[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.,          MAURICE D. HINCHEY, New York
Washington                           SAM FARR, California
 TOM LATHAM, Iowa                    ALLEN BOYD, Florida          
 JO ANN EMERSON, Missouri
 VIRGIL H. GOODE, Jr., Virginia
 RAY LaHOOD, Illinois               
                                                                                                                                                
 NOTE: Under Committee Rules, Mr. Young, as Chairman of the Full 
Committee, and Mr. Obey, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
   Henry E. Moore, Martin P. Delgado, Maureen Holohan, and Joanne L. 
                        Perdue, Staff Assistants
                                ________
                                 PART 7
     FARM AND FOREIGN AGRICULTURAL SERVICE PROGRAMS AND FOOD SAFETY 
                                PROGRAMS

                                                                   Page
 Farm and Foreign Agricultural Service............................    1
     Farm Service Agency..........................................  135
     Risk Management Agency.......................................  367
     Foreign Agricultural Service.................................  471
 Food Safety......................................................  771
     Food Safety Inspection Service...............................  889
                                ________

                     U.S. GOVERNMENT PRINTING OFFICE
 87-870 O                   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

                              ----------                              

                                          Wednesday, March 5, 2003.

                 FARM AND FOREIGN AGRICULTURAL SERVICES

                               WITNESSES

J.B. PENN, UNDER SECRETARY
JAMES R. LITTLE, ADMINISTRATOR, FARM SERVICE AGENCY
A. ELLEN TERPSTRA, ADMINISTRATOR, FOREIGN AGRICULTURAL SERVICE
W. KIRK MILLER, GENERAL SALES MANAGER
ROSS J. DAVIDSON, JR., ADMINISTRATOR, RISK MANAGEMENT AGENCY
STEPHEN B. DEWHURST, BUDGET OFFICER, DEPARTMENT OF AGRICULTURE

                       Introduction of Witnesses

    Mr. Bonilla. The subcommittee will come to order.
    We are delighted today to have with us for our hearing Dr. 
J.B. Penn, the Under Secretary for Farm and Foreign 
Agricultural Services; Mr. James Little, who is joining us with 
the--he is Administrator of the Farm Service Agency; Ms. Ellen 
Terpstra, the Administrator of the Foreign Agricultural 
Service; Mr. W. Kirk Miller, the Department's General Sales 
Manager; and Mr. Ross Davidson, the Administrator of the Risk 
Management Agency; and, of course, Steve Dewhurst, the 
Department's Budget Officer.

                        Members' Opening Remarks

    We have read your statements and appreciate your submitting 
them in advance, and they will be included in the record.
    Before I turn to you, Dr. Penn, for your opening statement, 
I would like to recognize Ms. Kaptur for any opening comments 
she may have. But I would like to, before I do that, 
acknowledge that Mr. Miller is from her home State of Ohio, 
attended Ohio State University and no doubt thought that that 
end zone pass interference call was the right call in the 
championship game this last January.
    So Ms. Kaptur.
    Ms. Kaptur. Thank you, Mr. Chairman, and I appreciate your 
acknowledgment of a Buckeye up there at the table. It is a 
welcome change, and we wish all of you success and appreciation 
for your service to the people of our country and, indeed, the 
people of the world.
    Dr. Penn, we want to welcome you and all of your colleagues 
and to say that I know that there is a lot of pressure on you 
because of the adoption of the 2002 farm bill and the recent 
disaster package, and that is a lot of effort for the Farm 
Service Agency. I want to thank the Secretary and the 
Department for responding immediately to some of the issues 
that we brought up here last week about staffing difficulties 
in various offices and trying to provide sufficient staffing to 
accommodate farmers who are applying out there.
    So I want to thank the Department for its speedy 
acknowledgment of the need that was presented last week.
    I also want to mention on the crop insurance issue, as we 
begin, we obviously hear from many farmers around the country 
who claim that they can't get insurance because of the crops 
they raise. Then other farmers who aren't buying insurance 
because they say, well, you know, 1 out of 5 years, we will 
take the losses. The inability of the insurance system to reach 
broadly remains a difficulty for us.
    In terms of the Foreign Agricultural Service--and we will 
have questions on this--they really face a very daunting task, 
and I personally will ask questions about this. I am concerned 
about the inadequacy of resources to do the job and how we are 
going to meet the demands, not only in terms of Central Asia 
and the Middle East, but the Asian Peninsula and other places 
around the world.
    So we look forward to your testimony this morning.
    And thank you, Mr. Chairman, very much. It is a pleasure to 
be here today.
    Mr. Bonilla. Thank you, Ms. Kaptur.
    J.B., bear with us. We have a lot of members of the full 
committee that are at simultaneous hearings, so people will be 
coming in and out. As you may have heard, we are trying to--we 
are going to try to get our appropriations bills done all 
across the board as early as possible this year. This 
subcommittee has a lot of pride in the fact that they have--
that we have worked together to get our bills done in a timely 
fashion in the last couple of years, and we fully expect to do 
that again.
    We are going to--so we are cramming in a lot of hearings 
that are running simultaneous with our different subcommittees. 
On this subcommittee, we expect to conclude our hearings by the 
end of the month, by March 20th.
    So with that, I would ask you to proceed.

                  Under Secretary's Opening Statement

    Dr. Penn. Thank you, Mr. Chairman. It is a pleasure to be 
back with you again and before the Committee.
    As you noted, we have the administrators from our agencies, 
except for Mr. Little, who somehow has been waylaid on his way 
here, and so we expect him momentarily. And we also have, as 
you noted, Steve Dewhurst, who is well known to this Committee. 
I will be very brief in my remarks, because I know that you 
have seen the prepared statements.
    I would like to just begin by noting the importance of the 
Farm and Foreign Agricultural Services mission area to the 
entire Department of Agriculture. We are at the forefront in 
trying to meet the challenges that our farmers and ranchers 
face in the 21st century, and as Congresswoman Kaptur noted, we 
have had a lot of challenges this past year. First, we had the 
farm bill, which was enacted in May and made applicable to the 
2002 year. So that was a massive undertaking for us, and it is 
still ongoing.
    We also had a very severe drought that affected 
considerable parts of the country last year; and then, along 
with that, we had the failure of the Nation's largest crop 
insurance company, which we had to work through. Now we are 
involved in implementing the emergency disaster program that 
was passed on February 20th.
    And at the same time, as you have heard, we have this very 
ambitious trade negotiation agenda that is underway, and we are 
also dealing with all of the problems involved in keeping open 
the markets that we have already gained for the products of our 
farmers and ranchers.
    The budget proposal that we are going to discuss today 
fully supports continuation of these activities, and we 
thinkthat it is more than adequate to enable us to do a successful job 
for American agriculture.

                          FARM SERVICE AGENCY

    I would like to note the three agencies individually for 
just a moment. The Farm Service Agency, which Mr. Little heads, 
is, of course, the one in which we have the most presence 
around the country. We have perhaps 2,500 locations. This is an 
agency that interacts most directly with farmers and ranchers; 
and we have been heavily involved, as the Congresswoman noted, 
in implementing the 2002 farm bill. That is a very complex farm 
bill. It enabled producers to update bases and yields, which 
they hadn't been able to do for many years before, and it posed 
a lot of difficult economic decisions. And so we have been 
working very diligently to try to get all of the producers 
enrolled and to try to get the benefits going to the farmers 
and ranchers as quickly as we can.
    We think that the progress on program sign-up has been 
satisfactory. We would like it to be a little faster, of 
course, but we believe we will be able to complete that job by 
April 1.
    We have paid out $2.2 billion thus far in direct and 
countercyclical payments as a result of the sign-up. We have 
paid out $1.1 billion in Milk Income Loss payments under the 
new program that was included in the farm bill. And the 
Congress enabled a Peanut Quota Buyout Program, which was worth 
$1.3 billion, and thus far, we have paid out $1.2 billion. So 
we are nearing the end of that program.
    And in addition, we have made the Apple Market Loss 
Assistance and several other payments thus far this year.
    Our budget places priority on enhancing FSA's ability to 
continue to assist producers. We propose a 2004 program level 
for salaries and expenses of $1.3 billion, and that supports 
our ongoing ceiling of 5,900 Federal staff years and 10,800 
non-Federal county staff years.
    In addition to personnel, we continue to modernize our 
services. This is an area that lends itself well to 
modernization with information technology; and so we are 
implementing geographical information systems. The President's 
budget has $42 million included for that purpose, but it 
appears under the Office of the Chief Information Officer.
    And I would note that FSA, since the mid-1990s, has played 
a critical role in providing loans and loan guarantees to farm 
families who would otherwise be unable to obtain the credit 
they need to continue their operations. By law, a substantial 
portion of the direct loan funds is reserved each year for 
beginning and limited-resource and socially disadvantaged 
farmers and ranchers. And so our budget proposal includes 
funding for $850 million in direct loans and $2.7 billion in 
guarantees. We think that these numbers are sufficient to meet 
the needs that we are going to encounter throughout fiscal year 
2004.

                         RISK MANAGEMENT AGENCY

    Turning quickly to the Risk Management Agency, led by Mr. 
Davidson, the Federal Crop Insurance program, we believe, plays 
a very important role already and can play a much more 
significant role in helping producers manage their risk. Last 
year, crop insurance provided $37 billion in protection on over 
215 million acres, and that was 4 million acres more than the 
previous year.
    For point of reference, we produced $200 billion worth of 
agricultural output. The Risk Management Agency is insuring $37 
billion of that. We are budgeting for slightly lower 
participation in 2004, based on estimates of planned acreage 
and expected market prices for the year.
    Our budget also includes a legislative proposal to reduce 
the administrative expense reimbursement from 24.5 percent to 
20 percent of the premium to the companies.
    The 2004 budget requests an appropriation of such sums as 
necessary for the mandatory costs associated with the program, 
and that, of course, will provide the necessary resources that 
we need to meet the program expenses at whatever level the 
producers may choose to participate.
    For salaries and expenses for the Risk Management Agency, 
$78 million in discretionary spending is proposed, and that is 
an increase of $7.8 million for this agency.
    We also have nearly $9 million for RMA information 
technology, which falls under the departmentwide common 
computing environment, and that will provide for upgrading a 
lot of the IT facilities of the agency which have not been 
upgraded for a decade or more.

                      FOREIGN AGRICULTURAL SERVICE

    And finally, Mr. Chairman, the Foreign Agricultural 
Service, and USDA's international activities. I think that 
everyone here would agree that we can't overstate the 
importance of expanding market opportunities for America's 
farmers and ranchers. That is among our very highest priorities 
and certainly the highest priority of the Foreign Agricultural 
Service.
    As I mentioned, we continue our trade expansion efforts on 
several fronts. We have the expansion of new trade agreements 
as a top priority, including the multilateral negotiations on 
the Doha development agenda. In addition to that, we have found 
that we have to devote more resources now to maintaining the 
markets that we already have open. The difficulties we have 
with China and with Russia and with Mexico have been widely 
reported, and it takes a lot of resources, not only from the 
Department of Agriculture, but also from our interagency 
colleagues, to make sure that everybody lives up to the trade 
agreements that they have already entered into.
    And I would just note, Mr. Chairman, that this month marks 
the 50th anniversary of the Foreign Agricultural Service. We 
are so privileged to have Ms. Terpstra as the Administrator, 
who is far younger than her agency.
    The budget provides funding of $145 million for 2004, and 
this supports several of our major activities. We have 20 
additional staff-years proposed for this agency to support the 
trade negotiations, to give us some capability in the important 
area of biotechnology and in sanitary and phytosanitary 
activities. We also will expand our trade capacity-building 
activities, and then we have to meet the pay costs and our 
payments to the Department of State for the administrative 
services that are provided to our foreign missions.
    Also, FAS, as the committee knows, administers the major 
export promotion and market development activities, and these 
are guided by the new farm bill. The amount of funding for 
these activities is indicated in the new farm bill, and our 
budget fully reflects those funding levels.
    Now, for our commitment to alleviating hunger and improving 
food security in developing countries through food assistance, 
the budget includes a proposal of $1.6 billion in total. This 
includes $1.3 billion for Public Law 480 for both Title I and 
Title II. We also have included $50 million of appropriated 
funding for the McGovern-Dole International Food for Education 
and Child Nutrition Program, which was included in the 2002 
farm bill.
    So, Mr. Chairman, let me conclude by saying that we view 
this as a very modest proposal. We think it is a very positive 
proposal. It is intended primarily to enable us to continue to 
provide the services that we have been providing, and we 
appreciate the support of the committee.
    Thank you, Mr. Chairman.
    Mr. Bonilla. Thank you, J.B.
    [The prepared statements of J.B. Penn, James R. Little, 
Ross J. Davidson, Jr., and Ellen Terpstra follow:]

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 


    Mr. Bonilla. Before I begin questioning, I would like to 
also welcome someone on your panel.
    Ms. Kaptur has a hometown friend here; I also have one from 
Texas, Mr. Davidson. Ross Davidson has a good, long history 
back home in Texas working for great corporations like Tesoro 
and what has been judged consistently over the years as the 
best insurance company in America, and that is USAA--so you 
have good men here--and his home is within about half a mile of 
my home back in San Antonio. So a small world.
    But welcome--a special welcome to you today.

                       COMMODITY PROGRAM SIGN-UP

    Dr. Penn, during our hearing last Thursday, the Secretary 
was here, and she was telling us that there would be no 
extension of the April 1 deadline for enrollment in the direct 
and countercyclical farm program for crop year 2003. About a 
week earlier, the Department said only 41 percent of farmers 
had signed up for the commodity programs under the farm bill.
    Members of this subcommittee have received complaints from 
their constituents who could not get appointments in their 
county offices until after the deadline. I point out that we 
had the same kind of situation with the livestock compensation 
program announced by the Department last October. We think we 
fixed that as part of our final action in the omnibus bill this 
year under section 203 of Division N of Public Law 108-7, but 
the fixed cost of $100 million according to CBO.
    Would you tell us in some detail what you are doing to meet 
this workload crunch and how you will handle farmers who missed 
the deadline through no fault of their own?
    Dr. Penn. Well, thank you, Mr. Chairman. Let me see if I 
can provide some perspective and some clarification.
    As you indicated, each week we issue a sign-up number, 
which is an average across all of the States for the United 
States. That number at the current moment, as you indicated, is 
48 percent. So if you look at all of the farmers across the 
country, 48 percent have signed up and are now eligible for the 
benefits under the 2002 Act.
    But we note that there are a considerable number of farmers 
who are not going to sign up; that is, they are going to accept 
the default option, and the default option is simply that they 
accept the production flexibility contract acreage and yields 
with the addition of soybean acres that they have historically 
had. So there is no reason for them to come to the office. We 
don't know exactly how many that is going to be, but we would 
venture a guess that it is certainly at least a fourth and 
perhaps as many as a third.
    So we have the major agricultural States where most of the 
acreage base and yield updating will occur, and we would note 
if you look at those, that their numbers are between 55 and 60 
percent. So if we take 55 percent and we add a third to that, 
then that gets us pretty close to 85 percent of the producers 
that we think are already taken care of. That leaves us the 
rest of this month to sign up the remaining 15 or 20 percent of 
the farmers.
    Now, Mr. Little and his staff look across the country every 
week, and we are trying to identify those particular counties 
in which the workload is the heaviest; and in those cases, we 
are trying to divert additional resources to those counties. We 
are bringing in more computers. We are trying to lengthen the 
office hours so that producers can come in beyond the regular 
office hours. And we think that doing these things, focused on 
these particular counties where the workload is heaviest, that 
we will be able to complete the sign-up by April 1.
    As I indicated earlier, we have well over 2,000 locations, 
and we think that the difficulty is probably going to occur in 
no more than 10 percent of those. So that is maybe 200 counties 
where we have to make these extraordinary efforts, we think.
    Mr. Bonilla. So none of these producers then that have just 
got caught--as they claimed, they called and just couldn't get 
an appointment--they should be addressed then, right?
    Dr. Penn. We think they should be addressed, and if there 
are any producers who through no fault of their own can't get 
signed up by April 1, then we will make sure we get them signed 
up as soon as we possibly can. They won't suffer any loss of 
benefits whatsoever because of that.
    Mr. Bonilla. On implementing the farm bill, J.B., last year 
a budget amendment was submitted requesting $60 million for the 
increased costs of implementing the farm bill programs, and 
final congressional action in our most recent bill, $70 million 
was provided for that purpose.
    My question is, is this level of funding sufficient to meet 
the need throughout the current fiscal year, and is this level 
of funding sufficient--funding sufficient also to administer to 
new disaster payments that we just appropriated in the omnibus 
bill?
    Dr. Penn. Yes, Mr. Chairman. We think that financial 
resources are not our problem. It is just finding enough people 
and having enough hours in the day to get everybody through the 
offices.
    As you note, the farm bill itself included $55 million for 
our expenses. We had originally estimated we would need $110 
million. Of that $55 million, $5 million was earmarked for an 
unrelated project, so we had $50 million immediately, and we 
used that to add temporary staff so that we could immediately 
begin implementation.
    And then we had proposed an additional $60 million, and in 
the appropriations bill, as it turned out, we got $70 million 
for the remainder of implementation of the 2002 farm bill and 
the disaster package. So we think we have enough financial 
resources.
    Again, our problem is just getting enough people, getting 
them trained and making sure we can get the producers through 
the county offices on time.
    Mr. Bonilla. Thank you.
    I will now yield to Ms. Kaptur.

                           CCC SALES TO IRAQ

    Ms. Kaptur. Thank you, Mr. Chairman.
    We will have several rounds of questioning, but my first 
round, Mr. Under Secretary, I am going to ask questions 
regarding Iraq and the Department of Agriculture. And we had 
called your office on this, so I know many of the questions you 
will not be able to answer today, but we are asking for full 
disclosure for the record.
    As I begin my questioning, I would like to ask unanimous 
consent to submit a GAO report to the record, November 1990, 
entitled Iraq's Participation in U.S. Agricultural Export 
Programs.
    Mr. Bonilla. Without objection, that will be entered into 
the record.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]     
    
    Ms. Kaptur. Thank you, Mr. Chairman.
    We will also be asking to submit House hearings that were 
held by the Economic Stabilization Subcommittee of the Banking 
Committee back during the early 1980s, regarding these same 
sets of questions.
    Mr. Secretary, my objective this morning is to try to make 
the record clear, as clear as we can as we face this imminent 
war with Iraq, and how America ended up in this position and 
how various policies led to the very dangerous situation we 
find ourselves in today.
    One of the most curious developments in all of this is 
trying to decipher what happened back during the late 1970s, 
1980s and 1990s with regard to the relationship between the 
Commodity Credit Corporation and the financing of billions of 
dollars' worth of sales to Iraq. For example, in the early 
1980s, between 1983 and 1990, nearly 17 percent of total 
guarantees from the Commodity Credit Corporation went to one 
country, Iraq. And indeed, in the years 1987 and 1988, Iraq was 
the beneficiary of almost 25 percent of all guarantees provided 
by the Commodity Credit Corporation.
    One of the first questions I will have for you is looking 
at the GAO reports back in the 1990s, we thought we were at 
least $2 billion in arrearages in terms of Iraq's ability to 
repay, but I wanted to give you the benefit of my own questions 
that I ask myself on this; and if you could provide for the 
record manifests and accounting records.
    Was the CCC involved in any way in the shipments of--the 
financing of shipments of anthrax, for example, or fertilizers? 
I know for certain, fertilizers were exported from the State of 
Ohio through the CCC early in the 1980s.
    I would like to know which exporters received bonuses to 
facilitate sales to Iraq through the early 1990s, and if one 
reads carefully the original GAO study that was done on this, 
probably the three most important pages, pages 12, 13 and 14, 
document the history of the CCC's relationship to Iraq from 
1983 to 1990, indicating that Iraq began participating in the 
Department of Agriculture's GSSEP program with an initial 
allocation of $401.9 million in export credit guarantees.
    There seems to have been quite a debate in the Reagan-Bush 
administration about the nature of that relationship, and it 
always seemed that the decisions were made back in the 1980s 
that really favored Iraq. The amount of CCC financing 
increased. Sanctions were lifted in 1988. And during the 1980s 
Iraq was declared not a terrorist country. Right up to the 
invasion of Kuwait by Iraq, the amount of financing through the 
CCC was increasing.
    What is more interesting, in 1990, June, the Assistant 
Secretary of State for Near Eastern and South Asian Affairs for 
the Bush administration testified before the Senate Foreign 
Relations Committee and said the administration opposed 
congressionally imposed sanctions against Iraq as not 
contributing to our foreign policy goals; and so I just wanted 
to stress to you, at least the concern of this member, about 
what really happened.
    And for the record this morning, I am wondering if you 
could at least initially provide us--in terms of those 
relationships, what kind of insight can you give us, and what 
are the arrearages remaining today from those operations of the 
CCC with Iraq?
    Dr. Penn. Well, thank you for the question and thank you 
for having your office alert us as to the subject you were 
interested in. We didn't have enough time to compile the 
records that you are requesting, but we will certainly make an 
attempt to do that. We will try to provide all the information 
that responds to your questions just as quickly as we can.
    As you note, these are developments that occurred some time 
ago, well before our watch, and the world was a much different 
place then, with Iran and Iraq and the geopolitics. So it is 
very difficult for me to recall at this moment exactly what may 
have come into play there.
    I did ask our staff to examine the CCC's relationship to 
Iraq, and the most information I can provide you at this moment 
is that we think, from our preliminary examination, that the 
Commodity Credit Corporation is owed $2 billion in principal by 
Iraq and that there is perhaps a billion dollars arrearage in 
overdue interest on that account.
    That is as much as I can give you right now in terms of the 
particulars, but we will, as I said, examine the records and 
try to be as responsive as we possibly can.
    [The information follows:]

             Iraqi Debt to the Commodity Credit Corporation

    Iraq's debt to the Commodity Credit Corporation under the 
GSM-102/103 programs as of March 5, 2003, is as follows:

                        [In thousands of dollars]

        Item                                                      Amount
Principal Arrears.......................................      $1,940,703
Interest Arrears........................................         212,321
Late Interest...........................................       1,597,474
                    --------------------------------------------------------
                    ____________________________________________________
      Total.............................................       3,750,498

    Ms. Kaptur. I thank you very much, Mr. Secretary. My time 
is up on this round, but I think it is important for the public 
to understand that when these arrearages exist in the way that 
we function as a committee, obviously, and as a Congress, we 
have to reimburse the CCC for any losses eventually. So those 
arrearages are paid for by the American people ultimately. 
Thank you.
    Thank you, Mr. Chairman.
    Mr. Bonilla. Thank you, Ms. Kaptur.
    As we usually do on this subcommittee, when the gavel goes 
down, we recognize members in order of seniority, but if not, 
we go by the time of arrival. And considering that, I will now 
recognize Mrs. Emerson.

