report to me on possible changes.

    Mr. Obey. Why do I have to do this in order to get you to 
do what I have been asking you to do for months?
    Secretary Veneman. I appreciate what you are saying. I feel 
very strongly about strengthening the overall laboratory 
capacity. This is an issue which has come to the forefront, 
particularly since the incidents of 9/11. We need to make sure 
that we have strong laboratory capacity for a whole array of 
issues. We feel strongly about that. It is part of protecting 
the infrastructure of agriculture, and it is something that we 
take very seriously. We will look at this issue and the legal 
issues that you have raised and the legal questions, and we 
will get back to you.
    Mr. Obey. That is what I have been asking you to do for 
over 6 months. It is about time.
    Mr. Bonilla. Thank you, Mr. Obey. We will proceed with the 
5-minute rule on questioning, and I ask members to abide by 
that. When I hit the gavel, we will recognize members in order 
of seniority, and if they arrived later, we will recognize 
members in that order.
    I ask Members to please turn off any electronic devices, 
such as pagers and cell phones. That helps us proceed. We do 
not expect to be interrupted in this hearing with any votes at 
all on the House floor, so we are fortunate in that regard. I 
do plan on ending this hearing at noon.
    Madam Secretary, you may proceed.


                            budget overview


    Secretary Veneman. Mr. Chairman, thank you very much.
    I do appreciate being here with you and the other members 
of the committee. I would like to thank the subcommittee for 
your ongoing relationship and your support of our Department. I 
think that we have a long history of cooperation between this 
committee and the Department to support American agriculture 
and the other mission areas that we are involved with.
    We have submitted a formal statement for the record and I 
ask that it be included in the record, but before I provide 
some of the budget highlights today, I wanted to just touch 
upon a few issues which have been in the forefront of our 
Department and on the minds of the farmers and ranchers in 
recent weeks.


                          disaster assistance


    First, as you said, we had a very unusual appropriations 
process. As part of that appropriations process, as part of the 
2003 omnibus package, there was additional money added in for 
disaster assistance. On Thursday, the President signed the 
legislation, and on that day we also established a disaster 
assistance working group within USDA to work on the disaster 
assistance programs. This is going to be patterned after our 
Farm Bill working group that we believe has worked so 
effectively as we have worked to implement the Farm Bill that 
was passed last year. Their charge is very clear. We want to 
make sure that implementation of the disaster assistance 
program is a farmer friendly process and make sure that the 
program benefits reach the producers as quickly as possible.


                 livestock compensation program sign-up


    Sign-up for the additional benefits associated with the 
Livestock Compensation Program will begin April 1. That is for 
the Livestock Compensation Program, which we started last year. 
Also the sign-up for tobacco crop losses will begin March 17 
with sign-up dates for the other programs in the near future.
    The other programs are ones that we are going to have to 
design and determine exactly what the criteria are. So they 
will take a bit longer.
    USDA has launched a disaster assistance implementation Web 
site which contains basic program information, and it has 
announcements on sign-up questions and answers and is inviting 
public comment onto the Web site on the implementation of the 
disaster assistance provisions.


                        farm bill implementation


    I also want to touch for a moment on the Farm Bill 
implementation. I know that has been an issue that many of you 
and your farmers and ranchers have been concerned about. We 
continue to make good progress on implementation of the Farm 
Bill. Sign-up for base and yield adjustments ends on April 1, 
and our county offices are working very hard to ensure that 
producers are signed up. I must say that our people out in the 
field have really been doing yeoman's work to get the farm bill 
implemented and to get the benefits to our farmers and 
ranchers. It is not an easy process. There are lots of changes 
in this Farm Bill, but they continue to do the best job that 
they can to get the job done as quickly as possible.
    This week we made an announcement on many of the 2003 crop 
loan rates. Those are the earliest that they have been made in 
recent history.


                     dairy export incentive program


    In addition, not related to the Farm Bill, we also have 
announced the third allocation this week under the Dairy Export 
Incentive Program for the 2002-2003 year. This additional 
allocation will help U.S. dairy farmers improve their 
competitive position and build sustainable, international 
markets.
    If I can move on to the budget and provide a quick overview 
of this Administration's proposals before taking questions.


                        2004 president's budget


    The 2004 budget focuses on key priorities for USDA. 
Ensuring a safe and wholesome food supply and safeguarding 
America's homeland, continuing rapid implementation and 
diligent administration of the 2002 Farm Bill, including 
providing record amounts for conservation funding and 
protecting natural resources, providing unprecedented funding 
for a food and nutrition safety net, expanding agricultural 
trade, expanding housing for rural citizens, investing in 
America's rural sector, and improving USDA's program delivery 
and customer service.
    The 2004 budget calls for $74 billion in spending, an 
increase of $1.4 billion, or about 2 percent above the level 
requested for 2003. This is approximately $5.4 billion higher 
than the actual level for 2001, and represents a growth of 8 
percent since this Administration took office. Discretionary 
outlays are estimated at $20.2 billion, about a 1 percent 
change, or $300 million below the 2003 requested level. The 
request before this committee for fiscal year 2004 amounts to 
$15.5 billion.


                          food safety programs


    The budget seeks record level support for USDA's Food 
Safety and Inspection Service, the meat and poultry food safety 
programs, as well as the increases to strengthen agricultural 
protection systems. These areas of our budget have been top 
priorities for this Administration since we came into office, 
and particularly since the events of September 11.
    FSIS funding will increase to a program level of $899 
million, an increase of nearly $42 million over the fiscal year 
2003 requested level. This represents $117 million, or a 15 
percent increase, in these food safety programs since fiscal 
year 2001, when the Bush Administration took office. The $899 
million level for FSIS is comprised of $797 million in 
appropriated funds and new fees for inspection services beyond 
an approved inspection shift.
    In addition, existing user fees are expected to generate 
$102 million. This will fund 7,680 food safety inspectors, an 
increase of 80 inspectors and provide specialized training for 
the inspection workforce, increase microbiological testing and 
sampling, strengthen foreign surveillance programs and increase 
public education efforts.


                           homeland security


    Regarding homeland security and agricultural protection 
systems, the budget includes nearly $47 million in new funding 
to strengthen laboratory security measures, to conduct research 
on emerging animal diseases, improve biosecurity and develop 
new vaccines, create new biosecurity database systems, and 
continued development of the Unified Federal-State Diagnostic 
Network for identifying and responding to high risk pathogens.


               animal and plant health inspection service


    For the Animal and Plant Health Inspection Service, we are 
requesting increases of about $30 million above our 2003 
request for inspection services, including expanding the 
availability of foot-and-mouth disease vaccines, providing 
additional protections against chronic wasting disease and 
poultry diseases, and expanding diagnostic and other scientific 
and technical services.
    In addition, $200 million is requested for the National 
Research Initiative, including funding for genomics research. 
The President's budget supports the continued implementation of 
the 2002 Farm Bill. As I indicated before, we have made good 
progress so far, but we could not have done it without the 
tremendous efforts of our staff from Washington and in the 
field. Funds are provided in the budget to support continued 
implementation efforts.


                         conservation programs


    We are now in the process of implementing the largest and 
most wide-reaching Farm Bill conservation title ever, which 
represents an unprecedented investment in conservation that 
will have significant environmental benefits. Total program 
level funding for Farm Bill conservation programs increases 
from about $2.2 billion in 2001, when this Administration took 
office, to nearly $3.9 billion in 2004. This includes $3.5 
billion for financial assistance and $432 million for 
conservation technical assistance in 2004 in support of Farm 
Bill implementation, which is an overall increase of $582 
million over 2003.
    I might add that the Department recently issued the 
proposed rule for the EQIP program for public comment. We have 
also issued an Advance Notice of Proposed Rulemaking regarding 
the Conservation Security Program so we are making good 
progress in the implementation of some of these major 
conservation programs.


                      food and nutrition programs


    The fiscal year 2004 budget reflects the Bush 
Administration's continued commitment to the nutrition safety 
net by including a record $42.9 billion for domestic food 
assistance programs, a $1.7 billion increase over the requested 
level for fiscal year 2003. The President has often said this 
is a compassionate administration, and our continued support 
for these programs demonstrates that continued commitment. The 
budget supports an estimated 21.6 million food stamp 
participants. It supports a record level of 7.8 million low 
income, nutritionally at risk WIC participants. It supports an 
average of 29 million school children each day in the National 
School Lunch Program. Particularly with the WIC and school 
lunch programs, we are reaching more Americans and helping to 
educate more people about healthy eating and stressing the 
importance of balanced diets. It is part of the President's 
Healthier U.S. Initiative.
    The budget also includes a $2 billion contingency reserve 
for food stamps, and a $150 million contingency reserve for WIC 
to be available to cover unanticipated increases in 
participation of these programs. A high priority of the 
Administration is reauthorization of the child nutrition 
programs and WIC this year to ensure stable and adequate 
funding for the programs and to improve the nutritional intake 
of participants.
    This week I unveiled some of the Administration's 
principles regarding reauthorization, to include ensuring that 
all eligible people have access to these important programs, 
working to provide more incentives to schools to provide 
healthy choices, including examining innovative approaches to 
do so, and ensuring continued program integrity.


                  foreign market development programs


    The fiscal year 2004 budget continues a strong commitment 
to export promotion and foreign market development efforts by 
proposing $6.2 billion in spending. Since this Administration 
took office, these programs have experienced significant 
growth, increasing by $957 million, or an 18 percent increase 
over fiscal year 2001. Included in our trade budget is funding 
for USDA's market development programs, including the market 
access and cooperator programs, which are increased by $15 
million over fiscal year 2003. The budget requests a new 
centralized fund of $6.6 million to support the agency's work 
in addressing important cross-cutting trade issues and 
compliance monitoring, dispute resolution and biotechnology 
activities within the Department of Agriculture.
    The program level of $4.2 billion is provided for the 
Commodity Credit Corporation export credit guarantee 
activities. Nearly $1.6 billion is requested for U.S. foreign 
food assistance activities, including $50 million for the 
McGovern-Dole International Food for Education and Child 
Nutrition Program, which builds upon the pilot program, the 
Global Food for Education Initiative.


                       rural development programs


    We have worked hard in this budget to provide funding to 
increase rural homeownership and to enhance the economic 
opportunities and the quality of life in rural America. The 
Administration proposes spending $11.9 billion for rural 
development programs. This budget supports the President's 
Homeownership Initiative with particular emphasis on minority 
family homeownership. The initiative provides more than a 40 
percent increase for single family housing. Nearly $4.1 billion 
is requested for direct and guaranteed section 502 single 
family housing loans compared to an estimate of $2.8 billion 
for fiscal year 2003.
    The President's budget will provide 49,000 new 
homeownership opportunities for low and moderate income 
families in rural areas. In addition, the water and waste 
disposal program is maintained at the requested fiscal year 
2003 level of $1.5 billion.


                          usda strategic plan


    The budget supports the Department's strategic plan and 
supports several management initiatives to better integrate 
computer systems and technology to provide the Department's 
constituents with enhanced ability to access records, sign up 
for crop benefits and other program benefits, to access USDA 
studies and economic information, and to respond to USDA 
surveys. These initiatives will also provide USDA employees 
with the necessary tools to efficiently operate and deliver our 
services.
    Our attention to financial management paid off with--as you 
recognized, Mr. Chairman, and we appreciate that--the first 
ever clean opinion on the Department's financial statements and 
significant reductions in delinquent debt. We are proud of this 
accomplishment. It has taken a tremendous amount of effort on 
the part of our CFO, Mr. McPherson, and the team he has been 
working with to achieve this. It was not an easy task within 
USDA.


                          civil rights budget


    We are also providing increased focus on efforts to 
eliminate discrimination. The budget requests $800,000 to fund 
the new Office of the Assistant Secretary for Civil Rights. We 
appreciate the funding that was provided by the Congress in 
2003 for this office. The President recently nominated Mr. 
Vernon Parker to be the new Assistant Secretary for Civil 
Rights and we are working with the Senate committee to try to 
get speedy confirmation for Mr. Parker so he can officially 
begin his new duties.
    That completes my overview of some of the key points of 
this budget as well as an update of some key priorities within 
the Department. I thank you, Mr. Chairman, and all of the 
members of the committee for the opportunity to be here this 
morning. We look forward to working with the committee.
    Our team at the USDA is available in the coming months to 
provide more budget details and information on the important 
issues that we are discussing. I thank you again very much, and 
I will be happy to respond to the committee's questions.
    [The prepared statement of Secretary Veneman follows:]

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                              OUTSOURCING

    Mr. Bonilla. Thank you, Madam Secretary. The first question 
I have is about the outsourcing of microbiological and chemical 
testing. The principle is related, but the function is 
different, but this relates to what Mr. Obey was talking about 
earlier that dealt with his particular area.
    I have been working on this for a while. With the concern 
that we have now for national security, we need more operations 
that are available to do this kind of work. It has been done at 
USDA for a long time, and we appreciate that. We are not trying 
to eliminate anybody's job. Secretary Murano has been very 
supportive in this area, so I am stumped on why we cannot move 
forward on some outsourcing. We have been working on this for a 
long time. Quite frankly, if it is not done this year 
expeditiously, we will more than likely try to address it in 
this bill. I would like to hear your views and why we can't 
move quickly on this.
    Secretary Veneman. Mr. Chairman, I appreciate your 
question, and we are moving to expand our laboratory capacity 
through partnerships. I must say that there has been, in the 
Federal Government, or at least in our Department, a bias 
towards using Federal labs only. I think 9/11 has given us the 
impetus, as I mentioned in response to Mr. Obey, to look more 
broadly at laboratory capacity and to look at where the 
resources are in this country.
    Having been in a State Department of Agriculture and 
knowing the capacity of our state laboratory, which was in 
conjunction with the University of California at Davis, I know 
that we have tremendous capacity in laboratories outside the 
Federal Government. We are continuing to look at opportunities 
to partner with other laboratories, to utilize resources, and 
to create the kind of overall infrastructure in this country 
that we believe we need, particularly if we were to look at 
some kind of very, very expanded outbreak of a disease, for 
example, or one that was intentionally introduced. We need to 
continually look at our lab capacity, and that is one thing 
that we are working on in the Department. We look forward to 
hearing from you and working with you.
    Mr. Bonilla. Very good. This is not designed to take 
anyone's position away. With outsourcing, you may need some 
labs one year, and you may not need them the next year. This 
makes it also more efficient, makes the whole process more 
efficient.
    I yield to Ms. Kaptur, and I remind members to adhere to 
the 5-minute rule.
    Ms. Kaptur. Thank you, Mr. Chairman.

                           NUTRITION LABELING

    Two bookkeeping items. Madam Secretary, we commended the 
Food Safety and Inspection Service for having proposed 2 years 
ago the amendment of regulations dealing with nutrition 
labeling of poultry and meat, and I have for you today a letter 
signed by several Members of Congress, including members of 
this subcommittee, urging OMB to promptly review the FSIS 
proposal and issue the final rule this spring, and I am 
requesting unanimous consent to have a copy of the letter 
included in the record and invite the Secretary's cooperation 
in urging OMB to move this quickly.
    Mr. Bonilla. Without objection.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT
    
       
                        BIOFUELS/RENEWABLE FUELS

    Ms. Kaptur. Thank you. I would ask Mr. Collins to get his 
calculator out. My fundamental question of this panel this 
morning is what percent of farm income today relates to Federal 
subsidy as opposed to earning income from the market? You may 
not have that right at the tip of your fingers, but I am going 
to say to the Secretary that as I listened to your testimony, I 
kept thinking back to an article that I read in the Washington 
Post, the first sentence of which is, ``American oil refineries 
have dramatically increased their reliance on Iraqi crude even 
as the Bush Administration steps up preparations for a military 
attack against Baghdad to offset a shortfall in oil imports 
caused by a recent political crisis in Venezuela.''
    I have to say in anticipating the numbers that Mr. Collins 
is going to give us, I am extraordinarily disappointed because 
we have talked about this before. In your testimony today the 
whole issue of new industries for agriculture, especially 
biofuels, is not even mentioned. Not only is it not mentioned, 
but in the backup material that was submitted to us for the 
testimony today we asked the Department to prepare for us a 
budget proposal that goes across every single instrumentality 
within USDA and essentially the budget you are presenting to us 
today defunds some of the mandatory funding provided in the new 
energy title of the farm bill. According to the budget cross-
cut we have been presented from your Department's Budget 
Office, the Departmentwide effort with respect to bio-based 
products is a reduction of over $70 million from last year's 
level of $295.2 million, which I considered extraordinarily 
inadequate to a level of $225.6 million.
    When I couple this with the President's national energy 
plan, which did not have one of its more than 100 
recommendations being a specific charge to the U.S. Department 
of Agriculture, I am of the conclusion now that the Bush 
Administration does not wish to use the powerhouse of fiber and 
grain in this country to produce new fuels. I find this 
appalling. It makes me angry.
    I would like to know, Madam Secretary, what you will do, in 
spite of the budget you presented to us, to demonstrate 
commitment beyond announcing a few loans and grants for 
localized projects to help our country move into a new fuels 
age based in the soil?
    Secretary Veneman. I appreciate your question because I 
want to reassure you that this Administration is absolutely 
committed to renewable fuels.
    As you know, the President has continued to support 
renewable fuels. It was something that was clearly stated in 
the President's energy plan with regard to the use of renewable 
fuels. We continue to have more and more capacity for renewable 
fuels. The California waiver that was requested was not granted 
on the MTBE issue, which gave more opportunity for ethanol. In 
addition, the Administration has supported very strongly the 
renewable fuels standard which was in last year's energy bill 
that would substantially increase the market for biobased 
fuels. So we are very, very supportive.
    In addition, I think some of the numbers are very 
interesting, and I will have Dr. Collins follow up on this as 
well. It is estimated that about 10 percent of our corn 
production this year will go into the production of ethanol, if 
I am not mistaken. We think that is a very positive sign for 
ethanol, and we are going to do everything that we can to 
continue to support and expand the production of biobased 
fuels.
    The renewable fuels standard, which as I said is in the 
energy bill, is one of the most important tools that we can 
have to expand the use of bio-based fuels.
    Mr. Collins. Ms. Kaptur, our energy strategy takes place on 
several fronts. One front is through energy legislation, and I 
think the Department of Agriculture has had a strong voice 
within the Administration to support many of the provisions 
which have been in, for example, the Senate energy bill, which 
has a renewable fuels standard.
    The second aspect is our underlying basic research. In 
2003, we did ask for increases in our basic research for ARS 
and the Forest Service for bioproduct and bioenergy research. 
There were small increases in 2003 and we maintain that level 
for 2004.
    The third aspect, and one where we do have some difficulty, 
is in the energy title of the Farm Bill. Much of the decline 
you talked about in spending on energy at USDA is captured in 
section 9010 of title 9 of the Farm Bill, which is the CCC 
bioenergy program. The Administration did propose $100 million 
in funding for that program, as opposed to $150 million in the 
previous year. So that accounts for a big part of that decline.
    The 2003 appropriations bill provides us $115.5 million for 
that provision so we presumably will be spending more than what 
we proposed, but less than what is authorized by the Farm Bill. 
There are other parts of the Farm Bill that we are fully 
funding. For example, the Biomass Research and Development Act 
at $14 million a year is fully funded, and is an important 
program that we run jointly with the Department of Energy.
    Ms. Kaptur. The President's proposal on the hydrogen fuel 
cell car provides a 120 percent increase to that title in the 
Department of Energy, but it comes out of the biomass program, 
which is reduced by 28.5 percent. That is DOE's biomass 
program.
    Mr. Bonilla. Thank you. Mr. Latham.
    Mr. Latham. Thank you, Mr. Chairman.

                    AMES, IOWA MODERNIZATION PROJECT

    Welcome, Madam Secretary. I know this is going to be a real 
shock to you to talk about the Ames modernization project for 
the National Animal Disease Center. The conversation that we 
had this morning talking about the urgent need for 
modernization for labs, for capacity, I think really brings to 
mind how important it is. Obviously, it is of significant 
concern to me to see in the budget proposal that there is no 
funding request for the continuation of the modernization.
    In a report last May 2002, there is a note that says under 
the master plan, construction of the animal health facility 
will be delayed if less than $331 million is appropriated in 
the 2004 bill. Obviously we have gotten some additional funds 
since then so the entire $331 million would not be necessary. I 
would like to know what the justification is, for a zero 
request, and how long this project is going to be delayed. It 
is absolutely critical today with the situation we are in 
following 9/11 that this project be completed on time. I would 
like to hear your thoughts on it.
    Secretary Veneman. Congressman, I absolutely agree with you 
that Ames is a priority for the U.S. Department of Agriculture. 
We have put a substantial amount of money into the 
modernization plan. We had about $124 million which has been 
provided to the Agricultural Research Service by Congress in 
fiscal year 2001 and fiscal year 2002, and we have aggressively 
moved ahead. We have moved the shopping center facilities, that 
have been under some scrutiny, and we also have about $14 
million received by APHIS in 2002 to continue that project.
    This is a budget that obviously we have to make some 
difficult priority-setting decisions, and we want to continue 
to work with you and with the committee to try to set those 
priorities as we work through this budget process. But 
certainly Ames continues to be a priority. The money which has 
been allocated continues to be spent, and the projects are 
underway. We believe that over time we will need to get 
additional moneys in the budget to continue to fund the Ames 
projects that are outlined in the master plan.
    Mr. Latham. My concern outside of zero in the request is 
that apparently there has only been about $10 million obligated 
of all of the money appropriated. Why isn't it moving? I think 
this is the largest public works project which USDA has 
attempted, but it does not seem like it is moving.
    Secretary Veneman. My understanding is that they are moving 
as quickly as possible under the current plans. Obviously you 
have seen it since I have, and I will certainly talk to our 
people about whether or not there is any impediment to them 
moving more quickly. As you say, there is money in the fund now 
to continue some of this construction, and we will see if there 
is anything that we can do to move the construction along more 
quickly.
    Mr. Latham. You are aware, obviously, if we do delay this 
and do not go with the accelerated plan, where we are talking 
about $430 million, the cost goes to a minimum probably $451 
million. From there delays run the cost to $548 million, 
depending upon the length of delay for this project. With the 
commitments that I have had from the administration as far as 
funding the project, I am surprised that there was not enough 
money in the request.
    Thank you, Mr. Chairman.
    Mr. Bonilla. Thank you, Mr. Latham.
    Mr. Hinchey.
    Mr. Hinchey. Thank you, Mr. Chairman. Good morning, Madam 
Secretary.

                      DISASTER ASSISTANCE PROGRAM

    I want to ask you about the disaster assistance program. 
The omnibus appropriations bill contained $3.1 billion in 
disaster assistance for farmers who lost crops due to bad 
weather and other conditions last year. The bill was signed by 
the President in spite of the fact that he criticized that 
particular portion of it. He said some things that were 
critical of the disaster provisions in the bill.
    Last fall, there was a decision made to compensate 
livestock producers, and the compensation that was provided to 
those producers was funded out of disaster provisions, but 
rather out of section 32 funds. Those section 32 funds are not 
designed to provide assistance for disaster relief, but they 
are intended for purchases of surplus fruits and vegetables. I 
am wondering what the impact of taking that money out of 
section 32 is and how much money is left in that fund.
    At the time the livestock assistance program was announced 
last fall out in South Dakota, it was estimated that it would 
cost in the neighborhood of $730 million, but the last estimate 
has it closer to $1 billion. The disaster assistance provisions 
in the farm bill replenished only $250 million of that. 
Obviously it has been depleted by some substantial amount. I 
wonder if you can tell us how much is left in the section 32 
account at this moment.
    Secretary Veneman. The reason this program was implemented 
last year is because there had not been any congressional 
action on disaster, and some of the farmers and ranchers that 
were most underserved in terms of having crop insurance and 
risk management tools were the livestock producers.
    We looked at constructive ways to try to address some of 
those needs, and that is where the Section 32 program came into 
effect. The livestock compensation program has been extended in 
this disaster provision. It was just added to the 2003 bill, 
and we will implement that as quickly as possible with sign-up 
to begin on April 1st for that particular component of the 
disaster bill.
    In the 2003 appropriation, $250 million was added back into 
Section 32, giving us the ability to meet all of our 
obligations for the feeding programs and so forth.
    Particularly there was some concern about The Emergency 
Food Assistance (TEFAP) program. We have increased our TEFAP 
spending; for example, in this Administration, for the last 3 
years funding has been close to a billion dollars. That is 
compared to the previous 3 years before we came into office for 
a combined 3 year total of just over $600 million.
    So we have put a lot of emphasis on these programs. We have 
continued to work diligently to try to provide for those in 
need, and we do believe that with the $250 million, we will 
have adequate resources.
    Now, as far as what is in Section 32 at this very moment, I 
will have Mr. Dewhurst go through the numbers.
    Mr. Hinchey. The comparison is interesting, but in those 
years the economy was a lot better. So it is a little bit 
disingenuous to make comparisons based upon the situation that 
existed then.
    Secretary Veneman. But I believe these are the highest 
levels that have ever been put into TEFAP.

                            SECTION 32 FUNDS

    Mr. Dewhurst. Congressman, just for your information, for 
Section 32 for the current fiscal year, with the addition of 
the money in the omnibus bill, there is a total of about $1.4 
billion available for surplus purchases and other uses of 
Section 32; $937 million of that is set aside for the Livestock 
Compensation Program that you talked about. That leaves 
something in excess of $400 million available for surplus 
removal. That is essentially consistent with the historic 
amounts of money we have used in Section 32 for that purpose. 
So with the assistance of the bill, we are able to proceed with 
our business in the normal way.
    Mr. Hinchey. So $400 million is available for such 
purchases as, say, fruits and vegetables for school lunch 
programs and things of that nature?
    Mr. Dewhurst. Yes, sir.
    Mr. Hinchey. You believe it is adequate?
    Mr. Dewhurst. It is consistent with what we have done every 
year. Yes, it is adequate.
    Mr. Hinchey. The danger, of course, is that the money was 
spent before we knew that it was going to be reimbursed by 
Congress. That placed that program in a precarious situation, 
and the way it was done, frankly, raised a whole lot of 
questions about political motivation, and where it was 
announced, the timing of the announcement. I want to make that 
stipulation, that this is an important program.
    Section 32 is important to the people that I represent. And 
it is important to, I know, people in Washington State and a 
number of other places across the country. So we would not like 
to see that fund depleted for political purposes.
    Mr. Bonilla. Thank you.
    Mrs. Emerson.
    Mrs. Emerson. Secretary Veneman, thanks for being here. 
Well, there are several questions I have, all over a different 
scope of issues.

                           VALUE ADDED GRANTS

    But let me ask you first, the Administration has zeroed out 
the budget for one of the most important rural development 
programs, I think; that is, the value added development 
programs. I mean, we are only in the third year of this 
program. It has held a whole lot of hope for agriculture, for 
the future of our very rural communities. I really would like 
to get a justification for why that has been cut.
    Secretary Veneman. First of all, I agree with you that 
those value-added grants are a very useful tool for rural 
America, for farmers and ranchers, to look at new opportunities 
for marketing their products.
    We have some money in the budget, in the discretionary 
budget, for the value-added grants. There was a program that 
was included under the 2003 Farm Bill, basically an earmark out 
of the Farm Bill for a value-added grant program that is not 
continued into this year.
    We have several programs that were in the Farm Bill that 
were funded for the 2003 fiscal year that didn't carry over in 
the 2004 budget. However, we did put some money into the 
discretionary side. But, of course, with just limited 
discretionary resources, we weren't able to fund it at the 
level that the mandatory side gave us through the Farm Bill 
last year. But we do know the value of that program, and have 
provided some funding for it.
    Mrs. Emerson. Can I take it that if our committee would 
decide that more money should be placed into that program, that 
you would not be opposed to that?
    Secretary Veneman. No. We support this program. We want to 
work with you on setting the priorities on this budget. 
Obviously, this is the budget that was developed for the 
various programs, but we want to work with you.
    Mrs. Emerson. I appreciate that, because I have so many 
producers who need additional opportunities, and they are--all 
of the programs combined still don't provide enough resources 
to help our folks. At least if we are asking them to take that 
big of a risk, I want to be sure there is a little bit of a 
safety net there. So I appreciated that.
    Now, when you were speaking, and I apologize for having to 
leave for a few minutes, you mentioned that, you know, things 
are progressing real well with farm bill sign-up and the like. 
And I know it has just been a nightmare for everybody; not only 
your employees, who, I might add, are doing on our local level 
the most incredible, fantastic job I have ever seen----
    Secretary Veneman. Thank you for the compliment.