                       FSA COUNTY OFFICE STAFFING

    Mrs. Emerson. Thanks, Mr. Chairman. I do have some 
questions I want to submit for the record, because I am going 
to have to be scurrying between subcommittees too, and I 
apologize for that, because I have a lot of questions I want to 
ask.
    I appreciate, Dr. Penn, the fact that y'all are going to 
try to accommodate our farmers who for some reason or other, 
because of the backlog and the tremendous time it has taken to 
sign up for the farm bill to be accommodated, so that they 
actually can participate in the program. I just want to 
reiterate that we have several counties--and I know one of 
which, you are sending in extra people to help because wehave 
got a huge, huge backlog. And contrary to perhaps other areas, most of 
my farmers do sign up for the program.
    One of the things that does worry me to some extent is, 
when you send in temporary employees, the level of knowledge 
they have about the program and whether or not that is going to 
lengthen the process. You know, what are you all doing to 
ensure that our producers do get the same level of assistance 
with the temporary personnel as they do with the permanent?
    Dr. Penn. Well, Congresswoman Emerson, as you know, that is 
a problem, and in a lot of these rural areas where the county 
office has the greatest workload, it is very difficult to just 
go out and quickly add temporary employees who are trained and 
who are knowledgeable of the program. So that is a particular 
challenge for us.
    Most of the people that we can get quickly are people who 
can do the clerical work of the office, freeing up the people 
who do know the details of the programs to interact with the 
producers; and that is what we are trying to do, to make sure 
that when the producers are in the office, that they are 
dealing with people who do understand the programs and who have 
been trained.
    And so, to the extent that we possibly can, we are trying 
to make sure that that happens.
    Mrs. Emerson. Okay. And that brings to mind another issue 
that we talked about with Secretary Veneman last week, and that 
was, you know, in the whole scheme of reorganizing or 
consolidating offices, it does make me very uncomfortable, the 
thought that we would contract out some of these services to 
the private sector when you need a tremendous amount of 
technical expertise to help administer the program. And when 
you have got, you know, the farm bill, you have got disaster 
assistance--you know, what have you--this becomes very 
problematic in my opinion. So I just wanted to raise that.

                       RICE FOR HUMANITARIAN AID

    Let me ask another question, just shifting subjects 
completely. With regard to Foreign Agricultural Service 
indirectly, one of the things that--and to Iraq specifically, 
one of the things that, you know, we are trying to encourage is 
that in the aftermath of whatever we end up doing in Iraq, we 
can include rice in any kind of humanitarian aid. Certainly we 
have an abundance of it, and I would like to know if you all 
will be able to work with USAID to ensure that we can include 
rice as--since that is the main staple of the Iraqi diet. So I 
want to say that.

                         EMERSON TRUST ACTIVITY

    And then let me ask about the Emerson Trust, and I feel a 
little funny asking about it since it was named after my late 
husband, but anyway, I am concerned about it. Can you summarize 
the instances for me in the past that the Emerson Trust has 
been used?
    Dr. Penn. Off the top of my head, I can give you a bit of 
information, and we will supplement that for the record.
    The Emerson Trust has been used in the past few years. The 
trust is authorized at 4 million tons, and it has been drawn 
down to 1.9 million tons, today, of grain. It was used two 
times in 2002.
    Under the current Administration, there were two tranches 
taken from the reserve that totaled 575,000 tons, and those 
have been the only times that it has been used in my memory. We 
can go back and provide you more detail.
    [The information follows:]

                  The Bill Emerson Humanitarian Trust

    The Bill Emerson Humanitarian Trust (BEHT) was established 
in 1998 by enactment of the Africa Seeds of Hope Act. It 
replaced the Food Security Commodity Reserve, which was enacted 
in 1980. The 1998 Act also changed the release authority from 
the President to the Secretary of Agriculture, authorized the 
Secretary to swap eligible commodities held in the BEHT for any 
U.S. commodity (including processed commodities) of equal 
value, and allowed for holding cash in the BEHT. Since the 
wheat reserve was established, it has been used for the 
following purposes:
    December 5, 1984--President Reagan authorized release of up 
to 300,000 metric tons for use in P.L. 480, Title II, for 
unanticipated needs in Africa.
    October 26, 1988--President Reagan authorized release of up 
to 1.5 million metric tons for P.L. 480, Titles I and II, 
because of short domestic supplies.
    September 14, 1989--President Bush authorized release of up 
to an additional 2.0 million metric tons for P.L. 480, Titles 
I, and II because of short domestic supplies.
    May 31, 1991--President Bush authorized release of up to 
300,000 metric tons for use in P.L. 480, Title II, for 
unanticipated needs in the Middle East.
    July 19, 1994--President Clinton authorized release of up 
to 200,000 metric tons for use in P.L. 480, Title II, for 
unanticipated needs in the Caucasus region.
    January 22, 1996--President Clinton authorized release of 
up to 1.5 million metric tons for use in P.L. 480, Titles II 
and III, because of short domestic supplies.
    June 7, 2002--Secretary Veneman authorized the release of 
275,000 metric tons of wheat to be exchanged for other 
commodities for use in P.L. 480, Title II, for unanticipated 
needs in Southern Africa.
    August 28, 2002--Secretary Veneman authorized the release 
of 300,000 metric tons of wheat to be exchanged for other 
commodities to be used for the Southern Africa food security 
crisis. After this release, the Trust was reduced to about 1.98 
million metric tons.

    Mrs. Emerson. Have y'all come up with any kind of a plan 
that would supplement or replenish the trust with additional 
food?
    Dr. Penn. We have not, but we are considering how best to 
do that. As I said, it is down now to 1.9 million tons, which 
is still a very considerable amount of grain, but we are 
looking at the possibilities for how to do that.
    Mrs. Emerson. So is that the reason, then, perhaps, that 
y'all didn't include any money in the budget request for 
replenishing it?
    Dr. Penn. Well, we think that it is adequate--that we have 
adequate resources for the food aid needs for the current year; 
and, yes, we are still considering how best to do that and 
where the funds might come from.
    Mrs. Emerson. In spite of all the food aid that we may need 
to give not only to Iraq, but also to sub-Saharan Africa, et 
cetera, do you think there is enough in that to----
    Dr. Penn. We think we have enough, counting the money that 
is proposed in the budget, plus the carry-over, plus the use of 
the reserve and the shipments that follow on once you tap the 
reserve; we think there is an ample amount for this year, yes.
    Mrs. Emerson. Okay. Well, hopefully if we have an 
opportunity, we can talk about that in more depth.
    And the time is out, Mr. Chairman, so thanks.

                          FOREIGN DEBT TO CCC

    Mr. Bonilla. Thank you, Mrs. Emerson.
    Before I yield to Mr. Farr, Ms. Kaptur brought up an 
interesting issue about foreign debt specifically owed by Iraq, 
but as we all know, there is a lot of money out there from 
different countries, and I think it might be appropriate, 
J.B.--I am not asking you to go back and dig through files back 
during the Carter administration, but to--if you have a running 
total on what foreign debt is to the CCC from all foreign 
entities, that would be very helpful if you could provide that 
for the record.
    Dr. Penn. We can certainly do that.
    [The information follows:]

               Commodity Credit Corporation Foreign Debt

    As of February 28, 2003, the exposure of the Commodity 
Credit Corporation resulting from direct credit and loan 
guarantees to foreign countries totaled $22.4 billion. Of this 
amount, $4.3 billion represents contingent liability for the 
GSM-102, GSM-103, and Supplier Credit programs.

    Mr. Bonilla. Thank you.
    Mr. Farr.
    Mr. Farr. Thank you, Mr. Chairman.

                             COFFEE PRICES

    Thank you, Dr. Penn, for being here. And I am sorry that I 
am just going to have to ask this question and run.
    It is often said that our food policies and our foreign 
policy, the right hand of the Federal Government doesn't know 
what the left hand is doing, and I can't think of an area that 
is more demonstrative of that issue than essentially what is 
happening in the coffee-growing countries of Central and Latin 
America.
    We are involved in a $1.2 billion investment in Colombia, 
which is one of the leading coffee growers in the world, and at 
the same time throughout Colombia and the Central American 
countries, which we have been heavily involved in because of 
tragedies there by natural disasters and wars in the past, we 
have really been trying to help these countries, which are 
growing countries, take their number one cash crop, legitimate 
cash crop, coffee, and really sustain it.
    Yet we have four multinational companies, three of which 
are headquartered in the United States--Kraft, Sara Lee, 
Proctor & Gamble and Nestle--who buy 80 percent of the coffee 
in the world, and what has happened is that the coffee prices 
have gone to an all-time low, so much so that we are now 
putting our food aid program, which you monitor, the Public Law 
480 food, back into these countries to feed starving coffee 
farmers.
    In fact, the Ag News reported in the last year that some 
40,000 El Salvadorans, 130,000 coffee workers have lost their 
jobs since the crisis. At least three children were reported to 
have starved to death because of malnutrition, because of the 
coffee industry collapse.
    So the right hand here is that we are investing in trying 
to get people to grow legitimate crops which are cash crops 
that are--that they can--and the best growers in Latin America 
are the coffee growers, and it is still small, agrarian 
agriculture.
    Congress was so concerned about this that last year we 
passed in the last night of session--I authored it along with 
Cass Ballenger and other members of this committee, H. 
Resolution 604, which essentially put the onus on the State 
Department to come up with some recommendations in this area. 
But it seems to me that the Department, your department, ought 
to take a look at that resolution and come back with a strategy 
that does something that gets at these American corporations.
    I mean, in essence, the coffee prices on the market here in 
the United States haven't dropped at all, but what they are 
buying, the coffee--and we have put a lot of money into 
teaching the Vietnamese how to grow coffee. They are growing 
the poor-quality coffee which is flooding the market.
    But here is the dilemma. I mean, these are American 
companies, and we buy a lot of food from these companies for 
our School Lunch Program and for our Feeding Nutrition Programs 
and for, certainly, the military. I would imagine that for 
these companies the United States might be their biggest 
customer, and yet their corporate policies regarding coffee 
purchases are just abominable as far as what we are trying to 
do for social international aid to stop the cocaine growth and 
all of that.
    And my point is, in your assisting these farmers who are 
being displaced because of low prices, has there been any 
discussion about how to stop that spiraling downfall of coffee 
growers in Central America and northern Latin America so that 
you don't have to put so much of our food aid program, in 
addition to our foreign aid, just to keep these people from 
starving? And are there ways in which you can use your 
influence over the purchases of food from these four big 
companies?
    And I am not the only one that is talking about this. 
Congressman Ballenger is very, very active in this issue, 
because we have just seen what happened in Colombia where we 
are appalled that our American corporations are sort of 
undermining our effort to have a sustainable agriculture there.
    So are you familiar with this issue, and is there anything 
you can do from your department to try to balance out, I think, 
the equity of coffee issues here and our purchases of coffee. 
And perhaps there is even discussion that we are one of the few 
countries that doesn't have any quality standards for coffee. 
We don't have any coffee growers in the United States other 
than Kona, Hawaii, and it is a niche market, so we don't have 
any pressure from the inside to sort of worry about the quality 
of imports.
    Dr. Penn. Well, I can say, Mr. Farr, that I am generally 
familiar with the issue.
    This is a very important issue in terms of economic 
development activities all around the world, and as you 
correctly note, not only the U.S. Government, but international 
development organizations such as the World Bank have 
encouraged small holders to produce the crops that they produce 
best, everywhere in the world. Coffee has been one of those 
that has been very important, and it has been particularly 
noted that Vietnam is a new producer and has provided a lot of 
supply to the market now and that coffee prices have been 
depressed for quite some time. So it is a problem, I think.
    I take your point about coordination across government 
agencies, coordination among the international development 
agencies, because if everybody expands production, we are going 
to increase the supply and drive down the price.
    And then I take your point about our food aid programs. The 
development activities are not something that the Department of 
Agriculture has a direct responsibility for. That would be 
carried out under Title II of Public Law 480, which is the 
responsibility of the Agency for International Development. But 
we do have some food aid activities, and I take your point that 
some of our food aid may be going to places where the coffee 
prices are depressed.
    We will certainly look into that, and I would be happy to 
try to provide you more information as soon as I can.
    [The information follows:]

                        Worldwide Coffee Crisis

    The U.S. Agency for International Development (USAID) is 
providing resources and coordinating initiatives to address the 
worldwide coffee crisis. USAID Coffee Activities work to create 
sustainable small-holder coffee systems which provide 
significant income, employment, social, environmental and 
consumer benefits. Where potential exists for farmers to 
effectively compete within the coffee sector, USAID is working 
to improve local capacity to produce and effectively market 
high quality coffee thereby increasing the price farmers earn 
for their product. At the same time, USAID programs assist 
farmers that cannot effectively compete within the coffee 
sector to diversify their activities and identify other sources 
of income.
    On August 30th, 2002, USAID signed a Quality Coffee 
agreement with Costa Rica, El Salvador, Guatemala, Honduras, 
Nicaragua, the Dominican Republic and Panama. USAID will 
provide $8 million for a market-based program to assist small 
and medium coffee producers to improve coffee quality, form new 
business linkages, secure longer-term contracts with the 
specialty coffee industry, and identify and implement 
diversification options for producers that cannot be 
competitive.
    In Colombia, USAID is helping mitigate the present 
situation by beginning a $7 million 5-year effort on specialty 
coffee activities in opium poppy and coca cultivation areas. 
USAID's partners are working in partnership with the Coffee 
Quality Institute and the Specialty Coffee Association of 
America on coffee quality and market access activities.

    Mr. Farr. Thank you very much. And it would be helpful if 
you could talk to AID and the State Department, because you 
have ag attaches in the very embassies of the countries we are 
talking about.
    Mr. Penn. We do.
    Mr. Bonilla. Thank you, Mr. Farr.
    Mr. Nethercutt.

                  RELEASE OF WHEAT UNDER EMERSON TRUST

    Mr. Nethercutt. Thank you, Mr. Chairman.
    Welcome to all of you. We appreciate your being here to 
testify.
    Mr. Davidson, I especially appreciate the remarks of the 
chairman with respect to your position as Administrator of the 
Risk Management Agency. I know you went out to my district in 
our State. You have been out around the country talking to 
people, and that is advisable for people in administrative 
positions.
    I looked at the Web site of the Farm Service Agency, and 
this is what it says, just to remind you if you haven't looked 
at it recently: The Farm Service Agency at the U.S. Department 
of Agriculture ensures the well-being of American agriculture, 
the environment, and the American public through efficient and 
equitable administration of farm commodity programs, among 
other things.
    You probably know that I am not happy about the Emerson 
Trust history with this administration. You all--the USDA is 
the subject of an Inspector General's investigation at my 
request, and it stems from the sales that occurred in 2002, 
three separate times as I look at the record, that in my 
opinion--I think an objective opinion of most of the people 
looking at it--caused a reduction in the price of soft white 
wheat in the marketplace, a total reduction by virtue of the 
government's releasing stocks, offering these sales without 
prior notice contrary to a policy that had been in place for 
years, since the 1980s as I understand it, under the Food 
Security Wheat Reserve Act of 1980 and subsequent times, that 
later became the Emerson Trust in 1998.
    These sales occurred to the detriment of not only the 
farmer, the agriculture industry in the Northwest and across 
the rest of the country, but specifically to the serious 
financial detriment of the small elevators, the guys who are 
holding government stocks, getting storage at low storage 
prices, I might add to you, in the Northwest. We have some of 
the lowest in the country.
    And by virtue of your agency's either intentionally 
departing from the prior practice of taking only so much from 
each elevator so there would be equitable distribution across--
you know, equitable paying, so to speak, taking those stocks 
out of an elevator and no more government storage payments--I 
think it was done either intentionally, without notice, in a 
departure from prior practices--it was either done through the 
gross negligence of someone or some of those in the agency, or 
it was just bone-headed.
    By any objective standard, I would argue to you, it hurt 
American agriculture. It hurt the price for the farmer, hurt 
the storage conditions for the small elevator guys by having, 
you know, others be able to engage in predatory practices that 
cleaned out an elevator when, you know, the purchaser, the 
third-party purchaser, had lots of stocks on hand; and so, 
therefore, it eliminated some competition in the grain storage 
area, and it literally hurt the price of wheat for the farmer.
    And I think it was done for one of those three reasons. 
That is what I have tried to think through might be the 
motivation that resulted in the action.
    I don't see any good reason for having done what you all 
did, and there is further investigation being undertaken now by 
the IG. They are out on the ground, and God bless them. I think 
they are going to find all kinds of things with respect to the 
improprieties with the way this unfolded.
    I have been a strong ag supporter, the agency as well. But, 
boy, this has me hot, because it hurt my people, and it hurts 
rural America. It hurts rural eastern Washington and other 
regions that were stuck with, you know, the impact of a policy 
that allows predatory practices to occur. Whether intended or 
not, I don't know, but it allowed it.
    So I will have more questions, but I am happy to have any 
answers that you might want to express to justify what you did 
and why you did it.
    But I am a hard sell on this one. I think you made a huge 
mistake, and it hurt my own people. It hurt the wheat industry, 
and frankly, it hurts the program and it hurts the Department.
    So that is my little speech. But I am serious about it. It 
really bothers me. I am really irritated by it, and I am going 
to follow it up vigorously. So if you have a response, I would 
be happy to hear it.
    Dr. Penn. Well, I would just say, Congressman, that we do 
know your feelings on this, we know how strongly you feel about 
it. You and I have discussed this. The IG is conducting an 
investigation, and so I think with that, rather than rehash it, 
I will just leave it there, but I do appreciate your 
sentiments.
    Mr. Nethercutt. Thank you.
    Mr. Bonilla. Mr. Goode.

                     LIVESTOCK COMPENSATION PROGRAM

    Mr. Goode. Thank you, Mr. Chairman.
    Dr. Penn, Mr. Little, I have got a question, I guess 
directed best to Mr. Little, on the Livestock Compensation 
Program which was included in the omnibus appropriations 
package.
    The sign-up date is April 1 for all those that didn't make 
the September 9th cutoff date?
    Mr. Little. Yes, sir.
    Mr. Goode. Let me ask you this: What about livestock 
producers that sold their livestock, say, in November or 
December? They would still be eligible to go back and pick that 
up?
    Mr. Little. We are still developing the final procedures, 
but if they sold them in November--the original date that we 
were looking at was back in June, I believe. As long as they 
owned the livestock between 90 days before or 90 days after 
June 1 of 2002, they would be eligible, so if they sold them in 
November, they should be covered.
    Mr. Goode. Is that fixed, or is that what you are looking 
at?
    Mr. Little. That would be what we are still looking at, 
yes. At least I don't know of anything----
    Mr. Goode [continuing]. That is going to change that?
    Mr. Little. Yes, sir.
    Mr. Goode. So if they had them on August the 1st or August 
15th, they would still be okay?
    Mr. Little. Yes. They had to own the cows anywhere between 
90 days before or 90 days after June 1, 2002.