                           FARM BILL SIGN-UP

    Mrs. Emerson [continuing]. Are way overworked, and we could 
use some more people to help them. But it has taken lots of my 
producers, it has taken a half a day to three-quarters to a 
full day to get their farms signed up in this program. And I am 
worried about this April 1st deadline. Forgive me if someone 
else asked that question.
    Some of our offices aren't halfway done in my district. How 
are you going to respond if we can't meet that April 1st 
deadline?
    Secretary Veneman. The April 1st deadline is very 
important. It is not going to change, because we have to have 
some certainty in the process. I asked my folks this yesterday, 
and I am informed that the appointment books are not yet full. 
So there are still appointments available in virtually every 
place in this country.
    Now, if it comes to a point where there are areas of the 
country where there is a big crunch, and we don't have the 
people signed up, we will move resources. If a particular 
county has people that are pretty much finished, we will bring 
those people over for a week or two to help with areas that may 
be a little bit more behind the curve, but we are committed to 
getting this done.
    I might add that we asked for considerably more money to 
implement this Farm Bill, which we were not given, and we have 
still managed to implement it. As you say, our people are 
spread to the limit, and I appreciate the fact that you 
recognize what they have been going through.
    We received another $70 million in the 2003 bill that was 
just passed, but it is going to take some time to hire those 
people and to train them. Right now we have a lot of temporary 
staff such as retirees who have come back to help, but we will 
deploy resources as we need to get the job done.
    Mrs. Emerson. We only have a month left when you think 
about it.
    Secretary Veneman. But the pace of sign-up is continuing to 
increase all of the time. So we are fairly confident that we 
have got the processes in place to get it done.
    Mrs. Emerson. I hope you will feel that you can ask us for 
more help, temporarily even, if you need it, because I am very 
concerned in spite of the fact that they are doing a terrific 
job.
    I will wait for the second round.
    Mr. Bonilla. Thank you.
    Before I yield to Mr. Farr, Ms. Kaptur asked for a very 
brief comment.
    Ms. Kaptur. Thank you, Mr. Chairman.
    I want to say I associate myself with what Mrs. Emerson has 
just said. Our office just yesterday received a call from an 
Ohio producer who said he could not even get an appointment 
until sometime in May, even though the program sign-up deadline 
is April 1st.
    So many of our States and locations are overbooked. Thank 
you for bringing that up.
    Mr. Bonilla. Mr. Farr.
    Mr. Farr. Thank you, Mr. Chairman.
    First of all, I want to say how pleased I was that the 
President appointed you as Secretary of Agriculture after 
serving as Secretary of Agriculture in the great State of 
California, which is the biggest producer of agriculture in the 
United States. And I am sure as the State director you were 
aware of the myriad of bureaucracy that is in a lot of our 
delivery programs.
    I was impressed in your testimony that you said on page 18 
that one of the goals under food and nutrition is ensuring 
access to meals for all children, and I think that is really 
important that we focus a little bit on that, and it seems to 
me that you don't. Sixty percent of the entire USDA budget is 
in the Food and Nutrition Service, yet we spend the majority of 
our time talking about commodity programs and emergency 
payments. We talk a lot about growing and very little on 
feeding.

                     NUTRITION PROGRAMS--MEANS TEST

    And I want to applaud you on your statement that you wanted 
meals for all children, because what appalls me is that the 
economy of this country has put a lot more children into the 
hunger status, into the poor status, because the economy is so 
rotten.
    These are entitlement programs, and we doled out last year 
$3.1 billion in emergency aid to farmers who weren't even 
entitled to it just because they happened to live in a county. 
We didn't have any means test. We didn't say, do you need the 
money? Are you poor? Is this going to help you? You just got it 
because you were in a certain county that was declared a 
disaster.
    But you go on to say on the same page, right after it, that 
you are going to--the studies of national surveys suggest that 
a significant number of children approved for free and reduced 
price meals are from ineligible households. That may be true, 
but it doesn't say anything about whether these ineligible 
households feed their children. It doesn't say how the program 
is administered when the children come through the school lunch 
line.
    I have got a task force at home called the Hunger Task 
Force. We are involved in every one of the commodity programs, 
the nutrition programs, and what I am learning is that it is an 
incredible bureaucracy. What happens in a school is children 
come to the lunch program, and you have to single them out 
there as they are standing in line; say, you have to pay for 
this meal, you don't have to pay, you have to pay. It is 
absolutely demoralizing. It is ridiculous.
    Do you know what teachers do? They take the money out of 
their pocket, and they pay for the kids. We ought to be 
eliminating that. If we can give farmers $3.1 billion without 
even having to show that they are rich or poor, and yet we are 
singling kids out in line, and your Department is going to go 
on and find out that there are more accurate certifications to 
help ensure that resources are targeted correctly. The 
resources are targeted correctly right now. The problem is this 
means test. We don't means-test those kids when they get on the 
bus to go to school. We don't means-test those kids when they 
go into the library to check out a book. We are going to means-
test them when they come and say, I want lunch or breakfast?
    Reauthorization is up this year. I hope this Department 
will come in and say, look, the U.S. Department of Agriculture 
is about feeding hungry people, and we want to make sure that 
we feed them from prenatal with WIC to the grave with Meals on 
Wheels, and that we ought to eliminate the incredible amount of 
bureaucracy that is in this program, because the people at the 
local level, and you know this from being a State director, are 
doing a heck of a job. But their hands are so tied that we 
would get a waiver so that the kids--the school lunch program 
and school breakfast program had to be qualified separately, 
run separately, certified separately. And that waiver is in for 
two school districts in the entire country. I hope it is lifted 
for the Nation.
    But my question to you is are you really going to put this 
onus on kids to try to figure out--if they are eligible when we 
are not means-testing farmers for bailouts?
    Secretary Veneman. I appreciate your question and your 
focus on these programs, because, as you say, this is a very, 
very big part of our budget, and they are also up for 
reauthorization this year. It is something we are beginning to 
really focus on in our Department and we want to work with the 
committees in both the House and the Senate to do that.
    This week I made a speech which outlined some very general 
principles we are looking at in terms of those programs. One is 
to ensure that all eligible children benefit from the child 
nutrition programs and receive program benefits, making sure 
kids who are entitled aren't being left behind, and to focus on 
streamlining, some of the ways that this program is 
administered. We are looking at the various aspects of the 
program to determine how we best do that. We haven't yet made a 
determination, but, given the work you are doing in your area, 
I would like to have our folks have the opportunity to visit 
with the appropriate people and to benefit from the research 
that you all are doing.
    The second aspect is to support healthy school 
environments, to make sure the children are getting healthy 
school lunches. We are talking about how to possibly provide 
some financial incentives for healthier eating. We have had a 
pilot program that was part of the Farm Bill for putting more 
fruits and vegetables in certain schools, and we have done 
that, in four States, and the Zuni Pueblo in New Mexico. It has 
been very, very well received, and we have heard very good 
stories about the fact that children like having access to the 
fruit.
    In fact, a mother in California walked up to me the other 
day and said, our children--she is a teacher--she said, our 
children need snacks in schools. I told her about this program 
that was being piloted. She was very positive about the 
opportunities to put more snack fruits and vegetables into 
schools for kids, and about the healthier eating.
    And finally, we want to do everything we can to ensure the 
program integrity, and to be sure that programs are operated 
properly. So we certainly, given your interests, look forward 
to working with you and your staff and the people in your 
district who are working on reauthorization to get your input 
as we look at the realities.
    Mr. Farr. Well, the eligibility ought to be defined as 
hungry, not wealthy parents.
    Secretary Veneman. There are means tests now. All school 
lunches are subsidized to some extent. There are some lunches 
that are reduced cost, and then there are some that are free. 
So there is means testing today, but the question is do those 
definitions need to be changed? Do we need to change the 
administration of them? No determination yet has been made on 
those questions.
    Mr. Bonilla. Thank you, Mr. Farr.
    Mr. Goode.
    Mr. Goode. Thank you, Mr. Chairman.

                     LIVESTOCK COMPENSATION PROGRAM

    Back to the LCP program. With the April 1st deadline now, 
that will cover all jurisdictions that have a primary 
designation for 2002, is that correct?
    Secretary Veneman. Yes.
    Mr. Goode. For 2001 or just 2002? Or 2001?
    Secretary Veneman. The disaster portions of the bill cover 
both 2001 and 2002.
    Mr. Goode. Does the LCP cover both years, too?
    Secretary Veneman. It will cover the eligible counties.
    Mr. Goode. The eligible counties are the primary designated 
counties by the Governor of the State in 2002, correct?
    Secretary Veneman. Yes.
    Mr. Goode. All right. And that will cover all of those that 
did not make the September 9th deadline if the Governor has 
designated them as primary, correct?
    Secretary Veneman. That is correct.
    Mr. Goode. I understand. I think you did mighty well with 
what you had to work with overall.
    Secretary Veneman. Thank you.
    Mr. Goode. But in Virginia I think you probably wouldn't 
need additional persons. You can shift them from those counties 
that made the deadline to those that didn't, if needed. Now, 
that is not a statewide perspective, that is a southern 
Virginia perspective.

                     FREE AND REDUCED LUNCH PROGRAM

    Go to the free and reduced lunch program. I would make this 
observation: Years ago many didn't want to sign up for it, but 
you have got so many in Virginia, and I am sure the same is 
true in other States. There is a push to get kids on free and 
reduced lunch because the more kids you can get on free and 
reduced lunch, the more aid you can get under an array of State 
programs in addition to some Federal programs.
    And then I read that yesterday about some investigation 
that said there might be more than a billion dollars was gotten 
in those programs where the parents weren't eligible. Is that--
--
    Secretary Veneman. There have been studies projecting 
certain amounts of money for schools with high numbers of 
children certified for free meals. You are exactly right. There 
are reasons that schools want to sign up children for the 
school lunch program outside of the areas of eligibility.
    Mr. Goode. Everyone.
    Secretary Veneman. It does impact what the schools can get 
under other unrelated-to-USDA programs. And that is one of the 
issues we are really struggling with in terms of 
reauthorization, because there is an outside incentive to sign 
up people for free and reduced price school lunches, regardless 
of eligibility, and that is where the debate really gets 
difficult, because we know that there are these other 
incentives.
    Mr. Goode. I know what Mr. Farr said, but I heard from 
school persons and parents that most--20 years ago, many didn't 
want to take a free lunch, but now more people want to take a 
free lunch than not get a free lunch. So I don't know if there 
is any embarrassment or not.
    Let me say one thing. He said that ``I would like to give 
everybody a free lunch.'' But I looked into the thing about 4 
or 5 years ago. That is a huge cost, as I recall. I don't know, 
maybe if you give everyone a free lunch, how many people are 
you going to get rid of that is going to determine who gets a 
reduced lunch, and that it was pretty staggering.
    I mean, that would be great if you could do it, but how 
much does it cost?
    Secretary Veneman. Let me just have Steve Dewhurst go into 
that. That will probably give you some indication.
    Mr. Dewhurst. We have about 29 million children who 
participate in the program on average, total, and about half of 
those children, something over 14 million, receive free 
lunches. The rest of the lunches have some degree of subsidy in 
them. The program is roughly a $10 billion program. So, if you 
were to go to a universal free lunch, you would take the 
remaining 14 million children and give them free lunches in 
place of whatever they are buying now.
    Mr. Goode. That would be 10 billion?
    Mr. Dewhurst. I don't think it would be $10 billion, but $5 
or $6 billion. It would be some number substantially above the 
current budget.
    Mr. Goode. The offset from having the situation where you 
didn't have to check everybody, how much would you save on 
that, tens of millions?
    Mr. Dewhurst. The savings would be in administrative costs.
    Secretary Veneman. Most of that is done through the 
schools.
    Mr. Dewhurst. We share the administrative costs with the 
States. I suspect we could make an estimate of administrative 
cost savings.
    Mr. Goode. If you go to healthy lunches across the board, 
that is the only free lunch you get, you might have a decrease 
in the demand for free lunches. I fully support healthy 
lunches, but I know the tastes of many in America.
    Secretary Veneman. That is the dilemma of food school 
service providers.
    Mr. Bonilla. Thank you.
    Ms. DeLauro.
    Ms. DeLauro. I would like to, just make a general statement 
on the school lunch program. I think it interesting to point 
out in that article today, it was Eric Bost, the Under 
Secretary for Food and Nutrition, who said he thinks that the 
27 percent estimate of ineligibility is too high; but the 
problem is significant. So I think it needs to be sifted out.

                              FOOD SAFETY

    I want to move to several questions which have to do with 
an issue that I am very, very interested in; that is, food 
safety. These are questions you do not have to answer now, but 
if you can please answer them, that would be helpful, because I 
want to get on to some other things.
    You talked about $42 million for the Department's food 
safety activities. My understanding is $15.7 million goes for 
pay increases, $25.6 million for other programs, including $4.2 
million for aiding new inspectors. I know we need more 
resources for inspectors, but is this enough; with increased 
line speeds and industry growth, is this sufficient to 
effectively protect our food supply? Do you need additional 
resources for more inspectors? If yes, how many inspectors do 
you need to do the job, and at what cost? And we will get you 
that question. I don't want you to answer that now.
    [The information follows:]

    We have assessed our resources and believe that the fiscal 
year (FY) 2004 budget request of $4.3 million for an increase 
of 80 inspectors from FY 2003 will allow FSIS to effectively 
ensure that meat, poultry, and egg products are safe, wholesome 
and accurately labeled.

    Ms. DeLauro. So I want to move to some other areas, 
primarily the issue of both Nebraska Beef and Supreme Beef. A 
few weeks ago, I sent a letter to you about my concerns with 
the USDA settlement in the Nebraska Beef case. I understand the 
response is forthcoming shortly, and I look forward to that 
response. I said in the letter that the successful challenge by 
Nebraska Beef to withdraw USDA's inspection services only 
heightens concerns raised by USDA's defeat in the earlier 
Supreme Beef case.
    Further, I am concerned that despite these repeated 
assaults on food safety protections, that the Department has 
been unwilling to ask Congress for the authority that it needs 
to protect the public health. From Supreme Beef and Nebraska 
Beef at a minimum it appears that USDA's basic food safety 
authority is under a cloud and that another company can easily 
challenge USDA's authority.
    At worst it may be that USDA does not have the authority 
that it needs to protect our food supply. Between Supreme Beef 
and Nebraska Beef the Department can no longer shut down a 
plant for failing salmonella standards, and with Nebraska--we 
have no authority to stop production in plants with known 
unsanitary conditions, so that the good work that was done a 
number of years ago to put into practice safety valves on 
ensuring the safety of our food supply have been, in fact, 
undermined I might add, I believe with the complicity of the 
USDA.
    How does the consent decree and order guarantee, that the 
meat produced at Nebraska Beef is safe? What steps are being 
taken now to clean and improve the plant's operation? How and 
when will the Food Safety and Inspection Service evaluate the 
effectiveness of those steps? In light of Supreme Beef and 
Nebraska Beef, do you believe that USDA still has the legal 
authority to close down meat plants that repeatedly fail to 
comply with USDA's food safety standards?
    I might say to some of my colleagues here that a portion of 
that tainted meat, in terms of the school lunch program, has 
repeatedly gone to our school lunch program, putting our most 
vulnerable people in grave danger and in jeopardy.
    Given these challenges, do you think it is time to step 
back and assess whether or not the USDA has the authority that 
it needs to protect the public health? Is it time for you to 
have a clear mandate and authority to protect the public 
health, including pathogen standards and a strong food safety 
system, and will you work with us in the Congress to give you 
the authority that you need to protect our food supply?
    Secretary Veneman. Congresswoman DeLauro, I want to tell 
you how very, very seriously we take the issue of food safety. 
Our Department declared a war on pathogens. You know we have a 
very strong food safety team with Dr. Murano and Dr. McKee, the 
Administrator of the Food Safety and Inspection Service.
    In these cases, let me just say with the Nebraska Beef 
case, we withdrew inspectors. There was a TRO granted.
    Ms. DeLauro. I applaud you for removing the inspectors, by 
the way. I truly do.
    Secretary Veneman. I think we have been very proactive in 
the move to remove inspectors out of plants where we cannot get 
compliance in areas where we believe we need more compliance. 
We have not hesitated to remove inspectors. There was a TRO. We 
believe, and our lawyers tell us, that we would have won that 
case if it had gone to hearing on the merits.
    But the consent decree that was entered into, we believe, 
gave us so much more control, in that plant, over what was 
going on that we agreed to the consent decree so that we could 
get in and make sure that the plant was operating in a way that 
was efficient and safe for the American people. And we are 
continuing to evaluate everything that Nebraska Beef does. We 
have substantially increased the inspections in that plant and 
the oversight. And so that is how that matter evolved.
    I do not believe that that case, in any way, undermines our 
ability to remove inspectors if we feel that that step is 
warranted, and we will not hesitate to remove inspectors. I 
want to make that clear.
    But we will obviously, as you ask, continue to work with 
the Congress on our food safety issues. We are looking at a 
whole variety of issues that are impacting the food safety 
system. We have had a very strong study on BSE. We have taken 
several steps to protect the meat supply in that regard. We 
have taken steps with regard to E-coli. We have taken steps 
with regard to listeria, and we are going to continue to use 
the best science, the best technology, and the best training to 
improve our food safety systems.
    Ms. DeLauro. I will just say to you that you can have the 
best training, but if these companies can continue to go to 
court and undermine what they did with salmonella, that the 
best training in the world is not going to provide us with the 
opportunity to be able to contain those difficulties. It is 
hard to believe that the consent decree could give more power, 
when, in fact, it is the fox in the chicken coop, because they 
determine who the independent agency is, they select the 
internal people to deal with this.
    My question ultimately comes down to USDA, and then I have 
to imagine from your comments, not the Department does not want 
any authority to be able to deal with a safe food supply, but 
is willing to go to court to be defeated and water down 
procedures that many of us here on this committee worked very 
hard to put into practice. And now they have been rendered 
essentially ineffective because of these court cases and the 
unwillingness of the Department to take it on, and to demand 
from Congress the authority to be able to deal with some of 
these issues.
    Secretary Veneman. Congresswoman, I am not saying that we 
weren't willing to look at the various authorities. We are 
looking at the authorities available to us. However, I will 
tell you that even if we had something like mandatory recall 
authority, I don't believe that would have stopped the company 
from going in and trying and doing a TRO. Companies can go in 
and get some kind of TRO against the action that we have taken.
    Now, as I said, I believe we still have the ability, and we 
will continue to use the authority to withdraw our inspectors, 
which is our most valuable tool in our oversight of the meat 
and poultry plants.
    Mr. Bonilla. Thank you.
    Mr. Nethercutt.
    Mr. Nethercutt. Welcome, Madam Secretary, and gentlemen, 
and to your team, welcome. I want to comment on food safety. We 
are a country of 285 million people. My sense is that the 
incidence of food poisoning and food problems and lack of 
safety is relatively small. I know you can have a zero 
tolerance of food safety infractions, but I don't know of any 
other country on the face of the Earth that has a better food 
safety inspection than we do.
    And I know that we can anecdotically argue about 
deficiencies, and that is legitimate, but, my goodness, I think 
that we have a very safe food supply in this country, and I 
think it is inaccurate to say that we have a dismal food safety 
record. I think that we have very high, good quality food 
safety. Would you agree?
    Secretary Veneman. Absolutely. I believe we have the safest 
food supply in the world, but we continue to do everything that 
we can to make sure that it stays that way. Our consumers have 
tremendous confidence in our food supply. That is why we 
haven't had some of the consumer backlash issues that we have 
seen in Europe, for example, because our consumers do have 
confidence in the food safety systems that we have.
    Again, we are working to continually improve, because we 
can never rest on our laurels. We have to look at emerging 
pathogens. We have to look at it hard from every kind of 
problem that we have, and that is what our commitment is to 
continue to do.
    Mr. Nethercutt. I appreciate that. That is a good 
commitment.

                     EMERSON TRUST/RISK MANAGEMENT

    Let me talk with you, as I mentioned a day or so ago, about 
an issue on the Emerson Trust, and the problems that I have 
faced in our district relative to what I think is a flawed 
policy in the Department of Agriculture for the way these 
Emerson Trust developments occurred. And I know the inspector 
general is doing an investigation. I don't know if you have 
anything to add at this point, but I know you are sensitive to 
it. I am unhappy with respect to the way it unfolded, because 
it hit the wheat industry in my district, in my region, and our 
entire State very hard, and I think it was improper, the way it 
unfolded.
    So I will look forward to what the inspector general comes 
forward with. I know there is an investigation in process right 
now. So I just mentioned it for the record, because I am very 
concerned about the way it happened as it relates to the USDA's 
obligation to the farmer and producer and the rural communities 
on the ground.
    I want to mention to you, I saw you made a speech just 
recently on the issue of risk management, and I am an advocate 
of school lunch programs, and I know Mr. Farr's dedication to 
this is genuine and heartfelt. But I would just hasten to add 
that if we don't have a production agriculture industry in this 
country that can produce food that can go to the school lunch 
programs and nutrition programs, then we are in a world of hurt 
in terms of being dependent on other countries of the world to 
provide us safe food and fiber.
    So I am here to advocate for production agriculture, and I 
don't believe that there is a disproportionate benefit to 
production agriculture at the expense of school lunch programs 
or other nutrition programs in our government.
    With respect to the social side of agriculture spending, it 
is monstrous as opposed to the production side of agriculture 
assistance. We got farmers that need to produce, and the risk 
management, I think, is a good way to go to assist our farmers 
in producing effectively and efficiently and competitively 
around the world. Ross Davidson is doing a good job and has the 
right idea. That it is not just crop insurance--and you as 
well--it is giving farmers tools to be better managers, and I 
think that is part of the equation.
    So if you care to comment on the Emerson Trust and risk 
management, I would be delighted to hear what your testimony 
is.
    Secretary Veneman. Well, thank you. And I appreciate the 
opportunity to talk with you about the Emerson Trust. We are 
looking at your concerns very closely, and, as you said, the IG 
is looking at it as well, and conducting an audit on this 
situation. But there were issues that related to proximity to 
the shipping points and the type of grain that was required 
that played into the decision as well. I appreciate you 
recognizing the risk management initiative that we have taken 
in the Department.
    What I announced at my outlook speech last week is that we 
are going to take an overall look at risk management from two 
perspectives; first, to look at risk management tools and risks 
management gaps in terms of insurance coverage. For example, 
this year we felt that there was inadequate coverage for 
livestock producers. That is why we acted with this livestock 
compensation program. We know there are gaps like that. We know 
there are gaps in some of the areas in the Northeast, in some 
of the specialty crop farms, and in some of the more diverse 
farming operations that involve specialty crops and so forth. 
So we wanted to take a look at what are the gaps.
    We are going to be doing that. And what are some of the new 
kinds of risk management tools. We have some new products that 
are being put out before the Risk Management Board. Keith 
Collins is a member of that. He can talk more about that if we 
need to. As well, we want to look at what are the operational 
aspects. Do we need additional authority in terms of oversight 
of the companies themselves?
    We saw the biggest crop insurance company in the country 
file bankruptcy last year. That is something that we are taking 
very seriously. We want to make sure that we have the 
appropriate authorities in place.
    So that is the initiative that we have undertaken this 
year, and we are going to be working on that risk management 
initiative, and we will look forward to working with you on 
that.
    Mr. Nethercutt. Thank you, Mr. Chairman.
    Mr. Bonilla. Thank you, Mr. Nethercutt.
    Mr. Boyd.
    Mr. Boyd. Thank you, Mr. Chairman.
    And, Madam Secretary, welcome to you and your team, and 
thanks for the call earlier to discuss things that might be 
important to us.
    I want to just start maybe with a short opening statement, 
to tell you that I read your testimony, and I found a lot of 
good things in it, and some that probably wouldn't surprise you 
that I felt were inadequate, as I am sure that you probably 
feel the same way.
    I know you have a very difficult job. I am sitting here 
thinking, listening to the other Members talk about the 
different programs you have got to administer; the farm 
program, you have got to focus on marketing, you have got to 
focus on conservation, you have got to focus on rural 
development. Obviously we are going through a consolidation, 
have been, of our agriculture resources, and we will continue 
to do that, I think. And rural development is a major issue for 
some of those rural communities. Food safety, which Ms. DeLauro 
talked about; nutrition, which others have talked about. It is 
a monumental task. I am not sure I would want your job. And I 
just want to tell you that we understand this difficult job, we 
appreciate it.

                        FARM BILL IMPLEMENTATION

    I do want to echo the words of Mr. Nethercutt and Mrs. 
Emerson, that given all of those responsibilities, when you 
boil it down, the wisdom of George Washington when this country 
was started about never, never let the production agriculture 
industry in this country die, it is appropriate today. And 
given the world situation, open borders, trade, economic 
situations, it is more and more difficult. And so I wanted to 
focus on that.
    And I want to ask you a couple of questions. Number one, 
you made a statement earlier in answering a question, and you 
said, we asked for considerably more money to implement the 
Farm Bill than we were given. I think that is what you said. 
First of all, my first question is, who did you ask?
    And my second question really goes beyond that. And I would 
remind you that since 1994, we have reduced the FSA employees 
by 38 percent, permanent employees. We have reduced temporary 
staffing levels by 41 percent since 1996. The people we have 
out there are doing a great job. You know, I deal with them. I 
know them. Many of them I have worked with in my area for 20 
plus years, and they really do a great job. Many of us 
supported the downsizing that went on here in the 1990s. I 
wasn't here, but, it was something that needed to be done.
    But my question is how long can we continue to do that and 
effectively implement the programs that we have to have in this 
country to maintain a viable agricultural industry? Are you 
going to let FSA become an ineffective organization on your 
watch? I would like to ask you those two questions. Number one 
is about the statement, who you asked for more money; and 
secondly, about the FSA employee situation.
    Secretary Veneman. Thank you, Congressman. I appreciate the 
question, and I also appreciate you recognizing the diversity 
of the program mix that we have in the Department of 
Agriculture. We didn't even cover the Forest Service in this 
hearing, but that is another large part of our Department 
having the bulk of the employees.
    We have three hundred different programs in USDA covering 
three different sections of OMB. It is the most diverse 
Department in government.
    On this issue of the Farm Service Agency and the money, as 
the Farm Bill was negotiated last year, there was a question 
about how much money USDA would need to implement this Bill, 
and we gave the Congress that number, and I believe we got 
about half of that money. We asked for $110 million, and we got 
$50 million in the Farm Bill.
    So the answer to your first question of who we asked for 
more money is we asked the Congress.
    Mr. Boyd. Is that one-shot money you are talking about 
there?
    Secretary Veneman. That was the Farm Bill implementation 
money, yes. And we got $50 million in the Farm Bill, and then 
we got an additional $70 million in the 2003 appropriations, 
but we didn't get that until last week. And obviously we 
haven't been able to hire with that money yet.
    Mr. Boyd. The statement you made was regarding the one-shot 
implementation of the Farm Bill?
    Secretary Veneman. Right.
    Now, there have been reductions in the work force in FSA 
since the 1996 Bill because many of the farm programs went into 
the decoupled program. It was a different kind of program. With 
the new Farm Bill, the programs again require many different 
decisions on the part of the farmer, requiring more workload 
within our FSA offices, which is why we have been using 
additional staff to get this job of implementation done.
    But we are also looking at additional tools. We have put a 
tremendous amount of resources into information technology to 
help the farmers and ranchers. The people I have talked to 
really like these calculation tools that we have been able to 
develop through technology to help them calculate potential 
program benefits. It will help our Farm Service Agency people 
better service the farmers. It will get our forms on-line. It 
will allow the system to be more efficient and will allow us to 
be able to create those kinds of efficiencies. So that is a 
priority as well.
    But we do appreciate, and I certainly appreciate, the 
comments that you have made about our employees. They are doing 
yeoman's work out there. We know it has been difficult. They 
are now going to have a disaster bill to administer as well. It 
has not been easy but they are continuing to do a tremendous 
job for the American farmer.

               FARM SERVICE AGENCY OFFICE CONSOLIDATIONS

    Mr. Boyd. Are we going to continue to merge offices? We 
supported the merger of the offices. It is working fairly well 
in most places, but I think we are a little bit thin in some 
places. Are we going to continue to do that on your watch? Are 
we going to be able to have adequate resources to implement the 
Farm Bill, which obviously takes more staff work, than the old 
bill.
    Secretary Veneman. We are continuing to look at where we 
can have efficiencies within the system with regard to offices. 
And, I mean, we are looking at the whole range of USDA offices, 
not just FSA, about where can we have efficiencies, about where 
can we have collocations, where can we better integrate 
technology. We are committed to providing the services in the 
best way that we possibly can for the farmers and ranchers.
    Mr. Bonilla. Thank you, Mr. Boyd.
    I now yield to Mr. Kingston and then go directly to Mr. 
LaHood to complete our first round of questioning.
    Mr. Kingston. Thank you, Mr. Chairman.
    And, Madam Secretary, it is great to see you again. I 
appreciate all of the hard work that you guys do.
    I wanted to ask you about four areas that are very 
sensitive, that I would like to see your commitment to help us 
broker some peace. And sometimes, generally speaking, there is 
a reluctance on the administration to get involved with, you 
know, maybe local turf wars. So if these fall into that 
category, it would be better to say that we are going to let 
Congress resolve it rather than take a role.

                       ORGANIC FARMING STANDARDS

    One is, as you know--and these things always drag this bill 
down. There are the organic farming provisions and the 
definition of an organic chicken. As you know, there is a 
study, and if the study says there is plenty of inexpensive 
organic chickens out there, then one company's definition won't 
stand up. If there is not, then what they have been calling 
organic since 1997 is going to continue.
    But I think you will find there are people who are pro and 
con in the Congress who want to work with your office to try to 
resolve that issue. And so my question to you is do you see 
yourself playing a role in that, or do you want us to try to 
resolve it on the Hill?
    Secretary Veneman. Well, I think that certainly on this 
issue of organic, there are very strong feelings, as you say. 
Our position has been that it took over 10 years to implement 
the organic standards law. It was passed in the 1990 Farm Bill, 
and it became effective in October of 2002, almost 12 years 
later. This regulation received the most public comments ever 
received on any rule that USDA has ever dealt with. So it has 
been a very, very difficult and long, drawn-out process, and so 
there is a very strong feeling about not changing those 
regulations.
    Now, as far as working with people in trying to resolve the 
issues, I think there are some things that we can work together 
on, one of which is the study in progress. This is the one 
referenced in the 2003 bill regarding Organic Livestock Farms. 
We are continuing to work on that study and get it done as 
quickly as possible.
    The other thing that I think we can do is help the 
companies that feel that they are having difficulty getting the 
feed to find sources of organic feed. We have tried to be 
helpful in that regard.
    The third is that if it is not possible to reach the 
certified organic standard, are there other labels which they 
would qualify for, and, you know, something that is not the 
USDA national organic certified label? And I think that some of 
these companies are exploring the opportunity to use either a 
hormone-free feed or something similar as an alternative to 
using the labels if they can't meet the requirements.
    Mr. Kingston. Your role in that, you would be willing to 
sit down with us and kind of hash out some of this stuff?
    Secretary Veneman. Absolutely. I directed my people to do 
that.

                       COUNTRY OF ORIGIN LABELING

    Mr. Kingston. Okay. The second one, which is equally as 
sensitive to my good friend, Mr. Latham. I understand there is 
a Senator named Grassley who felt similar on stockyard 
ownership and packing, and, you know we have strong Members in 
both Houses who feel different ways on this.
    Do you see yourself wading into that?
    Secretary Veneman. I think both of these issues were issues 
that were debated in the Farm Bill. The country of origin 
labeling is something we implemented, because it was part of 
the Farm Bill that was passed as a voluntary program, and then 
became a mandatory program.
    There are a lot of differences of opinion within the 
various agriculture communities out there. I have been to some 
of the conventions. I have heard the debate. It is very split 
in terms of the opinion.
    We have a law, however, on country of origin labeling that 
we are implementing. That is our position at this point. We did 
not, as an Administration, support that provision during the 
Farm Bill debate. I think that is a well-known fact.

                          PACKER CONCENTRATION

    On packer concentration, we have had under consideration 
for some period of time plans to develop a study to look at 
this whole issue--the economic conditions, the trends, the 
operational impacts, the economic impacts, but the funding for 
that study was contained in the 2003 budget, which, of course, 
was just passed a couple of weeks ago.
    We had held up on doing that study, but we are now going to 
initiate that comprehensive study, using both internal 
resources, and resources in the private and university sectors.
    Mr. Kingston. Okay. I have some more questions, Mr. 
Chairman, for the second round.
    Mr. Bonilla. Thank you.
    Mr. LaHood.
    Mr. LaHood. Thank you, Mr. Chairman.
    Madam Secretary, notwithstanding what was said earlier, I 
think you are doing a pretty good job. I think that you have a 
hard job. I think it is a little unfortunate when a Member has 
an individual problem, and they bring it to the whole committee 
and take up all of the time of the committee to do that. That 
is not the way I would operate. I doubt it is the way that most 
Members would operate, but I guess that is the way it is.

                           FARM BILL SIGN UP

    Let me touch on four things, and you can comment on them if 
you would like; and if you don't want to, you don't have to. I 
have heard a lot from my farmers about the sign-up. I have told 
them that they need to do it before April 1st. But the FSA 
offices need more people. I don't know if you can assign more 
temporary people. I don't know what you can do about it. But if 
every farmer complies with your requirement to sign up before 
April 1st, there are just not going to be enough people to do 
the paperwork.
    I think rural development is a good, strong program. I hope 
you will continue to really do all that you can do to support 
that in an economy in rural America that is hurting very badly. 
Rural development is a big, big asset for us, and people are 
really taking advantage of it.
    I have met with Secretary Moseley about my e-file bill that 
we passed some time ago. I think it would go a long way to cut 
down on a lot of paperwork. I would encourage the Department to 
do all you can to keep the jets flaming on that, because I 
think it would be very helpful.

                          WAREHOUSE PROVISION

    And I guess if you can answer any question, it would be on 
the warehouse provision, the 6-month extension that was 
included in the final budget that we passed. Are you going to 
weigh in on that, or are you going to ask other people to be 
involved, or what is your feeling? Because, you know, obviously 
that is going to be a big issue. I don't want the 6 months to 
elapse and not have anything done.
    And thank you for being here.
     Secretary Veneman. Thank you very much.
    On the warehouse extension, we have been working very 
closely with the National Association of State Departments of 
Agriculture (NASDA) on that, and we will continue to do so to 
try to reach some accommodation. This issue involved fixing a 
regulation that we were told we had to fix by the courts, and 
that is what our people attempted to do. We know that it has 
caused some difficulty in a few States, and so we have 
continued to try to work with those States. We will continue to 
try to do that during the 6-month extension period. I will 
certainly commit that to you.

                           FARM BILL SIGN UP

    On the sign-up issue, as I think I said in response to an 
earlier question, the April 1st date is absolutely firm, and we 
are going to reallocate resources where we can. We have some 
additional money now. How many additional people we can 
actually hire and train before April 1st will maybe take more 
resources than it is worth. But there may be some people who 
have some experience that we can hire temporarily and there may 
be some smaller offices where the sign-up is complete and we 
can reallocate those resources. We can possibly send some 
people from Washington to assist. We will try to reallocate 
resources in areas where we see there are backlogs.
    But I was informed, as I said before, yesterday, that there 
is no county office that we know of that has their appointment 
books completely full, although I did hear Ms. Kaptur's 
statement. We will go back and look at that, because she said 
earlier that there was someone who said that they couldn't get 
an appointment until May, which doesn't make sense to me, given 
the circumstances we are under with the April 1st deadline.
    But we are very committed to making sure that we get the 
farmers signed up. I have to say that one of the concerns was 
that we were very, very surprised at the slow rate at which 
farmers came in. In other words, we didn't start to see people 
come in until after the first of the year, despite the fact 
that we were encouraging them to do so. They didn't really come 
in until these last few months.

                       E-FILE TECHNOLOGY PROGRAMS

    Let me also address your e-file issue, because, as I said 
in response to Mr. Boyd's question, we do feel strongly about 
the technology aspect of what we can do and how much easier it 
will be for farmers and ranchers if we can truly get good e-
file and e-government types of programs up and running.
    We have got a very good CIO who is doing an excellent job 
trying to integrate some of those programs. We have got a 
project looking at how do we integrate all of our maps and get 
them digitized. For example, FSA has run a separate set of 
maps--basically pen and ink maps, and NRCS has a separate set 
of maps. Once we get all of that digitized and into computers, 
imagine how much better off we will be in terms of helping our 
farmers and ranchers do the right thing by enabling them to 
apply and access conservation programs on-line. So we are very, 
very much in agreement with you on the importance of this 
initiative.

                           RURAL DEVELOPMENT

    Finally, on the rural development issues, I had the 
opportunity yesterday morning to speak to all of our State 
rural development directors. I think that Under Secretary Dorr 
is providing a tremendous amount of vision and leadership in 
this area. We are looking at all kinds of opportunities for 
rural America. We are looking at the kinds of economic 
opportunities that rural America needs to sustain itself by 
looking at our programs very creatively, and by looking at how 
do we best measure our programs to see what are the most 
effective programs in terms of rural development. So we have 
had an initiative to reevaluate regard as well.
    So, again, I agree with you that we have to look very 
broadly at our rural development programs. We need to look at 
how do we create and provide economic opportunities. We have a 
broadband initiative that we announced recently that I think 
holds tremendous promise, because if rural America is going to 
participate in the economy of the 21st century, they have to 
have the tools. So things like broadband are very important.
    So we will look forward to working with you and this whole 
committee on ways to strengthen rural America.
    Mr. Bonilla. Thank you, Mr. LaHood.
    We will now begin our second round of questions, and we do 
intend, however, to go as long as we can and adjourn at noon.
    In light of trying to save a little time, Madam Secretary, 
I am going to submit my next question about conservation 
technical assistance and the disagreement, I suppose, of what 
may have been in the farm bill versus what OMB wants to do and 
where to get this money--I am going to submit that for the 
record. If you would get back to us on that, we would 
appreciate it.
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    Mr. Bonilla. Ms. Kaptur.

                              FARM INCOME

    Ms. Kaptur. Thank you, Mr. Chairman, very much. And I 
listened to what the Secretary said about the need for economic 
growth in rural America. With 85 percent of farm families 
having to work off farm in order to make ends meet, the most 
popular program in rural America for our farm groups when they 
get together is stress management.
    And looking at the situation with farm income, Mr. Collins, 
have you been able to locate any numbers for us?
    Mr. Collins. Yes, Ms. Kaptur, I have. Let me go back and 
give you 3 years of data. In fiscal year 2000, 48 percent of 
net farm income came from government payments; in 2001, 45 
percent; and in 2002, 40 percent.
    Part of the reason for the drop was, as the Secretary 
mentioned, a lot of producers didn't sign up during the end of 
2002 and are signing up now. So government payments fell an 
unusual amount in 2002.
    Ms. Kaptur. It is close to half.
    Mr. Collins. It is close to half.
    Ms. Kaptur. A few years ago it was higher than that because 
of the abysmal prices and what happened with the market. But 
imagine most workers in our country getting a supplemental 
income of half from the Government of the United States when 
they are out there trying to make it in the marketplace. It is 
the most difficult situation for rural America. It has been 
continuing for a very long time. And that is why I am going to 
go back to my original line of questioning, because as I look 
at our rural development programs, our research programs, 
billion-dollar rural development, $2 to $5 billion depending 
upon which accounts you add up, we have to think in billions of 
dollars.
    We have to think in billions, not Federal subsidy, but ways 
that we use Federal programs to generate billions of dollars of 
private market income in rural America. Bioenergy and biofuels 
is absolutely one of the pillars of that new future.
    Mr. Chairman, I am going to submit, and ask unanimous 
consent of the committee to submit, for the record figures on 
the current budget you are submitting to us which shows that 
with the Agricultural Research Service we have a decrease of 
several million dollars for our new uses in that account. We 
also have a decrease in the CCC in their bioenergy payments.
    We have a decrease in the budget of value-added grants that 
Congresswoman Emerson talked about of over $40 million; a 
decrease in the renewable energy section of 9006 of the farm 
bill, $23 million.
    I am going to submit this for the record because I am going 
to ask the Secretary, knowing her personal commitment to this, 
to see if there is not a way to work with this Congress and to 
change the way that USDA does business on the energy issue.
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                               BIOENERGY

    Ms. Kaptur. I have a bill, I don't expect the 
administration to support it, but they should, H.R. 130, called 
the Biofuels Energy Independence Act. Here is the target. Every 
year for the last several years America has imported $60 
billion worth of petroleum. Our trade deficit in petroleum is 
growing. It is higher now than it was 20 years ago. In spite of 
all of our conservation programs, we are more and more 
dependent on other countries, and we are about to go to war. 
Some say it isn't for oil, but the money that oil made created 
and maintains those dictatorships. All of the problems that we 
are facing are tied to the politics of the oil regions of the 
world. Terrorism grows out of the insurgency that just happens 
to be occurring over the oil fields because there is nothing 
else there. 99 percent of their economy relates to oil. There 
is no more important issue to this government than to become 
energy independent.
    Agriculture has to be at the table. She is still not there.
    I checked the budget of the Department of Energy and the 
President's proposal for hydrogen fuel cell research. He only 
budgeted this year $48 million of an increase, not the $1.2 
billion that he talked about in the State of Union Address. He 
took $31 million out of biomass at DOE.
    So, Madam Secretary, the target for rural America should be 
to displace the $60 billion we are importing. The bill that I 
have would create, modeled on the rural telephone and the rural 
electric, the kind of national system to create a financing 
platform to move this industry up. We need your help to do 
that. It is a political fight, but it is our watch. It is our 
time. God put us here right now for our country and the world. 
I am asking you to really look at this.
    There are 3.3 million vehicles on the road today in our 
country that are capable of using E-85. Most places in the 
country do not have E-85 pumps. Your own Department has 700 
vehicles that are E-85 capable. Your Department could do so 
much, if you can somehow take this spaghetti of different 
programs that are technically involved with energy and create a 
real task force inside your agency. I think every single member 
of this committee would support that. There are Republicans and 
Democrats interested in this issue. We are not moving the 
system to help America when she needs us. Tom Osborne of 
Nebraska was on the floor about this the other night.
    I would ask you if you have made any efforts which you have 
not made us aware in your testimony that will help us dig 
America out of this hole and move bioenergy up as one of the 
major priorities at the Department.
    Secretary Veneman. Again, Congresswoman Kaptur, I want to 
reiterate that this is a strong priority of our Department and 
of our President.
    As you look at the issue of bioenergy, one of the things 
that can most help this industry is the demand side, and the 
thing that can most help the demand side in the immediate near 
future is the renewable fuels standard that is contained in the 
energy bill.
    We are looking at all of the energy issues. If we look at 
the dependence on oil, there are promising opportunities out 
there. There is a plant that I visited called Cargill-Dow in 
Nebraska. It is creating polymers out of corn that are 
replacing plastics that petroleum-based products are now being 
used for. The promise of agriculture in some of these 
industrial-use areas is tremendous. We are continuing in our 
Department to promote that.
    A high amount of our corn is now being used in ethanol, I'd 
say about 10 percent. And, we are seeing a tremendous increase 
in the number of ethanol plants around the country. The 
renewable fuels standards would be one of the biggest helps, 
and we are coordinating all of our alternative fuels in energy 
programs. Keith Collins has been very involved in looking at 
how we can continue to better promote and enhance the 
opportunities for these products.
    Ms. Kaptur. My time is up on this round, but I would ask 
you to send us a letter, with Mr. Collins, on how we can help 
you improve the efforts in USDA in this area because I don't 
believe your budget reflects that commitment.
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    Mr. Bonilla. Thank you, Ms. Kaptur.
    Would members like a third round of questioning?
    Mr. Kingston. I would say that the Secretary wanted a third 
round.
    Mr. Bonilla. We want to accommodate the questions. Madam 
Secretary, would you like to take a break or continue? In spite 
of what I said earlier, we will probably go past the noon hour.
    Secretary Veneman. I am okay for the time being.
    Mr. Bonilla. I yield to Mr. Latham, and when he concludes, 
I will ask Mr. Latham to take the Chair, and he will continue 
the hearing. We will go to a third round.
    Mr. Latham. Thank you, Mr. Chairman.
    Obviously the renewable energy situation is very, very 
important. I was pleased to see that as far as ethanol, I think 
we hit the 1 billion gallon production mark. Estimates are that 
we are adding in most areas 10 to 15 cents a bushel to the 
price of corn today. The great thing is that it is value added. 
Most of the plants that are coming on-line today are farmer 
owned, so the money is staying in the communities rather than 
going to big conglomerates. We want to continue that growth and 
make sure that it happens in the future. I think we can be kind 
of the agricultural Middle East here in the United States.

                        BUDGET REQUEST--AMES LAB

    Just as a question, going back to the Ames Lab, what was 
your request of OMB, do you know?
    Secretary Veneman. I don't.
    Mr. Latham. Can you get that, Mr. Dewhurst?
    Mr. Dewhurst. At the time we were doing the budget to 
finish the accelerated plan, the figure was $306 million. That 
is what we sent you a year ago, and it was the same number.
    Mr. Latham. That was your request to OMB to complete the 
funding, okay. I appreciate that.

                             BIOTECHNOLOGY

    One of the really important things for the future in 
agriculture, and everybody talks about rural development and 
economic development in farm country, we have some great 
opportunities in biotechnology as far as growing pharmaceutical 
proteins in corn and other agricultural commodities on a very 
cost-efficient basis.
    Last year the Biotechnology Regulatory Service was supposed 
to release new guidelines for the 2003 crop year for 
pharmaceuticals and industrial proteins; I think you are 
drafting a notice of proposed rulemaking on the subject. The 
importance of this is growing. There is money in the 2003 
appropriation bill that was just signed for start-up of a 
biologics facility. I think that is very, very important. Can 
you tell me where you are on the guidelines and the protocol? 
There are models for protocols out there. I think it is a 
tremendous opportunity for the future.
    Secretary Veneman. First, I would absolutely agree that it 
is a tremendous opportunity. It provides a great promise for 
our farmers.
    The guidelines which you are referring to should be out, I 
believe, within the next couple of weeks, 2 to 3 weeks at the 
most. They are in the final stages, but I can't give you an 
exact date because we cannot guarantee how long all of the 
clearances will take, but they are in the final stages of 
drafting at this point.
    But I also talked in my outlook speech last week about the 
importance of another initiative that we are undertaking, and 
that is looking at all of our biotechnology authorities and 
regulations to make sure that our regulatory structure is 
keeping up with the technology. We have seen some things 
happen, whether it was ProtoGene or others. We have to make 
sure that we have a strong regulatory system so we do not 
undermine the promise of this technology. We are committed to 
making sure that our regulations are appropriate and that we 
continue to have the kinds of controls on this industry to 
allow it to grow and thrive.

               GENETICALLY MODIFIED AGRICULTURAL PRODUCTS

    Mr. Latham. That brings up a very important item. My 
background as a farmer and also my involvement in the seed 
business, I heard for 20 years before I got in this job about 
what was going to happen with biotechnology, genetically 
modified varieties. All of the focus then was on the production 
side. I sat through hundreds of meetings talking about 
genetically modified varieties and the potential and the 
concerns for the future. Never once did consumer acceptance 
come up. That is the reality of it.
    I hope there is some initiative from USDA to bring the 
public along so that they understand the value of this type of 
new technology. I think one of the most exciting things in this 
arena is the orphan drugs, which are expensive for a 
pharmaceutical company to develop for a small population. The 
protein can be grown for maybe a 20th of the cost that it would 
be otherwise in a laboratory. I believe it is important to make 
sure that the public is brought along with us on this and they 
understand that there is a real benefit for society and it is 
not just a matter of farmers wanting to get another market, but 
there is a real benefit for society. I don't know if you have 
any initiative like that, or what you can do to help.
    Secretary Veneman. We have tried to be very proactive on 
the education side. I think there are a couple of things that 
have helped consumer acceptance in this country. One is 
confidence in the regulatory system.
    Mr. Latham. The Ames Lab would help there.
    Secretary Veneman. The second thing is getting products 
with consumer benefit. We have seen products like the vitamin A 
enriched rice, and there is the promise of tomatoes with 
increased lycopene, and some other product varieties where 
there are nutritional benefits for consumers. I think the 
strict pharmaceutical use of crops will be looked at somewhat 
differently by the consumer because they are looking at Europe 
at least at the food uses. There has been no consumer problem 
with pharmaceutical biotechnology use.
    So I think the challenge in some parts of the world, 
particularly in Europe, is to get consumer acceptance of the 
fact that this food is certainly beneficial and good for the 
consumer.
    The other thing that has not been well enough addressed and 
promoted as a public good from this agricultural technology is 
the environmental benefits. We have seen tremendous increases 
in water quality benefits from use of Bt cotton, for example. 
In some of these areas we are seeing very good results in terms 
of water quality, but I think a lot of people do not understand 
the fact that agricultural products are being grown with much 
less chemical input to the betterment of the environment as a 
result of some of these technologies, and that is a message 
that we have tried to get out.
    Mr. Latham. I would appreciate any efforts you can do to 
inform the public.
    Mr. Bonilla. Mr. Hinchey.

                         CROP INSURANCE PROGRAM

    Mr. Hinchey. Madam Secretary, I would like to ask you a 
question about the Crop Insurance Program. Over the course of 
the last several years we have made some changes in the way 
that specialty crops are addressed by the Congress and 
administration in times of disasters. The members of this 
committee have been very helpful in developing a response to 
disasters in specialty crops on a fairly bipartisan basis. I am 
wondering if there are any approaches to crop insurance being 
taken by the Department which would address the peculiar needs 
of specialty crops, vegetables, fruits, things of that nature?
    Secretary Veneman. Absolutely. I announced an initiative 
last week in which we are taking a two-pronged approach to 
looking at crop insurance. One, we are looking at where the 
underserved areas are and where do we need to help develop more 
risk management tools. Our Crop Insurance Board is continually 
looking at new products in that regard.
    There is a Pennsylvania program that was just approved 
looking at a whole farm approach because of the difference in 
agriculture in that area.
    There are some creative approaches that are being piloted 
now to address the kinds of concerns you are talking about, and 
we are going to be very proactive in addressing some of the 
risk management needs of our farmers and ranchers in some of 
the underserved areas.
    The second thing that we are doing on the risk management 
initiative that we have implemented is we are looking also at 
the operation of the program. As I said earlier, we saw the 
largest crop insurance company in the world go belly up this 
year. We want to make sure that we have proper oversight over 
the companies themselves.
    Mr. Hinchey. I have just been handed an article from the 
National Journal. It says that you announced that RMA would 
make $18 million available to reduce the cost of crop insurance 
by increasing subsidies in 15 States in which participation of 
the Crop Insurance Program is low. They include a lot of States 
in the Northeast.
    Secretary Veneman. That is correct. That program, within 
the Risk Management Agency, is the kind of program that we are 
talking about to address some of the needs of some of the 
underserved areas. The Northeast has been an area that has not 
had access to as many of the tools in terms of crop insurance, 
so we are looking at the Pennsylvania program and we are using 
that RMA program which you just referenced to address crop 
insurance needs.
    Mr. Hinchey. Thank you very much.

                    AMERICAN HERITAGE RIVERS PROGRAM

    You support two positions associated with the American 
Heritage Rivers Program. Those two positions are the 
Susquehanna and the Hudson River Navigators. I know these are 
rather parochial programs and they may not have come to your 
attention. I would appreciate if you would take a look at them 
if that is the case.
    The Hudson River Navigator position has remained vacant for 
several months. It is an important program that works with 
local communities and it is a way for the administration to 
reach out to local communities and help them with their 
relations with the Federal Government as it relates to 
navigable waters.
    I am wondering if you can tell us at some point what is the 
status of this position and when we could expect to see it 
filled?
    Secretary Veneman. Sir, I would like to get back to you 
with that answer for the record because I don't have that 
information at my fingertips.
    Mr. Hinchey. I didn't expect you to have it. I would 
appreciate if you would get back to me on that.
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    For 2003, NRCS has $225,000 devoted to those two positions, 
and it is our intention to fill the Hudson River position as 
quickly as NRCS can get announcements out and applicants 
applying.
    NRCS had a nationwide hiring freeze on until the FY 2003 
Appropriations Act was enacted. Now that there is an Act, NRCS 
expects to be able to lift that hiring freeze and move forward 
with these and several hundred other positions that have been 
on hold.

                           USDA DAIRY POLICY

    Mr. Hinchey. A question on dairy policy, in the President's 
budget, the OMB expresses concern about the cost of dairy price 
support programs and they lament ``lack of supply response.'' 
In other words, the fact that there is an oversupply of milk is 
keeping prices low. We generally know that. Our producers are 
just too productive.
    As far as we can determine, there are basically only two 
ways to reduce production if we endorse this idea. One would be 
to reduce the number of producers, which means putting small 
family farmers out of business; and the other is to reduce 
production of farmers through supply management. I am wondering 
if you would first of all agree that those are the only two 
ways that this problem could be addressed, and which supply 
response do we prefer? Do we want to reduce the number of 
family farmers or do we want to institute a supply management 
program?
    Secretary Veneman. I would say that there is another way, 
and that would be to increase demand for the product. There are 
lots of new opportunities, and we are seeing lots of innovation 
in the dairy industry. There are certainly lots of increased 
consumption of some of our products, and we are even seeing 
increased dairy exports. So, I wouldn't want to agree with you 
on those two options you presented because I would like to see 
increased demand.
    Mr. Hinchey. We have been trying to do that, working with 
the Department in various ways to try to get milk products into 
schools; for example, to try to limit the propensity of schools 
to embrace soft drinks rather than dairy products. I would love 
to hear what you have in mind to promote consumption and I 
would like to help you on that and I am sure other members 
would as well.
    Mr. Latham [presiding]. Mrs. Emerson.

                        FSA OFFICE CONSOLIDATION

    Mrs. Emerson. Madam Secretary, I would like to go back to 
something Mr. Boyd started, and it is difficult to get anything 
done in 5 minutes. He spoke about consolidation of offices and 
that sort of thing. I have heard through the grapevine, and 
hopefully you can tell me I am wrong, hopefully I am wrong, but 
I have heard that USDA was going to consolidate or close about 
200 offices. If that is true, given what we have been talking 
about since the beginning of this hearing, the fact that the 
farm bill, trying to deliver the farm bill, deliver disaster 
aid and conservation programs, how can we ever do with 200 less 
offices and deliver what we already don't have the manpower to 
do?
    Secretary Veneman. We are looking at roughly that number, 
but not in FSA alone. We are looking throughout government at 
where we can consolidate offices. I worked on this project when 
I was Deputy Secretary in the last Bush Administration, and 
there has been a lot of work done as a result of some of the 
things we were doing then to look at where all of our offices 
were, and to consolidate offices for efficiency. It certainly 
gives farmers a better opportunity to have one-stop shopping 
for services. We have come a long way in that regard, but we 
think there are still opportunities where we can consolidate 
some agency offices.
    Rural Development is looking at where their offices are 
structured given where they are located at this point. We have 
also seen some regionalization of offices in places like APHIS, 
for example. So, we are looking at the whole Department in 
doing this initiative. It also ties back in with more and more 
of the services that we can ultimately deliver on-line.
    We know that we have a herculean task with this Farm Bill 
and with the disaster assistance, but the initial sign-ups are 
where the real infusion of resources needs to take place. Once 
the farmers make their elections under this Farm Bill, it 
should not take the kind of additional resources required 
currently in FSA to run the continued program.
    Mrs. Emerson. But then we have the Conservation Security 
Program.
    Secretary Veneman. Much of this will be done out of the 
NRCS program. We have a very innovative program there which 
uses technical service providers and partnering with the 
private sector to help us with some of the conservation 
assistance.
    Mrs. Emerson. By contracting with the private sector, that 
brings up a question I was not going to ask, by contracting 
with the private sector, do you actually save money?
    Secretary Veneman. I don't know exactly how much money we 
save.
    Mr. Moseley. Yes. We save a little bit of money. It is 
marginal.
    Mrs. Emerson. Can you show me that? Can you show me where 
you save money because in other agencies in other departments 
of the government, not USDA related, it oftentimes is more 
expensive to contract out. I would like to see some background 
to back that up, if you don't mind.
    Mr. Moseley. We can attempt to provide that. The issue here 
is it is part of competitive sourcing. We competitively source 
this. If it is less costly to use private sector, we use 
private sector. You develop an experience with it as you start 
to accomplish the goal.
    [The information follows:]

    NRCS is pursuing potential opportunities to reduce costs 
and improve program delivery through the use of private-sector 
Technical Service Providers and competitively sourcing other 
work currently performed by NRCS employees.
    Competitive Sourcing provides for a cost comparison between 
government performance of an activity and private sector 
performance before a decision is made to outsource. Outsourcing 
will only occur when private sector performance is shown to be 
more cost effective. Whether or not any activities will 
actually be outsourced, and the related cost savings, will not 
be known until the competitive sourcing studies are completed. 
To date, no studies have been completed and no activities have 
actually been outsourced.
    The innovative system which is using technical service 
providers and partnering with the private sector was authorized 
in the Farm Security and Rural Investment Act of 2002, Public 
Law 107-171, (2002 Farm Bill). It requires that USDA establish 
a system for approving individuals and entities to provide 
technical assistance to carry out Food Security Act 
conservation programs and establish the amounts and methods for 
payments for that assistance.
    As advertised in FedBizOpps, NRCS is seeking to identify 
sources and receive information on past and current market 
prices from individuals and entities providing conservation 
technical assistance. NRCS intends to use this pricing data to 
establish payment rates for technical service providers. 
Therefore, since NRCS is in the process of developing rules and 
rates for technical service providers we currently have no 
established cost savings for this activity.