                      ADVERSE EFFECTIVE WAGE RATE

    Mr. Goode. Let me ask--and I don't know whether you--I 
guess you are on this too.
    You know, the H2A workers get an adverse effective wage 
rate. Those are the persons from mainly non-U.S. areas, and 
their wage rate--it is adverse. It is not minimum; it is not 
prevailing. And the Department of Labor, of course, determines 
prevailing wage rate, and the Department of Labor I believe 
issues what the adverse effective wage rate is. And this is 
what food producers and a number of other agricultural 
producers pay to the migrant labor.
    In my area, wages aren't going up; they are coming down--a 
tremendous amount of layoffs in manufacturing. But the adverse 
effective wage rate for--I will just pick a peach orchardist 
that called me yesterday about it--continues to go up. And the 
survey, it is my understanding, is done by the Department of 
Agriculture. I am not sure it is done by the FSA, but y'all do 
the survey, and then you give the information to the Department 
of Labor.
    I want to know if you could tell me why the adverse 
effective wage rate--and it is a pretty sharp increase, and it 
is a huge impact on the apple growers and the peach growers and 
a number of other agricultural commodities in my area. I would 
just like to--I can't understand why the persons from the USDA, 
when they are calling around getting information for the 
survey, why it keeps going up when the wages and everything 
else aren't going up.
    Mr. Little. First off, I don't believe it is the Farm 
Service Agency that does the survey. It is probably the ERS or 
NASS. If I were to give you a reason why the rate is going up, 
it would only be an opinion. It could be because it is 
difficult to get temporary labor, but that is only my opinion.
    Mr. Goode. Thank you, Mr. Chairman.
    Mr. Bonilla. Thank you, Mr. Goode.
    Mr. LaHood.

                       FSA COUNTY OFFICE STAFFING

    Mr. LaHood. Mr. Little, if you have already answered this, 
I will just--you don't need to answer it.
    What is the status of putting people in the field to help 
with the paperwork that needs to be filed by April 1st?
    Mr. Little. Dr. Penn did refer to that earlier. The 2002 
farm bill did provide additional staffing, so beginning in the 
July time frame, we brought on about 1,000 new staff-years for 
the remainder of 2002 and all of this fiscal year. Then the 
2003 appropriations provided an additional $70 million, with 
which we will hire additional temporary staffing.
    You know, temporary staffing is not the best fix, because 
it only provides additional staff to do the administrative 
work, but it does free up time for the people that have the 
technical knowledge to conduct the sign-up.
    We are getting as much temporary help as we can out there, 
we are working overtime, we have provided additional personal 
computers for the additional staffing. We are shifting people 
from counties that aren't heavily booked to those counties that 
are. So we are doing everything we can to provide the staff 
that is necessary.
    Mr. LaHood. So you believe that there is enough staff out 
there to accommodate the folks that will be coming in the 
offices between now and April 1st?
    Mr. Little. We believe we've got enough staff overall. We 
are thinking there might be 200 counties nationwide that will 
have difficulty getting everybody in by April 1, but as long as 
the producers let us know that they still need to come in, we 
are putting them on a register that will allow them to go in 
after April 1. So no farmers that have an intention to update 
their bases and yields are going to go without.

                      WAREHOUSE ACT IMPLEMENTATION

    Mr. LaHood. Well, which one of you--I don't know if it is 
you, Dr. Penn, or maybe somebody else at the table--has the 
responsibility for the Warehouse Act implementation?
    Dr. Penn. I guess I am the culprit there.
    Mr. LaHood. I notice from your testimony that the issue of 
preemption is something that--whether you are proposing it, it 
is a done deal or what. But, you know, there are a lot of 
States that are opposed to that, including Illinois, Iowa, 
Indiana.
    Can you address that? Is that a done deal, or is that 
something you are proposing?
    Dr. Penn. It was something that we proposed to do, but in 
the 2003 Appropriations Act, the Congress installed a 180-day 
moratorium, so, in effect, all of our activity is now 
prohibited.
    I think, Congressman, this was one of those efforts to do 
good that got widely misunderstood. The case law associated 
with the Warehouse Act has been such that the Federal 
preemption issue, our lawyers thought, was well established. 
When the Congress revised the U.S. Warehouse Act and we 
published the final regulations, we noted that in the 
regulations. Then we tried to provide additional coverage for 
producers. And we did that in our proposal virtually all of the 
States except a very few, including the ones that you 
mentioned--Illinois, Indiana, Iowa still have programs that 
would provide more producer protection than what we would do. 
For most of the States in this country, our proposal would have 
provided additional protection for producers, not only those 
who store grain in the warehouse, but also those who sell grain 
to the warehouses. So it was an effort to try to improve 
producer protection, and we thought those States that provide 
more than what the Federal Government was going to do could 
still do that. In fact, we think that is the case.
    We worked long and hard with the National Association of 
State Departments of Agriculture, we worked with the warehouse 
group, we worked with the National Grain and Feed Association, 
we made a good-faith effort to try to deal with all the 
stakeholders to work out a program that would be satisfactory 
to all, but we didn't succeed, and so the Congress has imposed 
the moratorium on our activities.
    Mr. LaHood. Well, I assume you are going to be working on 
this between now and the time that we sort of established in 
the bill that we passed a month or so ago, to make some kind of 
a policy, right?
    Dr. Penn. Well, we have had extensive negotiations with all 
of those groups, as I indicated, and we are still quite willing 
to sit down and see what could be put together that would be 
satisfactory to everybody, We are willing to visit with all of 
the stakeholders during the time that is allotted to us.
    Mr. LaHood. Would you be willing to consider exempting 
those States that have more protection than the States that--
well, for example, would you be willing to exempt Iowa, 
Illinois and Indiana because they provide more protection and 
actually make that a part of the policy?
    Mr. Penn. Yes, sir, it is my understanding that they are 
exempt, that they are quite free to provide more protection 
than the Federal Government was providing. But I think in a 
large number of States, we were simply increasing the amount of 
protection that was available to producers. Our sole intent in 
this was to increase the protection that was available to the 
farmers who were producing the grain.

                           E-FILING OF FORMS

    Mr. LaHood. Could somebody tell me what the progress of the 
e-file bill is? E-filing that allows for producers to be in 
their farmhouse and use their computer to file forms that 
ordinarily they would have to file in the offices?
    Dr. Penn. Mr. Little?
    Mr. Little. The e-file legislation did require that the 
service center agencies--Farm Service Agency, Rural Development 
and NRCS--provide farmers the capability to file from their 
homes or their place of business as of July of 2002, and we 
have got substantially all of our forms on line to where they 
can fill them out from home.
    We also implemented a system for electronic loan deficiency 
payments on a pilot basis which we are expanding this fall. So 
we are basically compliant. We are not as far as we would like 
to be because the forms are not totally integrated with our 
systems, but as we grow and we continue to move on to the 
common computing environment, those forms that they fill out at 
home will automatically tie into our systems. Just this past 
week we also implemented e-filing for one of our farm loan 
programs. Producers are able to file their loan applications on 
line as well. So we are moving ahead. I will be honest, we are 
not as far ahead as I would like to be, but I think with the 
limited resources that we have and the time that it has taken, 
I think we are doing fairly well.
    Mr. LaHood. Thank you, Mr. Chairman.
    Mr. Bonilla. Thank you, Mr. LaHood.
    We will now go to our second round of questioning. Whatever 
questions I have, J.B., I will submit for the record. We may 
have a vote. If that happens, I am going to go and vote and you 
can continue.
    Ms. Kaptur.

                           CCC SALES TO IRAQ

    Ms. Kaptur. Mr. Secretary, you responded to my first round 
of questioning in terms of your willingness to provide data 
from the Department on Iraq. When you made the comment at least 
in which you inferred that it is very old information and you 
would not go back to the Carter administration, let me just 
make the observation that I consider this Iraq issue obviously 
paramount and I don't consider it to be old. I consider it to 
be current.
    I just wish to make these two statements before moving to 
another topic. In the year of 1988, Iraq received over $1 
billion in GSM-102 guarantees, making it the second largest 
recipient of GSM credit guarantees during that year.
    Also, at that time there was a serious disagreement between 
the Congress, the legislative branch, and the executive branch 
regarding policy--policy toward Iraq. A Senate bill in April 
1990 was introduced stating that no assistance, grant, sale, 
loan, lease, credit guarantee or insurance may be furnished to 
Iraq unless the President certifies that Iraq has opened its 
nuclear, chemical and biological sites to international 
inspection. A similar bill was introduced in the House, and yet 
in June 1990 the Assistant Secretary of State for Near Eastern 
and South Asian Affairs testified before the Senate Foreign 
Relations Committee that the administration--the then Bush-
Quayle administration--opposed Congressionally authorized 
sanctions against Iraq, saying that they would not achieve U.S. 
goals in Iraq, that other nations would not join the embargo, 
that the administration's policy is to avoid using agricultural 
trade to pursue foreign policy goals, and sanctions would 
increase the U.S. trade foreign deficit.
    I would suggest that the U.S. policy in terms of 
international relations flows not in days but in decades and 
that part of the quandary we face today is because of the 
relationship between the financing of sales to Iraq and signals 
that were given to that government which remain problematic 
today. So I just wanted to place that on the record and again 
appreciate your cooperation.
    Mr. Bonilla. Ms. Kaptur, as I said earlier, you can 
continue as I go vote and when you feel that you need to leave, 
go ahead and we will take a short break until we return, J.B.

                                BIOFUELS

    Ms. Kaptur. Thanks, Mr. Chairman. I wanted to move to the 
subject of biofuels, a real new market for agriculture in 
America. We discussed the experience of biofuels last year in 
your appearance before our subcommittee, and energy 
independence being a paramount goal for our Nation as gasoline 
prices go over $2 a gallon in America, your budget proposes to 
reduce the CCC funding in support of the biofuels program by 
$15 million, and I am asking you in this round why are you 
doing this, particularly in view of the fact that even in terms 
of the President's proposal at the Department of Energy, the 
so-called money for the hydrogen fuel cell comes out of the 
biomass accounts at the Department of Energy? So we are 
reducing our commitment to biofuels, not just at Department of 
Agriculture but at the Department of Energy.
    Dr. Penn. I am not familiar with that specific reduction, 
so, Congresswoman, if I could, I would like to ask Steve 
Dewhurst if he could elaborate on that.
    Mr. Dewhurst. You are correct. The program has been 
authorized at $150 million a year. I do think it is important 
to know that if you look at the program over the past couple of 
years, in 2001 the actual use of the program was about $41 
million. If you look at 2002, the actual use was $78 million. 
In the 2003 act that Congress just passed the program is at 
$115 million. And in the President's budget it is at $100 
million. So you are absolutely correct. The $100 million is 
lower than the authorization, but it is higher than the actual 
use that we have had in the program in 2001 and 2002.
    Ms. Kaptur. I thank you very much for that clarification, 
Mr. Dewhurst. I think part of the problem is the lack of real 
commitment by the Department of Agriculture to see itself as a 
player in the biofuels industry in this country.
    Mr. Secretary, you couldn't be from a more important State 
and a more important region of the country. I have a really 
great map here that shows where capacity is being developed, 
and it just seems to me that the Department of Agriculture 
should be in the lead. And frankly, when I look at a $60 
billion trade deficit in petroleum, as I said to the Secretary 
last week, it is very clear where the target is. Every single 
person that is fortunate to be appointed in the Department 
should be thinking about this new industry and ways to 
encourage its development here at home.
    I wish that I personally could buy ethanol in my district 
because I can go up to Detroit and buy a Ford Taurus today and 
by the time I get it back to Toledo it is out of fuel. I cannot 
buy ethanol in my State. Well, there are two pumps in Columbus 
but I am not going to drive 2\1/2\ hours to fill the tank and 
drive another 2\1/2\ hours back to Toledo.
    Can't the Department be more creative in helping this 
industry come on line and help it be farmer owned? What is the 
problem?
    Dr. Penn. Let me respond by saying that I think, this one 
budget entry aside, the Department is very favorably inclined 
to renewable fuels. And look at the ethanol industry. This is 
an infant industry, maybe 10 years old, that today is going to 
use 10 percent of the entire corn crop, and the Department I 
think has been very supportive in the development of that 
industry.
    We are also trying to be very supportive in all of the 
renewable fuels areas, not only in this mission area, but also 
in the Rural Development area and in the Office of the Chief 
Economist. There is a lot of activity concerning renewable 
fuels and how best to support those, and the Department was a 
big participant in the energy bill that the Congress considered 
last year and did not complete action on.
    So I think that it is not quite fair to say that we are not 
interested. We are always seeking new uses for products, new 
markets for America's farmers, and so this is an area in which 
I certainly agree with you we have a lot of opportunity to do 
more.
    Ms. Kaptur. Mr. Penn, I don't know what your request was to 
OMB, but I can tell you that in the cross-cut budget analysis 
that we received from the Department of Agriculture indeed your 
budget for 2004 proposes a $70 million cut in support for 
biofuels development, $40 million alone--over $40 million out 
of your value-added research accounts.
    I can also tell you that the vehicular use within the 
Department of Agriculture, other than Beltsville, using 
biofueled vehicles is abysmal. And the reductions in CCC, I 
wish I was a prosecutor here. I could say that your rhetoric 
does not match the reality, and maybe it is OMB that is the 
problem. But the reason I am pleading with you, you set the 
policy. Most of the development that has gone on around the 
country in biofuels has been without your help. I see farmers 
in my State struggling to finance the development of ethanol 
and biodiesel production. There is no help from the Department 
of Agriculture. Actually it is an embarrassment. And you are 
right in saying it is an infant industry, and because it is an 
infant industry the Seven Sisters can come down and push down 
the prices in this country.
    I have a bill modeled on the rural telephone and rural 
electric experiences, for a rural biofuel industry in this 
country. I would love the Department's support. We have to 
provide the platform to birth up this industry, but I don't see 
the muscle from the Department of Agriculture behind this. We 
have a $60 billion hole in terms of imports, yet we have a 
budget from your Department that cuts support to biofuels.
    I am really pleading with you for the sake of the country, 
and look what is happening to us. Whether it is Venezuela, 
whether it is Africa, whether it is Iraq or Saudi Arabia, we 
are becoming more and more dependent. Our military is extended 
all over the globe and why are we there? What is the main 
source of income these places are getting from us? Buying 
petroleum.
    So this is, as I said to the Secretary, this is our 
generation, our time, our watch, and it will never come back to 
us again. Your Department is critical. I would love during your 
tenure to be able to have you help come to my district and open 
up some biodiesel and ethanol pumps and to in your value-added 
accounts find the most Btu's per ton of biomass that we can 
create in this country and to have that industry flourish and 
to provide a financing platform not just for the big muscle 
guys like ADM but for the farmers who are struggling across 
this country to make income from the market, not from their 
mailbox. We really need your help. You are on the executive 
side, I am not, and I would just plead with you to consider 
what more can be done at USDA and to bring together a team.
    The Secretary's answer to me last week on this was: 
Congresswoman, you know the regulatory side; MTBE, for example, 
is helping the demand side. I am asking you also to think about 
the supply side and how we jack up the supply side and do not 
wait just for EPA and others to solve this problem, but to be 
aggressive. Look at the power you have.
    America needs your engagement on this beyond where you see 
yourself today. Can you do more? Can you assemble a team there 
at USDA of your top experts and really look at bioenergy as a 
top priority for the Department?
    Dr. Penn. Well, again let me just say in response that I 
think we share your enthusiasm for renewable fuels. We share 
your enthusiasm for new markets for the products from the 
farms, and I would argue that we are making a big effort. When 
you look at all of the activities across the Department that 
are not particularly visible in this budget, such as the 
research effort in the Agricultural Research Service and 
activities in Rural Development and other parts of the 
Department, we are making a big effort to be supportive of 
renewable fuels and all of these new markets that may be 
available for farmers.
    Again, I say we have been very supportive of the ethanol 
market and that is one which has now started to mature. A 
billion bushels of corn this year, over 10 percent of the 
entire crop that was produced in 2002, will be used as feed 
stock for ethanol, and so we are enthusiastic about renewable 
fuels.
    Ms. Kaptur. Mr. Secretary, do you have a special bioenergy 
working group at top levels, at your level of USDA?
    Dr. Penn. Not that I am aware of.
    Ms. Kaptur. If I could plead with you, connect the dots in 
your Department and with a $70 million reduction in the 
Department's commitment to biofuels which I hope that this 
Congress can fix, you should not have a reduction in this 
important area. I can't make you do this, I guess, but I would 
encourage you in the strongest way possible to use the power of 
your Department to help America dig herself out of the hole 
that she is in and remove the chief strategic vulnerability 
that we have from a military standpoint and an economic 
standpoint.
    I will say on the record the last four recessions, 
including the one that we are in today, were caused by rising 
oil prices. And so America better wake up. And our farmers--
Keith Collins told us last week 50 cents of every farm dollar 
is Federal subsidy. Why can't our farmers farm the market? We 
need to look at supply side and we need to help our country, 
and I think you are a central player and you need to see it 
that way and be aggressive.
    Now I am going to give you permission to take a break 
because I have to go vote, and I thank you very much for this 
round of questioning. Appreciate it.
    Dr. Penn. Thank you.
    [Recess.]
    Mr. Bonilla. J.B., if you are ready we will continue, and 
thank you for bearing with us to break for the vote. I now 
yield to Mr. Nethercutt.