    Mrs. Emerson. Do you let your former employees who have 
done a task to rebid and recompete themselves to do the same 
task?
    Mr. Moseley. Yes.

                      COMMODITY ASSISTANCE PROGRAM

    Mrs. Emerson. With regard to the School Lunch Program or 
Breakfast Program, the Commodity Program is a great assistance 
to the School Lunch Program and obviously agriculture as well. 
How do you feel about enacting a modest commodity program for 
school breakfast, maybe 5 cents in commodities for each 
breakfast served?
    Secretary Veneman. Do you mean in terms of purchasing 
products?
    Mrs. Emerson. Yes. In other words, using the Commodity 
Program for the School Breakfast Program, which we currently do 
not do, maybe just 5 cents in commodities for each breakfast 
served?
    Secretary Veneman. That is something we might look at in 
reauthorization. I have to say I have not looked at that issue.
    Mrs. Emerson. I know that you all have done a really good 
job around the country getting prepared for the child nutrition 
reauthorization, but I would ask if you would look at that 
perhaps as something that might be beneficial.
    Another question that I have with regard to school lunches, 
we have in my district specifically but I am sure it is 
elsewhere, we have a lot of families who actually cannot afford 
the 40 cents for the reduced fee or for the reduced price 
school lunch. It has been suggested to me, and I want your 
opinion about this whether you think it would be a doable 
thing, it has been suggested to me that all children with 
family income below 185 percent of poverty, which is the WIC 
level, would receive a free lunch. What do you think about that 
idea?
    Secretary Veneman. Again, we want to make this program as 
efficient as possible in terms of serving those who are 
eligible to be served. We are looking at all of that in 
reauthorization. I suspect that the proposal you are putting 
forward would have a considerable cost associated with it, and 
I think as the reauthorization takes place there are going to 
be issues of whether certain kinds of changes in the program 
create additional cost on the program. It may be something to 
be considered, but I can't respond at this point.
    Mrs. Emerson. I have a couple of families who have lots of 
children and when you add 40 cents up for each child, it is 
more than they can afford.
    Secretary Veneman. So you are saying we should look at 
families with larger numbers of children and see if there could 
be some additional assistance? We will put that in the mix.
    Mrs. Emerson. Thank you, and I would love to work with you 
on that.
    Mr. Farr. Thank you for asking those questions because that 
is where I was going with my earlier questions.
    I wish Mr. Nethercutt was here because he stated we are 
about production agriculture and thought I was putting too much 
emphasis on the feeding side. I think it all does relate to 
production agriculture, but what I think is patently unfair in 
the United States and the administration of the program is that 
the majority of the money goes to a small number of producers 
producing a very small number of crops in the total array of 
crops. Almost none of it goes to those producers which are in 
the fresh fruits and vegetables area. Logically you can store 
the commodity programs, you can store corn, cotton, wheat and 
soybeans. We have historically had an inability to ship or 
store or package fresh fruits and vegetables, but that has 
changed with these new atmospheric conditions. They can put in 
a bag and keep lettuce on the shelf for a month.
    I am interested, in light of the fact that the Federal 
Government has produced these nutritional standards, we ought 
to start moving some of our money where our mouth is, and I 
think Congresswoman Emerson's questions about using some of 
those commodities, particularly in the dairy area, might be 
good for the Breakfast Program.
    What we need to do is put a lot more into purchasing fresh 
products. I asked this last year and I am not going to go back 
into it, but it was appallingly lacking any efforts. We do a 
lot of canned and meats, but it is still packaged. I am 
wondering if the Department can provide for us the data, 
because as you pointed out in your testimony, this is not just 
a USDA purchase, but the State and local governments also 
purchase.
    Could we get a report on the amount of fresh fruits and 
vegetables that are purchased at the Federal, State and local 
level?
    Secretary Veneman. We will do our best to provide you with 
that kind of report.
    Mr. Farr. For the School Lunch Program.
    Secretary Veneman. Yes.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
                   NATIONAL ORGANIC STANDARDS PROGRAM

    Mr. Farr. Let me move to something else, because some of 
those purchases might be organic.
    Mr. Kingston raised the point about the organic snafu that 
went into the omnibus appropriations bill. Most of us were 
appalled by it and have endorsed efforts to repeal it. Senator 
Leahy introduced legislation as well as Congressman Kind and 
myself here, and I was very pleased to read in today's National 
Journal your statement regarding USDA standards remaining in 
place, and that you are concerned that the language inserted in 
the Omnibus Appropriations Act weakens the National Organic 
Program.
    Can you do something to make sure that that language does 
not get implemented?
    Secretary Veneman. No, that is your job.
    Mr. Farr. Well, it is both of our jobs. I mean, as you 
stated, you worked 10 years in the Department, got a record 
number of responses. This is really undermining a program, and 
I think in response to another question, what we have to have 
is confidence in the regulatory system.
    Secretary Veneman. I said that tongue-in-cheek. As my 
statement I put out yesterday said, we did work long and hard 
on this, and we believe we ought to maintain the organic 
standards that were agreed to.
    The provision that is in the fiscal year 2003 Bill requires 
us to conduct a study to determine whether or not there is 
available organic feed. We have been in the process of 
conducting such a study for some time, so we are already 
engaged in that process. But we are currently doing everything 
we can. Under the current organic law, we are continuing to 
implement the organic standards as they were put forward and 
implemented in October of 2002.
    Mr. Farr. And in that study, you can also determine whether 
there is quantity versus cost, and you can take a long time on 
that study, can't you, and the provision in the omnibus runs 
out at the end of this fiscal year?
    Secretary Veneman. Well, I don't know when the study is 
going to be completed, but we are engaged in looking at the 
whole feed sector, and whether or not sufficient organic feed 
is available.
    Mr. Farr. I want assurances that all of the hard work that 
went into creating the organic standards are not going to be 
undermined by this latest effort by not allowing you to enforce 
the rule.
    Secretary Veneman. I understand your concerns, and my 
statement indicates that I have some of the same concerns.
    As I said earlier to Mr. Kingston, we are also outreaching 
to the people who have a concern with this, to try to give them 
access to the names of feed suppliers, to address the problem 
that they believe that they have in terms of access to supply 
by providing information on where they can get the kind of feed 
that they need.
    Mr. Farr. Could you supply us with that information also?
    Secretary Veneman. Certainly.
    [The information follows:]

    We have compiled a preliminary list of organic feed 
suppliers based on information from the Organic Trade 
Association, the National Sustainable Agriculture Information 
Service, and others that we will post on the National Organic 
Program website at www.ams.usda.gov/nop. Certifying agents are 
required to send USDA a list of all operations that they 
certify. As we compile this information, we will add to our 
list of organic feed suppliers.

    Mr. Latham. Thank you, Mr. Farr.
    Ms. DeLauro.
    Ms. DeLauro. Thank you, Mr. Chairman.

                    PRODUCT DISTRIBUTION DISCLOSURE

    Madam Secretary, I would just like to continue talking 
about disclosure. Last year E. coli 0157:H7 tainted ground beef 
produced by a Colorado plant resulted in a recall of 
approximately 19 million pounds of product. Colorado and other 
State public health officials that wanted to inform their 
citizens where the contaminated product was sold were not able 
to get the product distribution information from USDA because 
the Department only shares a plant's customer list with States 
that sign a memorandum of understanding promising not to 
release the information to the public. Some States have open 
record laws that prevent them from signing such an MOU.
    The USDA's approach to providing distribution lists seems 
to be counterintuitive as consumers urgently need to know if 
the meat in their refrigerator came from a contaminated or an 
implicated product. These were articles that appeared in the 
Denver Post in August of 2002. State health officials asked 
Conagra for its list of distributors from a second 18.3 million 
pound recall so State inspectors could track which restaurants 
and grocery stores got the meat. Conagra said no. USDA 
regulations said it is the company's choice. It said a recent 
change in that rule will not help Coloradoans.
    My questions to you on this issue from the Department's 
perspective, explain to us the logic behind USDA's policy not 
to release distribution information to States that will tell 
consumers where the recalled product is sold?
    Is there any legal barrier to the Department's release of 
this information to State public health officials that is 
responding to a recall, and what do you think we can do to 
ensure that the information is passed on to consumers in a 
timely manner? As I understand it, there was lag time, 8-10 
days, in which this product was on the shelf being eaten and 
consumers could not get the benefit of the information.
    Secretary Veneman. I am not completely aware of all of the 
details of what you are describing, but I am generally aware of 
this disclosure issue. I know that we have looked at the 
lessons learned out of this recall and the need to disclose 
certain information, and we have implemented some new 
procedures which I can get to you on the record to provide 
better information sharing to both States and consumers. I 
agree with you, people need to know what product is being 
recalled.
    We realized that there were some difficulties within the 
system. Again, I don't know whether or not there are legal 
impediments, but I can commit that we are making sure if there 
is a lag in getting information out, we are trying to correct 
deficiencies that we may have detected in that recall.
    In every one of these situations, we always try to learn 
from what happens and make the system better if there is an 
issue.
    Ms. DeLauro. I appreciate that information. So you are 
amenable to providing distribution lists to State officials and 
public health officials with these occurrences to allow 
consumers to understand where the product is being sold, and 
not purchase from a supplier, or at least not purchase for the 
period of time when we understand that the meat is tainted or 
it is being recalled. Because that information does not get to 
the consumer and it is being prevented both by the industry and 
the USDA.
    Secretary Veneman. Again, I don't know what the impediments 
are, but we will get something back to you.
    [The information follows:]

    There are no barriers to the Department's release of 
distribution information to the States.

    Ms. Kaptur. Would the gentlelady yield?
    Yesterday we were informed by the Inspector General that 
only 12 percent of recalls are ever recovered, which means that 
88 percent of the bad stuff is still out there in the system.
    Secretary Veneman. I think that is an interesting issue 
that you bring up because it is different than the one that Ms. 
DeLauro brought up, and that is what the definition of a recall 
is. It is not that it is still in the system.
    When we announce the amount of the recall, it was the 
amount produced on that day. Obviously a tremendous portion has 
already been consumed.
    There have been some meetings with consumer and industry 
groups to determine what we should be defining as a recall 
because when you say that you are recalling a certain amount of 
product, it is the amount that was produced that day. Obviously 
not all of it is still in the system. That is where the IG gave 
you that number, I believe.
    Ms. DeLauro. I will follow up on that later.
    Mr. Latham. Mr. Boyd.
    Mr. Boyd. Madam Secretary, I want to follow up on a 
question asked earlier by Ms. Kaptur related to research and 
development by the United States Government Department of 
Agriculture, and I want to speak in macro terms but also 
specifically.

                 CITRUS CANKER RESEARCH AND DEVELOPMENT

    It will not surprise you that I want to address citrus 
canker in that question. We all realize that we would not be 
where we are today if the people that went before us did not 
invest a lot of money in research and development to make us 
the best agricultural production country in the world. I think 
a lot of our folks are worried about that now because they see 
trends, like I do, that the numbers are down. I am trying to 
compare apples to apples here, and maybe Mr. Dewhurst can 
argue, but there is a 15 percent reduction in the ARS budget 
from 2002 actual to this budget request, and about a 4 percent 
in the CSREES. I know that we are in difficult times, but 
farmers are not like the folks that ran Enron and Global 
Crossing. They do not farm with their eye on the next quarterly 
financial statement or tomorrow's stock price. They are 
visionary, and they want their kids to take this farm and run 
with it down the road. But with today's global economic 
environment, we cannot do that unless we invest in research and 
development.
    I have spent my entire life farming. I still do. I could 
not do it if we did not have the technological advances 
provided to some extent by industry, but mostly by the United 
States Government and our State governments. It is our watch, 
as Ms. Kaptur said. We cannot let our research and development 
capacity decline. That is like mortgaging our children's 
future. That is my little lecture, and I apologize for that in 
taking your time to lecture, but we need to be visionary on 
this.
    Let me be specific. Citrus canker, and you know that issue 
well. It came into this country in 1989 through the Miami 
Airport, was planted in a residential yard a quarter of a mile 
from the Miami Airport. We discovered it in 1995. We have spent 
hundreds of millions of dollars of this Federal Government's 
money, matched by the State of Florida. In addition to the 
economic loss suffered by the farmers, the industry, and I am 
not sure that we are winning the battle. You have been very, 
very helpful in that, and I am grateful to you. I sometimes 
feel I have worn my knees out begging Mr. Bonilla, Mr. Obey, 
Mr. Young and Ms. Kaptur and your office to work through this. 
We have to keep the commercial industry cooperative to fight 
this battle. It is a legal quagmire, and you know that.
    Have you guys weighed into that or would you consider 
weighing in if we continue to have legal problems on that 
issue?
    Secretary Veneman. I have to say I honestly do not know if 
we have intervened in that case or not, and I can have my 
lawyers to look at the possibility. I thought the case had 
gotten to the point where it allowed us to resume the program.
    Mr. Boyd. That is true, but they are appealing. Of course 
what the folks are fighting, the cities and counties and some 
individuals in south Florida, are challenging the 1,900-foot 
rule. Actually the last ruling is a positive one, and so we are 
in pretty good shape. But if we get stopped again, we 
desperately need the Department to step up legally. I don't 
know what the legal terms are, but present a brief to the 
court.
    Secretary Veneman. We will look at the feasibility of doing 
that. I don't know without talking to my lawyers whether or not 
we can do that. But we will certainly look at it.
    Mr. Boyd. My second question goes to the macro issue, and 
that is what is the administration's long-term strategy on the 
research and development side for maintaining the technological 
edge that the United States of America has on the agricultural 
production side? That is a very simple question, and there 
should be a strategy in place and if there is, I would like for 
you to share it with us.
    Secretary Veneman. I absolutely agree that research and 
development has been critical to the food and agriculture 
industry in this country and it continues to be. A lot of 
people think of agriculture as a low tech business, but as you 
know, it is a very high tech business and without new 
technology we would not be the most efficient producers in the 
world.
    The interesting thing about research and development is 
that it has continued to grow, and I don't have the absolute 
numbers, but more and more research has been done by the 
private sector. It used to be, when the Department of 
Agriculture was formed over 100 years ago, that 100 percent of 
agricultural research was done by the government. Today over 60 
percent is done by the private sector.
    One of the things that we have tried to do is to look at 
where the research priorities are from a public perspective. 
How do we help farmers address both the short and long-term 
issues that they are facing today, be it environmental issues 
or food safety issues or genomic mapping opportunities which 
will give us information to determine things like food safety 
strategies or strategies to fight pests and diseases. There are 
tremendous new opportunities in research. We want to make sure 
that our priority setting is right in this regard.
    We are working closely with the Office of Science and 
Technology. We are trying to leverage resources by partnering 
with other research institutions. For example, when we were in 
China this summer, Dr. Jen, our Under Secretary for Research 
Education and Economics, had negotiated a joint partnership to 
do genomics research on pigs with China and to share that work 
because the underlying research of that project will be so 
important in dealing with the industry itself.
    I think there are new ways we can look at research. We 
would love to have unlimited resources to put into some of 
these projects, but we have to make priorities in the budget 
and so it becomes difficult. I do think that when we look at 
research we are looking at the whole range of issues. The pest 
and disease issues are also ones that agriculture is 
continually confronting on the research area.
    Mr. Latham. Thank you, Mr. Boyd. I had one comment. Mr. 
Farr brought up the fact that most of the commodity dollars go 
to a few crops and few farmers, and I would just suggest that 
one of the policy changes made in the new farm bill, which I 
strongly disagree with, is that it very much limits the 
opportunity for different crops to come in because now it is by 
commodity rather than by the land. Before you had flexibility 
to grow anything on that land, today you don't if you want to 
get subsidies. So that policy part of the farm bill is only 
going to make things worse.
    Mr. Farr. That is the point, that you do not really help 
all farmers in need.
    Mr. Latham. Exactly. I am in total agreement with you.

                          PACKER CONCENTRATION

    One question that I have, in the fiscal year 2004 request, 
the Department would like $1 million to implement a new pilot 
program to audit the top four meat packers. I just want to know 
what types of things you will be reviewing with the audit and 
what you intend to do with the results? Does this have to do 
with mandatory price reporting?
    Secretary Veneman. This is a request through our Packers 
and Stockyards Administration under GIPSA. There has been a lot 
of questions raised about concentration in the meat packer 
industry and what impacts this is having, and so this is an 
attempt to audit the largest of those packers and do a complete 
audit. So we have requested money for that purpose.
    Mr. Latham. Very good.
    Ms. Kaptur.

                              FOOD SAFETY

    Ms. Kaptur. Thank you, Mr. Chairman. I wanted to move to 
the subject of food safety and inspection.
    I would like to place in the record and ask unanimous 
consent to do so the following figures relating to food safety 
of the Department. First of all, the appropriated levels since 
1997, which have been increasing, the fact that as of September 
30 last year there were fewer inspectors on board 7,560. That 
is down from 2001, 7,645.
    Recalls have doubled, the amount of pounds recalled. In 
fact, it has more than doubled since 1997. It was 27 million 
pounds recalled in 1997. Last year it was 56 million pounds. 
And finally, the recalls for class 1 violations by number, 
which has had a sixfold increase since 1997. Class 1 health 
violation recalls were 16 in 1997, and for the fiscal year 
2002, 98. That is a sixfold increase, and it is an increase 
that is very serious, and I want to emphasize sixfold, six 
times more than 5 years ago.

                             LISTERIA RULE

    I want to move to the issue of listeria, and I am only 
going to pick out one piece of this and one plant, the Wampler 
plant in Pennsylvania, owned by Pilgrim's Pride. I am going to 
be asking the Secretary about why the listeria rule was 
changed.
    This particular plant's bad practices led to the deaths of 
seven people and miscarriages and many hospitalizations. The 
problem was tainted turkey.
    Now the Department in response to that situation issued a 
strong rule which the Secretary herself called aggressive, but 
something happened on the way to the implementation of the rule 
and that is what I want to get at. I also want to put in the 
record an article from Time Magazine of this week, ``Can Cold 
Cuts Kill?'' sub-headline, ``The USDA may be dragging its feet 
on inspections and favoring the industry.''.
    I also want to place on the record the fact that Wampler's 
Pilgrim's Pride was the 18th largest agribusiness campaign 
contributor to Federal elections, all on one side of the aisle. 
100 percent of their campaign contributions went not to my side 
of the aisle. The National Food Processors Association is 
quoted in this Time Magazine article as having persuaded the 
USDA to weaken the listeria rule, gave $150,000 in soft money 
only to the majority party. The head of the Food Marketing 
Institute, which has led the industry's effort to weaken E. 
coli testing, was one of President Bush's $100,000 Club 
contributors.
    It is very interesting that that particular organization 
also did contribute to some Democrats, but the ratio was 6 to 
1. Food Marketing Institute favored the majority party 6 to 1. 
I don't know if that has any relationship to the number of 
class 1 violations, but 6 to 1 seems to be an interesting ratio 
here.
    Madam Secretary, my question is the White House denied, in 
press reports at least, any role in changing the final listeria 
rule. However, Under Secretary Murano acknowledged consulting 
both the White House and the industry on the final rule, 
claiming it was only fine-tuned.
    I would like you to explain what happened with the progress 
of that aggressive rule you had originally introduced; and 
also, as I understand it, the final rule drops any fines for 
plants that violate. No fines for companies and also limits 
testing only to plants with the riskiest products and plants 
that do not do their own testing. What happened?
    Secretary Veneman. We do not have a listeria final rule 
yet. There is a proposed listeria rule which has been out for 
public comment for some time and under which a risk assessment 
has been going on.
    However, after the Wampler issue, I said we cannot wait for 
the listeria rule to come out; what else can we do? I want to 
be aggressive on this.
    We issued a directive to our meat plants identifying what 
we were going to require them to do on listeria. This was more 
complete than was the proposed rule for listeria and more 
aggressive.
    We are in the process of completing the final listeria 
rule. Yesterday there was a meeting with all interested 
parties, including consumer groups, industry and so forth, on 
the listeria rule risk assessment. Unfortunately, I didn't have 
a chance to get briefed on how that meeting went, but that was 
then shared with what they found out about the risk assessment, 
and from these inputs the final rule will be written and we are 
working on an aggressive time frame to get that rule done.
    This directive was done as an interim step because we did 
not want to wait for the rulemaking process to be complete. In 
addition, on the E. coli issue, we have taken directives to 
implement steps on reducing E. coli. We have taken steps to 
implement processes to protect against Bovine Spongiform 
Encephalopathy (BSE). We have been very aggressive on these 
food safety issues, and we are going to continue to be.
    I would be happy to have our Under Secretary Elsa Murano 
and our food safety inspection people talk to you about the 
steps that we have taken and the steps that we will continue to 
take on these issues.
    Ms. Kaptur. Will your final rule include fining companies 
where violations are found?
    Secretary Veneman. I cannot comment on what the final rule 
will contain.
    Mr. Hinchey. Madam Secretary, you are 30 minutes beyond the 
allotted time. We have some tough questions now coming up.

                     LIVESTOCK COMPENSATION PROGRAM

    In Congress, we are not allowed to put items on web sites 
60 days before elections. We cannot send out mass mailings 60 
days before the election, either primary or general election. 
But those restrictions do not apply to the executive branch 
unless they impose them upon themselves. The executive branch 
behaves differently according to the administration that is in 
office. I know someone in your position is asked to do some 
things that you might not do on your own, but nevertheless you 
are asked to do them by higher ups.
    One of the things that irritated a lot of people last 
September was the announcement of the livestock compensation 
program, and the way it was handled. There were no Democrats 
invited to the announcement when it was made at a campaign 
appearance in South Dakota. There were only Republicans 
present, and it was telecast via closed circuit TV to various 
places around the country. One of the candidates for election 
in South Dakota was given a very prominent role, and he just 
coincidentally happened to be in a very tight race with an 
incumbent out there. I wonder what the Department's policy is 
with regard to political events how you feel about them?
    Secretary Veneman. Well, again this was the announcement of 
the Livestock Compensation Program. It had been a program that 
had been conceived and requested by some Members. When we 
finally determined that we were going to do this program, and 
again, keep in mind that despite calls for disaster assistance, 
Congress had not acted. The sector that was in most need 
because of lack of risk management tools; i.e., crop insurance, 
was the livestock sector. So we did implement this program and 
include some of the Members which had requested the program 
itself in the announcement.
    We often bring Members of Congress to the Department for 
these kinds of announcements, either on radio or TV, sometimes 
it is one party, sometimes it is bipartisan. Certainly it is a 
common practice that we include Members of Congress in the 
things that we do and the announcements that we make, depending 
on their level of interest.
    Mr. Hinchey. I know that. I also know that the 
appropriations process broke down completely last year. We had 
a budget which could not fit the appropriations in it, and 
people here who were responsible for carrying out that activity 
were made very uncomfortable, and I hope that they were 
embarrassed about how that process went. We did not finish it 
up the funding for 2003 until just recently. The President just 
signed the bill last week.
    So yes--through no fault of this committee because this 
subcommittee and the committee as a whole carried out its 
responsibilities in a very timely fashion--there was no 
appropriation for FY 2003 until recently. The leadership of the 
House was not able to fit everything together and as a 
consequence, as you indicate, the appropriations process just 
fell apart.
    Because there was this problem with livestock you had to 
respond, and I think you responded in an interesting way. I 
thought that funding the program from that particular source 
was not a good idea because section 32 is a source that is 
important to farmers where I live. Section 32 is generally 
dedicated to purchases of specialty crops, and it was being 
used here for livestock which was totally out of the context. 
But that is really not my question at this particular point.
    I know this is not a question that you want to answer, but 
the fact of the matter is that particular event was held in a 
political way. It was designed to benefit a political 
candidate, running for public office at the time. However, it 
was done in a very partisan way. It was done to benefit 
specifically candidates of the Republican Party. You made a 
major announcement, almost $1 billion in livestock 
compensation. A lot of people would have been interested in 
attending if they had been invited.
    I am not saying that these things happen only while you 
have been Secretary of agriculture. Other people may have done 
similar things in the past, but this particular event received 
a lot of attention. There was big a story in the New York Times 
about it. It is the kind of thing that we hope will not happen 
again. And when there are announcements like that, we hope that 
Democrats will be invited as well.
    Secretary Veneman. I appreciate your concern.
    Mr. Latham. Mr. Farr.
    Mr. Farr. Thank you, Mr. Chairman.

                            POLLUTED RUN-OFF

    Madam Secretary, I thank you for your interest in 
responding to last year's concerns raised by this committee and 
addressing problems associated with polluted runoff. We brought 
that up, and you pointed out in your testimony that through 
NRCS, you are going to support the important activities 
addressing those problems not only with polluted runoff from 
animal feeding operations, but also for providing specialized 
technical assistance to land users on grazing lands.
    What wasn't in your budget, and I am hopeful that we can 
get it in there, is some $600,000 that was appropriated for the 
last two fiscal years for an NRCS study that is going on in 
California in conjunction with the National Marine Sanctuaries. 
Essentially NRCS is doing the work on the land, and it is a 
six-county area, essentially the territory from southern San 
Francisco to Santa Barbara. It has gotten all of the State 
agencies involved, and what is unique about it is the 
agricultural agencies, particularly the State Farm Bureau and 
local farm bureaus, are very excited about it because it is not 
mandatory. They are just volunteering access to their lands and 
sharing information so that we can find out how to best manage 
runoff. It is probably one of the largest areas of the United 
States that this is being done in, and certainly one of the 
most comprehensive studies. So for a very little amount of 
money we are getting a big bang for the buck. It is being 
written up in a lot of journals, and the Farm Bureau is very 
excited about it. They said they would participate as long as 
the program did not develop regulations that would make them 
mandate to do practices that they would just rather incorporate 
voluntarily if something was broken and needed fixing, and that 
is the way it is working.
    I commend you for your interest in that, and encourage you 
to continue to support that effort at NRCS.
    Secretary Veneman. Actually I will look at this. I know the 
unique issues relating to the coast terrain and some of the 
watershed areas there.
    I would note with regard to animal waste issues we have a 
very large increase in the EQIP program as a result of last 
year's Farm Bill which will certainly help with some of these 
issues. We also just had the release of the new Confined Animal 
Feeding Operations (CAFO) rule which USDA and EPA worked in 
strong cooperation on to make sure that we had a rule that 
could be implemented by farmers and ranchers so it would 
produce the kind of results that we want. We are very proud 
that we were able to work so cooperatively with EPA in 
developing that final rule to further protect the CAFOs.
    Mr. Farr. I had hoped one of the things that we could start 
doing is really develop a policy that, if we are going to help 
in the process of keeping people in agriculture, that we also 
get a commitment that those lands stay in agriculture, working 
cooperatively with the American Farm Land Trust. We have local 
farm land trusts. Because with urban sprawl going on in 
California, and it is going to hit other States as well, if we 
are going to take the most productive land in agriculture, 
perhaps in the world, out of agriculture production, we are 
killing the goose that lays the golden egg, the goose that 
provides a plus side on our balance of payments, trade 
payments, and for all of the reasons you know. I do think that 
we need to have a bigger role by the USDA in the preservation 
of ag land; not just we will help you stay in agriculture until 
the day you want to convert to housing.
    Secretary Veneman. We do have farmland preservation moneys 
within our budget. But I absolutely agree. Some of the land 
preservation trusts that have been set up, particularly in 
California, which has been a leader, are the Range Land Trust, 
and the Farm Land Trust, which I think have been great models 
for keeping land in production and creating the kinds of long-
term investments in ag land that you are talking about.
    Mr. Farr. Thank you for your help.
    Mr. Latham. Ms. DeLauro.
    Ms. DeLauro. Thank you, Mr. Chairman.

                             LISTERIA RULE

    Madam Secretary, if I could, I would like to go back to 
follow up on a couple of things that Ms. Kaptur talked about 
with regard to listeria. Last year when Dr. Murano was here, I 
asked her about the listeria rule and when we would have it 
finalized. She indicated that she thought that they were going 
to have a rule, and that 2003 was the earliest time for us to 
have a rule.
    I understand what you said about the directive in order to 
try to speed up the process, but it is pretty much March of 
2003 and we do not know when we are going to have a rule on 
listeria. Let me quote from the article that Ms. Kaptur put 
into the record because I think it is important with the 
questions that Ms. Kaptur brought up.
    A few days ago Time Magazine published an article that an 
industry newsletter stated that a number of key USDA personnel 
have bought into much of industrial proposals. Further, the 
directive was averted as a result of industry efforts made at 
the White House level.
    Leaving that there for a second, one of the critical points 
here is that the industry says or is potentially saying that 
there is no need to rush a final listeria rule because the 
directive is forcing plants to test for listeria. But the 
directive is no substitute for a final rule because a directive 
is only an instruction to FSIS inspectors telling them when and 
where to test, and if we do not get the dollars to deal with 
the testing, the industry has no incentive to do their own 
testing.
    I might add the issue of the fines that Ms. Kaptur brought 
up, and I think it is important to quote your predecessor, 
Secretary Glickman, ``We can fine circuses for mistreating 
elephants, but we cannot fine companies that violate food 
safety standards.''
    We can never get to holding an industry accountable for 
tainted meat in our food supply. All of these questions are 
trying to figure out why, what is the reason. Your directive is 
no replacement for a rule and it is now 2003. Where is the 
listeria rule? We are going to watch it carefully to see 
whether or not it has been watered down to continue to protect 
the industry.
    Secretary Veneman. Ms. DeLauro, I can only say that we did 
this directive as an interim step because I did not want to 
wait for the listeria rule to get done. We are going to get 
this rule out as quickly as possible. The risk assessment was 
presented to the interested parties yesterday. I can honestly 
say that I have pushed very hard to get this rule out as 
quickly as possible. We are doing simultaneous clearances on 
it. We are working the rulemaking process as quickly as we can. 
I am committed to getting this rule out.
    Ms. DeLauro. Do you believe, as your predecessor Secretary 
Glickman believed, that we ought to be able to fine these 
companies? What is your personal view of this?
    Secretary Veneman. I haven't looked at the legal 
authorities on fines. I have to be honest, I have not looked at 
those legal authorities, but I certainly think that it is 
something that needs to be considered and looked at in the mix.
    Ms. DeLauro. Do you believe that the fines to be applied to 
these companies will be in the process?
    Secretary Veneman. I don't understand what you are talking 
about, elimination of fines?
    Ms. DeLauro. In the first round in looking at this effort, 
I understood that we were going to apply fines to companies who 
were in violation.
    Secretary Veneman. I am quite sure that could not have been 
done in a directive.
    Ms. DeLauro. I would go back and look at that as well. The 
issue remains, and I go back to what Secretary Glickman pointed 
out. It was his strong view that we ought to have fines. I was 
asking your own personal view as the Secretary of Agriculture, 
the kind of authority that you would like as it has to do with 
both rulemaking and with mandatory recall and with fining 
companies that violate some very fundamental rules.
    Secretary Veneman. As I mentioned, one of the things that I 
have asked for is a complete review of all of our authorities. 
I am going to look at all of those authorities and determine 
whether or not we believe we have the authorities that allow us 
to do our job.
    Ms. DeLauro. Thank you, Mr. Chairman.
    Thank you, Madam Secretary.
    Mr. Latham. Mr. Boyd.
    Mr. Boyd. Madam Secretary, I am the last one so I will try 
to wind this up on a more pleasant note. You have been very 
diligent and kind to sit here for over 3 hours and answer our 
questions.

                         CITRUS CANKER RESEARCH

    Back to the previous point that we were talking about, 
citrus canker. I did want you to know that we earmarked money 
for citrus canker research. This is one of those earmark 
programs that you talked about in your testimony where maybe 
the needs and returns are not the greatest. However, I 
certainly think that research on citrus canker is something we 
have to do. Even if it takes us 5, 8, 10 years, we have to do 
it. Nobody else is going to do it. I hope next year when we get 
our budget request from you we will see some request for ARS 
money into citrus canker research. It is a $9 billion industry 
for our State, and it is really important to us.

                         RISK MANAGEMENT ISSUES

    Now, I want to wind up with one question on the Risk 
Management Agency, and I have a recommendation for a way to 
save some money. Isn't that great?
    From the way I understand it, the FSA compiles acreage and 
production data on producers in order to calculate losses and 
determine payments for crops insurance, as does the RMA 
collecting data also. If there is a discrepancy, the RMA always 
uses the FSA numbers; is that accurate and fair?
    Secretary Veneman. Mr. Collins.
    Mr. Collins. RMA only collects loss data if there is a 
disaster. RMA collects loss data through loss adjustment. 
Private companies hire loss adjusters to determine the size of 
the losses, so they are really independent systems.
    Mr. Boyd. Independent systems doing basically the same 
thing?
    Mr. Collins. Historically they have been independent 
systems. Under an act implemented in 2000, we have been 
directed to work those two systems together, and that is what 
we have been doing over the last couple of years. It is not 
easy because a Farm Service Agency farm, for payment purposes, 
is different than a Risk Management Agency farm. When a farm 
comes in to buy crop insurance, they may not buy it on the same 
farm definition or same piece of land that we make program 
payments on. They can elect to carve up their farm in different 
ways. They can provide insurance for what is called a basic 
unit. They can buy an optional unit or enterprise unit. There 
is a lot of ways that they can construct their crop insurance 
policy.
    Mr. Boyd. I believe farmers can game that system better 
than any way that you guys can dream up.
    Mr. Collins. I know that for a fact.
    Mr. Boyd. I deal with them every day.
    I guess my question, Madam Secretary, in this day of tight 
budgets and reduction in FSA staff is why are we basically 
duplicating the efforts? Although they may need some fine-
tuning, and there might be some technical differences. It might 
be a way to save some money. Risk crop insurance is something 
that, if we are going to stay in the farming business in this 
country, we have to figure out how to make it work. Honestly, 
at some other point in time I want to talk with you and your 
people because it is not working very well. We still have 
difficulties. They are not ready to give up, but we have to 
figure out how to make it work.
    Secretary Veneman. We appreciate the opportunity to do 
that. We are looking at where are the gaps in the system and 
where are the areas where the program not working, and we want 
to make new products available and make adjustments to the 
program where it is not working, and that is part of the 
initiative. We would be happy to work with you and our risk 
management people on that issue.
    We have these technical problems of different definitions 
of farms, but we are working on a technology project to try to 
bring these systems together in a more comprehensive way so 
that the data can be compared and shared even with the 
differences in farm definitions.
    Mr. Boyd. I would submit that ultimately each organization 
is compiling production data, loss data, yield data, and how 
you format it, we ought to be able to figure that out so as not 
to duplicate efforts.
    Mr. Collins. I agree, and we are looking at that. We have a 
big data mining effort going on between FSA and RMA.
    In addition to that, related to your concern about how crop 
insurance is working in Florida, we did award a contract to the 
University of Florida in 2002 to look at the problems with crop 
insurance in Florida. We got that report late in 2002. That is 
part of the Secretary's initiative to look at the gaps in crop 
insurance.
    Right now we have 32 pilot programs going on for crop 
insurance, many of them in specialty crops; citrus tree 
insurance is an example of one of those pilots. In addition, we 
awarded 40 contracts for research projects during 2002 to 
improve the portfolio of products in the Risk Management 
Agency. There is a lot of stuff in process, but it has got to 
be brought together.
    Mr. Boyd. Mr. Chairman, there was some language in the 
omnibus bill about the citrus nursery relative to the risk 
management and crop insurance. Are you familiar with that?
    Mr. Collins. No, I am not. In fiscal year 2003?
    Mr. Boyd. Yes, in the fiscal year 2003 bill.
    Mr. Collins. I don't remember that.
    Mr. Boyd. Because of that language, the USDA said that they 
have to scrap the whole rule that we put in place 3 or 4 years 
ago on the citrus canker compensation, the loss production. 
Maybe it is something that we can talk about outside of this 
setting. As it was represented to me it was a matter of wanting 
to scrap something that we already have in place because 
something was going to be added. You will endanger the whole 
Canker Program if we do not continue that part of it, that crop 
insurance part of it.
    Mr. Latham. If you want to submit something for the record, 
please feel free to do so.
    Mr. Boyd. Thank you, Mr. Chairman.
    [The information follows:]

    The Consolidated Appropriations Resolution for fiscal year 
2003 provided that the Secretary not use more than $18,200,000 
of the funds of the Commodity Credit Corporation, to remain 
available until expended, to compensate commercial citrus and 
lime growers in the State of Florida for lost production with 
respect to trees removed to control citrus canker, and with 
respect to certified citrus nursery stocks within the citrus 
canker quarantine areas. This language does not affect risk 
management and crop insurance programs of the Department. 
Indemnities paid under citrus and citrus tree insurance 
policies are not affected by any compensation paid for tree 
removal as a result of citrus canker.

    Mr. Latham. Ms. Kaptur.
    Ms. Kaptur. Thank you, Madam Secretary, for remaining 
longer than you anticipated, along with all of your associates.

                              USDA WEBSITE

    I have this comment and then I have an additional one that 
I want to ask on our international food programs. In your prior 
comments you referenced your Web site and I am going to be 
placing on the record the Department of Agriculture Web site as 
of October 30, 2002, just a few days before election. This Web 
site includes photos of 21 Republicans and 3 Democrats in this 
Congress. We know this institution is about equally divided, 
but my question and concern goes to the fact that some Members 
who were in heavily contested races, David Phelps and John 
Shimkus, for example, the only photo on your Web site was of 
John Shimkus. And the same was true of a Member from 
Connecticut. It was obvious that there was favoritism shown on 
the Web site. We have tabbed the Republicans who have photos 
and the Democrats who have photos. No Democrat was pictured 
alone. The Democrats were always surrounded by three or four 
Republicans. I know that Republicans have a little edge on us 
here, but that is quite a significant disparity.
    My question is: Do you believe this to be an appropriate 
use of taxpayer funds on the USDA Web site?
    Secretary Veneman. Congresswoman, what the Web site has is 
pictures of the activities that we participate in. I think you 
mentioned Mr. Shimkus. I did a visit in his district, and we 
often have photos of events when we travel around the country. 
We chronicle those and make them available. They are public 
events. They are events for which the press is invited, and 
certainly it is only a recap of the event that we participated 
in.
    Ms. Kaptur. Do you think that it is appropriate to have 
pictures of contested candidates a week before election on the 
Government of the United States Web site and it is a 7 to 1 
ratio in favor of the party which appointed you?
    Secretary Veneman. I wasn't aware of the ratio. All I am 
saying is that it is about chronicling the things that we are 
doing. These were not events that were outlined or put on there 
at that period of time. They were left on our Web site.
    Ms. Kaptur. I regret that I have to place this in the 
record. The photos cannot be included, but we will include the 
names. If it is true that the photos represent the districts 
into which you are going, then it is seriously disproportional, 
and the Department receives enormous support from both sides of 
the aisle in Congress. I know my comments will be taken into 
consideration.
    [The information follows:]

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                            GLOBAL FOOD AID

    Ms. Kaptur. I want to move to a final question on global 
food aid and to ask the help of the USDA in countering a major 
enemy that the United States now faces in the form of terrorism 
globally, particularly as it regards new terrorists that are 
being born every day. Even if we take Iraq, we are not going to 
be out of the sands there until long after I die.
    One of the major ways that the terrorists are being 
produced is through the madrasas, hundreds, thousands of them, 
largely funded by the Saudis all over that part of the world. 
The lure that they have for the boys to come in--they do not 
educate the girls--is wheat and food. One of our major tasks in 
securing a more stable future is to feed children in that part 
of the world and displace the madrasas with schools that 
educate and feed.
    Thus, it is with surprise to me that I see that the Global 
Food for Education Program, although you mention it in your 
testimony, is one-sixth of the size that it used to be. It used 
to be funded at about $300 million. It was reduced to $100 
million. Your budget calls for $50 million. In addition to 
that, there is no increase in funding for the PL-480 program, 
and because of the lack of surplus last year the 416 program, 
which is one of my very favorites, is nonexistent in terms of 
your budget.
    We are told by the World Food Program that needs are going 
to be increasing. For instance, even with Iraq we have 24 
million people we are going to have to feed there. I happened 
to be at a conference the other day with the head of AID, and I 
asked him if he had ever had a long meeting with you, and he 
had not. I said he would never get the money in his budget. I 
said the money to do feeding is through USDA and you and 
Secretary Veneman have to sign an agreement. He seemed to hear 
what I said to him.
    My question to you is how do you intend to meet the needs 
that are out there in view of the shortfalls in your own 
budget?
    Secretary Veneman. Well, I certainly appreciate your 
concern because food aid is very important, particularly in the 
world in which we now live, and I also appreciate your concern 
for what is now the McGovern-Dole International Program, which 
is the Global Food for Education Initiative's successor after 
this Farm Bill.
    The difficulty in this budgeting process is that in last 
year's budget the $100 million came out of mandatory funds, and 
the way the Farm Bill left it was to say that the next year's 
budget; i.e., fiscal year 2004, had to come out of appropriated 
or discretionary funds, which is why it was difficult to put 
that amount of money into the budget. So certainly we recognize 
the value of feeding children, of getting them into the 
schools, of creating the exact kinds of things that you have 
talked about.
    We are working closely, and as you know, this is an 
interagency process. The interagency meets and determines the 
needs and where the resources are going to be requested and 
where they are going to come from. We work closely in the 
interagency process, which includes State, AID, USDA and other 
agencies, to address the food aid needs and we will continue to 
do that. We have money budgeted for PL-480. We have increased 
substantially our PL-480 funding over the last couple of years 
primarily so we are not so dependent on 416 commodities to have 
them come from appropriated funds, but we continue to look 
within the interagency process at the whole food aid need 
around the world.
    Ms. Kaptur. Do you intend to request a supplemental on this 
whole international food arena?
    Secretary Veneman. I cannot speak on behalf of the 
Administration in that regard. If that becomes necessary, we 
will work with the interagency and with the President to do 
that.
    Ms. Kaptur. Mr. Chairman, I am going to submit an article 
that was released this week, ``Plummeting food aid: World Food 
Program urges more to combat hunger,'' which gives the 
international parameters and why this budget is inadequate. We 
look forward to a supplemental, Madam Secretary.
    Thank you for your testimony today.
    [The information follows:]

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    Mr. Latham. We will proceed with Ms. DeLauro.
    Ms. DeLauro. I would like to make two final comments, one 
which has to do with food safety, and I want to mention the 
School Lunch Program.

                              FOOD SAFETY

    We spent a fair amount of time talking about food safety 
and meat contamination. One of the things that I would like to 
work on, and will be trying to look at in the future, is how we 
focus on the primary causes of meat contamination, the feed 
that is being given to our cattle, the overcrowding of the feed 
lots, poorly trained workers, and I will continue to look at 
the lack of stringent government oversight in this area. I 
think we need to put our focus on some of the primary causes 
rather than what happens at the end of the process and how we 
deal with it.

                          SCHOOL LUNCH PROGRAM

    We are aware that there is data that suggest some 
ineligible children may be receiving the free or reduced School 
Lunch Program. All of us support efforts to make sure that the 
subsidies go to those children which are eligible. I have a 
cautionary approach in how the changes get made. There was 
similar documentation and requirements which were evaluated in 
a more rigorous demonstration project conducted by USDA in the 
1980s, and that evaluation found when income documentation was 
required at the time of application, five eligible students 
were deterred from participating for every ineligible student 
that was deterred.
    The fact of the matter is we do not have a sense of how 
many ineligible children are certified for free or reduced 
price meals. We should not use documentation to drive away 
those youngsters who are eligible. In the absence of some 
tested policies which increase the accuracy of school meal 
applications while harming eligible children, widespread income 
verification requirements maybe should not be adopted. We want 
to look at that before we make any wholesale changes and have 
eligible kids who cannot get the School Lunch Program.
    Thank you.
    Secretary Veneman. Let me make two comments. I am familiar 
with that study. Our people are familiar with that study, and 
it is the kind of thing that tells us that it is not easy to 
address this issue. Obviously we do not want to create a 
disincentive for eligible families, but we do have the other 
outside incentives which prompt schools to enroll students 
regardless of eligibility, which is why this is such a hard 
issue.
    Also on the issue of looking at the whole food chain with 
regard to food safety, I could not agree more. We want to look 
at the science that relates to the whole food chain and where 
are the points where we may have difficulties. We have strongly 
supported a science-based system. More and more both industry 
and consumer groups are coming together and saying yes, we need 
this approach. We have seen in the past some not willing to 
look at the whole food chain, but I see much more of a focus 
now on looking at the whole food chain in determining where are 
the points that we need to address.
    I mean, as I often say in my speeches, the issue of food 
safety is important to every part of the food chain. It is 
important to the producers because if people do not buy their 
product, they lose. It is important to producers and consumers. 
This is a very important issue, and one that we will continue 
to take very seriously.
    Ms. DeLauro. Thank you, Madam Secretary.
    Mr. Latham. Madam Secretary, thank you very much for your 
patience here today. We have gone much longer than anticipated. 
We appreciate your staff's participation, and we look forward 
to working with you. Don't forget Ames, Iowa.
    The committee is adjourned until 9:30 on March 5, when we 
will have the Farm and Foreign Agricultural Service testify for 
agriculture appropriations. With that, we are adjourned.

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                     Wednesday, February 26, 2003.

                      OFFICE OF INSPECTOR GENERAL

                               WITNESSES

PHYLLIS K. FONG, INSPECTOR GENERAL, OFFICE OF INSPECTOR GENERAL
JOYCE N. FLEISCHMAN, DEPUTY INSPECTOR GENERAL, OFFICE OF INSPECTOR 
    GENERAL
RICHARD D. LONG, ASSISTANT INSPECTOR GENERAL FOR AUDIT, OFFICE OF 
    INSPECTOR GENERAL
JON E. NOVAK, ACTING ASSISTANT INSPECTOR GENERAL FOR INVESTIGATIONS, 
    OFFICE OF INSPECTOR GENERAL
DELMAS R. THORNSBURY, DIRECTOR, RESOURCES MANAGEMENT DIVISION, OFFICE 
    OF INSPECTOR GENERAL
STEPHEN B. DEWHURST, BUDGET OFFICER, UNITED STATES DEPARTMENT OF 
    AGRICULTURE

                            Opening Remarks

    Mr. Bonilla. The subcommittee will come to order. Good 
morning to all and welcome to our first hearing for the fiscal 
year 2004 budget. I am delighted that we are going to start 
today with our Inspector General. We have before us the new 
Inspector General for the Department of Agriculture, Phyllis 
Fong. Ms. Fong was confirmed as IG in December of last year and 
was previously the IG for the Small Business Administration. We 
are glad to have you with us this morning.
    We also welcome everyone who has accompanied her this 
morning. Some are very familiar faces to us. As we know, Mr. 
Dewhurst. In particular we would like to recognize Joyce 
Fleischman and to thank her for ably serving the Department as 
acting Inspector General for 14 months before Ms. Fong's 
confirmation. We appreciate the hard work that you have done.
    From time to time, we would like to remind people that this 
subcommittee had some part in creating the office that you now 
hold. This was done some years ago when there were problems 
involving fraud and other illegalities in some of the 
Department's programs. The subcommittee suggested to the 
Secretary that there should be an office that was independent 
and not of the Secretary, but independent of individual agency 
of the Department.
    In fact, 2003 marks the 25th anniversary of the 
establishment of the Office of Inspector General. And speaking 
for all of us on this subcommittee, we congratulate you and 
each of your employees on this milestone.
    This is certainly a very challenging and exciting time to 
be in the IG's office, and we hope that the next 25 years are 
just as productive as the first 25 have been.
    We appreciate the work you do to make sure that USDA 
programs operate well and appreciate your success in catching a 
lot of the bad guys, because as we all know, there is a history 
of that, and when you have programs out there, a lot of folks 
unfortunately choose to take advantage of the good will that 
all of us are here to provide the people of this country.
    We look forward to your testimony, Ms. Fong, but before we 
begin, I am going to yield to Ms. Kaptur for any opening 
comments that she might have.
    Ms. Kaptur. Thank you, Mr. Chairman, and I think we should 
all congratulate ourselves for getting here this morning. I 
particularly want to welcome you, Ms. Fong, and to congratulate 
you on your appointment and achievement as a member of our 
senior executive service. I know to move from the Small 
Business Administration to the USDA is a major leap in terms of 
responsibility and jurisdiction, and I am someone who has great 
respect for the Inspector General's Office and for all of your 
colleagues who are with you here today, for the tremendous work 
that you do.
    And personally, if I could give you more dollars to recover 
more dollars, I would do it, and, in fact, I am one of the 
members of this committee that has long believed that the 
dollars you recover should go into your budget, not the general 
treasury, or at least a larger share of it, because I think it 
would incentivize and provide for more inspectors and for more 
attorneys and more auditors. With the amounts of money that 
this Congress has appropriated to the U.S. Department of 
Agriculture and all of its programs over the last several 
years, my feeling is that there is probably a great deal of 
fraud occurring that we are not finding, simply because we 
don't have the inspectors.
    We don't have the auditors out there in the field to the 
extent that we should, including some of our main line farm 
programs, because of the amount of increase, if one just looks 
at them, is staggering.
    So I look forward to your testimony, and we will have 
questions during the normal rounds. Thank you so very much.
    Mr. Bonilla. Ms. Fong, we will ask you to present your 
testimony in just a moment. We have received your detailed 
statement in writing, and it will appear in the record in its 
entirety, and I would also just like to state, before we begin, 
that this subcommittee, I am very proud of the way it has 
worked in the last couple of years, efficiently and in a timely 
manner, and I think everyone at USDA will find that we are 
going to proceed that way again this year, and will appreciate 
that.
    This subcommittee did its work on time last year and was 
ready to go. And due to forces beyond our control, we became 
part of the omnibus in the end, which none of us is pleased 
about. But I appreciate, Ms. Kaptur, all of the cooperation 
that we have on both sides of the aisle on this subcommittee, 
and we are very proud of the work that we have done. And we 
were very proud frankly that we have had strong bipartisan 
support for our final product the last couple of years. We do 
try to work with everyone and make them part of this team on 
the subcommittee as well as all of you at USDA. So we 
appreciate that very much.
    I also would like to say that I will recognize members, as 
I have in the past. If everyone is here on time when the gavel 
goes down, then we will recognize them in order of seniority. 
If not, then we will go by order of those who arrive--in order 
of arrival, but also taking into consideration that we are 
going to alternate back and forth.
    Ms. Kaptur. Thank you, Mr. Chairman. I am very thankful for 
that.
    Mr. Bonilla. And we also want to remind members that we do 
have a 5-minute rule, and we have had very good cooperation on 
that in the past so that we can have second and third rounds of 
questioning if we need, and we always try to allow as much time 
as possible, as many rounds as possible for every member.
    I would also like to ask everyone, we have had very good 
cooperation with cell phones and beepers. We would like to ask 
that that continue once again this year. Ms. Fong, you may 
proceed.

                           Opening Statement

    Ms. Fong. Thank you, Mr. Chairman, and Ms. Kaptur. I 
appreciate your warm welcome and the opportunity to appear 
before you today. I am delighted to be here on behalf of the 
Office of Inspector General and its dedicated professional 
staff, and I want to convey to both of you our appreciation for 
this committee's ongoing support over the years. You have truly 
been friends to our office, and we appreciate that.

                       Introduction of Witnesses

    Before I begin my remarks, I would like to introduce the 
colleagues who are with me here today from my staff: Joyce 
Fleischman, as you mentioned, who is the Deputy Inspector 
General; Dick Long, the assistant Inspector General for Audit; 
Jon Novak, our Acting Assistant Inspector General for 
Investigations; and Del Thornsbury, who is the Director of our 
Resources Management Division.
    And I anticipate that I will be turning to them quite a bit 
today to help respond to some of your questions on some of the 
more detailed and complex subjects that you may raise.
    While this is my first appearance before your committee as 
Inspector General at USDA, as you mentioned, I have been in the 
IG community for over 20 years and served as the IG at SBA. 
Since I have been at USDA, I have been reviewing the Office's 
activities and accomplishments, and I believe we have a very, 
very strong and effective organization. There are tremendous 
depths of professional knowledge in our audit and investigative 
staff, and I am very excited to be working with them.
    I am also looking forward to working with you. You are 
among our key clients in the Congress, and we look forward to 
providing you with professional oversight of the Department's 
programs. And we look forward to addressing the issues that are 
of concern to you. I hope to open the lines of communication 
with you and your staff so that we are fully aware of the 
issues that are of concern to you.
    Today I want to briefly address three areas where the IG's 
office has focused its efforts and where I believe we have made 
a very significant impact on USDA programs. Those three areas 
are homeland security, food safety, and financial management. 
And then I would like to end with a brief statement about our 
fiscal year 2004 budget request.

                           HOMELAND SECURITY

    Homeland Security has been one of the most significant 
issues facing the Department, as you know, and our office has 
taken the lead to address this issue in a number of areas, 
including border security, controls over biological agents, 
USDA labs, and security over incendiary devices. One area that 
I think is of great importance, where we have spent a lot of 
resources and we have accomplished a lot is the area of 
security at USDA-operated and -funded laboratories.
    As you know, the Department operates approximately 330 
laboratories throughout the country, while most of them may 
store or use moderate to low-risk agents, some store or use a 
number of high-risk agents. We became very concerned about this 
issue after the events of September 11th and initiated a number 
of audit reviews to look at how the Department was controlling 
these situations. We issued an audit report in March 2002 and 
recommended to the Department that it undertake a number of 
actions to strengthen security at the laboratories with high 
risk agents, and we also recommended that the Department 
immediately implement Department-wide policies to deal with 
four significant issues: Materials accountability, physical 
security, personal security, and incident reporting.
    I am pleased to report that the Secretary assigned a task 
force to deal with these issues and to develop some policies 
and procedures. Our office provided technical and expert 
assistance during that process, and, in August 2002, the 
Department did issue new security policies applicable to its 
BSL-3 facilities. I would like to mention that the USDA 
deserves credit for doing this. To the best of our knowledge, 
it is the first Federal department to issue department-wide 
guidance in the area of biosecurity, and so we would like to 
recognize that accomplishment.
    Another area in Homeland Security that we have been 
spending a lot of our time on is border security. We have 
recently completed a review of the Animal and Plant Health 
Inspection Service's, APHIS's, policies and procedures for 
identifying risk among the types of goods that enter the 
country to prevent the entry of exotic pests and diseases and 
APHIS's activities in conducting inspections at ports of entry.
    We concluded that APHIS needs a more effective systematic 
assessment of the risks involved. We also concluded that 
inspection operations and staffing allocations at ports of 
arrival were not always based on risk assessment. APHIS has 
agreed with our recommendations, and we are working with them 
to implement corrective action.
    Our Investigations staff has also been active in Homeland 
Security work. Some of you may know that our agents are 
involved with various joint terrorism task forces throughout 
the country. We had an example recently where our investigators 
worked with the U.S. attorney for the district of Oregon, as 
well as the Bureau of Alcohol, Tobacco, Firearms, and 
Explosives to follow up on a search warrant situation that ATF 
had served on the residence of a Palestinian man from Lebanon, 
and we had information that indicated he trained with 
Palestinian guerilla groups. He made references to a terrorist 
group, and there were other indications that he might be 
involved in terrorist activity.
    He also became the target of investigations by several law 
enforcement agencies, and this is all detailed in my written 
statement. As a result of our investigation, we found that 
there was a loss to the Government of approximately $65,000, 
including $18,000 in the Food Stamp Program and the Special 
Supplemental Nutrition Program for Women, Infants and Children. 
So there was a direct tie to USDA programs. As a result of 
this, the subject was convicted and sentenced, and his 
naturalized citizenship has been revoked. Our investigative 
staff has been very involved in significant Homeland Security 
investigative efforts.

                              FOOD SAFETY

    The next issue that I would like to address concerns IG 
activities to ensure the safety of our Nation's food supply. We 
believe that threats to public health and safety are among the 
most significant issues that we handle. As you all know, some 
of the largest recalls of meat products in the history of the 
industry occurred during 2002 due to the discovery that these 
products contained E.coli or Listeria. The Centers for Disease 
Control reported more than 20 deaths and over 60 illnesses 
originating from these situations.
    Although many of the recalls occurred with the cooperation 
of the industry, many of these contaminations occurred because 
of unsanitary production methods which were neglected by the 
food processors. We currently have work underway to review 
FSIS's recall operations where meat or poultry products were 
found to be adulterated. We have been focusing primarily on the 
plant in Greeley, Colorado, where 19 million pounds of ground 
beef were recalled because of E.coli, and the plant in 
Pennsylvania where 27 million pounds of ready-to-eat poultry 
product were recalled because of Listeria.
    To address these threats to public safety, we are also 
pursuing joint investigative activities with other Federal, 
State, and local agencies to share intelligence where warranted 
and to pursue whatever criminal prosecutions need to be 
pursued.