                  RELEASE OF WHEAT UNDER EMERSON TRUST

    Mr. Nethercutt. Thank you, Mr. Chairman. Dr. Penn, did you 
analyze or anybody in your shop analyze the market impacts that 
could occur by the release of this wheat in July and September 
and I think December, if I am not mistaken? Did you do any 
analysis in terms of the market impact?
    Dr. Penn. I can't recall all of the particulars and I can't 
recall the exact timing, but I believe that release was during 
the period when we had a run-up in wheat prices. So if there 
was ever a good time to release wheat from the reserve, I think 
that was probably it. There was an analysis. I can't recall the 
details, but we always look at what the market impacts of this 
are going to be because we know it is a very political issue. 
Once we release grain from any of these reserves, we watch 
that.
    Mr. Nethercutt. I am not talking so much about the decision 
to release, but the decision to release like you did that is 
allowing this predatory practice to occur. Wipe out one small 
reserve in favor of a third party buyer who has reserves of 
their own, essentially knocking out the competition. That is 
the negative effect that it appears to me that it had, and I am 
wondering if you did any analysis in the field. Do you go out 
to the field offices frequently?
    Dr. Penn. Yes, I do.
    Dr. Nethercutt. How often?
    Mr. Penn. Oh, I don't know. I can't tell you precisely. I 
would have to look at my travel schedule. I do go to the field 
offices and the producer meetings. I spend a lot of time with 
the farmers. My door is always open to anybody who wants to see 
me. I don't think accessibility or involvement is an issue with 
me.
    Mr. Nethercutt. I am not suggesting that it is. I just want 
to understand what analysis in the field, in the market, in the 
industry you might have engaged in before making the decision 
to depart from prior practices of a little from here, a little 
from here, limitations on purchasing--or putting that release 
of those wheat bushels out in the market.
    Dr. Penn. Congressman, the situation was analyzed. And 
again it has been such a long time ago and there have been so 
many other things that I can't recall the particulars. But as 
you know, it did involve the release of required wheat for 
particular users; certain types of wheat were required. Those 
were stored in particular parts of the country. There was an 
examination of all of those details and it wasn't just a 
question of releasing wheat, but it was releasing wheat by 
class, and the differential market impacts were analyzed.
    I do not recall the details. I wish I could. But I assume 
the IG will look at all of that in the course of their 
investigation.
    Mr. Nethercutt. I think part of the problem in the process 
that is engaged in with respect to these decisions is that 
there is a lack of information. So I have to assume that if 
there is no evidence of analysis, or if there is no evidence of 
bids that were rejected, that they were not done or that they 
were not--that the records were not kept for some reason, which 
leads me to the question: Do you see any changes necessary with 
respect to future releases of CCC-owned wheat?
    Dr. Penn. Well, as I indicated in response to another 
earlier question, we have had several sales of wheat from the 
Emerson Trust. The one that you are most concerned about was 
the very first one, and I think the policy was modified for the 
subsequent sales to go to a broader area.
    Again, I think there was a particular need for a particular 
class of wheat which I think caused the first sale to be 
concentrated in the Pacific Northwest. I think as the 
subsequent releases were made that other classes of wheat were 
required and so the geographic area was much broader. So the 
removal from the warehouses was more widely dispersed in the 
other releases than it was perhaps in the first one.
    Mr. Nethercutt. That does not answer my question. There was 
hard red and soft white, and you hit us hard the second time 
just like you hit us hard the first time and you hit us hard 
the third time, and there was not any great need with respect 
to any international Emerson requirements in the second sale. 
As a result of what the Department has done, we have got now 
the government-owned wheat concentrated in five big 
international companies. Five. That is where the concentration 
is. So we have essentially, by virtue of the action of the 
Department in connection with this matter, limited those who 
occupy a place in the Emerson Trust reserve. I mean, you have 
got it concentrated in five international companies, big guys 
who had adequate reserves, and I am just trying to get a sense 
of whether you think that was the result you expected.
    Do you think there ought to be any different procedures 
used next time? Is this 20 percent limitation a sensible one or 
is it, based on all that has occurred, you still don't want to 
do it?
    I would just finally--I know my time is up--I would urge 
you not to do this again if you are contemplating doing it; 
that is, additional similar sales. I would be stunned if you 
did--you, the Department--because I think there ought to be 
this limitation that does not have such a negative impact on 
rural America and small grain elevators. Do you see what I am 
driving at?
    Dr. Penn. I understand your concern.
    Mr. Nethercutt. Do you see policy changes necessary?
    Dr. Penn. Well, we are reviewing the situation. As I said, 
we have been aware of your concern for some time and we are 
aware of the nature of the problem that you have pointed out to 
us and we are reviewing the situation.
    Mr. Nethercutt. Well, is it your opinion as you sit here 
today that maybe going back to the prior practices of limiting 
that which comes out of any elevator to say 20 percent is a 
sensible practice? A fair practice?
    Dr. Penn. I think it may well be. But the point is that 
this grain is stored at the behest of the government and it is 
stored for a purpose and at some point the grain does have to 
be released. I mean that is the purpose for having it stored, 
of course.
    Mr. Nethercutt. I understand.
    Dr. Penn. And I would note that a lot of elevators are 
never happy when any grain is removed from their premises. 
Storing grain for the government is a good practice, a good 
business, but we do have to use it from time to time.
    Mr. Nethercutt. I understand, but yet when you come along 
and you wipe out a small elevator by virtue of the practice and 
policy that is in place, contrary to prior practice and policy, 
you bet they are unhappy. I have got some real unhappy people 
in my district to the tune of about a million bucks. And what 
that means is that in the price depression that occurs as a 
result of, in part, I am not blaming you for all of it, but in 
part for the actions of the government, we have got lower 
prices now for farmers. That has a corresponding negative 
impact on small towns, and sometimes the only way to keep the 
economy going is to have a little bit of grain in the small 
elevator rather than the big guy down on the river, because 
they do not worry so much about the impact like the small guys 
do. And you allow the predatory practices to occur that I think 
occurred in this case. Big ones going after small ones because 
they wipe out the competition.
    So I can't imagine that you would not say this policy 
should be formalized or changed from the last 2 years of this 
administration. And I love this administration. Don't get me 
wrong. I am very proud of this administration; however, it is 
not beneath me to be critical when my own people are affected 
and affected negatively. So I would hope that your testimony 
would be that it was not the greatest judgment that you made 
three separate times, because it had this negative impact on 
the market. It hurts rural America and it really advantages big 
versus little.
    So is there any reason why you would say that policy change 
is not necessary?
    Dr. Penn. Well, Congressman, let me respond again and say 
that like most issues there are two sides to the issue, and 
there are some other considerations, and I feel inadequate 
today to respond to you, to tell you what the other side of the 
issue is because I simply am not familiar enough with it to do 
that. But there are good arguments for doing what was done. As 
I said before, we do not think we are infallible, and we are 
certainly willing to review and reevaluate the policy, and if 
it was a boneheaded decision, as you suggest, then we certainly 
will not do it again.
    Mr. Nethercutt. And I appreciate that, and I would hope 
not. I guess my sense is that there may be good arguments, but 
I have no clue what they might be, and at this point, your 
testimony is you do not either, although they might be out 
there?
    Dr. Penn. No, no, that is not what I am saying. There were 
good arguments and it was a considered judgment. I could give 
you those arguments, and I would be happy to do that. I would 
be happy to follow up with discussion with you personally and I 
would be happy to provide material for the record, whatever you 
think might be most appropriate. But this was an issue that was 
considered and as I said before, there are other 
considerations.
    Mr. Nethercutt. I do not want to beat this horse until it 
is completely dead, but I do refer you back to the Farm Service 
Agency mission: Equitable administration, efficient 
administration of farm commodity programs and to ensure the 
well-being of American agriculture. I have a lot of farmers out 
my way and a lot of elevator people who would say this is not 
fair. My own State legislature this past week passed a 
resolution condemning, criticizing, constructively suggesting 
that what happened in 2002 to present was so detrimental to the 
ag industry in our region, and I would argue some parts of the 
rest of the country, that it was worthy of a rather unanimous 
vote out in my State legislature. So it is getting the 
attention of a lot of people and they are very concerned about 
the policy of the administration.
    I understand I might have a chance for one more question, 
Mr. Chairman.
    Mr. Bonilla. Go right ahead, Mr. Nethercutt.

                       FUND FOR DEMOCRACY PROJECT

    Mr. Nethercutt. On another matter, my staff recently met 
with some representatives of the Fund for Democracy and 
Development. I understand there is some kind of a dispute 
between the Department and the Fund about some project in 
Russia, and I would request that the Department make a good 
faith effort to reach some sort of a compromise so that the 
money can be used for something worthwhile rather than the 
current situation where I understand there is money sitting 
idle, and I can provide with you more details on that as well 
if you want or later with a staff member to get some details. 
But I would just put it on your radar screen, if you do not 
mind; take a look and see with respect to this particular Fund 
issue.
    Dr. Penn. We are aware. Thank you.
    Mr. Nethercutt. Mr. Chairman, I am finished.
    Mr. Bonilla. Thank you, Mr. Nethercutt. We again have some 
members who are attending other hearings. We feel like we have 
allowed ample time for them to return from the last vote. Mr. 
Latham was interested in submitting questions for the record, 
and I understand Ms. Kaptur has some further questions, but we 
cannot locate her at this time so with that in mind we suspect 
that her questions will be submitted for the record, and we 
stand adjourned until 9:30 tomorrow morning and we appreciate 
your appearance here today.
    Thank you.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
        
                                         Wednesday, March 12, 2003.

   U.S. DEPARTMENT OF AGRICULTURE FOOD SAFETY AND INSPECTION SERVICE

                               WITNESSES

ELSA A. MURANO, UNDER SECRETARY FOR FOOD SAFETY
GARRY L. McKEE, ADMINISTRATOR, FOOD SAFETY AND INSPECTION SERVICE
STEPHEN DEWHURST, BUDGET OFFICER, DEPARTMENT OF AGRICULTURE

                       Introduction of Witnesses

    Mr. Latham [presiding]. Good morning, everyone. I am 
Congressman Tom Latham; I am not Henry Bonilla. The Chairman is 
in a caucus conference this morning; I believe the Democrats 
also have one, so there may be fewer members initially than 
what we would expect normally. But welcome, everyone.
    Today the committee takes up the very serious issue of food 
safety, and the administration's fiscal year 2004 budget 
request for the Food Safety and Inspection Service. I am 
delighted to have before us today Dr. Elsa Murano, the Under 
Secretary for Food Safety; Dr. Garry McKee, the Administrator 
of FSIS, and our budget guru, Mr. Steve Dewhurst. Dr. Murano 
appeared before the committee last year, but this is Dr. 
McKee's first time before this group. And we extend a warm 
welcome to you and to the colleagues from the agencies that are 
with you here today.
    We certainly face some hard work in ensuring the safety of 
foods against both intentional and unintentional contamination. 
Parts of your agency's mission have not changed since the 
start, yet in other areas, you face brand-new challenges. That 
certainly creates some hard decisions on priorities and 
budgeting. On behalf of this committee, I am proud to say that 
last year we fully funded the Agency's budget request. We share 
your commitment to keeping our food supply safe.
    With the team before us, we can see that the administration 
certainly has focused on science, expertise, and food safety, 
and on the need to manage resources well. The job that you and 
your folks in the field do is extremely important, and I hope 
all of the FSIS employees realize that we appreciate their 
dedication and fine work.
    Before we hear from our panelists, I would turn to my 
colleague, the ranking member from Ohio, for any opening 
remarks she may have.
    Ms. Kaptur. Thank you, Mr. Chairman, very much. Dr. Murano, 
Dr. McKee, we welcome you this morning, and obviously Mr. 
Dewhurst as well back again before our subcommittee.
    Dr. Murano, the issues that you deal with in food safety 
are obviously on the minds of the American people, and they 
meet the results of your work and our work every day when they 
shop in the grocery stores and buy product in our restaurants. 
We are very interested in your testimony this morning because 
of the larger number of food-borne illnesses that are affecting 
the American people. And with recalls like Wampler and ConAgra, 
the volumes involved are at historic highs.
    Just yesterday, indeed in Ohio, there was another recall 
from American Food Groups, I am sure you are aware of this, 
106,000 pounds of fresh and frozen ground beef products. I 
think one of the problems is that the time it takes, if you do 
discover it to the time of recall, seems to be a big lag. Then, 
as I asked the Secretary when she was here, the issue of 
recovery, recall doesn't mean anything. You get some 
information out there, but most of the product remains in the 
stores or wherever it might be for eventual consumption. The 
agency has had a drop of 35 percent in enforcement actions 
since the year 2000. The General Accounting Office has 
expressed some concerns about that in reports that have been 
given to us.
    So, we are very interested in the record levels of funding 
that Congress has been providing, but the follow-through has a 
lot to be desired. So we are really happy that you are here 
this morning. We want to hear about what you are doing within 
USDA in order to make our food system not just the best it has 
ever been, but even better than it has ever been.
    Thank you both so very much for being here today.
    Mr. Latham. Thank you, Ms. Kaptur.
    And on a personal level, thank you for dropping by last 
week for a visit. You may proceed with your opening statements.

                           Opening Statement

    Ms. Murano. Thank you, Mr. Chairman.
    I am Dr. Elsa Murano, Under Secretary for Food Safety. With 
me today are Dr. Merle Pierson, Deputy Under Secretary for Food 
Safety, Dr. Garry McKee, Administrator of the Food Safety and 
Inspection Service, and other FSIS representatives.
    The safety of our food supply is one of the most important 
issues we face not only at USDA but as a Nation. There is 
really nothing more personal or vital to all of us than the 
food we provide to our families. We have the best food 
production and processing systems in the world, providing 
consumers with the most abundant and safest food supply. 
However, last year was a testament that maintaining the safety 
of our food is an on going challenge. We faced two outbreaks, 
one caused by Listeria monocytogenes, another caused by E. coli 
O157:H7. According to the Centers for Disease Control and 
Prevention, CDC, over the past decade, there has been a major 
Listeria outbreak associated with ready-to-eat products in the 
United States every two to four years, and E. coli O157:H7, due 
to consumption of undercooked hamburgers are almost an annual 
occurrence.
    Despite these challenges, we have made significant 
improvements to our food safety program. We believe that the 
Pathogen Reduction/Hazard Analysis and Critical Control Point 
(HACCP) Rule in 1996 has made food safer. In May of 2002, the 
CDC reported that the rate of foodborne illnesses across the 
board has decreased 21 percent.
    I want to review some of the achievements we have made in 
improving food safety before I describe our plan to combat 
these outbreaks of foodborne illness.
    Last year when I testified before this Subcommittee, I 
outlined to you five goals that I intended to pursue in the 
coming year to ensure that we are proactive in protecting 
public health. We have pursued these goals with an aggressive 
vigor, and I am proud to report that much has been accomplished 
over the last year in our pursuit of these goals to ensure the 
safety of the Nation's food supply.
    The first goal is to ensure policy decisions are based on 
science. My background as a researcher in food safety has shown 
me the importance of utilizing science in formulating 
regulatory policy. Risk assessments are scientifically-based 
processes of estimating the likelihood of exposure to a hazard 
and the resulting public health impact. They are the best way 
to measure pervasiveness of pathogens, and they provide a solid 
foundation from which we base policies on science. The benefits 
of using them can be seen in our initiatives on E. coli O157:H7 
and Listeria monocytogenes last year.
    We learned from our risk assessment on E. coli O157:H7 that 
the pathogen was not the proverbial needle in a haystack that 
we once believed. On the contrary, it was much more prevalent 
than previously thought, which meant that we had to take a hard 
new look at our strategies to address its occurrence. We also 
learned that not all establishments were implementing HACCP 
systems that were effective for controlling E. coli O157:H7. 
Others were not correctly validating the interventions used to 
control the pathogen.
    Finally, we realized that simply focusing on grinding 
operations was not effective. Therefore, in order to be 
efficient, we also needed to focus on the production process, 
the slaughter process and trimmings as contributors to the 
problem.
    In December, we issued an interim directive to our 
inspectors to make sure that establishments producing ready-to-
eat meat and poultry products are preventing Listeria 
monocytogenes contamination. This directive was absolutely 
necessary, given the gravity of the northeastern Listeriosis 
outbreak in the fall.
    Furthermore, we recently completed a draft risk assessment 
on Listeria, which evaluates all the factors that potentially 
contribute to the overall risk to public health. The 
information developed during the risk assessment process is 
critical to exploring a variety of risk management scenarios, 
and we plan to examine different combinations of testing and 
intervention that present possibilities for future 
policymaking. We will consult the risk assessment as we work on 
a final rule to reduce Listeria in processing plants that are 
producing ready-to-eat meat and poultry products, moving as 
rapidly as we can to develop this final rule while using sound 
science as a basis.
    Our second goal is to improve the management and 
effectiveness of FSIS programs. In order to fulfill this goal, 
we needed a leader to head FSIS through one of its most 
profound transformations toward a public health mission. I am 
truly proud to say I have found this leader in Dr. Garry McKee, 
who started on September 1st, 2002. In this very short time, he 
has made a very positive impression on the agency's employees 
and constituents alike. Dr. McKee is a committed public health 
professional with over 30 years of public health experience, 
and a proven leader in managing public health programs and 
personnel. With his leadership, we are already seeing increased 
employee accountability, improved communication flow, and 
increased efficiency in the agency's programs. As a public 
health agency, lives depend on our programs and operations to 
work as a finely-tuned machine.
    In addition to selecting Dr. McKee as administrator, I 
started a reorganization of FSIS last year so that the agency 
can meet its public health and food safety goals better. The 
purpose for this reorganization is to increase accountability, 
enhance communication, and improve overall efficiency. This 
reorganization will also ensure that the principles of public 
health and food safety cut across the entire spectrum of FSIS's 
work. We have added four assistant administrators for Food 
Security; Program Evaluation, Enforcement and Review; Outreach 
and External Affairs; and International Coordination to 
strengthen the working relationship between our various 
offices.
    The third goal is to improve coordination of food safety 
activities with other public health agencies. I am a strong 
believer that, by working together, all the agencies with 
public health responsibilities can best utilize our resources 
to ensure a safe food supply. An example of our progress in 
this area was an unprecedented investigation that we 
coordinated with the CDC and other State and local public 
health agencies on the northeastern Listeriosis outbreak last 
fall.
    Another example is our very close working relationship with 
the Food and Drug Administration Commissioner, Dr. Mark 
McClellan. He and I have established regular meetings to 
increase our interaction on issues of mutual concern, and to 
discuss policy positions of common interest.
    States are also an integral part of the U.S. food safety 
system. We are continuing to take steps to improve Federal/
State cooperation on State meat and poultry inspection 
programs. For example, we are working in close cooperation with 
State program directors on the National criteria for meat and 
poultry inspection programs, a project to update, clarify, and 
simplify requirements for cooperative State meat and poultry 
inspection programs.
    Our fourth goal is to protect the food supply against 
intentional harm. Since the attacks on September 11, FSIS has 
strengthened coordination efforts to prevent, detect, and 
respond to food-related emergencies resulting from acts of 
terrorism, and ensure the safety of meat and poultry and egg 
products that come to us from other countries. With a strong 
food safety infrastructure already in place, FSIS has been able 
to focus on fortifying existing programs and improving lines of 
communication both internally and externally.
    In addition to reinspecting imported product, FSIS 
continually assesses foreign establishments to make sure their 
sanitation and inspection procedures are equivalent to those in 
the United States. We have also conducted a risk assessment to 
be used as a tool for determining the most vulnerable products, 
likely agents, and potential sites for deliberate adulteration 
of domestically produced meat, poultry, and egg products.
    We are also developing a threat assessment of the import 
system to identify points in the production of imported 
products where biological, chemical, and radiological 
contaminants could be intentionally added to foods being 
brought into the United States.
    Finally, our fifth goal is to engage in proactive education 
programs. As we continue to examine emerging and existing food 
safety problems, it is important that we remember that reducing 
food-borne illness requires numerous interventions all along 
the farm-to-table continuum. We must consider all the 
strategies available to us, and education is one of them. That 
is why we continually look for the most cost effective ways to 
get the food safety message out to all food handlers from coast 
to coast.
    Because we have the same safety requirements for the U.S. 
meat and poultry produced for export and for products entering 
the United States, our efforts have a worldwide impact.
    Having safe food available to citizens around the world is 
vital to protecting global health. For this reason, we are 
fully committed to working with our international partners in 
ensuring a safe food supply worldwide.
    We lead the U.S. Office of the Codex Alimentarius 
Commission, and we are actively engaged in the activities of 
this Commission.
    We have made significant progress in achieving our five 
goals on both domestic and international levels. I am very 
optimistic that we can make a difference in breaking the cycle 
of foodborne illness outbreaks through working with our 
partners all along the farm-to-table continuum.
    At this time, I would like to focus briefly on the 
initiatives of the fiscal year 2004 budget request, and 
indicate how this additional funding will help us reach our 
goals.
    The $42 million increase in the FY 2004 budget to 
strengthen the FSIS food safety program encompasses $23.6 
million in increases to cover raises in employee salaries and 
benefits, the costs of inflation, and FSIS's support of State 
inspection programs.
    The other part of the budget increase covers $19.3 million 
in initiatives to fund the hiring of more food safety 
inspectors, provide specialized training for the inspection 
workforce, increase microbiological testing and sampling, 
strengthen foreign surveillance programs, and increase our 
public education efforts.
    Out of this additional funding, we are requesting $1.7 
million to include baseline studies on a variety of pathogens, 
which will allow us to collect data on the presence of 
microbial hazards. It is crucial for us to use this information 
in developing risk assessment models.
    We are also requesting $5.7 million to help us expand our 
in-depth HACCP training to all our veterinarians and 
inspectors. In addition, our budget requests $4.3 million to 
increase our workforce to 7,680 in-plant staff by adding 80 new 
positions, which are necessary to meet the demands of industry 
growth.
    Another request is $4.5 million to provide additional 
microbiologists, chemists, laboratory technicians, and other 
personnel to increase our ability to identify adulterants in 
meat, poultry, and egg products.
    Additionally, our budget includes $1.8 million to increase 
the number of foreign program auditors.
    And finally, our budget calls for an additional $1.5 
million for food safety education, to help us spread the 
important message of safe food handling and preparation.
    Mr. Chairman, I am committed not only to furthering our 
progress on our five goals to improve safety, but also to win 
this war on pathogens. I am truly optimistic that we can 
accomplish these goals from working with everyone who has a 
stake in the farm-to-table continuum, whether they are 
government, industry, consumer groups, or academia.
    This concludes my statement, Mr. Chairman. Thank you for 
the opportunity to testify before you on behalf of the Office 
for Food Safety. I would like to give a couple of minutes to 
Dr. Garry McKee, who would like to introduce himself to you.
    [The prepared statement of Dr. Elsa Murano follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
        