                          FINANCIAL MANAGEMENT

    On a happier note, in the area of financial management, I 
am very proud to report that, for the first time since 1990, 
the Department and all of its standalone agencies received 
unqualified audit opinions on their fiscal year 2002 financial 
statements. This achievement of an unqualified opinion is a 
major accomplishment. We attribute that to the Secretary's 
leadership and the commitment and hard work of the Department's 
Chief Financial Officer and the standalone agencies' CFOs. 
There is still work to be done, however. Continued enhancements 
and improvements to the financial systems are needed so that 
Department managers have access to timely information on a 
daily basis, and so that they can make informed decisions in a 
businesslike manner.
    The Department recognizes this need. The Secretary has 
emphasized to all of us that USDA will continue to work on 
financial management, and we will be working with the 
Department to improve its financial management accountability.

                          2004 BUDGET REQUEST

    Finally, I would like to comment on the 2004 budget request 
for the Office of Inspector General. As Ms. Fleischman 
testified last year before this committee, the IG's office 
initiated a business process reengineering project to improve 
IG operations and to enhance our own effectiveness and 
efficiency. This has resulted in a strategic plan for the 
office that focuses on equipping and training our employees for 
the future, primarily with an emphasis on state-of-the-art 
Information Technology as the key.
    The President's 2004 budget request for the Office supports 
our strategic plan to obtain this critical IT equipment. It 
provides for an increase of $1.7 million for pay costs and $2.3 
million for essential IT equipment and software. I want to note 
here that my understanding of the strategic plan for IT 
investments is that it is a multi-year initiative. We had 
originally requested funding in 2003 of approximately $3 
million. This request for 2004 would represent a continuing 
effort to fund our initiatives to fully equip and train our 
personnel. We anticipate that we will be coming before you 
every year to testify about the progress we have made and about 
the resources that we need to continue our efforts.
    So I ask your support. I appreciate your support in the 
past, and I ask for your support in the coming year for this 
request, because I strongly believe that our audits and 
investigations save money for taxpayers. They ensure the 
integrity of USDA programs and they promote Homeland Security 
and the safety of the food supply.
    This concludes my statement. Mr. Chairman, I appreciate the 
opportunity to appear, and I am happy to take questions.
    Mr. Bonilla. Thank you, Ms. Fong.
    [The prepared statement of Phyllis K. Fong follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
        
                     INFORMATION TECHNOLOGY FUNDING

    Mr. Bonilla. I would like to start by making a statement 
just to clarify something relating to fiscal year 2003 and the 
appropriation for this Office for the IG's information 
technology office. In reviewing the opening statement of the 
witness on page 25, there is reference to IT funding in fiscal 
year 2003, which I find to be misleading.
    Let me just state that the appropriated resources for the 
IG's office for the current year include funding for pay costs 
and funding for the requested IT increase. I should note that 
we did offset several USDA program increase requests for audit 
funding with corresponding decreases for the IG office. The 
IG's office had been paying for those audit contracts in the 
past. Basically we transferred a function and the money to 
perform that function. We support the efficiencies and advances 
that information technology can bring to the Office of the IG, 
so I wanted to state for the record that Congress funded the 
Office of Inspector General's information technology request in 
2003. No need for you to respond to that. We just wanted to 
make that statement for the record.

                    RISK ASSESSMENT AND INSPECTIONS

    The first question I have this morning involves the risk 
assessment and inspection operations. According to your 
statement, the Office of Inspector General concluded that APHIS 
needs a more effective systematic assessment of the risks 
involved with various pests and pathways by which they can 
enter the country and that inspection operations and staffing 
allocations were not always based on risk assessments.
    How are you working with APHIS to implement an effective 
systematic risk assessment system, and how does an effective 
systematic assessment of the risks differ from what is in place 
now?
    Ms. Fong. Well, as you mentioned, we have recently issued 
an audit report on this topic, and our audit report made 
numerous and very specific recommendations to APHIS as to how 
it could improve its systems. We are working with APHIS on 
this. This issue will be complicated by the fact that this 
particular piece of APHIS will transfer over to the Department 
of Homeland Security in March. We will be working very closely 
with Homeland Security and the IG's office there, as well as 
with APHIS, to make sure that there is a smooth transition and 
that our recommendations are clearly understood by the IG's 
office and program staff over at Homeland Security. We will 
keep our hands in this to the extent that we can. This is 
obviously a new area for all of us as the Department of 
Homeland Security ramps up, and we will have to work very 
cooperatively with that department for a period of time here to 
make sure the transition is smooth.
    In terms of how an effective risk assessment differs from 
what is in place now, my understanding is that the current 
system that was put into place by APHIS to evaluate risk 
assessments has not been very effective, and so we had 
recommendations to improve them. And in addition, it did not 
specifically address certain issues, it was not statistically 
based, there was not a consistent methodology for collecting 
and analyzing data, and there were not adequate records. We 
have made recommendations in this area to APHIS for corrective 
action.
    Mr. Bonilla. Thank you, Ms. Fong.
    Before I yield to Ms. Kaptur, I would like to thank her for 
a product she has given us all this morning, and I thought it 
was a product that she was most proud of. But it is not. It is 
the lid. Is that correct, Ms. Kaptur?
    Ms. Kaptur. It is both, Mr. Chairman. Although I said as an 
Italian dip from Ohio, it probably doesn't have all the 
jalapeno robustness that a gentleman from Texas would require, 
but that can be added to the mix.
    Mr. Bonilla. Thank you, Ms. Kaptur.

                          BUDGETARY RESOURCES

    Ms. Kaptur. Thank you. Ms. Fong, thank you very much for 
your testimony. I am trying to read the numbers here. The 
administration is requesting $84.2 million for this coming 
fiscal year, counting both the information technology and the 
regular appropriations you are seeking. Is that correct?
    Ms. Fong. That is correct.

                               RECOVERIES

    Ms. Kaptur. Let me ask you, not having been part of those 
that drafted the laws to create the IG--I just voted for them. 
I didn't draft them--what is the logic not to permit any part 
of the dollars recovered by USDA to go directly to your budget? 
What is the legal theory behind that?
    Ms. Fong. Well, that is a very good question. My 
understanding on this--and I am not sure that the committee 
specifically addressed it when it was drafting the 
legislation--is that in many instances when our audits and 
investigations results in recoveries there may be punitive 
fines assessed, but there may also be restitutions for the 
recoveries of costs that have been expended.
    In many cases, to make the government whole, the recoveries 
would appropriately go to the program areas that had initially 
put forth the expenditure or had lost the money, so to speak. 
This would, in effect, make the program budgets available to 
provide assistance to those who truly deserve or are eligible 
for Federal assistance.
    Ms. Kaptur. These are programs outside USDA?
    Ms. Fong. They would be true Governmentwide in every 
department's programs.
    Ms. Kaptur. Well, I am reading from the testimony notes 
that in 2002, the IG's actions at USDA produced $54 million in 
fines. I am trying to compare what you are asking for in the 
budget versus what you actually produced last year in terms of 
fines and recoveries. There is $54 million in fines. There were 
decisions to recover another $30 million. So that almost equals 
what you are asking for in appropriated dollars. And then there 
were decisions to redirect the use of $166 million. I don't 
quite understand what that means in a budgetary sense, but, 
fundamentally based on what you recover and the--you could fund 
yourself based on your own activities.
    Ms. Fong. Well, it does appear to be a one to one ratio.
    Ms. Kaptur. I just think that there should be an incentive. 
I say to my colleagues on the committee: There ought to be 
some, even if it is a small one, 25 percent of the total amount 
that they receive in fines that goes back into their budget. 
Right now that money goes to the Treasury Department, I think, 
and I have served on the Treasury Subcommittee here, too, and I 
know they are happy to have the money. But these individuals 
are the ones doing the work, and we are always scrounging for a 
million here and there in this committee, so I think this is 
something we really should look at as we move forward here. So 
that was one point I wanted to make.

                              FOOD RECALLS

    And then the other one I wanted to ask, Ms. Fong, on the 
food recalls you mentioned Listeria and E.coli, and a couple of 
plants like Greeley, Colorado. What percent of the recall 
tonnage was actually recovered? By any statistic you want to 
use for a given plant or overall if you look at the millions 
and millions of tons that were in the last year. I am very 
troubled by the language. I have said this several years now. 
We talk about recall, which gives the impression to the public 
that, oh, it has all come back. Well, no it hasn't. Most of it 
is not recovered.
    Ms. Fong. I think you have a very good point there. As you 
know, we are doing some audit work on these two situations, and 
I understand from my staff that, with respect to the ConAgra 
situation, approximately 3 million pounds were returned, which 
is about 16 percent. In the Pilgrim's Pride situation, 
approximately 27.4 million pounds were returned, which is about 
15 percent.
    Ms. Kaptur. What happens to what isn't recovered?
    Ms. Fong. I imagine it is either in people's freezers or 
people have consumed it. There is just no way to tell what has 
happened.
    Ms. Kaptur. Could the IG make some recommendations to us 
about what we do about that? Do we impose additional fines on 
these companies? I mean, what do we do to make this system 
seamless and get the bad stuff off the market? It shouldn't be 
there in the first place, so I think that clean plants and 
inspections are very important, but it really troubles me. I 
see these press reports all the time. Is there a different type 
of labeling we could do? Is your intention to make those 
recommendations to us?
    Ms. Fong. Yes. We are drawing to a close on our audit work. 
The report is in the draft stages, and I know that there will 
be some very specific recommendations as to what we found where 
the breakdowns may have occurred and what we believe could be 
done to address this issue.
    Ms. Kaptur. I thank you. I know my time is expired, and I 
just would ask as just one member of this subcommittee, when 
you make your report, give us the language, give us the 
linguistics of talking about this in a way that is 
understandable to the public so we don't tell them we have 
recalled and in their mind they think, oh, it is all back 
somewhere safe, when it really isn't. The words are wrong. We 
are not using the right words on this, and so I think that help 
us with the language here to improve our system. Thank you.
    Ms. Fong. Thank you.
    Mr. Bonilla. Thank you, Ms. Kaptur.
    Mr. Latham.
    Mr. Latham. Thank you, Mr. Chairman. I look forward to a 
very productive year here on the committee. I want to thank Ms. 
Kaptur for the Italian dip. We look forward to that. And some 
late evenings around here. So thank you.

                          LABORATORY SECURITY

    Last year at the hearing, the Inspector General spoke of an 
interim report to the Department that pointed out the need for 
Agriculture to inventory and strengthen security controls on 
biohazardous materials around the country. When was your last 
review on the subject of security controls on biohazardous 
materials around the country, and what remains to be done?
    Ms. Fong. We have a number of initiatives going on with 
respect to the labs that USDA either owns or operates. We 
recently issued a report in the spring of 2002 on those labs. 
We have a few more reports that are coming out, and we have a 
number also that are in progress.
    Mr. Long, would you like to elaborate on the specific work 
that we are doing?
    Mr. Long. Some of the initial work that we have done since 
our first report has been to look at the issue of USDA-funded 
research laboratories, at universities and at other 
institutions, following the same logic that we used on the 
previous review i.e., what were their controls and whether they 
maintained an inventory. We currently have a draft report under 
review by the Department, and will be meeting with Department 
officials next week on it. In this report, we make specific 
recommendations to the Department on getting information out to 
the land grant institutions and the colleges and universities 
that receive funding--and also to other grantees who receive 
funding for research--and they have been very receptive. We 
have had some interim issues with them as we perform that work, 
and they have taken immediate action on individual instances 
that we brought to their attention.
    The Department has also issued their overall policy for 
BSL-3 laboratories. They also are about to issue their policy 
for BSL-2s or below. For all laboratories, these are the types 
of things that you need to do in relation to security, 
biosecurity issues, and the Department has pushed this through. 
These two documents can be a guide for the land grant 
institutions and for other grantees. The problem is that a lot 
of these grantees and institutions do work for other 
departments, and there is a need for a government-wide policy 
on this type of research out there.
    We also have additional work in progress. We are doing a 
follow-up review on our March report. We have made unannounced 
visits at some of these laboratories to see whether or not they 
have taken corrective action as directed by the Secretary's 
office, and we are in process of analyzing all of that 
information. There have been improvements. They have made 
change by shifting from a biosafety to a biosecurity level. So 
we do see a lot of improvement being made in the area of 
laboratories.

                       INTERAGENCY COMMUNICATION

    Mr. Latham. I realize it is going to be very difficult to 
integrate and to bring agencies in from outside to put in one 
Homeland Security Department, but I just wonder about 
information sharing about and what kind of progress we are 
making in that arena, particularly with respect to APHIS and 
FSIS.
    Mr. Long. This has been an area of concern that we have 
raised to APHIS and FSIS. We raised this issue even between the 
two of them on the foot-and-mouth issue that we issued a report 
on last year about how they communicate with each other and the 
U.S. Customs Service. It continues to be an area of concern 
that we have in that APHIS report that we talked about earlier. 
It is an issue of how they relate to Customs regarding borders. 
How they relate to the Food Safety and Inspection Service at 
the ports is going to be a concern also. The ports may be an 
even bigger concern, because the Department of Agriculture is 
going to be responsible for identifying pests and other things 
that should not be brought in. They will need to communicate 
with the inspectors that are now going to be at DHS. Also, 
those same inspectors are going to deal with the FSIS 
inspectors at port areas regarding meat importation issues.
    So I think it is a concern of ours, and we are informing 
the program staff of the Department of Homeland Security and 
also the IG at the Department of Homeland Security, that these 
are issues that our Department is working on now. We just met 
with APHIS the other day and they informed us that these are 
issues that they are trying to work out through Memoranda of 
Understanding with DHS. The Department is really going to have 
to be on top of this and push to protect the interest of U.S. 
agriculture.
    Mr. Latham. Is there much institutional resistance? That 
seems to be the biggest problem.
    Mr. Long. I think in the past there has been some 
resistance, but I think now we see more communication between 
them.
    Mr. Latham. Thank you, Mr. Chairman.
    Mr. Bonilla. Thank you, Mr. Latham.
    Mr. Nethercutt.

                  EMERSON TRUST RESERVE WHEAT RELEASE

    Mr. Nethercutt. Thank you, Mr. Chairman. Ms. Fong, welcome. 
Glad to have you here, and welcome to the rest of your team as 
well. I want to compliment Ms. Fleischman for her work in--on 
an interim basis prior to your being formally appointed, and so 
I appreciate your attention to the issues involving 
agriculture.
    I want to raise a question today, and you may have 
suspected I might, with respect to the Emerson Trust reserve 
wheat release that occurred in July of 2002. Are you familiar 
with this issue?
    Ms. Fong. I have been briefed on it.
    Mr. Nethercutt. Okay. You know how serious I am about this, 
then, and my concern that what USDA has done has impacted my 
constituents and other small elevator operators around the 
country. And I am concerned not with the right to deal with the 
wheat stocks, but the procedures that occurred at USDA, and I 
know there is an ongoing investigation. So I don't expect 
necessarily for you to be fully responsive today under the 
circumstances, but I want to impress upon you how negative the 
impact has been on my farmers, my local economies in eastern 
Washington because of the procedures that were, in my opinion, 
not historically followed, and perhaps there is a lack of 
procedure that USDA followed. In other words, there was no 
sensitivity to the standards that had theretofore been set with 
respect to dealing with wheat releases.
    The catalog process had been used since the 1980s to 
announce CCC releases for sale. There was a reason for this and 
an expectation that this was the proper approach, because it 
wouldn't allow the system to be skewed and big operators to 
take advantage of small operators.
    I fear, and I fully believe as I sit here, that that is 
what has happened in this latest go-round from July of last 
year until now, and I think there has been an incredible 
insensitivity at the USDA level with respect to the 
consequences of its action, especially as it relates to soft 
white wheat. With the action by the Federal Government, our own 
USDA, soft white wheat prices have dropped 40 cents in a matter 
of days, at a time when they were ascending to the point where 
people in farm country were sort of able to make a little 
money, and that now has--the price has hovered about $3.80 a 
bushel for months. I think it is directly related to what USDA 
did or didn't do in connection with the Emerson Trust.
    So, you know, at the risk of being sort of hypersensitive 
about this, I will take the risk, I really am. It really, 
really bothers me the way this all unfolded. So I hope that you 
will be aggressive in your investigation and leave no stone 
unturned with respect to finding out the whys and wherefores of 
what happened. Because if you don't, I am going to, and I am 
really serious about this. There is legislative action at our 
State Legislature that has taken steps with respect to this 
whole issue, and it has really hurt people in farm country, 
especially as we look at the consequences of CRP on the 
negative side for production agriculture.
    Positive side for conservation, negative side for 
production agriculture. It takes land out of production, and 
that hits the local economies dramatically. You know, the 
implement store and the feed guy and the seed person, they 
don't get to make any money, because there is no production 
going on. So I will give you in, I guess my last minute of my 
time, I would appreciate having some response and some 
assurance that you are going to be vigorous and aggressive with 
respect to this issue.
    Ms. Fong. We understand your concern. We have been working 
on this in response to your request last summer. We have 
conducted a preliminary review, as you know, and came up with 
some initial conclusions which we shared with the Department's 
program office. After that, we decided that a more full-scale 
inquiry was warranted so we have initiated field work. We are 
currently in the field talking to a number of affected people, 
and we are working very diligently on our audit plan to make 
sure that we do address the issues that arise. I think that we 
will have some results in the next few months, and we will 
certainly share them with the Department and with you.
    Mr. Nethercutt. Well, I appreciate that very much, and I 
have been aggressive with respect to Ms. Fleischman and others, 
and it is out of no disrespect for you. It is out of my concern 
for what is good for American agriculture. So I appreciate the 
work that you all have done, and I thank you for your response.
    Mr. Bonilla. Thank you, Mr. Nethercutt.
    Mr. Goode.

                     PESTICIDES ON IMPORTED PRODUCE

    Mr. Goode. Yes, Ms. Fong, I, like Mr. Nethercutt, 
appreciate your being here.
    Let me ask you this with regard to APHIS. Items that come 
into this country, what are we doing to determine if they have 
used DDT on foreign produce?
    Ms. Fong. I think we may have to get back to you on that. 
We don't have a response right now.
    Mr. Goode. The reason I am asking, my wife went to--and got 
some tomatoes last week, and it had a sticker on them that 
said, please wash for pesticides. And somebody at the store 
told her that they might have DDT on them because they came 
from another country.
    Ms. Fong. Was there a country of origin label on it?
    Mr. Goode. No.
    Ms. Fong. All right. We will look into that and see if we 
can provide a response to you.
    [The information follows:]

    USDA's Animal and Plant Health Inspection Service does not 
handle residue testing on imported produce. The Environmental 
Protection Agency establishes standards for pesticides on 
imported produce and the Food and Drug Administration is 
responsible for conducting spot checks and random testing of 
incoming shipments of produce.

    Mr. Goode. All right. That is my one question, Mr. 
Chairman.
    Mr. Bonilla. Thank you, Mr. Goode.
    Mrs. Emerson.

                  THREATS AGAINST GOVERNMENT EMPLOYEES

    Mrs. Emerson. Hi. Welcome. Thank y'all for being here 
today. I have a question that might be a little bit out of the 
ordinary, but it does concern a specific investigation that 
your office conducted in my region involving a man who 
assaulted a Forest Service law enforcement personnel during a 
drug investigation.
    Basically this is what happened. Forest Service agents and 
some of our county enforcement people were conducting 
surveillance on a methamphetamine lab operation in the Mark 
Twain National Forest, and they were fired upon by one of the 
suspects. And the suspects were subsequently apprehended and 
charged, but this particular instance does bring to light 
another more serious matter, and that is, at least in my region 
of the country, meth production and distribution is really 
nearing crisis levels. And our local law enforcement officials 
and the Federal agents who routinely work together to stop this 
problem, they are all very concerned about their own safety, as 
well as the safety of people in and around the Forest Service.
    I don't know if you are familiar, Ms. Fong, with the 
specific case I am referring to, but can you just take a moment 
to address this sort of situation and how your office may 
respond to such an event?
    Mr. Novak. Yes. Actually, we assisted in that 
investigation. One of our agents, along with Forest Service and 
local law enforcement, conducted the investigation. I think he 
got 18 months in prison. Any time there is an incident of 
workplace violence in the Department, our office gets called, 
regardless of what agency it is. Ms. Fong's testimony mentions 
various assaults and other incidents. We have even had an 
employee convicted of murder. Our agency will respond to 
workplace violence regardless of what it is. If somebody makes 
a threat, if it is a specific threat, if it is an assault, our 
agency will get involved. Now, as far as issues on drug 
protection and investigations in Federal forests, I am not in a 
position to respond to that.
    Mrs. Emerson. Well, that is not generally your 
jurisdiction, but we appreciate the fact that you came in and 
helped with that investigation, but this is becoming more of a 
problem as opposed to less, and we are lucky that we have some 
Forest Service employees who actually have helped our local law 
enforcement people try to get a handle on this. But, you know, 
it is going to happen more.
    Mr. Novak. We are certainly noticing more violence in all 
of our programs. At this point, we have talked to the 
employees, some things that they can do to prevent workplace 
violence, we respond to complaints about workplace violence, 
and the employees know that as well. I mean, all the employees 
in the Department know that if there is an issue, if there is a 
threat, if there is an actual physical assault, they will see 
Office of Inspector General agents involved with the 
investigation. Some cases we work with the local police. 
Sometimes we work the cases alone.
    Mrs. Emerson. Well, I appreciate that. I wish we could--
didn't have this problem at all, but we do appreciate your 
response and hope that you will continue to monitor the 
situation. That is all I have got, Mr. Chairman.
    Mr. Bonilla. Thank you, Mrs. Emerson.

                       HOMELAND SECURITY FUNDING

    Ms. Fong, related to the Homeland Security funds that have 
been appropriated thus far, there have been a little over $300 
million. Tell us about the time line for auditing these funds, 
what you have planned ongoing in this area and what you did 
with the $4 million that we put in the supplemental for you on 
Homeland Security.
    Ms. Fong. Absolutely. We have initiated a review of the 
Department's use of the $328 million in supplemental funding. 
We had an entrance conference a week ago or so. We have started 
to collect documents from the Office of Planning and Budget 
that would document where the money is going and what it is 
being used for. Our review will focus on the basic issue of 
verifying the amount of expenditures that the Department has 
been incurring and determining whether the funds were obligated 
and expended for authorized purposes. We anticipate it will 
take us several months to finish the analysis and the field 
work on this. Assuming that there are no complications, we 
anticipate a report in midsummer of 2003.
    Mr. Bonilla. And that is also included in the expenses that 
you are using for that, is that what you are saying, what the 
supplemental was for as well?
    Ms. Fong. That is correct. We will be verifying the uses of 
the funds to make sure that they were used for authorized 
purposes, for Homeland Security purposes. I understand that 
those funds were appropriated for a 2-year period, so they are 
available to the Department in 2002 and 2003.
    With respect to the portion of the money that was made 
available to the IG's office--$3.9 million--I have a detailed 
schedule that I will be happy to submit for the record. Very 
briefly, we have used these funds for secured communications 
devices, radios for investigative and law enforcement purposes, 
security clearances for our staff so that they can access 
classified and sensitive information, and personal protective 
equipment gear, such as helmets.
    Mr. Bonilla. Ms. Kaptur.

                         WASTE, FRAUD AND ABUSE

    Ms. Kaptur. Yes, Mr. Chairman. I wanted to ask, Ms. Fong, 
as you look at your job and the budget of USDA, billions and 
billions and billions, $50 billion, $60 billion a year, and you 
think about fraud and crime and deception, what percent of the 
dollars expended by USDA do you think may be being diverted and 
improperly spent through criminal activity?
    Ms. Fong. I am not sure that there is really any way to 
predict or project that. Whenever there is a Government program 
that offers benefits or funding or insurance or some other kind 
of assistance, there will be people looking to take advantage 
of that, people who are unscrupulous. There will always be a 
certain level of fraud. I saw that at SBA, and I am sure that 
is true of every department and agency around town.
    My guess is that certain programs may be more vulnerable to 
fraud than others. Programs that have large amounts of money 
where program controls are not as effective as they could be 
will probably be more susceptible to fraud.
    Ms. Kaptur. You recover about $200 million a year, right, 
with fines and restitutions and so forth?
    Ms. Fong. Yes.
    Ms. Kaptur. Out of $60 billion. I just would say that that 
is a very meager amount, and I hope that the funding that we 
will provide this year and your new energy will help to ferret 
out more wrongdoing, because the rate of growth of programs, if 
one looks at the expenditure and different accounts, is an 
absolute indicator that there is probably lots of bad stuff 
going on out there, and I don't see the dollars recovered 
commensurate with the increase in spending. So something 
isn't--I would hypothetically propose, that a lot more could be 
done.
    Ms. Fong. Well, we certainly appreciate your support and 
your interest in our activities. The IG staff is working very 
hard. People put in many hours on these investigations and 
audits, and there is much more work than any one office can 
handle.

                          FOOD PRODUCT RECALLS

    Ms. Kaptur. I wanted to ask you in the area of food safety, 
you mentioned the large recalls in 2002, and to be precise, 56 
million pounds of products were recalled. That doesn't mean 
recovered. More than 2\1/2\ times the amount in prior years. 
And I guess one could say if you are at least trying to recall 
that much more, the system isn't working. What do you think?
    Ms. Fong. Well, that is exactly the issue that one of our 
audits is focused on--those two situations in 2002. What we are 
looking at is the system itself, what could have gone wrong, 
was there something in FSIS's oversight that could be tightened 
up? Is there a situation in the plants themselves? How 
effective is the Hazard Analysis and Critical Control Points 
process? That is precisely what we are trying to pinpoint in 
our review: what went wrong, what could be done about it, how 
we can prevent this in the future, and what systemic measures 
we can take to fix this.
    Ms. Kaptur. With respect to the recall at the Wampler plant 
in Pennsylvania, I am very concerned about news reports that 
appear to indicate that a USDA official has publicly disparaged 
a Federal inspector at that particular plant who filed numerous 
reports about unsanitary conditions. Are you looking at this 
situation, and what is your view of USDA officials attacking a 
whistleblower in the press?
    Ms. Fong. I am not familiar with that particular news 
report. I haven't seen it. I haven't heard about it. We are 
pursuing allegations that have come to us. I believe we do have 
a complaint from a whistleblower that has been referred to us, 
and FSIS has been cooperating with us in that investigation. We 
take whistleblower complaints very, very seriously, and we want 
to protect whistleblowers to the full extent of the law.