                           Opening Statement

    Mr. McKee. Thank you, Mr. Chairman, and members of the 
Subcommittee. I am pleased to have the opportunity to provide a 
statement on the current status of Food Safety and Inspection 
Service programs, and on the fiscal year 2004 budget request 
for food safety within the U.S. Department of Agriculture.
    I would like to take this opportunity to introduce myself, 
since this is my first time before the Subcommittee.
    I have been with FSIS for a little over six months now. 
Although I come to FSIS from the Wyoming Department of Health, 
I am a proud Oklahoman at heart. I graduated from the 
Southwestern Oklahoma State University and the University of 
Oklahoma, concentrating on microbiology and public health. 
Having been in the public health field for more than 30 years, 
I am very comfortable with the work and responsibilities of 
FSIS, and am pleased to have Dr. Murano as a partner in our war 
on pathogens.
    I have spent my entire career in this field, and I am 
devoted to administering FSIS under its protocols and 
scientific foundations. Public health is my number one 
priority. Thus, we are building FSIS into a recognized, 
credible, world-class public health agency that is a model for 
all other public health institutions.
    What does a world-class public health agency mean? Frankly, 
it means we need to be the experts in improving the safety of 
meat, poultry, and egg products for the American people. We 
must also ensure that our food supply is safe and secure from 
bioterrorist attacks, intentional tampering, or other forms of 
adulteration.
    While I believe that FSIS has made considerable progress 
towards these goals, more can be done to make this agency the 
top notch public health regulatory agency we envision it can 
be. The nearly 10,000 employees at FSIS are dedicated to 
achieving this vision.
    To fulfill this vision, there are three functions of a 
successful public health model that FSIS must implement.
    First, FSIS must assess public health problems using 
science, such as surveillance, data collection, monitoring, and 
forecasting trends.
    Second, FSIS must develop policies to reduce the risk of 
foodborne illness using science-based knowledge.
    Finally, FSIS must assure the public that we are a credible 
public health agency through enforcement of established 
statutory and regulatory responsibilities.
    While Dr. Murano has already provided an overview of how 
our budget request will help us carry out the first two 
functions, I would like to take a moment to focus on the third 
element of a successful public health model. I am deeply 
committed to all three of these functions, but I believe that 
an integral part of becoming a credible public health agency is 
to have a well-trained workforce capable of enforcing 
established statutory and regulatory requirements.
    Thus, the FY 2004 budget requests an increase of $5.7 
million to enhance the agency's workforce training capability, 
which is my number one priority. This will allow FSIS to retool 
and expand its existing training programs by incorporating a 
public health focus and integrating scientific and technical 
principles, including Hazard Analysis and Critical Control 
Points validation with training on technical and regulatory 
approaches to inspection.
    In addition to increasing the technical skills of our 
employees, the agency intends to use training opportunities to 
strengthen the management capabilities of our workforce as 
well.
    Additionally, the agency plans to take the training 
opportunities we offer into the field and directly to our 
employees. The goal of this initiative is to provide employees 
a variety of training options, including the ability to take 
courses taught by university professors near their work sites.
    FSIS plays an essential role in ensuring that the meat, 
poultry, and egg products that we eat are safe. While we mainly 
focus on the processing of these products, we have a 
responsibility to the American people to make sure that the 
entire food chain is strong. Food safety is a team effort, and 
we are always working to improve our role in the process. 
However, it requires that everyone involved in the process, 
from the farmer to the consumer, carries out his or her 
responsibility in ensuring that the food we eat is safe and 
safely prepared. The FSIS works with industry, consumers, and 
our sister agencies on a daily basis in the war on pathogens.
    Mr. Chairman, thank you for the opportunity to submit 
testimony to the Subcommittee on how FSIS is working with 
Congress and other partners to become a first-class public 
health agency. It is my hope that, working together, we will 
take food safety in the United States to unsurpassed heights. I 
look forward to working with you to ensure that the vision of 
FSIS as a world-class public health agency is realized. Thank 
you.
    [The prepared statement of Dr. Garry L. McKee follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
        
                                LISTERIA

    Mr. Latham. Thank you very much for your statements.
    I would like to mention that the camera here today is with 
Iowa Public Television, which we all love at home. It will be 
filming for a premier farm show, hosted by Mark Pearson. We are 
glad to have you with us here today.
    We spent a good deal of time discussing food safety at the 
Secretary's hearing two weeks ago, and I would like to continue 
that conversation today.
    Specifically, I would like to address your agency's effort 
to combat Listeria contamination. As you know, Listeria is a 
particular problem since it can contaminate ready-to-eat 
products, and can, in some cases, be fatal. I know from our 
conversations that this is a top priority for you.
    You just told us that you are working on the Listeria rule, 
that a risk assessment has just been completed as part of the 
rule-making process. You issued the Listeria directive to field 
staff this fall, and you are increasing testing for Listeria. 
Can you fill us in on how these efforts are going?
    Ms. Murano. Sure. I would be very happy to do that, Mr. 
Chairman.
    Listeria is an environmental contaminant. And that is how 
that organism ends up in these ready-to-eat products, 
basically, at a processing plant. If Listeria is in the 
environment of the plant, it can get onto food contact 
surfaces, and from there it can contaminate product after the 
product has been processed with a heat treatment, for example. 
The key to defeating this pathogen, is to find it where it 
lurks, the niches it may be harbored in inside the plant 
environment. Environmental testing is very important to help us 
find where the organism is, where it might be harbored, and 
where we can--by eliminating that niche, minimize the risk of 
contamination of product with this organism.
    Two items that you mentioned, the Listeria directive and 
then the Listeria rule are what we have been working on. The 
Listeria directive is a directive to our employees. We drafted 
that directive knowing that when a directive is issued you are 
basically instructing your inspectors. It is not a rule, and it 
is not a regulation. It is simply an instruction to our 
inspectors. We drafted it in such a way that we would strongly 
motivate industry so that we can achieve a couple of goals.
    Number one, that environmental testing would continue by 
industry, but that we would conduct it as well. And, secondly, 
because a lot of the industry conducts so many of these 
environmental tests already, that they would share that data 
with us.
    We strongly believe that in the case of the outbreak of 
last fall, had we, the agency, known about the results that the 
plant had been getting over time, it would have been certainly 
very helpful to us in trying to ascertain a trend and maybe 
anticipate a potential problem. The directive was designed to 
do exactly that.
    Now, the directive is in place, but we look at it almost as 
an interim fix, if you will. It certainly has been effective, I 
can tell you that. A large number of plants that did not share 
their data with us before the directive are doing so now. So I 
see that as certainly a success.
    But the real results are going to be realized through the 
finalizing of a rule that was proposed back in 2001. We needed 
to conduct a risk assessment that would help us figure out what 
the management strategies are that one could put into place to 
significantly reduce the risk of Listeriosis, of Listeria being 
in and ending up in product. So we are very happy that we have 
completed that risk assessment.
    We had a public meeting where we discussed the risk 
assessment with interested parties. It is posted on the FSIS 
web site. In the meantime, we are getting that risk assessment 
peer reviewed, and we are moving forward as quickly as we can 
to develop strategies based on that risk assessment to complete 
the final version of the rule for minimizing risk based on the 
scientific evidence we were able to gather from that risk 
assessment.
    So, I feel very confident that through these steps we will 
actually make a difference. We will be able, for the first time 
in many years, to address the problem of Listeria contamination 
in these ready-to-eat products.

                           LISTERIA DIRECTIVE

    Mr. Latham. From the public health perspective, has your 
directive been as effective as you had hoped? Or what is your 
feeling?
    Ms. Murano. Well, there haven't been any outbreaks that we 
know of. So in that sense we could supposedly claim victory. 
But to me, the way to look at it is that this directive has 
succeeded for us because it has helped us obtain data from 
plants that never shared it with us before, which is great for 
anticipating trends and potential problems.
    So in that sense, it absolutely has been a success. The 
fact that we have not had any illnesses due to these products 
so far, certainly one could take credit for that, but I don't 
take credit very quickly. I would rather continue on this path 
and make sure that our inspectors are doing their intensified 
testing program, which is also part of the directive, at those 
establishments that either don't share data with us or are not 
doing environmental testing themselves.
    Mr. Latham. I think there was some concern about the 
process that was used to develop the directive, and I would 
like to, ask you if public health was a deciding factor as far 
as changes that were made in the directive?
    Ms. Murano. Absolutely, Mr. Chairman. A directive is, as I 
said before, an instruction to our inspectors. So we could 
issue a directive right now without seeking public input. It is 
a set of instructions to our inspectors. We don't have to seek 
public input. But we decided to do so in this case because of 
the great interest of a lot of our stakeholders on this issue. 
We certainly were very, very careful to determine what we 
needed to do in order to make this directive able to accomplish 
the goals of, again, making sure that environmental testing is 
taking place and that for those tests that are being done by 
plants, results are being shared with us as much as possible.
    Most of it, frankly, came from my mind, so I can speak 
personally on this. Certainly, this policy was developed with 
the great help of all the professional experts that we have in 
the Office of Policy and Program Development at FSIS. 
Absolutely, public health is the reason we developed the 
directive as we did, and is the reason we do everything that we 
are doing in policymaking. So, I appreciate your question.
    Mr. Latham. Very good. Thank you.
    Ms. Kaptur.

                       FSIS INSPECTION WORKFORCE

    Ms. Kaptur. Thank you, Mr. Chairman.
    Secretary Murano and Dr. McKee, the Congress, over the last 
several years, has seen fit to increase your budget by $228 
million. Back in 1997, the FSIS received an appropriated 
folding of $574 million. And for the fiscal year 2003, we 
increased your funding over your request to $759,759,000. The 
budget request this year is for $797 million. So that is about 
a $228 million increase over the last few years. At the same 
time, based on information that you have given us, you have 
actually decreased the number of inspectors from a level in 
2001 of 7,645 inspectors to in 2002 a level of 7,560 
inspectors, which is a reduction of 85 inspectors. At the same 
time, the recalls for class one health violations have more 
than doubled in our country to a level of, in the year 2002, 56 
million pounds recalled by the Department of Agriculture. 
Incidentally, that figure for 2001 is a 29 million-pound 
increase over the year 2001. And the number of class one health 
violations has absolutely skyrocketed.
    Now, what I don't really understand about this, because 
lives are at stake, how can we be increasing your budget, how 
can you be decreasing inspectors, and, therefore, the number of 
recalls increasing across this country? What are you doing with 
the money we are giving you?
    Ms. Murano. Thank you for that question, Ms. Kaptur. Let me 
address a couple of the issues you have raised.
    First, regarding the number of inspectors, I will let Dr. 
McKee elaborate a little bit more on this if he wants to.
    We have changed the classification of our inspectors. The 
numbers that you quote certainly apply to inspectors, but 
because of the change in inspection system to HACCP that 
occurred beginning in 1998, we have modernized our inspection 
force. By that I mean that some inspectors are now consumer 
safety officers. And these are individuals who are highly 
trained HACCP experts. And when you add those individuals, 
there are over 100 of them, you will see that actually, if 
anything, we have increased the number of inspectors that we 
have.
    These consumer safety officers are really where we want to 
go with our training. We would like nothing better than to have 
every one of our inspectors be as well trained as these 
consumer safety officers. So that when you count these consumer 
safety officers as inspectors, which they definitely are, we 
certainly haven't decreased the number of inspectors.
    Ms. Kaptur. And are those individuals in-plant personnel?
    Ms. Murano. They are not assigned to any specific plant, 
but they absolutely go to plants. And their role is, for 
example, to conduct audits of HACCP plants. This is extremely 
important because it allows us to ascertain whether plants' 
HACCP plans are sound and are actually going to prevent 
contamination from E. coli O157:H7.

                            RATE OF RECALLS

    To address the second part of your question: Absolutely, 
the number of recalls has increased. There is no question about 
that. In fact, if you look at the rate of increase of recalls, 
it is about 21 to 23 percent over the last few years.
    When you consider that the real test of the effectiveness 
of programs is foodborne illnesses, and the Centers for Disease 
Control and Prevention has told everyone that the rate of 
foodborne illness has decreased by about, coincidentally, 23 or 
24 percent over the same period of time, you have a dichotomy. 
You have recalls going up, but you have foodborne illnesses 
going down. This is a result of better surveillance systems and 
better testing for these pathogens.
    The fact that we are finding these pathogens results in 
recalls. The vast majority of the recalls that take place have 
nothing to do with outbreaks, thankfully. That certainly is 
explained when you see the dichotomy of an increase in recalls 
while you have a decrease in foodborne illness.
    Another explanation for the dichotomy can be the fact that 
we are seeing plants increase their reporting of contaminated 
product, when they call us and say we have contaminated product 
with an adulterant and we are going to do a recall. That has 
increased about 12 percent. So the increased surveillance and 
the increased reporting are certainly what have resulted in 
most of the recalls that we conduct.
    Now, are we happy with recalls? As the foodborne illnesses 
go down we would like to also start seeing a downward trend of 
those recalls. That will be achieved as we implement programs 
such as auditing HACCP plans, which will be the preventive 
measure, as opposed to catching product that is contaminated 
once it has reached the retail market, which is certainly not 
where we want to be.
    Ms. Kaptur. Well, I know that the time has expired on this 
round for me, Doctor. But I would like to ask unanimous consent 
to place in the record a New York Times article from last 
December entitled ``Plant's Sanitation May Have Link to Deadly 
Bacteria.'' .
    Mr. Latham. Without objection.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF] 
    
        Ms. Kaptur. And in the second round, I will be asking about 
the Listeria outbreak at the Wampler plant in Pennsylvania and 
the Department's rather hesitant approach to what has now 
already resulted in the deaths of eight Americans and why the 
Department was not more aggressive in cleaning up that 
situation, when in fact one of your own inspectors was aware of 
what was occurring inside that plant. But we will do that on 
the second round.
    And I thank you, Mr. Chairman.
    Mr. Latham. Thank you.
    The gentlewoman from Missouri.
    Ms. Emerson. Thank you, Mr. Chairman.

                           HOMELAND SECURITY

    Hi, Dr. Murano. How are you, Dr. McKee? Obviously, the 
mission of the Food Safety Inspection Service was not changed 
by the events of September 11 and the ongoing crises around the 
world, but it did expand your scope. And today, biological and 
chemical threats to our Nation's food supply are a major 
concern. Can you tell me what steps your department is taking 
to address these issues?
    Ms. Murano. I would be happy to.
    Well, certainly after September 11, and I am sure Secretary 
Veneman spoke to this issue when she had her hearing here, the 
Department took specific steps in terms of organizing itself 
with its own Homeland Security Council to protect agricultural 
production, as well as food safety. My involvement has been, as 
makes sense, food safety. And the activities that FSIS has 
engaged in, in food safety, to prevent and be able to respond 
very quickly to intentional attacks on the food supply, have 
been very extensive.
    For example, one of the first things that they did at FSIS 
was to establish an Office of Emergency Preparedness, a 
Homeland Security Office within FSIS itself. As I alluded to in 
my testimony, we have conducted what we call vulnerability 
assessments to see what agents are most likely to be used and 
what products are most likely to be attacked. And we have also 
been conducting a threat assessment, to determine the points 
along the production processing where we are the most 
vulnerable. These assessments are extremely important.
    Secondly, we have been engaging in simulation exercises, 
not only just internally, but also with the Food and Drug 
Administration, CDC, and so forth, which have been extremely 
valuable. Because only when you are in an emergency situation 
where you have to make a decision, do you really understand the 
scope of the problem, and also you really find your weaknesses 
in terms of how quickly you can communicate with other agencies 
in responding to a threat. These exercises have been extremely 
useful, and we continue to do them.
    Our laboratory capabilities have been enhanced. We are now 
able to detect certain threat agents that we normally were not 
looking for, and that is definitely a necessary capability that 
we have. We participate with FDA on something called eLEXNET, 
which is a laboratory network. And so if there is a surge of 
capacity that is needed to detect a certain agent in a certain 
food, whether it is meat or poultry, all of us can help each 
other. So that is extremely important.
    We have also used supplemental funding that was supplied 
back in 2002 to hire 20 import surveillance liaison inspectors. 
And these are individuals who are located in specific ports of 
entry, and their expertise is to focus on Homeland Security and 
to coordinate better with Customs and APHIS. The APHIS 
surveillance function is now in the Department of Homeland 
Security.
    FSIS has put together a booklet that outlines all of these 
activities very well. One important activity that we certainly 
engaged in at FSIS was to develop guidelines for industry. It 
is very, very important to do that, because that is where a lot 
of the emphasis needs to be placed in terms of securing the 
businesses so that unauthorized individuals can't just go in. 
We have copies of that as well in English and Spanish. So I can 
certainly provide that to you and any other member of the 
committee.

                      SAFETY OF IMPORTED PRODUCTS

    Ms. Emerson. Thank you very much. I would like to see that. 
I am sure all of our colleagues would as well.
    Obviously, we need to scrutinize or better scrutinize the 
products imported from other countries. Have you all increased 
efforts to prevent a threat from an imported product?
    Ms. Murano. That is very, very important. And we pride 
ourselves, frankly, on the fact that our import equivalence 
system does that, whether it is worrying about intentional or 
traditional contaminants to the food supply.
    As you know, Ms. Emerson, the system is based on three 
components. One is that we go to the countries that want to 
export product to the U.S. and we ensure that they have an 
equivalent inspection system. That is very important, because 
inspectors are at every meat and poultry processing plant in 
this country every day that that plant is open. We require that 
other countries who want to export meat or poultry to us have 
the same system.
    Secondly, we have import facilities, about 145 of them, 
where we do reinspection of product as it comes into the 
country.
    And the third thing we do is conducting, at least once a 
year, audits of these countries to make sure that they are 
still equivalent to our inspection system.
    So that in itself has helped us tremendously, because it is 
the infrastructure that we needed in order to be able to 
control as best as we can the intentional contamination of 
foods that come from other countries.
    Ms. Emerson. Well, I would love to ask a follow-up, but I 
am out of time. So, thank you very much.
    Mr. Latham. You are correct, you are out of time.
    Mr. Boyd.

       RELATIONSHIP BETWEEN FOODBORNE ILLNESS, HACCP, AND RECALLS

    Mr. Boyd. Mr. Chairman, you are tough.
    Thank you, Mr. Chairman, and Dr. Murano and Dr. McKee.
    I just want to say I know we hear a lot of discussion about 
statistics of foodborne illnesses and recalls in HACCP. But I 
want you to know that this is one member that is very heartened 
by what we see, by the facts, by the statistics. I believe that 
we have the safest food supply in the world, and I believe we 
are making it even safer. I say that because I have visited 
many of the processing plants in the district that I represent 
and seen the detail of how you are implementing this new 
system, and the statistics bear that out.
    My question really goes to this. And I think you spoketo 
this earlier. But you have got a decline in foodborne illnesses and you 
have got an increase in recalls. You have got a HACCP system which 
seems to be working well. Do you think there is a correlation between 
the decline in foodborne illnesses and HACCP and the aggressive nature 
of the recalls? I think you addressed this earlier, but I wanted to 
make sure that we went on the record.
    Ms. Murano. Absolutely, sir. I do. And CDC also does. CDC, 
in their own report, has said that they attribute the decrease 
in foodborne illnesses to the implementation of HACCP. So you 
don't have to take my word for it; you can take their word for 
it. I think if we weren't doing recalls, one could argue that 
perhaps we are not doing our job. The fact that we are 
aggressively pursuing contaminated product I think is certainly 
evident in these numbers of recalls.
    As I said before, however, doing lots of recalls is not our 
goal. Public health is our goal. And so what I expect will 
happen is, because of our policies on E. coli O157:H7 Listeria 
and Salmonella, we will see a decline in the number of recalls 
to match the decline in the foodborne illnesses.
    Mr. Boyd. I think the point that Ms. Kaptur was making and 
others may make on this committee is that we ought never to be 
satisfied.
    Ms. Murano. Right.

                        FOOD SAFETY TECHNOLOGIES

    Mr. Boyd. We can always make the system better and the food 
safer, and my next question really speaks to that. Do you think 
that your agency can be a catalyst for developing new 
technology and implementing new technology and working hand in 
glove with the industry? Does that conflict with your work as a 
regulator? Would you speak to that briefly?
    Ms. Murano. I sure would. Thank you for that question.
    I am a firm believer that new technologies and even 
traditional technologies that will kill the pathogens is what 
we need to really work on, because that is what we want to do. 
Otherwise, we will always have pathogens in raw products. That 
is just because the micro-organisms are all over nature.
    We at FSIS don't want to be a stumbling block to the 
approval of safe technologies that are going to work in 
enhancing food safety such as new decontamination rinses, 
organic acids, whatever the technology might be. Industry and 
academia end up doing most of the developing of these 
subtechnologies. We need to be able to fast track, whenever 
possible, the implementation of these technologies so that we 
can put them into place and not be waiting years and years to 
allow industry to use safe technologies that are going to 
enhance food safety.
    Mr. Boyd. So your answer would be that you believe that you 
can be a catalyst, and you don't think that conflicts with your 
role as a regulator?
    Ms. Murano. Correct.
    Mr. Boyd. Thank you, Mr. Chairman. And I will wait for my 
next question on the second round.
    Mr. Latham. Thank you, Mr. Boyd. And I think you set a new 
record by not going over time. That is very good and I 
appreciate it.
     Mr. Nethercutt.

                            U.S. FOOD SAFETY

    Mr. Nethercutt. Thank you, Mr. Chairman.
    And I want to welcome the panel and the team behind you, 
and appreciate your commitment to the agency. And I also agree 
with Mr. Boyd's comments. I think this all has to be put into 
perspective, this issue of food safety. And I know we can't 
ever be satisfied with any deficiencies. But in terms of our 
record in this country versus the record of other countries 
around the world, how would you say we rank? And in what--maybe 
you can try to sort of quantify how you look at our food safety 
record and our food safety standards and protections relative 
to other countries around the world.
    Ms. Murano. Surely. It is a difficult question to answer, 
because when you try to look for the data on the incidence of 
foodborne illness from other countries, a lot of countries 
don't do a very good job reporting those at all. There are 
several countries in Europe that certainly do. When you look at 
the incidence of, for example, Salmonellosis, or 
Campylobacteriosis, per 100,000 people, we see that the rates 
of those illnesses in this country, in the United States of 
America, are a lot lower than those countries. And certainly, 
when you consider the developing countries, that is not even a 
question. We obviously have a much better record of food 
safety.
    You are quite right. That is not something that necessarily 
we should be able to rest on. We do have the safest food supply 
in the world. And one might argue maybe there are some 
countries, Australia, for example, that say well, we have just 
as good a system as you do, United States. And that is fine. 
So, at worst, we have as good a system as the best countries, 
and at best we certainly have the best food supply in the 
world.
    But we are not resting there. There is always room for 
improvement. And this is our goal, to continually work to 
implement sound science in order to absolutely do the best that 
can potentially be done to enhance food safety.
    Mr. Nethercutt. Well, that is great. And let me ask you 
this. My sense is we consume in this country probably--is it 
roughly a billion meals a day? Would that be fair to say?
    Ms. Murano. I think I have heard that, and I believe that 
is probably pretty close. So when you consider the number of 
illnesses, certainly it is low considering the number of people 
and the number of meals that are consumed. But again, to us, we 
want to have the incidence of foodborne illness as low as it 
possibly can be. We are not going to relent.

                          FSIS BUDGET REQUEST

    Mr. Nethercutt. No, I agree. Now, let me ask you this. With 
respect to your budget requests and the President's budget, are 
you satisfied that the budget requests that you are making to 
the Congress and that you are asking us to support here in the 
area of food safety and inspection services, are you satisfied 
that you can maintain or improve, and even improve, the safety 
record of our food system beyond what we have had in the past? 
Are you satisfied that it will meet all your needs, that we are 
not deficient in any respects with respect to the job you have 
to do and the money you need to do that job?
    Ms. Murano. I believe so, and I will tell you why. As Dr. 
McKee said in his comments, a lot of the money that we are 
requesting has to do with training of inspectors. And those are 
the men and women who are in the front lines whoare going to 
implement and are implementing the policies that we write here in 
Washington, D.C. So for them to be as effective as possible can only 
improve food safety.
    Secondly, we are requesting money for conducting baseline 
studies to ascertain the prevalence of various pathogens in the 
food supply throughout the country and according to seasonal 
differences and geographic differences and so forth. And that 
is the foundation for the science of risk assessment, which is 
what we base our policies on. So we can only get better. 
Absolutely. I am convinced of that.

                         U.S. FOOD CONSUMPTION

    Mr. Nethercutt. Let me finally ask you. What proportion of 
the foods that are consumed by U.S. citizens are meat and 
poultry compared to other food products, fruits and vegetables? 
Have you done any analysis on that? What would you say? Maybe--
and I am not trying to pin you down specifically on numbers, 
because that is hard to quantify, I am sure. But based on 
percentage, for example, is it two to one? Is it less than that 
in terms of meat and poultry versus fruit and vegetables or 
prepared foods?
    Ms. Murano. I don't think I can answer that question now, 
but I can certainly find that out for you. But I will tell you 
that consumption of meat and poultry products is very high, and 
that is why we have to do the best job that we possibly can. 
And knowing there are other products out there that are not 
meat or poultry that also cause foodborne illness is certainly 
a cause for concern of mine, even though I can't really do 
anything about it because they are not under my jurisdiction. 
But I certainly urge everyone to realize that, when you talk 
food safety, it is everything, it is fruits and vegetables, it 
is seafood, it is eggs, it is meat, and it is poultry. And a 
lot of the safe food handling practices that we must follow 
apply to a lot of those foods as well.
    [The information follows:]

                   U.S. Meat and Poultry Consumption

    According to USDA's Economic Research Service, meat and 
poultry comprise 13.2 percent of total calories consumed in the 
U.S. Nine percent of this total is attributable to red meat 
consumption, while 4.2 percent comes from poultry consumption.

    Mr. Nethercutt. Thank you very much for your testimony.
    Thank you, Mr. Chairman.
    Mr. Bonilla [presiding]. Thank you, Mr. Nethercutt.
     I would like to take a moment to thank Mr. Latham for 
filling in for me at the last moment. We had to make a change 
due to an event I had to attend this morning at the request of 
Chairman Young.
    And I also would like to compliment the good work that you 
have done, Dr. Murano, along with your great team Dr. McKee, 
thank you for being here, and Steve. With the knowledge and 
expertise that you bring to the table every day at your job, we 
are very grateful for what you do.
    I know Mr. Latham also addressed the question on Listeria 
and how that is progressing and how the directive is 
progressing, that you answered the question very thoroughly and 
we appreciate that as well.
    So, without further adieu, I will now yield to Mr. Farr.

                         MOBILE SLAUGHTER UNITS

    Mr. Farr. Thank you, Mr. Chairman. I just have one question 
because I have got another appropriations meeting I have got to 
be in. It really goes to Dr. McKee.
    I know my staff chatted with you yesterday regarding an 
existing inspection policy for cattle slaughter, for meat 
slaughter, essentially the existing policy prohibits the ranch-
based mobile slaughter units, units that the Department of 
Health developed on I know Lopez Island in Washington, Mr. 
Nethercutt's State, and in the south county of Monterey, which 
I represent. And I just want to know that you can get back to 
us on how the Department can make these operations cost 
effective. I mean, what can be done to make them work?
    As you know, ranchers can slaughter their own cattle for 
their own consumption. But what is happening to a lot of 
ranchers in America is they are beginning to be part of the 
eco-turf, farm-agro-tourism, having people come and stay there 
and work. Then that food can't be sold to them when they leave 
as they could if they harvested vegetables or produced wine or 
things like that. And the effort was to try to make this kind 
of small business friendly. And I would hope that you could 
look into those policies and see how that might turn out and 
let us know as soon as possible so that these operations can be 
cost effective.
    Mr. McKee. Mr. Chairman, Mr. Farr, we will look into that. 
I talked with your staff as you mentioned, yesterday. We will 
follow up on that. The main focus will be to make sure that we 
can protect the public health regardless of the numbers. And we 
certainly want to accommodate operations as best we can, and we 
will certainly get back to you with an answer on that.
    [The information follows:]

                         Mobile Slaughter Units

    FSIS does not have any regulatory or statutory prohibition 
on mobile cattle slaughter facilities. The owners would need to 
apply for a grant of inspection through the District Office. 
The facility would be required to meet the same regulatory 
requirements as any other cattle slaughter and processing 
facility. Examples of these requirements are HACCP plans, SSOP 
plans, sanitation performance standards, potable water, and 
local waste discharge. USDA staffing of such a mobile facility 
is often difficult logistically when there is a shifting 
location in remote areas, for example, where the mobile 
slaughter unit moves over a 150-200 mile radius. If the mobile 
slaughter unit is used intermittently, that would entail 
shifting resources from other food safety responsibilities. In 
other words, it can be problematic to provide inspectors to 
these remote locations unless there is an established 
operational schedule. Public health is FSIS' number one 
priority, and thus we must utilize our employee resources in a 
way to best achieve this goal.

    Mr. Farr. Thank you very much.
    Mr. Bonilla. Thank you, Mr. Farr.
    Mr. Goode.

                             FOREIGN AUDITS

    Mr. Goode. Thank you, Mr. Chairman. I, too, want to echo 
what several others had, and say to Dr. Murano and Dr. McKee 
and those at FSIS, I think you do a good job. I feel very safe 
eating U.S. food.
    In your testimony, you mentioned that you do random 
inspections. Even though--that is on things that come into this 
country. And you have also checked out what other countries do 
before their food gets here. And you base that on compliance 
history. Is it the history from the random inspections, is it 
the history in the country from which the food comes, or is it 
a combination?
    Ms. Murano. It really is a combination. Because when we 
first go to a country that wants to export meat or poultry to 
the U.S., we do a thorough inspection of plants and laboratory 
capabilities, because they have to do the same things that we 
do. They have to basically mimic what we do here. And so the 
history of those audits absolutely comes into play, because we 
have what we call ``delisted plants'' based on when we go back 
and do an audit and find that things have kind of fallen by the 
wayside. Absolutely, we delist them, which means we take them 
off the list of approved plants and they have to start all over 
again to convince us that they have improved their inspection 
system.
    When product comes here and we inspect the shipments, if we 
find problems with those shipments, that absolutely turns on a 
red light. And even if a country, for example, may not be on 
the schedule to be audited at that time, those kinds of 
situations prompt an audit. It is all of the above, to be 
honest.
    Mr. Goode. Let me ask you somewhat of a follow-up. Could 
you just say over the last 3 years, to the best of your 
knowledge, which would be said the top three countries that 
haven't had any problems?
    Ms. Murano. Well, I would say Canada, New Zealand,and 
Australia.
    Mr. Goode. Okay.
    Ms. Murano. And we are travelling to New Zealand actually 
this Friday to attend a meeting with these countries. They do 
have systems as good as ours.
    Mr. Goode. Can you tell us who is in delist status, or 
would you rather not?
    Ms. Murano. Well, I would rather not. But I can tell you 
that there have been countries in the past that have been on 
the brink and they have gotten their act together. And that is 
certainly very reassuring to us. Because the kiss of death is 
to be delisted by the United States. We represent the gold 
standard to other countries. If a plant gets delisted by us, 
obviously, they can't sell to us anymore, but they are going to 
have a tough time selling to anybody else.
    Mr. Goode. All right. Thank you, Mr. Chairman.
    Mr. Bonilla. Thank you, Mr. Goode.
    Ms. DeLauro.

                       SINGLE FOOD SAFETY AGENCY

    Ms. DeLauro. Thank you very much, Mr. Chairman, and 
welcome, Dr. Murano, it is good to see you again.
    Let me make a very quick comment on the single food agency 
and then put those questions in the record so I have time to 
move to some other areas. You know what my view is about it, 
creating a single consolidated food safety administration and 
Congressman Latham also shares that view. I think something 
that you said before is critically important; that what you 
view as the mandate is that whether it is meat, poultry, 
fruits, vegetables, that all of it has to be considered.
    There are lots of different pieces here. We need to 
consider having it in one place so that, in fact, we can have a 
more effective way of ensuring a safe food supply.

                       RECALL DISTRIBUTION LISTS

    Let me move to two other areas. One is recall distribution 
lists. Last July USDA implemented a rule ostensibly to allow 
State health departments to learn where recalled contaminated 
meat is being sold. During last year's recall of E. coli: 
O157:117; tainted ground beef from a Colorado plant, the State 
public health officials that wanted to inform their citizens 
where the contaminated product was sold were not able to get 
product distribution information from the USDA. A Denver Post 
article noted, ``USDA,'' and I quote, ``will give lists of the 
companies that purchased and distributed the meat only to 
States that promised not to share it with anyone, not even 
consumers.'' This seems, in my view, counterintuitive as 
consumers may urgently need to know if that meat in their 
refrigerator or freezer came from an implicated product.
    Is there any barrier, legal or otherwise, to the 
Department's release of their information to any State public 
health official that is responding to a recall, and if so, 
would you support legislation to allow USDA to tell States 
where tainted product has been distributed so that they can 
inform their consumers where the recalled product was sold?
    Ms. Murano. Thank you, Ms. DeLauro, for that question. This 
is such an important issue. I have certainly done a lot of 
homework on this. I am not a lawyer, I will tell you right now. 
I am a microbiologist, so I have relied on our legal team to 
let me know what is and what is not possible.
    As they tell me, there is no legal impediment for us to 
share that information, the distribution list.The issue is that 
we, as a public health agency, want recalls to take place as fast as 
possible, and if we need that information, and a plant refuses to give 
it, there is no legal impediment. We seek a subpoena, and we get that 
information, but then that takes several days to accomplish.
    Plants will readily give us that information if we don't 
share it, and they will give it to us in minutes, so it really 
is an issue of how quickly do we need that information so that 
we can monitor the implementation of our recall, which is our 
role, and for State departments of health to do the same. If we 
obtain that information from these plants and we give out that 
information, which to them is of commercial value, that sharing 
is not going to take place anymore, and we are going to have to 
go after that information through subpoenas, which again is 
going to delay a recall, and when it is people sick and perhaps 
in even worse situations than just ill, that information is 
critical to be available very, very quickly.
    I have thought about this a lot. If consumers had the names 
of retailers and so forth, certainly in some instances that is 
something that would be beneficial. But I did learn from the 
ConAgra recall that happened last year that a lot of the 
entities in their distribution lists were not supermarkets, but 
were distribution centers and so forth, and that information 
would not be helpful to a consumer because they don't buy at 
those places.
    We have always told people whenever there is a recall, and 
it is in every one of our recall release sheets, that they need 
to take their product to their point of purchase. They don't 
need to be worried about whether it was from the place they 
bought it or if it wasn't from the place they bought it.
    Ms. DeLauro. Let me ask you, Dr. Murano, because my time is 
going to run out very soon. Would you support legislation that 
would allow USDA to tell States if a tainted product has been 
distributed so that we can inform consumers and make consumers 
a part of this process? The distributor knows it, the U.S. 
Government knows. The only folks that are in the dark are the 
consumers. Yes or no, would you support the legislation, so I 
can move on to another question?
    Ms. Murano. I wouldn't, because right now we have that 
legal authority. We just don't utilize it because it takes days 
for us to obtain a subpoena that is going to allow us to get 
that information, and I don't know any legislation that would 
prevent a company from taking whatever steps they need and then 
having us have to get a subpoena anyway.
    Ms. DeLauro. Maybe what we can do is as a law-making body 
is to try to figure a way in which we can provide you with some 
legal authority that would lessen the amount of time involved. 
This is not about a company's bottom line. This is essentially 
about the safety of the people in this Nation, and clearly the 
folks in Colorado are very, very concerned about the inability 
to get ahold of that data authorized to be able to inform their 
citizens to allow their public health officials to do the job 
that, in fact, they were instructed to do on behalf of their 
constituents.
    I will put a question in the record about the Nebraska beef 
issue. Thank you.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Bonilla. Thank you, Ms. DeLauro.
    Mr. Kingston is also submitting questions for the record. 
He had to attend another hearing as well.
    Mr. Bonilla. Mr. Latham, I appreciate your asking my 
question earlier on Listeria, and I yield to you for your 
series of questions.
    Mr. Latham. Thank you very much, Mr. Chairman.
    I just want to personally thank you for the great job that 
you do. With your background at Iowa State, I would expect that 
to be the case.
    Ms. Murano. Yes, sir.

                       SINGLE FOOD SAFETY AGENCY

    Mr. Latham. Ms. DeLauro brought up an interesting proposal 
that we have talked about for several years, and that is the 
consolidation of food inspection activity into one agency to 
ensure the safety of our food for consumers. I would really 
like to get your opinion for the record as to what you think 
maybe would be the pluses and minuses to that type of an 
entity? Apparently I think last year there was some testimony 
about concerns with cooperation and communication between APHIS 
and FSIS. I would really like to hear your opinion on the 
single agency.
    Ms. Murano. Sure. I will try to be concise. To me if I 
learn nothing else after coming to Washington and being here 
about a year and a half, I have realized that this place runs 
based on relationships and to me, whether we are in one agency 
or many agencies, it is the relationships of the people that 
have to work together to get something done. I know of agencies 
that are within the same department that don't see eye to eye, 
don't talk to each other. We have better relationships with 
some of those agencies than they do with other agencies within 
their same department.
    So my view is that it is relationships that work, and that 
is why I am very glad to say that I have worked very, very 
hard, and Commissioner McClellan certainly has worked very, 
very hard, to establish a good relationship. We have done the 
same to establish a relationship with CDC. We have a liaison 
person that is housed at CDC all the time, but who's an FSIS 
employee, for example.
    So to me it is a question of relationships, and rearranging 
the offices and so forth is not necessary to accomplish that if 
you do have good relationships with these agencies.
    Mr. Latham. Do you see any problems with APHIS moving to 
Homeland Security--problems associated with communications 
between APHIS and FSIS? Are you communicating well with APHIS?
    Ms. Murano. We are, and I will tell you I want to thank the 
committee, because the appropriation we received for 2003 
funded a computer system that is designed to make it very 
seamless between ourselves, APHIS, the quarantine people who 
have moved to Homeland Security and Customs. So if anything, 
because of that software, we are going to be able to 
communicate better than ever. It doesn't really matter to us 
where they are. If anything, now it is going to be better than 
it has been because we are eliminating that technological 
barrier where we hadn't been communicating as well as we should 
have on what foods were coming into this country that Customs 
or APHIS would be looking at. There were a few potential gaps, 
and we have been able to, through this new technology, fill 
those gaps and be able to be very seamless with them.
    Mr. Latham. You don't see any problem with----
    Ms. Murano. I don't.
    Mr. Bonilla. Thank you, Mr. Latham.
    Mr. Hinchey.
    Mr. Hinchey. Thank you, Mr. Chairman.

                   FUNDING FOR ADDITIONAL SCIENTISTS

    Dr. Murano, it is nice to see you, and I, too, want to 
thank you for the job that you do and for the sincere 
commitment that you bring to your responsibilities and the way 
you carry them out.
    You are requesting some additional money for the Food 
Safety and Inspection Program. I think it is about $42 million. 
About half of that is going to go to required increases in 
salaries and things of that nature, but you are asking for, 
among other things, $4\1/2\ million for some additional 
microbiologists, chemists, laboratory technicians and others. I 
am wondering if you can tell us how many of those additional 
scientists you will be able to hire, and what kind of work that 
they will be doing, and where they will be doing it.
    Ms. Murano. We are requesting 26 staff years with that 
money. And the reason we need these folks is that obviously, 
for example, with our added responsibilities to implement the 
Listeria directive, for example, our folks are going to be 
doing and are already doing more testing than they were doing 
before. We are doing environmental testing of plants for 
Listeria that we weren't doing before. Also, Homeland Security 
is another issue because we need to be able to test for certain 
agents that we never had to worry about before.
    Mr. Hinchey. How soon would you be able to have them on 
line? Could you tell us?
    Ms. Murano. Well, I don't think I can answer that question. 
I don't know if Dr. McKee wants to address that, but we can 
certainly get that information to you. Our Office of Management 
is in charge of human resources and certainly we impress upon 
them always how quickly we need to fill positions, whether it 
is these or others, and it is because of homeland security, to 
be honest.
    [The information follows:]

                             FSIS Staffing

    Once the fiscal year 2004 appropriations for FSIS is signed 
into law, the Agency will advertise these 26 positions and 
begin interviewing qualified applicants. The Agency expects 
that it will take three to six months to fill these positions 
with qualified individuals.

                        FOREIGN PROGRAM AUDITORS

    Mr. Hinchey. You have also asked for $1.8 million for 
foreign program auditors. I wonder if you can give us some more 
detailed information about that. Where will they be, and in 
what countries are they going to be located?
    Ms. Murano. These will be seven staff years.
    Mr. Hinchey. Seven staff years?
    Ms. Murano. Seven. Yes, sir. It is not necessarily that 
they are going to be housed in other countries. They may or may 
not be, depending on what needs we ascertain, but this is so 
that we can enhance these audits that I was talking about 
earlier because we need to do these on as regular a basis as 
possible to make sure that when we say a country has the 
equivalent system as ours, we say that with certainty because 
we have been there as often as possible.
    Right now we do those audits about once a year, and with 
some of these countries we need to do it more often than that.
    Mr. Hinchey. So these people will be flexible; they will 
just go where you think the need is at any given moment?
    Ms. Murano. Absolutely. Yes, sir.