                              FOOD SAFETY

    Ms. Kaptur. What is the single most important action you 
think this subcommittee could take to help USDA improve its 
dismal performance on food safety issues?
    Ms. Fong. We have issued a number of audit reports in this 
area. We have another one coming out on ConAgra and Pilgrim's 
Pride. The simple answer would be for the Department to take 
corrective action on our recommendations.
    Ms. Kaptur. You say in your testimony that many of the 
contaminations occurred from unsanitary production methods 
neglected by the processor. That really is an incredible 
statement. Why do you think this is happening, and what should 
USDA and your office be doing about it besides issuing reports?
    Mr. Long. This is a very important area that we have been 
working with FSIS, and particularly Dr. McKee, the new 
administrator of FSIS, on attacking these particular issues. 
The General Accounting Office had a report that dealt with the 
issue of how processors respond to these unsanitary conditions 
that are noted in plants and why corrective action isn't taken. 
We recommended in our 2000 audit report that APHIS establish an 
internal review group to visit the plants unannounced and 
perform spot-check and see what was going on.
    FSIS has recently started the process of having teams go 
out and look at why these conditions haven't been cleaned up, 
FSIS has an automated system to track compliance efforts. When 
an inspector issues what they call noncompliance reports, they 
are supposed to be entered into the automated system so they 
can be cleared out. And why aren't they? We found a bunch of 
them at ConAgra and a bunch of them at Wampler. In some 
instances, the inspectors may not even be putting them into the 
system. They may just be discussing the problems with producers 
instead of entering them in the system to establish a trail to 
track to see, what has been done to clean up the situation.
    I see some movement on the part of FSIS in this area. They 
have started these teams, and recently FSIS has also issued 
some notices of their intent in this area. So I do see movement 
in that area, but it is a very key that immediate action is 
taken the in-plant inspectors should take immediate action.
    Ms. Fleischman. If I could add to that, please. You have 
asked a number of questions, actually, about the quantity of 
recall----
    Ms. Kaptur. Yes.
    Ms. Fleischman [continuing]. And what comes back. The key 
to this issue that you raise is early intervention by FSIS. Our 
auditors have repeatedly recommended to FSIS that FSIS have 
some mechanism by which it can review patterns of activity, 
patterns of noncompliance notices filed in individual plants by 
the inspectors there, to look at this on a regular basis. If 
FSIS sees an early pattern developing, such as a particular 
sanitation problem, if you will, whether it is on the line, in 
the drains, wherever--then FSIS could go to early intervention 
with that particular plant.
    Early intervention would hopefully prevent being 6 months 
down the road and having a 19 million-pound recall, as at 
ConAgra in Greeley, or 27 million pounds at Pilgrim's Pride, 
the Wampler plant in Pennsylvania. If there was early 
intervention, you would have smaller recalls or, hopefully, no 
recalls at all, because you would correct the problem quickly.
    As Mr. Long stated, in response to the latest 
recommendation that the auditors made in that regard in our 
2000 report on FSIS's implementation of HACCP, FSIS has begun a 
process to do that. As part of our audit work that is directed 
at the ConAgra situation in Greeley, Colorado, and at the 
Pilgrim's Pride situation in Pennsylvania, we are looking at 
how those two situations occurred, following up on the previous 
audit recommendation to determine whether or not FSIS's efforts 
so far are bearing fruit. If they are, that will be great. That 
is one of the things that we are looking at. The answer to 
those questions is that the recommendations that we may make to 
FSIS will go a long way towards responding to the issues that 
you have raised with respect to recalls, quantity returned--as 
well as to prevent this sort of situation from occurring in the 
first place.
    Ms. Kaptur. Thank you. Mr. Chairman, thank you for your 
indulgence, because, I kind of am bowled over by the fact that 
if people are reporting to FSIS, you would think that there 
would be some type of collation of this information and an 
immediate dispatch of personnel or whatever it is. Does it go 
into a black hole? How disorganized is this system? You know, 
we have all sorts of professional people that come up here and 
testify before us, and they have all these titles. Well, what 
is going on? What is happening inside the bureaucracy that 
prevents the information from being registered and responded 
to? When you talk about preventive action, where do those 
reports go? I mean, do they just go into a drawer?
    Mr. Bonilla. We can save that for the third round if we 
need. We have a couple other members, Ms. Kaptur, who would 
like to proceed.
    Ms. Kaptur. All right, Mr. Chairman. Thank you very much.
    Mr. Bonilla. Mr. Latham.

                            FOOD STAMP FRAUD

    Mr. Latham. Thank you, Mr. Chairman. You have uncovered 
various Food Stamp and other frauds in which the monies from 
the frauds were transferred to accounts benefiting or suspected 
of benefiting terrorist operatives, and I would just like to 
know how you assess your efforts in Food Stamp fraud 
investigations, in particular as far as funding of terrorism is 
concerned.
    Ms. Fong. Let me just make a few remarks, and then Mr. 
Novak might want to say a few words. We have had a number of 
cases on that, and I think Mr. Novak can address the details of 
them better than I can.
    We do have a certain level of resources invested in Food 
Stamp fraud on our Investigations side. It is a program that is 
very important to the Department and to us. We know that there 
are attempts to use that program for improper purposes, and so 
we do have a number of very significant investigative efforts 
going on. I believe that we will continue to do so. That will 
be a priority for our office.
    Clearly, any time there is an allegation that department 
monies are being funneled to terrorist organizations, that that 
is a very serious allegation. We must look into it. Mr. Novak, 
do you want to address some of the specifics?
    Mr. Novak. Yes. As was stated earlier, we have several 
agents assigned to Joint Terrorism Task Forces. If we receive 
any allegations regarding funds from fraud in our programs that 
appear to be going over to the Middle East or Pakistan, then we 
set those cases up, and we work them. We work them with the 
Joint Terrorism Task Forces and if they have connections 
overseas, we may consult with the Central Intelligence Agency. 
We have met with them to discuss cases where we have had funds 
going overseas.
    I don't know whether I can talk in an open hearing 
regarding cases where we have a connection, where we believe 
funds are actually going to associates of terrorists, but those 
are few. There are few cases.
    We can get back on the specifics and the numbers of cases, 
where those funds are actually going, where we have traced them 
overseas, and in those cases where we believe the funds have 
been used.
    Mr. Latham. Maybe we can visit sometime outside of a public 
forum.
    I guess my concern is whether or not you are getting 
substantive cooperation and assistance from other agencies.
    Mr. Novak. All indications are we are getting full 
cooperation from the intelligence agencies where we ask for 
information. The Department is in the process of setting 
access, so we are one part of the intelligence network 
involving the CIA and others. The members of the Joint 
Terrorism Task Forces began to share information as soon as we 
got security clearances. That is what some of the Supplemental 
Homeland Security funding was used for. They share the 
information that we need to get.
    Mr. Latham. So communication and cooperation have not been 
a problem?
    Mr. Novak. No.
    Mr. Latham. Thank you.
    Ms. Fleischman. An interesting aspect of this is that the 
Joint Terrorism Task Forces have come to us and asked 
specifically for OIG Special Agent participation and work.
    The Joint Terrorism Task Forces cover a lot of territory. 
We would be happy to talk to you privately because much of this 
information is sensitive, obviously, and some of it is 
classified.
    I think overall the level of cooperation amongst the law 
enforcement agencies, as well as the agencies within USDA whose 
programs might be involved--the cooperation both within USDA 
and without--has been quite good. Communication is going as 
well as it can go given the restrictions on information 
sharing.
    Mr. Latham. That is good to hear. I appreciate that very 
much.
    Thank you, Mr. Chairman.
    Mr. Bonilla. Thank you, Mr. Latham.
    Mr. Goode.
    Mr. Goode. Thank you, Mr. Chairman.
    Mr. Latham, in a previous question touched on this topic. 
You recovered last year $200 million. Out of that $200 million, 
what portion of it was related to food stamp fraud?
    Ms. Fong. That is a good question.
    Mr. Novak. I have a figure on the Food and Nutrition 
Service fraud which includes food stamp as well as child care, 
and the total figure for fiscal year 2002 was $22,970,000.
    Mr. Goode. What was the biggest area of fraud?
    Mr. Novak. Generally, it is food stamp trafficking.
    Mr. Goode. Out of the recovery, in the entire USDA, is food 
stamp the biggest area for fraud?
    Mr. Novak. Yes, it is just ahead of the Farm Service Agency 
FSA, farm programs. Farm programs is $19 million.
    Mr. Goode. Well, more is spent on food stamps than FSA, so 
is it the same percentage of fraud that you recover?
    Mr. Novak. Are you talking about what we recover or the 
actual spending in the entire program?
    Mr. Goode. Right, the entire program.
    Mr. Novak. I don't know what the entire spending of the 
program is.
    Mr. Goode. On food stamps, you recover about 1 percent of 
the total amount spent on food stamps?
    Ms. Fleischman. That is correct.
    Mr. Goode. And FSA, that is 1 percent, too?
    Ms. Fleischman. It may be, but right now I don't think 
either Mr. Novak or I have the total dollar value for farm 
programs in mind.
    The answer to your question would be more accurate from us 
if we could submit that for the record, because off the top of 
my head I don't know what the total value is for farm programs. 
We would have to supply that.
    [The information follows:]

    The Farm Service Agency had $2.713 billion in total outlays 
for the farm programs in fiscal year 2002, excluding outlays 
for the commodity programs and most of the outlays for the 
Conservation Reserve Program which are funded through the 
Commodity Credit Corporation. The $19 million in recoveries for 
2002 equates to approximately 0.7 percent of that year's 
program.

    Mr. Goode. Utilizing the card instead of food stamps, has 
that decreased fraud? Just a ball-park, how much do you think 
that has decreased fraud?
    Mr. Novak. I don't think that we can give you a value, but 
we can certainly state that the amount of criminal activity has 
decreased, because we do not have substantial street 
trafficking, and that is the buying and selling of food stamps 
for drugs or whatever else. Now the trafficking takes place in 
the stores. Certainly the number of people involved in criminal 
activity has decreased substantially.
    Mr. Goode. What do they do, buy something with the card 
that is valid and trade it for cigarettes or beer?
    Mr. Novak. Our folks get involved in criminal aspects where 
they are looking for prosecution, but we do have instances 
where they will take their benefits, go into the store, and use 
the funds to purchase drugs.
    Mr. Goode. But you cannot take the card and get cash on the 
card?
    Mr. Novak. That is the criminal activity that we 
investigate. It is a criminal violation. That is what we 
investigate.
    Mr. Goode. You cannot cash out the card, can you?
    Mr. Novak. Not legally.
    Mr. Goode. That is what I meant, legally.
    Ms. Fleischman. The pattern of crime has changed somewhat. 
Typically, we do not see as much street trafficking, the 
exchange, literally, of the stamps for a discounted value on 
the stamps in cash.
    Now what we see is--for example, somebody will have a card 
and they may sell the card to the owner of the store. The owner 
will pick a time in the late night because the machines run 24/
7, will pick a time in the late night, and you will see swipe 
after swipe on the card and the total amount of money maybe is 
$400. Each transaction is worth $50. You automatically know 
something is peculiar here, and it is occurring at 2 a.m. It is 
highly unlikely that somebody is buying $50 increments of 
groceries up to $400 at 2:00 in the morning.
    We have computer programs that watch for these sorts of 
patterns of activity in the overall computer system. When we 
see these types of patterns, we open the case and we start to 
look at that store's pattern of activity and its records. Then 
we start to look at how much in the way of actual groceries, 
for lack of a better term, does the store have, and what is its 
total volume of traffic. Frequently, what we will find is the 
actual amount of inventory of groceries is significantly less 
than the amount of transactions on Electronic Benefit Transfer 
cards in that location. What we have then is essentially a 
conspiracy to commit fraud.
    It is a much bigger operation in the sense of criminal 
activity, but it all occurs in the stores, it does not occur in 
the streets. What we have done is essentially make it a little 
bit harder for individuals to commit the crime, to traffic in 
food stamps.
    Mr. Goode. For the individual recipient of the card, the 
easiest way for them is to sell the card at a discount?
    Ms. Fleischman. They can do that or allow the card to be 
used for money.
    Mr. Goode. There is no requirement that the store owner 
have a photo, because if they are crooked, it will not matter 
anyway.
    Ms. Fleischman. I don't believe it is a requirement now.
    Mr. Goode. How effective would that be? My time has 
expired, but in the area of underage purchase of alcohol, it 
slows it some. I don't know whether that would slow the fraud.
    Ms. Fleischman. Some years ago, as EBT was being brought 
online, and the food stamp program was the first of the EBT 
type of transaction for Federal benefits, one of the things 
that this Office of Inspector General did was to try to put 
security measures in the program, particularly for 
identification of users of cards, such as photographs; that are 
embedded in the cards as a security feature. The one measure 
that we actually got was a PIN number, but, of course, people 
can circumvent the PIN number.
    But you have raised a very good way to make sure that when 
the transaction occurs, there is a matchup of a photograph that 
is embedded on that chip in the card by the person and the 
machine that are recording the transaction. That is a safety 
control measure which has not been adopted yet.
    Mr. Goode. Thank you, Mr. Chairman.
    Mr. Bonilla. Mr. Boyd.
    Mr. Boyd. Mr. Chairman, I apologize for being late today.
    And also apologize to Ms. Fong for being late; I would like 
to congratulate you on your new appointment. Many of the 
veterans at your table have heard me sing this song before, and 
some of the committee members have, but I am sure you have not 
heard it, so you are going to be forced to listen to my bad 
tune.

                            INVASIVE SPECIES

    I specifically want to address your written testimony and 
remarks on the APHIS section. I want you to help me understand, 
with the organizational changes, exactly where APHIS is and 
what your responsibility is as it relates to it. My concern is 
the citrus canker issue in Florida which you may not be aware 
of.
    In the 1990s, we had a citrus tree brought into the Miami 
airport by a tourist, and it was infected with a canker, and it 
has cost this Government tens of millions of dollars to fight 
that citrus canker outbreak. It slipped by our APHIS inspection 
controls. It has also cost taxpayers in the State of Florida a 
considerable amount of money in addition to what it has cost 
the industry and it is threatening the very viability of our $9 
billion citrus industry in Florida.
    I notice that you spoke to APHIS in your remarks and you 
talked about APHIS needing a more effective, systematic 
assessment of the various pests and pathways by which they can 
enter the country. You also concluded that the inspection 
operations and staffing allocations at ports of arrival were 
not always based on risk assessment.
    My question is, can you tell me what steps you recommend 
for the service to prevent things like the citrus canker issue 
from happening; and because of the transfer, your assessment of 
how these techniques are being implemented?
    Ms. Fong. I understand we did some work on the citrus 
canker issue, and I will ask Mr. Long to address that 
specifically.
    In terms of the transfer of the functions to the Department 
of Homeland Security, the border inspection function of APHIS 
is supposed to go over in March. We do not know specifically 
how that is going to work. We are in constant communication 
with the IG's office at the Department of Homeland Security, 
and we have been providing them copies of reports that we have 
issued on the functions of Agriculture that are going to go 
over there, as well as the investigative and audit work that we 
have ongoing.
    I believe there will be a fairly smooth transition in the 
oversight of that APHIS function between our office and the 
Department of Homeland Security and its IG office, and we will 
continue to work with Homeland Security to make sure that they 
understand our concerns and the kinds of problems we've 
identified are.
    In response to your specific question regarding citrus 
canker . . . do you have any comments, Mr. Long?
    Mr. Long. The audit that we issued on citrus canker dealt 
more with how APHIS was dealing with the State of Florida and 
the flow-of-funds issue. Your particular question dealt with 
how they might have caught that or how they might have shown 
that as a particular risk that they should be looking for.
    We are addressing some of those issues in the report that 
we are going to release, in how they target the pathways and 
how they identify the pathways through which invasive species 
can come into the country, and how they target those.
    We found some major problems with how APHIS goes about 
identifying the risk assessment. They tend to only target the 
traditional pathways, such as the large airports, the large 
terminals and large border crossings, instead of perhaps rail 
facilities and things of that nature.
    How they collect the data is also a major problem with the 
system. They have a system in place, but it was not working. 
Some port areas were not even entering data into the system, so 
we could not determine if we have the right people and the 
right numbers at the right place.
    That is what we are recommending, and APHIS agreed that the 
current system was not working, and that they needed to do more 
in identifying all pathways through which invasive species come 
into this country. Now that the APHIS function it is going to 
Homeland Security, it will still be incumbent upon APHIS to 
work with Homeland Security at that level to ensure that these 
things are being identified to prevent them from coming into 
this country.
    Mr. Boyd. So you do not have a good handle on how they may 
be addressing these recommendations that you made, because of 
the transfer?
    Mr. Long. They have basically agreed with the 
recommendations. We met with them earlier this week, and we are 
waiting for their written response to the report. They need to 
address our recommendations.
    What we would be looking for is how they are going to be 
working with the Department of Homeland Security on those areas 
to make those improvements. Also, even though that inspections 
functions going to be taken over by DHS, it is still up to the 
Department of Agriculture as to what can and can't come into 
this country.
    There is going to have to be a relationship there between 
Agriculture and DHS. They say they are addressing this process 
through MOUs as to how they anticipate that will work.
    Mr. Boyd. Mr. Chairman, our border States continue to be 
extremely vulnerable. I guess we are more susceptible because 
of our location.
    Mr. Bonilla. Mr. Boyd, we have had a second round of 
questioning already. Did you have an additional round?
    Mr. Boyd. Not at this time, Mr. Chairman.
    Mr. Bonilla. Thank you, Mr. Boyd.

                       FOOD AND NUTRITION SERVICE

    Relating to what Mr. Goode brought up, in the last current 
budget year, FNS has received funding increases for program 
integrity studies and a WIC vendor study.
    My question is, how, if at all, is your office working with 
FNS to be sure that these studies are thorough and appropriate; 
and has FNS consulted with your office on the design or 
implementation of any of these integrity studies?
    Ms. Fong. My understanding--and Mr. Long can certainly jump 
in if I am wrong--is that, historically, we have done a number 
of audits in the Food Stamp arena, and we have come up with a 
number of recommendations. I believe our staff is in continual 
consultation with FNS on these issues.
    Is there anything specific you want to add to that?
    Mr. Long. WIC has been the program monitored, and we have 
had a number of audit reports on that in the past, and FNS is 
doing these additional studies. They consulted with us during 
the implementation of those studies and we will be looking at 
the results.
    They got some money from Congress also to look at school 
lunches and eligibility for free or reduced-price lunches. We 
have been working with them on some pilot projects and how they 
have designed them, and we have given specific recommendations 
on a particular one where we felt it was not focused or 
collecting the right type of information.
    Mr. Bonilla. I want to make sure that we do not discover in 
the future that we have two different types of operations that 
are not consulting with each other.
    I am glad that they are consulting with your office.
    Ms. Kaptur.

                   RECOVERIES FROM FOREIGN NATIONALS

    Ms. Kaptur. I asked several questions about APHIS last 
year, and particularly the international architecture that 
prevents the United States of America from recovering losses 
incurred as a result of the illegal or otherwise import of 
invasive species. When we are dealing with countries that do 
not have tort systems, and insects or fungus or whatever comes 
in here, we find what has been happening--and I have spoken 
with several Secretaries of Agriculture now about this 
problem--the people that end up paying for the damage that Mr. 
Boyd referenced are the taxpayers of the United States. I am 
fed up with it.
    On the citrus canker issue alone, we have spent close to a 
billion dollars, Federal, the State of Florida, the farmers 
that have been harmed. It is a phenomenal figure.
    In my part of the country, we have the issue of the Asian 
longhorn beetle. We have maple sugar growers in Ohio that are 
just waiting for that thing to crawl across the State lines. We 
know that did not come from the United States. We actually know 
what country it came from; we know how it got in here. And yet 
I am being asked, as a Member of Congress, to appropriate 
dollars to pay for the remediation of something that was not 
caused by the people of my community or this country.
    My question to you is, in the report, the APHIS report that 
you are going to complete, what recommendations do you have for 
us from a legal standpoint of how, under the World Trade 
Organization, we recover, we can basically take to court these 
countries that are sending in this stuff, in spite of the fact 
that we have no tort system to relate to in those respective 
nations?
    We have all these attorneys at USDA. Can't you tell us what 
we can do in order to place the responsibility where it belongs 
in paying for the remediation of this?
    Ms. Fong. I am not familiar with this issue in great 
detail. I share your concern. It sounds like it is a tremendous 
burden on the American taxpayer.
    Ms. Kaptur. The dollars are going up, and we have to take 
funding out of programs important to the American people to pay 
for damages that are not our fault. There is something 
seriously wrong with the international legal systems that 
permit this to happen, and we cannot recover.
    My question is, can you or any of your colleagues suggest 
to us, or in the report you are going to give us, how do we 
recover internationally? I asked the Secretary to inquire about 
this at a WTO conference she went to. I didn't get a report 
back on that.
    Ms. Fong. I do not know that our report addresses that. It 
strikes me as potentially a treaty issue or a question of 
international law. We can talk to the Office of General Counsel 
and see if there is anything that they can do to further the 
discussion and flesh it out.
    Ms. Kaptur. West Nile virus came in in tires at a port. We 
know the origin. We know it was not domestic, and yet we cannot 
get at it. We need to have a forum for that, and it strikes me, 
there must be a set of people over there at USDA that can take 
the burden off the Government and the American taxpayer. There 
is no forum that exists right now that I am aware of. I would 
be appreciative of recommendations along that line.

                           FOOD STAMP PROGRAM

    I wanted to make a comment about food stamps. I support all 
of the rooting out of fraud not just in food stamps, but 
wherever you can find it; and I know that you are just 
scratching the surface.
    On food stamps, as a result of welfare reform, is it true 
that our food stamp usage has gone down considerably as a 
country?
    Ms. Fong. Yes.
    Ms. Kaptur. Do you have any ongoing studies of the numbers 
of Americans who are eligible for food stamps and are not 
applying because law, the laws which have been passed, make it 
much more difficult?
    Some States have 14-page application forms. In Ohio, the 
food bank lines are longer than we have ever seen. In fact, we 
have been talking about an exchange from northern to southern 
Ohio because the numbers of people coming to food banks is 
phenomenal.
    If you do not have such a study ongoing, how can we get it, 
so we can get a sense of how many people are eligible that are 
not being caught in the safety net?
    Ms. Fong. It sounds like your concern is whether the 
application process is acting as a deterrent to people 
participating?
    Ms. Kaptur. That could be a problem. I do not know what all 
the problems are. I know, as a Member of Congress, I have been 
asked to participate in food bank programs to encourage our 
community to donate more. My home county is not the fastest 
growing in Ohio, Mr. Strickland's is, and it is vast. So there 
is something wrong.
    For those people who are hungry, why are they not on the 
rolls?
    Ms. Fong. FNS may have some studies under way which we can 
look into and provide information if that is the case. We would 
be very happy to talk with your staff about this issue to make 
sure that we understand your concerns.
    Ms. Kaptur. I would like to make Ohio a test case of what 
is wrong. Why are these lines so long. I know a lot of these 
people qualify, but they are not on the program. So what has 
gone wrong?
    I am over my time. Thank you.
    Mr. Bonilla. Mr. Boyd.

                          PIGFORD V. GLICKMAN

    Mr. Boyd. Briefly, and I don't know if this has been 
covered. The consent decree in Pigford v. Glickman, which is 
the African American farmer lawsuit. There were audits run from 
1997 to 2000, and 2000 is the last audit. That last audit 
showed some serious problems, maybe 50 or 60 problems, which 
you specifically identified.
    I notice we have not had an audit since then. What is the 
plan on that? Are we going to bring that in for a good landing?
    Mr. Long. Even though we have not issued any new audits, we 
have continued to work with the Department on resolving the 
prior seven reports which we issued. We meet with the Office of 
Civil Rights quarterly, and we are continuing to try to seek 
resolution of some of the recommendations and implementation of 
those recommendations.
    I can provide you a status report on the status of those 
recommendations and where we are. The Department has appointed 
an Assistant Secretary for Civil Rights, but I don't think he 
has been confirmed yet.
    Mr. Boyd. Do you routinely monitor the case backlog?
    Mr. Long. Yes.
    Mr. Boyd. If we can get an update, maybe that would answer 
the question.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT
    
                          BUDGETARY RESOURCES

    Secondly--Mr. Chairman, this is a budget question. It has 
to do with your own budget. I notice that $2.3 million is being 
requested for new computer equipment. Reviewing the budget 
information submitted by USDA, it appears that $2 million of 
that amount is coming out of the office's equipment budget. 
That does not leave anything for any other equipment needs for 
the fiscal year. That just leaves a few thousand dollars.
    How many people do you have, 400 or 500?
    Ms. Fong. We have over 600. I belive we are asking for $2.7 
million for a new initiative to address our IT equipment needs 
right now. The $2 million is just for normal replacement. So 
this is an additional request.
    Mr. Thornsbury. In the overall equipment budget under 
object class 31 for equipment, the agency has not spent a lot 
of money, and we do not have a lot of extra money. Most of the 
funding you see in the object class breakout is primarily for 
the new increase.
    Mr. Boyd. Just a couple hundred thousand dollars is left 
for all other things?
    Mr. Thornsbury. Unless we make some savings in some other 
areas, then we will make some adjustments.
    Mr. Boyd. So you do have a budget problem?
    Mr. Thornsbury. We have a tight budget; that is correct.
    Mr. Bonilla. Thank you, Mr. Boyd.
    I yield to Ms. Kaptur. Also, we had a couple members who 
had to go to other hearings, and they are submitting questions 
for the record.

                           HOMELAND SECURITY

    Ms. Kaptur. Mr. Chairman, I would make a request at some 
point, when it is convenient. I would appreciate a private 
briefing and update on the USDA programs and diversion of funds 
and terrorism. I have not had one of those in about a year, and 
it would be very interesting to hear additional information.
    Ms. Fong. We would be happy to do that.
    Ms. Kaptur. Thank you.
    On the issue of homeland security, several press reports 
indicate that USDA's performance on two different homeland 
security exercises held a few months ago was very dismal. My 
sense, from your testimony, is that this is not an issue that 
concerns you as the IG; and I am just wondering whether these 
issues that relate to homeland security and various exercises 
of the USDA, if you see a role for the IG in tightening up what 
the Department is doing?
    Ms. Fong. I believe you are referring to the Crimson series 
of exercises dealing with APHIS and FSIS. We have participated 
in those exercises because there is a role for the IG's office 
in these kinds of situations where there is a possibility that 
there may be a bioterrorist incident occurring. Our role would 
be to provide the law enforcement expertise to address the 
causes and, if there are bioterrorists functioning, to detect 
and find them and prosecute them. We are interested and 
involved, and we participate in the Department's Homeland 
Security Council.
    I was not there for the first two exercises, but I have 
been advised that they have been tremendous learning 
experiences for everybody at USDA. This is a new area as we 
attempt to prepare ourselves for that kind of situation.
    I participated in one exercise recently, and learned a 
tremendous amount. As the process moves on, we would hope to 
see the Department getting more comfortable and better at 
responding to these kinds of situations.
    Ms. Kaptur. Wasn't there something stolen from one of the 
Michigan labs?
    Ms. Fong. There is an allegation that there was a swine 
virus that was stolen. Mr. Novak's staff ran the investigation 
on that.
    Mr. Novak. We are expecting a plea soon on the case, so I 
can only give you limited information. It was reported in the 
media that at Michigan State University there was a break-in 
and an altered swine flu virus, which had been created at 
Michigan State, was stolen. So the Michigan State University 
police and the FBI initially got involved.
    What I can tell you at this point is that there was no 
theft. There was no genetically engineered virus, so the case 
turned into a USDA grant fraud investigation, and that is what 
the prosecution of the case is going to involve. There was no 
break-in and no theft of anything at all.
    There had been falsified research. We had funded $700,000 
in research to Michigan State University for what we thought 
was going to be a vaccine for the influenza. However, we found 
out that the research had not been conducted and this was a 
cover-up for the fact that there was no research.
    Ms. Kaptur. Thank you for that clarification.
    I wanted to ask, on a related note, the New York Times 
reported last November that a worker hired by USDA to replace 
striking workers at Plum Island had an arrest record. He also 
reported that he failed to show up for work for several days, 
and took a laptop computer with him that contained information 
on the computer system at Plum Island.
    Would you comment on this episode and what it says about 
USDA's personnel security?
    Mr. Novak. I can address the information on the laptop.
    As soon as we heard about this, both the FBI and our office 
responded, and we talked to the security personnel at the site. 
This individual was a computer person, and the information on 
the computer was the work that he was working on for Plum 
Island. It did not involve security at the facility. There was 
nothing criminal. We were concerned that we had someone 
stealing computer information, and that is not what it appeared 
to be.
    Ms. Kaptur. Did he take a laptop off premises?
    Mr. Novak. I will have to get back to you on that specific 
issue. It may have been his own computer, but I will have to 
get back to you on that specifically.
    [The information follows:]

    The contractor was in possession of a Government-issued 
laptop computer when he was terminated from his employment at 
Plum Island due to prolonged unexcused absence from work. 
During his tenure at Plum Island, the contractor was considered 
to be a good employee, and his possession of the laptop was not 
a security risk. The laptop did not contain any secret or 
specialized information. After his departure, the contractor 
was contacted by Plum Island officials about the return of the 
laptop computer, which was handled immediately and without any 
difficulty or incident.

    Ms. Kaptur. My general question relates to security at USDA 
and any of the facilities that USDA owns. Or what about labs 
that receive funds from USDA that are not under your 
jurisdiction and are not Federally owned? Do you see a role for 
the IG in this new world in which we are living to ensure that 
the research that goes on there may be of a lesser nature than 
that which may occur within USDA-owned facilities? Are you 
taking a look at what is out there, and do you see a role for 
the IG in this?
    Ms. Fong. Absolutely. The security at USDA-funded labs had 
not been a priority until September 11, when we began to 
realize that perhaps there are some vulnerabilities. That had 
never been the focus before.
    We have an audit that looks at the physical security of 
those labs, and who can gain entry and has access to the 
samples.
    Ms. Kaptur. I remember when I visited Ames, Iowa, and I was 
in a lab shortly before 9/11 and after 9/11, and the story hit 
about anthrax. I remember how confusing the press reports were. 
If I go to the Ames lab today, compared to 2 years ago, what 
would the difference be?
    Mr. Long. You should see a difference today based upon the 
reviews of the Department. We have been to Ames twice as part 
of our work. Sandia also looked at Ames. There have been 
recommendations and improvements made. I think you would see 
something very different than before.
    Ms. Kaptur. The anthrax reports, purportedly it might have 
come from Ames, and then they denied that. Nothing came from 
Ames, correct?
    Mr. Long. Nothing has come to our attention that would 
indicate anything came from Ames.
    Ms. Fleischman. Based upon what we know about the form of 
the anthrax that was used in the letters in the attack in 
October/November of 2001, as far as we can tell--and it is one 
of the things that we have looked at when we visited Ames and 
other laboratories in the USDA system--as far as we can tell, 
there is no quantity of anthrax in any of those laboratories or 
facilities that would be in the same physical form as those 
anthrax spores used in the attacks in 2001.
    It is a totally different type or form. It could not be 
used. The samples that the Department has could not be used in 
a similar sort of attack. It seems it is highly unlikely that 
the anthrax used in those attacks came from USDA labs.
    Ms. Kaptur. I just wanted to reinforce, I think my own 
personal interest in these security issues at USDA, and if 
there is anything that you can do to tighten up consciousness 
and regimen, I think the American people would want that.