                         FOOD SAFETY EDUCATION

    Mr. Hinchey. You are also asking for an increase of $1-\1/
2\ million for food safety education. Can you tell us what kind 
of new public education efforts will be undertaken with that 
funding?
    Ms. Murano. Sure. We need to make sure that we address what 
we call underserved groups with messages of food safety. We 
have done a lot of work with pregnant women and Listeriosis, 
which we are very proud of, but there is a lot more to do. 
There is a great need to address food safety education among 
minority groups, for example, Spanish-speaking groups. We need 
to publish a lot of our materials in Spanish and in a variety 
of languages. The elderly certainly is a population that is 
increasing in the United States, and we need to be able to 
serve them as well with safe food handling messages.
    Mr. Hinchey. So will you use public media to reach out to 
these people?
    Ms. Murano. We intend to use public media. We intend to go 
through the country for different events, for example, the 
Macy's Thanksgiving Day parade, and whatever we can do to 
promote the message of food safety. I have personally done 
several food safety events in the country, and I am finding 
that what attracts the attention of the people and the media is 
when you have a celebrity with you. It is not just good enough 
for me to show up, apparently.
    Mr. Hinchey. I can't imagine why.
    Ms. Murano. I can't either. We did an event with Miss 
America. We are getting ready to do another event with some 
country music artists. So that is part of the strategy to get 
that message out.

                           USER FEE PROPOSAL

    Mr. Hinchey. Let me just ask you about the budget. You have 
a proposal to collect $122 million in user fees from 
slaughterhouses, processing plants and other facilities, but 
that amount comes from programs that are not authorized. The 
Agriculture Committee has refused to authorize the collection 
of those user fees, and the full Appropriations Committee has 
never allowed the collection of fees without an authorization 
from the authorizing committee. So I am wondering how big a 
problem that is going to cause for you. You have written $122 
million in your budget, but it is not going to materialize.
    Ms. Murano. Legislation would need to be enacted to collect 
those $122 million in user fees. Authorizers need to do that. 
We appeal certainly to this subcommittee that if user fees are 
not authorized, that you will make sure that we get that money 
one way or another. We count on you for that.
    Mr. Hinchey. Thank you, Doctor.
    Mr. Bonilla. Thank you, Mr. Hinchey. If you ever do an 
event with Sarah Michelle Gellar, let me know. My teen-age son 
would love to meet her.
    Just to advise Members, we probably will have a series of 
votes at about 5 after 11:00. I don't believe we have any 
questions remaining on our side of the aisle, so if we can 
conclude by then, and if not, we will consider coming back 
after the votes if there are more questions.
    Ms. Kaptur.

                            LISTERIA RECALL

    Ms. Kaptur. Thank you, Mr. Chairman. These are 
extraordinarily important witnesses to us, and I wanted to 
focus in on the subject I brought up on the first round, and 
particularly the Wampler plant in Pennsylvania. And we could 
take other plants, but in view of the time, I have to select 
one example here. What troubles me, Dr. Murano, is from what I 
have read--and I ask that this New York Times article be placed 
in the record.
    [The information follows:]

    [GRAPHIC(S)NOT AVAILABLE IN TIFF]
        
    Ms. Kaptur. There appears to be very judicious work being 
done by at least one inspector at the Wampler plant, who then 
became engaged in bureaucratic wrangling with another inspector 
at the plant, and even though the first inspector issued alerts 
about the plant in August, the Department took no action until 
October 13.
    Several weeks ensued, and the sanitation problems that he 
found included mold and algae on the walls, condensation 
dripping from the duct work over the processing tables, which 
were enough to justify the closing of the plant. And this 
particular company is the Nation's second largest poultry 
company. In addition, it appears that the Listeria that caused 
the deaths was found in the drains.
    And my question really is here you have got somebody out 
there. It takes a lot of guts. People get intimidated very 
easily, don't they, and particularly people who don't have the 
top job. Here you have got somebody. I come from a family where 
our relatives worked in slaughterhouses. I know what that work 
is like. It takes guts for somebody on the line who is an 
inspector or a worker to speak up.
    So here is somebody who is saying, something is wrong in 
this stinking plant, and it went on for weeks and weeks and 
weeks, and I don't know which Americans have lost their lives. 
I know there have been eight already, and there have been at 
least 54 illnesses, but the fact that your testimony doesn't 
even mention these, whether it was the Wampler plant or the 
ConAgra plant, even to reference them, is shocking for me this 
morning.
    Twenty-seven million pounds recalled. The inspector general 
is now looking into this. We have all these regulations. How is 
it possible that USDA didn't listen to one of its own 
inspectors? What the newspaper article says is--well, there 
were some records that the company had, but they were put in a 
drawer. The inspector says, we are not allowed to take records 
out of a company and Xerox them or analyze them. Please, what 
happened within the USDA that allowed lax enforcement, that has 
now killed Americans and injured dozens and dozens of people in 
this country? What went wrong?
    Ms. Murano. Ms. Kaptur, this is a matter that is extremely 
serious and very important to me. The reason OIG is 
investigating this is at our request. I requested OIG to 
investigate this as soon as I found out there was an inspector 
who was claiming he had not been listened to. I talked to the 
district manager of that district, who has attested to the fact 
that he said to the inspector, do what you need to do, shut 
down the plant, do whatever you need to do, you have the 
authority. That inspector certainly also could have reported 
this to OIG.
    So OIG is going to get to the bottom of it, and it is so 
serious to me that if OIG finds that inspector was prohibited 
from doing his job in any way, we are going to deal with that. 
I will assure you of that. So we requested OIG to do this 
investigation.
    I do want to tell you that the question of the records is 
why we put in place the Listeria directive, because it is so 
important for us to see the testing records of those plants. 
Since we don't have a rule in place yet, we designed that 
directive so these plants will share that information with us. 
I am happy to tell you that a couple of hundred plants that 
never shared that data with us are now sharing because of the 
directive.
    I share in your concern over people who are ill. This is 
what drives us. I have pictures of some of these families' 
members in my office, and I don't want to tell you that in some 
self-serving way. I just want to tell you how much this 
personally means to me and assure you that OIG will get to the 
bottom of it, and we will take action, whatever is necessary.
    Ms. Kaptur. Are the two inspectors in question still in the 
employ of the Department of Agriculture?
    Ms. Murano. As far as I understand, they are.
    Ms. Kaptur. All right. In the end I don't think that 
inspectors should be the ones who hold the majority of 
responsibility here. The company is the entity in this equation 
that didn't do its job; and according to the data we have, that 
the two districts with the highest percentage of no documented 
HACCP violations included the Philadelphia office, where 64 of 
the plants were listed as having no violations, that is the 
Wampler's district, and the Boulder, Colorado, office where the 
ConAgra plant is located that had 59 percent of the plants 
having no listed violations.
    I think that the Department of Agriculture ought to start 
doing its job. There has been a lot of compliments for lives 
that have been saved and for a food safety system that works 
better than most in the world, but the fact is we have the 
highest number of recalls that we have ever had in Class I 
violations in this country, nearly 100 now, 98, and we have had 
the largest amount of recalled meat product in the history of 
this Nation.
    Somebody isn't doing their job, and we have provided the 
money for inspectors. We respect the inspectors that are trying 
to do their jobs out there, but somebody is impeding the 
process, and these companies had better not be left off the 
hook. I don't get a dime from them in my campaign fund. So my 
heart is with the families and with those inspectors that are 
trying to do their job, Madam Under Secretary, and I would hope 
you would support those inspectors that are trying to do their 
job.
    Ms. Murano. I absolutely do, and I will tell you part of 
our reorganization in FSIS is to establish a program evaluation 
review function. It is a quality control office that never 
existed before. So that is how strongly I feel about us being 
able to make sure that if there are problems in districts, that 
we find out those problems and fix them.
    Mr. Bonilla. Thank you, Ms. Kaptur. And just for the 
record, so there is no question, we have the safest food supply 
in the world, not just compared to most of the world.
    Mr. Boyd.

                      EFFECT OF BUDGET REDUCTIONS

    Mr. Boyd. Thank you, Mr. Chairman.
    Mr. Chairman, I knew this lovefest we were having was too 
good to be true. But you know, Mr. Chairman, ever since I have 
been on the committee, I have seen Mr. Dewhurst sit there. He 
has probably served in his position longer than the other 
folks, and I don't think I have ever seen him asked a question. 
So I want to ask him a question, and it is a very serious 
question: Mr. Dewhurst, I was reading Congress Daily this 
morning, and I noticed that Chairman Jim Nussle has said that 
he is considering a 1 percent reduction in both discretionary 
and mandatory programs below the enacted fiscal year 2003 
levels; certain programs may be off limits, namely Social 
Security, unemployment benefits, defense and homeland security 
but USDA will probably not be protected. I assume that if you 
take those off limits, that would increase the 
percentagesignificantly on the ones that were on limits. Those programs 
in the Ag bill would include such mandatory programs as WIC, food 
stamps, farm programs, in addition to all the discretionary work that 
we are talking about.
    My question to you simply, sir, is what kind of chaos would 
this create in the department across the board in the budgeting 
process? You have been here a long time and you know this 
process well. What kind of chaos would it create there in this 
Congress, and not only there, but out in the country? Would you 
care to comment?
    Mr. Dewhurst. Sure. Really you have two kinds of problems. 
If you are talking about the current fiscal year, fiscal year 
2003, you really have two kinds of problems. One is 
uncertainty. We have a fiscal year 2003 appropriations bill. It 
had a .65 percent rescission for most discretionary programs 
built into it, including the FSIS, and we are working our way 
to figure out how to deal with all that. And so anytime there 
is any discussion of further kinds of changes like that, it 
creates uncertainty in the bureaucracy, and you don't know 
whether to hire people or what you should do, because you may 
lose some money down the road.
    The second thing that comes into the question is whether or 
not at the end of the day your funding would be inadequate if 
you had to absorb such a rescission, and without knowing the 
details, I don't want to make too many judgments about that, 
but programs like WIC, food stamps, child nutrition, and farm 
programs and so forth are performance-driven entitlements 
essentially, and this administration and the previous 
administration tried very hard to make sure there is enough 
money to help the people who need help under those programs. In 
the labor-intensive programs, the biggest cost is salaries and 
the pay increase and so forth that is built into the law, and 
to the extent that you have to absorb further reductions, it 
means you essentially don't have enough money to meet those 
costs, and therefore you have to reconsider your hiring actions 
and so forth. But this fiscal year has been very difficult from 
our perspective simply because the appropriations bills were so 
late, and at this point further uncertainty will simply make it 
more difficult.
    Mr. Boyd. Thank you, Mr. Dewhurst. You did a good job of 
answering the question. I didn't know whether Dr. Murano was 
going to punt to you over there.
    Mr. Dewhurst. She doesn't want her budget cut.
    Mr. Boyd. I understand. We don't want that either.
    I just want to say that I hope that this Congress, this 
House, will reject this notion, and it is an obvious attempt by 
the budget Chairman to follow a rule which my Blue Dog 
counterparts and I agree with, and that is pay-go. It is a very 
meager attempt at pay-go. Of course, the pay-go in this case is 
for the $700 billion or $1.6 trillion or whatever it is tax cut 
that we are dealing with.
    But thank you very much, and I am glad we got to hear from 
you to answer the question. You handled yourself very well. 
Thank you.
    Mr. Bonilla. Mr. Dewhurst always handles himself very well.
    Mr. Hinchey.

                        FSIS ENFORCEMENT ACTIONS

    Mr. Hinchey. Thank you, Mr. Chairman.
    Dr. Murano, I was just looking at some figures on 
enforcement actions, and I see that the enforcement actions by 
FSIS dropped between 2000 and 2001. In 2000, you took 49,392 
actions. In 2001, this number dropped to 32,224. I know I am 
springing this on you at the moment, so I don't expect you to 
be able to respond in detail about this matter, but if you 
would kindly let us know what caused that decline, I would very 
much like to understand that better.
    Ms. Murano. Sure. Mr. Hinchey, one thing that I do have a 
great interest in is of those enforcement actions, how many 
resulted in plant suspensions, which is the ultimate 
enforcement action, if you will, where we pull inspectors, the 
plant is closed down, and can't operate anymore. And when you 
look at that, that percentage of enforcement actions that 
resulted in plant suspensions has actually increased. In 1998 
it was about 2.3 percent, and in 2002 it was 4.8 percent. So 
the enforcement actions, even if overall they have decreased, 
could be due to a variety of reasons, but certainly the ones 
that resulted in suspensions, which are the ones I am 
interested in, because they are the ones that protect the 
public health the best in the sense of stopping a company that 
maybe is producing unsafe product, those have increased.
    Mr. Hinchey. Suspensions of inspections actually declined 
from 2000 and 2001. It went down from 184 to 119.
    Ms. Murano. If you look over from 1998 on--sometimes they 
go up, sometimes they go down. It depends on a number of 
factors.
    Mr. Hinchey. I know that you don't have these numbers in 
your head, and I am not asking you to give me a detailed answer 
to this now, but I would like the information over the course 
of the next week or so.
    Ms. Murano. Surely.
    Mr. Hinchey. These are the numbers that you gave us, and we 
are seeing a decline in suspensions of inspection from 184 to 
119 and a very dramatic drop in the total reviews from 49,392 
to 32,224. So I am not asking you to give me that explanation 
now, I don't think you have it, but I would like to understand 
it. I would like to know why that is happening, and if you 
could tell me that, I would very much appreciate it.
    Ms. Murano. Certainly.
    [The Information follows:]

                      FSIS Enforcement Activities

    Suspensions of inspection in fiscal year 2001 are 
consistent with the number of suspensions in fiscal year 1999.
    The decline in suspensions from 184 in fiscal year 2000 to 
119 in fiscal year 2001 is primarily associated with the 
success of HACCP outreach initiatives to establishments and/or 
industry and plant awareness of the HACCP requirements.
    Please note that the numbers that you quoted as enforcement 
actions for fiscal years 2000 and 2001 (49,976 and 32,224) 
represent the number of planned and random reviews of 
establishments and of products as they move through commerce. 
These reviews are carried out to prevent meat, poultry, and egg 
products that are not wholesome or safe from entering the food 
supply, to assure compliance with Federal laws, and to obtain 
and maintain current data on persons or firms engaged in the 
handling and distribution of meat, poultry, and egg products. 
The increased number of reviews during fiscal year 2000 were 
related to the increase in the number of warning letters issued 
during the previous year and follow-up reviews conducted during 
HACCP implementation.

                          FOODBORNE PATHOGENS

    Mr. Hinchey. I am looking at Consumer Reports, and it is 
raising a number of red flags with regard to the safety of food 
out in the marketplace, not at the production facilities, but 
where people are buying it.
    In January the magazine released a report on the condition 
of chicken in supermarkets. Consumer Reports purchased 484 
fresh whole broilers in stores in 25 cities across the country 
in the spring of 2002. They found Campylobacter in 42 percent 
of the chickens and Salmonella in 12 percent of the chickens. 
They also found that 90 percent of the Campylobacter bacteria 
and 34 percent of the Salmonella were resistant to one or two 
more antibiotics that would normally be used to treat the 
illnesses caused by this bacteria.
    This is a real product. It is in real stores being 
purchased by real people, and I think that what we are 
concerned about is that this gets out into the stores in spite 
of the system that we have set up for controlling Salmonella 
and the other bacteria. The Department doesn't even sample for 
Campylobacter, but I am told this is a serious illness that can 
cause meningitis, arthritis and something called Guillaume-
Barre syndrome.
    Consumer Reports say that USDA is working on a study that 
could help establish a standard for Campylobacter, but that you 
have no timeline in mind for setting the standard. Last 
November another Consumer Report study looked at contamination 
in ground beef in grocery stores. They found that 1 percent had 
substantial levels of fecal bacteria; again, a troubling 
finding, because there were 198 samples of ground beef from 
supermarkets in 9 States that tested for fecal bacteria. Two of 
the samples had high levels of E. coli O157.H7, and that we 
know that 60 people die routinely from E. coli O157.H7 
infections, and 73,000 become ill. This is a matter of concern. 
It is being published in a national publication. I would like 
you to comment on that, if you would, and tell us what you 
think we ought to be doing working with you to try to prevent 
these things from occurring in the future.
    Ms. Murano. Certainly.
    Well, as a microbiologist, I am very well acquainted with 
Campylobacter.
    Mr. Hinchey. What is it?
    Ms. Murano. It is a gram-negative bacteria that does cause 
a pretty profuse, watery diarrhea with foul odor, and it is 
gastroenteritis that certainly can have complications in 
specific people, such as what you mentioned, Guillaume-Barre 
syndrome, et cetera.

                      FUNDING FOR BASELINE STUDIES

    Let me say to you first, to answer the last part of your 
question. One of the reasons that we are requesting money for 
these baseline studies is so that we can do baseline studies, 
for example, on Campylobacter jejuni, to determine the 
prevalence of it in different food products that we regulate 
throughout the country. That is very important for us because 
that is how we can then discern what should be the levels.
    But before we run out of time, I do want to certainly make 
the case that without minimizing the importance of doing 
whatever we can to reduce Campylobacter illnesses, this is 
another one of those statistics that CDC has shown that over 
the last 5 years or so, there has been a 27 percent decrease in 
Campylobacteriosis illness in the United States, which heartens 
us certainly, but we do agree that through these baseline 
studies we will be able to really ascertain what is the 
prevalence of this organism and then decide what we need to do 
about it.
    Mr. Hinchey. I remain troubled by it because this is a 
recent report in Consumer Reports, and 42 percent of the 
chicken that they sampled had this particular bacteria, the 
Campylobacter bacteria. That is a very high percentage, 42 
percent.
    Ms. Murano. But we intend to do something about it is what 
I am telling you.
    Mr. Hinchey. Okay. Thank you, Mr. Chairman.
    Mr. Bonilla. Thank you, Mr. Hinchey.
    Ms. Kaptur, I will let you conclude, unless there are many 
remaining questions today. But Mr. Boyd has one brief question, 
and then we will go to Ms. Kaptur to conclude the hearing.

                        EXOTIC NEWCASTLE DISEASE

    Mr. Boyd. Thank you, Mr. Chairman. And my question maybe is 
for Dr. McKee.
    The Exotic Newcastle disease issue in California, I know 
you have got FSIS inspectors from all over, including in my 
State of Florida, going there to help. Can you tell us about 
the protocol for quarantine after those personnel come back to 
their States? And there has been some question amongst some of 
my folks that it may not be adequate, and I wanted you to 
address that.
    Mr. McKee. Thank you, Mr. Chairman and Mr. Boyd. I can't go 
into exact details of the process, but I was involved in 
direction that a protocol would be set up that would be 
adequate to prevent any return of or contamination of those 
inspectors or veterinarians that were helping to work the 
Newcastle outbreak. So I can assure you that the procedures 
that we put in place to prevent that was adequate.
    I do have information. Seventy-two hours is the 
decontamination time that they are required to go through, and 
it is a process that we can assure that there will not be 
contamination coming back into the plant.
    Mr. Boyd. Dr. McKee, there have been some, including a 
former ARS director of the Southeast Poultry Research Lab in 
Athens, Georgia, who have questioned the adequacy of that 
protocol, and I don't understand all of those things. You and 
your people, some of whom are sitting behind you, do better 
than I do, but if you would personally look at it and be 
satisfied those protocols are adequate, I think it would be 
very helpful to our people in Florida.
    Mr. McKee. Yes, I will certainly do that.
    Mr. Bonilla. Thank you, Mr. Boyd.
    Mr. Hinchey is going to submit a couple more questions for 
the record, to my understanding, but I will let Ms. Kaptur wrap 
up the last 5-minute round here that we have.

                          FOODBORNE ILLNESSES

    Ms. Kaptur. Thanks, Mr. Chairman.
    I just wanted to place on the record, before I conclude, 
data from the CDC that food-borne illness this past year has 
caused 76 million illnesses in our country, 325,000 
hospitalizations and 5,000 deaths. In the new data that the CDC 
has given to us, they only have summarized the data relating to 
the incidence of illnesses, and there is no data on 
hospitalizations or death in the newly amended report. The CDC 
does discuss the FSIS, however, and HACCP, but they lump 
statistics together with the FDA, seafood, juice, HACCP, egg 
quality improvements and so forth. One of the statements they 
do make in this updated report is that there is a very high 
incidence of food-borne illnesses in children; especially 
infants remain a major concern.

                            LISTERIA RECALL

    Ms. Kaptur. I would also like to submit for the record in 
my own way in defense of a food inspector that I have never met 
following on the Wampler plant. It was just one inspection 
report submitted midyear last year where he observed the 
operations of the chicken roll department and observed several 
flies on the chicken salad blending area during operations. He 
immediately notified his department supervisor of those 
findings and observed noncompliance in the following week. The 
preventative measures, as indicated on the previous report, 
were not applied or were ineffective as he then did a 
subsequent examination. He found no documentation to suggest 
that the company had done anything to remediate the problem. He 
held a meeting with the second shift plant manager and provided 
a written notification of a repetitive facility noncompliance.
    I just believe that this set of deaths and illnesses didn't 
have to happen because something didn't go right inside of the 
inspection process in its relationship to the plant management. 
Too many weeks were wasted, Madam Under Secretary, and I am 
hoping for the record you would provide for us a detailed 
explanation of what happened in all those days that were wasted 
before the USDA finally shut that plant down and tried to get 
the company to remediate the Listeria and other problems, 
health and safety problems, that were there.
    [The information follows:]

    [GRAPHIC(S)NOT AVAILABLE IN TIFF FORMAT] 
    
        
                    CONSUMER NOTIFICATION OF RECALLS

    Ms. Kaptur. I thank you very much for your testimony today, 
and in the remaining 2 minutes my final question is I am going 
to submit for the record the recall notice that was just issued 
on a plant in Ohio, and it basically tells people where the 
product was made, American Food's Group, Green Bay Dressed 
Beef, 106,000 pounds of fresh and frozen ground beef 
contaminated with E. coli 0157:H7. But then they tell you that 
some of it was sent to Kroger as beef ground sirloin patties. 
Some of it was sent to Meyers as ground beef chuck.
    How does the consumer know how to interpret these in order 
to protect themselves? It says that these products were 
distributed to stores in Ohio, Illinois, Indiana, Kentucky, 
Michigan, Missouri, North Carolina, Tennessee, Virginia and 
West Virginia. What is the consumer's ability to know that this 
is something I don't want to buy? What kind of labeling or 
information can you provide to the consumer so they know how to 
act on this report? How can you make it consumer-friendly?
    Ms. Murano. I understand that, and the difficulty that 
sometimes occurs. But in this particular case there is what we 
call case-ready product which would have that label. So in this 
particular case, this is easy for a consumer to know because it 
is case-ready. In other words, it came already packaged. But 
what happens a lot of times is that product gets sold to a 
supermarket, they open it up, regrind it, mix in some other 
trimmings, and then it gets repackaged, and that is the product 
that consumers cannot correlate with what might be on a press 
release such as this.
    In this particular instance, that is not a problem, but 
typically it is for that very reason, because of the 
repackaging that occurs at the retail store. That is why we 
urge people then to simply return the product to the point of 
purchase or throw it out or whatever they want to do with it, 
because they have that power within them, and I don't 
underestimate the intelligence of American consumers. I think 
people realize that if you live in one of those States, and you 
have ground beef, there is nothing wrong with going to your 
point of purchase and saying, is this part of the recall? And 
retailers do a very good job of informing their customers 
whether it is or it isn't.
    But I do share in the concern certainly that what we want 
is for consumers to heed these warnings, and that is something 
that is a personal concern to me because a lot of times even 
when consumers know that a product is contaminated, that it is 
exactly what they have in their refrigerator, such as what 
happened a few years ago with ice cream from Schwan's company, 
31 percent of the people, knowing that the product was 
contaminated and they were contacted by Schwan's, still went 
ahead and ate it. So it is a difficult situation that even when 
they have all the information, sometimes they don't comply, and 
that is why our food safety education campaign is so important.

                     RECOVERY OF RECALLED PRODUCTS

    Ms. Kaptur. Madam Under Secretary, I am going to ask you 
for recommendations for the record of how bar-coding can be 
placed on meat, especially the plants that have been cited in 
the past, so the consumer can absolutely know that they 
shouldn't buy it, because most of the meat that is recalled is 
not recovered.
    [The information follows:]

                               BAR-CODING

    All product recalls are voluntary actions undertaken by 
companies or institutions. The company conducting the recall 
determines the best way to notify their consumers, which may 
include the issuance of a press release or some other type of 
public information. Currently, FSIS has in place mechanisms to 
allow consumers to identify product involved in a voluntary 
recall. All labels for products under FSIS' jurisdiction must 
list the establishment's name and address. When a company 
decides to carry out a voluntary recall, FSIS issues two 
documents for the recall of all products under FSIS 
inspection--a press release and a Recall Notification Report 
(RNR), which lists the company's name and address. The press 
release is widely distributed to various news media outlets, 
trade associations, consumer groups, and Congressional staff. 
The RNR is distributed via e-mail to other Federal agencies and 
to over 450 food safety, agricultural, and public health 
officials throughout the United States at the Federal, State, 
and local levels. Both the FSIS press release and the RNR are 
posted on the agency's web site. The agency believes that bar-
coding would not provide any additional benefit over the 
agency's current practices for notifying consumers.

    What percentage of the meat at Wampler's has been recovered 
to date; not recalled, but recovered? Of 27 million pounds, how 
much?
    Ms. Murano. I don't know the answer to that, but I am sure 
it is not anywhere near the full amount. Part of the problem is 
that we always conduct recalls going as far back in time as 
necessary to err on the side of safety, and most of the time a 
lot of that product has already been consumed, too, so for us 
to recover it is impossible.
    I do agree with you that a lot of times we put down a 
figure of a certain amount, and there is no way we can recover 
that amount because it has already been consumed. So that is 
one of the frustrations that we actually have with people being 
very concerned about knowing how much product is there.
    Mr. Bonilla. Dr. Murano, thank you for your testimony here 
today.
    Dr. McKee, Steve, we appreciate your time, and I think that 
you sense, every member of this subcommittee, that they have a 
tremendous respect and appreciation for the work that you have 
done under the leadership of Dr. Murano the last year and a 
half.
    Ms. Kaptur has a letter she would like to submit for the 
record.
    Is that correct, Ms. Kaptur?
    Ms. Kaptur. Thank you, Mr. Chairman. It is.
    Mr. Bonilla. Without objection, it will be entered into the 
record.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
    
    Mr. Bonilla. Again, we thank you for your testimony. The 
subcommittee will stand in recess until 1:30 this afternoon.
    [Recess.]
    [The information follows:]

    [GRAPHIC(S)NOT AVAILABLE IN TIFF] 
    
        


                           W I T N E S S E S

                              ----------                              
                                                                   Page
Davidson, R. J., Jr..............................................     1
Dewhurst, S. B...................................................1, 771
Little, J. R.....................................................     1
McKee, G. L......................................................   771
Miller, W. K.....................................................     1
Murano, E. A.....................................................   771
Penn, J. B.......................................................     1
Terpstra, A. E...................................................     1


                               I N D E X

                              ----------                              

                          Farm Service Agency

                                                                   Page
ADP Expenditures.................................................   135
Administrative Support, Tobacco Program..........................   178
Bio-Energy................................................126, 220, 228
Biographical Sketch:
    Administrator, FSA...........................................    70
    Under Secretary Penn.........................................    69
Boll Weevil Eradication Loans.............................138, 210, 212
Civil Rights.....................................................   238
Coffee Prices....................................................   118
Commodity Credit Corporation:
    Borrowing Authority..........................................   175
    Contractual Services.........................................   157
    Export Credit Guarantees.....................................   157
    Foreign Debt.................................................   118
    Interest Rate on Borrowings..................................   160
    Inventory..................................................160, 162
    Leasing Costs................................................   143
    Sales to Iraq...............................................75, 125
    Surplus Commodities..........................................   229
    TEFAP Donations..............................................   164
Commodity Programs Signup........................................    74
Conservation Programs............................................   141
Conservation Reserve Program:
    Administrative Costs.........................................   150
    Cover........................................................   147
    Enrollment...................................................   206
    Estimates....................................................   152
    Farmable Wetlands Pilot Project..............................   209
    Signups and Eligibility Criteria...........................148, 209
    Technical Assistance.......................................150, 152
Cotton...........................................................   210
County Offices.................................................145, 214
    Employees....................................................   168
    Location...................................................144, 214
    Staffing...................................................115, 123
    Workload.....................................................   205
Dairy Price Support Program....................................234, 236
Discrimination Lawsuit Settlement................................   135
E-Government:
    E-Filing of Forms............................................   125
    E-LDP's......................................................   219
Emergency Conservation Program:
    Allocations................................................154, 155
    Needs......................................................154, 209
    Practices....................................................   156
Emergency Disaster Loans.........................................   193
Emerson Trust.............................................116, 120, 129
Equipment Purchases..............................................   136
Explanatory Notes:
    Commodity Credit Corporation.................................   321
    Farm Service Agency..........................................   242
Farm Bill:
    Implementation...............................................   216
    Signup.....................................................222, 226
Farm Loans.....................................................222, 227
    Activity.....................................................   180
    Budget Request...............................................   180
    Costs........................................................   209
    Credit Sales of Acquired Property............................   200
    Debt Write-Off...............................................   179
    Delinquencies..............................................185, 227
    Economic Assumptions.........................................   179
    Inventory Property.........................................187, 230
    Loans to FSA Employees.......................................   204
    Rescheduling.................................................   182
    Socially Disadvantaged Farmer Targets........................   196
    Status.....................................................209, 210
Farm Operating Loans.............................................   189
Farm Ownership Loans.............................................   190
Farm Storage Facility Loan Program...............................   206
Farming, Costs of................................................   227
Future Farmers of America........................................   241
GAO Report: Iraq's Participation in U.S. Agricultural Export 
  Programs.......................................................    77
Geographic Information System....................................   212
Hazardous Waste Management Program...............................   175
Indian Tribe Land Acquisition Loan Program.......................   203
Iraq.......................................................75, 115, 125
Livestock Compensation Program...................................   122
Loan Service Fees................................................   146
Loan Deficiency Payments.........................................   219
Milk Protein Concentrate.........................................   235
Nonfat Dry Milk..................................................   229
Object Classes:
    25...........................................................   205
    41...........................................................   140
Opening Statement, Under Secretary, FFAS.........................     2
Questions Submitted for the Record:
    Mr. Bishop...................................................   238
    Mr. Bonilla, Chairman........................................   135
    Ms. Emerson..................................................   222
    Mr. Hinchey..................................................   230
    Ms. Kaptur, Ranking Member...................................   226
    Mr. Latham...................................................   216
    Mr. Obey.....................................................   234
Salaries and Expenses:
    Advances and Reimbursements..................................   138
    Budget Request...............................................   208
    Leasing Costs................................................   143
    Salaries and Benefits, Average...............................   174
    Travel Costs.................................................   140
Signup:
    Commodity Programs...........................................    74
    Conservation Reserve Program.................................   209
Small Farms......................................................   240
Staffing:
    County Offices.............................................115, 123
    Employees on Detail..........................................   208
    Farm Loan Program Administration.............................   204
    Levels................................................225, 226, 236
    State Offices................................................   172
State Mediation Grants...........................................   197
Tobacco Administrative Costs.....................................   178
Warehouse Act Implementation.....................................   124
Written Testimony:
    Administrator, Farm Service Agency...........................    21
    Under Secretary, Farm and Foreign Agricultural Services......     6

                      Foreign Agricultural Service

Agricultural Trade Offices................................471, 593, 594
Arrearages.......................................................   510
Azores Collaborative Research and Education Program..............   625
Bill Emerson Humanitarian Trust..................................   615
Binational Agricultural Research and Development Fund............   598
Biographical Sketch:
    Ellen Terpstra...............................................    72
    W. Kirk Miller...............................................    73
Biosafety Protocol...............................................   621
Biotechnology..................................................629, 634
Buyouts..........................................................   613
China WTO Accession..............................................   614
Cochran Fellowship Program.....................................596, 627
Commodity Assistance Decisions...................................   625
Conferences......................................................   595
Countries Graduating from Food Aid...............................   613
Dairy Export Incentives Program..................................   586
Development Assistance...........................................   666
E.U. Negotiations................................................   614
E-Government.....................................................   626
Explanatory Notes................................................   701
Export Credit Guarantees.........................................   498
Export Enhancement Program.....................................493, 619
Export Incentive Program.........................................   498
Export Loan Guarantee Programs...................................   615
Facilities Guarantee Program.....................................   614
Food Security Commodity Reserve..................................   613
Foreign Currency.................................................   625
Foreign Market Development Cooperator Program...599, 601, 611, 625, 628
Free Trade Agreement of the Americas.............................   692
Global Food for Education Initiative............585, 619, 628, 637, 696
Global Marketing Strategy........................................   638
HIV/AIDS.........................................................   638
Homeland Security................................................   700
Information Technology...........................................   626
International Cooperation and Development........................   471
International Food Shows.........................................   587
International Housing............................................   627
Iraq...........................................................642, 650
Landsat..........................................................   594
Language Training................................................   594
Local Currency...................................................   614
Management Retreats..............................................   595
Market Access Compliance.........................................   614
Market Access Program..........................................473, 627
McGovern-Dole Global Food Program................................   668
Methyl Bromide............................................622, 624, 636
Montreal Protocol..............................................622, 624
Nat. Advisory Council on International Monetary and Financial 
  Policies.....................................................640, 656
Ocean Freight Differential.....................................514, 599
Overseas Rental Expenses.........................................   624
Overseas Travel by Under Secretary Penn..........................   632
Pay Cost.........................................................   624
PL 480 Explanatory Notes.........................................   324
PL 480 Title I Agreements.................................513, 614, 616
PL 480 Title II............................514, 585, 626, 628, 636, 694
PL 480 Title II External Transportation..........................   585
PL 480 Title II Internal Transportation..........................   585
PL 480 Title III.................................................   585
Quality Samples Program........................................620, 628
Relations with USTR and USAID....................................   620
Representation...................................................   595
Restrictions on AID Programs.....................................   473
Rice.............................................................   620
Russian Poultry..................................................   631
Section 416(b) Commodities......................587, 617, 627, 637, 696
Section 416(b) Transportation Costs..............................   586
Staffing Needs...................................................   666
State Department Reimbursements................................613, 624
Supplier Credit Guarantee Program................................   471
Telecommunications...............................................   619
Testimony of Ellen Terpstra......................................    48
Trade Adjustment Assistance for Farmers..........................   693
Trade Capacity Building..........................................   621
Trade Surplus....................................................   669
US-Australia Trade...............................................   626
World Trade Organization.......................................614, 619

                         Risk Management Agency

A & O Reimbursement Rate.......................................435, 437
Administrative & Operating Costs.................................   410
Administrative Expense Reimbursement Legislative Proposal......372, 434
Biographical Sketch, Ross J. Davidson............................    71
Borrowings.......................................................   421
Commercial and Assigned Risk Funds...............................   408
Congressional Affairs............................................   433
Crop Insurance Industry Annual Meetings..........................   414
Dairy Options Pilot Program......................................   382
Delivery Expenses................................................   414
Explanatory Notes................................................   439
Group Risk Plan................................................384, 401
Hotline Investigations...........................................   433
Information Technology...........................................   433
Insured Crops....................................................   418
Loss Ratio.......................................................   401
Other Services...................................................   370
Participation.............................................370, 373, 422
Payments to Companies and Producers..............................   367
Profits and Losses.............................................367, 406
Program Delivery.................................................   373
Program Indicators...............................................   425
Reinsured Companies............................................409, 416
Revenue Assurance................................................   403
Risk Management Education........................................   426
Staffing Plans...................................................   369
Testimony of Ross J. Davidson....................................    34
Unobligated Balances--FCIC Fund..................................   424

                   Food Safety and Inspection Service

Audits:
    Foreign..........................850-851, 856-857, 910-913, 965-967
    GAO/OIG.....................................................987-988
Automated Corporate Technology Suite (FACTS)....................952-953
Bar-Coding.......................................................   879
Biographies:
    Administrator, Food Safety and Inspection Service, Garry L. 
      McKee, Ph.D................................................   835
    Under Secretary, Food Safety, Elsa A. Murano, Ph.D...........   799
Budget Request:
    Baseline Studies.............................................   868
    Equivalency Review Trips....................................965-967
    Food Safety and Inspection Service.....................848, 864-866
    Public Relations Campaign...................................959-961
    Scientists, Additional Funding for...........................   856
    State Inspection Programs...................................956-957
Campylobacter Prevalence.........................................   988
Codex Alimentarius................................947-948, 953-954, 971
Condemned Product...............................................919-920
Consumption, Food in the U.S....................................848-849
Data Quality Requirements.....................................1004-1005
    E. coli O157:H7 Policy......................................983-984
Egg Products:
    Inspection and Salmonella Enteritidis........................   942
    Inspection Training Program..................................   944
    Organic......................................................   970
Electronic Export Certificates...................................   946
Enforcement Activities.......................866-867, 940, 962, 980-982
Equivalency Determinations, Foreign Country...........909, 914-917, 965
Exotic Newcastle Disease........................................868-869
Explanatory Notes.............................................1013-1054
Export:
    Countries..........................................896-908, 974-975
    Electronic Export Certificates...............................   946
Field Automation and Information Management (FAIM).............944, 949
Financial and Accounting Procedures, External Review of..........   950
Food Safety:
    Coordination...............................................996, 997
    Education..................................................857, 959
    Labeling.....................................................   979
    Modernize Meat Inspection Authorities.......................886-887
    Organic Standards............................................   970
    Single Agency....................................851, 855-856, 1000
    Technology.........................................846-847, 971-972
    United States, in the........................................   847
Foodborne:
    Illnesses....................................................   869
    Pathogens....................................................   867
    Relationship Between Foodborne Illness, HACCP, and Recalls..845-846
Grants to States...............................................938, 945
Guidance Documents...............................................   989
HACCP:
    Implementation..............................................986-987
    Plants.......................................................   943
    Relationship Between Foodborne Illness, HACCP, and Recalls..845-846
Homeland Security.................................844-845, 954-956, 991
    Hotline, Meat and Poultry....................................   943
Humane Slaughter....................................976-978, 1009, 1012
Import:
    Condemned product...........................................919-920
    Inspection..............................................908-917-986
    Product Safety...............................................   845
    Reinspection.................................................   985
    Surveillance Liaison Inspector...............................   991
    Violation....................................................   957
Inspection:
    Establishments.........................................895, 910-914
    Exemptions...................................................   936
    Exporting Countries.........................................896-898
    Inspectors and Consumer Safety O838-839, 948, 982, 984-985, 991-992
    Modernize Meat Inspection Authorities..................886-887, 990
    Product Inspection:
        Egg Products.............................................   942
        Livestock Inspected, Amount of...........................   942
        Poultry Inspected, Amount of.............................   941
        Volume and Cost of Meat an Poultry Inspection at 
          Slaughter..............................................   939
    State Equivalency..................................918-919, 956-957
    Training.................................944, 963-964, 973, 984-984
    Violations...................................................   973
    Voluntary Inspection.........................................   937
Irradiation.....................................................950-951
    Laboratory Accreditations...................................935-936
Laboratories, `Surge Response' Capacity..........................   975
Listeria:
    Directive...................................................837-838
    Ready-to-Eat (RTE) Products..................836-837, 957-958, 1001
    Recall.................................................858, 869-877
    Regulations.................................................957-958
Microbiological Performance Standards..........................951, 962
Microbiological Testing, Outsourcing.............................   960
Microtesting.....................................................  1002
Mobile Slaughter Units...............................849-850, 1010-1012
Nebraska Beef................................853-854, 967-969, 998-1000
Nonambulatory Animals............................................   976
Opening Statements:
    Administrator, Food Safety and Inspection Service, Garry L. 
      McKee, Ph.D...............................................800-801
    Under Secretary, Food Safety, Elsa A. Murano, PhD...........772-776
Organic Standards for Egg Products...............................   970
Outreach, Small and Very Small Plant.............................   994
Pathogen Testing.......................................958-959, 990-991
Pilot Programs..................................................889-894
Public Meetings..................................................   952
Questions Submitted for the Record:
    Chairman Bonilla.............................................   889
    Ms. DeLauro..................................................   998
    Mr. Farr.....................................................  1009
    Ms. Kaptur...................................................   976
    Mr. Kingston.................................................   970
    Mr. Latham...................................................   973
Recalls:
    Con Agra....................................880-884, 995, 1005-1008
    Consumer Notification of...............................878, 932-934
    Distribution Lists..........................................851-854
    Listeria...........................................858-864, 869-877
    Products from 2000-2002.....................................920-932
    Rate of.....................................................839-843
    Recovery of Product..........................................   879
    Review of Process............................................   989
    Relationship Between Foodborne Illness, HACCP, and Recalls...   845
Recovery Tests, Advanced Meat....................................   962
Research Projects...............................................894-895
Residue Tests....................................................   937
Salmonella Enteritidis:
    Egg Products.................................................   942
    In Flocks....................................................   978
    Testing...................................................995, 1003
Sanitary and Phytosanitary Cooperative Efforts..................917-918
Sentinel Sites...................................................   943
User Fees:
    Proposed Legislation...................................857-858, 954
Whistleblower Complaints........................................982-983
Written Statements:
    Administrator, Food Safety and Inspection Service, Garry L. 
      McKee, Ph.D...............................................802-834
    Under Secretary, Food Safety, Elsa A. Murano, Ph.D..........777-798

                                  