                          EMPLOYEE MISCONDUCT

    Moving to one other line of questioning, this relates to 
some political activities that USDA may be engaged in by 
political appointees. I am curious whether the IG ever reviews 
political activities by administration appointments to ensure 
that they are within the law and that the Department is 
properly reimbursed for any expenses incurred?
    Ms. Fong. I don't believe we have any allegations of that 
pending right now.
    My sense is that the Department's ethics officials would 
play the front-line defense there in terms of providing advice, 
appropriate advice, as to the guidelines political appointees 
should follow.
    Now, if there is a situation where someone believes that 
something may have been done improperly, certainly we would be 
happy to look at that and to evaluate that. But, as far as I 
know, we have not received any complaints or allegations at 
this point.
    Ms. Kaptur. Do you think it is appropriate for the 
Department to hold official events close to Election Day with 
only members of the political party of the President, such as 
the event on September 19 with Representative John Thune, who 
was running for the Senate, and that event was kept on the Web 
site of USDA through the election? Do you believe that is 
appropriate for the Department?
    Ms. Fong. I am not familiar with that situation. That was 
before I came to USDA, and I would be happy to look into that.
    Ms. Kaptur. Thank you.
    [The information follows:]

    OIG will look into the allegation of inappropriate 
political activity by the Department. The Agency will aim to 
have preliminary results of its investigation regarding whether 
or not wrongdoing occurred by the early part of September 2003.

    Ms. Kaptur. Will the IG be reviewing the rewarding of any 
bonuses to political appointees, which White House Chief of 
Staff Card recently authorized?
    Ms. Fong. It is not the normal policy or procedure for the 
Department to run the bonus decisions through our office. 
Again, if there is a particular concern that someone has or an 
allegation that something may have been improper, we would be 
happy to evaluate that.
    Ms. Kaptur. Thank you.

                      COMMODITY CREDIT CORPORATION

    Ms. Kaptur. My final request is one for information. If I 
were interested, going back to the 1980s, in the activities of 
the Commodity Credit Corporation and transactions that it had 
undertaken relative to Iraq, could you help prepare that 
information?
    Ms. Fong. My staff tells me we would be happy to render 
whatever assistance we can.
    Ms. Kaptur. I will submit a formal request.
    Mr. Chairman, thank you.
    Mr. Bonilla. I would like to thank all of you for being 
here today.
    I would like to make an announcement that we have the 
Secretary scheduled for tomorrow at the same time, and we do 
expect to proceed on schedule in spite of the weather. I hope 
we can all make appropriate plans to leave earlier in order to 
attend the hearing.
    With that, the subcommittee stands adjourned until tomorrow 
morning.


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                           W I T N E S S E S

                              ----------                              
                                                                   Page
Collins, Keith...................................................     1
Dewhurst, S. B...................................................1, 989
Fleischman, J. N.................................................   989
Fong, P. K.......................................................   989
Long, R. D.......................................................   989
Moseley, J. R....................................................     1
Novak, J. E......................................................   989
Thornsbury, D. R.................................................   989
Veneman, Hon. A. M...............................................     1


                               I N D E X

                              ----------                              

                        Secretary of Agriculture

                                                                   Page
Animal and Plant Health Inspection Service.......................     9
American Heritage Rivers Program.................................    83
Ames Iowa:
    Ames Iowa, Modernization Project.............................    50
    Budget Request Ames Lab......................................    80
Bioenergy........................................................    76
Biofuels/Renewable Fuels.........................................    49
BioTechnology....................................................    80
Budget Overview..................................................     6
Chronic Wasting Disease in Wisconsin.............................     3
Conservation Programs............................................    10
Conservation Technical Assistance................................70, 71
Commodity Assistance Program.....................................    85
Country of Origin Labeling.......................................    66
Civil Rights Budget..............................................    11
Citrus Canker Research and Development..........................94, 103
Crop Insurance Program...........................................    82
Disaster Assistance Program...................................... 8, 51
E-File Technology Programs.......................................    68
Emerson Trust/Risk Management....................................    62
Explanatory Notes:
    Office of the Secretary FY 2004 President's Budget..........328-340
    Revised Office of the Secretary Explanatory Notes--Enacted FY 
      2003......................................................324-327
Farm Bill:
    Farm Bill Implementation..................................... 8, 64
    Farm Bill Sign-up........................................54, 67, 68
Farm Income......................................................    72
Farm Service Agency Office Consolidation.........................65, 84
Food and Nutrition:
    Food and Nutrition Programs..................................    10
    Free and Reduced Lunch Program...............................    58
    Nutrition Programs--Means Test...............................    55
    School Lunch Program.........................................   142
Food Safety:
    Food Safety Program..................................9, 59, 97, 142
    Nutrition Labeling........................................... 43-48
Foreign Market Development Programs..............................    11
Genetically Modified Agricultural Products.......................    81
Global Food Aid..................................................   138
Homeland Security................................................     9
Laboratory Capacity..............................................     4
Livestock Compensation Program Sign-up........................8, 57, 98
Listeria Rule...................................................97, 101
Opening Statement................................................     1
Organic Standards:
    National Organics Standards Program..........................    92
    Organic Farming Standards....................................    66
Outsourcing......................................................    43
Packer Concentration.............................................    96
Polluted Runoff..................................................   100
2004 President's Budget..........................................     9
Product Distribution Disclosure..................................67, 93
Risk Management Issues...........................................   103
Questions for the Record Submitted by Chairman Bonilla:
    Advisory Committees, Panels, Task Forces, and Commissions...180-182
    Agricultural Credit Insurance Fund...........................   200
    APHIS and Farm Service Agency Compensation Payments by Fiscal 
      Year.......................................................   186
    Ames, Iowa Biocontainment Facilities.........................   203
    Asset Sales..................................................   256
    Biobased Product Studies.....................................   203
    Bioterrorism and Biosafety:
        Biosecurity..............................................   226
        Biotechnology Risk Assessment............................   203
        Bioterrorism...........................................207, 225
        Cartagena Protocol on Bioterrorism......................213-238
    Captive Supply Study........................................252-253
    CCC:
        CCC Section 11 Allocations..............................194-196
        CCC Section 11 Activities................................   196
        CCC Funding of Emergency Pest and Disease Programs.......   227
    Codex Alimentarius...........................................   190
    Corporate Systems Investments...............................227-229
    Congressional Earmarks.......................................   208
    Congressional Relations Activities..........................147-150
    Congressional Relations Transfers............................   229
    Conservation Reserve:
        Conservation Reserve Program.............................   185
        Conservation Reserve Program Acreage Enrollment..........   192
        Conservation Reserve Program Technical Assistance........   197
        CRP Continuous Signup Program............................   209
    Conservation Technical Assistance............................   259
    Common Computing Environment...........................200, 215-222
    Corporate Systems Development................................   258
    Cost-Sharing Regulation......................................   250
    Country of Origin Labeling...................................   251
    Dairy Options Pilot Program..................................   189
    Delinquent Loans.............................................   151
    Department-wide Nutrition Education Funding..................   223
    Disaster Recovery/Business Continuance.......................   232
    Electronic Program Delivery.................................240-247
    Emergency Pest and Disease Programs..........................   223
    Expanding International Trade................................   223
    Farm Bill Implementation Costs...............................   260
    Farm Income..................................................   236
    Farm Loans...................................................   201
    Field Office Restructuring...................................   252
    Food and Nutrition:
        Average WIC Participation in FY 2003.....................   213
        Electronic Benefits Transfer and WIC Eligibles.....165, 174-177
        Estimates of Eligible Non-participants in the Food Stamp 
          Program................................................   210
        Facilitating Access to the Food Stamp Program...........210-212
        Food Stamp Error Rates...................................   212
        Food Stamp Program Participation.........................   210
        National School Lunch Program Certification Procedures...   255
        WIC Carryover............................................   208
        WIC EBT Implementation...................................   213
        WIC Program--2004 Budget Initiatives.....................   254
        WIC Program Reauthorization..............................   254
        WIC Protected Participation............................178, 179
    Food for Education and Child Nutrition Program...............   249
    Fund for Rural America.......................................   187
    Funding for Government-wide E-Government Initiatives.........   248
    Funding for Trade Enhancement................................   225
    Funding for Trade Agreement Negotiations.....................   240
    FSA Administrative Funding...................................   200
    Government Payments..........................................   236
    Government Spending for Fiscal Years 2002-2004...............   247
    Homeland Security:
        Homeland Security Supplemental...........................   234
        Memorandum of Agreement..................................   233
    Transfers to Department of Homeland Security.................   233
    Human Nutrition Initiative Studies.........................204, 207
    Loans.......................................................152-154
    Mandatory Price Reporting....................................   214
    Montreal Protocol Multilateral Fund..........................   236
    National Finance Center Data Recovery.......................230-232
    National Organic Standards...................................   214
    Outreach for Socially Disadvantaged Farmers..................   222
    Outside Legal Counsel........................................   183
    OSEC Staffing......................................157-165, 166-174
    Outsourcing..................................................   258
    Outsourcing Testing..........................................   263
    Proposal To Reduce Administrative Expense Reimbursements.....   249
    Public Affairs Activities...................................114-117
    Section 32 Fund.............................................261-262
    Senior Executive Service.....................................   263
    Service Center Modernization................................197-200
    Staff Year Reductions........................................   189
    Subsidy Costs for USDA Loan Programs........................190-192
    Subsidy Costs for Broadband Loans............................   252
    Sugar........................................................   209
    Technical Assistance Costs for CRP and WRP...................   193
    Tobacco Program.............................................154-156
    Trade Related and Biotechnology Activities...................   263
    Unauthorized Appropriations..................................   222
    USDA Homeland Security Council...............................   227
    USDA Office Closures.........................................   271
    USDA Strategic Goals.........................................   257
    Universal Telecommunications Network.........................   248
    User Fee Legislation.........................................   251
    User Fees for Meat, Poultry, and Egg Products Inspection.....   253
    Water and Wastewater Disposal Grants.........................   252
    Web-based Supply Chain Management System.....................   256
    Wetlands Reserve Program Acreage Enrollment..................   193
Questions for the Record Submitted by Mr. Kingston:
    Adequate Funding for FSA Employee Training...................   276
    Consent Decree...............................................   281
    E-File Requirements and Re-engineering.......................   277
    FSA Salaries and Expenses....................................   278
    FSA Staff..................................................273, 279
    FSA Workload.................................................   279
    H2A Non-immigrant Visa Program...............................   282
    Listeria Risk Assessment.....................................   275
    Montreal Protocol/Methyl Bromide.............................   272
    Organic Egg Standards........................................   274
    Organic Feed Provision......................................283-287
    Salaries and Expenses Funding................................   276
    Service Center Agencies and Homeland Security................   276
    Service Center Workload Measurement..........................   280
    State Office Restructuring...................................   282
    Tobacco Assistance...........................................   275
Questions for the Record Submitted by Mr. Latham:
    Ames, IA Modernization Project...............................   288
    Bioenergy....................................................   289
    Forward Contracting on Dairy Products........................   291
    FSA County Offices...........................................   289
    Meat Packers Study...........................................   291
Questions for the Record Submitted by Mrs. Emerson:
    Child Nutrition Reauthorization..............................   295
    Childhood Obesity Epidemic...................................   295
    Conservation Security Program................................   294
    Food Stamp Program...........................................   293
    McGovern-Dole International Food for Education and Child 
      Nutrition Program..........................................   296
Questions for the Record Submitted by Ms. Kaptur:
    BioFuels....................................................298-300
    Commodity Supplemental Food Program for Seniors..............   303
    Food Aid.....................................................   300
    Freight Forwarder Contract...................................   301
    Fruits and Vegetable Consumption Among Young People..........   304
    FSA Staff....................................................   303
    Global Food for Education Program............................   303
    Linking Nutrition Programs With Production Agriculture.......   306
    Over-Issuance of Benefits....................................   305
    Program Sign-Up..............................................   302
    Senior Farmers' Market Nutrition Programs....................   300
Questions for the Record Submitted by Ms. DeLauro:
    After School Supper Program..................................   314
    Listeria.....................................................   308
    Listeria Directive...........................................   314
    Listeria Recall at Wampler Foods.............................   315
    Mandatory Recall Authority...................................   311
    Nebraska Beef/Supreme Beef...................................   307
    Recall Distribution Lists....................................   309
    Revision of WIC Food Package Rules...........................   312
    Single Food Safety Agency....................................   310
    Summer Food Program..........................................   313
    USDA Food Safety Budget......................................   307
    WIC--Strategic Information Systems...........................   313
Questions for the Record Submitted by Mr. Berry:
    Beginning Farm Program......................................319-321
    Farm Bill Sign-Up............................................   322
    Inventory of Farm Property...................................   317
    Russian Inspections of U.S. Poultry Plants...................   321
Rural Development Program........................................11, 69
Section 32 Funds.................................................    52
Surveillance Testing on Deer.....................................     5
Statement by Anne Veneman, Secretary of Agriculture.............. 13-42
USDA Dairy Policy................................................    83
USDA Strategic Plan..............................................    11
USDA Website....................................................105-137
Value Added Grants...............................................    53
Warehouse Provision..............................................    68

                      Departmental Administration
                       FY 2004 Hearing Questions

Advisory Committees:
    Advisory Committee Staff Costs...............................   365
    Advisory Committees Funded From Other Sources................   365
    Explanatory Notes FY 2004...................................455-470
Agriculture Buildings and Facilities and Rental Payments:
    Carryover From Fiscal Year 2002..............................   364
    Explanatory Notes:
        FY 2004 President's Budget..............................438-445
        Revised Explanatory Notes Enacted FY 2003...............407-408
    Headquarters Complex Rental Charges..........................   361
    Increase in Agriculture Buildings and Facilities and Rental 
      Payments...................................................   364
    Rental Payments and GSA Repair Costs.........................   363
    South Building Renovation....................................   359
Celebration of Excellence Ceremony...............................   350
Cost of Settlements..............................................   341
Departmental Administration Explanatory Notes:
    FY 2004 President's Budget..................................411-437
    Revised Explanatory Notes Enacted FY 2003...................402-406
Distribution of Aircraft.........................................   352
Distribution of Motor Vehicles...................................   352
Early Out and Buyout Options.....................................   350
Equal Employment Opportunity Complaints..........................   344
Foreclosures.....................................................   341
Funding New Field Service Centers................................   345
Hazardous Materials Management:
    Agency Support...............................................   375
    Agencies Comprising the Hazardous Materials Working Group....   400
    CCC Grain Storage Site Status................................   377
    Compliance Docket............................................   376
    Compliance With State Law...................................370-373
    Explanatory Notes:
        FY 2004 President's Budget..............................446-454
        Revised Enacted FY 2003.................................409-410
    Foreclosures Requiring Cleanup...............................   376
    Funding for CERCLA, RCRA, and Pollution Prevention...........   369
    Funding for Sites...........................................382-399
    Forest Funding for Cleanup Forest Service Sites..............   399
    Forest Service Reimbursement.................................   400
    Forest Service Sites Cleanup Costs...........................   399
    Performance Goals............................................   368
    Salaries and Benefits........................................   374
    Salaries/Benefits Cleanup Costs..............................   374
    Typical Cleanup Efforts and Associated Costs................379-381
Historically Black Colleges and Universities....................353-356
Number of Complaints.............................................   344
Number of Credit Cards Issued....................................   350
On-Site Reviews..................................................   341
Processing Complaints............................................   345
Procurement Reform...............................................   346
Procurement Paperless Personnel Request System...................   350
Savings Through Credit Cards.....................................   351
Section 921, Federal Agriculture Improvement and Reform (FAIR) 
  Act............................................................   357
Targeted Disabilities............................................   351
USDA Streamlining................................................   346
USDA/1890 National Scholars Program..............................   346

      Office of the Chief Information Officer/Working Capital Fund
                       FY 2004 Hearing Questions

A-76 FAIR Act....................................................   497
Accounting Systems..............................................504-506
Audits...........................................................   506
Computer Security...............................................500-503
Corporate Systems................................................   504
Cost Accounting and User Fee Reviews.............................   500
Debt and Credit Management.......................................   495
Explanatory Notes:
    OCFO FY 2004 President's Budget.............................515-527
    OCFO Revised Enacted FY 2003................................510-514
    WCF FY 2004 President's Budget..............................528-555
FFIS Staffing Levels.............................................   503
Financial Statements............................................498-500
Foundation Financial Information System.........................479-484
GAO and OIG Reports.............................................486-492
National Finance Center........................................485, 486
NFC Emergency Recovery...........................................   506
Payroll System..................................................492-495
Remote Mirroring Backup Technology...............................   508
Unobligated Balances...........................................496, 497
USDA Travel......................................................   478
Working Capital Fund............................................473-478
Working Capital Fund Unobligated Balances........................   507

                Office of the Chief Information Officer
                       FY 2004 Hearing Questions

Approved FY 2004 Business Cases................................757, 758
Breakout of Object Class 25.0, Other Services....................   668
Breakout of CCE Procurement......................................   679
Breakout of Service Center Employees.............................   610
Budget Preparation Materials.....................................   685
CCE Acquisition of Equipment, Software..........................755-757
CCE Procurement Strategy.........................................   685
CCE Implementation Schedule....................................684, 755
CCE Return on Investment.........................................   754
CCE Unobligated Balance..........................................   756
CCE Web Applications supported...................................   755
Cyber Security Program Implementation...........................680-682
Contractor Support Services...........................558-601, 667, 668
Delivering Programs Through the InterNet........................656-665
Department-wide Information and Technical Infrastructure.........   745
Disaster Recovery Plans for USDA Mission-Critical Systems........   752
Expected CCE Return on Investment................................   678
Explanatory Notes:
    CCE FY 2004 President's Budget..............................787-803
    OCIO FY 2004 President's Budget.............................771-786
    CCE Revised Enacted FY 2003..................................   769
    OCIO Revised Enacted FY 2003.................................   767
Filling IT Vacancies.............................................   684
FSA Legacy Application, GIS......................................   758
FY 2002 and FY 2003 IRM Support Services Contracts...............   558
FY 2002 LAN/WAN Voice Installation Funds.........................   610
FY 2003 Homeland Security Spending on IT.........................   759
FY 2003 Spending on EAMS.........................................   760
FY 2004 Budget Request Increase.................................748-750
Freedom To E-File Implementation................................697-699
GAO and OIG Audit Findings......................................611-622
Government Paperwork Elimination Act Implementation.............752-753
Information Security and Privacy...............................699, 700
Interoperability Lab Costs.......................................   755
Improving Departmentwide IT Management and CIO Accountability..744, 745
IT Staff Convergence Initiative..................................   753
Latest CCC Quarterly Report.....................................602-609
New Positions Funded in FY 2004..................................   747
Object Class 31.0, Equipment Breakdown.........................669, 670
Object Class Table for CCE.......................................   678
OCIO Contracts/Subcontracts....................................747, 748
OMB Approval of USDA IT Spending.................................   757
OMB Exhibit 42..................................................622-653
Other Training Plans.............................................   677
Moratorium Waivers.............................................746, 747
Plans To Support Electronic Program Delivery...................666, 667
Purchase of Workstations Completed...............................   670
Risk Management Agency...........................................   761
RMA Infrastructure Modernization...............................762, 763
RMA Hot Site Backup............................................763, 764
Rural Development Web Farm Operations............................   764
SCIT Contracts Approved.........................................670-677
SCIT Modernization Plan Milestones, Progress....................692-697
Securing E-Business Transactions and Mission Critical Systems..665, 666
Service Center Modernization Initiatives.......................760, 761
Status and FY 2004 Plans for USDA's Enterprise Architecture......   751
Status of Common Computer Systems................................   677
Status of Business Process Re-engineering.......................687-692
Status of Cross-Training.......................................677, 678
Status of USDA's Corporate Systems Initiatives.................750, 751
Strengthening Information Risk Management......................682, 683
Strengthening IT Management.....................................654-656
Strengthening Management Controls................................   679
Support for USDA's Websites......................................   679
Telecommunications Security Architecture.......................683, 684
USDA E-Gov Initiatives Implementation............................   750
USDA's FY 2004 IT Budget........................................685-687
USDA FY 2004 Spending on Contractor Support Services.............   744
USDA Information Technology Budget...............................   557
USDA's IT Moratorium.............................................   747
USDA's IT Workforce Analysis.....................................   746
USDA Reliance on Contractor Assistance..........................700-743
USDA Service Center LAN/WAN/Voice Installations..................   610
USDA Total FY 2004 IT Expenditures...............................   654
Working Capital Fund Cost Increases..............................   762
Workstations by Agency...........................................   670

                        Office of Communications
                       FY 2004 Hearing Questions

Explanatory Notes:
    OC FY 2004 President's Budget...............................895-910
    OC Revised Enacted FY 2003...................................   893
Media Services...................................................   887
Office of Communications Budget Request..........................   888
Office of Communications Program Increases.....................890, 891
Press Releases Issued..........................................887, 888
Public Affairs Activities.......................................883-885
Reimbursement From Other USDA Agencies.........................888, 889
Resources and Staff Levels................................883, 886, 887

                     Office of the Chief Economist
                       FY 2004 Hearing Questions

Activities in Stoneville, Mississippi..........................915, 916
Explanatory Notes:
    OCE FY 2004 President's Budget..............................922-938
    OCE Revised Enacted FY 2003.................................919-921
Food and Agricultural Research Policy Institute..................   918
Impacts of Welfare Reform and Farm Labor.......................914, 915
Market for U.S. Exports to Asia and Latin America................   915
Potential Increases in Prices and Farm Income From Biomass.....916, 917
Risk Assessment Rule Making....................................913, 914
Risk Assessment Staff Time.......................................   914
USDA Activities Associated With Sustainable Agriculture........911, 912
USDA Food Safety Initiative Funds Budgeted.......................   916

                       National Appeals Division
                       FY 2004 Hearing Questions

Active Appeals...................................................   939
Director Appeals.................................................   939
Performance Goals and Indicators.................................   939
Vacant Positions...............................................939, 940
Explanatory Notes:
    Explanatory Notes--Increases.................................   940
    Explanatory Notes--Significant Decreases.....................   940
    NAD FY 2004 President's Budget..............................943-950
    NAD Revised Enacted FY 2003................................941, 942

                 Office of Budget and Program Analysis
                       FY 2004 Hearing Questions

Breakout of Resources for OBPA's Responsibility..................   952
Budget Related Legislative Proposals.............................   953
Code of Federal Regulations......................................   953
Increase for Information Technology..............................   954
Explanatory Notes:
    OBPA FY 2004 President's Budget.............................958-970
    OBPA Revised Enacted FY 2003................................955-957
Legislative Proposals............................................   852
USDA Budget Summary............................................953, 954

                        Homeland Security Staff

Explanatory Notes:
    Homeland Security Staff FY 2004 President's Budget..........972-977
    Homeland Security Staff Revised Enacted FY 2003..............   971

                     Office of the General Counsel

Attorney:
    Hours by Agency..............................................   808
    Hours Worked.................................................   807
    Locations....................................................   808
Cases:
    EEO Commission...............................................   846
    Civil and Criminal...........................................   809
Conservation Operations..........................................   849
Debt Collections.................................................   809
Examples of Recent Progress......................................   811
Explanatory Notes................................................   852
FY 2004 Budget Request Breakout..................................   810
Law Library......................................................   810
Object Class Breakout............................................   847
OGC Priorities...................................................   845
Private Counsel..................................................   808
Public Law 108-7.................................................   848
Revision to Explanatory Notes....................................   850
Staff Years......................................................   806
User Fee:
    Hours by Agency..............................................   805
    Programs.....................................................   805

                      Office of Inspector General

Adequacy of HACCP Implementation.................................  1074
Agency Staffing Levels...........................................  1052
Agriculture Risk Protection Act of 2000..........................  1057
Animal Cruelty...................................................  1058
Asset Forfeiture Transfers.......................................  1050
Biographical Sketch:
    Phyllis K. Fong..............................................  1016
Bioterrorism Initiative..........................................  1067
Budget Request, FY 2004..........................................   990
Budgetary Resources....................................1018, 1037, 1048
Business Process Re-engineering..............................1052, 1055
Commodity Credit Corporation.....................................  1040
Confidential Funds...............................................  1045
Emerson Trust Reserve Wheat Release..............................  1021
Employee and Public Misconduct...................................  1046
Employee Misconduct..............................................  1039
Employee Pay Scales..............................................  1051
Explanatory Notes................................................  1078
Farm Legislation Audit Work......................................  1058
Farm Service Agency..............................................  1070
FFIS Enforcement Operations......................................  1074
Financial Management.............................................   989
Financial Statement Audits.......................................  1042
Financial Statements.............................................  1051
Firearms.........................................................  1048
Food and Nutrition Service.......................................  1033
Food and Nutrition Service Programs..............................  1060
Food Product Recalls.............................................  1025
Food Recalls.....................................................  1019
Food Safety.............................................989, 1026, 1070
Food Safety FSIS.................................................  1064
Food Stamp Fraud.................................................  1028
Food Stamp Program...........................................1034, 1041
Forest Service...................................................  1056
FSIS Enforcement Operations......................................  1074
FSIS Recall Operations...........................................  1053
Genetically Modified Materials...................................  1069
Homeland Security.................................988, 1037, 1054, 1063
Homeland Security Funding........................................  1024
Hotline Complaint Summary........................................  1046
Indictments, Convictions, and Suits, FY 2002.....................  1047
Information Technology...........................................  1059
Information Technology Funding...................................  1017
Interagency Communication........................................  1021
Invasive Species.............................................1031, 1071
Investigation into New York Plant................................  1076
Joint Terrorism Taskforce........................................  1056
Laboratory Security..............................................  1020
OIG Homeland Security Funding....................................  1057
OIG Priority Settings............................................  1065
Opening Remarks (Mr. Bonilla, Ms. Kaptur)........................   985
Opening Statements (Ms. Fong)....................................   987
Outside Public Accountants.......................................  1045
Outsourcing of USDA Functions....................................  1063
Peanut Quota Buyout Program......................................  1067
Pesticides on Imported Produce...................................  1023
Pigford v. Glickman..............................................  1035
Recall Operations................................................  1075
Recoveries.......................................................  1018
Recoveries from Foreign Nationals................................  1033
Risk Assessment and Inspections..................................  1017
Risk Management Agency...........................................  1062
Security of Research Facilities..................................  1071
State Mediation Program..........................................  1042
Status of Program:
    Accomplishments in Fiscal Years 2002.........................  1095
    Audit Accomplishments........................................  1102
    Investigations Accomplishments...............................  1096
Threats Against Government Employees.............................  1023
Unqualified Audit Opinion........................................  1066
Waste, Fraud, and Abuse..........................................  1025
Whistleblowers...................................................  1053
Witnesses, Introduction of.......................................   987
Written Statement (Ms. Fong):
    2002 Farm Bill...............................................  1001
    Border Security..............................................   996
    Budget Request, FY 2004......................................  1014
    Commodity Distribution Programs..............................  1012
    Counterterrorism Efforts.....................................   998
    Employee Integrity...........................................  1013
    Farm and Foreign Agriculture Services........................  1002
    Farm Programs................................................  1001
    Financial Integrity..........................................  1004
    Food and Nutrition Service...................................  1009
    Food Safety..................................................   999
    Food Stamp Program (FSP).....................................  1010
    Food, Nutrition, and Consumer Services.......................  1009
    Homeland Security............................................   993
Information Technology...........................................  1003
Introduction and Overview........................................   991
Marketing and Inspection Programs................................  1005
Natural Resources and Environment................................  1007
Rural Business-Cooperative Service (RBS).........................  1008
Rural Development................................................  1008
Rural Housing Service (RHS)......................................  1009
Security at USDA-Operated and -Funded Facilities.................   994
Special Supplemental Nutrition Program for Women, Infants and 
  Children (WIC).................................................  1011
Statement of Nancy S. Bryson, General Counsel....................  1114

                                  
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